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MI Brompton UK Recovery Unit Trust

Annual report 30 June 2018

Contents Page

Directory* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Investment objective and policy* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Investment manager’s report* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Portfolio statement* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Comparative table* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Statement of the authorised unit trust manager’s responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Certification of the annual report by the authorised unit trust manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Statement of trustee’s responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Independent auditor’s report to the unitholders of the fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Statement of total return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Statement of change in net assets attributable to unitholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Notes to the financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Distribution table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

General information* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

* These collectively comprise the authorised unit trust manager’s report.


Directory

Authorised unit trust manager and registrarMaitland Institutional Services LtdSpringfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PWTelephone: 01245 398950Fax: 01245 398951Website: www.maitlandgroup.com(Authorised and regulated by the Financial Conduct Authority)

Customer service centreSpringfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PWTelephone: 0345 026 4288Fax: 0845 280 2416E-mail: [email protected](Authorised and regulated by the Financial Conduct Authority)

Directors of the authorised unit trust managerR. AckermannJ. Clark (appointed 21 December 2017)P.J. Foley-BrickleyS. GeorgalaD. JonesG. Kok (appointed 30 November 2017)R.W. Leedham (retired 19 December 2017)

Investment managerBrompton Asset Management LLP1 Knightsbridge Green, London SW1X 7QA(Authorised and regulated by the Financial Conduct Authority)

TrusteeNorthern Trust Global Services PLC50 Bank Street, Canary Wharf, London E14 5NT(Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the PrudentialRegulation Authority)

Independent auditorKPMG LLP, Statutory AuditorChartered Accountants15 Canada Square, Canary Wharf, London E14 5GL

MI Brompton UK Recovery Unit Trust 1


Investment objectiveThe investment objective of the MI Brompton UK Recovery Unit Trust (the fund) is to achieve capital growth.

Investment policyThe fund will invest principally in the securities of UK companies quoted on the London Stock Exchange that are experiencingdifficult trading or that have growth prospects that are not duly recognised by the market.

In addition to ordinary shares the fund may also invest in fixed interest securities, preference shares, debt securities convertibleto ordinary stock, money market instruments, deposits and any other permitted asset type deemed appropriate to meet theinvestment objective. The fund may also invest outside the UK.

Investment manager’s reportfor the year ended 30 June 2018

PerformanceThe MI Brompton UK Recovery Unit Trust gained 10.02% over the year to 30 June 2018, outperforming the UK equity market,which gained 8.97% while cash as measured by the three-month UK Interbank Rate returned 0.50%. At the year end, thegain from the fund’s July 2002 inception was 316.10% compared with the UK stockmarket’s 254.12% return while cash hadreturned 45.66%.

Manager’s reviewThe year under review was a mixed one for the UK stockmarket. During the first half of the year, the environment for equitieshad been benign as a result of the slow rise in inflation from subdued levels and only marginal monetary tightening by centralbanks. Risk aversion increased, however, in the second half and returns were more muted as investors grappled with thecomplexities of the UK’s Brexit negotiations, with tightening monetary policy on both sides of the Atlantic and signs thatPresident Trump’s increasingly aggressive stance on tariff policies could degenerate into a full-scale trade war with theEuropean Union and China. Such tensions were also visible in the currency markets, where sterling gained against the dollarand the yen but weakened against the euro.

UK gross domestic product growth emerged at a modest 0.2% for the first quarter of 2018, leaving the annualised growthrate at 1.2%, the weakest level recorded since the year to end June 2012, but the upward revision to the original first-quarterestimate heightened expectations that the Bank of England would raise base rates by a quarter point to 0.75% in August. Thereason for the upward revision was strength in the construction sector. Household consumption remained subdued, however,and business investment fell, with industrialists increasingly nervous about the Brexit discussions.

The strongest sectors in the UK stockmarket over the year were those most likely to benefit from global economic growthand rising commodity prices and likely to be least affected by the modest monetary tightening by central banks in the UKand the US. With oil prices rising 57.46% in sterling terms, the energy sector was the strongest in the market, returning37.77%. Basic materials were also noticeably strong, returning 30.01% as industrial commodity prices rose 10.63% insterling as measured by Thomson Reuters. Consumer services returned 13.98% while industrial stocks returned 10.48%.

So-called “bond proxies”, companies with steady non-cyclical characteristics whose dividend yields tend to be comparedclosely to government bond yields, were conspicuously weak in response to retreating global bond prices, down 0.28% insterling over the year. Thus, telephony, utilities and consumer goods fell 14.46%, 6.26% and 4.83% respectively whilehealthcare returned only 2.34%. As measured by market value, the strongest market area was mid-cap stocks while smallercompanies lagged both large and medium-sized companies.

2 MI Brompton UK Recovery Unit Trust


Investment manager’s reportcontinued

Portfolio reviewWithin the portfolio, some of the strongest returns among large and medium-sized companies came in sectors such as basicmaterials, energy, media, technology and support services. Among the materials holdings, Anglo American and Rio Tintoreturned 74.02% and 37.22% respectively. In energy, Royal Dutch Shell returned 39.52%; in media, Sky, which facedcompeting takeover bids, returned 49.96% and Pearson recovered 31.14%; in technology, Renishaw and Electrocomponentsreturned 48.08% and 33.88% respectively, while Intertek and Rentokil Initial, two support services stocks, returned 37.46%and 30.16% respectively.

