Melville Douglas Global Growth Fund Limited

Transcription

1 Melville Douglas Global Growth Fund Limited Annual Report and Audited Financial Statements Year ended

2 Melville Douglas Global Growth Fund Limited Contents Annual Report and Audited Financial Statements For the year ended Page Administration 2 Report of the Directors 3 Report of the Custodian 5 Investment Manager s Report 6 Independent Auditors Report 8 Statements of Comprehensive Income 10 Statements of Changes in Equity 11 Statements of Financial Position 12 Notes to the Financial Statements 13 Fund Statistics 25 Portfolio Statements 26

3 Administration Directors Directors Graham Baillie Michael Farrow Helen Holmes Oliver Sonnbichler Registered Office Standard Bank House La Motte Street St. Helier Jersey JE2 4SZ Channel Islands Manager and Secretary STANLIB Fund Managers Jersey Limited Standard Bank House La Motte Street St. Helier Jersey JE2 4SZ Channel Islands Investment Manager Standard Bank International Investments Limited Standard Bank House La Motte Street St. Helier Jersey JE2 4SZ Channel Islands Sub-Custodian and Banker The Bank of New York Mellon SA/NV London Branch The Bank of New York Mellon Centre 160 Queen Victoria Street London EC4V 4LA United Kingdom Administrator BNY Mellon Fund Services (Ireland) Limited Guild House, Guild Street International Financial Services Centre Dublin 1 Ireland Independent Auditors PricewaterhouseCoopers One Spencer Dock North Wall Quay Dublin 1 Ireland Legal Adviser Ogier Ogier House The Esplanade St. Helier Jersey JE4 9WG Channel Islands Sub-Investment Manager Melville Douglas Investment Management (Proprietary) Limited 8th Floor West Wing Baker Street, Rosebank Johannesburg, 2196 South Africa Custodian Capita Trust Company (Jersey) Limited 12 Castle Street St. Helier Jersey JE2 3RT Channel Islands Melville Douglas is a registered business name of Standard Bank International Investments Limited. Standard Bank International Investments Limited, Standard Bank Jersey Limited and STANLIB Fund Managers Jersey Limited are regulated by the Jersey Financial Services Commission. RMC.004 / 2

4 Report of the Directors The directors submit their audited annual report and financial statements for the year ended. Incorporation Melville Douglas Global Growth Fund Limited (the Company ) is an open-ended investment company incorporated by way of a continuance in Jersey on 31 March 2003 under the provisions of the Companies (Jersey) Law It was initially incorporated in the British Virgin Islands under the Mutual Funds Act The Company is a public company within the meaning of Article 16 of the Companies (Jersey) Law Participating shares may be issued and redeemed at prices based upon each class s underlying net asset value. Structure The Company offers investors a choice of classes (each such class being referred to as a ) and the opportunity to switch from one to another. As at there were 2 s available - US$ Balanced Class Fund and Pan Asian. A separate is established for each class of participating share and each is managed separately and independently. The US$ Income fully redeemed and closed on 5 June. The assets, liabilities, income and expenses attributable to each class of participating share are applied to the established for that class. If they are not attributable to any particular class of participating shares, they are allocated between all the s in such manner as the directors deem to be equitable. The Company is a single legal entity. As a result, although the assets, income, earnings, liabilities and expenses attributable to each will be segregated and kept separate from those attributable to other s, in the event of the Company not being able to meet the liabilities attributable to any particular out of the assets of such, the excess liabilities may be met out of the assets attributable to other s. Objective and investment policy US$ Balanced The is designed to provide long-term growth and to maximise investment returns in US dollars through investment in other funds for which Standard Bank International Investments Limited or any other Standard Bank Group Limited subsidiary or associate or Liberty Group Limited or any of its subsidiaries or associates acts as investment manager or adviser. For the avoidance of doubt the may also invest in collective investment schemes and make other investments which are not prohibited by the investment restrictions set out in the Prospectus. Pan Asian The is designed to provide long-term growth and to maximise investment returns in US Dollars through investment in other funds for which Standard Bank International Investments Limited or any other Standard Bank Group Limited subsidiary or associate or Liberty Group Limited or any of its subsidiaries or associates acts as investment manager or adviser. The is currently wholly invested in the Pan Asian Class of Melville Douglas Equity Fund Limited (the Pan Asian Master Fund ). The investment objective of the Pan Asian Master Fund is to provide a long-term capital growth by investing primarily in one or more investment funds or managed accounts. For the avoidance of doubt the Pan Asian Master Fund may also invest in collective investment schemes and make other investments which are not prohibited by the investment restrictions applicable to the Pan Asian Master Fund set out in the Prospectus. Results and dividends The Company does not intend to distribute income and capital gains realised by the Company on its investments by way of dividend. Accordingly, income on investments and increases in the capital value of the investments of the Company will be reflected in the value of the Participating Shares. The results for the year are disclosed in the Statements of Comprehensive Income. Directors The directors of the Company are set out on page 2. All directors are non-executive. Graham Baillie and Helen Holmes are directors of the Investment Manager, Standard Bank International Investments Limited. Oliver Sonnbichler is an employee of the Investment Manager. Michael Farrow is an independent Non-Executive Director. No director has a service contract with the Company or holds any interest in the capital of the Company. / 3

