D-A-CH PORTFOLIO (IRELAND) PLC CONDENSED INTERIM REPORT AND UNAUDITED ACCOUNTS FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2018

Transcription

1 CONDENSED INTERIM REPORT AND UNAUDITED ACCOUNTS FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2018 Registered Number:

2 TABLE OF CONTENTS FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2018 Page Directors and General Information 1 Investment Manager s Report 2-4 Portfolio of Investments 5-7 Statement of Comprehensive Income 8 Statement of Financial Position 9 Statement of Changes in Net Assets Attributable to Redeemable Participating Shareholders 10 Notes to the Financial Statements Significant Changes in Portfolio Composition 19-20

3 DIRECTORS AND GENERAL INFORMATION FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2018 Directors: Paul Dobbyn (Irish)* John McGrath (Irish)* Michael Krauss (German) Andreas P. Schmidt (German) Christoph Schäfer (German) Depositary: State Street Custodial Services (Ireland) Limited 78 Sir John Rogerson s Quay Dublin 2 Ireland * Independent Investment Manager: LBBW Asset Management Investmentgesellschaft mbh Fritz-Elsas-Straße Stuttgart Germany Administrator and Secretary: State Street Fund Services (Ireland) Limited 78 Sir John Rogerson s Quay Dublin 2 Ireland Sponsoring Brokers: Arthur Cox Listing Services Limited Earlsfort Centre Earlsfort Terrace Dublin 2 Ireland Investment Advisor: Tresides Asset Management GmbH Stephanstraße Stuttgart Germany Registered Number: VAT Number: L Class A: ISIN: IE WKN: Class B: ISIN: IE00BQV1BW24 WKN:A12B0M Legal Advisers as to Irish Law: A&L Goodbody International Financial Services Centre North Wall Quay Dublin 1 Ireland Independent Auditors: PricewaterhouseCoopers Chartered Accountants and Registered Auditors One Spencer Dock North Wall Quay Dublin 1 Ireland German Tax Advisor: PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft Marie-Curie-Straße Frankfurt am Main Germany Registered Office: 78 Sir John Rogerson s Quay Dublin 2 Ireland 1

4 INVESTMENT MANAGER S REPORT FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2018 Fund Volume The D-A-CH Portfolio (Ireland) plc had Net Assets under management of million as of 30 June This represents a remarkable increase of around 54.3 million (+45.0%) since the end of December 2017, which is attributable to the purchase from clients. The outstanding number of shares is spilt up into 1.59 million Class A shares and 0.10 million Class B shares at the end of June. Investment Performance The performance YTD (as of 29 June 2018) of share class A was -2.9% which compares to a performance of around -1.3% of the internal reference, the Deutsche Börse MDAX Index. This is an underperformance for the period under review of 1.6% During the second quarter of 2018, the management sold Pfeiffer Vacuum after a great earnings season and impressive gains early in May. Further, the management sold Deutsche EuroShop in late in June as upside on investments in high-quality shopping centers in city centers and established locations seems very limited going forward. In general, the management increased the equity exposure after a set-back in the MDAX in April. Additionally management increased holdings in Wacker Chemie. The stock is still one of the most preferred from a fundamental view point, but the share price retreated significantly and above the average market draw down in mid-june. Generally speaking, the weakness in the equity markets did not just affect small-caps, but also hit economically sound companies across the board. Especially shares which are linked to the automotive industry suffered from potential tariffs that might be imposed by the USA. The management, however, considers this conflict to be rather temporarily and does not expect the economy to be severely effected in the long-term. At the end of the period the Company was invested in 37 different equity securities. The focus of the portfolio remains on German shares, approximately 13% are invested in the Swiss market and 2% in Austrian shares. For the coming months, we expect an ongoing high volatility in the market and therefore keep a close eye on equity securities which might become quite fairly and/or more attractively priced. 2

