GLOBAL VALUE & GROWTH

Transcription

1 GLOBAL VALUE & GROWTH Societe d'investissement a Capital Variable Fonds d'investissement Specialise FINANCIAL STATEMENTS WITH THE REPORT OF THE REVISEUR D'ENTREPRISES AGREE THEREON 31 DECEMBER 2015 R.C.S. Luxembourg B Subscriptions are only valid if made on the basis of the current prospectus accompanied by the latest annual and semi-annual report

2 GLOBAL VALUE & GROWTH SICAV-FIS TABLE OF CONTENTS GENERAL INFORMATION Management and Administration 3 Board of Directors 3 REPORT OF THE REVISEUR D'ENTREPRISES AGREE 4-5 BOARD OF DIRECTORS' REPORT 6-11 FINANCIAL STATEMENTS Statement of Net Assets 12 Net Asset Value per share 12 Statement of Operations and Changes in Net Assets 13 Statement of Changes in Number of Shares Outstanding 14 Financial Details Relating to the Last Three Years 14 SECURITIES PORTFOLIO NOTES TO THE FINANCIAL STATEMENTS

3 MANAGEMENT AND ADMINISTRATION REGISTERED OFFICE Global Value & Growth SICAV-FIS 5, Place de la Gare L-1616 Luxembourg INVESTMENT MANAGER (COMMITTEE) Steffen Ronn Jensen 6, boulevard du Jardin Exotique MC Monaco ADMINISTRATION AGENT Carnegie Fund Services S.A. 5, Place de la Gare L-1616 Luxembourg Mr. Jakob KJELGAARD CEO CORE CAPITAL, LUX 10, rue Mathias Perrang L-8160 Bridel CUSTODIAN BANK Banque Carnegie Luxembourg S.A. 5, Place de la Gare L-1616 Luxembourg Mr. Stephan KARLSTEDT CARNEGIE FUND SERVICES S.A. 5, Place de la Gare, L-1616 Luxembourg, AIFM Carnegie Fund Services S.A. 5, Place de la Gare L-1616 Luxembourg LEGAL ADVISOR Bonn & Schmitt 22-24, rives de Clausen L-2165 Luxembourg BOARD OF THE AIFM Bruno FREREJEAN - Chairman Andreas ULLER Jean-Marc DELMOTTE INDEPENDENT AUDITOR H.R.T. Revision S.A. 163, rue du Kiem L-8030 Strassen BOARD OF DIRECTORS CHAIRMAN : Steffen Ronn Jensen 6, boulevard du Jardin Exotique MC Monaco DIRECTORS : Jakob Kjelgaard Chief Executive Officer Core Capital Management S.A. 10, rue Mathias Perrang L-8160 Bridel Marten Adriaan Lanting Director of Companies 8, Avenue des Ligures MC Monaco 3

4 hit PKf REVISION To the Shareholders of Global Value & Growth SICAV-FIS 5, Place de la Gare L-1616 Luxembourg REPORT OF THE REVISEUR D'ENTREPRISES AGREE We have audited the accompanying financial statements of Global Value & Growth SICAV-FIS (the "Fund"), which comprise the statement of net assets and the statement of investments as at 31 December 2015 and the statement of operations and changes in net assets for the year then ended, and a summary of significant accounting policies and other explanatory information. Responsibility of the Board of Directors of the Fund for the financial statements The Board of Directors of the Fund is responsible for the preparation and fair presentation of these financial statements in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the financial statements and for such internal control as the Board of Directors of the Fund determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Responsibility of the reviseur d'entreprises agree Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the reviseur d'entreprises agree's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the reviseur d'entreprises agree considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors of the Fund, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 4

5 REVISION Opinion In our opinion, the financial statements give a true and fair view of the financial position of Global Value & Growth SICAV-FIS as of 31 December 2015 and of the results of its operations and changes in its net assets for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the financial statements. Other matter Supplementary information included in the annual report has been reviewed in the context of our mandate but has not been subject to specific audit procedures carried out in accordance with the standards described above. Consequently, we express no opinion on such information. However, we have no observation to make concerning such information in the context of the annual report taken as a whole. On behalf of H.R.T. REVISION S.A. Cabinet de revision agree Anthony PONT Reviseur d'entreprises agree Strassen, 16 March

