Idea Transcript
INTERIM REPORT & ACCOUNTS
For the six months from 1 July 2013 to 31 December 2013
4a Rue Henri Schnadt L-2530 Luxembourg Grand Duchy of Luxembourg RCS: Luxembourg B 22.847
Henderson Horizon Fund Incorporated in Luxembourg as an open-ended investment company with variable capital organised as a Société d’Investissement á Capital Variable (SICAV) qualifying as a UCITS (Undertaking for Collective Investment in Transferable Securities). No subscriptions can be received solely on the basis of this report. Subscriptions are only valid if made on the basis of the current prospectus, supplemented by the latest audited annual report and the latest unaudited semi-annual report, if published thereafter and of the relevant Key Investor Information Document.
Contents General Information on the Fund
Page 1
Directors’ Report
Page 3
Investment Manager’s Report
Page 4
Net Asset Value Summary
Page 6
Performance History
Page 9
Combined Statements
Page 10
Bond Funds
Core Credit Fund
Page 12
Euro Corporate Bond Fund
Page 18
Euro High Yield Bond Fund
Page 25
Global High Yield Bond Fund
Page 31
Total Return Bond Fund
Page 36
Regional Funds
American Equity Fund
Page 46
Asian Dividend Income Fund
Page 50
Asian Growth Fund
Page 55
Euroland Fund
Page 60
European Growth Fund
Page 65
Japanese Equity Fund
Page 70
Pan European Equity Fund
Page 74
Specialist Funds
Asia-Pacific Property Equities Fund
Page 79
China Fund
Page 83
Global Opportunities Fund
Page 88
Global Property Equities Fund
Page 93
Global Technology Fund
Page 98
Japanese Smaller Companies Fund
Page 103
Pan European Alpha Fund
Page 108
Pan European Property Equities Fund
Page 113
Pan European Smaller Companies Fund
Page 118
Notes to the Financial Statements
Page 124
General Information
Page 143
Henderson Global Investors
Page 144
General Information on the Fund
Chairman: Iain Clark 36 Clapham Common Westside London, SW4 9AP United Kingdom Independent Director Directors: Stewart Cazier 201 Bishopsgate London, EC2M 3AE United Kingdom Managing Director of Distribution Henderson Global Investors Limited Tony Sugrue 4a Rue Henri Schnadt L-2530 Luxembourg Grand Duchy of Luxembourg Brand Manager, Henderson Fund Management (Luxembourg) S.A. Jeremy Vickerstaff 4a Rue Henri Schnadt L-2530 Luxembourg Grand Duchy of Luxembourg General Manager, Henderson Fund Management (Luxembourg) S.A. Jean-Claude Wolter Honorary Lawyer, 11B Boulevard Joseph II L-1840 Luxembourg Grand Duchy of Luxembourg Les Aitkenhead 24 The Avenue Hitchin Hertfordshire SG4 9RL United Kingdom Independent Director (appointed 10 October 2013) Steven de Vries Roemer Visscherstraat 43-45 Amsterdam 1054 EW The Netherlands Head of European Retail Sales Henderson Global Investors B.V. (appointed 10 October 2013) Investment Adviser: Henderson Management S.A. 4a Rue Henri Schnadt L-2530 Luxembourg Grand Duchy of Luxembourg
Management Company: Henderson Fund Management (Luxembourg) S.A. 4a Rue Henri Schnadt L-2530 Luxembourg Grand Duchy of Luxembourg Investment Manager & Distributor: Henderson Global Investors Limited 201 Bishopsgate, London, EC2M 3AE United Kingdom Sub-Investment Manager for the Asia-Pacific Property Equities Fund, the China Fund and the Japanese Smaller Companies Fund and the Asia portfolio of the Global Property Equities Fund: Henderson Global Investors (Singapore) Limited 1 Marina Boulevard, #28-00, Singapore 018989* Sub-Investment Manager for the North American Portfolio of the Global Property Equities Fund: Harrison Street Securities LLC 71 North Wacker Drive, Suite 3575 Chicago, Illinois 60606 United States of America Sub-Investment Manager for the North American Portfolio of the Euro High Yield Bond Fund, Global High Yield Bond Fund and Total Return Bond Fund: Henderson Global Investors (North America) Inc Olympia Centre 737 North Michigan Avenue Suite 1700 Chicago, IL60611 USA Registered Office: 4a Rue Henri Schnadt L-2530 Luxembourg Grand Duchy of Luxembourg Administrator: BNP Paribas Securities Services Luxembourg Branch 33 Rue de Gasperich L-5826 Hesperange Grand Duchy of Luxembourg Registrar and Transfer Agent: BNP Paribas Securities Services Luxembourg Branch 33 Rue de Gasperich L-5826 Hesperange Grand Duchy of Luxembourg Company Secretary: Henderson Fund Management (Luxembourg) S.A. 4a Rue Henri Schnadt L-2530 Luxembourg Grand Duchy of Luxembourg 1
Custodian: BNP Paribas Securities Services Luxembourg Branch 33 Rue de Gasperich L-5826 Hesperange Grand Duchy of Luxembourg *The registration of Henderson Global Investors (Singapore) Limited with the relevant authorities is ongoing.
Auditor: KPMG Luxembourg S.á.r.l. 9 Allée Scheffer L–2520 Luxembourg Grand Duchy of Luxembourg Hong Kong Representative: RBC Investor Services Trust Hong Kong Limited Central Plaza, 51st Floor 18 Harbour Road Wanchai Hong Kong Denmark Representative: Nordea Bank Danmark A/S Strandgade 3, Christiansbro Postboks 850 DK-0900 Copenhagen C, Denmark Malta Representative: Atlas JMFS Investment Services Limited 67/3, South Street, Valletta, VLT 1105 Malta Spain Representative: Allfunds Bank S.A. Estafeta, 6 Complejo Plaza de la Fuente, La Moraleja, Alcobendas 28109 Madrid Switzerland Representative: BNP Paribas Securities Services, Paris, Succursale de Zurich Selnaustrasse 16, PO Box 2119 8022 Zurich, Switzerland Legal Adviser to the Fund as to Luxembourg Law: Linklaters LLP 35 Avenue John F. Kennedy PO Box 1107 L-1011 Luxembourg Grand Duchy of Luxembourg
General Information on the Fund
Legal Adviser to the Fund as to English Law: Eversheds LLP One Wood Street London EC2V 7WS United Kingdom Legal Adviser to the Fund as to Hong Kong Law: Deacons 5th floor, Alexandra House 18 Chater Road Central Hong Kong Legal Adviser to the Fund as to Dutch Law: Eversheds Faasen B.V. Wibautstraat 224 1097 DN Amsterdam Postbus 12929 1100 AX Amsterdam The Netherlands Legal Adviser to the Fund as to Swiss Law: Naegeli & Partners Attorneys at Law Klausstrasse 33 8008 Zurich Switzerland Legal Adviser to the Fund as to German Law: AGS Legal Atrium Friedrichstrasse Friedrichstrasse 60, 10117 Berlin Germany Legal Adviser to the Fund as to Italian Law: Freshfields Bruckhaus Deringer Palazzo Valadier Piazzo del Popolo, 18, 00187 Rome Italy Legal Adviser to the Fund as to Austrian Law: BAUM Financial Services Law Team Alte Rabenstraße 2 20148 Hamburg Germany Legal Adviser to the Fund as to Singapore Law: Allen & Gledhill LLP One Marina Boulevard # 28-00 Singapore 018989
(continued)
Legal Adviser to the Fund as to Spanish Law: Perez-Llorca Paseo de la Castellana, 50, 28046 Madrid Spain
Legal Adviser to the Fund as to Isle of Man Law: Simcocks Advocates Ridgway House Ridgway Street Douglas IM99 1PY Isle of Man
Legal Adviser to the Fund as to Belgian Law: Roel Valkenborgh Law Firm Bruinborrelaan 6 1860 Meise Belgium
Legal Adviser to the Fund as to Macanese Law: Deacons 5th floor, Alexandra House 18 Chater Road Central Hong Kong
Legal Adviser to the Fund as to French Law: Alma & Peak Associaton d’Avocats (AARPI) 88 Avenue Kleber 75116 Paris France
Legal Adviser to the Fund as to Danish Law: Bird & Bird Advokatpartnerselskab Kalkbraenderiloebskaj 4 2100 Copenhagen Denmark
Legal Adviser to the Fund as to Taiwanese Law: Russin & Vecchi 205 Tun Hwa N. Road 9th Floor, Bank Tower Taipei Taiwan Legal Adviser to the Fund as to Norwegian Law: Haavind AS Bygdøy Allé 2 PB 359 Sentrum NO-0101 Oslo Norway Legal Adviser to the Fund as to Swedish Law: Eversheds Advokatbyrå AB Strandvägen 1 P.O. Box 14055 SE-104 40 Stockholm Sweden Legal Adviser to the Fund as to Irish Law: Eversheds One Earlsfort Centre Earlsfort Terrace Dublin 2 Ireland
2
Legal Adviser to the Fund as to Finnish Law: Hannes Snellman Attorneys Limited Eteläranta 8 PO Box 333 00131 Helsinki Finland Legal Adviser to the Fund as to Maltese Law: Lorraine Conti 94 Macerata Street Floriana FRN 1091 Malta Legal Adviser to the Fund as to Portuguese Law: Campilho, Silveira, Sarmento – Sociedade de Advogados, RL Alameda Basilio Teles, No 12B 4150-127 Porto Portugal Legal Adviser to the Fund as to Greek Law: Zepos & Yannopoulos 75 Katehaki & Kifissias Avenue 115 25 Athens Greece Legal Adviser to the Fund as to Chilean Law: Guerrero, Olivos, Novoa y Errázuriz Av. Vitacura 2939 Piso 8 Las Condes 7550011 Santiago Chile
Directors’ Report
Introduction Henderson Horizon Fund (the “Fund”) is an open-ended investment company incorporated in Luxembourg as a société d’investissement à capital variable (SICAV) on 30 May 1985 and is a recognised collective investment scheme for the purposes of Section 76 of the United Kingdom Financial Services Act 1986. Potential investors in the United Kingdom are advised that all, or most, of the protections afforded by the United Kingdom regulatory system will not apply to an investment in the Fund and that compensation will not be available under the Financial Services Compensation Scheme. The Company is an umbrella structure, comprising various sub-funds. Each sub-fund is operated as a distinct Fund with its own portfolio of investments and specific investment objectives. Financial Statements A copy of the latest Annual and Interim Report may be obtained upon request from either the offices of the companies registered as distributors or from the Registered Office of the Company. Alternatively, please go to www.Henderson.com. Activities during the period The Company followed the normal activities of an open-ended investment company. The Investment Manager’s Report that follows gives a general market review. The Net Assets at 31 December 2013 amounted to USD 16.15 billion. At the period end, the Company consisted of 21 active sub-funds. Fund Changes • Global Core Credit was renamed Core Credit Fund on 1 November 2013. • Global High Yield Bond Fund launched on 19 November 2013. • Details of share class launches and closures can be found on page 124. The Directors may from time to time close sub-funds as well as add further sub-funds with different investment objectives, subject to the approval of the Commission de Surveillance du Secteur Financier (“CSSF”). Corporate Governance Statement The Board of Directors adheres to the Association of the Luxembourg Fund Industry (“ALFI”) code of conduct for Luxembourg investment funds. The code of conduct sets a framework of high-level principles and best practice recommendations for the governance of Luxembourg investment funds. On behalf of the Henderson Horizon Fund Board, I would like to thank you for your continued support. Iain Clark Chairman 28 February 2014