Conspicuous weakness was, however, shown by Provident Financial, the subprime lender, which fell 66.31%% in response toa profit warning, boardroom turmoil and a deep discount refinancing, while two retailers, N Brown and Dixons Carphone, fell42.61% and 30.18% respectively amid concerns for traditional retailers in the face of online threats. The failure of a takeoveroffer from Hammerson combined with retail woes to leave Intu Properties, a leading shopping centre owner, 28.34% lower.

Among smaller stocks, Advanced Oncotherapy recovered 252.78% after a significant cash injection to back its innovativemedical technology while Oxford BioMedica responded strongly to fresh evidence of the efficacy of its early-stage treatmentsfor cancer and other illnesses, rising 164.64%. Serica Energy gained 120.17% after it announced a transformationalacquisition of North Sea assets from BP, financed without recourse to shareholders. Hogg Robinson, the corporate travelagency and expenses management group, advanced 83.04% following an agreed takeover bid while TT Electronics advanced28.79% in response to further evidence of corporate recovery as a result of rationalisation measures.

A number of smaller stocks were conspicuously weak, however, with IndigoVision falling 57.56% after a profit warning anda management shake-up. Investors also grew less optimistic about operational progress at Peel Hotels and LiDCO, down47.72% and 27.45% respectively.

During the year, the fund initiated a new holding in Marks & Spencer while increasing a number of holdings on weakness oras a result of share issues. These included N Brown, BT, Capital & Counties Properties, Dixons Carphone, GlaxoSmithKline,IMI, IndigoVision, Intu Properties, Kingfisher, Northbridge Industrial Services, Peel Hotels, Provident Financial, J Sainsbury,Serco, Standard Life and Vodafone. Partial profits, meanwhile, were taken in Electrocomponents, Renishaw, Rentokil Initialand Serica Energy and takeover bids resulted in disposals of the holdings in Dr Pepper Snapple and Booker.

OutlookAt the year end, monetary trends were relatively weak but had stabilised after a sharp deterioration in the early spring,suggesting that the recent economic growth slowdown would continue. Non-monetary indicators compiled by the Organisationfor Economic Cooperation and Development were also confirming an economic slowdown. US economic activity was nolonger delivering positive surprises although core US inflation during the late spring had risen to its highest level since 2012.This contributed to expectations among investors that official US interest rates would be subject to one or possibly two furtherrises over the remainder of 2018.

Further uncertainty was triggered by the fact that in June, the Chinese renminbi staged its worst weekly fall since the August2015 devaluation even though indicators for Chinese manufacturing were stable. This suggests that the trade skirmishesbetween China and the US may have serious ripple effects in the currency markets, something that is likely to cause a retreatby equity investors into less risky asset classes.

Monetary trends in the UK and the eurozone recovered somewhat in the late spring but the trend remained weak, suggestingthat pan-European economic news may continue to disappoint investors. The UK services sector appeared more robust inthe late spring but this may merely reflect a catch-up after the unusually poor winter weather, not least because consumerconfidence weakened in early 2018, with worries about unemployment increasing. Monetary trends, meanwhile, suggest thateconomic growth will hover around 1% on an annualised basis for some time.

Relative performance among companies and sectors may, therefore, vary significantly over the second half of 2018,emphasising the importance of stock selection in generating performance.



Portfolio statementas at 30 June 2018

Market % of total value net assets

Holding Security £ 2018

Oil & gas 3.66% (3.67%)

Oil & gas producers 3.66% (3.67%)442 Royal Dutch Shell ‘A’ 11,620 0.12

7,027 Royal Dutch Shell ‘B’ 190,678 1.98250,888 Serica Energy* 150,533 1.56

352,831 3.66

Alternative energy 0.00% (0.00%)81 Ocean Power Technologies 52 0.00

Basic materials 6.70% (6.18%)

Mining 6.70% (6.18%)14,745 Anglo American 249,810 2.5963,327 Hochschild Mining 120,638 1.256,568 Rio Tinto 275,889 2.86

646,337 6.70

Industrials 32.14% (30.87%)

Construction & materials 2.54% (2.80%)53,326 Melrose Industries 113,371 1.18

153,000 Michelmersh Brick* 131,580 1.36

244,951 2.54

Aerospace & defense 1.70% (1.84%)25,351 BAE Systems 163,920 1.70

General industrials 5.13% (5.21%)41,950 Smith (DS) 218,560 2.2710,366 Smiths 176,015 1.8216,819 Vesuvius 100,494 1.04

495,069 5.13

Electronic & electrical equipment 6.58% (6.15%)18,970 Halma 259,889 2.694,623 Renishaw 244,326 2.53

53,718 TT Electronics 130,266 1.36

634,481 6.58

Industrial engineering 3.12% (2.54%)12,010 IMI 135,833 1.41

126,787 Northbridge Industrial Services* 164,823 1.71

300,656 3.12



Portfolio statementcontinued



Support services 13.07% (12.33%)32,235 Electrocomponents 244,212 2.53

221,500 Hogg Robinson 264,693 2.743,015 Intertek 172,337 1.79

162,900 Johnson Service* 224,150 2.3262,313 Rentokil Initial 218,594 2.27

138,699 Serco 137,243 1.42

1,261,229 13.07

Consumer goods 6.98% (8.20%)

Beverages 0.00% (0.84%)

Household goods & home construction 5.33% (5.55%)15,657 Bovis Homes 179,351 1.8625,175 Colefax* 128,393 1.3338,842 Redrow 206,834 2.14

514,578 5.33

Personal goods 1.65% (1.81%)3,803 Unilever 159,422 1.65

Heath care 4.98% (4.08%)

Health care equipment & services 1.22% (1.44%)75,000 Advanced Oncotherapy* 34,500 0.36