5 Report of the Directors (continued) Statement of Directors Responsibilities The directors are responsible for preparing the financial statements in accordance with applicable Jersey law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 The Financial Reporting Standard Applicable in the UK and Republic of Ireland (FRS102). The Companies (Jersey) Law, 1991 requires the directors to prepare the financial statements for each financial year, which give a true and fair view of the state of affairs of the Company and of the results of the Company for that year. In preparing these financial statements, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent; - state whether applicable accounting standards have been followed subject to any material departures disclosed and explained in the financial statements; and - prepare the financial statements on the going concern basis unless it is inappropriate to assume that the Company will continue in operation. The Directors confirm that they have complied with the above requirements in preparing the financial statements. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991 and FRS 102. They are also responsible for safeguarding the assets of the Company and hence taking reasonable steps for the prevention and detection of error, fraud and non-compliance with law or regulations. So far as each person who is a director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware. Having made enquiries of fellow directors and the Company s auditor, each director has taken all the steps that he/she is obliged to take as a director in order to make himself/herself aware of any relevant audit information and to establish that the auditor is aware of the information. Independent Auditors PricewaterhouseCoopers Ireland have indicated their willingness to continue in office. A resolution to reappoint PricewaterhouseCoopers Ireland as independent auditors of the Company will be proposed at the annual general meeting. A copy of the Notice of the Annual Form of Proxy General Meeting is attached and form part of these financial statements. Connected Parties The Directors are satisfied that there are arrangements in place to ensure that transactions with connected parties entered into during the year were carried out as if negotiated at arm s length and were in the best interests of shareholders. Secretary The Secretary of the Company during the year ended was STANLIB Fund Managers Jersey Limited. By order of the board STANLIB Fund Managers Jersey Limited Secretary 18 January 2016 / 4

6 Report of the Custodian To the members of Melville Douglas Global Growth Fund Limited. The Custodian is responsible for the safekeeping of all the property of the Company which is entrusted to it, as prescribed in the Custodian Agreement. Under the principles of the Guide to open-ended unclassified collective investment funds offered to the general public (the OCIF Guide ), issued by the Jersey Financial Services Commission, the Custodian has a duty to take reasonable care to ensure that the methods adopted by the Company s Manager in respect to the pricing of, and dealing in, shares in the Company are compliant with the Company s principal documents. It is the opinion of Capita Trust Company (Jersey) Limited in respect of the year ended, that to the best of our information, knowledge and belief, that in all material respects, the Manager managed the s in that year: a) in accordance with the limitations imposed on the investment and borrowing powers of the Company by the Articles and Prospectus and; b) otherwise in accordance with the provisions of the Management and Custodian Agreements. Capita Trust Company (Jersey) Limited Custodian 18 January 2016 / 5