3
Investment Manager’s Report For the period from 1 July 2013 to 31 December 2013
All index returns are US dollar total returns, sourced from Thomson Reuters Datastream, 6 months to 31 December 2013, unless otherwise stated. Overview Speculation about when the ‘tapering’ (reduction) of US quantitative easing (QE) would commence was the key factor affecting global equities over the review period. Performance was strong across most developed markets, even in the wake of the Federal Reserve (Fed)’s December decision to begin scaling back its asset purchases. Equity markets responded well to the news, as it suggested a more secure global recovery. In Europe, while economic data was mixed, lower macro risks supported equity markets. In Japan, the focus on stimulus continues to support the economy, and equity markets performed well. Emerging markets (EM) continued to see economic growth slowing from the impressive levels of a few years ago. Ten-year treasury and gilt yields closed 2013 more than a full percentage point higher than the start of the year. Corporate bonds outperformed government bonds as investors looked for income opportunities and acknowledged strengthening corporate fundamentals. The MSCI World Index rose by 17.1% in US dollar terms (7.2% in sterling terms). Europe European equities benefited from the positive tone of Western markets, but economic news within the eurozone was generally disappointing – sufficiently so for the European Central Bank (ECB) to reduce its benchmark interest rate from 0.5% to 0.25%. A decline in French GDP of -0.1% in the third quarter was unexpected, while falling inflation became increasingly worrying toward the end of the review period. Unemployment in the eurozone remained persistently high, particularly among the under-25s. The picture in Germany was better, however, as consumer confidence rose and manufacturing activity increased. Indeed, the gains in the European equity market were largely fuelled by the strong performance of Germany’s Dax, which rose 20% in local terms over the six months. Over the review period, share prices were volatile amid concerns over both the future path of US economic policy and the risks posed by higher commodity prices, slowing demand and sluggish export growth. As a sector, banks weighed the most on European indices after the ECB announced it would begin a thorough review of the balance sheets of 130 eurozone financial institutions, to unearth potential risks before moving closer to a banking union for the region. As part of the asset-review exercise, the ECB will ask these banks to set aside 8% of their risk-adjusted capital as a buffer against losses on loans and other parts of their balance sheets. In other news, Ireland announced it would be exiting its bailout programme after three years and €85 billion of aid, while the Netherlands became the latest eurozone member to be stripped of its triple A credit rating by Standard & Poor’s. The credit ratings agency cited concerns over the country’s growth prospects as the reason for its downgrade. Indeed, at the end of the period, Standard & Poor’s also downgraded the eurozone’s credit rating from AAA to AA+, reflecting its concerns about the region’s finances. The FTSE World Europe exUK index rose 23.2% in US dollar terms (+16.3% in euro). US US equities made good progress during the review period, boosted by strengthening macroeconomic data. Market gains came despite a partial government shutdown and fears surrounding when the central bank might start reducing its asset purchases. In December, after months of speculation, the US Fed finally announced that it would begin reducing the level of its monthly asset-purchase programme from US$85 billion to US$75 billion. That the US economy is considered strong enough to withstand a reduction in monetary stimulus was wellreceived by investors, as was the central bank’s reassurance that interest rates would stay low well past the time that the unemployment rate falls below 6.5%. Evidence of robust economic growth over the period was provided by third-quarter GDP, which at 4.1% represented the fastest rate of expansion for two years, driven by higher consumer spending and corporate investment. On the jobs front, data released in November revealed that unemployment stood at 7.0%, its lowest level in five years. Other good news during the period included Congress announcing that a cross-party deal had been agreed on the federal budget, averting the need for another shutdown of government services in the New Year. The S&P 500 index rose 16.3% in US dollar terms. UK The UK market performed strongly over the period helped by data that pointed to UK economic growth being among the fastest in the developed world. This data was encouraging enough for the International Monetary Fund to upgrade its forecast for UK growth to 1.4% for 2013, while third quarter GDP growth figures were better than expected at 0.8%, bringing the estimated annualised growth rate up to 1.9%. The housing market continued to improve, with house prices buoyed by cheaper borrowing costs and mortgage approvals reaching their highest level in almost six years. However, this gave rise to concerns that a bubble might be forming in the property markets. UK business confidence continued to rise over the period. According to ICAEW/Grant Thornton, almost two-thirds of businesses (63%) are more confident about their economic prospects over the coming 12 months than the previous year. UK consumer price index (CPI) inflation dropped unexpectedly to 2.1% in November, very close to the Bank of England’s 2.0% target. In less positive news, UK consumer confidence unexpectedly fell in December as Britons’ outlook on the economy worsened. The FTSE All-Share Total Return Index rose 21.6% in US dollar terms (11.4% in sterling terms).
4
Investment Manager’s Report
(continued)
For the period from 1 July 2013 to 31 December 2013
Asia-Pacific and emerging markets Asian and Emerging Markets (EM) underperformed Western markets amid speculation about the tapering of QE in the US. Investors’ concerns focused on the ability of some countries, particularly those with significant current-account deficits, to withstand this loss of liquidity. On the upside, China’s ‘Third Plenum’ concluded with the government announcing a series of reforms aimed at reinvigorating the economy. China’s economy grew by an annualised 7.8% in the third quarter, thanks to looser monetary policy and investment in infrastructure. Elsewhere, Indian markets rallied following the recent state elections, Australian third-quarter GDP came in at 0.6% – missing forecasts, while Singapore’s GDP fell by 2.7% after a reduction in manufacturing activity. (MSCI Emerging Markets Index 6.6%; MSCI China Index +15.7%; FTSE World Asia Pacific ex-Japan Index +10.4%, all in US dollar terms). In Japan, Prime Minister Abe’s reforms continued to bear fruit; inflation rose to 1.2% in November, well on its way to its 2.0% target, while the export market continued to benefit from the weak yen. On the downside, however, economic growth proved disappointing, with thirdquarter GDP growth coming in at an annualised rate of 1.1%, significantly lower than the initial reading of 1.9%. The FTSE Japan Index rose 15.8% in yen terms, although this reduces to 9.5% in US dollar terms because of currency movements. Bonds A combination of improving economic news and the Fed’s decision to reduce its stimulus programme by US$10 billion saw bond prices move lower and yields rise. US treasuries and UK gilts bore the brunt of the sell-off, while government bonds in the eurozone performed better amid weaker economic data and the ECB’s interest-rate cut from 0.5% to 0.25%. Japanese government bonds traded in a reasonably narrow range; improving data on Japanese economic growth and rising inflation played off against the execution of Japan’s considerable asset purchase programme. In general, investment-grade corporate bonds performed better than government bonds, but lagged behind high-yield bonds, which benefited from investors’ appetite for risk. In EM, bonds saw significant outflows before the announcement of US tapering, reflecting concerns about the impact of reduced liquidity on EM economies. The JP Morgan Global Government Bond Index returned 1.4%, while the Barclays Global Aggregate Corporate Bond Index fell 0.2% in US dollar terms.