6 GLOBAL VALUE GROWTH SICAV-FIS BOARD OF DIRECTORS' REPORT Letter from the Chairman In 2015 Net Asset Value (NAV) per share decreased from EUR to EUR representing a return of minus 0.4% - underperforming our 5% Benchmark by 5.4%. Since inception in November 2009, Global Value Growth SICAV FIS (GVG) is up 137% outperforming our Benchmark with 107.2% points. On a rolling 5 years basis, the annual average net return is 14.2% and since inception the average annual return is 15.1% will not be remembered as a good year for equities. MSCI North America fell 2.4%, MSCI Europe increased 5.5%, and MSCI World increased 0.2% - all in local currencies. FX In 2015 the USD increased 11.4%. As many of you know, GVG has been working with a FX hedge since inception of the fund in order to decrease the volatility of our results. Normally the hedge is around 1 /3 of the exposure. Last year the FX hedge decreased the result with a little more than 2% of our fund assets. Our most important stocks were: Apple (AAPL) GVG started buying AAPL around $27 in early 2010 when the ipad was introduced. In the spring of 2012 I sold more than half of our position at the $75-level and lowered the weighting to just below 10%. Since spring 2012 the desired allocation to AAPL has been around this level. Including the dividend the AAPL-stock decreased 4% to $106.2 in Early 2016 AAPL is trading at multiples that we have only experienced once in 10 years. That was April 2013, after the somewhat disappointing iphone 5 launch. I believe there are similarities between the situation in April 2013 and today given a relatively disappointing iphone 6S cycle. One year after April 2013 the AAPL stock was up 50% and it was up over 120% two years after. I believe that most company specific bad news is priced into the stock. AAPL still looks like an above average company, and as long as the stock trades below average multiples, I expect to have the stock in our portfolio. Bank of America (BAC) Another good value play has been BAC. In July 2012 I initiated a 2.5%-allocation of BAC around $7.30 per share when the stock traded with a huge discount to book value. After a few quarters that confirmed that BAC was on the right track and the book value increasingly looked like it would not go lower, I increased the allocation. End of 2013 our allocation was 5.7% and the stock reached $15.5. During 2014 we had the opportunity to add to our position and our allocation to BAC was 9.3% end of

7 GLOBAL VALUE GROWTH SICAV-FIS BOARD OF DIRECTORS' REPORT Bank of America (BAC) (continued) The stock finished 2014 at $18.1. Last year BAC continued to report improving numbers and I believe the big write offs for legal settlements will soon be a thing of the past. I believe that in the not to distant future the market will reward BAC with higher multiples. In early 2016 BAC is trading below $14 which is 0.6 times book value. I think BAC should be trading at minimum one time book value. My estimated 2016 book value is $24. So there is significant upside in my opinion and a nice margin of safety. For this reason I increased our allocation to BAC in 2015 from 9.3% to 15.3%. JP Morgan (JPM) GVG initiated a 7% allocation to JPM in Q around $33 per share. In Q we had the opportunity to buy more when the stock dropped from $46 to $31. By the end of 2012 the allocation was around 12.5% as the stock price had increased to the $43-level. By the end of 2013 the stock reached $58.2, and I had lowered the allocation to 9.9% as JPM was trading at book value at the time. The stock price end of 2014 was 62.3 and I had lowered the allocation further to 9.3%. Last year I increased the allocation again to 11.4%. The stock ended 2015 at $66.4. JPM is the biggest US bank by assets and is probably the bank (and Wells Fargo) that weathered the financial crisis the most impressive was a record year for JPM. Net profit was $24.4 billion. Return on assets went from 0.89% in 2014 to 0.99% in Return on equity increased to 11% and total loans increased 11% - despite a lower balance sheet. Right now JPM is in the process of right sizing its balance sheet. USA is implementing new tobig-to-fail-and-systemically-important-bank-rules that demand an additional layer of capital that can range from 1% to 5%. JPM said in January, that they expect its surcharge will drop from 4.5% in 2014 to 3.5% in 2015 after cutting nearly $200 billion in non-operating deposits, shrinking hard-to-value illiquid assets by more than $15 billion, and slashing derivatives by $15 trillion. Given JPMs huge balance sheet I am very impressed with how nimbly JPM have accomplished this. Now - in January I still believe JPM is a very attractive investment (JPM CEO - Jamie Dimon - seems to be of the same opinion. He bought shares ($26 million) for his personal account on February 11th 2016). JPM is now trading at less than 10 times expected 2016 EPS and less than 0.9 times expected 2016 book value. Berkshire Hataway (BRK) In BRK was a very profitable value play for us. We tripled our allocation to BRK in early summer of 2012 to an allocation of 15.9% at the $ price-level. After increasing 15.5% in 2012, the BRK stock increased another 33.4% in 2013 and then another 29.2% in 2014 and reached a price of $228,615 per share. BRK is still an attractive investment but the higher stock price in 2014 motivated me to lower the allocation yet another notch from 12.4% end of 2013 to 8% end of I kept the allocation around 8% last year and the stock price took a breather and decreased from to Now in early 2016 the stock trades very close to 1.2 times book value, which is BRKs announced level for stock buy backs. 7