7 Investment Manager s Report For the year ended US$ Balanced (the ) Investment objective To provide long-term capital growth by investing in a combination of global equity, bond and income funds with a view to maximising investment returns in US Dollars. Quantitative analysis The s return for the period was -3.09%. The s benchmark is 50% MSCI World and 50% US dollar cash. The benchmark return was -2.09% for the period under review. Commentary Cash was king over the year. By virtue of protecting the nominal value of capital, US dollar cash outperformed global equities, global bonds and even gold over the past twelve months. Deflation/disinflation was the overarching theme of the past twelve months, emanating in risk asset prices, in commodity prices and in growth expectations. The first half of saw yet another Eurozone existential wobble until a Greek bailout package (the third within five years) was finally agreed in July. This Greek drama may prove to be a sideshow to simmering concerns about the sustainability of China s multi-decade breakneck growth. The situation boiled over in August when the People s Bank of China devalued the renminbi (by a modest 3%) amidst softer economic data. The uncertain outlook even stayed the Federal Reserve s hand to raise rates for the first time in nine years. Close to zero US rates for (a bit) longer should have been positive news for stock markets given financing costs would remain accommodative and better yielding assets look attractive. However, the benefits have been outweighed by the associated uncertainty (which markets loath) because any Fed action has now become data dependent on not just the vagaries of US economic indicators, but also on international barometers. In commodities the OPEC meeting in November proved a pivotal moment for the oil price, with Saudi Arabia no longer prepared to defend the price at the expense of further loss to market share. The halving of the oil price over the past 18 months was an effective tax cut for the consumer and corporates, and helped to defer the US rate tightening cycle. However, it is also a clear negative for oil companies and net producing countries. Commodity price deflation was also apparent in the mining sector where new projects, signed off when prices were far higher, have led to a multi-year supply glut. The s overweight exposure to risk assets relative to the benchmark coupled with underperformance in certain underlying funds across the asset categories resulted in the underperforming its benchmark. Forward thinking The US and UK economies have been on a steady recovery path for some time. Europe is expected to join in, helped by a more competitive currency, stronger loan growth and a rebound from a low base. Low commodity prices act as an additional spur to demand (i.e. an effective tax cut at the petrol pump), to corporate profitability (i.e. costs) and to moderate inflation. China is slowing, but we do not expect a hard landing as the expansion of the services and consumer sectors will temper manufacturing weakness. Policy makers have plenty of levers to pull given the country s twin surpluses, foreign currency reserves, and scope to cut rates and/or bank reserve ratio requirements. If it was not for a weak international environment, the Federal Reserve would have already hiked rates given the US employment rate is now at the lowest level since April However, we expect the trajectory to be very gentle given inflation is not a threat. In short there are two outcomes regarding US rates, either there is tightening into strength (i.e. a better earnings outlook), or the outlook remains muted and therefore monetary conditions remain very accommodative. In summary global equities continues to be our favoured asset class given the paucity of returns elsewhere. Valuations are above historic averages but remain supported by low interest rates with scope for a multiple re-rating relative to cash and bonds. We view bonds as expensive and find cash very unattractive at current levels of interest rates. We will continue to manage the on the basis of the balance of risks we can see, and most importantly on the basis of valuation and margin of safety. / 6

8 Investment Manager s Report (continued) Pan Asian (the ) Investment objective To provide long-term capital growth by investing in listed equities in both the developed and emerging regions of Asia. The aim is to maximise investment returns in US Dollars. Quantitative analysis The s return was -9.97% for the period under review. The Fund s benchmark is composed of % Topix (Japan) and 70% MSCI Asia Pacific ex-japan. The benchmark return was -8.52% for the period. Commentary The year in review has been a turbulent and perplexing period for financial markets. Investor sentiment has been particularly fragile in Asia, with concerns over global growth and inflation expectations exacerbated by confusing and sometimes conflicting responses from policy makers in China and the US. The weak data has mostly come from China, and whilst any change in growth expectations for the world s second largest economy has major ramifications for the region, the market reaction was amplified by the central government s mixed messages regarding state intervention in currency and domestic stock markets. After an encouraging end to and first quarter of, the Japanese economy has since underwhelmed, with sluggish GDP expansion despite the dual tailwinds of a weak currency and lower commodity prices. Real wage growth remains stubbornly low and core CPI has dipped back into deflation following a 0.1% fall in August. At the corporate level, there are some signs of encouragement, earnings growth remains robust, there has been significant progress with shareholder friendly corporate governance initiatives and valuations remain attractive relative to global peers. The Pan Asian Class performed broadly in line with the benchmark, with the positive effect of the slight overweight allocation to Japan offset by the underperformance of our Japanese managers. The overweight exposure to Japan remains in place, largely on a relative value basis. We believe that a combination of a weaker currency, corporate governance reforms and the potential for a pick-up in economic activity will combine to deliver a significant increase in Japanese corporate earnings along with the potential for a re-rating of the market, which remains at a significant discount to global peers by most measures. Forward thinking The long term prospects for Asian growth remain compelling, although the short-term environment is likely to remain challenging. The prospect of tightening US monetary policy and slowing growth in China are a major concern, but appear to be reflected in current stock market valuations. While the immediate outlook for the region as a whole remains bleak, there is considerable dispersion between countries and the broad market sell-off has created value in Asian markets with stronger macro economic fundamentals. Stock selection is key and we continue to favour unconstrained stock picking managers to invest in the best long-term opportunities. Standard Bank International Investments Limited Investment Manager 21 October Note: Statistics in the Investment Manager s Report are based on reported Net Asset Values at which may be different from the financial statements, as shown in note 11 / 7