5
Net Asset Value Summary Numbers are shown in USD terms (unless otherwise stated)
Fund
As at 30 Jun 12
Core Credit Fund1
Euro Corporate Bond Fund
551,348,674 EUR 438,273,236
Euro High Yield Bond Fund
Net Asset Value As at 30 Jun 13 486,428,717
1,765,099,016 EUR 1,350,766,557
As at 31 Dec 13 706,692,875
2,241,501,989 EUR 1,628,137,385
43,787,940 EUR 33,509,330
70,853,009 EUR 51,464,792
Global High Yield Bond Fund2
Total Return Bond Fund
American Equity Fund
Asian Dividend Income Fund
Asian Growth Fund
Euroland Fund
20,552,123
401,793,263 EUR 319,389,965
763,520,433 EUR 584,294,624
857,775,560 EUR 623,053 856
142,298,270
100,970,971
117,057,660
113,102,133
35,646,366
58,201,932 EUR 46,265,368
361,212,425
407,881,772
32,692,574
73,749,038 EUR 56,437,477
34,220,817
220,603,943 EUR 160,237,880
6
IR1 IR1 HEUR (EUR) IR1 HGBP (GBP) A1 (EUR) A1 (GBP) A2 (EUR) A2 I1 (EUR) I1 I2 (EUR) X1 (EUR) X2 (EUR) A1 HGBP (GBP) A2 HCHF (CHF) A2 HSEK (SEK) I2 HCHF (CHF) H2 (EUR) A1 (EUR) A2 (EUR) I2 (EUR) A2 HCHF (CHF) A2 HUSD Z2 HGBP (GBP) I2 HUSD A2 A2 (EUR) I2 I2 (EUR) A1 (EUR) A2 (EUR) A2 HUSD X1 (EUR) X2 (EUR) Z HGBP (GBP) A1 A2 A2(EUR) I1 I2 X2 A1 A1 (EUR) A1 (GBP) A1 (SGD) A2 A2 (EUR) A2 (GBP) A2 (SGD) C2 I1 I1 (GBP) I2 X2 H1 H1 (EUR) H2 H2 (EUR) A1 A2 A2 (EUR) I2 X2 X2 (EUR) A1 (EUR) A2 (EUR) I2 (EUR) X2 (EUR) H2 HGBP (GBP)
Net Asset Value Per Share As at As at As at 30 Jun 12 30 Jun 13 31 Dec 13 n/a 98.30 100.54 n/a 98.18 99.92 n/a 97.89 98.93 117.85 124.91 125.48 n/a n/a n/a 122.19 133.49 137.68 n/a 99.00 102.19 119.67 127.13 127.73 n/a 97.50 104.76 123.37 135.37 139.90 n/a 98.48 100.23 109.47 119.27 122.81 107.76 114.68 115.23 100.81 109.87 113.17 1,045.46 1,155.96 1,196.68 n/a n/a 102.15 n/a n/a 102.28 n/a 101.95 107.80 n/a 105.95 115.75 n/a 106.22 116.31 n/a 103.69 113.09 n/a 105.21 115.04 n/a 107.04 117.83 n/a n/a 100.30 n/a n/a 101.63 n/a n/a 101.63 n/a n/a 101.67 n/a n/a 101.67 n/a 97.60 97.73 100.51 104.70 105.85 101.03 105.49 106.67 n/a 97.49 97.62 n/a 97.79 98.67 101.23 107.29 109.35 12.89 n/a n/a 12.89 15.02 17.43 10.17 n/a n/a 13.32 n/a n/a 13.55 15.92 18.55 12.51 14.50 16.77 10.65 11.61 11.91 8.47 8.88 8.64 6.83 n/a 13.52 14.68 15.03 14.50 16.73 17.61 11.53 12.83 12.82 n/a n/a n/a 18.40 21.19 22.24 n/a 96.06 101.54 11.11 n/a n/a 7.07 7.95 7.55 15.14 17.41 18.40 14.06 16.15 16.94 n/a n/a 9.88 n/a n/a 9.73 n/a n/a 10.93 n/a n/a 9.73 69.58 n/a n/a 71.67 79.64 90.29 96.73 103.49 153.05 72.83 n/a n/a 69.54 76.80 87.00 96.18 102.27 150.98 20.65 n/a n/a 22.01 29.36 36.10 n/a n/a 10.31 21.24 28.29 34.79 n/a n/a 12.29
TER*
IR 0.21% IR HEUR 0.21% IR HGBP 0.21% A 1.20% A 1.20% A HUSD 1.20% I 0.75% I USD 0.75% I 0.75% X 1.55% X 1.55% A HGBP 1.20% A HCHF 1.20% A HSEK 1.20% I HCHF 0.75% H 0.83% A 1.32% A 1.32% I 0.75% A HCHF 1.32% A HUSD 1.32% Z HGBP 0.21% I HUSD 0.75% A 1.15% A EUR 1.15% I 0.75% I EUR 0.75% A 1.37% A 1.37% A HUSD 1.37% X 1.80% X EUR 1.80% Z HGBP 0.09% A 1.92%
I 1.00% X 2.52% A 1.96% A EUR 1.96% A SGD 1.96% A 1.96% A EUR 1.96% A SGD 1.96% C 1.00% I GBP 1.00% I 1.00% X 2.56% H 1.36% H EUR 1.36% H 1.36% H EUR 1.36% A 2.16% A EUR 2.16% X 2.76% X EUR 2.76% A 1.95% I 1.00% X 2.55% H HGBP 1.35%
Net Asset Value Summary (continued) Numbers are shown in USD terms (unless otherwise stated)
Fund European Growth Fund
Japanese Equity Fund
Pan European Equity Fund
Asia-Pacific Property Equities Fund
China Fund
Global Opportunities Fund
Global Property Equities Fund
As at 30 Jun 12 81,581,218 EUR 64,849,824
36,405,181
Net Asset Value As at 30 Jun 13 87,342,677 EUR 66,840,198
As at 31 Dec 13 94,484,633 EUR 68,629,858
43,521,286
50,234,038
1,962,155,856 EUR 1,559,739,666
2,663,041,097 EUR 2,037,929,216
3,993,040,646 EUR 2,900,385,003
304,502,923
464,546,745
401,222,719
192,055,244
166,007,690
197,741,436
5,557,866
5,863,781
7,721,913
812,662,690
1,329,041,351
1,204,838,435
7
A2 (EUR) I1 (EUR) I2 (EUR) R1 (EUR) B1 (EUR) R1 HGBP (GBP) R1 HUSD H1 (EUR) A1 A2 A2 (EUR) I2 X2 A1 (EUR) A2 (EUR) A2 H2 (EUR) I1 (EUR) I2 (EUR) I2 M2 (EUR) X2 (EUR) C2 (EUR) A2 HUSD I2 HUSD X2 HUSD G2 (EUR) A1 A1 (EUR) A2 A2 (EUR) I2 I2 (EUR) X2 H1 H2 A1 A1 (EUR) A2 A2 (EUR) A2 (SGD) I1 I2 I2 (EUR) X2 A1 A2 I2 X2 A1 A1 (EUR) A1 (GBP) A2 A2 (EUR) A2 (GBP) A2 HCHF (CHF) A2 HEUR (EUR) I1 I2 X2 H2 HEUR (EUR) I2 HEUR (EUR) I1 (GBP) I1 EUR H1 H2 H2 (EUR) G2 G2 HCHF (CHF) G2 HEUR (EUR)
