LHV World Equities Fund

Transcription

1 LHV World Equities Fund I half year report 2016 (Translation of the Estonian original)

2 LHV World Equities Fund I half year report Fund name Fund type Fund Manager LHV World Equities Fund Common fund Mikk Taras Main activity Investment of fund assets, EMTAK Legal address Tartu mnt. 2, Tallinn Phone (372) Fax (372) Fund Management Company AS LHV Varahaldus Commercial Register no. of Fund Management Company Management Board of Fund Management Company Mihkel Oja Joel Kukemelk Auditor AS PricewaterhouseCoopers 2

3 Table of contents CONFIRMATION OF THE FUND MANAGEMENT COMPANY S MANAGEMENT BOARD MEMBERS... 4 MANAGEMENT REPORT HALF YEAR INTERIM FINANCIAL STATEMENTS... 7 Balance Sheet... 7 Statement of income and expenses... 8 Statement of changes in net assets... 9 Statement of cash flows Notes to financial statements Note 1 Accounting principles Note 2 Concentration of open currency positions Note 3 Assets by recalculation of interest rate Note 4 Assets by regions (by issuers) Note 5 Assets by sectors Note 6 Statement of comparison of the Fund s net assets value Note 7 Accrued income Note 8 Related parties STATEMENT OF TRANSACTION AND COMMISSION FEES STATEMENT OF THE FUND'S INVESTMENTS AS AT STATEMENT OF THE FUND'S INVESTMENTS AS AT

4 CONFIRMATION OF THE FUND MANAGEMENT COMPANY S MANAGEMENT BOARD MEMBERS LHV World Equities Fund 2016 first half year report comprises of a management report, financial report for the first half of 2016 and its notes, statements of investments and a statement of transaction and commission fees. Data and additional information presented in LHV World Equities Fund 2016 first half year report is true and complete. Financial statements give a true and fair view of the Fund s financial position, performance and cash flows. Financial statements are prepared in accordance with IAS 34 "Interim financial reporting" and with the regulation for Requirements for investment fund reports subject to disclosure as adopted by Minister of Finance. The financial statements are unaudited. Mihkel Oja Member of the Management Board Joel Kukemelk Member of the Management Board Tallinn,

5 MANAGEMENT REPORT LHV World Equities Fund is a public open-end common investment fund founded by AS LHV Varahaldus on 27 April The Fund is in compliance with the EU directive 2009/65/EC and the legislation of the Republic of Estonia regarding UCITS. The Fund s goal is to provide maximum long-term capital growth for its investors. The Fund invests both in developed markets (e.g. member states of the European Economic Area, the USA and Japan) as well as developing markets (e.g. Asia, Latin America and Eastern Europe). The fund invests up to 100% of its assets in equities or equity investment funds. In the first half of the year the bigger fluctuations in stock markets were caused by lower oil prices, China s economic slowdown and growing political risks in Europe. Among the largest global stock markets, the US and emerging markets stock exchanges rose, recovering from the previous year s decline. The stock markets of Europe and Japan took the biggest fall. As a whole the world s stock markets ended the first half of the year with a small decline. The price of the LHV World Equities Fund unit decreased by 11.2% in the first six months of year The investments of LHV World Equities Fund were pressured primarily by investments made to European stock markets, from which the stocks of European banks (Intesa SanPaolo, Erste Group Bank) declined the most. The share prices of industrial enterprises in Europe (MetsaBoard, Daimler, Renault) also went through a larger correction, as they are more dependent on economic cycles. Several investments to smaller European companies offered a positive return. Among the biggest risers were Ponsse, a Finnish forest machinery manufacturer and Kuka, a German robotics company. The Baltic stocks also offered good returns, being less influenced by the events of the outside world. There were no major changes in the Fund s investments during the first half of the year. The investments are continuing to focus on the stock exchanges of the US, Europe, Japan and Baltics. In the long term, we see more value in the US and European companies that are more dependent on economic cycles, whose price levels are more attractively valued and dividend yields higher. In contrast, the companies operating in more conservative sectors such as food producers and consumer staples manufacturers, are trading on price levels considerably higher than on average. The selection of more cyclical stocks involves a somewhat higher short-term volatility, but we believe it to be the best choice in order to ensure a good result on a long term basis. The biggest dividend payers of LHV World Equities Fund are the banks and car industries of Western Europe and Baltic companies. Although these companies are more dependent on economic cycles, they offer a dividend yield in the range of 6-10%. LHV World Equities Fund will continue to invest in individual equities in particular, because we have passed the post-crisis market phase, where the tide lifted all the boats equally. In the economic cycle we have reached the low-growth environment, but at the same time we see a decrease in unemployment, moderate wage growth and strong domestic consumption in wealthier countries. The Fund s investments are positioned to benefit in the longterm from these trends. The selection of more cyclical stocks involves a somewhat higher short-term volatility in the Fund, but we believe that at current price levels it will ensure a better result long term. As at the Fund s assets under management totalled EUR (-24.5%). On 19 July 2016, the Estonian Financial Supervision Authority authorized the merger of Danske Invest New Europe Fund (the merging fund) and LHV World Equities Fund (the receiving fund). The merger will take place on 31 August 2016, when the merging fund will be dissolved and all its assets and liabilities will be transferred to the receiving 5

