the monks investment trust plc - bailliegifford.com

Annual Report and Financial Statements 30 April 2021

THE MONKS INVESTMENT TRUST PLC

Global growth from different perspectives

Notes None of the views expressed in this document should be construed as advice to buy or sell a particular investment. Investment trusts are UK public listed companies and as such comply with the requirements of the UK Listing Authority. They are not authorised or regulated by the Financial Conduct Authority (FCA).Monks currently conducts its affairs, and intends to continue to conduct its affairs, so that the Company’s Ordinary Shares can qualify to be considered as a mainstream investment product and can be recommended by Independent Financial Advisers to ordinary retail investors in accordance with the rules of the FCA in relation to non-mainstream investment products.

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take you should consult your stockbroker, bank manager, solicitor, accountant or other independent financial advisor authorised under the Financial Services and Markets Act 2000 immediately if you are in the United Kingdom or, if not, from another appropriately authorised financial adviser.If you have sold or otherwise transferred all of your ordinary shares in The Monks Investment Trust PLC, please forward this document, together with accompanying documents, but not your personalised Form of Proxy, as soon as possible to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was or is being effected for delivery to the purchaser or transferee.

Global growth from different perspectivesThe Monks Investment Trust aims to deliver above average long-term returns for shareholders by keeping fees and costs low and harnessing the long-term growth potential of companies.

1 Financial Highlights

Strategic Report

2 Chairman’s Statement

4 The Managers’ Core Investment Beliefs

5 Managers’ Report

11 Portfolio Positioning

12 Investment Portfolio by Growth Category

14 List of Investments

17 One Year Summary

18 Five Year Summary

19 Ten Year Summary

20 Business Review

Governance Report

24 Directors and Management

25 Directors’ Report

28 Corporate Governance Report

32 Audit Committee Report

34 Directors’ Remuneration Report

36 Statement of Directors’ Responsibilities

Financial Report

37 Independent Auditor’s Report

42 Income Statement

43 Balance Sheet

44 Statement of Changes in Equity

45 Cash Flow Statement

46 Notes to the Financial Statements

Shareholder Information

57 Notice of Annual General Meeting

60 Further Shareholder Information

60 Analysis of Shareholders

61 Automatic Exchange of Information

61 Alternative Investment Fund Managers Directive

63 Communicating with Shareholders

63 Third Party Data Provider Disclaimer

64 Glossary of Terms and Alternative Performance Measures

Contents

Investor Disclosure DocumentThe UK Alternative Investment Fund Managers Regulations require certain information to be made available to investors prior to their investment in the Company. The Company’s Investor Disclosure Document is available for viewing at monksinvestmenttrust.co.uk.

Front coverDynamic Flowing Water on multi coloured holographic background.

https://www.bailliegifford.com/en/uk/individual-investors/literature-library/funds/investment-trusts/monks/monks-investment-trust-investor-disclosure-document

The Monks Investment Trust PLC 01

Financial Highlights

*Source:Refinitiv/BaillieGifford.Allfiguresarestatedonatotalreturnbasis.TotalreturnisanAlternativePerformanceMeasure–seeGlossaryofTermsandAlternativePerformanceMeasuresonpages64to65.

†Benchmark:theFTSEWorldIndex(insterlingterms)istheprincipalindexagainstwhichperformanceismeasured.#AlternativePerformanceMeasure–seeGlossaryofTermsandAlternativePerformanceMeasuresonpages64to65.

Pastperformanceisnotaguidetofutureperformance.Seedisclaimeronpage63.

Share Price* +53.1% NAV* +54.7%(borrowingsatpar)

NAV* +55.5%(borrowingsat fairvalue)

Benchmark*† +33.9%

Financial Highlights – Year to 30 April 2021

A2020

D J FM J J A S O N A2021

M

1600

1200

1000

800

1400

A2020


M

8

4

2

0

6

A2020


M

160

150

110

140

130

100

120

Share Price (pence)

Shareprice

Premium/(Discount)#

Premium/(Discount)(afterdeductingborrowingsatfairvalue#)plottedasatmonthenddates

NAV and Benchmark(figuresrebasedto100 at30April2020)

NAVtotalreturn (afterdeducting borrowingsatfairvalue#)

Benchmark† totalreturn

02AnnualReport2021

Strategic Report

*Totalreturnsfrom31March2015to30April2021.Pastperformanceisnotaguidetofutureperformance.TotalreturninformationissourcedfromBaillieGifford/Refinitivandrelevantunderlyingindexproviders.Seedisclaimeronpage63.ForadefinitionoftermsusedseeGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65.

Chairman’s Statement

Inlastyear’sstatement,writtenastheCovid-19virustookhold,mypredecessornotedthatthe‘pandemicislikelytoacceleratetrendsthatwerealreadyinplay,drivenbytechnologicalchangeandenvironmentalnecessity’.Oneyearon,thishasproventobeaprescientcommentary,andthevalueofMonks’shareshaveriseninexcessof50%asstrongfundamentalsdroveimpressiveincreasesinrevenuesacrossarangeofportfolioholdings.

Reviewingasingle12-monthperiodcanbemisleadingandtheBoardexpectstheyeartoApril2021tobeanoutlierformanyreasons,buttherealprogressformanyoftheCompany’sholdingshasbeensignificant.Thattheportfoliocopedsowellwiththeworldoflockdownistestamenttotherobustnessofthestrategyputinplacein2015,andtheexcellentstockselectionsincethen.

Overandabovethetremendoussharepriceappreciation,muchhasbeenachievedduringtheperiod:arecordlevelofshareissuance;weraisedlong-termdebt;theportfoliowasturnedoveratasteadypaceassharepricesrose;andweincreasedourfocusongovernanceandsustainability.Inaddition,asannouncedlastyear,wesaw:theretirementofoneofthethreenamedmanagers;theretirementoftwonon-executiveDirectors,includingmypredecessorasChairman;andtheappointmentofonenewDirector.TheworkingsoftheCompanyhavecontinueduninterruptedbythepandemicwiththeManagersandtheBoardworkingandmeetingremotelythroughoutthisperiod.

PerformanceDuringtheyeartheNAVtotalreturn,withborrowingscalculatedatfairvalue,was55.5%andthesharepricetotalreturnwas53.1%,whiletheFTSEWorldIndexreturned33.9%.ItisnowsixyearssincethechangeininvestmentapproachwasimplementedinMarch2015.Fiveyearsandbeyondareappropriateyardsticksbywhichtomeasurethelong-termstrategyoftheCompany.SincetheendofMarch2015theNAVtotalreturnhasbeen184.1%*againstthecomparativeindexat107.6%*.Overthesameperiodthesharepricetotalreturnwas229.9%*.

Share IssuanceOneofthestrategicobjectivestheBoardhadin2015wastoeradicatethediscount.Withthesharestradingataconsistentpremiumthroughouttheyear,theCompanywasabletoissue12.9millionnewsharesatpricesinexcessofNAV,raisingover£168millionofnewfundsforinvestment.ThepremiumtoNAVwithborrowingscalculatedatfairvaluestoodat2.8%at30April2021,slightlydownfromthe4.4%atthestartofthefinancialyear. AlargerCompanyisimportantforliquidityandmakingoursharesattractivetowealthmanagers,andithelpstoreducecostsbydilutingthefixedelementandbenefitingfromthetieredfeestructureagreedwiththeManagersin2018.MonkshasoneofthelowestcostratiosofanyinvestmenttrustlistedintheUK.

Borrowings and GearingOurInvestmentTruststructureallowsgearing,whichwillenhancelong-termreturns,eveniffutureequityreturnsareclosertothelong-runaveragethanwehaveexperiencedoverthelastfiveyears.TheBoard’sstrategicborrowingtargetis10%anditisexpectedthatgearingwillbemaintainedintherangeofminus15%toplus15%.Gearingfellthroughtheyear,from6.5%atthestart,to3.2%attheinterimstageandto0.8%byyearend.Afterayearofsuchimpressivestockmarketreturns,themanagersdecidedtocrystallisesomeprofits.Combinedwithshareissuance,thiscausedgearingtofallbeneathourlong-termtarget.Inthemediumtermwewouldexpectgearingtoriseagain.Givenourclosed-endstructure,theBoarddecidedtotakeadvantageofverylowlongratesandissuesomefixeddebt.Short-termdebtisoftenlessreadilyavailablewhenthereisanyvolatilityinmarkets,whichispreciselywhengearingismoreattractive.IampleasedtoreportthattheCompanysuccessfullyraised£100millionin twotrancheswithanaveragedurationof30yearsandcoupon of1.8%.

Management ExpensesMonksiscompetitiveonfeesandexpenses,whichhelpstoenhancereturnstoshareholders.Thetotalongoingchargesratiofortheyearto30April2021was0.43%,downfrom0.48%intheprioryearand0.58%atApril2015.Thecurrenttieredmanagementfeescale(seenote3totheFinancialStatements)shouldensurethatallshareholderswillbenefitfromeconomiesofscale.

Earnings and DividendMonksinvestswiththeaimofmaximisingcapitalgrowthratherthanincome.AllcostsarethereforechargedtotheRevenueAccount.TheCompany’spolicyistopaytheminimumdividendrequiredtomaintaininvestmenttruststatus.Retainedearningsarereinvestedintheportfolio.TheBoardisrecommendingthatasinglefinaldividendof2.0pshouldbepaid,comparedto2.5plastyear.

Governance and Sustainability TheCompany’sManagerscontinuetobeveryfocusedonensuringtheholdingsintheportfolioaddresstheneedsofallstakeholders.Atthesametime,theywishtobackandencourageambitionamongstthecompaniesthattheyownforyou.Thisrequiresdeepunderstandingofindividualcompaniesandthepatiencetoengagewithmanagement.JustasMonksinvestsforthelongterm,weencouragetheinvesteecompaniestodothesame.EachyeartheManagershavematerialengagementswithwelloverhalftheholdingsintheportfolio.Atpresent,anindustryisemergingaroundthenarrowmeasurementofEnvironmental,SocialandGovernancefactors.Whilstwewillpaycloseattentiontotheseandintimewillreportonmetricswefeelareappropriate,wethinkthatpatientengagementandencouragementofcompaniesthatarebothsustainableandprogressiveisthebestwaytoenhancelong-termreturns,andmuchofthiscannotbe


Strategic Report

capturedquantitatively.IwouldencourageyoutorefertotheMonks Stewardship Report 2020ontheCompany’spageoftheManagers’website,andreadmoreonthisimportantsubjectandhowtheManagersthoughtfullyengagewiththecompaniestheyinvestinonyourbehalf.

Unlisted Holdings OurstrategyforunquotedinvestmentsistohaveSchiehallion,adiversifiedportfolioofunlistedcompaniesalsomanagedbyBaillieGifford,asourcoreholding(currentlythecombinedordinaryandCshareholdingsrepresenttheCompany’slargestpositionat3.7%oftotalassets),andtoco-investselectivelyincompaniesthatourmanagersfindparticularlyattractive.Attheyearend,afurther2.3%oftheportfoliowasinvesteddirectlyinprivatecompanies.

The Board and The ManagersThisyearhasseentheretirementofthreeindividualsfromMonks.AttheAGMinSeptemberthelong-standingChairman,JamesFergusonretired.Hejoinedtheboardin2002,wasmadeChairmanin2005,andsincethenhascalmlycopedwiththedisruptionofthefinancialcrisisof2007–2009;theswitchtotheGlobalAlphaTeamatBaillieGiffordin2015;andmostrecently,theeffectsoftheCovid-19pandemic.

EdwardHarleyretiredasanon-executiveDirectorinMarch;havingservedontheboardsince2003hehasalsosteeredtheCompanythroughalltheseupsanddowns.

ThetriumvirateofretireesiscompletedbyCharlesPlowdenwhohasbeentheleadmanagersinceMarch2015.CharlesretiredfromBaillieGiffordattheendofApril2021.HehadbeentheseniorinvestorintheGlobalAlphateamsinceheestablishedthestrategyin2005,anditwashisrecordthereandtheclarityoftheprocessthatattractedtheBoardwhenweswitchedstrategyin2015.CharlesquicklyputinplacethebuildingblockswhichhaveallowedMonkstoflourish–aclearphilosophyandprocess,outstandingperformanceandeffectivecommunicationtogenerategreaterdemandfortheshares.IwouldliketothankJames,EdwardandCharlesforalltheyhavedoneforMonksInvestmentTrustandtheBoardwishesallofthemthebestfortheirfutureendeavours.

AsMonkshasbeeninexistencesince1929,DirectorsandManagerscomeandgo.Weareinthefortunatepositionofhavingconsiderablecontinuity.SpencerAdair,formerlyadeputymanager,hastakenontheroleofinvestmentmanagerandis ablyassistedbyMalcolmMacCollwhocontinuesasdeputy.SpencerandMalcolmhaveworkedtogetherforover15yearsandinadvanceofCharles’retirementstrengthenedtheirwiderresearchteam.

ClaireBoylewasappointedasanindependentnon-executiveDirectorwitheffectfrom1May2020.Shehasnearlytwodecadesofexperienceinfinancialservicesandinvestmentmanagement.Shehasalreadymadeausefulcontributiontoourdeliberations,despitehavingjoinedinlockdown.

OutlookMonkshasmadeprogressonmanyfronts,thankstothepatientapplicationofatriedandtestedinvestmentapproachwhichisbasedonbottom-upstockpickingandafocusongrowthcompaniesanywhereintheworld.Centraltotheapproachis toconstantlychallengeestablishedbeliefstoidentifyfurtherchanges,whichmightgenerateideasthatleadtofutureprofitableinvestments.Wethinkthepaceofchangewillnotabateandourobjectiveistostayaheadofchangeintechnology,data,culturalshifts,consumerbehaviourandmanyotherfactors.Weseek toinvestinstrongandflexiblecompaniescapableofnavigating,driving,orbenefitingfromchange.Returnswillnotbelinear–weshouldexpectgreatervolatilityaspolicyrespondstoeconomicrecovery–butitisduringjustsuchperiodsthatmanyopportunitiescometolight.

Annual General MeetingTheCompany’sAGMhasbeenscheduledtotakeplaceon 2September2021attheInstituteofDirectors,PallMall,London,SW1Y5EDbut,giventheongoinguncertaintyaboutafurtherwaveofinfections,oranewvariant,theBoardwillcontinuetomonitordevelopmentsandmaybeforcedtoprohibitshareholdersfromattendinginperson.Wehopenot.Nevertheless,theBoardencouragesallshareholderstoexercisetheirvotesattheAGM bycompletingandsubmittingaformofproxy.WewouldencourageshareholderstomonitortheCompany’swebsiteatmonksinvestmenttrust.co.ukwhereanyupdateswillbepostedandmarketannouncementswillalsobemade.

ShouldshareholdershavequestionsfortheBoardortheManagersoranyqueriesastohowtovote,theyarewelcomeasalwaystosubmitthembyemailtotrustenquiries@bailliegifford.com or call08009172112.

KSSternbergChairman17June2021

https://www.bailliegifford.com/en/uk/individual-investors/literature-library/funds/investment-trusts/monks/investment-intelligence/monks-stewardship-report-2020/

https://www.bailliegifford.com/en/uk/individual-investors/funds/monks-investment-trust/

mailto:[email protected]

04AnnualReport2021

Long-term Perspective— Long-termholdingsmeanthatcompanyfundamentalsare

giventimetodrivereturns.

— Weprefercompaniesthataremanagedwithalong-termmindset,ratherthanthosethatprioritisethemanagement ofmarketexpectations.

— Webelieveourapproachhelpsusfocusonwhatisimportantduringtheinevitableperiodsofunderperformance.

— Short-termportfolioresultsarerandom.

— Aslonger-termshareholdersweareabletohavegreaterinfluenceonenvironmental,socialandgovernancematters.

Dedicated Team with Clear Decision-making Process— Seniorandexperiencedteamdrawingonthefullresources

ofBaillieGifford.

— Alignmentofinterests–theinvestmentteamresponsibleforMonksallownsharesintheCompany.

Portfolio Construction— Investmentsareheldinthreebroadholdingsizes–asset

outonpages12and13.

— Thisallowsustobackourjudgementinthosestocksforwhichwehavegreaterconviction,andtoembracetheasymmetryofreturnsthrough‘incubator’positionsinhigherrisk/returnstocks.

— ‘Asymmetryofreturns’:someofoursmallerpositionswillstruggleandtheirsharepriceswillfall;thosethataresuccessfulmayrisemanyfold.Thelattershouldoutweightheformer.

Low Cost— Investorsshouldnotbepenalisedbyhighmanagementfees.

— Lowturnoverandtradingcostsbenefitshareholders.

WebelievethefollowingfeaturesofMonksprovideasustainablebasisforaddingvalueforshareholders.

Active Management— Weinvestinattractivecompaniesusinga‘bottom-up’

investmentprocess.Macroeconomicforecastsareofrelativelylittleinteresttous.

— Highactiveshare*providesthepotentialforaddingvalue.

— Weignorethestructureoftheindex–forexamplethelocationofacompany’sHQandthereforeitsdomicilearelessrelevanttousthanwhereitgeneratessalesandprofits.

— Largeswathesofthemarketareunattractiveandofnointeresttous.

— Asindexagnosticglobalinvestorswecangoanywhereandonlyinvestinthebestideas.

— Astheportfolioisverydifferentfromtheindex,weexpectportfolioreturnstodiverge–sometimessubstantiallyandoftenforprolongedperiods.

Committed Growth Investors— Inthelongrun,sharepricesfollowfundamentals;growth

drivesreturns.

— Weaimtoproduceaportfolioofstockswithaboveaveragegrowth–thisinturnunderpinstheabilityofMonkstoaddvalue.

— Wehaveadifferentiatedapproachtogrowth,focusingon thetypeofgrowththatweexpectacompanytodeliver. Allholdingsfallintooneoffourgrowthcategories–asset outonpages12and13.

— Theuseofthesefourgrowthcategoriesensuresadiversity ofgrowthdriverswithinadisciplinedframework.

The Managers’ Core Investment Beliefs

Strategic Report

*ForadefinitionoftermsusedseeGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65.


1WorldEconomicOutlook,April2021:ManagingDivergentRecoveries.*Totalreturnsfrom31March2015to30April2021.Pastperformanceisnotaguidetofutureperformance.TotalreturninformationissourcedfromBaillieGifford/Refinitivandrelevantunderlyingindexproviders.Seedisclaimeronpage63.ForadefinitionoftermsusedseeGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65.

Managers’ Report

Strategic Report

BackgroundWhilewearereportingonthetwelvemonthstotheendofApril2021,itismoreusefultostretchourtimehorizonbacktotheAutumnof2019,priortothepandemic.AtthetimeoftheInterimReportof31October2019,theCompany’sNAVwas861.0pandequitymarketswerearound10yearsintothelongrecoveryfromthe2008–9financialcrisis.Wehadalreadystartedwithdrawingfrom‘CyclicalGrowth’holdingsandre-cyclingtheproceedsintootherareasoftheportfolio.WedidnotforeseethecalamitouscollapseintheworldeconomythatwasprecipitatedbyCovid-19,butwefeltadecadeintoacyclicalreboundtherewerecompaniesthatweremorevulnerableif,andwhen,thatrecoverystalled.

TheCompany’sNAVhitalowof721.3pinmid-March2020,justpriortotheperiodunderreview,andthenbouncedto875.6pbytheendofApril2020.Fromthispoint,theNAVroseverystronglytoendthefinancialyearat1,358.1pinApril2021(totalreturn+55.5%).Thestrongrecoveryfromthelowhasbeendrivenbyfundamentalperformancefromwhatmightbroadlybecalledtechnologycompanies.Thesecompaniesareprofitingfromthemovefromofflinetoonline,fromphysicaltovirtual,fromeducatedguessworktodatadrivenscience.

Whilewepaynoheedtoeconomicindicators,itisusefultonotethatduring2020theworldeconomywentthroughitsbiggesteconomicshocksincetheSecondWorldWar.RealGDPfell3.3%accordingtotheIMF,thiscomparestothe0.6%declinerecordedin20091.Weareemergingfromaquiteunprecedentedperiod.Wesalutethestoicismofhealthworkers,frontlineworkers,scientists,teachersandmanymorewhohavehadtheirworldsturnedupsidedownbythecoronavirusyethaveadaptedandcontinuedtoworkthroughthisverychallengingperiod.

Lookingbackonthisroller-coasterride,whathasbeenconsistentisourapproach,albeitwehavecontinuedtoworkfromhomesothattheapproachtomeetingcompanymanagement,colleaguesandotherexternalpartieshashadtoadapt.Theswiftmoveonlinefortheofficeenvironmenthasbeenreplicatedinmanyotherpartsoftheglobaleconomyandthishaspositivelyimpactedmanyoftheportfolioholdingswhowerealreadyusedtosellinggoodsandservicesinavirtualworld.Aboveall,wehaveretainedalong-termandoptimisticviewpoint.

Performance Consistentwiththatlong-termperspective,welookbacktotheperformanceofthe6yearssincetheGlobalAlphateamtookoverthemanagementofTheMonksInvestmentTrust.Overthisperiod,wehavedeliveredacumulativeNAVtotalreturnof+184.1%*(shareprice+229.9%*)comparedtothecomparativeindex(FTSEWorld)whichisup+107.6%*.TheyeartoApril2021significantlyenhancedtheselong-termnumberswiththeNAVtotalreturnrisingby55.5%*againstthecomparativeindexwhichincreasedby33.9%*.

Thelast12monthshavebeenexceptionalforstockmarkets, withMay2020coincidingwiththeearlystagesofaverystrongrecoveryfromthebottomofthepandemicsell-off.Ofthetoptenpositivecontributorstoperformance,insterlingterms,tworosefour-fold(TeslaandSeaLimited),onerosethree-fold(Farfetch)andthreemorerosetwo-fold(MeituanDianping,TrupanionandZillowGroup).Thetoptenalsofeaturedestablishedwinners,Alibaba(throughSoftBank),Amazon,ShopifyandAlphabet.

Theportfoliohasprosperedfromowningthesestocksandmanyotherswhicharebeneficiariesofcommercemovingonline.Wethinkthemovefrombricksandmortartodigitalwilltakemanyyearssomanyofthesecompaniesarestillintheearlystagesofpenetratingvastnewmarkets.Forexample,ecommerceintheUSrosefrom11%beforethepandemicto16%currentlybutwillnotleveloutuntilitis50–60%socangrowatstrongratesformanyyears.

Teslaisanexceptionalcompanywithamaverickleader.Itwasthemostsignificantcontributorto12-monthperformanceasitcontinueditsmarchtodominanceintheautomobileworld.Despitefactoryshutdownsduringthepandemic,thecompanyincreasedproductionbyover30%to500,000vehicles.Itwillsoonhavecapacitytomanufacture1.5millionvehiclesinCalifornia,BerlinandShanghaianditisbuildingaplantinTexasthatwillbethemainproductionlocationfortheTeslaSemi(truck)andCybertruck(pickup).Whilsttraditionalautomakersarenowproducingelectricvehiclesatscale,wethinkTesla’stechnologyleadisverysignificantandthereareinterestingoptionsaroundsolarpowerandautonomousdriving,whereTeslaalsohasaleadingedge.

©TaiwanSemiconductorManufacturingCo.,Ltd.

TSMC, the Taiwan Semiconductor Manufacturing Company, is one of the more traditional holdings in the portfolio.

06AnnualReport2021

Strategic Report

Theconsistentthemeintheremainderofthetoptenpositivecontributorsisthemoveonline.Asnoted,theseareacombinationofestablishedecommercecompanies(Amazon,Shopify,Alphabet,AlibabaviaSoftBank)aswellascompaniesinnicheoremergingareasofvirtualconsumption.SeaLimitedisagaming,ecommerceandpaymentscompanyoperatinginSouthEastAsia.SeahasbackingfromTencentwhichoperatessimilarplatformsinChinaandinwhichwehaveinvestedforoveradecadethroughNaspers.Luxurygoodscompanieshavetraditionallybeencautiousaboutsellingproductsthroughonlineportalsbutthepandemicmayhavechangedthatasmanyoftheirtraditionaldistributionroutes(airportdutyfree,travel)havebeenclosed.AbeneficiaryofthistrendhasbeenBritish-Portugueseportal,Farfetchwhichhasquicklyestablisheditselfastheonlineluxuryshoppingdestination.

ThetopcontributorsareroundedoffbyChina’slargestfood-deliveryandlocalservicescompanyMeituanDianping,acompanythatprovidesmedicalinsuranceforpetsinTrupanionandanotherUScompanywhichisdisruptingthedomesticpropertymarket–Zillow.

ItisworthcommentinguponSoftBank.ThisisaJapaneseholdingcompanyrunbyamaverickwhorivalsTesla’sMrMusk.WecommenteduponthepurchaseofSoftBankinlastyear’sreportatwhichpointwehadjusttakenaninitialpositionwhenSoftBankwastradingatarounda50%discounttoitsnetassetvalue.Itsleader,MasayoshiSonmayhavestruckoneofthegreatestdealsinhistorywhenhepaidUS$20millionfora30%stakeinAlibabain1999.AtthetimeofourownpurchaseofSoftBanklastyear,wesolddownsomeofthestakeinAlibabatobuytheSoftBankposition.Thistradehasworkedwellasthe

discounttonetassetvalueforSoftBankhasnarrowedconsiderablywhilstatthesametimeAlibabahassufferedfromregulatoryconcernsandthecancellationofthevaluableAntFinancialIPO.MonksalsoholdsasmallstakeinAntFinancialwhichcontinuestobeprivate.Towardstheendoftheyear,wetrimmedthepositioninSoftBank,havingseenthesharepricealmostdoubleinjustover12months.

Theportfoliowasfortunatetohaveverylittleexposuretothefrontlineofthepandemic–travel,oilandgas,traditionalretailandproperty.Thetoptendetractorsfromperformanceareaneclecticgroup.TheyincludetwolargeJapanesefinancials,SumitomoMitsuiTrustandMS&ADInsurancewhosepotentialinsurancelosseshaveledustosellduringtheperiodandtwocompaniesexposedtocommoditypricesinKirby(aUSinlandbargeoperator,alsosold)andOrica(explosives).Thereareanumber ofdisruptiveChinesecompanies–therecentlypurchasedLiAuto(whichwehopecouldturnouttobeChina’sTesla),BrillianceAutomotive(themanufactureranddistributorofBMWcarsinChina)andPingAnHealthandTechnology(atelemedicinecompany).Wehavehighhopesfortelemedicine;mostsimplemedicalproblemscanbediagnosedquicklyandefficientlyviaanonlineconsultationandPingAnusesasignificantlevelofartificialintelligencetoaidtheon-screendoctors.

TheremainingsignificantdetractorsareLendingTree(USonlinefinancialservices,whichsufferedapauseinactivityduringlockdowns),JustEatTakeaway(whichwesoldasitwascedingmarketshare)andanewerpurchase,OscarHealth.Thelatterisadisruptivehealthinsurerusinginsightfulandpersonaldatatobetterpriceitscustomers’risk.Oscar’scustomerbaseroseby75%in2020.

©ImaginechinaLimited/AlamyStockPhoto.

Meituan Dianping, the Chinese food-delivery and local services company, was a top contributor to performance in the year.


Strategic Report

Inbetweentheseperformanceoutliers,avastswatheofothercompanieshaveproducedstrongresultsduringtheperiod. Manyoftheseonemightclassasmoretraditional–TSMC(semi-conductors),ArthurJ.Gallagher(insurance),MartinMarietta(constructionmaterials)andMasterCard(creditcards).Whilsttheonlinedisruptorsprovidealotofexcitement,wedonotlosesightofthefactthatMonksbenefitsfrombalanceanddiversityacrossitsstockholdingsandthisisanaspectwehavebeenthinkingofcarefullyaswelookoutoverthenextfiveyearsandbeyond,whichisourtypicaltimehorizon.

Portfolio ChangesThemostsignificantchangesoverthelongertermhavebeenthereductionintheCyclicalGrowthcategoryandincreaseinRapidGrowthcompanies.AtApril2015,Rapidaccountedforaround22%andhasnowincreasedto52%.Cyclicalstartedat31%sixyearsagoandisnowaroundhalfthatlevel(16%).

Inthelast12months,portfolioturnoverremainedthesameat16%.Intotaltherewere30newpurchasesand24completesales,withtheactivitybeingweightedtothefirstsixmonthsoftheperiod(i.e.May-October2020)whentheopportunitiesofthepandemicselloffwereattheirmostsignificant.

Whilsteverythingwedoisdrivenbybottom-upstockpickingandtheindividualcircumstancesofthecompaniesithelpstomakesenseofquitealonglistoftradingactivitybytalkingtosomebroaderthemes.ThegrowthintheweightofRapidholdingshasbeentheresultofanumberofmovingparts.

First,overtimewehavereducedourpositionsinthemega-platformsnotablyAlibaba,Amazon,Alphabet,Facebook,TeslaandVisa.WesoldVisainthefirsthalfof2020afterachievingconsistentgrowthformanyyearswiththetailwindofcommercemovingonline.WecontinuetohaveexposurethroughMasterCard.

Second,someoftheproceedsofthesereductionshavebeenre-investedinanewwaveofdigitalcompanies,soinpayments,ratherthanowningVisawenowhaveAdyenandStripe.WesoldSAPasanincumbentsoftwarecompanyandpurchasedanumberofdigital‘natives’whichdon’thavethebaggageoflegacybusinesseswhichcouldactasabrakeongrowth–theseincludeTwilio(customercommunications),Cloudflare(webperformanceandsecurity),Datadog(monitoringofcloudsoftwareplatforms),andSnowflake(dataplatformsandanalysis).TheCloudisone ofthemostimportanttechnologyleapssincethepersonalPCbecamemainstreaminthemid1980s.Newonlineentrantslookingtodisrupttraditionalbusinessesnowhaveverylowbarrierstoentry,asakeyrawmaterialindataandstoragecan berentedcheaplyfromdayone.Wethinkthesecompanieshavehugegrowthopportunitiesiftheycangoontodominateintheirrespectiveniches.

Third,alsowithintheRapidGrowthcategory,wehavecontinuedtoaddhealthcarestocks.TheseincludeModerna(mRNAtechnology),ExactSciences(moleculardiagnostics),StaarSurgical(implantablelenses),OscarHealth(insurance),andCertara(biosimulationindrugdiscovery).Wealsosoldonesuccessfulhealthcareinvestment,Seagen(formerlySeattleGenetics)asitspricereachedourestimateoflong-termfairvalue.

Fourth,wehavepurchasedsomefast-growingpersonalconsumptionandentertainmentbusinessessuchasBumble(onlinedating),ByteDance(theownerofTikTok),Wayfair(onlinefurniture),EpicGames(computergamessuchasFortnite),TencentMusicEntertainment(China’sSpotify)andIAC/Interactive.ThelatterisaholdingcompanyheadedbyBarryDiller.MrDillerhasastronghistoryofincubatingandthenspinningoffsuccessfulonlinecompanies,andthecurrentholdingsincludeANGI(homeservicessuchasplumbing,lawncare),andVimeo(avideoplatform).

©TEDALJIBE/AFP/GettyImages.

Sea Limited, the South East Asian gaming, ecommerce and payments platform, benefited from the move online.

08AnnualReport2021

Strategic Report

ThelastfactorthathasboostedtheweightofRapidGrowthholdingshasbeensharepriceperformance,whichwereferencedabove.Suchsignificantgains,evenwhenaccompaniedbyfastrevenuegrowth,doleadustoconsiderthebalanceoftheportfolioandsinceearly2020wehavebeenlookingtoidentifyamorediversesetofexposures.Theseincludethepurchaseofhigh-qualityStalwartcompanieswhichwehadadmiredforalongtimeandwherethepandemicsell-offprovidedanentrypoint.Theyarehouseholdnamesinadidas(brandedsportswear),EstéeLauder(cosmetics)andS&PGlobalInc(formerlyStandardandPoors,afinancialratingsagency).

Afteracrisis,capitalgetswithdrawnfromcertainindustriesso wehavesoughtoutcompaniesthatcanimprovetheirmarketpositionsandemergestronger.TheseincludeLyft(ridesharing),BookingsHoldings(thedominantonlinetravelagent),RioTinto(mining),andWizzAir(alow-costairlinemainlyoperatinginEasternEurope).WehavealsoaddedtoRyanairwhichtheportfoliohasownedformanyyearsandwillbenefitfromafurtherretrenchmentofitscompetitors.

Thecompletesalesintheportfoliohavemadewayformanyofthestocksmentionedabove.AswellassellingKirbyandOricawithcommodityexposurewealsosoldMRCGlobalandDistributionNOW(bothsupplierstotheenergyindustry),andFerro-AlloyResources(aVanadiumminer).WesoldGrubHubandJustEatTakeawayaswehavesettledonDoordashbeingthepotentialwinnerinfooddelivery.Salesalsoincludecompanieswhoseshareshavedonewellandarenowmoreexpensiveinthecontextoftheirfundamentalssuchasearningspershare–ChipotleMexicanGrill,andWaters(scientificinstruments).

Governance and Sustainability TheChairmanhasreferredtothisimportantarea.OurwiderteamhasadedicatedGovernanceandSustainability(G&S)analyst,andBaillieGifford’sbroaderresearchdepartmenthasovertwentyfulltimeG&Spersonneldedicatedtoengagement,research,andproxyvoting.Ourstartingpointisthatweonlybuycompaniesthatwefeelhavestrongfoundationsandwillneednudgingtowardsevenbetterstandardsratherthanfrequentorpubliccriticism.Wethinkitachievesmoreinthelongtermtotendtobeasupportiveshareholder,sowedon’tstartwithbadcompaniesandplantomakethembetter.