Net Asset Value Per Share As at As at As at 30 Jun 12 30 Jun 13 31 Dec 13 9.40 11.46 12.78 9.14 11.01 12.17 n/a 11.51 12.92 9.50 11.50 12.72 21.76 26.34 29.31 10.17 n/a n/a 9.85 11.96 13.26 n/a n/a 10.35 9.75 n/a n/a 9.94 11.80 12.74 7.90 n/a n/a 10.56 12.63 13.70 9.59 11.31 12.17 15.46 18.52 21.34 16.12 19.57 22.73 10.05 12.74 15.58 n/a 9.96 11.58 16.43 n/a n/a 17.21 21.03 24.53 n/a 11.06 13.59 n/a 13.75 16.05 15.61 18.85 21.83 11.16 13.73 16.02 n/a n/a 10.68 n/a n/a 10.40 n/a n/a 10.02 n/a n/a 10.43 11.66 14.66 14.86 9.27 n/a n/a 12.56 16.09 16.46 9.99 12.31 11.95 13.38 17.29 17.77 10.64 13.23 12.91 12.09 15.38 15.69 n/a n/a 9.87 n/a n/a 9.87 10.10 11.10 13.70 8.03 n/a n/a 10.14 11.14 13.74 8.06 8.52 9.99 12.85 14.08 17.35 10.13 n/a n/a 10.57 11.73 14.54 8.40 n/a n/a 9.60 10.49 12.90 14.02 16.56 19.74 14.04 16.59 19.63 14.98 17.71 21.36 13.54 15.91 19.02 13.04 14.56 14.41 10.29 n/a n/a 8.31 n/a n/a 14.27 16.24 16.26 11.26 12.46 11.80 9.10 10.67 9.82 n/a 10.59 10.57 n/a 10.58 10.56 13.61 n/a n/a 15.38 17.65 17.75 13.81 15.61 15.58 n/a n/a 10.26 10.54 12.03 12.04 10.21 9.31 8.57 n/a n/a 91.76 n/a n/a 10.29 n/a n/a 10.39 n/a n/a 10.04 n/a n/a 9.53 n/a n/a 9.51 n/a n/a 9.52
TER*
A 1.95% I 1.00% I 1.00% R 2.00% B 1.14% R HUSD 2.00% H 1.35% A 1.96% I 1.00% X 2.56% A 1.90% A EUR 1.90% A USD 1.90% H 1.30% I 1.00% I 1.00% I USD 1.00% M 1.00% X 2.50% C 1.20% A HUSD 1.90% I HUSD 1.00% G 0.85% A 1.93% A 1.93% A EUR 1.93% I 1.00% I EUR 1.00% X 2.53% H 1.33% H 1.33% A 1.95% A 1.95% A EUR 1.95% A SGD 1.95% I 1.00% X 2.55% A 2.20% A 2.20% I 1.00% X 2.80% A 1.92%
A 1.92% A EUR 1.92% A GBP 1.92% A HCHF 1.92% A HEUR 1.92% I 1.00% X 2.52% H HEUR 1.32% I HEUR 1.00% I GBP 1.00% I EUR 1.00% H 1.32% H 1.32% H EUR 1.32% G 0.85% G HCHF 0.85% G HEUR 0.85%
Net Asset Value Summary (continued) Numbers are shown in USD terms (unless otherwise stated)
Fund Global Technology Fund
Japanese Smaller Companies Fund
Pan European Alpha Fund
As at 30 Jun 12 1,703,921,248
44,833,760
215,211,149 EUR 171,073,753
Net Asset Value As at 30 Jun 13 2,368,058,830
As at 31 Dec 13 2,904,952,709
64,841,304
158,142,353 EUR 121,020,634
75,032,058
542,880,524 EUR 394,326,697
Net Asset Value Per Share As at As at As at 30 Jun 12 30 Jun 13 31 Dec 13 A1 34.77 38.27 45.96 A1 (EUR) 27.44 n/a n/a A1 (GBP) 22.17 n/a n/a A2 34.77 38.27 45.96 A2 (EUR) 27.44 29.37 40.95 A2 (GBP) 22.17 25.16 33.38 A2 HSGD (SGD) n/a 95.28 114.29 H2 n/a 10.02 12.06 I1 35.83 39.80 48.02 I2 35.91 39.89 48.14 I1 (GBP) 22.84 26.07 34.72 X2 33.01 36.12 43.25 X2 (EUR) 26.05 27.72 38.53 C2 9.32 10.34 11.28 M2 n/a 10.35 12.49 G2 n/a n/a 10.63 A2 HCHF (CHF) n/a n/a 99.96 H2 (EUR) n/a n/a 10.92 H1 n/a n/a 10.20 A1 24.87 n/a n/a A2 25.35 30.48 35.22 A2 (JPY) 2,016.45 3,020.53 3,698.38 I1 26.29 n/a n/a I2 26.31 31.54 36.39 X2 24.55 29.09 33.31 A1 (EUR) 11.41 12.92 14.18 A2 (EUR) 11.44 12.95 14.16 A2 HUSD 9.88 11.24 12.31 I1 (EUR) 11.62 n/a n/a I2 (EUR) 11.79 13.42 14.76 I2 HUSD 10.52 n/a 10.97 X2 (EUR) 11.23 12.67 13.84 S2 (EUR) 10.50 11.83 12.92 S2 HSGD (SGD)
Pan European Property Equities Fund
Pan European Smaller Companies Fund
TOTAL in USD
TER*
A 1.92%
A 1.92% A EUR 1.92% A GBP 1.92% A SGD 1.92% H 1.32% I 1.00% I 1.00% I GBP 1.00% X 2.52% X EUR 2.52 C 1.20% M 1.00% G 0.85% A HCHF 1.92% H EUR 1.32% H 1.32% A 1.95% A JPY 1.95% I 1.00% X 2.55% A 1.92% A 1.92% A HUSD 1.92% I 1.00% I HUSD 1.00% X 2.52% S 2.22%
10.31
11.63
12.70
S HSGD 2.22%
S2 HUSD
n/a
10.81
11.82
S HUSD 2.22%
Z2 (EUR)
112.42
130.72
144.96
Z 0.11%
X2 HUSD
n/a
n/a
10.23
X HUSD 2.52%
191,807,690
450,215,079
497,531,995
A1 (EUR)
17.91
20.16
22.67
A 1.91%
EUR 152,470,081
EUR 344,533,347
EUR 361,387,339
A2 (EUR)
19.84
22.76
26.09
A 1.91%
I1 (EUR)
18.80
n/a
n/a
I2 (EUR)
21.27
24.62
28.36
I 1.00%
X2 (EUR)
19.13
21.83
24.94
X 2.51%
H1 (EUR)
n/a
n/a
20.79
H 1.31%
H2 (EUR)
n/a
n/a
22.33
H 1.31%
498,879,679
765,181,524
1,507,303,257
A1 (EUR)
19.84
n/a
n/a
EUR 396,565,044
EUR 585,565,797
EUR 1,094,844,794
A2 (EUR)
20.05
25.88
32.51
A 1.90%
I1 (EUR)
20.75
26.63
33.48
I 1.00%
I2 (EUR)
21.17
27.57
34.76
I 1.00%
X2 (EUR)
19.40
24.89
31.27
X 2.50%
Z2 (EUR)
10.23
13.43
17.10
Z 0.09%
H2 (EUR)
n/a
n/a
11.58
H 1.30%
7,351,965,142
12,193,264,830
16,154,124,111
*In accordance with standard industry practice, the stated TERs do not include performance fees earned in the period. The amounts earned in relation to performance fees for the period are shown in note 6 to the financial statements on page 130. 1 Global Core Credit Fund was renamed Core Credit from 1 November 2013. 2 On 19 November 2013 the Global High Yield Bond Fund was launched.