8 GLOBAL VALUE GROWTH SICAV-FIS BOARD OF DIRECTORS' REPORT - continued - Munich Re Like other stocks in our portfolio, I don't own Munich Re because I expect it to beat the equity markets. It gives stability and I like to think of Munich Re as a conservative stock/aggressive bond. In 2015 I increased our weighting from 2.9% to 8% as I could buy more of the stock below book value. Last year the stock price increased 11.3% to $184.5, excluding the handsome dividend of more than 8. Munich Re has one the strongest balance sheets in the industry and I do not expect them to change their more than 3 decade long dividend policy. Allianz I have bought Allianz for almost the same reasons as Munich Re. In 2015 I increased our weighting to Allianz from 1.4% to 4.4%. This stock also did well last year and increased 19%. The stock trades close to book value and pays a dividend well above 5%. Wal-Mart (WMT) WMT has been growing their earnings, revenues, dividends and book value per share for more than 40 years in a row. This winning streak ended in 2014 when EPS was $ cents lower than Revenue, dividends and book value is still growing every year, but WMTs new CEO announced a new growth strategy in October last year. WMT will invest in the customer experience. This means wider isles, less waiting time at the cash register, higher salaries for the WMT associates, more education etc. Short term WMT expects this strategy to have a negative impact to the EPS of around 20%. Initially Wall Street did not buy into this strategy. WMT was our worst performer last year with a drop of 27.2% and ended the year at $61.4. It is not the first time I have seen this kind of invest-some-profit-margin-in-the-client- experience-toreignite-growth-strategy. Early in the 00's, McDonalds (MCD) implemented a similar strategy as the departing CEO had overdosed on cost cutting and the restaurants looked worn out, hurting the costumer experienced. From 2000 to 2002 the new management in MCD invested a lot in upgrading the customer experience and had declining EPS. In 2003 the strategy worked and the EPS started to grow again from $1.43 in 2003 to close to $5 last year. The stock did even better and increased from $15 to $118 end of I believe WMT is taking the right medicine and it will be very investing to follow the implementation in the coming quarters. 8