Wewanttobackandencourageambitionamongstthecompaniesthatweownforyou.Thisrequiresunderstandingofanindividualcompanyandthepatiencetoengage.Wegetgoodaccesstomanagementbybeingasupportivelong-termholderwhocanholdsignificantstakesincompanies.Thisaccessbringsengagement,whichinturnhelpsusencouragebehavioursthatsupportallstakeholdersinabusiness.Justasweinvestforthelongterm,weencouragetheinvesteecompaniestodothesame.Wearepreparedtobetoughwithcompaniesandtheirmanagementteams,continuingtoownandengageratherthansellbecausetheydonotfitanarrowquantitativemodelwhichpurportstomeasureEnvironmental,SocialandGovernancefactorsprecisely.

Ifcorporatebehaviourisnotprogressive,wewillsellbutonlyafterengagementhasbeenfulsomeandclear.Wehavedonethisoverthelast12–18monthswithJefferiesFinancialGroup(formerlyLeucadia)whichwehaveultimatelysold.Whenweboughtthecompanyin2015,wefeltwehadidentifiedaninvestmentbank

©Bloomberg/GettyImages.

Farfetch, a British-Portuguese portal for luxury goods, overcame the traditional caution over selling such products online.


withamanagementteamwhichwasmuchbetteralignedthantheaverageinthatindustry.Forexample,by2020theCEO(RichHandler)andPresident(BrianFriedman)hadacombined9%ownershipandhaveneversoldashareotherthanforcharitypurposes.DuringourownershipJefferieshadre-organiseditselffromaholdingcompanyintoapurer-playinvestmentbank.Thisgeneratedvaluebutthebankingbusinesswassubjecttorisingcosts(compensation)astheM&Acycleextended.

OneofourfivecoreESGbeliefsis‘Long-termfocusedremunerationwithstretchingtargets2’.WhentheremunerationcommitteesawfittopaymanagementcashbonusesdespitemissingakeytargetforROE,weengagedwiththecommitteechairperson.Thiscalldemonstratedalackofindependence,andwhenchallengeditbecameapparentthatthecashawardswerepartlytohelptheexecutivespaytaxbillsforunvestedshareawards.Weopposedthere-electionofthechairperson,andthecompensationplan.Thelatterwas31%opposedandwesoldthesharesafterthepostpandemicrecovery.Overall,Jefferieshasnotbeenagoodinvestmentanditshowstheimportanceofcorporateculturetothesuccessofabusiness.

Amoreencouragingengagementtookplaceduringtheyear withServiceCorpInternational.AsAmerica'slargestchainofundertakers,itwasverymuchonthefrontlineduringthepandemic.Thisisacompanywearestillgettingtoknow,havingpurchaseditin2018.Sincethenwehavebeenengagingwiththecompanyandhavegoodprogresstoreport.WespoketotheCEOandCFOaboutchangestotheproxystatementandtheoperationalimpactofCovid-19.

In2019,werequestedgreaterboardrefreshmentandchanges toexecutiveremuneration.Thecompanyhasmadeprogressonbothfronts.Averagedirectortenurehasfallenfrom24to16years.Abalanceisbeingstruckbetweenfreshchallengeanddeepdomainexpertise.Withregardstopay,wearedelighted thattheyhaveintroducedcustomersatisfactionmetricsintotheshort-termremunerationplanandanabovemidcap-averagereturnonequitytriggertothelong-termincentiveplan(LTIP).ThereremainsmoretogowiththeLTIPandwehaveaskedforfurtherrecommendationstobeputtothecompensationcommittee.

Trupanion, a US company providing medical insurance for pets, was among the Company’s top contributors to performance in the year.

2Theotherfourare:Prioritisationoflong-termvaluecreation;Aconstructiveandpurposefulboard;Fairtreatmentofstakeholders;andSustainablebusinesspractices.

10AnnualReport2021

ThediscussionduringthepandemicrevealedtheextraordinarystepsServiceCorphastakeninthefightagainstCovid-19.Forexample,itsuspendedallplannedpriceincreases,wishingto dorightbysocietyratherthanpursueprofitmaximisation.We fullysupportthispolicy.Manyindustryparticipantsaresmall,independentundertakerswhoarestrugglingtoadapt–insomecasesthey'stoppedansweringthephone'.ServiceCorphassteppedin,deployingassetsandpeopletoareasmostinneed.Thisconversationleftusincreasinglyimpressedatthecultureoftheorganisationandthemanagementteam'scareofstaff,thecommunitiestheyserveandthelong-termsustainabilityofthebusiness.

FurtherexamplesofourengagementwithcompaniescanbeseenintheMonks Stewardship Report 2020,whichisavailableontheCompany’spageoftheBaillieGiffordwebsite,under‘Documents’and‘InvestmentIntelligence’.

Management TeamInMay2020,weannouncedthatCharlesPlowdenwouldretirefromBaillieGiffordattheendofApril2021whichcoincidedwiththeMonksyearend.CharleshasbeenafountofwisdomandwitfornearlyfourdecadeswhileatBaillieGiffordandwasinstrumentalintheMonksportfoliochangessince2015whichhavedrivenexcellentreturnsandhealthydemandforMonksshares.WearegratefulforthemanyinsightshehassharedwithussincewestartedworkingtogetherontheGlobalAlphateamin2005.Aboveall,hehasmadesurethatwecansustainhislegacybyleavinginplaceateamofdiversethinkersforthemanagementofMonks Investment Trust.

InanticipationofCharles’retirement,wehavestrengthenedtheteamwhichsupportsthemanagers.ThatteamwasfivepeoplewhenwetookonresponsibilityforMonksin2015,andtodayitisseven.Thenewinvestmentmanager,SpencerAdair,has21years’experience.Deputymanager,MalcolmMacColl,has22years’experienceandbothhaveworkedtogetherasMonks’deputiesforsixyears.

OutlookWelookforwardnotbackwards,weexpectchangenotstasis. Itisunderstandablethatmanyarealightingonthepost-pandemicphaseasaturningpointforstockmarketsbutwethinkitmorelikelythatitacceleratesthetrendswearebackingthroughcarefulstockselection.Wearegrowthinvestors,weconcedewehaveenjoyedatailwindinthelastfewyearsbutwealsofeelstronglythatambitiouscompanieswillcontinuetodrivestockmarketreturnsandourfocusshouldbeonidentifyingthosethathavethatpotential.

EachyearwewritetheMonksResearchAgenda,whichshapeshowweapproachcertainaspectsofourresearch.Whilstbottom-upstockpickingdominatesourapproach,theagendacanleadusonjourneysthathelpusfindthestocksthatwillgeneratelong-termreturns.Thisyearwearecontinuingtofocusonnewareasthattechnologyhasnotyettouched–healthcare,education,realestateandenergy.Wearealsothinkingofthenextstageofdevelopmentofonlineservices;wereferredtothisaboveinourcommentsaboutthecloudbeingoneofthemostsignificantevolutionsofthelastfortyyears.Wecontinuetolookatensuringcompaniesdotherightthingbysocietyandtryingtounderstandtheimplicationsofthegreatenergytransitionassolarandwindenergypotentiallydriveenergycostsdownwhileatthesametimeallowingentitiesaroundtheworldtoreachcarbonneutralorzerocarbontargets.

Whilstthesetrendsmayendureforadecadeormore,weremainpragmaticandopportunisticinshapingtheportfolioaroundarangeofgrowthcompaniesthatmightprosperascycleschange.Aboveall,optimismisbuiltintoourDNAandwelookforwardtoseekingthechangesthatcanprovidefurtherprofitableinvestments.

SpencerAdair MalcolmMacColl

BaillieGifford&Co17June2021

Furtherexamplesofour engagementwithcompanies canbeseenintheMonks Stewardship Report 2020.






Portfolio PositioningAs at 30 April 2021

Sectoral 2021 (2020)Geographical 2021 (2020)

Industrials 9.6% (12.9%)Technology

23.6% (21.3%)

Net Liquid Assets 3.2% (0.9%)

Financials20.2% (22.0%)

Energy 1.4% (2.0%)Basic Materials 3.7% (1.7%)

Consumer Staples 1.3% (2.2%)

Telecommunications0.8% (1.6%)

Healthcare13.5% (15.8%)

Consumer Discretionary 19.3% (17.5%)

Real Estate 3.0% (1.6%)

Utilities 0.4% (0.5%)

North America 49.7% (48.6%)

Net Liquid Assets 3.2% (0.9%)

Emerging Markets14.9% (17.6%)

United Kingdom11.6% (7.3%)

Developed Asia 3.9% (3.5%)

Continental Europe10.5% (12.2%)

Japan 6.2% (9.9%)

Althoughthemanagers’approachtostockpickingisresolutely‘bottom-up’innatureandpaysnoattentiontothestructureoftheindex,itisessentialtounderstandtherisksofeachinvestmentand,inturn,wheretheremaybeconcentrationsofexposures.ThechartaboveoutlinesthekeyexposuresoftheportfolioattheCompany’syearend:

— 15.7%oftheportfolioisclassifiedasDevelopedMarketGrowth. Thisincludesexposuretoindustrialandconsumersectors,amongothers.IndustrialbusinessesincludeMartinMarietta,aleadingUSaggregatessupplier.Intheconsumersetting,thereisexposuretoEstéeLauder,aglobalcosmeticsbrand,andRyanair,thelow-costairline.

— 15.3%oftheportfolioisinvestedinstocksidentifiedtobethebeneficiariesofgrowthinDevelopingEconomies.Thereismeaningfulexposuretocompanieslikelytoprofitfromincreasingconsumptionlevelsandfinancialdevelopmentinemergingmarkets.IntheformercategoryisAlibaba,aChineseonlineretailer.ExamplesofthelatterincludeHDFC,anIndianmortgageprovider,andPingAnInsurance,oneofChina’smostinnovativeinsurancecompanies.

— 50.3%oftheportfolioisidentifiedasbeingexposedtotheNewEconomy.Thisbracketsadiverserangeofbusinessesfrominternetwinnersindevelopedandemergingeconomiestohealthcareandsemiconductorcompanies.InternetwinnersincludecompaniessuchasAmazon,theUSonlineretailer,andNaspers,theSouthAfricaninternetbusiness.ProminentnamesinhealthcareincludeTeladoc,theUStelemedicinecompanyandModerna,themRNAdrugdiscoverycompany.TSMCmakessemiconductor‘chips’,whilstAdvantestandTeradyneprovidetestingequipmentandservicestotheindustry.

— 15.5%oftheportfolioisclassifiedasEconomicallyAgnostic/Idiosyncratic.Thisincludesadiversifiedrangeofcompanies,manyofwhicharegrowthstalwartbusinesses,suchasAnthem,theUShealthinsuranceprovider,ServiceCorporation,thecrematoriabusinessandthedigitalpaymentsbusiness,MasterCard.USinsurancespecialistsArthurJ.GallagherandMarkelmakeuppartoftheexposuretotheinsurancecycle.

— Theremaining3.2%iscomposedofnetliquidassets.

Thematic Exposure

ConsumerDemand Employment 5.5%

IndustrialDemand 4.3%CarbonHeavy 3.0%CapitalMarkets/ AssetInflation 2.9%

PlatformCrush 14.3%Regulation/Anti-trust 10.7%Innovation/ TransformationalHealth

9.1%

Transformative/ UnprovenModel

5.6%

EnterpriseCloud 4.0%Innovation/Chips 2.9%Other 3.7%

EmergingMarkets MiddleClasses—EMFinancial

Development 6.0%—EMConsumer

Catch-up 4.1%

10.1%

CarbonHeavy 4.0%Lending/UnderwritingRisk 0.9%IndustrialDemand 0.3%

HighlyValued Compounders

10.0%

Idiosyncratic 3.2%InsuranceCycle 2.3%

Net Liquid Assets 3.2%

Developed Market Growth

15.7%

Developing Economies

15.3%

NewEconomy

50.3%

Economically Agnostic 15.5%

Strategic Report

12AnnualReport2021

Investment Portfolio by Growth Category*

As at 30 April 2021

Growth Stalwarts Rapid Growth

c.10%p.a.earningsgrowth

Company characteristics

Durablefranchise

Deliverrobustprofitabilityinmostmacroeconomicenvironments

Competitiveadvantageincludesdominantlocalscale,customerloyaltyandstrongbrands

c.15%to25%p.a.earningsgrowth


Earlystagebusinesseswithvastgrowthopportunity

Innovatorsattackingexistingprofitpoolsorcreatingnewmarkets

Highest conviction holdings c.2.0% each

Moody’sMicrosoftPrudentialAnthemMasterCardAIA

1.91.81.81.71.71.6

TheSchiehallionFund†

NaspersAmazon.comAlphabetSeaLimitedShopify

3.82.72.31.91.81.6

MeituanDianpingAlibabaTesla

1.61.51.5

Average sized holdings c.1.0% each

PernodRicardArthurJ.GallagherFacebookOlympusEstéeLauderS&PGlobalThermoFisher ScientificResmedSysmex

1.31.31.31.21.10.9

0.80.80.8

BroadridgeFinancial SolutionsadidasServiceCorporation International

0.70.7

0.7

FarfetchTrupanionPingAnInsuranceModernaCloudflareLemonadeTheTradeDeskZillowProsusMercadoLibre

1.31.01.00.90.90.90.90.90.90.8

HDFCRelianceIndustriesAlnylam PharmaceuticalsDenaliTherapeuticsCyberAgentM3NovocureTeladoc

0.80.8

0.70.70.70.70.70.7

Incubator holdings c.0.5% each

CoStarHoshizakiCorp

0.40.3

SensyneHealthIlluminaAxonEnterpriseAppianAdyenByteDanceCheggSchibstedCertaraBumbleNetflixRenishawSpotifyEpicGamesTwilioDoordashWayfairICICIBankGenmabExactSciencesAbiomedTencentMusic EntertainmentiRobotStaarSurgical

0.60.60.60.60.60.60.60.60.60.50.50.50.50.50.50.50.50.50.40.40.4

0.40.40.4

DatadogICICIPrudential LifeInsuranceGRAILB3GroupAutohomeLiAutoAntInternationalPingAnHealthcare &TechnologyInteractiveBrokers GroupMail.ruGroupOscarHealthUbisoft EntertainmentAdevintaAsaLendingTreeIstyleKEHoldingsSnowflakeSpaceExploration TechnologiesStripe

0.4

0.40.40.40.40.40.4

0.3

0.30.30.3

0.30.20.20.20.20.2

0.1<0.1

Total in this growth category 22.8% Total in this growth category 51.7%

Time

Earnings

Time

Earnings

*Excludesnetliquidassets.†CombinedordinaryandCshareholdings.

Strategic Report


Cyclical Growth Latent Growth

c.10%to15%p.a.earningsgrowththroughacycle


Subjecttomacroeconomicandcapitalcycleswithsignificantstructuralgrowthprospects

Strongmanagementteamshighlyskilledatcapitalallocation

Earningsgrowthtoaccelerateovertime


Companyspecificcatalystwilldriveaboveaverageearningsinfuture

Unspectacularrecentoperationalperformanceandthereforeoutoffavour

MartinMarietta Materials 1.8

Ryanair 1.9

Total in this holding size

32.9%

TSMCCRHBookingHoldingsTeradyneAlbemarleAdvantestSiteOneLandscape SupplyAtlasCopco

1.31.11.00.90.90.8

0.80.7

BHPBillitonRioTintoCBREGroupSoftBankGroup

1.41.41.10.8


39.1%

EOGResourcesSMCCharlesSchwabRichemontMarkelEpirocLyftDeutscheBoerseWizzAirHoldingsSandsChinaHaysWabtecPageGroupOrica

0.60.60.60.60.60.60.50.50.40.40.30.30.30.2

IAC/InteractivecorpSberbankofRussiaHowardHughesFairfaxFinancialStericycleToyotaTsushoSilkInvestAfrica FoodFundBrillianceChina Automotive

0.60.50.50.40.40.3

0.2

0.2


28.0%

Total in this growth category 15.8% Total in this growth category 9.7%

Time

Earnings

Time

Earnings

Strategic Report

14AnnualReport2021

Name BusinessGrowth category

Fair value£’000

% oftotal

assets

Cumulative % of total

assets

Equities

TheSchiehallionFund* Globalunlistedgrowthequityinvestmenttrust Rapid 63,080 1.9

TheSchiehallionFundCShares* Globalunlistedgrowthequityinvestmenttrust Rapid 61,366 1.8

124,446 3.7

Naspers Mediaandecommercecompany Rapid 87,615 2.6

Amazon.com Onlineretailer Rapid 75,975 2.3

Alphabet Onlinesearchengine Rapid 62,891 1.9

Ryanair LowcostEuropeanairline Latent 61,113 1.8

Moody’s Creditratingagency Stalwart 60,017 1.8

SeaLimited Onlineanddigitalgaming Rapid 59,062 1.8

Microsoft Softwareandcloudcomputingenterprise Stalwart 58,559 1.8

MartinMariettaMaterials Cementandaggregatesmanufacturer Cyclical 58,423 1.7 19.4

Prudential Internationallifeinsurance Stalwart 57,656 1.7

Anthem Healthcareinsurer Stalwart 56,233 1.7

MasterCard Electronicpaymentsnetworkandrelatedservices Stalwart 54,786 1.6

AIA Asianlifeinsurer Stalwart 52,712 1.6

Shopify Onlinecommerceplatform Rapid 52,317 1.6

MeituanDianping Onlinecommerceplatform Rapid 51,041 1.5

Alibaba Onlinecommercecompany Rapid 48,729 1.5

Tesla Electriccarsandrenewableenergysolutions Rapid 47,670 1.4

BHPBilliton Mineralexplorationandproduction Latent 45,719 1.4

RioTinto Globalcommoditiesbusinesses Latent 45,536 1.4 34.8

Farfetch Onlinefashionretailer Rapid 42,460 1.3

TSMC Semiconductormanufacturer Cyclical 42,214 1.3

PernodRicard Globalspiritsmanufacturer Stalwart 42,065 1.3

ArthurJ.Gallagher Insurancebroker Stalwart 41,936 1.3

Facebook Socialnetworkingwebsite Stalwart 40,897 1.2

Olympus Optoelectronicproducts Stalwart 39,701 1.2

CRH Diversifiedbuildingmaterialscompany Cyclical 36,619 1.1

CBREGroup Commercialrealestateoperator Latent 35,991 1.1

EstéeLauder Globalcosmeticbrandsbusiness Stalwart 35,122 1.0

Trupanion Pethealthinsuranceprovider Rapid 32,224 1.0 46.6

PingAnInsurance Chineselifeinsurer Rapid 32,079 1.0

BookingHoldings Onlinetravelagency Cyclical 30,929 0.9

Moderna DrugdiscoveryusingmRNAtechnology Rapid 30,477 0.9

Cloudflare CloudbasedITservicesbusiness Rapid 30,328 0.9

Lemonade Dataandinsurancecompany Rapid 29,996 0.9

TheTradeDesk Advertisingtechnologycompany Rapid 29,712 0.9

Teradyne Semiconductortestingequipmentmanufacturer Cyclical 28,906 0.9

Zillow USonlinerealestateservices Rapid 28,797 0.9

Prosus Mediaandecommercecompany Rapid 28,498 0.9

Albemarle Specialitychemicals Cyclical 28,154 0.8 55.6

S&PGlobal Globalcreditratingagency Stalwart 27,701 0.8

MercadoLibre LatinAmericanecommerceplatform Rapid 27,197 0.8

HDFC Indianmortgageprovider Rapid 27,133 0.8

List of InvestmentsAs at 30 April 2021

* TheSchiehallionFundismanagedbyBaillieGifford.TheCompany’sholdingsinTheSchiehallionFundareexcludedfromitsassetswhencalculatingthemanagementfee. Seenote3onpage47.TheordinaryandCshareportfoliosofTheSchiehallionFundaremanagedasdistinctinvestmentpools,untilsuchtimeastheCsharesareconvertedintoordinaryshares.

Strategic Report



Fair value£’000

% oftotal

assets


assets

Equities (continued)

Advantest Semiconductortestingservices Cyclical 26,235 0.8

ThermoFisherScientific Scientificinstruments,consumablesandchemicals Stalwart 26,221 0.8

SoftBankGroup Technologyfocusedinvestmentgroup Latent 26,055 0.8

Resmed Developsandmanufacturesmedicalequipment Stalwart 25,658 0.8

Sysmex Medicaltestingequipment Stalwart 25,266 0.8

RelianceIndustries Indianenergyconglomerate Rapid 25,052 0.7

SiteOneLandscapeSupply USdistributoroflandscapingsupplies Cyclical 24,580 0.7 63.4

BroadridgeFinancialSolutions Providestechnologybasedsolutionstothe financialservicesindustry Stalwart 23,912 0.7

adidas Sportsapparelmanufacturer Stalwart 23,295 0.7

AlnylamPharmaceuticals RNAinterferencebasedbiotechnology Rapid 23,066 0.7

AtlasCopco Industrialequipment Cyclical 23,036 0.7

DenaliTherapeutics Earlystagebiotechcompany Rapid 22,215 0.7

CyberAgent Japaneseinternetadvertisingandcontent Rapid 22,091 0.7

M3 Onlinemedicalservices Rapid 21,869 0.7

ServiceCorporationInternational Deathcareservices Stalwart 21,753 0.7

Novocure Biotechnologycompanyfocusingonsolid tumourtreatment Rapid 21,473 0.6

Teladoc Healthcareservicesprovider Rapid 21,259 0.6 70.2

SensyneHealth Healthcaretechnologycompany Rapid 20,944 0.6

Illumina Genesequencingbusiness Rapid 20,580 0.6

EOGResources Naturalgasexplorerandproducer Cyclical 20,122 0.6

AxonEnterprise Manufactureroflawenforcementdevices Rapid 20,112 0.6

SMC Produceroffactoryautomationequipment Cyclical 19,957 0.6

Appian Enterprisesoftwaredeveloper Rapid 19,910 0.6

CharlesSchwab Onlinesavingsandtradingplatform Cyclical 19,893 0.6

Richemont Luxurygoodscompany Cyclical 19,862 0.6

Markel Marketsandunderwritesspecialityinsuranceproducts Cyclical 19,395 0.6

Adyen Digitalpayments Rapid 18,790 0.6 76.2

ByteDance OnlinecontentplatformincludingTikTok Rapid 18,285 0.5

Chegg Onlineeducationalplatform Rapid 18,253 0.5

Epiroc Contructionandminingmachinery Cyclical 18,189 0.5

Schibsted Mediaandclassifiedadvertisingplatforms Rapid 18,175 0.5

IAC/Interactivecorp Holdingcompanyforonlineproperties Latent 18,143 0.5

Certara Drugdiscoveryanddevelopmentcompany Rapid 18,092 0.5

Bumble Datingapplication Rapid 17,369 0.5

Netflix SubscriptionserviceforTVshowsandmovies Rapid 17,284 0.5

Renishaw Worldleadingmetrologycompany Rapid 17,249 0.5

Spotify Onlinemusicstreamingservice Rapid 17,148 0.5 81.2

EpicGames Gamingsoftwaredeveloper Rapid 16,925 0.5

Twilio Cloudbasedcommunicationsplatform Rapid 16,925 0.5

Doordash Onlinecommerceplatform Rapid 15,887 0.5

Wayfair Onlinehomefurnishingsbusiness Rapid 15,880 0.5

SberbankofRussia Russiancommercialbank Latent 15,501 0.5

Lyft Ridehailingplatform Cyclical 15,437 0.5

Denotesunlisted(privatecompany)investment.

Strategic Report

16AnnualReport2021


Fair value£’000

% oftotal

assets


assets

Equities (continued)

HowardHughes USrealestatedeveloper Latent 14,703 0.4

ICICIBank Indianretailandcorporatebank Rapid 14,673 0.4

DeutscheBoerse Stockexchangeoperator Cyclical 14,594 0.4

Genmab Biotechnologycompany Rapid 14,543 0.4 85.8

FairfaxFinancial Commercialinsurance Latent 14,543 0.4

Stericycle Regulatedmedicalwastemanagementservices Latent 14,538 0.4

ExactSciences Cancerdetectionandtreatment Rapid 14,255 0.4

WizzAirHoldings Low-costEastEuropeanairline Cyclical 14,025 0.4

Abiomed Medicalimplantmanufacturer Rapid 13,849 0.4

TencentMusicEntertainment Onlinemusicstreamingandsocialmedia Rapid 13,561 0.4

CoStar Commercialpropertyportal Stalwart 13,510 0.4

SandsChina Macaucasinooperator Cyclical 13,368 0.4

iRobot Domesticandmilitaryrobotmanufacturer Rapid 13,028 0.4

StaarSurgical Implantablecontactlenses Rapid 12,978 0.4 89.8

Datadog CloudbasedITsystemmonitoringapplication Rapid 12,730 0.4

ICICIPrudentialLifeInsurance Lifeinsuranceservices Rapid 12,723 0.4

GRAIL Bloodtestingforearlycancerdetection Rapid 11,979 0.4

B3Group Brazilianstockexchangeoperator Rapid 11,714 0.4

Autohome Chineseonlineautomobilewebsite Rapid 11,680 0.3

LiAuto ElectriccarswithafocusonChina Rapid 11,555 0.3

AntInternational Chineseonlinepaymentsandfinancialservicesbusiness Rapid 11,494 0.3

PingAnHealthcare&Technology Chinesetelemedicinebusiness Rapid 11,301 0.3

ToyotaTsusho Africanautodistributor Latent 11,136 0.3

Hays Recruitmentconsultancy Cyclical 10,975 0.3 93.2

InteractiveBrokersGroup Globalelectronictradingplatform Rapid 10,725 0.3

Wabtec Railandtransitproductsandservices Cyclical 10,549 0.3

Mail.ruGroup Russianinternetandcommunicationservices Rapid 10,253 0.3

OscarHealth Disruptivepersonalinsuranceprovider Rapid 10,106 0.3

UbisoftEntertainment Gamedevelopmentplatform Rapid 9,257 0.3

HoshizakiCorp Commericalkitchenequipmentmanufacturer Stalwart 8,717 0.3

PageGroup Recruitmentconsultancy Cyclical 8,214 0.2

AdevintaAsa Mediaandclassifiedadvertisingplatforms Rapid 7,156 0.2

SilkInvestAfricaFoodFund Africafocusedprivateequityfund Latent 6,065 0.2

LendingTree USonlineloanmarketplace Rapid 5,960 0.2 95.8

Orica Australianindustrialexplosivescompany Cyclical 5,739 0.2

Istyle Japanesecosmeticsbusiness Rapid 5,544 0.2

BrillianceChinaAutomotive† Manufactureandsaleofminibusesand automotivecomponents Latent 5,163 0.2

KEHoldings Chineserealestateportal Rapid 5,028 0.2

Snowflake Cloudbaseddatainsightapplication Rapid 4,974 0.1

SpaceExplorationTechnologies Spacerocketsandsatellites Rapid 3,033 0.1

Stripe Paymentsplatform Rapid 1,213 <0.1

Total Investments# 3,238,130 96.8

Net Liquid Assets# 106,638 3.2

Total Assets# 3,344,768 100.0

Denotesunlisted(privatecompany)investment.† Suspendedinvestment.# ForadefinitionoftermsusedseeGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65.

Strategic Report


30 April2021

30 April2020 % change

Totalassets(beforedeductionofborrowings) £3,344.8m £2,107.4m

Borrowings(atbookvalue) £139.8m £143.8m

Shareholders’funds £3,205.0m £1,963.6m

Shareholders’fundspershare(borrowingsatbookvalue) 1,355.4p 878.4p 54.3

Netassetvalueperordinaryshare(borrowingsatpar)† 1,355.3p 878.3p 54.3

Netassetvalueperordinaryshare(borrowingsatfairvalue)† 1,358.1p 875.6p 55.1

Shareprice 1,396.0p 914.0p 52.7

FTSEWorldIndex(insterlingterms)# 31.2

Revenueearningsperordinaryshare 3.42p 4.24p (19.3)

Dividendspaidandpayableinrespectofthefinancialyear 2.00p 2.50p (20.0)

Ongoingcharges† 0.43% 0.48%

Premium(overNAVwithborrowingsatpar)† 3.0% 4.1%

Premium(overNAVwithborrowingsatfairvalue)† 2.8% 4.4%

Activeshare† 86% 87%

Year to 30 April 2021 2020

Total return performance‡

Netassetvalue(borrowingsatpar)† 54.7% 3.3%

Netassetvalue(borrowingsatfairvalue)† 55.5% 3.4%

Shareprice† 53.1% 3.7%

FTSEWorldIndex(insterlingterms)# 33.9% (1.0%)

Year to 30 April 2021 2021 2020 2020

Year’s high and low High Low High Low

Netassetvalue(borrowingsatpar)† 1,426.6p 861.1p 990.6p 726.0p

Netassetvalue(borrowingsatfairvalue)† 1,424.6p 858.4p 988.1p 721.3p

Shareprice 1,484.0p 890.0p 1,026.0p 647.0p

Duringtheyearto30April2021thepriceatwhichtheCompany’ssharepricetradedrelativetoitsnetassetvalue(withborrowingsatfairvalue†)rangedfromapremium†of7.0%toadiscount†of1.8%(yearto30April2020–premium†of6.2%toadiscount†of12.1%).Thepremium/(discount)graphsonpage1andthefollowingpagedonotreflecttheseextremes,beingplottedonamonthlybasis.

Year to 30 April 2021 2020

Net return per ordinary share

Revenue 3.42p 4.24p

Capital 469.83p 22.26p

Total 473.25p 26.50p

* ForadefinitionoftermsusedseeGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65.† Alternativeperformancemeasure–seeGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65.#TheFTSEWorldIndex(insterlingterms)istheprincipalindexagainstwhichperformanceismeasured.‡ Source:BaillieGifford/Refinitivandrelevantunderlyingindexproviders.Seedisclaimeronpage63.

Pastperformanceisnotaguidetofutureperformance.

One Year Summary*

Strategic Report

18AnnualReport2021

ThefollowingchartsindicatehowaninvestmentinMonkshasperformedrelativeto itscomparativeindex*anditsunderlyingnetassetvalueoverthefiveyearperiodto 30April2021.

Premium/(discount) to Net Asset Value† (plottedonamonthlybasis)

5 Year Total Return Performance†

(figuresrebasedto100at30April2016)

Relative Annual Net Asset Value and Share Price Total Returns† (relative to the FTSE World Index* total return)

Annual Net Asset Value and Share Price Total Returns†

Source: Refinitiv/Baillie Gifford.

Dividends are reinvested.

NAV total return†‡

Share price total return†

2017Years to 30 April

2018 2019 2020 2021

10%

20%

60%

30%

50%

40%

0%

Source: Refinitiv/Baillie Gifford and relevant underlying index providers#.

Dividends are reinvested.




2018 2019 2020 2021

30%

10%

20%

0%

70

100130

160

190

220

250

280

310

340

2016Cumulative to 30 April

2018 2019 2020 20212017

Source: Refinitiv and relevant underlying index providers#.



FTSE World Index* total return

Source: Refinitiv/Baillie Gifford.

Monks premium/(discount) (after deducting borrowings at fair value)†

Monks premium/(discount) (after deducting borrowings at par)†


2018 2019 2020 20212017

(16%)

8%

(12%)

(8%)

(4%)

0%

4%

Five Year Summary

* TheFTSEWorldIndex(insterlingterms)istheprincipalindexagainstwhichperformanceismeasured.† Alternativeperformancemeasure–seeGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65.# Seedisclaimeronpage63.‡ Withborrowingsdeductedatfairvalue.


Strategic Report


Ten Year Summary*

Revenue Gearing Ratios

Year to30 April

Grossrevenue

£’000

Availablefor ordinary

shareholders£’000

Revenue earnings per ordinary share ‡ p

Dividend paidand proposed

per share net

p

Ongoing * charges ¶ %

Gearing # %

Potential gearing #§

%

2011 27,366 10,600 4.06 3.00 0.63 10 152012 31,424 13,889 5.35 3.95 0.63 (7) 162013 22,983 11,778 4.68 3.95 0.60 1 82014 21,585 11,181 4.87 3.95 0.57 (1) 42015 20,215 10,549 4.74 3.95 0.58 7 122016 15,149 4,954 2.31 1.50 0.59 7 82017 17,593 5,043 2.36 1.25 0.59 7 82018 19,759 5,588 2.61 1.40 0.52 5 62019 23,268 7,186 3.30 1.85 0.50 6 72020 26,691 9,319 4.24 2.50 0.48 6 72021 22,529 7,801 3.42 2.00 0.43 1 4

Cumulative Performance (taking 2011 as 100)

At30 April

NAV per share (fair) *

NAV total return ̂ (fair) *

Share price

Share price total * return ̂

Comparative Index ̂

Comparative Index total return ̂

Revenueearnings

pershare

Dividend paid and

proposedper share

(net)

Retail price index ̂

2011 100 100 100 100 100 100 100 100 1002012 95 96 93 94 95 97 132 132 1032013 101 103 98 100 112 118 115 132 1062014 105 108 102 105 116 126 120 132 1092015 118 122 120 125 134 149 117 132 1102016 116 122 117 123 131 150 57 50 1122017 163 170 179 189 168 196 58 42 1152018 188 197 216 228 176 211 64 47 1192019 210 221 243 257 192 236 81 62 1232020 217 229 251 266 185 233 104 83 1252021 336 355 384 408 243 312 84 67 128

Compound annual returns

5year 23.6% 23.9% 26.8% 27.1% 13.1% 15.8% 8.2% 5.9% 2.9%10year 12.9% 13.5% 14.4% 15.1% 9.3% 12.1% (1.7%) (4.0%) 2.5%

* ForadefinitionoftermsusedseeGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65.†Shareholders’fundspersharehasbeencalculatedafterdeductingborrowingsatbookvalue(seenote15onpage52).Netassetvalue(NAV)persharehasbeencalculatedafterdeductingborrowingsateitherparvalueorfairvalue.SeeGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65.