8
Performance history (Annualised to 31 December 2013) Performance numbers are shown in USD terms (unless otherwise stated). Fund & Benchmark Core Credit (previously Global Core Credit) Euro Corporate Bond Fund3
A2 A1 A2
8
iBoxx Euro Corporates Index Euro High Yield Bond Fund (EUR)7
A1 A2
BofA ML European Currency Non-Financial High Yield Constrained Index Global High Yield Total Return Bond6 American Equity Fund
A2 A2 A1 A2
S&P 500 Index Asian Dividend Income Fund
A1 A2
MSCI AC Asia Pacific ex Japan Index Asian Growth Fund2
A1 A2
MSCI AC Asia ex Japan Index Euroland Fund (EUR)5
A1 A2
MSCI EMU Net Return EUR Index European Growth Fund (EUR)4
A1 A2
FTSE World Europe ex UK Total Return Index Japanese Equity Fund
A1 A2
MSCI Japan Index Pan European Equity Fund (EUR)
A1 A2
FTSE World Europe Index Asia-Pacific Property Equities Fund
A1 A2
FTSE EPRA / NAREIT Pure Asia total return net dividend index (Capital constrained) China Fund9
A1 A2
MSCI China Index Global Opportunities Fund
A1 A2
MSCI World Index Global Property Equities Fund
A1 A2
FTSE EPRA / NAREIT Developed Index Global Technology Fund
A1 A2
MSCI All Countries World IT Index Japanese Smaller Companies Fund
A1 A2
Tokyo SE Second Section Index Pan European Alpha Fund (EUR)
A1 A2
50% MSCI Europe (inc UK) Total Return Net Dividends Index and 50% ECB Benchmark rate Pan European Property Equities Fund (EUR)1
A1 A2
FTSE EPRA / NAREIT Developed Europe Capped Index Net TRI Pan European Smaller Companies Fund (EUR)
A1 A2
HSBC Smaller Companies Pan European Index
2009* % -31.86 -31.86 -26.21 -15.04 -10.18 -10.39 -13.28 -12.41 -22.93 -26.24 -25.74 -16.47 -16.47 -31.33 -18.97 -18.46 -25.81 -15.02 -13.24 -20.24 28.81 28.81 -14.32 -29.42 -29.47 -29.01 -34.65 -33.43 -35.86 -14.5 -14.50 -21.70 -1.36 -1.11 -15.39 5.18 5.29 -32.21 -41.69 -40.04 -35.11 -29.82 -29.87 -24.49
2010* % 10.1 10.10 14.43 8.98 -8.97 21.34 15.05 15.03 26.71 12.36 12.39 20.53 -2.63 -2.63 0.89 21.9 21.83 21.81 9.31 9.32 4.62 -0.26 -0.26 13.28 14.17 12.51 10.77 26.27 26.29 25.05 18.48 18.17 15.57 7.81 7.75 5.62 18.71 18.69 11.12 22.61 22.65 28.89 45.95 45.89 29.49
2011* % 7.51 2.63 30.21 30.21 30.69 20.67 20.65 29.83 21.92 21.94 26.02 9.79 9.75 17.46 15.11 17.46 15.82 15.86 13.18 9.84 9.79 16.09 17.74 17.66 21.90 27.99 27.99 22.18 22.28 22.24 31.19 28.36 28.47 33.36 26.49 26.49 24.05 14.98 15.01 19.44 9.86 9.74 8.04 25.13 25.46 29.63 26.83 26.84 21.40
2012* % 7.99 6.02 -1.30 -1.30 5.45 -6.22 -6.69 -12.56 -15.51 -15.50 -13.15 -5.58 -5.54 -13.93 -3.84 -10.74 -3.42 -3.50 -7.07 -2.14 -2.18 -4.88 -8.04 -8.05 -1.56 -29.79 -29.83 -13.89 -4.69 -4.68 -4.41 -1.03 -1.18 2.36 1.13 1.13 5.75 0.30 0.28 0.16 3.82 2.60 -1.07 -5.43 -5.48 -6.34 -14.26 -14.24 -11.39
2013 % 3.13 2.77 2.24 11.67 2.47 0.37 30.76 32.39 4.51 4.39 3.65 8.64 3.33 36.02 19.99 20.23 22.04 30.13 27.35 25.28 25.17 19.99 5.47 5.58 6.50 16.00 15.94 3.64 31.39 30.26 27.37 1.46 1.62 3.67 25.57 27.06 30.25 18.61 20.41 20.27 9.97 15.48 15.70 10.79 37.81 32.20
*Performance runs from 30 June to 30 June for each year, unless otherwise stated. Performance quoted in the manager’s report relates to Class A accumulation shares. Past performance should not be taken as a guide to the future. Performance would have been lower had any initial charge been included. The basis of the performance calculation is determined by the Swiss Funds Association. The source of the indices statistics is Morningstar. On 1 July 2009 the Pan European Property Equities Fund changed its benchmark from FTSE EPRA/NAREIT Europe (UK Restricted) to EPRA/NAREIT Developed Europe Capped Index Net TRI.
1
On 1 December 2009 the Pacific Equity Fund changed its name to Asian Growth Fund and its objective. It also changed its benchmark from MSCI AC Pacific ex Japan Index to MSCI AC Asia ex Japan Index. 3 On 18 December 2009 the Euro Corporate Bond Fund was launched. 4 On 18 June 2010 the European Growth Fund was launched. On this date the New Star European Growth Fund merged into the Fund.
On 8 November 2011 the Continental European Equity Fund changed its name to Euroland Fund. It also changed its benchmark from FTSE World Europe ex UK Index to MSCI EMU Net Return EUR. 6 On 29 March 2012 the Total Return Bond Fund launched. This Fund is benchmark agnostic as such is not built around or measured against a bond index. 7 On 19 November 2012 the Euro High Yield Bond Fund was launched.
2
5
9
On 24 April 2013 the Global Core Credit Fund was launched and renamed Core Credit on 1 November 2013. 9 On 2 July 2012 the China Fund changed its benchmark from MSCI Golden Dragon Index to MSCI China Index. 8
Henderson Horizon Fund – Combined Statements Combined Statement of Net Assets
Combined Statement of Net Assets
At 31 December 2013 (USD)
At 30 June 2013 (USD)
Assets Investment in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Total liabilities Net assets at the end of the period
15,170,439,074 875,323,275 68,246,148 70,926,992 13,812,475 6,745 17,803,694 13,622,965 12,079,711 8,893,323 2,057,878 6,255,044 16,259,467,324
Assets Investment in securities at market value Cash at bank Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets
11,631,157,443 585,275,764 60,794,896 87,197,187 124,080,802 9,603 530,074 7,505,559 7,487,806 2,795,961 1,014,244 7,931,044 12,515,780,383
6,815,862 1,413,223 24,791,356 40,403,317 29,768,452 1,007,482 384,251 745,411 13,859 105,343,213
Liabilities Bank overdrafts Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Total liabilities
32,532,822 3,674,231 169,252,509 40,631,675 57,744,247 12,309,411 1,195,680 77,175 4,793,889 303,914 322,515,553
Net assets at the end of the year
16,154,124,111
10
12,193,264,830
Henderson Horizon Fund – Combined Statements Combined Statement of Operations
Combined Statement of Operations
For the period from 1 July 2013 to 31 December 2013 (USD)
For the year from 1 July 2012 to 30 June 2013 (USD)
Income Dividend Income Bond interest Income Net interest received on contracts for difference Bank interest Other income Total income
63,015,546 63,343,967 242,957 308,524 520,763 127,431,757
Income Dividend Income Bond interest Income Net interest received on contracts for difference Bank interest Other income Total income
175,597,644 71,607,456 1,708,326 502,516 6,555,497 255,971,439
Expenses Custodian fee Management fee (note 6) Shareholder servicing fees and distribution fees (notes 7 and 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Net interest paid on contracts for difference Total expenses
1,348,820 78,444,159 19,050,679 4,985,640 3,196,821 2,455,914 3,373 853,222 110,338,628
Expenses Custodian fee Management fee Shareholder servicing fees and distribution fees Administration fee Operations expenses Annual tax Amortisation of reorganisation and formation expenses Net interest paid on contracts for difference Total expenses
1,893,554 116,261,791 28,010,949 7,064,357 4,448,696 3,504,012 6,402 3,409,027 164,598,788
Net gain from investment Net realised gain on investment in securities Net realised loss on forward foreign exchange contracts Net realised gain on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised gain on options contracts Net realised currency exchange gain
17,093,129 337,392,878 (2,008,992) 15,795,424 (3,860,432) (3,487,929) 45,812 15,845,778
Net gain from investment Net realised gain on investment in securities Net realised gain on forward foreign exchange contracts Net realised gain on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised gain on options contracts Net realised loss on currency exchange
91,372,651 596,761,456 9,725,933 929,079 (2,187,827) (69,002) 2,924,371 (11,322,826)
Net realised gain
376,815,668
Net realised gain
688,134,735 485,805,706 (12,755,844) 21,282,037 6,834,080 (2,240,144) (55,345)
Increase in unrealised appreciation on investment in securities Increase in unrealised appreciation on forward foreign exchange contracts Increase in unrealised appreciation on contracts for difference Increase in unrealised appreciation on futures contracts Increase in unrealised appreciation on swap contracts Decrease in unrealised depreciation on options contracts
1,212,919,384 28,848,358 6,911,089 4,086,888 8,624,853 (7,349,690)
Increase in unrealised appreciation on investment in securities Increase in unrealised depreciation on forward foreign exchange contracts Increase in unrealised appreciation on contracts for difference Increase in unrealised appreciation on futures contracts Increase in unrealised depreciation on swap contracts Increase in unrealised appreciation on options contracts
Net increase in assets as a result of operations
1,630,856,550
Net increase in net assets as a result of operations
1,187,005,225
Combined Statement of Changes in Net Assets
Combined Statement of Changes in Net Assets
For the period from 1 July 2013 to 31 December 2013 (USD)
For the year from 1 July 2012 to 30 June 2013 (USD)
Net assets at the beginning of the year Exchange rate effect on opening net assets
12,193,264,830 362,605,983
Net assets at the beginning of the year Exchange rate effect on opening net assets
Net gain from investment Net realised gain on investments Net realised currency exchange gain Proceeds from shares issued Payments for shares redeemed
17,093,129 343,876,761 15,845,778 6,069,307,787 (4,089,470,725)
Net gain from investment Net realised gain on investments Net realised currency exchange loss Proceeds from shares issued Payments for shares redeemed
Net equalisation received (note 13) Increase in unrealised appreciation on investment Dividends paid (note 14) Net assets at the end of the period
Net equalisation received Increase in unrealised appreciation on investment Dividends paid
6,919,727 1,254,040,882 (19,360,041)
Net assets at the end of the year
16,154,124,111
The accompanying notes form an integral part of these financial statements.