1,190,635 LiDCO* 83,344 0.86

117,844 1.22

Pharmaceuticals & biotechnology 3.76% (2.64%)11,200 GlaxoSmithKline 171,338 1.7719,465 Oxford BioMedica 191,769 1.99

363,107 3.76

Consumer services 15.65% (16.75%)

Food & drug retailers 3.56% (5.45%)54,018 J Sainsbury 173,452 1.8067,393 Wm Morrison Supermarkets 169,830 1.76

343,282 3.56

General retailers 6.93% (6.35%)78,526 Dixons Carphone 146,530 1.5218,075 Inchcape 140,714 1.4645,394 Kingfisher 134,684 1.4045,569 Marks & Spencer 134,474 1.3966,079 N Brown 111,872 1.16

668,274 6.93






Media 4.56% (4.03%)846,780 Dods* 108,388 1.12250,000 Metrodome** - 0.0019,249 Pearson 170,354 1.7711,009 Sky 160,897 1.67

439,639 4.56

Travel & leisure 0.60% (0.92%)80,000 Peel Hotels* 57,600 0.60

Telecommunications 2.86% (3.17%)

Fixed line telecommunications 1.40% (1.51%)61,989 BT 134,981 1.40

Mobile telecommunications 1.46% (1.66%)76,868 Vodafone 141,283 1.46

Financials 19.43% (20.20%)

Banks 4.50% (5.00%)22,703 HSBC 161,350 1.67

214,749 Lloyds Banking 135,335 1.4053,800 Royal Bank of Scotland 137,728 1.43

434,413 4.50

Non-life insurance 2.24% (2.25%)31,783 RSA Insurance 215,807 2.24

Life insurance 1.46% (2.99%)53,005 Legal & General 140,940 1.46

Real estate investment trusts 4.53% (4.47%)21,583 British Land 145,038 1.5071,905 Intu Properties 129,537 1.3487,978 Londonmetric Property 162,671 1.69

437,246 4.53

Real estate investment & services 1.47% (1.40%)49,531 Capital & Counties Properties 142,204 1.47

Financial services 4.57% (3.40%)38,183 H&T* 129,440 1.3430,148 International Personal Finance 61,442 0.6421,874 Provident Financial 131,157 1.3636,472 Standard Life 118,753 1.23

440,792 4.57

Equity investment instruments 0.66% (0.69%)6,516 Gresham House Strategic* 63,857 0.66






Technology 4.08% (5.10%)

Software & computer services 2.46% (3.29%)50,175 IndigoVision* 56,698 0.5928,675 Sage 180,194 1.87

236,892 2.46

Technology hardware & equipment 1.62% (1.81%)134,586 Spirent Communications 155,851 1.62

Investment assets 9,307,538 96.48 Net other assets 339,781 3.52

Net assets 9,647,319 100.00

All investments are ordinary shares or stock units on a regulated securities market unless otherwise stated. The percentagesin brackets show the equivalent % holdings as at 30.06.17.

* Quoted on AIM.

** This is a delisted security and has been valued at the manager’s best assessment of its fair value.



Comparative tableChange in net assets per unit Accumulation units 30.06.18 30.06.17 30.06.16 p p p

Opening net asset value per unit 375.59 300.73 312.73Return before operating charges^ 47.98 82.64 -5.25Operating charges -8.65 -7.78 -6.75Return after operating charges^ 39.33 74.86 -12.00Distributions -2.96 -2.22 -2.61Retained distributions on accumulation units 2.96 2.22 2.61Closing net asset value per unit 414.92 375.59 300.73^After direct transaction costs of -0.16 -0.17 -0.15PerformanceReturn after charges 10.47% 24.89% -3.84%Other InformationClosing net asset value £9,647,319 £8,703,052 £6,946,131Closing number of units 2,325,104 2,317,185 2,309,773Operating charges 2.18% 2.25% 2.23%Ongoing operating charges* 2.18% 2.19% 2.23%Direct transaction costs 0.04% 0.05% 0.05%PricesHighest unit price 429.61 385.74 322.13Lowest unit price 376.47 292.31 272.82

Operating charges include indirect costs incurred in the maintenance and running of the fund, as disclosed (but not limitedto) the detailed expenses within the statement of total return. The figures used within this table have been calculated byannualising the expenses incurred against the average net asset value for the accounting year.

The return after charges is calculated as the closing net asset value per unit plus the distributions on accumulation unitsminus the opening net asset value per unit as a % of the opening net asset value per unit.

Direct transaction costs include fees, commissions, transfer taxes and duties in the purchasing and selling of investments,which are offset where applicable against any dilution levies charged within the accounting year. The figures used within thetable have been calculated against the average net asset value for the accounting year.



Comparative tablecontinued

Risk and reward profileThe risk and reward indicator table demonstrates where the fund ranks in terms of its potential risk and reward. The higherthe rank the greater the potential reward but the greater the risk of losing money. It is based on past data, may change overtime and may not be a reliable indication of the future risk profile of the fund. The shaded area in the table below shows thefund’s ranking on the risk and reward indicator.

Typically lower rewards, Typically higher rewards,lower risk higher risk

The fund is ranked five because funds of this type have experienced medium-to-high rises and falls in value in the past.Please note that even the lowest risk class can lose you money and that extreme market circumstances can mean you suffersevere losses in all cases. The indicator does not take into account the following risks of investing in this fund:

• There may be cases where the company in which the fund owns shares falls into receivership due to trading difficulties.This could cause losses to the fund and reduce your investment.

