Annual report and audited financial statements Ashburton Emerging Markets Funds Limited. For the year ended 31 March The study of growth

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1 The study of growth The study of growth is to recognise the value of evolution progressive and ongoing. It is a perpetual cycle of advancement. At Ashburton Investments, we believe that sustainability is key to nurturing growth and, ultimately, expanding horizons. Annual report and audited financial statements Ashburton Emerging Markets Funds Limited For the year ended 31 March 2017 A part of the FirstRand Group

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3 Contents Management and administration 2 Directors of Ashburton Emerging Markets Funds Limited 2 Investment policy and objectives 3 Managers report 4 Directors report 5 Custodian report 7 Independent auditors report to the members of Ashburton Emerging Markets Funds Limited 8 Equity Fund Chindia Equity Fund 10 Notes to the financial statements 14 Notice of the annual general meeting 22 Form of proxy 23 The following are included within the fund: Portfolio statement Statement of financial position Statement of comprehensive income Statement of changes in redeemable preference shareholders net assets Cash flow statement Notes to the financial statements Statement of material portfolio changes 10 year price, performance, distribution and total expense ratio

4 Management and administration Registered Office 17 Hilary Street, St Helier, Jersey, JE4 8SJ, Channel Islands. Manager Ashburton Fund Managers Limited. PO Box 239, 17 Hilary Street, St Helier, Jersey, JE4 8SJ, Channel Islands. Investment Manager, Administrator, Secretary and Registrar Ashburton (Jersey) Limited. PO Box 239, 17 Hilary Street, St Helier, Jersey, JE4 8SJ, Channel Islands. Bankers and Sub-Custodian BNP Paribas Securities Services S.C.A., Jersey Branch, Liberté House, La Motte Street, St Helier Jersey, JE2 4SY, Channel Islands. Independent Auditors PricewaterhouseCoopers CI LLP. 37 Esplanade, St Helier, Jersey, JE1 4XA, Channel Islands. Legal Advisers Ogier. Ogier House, The Esplanade, St Helier, Jersey, JE4 9WG, Channel Islands. Custodian BNP Paribas Securities Services Trust Company (Jersey) Limited Liberté House, La Motte Street, St Helier Jersey, JE2 4SY, Channel Islands. Directors of Ashburton Emerging Markets Funds Limited David Waters qualified as a Chartered Accountant in London in He was a partner at Coopers & Lybrand, South Africa before moving to the Channel Islands in 1986, where he became Senior Partner of Ernst & Young, Jersey. Following the Royal Bank of Canada s ( RBC ) acquisition of Ernst & Young s trust company, David became Managing Director of RBC s British Isles trust business. He retired in Ian Ling is a Director of Ashburton Fund Managers Limited. He was appointed a Director of Ashburton (Jersey) Limited in 1992 up to his retirement in He has over 45 years of experience of the finance industry, having been a partner of London stockbroking firm, Laurie Milbank & Company, a founder member of Channel Islands Portfolio Managers Limited and a former Director of Quilter Goodison (CI) Limited. Nicholas Lee is Ashburton s Director of Portfolio Management Services and is also on the board of Ashburton Fund Managers Limited. Nick joined Ashburton in 1988 and has over 38 years of experience in the investment industry. From 1979 to 1988, Nick worked in the Investment Management team at Barclays de Zoete Wedd, firstly as an investment analyst and then as a pension fund manager. Nick is also a Member of the Chartered Institute for Securities and Investment. Nicholas Taylor is the Chief Financial Officer and a Director of Ashburton Investments International Holdings Limited, Ashburton (Jersey) Limited and Ashburton Fund Managers Limited. After graduating as an electrical engineer, Nicholas joined Coopers & Lybrand, where he qualified as a Chartered Accountant. He joined Ashburton in 1994 and is a Fellow of the Institute of Chartered Accountants in England and Wales. Peter Bourne is a Director of Ashburton (Jersey) Limited and is also on the board of Ashburton Fund Managers Limited, which is an associated Company. Having joined the FirstRand Group in 1983, he has been an investment professional since Prior to joining Ashburton, he headed up the Portfolio Management division of the FirstRand Group s Wealth Segment. Peter joined the Board of Ashburton (Jersey) Limited as Managing Director in 2007, a position he relinquished in He is a member of the Chartered Institute of Securities and Investment. 2 Ashburton Emerging Markets Funds Limited