9 GLOBAL VALUE GROWTH SICAV-FIS BOARD OF DIRECTORS' REPORT - continued - Bed Bath and Beyond (BBBY) The second reason why our fund performed sub par last year is BBBY. Last year BBBY fell 37.3% from $77 to $48.3. I did not add to our position during 2015 and the allocation decreased from 5.25% to 3.9%. BBBY has been growing their Revenue Per Share (RPS) on average 14.5% and 15.5% the last 10 and 5 years respectively. EPS has been growing on average 14% and 19% the last 10 and 5 years respectively. Among retailers BBBY has one of the strongest balance sheets. BBBY is trading around 8 times EPS and in Q3 last year BBBY announced a huge stock-buy-back-program of $2.5 billion. That is 1/3 of their present market value. This is a strong signal that the management find their stock very undervalued. LVMH Last year our largest holding - LVMH - showed great resilience amid weak global economic growth and the November 13th terrorist attack in Paris. In 2015 LVMH accelerated from their long term average high single digit growth rate and increased their business 16% - with all product categories showing excellent performance. At the earnings release in early February the CEO - Bernard Arnault - seemed very upbeat about the future of LVMH and he has wondering why the stock price of LVMH very often seemed to do nothing when LVMH was performing above par and performing very good when LVMH performed below par was a year like that. Last year the stock price of LVMH only increased 9.5%. I still believe LVMH is a very attractive long term investment opportunity and is very well positioned to capitalize on the growing class of affluent consumers in the world. The news flow coming out of China has lowered the enthusiasm for a lot of stocks. LVMH is one of them. But none of the news coming out of China has changed my believe, that 10 years from now, the number of Chinese tourists traveling abroad will have more than doubled to 240 million. Just imagine that fewer than 10% of the Chinese currently have a passport. Tods We have owned Tod's before. In July 2012 I made a small 2.4% allocation to Tod's around the 70-level. In late summer 2013 we sold our Tod's shares at the level. In October 2014 we could buy the stock back below 70 as Tod's reported lower earnings as their business got hurt by the Hong Kong demonstrations. Plus Tod's has chosen to invest in the future and upgrade their flag ship store on Madison Avenue in New York. Tod's also ended several retail relationships that did not perform up to par. This strategy has hurt the bottom line and EPS decreased from 4.75 in 2012 to 3.17 in The strategy seems to work now. On my recent store visits (in January 2016) I was impressed with the new line up of products - and lots of them in the must-have category in my opinion. I believe that Tod's is getting more in control of their client experience and they are attracting new customers without loosing the more classic oriented customer. 9

10 GLOBAL VALUE GROWTH SICAV-FIS BOARD OF DIRECTORS' REPORT Tods (continued) So it would not surprise me to see Tod's beating the 4.75 EPS record in the not too distant future. I took advantage of the sell-off from the 140-level and established a 5% allocation below 70 in Q I would not mind having a higher allocation if the stock was not so illiquid. The majority of the shares is owned by the CEO and founder. McDonalds (MCD) MCD has been a very good investment for our fund. We have owned MCD since fund inception ($62.9) and initially had an allocation 19.3%. Over the years I have lowered our allocation as the stock appreciated and in Q4 last year GVG sold our last MCD at $104. Sanofi I also sold our last Sanofi in Q4 last year around 90 when they announced expected lower insulin sales. We have owned Sanofi since fund inception ( 50.4) and initially had a 10.4% allocation. So both MCD and Sanofi have been very good investments for our fund - even excluding the above average dividends. Expected opportunities I do not pride myself of being able to time the market. You should expect me to be out of sync with the equity market for 1- or even 2-year periods from time to time. I am primarily a bottom-up-investor. Company by company I look for long term opportunities that live up to our investment model (please also refer to: Today beginning of 2016 I estimate that our universe of opportunities is very attractive. Equity markets trade at the historic average of times earnings and leading 10 years government bonds are trading way above the historic average representing a yearly return at the %-level. As fear and doubt about the future slowly decreases and investors are less happy with earning less than 2% on government bonds, I expect more funds to be allocated to equities. 10

11 GLOBAL VALUE GROWTH SICAV-FIS BOARD OF DIRECTORS' REPORT Volatility can be high for GVG It's very important to note that the GVG-strategy is a focused strategy and the mandate allows me to allocate up to 30% of the fund's capital to one single investment (though no single investment has represented more than 23% at any point in time during the life of the fund). Some of you may recognize this focused strategy from other investors like Phillip Fisher, Charlie Munger, T. Rowe Price and Warren Buffett. When the stocks I choose are right, we are likely to outperform the equity benchmarks. The flipside obviously is when the investments I make are wrong from time to time. Consequendy, the GVG results can differ a lot from the typical equity benchmarks. GVG will try to keep volatility low by focusing on what we describe as all-weather-stocks. That's value stocks with a growth element (please also refer to the GVG-investment principles at: The GVG investors are not burdened with costs for expensive distribution platforms - the first priority is to protect and grow your capital. In other words: "We get by with a little help from our friends" and if you like your experience at Global Value & Growth SICAV-FIS - I hope you will tell your network about it. I would like to express my gratitude to those of you who did this last year. Thank you for your trust. I wish you good health, success and happiness in 2016, Steffen Ronn Jensen Chairman of the Board Global Value & Growth SICAV-FIS February 23rd,