#AlternativePerformanceMeasure.SeeGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65.‡Thecalculationofrevenueearningspershareisbasedontherevenuefromordinaryactivitiesaftertaxationandtheweightedaveragenumberofordinarysharesinissue(seenote7onpage49).

¶From2012calculatedastotaloperatingcostsdividedbyaveragenetassetvalue(withdebtatfairvalue)inaccordancewithAICguidelines.Prioryearshavenotbeenrecalculatedasthechangeinmethodologyisnotconsideredtoresultinamateriallydifferentfigure.

§Totalborrowingsexpressedasapercentageofshareholders’funds(seeGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65).^ Source:Refinitivandrelevantunderlyingindexproviders.Seedisclaimeronpage63.

Capital

At30 April

Total assets * £’000

Borrowings£’000

Shareholders’ funds * £’000

Shareholders’ funds per share † p

NAV per share † (par) p

NAV per share † (fair) p

Shareprice

p

Premium/ * (discount) # (par) %

Premium/ * (discount) # (fair) %

2011 1,220,493 159,614 1,060,879 406.8 406.7 403.9 364.0 (10.5) (9.9)2012 1,149,366 159,647 989,719 386.4 386.3 382.8 338.5 (12.4) (11.6)2013 1,065,906 79,679 986,227 410.4 410.2 408.1 355.0 (13.5) (13.0)2014 1,012,608 39,712 972,896 426.9 426.8 425.2 370.0 (13.3) (13.0)2015 1,147,620 124,029 1,023,591 478.4 478.3 476.0 435.1 (9.0) (8.6)2016 1,096,804 85,855 1,010,949 472.5 472.4 470.1 425.3 (10.0) (9.5)2017 1,521,130 107,056 1,414,074 660.9 660.8 656.8 653.0 (1.2) (0.6)2018 1,759,541 103,007 1,656,534 762.9 762.8 759.0 785.0 2.9 3.42019 2,001,977 139,162 1,862,815 852.2 852.1 848.9 883.0 3.6 4.02020 2,107,386 143,762 1,963,624 878.4 878.3 875.6 914.0 4.1 4.42021 3,344,768 139,788 3,204,980 1,355.4 1,355.3 1,358.1 1,396.0 3.0 2.8

Strategic Report


20AnnualReport2021

Business Model

Business and StatusTheMonksInvestmentTrustPLC(‘theCompany’)isapubliccompanylimitedbysharesandisincorporatedinEnglandandWaleswithitsregisteredofficeaddressc/oComputershareInvestorServicesPLC,MoorHouse,120LondonWall,LondonEC2Y5ET.TheCompanyisaninvestmentcompanywithinthemeaningofsection833oftheCompaniesAct2006andcarriesonbusinessasaninvestmenttrust.InvestmenttrustsareUKpubliclistedcompaniesandtheirsharesaretradedontheLondonStockExchange.Theyinvestinaportfolioofassets inordertospreadrisk.TheCompanyhasafixedsharecapitalalthough,subjecttoshareholderapprovalsoughtannually,itmaypurchaseitsownsharesorissueshares.ThepriceoftheCompany’ssharesisdetermined,likeotherlistedshares,bysupplyanddemand.

TheCompanyhasbeenapprovedasaninvestmenttrustby HMRevenue&CustomssubjecttotheCompanycontinuingtomeettheeligibilityconditions.TheDirectorsareoftheopinionthattheCompanyhascontinuedtoconductitsaffairssoastoenableittocomplywiththeongoingrequirementsofsection1158oftheCorporationTaxAct2010andtheInvestmentTrust(ApprovedCompany)(Tax)Regulations2011.

TheCompanyisanAlternativeInvestmentFund(AIF)forthepurposesoftheUKAlternativeInvestmentFundManagersRegulations.

PurposeTheMonksInvestmentTrustaimstodeliveraboveaveragelong-termreturnsforshareholdersbykeepingfeesandcostslowandharnessingthelong-termgrowthpotentialofcompanies.

Objective and Policy TheCompany’sobjectiveistoinvestgloballytoachievecapitalgrowth.Thistakespriorityoverincomeanddividends.

Monksseekstomeetitsobjectivebyinvestingprincipallyinaportfolioofglobalquotedequities.Equitiesareselectedfortheirinclusionwithintheportfoliosolelyonthebasisofthestrengthoftheinvestmentcase.

Therearenolimitstogeographicalorsectorexposures,butthesearereportedto,andmonitoredby,theBoardinordertoensurethatadequatediversificationisachieved.Thenumberofholdingsinequitiestypicallyrangesfrom70to200.Atthefinancialyearend,theportfoliocontained127equityholdings.Aportfolioreviewbytheinvestmentmanagersisgivenonpages5to10andtheinvestmentsheldattheyearendarelistedonpages14to16.

Investmentmayalsobemadeinfunds(openandclosed-ended)includingthosemanagedbyBaillieGifford&Co.ThemaximumpermittedinvestmentinUKlistedinvestmentcompaniesinaggregateis15%ofgrossassets.Assetclassesotherthanquotedequitiesmaybepurchasedfromtimetotimeincludingfixedinterestholdings,unquotedsecuritiesandderivatives. TheCompanymayusederivativesforthepurposeofefficientportfoliomanagement(includingreducing,transferringoreliminatinginvestmentriskinitsinvestmentsandprotectionagainstcurrencyrisk)andtoachievecapitalgrowth.

Whilethereisacomparativeindexforthepurposeofmeasuringperformance,noattentionispaidtothecompositionofthisindexwhenconstructingtheportfolio;theportfoliomay,therefore,differsubstantiallyfromthatoftheindex.Along-termviewistakenandtheremaybeperiodswhenthenetassetvaluepersharedeclinesbothinabsolutetermsandrelativetothecomparativeindex.Paymentofdividendsissecondarytoachievingcapitalgrowth.Thesharesarenotconsideredtobeasuitableinvestmentforthoseseekingaregularorrisingincome.

Borrowingsareinvestedinequitiesandotherassetclasseswhenthisisconsideredtobeappropriateoninvestmentgrounds.Gearinglevels,andtheextentofequitygearing,arediscussedbytheBoardandinvestmentmanagersateveryBoardmeetingandadjustedaccordinglywithregardtotheoutlook.Newborrowingswillnotbetakenoutifthistakesthelevelofeffectiveequitygearingtoover30%ofshareholders’funds.Equityexposuremay,onoccasions,bebelow100%ofshareholders’funds.

PerformanceAteachBoardmeeting,theDirectorsconsideranumberofperformancemeasurestoassesstheCompany’ssuccessinachievingitsobjectives.

Key Performance IndicatorsTheBoardusesperformanceindicators(KPIs)tomeasuretheprogressandperformanceoftheCompanyovertimewhendischargingitsdutiesassetoutonpage28andevaluatingtheManagersasnotedonpage25.TheseKPIsareestablishedindustrymeasuresandareasfollows:

— themovementinnetassetvalueperordinaryshareon atotalreturnbasis;

— themovementinthesharepriceonatotalreturnbasis;

— thepremium/discount;and

— ongoingcharges.

AnexplanationofthesemeasurescanbefoundintheGlossary ofTermsandAlternativePerformanceMeasuresonpages64and65.Theone,fiveandtenyearrecordsoftheKPIsareshownonpages17to19.

Inadditiontotheabove,theBoardalsohasregardtothetotalreturnoftheCompany’sprincipalcomparativeindex(FTSEWorldIndexinsterlingterms)andconsiderstheperformanceofcomparablecompanies.

BorrowingsTheCompany’sborrowingsat30April2021comprised £40million63/8%debenturestockrepayablein2023(30April2020–£40million),£60million1.86%SeriesANotesrepayablein2054(30April2020–nil)and£40million1.77%SeriesBNotesrepayablein2045(30April2020–nil).At30April2021therewerenoborrowingsunderthe£100millionfloatingratefacilitywithNationalAustraliaBank(30April2020–US$124.7million)ortheshort-termloanfacilitywithScotiabank(Ireland),initiallyfor£5millionbutwiththeabilitytoincreaseitto£50million(30April2020–£5million).FurtherdetailsoftheCompany’sborrowingsaresetoutinnotes11and12onpage51anddetailsoftheCompany’sgearinglevelsareincludedintheChairman’sStatementonpage2andtheTenYearSummaryonpage19.

Strategic Report

Business Review


Principal and Emerging RisksAsexplainedonpage30thereisanongoingprocessforidentifying,evaluatingandmanagingtherisksfacedbytheCompanyonaregularbasis.TheDirectorshavecarriedoutarobustassessmentoftheprincipalandemergingrisksfacingtheCompany,includingthosethatwouldthreatenitsbusinessmodel,futureperformance,solvencyorliquidity.Adescriptionoftheserisksandhowtheyarebeingmanagedormitigatedissetoutbelow.

TheBoardconsiderstheongoingCovid-19pandemicandtheimpactofBrexittobefactorswhichexacerbateexistingrisks,ratherthandiscreterisks,withinthecontextofaninvestmenttrust.Theirimpactisconsideredwithintherelevantrisks.

Financial Risk–theCompany’sassetsconsistmainlyoflistedsecuritiesanditsprincipalandemergingfinancialrisksarethereforemarketrelatedandincludemarketrisk(comprisingcurrencyrisk,interestrateriskandotherpricerisk),liquidityriskandcreditrisk.Anexplanationofthoserisksandhowtheyaremanagediscontainedinnote19totheFinancialStatementsonpages53to56.TheBoardhas,inparticular,consideredtheimpactofmarketvolatilityduringtheCovid-19pandemic. Tomitigatethisrisk,thecompositionanddiversificationoftheportfoliobygeography,industry,growthcategory,holdingsizeandthematicriskcategoryareconsideredateachBoardmeetingalongwithsalesandpurchasesofinvestments.Individualinvestmentsarediscussedwiththeinvestmentmanagerstogetherwiththeirgeneralviewsonthevariousinvestmentmarketsandsectors.Astrategymeetingisheldannually.TheBoardhasconsideredthepotentialimpactonsterlingfollowingtheUK’sdeparturefromtheEuropeanUnionandsubsequenttradeagreement.ThevalueoftheCompany’sinvestmentportfoliowouldbeaffectedbyanyimpact,positivelyornegatively,onsterling.Theportfoliodiversificationnotedabovelimitstheextentofsuchimpact.

Investment Strategy Risk–pursuinganinvestmentstrategytofulfiltheCompany’sobjectivewhichthemarketperceivestobeunattractiveorinappropriate,ortheineffectiveimplementationofanattractiveorappropriatestrategy,mayleadtoreducedreturnsforshareholdersand,asaresult,adecreaseddemandfortheCompany’sshares.ThismayleadtotheCompany’ssharestradingatawideningdiscounttotheirNetAssetValue.Tomitigatethisrisk,theBoardregularlyreviewsandmonitors:theCompany’sobjectiveandinvestmentpolicyandstrategy;theinvestmentportfolioanditsperformance;thelevelofdiscount/premiumtoNetAssetValueatwhichthesharestrade;andmovementsin theshareregister,andraisesanymattersofconcernwiththeManagers.

Regulatory Risk–failuretocomplywithapplicablelegalandregulatoryrequirementssuchasthetaxrulesforinvestment trustcompanies,theFCAListingrulesandtheCompaniesActcouldleadtotheCompanybeingsubjecttotaxoncapitalgains,suspensionoftheCompany’sStockExchangelisting,financialpenaltiesoraqualifiedauditreport.Tomitigatethisrisk, BaillieGifford’sBusinessRisk,InternalAuditandComplianceDepartmentsprovideregularreportstotheAuditCommittee onBaillieGifford’smonitoringprogrammes.Majorregulatorychangecouldimposedisproportionatecomplianceburdenson

Strategic Report

theCompany.Insuchcircumstancesrepresentationismadetoensurethatthespecialcircumstancesofinvestmenttrustsarerecognised.Shareholderdocumentsandannouncements,includingtheCompany’spublishedInterimandAnnualReportandFinancialStatements,aresubjecttostringentreviewprocessesandproceduresareinplacetoensureadherencetotheTransparencyDirectiveandtheMarketAbuseDirectivewithreferencetoinsideinformation.

Custody and Depositary Risk–safecustodyoftheCompany’sassetsmaybecompromisedthroughcontrolfailuresbytheDepositary,includingbreachesofcybersecurity.Tomitigatethisrisk,theBoardreceivessix-monthlyreportsfromtheDepositaryconfirmingsafecustodyoftheCompany’sassetsheldbytheCustodian.CashandportfolioholdingsareindependentlyreconciledtotheCustodian’srecordsbytheManagers.TheCustodian’sauditedinternalcontrolsreportsarereviewedbyBaillieGifford’sBusinessRiskDepartmentandasummaryofthekeypointsisreportedtotheAuditCommitteeandanyconcernsinvestigated.

Operational Risk–failureofBaillieGifford’ssystemsorthoseofotherthirdpartyserviceproviderscouldleadtoaninabilitytoprovideaccuratereportingandmonitoringoramisappropriationofassets.Tomitigatethisrisk,BaillieGiffordhasacomprehensivebusinesscontinuityplanwhichfacilitatescontinuedoperationofthebusinessintheeventofaservicedisruption(includinganydisruptionresultingfromtheCovid-19pandemic)ormajordisaster.SincetheintroductionoftheCovid-19restrictions,almostallBaillieGiffordstaffhavebeenworkingfromhomeandoperationshavecontinuedlargelyasnormal.TheBoardreviewsBaillieGifford’sReportonInternalControlsandthereportsbyotherthirdpartyprovidersarereviewedbyBaillieGiffordonbehalfoftheBoard.TheotherkeythirdpartyserviceprovidershavenotexperiencedsignificantoperationaldifficultiesaffectingtheirrespectiveservicestotheCompany.

Discount Risk –thediscount/premiumatwhichtheCompany’ssharestraderelativetoitsNetAssetValuecanchange.TheriskofawideningdiscountisthatitmayundermineinvestorconfidenceintheCompany.Tomanagethisrisk,theBoardmonitorsthelevelofdiscount/premiumatwhichthesharestradeandtheCompanyhasauthoritytobuybackitsexistingshareswhendeemedbytheBoardtobeinthebestinterestsoftheCompanyanditsshareholders.

Political Risk –politicalchangeinareasinwhichthe CompanyinvestsormayinvestmayincreasinglyhavepracticalconsequencesfortheCompany.Tomitigatethisrisk,developmentsarecloselymonitoredandconsideredbytheBoard.FollowingthedepartureoftheUKfromtheEuropeanUnionandthesubsequenttradeagreementbetweentheUKandtheEuropeanUnion,theBoardcontinuestoassessthepotentialconsequencesfortheCompany’sfutureactivities,includingthosethatmayarisefromfurtherconstitutionalchange.TheBoardbelievesthattheCompany’sglobalportfolio,withonly11.6% oftheportfolioexposedtotheUnitedKingdom,positionstheCompanytobesuitablyinsulatedfromBrexit-relatedrisk.

22AnnualReport2021

Leverage Risk–theCompanymayborrowmoneyforinvestmentpurposes(sometimesknownas‘gearing’or‘leverage’).Iftheinvestmentsfallinvalue,anyborrowingswillmagnifytheextentofthisloss.Ifborrowingfacilitiesarenotrenewed,theCompanymayhavetosellinvestmentstorepayborrowings.TheCompanycanalsomakeuseofderivativecontracts.TomitigatethisriskallborrowingsrequirethepriorapprovaloftheBoardandleveragelevelsarediscussedbytheBoardandinvestmentmanagersateverymeeting.Covenantlevelsaremonitoredregularly.ThemajorityoftheCompany’sinvestmentsareinquotedsecuritiesthatarereadilyrealisable.Furtherinformationonleveragecanbefoundonpage61andintheGlossaryofTermsandAlternativePerformancemeasuresonpages64and65.

Viability StatementHavingregardtoprovision31oftheUKCorporateGovernanceCode,theDirectorshaveassessedtheprospectsoftheCompanyoverathreeyearperiod.TheDirectorsbelieve,havingtakenintoaccountanumberoffactorsincludingtheinvestmentmanagers’investmenthorizon,thisperiodtobeappropriateas,intheabsenceofanyadversechangetotheregulatoryenvironmentandthefavourabletaxtreatmentaffordedtoUKinvestmenttrusts,itisaperiodoverwhichtheydonotexpecttheretobeanysignificantchangetothecurrentprincipalrisksandtotheadequacyofthemitigatingcontrolsinplace.TheDirectorsdonotenvisageanychangeinstrategyorobjectivesoranyeventsthatwouldpreventtheCompanyfromcontinuingtooperateoverthatperiod.

InmakingthisassessmenttheDirectorshavetakenintoaccounttheCompany’scurrentpositionandhaveconductedarobustassessmentoftheCompany’sprincipalandemergingrisksanduncertainties(asdetailedonpages21and22),inparticulartheimpactofmarketriskwhereasignificantfallinglobalequitymarketswouldadverselyimpactthevalueoftheinvestmentportfolio.TheDirectorshavealsoconsideredtheCompany’sinvestmentobjectiveandpolicy,thelevelofdemandfortheCompany’sshares,thenatureofitsassets,itsliabilitiesandprojectedincomeandexpenditure.ThevastmajorityoftheCompany’sinvestmentsarereadilyrealisableandcanbesold tomeetitsliabilitiesastheyfalldue,themainliabilitiescurrentlybeingthedebenturestockrepayablein2023andloannotesrepayablein2045and2054.TheCompany’sprimarythirdpartysuppliers,includingitsManagersandSecretaries,CustodianandDepositary,Registrar,AuditorandBroker,arenotexperiencingsignificantoperationaldifficultiesaffectingtheirrespectiveservicestotheCompanyduringthisperiodofremoteworking.Inaddition,assubstantiallyalloftheessentialservicesrequiredbytheCompanyareoutsourcedtothirdpartyserviceproviders,thisallowskeyserviceproviderstobereplacedatrelativelyshortnoticewherenecessary.Specificleverageandliquiditystresstestingwasconductedduringtheyear,includingconsiderationoftheriskoffurthermarketdeteriorationresultingfromtheCovid-19pandemic.Thestresstestingdidnotindicateanymattersofconcern.TheBoardcontinuestomonitortheeconomicimpactoftheUK’sdeparturefromtheEuropeanUnionbutdoesnotconsiderthatsuchimpactwouldaffectthegoingconcernstatusorviabilityoftheCompany.

Strategic Report

BasedupontheCompany’sprocessesformonitoringoperatingcosts,sharepricepremium/discount,theManagers’compliancewiththeinvestmentobjective,theportfolioriskprofile,leverage,counterpartyexposure,liquidityriskandfinancialcontrols,theBoardbelievesthattheprospectsoftheCompanyaresoundandtheDirectorsareabletoconfirmthattheyhaveareasonableexpectationthatitwillcontinueinoperationandmeetitsliabilitiesastheyfalldueoveraperiodofthreeyears.

Promoting the Success of the Company (Section 172 Statement)Undersection172oftheCompaniesAct2006,thedirectorsofacompanymustactinthewaytheyconsider,ingoodfaith,wouldbemostlikelytopromotethesuccessofthecompanyforthebenefitofitsmembersasawhole,andindoingsohaveregard(amongstothermattersandtotheextentapplicable)to:a)thelikelyconsequencesofanydecisioninthelongterm,b)theinterestsofthecompany’semployees,c)theneedtofosterthecompany’sbusinessrelationshipswithsuppliers,customersandothers,d)theimpactofthecompany’soperationsonthecommunityandtheenvironment,e)thedesirabilityofthecompanymaintainingareputationforhighstandardsofbusinessconduct,andf)theneedtoactfairlyasbetweenmembersofthecompany.

Inthiscontext,havingregardtoMonksbeinganexternally-managedinvestmentcompanywithnoemployees,theBoardconsiderstheCompany’skeystakeholderstobe:itsexistingandpotentialnewshareholdersanddebenturestockholders;itsexternally-appointedmanagers(BaillieGifford);otherprofessionalserviceproviders(corporatebroker,registraranddepositary);lenders;widersocietyandtheenvironment.

TheBoardconsidersthattheinterestsoftheCompany’skeystakeholdersarealigned,intermsofwishingtoseetheCompanydeliversustainablelong-termgrowth,inlinewiththeCompany’sstatedobjectiveandstrategy,andmeetthehigheststandardsoflegal,regulatory,andcommercialconduct,withthedifferencesbetweenstakeholdersbeingmerelyamatterofemphasisonthoseelements.TheBoard’smethodsforassessingtheCompany’sprogressinthecontextofitsstakeholders’interestsaresetoutbelow.

TheBoardplacesgreatimportanceoncommunicationwithshareholders.TheAnnualGeneralMeetingprovidesthekeyforumfortheBoardandManagerstopresenttoshareholdersontheCompany’sperformance,futureplansandprospects.UndernormalcircumstancesitalsoallowsshareholderstheopportunitytomeetwiththeBoardandManagersandraisequestionsandconcerns.Whilethe2020AnnualGeneralMeetingwasclosed,inaccordancewithgovernmentCovid-19guidelines,shareholderquestionswereinvitedandrespondedtobyemail,andaManagers’presentationwaspublishedontheCompany’spageoftheManagers’website,inordertomaintainshareholdercommunicationdespitetherestrictionsonphysicalgatherings.TheChairmanisavailabletomeetwithshareholdersasappropriate.TheManagersmeetregularlywithshareholdersandtheirrepresentatives,reportingtheirviewsbacktotheBoard.Directorsalsoattendcertainshareholderpresentations,inorder


togaugeshareholdersentimentfirsthand.ShareholdersmayalsocommunicatewithmembersoftheBoardatanytimebywritingtothemattheCompany’sregisteredofficeortotheCompany’sbroker.ThesecommunicationopportunitieshelpinformtheBoardwhenconsideringhowbesttopromotethesuccessoftheCompanyforthebenefitofallshareholdersoverthelongterm.

TheBoardseekstoengagewithitsManagersandotherserviceprovidersinacollaborativeandcollegiatemanner,encouragingopenandconstructivediscussionanddebate,whilstalsoensuringthatappropriateandregularchallengeisbroughtandevaluationconducted.ThisapproachaimstoenhanceservicelevelsandstrengthenrelationshipswiththeCompany’sproviders,withaviewtoensuringtheinterestsoftheCompany’sshareholdersandstockholdersarebestservedbykeepingcostlevelsproportionateandcompetitive,andbymaintainingthehigheststandardsofbusinessconduct.

WhilsttheCompany’soperationsarelimited,asthirdpartyserviceprovidersconductallsubstantiveoperations,theBoardisaware oftheneedtoconsidertheimpactoftheCompany’sinvestmentstrategyandpolicyonwidersocietyandtheenvironment.TheBoardconsidersthatitsoversightofenvironmental,socialandgovernance(‘ESG’)mattersisanimportantpartofitsresponsibilitytoallstakeholdersandthatproperconsiderationofESGfactorssitsnaturallywithMonks’longstandingaimofprovidingasustainablebasisforaddingvalueforshareholders.TheBoard’sreviewoftheManagersincludesanassessmentoftheirESGapproachanditsapplicationinmakinginvestmentdecisions.TheBoardsupportstheManagers’Long-termPerspectiveassetoutintheirCoreInvestmentBeliefsonpage4andregularlyreviewsGovernanceEngagementreports,whichdocumenttheManagers’interactionswithinvesteecompaniesonESGmatters.TheCompany’sAnnualStewardshipReportispublishedontheManagers’websiteatmonksinvestmenttrust.co.uk.

TheBoardrecognisestheimportanceofkeepingtheinterestsoftheCompany’sshareholders,andofactingfairlybetweenthem,firmlyfrontofmindinitskeydecisionmaking.TheCompanySecretariesareatalltimesavailabletotheBoardtoensurethatsuitableconsiderationisgiventotherangeoffactorstowhichtheDirectorsshouldhaveregard.InadditiontoensuringthattheCompany’sstatedinvestmentobjectivewasbeingpursued,keydecisionsandactionsduringtheyearwhichrequiredtheDirectorstohaveregardtoapplicablesection172factorsincluded:

— thedecisionnottoreplaceMrJGDFergusonandMrEMHarleyimmediatelyfollowingtheirdeparturefromtheBoard,inordertoassessthecomplementaryskillsetrequiredofanewDirectorandidentifycandidatesthatmeettheNominationCommittee’sobjectiveofdevelopingadiversepipelineforBoardsuccession;

— theissuanceof£100millioninprivateplacementloannotes,maturingin2054and2045,increasingtheCompany’sborrowingcapacityinordertogenerateimprovedreturnstoshareholdersthroughthedeploymentofgearing;

— theraisingofover£168millionfromnewshareissuance,at apremiumtonetassetvalue,inordertosatisfyinvestordemandovertheyear,whichalsoservestheinterestsofcurrentshareholdersbyreducingcostspershareandhelpingtofurtherimproveliquidity;and

— thedecisiontodeclareadividendof2.0p,theminimumdistributionpermissibleunderinvestmenttrustregulations,inordertoretainfundsforreinvestment,consistentwithMonks’growthfocusanditsshareholders’priorities.

Employees, Human Rights and Community IssuesTheBoardrecognisestherequirementtoprovideinformationaboutemployees,humanrightsandcommunityissues.AstheCompanyhasnoemployees,allitsDirectorsarenon-executiveandallitsfunctionsareoutsourced,therearenodisclosuresto bemadeinrespectofemployees,humanrightsandcommunityissues.

Gender RepresentationTheBoardcurrentlycomprisesfiveDirectors,threemaleand twofemale,followingtheretiralsofMrFergusonandMrHarley,andcomplieswiththeHamptonAlexandertargetof33%femalemembership.TheCompanyhasnoemployees.TheBoard’spolicyondiversityissetoutonpage23.

Environmental, Social and Governance PolicyDetailsoftheCompany’spolicyonsociallyresponsibleinvestmentcanbefoundunderCorporateGovernanceandStewardshiponpage31.

TheCompanyconsidersthatitdoesnotfallwithinthescopeoftheModernSlaveryAct2015anditisnot,therefore,obligedtomakeaslaveryandhumantraffickingstatement.Inanyevent, theCompanyconsidersitssupplychainstobeoflowriskasitssuppliersaretypicallyprofessionaladvisers.AstatementbytheManagersundertheActhasbeenpublishedontheManagers’websiteatbailliegifford.com.

Future Developments of the CompanyTheoutlookfortheCompanyisdependenttoasignificantdegreeoneconomiceventsandthefinancialmarkets.PotentialthreatsarediscussedinthePrincipalRisksanalysisonpages21and22andfactorswhichtheBoardconsidertoindicatetheCompany’spositiveprospectsandfinancialhealtharediscussedintheViabilityStatementonpage22.FurthercommentsontheoutlookfortheCompanyanditsinvestmentportfolioaresetoutintheChairman’sStatementonpages2and3andtheManagers’Reportonpages5to10.

TheStrategicReportwhichincludespages2to23wasapproved bytheBoardofDirectorsandsignedonitsbehalfon17June2021.

KSSternbergChairman

Strategic Report

https://www.bailliegifford.com/en/uk/about-us/modern-slavery-statements/


24AnnualReport2021

Directors

KS Sternberg KarlSternbergwasappointedaDirectorin2013andbecameChairmanin2020.HeworkedforMorganGrenfellAssetManagement(ownedbyDeutscheBank)from1992to2005 inavarietyofroles,ultimatelyasthechiefinvestmentofficerofDeutscheAssetManagementLimited.HeleftthatroletoestablishOxfordInvestmentPartners,aninvestmentmanagementcompanyforagroupofOxfordcolleges,wherehewaschiefexecutiveofficeruntil2013.HeisadirectorofJPMorganElectPlc,HeraldInvestmentTrustplc,JupiterFundManagementplcandClipstoneLogisticsREITplc.HeisalsoadirectorofAllianceTrustPLC,until30June2021,andofLowlandInvestmentCompanyPLC,fromwhichhewillretirelaterthisyear(datetobeconfirmed).

C BoyleClaireBoylewasappointedaDirectorin2020.HavingqualifiedasacharteredaccountantwithCoopers&Lybrand,whereshespecialisedinlitigationsupportandforensicaccounting,MsBoylethenspentthirteenyearsworkinginequityinvestmentmanagementfor:RobertFlemingInvestmentManagement;AmericanExpressAssetManagement;andlatterlyOxburghPartnersLLP,whereshewasapartnerwithresponsibilityfortheirEuropeanEquityHedgeFund.Sheisanon-executivedirectorandchairoftheauditcommitteeofAberdeenJapanInvestmentTrustPLCandanon-executivedirectorandchairoftheauditcommitteeofFidelitySpecialValuesPlc.

BJ RichardsBelindaRichardswasappointedaDirectorin2016.SheisaformerseniorpartneratDeloitteLLPwithathirtyyearcareerspecialisinginbusinessoperationsandstrategydevelopment withaparticularfocusontheFinancialServicesandConsumerProductssectors.SheiscurrentlythechairoftheauditcommitteeofSchroderJapanGrowthFundplcandAvastplcandanon-executivedirectorofPhoenixGroupHoldings.Inaddition,sheisatrusteeoftheYouthSportTrust.

Professor Sir Nigel ShadboltProfessorSirNigelShadboltwasappointedaDirectorin2017.HeisPrincipalofJesusCollege,Oxford,ProfessorialResearchFellowintheDepartmentofComputerScience,UniversityofOxfordandavisitingProfessorofArtificialIntelligenceattheUniversityofSouthampton.HespecialisesinopendataandartificialintelligenceandiscurrentlyalsochairmanoftheOpenDataInstitute.

Directors and Management

JJ TigueJeremyTiguewasappointedaDirectorin2014.HebecameChairmanoftheAuditCommitteeon1May2015andSeniorIndependentDirectoron3September2019.MrTiguewasthefundmanagerofForeign&ColonialInvestmentTrustPLCfrom1997toJune2014.HeisadirectorofTheMercantileInvestmentTrustplcandAberdeenStandardEquityIncomeTrustPLC.HewasadirectoroftheAssociationofInvestmentCompaniesfrom2003to2013.

AlloftheDirectorsaremembersoftheAuditCommitteewith theexceptionofMrKSSternberg.

Managers and Secretaries TheCompanyhasappointedBaillieGifford&CoLimited,awhollyownedsubsidiaryofBaillieGifford&Co,asitsAlternativeInvestmentFundManager(‘AIFM’)andCompanySecretary.BaillieGifford&CoLimitedhasdelegatedportfoliomanagementservicestoBaillieGifford&Co.BaillieGifford&Coisaninvestmentmanagementfirmformedin1927outofthelegalfirmBaillie&Gifford,WS,whichhadbeeninvolvedininvestmentmanagementsince1908.

BaillieGiffordisoneofthelargestinvestmenttrustmanagersin theUKandcurrentlymanagesthirteenclosed-endedinvestmentcompanies.BaillieGiffordalsomanagesopenendedinvestmentcompanies,togetherwithinvestmentportfoliosonbehalfofpensionfunds,charitiesandotherinstitutionalclients,bothintheUKandoverseas.FundsunderthemanagementoradviceofBaillieGiffordtotalaround£330billion.BasedinEdinburgh,itisoneoftheleadingprivatelyownedinvestmentmanagementfirmsintheUK,with47partnersandastaffofaround1,500.

FollowingCharlesPlowden’sretirementon30April2021,theinvestmentmanagersofMonksareSpencerAdairandMalcolmMacColl.SpencerandMalcolmarebothpartnersatBaillieGiffordandhavebeenworkingtogethersince2005.MalcolmisoneofBaillieGifford’stwojointseniorpartners.

BaillieGifford&CoandBaillieGifford&CoLimitedarebothauthorisedandregulatedbytheFinancialConductAuthority.

Governance Report


Directors’ Report

TheDirectorspresenttheirReporttogetherwiththeauditedFinancialStatementsoftheCompanyfortheyearto30April2021.

Corporate GovernanceTheCorporateGovernanceReportissetoutonpages28to31andformspartofthisReport.

Managers and Company SecretariesBaillieGifford&CoLimited,awhollyownedsubsidiaryofBaillieGifford&Co,hasbeenappointedastheCompany’sAlternativeInvestmentFundManager(‘AIFM’)andCompanySecretaries.BaillieGifford&CoLimitedhasdelegatedportfoliomanagementservicestoBaillieGifford&Co.Dealingactivityandtransactionreportinghavebeenfurthersub-delegatedtoBaillieGiffordOverseasLimitedandBaillieGiffordAsia(HongKong)Limited.

TheInvestmentManagementAgreementsetsoutthemattersoverwhichtheManagershaveauthorityinaccordancewiththepoliciesanddirectionsof,andsubjecttorestrictionsimposedby,theBoard.TheInvestmentManagementAgreementisterminableonnotlessthansixmonths’notice.Compensationfeeswouldonlybepayableinrespectofthenoticeperiodifterminationweretooccursooner.Theannualmanagementfeeis0.45%onthefirst£750millionoftotalassets,0.33%onthenext£1billionoftotalassetsand0.30%ontheremainingtotalassets(seenote 3onpage47formoredetails).

