Aurora Investment Trust : Annual Report - 31 December 2022

Contents

Strategic Report

Financial and

Performance

Highlights

Strategic Report

Policy

Phoenix Asset Management Partners Limited ("Phoenix") was appointed as Investment Manager on 28 January 2016. Phoenix currently seeks to achieve the Company's Objective by investing, primarily, in a portfolio of UK listed equities.

The portfolio will remain relatively concentrated. The exact number of individual holdings will vary over time but typically the portfolio will consist of

15 to 20 holdings.

The Investment Policy of the Company can be found on page 7.

Dividend

The Board proposes to pay a final dividend of 2.97p per ordinary share (2021: 1.84p) to be paid on 4 July 2023 to shareholders who appear on the register as at 9 June 2023, with an ex-dividend date of 8 June 2023.

Annual General Meeting ("AGM")

The AGM of the Company will be held at 25 Southampton Buildings, London WC2A 1AL on 27 June 2023 at 2 p.m. There will be no Investment Manager presentation at the AGM. Instead, there will be a separate Investment Manager presentation and Q&A event at 4 p.m. on 10 October 2023 at the Queen Elizabeth II Centre, Broad Sanctuary, Westminster, London SW1P 3EE.

4

Chair's Statement

Lucy Walker

Chair

20 April 2023

This is my first statement as Chair of your Company, since I succeeded Lord Howard Flight on 28 June 2022. I would like to thank Lord Flight and The Honourable James Nelson for their service to the Company during their tenure, following their retirement at last year's AGM.

Performance

2022 was a difficult year, with concerns over inflation and the war in Ukraine causing significant market turbulence. The Company's Net Asset Value ("NAV") Total Return* for the year ended 31 December 2022, on a non-IFRS basis, was -17.4% (2021:

+17.1%) and the share price total return* was -16.3% (2021: +13.5%). Over the same period the Company's benchmark FTSE All-Share Index (total return) increased by 0.3% (2021: 18.3%), predominantly due to the c.25% weighting in energy and mining stocks which performed strongly after the Russian invasion. The Mid Cap index is less exposed to those sectors, and saw a fall of 20% for the year.

The strongest contributor to the Company's performance was the inflation hedge, put in place in 2021 and sold early in 2022, while the weakest contributor was Barratt Developments, where the proceeds from the inflation hedge were invested. We recognise that this was a disappointing performance for shareholders, but concentrated portfolios of undervalued holdings are not immune to short or medium term market volatility. The Board remains confident that the investment approach followed by the Investment Manager will lead to long term outperformance for shareholders.

Your Investment Manager, Phoenix Asset Management Partners Limited ("Phoenix"), has provided a full description of the development and financial performance of the portfolio over the year in the Investment Manager's Review on pages 14 to 23.

The Investment Manager and Performance Fees

2022 was the seventh year of Phoenix's management of the Company's portfolio, which began in January 2016. Throughout that time, Phoenix continued to employ a focused and patient investment approach.

Phoenix receives no annual management fee, which is a unique aspect of the Company. Instead it is solely remunerated from an annual performance fee, equal to one third of the outperformance of the Company's NAV against its benchmark, the FTSE All-Share Index (total return).

The performance fee is paid by issuance of the Company's ordinary shares, which are subject to a fixed three-year clawback period. That means the issued shares will be returned by the Investment Manager in the event that any outperformance versus the index reverses on the third-year anniversary. If outperformance fully reverses, the Investment Manager will receive nothing.

In the years ending 2019, 2020 and 2021 the Investment Manager was awarded shares in settlement of a performance fee.

In 2022, instead of paying a performance fee, the Company clawed back 530,311 shares from Phoenix, which were delivered to the Company and held in Treasury at the year end, but cancelled shortly after on 9 January 2023.