11
7,351,965,142 153,453,401 91,372,651 608,084,910 (11,322,826) 8,176,360,413 (4,686,171,708) 26,826,201 498,870,490 (16,203,844) 12,193,264,830
Core Credit Fund Managers’ report for the six months to 31 December 2013
Fund Managers James Briggs and Kevin Adams Corporate bond markets opened the second half of 2013 in tentative fashion, given the market’s negative reaction in May and June to comments by the Federal Reserve (Fed) about ‘tapering’ its asset-purchase programme. While improved economic data and valuations were both supportive for returns within the asset class, many market participants and commentators predicted an accelerated unwinding of the unprecedented monetary policy stimulus of recent years. This, in turn, was expected to herald the ‘great rotation’ as asset allocators rebalanced their portfolios away from bonds and into the equity markets. Credit markets also faced a range of political headwinds as the second half of 2013 unfolded. The Syrian conflict, a rapid deceleration in emerging market growth and a possible breach of the US debt ceiling all had the potential to destabilise markets. Meanwhile, somewhat inconclusive German elections and further political upheaval in Italy led to concerns that the nascent eurozone recovery could be under threat. Despite the risks outlined above, economic activity continued to improve and corporate fundamentals remained strong. Although we saw an increase in aggressive corporate activity – most notably in the US, with a significant upturn in mergers and acquisition activity and share buybacks – profit margins and cash flow remain strong, supported by record low interest rates. Default rates are expected to stay exceptionally low as US quantitative easing is replaced by accommodative monetary policy from European and Japanese central banks. The backdrop for corporate bond markets, therefore, remained supportive. Corporate bonds once again outperformed government bonds over the period, as outflows from the asset class and new supply from borrowers remained relatively muted. Credit markets ended the year firmly, as the Fed announced a more measured tapering to its asset-purchase programme than had been anticipated. As was the theme in 2013, the higher beta sectors of the credit market outperformed. The portfolio benefited from its elevated credit exposure, particularly in financials, cyclical industrials and subordinated debt in the second half of 2013, returning 2.37% over the period, ahead of the US-dollar Libor +1.50% target, which came in at 0.88%. We decreased our cash position throughout the period by participating in new issues, particularly in the early part of the fourth quarter when new issue premiums were most attractive. Verizon’s decision to buy Vodafone out of its holding in Verizon Wireless remains the highlight of the period. The deal produced the largest ever corporate bond issue and performed incredibly well, helping mitigate our exposure to telecoms, which detracted from performance. We took advantage of weakness in emerging markets at the end of the first half of 2013 to increase exposure to Asian and Latin American corporates – these outperformed over the second half of the year. Our holdings in sterling- and euro-denominated bonds performed well in the third quarter, but we failed to meaningfully increase our US-dollar exposure in the fourth quarter as relative valuations improved; this detracted from performance in December. We increased our holdings of securitised notes over the period, although a lack of exposure hindered performance, particularly in the third quarter. Our defensive position in peripheral Europe also detracted as these issuers continued to be more resilient than we expected. With credit spreads (over government bonds) now back to late-2007 levels, the starting point for valuations means that 2014 looks likely to be a more difficult year for credit. We believe that corporate bonds will continue to outperform government bonds during the year, but we expect volatility to increase from recent levels. We expect returns to be driven increasingly by sector selection and issuer selection as corporate activity increases.
12
Core Credit Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (USD)
For the period from 1 July 2013 to 31 December 2013 (USD)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
587,584,367 100,901,524 11,641,908 ---------1,852,812 ---6,030,292 ---------708,010,903
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
---------580,234 -------------
Net gain from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised gain on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange gain
737,794 ----
34,133 511,991 ---102,398 135 33,081 -------
681,738 7,077,129 1,813,301 (12,030,581) ---315,461 ------12,404,262
1,318,028 Net realised gain
Net assets at the end of the period
---7,755,092 ---3,775 ---7,758,867
706,692,875
9,579,572
Increase in unrealised appreciation on investments Increase in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Increase in unrealised appreciation on futures contracts Increase in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
22,147,126 8,935,382
Net increase in assets as a result of operations
46,903,332
----
2,267,505 3,973,747 ----
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (USD) Net assets at the beginning of the period Net gain from investment Net realised loss on investment Net realised currency exchange gain Proceeds from shares issued
486,428,717 7,077,129 (9,901,819) 12,404,262 202,308,283
Payments for shares redeemed Net equalisation received (note 13) Increase in unrealised appreciation on investments Dividends paid (note 14) Net assets at the end of the period
13
(27,200,771) 794,135 37,323,760 (2,540,821) 706,692,875
Core Credit Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 IR1 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
575,861.64 1,625,190.45 (278,717.90) 1,922,334.19
IR1 HEUR (EUR) 1,497,753.36 102,249.48 ---1,600,002.84
IR1 HGBP (GBP) 1,600,000.00 191,262.33 ---1,791,262.33
IR1 HEUR (EUR) 1,600,002.84 99.92
IR1 HGBP (GBP) 1,791,262.33 98.93
Net Asset Value Per Share As at 31 December 2013 IR1 Number of shares outstanding: Equivalent to a net asset value per share of:
1,922,334.19 100.54
The accompanying notes form an integral part of these financial statements.
14
Core Credit Fund
Portfolio as at 31 December 2013 Number of Securities
Market % of value Net USD Assets
Jersey 4,300,000 EUR Atrium European Real Estate 4% 20/04/2020 1,300,000 GBP Heathrow Funding 6.25% 10/09/2018