TheBoardconsiderstheCompany’sinvestmentmanagementandsecretarialarrangementsonanongoingbasisandaformalreviewisconductedbytheManagementEngagementCommitteeannually.TheCommitteeconsidered,amongstothers,thefollowingtopicsinitsreview:thequalityofthepersonnelassignedtohandletheCompany’saffairs;theinvestmentprocessand theresultsachievedtodate;investmentperformance;theadministrativeservicesprovidedbytheSecretariesandthequalityofinformationprovided;themarketingeffortsundertakenbytheManagers;therelationshipwiththeManagers;and,comparativepeergroupchargesandfees.Followingthemostrecentreview,theManagementEngagementCommitteeconcludedthatthecontinuingappointmentofBaillieGifford&CoLimitedasAIFMandthedelegationofinvestmentmanagementservicesto BaillieGifford&Co,onthetermsagreed,isintheinterestsofshareholdersasawhole.Thiswassubsequentlyapprovedby theBoard.

Depositary TheBankofNewYorkMellon(International)LimitedhasbeenappointedastheCompany’sDepositoryinaccordancewith therequirementsoftheUKAlternativeInvestmentFundManagers(AIFM)Regulations.

TheCompany’sDepositaryalsoactsastheCompany’sCustodian.TheDepositary’sresponsibilitiesincludecashmonitoring,safekeepingoftheCompany’sfinancialinstruments,verifyingownershipandmaintainingarecordofotherassetsandmonitoringtheCompany’scompliancewithinvestmentlimits andleveragerequirements.

Directors InformationabouttheDirectorswhowereinofficeattheyear endanduptothedatetheFinancialStatementsweresigned,includingtheirrelevantexperience,canbefoundonpage24.

AllDirectorswillretireattheAnnualGeneralMeetingandall offerthemselvesforre-election.Followingformalperformanceevaluation,externallyfacilitatedbyLintstockcorporateadvisors,theChairmanconfirmsthattheBoardconsidersthattheDirectors’performancecontinuestobeeffectiveandthattheyremaincommittedtotheCompany.TheBoardthereforerecommendstheirre-electiontoshareholders.

Directors’ Indemnity and InsuranceTheCompanyhasenteredintoqualifyingthirdpartydeedsofindemnityinfavourofeachofitsDirectors.Thedeeds,whichwereinforceduringtheyearto30April2021anduptothedateofapprovalofthisreport,coveranyliabilitiesthatmayarisetoathirdparty,otherthantheCompany,fornegligence,defaultorbreachoftrustorduty.TheDirectorsarenotindemnifiedinrespectofliabilitiestotheCompany,anyregulatoryorcriminalfines,anycostsincurredinconnectionwithcriminalproceedingsinwhichtheDirectorisconvictedorcivilproceedingsbrought bytheCompanyinwhichjudgementisgivenagainsthim/her. Inaddition,theindemnitydoesnotapplytoanyliabilitytotheextentthatitisrecoveredfromanotherperson.TheCompanyalsomaintainsDirectors’andOfficers’liabilityinsurance.

Conflicts of InterestEachDirectorsubmitsalistofpotentialconflictsofinteresttotheBoardonanannualbasis.TheBoardconsidersthesecarefully,takingintoaccountthecircumstancessurroundingthemand, ifconsideredappropriate,theyareapprovedforaperiodofoneyear.HavingconsideredthelistsofpotentialconflictstherewerenoactualdirectorindirectinterestsofaDirectorwhichconflictedwiththeinterestsoftheCompany.

Dividends TheBoardrecommendsafinaldividendof2.0pperordinarysharefortheyear.Ifapproved,therecommendedfinaldividendontheordinaryshareswillbepaidon7September2021toshareholdersontheregisteratthecloseofbusinesson30July2021.Theex-dividenddateis29July2021.TheCompany’sRegistraroffersaDividendReinvestmentPlan(seepage61)andthefinaldateforelectionsforthisdividendis16August2021.

Governance Report

26AnnualReport2021

Share Capital

Capital StructureTheCompany’scapitalstructureconsistsof236,453,859ordinarysharesof5peachasat30April2021.TherearenorestrictionsconcerningtheholdingortransferoftheCompany’sordinarysharesandtherearenospecialrightsattachedtoanyoftheshares.

DividendsTheordinarysharescarryarighttoreceivedividends.InterimdividendsaredeterminedbytheDirectors,whereastheproposedfinaldividendrequiresshareholderapproval.

Capital entitlementOnawindingup,aftermeetingtheliabilitiesoftheCompany,thesurplusassetswillbepaidtoordinaryshareholdersinproportiontotheirshareholdings.

VotingEachordinaryshareholderpresentinpersonorbyproxyisentitledtoonevoteonashowofhandsand,onapoll,toonevoteforeveryshareheld.

Informationonthedeadlinesforproxyappointmentscanbefoundonpage58.

Major Interests in the Company’s SharesTheCompanyhasnotreceivedanynotificationsofmajorinterestsinthevotingrightsoftheCompanyasat30April2021.TherehavebeennonotificationsofmajorinterestsintheCompany’ssharesintimatedupto15June2021.

Annual General Meeting

Issuance of Shares AtthelastAnnualGeneralMeeting,theDirectorsweregrantedshareholders’approvalforageneralauthoritytoallotsharesandalsoanauthoritytoissuesharesorsellsharesheldintreasuryonanonpre-emptivebasis(withoutfirstofferingsuchsharestoexistingshareholderspro-ratatotheirexistingholdingsuptoamaximumnominalamountof£1,119,394.25).Duringtheyearto30April2021theCompanyissuedatotalof12,900,000sharesonanonpre-emptivebasis(nominalvalue£645,000,representing5.8%oftheissuedsharecapitalat30April2020)atapremiumtonetassetvalue(onthebasisofdebtvaluedatparvalue)on89separateoccasionsatanaveragepriceof1,294.1pencepershareraisingnetproceedsof£168,500,000.Between1Mayand15June2021,theCompanyissuednofurthershares.Noshareswereheldintreasuryasat15June2021.

BothauthoritiesexpireattheforthcomingAnnualGeneralMeetingandtheDirectorsareseekingshareholders’approvaltorenewthemforafurtheryear,asdetailedbelow.

Resolution11intheNoticeofAnnualGeneralMeetingseeks ageneralauthorityfortheDirectorstoallotsharesuptoanaggregatenominalamountof£1,182,269.25.Thisamountrepresents10%oftheCompany’stotalordinarysharecapitalinissueat15June2021andmeetsinstitutionalguidelines.ThisauthoritywillcontinueuntiltheconclusionoftheAnnualGeneralMeetingtobeheldin2022orontheexpiryof15monthsfromthepassingoftheresolutions,ifearlier.

Resolution12,whichisproposedasaspecialresolution,seeksauthorityfortheDirectorstoissuesharesorsellsharesheldintreasuryonanonpre-emptivebasisforcashuptoanaggregatenominalamountof£1,182,269.25(representing10%oftheissuedordinarysharecapitaloftheCompanyasat15June2021).ThisauthoritywillonlybeusedtoissuesharesorsellsharesfromtreasuryatapremiumtonetassetvalueonthebasisofdebtvaluedatparvalueandonlywhentheDirectorsbelievethatitwouldbeinthebestinterestsoftheCompanytodoso.ThisauthoritywillcontinueuntiltheconclusionoftheAnnualGeneralMeetingtobeheldin2022orontheexpiryof15monthsfromthepassingoftheresolutions,ifearlier.

Purchase of Own Shares AtthelastAnnualGeneralMeetingtheCompanywasgrantedauthoritytopurchaseupto33,559,440ordinaryshares(equivalenttoapproximately14.99%ofitsissuedsharecapital),suchauthoritytoexpireattheAnnualGeneralMeetinginrespectoftheyearended30April2021.Noshareswereboughtbackduringtheyearunderreviewandnosharesareheldintreasury.Theprincipalreasonforsharebuy-backsistoenhancenetassetvaluepershareforcontinuingshareholdersbypurchasingsharesatadiscounttotheprevailingnetassetvalue.

TheCompanymayholdbought-backshares‘intreasury’andthen:

(i) sellsuchshares(oranyofthem)forcash(oritsequivalentundertheCompaniesAct2006);or

(ii) canceltheshares(oranyofthem).

Shareswillonlybesoldfromtreasuryatapremiumtonetassetvalue.

TheDirectorsareseekingshareholders’approvalattheAnnualGeneralMeetingtorenewtheauthoritytopurchaseupto14.99%oftheCompany’sordinarysharesinissueatthedateofpassingoftheresolution,suchauthoritytoexpireattheAnnualGeneralMeetingoftheCompanytobeheldinrespectoftheyearended30April2022.

InaccordancewiththeListingRules,themaximumprice(excludingexpenses)thatmaybepaidontheexerciseoftheauthoritymustnotexceedthehigherof:

(i) 5percent.abovetheaverageclosingpriceontheLondonStockExchangeofanordinaryshareoverthefivebusinessdaysimmediatelyprecedingthedateofpurchase;and

(ii) thehigherofthepriceofthelastindependenttradeandthehighestcurrentindependentbidforashareontheLondonStockExchange.

Theminimumprice(exclusiveofexpenses)thatmaybepaidis 5ppershare.Purchasesofshareswillbemadewithinguidelinesestablished,fromtimetotime,bytheBoard.TheCompanydoesnothaveanywarrantsoroptionsinissue.YourattentionisdrawntoResolution13intheNoticeofAnnualGeneralMeetingon page58.Thisauthority,ifconferred,willbeexercisedonlyifto dosowouldresultinanincreaseinnetassetvalueperordinarysharefortheremainingshareholdersandifitisinthebestinterestsofshareholdersgenerally.

Governance Report


Articles of Association TheCompany’sArticlesofAssociationmayonlybeamendedbyspecialresolutionatageneralmeetingofshareholders.

Financial InstrumentsTheCompany’sfinancialinstrumentscompriseitsinvestmentportfolio,cashbalances,borrowingsanddebtorsandcreditorsthatarisedirectlyfromitsoperationssuchassalesandpurchasesawaitingsettlementandaccruedincome.ThefinancialriskmanagementobjectivesandpoliciesarisingfromitsfinancialinstrumentsandtheexposureoftheCompanytoriskaredisclosedinnote19totheFinancialStatements.

Disclosure of Information to AuditorTheDirectorsconfirmthatsofaraseachoftheDirectorsisawarethereisnorelevantauditinformationofwhichtheCompany’sAuditorisunawareandtheDirectorshavetakenallthestepsthattheymightreasonablybeexpectedtohavetakenasDirectorsinordertomakethemselvesawareofanyrelevantauditinformationandtoestablishthattheCompany’sAuditorisawareofthatinformation.

Post Balance Sheet EventsTheDirectorsconfirmthattherehavebeennopostBalanceSheeteventswhichrequireadjustmentof,ordisclosurein, theFinancialStatementsornotestheretoupto17June2021.

Independent AuditorTheAuditor,Ernst&YoungLLP,iswillingtocontinueinoffice and,inaccordancewithsection489andsection491(1)oftheCompaniesAct2006,resolutionsconcerningErnst&YoungLLP’sreappointmentandremunerationwillbesubmittedtotheAnnualGeneralMeeting.

Greenhouse Gas Emissions and Streamlined Energy & Carbon Reporting (‘SECR’)AlloftheCompany’sactivitiesareoutsourcedtothirdparties. TheCompanythereforehasnogreenhousegasemissionstoreportfromitsoperations,nordoesithaveresponsibilityforanyotheremissionsproducingsourcesundertheCompaniesAct2006(StrategicReportandDirectors’Reports)Regulations2013.Forthesamereasonsassetoutabove,theCompanyconsidersitselftobealowenergyuserundertheSECRregulationsandtherefore,isnotrequiredtodiscloseenergyandcarboninformation.

Bribery ActTheCompanyhasazerotolerancepolicytowardsbriberyandiscommittedtocarryingoutbusinessfairly,honestlyandopenly.TheManagersalsoadoptazerotoleranceapproachandhavepoliciesandproceduresinplacetopreventbribery.

Criminal Finances Act 2017TheCompanyhasacommitmenttozerotolerancetowardsthecriminalfacilitationoftaxevasion.

RecommendationTheDirectorsunanimouslyrecommendyouvoteinfavourof theresolutionstobeproposedattheAnnualGeneralMeeting asitistheirviewthattheresolutionsareinthebestinterestsofshareholdersasawhole.

OnbehalfoftheBoardKSSternbergChairman17June2021

Governance Report

28AnnualReport2021

Corporate Governance Report

TheBoardiscommittedtoachievinganddemonstratinghighstandardsofCorporateGovernance.Thisstatementoutlineshowtheprinciplesofthe2018UKCorporateGovernanceCode(the‘Code’)whichcanbefoundatfrc.org.uk,andtherelevantprinciplesoftheAssociationofInvestmentCompanies(AIC) CodeofCorporateGovernancewereappliedthroughoutthefinancialyear.TheAICCodeprovidesaframeworkofbestpracticeforinvestmentcompaniesandcanbefoundat theaic.co.uk.

ComplianceTheFRChasconfirmedthatAICmembercompanieswhoreportagainsttheAICCodewillbemeetingtheirobligationsinrelationtotheUKCode(theAICCodecanbefoundattheaic.co.uk).TheCompanyhascompliedthroughouttheyearunderreviewwiththerelevantprovisionsoftheCodeandtherecommendationsoftheAICCodeexceptthattheCompanydoesnothaveaseparateinternalauditfunction,asexplainedonpage32.

The BoardTheBoardhasoverallresponsibilityfortheCompany’saffairs. Ithasanumberofmattersreservedforitsapprovalincludingstrategy,investmentpolicy,currencyhedging,borrowings,gearing,treasurymatters,dividendandcorporategovernancepolicy.Aseparatestrategysessionisheldannually.TheBoardalsoreviewstheFinancialStatements,investmenttransactions,revenuebudgetsandperformance.FullandtimelyinformationisprovidedtotheBoardtoenableittofunctioneffectivelyandtoallowDirectorstodischargetheirresponsibilities.

TheBoardcurrentlycomprisesfiveDirectorsallofwhomarenon-executive.

TheChairmanisresponsiblefororganisingthebusinessof theBoard,ensuringitseffectivenessandsettingitsagenda. Theexecutiveresponsibilityforinvestmentmanagementhas beendelegatedtotheCompany’sAlternativeInvestmentFundManager(‘AIFM’),BaillieGifford&CoLimited,and,inthecontextofaBoardcomprisingonlynon-executiveDirectors,thereis nochiefexecutiveofficer.

TheSeniorIndependentDirector(SID)isMrJJTigue,and,assuch,isavailabletoshareholdersiftheyhaveconcernsnotproperlyaddressedtotheChairman.TheSIDleadstheChairman’sperformanceappraisalandchairstheNominationCommitteewhenitconsiderstheChairman’ssuccession.

TheDirectorsbelievethattheBoardhasabalanceofskillsandexperiencethatenablesittoprovideeffectivestrategicleadershipandpropergovernanceoftheCompany.InformationabouttheDirectors,includingtheirrelevantexperience,canbefoundonpage24.

ThereisanagreedprocedureforDirectorstoseekindependentprofessionaladvice,ifnecessary,attheCompany’sexpense.

Diversity PolicyAppointmentstotheBoardaremadeonmeritwithdueregard forthebenefitsofdiversity,includinggender,socialandethnicbackgrounds,cognitiveandpersonalstrengths.ThepriorityinappointingnewDirectorsistoidentifythecandidatewiththebestrangeofskillsandexperiencetocomplementexistingDirectors.TheBoardthereforedoesnotconsideritappropriatetosetdiversitytargets.

Appointments to the BoardFollowingtheNominationCommittee’sannualreviewoftheBoard’scompositionandbearinginmindthelevelofBoardrefreshmentoverrecentyears,itwasdeterminedthataperiod ofstabilisationwouldbenefittheBoard.Noimmediateneedwasidentified,toinitiaterecruitmentfollowingthedeparturesof MrFergusonandMrHarley.GiventheBoard’sambitiontodevelopadiversepipelineforsuccession,theCommitteedeterminedthatthenecessarytimeshouldbetaken,inordertoidentifytherequisiteskillsandexperiencesoughtinanypotentialcandidate,withparticularregardtotherecommendationsoftheParkerReview.

ThetermsandconditionsofDirectors’appointmentsaresetoutinformallettersofappointmentwhichareavailableforinspectiononrequest.

ADirectorappointedduringtheyearisrequiredtoretireandseekelectionbyshareholdersatthenextAnnualGeneralMeeting. InaccordancewiththeCode,allDirectorsofferthemselvesforre-electionannually.

Independence of DirectorsAlltheDirectorsareconsideredbytheBoardtobeindependentoftheManagersandfreeofanybusinessorotherrelationshipwhichcouldinterferewiththeexerciseoftheirindependentjudgement.

TheDirectorsrecognisetheimportanceofsuccessionplanningforcompanyboardsandtheBoard’scompositionisreviewedannually.TheBoardisoftheviewthatlengthofservicewillnotnecessarilycompromisetheindependenceorcontributionofdirectorsofaninvestmenttrustcompany,wherecontinuityandexperiencecanbeabenefittotheBoard.

Policy on Chairman’s TenureTheBoardconsidersthatthetenureoftheChairshouldbedeterminedprincipallybytheBoard’sroleinprovidingstrategicleadership,governance,challengeandsupporttotheManagers,whilstbalancingtheimportanceofindependence,refreshmentanddiversitywithretentionofthecorporatememory.ItfirmlybelievesthatanappropriatecombinationofthesefactorsisessentialforaneffectiveBoard.This,attimes,willnaturallyresultinsomelongerservingdirectors,includingtheChair.TheNominationCommitteeoftheBoardconsiderslongtermsuccessionplanningforthisroleaspartofitsbroaderremittoensureanappropriatelevelofrefreshmentanddiversityontheBoard.Itdoesnotbelievetheimpositionofhardtimelimitstobehelpfulinrespectofthisrole,anymorethanforthetenureofDirectorsoverall.

Governance Report

https://www.theaic.co.uk/aic-code-of-corporate-governance

https://www.theaic.co.uk


MeetingsThereisanannualcycleofBoardmeetingswhichisdesigned toaddress,inasystematicway,overallstrategy,reviewofinvestmentpolicy,investmentperformance,marketing,revenuebudgets,dividendpolicyandcommunicationwithshareholders.TheBoardconsidersthatitmeetssufficientlyregularlytodischargeitsdutieseffectively.ThetablebelowshowstheattendancerecordforthecoreBoardandCommitteemeetingsheldduringtheyear,excludingancillaryandsub-committeemeetings.TheAnnualGeneralMeetingwasattendedbyall theDirectors.

Directors’ Attendance at Meetings

Board Audit Committee

Management Engagement

CommitteeNomination Committee

Number of meetings 4 2 1 1

CBoyle 4 2 1 1

BJRichards 4 2 1 1

ProfessorSirNigelShadbolt 4 2 1 1

KSSternberg 4 2* 1 1

JJTigue 4 2 1 1

JGDFerguson 2 1 – –

EMHarley 4 2 1 1

* MrKSSternbergisnotamemberoftheAuditCommitteebutattendsbyinvitation.

Performance EvaluationAnappraisaloftheChairman,eachDirectorandaperformanceevaluationandreviewoftheBoardasawholeandtheAuditCommitteewascarriedoutduringtheyear.Afterconsideringandrespondingtoanevaluationquestionnaireprepared,circulatedandanalysedbyLintstockcorporateadvisors,eachDirectorhadaninterviewwiththeChairman.TheChairman’sappraisalwasledbyMrJJTigue,theSeniorIndependentDirector.Theappraisalsandevaluationsconsidered,amongstothercriteria,thebalanceofskillsoftheBoard,traininganddevelopmentrequirements,thecontributionofindividualDirectorsandtheoveralleffectivenessoftheBoardanditsCommittees.FollowingthisprocessitwasconcludedthattheperformanceofeachDirector,theChairman,theBoardanditsCommitteescontinuestobeeffectiveandthateachDirectorandtheChairmanremaincommittedtotheCompany.TheBoardsecuredtheservicesofLintstock,anindependentcorporateadvisorwhichhasnootherrelationshipwiththeCompanyoritsDirectors,inaccordancewiththerequirementforFTSE350companiestohaveBoardevaluationsexternallyfacilitatedeverythreeyears.

AreviewoftheChairman’sandotherDirectors’commitmentswascarriedoutandtheBoardissatisfiedthattheyarecapableofdevotingsufficienttimetotheCompany.TheChairman’sretiralfromtheboardsofLowlandInvestmentCompanyPlc(announced,withdatetobeconfirmed)andAllianceTrust(announced,effective30June2021)representedasignificantreductioninhisothercommitmentsduringtheyear,whichensuredthathewouldhavesufficienttimetodevotetotherole.

Induction and TrainingNewDirectorsareprovidedwithaninductionprogrammewhichistailoredtotheparticularcircumstancesoftheappointee.DuringtheyearbriefingsonindustryandregulatorymatterswereprovidedtotheBoardbytheManagersandSecretaries.Directorsreceiveotherrelevanttrainingasnecessary.

Management Engagement CommitteeTheroleoftheManagementEngagementCommitteeistoensurethattheManagerremainssuitabletomanagetheportfolio,thatthemanagementcontractiscompetitiveandreasonablefortheshareholders,andthattheCompanymaintainsappropriateadministrativeandcompanysecretarialsupport.AllDirectorsaremembersoftheManagementEngagementCommittee,whichischairedbytheChairmanoftheBoard.TheBoardconsiderseachmemberoftheCommitteetobeindependent.Todischargeitsduties,theCommitteemetononeoccasionduringtheyeartoconsider:theperformanceandsuitabilityoftheManager;thetermsandconditionsoftheAIFMAgreement,includingfees;andtheCommittee’sTermsofReference.TheCommittee’sTermsofReferenceareavailableonrequestfromtheCompanyandontheCompany’spageoftheManagers’website:monksinvestmenttrust.co.uk.

Nomination Committee TheNominationCommitteeconsistsofalltheDirectorsandKarlSternbergistheChairmanoftheCommittee.TheCommitteemeetsonanannualbasisandatsuchothertimesasmayberequired.TheCommitteehaswrittentermsofreferencewhichincludereviewingthecompositionoftheBoard,identifyingandnominatingnewcandidatesforappointmenttotheBoard,Boardappraisal,successionplanningandtraining.TheCommitteealsoconsiderswhetherDirectorsshouldberecommendedforre-electionbyshareholders.TheCommittee’sTermsofReferenceareavailableonrequestfromtheCompanyandontheCompany’spageoftheManagers’website:monksinvestmenttrust.co.uk.

RemunerationAstheBoardconsidersallitsmemberstobeindependent,and alltheDirectorsarenon-executive,theBoarddoesnotconsider itnecessarytoformaseparateRemunerationCommittee.Directors’feesareconsideredbytheBoardasawholewithin thelimitsapprovedbyshareholders.TheCompany’spolicyonremunerationissetoutintheDirectors’RemunerationReport onpages34and35.

Governance Report

https://www.bailliegifford.com/en/uk/individual-investors/literature-library/funds/investment-trusts/monks/monks-investment-trust-management-engagement-committee-terms-of-reference/

https://www.bailliegifford.com/en/uk/individual-investors/literature-library/funds/investment-trusts/monks/monks-investment-trust-nomination-committee-terms-of-reference/

30AnnualReport2021

Audit CommitteeThereportoftheAuditCommitteeissetoutonpages32and33.

Internal Controls and Risk ManagementTheDirectorsacknowledgetheirresponsibilityfortheCompany’sriskmanagementandinternalcontrolsystemsandforreviewingtheireffectiveness.Thesystemsaredesignedtomanageratherthaneliminatetheriskoffailuretoachievebusinessobjectivesandcanonlyprovidereasonablebutnotabsoluteassuranceagainstmaterialmisstatementorloss.

TheBoardconfirmsthatthereisanongoingprocessforidentifying,evaluatingandmanagingthesignificantrisksfacedbytheCompanyinaccordancewiththeFRCguidance‘GuidanceonRiskManagement,InternalControlandRelatedFinancialandBusinessReporting’.

Thepracticalmeasuresinrelationtothedesign,implementationandmaintenanceofcontrolpoliciesandprocedurestosafeguardtheCompany’sassetsandtomanageitsaffairsproperly,includingthemaintenanceofeffectiveoperationalandcompliancecontrolshavebeendelegatedtotheManagersandSecretaries.

TheBoardoverseesthefunctionsdelegatedtotheManagersandSecretariesandthecontrolsmanagedbytheAIFMinaccordancewiththeUKAlternativeInvestmentFundManagersRegulations(asdetailedbelow).BaillieGifford&Co’sInternalAuditandComplianceDepartmentsandtheAIFM’spermanentriskfunctionprovidetheAuditCommitteewithregularreportsontheirmonitoringprogrammes.Thereportingproceduresforthesedepartmentsaredefinedandformalisedwithinaservicelevelagreement.BaillieGifford&CoconductsanannualreviewofitssystemofinternalcontrolswhichisdocumentedwithinaninternalcontrolsreportwhichcomplieswithISAE3402–AssuranceReportsonControlsataServiceOrganization.ThisreportisindependentlyreviewedbyBaillieGifford&Co’sAuditorsandacopyissubmittedtotheAuditCommittee.

AreportidentifyingthematerialrisksfacedbytheCompanyandthekeycontrolsemployedtomanagetheserisksisreviewedbytheAuditCommittee.

TheseproceduresensurethatconsiderationisgivenregularlytothenatureandextentofrisksfacingtheCompanyandthattheyarebeingactivelymonitored.Wherechangesinriskhavebeenidentifiedduringtheyeartheyalsoprovideamechanismtoassesswhetherfurtheractionisrequiredtomanagetheserisks.

TheDirectorsconfirmthattheyhavereviewedtheeffectiveness oftheCompany’sriskmanagementandinternalcontrolssystems,whichaccordwiththeFRC‘GuidanceonRiskManagement,InternalControlandRelatedFinancialandBusinessReporting’,andtheyhaveproceduresinplacetoreviewtheireffectiveness onaregularbasis.NosignificantweaknesseswereidentifiedintheyearunderreviewanduptothedateofthisReport.

TheBoardconfirmsthattheseprocedureshavebeeninplacethroughouttheCompany’sfinancialyearandcontinuetobeinplaceuptothedateofapprovalofthisReport.

TocomplywiththeUKAlternativeInvestmentFundManagersRegulations,TheBankofNewYorkMellon(International)LimitedactsastheCompany’sDepositaryandBaillieGifford&CoLimitedactsasitsAIFM.

TheDepositary’sresponsibilitiesincludecashmonitoring,safekeepingoftheCompany’sfinancialinstruments,verifyingownershipandmaintainingarecordofotherassetsandmonitoringtheCompany’scompliancewithinvestmentlimits andleveragerequirements.TheDepositaryisliablefortheloss offinancialinstrumentsheldincustody.TheDepositarywill ensurethatanydelegatesegregatestheassetsoftheCompany. TheCompany’sDepositaryalsoactsastheCompany’sCustodian.TheCustodianpreparesreportsonitskeycontrolsandsafeguardswhichareindependentlyreviewedbyitsappointedauditors,KPMGLLP.ThereportsarereviewedbyBaillieGifford’sBusinessRiskDepartmentandasummaryofthekeypointsisreportedtotheAuditCommitteeandanyconcernsareinvestigated.

TheDepositaryprovidestheAuditCommitteewithareportonitsmonitoringactivities.

TheAIFMhasestablishedapermanentriskmanagementfunctiontoensurethateffectiveriskmanagementpoliciesandproceduresareinplaceandtomonitorcompliancewithrisklimits.TheAIFMhasariskmanagementpolicywhichcoverstherisksassociatedwiththemanagementoftheportfolio,andtheadequacyandeffectivenessofthispolicyisreviewedandapprovedatleastannually.Thisreviewincludestheriskmanagementprocessesandsystemsandlimitsforeachriskarea.

Therisklimits,whicharesetbytheAIFMandapprovedbytheBoard,takeintoaccounttheobjectives,strategyandriskprofileoftheportfolio.Theselimits,includingleverage(seepage61),aremonitoredandthesensitivityoftheportfoliotokeyrisksisreviewedperiodicallyasappropriatetoascertaintheimpactofchangesinkeyvariablesintheportfolio.ExceptionsfromlimitsmonitoringandstresstestingundertakenbyBaillieGifford’sBusinessRiskDepartmentareescalatedtotheAIFMandreportedtotheBoardalongwithremedialmeasuresbeingtaken.Noexceptionsoccurredduringtheyear.

Going ConcernInaccordancewithTheFinancialReportingCouncil’sguidanceongoingconcernandliquidityrisk,includingitsCovid-19guidance,theDirectorshaveundertakenarigorousreviewoftheCompany’sabilitytocontinueasagoingconcernandspecificallyinthecontextoftheCovid-19pandemic.

TheCompany’sprincipalrisksaremarketrelatedandincludemarketrisk,liquidityriskandcreditrisk.Anexplanationoftheserisksandhowtheyaremanagediscontainedonpages21and22andinnote19totheFinancialStatements.TheBoardhas,inparticular,consideredtheimpactofmarketvolatilityduringtheCovid-19pandemicbutdoesnotbelievetheCompany’sgoingconcernstatusisaffected.

Governance Report


TheCompany’sassets,themajorityofwhichareinvestments inquotedsecuritieswhicharereadilyrealisable,exceeditsliabilitiessignificantly.Allborrowingsrequirethepriorapproval oftheBoard.GearinglevelsandcompliancewithborrowingcovenantsarereviewedbytheBoardonaregularbasis. TheCompanyhascontinuedtocomplywiththeinvestmenttruststatusrequirementsofsection1158oftheCorporationTaxAct2010andtheInvestmentTrust(ApprovedCompany)Regulations2011.TheCompany’sprimarythirdpartysuppliers,includingitsManagersandSecretaries,CustodianandDepositary,Registrar,AuditorandBroker,arenotexperiencingsignificantoperationaldifficultiesaffectingtheirrespectiveservicestotheCompany.Accordingly,theFinancialStatementshavebeenpreparedon thegoingconcernbasisasitistheDirectors’opinion,havingassessedtheprincipalandemergingrisksandothermattersincludingtheimpactoftheCovid-19pandemicsetoutintheViabilityStatementonpage22,whichassessestheprospects oftheCompanyoveraperiodofthreeyears,thattheCompany willcontinueinoperationalexistencefortheperiodto31July2022.

Relations with ShareholdersTheBoardplacesgreatimportanceoncommunicationwithshareholders.TheCompany’sManagersmeetregularlywithshareholdersandreportshareholders’viewstotheBoard. TheChairmanhasmaintainedopenlinesofcommunicationwithmarketparticipantsandinvestorsintheCompany,separateofManagerinvolvement,inordertoascertainviewsoncorporatematters.TheChairmanisavailabletomeetwithshareholders asappropriate.ShareholderswishingtocommunicatewithanymembersoftheBoardmaydosobywritingtothemattheSecretaries’addressorthroughtheCompany’sBroker,InvestecBankplc(seecontactdetailsonthebackcover).

TheCompany’sAnnualGeneralMeetingprovidesaforumforcommunicationwithallshareholders.Thelevelofproxieslodgedforeachresolutionisannouncedatthemeetingandispublishedatmonksinvestmenttrust.co.uksubsequenttothemeeting. ThenoticeperiodfortheAnnualGeneralMeetingisatleasttwentyworkingdays.

Shareholdersandpotentialinvestorsmayobtainup-to-dateinformationontheCompanyatmonksinvestmenttrust.co.uk.

Governance Report

Corporate Governance and StewardshipTheBoardhasgivendiscretionaryvotingpowerstoBaillieGifford&Co.TheManagersvoteagainstresolutionstheyconsidermaydamageshareholders’rightsoreconomicinterestsandreporttheiractionstotheBoard.

TheBoardbelievesthatitisintheshareholders’intereststoconsiderenvironmental,socialandgovernance(ESG)factorswhenselectingandretaininginvestmentsandhasaskedtheManagerstotaketheseissuesintoaccount.TheManagersdonotexcludecompaniesfromtheirinvestmentuniversepurelyonthegroundsofESGfactors.Apositiveengagementapproachisemployedwherebymattersarediscussedwithmanagement withtheaimofimprovingtherelevantpoliciesandmanagementsystemsandenablingtheManagerstoconsiderhowESG factorscouldimpactlong-terminvestmentreturns.TheManagers’statementofcompliancewiththeUKStewardshipCodecan befoundontheManagers’websiteat bailliegifford.com. TheManagers’policyhasbeenreviewedandendorsedbytheBoard.Inaddition,theMonksStewardshipReport,whichoutlinestheManagers’approachtoengagementandprovidesexamples,ispreparedannually,andisavailableontheCompany’spageoftheManagers’websiteatmonksinvestmenttrust.co.uk.

TheManagersaresignatoriestotheUnitedNationsPrinciplesforResponsibleInvestmentandtheCarbonDisclosureProject,andarealsomembersoftheInternationalCorporateGovernanceNetwork.


https://www.bailliegifford.com/en/uk/individual-investors/literature-library/funds/investment-trusts/monks/monks-investment-trust-agm-proxy-results/


https://www.bailliegifford.com/en/uk/about-us/governance-sustainability/


32AnnualReport2021

Audit Committee Report

TheAuditCommitteeconsistsofMsCBoyle,MsBJRichards,ProfessorSirNigelShadboltandMrJJTigue,whoistheChairmanoftheCommittee.ThemembersoftheCommitteeconsiderthattheyhavetherequisitefinancialskillsandexperiencetofulfiltheresponsibilitiesoftheCommittee.TheCommittee’sauthorityanddutiesareclearlydefinedwithinitswrittentermsofreferencewhichareavailableonrequestfromtheCompanySecretaryandatmonksinvestmenttrust.co.uk.Thetermsofreferencearereviewedannually.

TheCommittee’seffectivenessisreviewedonanannualbasisaspartoftheBoard’sperformanceevaluationprocess.

AtleastonceayeartheCommitteemeetswiththeexternalAuditorwithoutanyrepresentativeoftheManagersbeingpresent.