9 Independent Auditors Report to the Members of Melville Douglas Global Growth Fund Limited Report on the financial statements Our opinion In our opinion Melville Douglas Global Growth Fund Limited s financial statements (the financial statements ): give a true and fair view of the state of the company s affairs as at and of its profit/loss for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including FRS 102, The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland, and have been properly prepared in accordance with the requirements of the Companies (Jersey) Law What we have audited The financial statements comprise: the Statements of Financial Position as at ; the Statements of Comprehensive Income for the year then ended; the Statements of Changes in Equity for the year then ended; the accounting policies; and the notes to the financial statements which include other explanatory information. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Generally Accepted Accounting Practice, including FRS 102, The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland. In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events. Opinion on other matter In our opinion, the information given in the Directors Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Other matters on which we are required to report by exception Under the Companies (Jersey) Law 1991 we are required to report to you if, in our opinion: we have not received all the information and explanations we require for our audit; or proper accounting records have not been kept; or the financial statements are not in agreement with the accounting records We have no exceptions to report arising from this responsibility. Responsibilities for the financial statements and the audit Our responsibilities and those of the directors As explained more fully in the Statement of Directors Responsibilities set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the company s members as a body in accordance with Article 113A of the Companies (Jersey) Law 1991 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. / 8

10 Independent Auditors Report to the Members of Melville Douglas Global Growth Fund Limited (continued) What an audit of financial statements involves We conducted our audit in accordance with International standards on Auditing (UK and Ireland). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. We primarily focus our work in these areas by assessing the directors judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements. We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Declan Murphy for and on behalf of PricewaterhouseCoopers Chartered Accountants Dublin 18 January 2016 / 9

11 Statements of Comprehensive Income For the year 1 October to (Comparatives are for the year 1 October 2013 to ) Income Notes Balanced Balanced US$ Income * US$ Income * Pan Asian Pan Asian Dividend income 2(d) 16,652 Interest income 2(d) 72,702 89,894 Deposit income 43,659 Net (loss)/gain on financial assets at fair value through profit or loss 2(h), 3 (2,676,488) 5,626,768 11,366 (636,664) 361,135 Total net (loss)/gain (2,587,134) 5,760,321 11,366 (636,664) 361,135 Expenses Custodian fees 4 29,442,528 3,398 5,000 5,000 Sub-Custodian fees 4 11,575 12,883 1,292 1,199 2,317 Administration fees 4 146, ,356 1,959 11,024 11,7 Directors' fees 4 18,128 13,672 8,849 18,128 13,672 Audit fees 4 3,998 4,018 2,656 3,998 4,018 Sundry expenses 13,431 11, ,081 2,065 Total operating expenses 223,289 2,244 18,600 43,4 38,802 Net (expense)/income before finance costs (2,810,423) 5,5,077 (7,234) (680,094) 322,333 Finance Costs: Bank overdraft interest (713) (322) (53) Total finance costs (713) (322) (53) Taxation 6 (2,225) (Decrease)/Increase in net assets attributable to holders of redeemable shares from operations (2,812,648) 5,529,364 (7,234) (680,416) 322,280 The results of US$ Balanced and Pan Asian s are from continuing operations. There are no recognised gains or losses for the year other than those set out in the Statements of Comprehensive Income. There are no differences between the results above and those under historical cost with the exception of the effect of revaluation of investments. *Terminated on 5 June. Results arose solely from operations to the date of termination. The notes on pages 13 to 24 form an integral part of these financial statements. / 10

12 Statements of Changes in Equity For the year 1 October to (Comparatives are for the year 1 October 2013 to ) US$ Balanced US$ Balanced US$ Income * US$ Income * Pan Asian Pan Asian Notes Net assets attributable to holders of redeemable shares at the beginning of the year 100,162,157 99,494,168 2,054,150 7,757,328 7,851,408 Proceeds from the issue of shares 7 4,703,654 8,785,618 Payments on the redemption of shares 7 (11,990,571) (13,646,993) (2,046,916) (1,377,997) (416,360) (Decrease)/Increase in net assets attributable to holders of redeemable shares from operations (2,812,648) 5,529,364 (7,234) (680,416) 322,280 Net assets attributable to holders of redeemable shares at the end of the year 90,062, ,162,157 5,698,915 7,757,328 *Terminated on 5 June. The notes on pages 13 to 24 form an integral part of these financial statements. / 11

13 Statements of Financial Position As at (Comparatives as at ) US$ Balanced US$ Balanced Pan Asian Pan Asian Assets Notes Financial assets at fair value through profit or loss 2(b), ,732,210 91,109,011 5,699,664 7,994,282 Cash and bank balances 2(c) 10,311,350 9,226,714 12,616 Revenue receivable 23,904 23,904 Total assets 91,067, ,359,629 5,712,280 7,994,282 Liabilities Bank Overdraft 221,814 Payable for shares redeemed 973, ,578 Administration fees payable 4 12,910 14, ,099 Custodian fees payable 4 2,617 2, Sub-Custodian fee payable 4 1,970 1, Director fees payable 4 6,409 6,844 6,556 7,992 Audit fees payable 4 4,061 4,563 4,178 4,679 Other payables 3,400 3, Total liabilities 1,004, ,472 13, ,954 Net assets attributable to holders of redeemable shares 90,062, ,162,157 5,698,915 7,757,328 Net asset value per share The financial statements were approved by the Board on 18 January 2016 and signed on its behalf by: Michael Farrow Director The notes on pages 13 to 24 form an integral part of these financial statements. / 12