Bonds Transferable securities and money market instruments admitted to an official exchange listing
Australia 1,556,000 1,315,000 1,600,000 2,260,000 2,000,000 3,170,000 3,000,000 2,270,000 1,800,000
USD EUR EUR GBP USD EUR EUR EUR EUR
BHP Billiton Finance 5% 30/09/2043 CNOOC Curtis Funding 2.75% 03/10/2020 Commonwealth Bank of Australia 4.375% 25/02/2020 Goodman Australia Finance 9.75% 16/07/2018 Goodman Funding 6.375% 12/11/2020 Origin Energy Finance 3.5% 04/10/2021 Telstra Corp 4.25% 23/03/2020 Transurban Finance 2.5% 08/10/2020 Wesfarmers 2.75% 02/08/2022
British Virgin Islands 1,920,000 GBP Global Switch Holdings 4.375% 13/12/2022 2,100,000 EUR Global Switch Holdings 5.5% 18/04/2018 Canada 2,400,000 EUR Total Capital Canada 1.875% 09/07/2020 Cayman Island 4,000,000 USD Hutchison Whampoa International 7.625% 09/04/2019 2,100,000 USD IPIC GMTN 5% 15/11/2020 3,000,000 USD Petrobras International Finance Co - Pifco 7.875% 15/03/2019 4,500,000 USD Vale Overseas 5.625% 15/09/2019 Finland 2,260,000 EUR Citycon 3.75% 24/06/2020 2,182,000 EUR CRH Finland Services 2.75% 15/10/2020 France 3,000,000 4,000,000 2,400,000 3,300,000 2,500,000 347,000 3,000,000 1,600,000 2,200,000 2,100,000 2,200,000 2,900,000 1,700,000
USD USD USD EUR USD USD USD EUR EUR EUR EUR USD EUR
BNP Paribas 3.25% 03/03/2023 BNP Paribas 5% 15/01/2021 BPCE 5.7% 22/10/2023 Casino Guichard Perrachon 3.157% 06/08/2019 Credit Agricole 1.625% 15/04/2016 Credit Agricole 3.5% 13/04/2015 Electricite de France 5.25% Perpetual Eutelsat 5% 14/01/2019 Gecina 4.25% 03/02/2016 Societe Des Autoroutes Paris-Rhin-Rhone 5% 12/01/2017 Societe Fonciere Lyonnaise 3.5% 28/11/2017 Societe Generale 2.75% 12/10/2017 Solvay Finance 4.199% Perpetual
Germany 1,600,000 EUR Eurogrid 3.875% 22/10/2020 2,890,000 EUR Mondi Consumer Packaging International 9.75% 15/07/2017 Ireland 985,000 EUR ESB Finance 3.494% 12/01/2024 1,720,000 EUR GE Capital European Funding 2.25% 20/07/2020 2,500,000 GBP GE Capital UK Funding 6.75% 06/08/2018 Italy 3,000,000 EUR Gtech Spa 5.375% 02/02/2018
1,593,163 1,828,612 2,490,485 4,725,539 2,223,296 4,491,020 4,641,143 3,141,295 2,485,584 27,620,137
0.23 0.26 0.35 0.68 0.31 0.64 0.66 0.44 0.35 3.92
3,168,476 3,266,097 6,434,573
0.45 0.46 0.91
3,264,705
0.46
4,892,860 2,269,969 3,417,075
0.69 0.32 0.48
4,892,281 15,472,185
0.69 2.18
3,145,838 3,020,495 6,166,333
0.45 0.43 0.88
2,835,183 4,380,178 2,477,778 4,714,999 2,514,150 357,927 3,000,000 2,471,529 3,221,900 3,196,899 3,204,916 2,975,678 2,402,542 37,753,679
0.40 0.63 0.35 0.67 0.36 0.05 0.42 0.35 0.46 0.45 0.45 0.42 0.34 5.35
2,414,281 4,357,202
0.34 0.62
6,771,483
0.96
1,349,578 2,357,461 4,868,785 8,575,824
0.19 0.33 0.69 1.21
4,646,916
0.66
5,904,038 2,414,679 8,318,717
0.84 0.34 1.18
1,979,176 2,959,375 4,543,424 2,263,851 4,091,678 3,733,430 2,475,738 22,046,672
0.28 0.42 0.65 0.32 0.58 0.53 0.35 3.13
4,893,671 3,068,453 7,962,124
0.69 0.43 1.12
4,461,595 3,126,347 7,587,942
0.63 0.44 1.07
4,840,205 2,951,203 7,791,408
0.68 0.42 1.10
South Korea 1,765,000 EUR Korea Gas 2.375% 15/04/2019
2,441,027
0.35
Spain 2,700,000 USD Telefonica Emisiones 5.877% 15/07/2019
3,030,452
0.43
4,117,432 4,414,779 4,510,616 13,042,827
0.58 0.62 0.64 1.84
2,893,068 3,106,362 5,999,430
0.41 0.44 0.85
2,988,819 6,162,043 6,915,604
0.42 0.88 0.99
3,102,955 3,999,826 1,150,130 4,899,805 2,126,250 3,424,998 1,042,672 3,459,628 39,272,730
0.44 0.57 0.16 0.69 0.30 0.48 0.15 0.49 5.57
2,512,500 2,839,486 5,351,986
0.36 0.40 0.76
Luxembourg 1,385,000 EUR 2,500,000 USD 3,200,000 EUR 2,080,000 USD 2,960,000 EUR 4,000,000 USD 1,600,000 EUR
Gazprom OAO Via Gaz Capital 3.7% 25/07/2018 Gazprom OAO Via Gaz Capital 8.146% 11/04/2018 GELF Bond Issuer 3.125% 03/04/2018 Glencore Finance Europe 7.5% Perpetual Prologis International Funding 2.75% 23/10/2018 SES 3.6% 04/04/2023 SES 4.625% 09/03/2020
Mexico 4,500,000 USD America Movil 5% 16/10/2019 2,203,000 EUR Petroleos Mexicanos 3.125% 27/11/2020 New Zealand 1,900,000 GBP Fonterra Cooperative 9.375% 04/12/2023 2,100,000 EUR Westpac Securities 3.875% 20/03/2017 Norway 5,000,000 USD Statoil 1.15% 15/05/2018 2,800,000 USD Statoil 3.125% 17/08/2017
Sweden 4,000,000 USD Nordea Bank 3.125% 20/03/2017 4,500,000 USD Skandinaviska Enskilda Banken 1.75% 19/03/2018 4,500,000 USD Swedbank 2.125% 29/09/2017 Switzerland 2,600,000 USD Credit Suisse 5.4% 14/01/2020 1,900,000 EUR UBS 6% 18/04/2018 The Netherlands 2,800,000 USD ABN AMRO Bank 4.25% 02/02/2017 4,510,000 EUR Coca-Cola HBC Finance 2.375% 18/06/2020 5,000,000 EUR Cooperatieve Centrale Raiffeisen-Boerenleenbank 3.875% 25/07/2023 2,200,000 EUR Deutsche Annington Finance 3.125% 25/07/2019 2,825,000 EUR Deutsche Annington Finance 3.625% 08/10/2021 1,160,000 USD Deutsche Annington Finance 5% 02/10/2023 5,000,000 USD Heineken 1.4% 01/10/2017 1,150,000 GBP Koninklijke 6% 29/05/2019 2,000,000 EUR Koninklijke 7.5% 04/02/2019 1,111,000 USD Petrobras Global Finance 3% 15/01/2019 3,500,000 USD Siemens Financieringsmaatschappij 1.5% 12/03/2018 United Arab Emirates 2,500,000 USD Abu Dhabi National Energy 2.5% 12/01/2018 2,400,000 USD Abu Dhabi National Energy 7.25% 01/08/2018
15
Core Credit Fund
Portfolio as at 31 December 2013 (continued) United Kingdom 2,700,000 EUR 2,500,000 GBP 1,160,000 EUR 3,000,000 GBP 3,600,000 GBP 3,700,000 USD 1,800,000 GBP 5,000,000 USD 2,900,000 USD 1,300,000 GBP 1,400,000 GBP 1,500,000 USD 1,050,000 USD 2,800,000 GBP 500,000 GBP 3,000,000 EUR 2,700,000 GBP 1,600,000 GBP 2,500,000 GBP 1,300,000 GBP 2,931,000 EUR 1,600,000 GBP 2,000,000 GBP 2,200,000 EUR 2,510,000 EUR 2,400,000 USD 2,500,000 GBP 3,700,000 GBP 2,400,000 GBP 1,300,000 GBP 1,600,000 GBP 1,600,000 GBP 2,500,000 GBP 1,000,000 USD 3,920,000 USD 750,000 USD 2,500,000 GBP 3,245,000 USD 2,500,000 USD 1,200,000 GBP 2,600,000 GBP 1,174,000 EUR 1,700,000 GBP 1,295,000 EUR 2,600,000 GBP 4,000,000 GBP 2,240,000 GBP 15,000,000 GBP 4,500,000 USD 3,500,000 GBP