12 GLOBAL VALUE & GROWTH SICAV-FIS STATEMENT OF NET ASSETS AS AT 31 DECEMBER 2015 (Expressed in EUR) ASSETS Securities portfolio at market value (Note 2.1) 90,932, Cash at banks and liquidities 25, OTHER ASSETS Dividends receivable 78, Brokers receivable 778, Receivable commissions on redemptions 1, Receivable on subscriptions 47, Total assets 91,865, LIABILITIES Management fee payable (Note 6) (57,006.15) Bank Overdraft (4,204,726.29) Payable on redemptions (416,650.45) Taxe d'abonnement payable (2,216.20) exchange contracts (Note 5) (81,723.87) Other payables (10,056.00) Total Liabilities (4,772,378.96) NET ASSET VALUE 87,092, NET ASSET VALUE PER SHARE AS AT 31 DECEMBER 2015 (Expressed in EUR) Net asset value per share The accompanying notes form an integral part of these financial statements 12

13 GLOBAL VALUE & GROWTH SICAV-FIS STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 DECEMBER 2015 (Expressed in EUR) INCOME Dividends, net (Note 2.4) 1,454, Redemption fees 70, Total Income 1,524, EXPENSES Performance fee (Note 7) (1,213,499.21) Management fee (Note 6) (743,699.20) Custodian and administration fee (Note 8) (122,313.47) Taxe d'abonnement (Note 4) (9,641.31) Bank interest (52,055.10) Printing & publication expenses (2,665.32) Professional expenses (8,808.75) Audit Fees (7,157.12) Total Expenses (2,159,839.48) Net investments result (635,493.07) Realised gains on investments 4,737, Realised loss on investments (434,814.30) Net profit on foreign exchange 2,445, Net realised profit 6,112, Variation in net unrealised depreciation on investments (note 9) (6,828,110.69) Variation in net unrealised appreciation on forward foreign exchange contracts 445, Decrease in net assets as a result of operations (269,642.38) Subscriptions 9,874, Redemptions (17,939,040.47) Decrease in net assets (8,334,443.39) Net assets at the beginning of the year 95,427, NET ASSETS AT THE END OF THE YEAR 87,092, The accompanying notes form an integral part of these financial statements 13

14 GLOBAL VALUE & GROWTH SICAV-FIS STATEMENT OF CHANGES IN NUMBER OF SHARES OUTSTANDING FOR THE YEAR ENDED 31 DECEMBER 2015 Shares outstanding as at 1 January , Shares issued 38, Shares redeemed (72, ) Shares outstanding as at 31 December , FINANCIAL DETAILS RELATING TO THE LAST THREE YEARS (EUR) 31 December 2015 Total net assets 87,092, Net asset value per share December 2014 Total net assets 95,427, Net asset value per share December 2013 Total net assets 91,668, Net asset value per share The accompanying notes form an integral part of these financial statements 14

15 GLOBAL VALUE & GROWTH SICAV-FIS STATEMENT OF INVESTMENTS AS AT 31 DECEMBER 2015 NOMINAL SECURITY DESCRIPTION MARKET % VALUE OF NET (EUR) ASSETS Transferable Securities Admitted To An Official Exchange Listing Shares France 7,000 Christian Dior 1,097, ,000 Hermes International 935, ,900 LVMH Moet Hennessy Louis Vuitton 14,330, ,363, Germany 24,000 Allianz 3,925, ,500 Henkel 3,234, ,000 Munich Re Registered 7,012, ,172, Italy 57,959 Tod's 4,233, ,233, Switzerland 1,000 Nestle Registered 68, , United States of America 81,600 Apple 7,892, ,800 Bed Bath & Beyond 3,404, ,000 Bank of America 13,361, Berkshire Hathaway A 7,088, ,000 Coca Cola 39, ,000 C olgate-pafmolive 61, ,000 Johnson & Johnson 94, ,200 JPMorgan Chase & Co 9,962, ,000 McDonald's 108, ,000 Wal-Mart Stores 14,081, ,094, TOTAL SHARES 90,932, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL EXCHANGE LISTING 90,932, TOTAL SECURITIES PORTFOLIO 90,932, A statement of changes in the composition of the portfolio is available to Shareholders free of charge on request from the Company's registered office The accompanying notes form an integral part of these financial statements 15