• The fund invests in particular stocks which are experiencing difficulties or are undervalued. It may therefore not performin line with funds that have a broader investment policy.

• For further risk information please see the prospectus.

Risk warningAn investment in a unit trust should be regarded as a medium-to-long-term investment. Investors should be aware that theprice of units and the revenue from them can fall as well as rise and investors may not receive back the full amount invested.Past performance is not a guide to future performance. Investments denominated in currencies other than the base currencyare subject to fluctuation in exchange rates, which can be favourable or unfavourable.



1 2 3 4 5 6 7

Statement of the authorised unit trust manager’s responsibilities

The Collective Investment Schemes sourcebook published by the FCA, (the COLL Rules) require the authorised unit trustmanager to prepare financial statements for each annual accounting period which give a true and fair view of the financialposition of the fund and of the net income and net gains on the property of the fund for the period.

In preparing the financial statements the authorised unit trust manager is responsible for:

■ selecting suitable accounting policies and then apply them consistently;

■ making judgements and estimates that are reasonable and prudent;

■ following UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republicof Ireland;

■ complying with the disclosure requirements of the Statement of Recommended Practice for UK Authorised Funds issuedby the Investment Management Association in May 2014;

■ keeping proper accounting records which enable it to demonstrate that the financial statements as prepared comply withthe above requirements;

■ assessing the fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern;

■ using the going concern basis of accounting unless they either intend to liquidate the fund or to cease operations, orhave no realistic alternative but to do so;

■ such internal control as they determine is necessary to enable the preparation of financial statements that are free frommaterial misstatement, whether due to fraud or error; and

■ taking reasonable steps for the prevention and detection of fraud and irregularities.

The authorised unit trust manager is responsible for the management of the fund in accordance with its trust deed, theprospectus and the COLL Rules.

Certification of the annual report by the authorised unit trust managerIn accordance with the requirements of the regulations and COLL Sourcebook, we hereby certify the report on behalf of theauthorised unit trust manager, Maitland Institutional Services Ltd.

R. AckermannD. Jones

DirectorsMaitland Institutional Services Ltd11 September 2018



Statement of the trustee’s responsibilities in respect of the scheme and report of thetrustee to the unitholders of the MI Brompton UK Recovery Unit Trust (the fund) for theyear end 30 June 2018.

The trustee in its capacity as trustee of MI Brompton UK Recovery Unit Trust must ensure that the fund is managed inaccordance with the Financial Conduct Authority’s Collective Investment Schemes Sourcebook, the Financial Services andMarkets Act 2000, as amended, (together the regulations), the trust deed and prospectus (together the scheme documents)as detailed below.

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

The trustee is responsible for the safekeeping of all custodial assets and maintaining a record of all other assets of the fundin accordance with the regulations.

The trustee must ensure that:

• the fund’s cash flows are properly monitored and that cash of the fund is booked in cash accounts in accordance withthe regulations;

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

• the value of units of the fund are calculated in accordance with the regulations;

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

• the fund’s income is applied in accordance with the regulations; and

• the instructions of the authorised unit trust manager, which is the UCITS management company, are carried out (unlessthey conflict with the regulations).

The trustee also has a duty to take reasonable care to ensure that the fund is managed in accordance with the regulations andthe scheme documents of the fund in relation to the investment and borrowing powers applicable to the fund.

Having carried out such procedures as we considered necessary to discharge our responsibilities as trustee of the fund, it isour opinion, based on the information available to us and the explanations provided, that, in all material respects the fund,acting through the authorised unit trust manager:

(i) has carried out the issue, sale, redemption and cancellation, and calculation of the price of the fund’s units and theapplication of the fund’s income in accordance with the regulations and the scheme documents of the fund; and

(ii) has observed the investment and borrowing powers and restrictions applicable to the fund in accordance with theregulations and the scheme documents of the fund.

Northern Trust Global Services PLCUK Trustee and Depositary Services11 September 2018



Independent auditor’s report to the unitholders of MI Brompton UK Recovery Unit Trust(the fund)

OpinionWe have audited the financial statements of the fund for the year ended 30 June 2018 which comprise the statement of totalreturn, the statement of change in net assets attributable to unitholders, the balance sheet, the related notes and distributiontable and the accounting policies set out on pages 14 to 26.

In our opinion the financial statements:

• give a true and fair view, in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standardapplicable in the UK and Republic of Ireland, of the financial position the fund as at 30 June 2018 and of the net revenueand the net capital gains on the property for the year then ended; and

• have been properly prepared in accordance with the trust deed, the statement of recommended practice relating toAuthorised Funds, and the COLL Rules.

Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Ourresponsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the fund inaccordance with, UK ethical requirements including the FRC Ethical Standard.

We have received all the information and explanations which we consider necessary for the purposes of our audit and webelieve that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Going concernWe are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriateor there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of atleast twelve months from the date of approval of the financial statements. We have nothing to report in these respects.

Other informationThe authorised unit trust manager (AUTM) Maitland Institutional Services Ltd is responsible for the other information whichcomprises the manager’s report and general information. Our opinion on the financial statements does not cover the otherinformation and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assuranceconclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statementsaudit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge.Based solely on that work:

• we have not identified material misstatements in the other information; and

• in our opinion the information given in AUTM’s report for the financial year is consistent with the financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where under the COLL Rules we are required to report to youif, in our opinion:

• proper accounting records for the fund have not been kept; or

• the financial statements are not in agreement with the accounting records.