6 fund without a liquidation procedure. The terms and conditions of the receiving fund, including the investment policy and strategy, will not change as a result of the merger. The expenses related to the merger will be covered by AS LHV Varahaldus. Following the merger no major changes in the financial results of the receiving fund are expected. Comparison of Fund s return with MSCI indices of different regions* NAV NAV Change in period MSCI Emerging Markets Index % MSCI North America Index % MSCI Asia Index (exc. Japan) % MSCI World Index % MSCI Europe Index % MSCI Japan % LHV World Equities Fund % * in euros, according to the official daily price; source: 6

7 1 HALF YEAR INTERIM FINANCIAL STATEMENTS Balance Sheet (In euros) Assets Note Cash and cash equivalents Financial assets at fair value through statement of income and expenses: Shares Fund shares Accrued income Total assets Liabilities and Fund s net asset value Financial liabilities at fair value through statement of income and expenses: Derivatives Current liabilities Liabilities to unit holders Liabilities to Fund Management Company Liabilities to depositary Total current liabilities Total liabilities Fund s net asset value Total liabilities and Fund s net asset value

8 Statement of income and expenses (in euros) Note Income Interest income 3 41 Dividend income Net gain/loss from financial assets at fair value through statement of income and expenses: Shares Fund shares Derivatives Net gain/loss on foreign exchange change Total income Operating expenses Management fees Depositary fees Transaction fees Other operating expenses Total operating expenses Change in Fund s net asset value

9 Statement of changes in Fund s net assets (in euros) Note Net assets of the Fund at the beginning of the period Cash received upon subscription of A units Cash received upon subscription of B units Cash paid upon redemption of A units Cash paid upon redemption of B units Change in Fund s net asset value Net assets of the Fund at the end of the period Number of A units outstanding at the end of the period Number of B units outstanding at the end of the period NAV of unit A at end of the reporting period NAV of unit B at end of the reporting period

10 Statement of cash flows (in euros) Cash flows from operating activities Interest received 3 41 Dividends received Net of purchases and sales of financial investments Operating expenses paid Net cash flows from operating activities Cash flows from financing activities Received from the issue of units Paid for redemption of units Net cash flows from financing activities Total cash flows Cash and cash equivalents at the beginning of the accounting period Change in cash and cash equivalents Effect of exchange rate changes Cash and cash equivalents at the end of the accounting period

11 Notes to financial statements Note 1 Accounting principles The financial statements of LHV World Equities Fund have been prepared in accordance with the International Financial Reporting Standards as they have been adopted by European Union (IFRS EU). The accounting principles of investment funds are stipulated in the Investment Funds Act, in the Accounting Act and in the regulation for Requirements for investment fund reports subject to disclosure as adopted by Ministry of Finance on The Fund s Net Asset Value is determined according to the rules set out by the Investment Funds Act 142 section 2 and 204 section 1. The report has been prepared using the same accounting principles as were used in the financial statements for the period ending on The prepared financial statements reflect the Fund s economic activity during The report has been prepared in euros. This report has been approved by the Management Board on Note 2 Concentration of open currency positions EUR USD CHF Assets exposed to currency risk Cash and cash equivalents Financial assets at fair value through statement of income and expenses: Shares Fund shares Derivatives Accrued income Total assets exposed to currency risk Liabilities exposed to currency risk Financial liabilities at fair value through statement of income and expenses: Derivatives Other liabilities Total liabilities exposed to currency risk Open currency position EUR USD CHF Assets exposed to currency risk Cash and cash equivalents Financial assets at fair value through statement of income and expenses: Shares Fund shares Derivatives Accrued income Total assets exposed to currency risk