16 GLOBAL VALUE & GROWTH SICAV-FIS INDUSTRY SECTOR ANALYSIS AS 31 DECEMBER 2015 SECTOR DESCRIPTION % OF NET ASSETS Banks Chemicals 3.71 Equity Investment Instruments 8.14 Food & Beverage Health Care 0.11 Insurance Pharmaceuticals & Biotechnology 0.07 Retail Software & Computer Services 9.06 Clothing &Accessories A statement of changes in the composition of the portfolio is available to Shareholders free of charge on request from the Company's registered office The accompanying notes form an integral part of these financial statements 16

17 GLOBAL VALUE & GROWTH SICAV-FIS NOTES TO THE FINANCIAL STATEMENTS 1 GENERAL GLOBAL VALUE & GROWTH ("the Company") was incorporated as a "Societe Anonyme" on 23 October The Company is organised as an investment company with variable capital ("SICAV") and qualifies as specialised investment fund, within the meaning of the February 13, 2007 Law as amended. The Company is governed by Luxembourg law. GLOBAL VALUE & GROWTH ("the Company"), which should be considered as an Alternative Investment Fund ("AIF") is managed by Carnegie Fund Services S.A. as the AIFM and registered by the CSSF since November 21, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Valuation of investments (a) The value of any cash at hand or on deposit, bills and demand notes and accounts receivable, prepaid expenses, dividends and interests declared or due but not yet collected will be deemed to be the full value thereof, unless it is unlikely that such values are received in full, in which case the value thereof will be determined by deducting such amount the Directors consider appropriate to reflect the true value thereof. (b) Securities listed on a stock exchange or traded on any other regulated market will be valued at the last available price on such stock exchange or market. If a security is listed on several stock exchanges or markets, the last available price on the stock exchange or market, which constitutes the main market for such securities, will be determining. (c) Securities not listed on any stock exchange or traded on any regulated market will be valued at their last available market price. (d) Securities for which no price quotation is available or for which the price referred to in (a) and/or (b) is not representative of the fair market value, will be valued prudently, and in good faith on the basis of their reasonable foreseeable sales prices. (e) Contracts for differences are valued at fair value based on the last available price of the underlying security. (f) Investments in investment funds of the open ended type are taken at their latest net asset values reported by the administrator of the relevant investment fund. ^ Financial futures contracts (on securities, interest rates and indices) are valued at the exchange quoted settlement price. While the contracts are open, unrealised gains and losses are recorded on "mark-to market" basis at the valuation date. When a contract is closed, the Fund records a realised gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the price at which the contract was originally written. (h) Options contracts (on securities, currencies, interest rates and indices) are valued on the basis of the last available trade price. (i) Forward foreign exchange contracts are valued by reference to the forward rate prevailing at the valuation date. 0 Contracts for which no price quotation is available or for which the price referred to in (g) and/or (h) is not representative of the fair market value, will be valued prudently, and in good faith on the basis of their reasonable foreseeable sales prices. 2.2 Realised profit and loss on investments Profits and losses on sales of investments have been determined on the basis of average cost. 17

18 GLOBAL VALUE & GROWTH SICAV-FIS NOTES TO THE FINANCIAL STATEMENTS 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.3 Foreign exchange The financial statements of the Company are maintained in Euro (EUR). The market value of the investments and other assets and liabilities expressed in currencies other than EUR has been converted at the rates of exchange ruling as at 31 December The cost of investments in currencies other than EUR has also been converted at the rates of exchange ruling as at 31 December Profits and losses arising from foreign exchange operations are taken to the Statement of Operations. 2.4 Income / expense from investments Dividends are recognised as income on the date securities are first quoted ex-dividend, to the extent information thereon is reasonably available to the Sub-Fund, net of any withholding taxes. Interest on bonds is accrued on a daily basis. 3 EXCHANGE RATES AT 31 DECEMBER CHF = EUR 1 USD = EUR 1 GBP = EUR 4 TAX STATUS The Company is registered under the Luxembourg law as a SICAV. Accordingly, no Luxembourg income or capital gains tax is, at present, payable. It is subject, however, to an annual "taxe d'abonnement" calculated as a percentage of the net asset value of the Company at the end of each quarter. This tax is payable quarterly. Presently the annual rate payable is 0.01%. 5 FORWARD FOREIGN EXCHANGE CONTRACTS As at 31 December 2015 the Fund had entered into the following outstanding forward foreign exchange contract: Purchase Sale Maturity Unrealised Result EUR 18,206, USD 20,000, Jun-16 EUR -81, ,