5 INVESTMENT MANAGER S REPORT FOR THE FINANCIAL PERIOD ENDED 30 JUNE (continued) Investment Performance (continued) D-A-CH Portfolio vs. MDAX from 29 December 2017 to 30 June D-A-CH Portfolio (Ireland) plc MDAX Source: Bloomberg, LBBW AM Performance Figures: Q Q Q Q Year Fund -3.2% +0.3% -2.9% Internal -2.3% +1.0% -1.3% reference Difference -0.9% -0.7% -1.6% The Fund shows a significant tracking error to its internal reference, the Deutsche Börse MDAX Index. This is due to the fact that the D-A-CH Portfolio (Ireland) plc. has the capability to diverge from the internal reference universe and invest in a broader investment universe (including for example Switzerland and Austria) and also that the management engages in a very active management approach. With a dedicated bottom up approach, active stock picking is a key element in the Fund s management. 3

6 INVESTMENT MANAGER S REPORT FOR THE FINANCIAL PERIOD ENDED 30 JUNE (continued) Total Gross Exposure and Portfolio Summary The Portfolio of the Fund as of 30 June 2018 was: Equity (Stocks) 92.91% Investment Funds & ETFs 0.00% Forward foreign currency exchange contracts -0.04% Total Investments 92.87% Cash at banks, other net asset, liabilities & adjustments 7.13% Total % The top 5 holdings of equities as of 30 June 2018 were the following: Symrise AG 3.2% Sonova Holding AG 3.1% Deutsche Wohnen AG 3.1% Morphosys AG 3.0% Qiagen 3.0% The Fund had no holdings of Investment Funds & ETFs as of 30 June Investment Policy The Investment Manager intends to continue following a flexible investment strategy to take advantage of investment opportunities in various equity-, bond-, currency- and commodity-markets. Derivative instruments will be viewed as vehicles to reduce market risk and/or create leverage, as deemed appropriate. The practice of seeking investment opportunities through careful analysis will continue. With this strategy, the management will strive to achieve a long term outperformance against the Deutsche Börse MDAX Index, the internal reference of the Fund. The Company invests mainly in equity securities from the so called D-A-CH region, namely Germany (D), Austria (A) and Switzerland (CH). Baden-Württembergische Bank LBBW LBBW Asset Management Investmentgesellschaft mbh Kleiner Schlossplatz 11 Fritz-Elsas-Straße Stuttgart Stuttgart Germany Germany July

7 PORTFOLIO OF INVESTMENTS AS AT 30 JUNE 2018 Security Description Security I.D. Holding at 30-Jun-18 Fair Value % of Net Asset Value Equities Austria ams AG AT0000A18XM4 (a) 49,000 3,125, % Germany Axel Springer SE DE (a) 69,600 4,311, % Bechtle AG DE (a) 63,800 4,217, % Brenntag AG DE000A1DAHH0 (a) 99,000 4,724, % Carl Zeiss Meditec AG DE (a) 77,700 4,541, % Deutsche Wohnen SE DE000A0HN5C6 (a) 131,500 5,444, % Evonik Industries AG DE000EVNK013 (a) 160,000 4,692, % Fielmann AG DE (a) 62,000 3,676, % Freenet AG DE000A0Z2ZZ5 (a) 181,000 4,106, % Fresenius SE & Co KGaA DE (a) 24,000 1,651, % Fuchs Petrolub SE - Pref - DE (a) 110,000 4,646, % Gerresheimer AG DE000A0LD6E6 (a) 61,900 4,302, % Hella GmbH & Co KGaA DE000A13SX22 (a) 95,500 4,584, % Indus Holding AG DE (a) 85,000 4,539, % Jenoptik AG DE (a) 145,437 4,883, % Jungheinrich AG - Pref - DE (a) 140,000 4,446, % K+S AG DE000KSAG888 (a) 231,000 4,885, % KION Group AG DE000KGX8881 (a) 66,400 4,092, % Krones AG DE (a) 44,600 4,937, % MorphoSys AG DE (a) 50,000 5,250, % Osram Licht AG DE000LED4000 (a) 100,000 3,500, % ProSiebenSat.1 Media SE DE000PSM7770 (a) 145,600 3,163, % Schaeffler AG - Pref - DE000SHA0159 (a) 360,000 4,014, % Software AG DE000A2GS401 (a) 120,000 4,789, % Stroeer SE & Co KGaA DE (a) 90,000 4,666, % Symrise AG DE000SYM9999 (a) 74,600 5,602, % United Internet AG DE (a) 92,400 4,533, % Wacker Chemie AG DE000WCH8881 (a) 42,000 4,710, % Wirecard AG DE (a) 33,700 4,648, % zooplus AG DE (a) 26,133 4,181, % 127,743, % 5