Main Activities of the CommitteeTheCommitteemettwiceduringtheyearandtheexternalAuditor,Ernst&YoungLLP,attendedoneofthosemeetings.BaillieGifford&Co’sInternalAuditandComplianceDepartmentsandtheAIFM’spermanentriskfunctionprovidedreportsontheirmonitoringprogrammesforthesemeetings.Inaddition,theexternalAuditormetwiththeAuditCommitteeChaironanad-hocbasistodiscussmatterspertinenttotheCommitteeastheyarose.

Themattersconsidered,monitoredandreviewedbytheCommitteeduringthecourseoftheyearincludedthefollowing:

— theresultsannouncementandtheAnnualandInterimReports;

— theCompany’saccountingpoliciesandpracticesandtheimplementationoftheManagers’valuationpolicyforinvestmentsinunquotedcompanies;

— theregulatorychangesimpactingtheCompany;

— thefairness,balanceandunderstandabilityoftheAnnualReportandFinancialStatementsandwhetheritprovided theinformationnecessaryforshareholderstoassesstheCompany’sperformance,businessmodelandstrategy;

— theeffectivenessoftheCompany’sinternalcontrolenvironment;

— reappointment,remunerationandtermsofengagementof theexternalAuditor;

— whethertheauditservicescontractshouldbeputouttotender;

— thepolicyontheengagementoftheexternalAuditorto supplynon-auditservices;

— theindependenceandobjectivityoftheexternalAuditor andeffectivenessoftheexternalauditprocess;

— theneedfortheCompanytohaveitsowninternalauditfunction;

— internalcontrolsreportsreceivedfromtheManagersandCustodians;and

— thearrangementsinplacewithinBaillieGifford&Cowherebytheirstaffmay,inconfidence,raiseconcernsaboutpossibleimproprietiesinmattersoffinancialreportingorothermatters.

Internal AuditTheCommitteecontinuestobelievethatthecomplianceandinternalcontrolsystemsandtheinternalauditfunctioninplacewithintheManagersprovidesufficientassurancethatasoundsystemofinternalcontrol,whichsafeguardsshareholders’investmentandtheCompany’sassets,ismaintained.Aninternalauditfunction,specifictotheCompany,isthereforeconsideredunnecessary.

Financial Reporting TheCommitteeconsidersthatthemostsignificantissueslikelytoimpacttheFinancialStatementsaretheexistenceandvaluationofinvestments,astheyrepresent96.8%oftotalassets,andtheaccuracyandcompletenessofincomefrominvestments.

Themajorityoftheinvestmentsareinquotedsecuritiesandmarketpricesarereadilyavailablefromindependentexternalpricingsources.TheCommitteereviewedtheManagers’ReportonInternalControlswhichdetailsthecontrolsinplaceregardingrecordingandpricingofinvestmentsandthereconciliationofinvestmentholdingstothirdpartydata.

Thevalueofallthelistedinvestmentsasat30April2021wereagreedtoexternalpricesources.TheCommitteeconsidered thevalueofallunquotedandsuspendedinvestmentsat30April2021,whicharedeterminedusingvaluationtechniquesbaseduponnetassetvalues,comparablecompanymultiplesandperformance,achievementofcompanymilestonesandotherinformationasappropriate,andassessedtheappropriateness ofthejudgementsandassumptionsusedinvaluingsuchinvestments.TheManagersagreedtheportfolioholdingstoconfirmationsfromtheCompany’sCustodian.

TheCommitteereviewedtheManagers’ReportonInternalControlswhichdetailsthecontrolsinplaceregardingcompletenessandaccuraterecordingofinvestmentincome. TheaccountingtreatmentofeachspecialdividendreceivedorreceivableduringtheyearwasreviewedbytheManagers.

TheCommitteeconsideredthefactors,includingtheimpactofCovid-19,thatmightaffecttheCompany’sviabilityoveraperiodofthreeyearsanditsabilitytocontinueasagoingconcernfortheperiodto31July2022,togetherwithreportsfromtheManagersonthecashpositionandcashflowprojectionsoftheCompany,theliquidityofitsinvestmentportfolio,compliancewithdebtcovenants,availabilityofborrowingfacilities,andtheCompany’sabilitytomeetitsobligationsastheyfalldue.TheCommitteealsoreviewedtheViabilityStatementonpage22andstatementonGoingConcernonpage30includingthepotentialimpactofCovid-19.Followingthisassessment,theCommitteerecommendedtotheBoardtheappropriatenessoftheGoingConcernbasisinpreparingtheFinancialStatementsandconfirmedtheaccuracyoftheViabilityStatementandstatementonGoingConcern.

TheManagersconfirmedtotheCommitteethattheywerenotawareofanymaterialmisstatementsinthecontextoftheFinancialStatementsasawholeandthattheFinancialStatementsareinaccordancewithapplicablelawandaccountingstandards.

Governance Report

https://www.bailliegifford.com/en/uk/individual-investors/literature-library/funds/investment-trusts/monks/monks-investment-trust-audit-committee-terms-of-reference/


Internal Controls and Risk ManagementTheCommitteereviewedtheeffectivenessoftheCompany’s riskmanagementandinternalcontrolssystemsasdescribed onpage30.Nosignificantweaknesseswereidentified intheyearunderreview.

External AuditorTofulfilitsresponsibilityregardingtheindependenceandobjectivityoftheexternalAuditor,theCommitteereviewedtheAuditor’sauditplan,whichincludesadescriptionoftheAuditor’sarrangementstomanageindependence,areportfromtheAuditorontheconclusionoftheauditsettingoutwhytheAuditorremainsindependentandtheextentandnatureofnon-auditservicesprovidedbytheAuditor.Non-auditfeesincurredbytheCompanyfortheyearto30April2021amountto£1,250andrelatedtothecertificationoffinancialinformationtothedebenturetrustee.

TheCommitteehasreviewedandapprovedthenon-auditservicesprovidedbytheAuditorduringtheyearanddoesnotbelievethattheyhaveimpairedtheAuditor’sindependenceastheamountinvolvedisimmaterial.

ToassesstheeffectivenessoftheAuditorandtheexternalauditprocess,theCommitteereviewedandconsideredtheauditplan,thefulfilmentbytheAuditoroftheagreedauditplan,areportfromtheAuditorontheconclusionoftheaudit,feedbackfromtheSecretariesontheperformanceoftheauditteamandtheAuditQualityInspectionReportonErnst&YoungLLPissuedbytheFRC’sAuditQualityReviewTeam(AQRT).

Followingacompetitivetenderprocess,Ernst&YoungLLPwasappointedastheCompany’sAuditorattheAnnualGeneralMeetingheldon2August2017,withCarolineMercerastheleadauditpartner.Theauditpartnersresponsiblefortheauditaretoberotatedatleasteveryfiveyearsinaccordancewithprofessionalandregulatorystandardsinordertoprotectindependenceandobjectivityandtoprovidefreshchallengetothebusiness.ThisisCarolineMercer’sfourthyearasleadauditpartnerfortheCompany’saudit.

Ernst&YoungLLPhasconfirmedthatitbelievesitisindependentwithinthemeaningofregulatoryandprofessionalrequirementsandthattheobjectivityoftheauditpartnerandstaffisnotimpaired.Havingcarriedoutthereviewdescribedabove,theCommitteeissatisfiedthattheAuditorremainsindependentandeffectiveforthepurposesofthisyear’sauditand,assuch,hasnotconsidereditnecessarytoputtheauditservicescontractouttotender. Inaccordancewithregulationsinrelationtothestatutoryaudits oflistedcompanies,theCompanyisrequiredtoputtheaudit outtotenderforthe2028yearend.

TherearenocontractualobligationsrestrictingtheCommittee’schoiceofexternalAuditor.

Regulatory ComplianceTheCommitteeconfirmsthattheCompanyisincompliancewiththerequirementsoftheStatutoryAuditServicesforLargeCompaniesMarketInvestigation(MandatoryUseofCompetitiveTenderProcessesandAuditCommitteeResponsibilities)Order2014,whichrelatestothefrequencyandgovernanceoftendersfortheappointmentoftheexternalauditorandthesettingofpolicyontheprovisionofnon-auditservices.

Accountability and AuditTherespectiveresponsibilitiesoftheDirectorsandtheAuditor inconnectionwiththeFinancialStatementsaresetoutonpages36 to 41.

OnbehalfoftheBoardJJTigueChairmanoftheAuditCommittee17June2021

Governance Report

34AnnualReport2021

Directors’ Remuneration Report

ThisreporthasbeenpreparedinaccordancewiththerequirementsoftheCompaniesAct2006.

Statement by the ChairmanTheDirectors’RemunerationPolicyissubjecttoshareholderapprovaleverythreeyearsorsoonerifanalterationtothepolicy isproposed.TheRemunerationPolicywhichissetoutbelow,wasapprovedbyshareholdersatthelastAnnualGeneralMeeting,heldinSeptember2020,andnochangesareproposed.

TheBoardreviewedtheleveloffeesduringtheyearanditwasagreedthatwitheffectfrom1May2021theChairman’sFeeshouldincreaseby£2,000perannum,Directors’Feesshouldincreaseby£1,000perannum,theincrementfortheAuditChairshouldincreaseby£1,000perannumandanincrementfortheSeniorIndependentDirector,of£3,000perannum,shouldbeintroduced.Thefeelevelswerelastincreasedon1May2019.

Directors’ Remuneration PolicyTheBoardiscomposedwhollyofnon-executiveDirectors,noneofwhomhasaservicecontractwiththeCompany.ThereisnoseparateremunerationcommitteeandtheBoardasawholeconsiderschangestoDirectors’feesfromtimetotime.BaillieGifford&CoLimited,theCompanySecretaries,providecomparativeinformationwhentheBoardconsidersthelevelofDirectors’fees.

TheBoard’spolicyisthattheremunerationofDirectorsshouldbesetatareasonablelevelthatiscommensuratewiththedutiesandresponsibilitiesoftheroleandconsistentwiththerequirementtoattractandretainDirectorsoftheappropriatequalityandexperience.TheBoardbelievesthatthefeespaidtotheDirectorsshouldreflecttheexperienceoftheBoardasawhole,befair andshouldtakeaccountoftheleveloffeespaidbycomparableinvestmenttrusts.AnyviewsexpressedbyshareholdersonthefeesbeingpaidtoDirectorswillbetakenintoconsiderationby theBoardwhenreviewingtheBoard’spolicyonremuneration.

Non-executiveDirectorsarenoteligibleforanyotherremunerationorbenefitsapartfromthereimbursementofallowableexpenses.TherearenoperformanceconditionsrelatingtoDirectors’fees

andtherearenolong-termincentiveschemesorpensionschemes.Thereisnonoticeperiodandnocompensationispayableonlossofoffice.

Limits on Directors’ RemunerationThefeesforthenon-executiveDirectorsarepayablequarterly inarrearsandaredeterminedwithinthelimitsetoutintheCompany’sArticlesofAssociation,whichiscurrently£300,000inaggregate.Anychangetothislimitrequiresshareholderapproval.

ThefeespaidtoDirectorsinrespectoftheyearended30April2021andtheexpectedfeespayableinrespectoftheyearending30April2022aresetoutinthetablebelow.ThefeespayabletotheDirectorsinthesubsequentfinancialperiodswillbedeterminedfollowinganannualreviewoftheDirectors’fees.

Expected fees for

year ending 30 Apr 2022

£

Fees as at 30 Apr 2021

£

Chairman’sfee 46,000 44,000

Non-executiveDirectorfee 31,000 30,000

AdditionalfeeforChairmanofthe AuditCommittee* 6,000 5,000

AdditionalfeefortheSenior IndependentDirector* 3,000 –

* TheAuditChairperformsadditionalresponsibilitiesasnotedin theAuditCommitteeReportonpages32and33.TheSeniorIndependentDirectorperformsadditionalresponsibilitiesasnoted onpage28.

Annual Report on RemunerationAnordinaryresolutionfortheapprovalofthisreportwillbeputtothemembersattheforthcomingAnnualGeneralMeeting.

ThelawrequirestheCompany’sAuditortoauditcertainofthedisclosuresprovidedinthisreport.Wheredisclosureshavebeenaudited,theyareindicatedassuch.TheAuditor’sopinionisincludedintheIndependentAuditor’sReportonpages32to33.

Directors’ Remuneration for the Year (audited) TheDirectorswhoservedduringtheyearreceivedthefollowingremunerationintheformoffeesandtaxablebenefits.ThisrepresentstheentireremunerationpaidtotheDirectors.

Name

2021Fees

£

2021 Taxable benefits †

£

2021Total

£

% change in year

2020Fees

£

2020 Taxable benefits †

£

2020Total

£

CBoyle(appointed1May2020) 30,000 – 30,000 – – – –

JGDFerguson(retired1September2020) 14,836 196 15,032 (65.8) 43,000 1,002 44,002

EMHarley(retired16March2021) 26,685 – 26,685 (8.0) 29,000 – 29,000

DCPMcDougall(retired3September2019) – – – – 10,001 252 10,253

BJRichards 30,000 – 30,000 3.4 29,000 – 29,000

ProfessorSirNigelShadbolt 30,000 – 30,000 3.4 29,000 – 29,000

KSSternberg(Chairfrom1September2020) 39,333 – 39,333 35.6 29,000 – 29,000

JJTigue(AuditCommitteeChair) 35,000 – 35,000 4.5 33,500 – 33,500

205,854 196 206,050 1.1 202,501 1,254 203,755

†ComprisesexpensesincurredbyDirectorsinthecourseoftraveltoattendBoardandCommitteemeetingsheldattheLondonofficesof BaillieGifford&CoLimited,theCompany’sSecretaries.Theseamountshavebeengrossedupforincometax.

Governance Report


Directors’ Interests (audited)TheDirectorsattheyearend,andtheirinterests(includingthoseofconnectedpersons)intheCompanyareasshowninthefollowingtable.TherehavebeennochangesintimatedintheDirectors’interestsupto15June2021.

NameNature

of interest

Ordinary 5p shares held at 30 April 2021

Ordinary 5p shares held at 30 April 2020

CBoyle Beneficial – –

BJRichards Beneficial 11,397 9,840

ProfessorSir NigelShadbolt Beneficial – –

KSSternberg Beneficial 18,189 13,483

JJTigue Beneficial 41,176 41,086

Statement of Voting at Annual General MeetingAtthelastAnnualGeneralMeeting,oftheproxyvotesreceivedinrespectoftheDirectors’RemunerationReport,99.8%wereinfavour,0.1%wereagainstandvoteswithheldwere0.1%.AtthelastAnnualGeneralMeetingatwhichtheDirectors’RemunerationPolicywasconsidered(September2020)99.8%oftheproxyvotesreceivedwereinfavour,0.1%wereagainstand0.1%werewithheld.

Relative Importance of Spend on PayThetablebelowshowstheactualexpenditureduringtheyear inrespectofDirectors’remunerationanddistributionstoshareholdersbywayofdividends.

2021£’000

2020£’000

Change%

Directors’remuneration 206 204 1.0

Dividendspaidtoshareholders 4,729 5,589 (15.4)

Cumulative years to 30 April2013 2016 20192018 20212020

Source: Refinitiv/Baillie Gifford and relevant underlying index providers#.

Monks share price

FTSE All-Share

FTSE World Index

Past performance is not a guide to future performance.

All figures are total returns (see Glossary of Terms and Alternative Performance Measures on pages 64 and 65).# See disclaimer on page 63.

50

100

150

200

250

300

350

400

450

2011 201520142012 2017

Performance Graph(figuresrebasedto100at30April2011)

Company Performance Thefollowinggraphcomparesthesharepricetotalreturn(assumingalldividendsarereinvested)toMonks’ordinaryshareholderscomparedwiththetotalshareholderreturnonanotionalinvestmentmadeupofsharesinthecomponentpartsoftheFTSEAll-ShareIndex.ThisindexwaschosenforcomparisonpurposesasitisawidelyusedmeasureofperformanceforUKlistedcompanies(FTSEWorldIndex,whichistheCompany’scomparativeindex,isprovidedforinformationpurposesonly).

Approval TheDirectors’RemunerationReportonpages34and35wasapprovedbytheBoardofDirectorsandsignedonitsbehalfon 17June2021.

KSSternbergChairman

Governance Report

36AnnualReport2021

TheDirectorsareresponsibleforpreparingtheAnnualReport andtheFinancialStatementsinaccordancewithapplicablelawandregulations.

CompanylawrequirestheDirectorstoprepareFinancialStatementsforeachfinancialyear.UnderthatlawtheyhaveelectedtopreparetheFinancialStatementsinaccordancewithapplicablelawandUnitedKingdomAccountingStandards(UnitedKingdomGenerallyAcceptedAccountingPractice)includingFRS102‘TheFinancialReportingStandardapplicableintheUKandRepublicofIreland’.

UndercompanylawtheDirectorsmustnotapprovetheFinancialStatementsunlesstheyaresatisfiedthattheygiveatrueandfairviewofthestateofaffairsoftheCompanyandoftheprofitor lossoftheCompanyforthatperiod.InpreparingtheseFinancialStatements,theDirectorsarerequiredto:

— selectsuitableaccountingpoliciesandthenapplythemconsistently;

— makejudgementsandaccountingestimatesthatarereasonableandprudent;

— statewhetherapplicableUnitedKingdomAccountingStandardshavebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedintheFinancialStatements;

— assesstheCompany’sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcern;and

— preparetheFinancialStatementsonthegoingconcernbasisunlessitisinappropriatetopresumethattheCompanywillcontinueinbusiness.

TheDirectorsareresponsibleforkeepingadequateaccountingrecordsthataresufficienttoshowandexplaintheCompany’stransactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionoftheCompanyandenablethemtoensurethattheFinancialStatementsandtheDirectors’RemunerationReportcomplywiththeCompaniesAct2006.TheyarealsoresponsibleforsafeguardingtheassetsoftheCompanyandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.

Underapplicablelawsandregulations,theDirectorsarealsoresponsibleforpreparingaStrategicReport,Directors’Report, aDirectors’RemunerationReportandaCorporateGovernanceStatementthatcomplieswiththatlawandthoseregulations.

TheDirectorshavedelegatedresponsibilitytotheManagersforthemaintenanceandintegrityoftheCompany’spageoftheManagers’website.LegislationintheUnitedKingdomgoverningthepreparationanddisseminationofFinancialStatementsmaydifferfromlegislationinotherjurisdictions.TheworkcarriedoutbytheAuditordoesnotinvolveanyconsiderationofthesemattersand,accordingly,theAuditoracceptsnoresponsibilityforanychangesthatmayhaveoccurredtotheFinancialStatementssincetheywereinitiallypresentedonthewebsite.

EachoftheDirectors,whosenamesandfunctionsarelistedwithintheDirectorsandManagementsection,confirmthat, tothebestoftheirknowledge:

— theFinancialStatements,whichhavebeenpreparedinaccordancewithapplicablelawandUnitedKingdomAccountingStandards(UnitedKingdomGenerallyAcceptedAccountingPractice)includingFRS102‘TheFinancialReportingStandardapplicableintheUKandRepublicofIreland’,giveatrueandfairviewoftheassets,liabilities,financialpositionandnetreturnoftheCompany;

— theAnnualReportandFinancialStatementstakenasawholeisfair,balancedandunderstandableandprovidestheinformationnecessaryforshareholderstoassesstheCompany’sperformance,businessmodelandstrategy;and

— theStrategicReportincludesafairreviewofthedevelopmentandperformanceofthebusinessandthepositionoftheCompany,togetherwithadescriptionoftheprincipalrisksanduncertaintiesthatitfaces.


Governance Report

Statement of Directors’ Responsibilities in Respect of the Annual Report and the Financial Statements

NotesThefollowingnotesrelatetofinancialstatementspublishedonawebsiteandarenotincludedintheprintedversionoftheAnnualReportandFinancialStatements:

— ThemaintenanceandintegrityoftheBaillieGifford&CowebsiteistheresponsibilityofBaillieGifford&Co;theworkcarriedoutbytheAuditorsdoesnotinvolveconsiderationofthesemattersandaccordingly,theAuditorsacceptnoresponsibilityforanychangesthatmayhaveoccurredtothefinancialstatementssincetheywereinitiallypresentedonthewebsite.

— LegislationintheUnitedKingdomgoverningthepreparationanddisseminationoffinancialstatementsmaydifferfromlegislationinotherjurisdictions.


OpinionWehaveauditedthefinancialstatementsofTheMonksInvestmentTrustPLC(the‘Company’)fortheyearended30April2021,whichcomprisetheIncomeStatement,BalanceSheet,StatementofChangesinEquity,CashFlowStatementandtherelatednotes1to20,includingasummaryofsignificantaccountingpolicies.ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisapplicablelawandUnitedKingdomAccountingStandardsincludingFRS102‘TheFinancialReportingStandardapplicableintheUKandRepublicofIreland’(UnitedKingdomGenerallyAcceptedAccountingPractice).

Inouropinion,thefinancialstatements:

— giveatrueandfairviewoftheCompany’saffairsasat30April2021andofitsprofitfortheyearthenended;

— havebeenproperlypreparedinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice;and

— havebeenpreparedinaccordancewiththerequirementsoftheCompaniesAct2006.

Basis for Opinion WeconductedourauditinaccordancewithInternationalStandardsonAuditing(UK)(ISAs(UK))andapplicablelaw.Ourresponsibilitiesunderthosestandardsarefurtherdescribedinthe‘Auditor’sresponsibilitiesfortheauditofthefinancialstatements’sectionofourreport.WeareindependentoftheCompanyinaccordancewiththeethicalrequirementsthatarerelevanttoourauditofthefinancialstatementsintheUK,includingtheFinancialReportingCouncil’s(FRC)EthicalStandardasappliedtopublicinterestentities,andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeserequirements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.

Conclusions relating to principal risks, going concern and viability statementInauditingthefinancialstatements,wehaveconcludedthattheDirectors’useofthegoingconcernbasisofaccountinginthepreparationofthefinancialstatementsisappropriate.OurevaluationoftheDirectors’assessmentoftheCompany’sabilitytocontinuetoadoptthegoingconcernbasisofaccountingincluded

— WeconfirmedourunderstandingoftheCompany’sgoingconcernassessmentprocessandengagedwiththeDirectorsandtheCompanySecretarytodetermineifallkeyfactorswereconsideredintheirassessment.

— WeinspectedtheDirectors’assessmentofgoingconcern,includingtherevenueforecast,fortheperiodto31July2022whichisatleast12monthsfromthedatethefinancialstatementswereauthorisedforissue.Inpreparingtherevenueforecast,theCompanyhasconcludedthatitisabletocontinuetomeetitsongoingcostsastheyfalldue.

— Wehavereviewedthefactorsandassumptions,includingtheimpactoftheCOVID-19pandemic,asappliedtotherevenueforecastandtheliquidityassessmentoftheinvestments. Weconsideredtheappropriatenessofthemethodsusedtocalculatetheforecastanddetermined,throughtestingofthemethodologyandcalculations,thatthemethods,inputsandassumptionsutilisedwereappropriatetobeabletomakeanassessmentfortheCompany.

— InrelationtotheCompany’sborrowingarrangements,weinspectedtheDirectors’assessmentoftheriskofbreachingthedebtcovenantsasaresultofareductioninthevalueoftheCompany’sportfolio.WerecalculatedtheCompany’scompliancewithdebtcovenantsinthescenariosassessedbytheDirectorsandperformedreversestresstestinginordertoidentifywhatfactorswouldleadtotheCompanybreachingthefinancialcovenants.

— WeconsideredthemitigatingfactorsincludedintherevenueforecastsandcovenantcalculationsthatarewithincontroloftheCompany.ThisincludedareviewoftheCompany’sassessmentoftheliquidityoftheinvestmentsheldandevaluatingtheCompany’sabilitytosellinvestmentsinordertorepayborrowingsorcovertheworkingcapitalrequirementsoftheCompanyshouldrevenuedeclinesignificantly.

— WereviewedtheCompany’sgoingconcerndisclosuresincludedintheannualreportinordertoassesswhetherthedisclosureswereappropriateandinconformitywiththereportingstandards.

Basedontheworkwehaveperformed,wehavenotidentifiedanymaterialuncertaintiesrelatingtoeventsorconditionsthat,individuallyorcollectively,maycastsignificantdoubtonthecompany’sabilitytocontinueasagoingconcernfortheperiodassessedbytheDirectors,beingtheperiodto31July2022,whichisatleast12monthfromwhenthefinancialstatementsareauthorisedforissue.

InrelationtotheCompany’sreportingonhowtheyhaveappliedtheUKCorporateGovernanceCode,wehavenothingmaterialtoaddordrawattentiontoinrelationtotheDirectors’statementinthefinancialstatementsaboutwhethertheDirectorsconsidereditappropriatetoadoptthegoingconcernbasisofaccounting.

OurresponsibilitiesandtheresponsibilitiesoftheDirectorswithrespecttogoingconcernaredescribedintherelevantsectionsofthisreport.However,becausenotallfutureeventsorconditionscanbepredicted,thisstatementisnotaguaranteeastotheCompany’sabilitytocontinueasagoingconcern.

Overview of Our Audit Approach

Key audit matters RiskofincorrectvaluationorownershipoftheinvestmentportfolioRiskofincompleteorinaccuraterevenuerecognition,includingtheclassificationofspecialdividendsasrevenueorcapitalintheIncomeStatement

Materiality Overallmaterialityof£32.05mwhichrepresents1%ofshareholders’funds.

Financial Report

Independent Auditor’s Report To the Members of The Monks Investment Trust PLC

38AnnualReport2021

An Overview of the Scope of Our Audit

Tailoring the scopeOurassessmentofauditrisk,ourevaluationofmaterialityandourallocationofperformancematerialitydetermineourauditscopefortheCompany.Thisenablesustoformanopiniononthefinancialstatements.Wetakeintoaccountsize,riskprofile,theorganisationoftheCompanyandeffectivenessofcontrols,includingcontrolsandchangesinthebusinessenvironmentwhenassessingthelevelofworktobeperformed.

Financial Report

RiskOur response to the risk

Key observations communicated to the Audit Committee

Incorrect valuation or ownership of the investment portfolio (asdescribedonpage32intheReportoftheAuditCommitteeandaspertheaccountingpolicysetoutonpage46).

Thevaluationoftheinvestmentportfolioat30April2021was£3,238.13m(2020–£2,088.83m)consistingofquotedequitieswithanaggregatevalueof£3,163.98m(2020–£2,067.84m),unquotedequitieswithanaggregatevalueof£68.99m(2020–£20.99m)andasuspendedinvestmentwithavalueof£5.16m(2020–£0m).

ThevaluationoftheassetsheldintheinvestmentportfolioisthekeydriveroftheCompany’snetassetvalueandtotalreturn.Incorrectinvestmentpricing,orafailuretomaintainproperlegaltitletotheinvestmentsheldbytheCompanycouldhaveasignificantimpactontheportfoliovaluationandthereturngeneratedforshareholders.

Thefairvalueofquotedinvestmentsisdeterminedbyreferencetobidvalueorthelasttradedpricedependingontheconventionoftheexchangeonwhichtheinvestmentisquoted.

UnquotedinvestmentsarevaluedatfairvaluebytheDirectorsfollowingadetailedreviewandappropriatechallengeofthevaluationsproposedbytheBaillieGiffordFairValuePricingGroup.TheunquotedinvestmentpolicyappliesmethodologiesconsistentwiththeInternationalPrivateEquityandVentureCapitalValuationguidelines(‘IPEV’).

Thevaluationoftheunquotedinvestments,andtheresultantimpactontheunrealisedgains/(losses),isthearearequiringthemostsignificantjudgementandestimationinthepreparationofthefinancialstatements.

We performed the following procedures:WeobtainedanunderstandingofBaillieGifford’sprocessesandcontrolssurroundinglegaltitleandpricingofquotedandunquotedsecuritiesbyperformingwalkthroughprocedures.

Forquotedinvestmentsintheportfolio,wecomparedthemarketpricesandexchangeratesappliedtoanindependentpricingvendorandrecalculatedtheinvestmentvaluationsasattheyear-end.

WeinspectedthestalepricingreportsproducedbyBaillieGiffordtoidentifypricesthathavenotchangedwithinonebusinessdayandverifiedwhetherthequotedpriceisavalidfairvalue.

Forasampleofunquotedinvestmentsheldasattheyear-endweutilisedourspecialistValuationsandBusinessModellingteamtoreviewandchallengethevaluations.Thisincluded:

— ReviewingthevaluationpaperspreparedbytheManagerforthefinalquarteroftheyear;

— AssessingwhetherthevaluationshavebeenperformedinlinewiththeIPEVguidelines;

— Assessingtheappropriatenessofthedatainputsandchallengingtheassumptionsusedtosupportthevaluations;

— Assessingotherfactsandcircumstances,suchasmarketmovementandcomparativeCompanyinformation,thathaveanimpactonthefairmarketvalueoftheinvestments;and

— DeterminingafairvaluerangeforthevaluationandassessingwhetherManagement’svaluationisreasonable.

Fortheremainingunquotedandsuspendedinvestments,weobtainedandassessedthevaluationpaperstosupportthevaluationoftheinvestmentsasat30April2021.

Werecalculatedtheunrealisedgains/lossesoninvestmentsasattheyear-endusingthebook-costreconciliation.

WecomparedtheCompany’sinvestmentholdingsat30April2021toindependentconfirmationsreceiveddirectlyfromtheCompany’sDepositaryorfromtheinvesteecompany.

The results of our procedures identified no material misstatements in relation to the incorrect valuation or ownership of the investment portfolio.

Key Audit Matters Keyauditmattersarethosemattersthat,inourprofessionaljudgement,wereofmostsignificanceinourauditofthefinancialstatementsofthecurrentperiodandincludethemostsignificantassessedrisksofmaterialmisstatement(whetherornotduetofraud)thatweidentified.Thesemattersincludedthosewhichhadthegreatesteffecton:theoverallauditstrategy,theallocationofresourcesintheaudit;anddirectingtheeffortsoftheengagementteam.Thesematterswereaddressedinthecontextofourauditofthefinancialstatementsasawhole,andinouropinionthereon,andwedonotprovideaseparateopiniononthesematters.


Financial Report

RiskOur response to the risk

Key observations communicated to the Audit Committee

Incomplete or inaccurate revenue recognition, including the classification of special dividends as revenue or capital in the Income Statement (pertheAuditCommitteereportsetoutonpage32andtheaccountingpolicysetoutonpage46).

Thetotalrevenuefortheyearto30April2021was£22.53m,consistingprimarilyofdividendincomefromquotedequityinvestments.

Thereisariskofincompleteorinaccuraterecognitionofrevenuethroughthefailuretorecogniseproperincomeentitlementsortoapplyanappropriateaccountingtreatment.

TheDirectorsmayberequiredtoexercisejudgementindeterminingwhetherincomereceivableintheformofspecialdividendsshouldbeclassifiedas‘revenue’or‘capital’intheIncomeStatement.

We performed the following procedures:WeobtainedanunderstandingofBaillieGifford’sprocessesandcontrolssurroundingrevenuerecognitionincludingtheclassificationofspecialdividendsbyperformingwalkthroughprocedures.

Forasampleofdividends,werecalculatedtheincomebymultiplyingtheinvestmentholdingsattheex-dividenddate,tracedfromtheaccountingrecords,bythedividendpershare,whichwasagreedtoanindependentdatavendor.Weagreedthissampletobankstatementsand,whereapplicable,wealsoagreedtheexchangeratestoanexternalsource.

Totestcompletenessofrecordedincome,wetestedthatdividendshadbeenrecordedforasampleofinvesteecompanieswithreferencetoinvesteecompanyannouncementsobtainedfromanindependentdatavendor.

Foralldividendsaccruedattheyearend,wereviewedtheinvesteecompanyannouncementstoassesswhetherthedividendobligationarosepriorto30April2021.Weagreedthedividendratetocorrespondingannouncementsmadebytheinvesteecompany,recalculatedthedividendamountreceivableandconfirmedthiswasconsistentwithcashreceivedasshownonpostyearendbankstatements,wherepaid.

WeperformedareviewoftheincomeandacquisitionanddisposalreportsproducedbyBaillieGiffordtoidentifyallspecialdividendsreceivedandaccruedduringtheperiod,aboveourtestingthreshold.TheCompanyrecognisedtwospecialdividendsaboveourtestingthreshold.Wehaveconfirmedthattheclassificationofrevenueforbothpaymentswasconsistentwiththeunderlyingmotivesandcircumstancesforthetwospecialdividends.

The results of our procedures identified no material misstatement in relation to incomplete or inaccurate revenue recognition, including incorrect classification of special dividends as revenue or capital in the Income Statement.

Intheprioryear,ourauditor’sreportincludedakeyauditmatterinrelationtotheimpactofCOVID-19.TheimpactofCOVID-19ongoingconcerncontinuedtoberelevanttoourauditoftheCompanyandweconsideredthisaspartofouroverallworkongoingconcernwhichissetoutunder‘Conclusionsrelatingtogoingconcern’.Theotherelementsoftheprioryearkeyauditmatterhavenotbeenincludedasaseparatekeyauditmatterasitwasdeterminedthattheydidnothaveasignificantimpactonourauditstrategyforthisyear’saudit.

Our Application of Materiality Weapplytheconceptofmaterialityinplanningandperformingtheaudit,inevaluatingtheeffectofidentifiedmisstatementsontheauditandinformingourauditopinion.

MaterialityThe magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.

WedeterminedmaterialityfortheCompanytobe£32.05m (2020–£19.64m),whichis1%(2020–1%)ofshareholders’funds.Webelievethatshareholders’fundsprovidesuswithmaterialityalignedtothekeymeasurementoftheCompany’sperformance.