19 GLOBAL VALUE & GROWTH SICAV-FIS NOTES TO THE FINANCIAL STATEMENTS 6 MANAGEMENT FEE In consideration for its services, the Investment Manager receives from the Company an annual fee of 0.75% payable monthly calculated on the basis of the average Net Asset Value of the Company. 7 PERFORMANCE FEE In consideration for its services, the Investment Manager is also entided to a performance related fee of 10% of the appreciation of the Net Asset Value per share which exceeds the benchmark. The benchmark is 5% per annum. The performance fee is due as of each Valuation Date. The accrued performance fees (if any) are payable quarterly. The performance fee mechanism is described in detail in the prospectus of the Fund. 8 CUSTODIAN AND ADMINISTRATION FEE In consideration for its services as Depositary, Banque Carnegie Luxembourg S.A. will receive from the Company a fixed fee payable monthly equal to 0.05% of the net assets with a minimum of EUR 20,000.- per annum. On the 21st November 2014 it has been agreed that the Management Company shall be entided to receive from the fund, for each sub-fund 0.075% of the net assets with a minimun fee of EUR 20,000.- per annum. 9 VARIATION IN UNREALISED GAIN / LOSS ON INVESTMENTS SECURITIES Description Variation in Unrealised gains on investments Variation in Unrealised loss on investments Variation in net unrealised depreciation on investments 4,881, (11,709,628.25) (6,828,110.69) 19

20 GLOBAL VALUE & GROWTH SICAV-FIS NOTES TO THE FINANCIAL STATEMENTS 10 OFF BALANCE-SHEET COMMITMENTS In accordance with the pledge agreement dated 28 December 2010 with effect date as from 1 January 2010, Banque Carnegie Luxembourg S.A. requested guarantees over the Fund's assets in order to secure the performance of the Fund's debts and obligations towards it. 11 OTHER INFORMATION FOR SHAREHOLDERS (UNAUDITED) During the financial year, the sub-fund of the Company has not been subject to material changes affecting the AIF and its investors, other than changes linked to AIFMD requirements. There was no specific staff attributable to the AIF and therefore no variable remuneration paid by the AIF. The board of directors is not receiving any remuneration for exercising their mandates. The sub-fund of the AIF is investing in highly liquid assets so that the AIF is, under normal market circumstances, in position to fulfill its obligations arising from redemptions. The liquidity of the AIF is monitored on a daily basis. As a consequence, no arrangements are made for illiquid assets nor for managing the liquidity of the AIF. The AIF has implemented a Risk Management Policy in accordance with the applicable Laws and Regulations which covers the following risks: Market Liquidity Counterparty Credit Operational Risk Investment Compliance The market risk of the AIF is captured by using the Value At Risk approach with 99% confidence level and 20 days time horizon. The model is back tested on a daily basis. The credit risk of the AIF is limited to the cash held at banks as the AIF is not investing in bonds and equivalent securities. The level of cash is limited hence the credit risk of the AIF is considered to be limited. The AIF is confronted with various operational risks which are linked to the instruments in which the AIF is investing such as but not limited to valuation risk, corporate action errors, wrong performance fee calculation, unreconciled cash and securities positions. The AIFM and the accounting agent have implemented a series controls in order to mitigate the operational risks. LEVERAGE The analysis done by the AIFM for the year 2015 are as follows: Min Max Average AIFMD Commitment Method Net Leverage AIFMD Gross Method Leverage % % % % % % 20