5 Investment policy and objectives Ashburton Emerging Markets Funds Limited ( the Company ) can create different funds established as separate funds but currently operates one fund being the Chindia Equity Fund ( the Fund ). The decisions relating to investments comprising the Fund are made in accordance with the Fund s objectives, whilst the asset allocation will generally be set in accordance with the respective current investment strategy adopted by the Investment Manager. The Company belongs to the Umbrella Fund category under the Collective Investment Funds (Recognized Funds) (Rules) (Jersey) Order 2003 ( the Order ) and the Fund belongs to the Securities Fund category. The principal objective of the Fund is to achieve long-term capital growth through equity or equity-related investments predominantly in the stock-markets of China and India. The Fund will focus on the quality and attractiveness of individual companies rather than the outlook for particular markets. The Fund will also invest in companies traded in other markets where a significant proportion of growth in their underlying business is set to derive from China or India. General features In general, Securities Fund category funds may invest in equities, fixed interest and other securities quoted on eligible markets as appropriate, as allowed by the Order. Investment may also be made in securities that are unquoted or not regularly traded on an eligible market to the extent permitted by the Order. Investments may also be made in other Collective Investment Schemes including those operated by the Investment Manager or a company or person associated with the Manager, provided the underlying fund is of a type permitted by the Order, and the total investment does not exceed 5% of the property of the fund. Investment in securities not officially listed on an eligible market, on a secondary market, or other securities market shall be made only to the extent permitted by the Order. The Fund will from time to time, and as appropriate for its mandate, invest in derivatives or other financial instruments used for efficient portfolio management, as permitted by the Order. The Fund will maintain adequate cash deposits to meet redemptions and to take advantage of any expected interest rate changes. Such balances will normally be held on short-term deposit but may be held in other forms of short-term money instruments including certificates of deposit, bills and floating rate notes. Ashburton Emerging Markets Funds Limited 3

6 Managers report Chindia Equity Fund Market update The Fund achieved strong returns over the year, delivering performance towards the top of its peer group. Both of the underlying regions in which we invest delivered positive results. Overall, stock selection proved to be the key generator of returns. China posted strong equity market returns for the period under review, driven by better than expected growth dynamics, resilient consumption (despite slowing wage pressure) and a rebound in commodity prices. Strength in property and consumption supported economic growth, offsetting the negative impact of weakening investment spending. This domestic recovery continued into Corporate earnings were broadly better than consensus expectations, albeit off a low base. The internet, telecom and technology sectors enjoyed an upward rerating while materials, construction and property stocks benefited from government stimulus. India enjoyed further gains during the twelve month period, albeit punctuated by volatility towards the end of 2016 following the election of Donald Trump in the US, and domestically, the demonetisation event that was announced on the same day as the US election result. After lagging other emerging markets in 2015 and most of 2016, India played catch-up over the first quarter of 2017 as domestic investment continued and greater interest in emerging markets developed generally. A stronger Indian rupee also assisted dollar returns. We retained a neutral country allocation for much of 2016, before moving underweight in China through November and December This position was reversed in January as our models recorded a more positive view, coinciding with an uplift in equity prices. In India, we have remained bullish for some time about the prospects for economic growth, earnings and therefore for market returns in India. However, following the strong gains seen in certain pockets of the market and particularly in smaller stocks, we have been slightly more active than previous periods, selling a number of shares that have rerated dramatically and taking new exposure to companies offering more cyclical exposure. Outlook While not cheap, Chinese stock valuations are not excessive given projected earnings growth for 2017 of around 15%. Together with government policy support, a consumer rebound and rising dividends, this should support the market rally going forward. Against this backdrop, several headline risks continue to bubble away under the surface and merit acknowledgement, including private sector debt, currency risk, US-China relations, commodity sector leverage and elevated housing prices in selective cities. But ahead of the fourth quarter 19th National People s Congress Party meeting, de-risking and stability are the primary policy goals, indicating supportive measures from Beijing if economically warranted. India s strong underlying medium to long term macro outlook, combined with a stable political backdrop, continues to drive interest in the country from an investment perspective. The government continues to progressively roll out significant reforms in a variety of areas that are ultimately improving both the quality and quantity of economic growth in the country, and hence improve the outlook for company earnings. Ashburton Fund Managers Limited Manager 31 March Ashburton Emerging Markets Funds Limited