14 Notes to the Financial Statements 1. Incorporation The Company was originally incorporated in the British Virgin Islands on 19 November 1998 and was incorporated in Jersey, Channel Islands by way of a continuance on 31 March The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented. These financial statements have been prepared on a going concern basis under the historical cost convention as modified by the measurement at fair value of investments in accordance with Financial Reporting Standard 102 The Financial Reporting Standard Applicable in the UK and Republic of Ireland (FRS102). A summary of the more important accounting policies is set out below. The US$ Income fully redeemed and closed on 5 June. 2. Accounting Policies a. Basis of Accounting These audited annual financial statements for the year ended have been prepared in accordance with FRS 102: the Financial Reporting Standard applicable in the UK and Republic of Ireland as issued by the Financial Reporting Council ( FRS 102 ). These audited annual financial statements should be read in conjunction with the audited annual financial statements for the year ended, which were prepared in accordance with accounting standards generally accepted in United Kingdom ( UK GAAP ) and the Statement of Recommended Practice for Authorised Funds ( SORP ) issued by the Investment Management Association ( IMA ). The Directors of the Company have applied Financial Reporting Standards 102 The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland for its annual and interim financial statements effective 1 October. Accordingly, these are the Company s first annual financial statements which have been prepared in accordance with FRS 102. The Company has consistently applied the accounting policies used in the preparation of its opening FRS 102 Statements of Financial Position at 1 October throughout all years presented, as if these policies had always been in effect. The information required by FRS 102, to be included in the Statements of Total Recognised Gains and Losses and Reconciliation of Movements in Shareholders Funds is, in the opinion of the directors, contained in the Statements of Comprehensive Income and Statements of Changes in Equity on page 11. In arriving at the results for the year, all amounts in the Statements of Comprehensive Income on page 10 relate to continuing activities. The Company has availed of the exemption available to open-ended investment funds under Section 7 Statements of Cash Flows of FRS 102 (Section 7.1a (c)), not to prepare a cash flow statement on the basis that substantially all of the Company s investments are highly liquid and carried at fair value, and the Company provides Statements of Changes in Equity. The transition to FRS 102 has resulted in no changes to the reported financial position or financial performance compared to that previously presented. No adjustments have been made to either the equity presented in the opening Statements of Financial Position as at 1 October 2013 or at i.e. at the end of the latest period presented in the Fund s most recent annual financial statements determined in accordance with the previous financial reporting framework. b. Investments Investments are recognised on the Statements of Financial Position at the date on which the Company becomes party to contractual provisions of the instruments. Investments are initially recognised at cost which is the fair value at date of recognition. Subsequently investments are re measured at fair value being the bid market price at the Statements of Financial Position date. Gains or losses arising from revaluation are recognised in the Statements of Comprehensive Income. On disposal of investments, gains and losses on sale of investments are calculated on an average cost basis and are taken to the Statements of Comprehensive Income in the year in which they arise. On initial application of FRS 102, in accounting for all of its financial instruments, an entity is required to apply either (a) the full requirements of Sections 11 Basic Financial Instruments and Section 12 Other Financial Instruments Issues of FRS 102, (b) the recognition and measurement provisions of International Accounting Standards ( IAS ) 39 Financial Instruments: Recognition and Measurement ( IAS 39 ) as adopted for use in the European Union and the disclosure requirements of Sections 11 and 12, or (c) the recognition and measurement provisions of International Financial Reporting Standards ( IFRS ) 9 Financial Instruments ( IFRS 9 ) and the disclosure requirements of Sections 11 and 12. The Company has elected to apply the full requirements of Sections 11 and Section 12 of FRS 102. The Company has elected to continue to use bid prices on the portfolio statements for financial statement purposes. / 13