8 PORTFOLIO OF INVESTMENTS AS AT 30 JUNE (continued) Security Description Security I.D. Holding at 30-Jun-18 Fair Value % of Net Asset Value Equities (continued) Luxembourg RTL Group SA LU (a) 61,000 3,544, % Netherlands Qiagen N.V. NL (a) 165,699 5,169, % Switzerland BB Biotech AG (Germany Listing) CH (a) 66,800 3,834, % BB Biotech AG CH (a) 13, , % dormakaba Holding AG CH (a) 7,500 4,502, % Dufry AG CH (a) 36,000 3,933, % Sonova Holding AG CH (a) 35,600 5,473, % u-blox Holding AG CH (a) 26,000 4,425, % 22,919, % Fair Value % of Net Asset Value Total Financial Assets at Fair Value through Profit or Loss (31 December 2017: 84.15%) 162,502, % Financial derivative instruments Forward foreign currency exchange contracts Settlement Date Currency Bought Amount Bought Currency Sold Amount Sold Unrealised (loss) % of Net Asset Value 21/09/2018 EUR 26,691,694 CHF 31,000,000 (71,648) (0.04)% Unrealised (loss) on forward foreign currency exchange contracts (71,648) (0.04)% Total Financial Liabilities at Fair Value through Profit or Loss (31 December 2017: Nil) (71,648) (0.04)% 6

9 PORTFOLIO OF INVESTMENTS AS AT 30 JUNE (continued) Fair Value % of Net Asset Value Total Investments at Fair Value through Profit or Loss (31 December 2017: 84.15%) 162,430, % Cash at Bank and Restricted cash (31 December 2017: 16.03%) 12,440, % Other Assets and Liabilities (31 December 2017: (0.18)%) 27, % Net Assets Attributable to Holders of Redeemable Participating Shares 174,899, % The counterparty for forward foreign currency exchange contracts is Royal Bank of Scotland Plc. Portfolio Classification The above securities marked (a) are quoted on a stock exchange or are dealt on another regulated market. % of Total Assets Analysis of Total Assets Transferable securities quoted on a stock exchange (ref (a) above) 92.60% Other current assets 7.40% % 7

10 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2018 Six months ended 30 June 2018 Six months ended 30 June 2017 Notes Income Dividend income 2,881,878 1,971,587 Interest income Miscellaneous income 10 - Net realised gain on financial assets at fair value through profit or loss 6,085,526 9,176,631 Net realised (loss) on currencies (358,211) (35,264) Net movement of unrealised (loss)/gain on financial assets at fair value through profit or loss (11,684,972) 3,009,936 Net movement of unrealised (loss) on currencies (66,755) (8,919) Total investment (loss)/income (3,142,491) 14,114,124 Expenses Operating expenses 3 (727,087) (512,286) Finance Costs Interest expense (86,179) (53,748) Net (Loss)/Income (3,955,757) 13,548,090 Withholding tax paid (436,212) (314,460) Dividends (1,184,013) (1,779,954) (Decrease)/increase in the Net Assets Attributable to Holders of Redeemable Participating Shares from Operations (5,575,982) 11,453,676 The Company had no recognised gains or losses in the financial period other than those dealt with in the Statement of Comprehensive Income. Gains and Losses arose solely from continuing operations. The accompanying notes form an integral part of the financial statements. 8

11 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE June 31 December Notes Assets Financial Assets at Fair Value through profit or loss 162,502, ,512,649 Cash at Bank 4 12,041,307 19,027,931 Restricted cash 4 399, ,350 Debtors 5 551, ,398 Total Assets 175,495, ,092,328 Liabilities Financial Liabilities at Fair Value through profit or loss (71,648) - Current Liabilities 6 (524,168) (465,237) (595,816) (465,237) Net Assets Attributable to Redeemable Participating Shareholders 174,899, ,627,091 Net Asset Value per Share Attributable to Holders of Redeemable Participating Shares at the end of the financial period/year 7 Class A Class B The accompanying notes form an integral part of the financial statements. 9