12 Liabilities exposed to currency risk Financial liabilities at fair value through statement of income and expenses: Derivatives Other liabilities Total liabilities exposed to currency risk Open currency position Note 3 Assets by recalculation of interest rate Up to 3 months 3-12 months 1-5 years Assets Cash and cash equivalents and term deposits Financial assets at fair value through statement of income and expenses: More than 5 years Derivatives Total Up to 3 months 3-12 months 1-5 years Assets More than 5 years Cash and cash equivalents Financial assets at fair value through statement of income and expenses Derivatives Total Note 4 Assets by regions (by issuers) Distribution of Fund s financial assets by regions: The Baltics 19.05% 19.17% Europe 46.01% 46.51% North-America 34.93% 34.32% Total 100% 100% 12

13 Note 5 Assets by sectors Distribution of Fund s financial assets by sectors: Cash and cash equivalents 6.51% 7.66% Durable goods 13.22% 14.85% Necessities 4.55% 3.41% Financial sector 12.64% 15.15% Healthcare 7.90% 7.21% Industrial sector 14.63% 13.31% Information technology 6.84% 6.18% Materials 3.06% 3.49% Regional funds 30.66% 28.75% Total 100% 100% Note 6 Statement of comparison of the Fund s net assets value Beginning of activities: August 2007 Value of Fund s net assets NAV of unit A NAV of unit B Note 7 Accrued income Accrued income includes dividends receivable in the amount of euros. As at the accrued income included dividends receivable in the amount of euros. All receivables have been collected in full by the time of preparation of these financial statements. Note 8 Related parties For the purposes of these financial statements, related parties include the Fund Management Company AS LHV Varahaldus and other investment and pension funds under the management of the Fund Management Company as well as other companies belonging to the same consolidation group with the Fund Management Company. The Fund pays a monthly management fee to the Fund Management Company. In the first half of 2016 the fees totalled euros (first half of 2015: euros). As at the balance sheet date, the payables to the Fund Management Company made up euros, consisting only of the management fee. As at the payable to the Fund Management Company for the management fee was euros. Transaction fees in the first half of 2016 and in the first half of 2015 to AS LHV Pank have been disclosed in the Statement of transaction and commission fees. 13

14 Statement of transaction and commission fees The fees for each depositary bank are related to both transaction fees and commission fees. Commissions for I half year of 2016 Number of transactions Volume of transactions Transaction and commission fees paid % of total fees AS Swedbank % AS LHV Pank % Total % During the reporting period securities transaction fees in the amount of 36 euros were paid to AS LHV Pank. Commissions for I half year of 2015 Number of transactions Volume of transactions Transaction and commission fees paid % of total fees AS Swedbank % AS LHV Pank % Total % During the reporting period securities transaction fees in the amount of 128 euros were paid to AS LHV Pank. 14

15 Statement of the Fund's investments as at (in euros) Issuer/Name of the Equity Country of location ISIN- code Nominal value Currency Quantity Average acquisition cost in currency Total acquisition cost in EUR Market price per unit as at in currency Market value EUR Share in the net value of the Fund s assets 1.Securities % Shares % Erste Group Bank Austria AT EUR % Olympic Entertainment Group Estonia EE EUR % Tallink Grupp Estonia EE EUR % Tallinna Kaubamaja Estonia EE EUR % Datalogic SpA Italy IT EUR % Intesa Sanpaolo Italy IT EUR % Apranga Lithuania LT EUR % Grindeks Latvia LV EUR % Daimler Germany DE EUR % KION Group Germany DE000KGX EUR % Metsa Board Finland FI EUR % Ponsse Finland FI EUR % Roche Holding Switzerland CH CHF % Apple Inc USA US USD % Bank of America USA US USD % Lennar USA US USD % Spirit Airlines USA US USD % Toll Brothers USA US USD % 15