15 Notes to the Financial Statements (continued) 2. Accounting Policies (continued) c. Cash and bank balances Cash is valued at cost, which approximates fair value. Cash is held in accounts at The Bank of New York Mellon SA/NV London Branch which allows the s instant access to their accounts. Term deposits are deposits held with various financial institutions bearing fixed or variable interest rates payable at maturity. d. Income Interest income is accounted for on an accruals basis using the effective yield basis. Dividend income is accounted for on the ex-dividend date. Dividend income is reported gross of withholding tax deducted at source and the related withholding tax is disclosed separately as a tax charge in the Statements of Comprehensive Income. e. Foreign currencies Transactions in foreign currencies are translated into the reporting currency of the s at the rates of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the reporting currency of the s at the rates of exchange ruling at the Statement of Financial Position date. The reporting currencies of the s are US Dollars. Differences arising on translation are included in the Statements of Comprehensive Income within revenue or expenses in the year in which they arise. f. Share issues and redemptions Shares in the Company may be issued at the issue price and redeemed at the redemption price on subscription days at the prices calculated in accordance with the Articles of Association and based on the value of the underlying investments held in the relevant. The directors present policy is that: i. On the issue of shares, the amount received is credited to the share capital account. ii. On redemption, the amount paid is debited to the share capital account. Should that account be fully utilised, the amount payable on redemption is debited to realised reserves. g. Expenses The Company is responsible for the payment of management, custodian, sub-custodian and administration fees, which are accrued for on each subscription day (see Notes 4 & 8). The Company is also responsible for the payment of auditors and directors remuneration together with reporting expenses and operational costs in accordance with the prospectus. All expenses are accounted for on an accruals basis. h. Net gains/(losses) on financial assets at fair value through profit or loss This item includes changes in the fair value of financial assets held for trading and excludes interest and dividend income and expenses. Unrealised gains and losses comprise changes in the fair value of financial instruments for the year. Realised gains and losses on disposals are calculated using the average cost method and are reflected as net gains or losses on investments in the Statements of Comprehensive Income. i. Withholding taxes In some jurisdictions investment income is subject to withholding tax deducted at the source of the income. Withholding tax is a generic term used for the amount of withholding tax deducted at the source of the income and is not significant for the Portfolio. Withholding tax is disclosed separately as a tax charge from the gross investment income in the Statements of Comprehensive Income. j. Total Expense Ratio The Total Expense Ratio ( TER ) is calculated and disclosed as per the guidelines issued by the Investment Management Association. The ratio expresses the sum of all costs charged on an ongoing basis to the s taken retrospectively as a percentage of the s average net assets. For clarity, when the is investing in other funds, the ongoing cost of these funds is not incorporated in the calculation of the TER. k. Distribution policy The Company s policy is to not distribute any income on its participating shares. i. Aggregation The directors do not believe that the aggregation of the s would be of any benefit to the users of the financial statements and, therefore this has not been provided. / 14

16 Notes to the Financial Statements (continued) 3. Gains and losses on financial assets at fair value through profit or loss Non-derivative securities: US$ Balanced US$ Balanced US$ Income * US$ Income * Pan Asian Pan Asian Net realised gain on investments 3,503,215 3,023,808 52,358 3,999 41,797 Net movement in unrealised investment schemes (6,104,901) 2,592,729 (40,992) (940,663) 319,338 Derivative securities: Net realised (loss)/gain on foreign currency contracts (74,802) 10,231 (2,601,686) 5,616,537 11,366 (636,664) 361,135 (74,802) 10,231 Net (loss)/gain on financial assets (2,676,488) 5,626,768 11,366 (636,664) 361, Expenses The Company is responsible for the payment of custodian, sub-custodian, administration, auditors and directors fees together with performance fees, reporting expenses and operational costs. The fees of the Investment Manager will be met by the Manager out of its fees. 5. Investment Purchases, Investment Sales and Commissions US$ Balanced US$ Balanced US$ Income * US$ Income * Pan Asian Pan Asian Purchases in year before transaction costs 14,627,875 33,081,1 Commissions 9,808 3,465 Gross purchases total 14,637,683 33,084,766 Sales in year before transaction costs 22,339,494 34,408,606 2,075,321 1,658, ,000 Commissions (2,623) Net sales total 22,339,494 34,405,983 2,075,321 1,658, ,000 *Terminated on 5 June. / 15

17 Notes to the Financial Statements (continued) 6. Taxation For the purposes of Jersey taxation, the Company will fall under Article 123C of the Income Tax (Jersey) Law 1961, as amended, as a Jersey resident Company which is neither a utility company nor a financial services company and as such will be charged to Jersey income tax at a rate of 0% on its income (other than on any rental income or property development profits arising in respect of Jersey situs real property or land). The Company will not be subject to tax in Jersey on any capital arising to it. Under applicable foreign tax laws, withholding taxes may be deducted from interest, dividends and capital gains attributable to the Company, at various rates. The Company pays withholding tax on dividends, which is deducted at source. This is shown separately as a taxation charge in the Statements of Comprehensive Income. US$ Balanced Overseas tax - withholding tax on dividend income 2,225 US$ Income * Overseas tax - withholding tax on dividend income Pan Asian Overseas tax - withholding tax on dividend income *Terminated on 5 June. 7. Share capital The Company is authorised to issue 100 management shares of 1.00 each and an unlimited number of participating shares of no par value. The management shares exist solely to comply with Jersey Law, which requires that participating redeemable preference shares ( participating shares ) must have a preference over another class of capital. The holders of the management shares are entitled to receive notice of general meetings of the Company and to attend and vote thereat. On a poll a holder of management shares is entitled to one vote for each management share held by him. Management shares carry no right to a dividend and are not redeemable. In a winding up, they rank only for a return of paid up nominal capital out of the assets of the Company (before the return of nominal capital paid up on participating shares). Participating shares carry the right to a proportionate share in the assets of the relevant and to any dividends that may be declared. Holders of the shares are entitled to receive notice of all general meetings of the Company and to attend and vote thereat. The holder of each share is entitled to one vote for each share of which he is a holder. Shares are redeemable by shareholders at prices based on the value of the net assets of the relevant as determined in accordance with its Articles of Association. Management shares The management shares have been issued to the Manager at par and the proceeds of the issue are represented by a separate management fund. Details of the management fund at the Statements of Financial Position date are as follows: Current account Management shares of 1.00 each Authorised, issued and fully paid The management fund is not reflected in the Statements of Financial Position. / 16