12 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO REDEEMABLE PARTICIPATING SHAREHOLDERS FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2018 Six months Six months ended ended 30 June June 2017 Net Assets Attributable to Holders of Redeemable Participating Shares at start of the financial period 120,627,091 89,783,473 Proceeds from shares issued 70,604,179 12,519,858 Payment for shares redeemed (10,755,931) (7,817,989) (Decrease)/increase in net assets attributable to redeemable participating shares from Operations (5,575,982) 11,453,676 Net Assets Attributable to Holders of Redeemable Participating Shares at end of the financial period 174,899, ,939,018 Six months ended 30 June 2018 Six months ended 30 June 2017 Class A Redeemable shares in issue at start of financial period 872, ,531 Redeemable shares issued during the financial period 844, ,939 Redeemable shares redeemed during the financial period (131,147) (51,033) Redeemable shares in issue at end of financial period 1,585, ,437 Six months ended 30 June 2018 Six months ended 30 June 2017 Class B Redeemable shares in issue at start of financial period 82,931 77,896 Redeemable shares issued during the financial period 25,282 8,500 Redeemable shares redeemed during the financial period (3,410) (7,075) Redeemable shares in issue at end of financial period 104,803 79,321 The accompanying notes form an integral part of the financial statements 10

13 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2018 D-A-CH Portfolio (Ireland) plc, (the Company and/or Fund ), is an Investment Company with variable capital incorporated on 16 November 1999 and is a specially designated Company pursuant to the Companies Act, The Company has been authorised in Ireland by the Central Bank of Ireland (the Central Bank ) as an undertaking for collective investment in transferable securities pursuant to the European Communities (the UCITS Regulations ). Accordingly, the Company is supervised by the Central Bank. The Company commenced operations on 29 February The Company is listed on the Irish Stock Exchange ( ISE ). 1. Investment Objective The investment objective of the Company is to achieve long-term capital growth. The Company will mainly invest in equity markets predominantly in European equity markets with a focus on the D-A-CH region (meaning Germany, Austria and Switzerland) and may also invest in other open-ended Investment Funds authorised in a Member State of the European Union, member state of the EEA, Australia, Canada, Japan, New Zealand, Norway, Switzerland or the United States who derive their profits from holdings in an internationally diverse portfolio of bond securities or that hold equities and/or provide exposure to commodities. The Company's holdings in open-ended investment funds may be denominated in currencies other than the Euro. The Company may also invest in bonds, exchange traded certificates ( ETCs ) and derivative instruments. The Company selects the assets class in which to invest on the basis of what the Investment Manager considers to represent good value and growth opportunities in the prevailing market conditions on the basis of market research conducted by the Investment Manager. No more than 20% of the Company's Net Asset Value will be invested in emerging markets. The Company will invest primarily in equity securities. 2. Summary of Significant Accounting Policies These condensed interim financial statements have been prepared in accordance with the Financial Reporting Standard 104 Interim Financial Reporting, the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland ( FRS 104 ) and the UCITS Regulations. The condensed interim financial statements as at 30 June 2018 are unaudited. We note that the statutory auditor s report in the audited year end financial statements as at 31 December 2017 was unqualified. The condensed interim financial statements should be read in conjunction with the annual financial statements for the financial year ended 31 December 2017, which have been prepared in accordance with accounting standards generally accepted in Ireland including the financial reporting standard applicable in the United Kingdom and Republic of Ireland ( FRS 102 ), the Companies Act, 2014 and the UCITS Regulations. The accounting policies applied are consistent with those of the annual financial statements for the financial year ended 31 December