Independent auditor’s report to the unitholders of MI Brompton UK Recovery Unit Trust(the fund)continued

Manager’s responsibilitiesAs explained more fully in their statement set out on page 10, the manager is responsible for: the preparation of financialstatements that give a true and fair view; such internal control as they determine is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud or error; assessing the fund’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis ofaccounting unless they either intend to liquidate the fund or to cease operations, or have no realistic alternative but to do so.

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

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.

The purpose of our audit work and to whom we owe our responsibilitiesThis report is made solely to the fund’s unitholders, as a body, in accordance with Rule 4.5.12 of the Collective InvestmentSchemes sourcebook (the COLL Rules) issued by the Financial Conduct Authority under section 247 of the Financial Servicesand Markets Act 2000. Our audit work has been undertaken so that we might state to the fund’s unitholders those matterswe are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we donot accept or assume responsibility to anyone other than the fund and the fund’s unitholders as a body, for our audit work,for this report, or for the opinions we have formed.

Ravi Lambafor and on behalf of KPMG LLP, Statutory AuditorChartered Accountants15 Canada Square, London E14 5GL11 September 2018



Statement of total returnfor the year ended 30 June 2018

30.06.18 30.06.17 Note £ £ £ £Income

Net capital gains 2 842,560 1,677,602Revenue 3 268,611 230,827

Expenses 4 (199,614) (178,935)

Interest payable and similar charges 4 1 (1)

Net revenue before taxation 68,998 51,891

Taxation 5 (141) (372)

Net revenue after taxation 68,857 51,519

Total return before distributions 911,417 1,729,121

Distributions 6 (68,860) (51,516)

Change in net assets attributable tounitholders from investment activities 842,557 1,677,605

Statement of change in net assets attributable to unitholdersfor the year ended 30 June 2018

30.06.18 30.06.17 £ £ £ £Opening net assets attributableto unitholders 8,703,052 6,946,131

Amounts receivable on issue of units 52,850 47,800

Less: amounts payable on cancellation of units (20,000) (20,000)

32,850 27,800

Change in net assets attributable to unitholders from investment activities (see statement of total return above) 842,557 1,677,605

Retained distribution on accumulation units 68,860 51,516

Closing net assets attributable to unitholders 9,647,319 8,703,052

The notes on pages 16 to 25 form an integral part of these financial statements.



Balance sheetas at 30 June 2018

30.06.18 30.06.17 Note £ £ £ £ASSETS

Fixed assetsInvestments 9,307,538 8,547,785

Current assetsDebtors 7 25,895 33,600Cash and bank balances 9 346,531 154,209

Total current assets 372,426 187,809

Total assets 9,679,964 8,735,594

LIABILITIESInvestment liabilities – –

CreditorsOther creditors 8 (32,645) (32,542)

Total creditors (32,645) (32,542)

Total liabilities (32,645) (32,542)

Net assets attributable to unitholders 9,647,319 8,703,052

The notes on pages 16 to 25 form an integral part of these financial statements.



Notes to the financial statementsfor the year ended 30 June 2018

1. Accounting policies

(a) Basis of accountingThe financial statements have been prepared under the historical cost basis, as modified by the revaluation of investmentsand in accordance with FRS 102 and the Statement of Recommended Practice (“SORP”) for Financial Statements of UKAuthorised Funds issued by the Investment Association (IA) in May 2014.

The financial statements have been prepared on the going concern basis.

The authorised status and head office of the fund can be found within the general information starting on page 27.

The certification of the annual report by the authorised unit trust manager can be found on page 10.

(b) Recognition of revenueRevenue is included in the statement of total return on the following basis:

Dividends on quoted equities and preference shares are recognised when the securities are quoted ex-dividend.

Interest on bank and short-term deposits is recognised on an earned basis.

All revenue includes withholding taxes but excludes irrecoverable tax credits.

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

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

(d) Treatment of expensesAll expenses, except for those relating to the purchase and sale of investments and stamp duty reserve tax, are chargedagainst revenue for the year on an accruals basis.

(e) TaxationCorporation tax is provided at 20% on revenue, after deduction of expenses.

Deferred tax is provided using the liability method on all timing differences arising on the treatment of certain items fortaxation and accounting purposes, calculated at the rate at which it is anticipated the timing differences will reverse.Deferred tax assets are recognised only when, on the basis of available evidence, it is more likely than not that there willbe taxable profits in the future against which the deferred tax asset can be offset.

(f) Distribution policyThe net revenue after taxation as disclosed in the financial statements, after adjustment for items of a capital nature, isdistributable to unitholders as dividend distributions. Any revenue deficit is funded from capital.

At the year end, there were no items of a capital nature.

The policy of the fund is to make dividend accumulations on the last working day of August each year, where any revenueaccumulated is transferred to the capital property of the fund.

(g) Basis of valuation of investmentsQuoted investments are valued at close of business bid prices on the last business day of the accounting year excludingany accrued interest in the case of fixed and floating rate interest securities.

Unquoted or suspended investments are valued by the investment manager taking into account where appropriate, latestdealing prices, valuations from reliable sources, financial performance and other relevant factors.

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



Notes to the financial statementscontinued

(g) Basis of valuation of investments (continued)Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to thefair value measurement of the relevant asset as follows:

• Level 1: Unadjusted quoted price in an active market for an identical instrument.

• Level 2: Valuation techniques using observable inputs other than quoted prices within level 1.

• Level 3: Valuation techniques using unobservable inputs.

(h) Exchange ratesTransactions in foreign currencies are recorded in sterling at the rate ruling at the date of the transactions. Assets andliabilities expressed in foreign currencies at the end of the accounting period are translated into sterling at the closingexchange rates ruling on that date.