Performance materialityThe application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

Onthebasisofourriskassessments,togetherwithourassessmentoftheCompany’soverallcontrolenvironment, ourjudgementwasthatperformancematerialitywas75% (2020–75%)ofourplanningmateriality,namely£24.04m (2020–£14.73m).

GiventheimportanceofthedistinctionbetweenrevenueandcapitalfortheCompany,wehavealsoappliedaseparatetestingthresholdfortherevenuecolumnoftheIncomeStatementof£1.60m(2020–£0.98m)whichissetasourreportingthreshold,calculatedas5%ofourplanningmateriality.

40AnnualReport2021

Reporting thresholdAn amount below which identified misstatements are considered as being clearly trivial.

WeagreedwiththeAuditCommitteethatwewouldreporttothemalluncorrectedauditdifferencesinexcessof£1.60m(2020–£0.98m),whichissetat5%ofplanningmateriality,aswellasdifferencesbelowthatthresholdthat,inourview,warrantedreportingonqualitativegrounds.

Weevaluateanyuncorrectedmisstatementsagainstboththequantitativemeasuresofmaterialitydiscussedaboveandinlightofotherrelevantqualitativeconsiderationsinformingouropinion

Other Information Theotherinformationcomprisestheinformationincludedintheannualreportotherthanthefinancialstatementsandourauditor’sreportthereon.TheDirectorsareresponsiblefortheotherinformationcontainedwithintheannualreport.

Ouropiniononthefinancialstatementsdoesnotcovertheotherinformationand,excepttotheextentotherwiseexplicitlystatedinthisreport,wedonotexpressanyformofassuranceconclusionthereon.

Ourresponsibilityistoreadtheotherinformationand,indoingso,considerwhethertheotherinformationismateriallyinconsistentwiththefinancialstatementsorourknowledgeobtainedinthecourseoftheauditorotherwiseappearstobemateriallymisstated.Ifweidentifysuchmaterialinconsistenciesorapparentmaterialmisstatements,wearerequiredtodeterminewhetherthereisamaterialmisstatementinthefinancialstatementsthemselves.If,basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementoftheotherinformation,wearerequiredtoreportthatfact.

Wehavenothingtoreportinthisregard.

Opinions on Other Matters Prescribed by the Companies Act 2006InouropinionthepartoftheDirectors’RemunerationReporttobeauditedhasbeenproperlypreparedinaccordancewiththeCompaniesAct2006.

Inouropinion,basedontheworkundertakeninthecourseoftheaudit:

— theinformationgivenintheStrategicReportandtheDirectors’Reportforthefinancialyearforwhichthefinancialstatementsarepreparedisconsistentwiththefinancialstatements;and

— theStrategicReportandDirectors’Reportshavebeenpreparedinaccordancewithapplicablelegalrequirements.

Matters on which we are Required to Report by ExceptionInthelightoftheknowledgeandunderstandingoftheCompanyanditsenvironmentobtainedinthecourseoftheaudit,wehavenotidentifiedmaterialmisstatementsintheStrategicReportorDirectors’Report.

WehavenothingtoreportinrespectofthefollowingmattersinrelationtowhichtheCompaniesAct2006requiresustoreporttoyouif,inouropinion:

— adequateaccountingrecordshavenotbeenkept,orreturnsadequateforouraudithavenotbeenreceivedfrombranchesnotvisitedbyus;or

— thefinancialstatementsandthepartoftheDirectors’RemunerationReporttobeauditedarenotinagreementwiththeaccountingrecordsandreturns;or

— certaindisclosuresofDirectors’remunerationspecifiedbylawarenotmade;or

— wehavenotreceivedalltheinformationandexplanationswerequireforouraudit.

Corporate Governance StatementTheListingRulesrequireustoreviewtheDirectors’statementinrelationtogoingconcern,longer-termviabilityandthatpartoftheCorporateGovernanceStatementrelatingtotheCompany’scompliancewiththeprovisionsoftheUKCorporateGovernanceCodespecifiedforourreview.

Basedontheworkundertakenaspartofouraudit,wehaveconcludedthateachofthefollowingelementsoftheCorporateGovernanceStatementismateriallyconsistentwiththefinancialstatementsorourknowledgeobtainedduringtheaudit:

— Directors’statementwithregardstotheappropriatenessofadoptingthegoingconcernbasisofaccountingandanymaterialuncertaintiesidentifiedsetoutonpage30;

— Directors’explanationastoitsassessmentoftheCompany’sprospects,theperiodthisassessmentcoversandwhytheperiodisappropriatesetoutonpage29;

— Directors’statementonfair,balancedandunderstandablesetoutonpage36;

— Board’sconfirmationthatithascarriedoutarobustassessmentoftheemergingandprincipalriskssetoutonpage21;

— Thesectionoftheannualreportthatdescribesthereviewofeffectivenessofriskmanagementandinternalcontrolsystemssetoutonpage30;and;

— ThesectiondescribingtheworkoftheAuditCommitteesetoutonpage32.

Responsibilities of Directors

AsexplainedmorefullyintheDirectors’ResponsibilitiesStatementsetoutonpage36,theDirectorsareresponsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview,andforsuchinternalcontrolastheDirectorsdetermineisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Inpreparingthefinancialstatements,theDirectorsareresponsibleforassessingtheCompany’sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccountingunlesstheDirectorseitherintendtoliquidatetheCompanyortoceaseoperations,orhavenorealisticalternativebuttodoso.

Financial Report


Financial Report

Auditor’s Responsibilities for the Audit of the Financial Statements Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditor’sreportthatincludesouropinion.Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewithISAs(UK)willalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.

Explanation as to What Extent the Audit was Considered Capable of Detecting Irregularities, Including Fraud Irregularities,includingfraud,areinstancesofnon-compliancewithlawsandregulations.Wedesignproceduresinlinewithourresponsibilities,outlinedabove,todetectirregularities,includingfraud.Theriskofnotdetectingamaterialmisstatementduetofraudishigherthantheriskofnotdetectingoneresultingfromerror,asfraudmayinvolvedeliberateconcealmentby,forexample,forgeryorintentionalmisrepresentations,orthroughcollusion.Theextenttowhichourproceduresarecapableofdetectingirregularities,includingfraudisdetailedbelow.

However,theprimaryresponsibilityforthepreventionanddetectionoffraudrestswithboththosechargedwithgovernanceoftheCompanyandmanagement.

— WeobtainedanunderstandingofthelegalandregulatoryframeworksthatareapplicabletotheCompanyanddeterminedthatthemostsignificantareUnitedKingdomGenerallyAcceptedAccountingPractice,theCompaniesAct2006,theAssociationofInvestmentCompaniesCodeofCorporateGovernance,TheAssociationofInvestmentCompaniesStatementofRecommendedPractice,theListingRules,theUKCorporateGovernanceCode,Section1158oftheCorporationTaxAct2010andTheCompanies(MiscellaneousReporting)Regulations2018.

— WeunderstoodhowtheCompanyiscomplyingwiththoseframeworksthroughdiscussionswiththeAuditCommitteeandCompanySecretaryandreviewofBoardminutesandtheCompany’sdocumentedpoliciesandprocedures

— WeassessedthesusceptibilityoftheCompany’sfinancialstatementstomaterialmisstatement,includinghowfraudmightoccurbyconsideringthekeyrisksimpactingthefinancialstatements.Weidentifiedfraudriskswithrespect totheincorrectvaluationandtheresultingimpactontheunrealisedgains/(losses)oftheunquotedinvestmentsandincompleteorinaccuraterevenuerecognitionthroughincorrectclassificationofspecialdividendsasrevenueorcapital.Furtherdiscussionofourapproachissetoutinthesectiononkeyauditmattersabove.

— Basedonthisunderstandingwedesignedourauditprocedurestoidentifynon-compliancewithsuchlawsandregulations.OurproceduresinvolvedreviewofthereportingtotheDirectorswithrespecttotheapplicationofthedocumentedpoliciesandproceduresandreviewofthefinancialstatementstoensurecompliancewiththereportingrequirementsoftheCompany.

AfurtherdescriptionofourresponsibilitiesfortheauditofthefinancialstatementsislocatedontheFinancialReportingCouncil’swebsiteathttps://www.frc.org.uk/auditorsresponsibilities. Thisdescriptionformspartofourauditor’sreport.

Other matters we are required to address — FollowingtherecommendationfromtheAuditCommittee,we

wereappointedbytheCompanyatitsAnnualGeneralMeetingon2August2017toauditthefinancialstatementsfortheyearending30April2018andsubsequentfinancialperiods.

— Theperiodoftotaluninterruptedengagementincludingpreviousrenewalsandreappointmentsisfouryears,coveringtheyearsending30April2018to30April2021.

— Thenon-auditservicesprohibitedbytheFRC’sEthicalStandardwerenotprovidedtotheCompanyandweremainindependentoftheCompanyinconductingtheaudit.

— TheauditopinionisconsistentwiththeadditionalreporttotheAuditCommittee.

Use of our reportThisreportismadesolelytotheCompany’smembers,asabody,inaccordancewithChapter3ofPart16oftheCompaniesAct2006.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.

CarolineMercer(Seniorstatutoryauditor)forandonbehalfofErnst&YoungLLP,StatutoryAuditor Edinburgh17June2021

42AnnualReport2021

Income Statement

For the year ended 30 April

Notes

2021Revenue

£’000

2021Capital

£’000

2021Total£’000

2020Revenue

£’000

2020Capital

£’000

2020Total£’000

Gainsoninvestments 9 – 1,069,700 1,069,700 – 50,247 50,247

Currencygains/(losses) 14 – 1,916 1,916 – (1,277) (1,277)

Income 2 22,529 – 22,529 26,691 – 26,691

Investmentmanagementfee 3 (10,011) – (10,011) (7,644) – (7,644)

Otheradministrativeexpenses 4 (1,656) – (1,656) (1,677) – (1,677)

Net return before finance costs and taxation 10,862 1,071,616 1,082,478 17,370 48,970 66,340

Financecostsofborrowings 5 (5,027) – (5,027) (6,046) – (6,046)

Net return on ordinary activities before taxation 5,835 1,071,616 1,077,451 11,324 48,970 60,294

Taxonordinaryactivities 6 1,966 (958) 1,008 (2,005) – (2,005)

Net return on ordinary activities after taxation 7,801 1,070,658 1,078,459 9,319 48,970 58,289

Net return per ordinary share 7 3.42p 469.83p 473.25p 4.24p 22.26p 26.50p

Note: Dividendspersharepaidandpayableinrespectoftheyear 8 2.00p 2.50p

ThetotalcolumnofthisStatementrepresentstheprofitandlossaccountoftheCompany.ThesupplementaryrevenueandcapitalcolumnsarepreparedunderguidanceissuedbytheAssociationofInvestmentCompanies.AllrevenueandcapitalitemsinthisStatementderivefromcontinuingoperations.AStatementofComprehensiveIncomeisnotrequiredastheCompanydoesnothaveanyothercomprehensiveincomeandthenetreturnonordinaryactivitiesaftertaxationisboththeprofitandtotalcomprehensiveincomefortheyear.Theaccompanyingnotesonpages46to56areanintegralpartoftheFinancialStatements.

Financial Report


Balance Sheet

Theaccompanyingnotesonpages46to56areanintegralpartoftheFinancialStatements.* AlternativePerformanceMeasure–seeGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65.

As at 30 April

Notes2021£’000

2021£’000

2020£’000

2020£’000

Fixed assets

Investmentsheldatfairvaluethroughprofitorloss 9 3,238,130 2,088,827

Current assets

Debtors 10 3,936 7,566

Cashandcashequivalents 19 108,723 19,537

112,659 27,103

Creditors

Amountsfallingduewithinoneyear 11 (5,063) (112,398)

Net current assets/(liabilities) 107,596 (85,295)

Total assets less current liabilities 3,345,726 2,003,532

Creditors and Provisions

Amountsfallingdueaftermorethanoneyear:

Debenturestock 12 (39,940) (39,908)

Loannotes 12 (99,848) –

Provisionfortaxliability 12 (958) –

(140,746) (39,908)

3,204,980 1,963,624

Capital and reserves

Sharecapital 13 11,823 11,178

Sharepremiumaccount 14 262,183 94,328

Capitalredemptionreserve 14 8,700 8,700

Capitalreserve 14 2,859,214 1,788,556

Revenue reserve 14 63,060 60,862

Shareholders’ funds 15 3,204,980 1,963,624

Shareholders’ funds per ordinary share 15 1,355.4p 878.4p

(borrowingsatbookvalue)

Net asset value per ordinary share* 1,355.3p 878.3p

(borrowingsatpar)

Net asset value per ordinary share* 1,358.1p 875.6p

(borrowingsatfairvalue)

TheFinancialStatementsofTheMonksInvestmentTrustPLC(Companyregistrationnumber236964)onpages42to56wereapprovedandauthorisedforissuebytheBoardandweresignedon17June2021.

KSSternbergChairman

Financial Report

44AnnualReport2021

Statement of Changes in Equity

For the year ended 30 April 2021

Notes

Sharecapital

£’000

Share premium account

£’000

Capitalredemption

reserve£’000

Capitalreserve

£’000

Revenuereserve

£’000

Shareholders’funds£’000

Shareholders’fundsat1May2020 11,178 94,328 8,700 1,788,556 60,862 1,963,624

Netreturnonordinaryactivitiesaftertaxation – – – 1,070,658 7,801 1,078,459

Ordinarysharesissued 13 645 167,855 – – – 168,500

Dividendspaidduringtheyear 8 – – – – (5,603) (5,603)

Shareholders’ funds at 30 April 2021 11,823 262,183 8,700 2,859,214 63,060 3,204,980

Theaccompanyingnotesonpages46to56areanintegralpartoftheFinancialStatements.

For the year ended 30 April 2020

Notes

Sharecapital

£’000


£’000

Capitalredemption

reserve£’000

Capitalreserve

£’000

Revenuereserve

£’000


Shareholders’fundsat1May2019 10,930 48,007 8,700 1,739,586 55,592 1,862,815

Netreturnonordinaryactivitiesaftertaxation – – – 48,970 9,319 58,289

Ordinarysharesissued 13 248 46,321 – – – 46,569

Dividendspaidduringtheyear 8 – – – – (4,049) (4,049)

Shareholders’ funds at 30 April 2020 11,178 94,328 8,700 1,788,556 60,862 1,963,624

Financial Report


Theaccompanyingnotesonpages46to56areanintegralpartoftheFinancialStatements.

Cash Flow Statement

For the year ended 30 April

Notes2021£’000

2021 £’000

2020£’000

2020£’000

Cash flows from operating activities

Netreturnonordinaryactivitiesbeforetaxation 1,077,451 60,294

Netgainsoninvestments (1,069,700) (50,247)

Currency(gains)/losses (1,916) 1,277

Financecostsofborrowings 5,027 6,046

Overseastaxincurred (1,718) (1,997)

Corporationtaxrefund 3,664 –

Changesindebtorsandcreditors 1,650 (148)

Cash from operations* 14,458 15,225

Interestpaid (4,547) (6,154)

Net cash inflow from operating activities 9,911 9,071

Cash flows from investing activities

Acquisitionsofinvestments (573,161) (353,934)

Disposalsofinvestments 490,209 293,267

Net cash outflow from investing activities (82,952) (60,667)

Cash flows from financing activities

Equitydividendspaid 8 (5,603) (4,049)

Ordinarysharesissued 169,924 45,973

Privateplacementdebtnotesissued 99,844 –

Borrowingsrepaid (99,596) –

Borrowingsdrawndown – 1,065

Net cash inflow from financing activities 164,569 42,989

Increase/(decrease) in cash and cash equivalents 91,528 (8,607)

Exchangemovements (2,342) 2,225

Cashandcashequivalentsat1May 19,537 25,919

Cash and cash equivalents at 30 April 108,723 19,537

* Cashfromoperationsincludesdividendsreceivedof£22,668,000(2020–£26,536,000)andinterestreceivedof£365,000(2020–£306,000).

Financial Report

46AnnualReport2021

TheMonksInvestmentTrustPLC(‘theCompany’)isapubliccompanylimitedbysharesandisincorporatedinEnglandand Wales.TheCompanyisaninvestmentcompanywithinthemeaningofsection833oftheCompaniesAct2006andcarriesonbusinessasaninvestmenttrust.

1 Principal Accounting Policies TheFinancialStatementsfortheyearto30April2021havebeenpreparedinaccordancewithFRS102‘TheFinancialReportingStandardapplicableintheUKandRepublicofIreland’onthebasis oftheaccountingpoliciessetoutbelowwhichareunchangedfrom theprioryearandhavebeenappliedconsistently.

(a) Basis of Accounting AlloftheCompany’soperationsareofacontinuingnatureandthe

FinancialStatementsarepreparedonagoingconcernbasisunderthehistoricalcostconvention,modifiedtoincludetherevaluationoffixedassetinvestmentsatfairvaluethroughprofitorloss,andontheassumptionthatapprovalasaninvestmenttrustundersection1158oftheCorporationTaxAct2010andtheInvestmentTrust(ApprovedCompany)(Tax)Regulations2011willberetained.TheBoardhas,inparticular,consideredtheimpactofmarketvolatilityduringtheCovid-19pandemicbutdoesnotbelievetheCompany’sgoingconcernstatusisaffected.TheCompany’sassets,themajorityofwhichareinvestmentsinquotedsecuritieswhicharereadilyrealisable,exceeditsliabilitiessignificantly.AllborrowingsrequirethepriorapprovaloftheBoard.GearinglevelsandcompliancewithborrowingcovenantsarereviewedbytheBoardonaregularbasis.TheCompanyhascontinuedtocomplywiththeinvestmenttruststatusrequirementsofsection1158oftheCorporationTaxAct2010andtheInvestmentTrust(ApprovedCompany)Regulations2011.TheCompany’sprimarythirdpartysuppliers,includingitsManagersandSecretaries,CustodianandDepositary,Registrar,AuditorandBroker,arenotexperiencingsignificantoperationaldifficultiesaffectingtheirrespectiveservicestotheCompany.Accordingly,theFinancialStatementshavebeenpreparedonthegoingconcernbasisasitistheDirectors’opinion,havingassessedtheprincipalandemergingrisksandothermattersincludingtheimpactoftheCovid-19pandemicsetoutintheViabilityStatementonpage22,whichassessestheprospectsoftheCompanyoveraperiodofthreeyears,thattheCompanywillcontinueinoperationalexistencefortheperiodto31July2022.

TheFinancialStatementshavebeenpreparedinaccordancewiththeCompaniesAct2006,applicableUnitedKingdomAccountingStandardsandwiththeStatementofRecommendedPractice‘FinancialStatementsofInvestmentTrustCompaniesandVentureCapitalTrusts’issuedbytheAssociationofInvestmentCompanies(AIC)inOctober2019.

InordertoreflectbettertheactivitiesoftheCompanyandinaccordancewithguidanceissuedbytheAIC,supplementaryinformationwhichanalysestheprofitandlossaccountbetweenitemsofarevenueandcapitalnaturehasbeenpresentedintheIncomeStatement.

TheDirectorsconsidertheCompany’sfunctionalcurrencyto besterlingastheCompany’sshareholdersarepredominantlybasedintheUK,theCompanyissubjecttotheUK’sregulatoryenvironmentanditisthecurrencyinwhichitsdividendsandexpensesaregenerallypaid.

(b) Financial Instruments Financialassetsandfinancialliabilitiesarerecognisedinthe

Company’sBalanceSheetwhenitbecomesapartytothecontractualprovisionsoftheinstrument.

(c) Accounting Estimates, Assumptions and Judgements ThepreparationoftheFinancialStatementsrequirestheuse

ofestimates,assumptionsandjudgements.Theseestimates,assumptionsandjudgementsaffectthereportedamountsofassetsandliabilities,atthereportingdate.Whileestimatesarebasedonbestjudgementusinginformationandfinancialdataavailable,theactualoutcomemaydifferfromtheseestimates.Thekeysourcesofestimationanduncertaintyrelatetotheassumptionsusedinthedeterminationofthefairvalueoftheunlistedandsuspendedinvestments,whicharedetailedinnote9onpages49and50.

(d) Investments TheCompany’sinvestmentsareclassified,recognisedand

measuredatfairvaluethroughprofitandlossinaccordancewithsections11and12ofFRS102.Investmentpurchasesandsalesarerecognisedonatradedatebasis.Investmentsareinitiallymeasuredatfairvalue,whichistakentobetheircostexcludingexpensesincidentaltopurchaseswhichareexpensedtocapitalonacquisition.Gainsandlossesoninvestments,includingthosearisingfromforeigncurrencyexchangedifferencesandexpensesincidentaltothepurchaseandsaleofinvestments,arerecognisedintheIncomeStatementascapitalitems.

Thefairvalueoflistedinvestmentsiseitherthebidpriceorthelasttradedpricedependingontheconventionoftheexchange onwhichtheinvestmentislisted.Thefairvalueofsuspendedinvestmentsisthelasttradedprice,adjustedfortheestimatedimpactonthebusinessofthesuspension.

UnlistedinvestmentsarevaluedatfairvaluefollowingadetailedreviewandappropriatechallengeofthevaluationsproposedbytheManagers.TheManagers’unlisted(privatecompany)investmentpolicyappliesmethodologiesconsistentwiththeInternationalPrivateEquityandVentureCapitalValuationguidelines(‘IPEV’).Thesemethodologiescanbecategorisedasfollows:(a)marketapproach(multiples,industryvaluationbenchmarksandavailablemarketprices);(b)incomeapproach(discountedcashflows);and(c)replacementcostapproach(netassets).Thevaluationprocessrecognisesalso,asstatedintheIPEVGuidelines,thatthepriceofarecentinvestmentmaybeanappropriatestartingpointforestimatingfairvalue,howeveritshouldbeevaluatedusingthetechniquesdescribedabove.

(e) Cash and Cash Equivalents Cashequivalentscompriseshort-termhighlyliquidinvestments

thatarereadilyconvertibletoknownamountsofcashandaresubjecttoaninsignificantriskofchangesinvalue.

(f) Income (i) Incomefromequityinvestmentsisbroughtintoaccounton

thedateonwhichtheinvestmentsarequotedex-dividendor,wherenoex-dividenddateisquoted,whentheCompany’srighttoreceivepaymentisestablished.EquityinvestmentincomeincludesdistributionsfromCollectiveInvestmentSchemes,otherthanthosethatrelatetoequalisationwhicharetreatedascapitalitems.Specialdividendsaretreatedasrevenueorcapitalitemsdependingonthefactsofeachparticularcase.

Ifscripistakeninlieuofdividendsincash,thenetamount ofthecashdividenddeclarediscreditedtotherevenueaccount.Anyexcessinthevalueofthesharesreceivedovertheamountofthecashdividendforegoneisrecognisedascapital.

(ii) Interestfromfixedinterestsecuritiesisrecognisedonaneffectiveyieldbasis.

(iii) Unfrankedinvestmentincomeandoverseasdividends includethetaxesdeductedatsource.

(iv) Interestreceivableondepositsisrecognisedonanaccrualsbasis.

Notes to the Financial Statements

Financial Report


2 Income

2021£’000

2020£’000

Income from investments

UKdividends 4,785 4,121

Overseasdividends 17,379 22,264

Other Income 22,164 26,385

DepositInterest 365 306

Total Income 22,529 26,691

Total income comprises:

Dividendsfromfinancialassetsdesignatedatfairvaluethroughprofitorloss 22,164 26,385

Interestfromfinancialassetsnotatfairvaluethroughprofitorloss 365 306

22,529 26,691

3 Investment Management Fee

2021£’000

2020£’000

Investmentmanagementfee 10,011 7,644

DetailsoftheInvestmentManagementAgreementaredisclosedonpage25.TheannualmanagementfeepayabletoBaillieGifford&CoLimitedis0.45%onthefirst£750millionoftotalassets,0.33%onthenext£1billionoftotalassetsand0.30%ontheremainingtotalassets.Forfeepurposes,totalassetsisdefinedasthetotalvalueofallassetsheldlessallliabilities(otherthananyliabilityintheformofdebtintendedforinvestmentpurposes)andexcludesthevalueoftheCompany’sholdingsinTheSchiehallionFund,aclosed-endedinvestmentcompanymanagedbyBaillieGifford&Co.TheCompanydoesnotcurrentlyholdanyothercollectiveinvestmentvehiclesmanagedbyBaillieGifford&Co.WheretheCompanyholdsinvestmentsinopen-endedcollectiveinvestmentvehiclesmanagedbyBaillieGifford,suchasOEICs,Monks’shareofanyfeeschargedwithinthatvehiclewillberebatedtotheCompany.Alldebtdrawndownduringtheperiodsunderreviewisintendedforinvestmentpurposes.

(g) Expenses Allexpensesareaccountedforonanaccrualsbasisandare

chargedtotherevenueaccountexceptwhere:(i)theyrelatetoexpensesincidentaltothepurchaseorsaleofinvestments(transactioncosts)whicharechargedtocapital.Transactioncostsaredetailedinnote9onpage50;or(ii)theyrelatedirectlytothebuy-back/issuanceofshares,inwhichcasetheyareaddedtothebuy-backcostordeductedfromtheshareissuanceproceeds.

(h) Borrowings and Finance Costs Borrowings,whichcompriseinterestbearingbankloans,loan

notesanddebenturesarerecognisedinitiallyatthefairvalueoftheconsiderationreceived,netofanyissueexpenses,andsubsequentlyatamortisedcostusingtheeffectiveinterestratemethod.Thefinancecostsofsuchborrowingsareaccounted foronanaccrualsbasisusingtheeffectiveinterestratemethodandareallocatedtorevenueintheIncomeStatement.

(i) Taxation Thetaxationchargerepresentsthesumofcurrenttaxandthe

movementintheprovisionfordeferredtaxationduringtheyear.Currenttaxationrepresentsnon-recoverableoverseastaxeswhichischargedtotherevenueaccountswhereitrelatestoincomereceivedandtocapitalwhereitrelatestoitemsofacapitalnature.DeferredtaxationisprovidedonalltimingdifferenceswhichhaveoriginatedbutnotreversedbytheBalanceSheetdate,calculatedonanon-discountedbasisatthetaxratesexpectedtoapplywhenthetimingdifferencesreverse,basedonwhathasbeenenactedorsubstantivelyenacted,relevanttothebenefitorliability.Deferredtaxassetsarerecognisedonlytotheextentthatitismorelikelythannotthattherewillbetaxableprofitsfromwhichunderlyingtimingdifferencescanbededucted.

(j) Dividend Distributions Whererelevant,interimdividendsarerecognisedintheperiodin

whichtheyarepaid.FinaldividendsarerecognisedintheperiodinwhichthedividendsareapprovedbytheCompany’sshareholders.

(k) Foreign Currencies Transactionsinvolvingforeigncurrenciesareconvertedattherate

rulingatthetimeofthetransaction.Monetaryassetsandliabilitiesandfixedassetinvestmentinforeigncurrenciesaretranslated attheclosingratesofexchangeattheBalanceSheetdate. AnygainorlossarisingfromachangeinexchangeratesubsequenttothedateofthetransactionisincludedasanexchangegainorlossintheIncomeStatementascapitalorrevenueasappropriate.

(l) Capital Reserve Gainsandlossesonrealisationofinvestments,changesinthe

fairvalueofinvestmentsheldandexchangedifferencesofacapitalnaturearedealtwithinthisreserve.PurchasesoftheCompany’sownsharesforcancellationarealsofundedfrom thisreserve.Thenominalvalueofsuchsharesistransferred fromsharecapitaltothecapitalredemptionreserve.

(m) Single Segment Reporting TheCompanyisengagedinasinglesegmentofbusiness,

beingthatofaninvestmenttrustcompany,consequently nobusinesssegmentalanalysisisprovided.

Financial Report

48AnnualReport2021

4 Other Administrative Expenses

2021£’000

2020£’000

Generaladministrativeexpenses 1,407 1,438

Directors’fees(seeDirectors’RemunerationReportonpage34) 206 203

Auditor’sremuneration–statutoryauditofannualFinancialStatements 42 35

Auditor’snon-auditremuneration–non-auditservices(seepage32) 1 1

1,656 1,677

5 Finance Costs of Borrowings

2021£’000

2020£’000

Bankloans 1,113 3,463

Debenturestocks 2,583 2,583

Loannotes 1,331 –

5,027 6,046

6 Tax on Ordinary Activities

2021Revenue

£’000

2021Capital

£’000

2021Total£’000

2020Revenue

£’000

2020Capital

£’000

2020Total£’000

Overseastaxation 1,698 – 1,698 2,005 – 2,005

UKcorporationtaxrefunded (3,664) – (3,664) – – –

Provisionfortaxliabilityinrespect ofIndiancapitalgainstax – 958 958 – – –

(1,966) 958 (1,008) 2,005 – 2,005

2021£’000

2020£’000

Thetaxchargefortheyearislower(2020–lower)thanthestandardrateofcorporationtax intheUKof19%(2020–19%).Thedifferencesareexplainedbelow:

Netreturnbeforetaxation 1,077,451 60,294

Netreturnbeforetaxationmultipliedbytheaveragestandardrateofcorporationtax intheUKof19%(2020–19%) 204,716 11,456

Capitalreturnsnottaxable (203,607) (9,304)

Incomenottaxable (3,927) (4,629)

Taxableexpensesintheyearnotutilised 2,818 2,477

Overseastax 1,698 2,005

Corporationtaxrefundinrespectofprioryears (3,664) –

Revenuetaxchargefortheyear (1,966) 2,005

ProvisionfortaxliabilityinrespectofIndiancapitalgainstax 958 –

Totaltaxchargefortheyear (1,008) 2,005

Asaninvestmenttrust,theCompany’scapitalreturnsarenottaxable.

Therevenuetaxchargefortheperiodincludes£3,664,000UKcorporationtaxrepaidinrespectoftheCompany’sfinancialyearsto2008,2009and2010,followingsuccessfullegalactionregardingthetaxtreatmentofoverseasdividendincome.Thisamounthadnotpreviouslybeenprovidedfor,asrecoverywasnotconsideredsufficientlyprobable.Ithasthereforebeenrecognisedonreceipt.Asitexceedstheoverseaswithholdingtaxsufferedintheperiod,thishasresultedinapositiverevenuetaxcharge.

Interestonthecorporationtaxrepaymentisincludedwithininterestincome.

ThecapitaltaxchargeresultsfromtheprovisionfortaxliabilityinrespectofIndiancapitalgainstaxasdetailedinnote12.

Financial Report


6 Tax on Ordinary Activities (continued) Factors that may affect future tax charges

At30April2021theCompanyhadapotentialdeferredtaxassetof£5,946,000(2020–£17,350,000)inrespectoftaxablelosseswhich areavailabletobecarriedforwardandoffsetagainstfuturetaxableprofits.Adeferredtaxassethasnotbeenprovidedontheselossesas itisconsideredunlikelythattheCompanywillmakesuitabletaxablerevenueprofitsinexcessofdeductibleexpensesinfutureperiods. Thepotentialdeferredtaxassethasbeencalculatedusingacorporationtaxrateof19%(2020–19%).TheUKGovernmentannouncedon3March2021itsintentiontoincreasetheUKrateofcorporationtaxto25%from19%from1April2023.Asthisratewasnotsubstantivelyenactedattheyearend,theunrecogniseddeferredtaxhasbeencalculatedbasedontheprevailingrateof19%.DuetotheCompany’sstatusasaninvestmenttrust,andtheintentiontocontinuemeetingtheconditionsrequiredintheforeseeablefuture,theCompanyhasnotprovidedfordeferredUKtaxonanycapitalgainsandlossesarisingontherevaluationordisposalofinvestments.

7 Net Return per Ordinary Share

2021Revenue

2021Capital

2021Total

2020Revenue

2020Capital

2020Total

Netreturnperordinaryshare 3.42p 469.83p 473.25p 4.24p 22.26p 26.50p

Revenuereturnperordinaryshareisbasedonthenetrevenuereturnonordinaryactivitiesaftertaxationof£7,801,000(2020–£9,319,000)andon227,881,626(2020–219,986,605)ordinarysharesof5p,beingtheweightedaveragenumberofordinarysharesinissueduring theyear.

Capitalreturnperordinaryshareisbasedonthenetcapitalgainforthefinancialyearof£1,070,658,000(2020–gainof£48,970,000)andon227,881,626(2020–219,986,605)ordinaryshares,beingtheweightedaveragenumberofordinarysharesinissueduringtheyear.

Therearenodilutiveorpotentiallydilutivesharesinissue.

8 Ordinary Dividends

2021 2020 2021£’000

2020£’000

Amounts recognised as distributions in the year:

Previousyear’sfinal(paid4September2020) 2.50p 1.85p 5,603 4,049

Wealsosetoutbelowthetotaldividendspaidandproposedinrespectofthefinancialyear,whichisthebasisonwhichtherequirements ofsection1158oftheCorporationTaxAct2010areconsidered.Therevenueavailablefordistributionbywayofdividendfortheyearis£7,801,000(2020–£9,319,000).

2021 2020 2021£’000

2020£’000

Amounts paid and payable in respect of the financial year:

Proposedfinal(payable7September2021) 2.00p 2.50p 4,729 5,603

9 InvestmentsInvestmentsinsecuritiesarefinancialassetsheldatfairvaluethroughprofitorloss.InaccordancewithFinancialReportingStandard102, thetablesbelowprovideananalysisoftheseinvestmentsbasedonthefairvaluehierarchydescribedonpage50,whichreflectsthereliabilityandsignificanceoftheinformationusedtomeasuretheirfairvalue.Duringtheyear,theCompanyacquiredfurthersharesinaninfrequentlytradedlistedequityinvestmentclassifiedasLevel2,atabookcostof£50,830,000.Inaddition,alistedequityinvestmentwithafairvalueatthepreviousyearendof£11,184,000wastransferredfromLevel1toLevel2whenitssharesweresuspendedandawrite-downfromthelasttradedpricewasapplied,toreflectthereputationalimpactofthesuspensionontheunderlyingbusiness.