14 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 30 JUNE (continued) 3. Operating Expenses Six months ended Six months ended 30 June June 2017 Administration expenses (55,289) (34,770) Audit fees (6,483) (6,483) Corporate Secretary expenses (2,493) (2,493) Depositary fees (47,390) (29,831) Directors expenses (1,496) (1,501) Directors fees (31,250) (31,250) Investment Manager fees (473,902) (297,814) Investment Advisor fees (78,984) (49,636) Listing fees (3,989) (4,000) Transfer Agent fees (1,995) (1,995) Legal fees (9,917) (4,987) Tax Advisor's fees (1,019) (2,992) Miscellaneous expenses (12,880) (44,534) (727,087) (512,286) 4. Cash The cash balances are held by the following institution: 30 June December 2017 State Street Custodial Services (Ireland) Limited 12,041,307 19,027,931 Restricted cash* 399, ,350 12,440,939 19,332,281 *As at 30 June 2018 the value of 399,632 (31 December 2017: 304,350) relates to restricted cash which is held in a segregated account to comply with minimum capital requirements per the Central Bank of Ireland. 5. Debtors 30 June December 2017 Dividend receivable 105,200 - Withholding tax reclaim recoverable 434, ,720 Receivable for Fund shares sold - 37,070 Other debtors 12,025 4, , ,398 12

15 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 30 JUNE (continued) 6. Current Liabilities (amounts falling due within one year) 30 June December 2017 Administration fee (48,052) (30,141) Audit fee payable (6,482) (13,406) Corporate Secretary expense (3,837) (3,055) Depositary fees (55,502) (42,678) Directors expenses (18,747) (18,175) Directors fees (31,250) (31,250) Investment Manager fee (182,200) (57,138) Investment Advisor fee (30,367) (9,523) Listing fees (12,292) (13,301) Transfer Agent fees (8,508) (9,155) Tax Advisors fee - (9,269) Miscellaneous expenses (100,356) (93,263) Payable for Fund shares repurchased (26,575) (134,883) (524,168) (465,237) 7. Net Asset Value per Redeemable Share Net Asset Value Net Asset Value Per Share 30 June 2018 Class A 91,362, Class B 83,536, December 2017 Class A 52,124, Class B 68,502, June 2017 Class A 45,996, Class B 59,943,

16 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 30 JUNE (continued) 8. Efficient Portfolio Management The Company may use derivative instruments for efficient portfolio management purposes in accordance with the investment policies and subject to the conditions and limits set out in the UCITS Regulations. Any such use should be reasonably believed by the Investment Manager to be economically appropriate to the efficient portfolio management of the Company, i.e., the use of efficient portfolio management may only be undertaken for the purpose of one or more of the following: a reduction in risk; a reduction in cost; or an increase in capital or income returns to the Company with a level of risk which is consistent with the risk profile of the Company and the risk diversification rules set out in the UCITS Regulations. During the financial period/year ended and as at 30 June 2018 and 31 December 2017 the Company did not employ any techniques or instruments for efficient portfolio management. 9. Contingent Liabilities There are no contingent liabilities as of 30 June 2018 (31 December 2017: Nil). 10. Soft Commissions/ Direct Brokerage Fees There have been no soft commission arrangements or direct brokerage fees affecting the Company during the financial period ended 30 June 2018 (30 June 2017: Nil). 11. Prospectus The most recent Prospectus for the Company was issued on 15 March Related Party Transactions The Investment Manager LBBW Asset Management Investmentgesellschaft mbh (LBBW Asset Management) is a wholly owned subsidiary of Landesbank Baden-Württemberg (LBBW). As at 30 June 2018 LBBW held 100% of the shares in the Company (31 December 2017: 100%). The Company may invest in assets, securities, and/or Companies for which LBBW (or an affiliated Company of the group) might provide brokerage or other services, is engaged in loans with or is doing research about. The Company will contract from time to time with LBBW for brokerage and other related services (e.g. purchase of Investment Funds and/or equity securities). During the financial period ended 30 June 2018, LBBW was not in receipt of monies paid by the Company with respect to brokerage or other related services (financial period ended 30 June 2017: Nil). The Investment Manager may hold assets and/or carry transactions (for its own interest or for clients) in assets which the Company holds or has dealt in. The Directors of the Company may have in a personal capacity dealt in the same assets as included in the Company s holdings but at all times had regard to their obligation to act in the best interests of the Company. 14