2 Net capital gains 30.06.18 30.06.17 £ £

Non-derivative securities 842,492 1,678,667

Currency gains 1,156 15

Transaction charges (1,088) (1,080)

Net capital gains 842,560 1,677,602

3 Revenue 30.06.18 30.06.17 £ £

UK dividends: Ordinary 258,467 203,905

UK dividends: Stock dividend 2,312 8,292

Overseas dividends 1,497 5,024

Property income dividends 4,742 11,636

UK dividends: Stock dividend 1,593 1,968

Sundry – 2

Total revenue 268,611 230,827




4. Expenses 30.06.18 30.06.17 £ £

Payable to the authorised unit trust manager, associates of the authorised unit trust manager and agents of either of them:

Authorised unit trust manager’s fee 29,500 29,500

Payable to the investment manager, associates of the investment manager and agents of either of them:

Investment manager’s fee 138,092 119,700

Payable to the trustee associates of the trustee and agents of either of them:

Trustee’s fee (including VAT) 12,000 11,762

Safe custody and other bank charges 6,631 5,584

18,631 17,346

Other expenses:

Audit fee (including VAT) 7,200 7,380

Audit fee (including VAT): taxation services 1,500 1,308

Financial Conduct Authority (FCA) fee 156 200

Legal fees 3,030 2,096

Printing costs 1,505 1,405

13,391 12,389

Expenses 199,614 178,935

Interest payable and similar charges (1) 1

Total 199,613 178,936




5. Taxation 30.06.18 30.06.17 £ £

a) Analysis of charge in the year:

Overseas tax 141 372

Current tax charge (note 5b) 141 372

b) Factors affecting taxation charge for the year:

Net revenue before taxation 68,998 51,891

Corporation tax at 20% 13,800 10,378

Effects of:

UK dividends (51,693) (40,781)

Stock dividends not taxable (463) (1,658)

Movement in surplus management expenses 38,656 33,066

Overseas tax expensed 141 372

Non-taxable overseas earnings (300) (1,005)

Current tax charge (note 5a) 141 372

c) Deferred Tax

At the year end there is a potential deferred tax asset of £255,586 (2017: £216,930) in relation to surplus managementexpenses. It is unlikely that the fund will generate sufficient taxable profits in the future to utilise these expenses andtherefore no deferred tax asset has been recognised in the year.

6. Distributions 30.06.18 30.06.17 £ £

Final distribution 30.06.18 68,860 51,516

Distributions 68,860 51,516

Reconciliation of net revenue after taxation to net distributions:

Net revenue after taxation per statement of total return 68,857 51,519Undistributed revenue brought forward 4 1Undistributed revenue carried forward (1) (4)

Distributions 68,860 51,516




7. Debtors 30.06.18 30.06.17 £ £

Accrued income:

Dividends receivable 25,278 32,983

UK income tax recoverable 617 617

Total debtors 25,895 33,600

8. Other creditors 30.06.18 30.06.17 £ £

Accrued expenses:

Amounts payable to the authorised unit trust manager, associates of the authorised unit trust manager and agents of either of them:

Authorised unit trust manager’s fee 2,425 2,465

Amounts payable to the investment manager, associates of the investment manager and agents of either of them:

Investment manager’s fee 12,109 10,891

Amounts payable to the trustee, associates of the trustee and agents of either of them:Trustee’s fee (including VAT) 2,005 2,992

Safe custody and other bank charges 3,656 5,244

5,661 8,236

Other expenses:Audit fee (Including VAT) 7,200 7,200

Audit fee (including VAT): taxation services 4,500 3,000

Printing costs 750 750

12,450 10,950

Total creditors 32,645 32,542

9. Cash and bank balances 30.06.18 30.06.17 £ £

Cash and bank balances 346,531 154,209

Cash and bank balances 346,531 154,209




10.Related party transactionsAuthorised unit trust manager and other fees payable to Maitland Institutional Services Ltd (the authorised unit trustmanager) are disclosed in note 4 and amounts due at the year end are shown in note 8.

Amounts receivable on issue and payable on cancellation of units are disclosed in the statement of change in net assetsattributable to unitholders and in note 6, amounts due at the year end are shown in notes 7 and 8.

Fees payable to Brompton Asset Management LLP (the investment manager) are disclosed in note 4 and amounts due atthe year end are shown in note 8.

Brompton Asset Management LLP and its associates had the following unitholdings in the fund:

Accumulation units Held at Change in Held at 30.06.18 period 30.06.17

New Star Investment Trust 659,993 – 659,993

11.Contingent liabilities and outstanding commitmentsThere were no contingent liabilities or outstanding commitments at the balance sheet date (2017: none).

12.Risk management policies and disclosuresIn pursuing its investment objectives, the fund may hold a number of financial instruments. These financial instrumentscomprise securities and other investments, cash balances, debtors and creditors that arise directly from the fund’soperations, for example, in respect of sales and purchases awaiting settlement, amounts receivable for creations andpayable for redemptions and debtors for accrued revenue.

In doing so, the authorised unit trust manager accepts market price risk in relation to the investment portfolio.

The fund may also enter into a range of derivative transactions whose purpose is efficient portfolio management. Inaddition the fund only executes derivative contracts where both the derivative instrument and the counterparty have beenapproved by the authorised unit trust manager.

The risks arising from financial instruments and the authorised unit trust manager’s policies for the monitoring andmanaging of these risks are stated below in accordance with the risk management policy of the authorised unit trustmanager.

These policies have been consistent for both years through which these financial statements relate.