18 Notes to the Financial Statements (continued) 7. Share capital (continued) Movements of participating shares The following tables show the movement in participating shares during the year ended and year ended. US$ Balanced Class Fund US$ Balanced Class Fund US$ Income * US$ Income * At the beginning of the year 6, ,716 15,788 Issued during the year 28,870 56,541 Redeemed during the year (74,386) (85,878) (15,788) At the end of the year 584,863 6,379 *Terminated on 5 June. Pan Asian Pan Asian At the beginning of the year 61,917 65,259 Issued during the year Redeemed during the year (11,393) (3,342) At the end of the year 50,524 61, Related Party Transactions The following disclosures are made in accordance with the requirements of Section 33 Related Party Disclosures of FRS 102. STANLIB Fund Managers Jersey Limited (the Manager ), Standard Bank International Investments Limited (the Investment Manager ), Melville Douglas Investment Management (Proprietary) Limited (the Sub-Investment Manager ), Capita Trust Company (Jersey) Limited (the Custodian ) and all directors of the Company are related parties of the Company. The Manager is considered a related party by virtue of its contractual arrangements. The Investment Manager and the directors are considered related parties to the Company as they make key operating decisions for the Company. The Manager has the primary responsibility for the management and administration of the Company. The Manager has appointed the Investment Manager to provide it with investment management services in relation to the Company. The fees of the Investment Manager are paid by the Manager out of its fees. The Manager does not currently charge a management fee on any of the Global Growth s. The Manager is entitled to an annual administration fee at a rate of 0.15% of the net asset value of each subject to a minimum of 7,000 per annum out of which the Administrator will be paid. / 17

19 Notes to the Financial Statements (continued) 8. Related Party Transactions (continued) The fees of the Custodian shall be calculated as follows, subject to an overall minimum fee in respect of each of 5,000 per annum % per annum on any and all amounts up to 50 million of the Net Asset Value of that ; 0.025% per annum on any and all amounts above 50 million of the Net Asset Value of that but only up to 100 million; 0.010% per annum on any and all amounts above 100 million of the Net Asset Value of that but only up to 500 million; and 0.005% per annum on any and all amounts above 500 million of the Net Asset Value of that. Such fees shall accrue daily and shall be payable to the Custodian by monthly payments in arrears becoming due on the first business day of each month in respect of the preceding month. The Custodian is also entitled to be reimbursed out of the s for charges and transaction fees levied on it by the Sub-Custodian and other sub-custodians which shall be at rates which have been negotiated on an arm s length basis or are otherwise on commercial terms. Michael Farrow is entitled to receive GBP4,000 per annum from the Company as director fees. Helen Holmes, Graham Baillie and Oliver Sonnbichler are entitled to 10,000 per director per annum from the Company. For the US$ Balanced directors fees incurred during the year ended amounted to 18,128 ( : 13,672) with 6,409 ( : 6,844) outstanding at the year end. There were no directors fees incurred during the year ended for the US$ Income ( : 8,849). For the Pan Asian directors fees incurred during the year ended amounted to 18,128 ( : 13,672) with 6,556 ( : 7,992) outstanding at the year end. All transactions with the above related parties are at arm s length. The fees incurred during the year ended and are as disclosed in the Statements of Comprehensive Income with the amounts outstanding at the year end disclosed in the Statements of Financial Position. The Company invests in other Melville Douglas Funds, which also receive services from the Manager, Investment Manager, Custodian and Sub-Custodian of the Company. The Company held investments in other Melville Douglas funds during the year. These funds are under the common management of Standard Bank International Investments Limited, the Investment Manager. The investments were made on an arms length basis in the ordinary course of business. Please refer to the portfolio statements on pages 26 and 27. / 18