17 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 30 JUNE (continued) 12. Related Party Transactions (continued) Director of the Company Christopher Schäfer is a senior employee of BW Bank, the former Investment Manager and an operation unit within LBBW. The former Investment Manager manages discretionary accounts on behalf of its other clients which hold and made transactions in Shares in the Company. The Director may be organisationally responsible for such accounts. The Director Andreas P. Schmidt is a senior employee of LBBW Investment Manager, Asset Management Investmentgesellschaft and head of the Portfolio Management Office at the Investment Manager. LBBW Asset Management is a German Kapitalverwaltungsgesellschaft (Investment Management Company) and manages various equity, bond and commodity funds. Director Michael Krauss is a senior employee of Tresides Asset Management GmbH, the Investment Advisor to the Company. Directors Michael Krauss, Andreas P. Schmidt, John McGrath and Paul Dobbyn are also Directors of Aureus Fund (Ireland) plc, and the Directors Michael Krauss, Christoph Schäfer, John McGrath and Paul Dobbyn are also Directors of Argentum Fund (Ireland) plc; whose investment manager (LBBW Asset Management) is part/a subsidiary of the same parent banking group (LBBW). In the opinion of the Directors, these are the only related parties under accounting standards generally accepted in Ireland, with whom the Company contracts. The Company holds and has dealt in Fund shares of LBBW Asset Management as part of its portfolio holdings in the past and may do so in the future. The Investment Manager fee for the financial period ended 30 June 2018 was 473,902 (financial period ended 30 June 2017: 297,814), of which 182,200 (financial year ended 31 December 2017: 57,138) was payable at the financial year end. The Investment Advisor fee for the financial period ended 30 June 2018 was 78,984 (financial period ended 30 June 2017: 49,636), of which 30,367 (financial year ended 31 December 2017: 9,523) was payable at the financial year end. Connected Persons Regulation 4(1) of the UCITS Regulations Restrictions of transactions with connected persons states that A responsible person shall ensure that any transaction between a UCITS and a connected person is conducted a) at arm s length, and b) in the best interest of the unit-holders of the UCITS. As required under UCITS Regulation 78.4 the Directors are satisfied that there are arrangements in place, evidenced by written procedures, to ensure that the obligations that are prescribed by Regulation 41(1) are applied to all transactions with a connected persons; and all transactions with connected persons that were entered into during the financial period to which the report relates, complied with the obligations that are prescribed by Regulation 41(1). 15

18 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 30 JUNE (continued) 13. Exchange Rates The following Euro exchange rates, as at the financial period/year end, were used to convert the financial assets at fair value through profit or loss and other financial assets and liabilities denominated in other currencies to Euro: Currency 30 June Dec June 2017 Japanese Yen Norwegian Krone Pound Sterling Swiss Franc US Dollar Comparative Figures The comparative figures are for the six months from 1 January 2017 to 30 June 2017 and as at 31 December Dividends The Directors authorised payment of dividends amounting to 1,184,013 (financial period ended 30 June 2017: 1,779,954) during the financial period ended 30 June The Board of Directors of the Company paid out a dividend on 23 April 2018 ( Ex-Date ) in respect of the financial year ended 31 December 2017 of 0.40 per share for Class A and of 5.10 per share for Class B. 16. Fair Value Hierarchy All the financial assets and financial liabilities of the Company are held at fair value at 30 June 2018 and 31 December FRS 102 Section on "Fair Value: Disclosure" requires disclosure relating to the fair value hierarchy in which fair value measurements are categorised for assets and liabilities. The disclosures are based on a three-level fair value hierarchy for the inputs used in valuation techniques to measure fair value. The Company has adopted FRED 62 Fair Value Hierarchy and is applying the fair value hierarchy as Levels 1, 2 and 3. Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 - Inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs). 16

19 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 30 JUNE (continued) 16. Fair Value Hierarchy (continued) The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability. The determination of what constitutes observable requires significant judgement by the Investment Manager. The Investment Manager considered observable data to be that market data that was readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. The following is a summary of the fair value hierarchy applied under FRS 102 as at 30 June 2018 and 31 December 2017 in valuing the Funds' assets and liabilities: 30 June 2018 Level 1 Level 2 Level 3 Total balance Assets Equity Securities 162,502, ,502,609 Total Assets 162,502, ,502,609 Liabilities Forward foreign currency exchange contracts - (71,648) - (71,648) Total Liabilities - (71,648) - (71,648) 31 December 2017 Level 1 Level 2 Level 3 Total balance Assets Equity Securities 101,512, ,512,649 Total Assets 101,512, ,512,649 17