Market price riskMarket price risk arises mainly from uncertainty about future prices of financial instruments held. It represents the potentialloss the fund might suffer through holding market positions in the face of price movements. This means the value of aninvestor’s holding may go down as well as up and an investor may not recover the amount invested. Investors shouldconsider the degree of exposure of the fund in the context of all their investments.

The fund’s investment portfolio is exposed to market price fluctuations, which are monitored by the authorised unit trustmanager as per the policies as set out in the prospectus. The investment guidelines and investment and borrowing powersset out in the instrument of incorporation, the prospectus and in the Financial Conduct Authority’s Collective InvestmentSchemes Sourcebook describe the nature of the market risk to which the fund will be exposed.




12.Risk management policies and disclosures (continued)

Currency riskAlthough the fund’s capital and income are denominated in sterling, a proportion of the fund’s investments may have currencyexposure and, as a result, the income and capital value of the fund are affected by currency movements.

Currency risk is the risk that the value of the fund’s investments will fluctuate as a result of changes in currency exchangerates. For funds where a proportion of the net assets of the fund is denominated in currencies other than sterling, the balancesheet can be affected by movements in exchange rates. The authorised unit trust manager monitors the currency exposureof the fund and may seek to manage exposure to currency movements by using forward exchange contracts or by hedgingthe sterling value of investments that are priced in other currencies.

The table below details the currency risk profile at the balance sheet date.

30.06.18

Currency £Euro 5,939Sterling 9,639,644Dollar 1,736

9,647,319

30.06.17

Currency £Euro 5,789Sterling 8,619,502Dollar 77,761

8,703,052

At the balance sheet date, if the value of sterling increased or decreased by 10%, with all other variables held constant,then the net assets attributable to unitholders would increase or decrease by approximately £768 (2017: £8,355).

Interest rate riskInterest rate risk, being the risk that the value of investments will fluctuate as a result of interest rate changes. The majorityof the fund’s assets comprise equity shares which neither pay interest nor have a maturity date.

Interest receivable on bank deposits or payable on bank overdraft positions will be affected by fluctuations in interestrates.

There is no material interest rate exposure in the fund (2017: none).

Credit riskCredit risk arises from the possibility that the issuer of a security will be unable to pay interest and principal in a timelymanner. Adhering to investment guidelines and avoiding excessive exposure to one particular issuer can limit credit risk.

There are no net borrowings or unlisted securities and the authorised unit trust manager considers that the fund has littleexposure to credit risk.




12.Risk management policies and disclosures (continued)

Liquidity riskLiquidity risk is the risk that a fund cannot raise sufficient cash to meet its liabilities when due. One of the key factorsinfluencing this will be the ability to sell investments at, or close to, the fair value without a significant loss being realised.

Under normal circumstances, a Fund will remain close to fully invested. However, where circumstances require: eitherbecause a view of illiquid securities markets or high levels of redemptions in the fund, the fund may hold cash and/ormore liquid assets. Temporary higher liquidity levels may also arise during the carrying out of a change in asset allocationpolicy, or following a large issue of units.

The manger considers that there is little exposure to liquidity risk.

Counterparty riskThe risk that the counterparty will not deliver the investments for a purchase or the cash for a sale after the Fund hasfulfilled it’s responsibilities which could result in the fund suffering a loss. The Investment manager minimises the risk byconducting trades through only the most reputable counter parties.

DerivativesThe fund may enter into derivative contracts for efficient portfolio management (EPM) purposes. The purposes of EPMmust be to achieve reduction of risk, the reduction of cost, or the generation of additional income or capital with anacceptably low level of risk and the use of these instruments must not cause the fund to stray from its investment objectives.

Any EPM transaction must be economically appropriate and the exposure fully covered. The authorised unit trust managermonitors the use of derivatives to ensure EPM rules are satisfied.

In the opinion of the authorised unit trust manager there is no sophisticated derivative use within the fund and accordinglya sensitivity analysis is not presented.

Fair value of financial assets and liabilitiesInvestments disclosed as at the balance sheet date are at fair value. Current assets and liabilities disclosed in the balancesheet are at amortised cost which is approximate to fair value.




13.Portfolio transaction costs

30.06.18 PurchasesAnalysis Net beforeof purchases purchase Commissions transaction cost paid Taxes cost £ £ % £ % £Equities 656,581 258 0.04% 3,038 0.46% 653,285Corporate actions 28,056 – 0.00% – 0.00% 28,056

Total purchases after commissionsand tax 684,637

SalesAnalysis Net beforeof sales sale Commissions Taxes transaction proceeds paid cost £ £ % £ % £Equities 767,360 268 0.03% 8 0.00% 767,636

Total sales after commissionsand tax 767,360

Commission as a % of average net assets 0.01%Taxes as a % of average net assets 0.03%

30.06.17 PurchasesAnalysis Net beforeof purchases purchase Commissions transaction cost paid Taxes cost £ £ % £ % £Equities 712,912 716 0.10% 2,435 0.34% 709,761Corporate actions 63,651 – 0.00% – 0.00% 63,651

Total purchases after commissionsand tax 776,563

SalesAnalysis Net beforeof sales sale Commissions Taxes transaction proceeds paid cost £ £ % £ % £Equities 451,086 442 0.10% 7 0.00% 451,535

Total sales after commissionsand tax 451,086

Commission as a % of average net assets 0.01%Taxes as a % of average net assets 0.03%

Commissions and taxes as a % of the average net assets form part of the direct transactions costs stated within thecomparative tables on page 8. The direct transaction costs within the comparative tables may differ due to the effect ofdilution levies charged (where applicable).