7 Directors report The Directors present their annual report to the members, together with the audited financial statements of Ashburton Emerging Markets Funds Limited ( the Company ) and financial statements of Chindia Equity Fund ( the Fund ) (together the financial statements ) for the year ended 31 March Incorporation The Company was originally incorporated as Chindia Equity Fund PC, a protected cell ( the PC ) of Ashburton Global Funds PCC, a protected cell company, on 8 November The Company subsequently converted to an Open Ended Investment Company with limited liability and changed its name to Ashburton Emerging Markets Funds Limited on 6 December The Company is a Jersey Recognized Collective Investment Fund operating as an umbrella Fund and complies with and has been granted a Recognized Fund Certificate under the Collective Investment Funds (Recognized Funds) (Rules) (Jersey) Order 2003 ( the Order ) and a permit under the Collective Investment Funds (Jersey) Law Results The statement of comprehensive income for the year ended 31 March 2017 is set out on page 11. Dividends The Directors do not recommend the payment of a dividend for the Fund s participating redeemable preference shares. All income will be accumulated and reflected in the share price of the Fund. Directors The Directors of the Company in office at 31 March 2017 are set out on page 2 of this report. All Directors served throughout the year and to the reporting year end date. Directors responsibilities for the financial statements The Directors are responsible for preparing these financial statements in accordance with applicable law and International Financial Reporting Standards ( IFRS ). Directors are required by the Companies (Jersey) Law 1991 (as amended) to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the total return 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 presume that the Company will continue in business. The Directors confirm they have complied with all the above requirements in preparing these 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 to enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991 and the Collective Investment Funds (Recognized Funds) (Rules) (Jersey) Order They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with law and regulations. The annual report and audited financial statements are published on which is a website maintained by Ashburton (Jersey) Limited and Ashburton Fund Managers (Proprietary) Limited, South Africa. The work undertaken by the Independent Auditors does not involve consideration of the maintenance and integrity of the website and, accordingly, the Independent Auditors accept no responsibility for any changes that may have occurred to the annual financial statements since they were initially presented on the website. Visitors to the website need to be aware that legislation in Jersey governing the preparation and dissemination of the accounts may differ from legislation in other jurisdictions. The Directors are responsible for the maintenance and integrity of the financial statements on the website. So far as the Directors are aware, there is no relevant audit information of which the Company s auditors are unaware, and each Director has taken all the steps that he or she ought to have taken as a Director in order to make himself or herself aware of any relevant audit information and to establish that the Company s auditors are aware of that information. Ashburton Emerging Markets Funds Limited 5

8 Directors report cont. The Directors believe that the carrying value of the investments is supported by their underlying net assets. Directors interests None of the Directors had a holding in the Fund during the year. Financial year The financial statements are prepared on an annual and semi-annual basis to the last business day in March and September respectively. The financial statements are audited annually after the year end. Principal activities The Company is an Open Ended Investment Company established as a vehicle for international investments. The Company is an umbrella scheme with one fund presently established. Should further funds be launched in the future, investors should be aware that, where assets of an individual fund were insufficient to meet that Fund s liabilities, then any liabilities that remained undischarged would revert to the Company as a whole and be allocated amongst the other funds. At the year end the Directors are not aware of any existing or contingent liability which could not be discharged out of the assets of the Fund. Investment policy and objectives The policy and objectives of the Fund are set out on page 3. To achieve these objectives, the Fund will hold or invest in a combination of financial instruments which may include:- - Investments in equities and other securities. - Cash, liquid resources and short-term debtors and creditors that arise directly from their investment activities. - Hedging instruments such as forward foreign currency exchange contracts. The holding of financial instruments pursuant to the Fund s investment objectives involves certain inherent risks. The main risks arising from the Fund s financial instruments are market price, foreign currency and liquidity risks. Hedging transactions may be entered into for the reduction or elimination of currency benchmark risk as allowed by 5.52 of the Order. These policies have remained unchanged since the beginning of the year to which these financial statements relate. As at 31 March 2017, the Fund does not hold a USD currency hedge in relation to any of the prevailing currency exposure resulting from the Fund s investments denominated in Indian rupees and Hong Kong dollars. Secretary The Secretary of the Company as at 31 March 2017 was Ashburton (Jersey) Limited who served for the whole of the year then ended. Manager The Manager of the Company as at 31 March 2017 was Ashburton Fund Managers Limited who served for the whole of the year then ended. Independent Auditors The Company s auditors, PricewaterhouseCoopers CI LLP, have indicated their willingness to continue in office. Subsequent Events Peter Bourne retired as a Director with effect from 15 June By order of the board Ashburton (Jersey) Limited Secretary 23 June 2017 Registered Office: 17 Hilary Street, St Helier, Jersey JE4 8SJ, Channel Islands 6 Ashburton Emerging Markets Funds Limited