As at 30 April 2021Level 1

£’000Level 2

£’000Level 3

£’000Total£’000

Listedequities 3,039,527 129,609 – 3,169,136

Unlistedequities – – 68,994 68,994

Totalfinancialassetinvestments 3,039,527 129,609 68,994 3,238,130

As at 30 April 2020Level 1

£’000Level 2

£’000Level 3

£’000Total£’000

Listedequities 2,019,786 48,052 – 2,067,838

Unlistedequities – – 20,989 20,989

Totalfinancialassetinvestments 2,019,786 48,052 20,989 2,088,827

Financial Report

50AnnualReport2021

9 Investments (continued) Fair Value Hierarchy Thefairvaluehierarchyusedtoanalysethebasisonwhichthefairvaluesoffinancialinstrumentsheldatfairvaluethroughtheprofitandloss

accountaremeasuredisdescribedbelow.Fairvaluemeasurementsarecategorisedonthebasisofthelowestlevelinputthatissignificanttothefairvaluemeasurement.

Level 1–usingunadjustedquotedpricesforidenticalinstrumentsinanactivemarket;

Level 2–usinginputs,otherthanquotedpricesincludedwithinLevel1,thataredirectlyorindirectlyobservable(basedonmarketdata);and

Level 3–usinginputsthatareunobservable(forwhichmarketdataisunavailable).

TheCompany’sunlistedinvestmentsat30April2021werevaluedusingavarietyoftechniques.Theseincludeusingcomparablecompanymultiples,netassetvalues,assessmentofcomparablecompanyperformanceandassessmentofmilestoneachievementattheinvesteecompanies.Thedeterminationsoffairvalueincludedassumptionsthatthetradingmultiplesandcomparablecompanieschosenfor themultiplesapproachprovideareasonablebasisforthedeterminationoffairvalue.Valuationsarecross-checkedforreasonablenesstoalternativemultiples-basedapproachesorbenchmarkindexmovementsasappropriate.Insomecasesthelatestdealingpriceisconsideredtobethemostappropriatevaluationbasis,butonlyfollowingassessmentusingthetechniquesdescribedabove.

2021£’000

2020£’000

Costofinvestmentsatstartofyear 1,445,130 1,326,374

Investmentholdinggainsatstartofyear 643,697 653,406

Valueofinvestmentsatstartofyear 2,088,827 1,979,780

Movementsinyear:

Purchasesatcost 568,212 351,191

Salesproceedsreceived (488,609) (292,391)

Gainsoninvestments 1,069,700 50,247

Valueofinvestmentsatendofyear 3,238,130 2,088,827

Costofinvestmentsatendofyear 1,739,132 1,445,130

Investmentholdinggainsatendofyear 1,498,998 643,697

Valueofinvestmentsatendofyear 3,238,130 2,088,827

Thepurchasesandsalesproceedsfiguresaboveincludetransactioncostsof£714,000(2020–£338,000)and£192,000(2020–£145,000)respectively.TheCompanyreceived£488,609,000(2020–£292,391,000)frominvestmentssoldduringtheyear.Thebookcostoftheseinvestmentswhentheywerepurchasedwas£274,210,000(2020–£232,435,000).Theseinvestmentshavebeenrevaluedovertimeand,untiltheyweresold,anyunrealisedgains/losseswereincludedinthefairvalueoftheinvestments.Oftherealisedgainsonsalesofinvestmentsduringtheyearof£214,399,000(2020–£59,956,000),anetgainof£117,824,000(2020–gainof£72,420,000)wasincludedininvestmentholdinggainsatthepreviousyearend.

2021£’000

2020£’000

Gains on investments:

Realisedgainsonsales 214,399 59,956

Changesininvestmentholdinggains 855,301 (9,709)

1,069,700 50,247

Significant Holdings Disclosure Requirements - Companies Act 2006 ThefollowingisprovidedinaccordancewiththedisclosurerequirementsoftheCompaniesAct2006inrelationtoinvestmentswhich

amountto20%ormoreofthenominalvalueofanyclassofsharesinanundertaking.

DuringtheyeartheCompanyhadaholdinginclassAsharesofSilkInvestPrivateEquityFundS.A.SICAR,compartment‘SilkInvestAfricaFoodFund’whichisincorporatedinLuxembourg.At30AprilMonksholdingwas:

2021Shares

held

2021Value£’000

2021% of Shares

held

2020Shares

held

2020Value£’000

2020% of Shares

held

SilkInvestAfricaFoodFund 10,000 6,065 42.6 10,000 3,037 46.3

Financial Report


10 Debtors

2021£’000

2020£’000

Amounts falling due within one year:

Accruedincome 2,719 3,204

Investmentsalesawaitingsettlement – 1,600

Shareissuanceproceedsawaitingsettlement 60 1,484

Overseastaxationrecoverable 1,032 1,155

Otherdebtorsandprepaidexpenses 125 123

3,936 7,566

Noneoftheabovedebtorsarefinancialassetsheldatfairvaluethroughprofitorloss.Thecarryingamountofdebtorsisareasonableapproximationoffairvalue.

11 Creditors – Amounts falling due within one year

2021£’000

2020£’000

NationalAustraliaBankLimitedloan – 98,854

Scotiabank(Ireland)loan – 5,000

Investmentpurchasesawaitingsettlement 941 5,890

Corporationtax 45 45

Othercreditorsandaccruals 4,077 2,609

5,063 112,398

Noneoftheabovecreditorsarefinancialliabilitiesheldatfairvaluethroughprofitorloss.Includedinothercreditorsis£2,771,000(2020–£1,901,000)inrespectoftheinvestmentmanagementfee.

Borrowing facilitiesAt30April2021theCompanyhada1year£100millionunsecuredfloatingraterevolvingfacilitywithNationalAustraliaBankLimited,whichexpireson30November2021anda4year£5millionunsecuredfloatingraterevolvingfacilitywithScotiabank(Ireland),withtheabilitytoincreaseitto£50million,whichexpireson13March2022.

At30April2021drawingswereasfollows:

— NationalAustraliaBankLimited:nil(2020–US$124.7millionataninterestrateof2.309%).

—Scotiabank(Ireland):nil(2020–£5millionataninterestrateof1.72775%).

Themaincovenantsrelatingtotheaboveloansarethattotalborrowingsshallnotexceed30%oftheCompany’sadjustednetassetvalueandtheCompany’sminimumadjustednetassetvalueshallbe£650million.

Therewerenobreachesofloancovenantsduringtheyear.

12 Creditors and Provisions – Amounts falling due after more than one year

Repayment date

Nominal rate

Effectiverate

2021£’000

2020£’000

£40million63/8%debenturestock2023 1/3/2023 6.375% 6.5% 39,940 39,908

£60million1.86%SeriesAnotes2054 7/8/2054 1.86% 1.86% 59,898 –

£40million1.77%SeriesBnotes2045 7/8/2045 1.77% 1.77% 39,950 –

139,788 39,908

ProvisionfortaxliabilityinrespectofIndiancapitalgainstax 958 –

140,746 39,908

Debenture stock Thedebenturestockisstatedatamortisedcost(seenote1(h)onpage47);thecumulativeeffectistodecreasethecarryingamount ofborrowingsby£60,000(2020–£92,000).ThedebenturestockissecuredbyafloatingchargeovertheassetsoftheCompany. UnderthetermsoftheDebentureAgreement,totalborrowingsshouldnotexceednetassetsandtheCompanycannotundertake sharebuy-backsifthiswouldresultintotalborrowingsexceeding66.67%.

Financial Report

52AnnualReport2021

12 Creditors and Provisions – Amounts falling due after more than one year (continued) Unsecured Loan Notes

DuringtheyeartheCompanyissuedthefollowingprivateplacementunsecuredloannotes:

— £60millionatacouponof1.86%maturingon7August2054

— £40millionatacouponof1.77%maturingon7August2045

Theunsecuredloannotesarestatedatthecumulativeamountofnetproceedsafterissue.Thecumulativeeffectistoreducethecarryingamountofborrowingsby£152,000.

Provision for Tax LiabilityThetaxliabilityprovisionat30April2021of£958,000(30April2020-nil)relatestoapotentialliabilityforIndiancapitalgainstaxthatmayariseontheCompany’sIndianinvestmentsshouldtheybesoldinthefuture,basedonthenetunrealisedtaxablecapitalgainsattheperiodendandonenactedIndiantaxrates.Theamountofanyfuturetaxamountspayablemaydifferfromthisprovision,dependingonthevalueandtimingofanyfuturesalesofsuchinvestmentsandfutureIndiantaxrates.

13 Share Capital

2021Number

2021£’000

2020Number

2020£’000

Allotted,calledupandfullypaidordinarysharesof5peach 236,453,859 11,823 223,553,859 11,178

Intheyearto30April2021,theCompanyissued12,900,000ordinaryshares(nominalvalueof£645,000)atapremiumtonetassetvalue,raisingnetproceedsof£168,500,000(2020–£46,569,000).Noshareswereboughtbackduringtheyearandnosharesareheldintreasury.At30April2021theCompanyhadauthoritytobuyback33,559,440ordinarysharesandtoallotorsellfromtreasury10,417,885ordinaryshareswithoutapplicationofpre-emptionrights.UndertheprovisionsoftheCompany’sArticlesofAssociationsharebuy-backsarefundedfromthecapitalreserve.

14 Capital and Reserves

Sharecapital

£’000


£’000

Capitalredemption

reserve£’000

Capitalreserve

£’000

Revenuereserve

£’000


At1May2020 11,178 94,328 8,700 1,788,556 60,862 1,963,624

Gainsoninvestments – – – 1,069,700 – 1,069,700

Exchangedifferencesonbankloans – – – 4,258 – 4,258

Otherexchangedifferences – – – (2,342) – (2,342)

MovementinprovisionfortaxonIndian notionalcapitalgains – – – (958) – (958)

Revenuereturnonordinaryactivities aftertaxation – – – – 7,801 7,801

Ordinarysharesissued 645 167,855 – – – 168,500

Dividendspaidintheyear – – – – (5,603) (5,603)

At30April2021 11,823 262,183 8,700 2,859,214 63,060 3,204,980

Thecapitalreservebalanceat30April2021includesinvestmentholdinggainsoninvestmentsof£1,498,988,000(2020–gainsof£643,697,000)asdetailedinnote9onpage50.Therevenuereserveisdistributablebywayofdividend.TheCompany’sArticlesofAssociationprohibitdistributionsbywayofdividendfromrealisedcapitalprofits.

15 Shareholders’ Funds Per Ordinary Share

2021 2020

Shareholders’funds £3,204,980,000 £1,963,624,000

Numberofordinarysharesinissueattheyearend 236,453,859 223,553,859

Shareholders’fundsperordinaryshare 1,355.4p 878.4p

Theshareholders’fundsfiguresabovehavebeencalculatedafterdeductingborrowingsatbookvalue,inaccordancewiththeprovisions ofFRS102.ThenetassetvaluefiguresshownontheBalanceSheetonpage43havebeencalculatedafterdeductingborrowingsateitherparvalueorfairvalue.Reconciliationsbetweenshareholders’fundsandbothNAVmeasuresareshownintheGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65.

Financial Report


16 Analysis of Change in Net Debt

At 1 May2020£’000

Cash flows£’000

Othernon-cashchanges

£’000

Exchangemovement

£’000

At 30 April 2021

£’000

Cashatbankandinhand 19,537 91,528 – (2,342) 108,723

Loansduewithinoneyear (103,854) 99,596 – 4,258 –

Debenturestocks (39,908) – (32) – (39,940)

Loannotes – (99,844) (4) – (99,848)

(124,225) 91,280 (36) 1,916 (31,065)

17 Contingent Liabilities, Guarantees and Financial Commitments At30April2021and30April2020theCompanyhadnocontingentliabilities,guaranteesorfinancialcommitments.

18 Transactions with Related Parties and the Managers and Secretaries TheDirectors’feesandshareholdingsaredetailedintheDirectors’RemunerationReportonpages34and35.NoDirectorhasacontract

ofservicewiththeCompany.DuringtheyearnoDirectorwasinterestedinanycontractorothermatterrequiringdisclosureundersection412oftheCompaniesAct2006.

BaillieGifford&CoLimitedhasbeenappointedastheCompany’sAlternativeInvestmentFundManager(‘AIFM’)andCompanySecretaries.DetailsofthetermsoftheInvestmentManagementAgreementaresetoutonpage25anddetailsofthefeesduringtheyearandthebalancesoutstandingattheyearendareshowninnotes3and11respectively.

19 Financial Instruments Asaninvestmenttrust,theCompanyinvestsinequitiesandmakesotherinvestmentssoastosecureitsinvestmentobjectiveofcapital

growth.TheCompanyborrowsmoneywhentheBoardandinvestmentmanagershavesufficientconvictionthattheassetsfundedbyborrowedmonieswillgenerateareturninexcessofthecostofborrowing.Inpursuingitsinvestmentobjective,theCompanyisexposedtoavarietyofrisksthatcauseshorttermvariationintheCompany’snetassetsandcouldresultineitherareductionintheCompany’snetassetsorareductionintheprofitsavailablefordividend.

Theserisksarecategorisedhereasmarketrisk(comprisingcurrencyrisk,interestrateriskandotherpricerisk),liquidityriskandcreditrisk.TheBoardmonitorscloselytheCompany’sexposurestotheserisksbutdoessoinordertoreducethelikelihoodofapermanentreductionintheCompany’snetassetsratherthantominimisetheshorttermvolatility.

Theriskmanagementpoliciesandproceduresoutlinedinthisnotehavenotchangedsubstantiallyfromthepreviousaccountingperiod.

Market Risk ThefairvalueorfuturecashflowsofafinancialinstrumentorotherinvestmentheldbytheCompanymayfluctuatebecauseofchangesin

marketprices.Thismarketriskcomprisesthreeelements–currencyrisk,interestrateriskandotherpricerisk.TheBoardreviewsandagreespoliciesformanagingtheserisksandtheCompany’sinvestmentmanagersbothassesstheexposuretomarketriskwhenmakingindividualinvestmentdecisionsandmonitortheoveralllevelofmarketriskacrosstheinvestmentportfolioonanongoingbasis.

DetailsoftheCompany’sinvestmentportfolioareshowninnote9.

Currency Risk CertainoftheCompany’sassets,liabilitiesandincomearedenominatedincurrenciesotherthansterling(theCompany’sfunctionalcurrency

andthatinwhichitreportsitsresults).Consequently,movementsinexchangeratesmayaffectthesterlingvalueofthoseitems.

TheinvestmentmanagersmonitortheCompany’sexposuretoforeigncurrenciesandreporttotheBoardonaregularbasis.TheInvestmentManagerassessestherisktotheCompanyoftheforeigncurrencyexposurebyconsideringtheeffectontheCompany’snetassetvalue andincomeofamovementintheratesofexchangetowhichtheCompany’sassets,liabilities,incomeandexpensesareexposed. However,thecurrencyinwhichacompany’ssharepriceisquotedisnotnecessarilytheoneinwhichitearnsitsprofits.

Themovementinexchangeratesonoverseasearningsmayhaveamoresignificantimpactuponacompany’svaluationthanasimpletranslationofthecurrencyinwhichthesharepriceofthecompanyisquoted.

ForeigncurrencyborrowingscanlimittheCompany’sexposuretoanticipatedfuturechangesinexchangerateswhichmightotherwiseadverselyaffectthevalueoftheportfolioofinvestments.

Exposuretocurrencyriskthroughassetallocation,whichiscalculatedbyreferencetothecurrencyinwhichtheassetorliabilityisquoted, isshownbelow.

Financial Report

54AnnualReport2021

19 Financial Instruments (continued) Currency Risk (continued)

At 30 April 2021Investments

£’000

Cash andcash

equivalents£’000

Loans, loan notes and

debentures£’000

Other debtors and creditors * £’000

Net exposure

£’000

USdollar 2,118,184 438 – 122 2,118,744

Euro 203,677 – – 1,032 204,709

Japaneseyen 206,572 – – 699 207,271

Otheroverseascurrencies 452,759 4,686 – 957 458,402

Totalexposuretocurrencyrisk 2,981,192 5,124 – 2,810 2,989,126

Sterling 256,938 103,599 (139,788) (4,895) 215,854

3,238,130 108,723 (139,788) (2,085) 3,204,980

*Includesnon-monetaryassetsof£76,000.

At 30 April 2020Investments

£’000

Cash andcash

equivalents£’000

Loans, loan notes and

debentures£’000

Other debtors and creditors * £’000

Net exposure

£’000

USdollar 1,258,762 7,633 (98,854) 491 1,168,032

Euro 142,611 439 – 1,155 144,205

Japaneseyen 207,850 – – 1,640 209,490

Otheroverseascurrencies 349,098 7,836 – (4,656) 352,278

Totalexposuretocurrencyrisk 1,958,321 15,908 (98,854) (1,370) 1,874,005

Sterling 130,506 3,629 (44,908) 392 89,619

2,088,827 19,537 (143,762) (978) 1,963,624

*Includesnon-monetaryassetsof£59,000.

Currency Risk SensitivityAt30April2021,ifsterlinghadstrengthenedby5%inrelationtoallcurrencies,withallothervariablesheldconstant,totalnetassetsandtotalreturnonordinaryactivitieswouldhavedecreasedbytheamountsshownbelow.A5%weakeningofsterlingagainstallcurrencies,withallothervariablesheldconstant,wouldhavehadanequalbutoppositeeffectontheFinancialStatementamounts.Theanalysisisperformedonthesamebasisfor2020.

2021£’000

2020£’000

USdollar 105,937 58,402

Euro 10,235 7,210

Japaneseyen 10,364 10,475

Otheroverseascurrencies 22,920 17,614

149,456 93,701

Interest Rate Risk Interestratemovementsmayaffectdirectly:

— thefairvalueofanyinvestmentsinfixedinterestratesecurities;

— thelevelofincomereceivableoncashdeposits;

— thefairvalueoftheCompany’sfixed-rateborrowings;and

— theinterestpayableonanyvariablerateborrowingswhichtheCompanymaytakeout.

InterestratemovementsmayalsoimpactuponthemarketvalueoftheCompany’sinvestments.Theeffectofinterestratemovementsupontheearningsofaninvesteecompanymayhaveasignificantimpactuponthevaluationofthatcompany’sequity.Thepossibleeffectsonfairvalueandcashflowsthatcouldariseasaresultofchangesininterestratesaretakenintoaccountwhenmakinginvestmentdecisionsandwhenenteringborrowingagreements.TheBoardreviewsonaregularbasistheamountofinvestmentsincashandfixedincomesecuritiesandtheincomereceivableoncashdeposits,floatingratenotesandothersimilarinvestments.TheCompanyfinancespartofitsactivitiesthroughborrowingsatapprovedlevels.Theamountofsuchborrowingsandtheapprovedlevelsaremonitoredandreviewedregularlyby theBoard.

Financial Report


19 Financial Instruments (continued) Interest Rate Risk (continued) Movementsininterestrates,totheextentthattheyaffectthefairvalueoftheCompany’sfixedrateborrowings,mayalsoaffecttheamount

bywhichtheCompany’ssharepriceisatadiscountorapremiumtothenetassetvalue(withborrowingsatfairvalue)assumingthattheCompany’ssharepriceisunaffectedbymovementsininterestrates.

Financial Assets TheCompany’sinterestrateriskexposureonitsfinancialassetsat30April2021amountedto£108,723,000(2020–£19,537,000),

comprisingitscashandshorttermdeposits.

Thecashdepositsgenerallycomprisecallorshorttermmoneymarketdepositsoflessthanonemonthwhicharerepayableondemand.Thebenchmarkratewhichdeterminestheinterestpaymentsreceivedoncashbalancesisthebankbaserate.

Financial Liabilities TheinterestrateriskprofileoftheCompany’sbankloansanddebentures(atamortisedcost)andthematurityprofileoftheundiscounted

futurecashflowsinrespectoftheCompany’scontractualfinancialliabilitiesat30Aprilareshownbelow.

Interest Rate Risk Profile

2021£’000

2020£’000

Floatingrate–USdollar – 98,854

Floatingrate–sterling – 5,000

Fixedrate–sterling 139,788 39,908

139,788 143,762

Maturity Profile

2021Within 1 year £’000

2021Between 1

and 5 years £’000

2021More than

5 years £’000

2020Within 1 year £’000

2020Between 1

and 5 years £’000

2020More than

5 years £’000

Repaymentofloansanddebentures – 40,000 100,000 103,854 40,000 –

Interestonloansanddebentures 4,374 9,846 45,612 3,155 5,100 –

4,374 49,846 145,612 107,009 45,100 –

Interest Rate Risk SensitivityAnincreaseof100basispointsinbondyieldsappliedtotheCompany’sfinancialliabilitiesasat30April2021wouldhavehadnoeffectontotalnetassetsandtotalreturnonordinaryactivities(2020–nil)andwouldhaveincreasedthenetassetvaluepershare(withborrowingsatfairvalue)by9.8p(2020–0.5p).Adecreaseof100basispointswouldhavehadnoeffectontotalnetassetsandtotalreturnonordinaryactivities(2020–nil)andwouldhavedecreasednetassetvaluepershare(withborrowingsatfairvalue)by9.8p(2020–0.5p).

Other Price RiskChangesinmarketpricesotherthanthosearisingfrominterestrateriskorcurrencyriskmayalsoaffectthevalueoftheCompany’snetassets.TheBoardmanagesthemarketpricerisksinherentintheinvestmentportfoliobyensuringfullandtimelyaccesstorelevantinformationfromtheInvestmentManager.TheBoardmeetsregularlyandateachmeetingreviewsinvestmentperformance,theinvestmentportfolioandtherationaleforthecurrentinvestmentpositioningtoensureconsistencywiththeCompany’sobjectiveandinvestmentpolicy.

Other Price Risk SensitivityAfulllistoftheCompany’sinvestmentsisshownonpages14to16.Inaddition,variousanalysesoftheportfoliobygrowthcategory,thematicriskcategory,geographyandbroadindustrialorcommercialsectorarecontainedintheStrategicReport.98.9%oftheCompany’snetassetsareinvestedinquotedequities(2020–105.3%).A10%increaseinquotedequityvaluationsat30April2021wouldhaveincreasedtotalassetsandtotalreturnonordinaryactivitiesby£316,914,000(2020–£206,874,000).Adecreaseof10%wouldhavehad anequalbutoppositeeffect.

Liquidity RiskThisistheriskthattheCompanywillencounterdifficultyinmeetingobligationsassociatedwithfinancialliabilities.LiquidityriskisnotsignificantasthemajorityoftheCompany’sassetsareinvestmentsinquotedsecuritiesthatarereadilyrealisable.TheBoardalsosetsparametersforthedegreetowhichtheCompany’snetassetsareinvestedinquotedequities.TheCompanyhasthepowertotakeoutborrowings,whichgiveitaccesstoadditionalfundingwhenrequired.TheCompany’scurrentborrowingfacilitiesaredetailedinnotes 11and12andthematurityprofileofitsborrowingsissetoutabove.

Financial Report

56AnnualReport2021

19 Financial Instruments (continued) Credit Risk

ThisistheriskthatafailureofacounterpartytoatransactiontodischargeitsobligationsunderthattransactioncouldresultintheCompanysufferingaloss.Thisriskismanagedasfollows:

— wheretheinvestmentmanagersmakeaninvestmentinabondorothersecuritywithcreditrisk,thatcreditriskisassessedandthencomparedtotheprospectiveinvestmentreturnofthesecurityinquestion;

— theDepositaryisliableforthelossoffinancialinstrumentsheldincustody.TheDepositarywillensurethatanydelegatesegregatestheassetsoftheCompany.TheManagersmonitortheCompany’sriskbyreviewingtheDepositary’sinternalcontrolreportsandreportingtheirfindingstotheBoard;

— investmenttransactionsarecarriedoutwithalargenumberofbrokerswhosecreditworthinessisreviewedbytheManagers.TransactionsareordinarilydoneonadeliveryversuspaymentbasiswherebytheCompany’scustodianbankensuresthatthecounterpartytoanytransactionenteredintobytheCompanyhasdeliveredonitsobligationsbeforeanytransferofcashorsecuritiesawayfromtheCompanyiscompleted;and

— cashisonlyheldatbanksthathavebeenidentifiedbytheManagersasreputableandofhighcreditquality.

Credit Risk ExposureTheamountthatbestrepresentstheCompany’smaximumexposuretodirectcreditriskat30Aprilwas:

2021£’000

2020£’000

Cashandcashequivalents 108,723 19,537

Debtors 3,936 7,566

112,659 27,103

NoneoftheCompany’sfinancialassetsarepastdueorimpaired.

Fair Value of Financial Assets and Financial LiabilitiesTheDirectorsareoftheopinionthatthereisnodifferencebetweentheamountsatwhichthefinancialassetsandliabilitiesoftheCompanyarecarriedintheBalanceSheetandtheirfairvalues,withtheexceptionoflongtermborrowings.ThefairvaluesoftheCompany’sborrowingsareshownbelow.Thefairvalueofthe63/8%debenturestock2023isbasedontheclosingmarketofferpriceassourcedfromBarclaysBXEC(2020–sourcePeelHunt/LondonStockExchange).TherevisedpricesourcewasapprovedbytheBoardandadopted bytheCompany30November2020,asitwasconsideredmoreresponsivetomarketmovements.Usingthecurrentpricesourceasat 30April2020wouldhavereducedthefairvalueofthedebentureby£1,319,000andincreasedthefairvalueNAVby0.6ppershare.ThefairvaluesoftheloannotesarecalculatedbyreferencetoUKGiltswithcomparablematurities,applyingafairvaluespreadusingnon-Giltbondindicesofsimilarduration.

2021Par

value£’000

2021Bookvalue£’000

2021Fair

value£’000

2020Par

value£’000

2020Bookvalue£’000

2020Fair

value£’000

Bankloansduewithinoneyear – – – 103,854 103,854 103,854

63/8%debenturestock2023 40,000 39,940 43,207 40,000 39,908 46,000

SeriesANotes1.86%2054 60,000 59,898 54,302 – – –

SeriesBNotes1.77%2045 40,000 39,950 36,015 – – –

140,000 139,788 133,524 143,854 143,762 149,854

20 Capital ManagementThecapitaloftheCompanyisitssharecapitalandreservesassetoutinnote14togetherwithitsborrowings(seenotes11and12).

TheobjectiveoftheCompanyistoinvestgloballytoachievecapitalgrowth,whichtakespriorityoverincomeanddividends.

TheCompany’sinvestmentpolicyissetoutonpage20.InpursuitoftheCompany’sobjective,theBoardhasaresponsibilityforensuring theCompany’sabilitytocontinueasagoingconcernanddetailsoftherelatedrisksandhowtheyaremanagedaresetoutonpages21,22and30.

TheCompanyhastheabilitytoissueandbuybackitsshares(seepage26)andanychangestothesharecapitalduringtheyear aresetoutinnote13.

TheCompanydoesnothaveanyexternallyimposedcapitalrequirementsotherthanthecovenantsonitsloans,loannotesanddebentureswhicharedetailedinnotes11and12.

Financial Report


Noticeisherebygiventhattheninety-secondAnnualGeneralMeetingofTheMonksInvestmentTrustPLCwillbeheldattheInstituteofDirectors,116PallMall,LondonSW1Y5EDonThursday,2September2021,at11.00amforthefollowingpurposes:

Ordinary Business Toconsiderand,ifthoughtfit,passthefollowingresolutionsasordinaryresolutions:

1. ToreceiveandadopttheFinancialStatementsoftheCompanyfortheyearended30April2021withtheReportsoftheDirectorsandoftheIndependentAuditorthereon.

2. ToapprovetheDirectors’AnnualReportonRemunerationfortheyearended30April2021.

3. Todeclareafinaldividendof2.0pperordinaryshare.

4. Tore-electMrKSSternbergasaDirector.

5. Tore-electMrJJTigueasaDirector.

6. Tore-electMsBJRichardsasaDirector.

7. Tore-electProfessorSirNigelShadboltasaDirector.

8. Tore-electMsCBoyleasaDirector.

9. ToreappointErnst&YoungLLPasIndependentAuditoroftheCompanytoholdofficeuntiltheconclusionofthenextAnnualGeneralMeetingatwhichtheFinancialStatements arelaidbeforetheCompany.

10.ToauthorisetheDirectorstodeterminetheremunerationoftheIndependentAuditor.

11.That,insubstitutionforanyexistingauthoritybutwithoutprejudicetotheexerciseofanysuchauthoritypriortothedatehereof,theDirectorsoftheCompanybeandtheyareherebygenerallyandunconditionallyauthorisedinaccordancewithsection551oftheCompaniesAct2006(the‘Act’)toexerciseallthepowersoftheCompanytoallotsharesintheCompanyandtograntrightstosubscribeforortoconvertanysecurityintosharesintheCompany(‘Securities’)providedthatsuchauthorityshallbelimitedtotheallotmentofsharesandthegrantofrightsinrespectofshareswithanaggregatenominalvalueofupto£1,182,269.25(representing10%oftheCompany’stotalissuedsharecapitalasat15June2021),

Piccadilly

Pall Mall

Haym

arket

Regent Street

St. James’s Street

Piccadilly Circus

The Mall

CharingCross

Whitehall

Strand

King St

St James SqPall M

all East

A400

INSTITUTE OF DIRECTORS

Trafalgar Square

SubjecttoGovernmentmeasuresrestrictingpublicgatherings,andrelatedpublichealthguidanceassociatedwiththeCovid-19pandemic,theAnnualGeneralMeetingoftheCompanywillbeheldattheInstituteofDirectors,116PallMall,LondonSW1Y5EDon Thursday,2September2021,at11.00am.Giventheongoinguncertainty,theBoardwillcontinuetomonitordevelopmentsandmaybeforcedtoprohibitshareholdersfromattendinginperson.TheBoardthereforeencouragesallshareholderstoexercisetheirvotesattheAnnualGeneralMeetingbycompletingandsubmittingaformofproxy;andtomonitortheCompany’swebsitewhereanyupdateswillbeposted.

Ifyouhaveanyqueriesastohowtovoteorhowtoattendthemeeting,pleasecalluson08009172112.

BaillieGiffordmayrecordyourcall.

suchauthoritytoexpireattheconclusionofthenextAnnualGeneralMeetingoftheCompanyafterthepassingofthisresolutionorontheexpiryof15monthsfromthepassingofthisresolution,whicheveristheearlier,unlesspreviouslyrevoked,variedorextendedbytheCompanyinageneralmeeting,savethattheCompanymayatanytimepriortotheexpiryofthisauthoritymakeanofferorenterintoanagreementwhichwouldormightrequireSecuritiestobeallottedorgrantedaftertheexpiryofsuchauthorityandtheDirectorsshallbeentitledtoallotorgrantSecuritiesinpursuanceofsuchanofferoragreementasifsuchauthorityhadnotexpired.

Toconsiderand,ifthoughtfit,topassresolutions12and13 asspecialresolutions:

12.That,subjecttothepassingofresolution11above,andinsubstitutionforanyexistingpowerbutwithoutprejudiceto theexerciseofanysuchpowerpriortothedatehereof,theDirectorsoftheCompanybeandtheyareherebygenerallyempowered,pursuanttosections570and573oftheCompaniesAct2006(‘theAct’)toallotequitysecurities(withinthemeaningofsection560(1)oftheAct)forcasheitherpursuanttotheauthoritygivenbyresolution12aboveorbywayofthesaleoftreasuryshareswhollyforcashasifsection561(1)oftheActdidnotapplytoanysuchallotmentorsale,providedthatthispower:

(a)expiresattheconclusionofthenextAnnualGeneralMeetingoftheCompanyafterthepassingofthisresolutionorontheexpiryof15monthsfromthepassingofthisresolution,whicheveristheearlier,savethattheCompanymay,beforesuchexpiry,makeanofferoragreementwhichwouldormightrequireequitysecuritiestobeallottedaftersuchexpiryandtheDirectorsmayallotequitysecuritiesinpursuanceofanysuchofferoragreementasifthepowerconferredherebyhadnotexpired;and

(b)shallbelimitedtotheallotmentofequitysecuritiesor thesaleoftreasurysharesuptoanaggregatenominalvalueof£1,182,269.25,beingapproximately10%ofthenominalvalueoftheissuedsharecapitaloftheCompanyasat15June2021.

Notice of Annual General Meeting


58AnnualReport2021

13.That,insubstitutionforanyexistingauthority,butwithoutprejudicetotheexerciseofanysuchauthoritypriortothedatehereof,theCompanybeandisherebygenerallyandunconditionallyauthorised,pursuanttoandinaccordancewithsection701oftheCompaniesAct2006(the‘Act’),tomakemarketpurchases(withinthemeaningofsection693(4)oftheAct)offullypaidordinarysharesof5peachinthecapitaloftheCompany(‘Shares’),(eitherforretentionastreasurysharesforfuturereissue,resale,transferorforcancellation)providedthat:

(a)themaximumaggregatenumberofSharesherebyauthorisedtobepurchasedis35,444,433,or,ifless, thenumberrepresentingapproximately14.99%oftheissuedordinarysharecapitaloftheCompanyasatthedateofthepassingofthisresolution;

(b)theminimumprice(exclusiveofexpenses)whichmaybepaidforeachShareis5p;

(c)themaximumprice(exclusiveofexpenses)whichmay bepaidforaShareshallbenotmorethanthehigherof: (i)5percentabovetheaverageclosingpriceontheLondonStockExchangeofaShareoverthefivebusinessdaysimmediatelyprecedingthedateofpurchase;and (ii)thehigherofthepriceofthelastindependenttradeof,andthehighestcurrentindependentbidfor,aShareontheLondonStockExchange;and

(d)unlesspreviouslyvaried,revokedorrenewedbytheCompanyinageneralmeeting,theauthorityherebyconferredshallexpireattheconclusionoftheAnnualGeneralMeetingoftheCompanytobeheldinrespectoftheyearending30April2022,savethattheCompanymay,priortosuchexpiry,enterintoacontracttopurchaseSharesundersuchauthoritywhichwillormaybeexecutedwhollyorpartlyaftertheexpirationofsuchauthorityandmaymakeapurchaseofSharespursuant toanysuchcontract.