16 Issuer/Name of the Equity Fund manager Country of location ISIN- code Nominal value Currency Quantity Average acquisition cost in currency Total acquisition cost in EUR Market price per unit as at in currency** Market value EUR Share in the net value of the Fund s assets Fund shares % Equity fund shares % DB X-Trackers MSCI Europe Small Cap DB Platinum Advisors Luxembourg LU EUR % Lyxor UCITS ETF EURO STOXX Banks Lyxor Asset Management France FR EUR % Lyxor ETF World Water Lyxor Asset Management France FR EUR % WisdomTree Japan Hedged Equity Fund WisdomTree Investments USA US97717W USD % ishares U.S. Home Construction Blackrock Fund Advisors USA US USD % Powershares QQQ Trust Series Invesco Management USA US73935A USD % Financial Select Sector SPDR Fund State Street Global Advisors USA US81369Y USD % Issuer/Name of the Equity Type Issuer Rating Rating Agency* Underlying asset name Maturity date Market value EUR Share in the net value of the Fund s assets Derivatives % USD Forward Future Swedbank Aa3 Moody s EUR % Credit Institution Type of deposit Country of location Rating Rating Agency Start date Underlying asset name Interest Maturity date Deposit amount Market value EUR Share in the net value of the Fund s assets 2. Deposits % Bank accounts Swedbank Demand deposit Estonia Aa3 Moody s EUR % % Swedbank Demand deposit Estonia Aa3 Moody s USD % 3. Other assets % Dividend receivables % TOTAL ASSETS % Liabilities of the Fund % FUND S NET ASSET VALUE % * The full name of the credit rating agency is Moody s Investor Service ** The market price per unit of currency includes the interest accrued as at that date 16

17 Statement of the Fund s investments as at (in euros) Issuer/Name of the Equity Country of location ISIN- code Nominal value Currency Quantity Average acquisition cost in currency Total acquisition cost in EUR Market price per unit as at in currency Market value EUR Share in the net value of the Fund s assets 1. Securities % Shares % Erste Group Bank Austria AT EUR % Olympic Entertainment Group Estonia EE EUR % Tallink Grupp Estonia EE EUR % Tallinna Kaubamaja Estonia EE EUR % Intesa Sanpaolo Italy IT EUR % Apranga Lithuania LT EUR % Grindeks Latvia LV EUR % Olainfarm Latvia LV EUR % Renault France FR EUR % Daimler Germany DE EUR % KION Group Germany DE000KGX EUR % KUKA Germany DE EUR % Metsa Board Finland FI EUR % Ponsse Finland FI EUR % Roche Holding Switzerland CH CHF % Apple Inc USA US USD % Bank of America USA US USD % Alphabet USA US02079K USD % Lennar USA US USD % Spirit Airlines USA US USD % Toll Brothers USA US USD % 17

18 Issuer/Name of the Equity Fund manager Country of location ISIN- code Nominal value Currency Quantity Average acquisition cost in currency Total acquisition cost in EUR Market price per unit as at in currency** Market value EUR Share in the net value of the Fund s assets Fund shares % Equity fund shares % DB X-Trackers MSCI Europe Small Cap DB Platinum Advisors Luxembourg LU EUR % Lyxor UCITS ETF EURO STOXX Banks Lyxor Asset Management France FR EUR % Lyxor ETF World Water Lyxor Asset Management France FR EUR % WisdomTree Japan Hedged Equity Fund WisdomTree Investments USA US97717W USD % ishares U.S. Home Construction Blackrock Fund Advisors USA US USD % Powershares QQQ Trust Series 1 Invesco Management USA US73935A USD % Financial Select Sector SPDR Fund State Street Global Advisers USA US81369Y USD % Issuer/Name of the Equity Type Issuer Rating Rating Agency* Underlying asset name Maturity date Market value EUR Share in the net value of the Fund s assets Derivatives % USD Forward Future Swedbank Aa3 Moody s EUR % Credit Institution Type of deposit Country of location Rating Rating Agency Start date Underlying asset name Interest Maturity date Deposit amount Market value EUR Share in the net value of the Fund s assets 2. Deposits % Bank accounts Swedbank Demand deposit Estonia Aa3 Moody s EUR % % Swedbank Demand deposit Estonia Aa3 Moody s USD % 3. Other assets % Dividend receivables % TOTAL ASSETS % Liabilities of the Fund % FUND S NET ASSET VALUE % * The full name of the credit rating agency is Moody s Investor Service ** The market price per unit of currency includes the interest accrued as at that date 18