9 Custodian report To the shareholders of Ashburton Emerging Markets Funds Limited It is the opinion of BNP Paribas Securities Services Trust Company (Jersey) Limited that in respect of the period from 1 April 2016 to 31 March 2017, during which time we acted as Custodian to the Company, to the best of our information, knowledge and belief, that in all material respects, the Directors and the Manager have managed the Company in that period: a) In accordance with the limitations imposed on the investment and borrowing powers of the Company and the Custodian by the Memorandum and Articles of Association, by Prospectuses and by all Orders for the time being in force under Article 10 of the Collective Investment Funds (Recognized Funds) (Rules) (Jersey) Order 2003; and b) Otherwise in accordance with the provisions of the Articles of Association, and the Management Agreement and those Orders. BNP Paribas Securities Services Trust Company (Jersey) Limited Liberté House, La Motte Street, St Helier Jersey, JE2 4SY, Channel Islands. 23 June 2017 Ashburton Emerging Markets Funds Limited 7

10 Independent auditors report to the members of Ashburton Emerging Markets Funds Limited Our opinion In our opinion, the financial statements give a true and fair view of the financial position of Ashburton Emerging Markets Funds Limited ( the Company ) and of Chindia Equity Fund ( the Fund ) together ( the financial statements ) as at 31 March 2017, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards and have been properly prepared in accordance with the requirements of the Companies (Jersey) Law 1991 and the Collective Investment Funds (Recognized Funds) (Rules) (Jersey) Order What we have audited The financial statements comprise: the statement of financial position as at 31 March 2017; the statement of comprehensive income for the year then ended; the statement of changes in redeemable preference shareholders net assets for the year then ended; the cash flow statement for the year then ended; and the notes to the financial statements, which include a summary of significant accounting policies. Basis for opinion We conducted our audit in accordance with International Standards on Auditing ( ISAs ). Our responsibilities under those standards are further described in the Auditor s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Company and the Fund in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code. Other information The directors are responsible for the other information. The other information comprises the reports as listed out in the contents page of the annual report and audited financial statements (the Annual Report ) (but does not include the financial statements and our auditor s report thereon). Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial statements The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards, the requirements of Jersey law and the Collective Investment Funds (Recognized Funds) (Rules) (Jersey) Order 2003 and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Company and the Funds ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company and the Fund or to cease operations, or have no realistic alternative but to do so. Auditor s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 8 Ashburton Emerging Markets Funds Limited

11 Independent auditors report cont. to the members of Ashburton Emerging Markets Funds Limited Auditor s responsibilities for the audit of the financial statements cont. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit 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 Company and the Funds internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Company and the Fund to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Report on other legal and regulatory requirements 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; 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. This report, including the opinion, has been prepared for and only for the 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 this opinion, 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. James de Veulle For and on behalf of PricewaterhouseCoopers CI LLP Chartered Accountants Jersey, Channel Islands 23 June 2017 Ashburton Emerging Markets Funds Limited 9