ByorderoftheBoardBaillieGifford&CoLimitedCompanySecretary30June2021

Notes1. Asamemberyouareentitledtoappointaproxyorproxiesto

exercisealloranyofyourrightstoattend,speakandvoteattheAGM.AproxyneednotbeamemberoftheCompanybutmustattendtheAGMtorepresentyou.Youmayappointmorethanoneproxyprovidedeachproxyisappointedtoexerciserightsattachedtodifferentshares.Youcanonlyappointaproxyusingtheproceduresetoutinthesenotesandthenotestotheproxyform.Youmaynotuseanyelectronicaddressprovidedeitherinthisnoticeoranyrelateddocuments(includingtheFinancialStatementsandproxyform)tocommunicatewiththeCompanyforanypurposeotherthanthoseexpresslystated.

2. Tobevalidanyproxyformorotherinstrumentappointingaproxy,togetherwithanypowerofattorneyorotherauthorityunderwhichitissignedoracertifiedcopythereof,mustbereceivedbypostor(duringnormalbusinesshoursonly)byhandattheRegistrarsoftheCompanyatComputershareInvestorServicesPLC,ThePavilions,BridgwaterRoad,Bristol,BS996ZYoreproxyappointment.comnolaterthantwodays(excludingnon-workingdays)beforethetimeofthemeetingoranyadjournedmeeting.

3. CRESTmemberswhowishtoappointaproxyorproxiesthroughtheCRESTelectronicproxyappointmentservicemaydosobyusingtheproceduresdescribedintheCRESTManualand/orbyloggingontothewebsiteeuroclear.com/CREST. CRESTpersonalmembersorotherCRESTsponsoredmembers,andthoseCRESTmemberswhohaveappointedavotingserviceprovider(s),shouldrefertotheirCRESTsponsororvotingserviceprovider(s),whowillbeabletotaketheappropriateactionontheirbehalf.

4. Inorderforaproxyappointmentorinstructionmadeusing theCRESTservicetobevalid,theappropriateCRESTmessage(a‘CRESTProxyInstruction’)mustbeproperlyauthenticatedinaccordancewithEuroclearUK&IrelandLimited’sspecifications,andmustcontaintheinformationrequiredforsuchinstruction,asdescribedintheCRESTManual.Themessage,regardlessofwhetheritconstitutestheappointmentofaproxyorisanamendmenttotheinstructiongiventoapreviouslyappointedproxymust,inordertobevalid,betransmittedsoastobereceivedbytheCompany’sregistrar(ID3RA50)nolaterthantwodays(excludingnon-workingdays)beforethetimeofthemeetingoranyadjournment.Forthispurpose,thetimeofreceiptwillbetakentobethetime(asdeterminedbythetimestampappliedtothemessagebytheCRESTApplicationHost)fromwhichtheCompany’sregistrarisabletoretrievethemessagebyenquirytoCRESTinthemannerprescribedbyCREST.AfterthistimeanychangeofinstructionstoproxiesappointedthroughCRESTshouldbecommunicatedtotheappointeethroughothermeans.

5. CRESTmembersand,whereapplicable,theirCRESTsponsors,orvotingserviceprovidersshouldnotethatEuroclearUK&IrelandLimiteddoesnotmakeavailablespecialproceduresinCRESTforanyparticularmessage.Normalsystemtimingsandlimitationswill,therefore,apply inrelationtotheinputofCRESTProxyInstructions.ItistheresponsibilityoftheCRESTmemberconcernedtotake(or, iftheCRESTmemberisaCRESTpersonalmember,or


https://www.eproxyappointment.com/Login

https://www.euroclear.com/errors/en/404.html


sponsoredmember,orhasappointedavotingserviceprovider(s),toprocurethathis/herCRESTsponsororvotingserviceprovider(s)take(s))suchactionasshallbenecessarytoensurethatamessageistransmittedbymeansoftheCRESTsystembyanyparticulartime.Inthisconnection,CRESTmembersand,whereapplicable,theirCRESTsponsorsorvotingserviceprovidersarereferred,inparticular,tothosesectionsoftheCRESTManualconcerningpracticallimitationsoftheCRESTsystemandtimings.

6. TheCompanymaytreatasinvalidaCRESTProxyInstructioninthecircumstancessetoutinRegulation35(5)(a)oftheUncertificatedSecuritiesRegulations2001.

7. ThereturnofacompletedproxyformorotherinstrumentofproxywillnotpreventyouattendingtheAGMandvotinginpersonifyouwish.

8. PursuanttoRegulation41oftheUncertificatedSecuritiesRegulations2001andsection311oftheCompaniesAct2006theCompanyspecifiesthattobeentitledtoattendandvoteattheAnnualGeneralMeeting(andforthepurposeofthedeterminationbytheCompanyofthevotestheymaycast),shareholdersmustberegisteredintheRegisterofMembersoftheCompanynolaterthanthecloseofbusinesstwodays(excludingnon-workingdays)priortothecommencementoftheAGMoranyadjournedmeeting.ChangestotheRegisterofMembersaftertherelevantdeadlineshallbedisregardedindeterminingtherightsofanypersontoattendandvoteatthemeeting.

9. Anypersontowhomthisnoticeissentwhoisapersonnominatedundersection146oftheCompaniesAct2006toenjoyinformationrights(a‘NominatedPerson’)may,underanagreementbetweenhim/herandtheshareholderbywhomhe/shewasnominated,havearighttobeappointed(ortohavesomeoneelseappointed)asaproxyfortheAnnualGeneralMeeting.IfaNominatedPersonhasnosuchproxyappointmentrightordoesnotwishtoexerciseit,he/shemay,underanysuchagreement,havearighttogiveinstructionstotheshareholderastotheexerciseofvotingrights.

10.Thestatementoftherightsofshareholdersinrelationtotheappointmentofproxiesinnotes1and2abovedoesnotapplytoNominatedPersons.TherightsdescribedinthosenotescanonlybeexercisedbyshareholdersoftheCompany.

11.Undersection338oftheCompaniesAct2006,membersmeetingthequalificationcriteriasetoutinnote14belowmay,subjecttocertainconditions,requiretheCompanytocirculatetomembersnoticeofaresolutionwhichmayproperlybemovedandisintendedtobemovedatthatmeeting.Theconditionsarethat:(a)theresolutionmustnot,ifpassed,beineffective(whetherbyreasonofinconsistencywithanyenactmentortheCompany’sconstitutionorotherwise);(b) theresolutionmustnotbedefamatoryofanyperson,frivolousorvexatious;and(c)therequest:(i)maybeinhardcopyformorinelectronicform;(ii)mustidentifytheresolutionofwhichnoticeistobegivenbyeithersettingouttheresolutioninfullor,ifsupportingaresolutionsentbyanothermember,clearlyidentifyingtheresolutionwhichisbeingsupported;(iii)mustbeauthenticatedbythepersonorpersonsmakingit;and(iv)mustbereceivedbytheCompanynotlaterthanWednesday21July2021.

12.Undersection338AoftheCompaniesAct2006,membersmeetingthequalificationcriteriasetoutatnote14belowmayrequiretheCompanytoincludeinthebusinesstobedealtwithattheAnnualGeneralMeetingamatter(otherthanaproposedresolution)whichmayproperlybeincludedinthebusiness(amatterofbusiness).TherequestmusthavebeenreceivedbytheCompanynotlaterthanWednesday21July2021.Theconditionsarethatthematterofbusinessmustnotbedefamatoryofanyperson,frivolousorvexatious.Therequestmustidentifythematterofbusinessbyeithersettingitoutinfullor,ifsupportingastatementsentbyanothermember,clearlyidentifythematterofbusinesswhichisbeingsupported.Therequestmustbeaccompaniedbyastatementsettingoutthegroundsfortherequest.MembersseekingtodothisshouldwritetotheCompanyprovidingtheirfullnameandaddress.

13.Undersection527oftheCompaniesAct2006,membersmeetingthequalificationcriteriasetoutatnote14belowmayrequiretheCompanytopublish,onitswebsite,(withoutpayment)astatement(whichisalsopassedtotheAuditor)settingoutanymatterrelatingtotheauditoftheCompany’sFinancialStatements,includingtheAuditor’sReportandtheconductoftheaudit.Suchrequestsmustbemadeinwritingandmuststateyourfullnameandaddress.

14.Inordertobeabletoexercisethemembers’rightsinnotes11to13,therelevantrequestmustbemadeby:(a)membersrepresentingatleast5%ofthetotalvotingrightsofallthememberswhohavearighttovoteontheresolutiontowhichtherequestsrelate;or(b)atleast100memberswhohavearighttovoteontheresolutiontowhichtherequestsrelateandholdsharesintheCompanyonwhichtherehasbeenpaidupanaveragesum,permember,ofatleast£100.SuchrequestsshouldbesenttotheCompanyatCaltonSquare,1GreensideRow,Edinburgh,EH13AN.Electronicrequestspermittedundersection338(seenote11)[email protected].

15.InformationregardingtheAnnualGeneralMeeting,includinginformationrequiredbysection311AoftheCompaniesAct2006,isavailablefromtheCompany’spageoftheManagers’websiteatmonksinvestmenttrust.co.uk.

16.Membershavetherighttoaskquestionsatthemeetinginaccordancewithsection319AoftheCompaniesAct2006.

17.Anycorporationwhichisamembercanappointoneormorecorporaterepresentativeswhomayexerciseonitsbehalfallofitspowersasamemberprovidedthattheydonotdosoinrelationtothesameshares.

18.Asat15June2021(beingthelastpracticabledatepriortothepublicationofthisnotice)theCompany’sissuedsharecapitalconsistedof236,453,859ordinaryshares,carryingonevoteeach.Therefore,thetotalvotingrightsintheCompanyasat15June2021were236,453,859votes.

19.Anypersonholding3%ormoreofthetotalvotingrightsoftheCompanywhoappointsapersonotherthantheChairmanofthemeetingashis/herproxywillneedtoensurethatbothhe/sheandhisproxycomplieswiththeirrespectivedisclosureobligationsundertheUKDisclosureandTransparencyRules.

20.NoDirectorhasacontractofservicewiththeCompany.




60AnnualReport2021

Company HistoryMonkswasincorporatedin1929andwasoneofthreetrustsfoundedinthelate1920sbyagroupofinvestorsheadedby SirAuckland(laterLord)Geddes.Theothertwotrustswere TheFriarsInvestmentTrustandTheAbbotsInvestmentTrust. Thecompanysecretary’sofficewasat13/14AustinFriarsin theCityofLondon,hencethenames.

In1931,BaillieGifford&CotookoverthemanagementofallthreetrustsandMonksbecameafoundermemberoftheAssociation ofInvestmentTrustsin1932.

In1968,underaSchemeofArrangement,thethreetrustsweremergedwithMonksacquiringtheordinarysharecapitalofFriarsandAbbots.

Monks is an investment trust. Investment trusts offer investors the following: — participationinadiversifiedportfolioofshares;

— constantsupervisionbyexperiencedprofessionalmanagers;and

— theCompanyisfreefromcapitalgainstaxoncapitalprofitsrealisedwithinitsportfolioalthoughinvestorsarestillliableforcapitalgainstaxonprofitswhensellingtheirinvestment.

How to Invest TheCompany’ssharesaretradedontheLondonStockExchange.Theycanbeboughtbyplacinganorderwithastockbrokerorbyaskingaprofessionaladvisertodoso.IfyouareinterestedininvestingdirectlyinMonks,youcandosoonline.Thereareanumberofcompaniesofferingrealtimeonlinedealingservices–findoutmorebyvisitingmonksinvestmenttrust.co.uk.

Sources of Further Information on the Company ThepriceofsharesisquoteddailyintheFinancialTimes andcanalsobefoundontheCompany’swebsiteat monksinvestmenttrust.co.uk andonotherfinancialwebsites.CompanyfactsheetsarealsoavailableontheCompany’swebsiteandareupdatedmonthly.TheseareavailablefromBaillieGiffordonrequest.

Monks Share IdentifiersISIN GB0030517261

Sedol 3051726

Ticker MNKS

LegalEntityIdentifier213800MRI1JTUKG5AF64

TheordinarysharesoftheCompanyarelistedontheLondonStockExchangeandtheirpriceisshownintheFinancialTimesunder‘InvestmentCompanies’.

Key Dates TheInterimReportisissuedinDecemberandtheAnnualReportisnormallyissuedinJune.The2021AGMisbeingheldatthestartofSeptember.DividendswillbepaidbywayofasinglefinalpaymentshortlyaftertheCompany’sAGM.

Capital Gains Tax ForCapitalGainsTaxindexationpurposes,themarketvalueofanordinaryshareintheCompanyasat31March1982(asadjustedforthefiveforonesharesplitinJuly2001)was14.1p.

Analysis of Shareholders at 30 April

Name2021

Number2021

%2020

Number2020

%

Institutions 35,471,681 15.0 37,673,933 16.9

Intermediaries 185,179,929 78.3 172,326,985 77.1

Individuals 14,363,343 6.1 13,068,090 5.8

Marketmakers 1,438,906 0.6 484,851 0.2

236,453,859 100.0 223,553,859 100.0

Share Register Enquiries ComputershareInvestorServicesPLCmaintainstheshareregisteronbehalfoftheCompany.Intheeventofqueriesregardingsharesregisteredinyourownname,pleasecontacttheRegistrarson03707071170.Thishelplinealsooffersanautomatedself-servicefunctionality(available24hoursaday,7daysaweek)whichallowsyouto:

— hearthelatestshareprice;

— confirmyourcurrentshareholdingbalance;

— confirmyourpaymenthistory;and

— orderChangeofAddress,DividendBankMandateandStockTransferforms.

YoucanalsocheckyourholdingontheRegistrars’websiteatinvestorcentre.co.uk.Theyalsoofferafree,securesharemanagementwebsiteservicewhichallowsyouto:

— viewyourshareportfolioandseethelatestmarketpriceofyourshares;

— calculatethetotalmarketpriceofeachshareholding;

— viewpricehistoriesandtradinggraphs;

— registertoreceivecommunicationsfromtheCompany,includingtheAnnualReport,inelectronicformat;

— updatebankmandatesandchangeaddressdetails;and

— useonlinedealingservices.

Totakeadvantageofthisservice,pleaseloginat investorcentre.co.ukandenteryourShareholderReferenceNumberandCompanyCode(thisinformationcanbefoundonthelastdividendvoucheroryoursharecertificate).

Further Shareholder Information




https://www-uk.computershare.com/Investor/#Home?cc=uk



Dividend Reinvestment PlanComputershareoperateaDividendReinvestmentPlanwhichcanbeusedtobuyadditionalsharesinsteadofreceivingyourdividendviachequeorintoyourbankaccount.Forfurtherinformationlogon to investorcentre.co.ukandfollowtheinstructionsortelephone03707071694.

Electronic Proxy Voting Ifyouholdstockinyourownnameyoucanchoosetovotebyreturningproxieselectronicallyateproxyappointment.com.

IfyouhaveanyquestionsaboutthisservicepleasecontactComputershareon03707071170.

InordertofulfilitsobligationsunderUKtaxlegislationrelatingtotheautomaticexchangeofinformation,theCompanyisrequiredtocollectandreportcertaininformationaboutcertainshareholders.

ThelegislationrequiresinvestmenttrustcompaniestoprovidepersonalinformationtoHMRConcertaininvestorswhopurchasesharesininvestmenttrusts.Accordingly,theCompanywillhavetoprovideinformationannuallytothelocaltaxauthorityonthetaxresidenciesofanumberofnon-UKbasedcertificatedshareholdersandcorporateentities.

Automatic Exchange of Information

Shareholders,excludingthosewhosesharesareheldinCREST,whocomeontotheshareregisterwillbesentacertificationformforthepurposesofcollectingthisinformation.

Forfurtherinformation,pleaseseeHMRC’sQuickGuide:AutomaticExchangeofInformation–informationforaccountholdersgov.uk/government/publications/exchange-of-information-account-holders.

InaccordancewiththeAIFMDirective,informationinrelationtotheCompany’sleverageandtheremunerationoftheCompany’sAIFM,BaillieGifford&CoLimited,isrequiredtobemade availabletoinvestors.InaccordancewiththeDirective,theAIFMremunerationpolicyisavailableatbailliegifford.com or on request(seecontactdetailsonthebackcover).ThenumericalremunerationdisclosuresinrespectoftheAIFM’srelevantreportingperiod(yearended31March2021)arealsoavailable atbailliegifford.com.

Alternative Investment Fund Managers (AIFM) Directive

TheCompany’smaximumandactualleveragelevels(seeGlossaryofTermsandAlternativePerformanceMeasuresonpages64and65)at30April2021areasfollows:

Leverage

Gross method Commitment method

Maximumlimit 2.50:1 2.00:1

Actual 1.01:1 1.04:1

CREST Proxy Voting IfyouareauseroftheCRESTsystem(includingaCRESTPersonalMember),youmayappointoneormoreproxiesorgiveaninstructiontoaproxybyhavinganappropriateCRESTmessagetransmitted.ForfurtherinformationpleaserefertotheCRESTManual.



https://www.gov.uk/government/publications/exchange-of-information-account-holders

https://www.bailliegifford.com/en/uk/about-us/important-disclosures/

https://www.bailliegifford.com/en/uk/about-us/literature-library/legal/baillie-gifford-group-remuneration-disclosure/

62AnnualReport2021

Risks Pastperformanceisnotaguidetofutureperformance.

MonksisalistedUKcompanyontheLondonStockExchange.Thevalueofitssharesandanyincomefromthemcanfallaswellasriseandinvestorsmaynotgetbacktheamountinvested.

Monksinvestsinoverseassecurities.Changesintheratesofexchangemayalsocausethevalueofyourinvestment(andanyincomeitmaypay)togodownorup.

Marketvaluesforsecuritieswhichhavebecomedifficulttotrademaynotbereadilyavailable,andtherecanbenoassurancethatanyvalueassignedtosuchsecuritieswillaccuratelyreflectthepriceMonksmightreceiveupontheirsale.

TheCompany’sriskcouldbeincreasedbyitsinvestmentinunlisted(privatecompany)investments.Theseassetsmaybemoredifficulttobuyorsell,sochangesintheirpricesmaybegreater.

Monksinvestsinemergingmarketswheredifficultiesindealing,settlementandcustodycouldarise,resultinginanegativeimpactonthevalueofyourinvestment.

Monkshasborrowedmoneytomakefurtherinvestments(sometimesknownas‘gearing’or‘leverage’).TheriskisthatwhenthismoneyisrepaidbytheCompany,thevalueoftheinvestmentsmaynotbeenoughtocovertheborrowingandinterestcosts,andtheCompanywillmakealoss.IftheCompany’sinvestmentsfallinvalue,anyinvestedborrowings willincreasetheamountofthisloss.

Monkscanbuybackitsownshares.Therisksfromborrowing,referredtoabove,areincreasedwhentheCompanybuysback itsownshares.

Monkscanmakeuseofderivativeswhichmayimpactonitsperformance.Currently,theCompanydoesnotmakeuseofderivatives.

AstheaimofMonksistoachievecapitalgrowthyoushouldnotexpectasignificant,orsteady,annualincomefromtheCompany.

Youshouldnotethattaxratesandreliefsmaychangeatanytimeandtheirvaluedependsonyourcircumstances.

MonksislistedontheLondonStockExchangeandassuchcomplieswiththerequirementsoftheUKListingAuthority.ItisnotauthorisedorregulatedbytheFinancialConductAuthority.

FurtherdetailsoftherisksassociatedwithinvestingintheCompany,includingaKeyInformationDocumentandhowchargesareapplied,canbefoundatmonksinvestmenttrust.co.uk,orbycallingBaillieGiffordon08009172112.ThisinformationhasbeenissuedandapprovedbyBaillieGifford&CoLimited,theManagersandSecretaries,anddoesnotinanywayconstituteinvestmentadvice.

TheFinancialStatementshavebeenapprovedbytheDirectorsofThe Monks Investment Trust PLC. Theinformationandopinionsexpressedinthisdocumentaresubjecttochangewithoutnotice.ThestaffofBaillieGiffordandMonksDirectorsmayholdsharesinMonksandmaybuyorsellsuchsharesfromtimetotime.




Monks on the Web Up-to-dateinformationaboutMonkscanbefoundontheCompany’spageoftheManagers’websiteat monksinvestmenttrust.co.uk.YouwillfindfulldetailsonMonks,includingrecentportfolioinformationandperformancefigures.

Trust MagazineTrustistheBaillieGiffordinvestmenttrustmagazinewhichispublishedtwiceayear.Itprovidesaninsighttoourinvestmentapproachbyincludinginterviewswithourfundmanagers,aswellascontaininginvestmenttrustnews,investmentfeaturesandarticlesaboutthetrustsmanagedbyBaillieGifford,includingMonks. Trustplaysanimportantroleinhelpingtoexplainourproductssothatreaderscanreallyunderstandthem.

YoucansubscribetoTrustmagazineorviewadigitalcopyat bailliegifford.com/trust.

Suggestions and Questions

Anysuggestionsonhowcommunicationswithshareholderscanbeimprovedarewelcome.PleasecontacttheBaillieGiffordClientRelationsTeam(seecontactdetailsinthe‘FurtherInformation’boxonthebackcover)andgivethemyoursuggestions.TheywillalsobeveryhappytoanswerquestionsthatyoumayhaveaboutMonks.

Client Relations Team Contact Details YoucancontacttheBaillieGiffordClientRelationsTeambytelephone(yourcallmayberecordedfortrainingormonitoringpurposes),email,faxorpost.Seecontactdetailsinthe‘FurtherInformation’boxonthebackcover.

Please note that Baillie Gifford is not permitted to give financial advice. If you would like advice please ask an authorised intermediary.

Communicating with Shareholders

Nothirdpartydataprovider(‘Provider’)makesanywarranty,expressorimplied,astotheaccuracy,completenessortimelinessofthedatacontainedherewithnorastotheresults tobeobtainedbyrecipientsofthedata.

NoProvidershallinanywaybeliabletoanyrecipientofthedataforanyinaccuracies,errorsoromissionsintheindexdataincludedinthisdocument,regardlessofcause,orforanydamages(whetherdirectorindirect)resultingtherefrom.NoProviderhasanyobligationtoupdate,modifyoramendthedataortootherwisenotifyarecipientthereofintheeventthatanymatterstatedhereinchangesorsubsequentlybecomesinaccurate.

Withoutlimitingtheforegoing,noProvidershallhaveanyliabilitywhatsoevertoyou,whetherincontract(includingunderanindemnity),intort(includingnegligence),underawarranty, understatuteorotherwise,inrespectofanylossordamagesufferedbyyouasaresultoforinconnectionwithanyopinions,recommendations,forecasts,judgements,oranyotherconclusions,oranycourseofactiondetermined,byyouoranythirdparty,whetherornotbasedonthecontent,informationormaterialscontainedherein.

Third Party Data Provider Disclaimer

FTSE Index Data FTSEInternationalLimited(‘FTSE’)©FTSE2021.‘FTSE®’isatrademarkoftheLondonStockExchangeGroupcompaniesandisusedbyFTSEInternationalLimitedunderlicence.AllrightsintheFTSEindicesand/orFTSEratingsvestinFTSEand/oritslicensors.NeitherFTSEnoritslicensorsacceptanyliabilityforanyerrorsoromissionsintheFTSEindicesand/orFTSEratingsorunderlyingdataandnopartymayrelyonanyFTSEindices,ratingsand/orunderlyingdatacontainedinthiscommunication.NofurtherdistributionofFTSEDataispermittedwithoutFTSE’sexpresswrittenconsent.FTSEdoesnotpromote,sponsororendorsethecontentofthiscommunication.



https://www.bailliegifford.com/en/uk/individual-investors/trust-magazine

64AnnualReport2021

Total Assets Thetotalvalueofallassetsheldlessallliabilities(otherthanliabilitiesintheformofborrowings).

Shareholders’ FundsShareholders’Fundsisthevalueofallassetsheldlessallliabilities,withborrowingsdeductedatbookcost.

Net Asset Value (APM)NetAssetValue(NAV)isthevalueofallassetsheldlessallliabilities,withborrowingsdeductedateitherparvalueorfairvalue asdescribedbelow.Pershareamountsarecalculatedbydividingtherelevantfigurebythenumberofordinarysharesinissue.

Net Asset Value (Borrowings at Par Value) (APM)Borrowingsarevaluedatnominalparvalue.

Areconciliationfromshareholders’funds(borrowingsatbookvalue)tonetassetvalueafterdeductingborrowingsatparvalue isprovidedbelow.

2021 £’000

2021 per share

2020 £’000

2020 per share

Shareholders’funds(borrowingsatbookvalue) 3,204,980 1,355.4p 1,963,624 878.4p

Add:bookvalueofborrowings 139,788 59.1p 143,762 64.3p

Less:parvalueofborrowings (140,000) (59.2p) (143,854) (64.4p)

Netassetvalue(borrowingsatparvalue) 3,204,768 1,355.3p 1,963,532 878.3p

Thepersharefiguresabovearebasedon236,453,859(2020–223,553,859)ordinarysharesof5p,beingthenumberofordinarysharesinissueattheyearend.

Net Asset Value (Borrowings at Fair Value) (APM)Borrowingsarevaluedatanestimateofmarketworth.ThefairvalueoftheCompany’s63/8%debenturestock2023isbasedontheclosingmarketofferpriceontheLondonStockExchange.ThefairvalueoftheCompany’sshorttermbankborrowingsisequivalent toitsbookvalue.

Areconciliationfromshareholders’funds(borrowingsatbookvalue)tonetassetvalueafterdeductingborrowingsatfairvalueisprovidedbelow.

2021£’000

2021 per share

2020£’000

2020 per share

Shareholders’funds(borrowingsatbookvalue) 3,204,980 1,355.4p 1,963,624 878.4p

Add:bookvalueofborrowings 139,788 59.1p 143,762 64.3p

Less:fairvalueofborrowings (133,524) (56.4p) (149,854) (67.1p)

Netassetvalue(borrowingsatfairvalue) 3,211,244 1,358.1p 1,957,532 875.6p

Thepersharefiguresabovearebasedon236,453,859(2020–223,553,859)ordinarysharesof5p,beingthenumberofordinarysharesinissueattheyearend.

Discount/Premium (APM)Asstockmarketsandsharepricesvary,aninvestmenttrust’ssharepriceisrarelythesameasitsNAV.WhenthesharepriceislowerthantheNAVpershareitissaidtobetradingatadiscount.ThesizeofthediscountiscalculatedbysubtractingthesharepricefromtheNAVpershareandisusuallyexpressedasapercentageoftheNAVpershare.IfthesharepriceishigherthantheNAVpershare,thissituationiscalledapremium.

Net Liquid AssetsNetliquidassetscomprisecurrentassetslesscurrentliabilities(excludingborrowings)andprovisions.

Active Share (APM)Activeshare,ameasureofhowactivelyaportfolioismanaged,isthepercentageoftheportfoliothatdiffersfromitscomparativeindex.Itiscalculatedbydeductingfrom100thepercentageoftheportfoliothatoverlapswiththecomparativeindex.Anactiveshareof100indicatesnooverlapwiththeindexandanactiveshareofzeroindicatesaportfoliothattrackstheindex.

Unlisted, Unquoted and Private Company Investments‘Unlisted’,‘Unquoted’and‘PrivateCompany’investmentsareinvestmentsinsecuritiesnottradedonarecognisedexchange.

Glossary of Terms and Alternative Performance Measures (APM)




Total Return (APM)Thetotalreturnisthereturntoshareholdersafterreinvestingthedividendonthedatethatthesharepricegoesex-dividend,asdetailedbelow.

2021NAV(par)

2021NAV(fair)

2021Share Price

2020NAV(par)

2020NAV(fair)

2020Share Price

ClosingNAVpershare/shareprice a 1,355.3p 1,358.1p 1,396.0p 878.3p 875.6p 914.0p

Dividendadjustmentfactor* b 1.0024 1.0024 1.0023 1.0020 1.0020 1.0019

AdjustedclosingNAVpershare/shareprice c=axb 1,358.5p 1,361.3p 1,399.2p 880.0p 877.4p 915.8p

OpeningNAVpershare/shareprice d 878.3p 875.6p 914.0p 852.1p 848.9p 883.0p

Totalreturn (c÷d)-1 54.7% 55.5% 53.1% 3.3% 3.4% 3.7%

* Thedividendadjustmentfactoriscalculatedontheassumptionthatthedividendof2.50p(2020–1.85p)paidbytheCompanyduringtheyearwasreinvestedintosharesoftheCompanyatthecumincomeNAV/shareprice,asappropriate,attheex-dividenddate.

Ongoing Charges (APM)Thetotalexpenses(excludingdealingandborrowingcosts)incurredbytheCompanyasapercentageofthedailyaveragenetassetvalue(withborrowingsatfairvalue),asdetailedbelow.

2021 2020

Investmentmanagementfee £10,011,000 £7,644,000

Otheradministrativeexpenses £1,656,000 £1,677,000

Totalexpenses a £11,667,000 £9,321,000

Averagenetassetvalue(withborrowingsdeductedatfairvalue) b £2,697,905,000 £1,933,065,000

Ongoingcharges a÷b 0.43% 0.48%

Gearing (APM)Atitssimplest,gearingisborrowing.Justlikeanyotherpubliccompany,aninvestmenttrustcanborrowmoneytoinvestinadditionalinvestmentsforitsportfolio.Theeffectoftheborrowingontheshareholders’assetsiscalled‘gearing’.IftheCompany’sassetsgrow,theshareholders’assetsgrowproportionatelymorebecausethedebtremainsthesame.ButifthevalueoftheCompany’sassetsfalls,thesituationisreversed.Gearingcanthereforeenhanceperformanceinrisingmarketsbutcanadverselyimpactperformanceinfallingmarkets.Thelevelofgearingcanbeadjustedthroughtheuseofderivativeswhichaffectthesensitivityofthevalueoftheportfoliotochangesinthelevelofmarkets.ThegearingratiosdescribedbelowareincludedintheTenYearSummaryonpage19.

PotentialgearingistheCompany’sborrowingsexpressedasapercentageofshareholders’funds.

InvestedgearingistheCompany’sborrowingsatparlesscashandbrokers’balancesexpressedasapercentageofshareholders’funds*.

Effectivegearing,asdefinedbytheBoardandManagersofMonks,istheCompany’sborrowingsatparlesscash,brokers’balances andinvestmentgradebondsmaturingwithinoneyear,expressedasapercentageofshareholders’funds*.

* Asadjustedtotakeintoaccountthegearingimpactofanyderivativeholdings.

Leverage (APM)ForthepurposesoftheAlternativeInvestmentFundManagers(AIFM)Directive,leverageisanymethodwhichincreasestheCompany’sexposure,includingtheborrowingofcashandtheuseofderivatives.ItisexpressedasaratiobetweentheCompany’sexposureanditsnetassetvalueandcanbecalculatedonagrossandacommitmentmethod.Underthegrossmethod,exposurerepresentsthesumoftheCompany’spositionsafterthedeductionofsterlingcashbalances,withouttakingintoaccountanyhedgingandnettingarrangements.Underthecommitmentmethod,exposureiscalculatedwithoutthedeductionofsterlingcashbalancesandaftercertainhedgingandnettingpositionsareoffsetagainsteachother.Theleveragefiguresat30April2021aredetailedonpage61.

Compound Annual Return (APM)Thecompoundannualreturnconvertsthereturnoveraperiodoflongerthanoneyeartoaconstantannualrateofreturnappliedtothecompoundedvalueatthestartofeachyear.

Directors Chairman: KS Sternberg CM BoyleBJ RichardsProfessor Sir Nigel ShadboltJJ Tigue

Registered OfficeComputershare Investor Services PLC Moor House120 London WallLondon EC2Y 5ET

Alternative Investment Fund Managers and Secretaries Baillie Gifford & Co LimitedCalton Square1 Greenside RowEdinburgh EH1 3ANTel: 0131 275 2000bailliegifford.com

RegistrarComputershare Investor Services PLC The PavilionsBridgwater RoadBristol BS99 6ZZTel: 0370 707 1170

Independent Auditor Ernst & Young LLPAtria One144 Morrison StreetEdinburgh EH3 8EX

BrokersInvestec Bank plc30 Gresham StreetLondon EC2V 7QP

DepositaryBank of New York Mellon (International) Limited1 Canada SquareLondonE14 5AL

Company Detailsmonksinvestmenttrust.co.ukIncorporated in England and WalesCompany Registration No. 00236964ISIN GB0030517261Sedol 3051726Ticker MNKS

Legal Entity Identifier: 213800MRI1JTUKG5AF64

Further Information Client Relations TeamBaillie Gifford & CoCalton Square1 Greenside RowEdinburgh EH1 3ANTel: 0800 917 2112Email: [email protected]


https://www.bailliegifford.com