14.Portfolio dealing spread

The average portfolio dealing spread at 30 June 2018 is 0.59% (2017: 0.52%).

15.Fair value disclosure

Valuation technique 30.06.18 30.06.17 Assets Liabilities Assets Liabilities £ £ £ £Level 1^ 9,307,538 – 8,547,785 –Level 2^^ – – – –Level 3^^^ – – – –

9,307,538 – 8,547,785 –

^ Level 1: unadjusted quoted price in an active market for an identical instrument.

^^ Level 2: valuation techniques using observable inputs other than quoted prices within level 1.

^^^ Level 3: valuation techniques using unobservable inputs.

16.Unitholders funds

30.06.18Opening number of units 2,317,185Units issued 12,931Units cancelled (5,012)

Closing number of units 2,325,104



Distribution tablefor the year ended 30 June 2018

Accumulation unit distribution

Distribution Amount Amountreinvested reinvested

2018 2017p p

Final 2.9616 2.2232

EqualisationNo equalisation is applied to transactions in units.



General information

Authorised status

The MI Brompton UK Recovery Unit Trust (the fund) is an authorised unit trust scheme and UCITS scheme operating underchapter 5 of COLL. The fund qualifies for certification under the UCITS directive but does not currently have a UCITS certificate.The fund was established on 5 September 2006 and authorised by the FCA on 6 September 2006.

The fund does not intend to have an interest in immovable property.

Unitholders are not liable for the debts of the fund.

Head office of the authorised unit trust manager

Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW

Address for service

The head office is the address in the United Kingdom for service on the fund of notices or other documents required orauthorised to be served on it.

Base currency

The base currency of the fund is pounds sterling.

Units

The trust deed allows the fund to issue different classes of units in respect of the fund.

The fund currently has the following units available for investment:

Class A accumulation units

Holders of accumulation units are not entitled to be paid the revenue attributable to such units, but that revenue is retainedand accumulated for the benefit of unitholders and is reflected in the price of units.

Valuation point

The scheme property of the fund will normally be valued at 12:00 on each dealing day for the purpose of calculating the priceat which units in the fund may be issued, sold, repurchased or redeemed.

For the purpose of the pricing of units, a business day is defined as a day on which the dealing office of the authorised unittrust manager (AUTM) is open for the buying and selling of units. The AUTM may at any time during a business day carryout an additional valuation of the property of the fund if the AUTM considers it desirable to do so, with the trustee’s approval.

Buying and selling of units

The AUTM will accept orders for the purchase and sale of units on normal business days between 08:30 and 16:30.Instructions to buy or sell units may either be in writing to:

Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW

Or by telephone on:0345 026 4288

The AUTM has the right to establish facilities for recording telephone calls made or received on this telephone line.

A contract note giving details of the units purchased will be issued no later than the next business day after the business dayon which an application to purchase units is received and instrumented by the AUTM. Certificates will not be issued in respectof units. Ownership of units will be evidenced by an entry on the register of unitholders.



General informationcontinued

Pricing basis

There is a single price for buying and selling units in the fund. This represents the net asset value of the fund. The unit priceis calculated on a forward pricing basis, that is at the next valuation point after the purchase or redemption is deemed to beaccepted by the AUTM.

The prices of units are published daily on www.maitlandgroup.com. Neither the AUTM nor the fund can be held responsiblefor any errors in the publication of the prices. The units in the fund will be issued and redeemed on a forward pricing basiswhich means that the price will not necessarily be the same as the published price.

Other information

The trust deed, prospectus, key investor information document and the most recent interim and annual reports may be inspectedat the office of the authorised unit trust manager which is also the head office of the fund. Copies may be obtained free ofcharge upon application. They are also available from the website of the authorised unit trust manager, the details of which aregiven in the directory of this report.

Unitholders who have complaints about the operation of the fund should in the first instance contact the AUTM, or, followingthat, may make their complaint direct to the Financial Ombudsman Service, Exchange Tower, London E14 9SR.

Remuneration of the authorised unit trust manager

Its purpose is to ensure that the remuneration of the staff of the manager is consistent with and promotes sound and effectiverisk management, does not encourage risk-taking that is inconsistent with the risk profiles, rules or instruments ofincorporation of itself and the UCITS it manages including the fund and does not impair the AUTM’s compliance with its dutyto act in the best interests of the UCITS it manages.

Further information is available in the manager’s remuneration policy document which can be obtained fromwww.maitlandgroup.com. A paper copy of the remuneration policy is available on request from the registered office of theauthorised unit trust manager free of charge.

30 June 2018 Number of Total Remuneration FixedBeneficiaries Paid Remuneration

Total remuneration paid by the AUTM during the year 74 £29,500 £29,500

Remuneration paid to employees of the AUTM who have material impact on the risk profile of the AIF 6 £6,322 £6,322

The table has been calculated based on the total remuneration paid to the AUTM as AUTM fees in the period contained withinthese accounts. The total remuneration has been apportioned between the code staff and general staff by way of a percentagebased assessment.

The management has reviewed the general principles of the remuneration policy and its application in the last year which hasresulted in no material changes to the policy.

Risk warning

An investment in a unit trust should be regarded as a medium-to-long-term investment. Investors should be aware that theprice of units and the revenue from them can fall as well as rise and investors may not receive back the full amount invested.Past performance is not a guide to future performance. Investments denominated in currencies other than the base currencyare subject to fluctuation in exchange rates, which can be favourable or unfavourable.



Registered in England No 6252939. Authorised and regulated by the Financial Conduct Authority.

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