12 Chindia Equity Fund Portfolio Statement as at 31 March 2017 Mid Market As a % Value of Net Description Currency Holding USD Assets Equities Hong Kong Agricultural Bank of China HKD 1,585, , Aluminium Corp China HKD 1,352, , Anhui Conch Cement HKD 209, , Brilliance China HKD 456, , China Cinda Asset Management HKD 1,839, , China Communications Construction HKD 521, , China Merchants Bank HKD 271, , China National Building Material HKD 988, , China Petroleum and Chemical HKD 966, , China Shenhua Energy HKD 364, , Citic Securities HKD 336, , Country Garden Holdings HKD 994, , CSPC Pharmaceuticals HKD 596, , Geely Automobile Holdings HKD 521, , Great Wall Motor HKD 587, , Guangzhou Automobile Group HKD 434, , Jiangxi Copper HKD 422, , Nine Dragons Papaer Holdings HKD 567, , Sunac China Holdings HKD 697, , Sunny Optical Technologies HKD 111, , Weichai Power HKD 410, , Yanzhou Coal Mining HKD 914, , Zhejiang Expressway HKD 638, , Hong Kong total (2016: 44.58%) 17,075, Portfolio Statement as at 31 March 2017 Mid Market As a % Value of Net Description Currency Holding USD Assets Collective investment schemes Yatra Capital EUR 5,402 31, Collective investment schemes total (2016: 0.15%) 31, Total portfolio (2016: 98.20%) 31,305, Cost $25,009,117 Cash and cash equivalents 126, Other net assets / (liabilities) (156,279) (0.50) Total net assets 31,275, R class shares in issue 5,408,328 R GBP class shares in issue 5,285,653 I class shares in issue 4,318 I GBP class shares in issue 623 C class shares in issue 5,510 D class shares in issue 144,986 India Arvind INR 128, , Ashoka Buildcon INR 106, , Axis Bank INR 42, , Bharat Petroleum INR 54, , Capital First INR 70, , City Union Bank INR 206, , Eicher Motors INR 1, , Endurance Technology INR 41, , Gateway Distriparks INR 88, , Godrej Industries INR 72, , Gujarat Gas INR 27, , HCL Technologies INR 67, , Housing Development Finance INR 41, , ICICI Bank INR 141, , IDFC INR 323, , Infosys Technology INR 61, , KPR Mill INR 27, , Lupin INR 15, , Motherson Sumi Systems INR 94, , Navkar INR 26,270 71, Phoenix Mills INR 70, , Power Grid Corporation of India INR 179, , Ramco Cements INR 17, , Sun Pharmaceutical Industries INR 43, , Tata Motors INR 95, , Tech Mahindra INR 56, , Tube Investments of India INR 67, , Ultratech Cement INR 8, , India total (2016: 51.81%) 14,199, Equities total (2016: 98.05%) 31,274, Ashburton Emerging Markets Funds Limited

13 Chindia Equity Fund cont. Statement of financial position as at 31 March Mar Mar 2016 Note USD USD Assets Financial assets at fair value through profit or loss 10 31,305,415 32,942,686 Trade and other receivables 1 29,889 10,478 Margin cash 10 21,168 - Cash and cash equivalents , ,350 Total assets 31,482,786 33,675,514 Liabilities Trade and other payables 2 207, ,318 Total liabilities 207, ,318 Net assets attributable to redeemable preference shareholders 31,275,450 33,549,196 The financial statements of the Company and the financial statements of the Fund on pages 10 to 20 were approved by the Board of Directors on 23 June N J Taylor Director N C Lee Director Statement of comprehensive income For the year ended 31 March Apr Apr Mar Mar 2016 Note USD USD Operating profit/(loss) Net gains/(losses) on financial assets and liabilities at fair value through profit or loss 3,10,11 6,552,608 (5,428,285) Investment income 4 535, ,388 Other income Expenses 5,10,12 (719,180) (578,937) Operating profit/(loss) 6,368,717 (5,210,755) Finance costs Distributions 6 (70,694) (111,205) Total finance costs (70,694) (111,205) Profit/(Loss) after distributions and before tax 6,298,023 (5,321,960) Withholding tax on dividends (24,316) 44,504 Increase/(Decrease) in net assets attributable to redeemable preference shareholders 6,273,707 (5,277,456) All results above are derived from continuing operations. Statement of change in redeemable preference shareholders net assets For the year ended 31 March Apr Apr Mar Mar 2016 Note USD USD Net assets attributable to redeemable preference shareholders at 1 April 33,549,196 48,315,148 Notes to the financial statements as at 31 March Mar Mar 2016 USD USD 1. Trade and other receivables Accrued interest and dividends receivable - 3,037 Due from brokers 29,889 - Subscriptions receivable - 7,441 Total trade and other receivables 29,889 10, Trade and other payables Due to brokers 97,231 - Redemptions payable 78,936 92,483 Other payables 31,169 33,835 Total trade and other payables 207, , Net gains/(losses) on financial assets and liabilities during the year comprise: Proceeds from sales of investments 88,704,626 23,843,987 Original cost of investments sold (83,675,938) (20,916,141) Gains realised on investments sold 5,028,688 2,927,846 Realised foreign exchange losses (12,201) (38,389) Net realised gains for the year 5,016,487 2,889,457 Net unrealised gains/(losses) for the year 1,536,121 (8,317,742) Net gains/(losses) on financial assets and liabilities 6,552,608 (5,428,285) 4. Income Investment income Dividends 535, ,388 Total investment income 535, ,388 Other income Bank interest Total other income Total income 535, , Expenses Audit fees 13,234 9,103 Bank overdraft fees and charges 2,095 2,162 Custodian s fees 12,955 19,284 Directors fees 8,178 9,456 Manager s fees 225, ,209 Administration fees 37,570 42,368 Sundry expenses 100, ,028 Transaction costs 319, ,327 Total expenses 719, , Distributions Equalisation paid on cancellation of shares 76, ,811 Equalisation received on creation of shares (5,446) (21,606) Net distributions for the year 70, ,205 Amount receivable on creation of shares 8 2,457,173 4,009,395 Amount payable on redemption of shares 8 (11,004,626) (13,497,891) Increase/(Decrease) in net assets attributable to redeemable preference shareholders 6,273,707 (5,277,456) Net assets attributable to redeemable preference shareholders at 31 March 31,275,450 33,549,196 The Company only has one Fund therefore there is no difference between the Fund s financial statements as presented above and the Company s financial statements. The notes on pages 14 to 20 form an integral part of these financial statements. Ashburton Emerging Markets Funds Limited 11