20 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 30 JUNE (continued) 16. Fair Value Hierarchy (continued) Investments classified within Level 1 include active listed securities. The forward foreign currency exchange contracts are classified within Level 2 (31 December 2017: Nil). There were no investments classified as Level 3 as at 30 June 2018 and as Level 2 or Level 3 as at 31 December There was no movement at financial instruments between level 1 and level 2 during the financial period/year ended 30 June 2018 and 31 December Seasonal/Cyclical changes The Company is not subject to seasonal or cyclical changes. 18. Events during the financial period The Board of Directors of the Company declared to pay out a dividend on 23 April 2018 ( Ex Date ) in respect of the financial year ended 31 December 2017 of 0.40 per share for Class A and 5.10 per share for Class B. The new Prospectus for the Company was issued on 15 March There were no other significant events affecting the Company during the financial period. 19. Subsequent Events There were no significant events affecting the Company since the financial period end. 20. Approval of Financial Statements The financial statements were approved by the Board of Directors on 26 July

21 SIGNIFICANT CHANGES IN PORTFOLIO COMPOSITION FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2018 The following Schedule of Significant Portfolio Changes reflect the aggregate purchases of a security exceeding 1% of the total value of purchases and aggregate disposals greater than 1% of the total sales in the financial period. At a minimum the largest 20 purchases and sales are required to be disclosed, if applicable. Purchases Security Description Security ID Cost Wacker Chemie AG DE000WCH8881 5,681,584 Osram Licht AG DE000LED4000 4,888,129 Fielmann AG DE ,186,911 Dufry AG CH ,095,028 dormakaba Holding AG CH ,149,540 Indus Holding AG DE ,626,501 Deutsche EuroShop AG DE ,615,723 Fuchs Petrolub SE - Pref - DE ,529,478 Software AG DE000A2GS401 2,522,765 Freenet AG DE000A0Z2ZZ5 2,483,611 Jungheinrich AG - Pref - DE ,429,909 Schaeffler AG - Pref - DE000SHA0159 2,367,175 Axel Springer SE DE ,303,670 Evonik Industries AG DE000EVNK013 2,296,095 Stroeer SE & Co KGaA DE ,241,993 ProSiebenSat.1 Media SE DE000PSM7770 2,197,277 Symrise AG DE000SYM9999 2,195,044 Qiagen N.V. NL ,167,849 ams AG AT0000A18XM4 2,157,254 Brenntag AG DE000A1DAHH0 2,123,575 Jenoptik AG DE000A1DAHH0 2,121,925 Deutsche Wohnen SE DE ,030,645 MorphoSys AG DE000A0HN5C6 1,952,291 BB Biotech AG DE ,942,156 K+S AG CH ,872,970 zooplus AG DE000KSAG888 1,834,249 u-blox Holding AG DE ,818,616 Hella GmbH & Co KGaA CH ,815,305 Gerresheimer AG DE000A13SX22 1,790,902 Wirecard AG DE000A0LD6E6 1,743,530 Uniper SE DE ,738,111 19

22 SIGNIFICANT CHANGES IN PORTFOLIO COMPOSITION FOR THE FINANCIAL PERIOD ENDED 30 JUNE (continued) Purchases (continued) Security Description Security ID Cost United Internet AG DE ,732,893 RTL Group SA LU ,726,432 KION Group AG DE000KGX8881 1,704,737 Krones AG DE ,700,179 Sonova Holding AG CH ,601,152 Bechtle AG DE ,563,916 Carl Zeiss Meditec AG DE ,393,242 Sales Security Description Security ID Proceeds Uniper SE DE000UNSE018 5,409,478 Deutsche EuroShop AG DE ,875,917 Pfeiffer Vacuum Technology AG DE ,148,245 Wirecard AG DE ,897,536 MorphoSys AG DE ,496,841 ams AG AT0000A18XM4 1,146,203 BB Biotech AG CH ,111,118 Stroeer SE & Co KGaA DE ,462 Telekom Austria AG AT ,688 Bechtle AG DE ,299 20