20 Notes to the Financial Statements (continued) 9. Financial risk management Consistent with the investment objectives, as noted in the Report of the Directors, the Company s financial instruments comprise mainly collective investment schemes. In addition, the Company holds cash, liquid assets and various items such as debtors and creditors that arise directly from its operations. The main risks arising from the Company s financial instruments are market risk (comprising market price risk, interest rate risk and currency risk), credit risk and liquidity risk. The Board reviews and agrees with the Manager and Investment Manager policies for managing each of these risks and they are summarised below Market risk Market risk is the risk that the fair value of, or future cash flows arising from, financial instruments will fluctuate because of the changes in market variables. Market risk comprises three types of risks: market price risk, interest rate risk, and currency risk. Market price risk Market price risk arises mainly from uncertainty about future prices of equity and equity-linked financial instruments. It represents the potential loss that the Company may suffer due to movements in securities prices. Market price risk is mainly reduced through diversification. While some s have one investment, these investments are in collective investment funds which achieve the diversification. These are usually the relevant matching s of other Melville Douglas Funds. Investment restrictions are in place to ensure that the impact of market price risk is minimised. In particular, the following restrictions/guidelines are applicable: US$ Balanced Not more than 10% of the net asset value of the shall be invested in the securities of any one issuer (excluding open ended funds); The assets of the shall be invested in at least three collective investment schemes. Not more than 70% of the net asset value of the shall be invested in any one single collective investment scheme; Not more that 10% of the net asset value of the shall be invested in any one single real property fund; and Not more than 5% of the net asset value of the shall be invested in any one single Warrant Fund, Leveraged Fund, Futures & Options Fund or geared Futures & Options Fund. US$ Income The terminated on 5 June. Pan Asian The assets of the shall not be invested in collective investment schemes whereby the investment policies and objectives are materially inconsistent with the investment policies of the. The is currently wholly invested in the Pan Asian Class of Melville Douglas Equity Fund Limited (the Pan Asian Master Fund ), hence the Mater Fund Policies apply. Such policies include: Not more than 10% of the net asset value of the Pan Asian Master Fund shall be invested in collective investment schemes which are not open ended collective investment schemes; The assets of the Pan Asian Master Fund shall be invested in at least two collective investment schemes, and not more than 75% of the net asset value of the Pan Asian Master Fund may be invested in any one collective investment scheme. Full details regarding the investment restrictions can be obtained from the prospectus. Sensitivity analysis The table below summarises the sensitivity of the s net assets attributable to holders of redeemable shares to market price movements. It shows the increase/(decrease) in the net assets attributable to holders of redeemable shares for the s given a 5% movement in the underlying investment prices at year end; all other variables remaining constant: US$ Balanced 4,036,611 4,555,451 Pan Asian 284, ,714 / 19

21 Notes to the Financial Statements (continued) 9. Financial risk management (continued) 9.1. Market risk (continued) Interest rate risk Interest rate risk is the risk that fair value of, or future cash flows arising from, the financial instruments will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk from cash held on deposit. Market forces (in terms of a general increase or decrease in interest rates in a particular currency) may therefore have a detrimental or positive effect on the cash flows from cash deposits. As cash deposits are available on demand, there is no fair value risk from interest rates. The Company does not actively manage interest rate risk as it is considered insignificant given the level of cash held. The below details provide analysis of fixed and floating rate financial assets for the US$ Balanced. US$ Balanced Fixed rate financial assets Floating rate financial assets Net assets not carrying interest 1,801,256 88,261,336 90,062,592 Total 1,801,256 88,261,336 90,062,592 US$ Balanced Fixed rate financial assets Floating rate financial assets Net liabilities not carrying interest 1,834,137 98,328, ,162,157 Total 1,834,137 98,328, ,162,157 As the Pan Asian holds only non-interest bearing financial assets there is no analysis of fixed and floating rate financial assets disclosed. Currency risk Currency risk is the risk that the fair value of, or future cash flows from, financial instruments will fluctuate because of changes in foreign exchange rates. The s assets and liabilities may be denominated in currencies other than the reporting currency of the. Therefore the value of such assets and liabilities may be affected favourably or unfavourably by fluctuations in currency rates. The Company may enter into derivative transactions for the purposes of hedging against currency risk on behalf of the Class Funds, subject to various maximum exposure limits. The net assets of the Pan Asian are denominated in the functional currency of the and are not directly affected by currency movements. Although the funds in which this invests in may have foreign currency exposure from its underlying portfolio of investments, this is reflected in the net asset value of the fund and therefore considered as part of market price risk. A proportion of the net assets of the US$ Balanced is denominated in currencies other than US Dollars, the functional currency of the. As a result, the performance of the can be affected by currency movements relative to the US Dollar. / 20