14 Chindia Equity Fund cont. Cash flow statement For the year ended 31 March Mar Mar 2016 Cash flow from operating activities USD USD Increase/(Decrease) in net assets attributable to redeemable preference shareholders 6,273,707 (5,277,456) Adjustment for: Interest expense 2,068 2,083 Dividend Income (535,262) (796,388) Withholding taxes 24,316 (44,504) Distributions paid to redeemable preference shareholders 70, ,205 Exchange losses on cash and cash equivalents 12,201 38,389 Net (increase)/decrease in receivables (29,889) 67,659 Net increase in payables 94,565 56,473 Net increase in margin cash (21,168) - Net (increase)/decrease in fair value of financial assets and liabilities (6,284,927) 6,054,474 Purchases of investments (80,782,428) (14,700,802) Proceeds from sale of investments 88,704,626 23,843,987 Cash generated from operations 7,528,503 9,355,120 Dividends received 513, ,892 Bank interest received Interest paid (2,095) (2,162) Net cash flow generated from operating activities 8,040,418 10,193,929 Cash flow from financing activities Distribution paid to redeemable preference shareholders (70,694) (111,205) Cash received on shares issued 2,464,614 4,009,395 Cash paid out on shares redeemed (11,018,173) (13,497,891) Net cash flow used in financing activities (8,624,253) (9,599,701) Net (decrease)/increase in cash and cash equivalents (583,835) 594,228 Cash and cash equivalents at beginning of year 722, ,511 Exchange losses on cash and cash equivalents (12,201) (38,389) Statement of material portfolio changes For the year ended 31 March 2017 The following tables show the top ten purchases and disposals for the year. Description Description Acquisition costs Soho China 1,047,371 Great Wall Motor 1,028,151 Shanghai Pharmaceuticals 1,017,981 China Minsheng Banking 1,016,979 Huaneng Renewables 827,257 Bank of Communication 824,269 Aluminium Corp China 822,549 China Jinmao Holdings 822,153 Zhejiang Expressway 819,610 China Merchants Bank 819,436 Other acquisitions 71,736,672 Total for year 80,782,428 Disposal proceeds China Overseas Land & Investment 817,964 PetroChina 807,476 Ping An Insurance 807,305 China Construction Bank 804,586 China Communications Services 777,772 China Railway Group 769,058 China Resources Enterprise 765,889 China Railway Construction 765,497 Tencent Holdings 761,135 China Mobile 750,118 Other disposals 80,877,826 Total for year 88,704,626 USD USD Cash and cash equivalents at end of year 126, ,350 Notes to the financial statements as at 31 March Currency exposure 31 March March 2016 HKD 17,076,396 12,443,397 INR 14,261,605 18,556,060 AUD - 560,272 GBP (31,275) 6,710 Other - - Total exposure % 94.09% The currency exposures at 31 March 2016 have been reclassified to show comparatives against 2017 currency exposure. 8. Shares issued/redeemed during the year Shares issued R class R class I class I class C class D class USD GBP USD GBP USD USD , ,611 4, ,741 5, ,076, ,451 3, ,743 - Shares redeemed R class R class I class I class C class D class USD GBP USD GBP USD USD ,374,904 1,021,138 4, , ,352,482 1,337, ,888 4, Ashburton Emerging Markets Funds Limited The notes on pages 14 to 20 form an integral part of these financial statements.

15 Chindia Equity Fund cont. 10 year price, performance, distribution and total expense ratio For the year ended 31 March 2017 (unaudited) Performance R class R class I class I class C class D class Net asset value Price per share R class R class I class I class C class D class USD GBP USD GBP USD USD USD USD GBP USD GBP USD USD % 38.02% 20.49% 39.73% 21.69% 20.18% 31,264, % -8.48% % -7.86% -9.28% % 33,521, % 47.89% 32.47% 48.67% 33.14% 31.99% 48,322, % 3.14% 11.06% 3.51% 11.15% 18.76% 42,256, % % % - 63,957, % % % - 105,802, % % % - 147,012, % % % - 108,252, % % % - 41,347, % % - 67,677, Highest offer price per share Lowest bid price per share R class R class I class I class C class D class R class R class I class I class C class D class TER R class (*) USD GBP USD GBP USD USD USD GBP USD GBP USD USD USD % % % % % % % % % % Distribution per share paid and payable Shares in issue R class R class I class I class C class D class R class R class I class I class C class D class USD GBP USD GBP USD USD USD GBP USD GBP USD USD ,408,328 5,285,653 4, , ,053,766 5,991,180 3, , ,330,138 7,209, ,565 4, ,146,289 9,080, , , ,695,996 5, , ,061,937 21,767-1,374, ,156,207 34,770-1,390, ,820,408-1,034-1,114, ,271, , ,399, ,365 - The above information relates to the actual published prices on the last dealing date of the year as at a.m. and it has not been audited. (*) The Total Expense Ratio ( TER ) is a measure of the total costs associated with managing and operating the funds. Details of the total expenses can be found in Note 4. Transaction costs are not included within the TER. Ashburton Emerging Markets Funds Limited 13

16 Notes to the financial statements cont. 9. Presentation of financial statements Ashburton Emerging Markets Funds Limited ( the Company ) has maintained the Chindia Equity Fund ( the Fund ) during the year ended 31 March Shares are issued and allocated to the Fund by the Company. The proceeds of the issue and the income arising thereafter are credited to the Fund. Expenses incurred during the year are charged to the Fund. Upon redemption, Shareholders are entitled only to their proportion of the value of the net assets held in the Fund. Accordingly, a separate statement of comprehensive income, statement of changes in shareholders net assets, statement of financial position, cash flow statement, statement of material portfolio changes and portfolio statement has been prepared for the Fund. General information and the objective of the Company and the Fund can be found within the Directors report. 10. Summary of significant accounting policies Accounting policies The principal accounting policies applied in the presentation of these financial statements are set out below and have been consistently applied to all periods presented. Basis of preparation The financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) on a going concern basis. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss. Standards and amendments to existing standards effective 1 April 2016 The Company and the Fund have applied the following standard and amendment for the first time for their annual reporting period commencing 1 April 2016; - Disclosure initiative - amendments to IAS 1. The adoption of this amendment did not have any impact on the current period or any prior period and is not likely to affect future periods. New standards, amendments and interpretations effective after 1 April 2016 IFRS 9, Financial instruments, this standard, issued in November 2009, is intended to replace IAS 39 Financial Instruments: recognition and measurement. IFRS 9 introduces new requirements for classification, measurement and recognition of financial assets and liabilities, and is likely to affect the Company s accounting for its financial instruments. The complete version of IFRS 9 was issued in July This standard is effective for annual periods on or after 1 January Early adoption is permitted. The standard establishes the two primary measurement categories for financial assets: amortised cost and fair value. For financial liabilities, the standard has been amended regarding fair value changes on own credit risk taken to Other Comprehensive Income ( OCI ) (for fair value option). The Company and the Fund are yet to assess the impact of this new standard. IAS 7 Statement of cash flows, going forward, entities will be required to explain changes in their liabilities arising from financing activities. This includes changes arising from cash flows (e.g. drawdowns and repayments of borrowings) and non-cash changes such as acquisitions, disposals, accretion of interest and unrealised exchange differences. Changes in financial assets must be included in this disclosure if the cash flows were, or will be, included in cash flows from financing activities. Entities may include changes in other items as part of this disclosure, for example, by providing a net debt reconciliation. However, in this case the changes in the other items must be disclosed separately from the changes in liabilities arising from financing activities. This standard is effective for annual periods on or after 1 January The Company and the Fund are yet to assess the impact of this new standard. There were no other new standards, amendments to standards and interpretations that are expected to affect the Company s and the Fund s financial statements. 14 Ashburton Emerging Markets Funds Limited

17 Notes to the financial statements cont. 10. Summary of significant accounting policies cont. Financial assets and financial liabilities Classification The Fund classifies its investments in debt and equity securities as financial assets or financial liabilities at fair value through profit or loss. This category has two sub-categories: (i) Financial assets and liabilities held for trading: A financial asset or financial liability is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing in the near term or if on initial recognition is part of a portfolio of identifiable financial investments that are managed together and for which there is evidence of a recent actual pattern of short-term profit taking. (ii) Financial assets and liabilities designated at fair value through profit or loss at inception: Financial assets and financial liabilities designated at fair value through profit or loss at inception are financial instruments that are not classified as held for trading but are managed, and their performance is evaluated on a fair value basis in accordance with the Fund s documented investment strategy. The Fund s policy requires the Investment Manager and the Board of Directors to evaluate the information about these financial assets and liabilities on a fair value basis together with other related financial information. Other financial assets such as due from brokers, subscriptions receivable, margin cash and cash and cash equivalents are categorised as loans and other receivables. Other liabilities such as due to brokers, redemptions payable and trade and other payables are categorised as other financial liabilities. Recognition, derecognition and measurement Regular purchases and sales of investments are recognised on the trade date the date on which the Fund commits to purchase or sell the investment. Financial assets and financial liabilities at fair value through profit or loss are initially recognised at fair value. Transaction costs are expensed as incurred in the statement of comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership. Subsequent to initial recognition, all financial assets and financial liabilities at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value of the financial assets or financial liabilities at fair value through profit or loss category are presented in the statement of comprehensive income within net gains/(losses) on financial assets and liabilities in the period in which they arise. Revenue recognition Investment income from Fund investments is recognised in the statement of comprehensive income on an ex-dividend basis when the right to receive payment is established or on a time proportionate basis for all debt instruments using the effective interest rate method. This is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts throughout the expected life of the financial asset or liability or, when appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. Withholding tax Dividend income is shown gross of withholding tax in the statement of comprehensive income. Withholding tax is shown as a separate item within the statement of comprehensive income in accordance with IAS 12: Income Taxes. Equalisation/Distributions Equalisation applies to shares purchased and redeemed during a distribution period. The income earned or accrued within the Fund and attributable to each share is not affected by the issue or redemption of shares during a distribution period. On the income allocation date, shareholders will either receive, or be advised of, reportable income. The same rate of distribution per share is applicable to all shareholders and for shares purchased during the distribution period the income equalisation will form part of the distribution or reported income. Ashburton Emerging Markets Funds Limited 15

18 Notes to the financial statements cont. 10. Summary of significant accounting policies cont. Bank interest and charges Bank overdraft interest and charges are recognised as expenses under note 5. Bank interest receivable on bank deposits is accrued on a daily basis and are recognised as Bank interest under note 4. Due from/to brokers Amounts due from/to brokers represent receivables for securities sold and payables for securities purchased that have been contracted for but not yet settled or delivered on the statement of financial position date respectively. Transaction costs Transaction costs are costs incurred to acquire financial assets or liabilities at fair value through profit or loss. They include fees and commissions paid to brokers and dealers. Transaction costs, when incurred, are immediately recognised in profit or loss as an expense. Details of transaction costs can be found in note 5. Cash and cash equivalents Cash and cash equivalents consist of cash in hand and deposits held at call with banks. Going concern The financial statements have been prepared on a going concern basis and the accounting policies have been applied consistently, other than where new policies have been adopted. Fair value estimation The fair value of financial instruments traded in active markets within the Fund are based on quoted market prices at the statement of financial position date. The quoted market prices used for financial assets and financial liabilities held by the Fund is the mid market price as at 10.00am on the last business day of the accounting period. Realised profits and losses resulting from the disposal of financial assets at fair value through profit or loss and unrealised profits resulting from the revaluation of retained financial assets and financial liabilities at fair value through profit or loss are recognised in the statement of comprehensive income. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions at an arm s length basis. The Company classifies fair value measurements using the fair value hierarchy in accordance with IFRS. The fair value hierarchy reflects the significance of the inputs used in making the measurements and has the following levels: 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 (that is, as prices) or indirectly (that is, derived from prices). Level 3 - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). 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. All financial instruments within the Fund are categorised under level 1 (2016: All financial instruments level 1). Currency translation Assets and liabilities that are denominated in foreign currencies are translated into the base currency of the Fund at the rates of exchange ruling at the Statement of financial position date. Exchange profits or losses are recognised in the Statement of comprehensive income. The relevant rates of exchange ruling as at the 31 March 2017 against the base currency were: AUD EUR GBP HKD INR USD Ashburton Emerging Markets Funds Limited