Abbey National Treasury Services 2.625% 16/07/2020 Anglo American Capital 6.875% 01/05/2018 Aviva 6.125% 05/07/2043 BAE Systems 4.125% 08/06/2022 Barclays Bank 10% 21/05/2021 BAT International Finance 9.5% 15/11/2018 BG Energy Capital 6.5% 30/11/2072 BP Capital Markets 1.375% 10/05/2018 British Sky Broadcasting Group 3.125% 26/11/2022 British Telecommunications 6.625% 23/06/2017 British Telecommunications 8.625% 26/03/2020 Centrica 4% 16/10/2023 Centrica 5.375% 16/10/2043 Centrica 5.5% 24/10/2016 Compass Group 7% 08/12/2014 Coventry Building Society 2.5% 18/11/2020 Coventry Building Society 6% 16/10/2019 Eastern Power Networks 4.75% 30/09/2021 EE Finance 4.375% 28/03/2019 Electricity North West 8.875% 25/03/2026 Experian Finance 4.75% 04/02/2020 Firstgroup 8.125% 19/09/2018 Firstgroup 8.75% 08/04/2021 G4S International Finance 2.875% 02/05/2017 HSBC Holdings 3.375% 10/01/2024 Imperial Tobacco Finance 2.05% 11/02/2018 Imperial Tobacco Finance 8.125% 15/03/2024 Intu SGS Finance 3.875% 17/03/2028 Lloyds TSB Bank 7.5% 15/04/2024 Motability Operations Group 5.375% 28/06/2022 National Grid Gas 6% 07/06/2017 Northern Gas Networks Finance 5.875% 08/07/2019 Northumbrian Water Finance 6% 11/10/2017 Pearson Dollar Finance Two 6.25% 06/05/2018 Pearson Funding Five 3.25% 08/05/2023 Pearson Funding Four 3.75% 08/05/2022 Rentokil Initial 5.75% 31/03/2016 Rio Tinto Finance 2.25% 14/12/2018 Royal Bank of Scotland 5.625% 24/08/2020 Royal Bank of Scotland 7.5% 29/04/2024 Segro 5.5% 20/06/2018 SSE 2% 17/06/2020 SSE 5% 01/10/2018 Standard Chartered Bank 4% 21/10/2025 Standard Chartered Bank 7.75% 03/04/2018 Tesco 6.125% 24/02/2022 UNITE Usaf 3.374% 30/06/2028 United Kingdom Gilt 2.25% 07/03/2014 Vodafone 1.25% 26/09/2017 Western Power Distribution East Midlands 5.25% 17/01/2023 2,050,000 EUR WM Morrison Supermarkets 2.25% 19/06/2020 2,530,000 EUR WPP Finance 2013 3% 20/11/2023
United States 1,421,000 USD 6,900,000 USD 2,093,000 USD 3,000,000 EUR 3,000,000 USD 4,200,000 USD 1,770,000 EUR 2,000,000 USD 3,555,000 EUR 2,400,000 USD 4,700,000 USD 2,800,000 USD 4,918,000 USD 2,300,000 GBP
21st Century Fox America 5.4% 01/10/2043 Altria Group 2.95% 02/05/2023 Altria Group 9.7% 10/11/2018 Amgen 2.125% 13/09/2019 Anheuser-Busch InBev Worldwide 1.375% 15/07/2017 Apple 2.4% 03/05/2023 AT&T 2.65% 17/12/2021 AT&T 5.8% 15/02/2019 Bank of America 2.5% 27/07/2020 Bear Stearns 7.25% 01/02/2018 Boeing 0.95% 15/05/2018 Brambles 3.95% 01/04/2015 Bristol-Myers Squibb 1.75% 01/03/2019 Cellco Partnership / Verizon Wireless 8.875% 18/12/2018
3,743,353 4,710,361 1,776,409 4,970,242 7,714,727 4,882,934 3,263,501 4,869,350 2,705,269 2,455,869 2,971,252 1,447,564 1,045,895 5,099,133 872,002 4,095,688 5,120,564 2,832,444 4,259,557 3,050,278 4,579,783 3,123,532 4,065,141 3,100,500 3,525,333 2,355,737 5,342,457 5,915,529 5,028,268 2,418,103 2,995,816 3,008,447 4,705,251 1,120,663 3,543,711 713,021 4,446,650 3,231,588 2,801,263 2,506,383 4,747,141 1,596,391 3,119,011 1,776,121 5,007,401 7,517,111 3,491,338 24,905,362 4,421,273 6,314,295
0.53 0.67 0.25 0.70 1.09 0.69 0.46 0.69 0.38 0.35 0.42 0.20 0.15 0.72 0.12 0.58 0.72 0.40 0.60 0.43 0.65 0.44 0.58 0.44 0.50 0.33 0.76 0.84 0.71 0.34 0.42 0.43 0.67 0.16 0.50 0.10 0.63 0.46 0.40 0.35 0.67 0.23 0.44 0.25 0.71 1.06 0.49 3.53 0.63 0.89
2,774,579 3,463,160 209,546,751
0.39 0.49 29.64
1,464,298 6,254,557 2,760,774 4,147,430 2,996,541 3,776,930 2,459,650 2,315,037 4,922,830 2,855,179 4,514,750 2,892,872 4,799,833 4,865,095
0.21 0.89 0.39 0.59 0.42 0.53 0.35 0.33 0.71 0.40 0.64 0.41 0.68 0.69
United States (continued) 800,000 EUR Coca-Cola Enterprises 2.375% 07/05/2025 2,000,000 USD Comcast 5.15% 01/03/2020 4,000,000 USD Digital Realty Trust 5.875% 01/02/2020 1,300,000 USD Glencore Funding 2.5% 15/01/2019 8,000,000 USD Goldman Sachs 2.9% 19/07/2018 1,240,000 GBP Health Care 4.8% 20/11/2028 5,000,000 USD Johnson & Johnson 5.55% 15/08/2017 2,300,000 USD Kellogg 1.875% 17/11/2016 1,332,000 USD Microsoft 4.2% 01/06/2019 5,500,000 USD Morgan Stanley 5.625% 23/09/2019 2,400,000 USD Nestle Holdings 1.375% 21/06/2017 2,095,000 EUR Oracle 3.125% 10/07/2025 3,500,000 GBP PepsiCo 2.5% 01/11/2022 3,700,000 USD Pfizer 0.575% 15/06/2018 3,000,000 USD Philip Morris International 5.65% 16/05/2018 1,600,000 EUR Philip Morris International 5.75% 24/03/2016 2,230,000 USD Praxair 1.25% 07/11/2018 2,100,000 USD Procter & Gamble 4.7% 15/02/2019 2,030,000 EUR ProLogis 3% 18/01/2022 15,000,000 USD United States Treasury 1.75% 31/03/2014 4,200,000 USD Wal-Mart Stores 3.25% 25/10/2020 4,900,000 USD WEA Finance/WT Finance Aust 6.75% 02/09/2019 Investment in Securities
1,018,488 2,240,112 4,257,696 1,253,578 8,175,604 1,999,398 5,717,293 2,341,934 1,473,322 6,252,243 2,396,662 2,929,923 5,362,378 3,707,346 3,450,786 2,443,769 2,145,603 2,354,856 2,757,294 15,056,250 4,298,404 5,827,751 138,486,466
0.14 0.32 0.60 0.18 1.17 0.28 0.81 0.33 0.21 0.88 0.34 0.41 0.76 0.52 0.49 0.35 0.30 0.33 0.39 2.13 0.61 0.82 19.61
587,584,367
83.18
417,979 6,707 5,178,287 46,982 20,865 (16,669) (148,536) (144,217) (1,733,155) (1,768,830) (2,564) (3,347) (314) (376) 1,852,812
0.06 0.73 0.01 (0.02) (0.02) (0.25) (0.25) 0.26
(278,889)
(0.04)
637,793 29,265 (148,500) 41,982 (110,426) 2,345,920 795,579 464,747 (1,082,774) (1,196,790) (405,765) (288,229) (66,520) (195,398) (117,420) 908,458 (406,938) 7,320 (1,272,685) (398,524) (458,905)
0.09 (0.02) 0.01 (0.02) 0.33 0.11 0.07 (0.15) (0.17) (0.06) (0.04) (0.01) (0.03) (0.02) 0.13 (0.06) (0.18) (0.06) (0.08)
Derivative Instruments Forward Foreign Exchange Contracts 157,792,145 EUR Buy Euro: Sell US Dollar 16/01/2014 2,532,032 EUR Buy Euro: Sell US Dollar 16/01/2014 176,743,809 GBP Buy Sterling: Sell US Dollar 16/01/2014 1,603,590 GBP Buy Sterling: Sell US Dollar 16/01/2014 1,350,282 GBP Buy Sterling: Sell US Dollar 20/03/2014 4,804,065 USD Buy US Dollar: Sell Euro 20/03/2014 93,586,212 USD Buy US Dollar: Sell Euro 20/03/2014 82,496,940 USD Buy US Dollar: Sell Euro 20/03/2014 96,476,498 USD Buy US Dollar: Sell Sterling 20/03/2014 97,449,120 USD Buy US Dollar: Sell Sterling 20/03/2014 215,819 USD Buy US Dollar: Sell Sterling 20/03/2014 261,631 USD Buy US Dollar: Sell Sterling 20/03/2014 188,858 USD Buy US Dollar: Sell Sterling 20/03/2014 219,457 USD Buy US Dollar: Sell Sterling 20/03/2014 Cross Currency Swaps 5,144,000 USD JP Morgan 3 Month USD-LIBOR USD/EUR 22/05/2018 Interest Rate Swaps 112,000,000 USD Barclays Capital 3 Month USD-LIBOR 12/07/2016 29,000,000 USD Barclays Capital 3 Month USD-LIBOR 12/07/2020 7,000,000 USD Barclays Capital 3 Month USD-LIBOR 12/07/2028 2,300,000 GBP Barclays Capital 6 Month GBP-LIBOR 25/04/2016 11,500,000 GBP Barclays Capital 6 Month GBP-LIBOR 30/09/2016 11,600,000 GBP Barclays Capital 6 Month GBP-LIBOR 25/04/2018 14,500,000 GBP Barclays Capital 6 Month GBP-LIBOR 17/05/2018 20,700,000 GBP Barclays Capital 6 Month GBP-LIBOR 25/04/2020 24,000,000 GBP Deutsche Bank 6 Month GBP-LIBOR 06/11/2023 95,000,000 GBP Deutsche Bank 6 Month GBP-LIBOR 07/11/2016 10,000,000 GBP Deutsche Bank 6 Month GBP-LIBOR 08/11/2020 5,000,000 GBP Deutsche Bank 6 Month GBP-LIBOR 08/11/2028 20,500,000 USD JP Morgan 3 Month USD-LIBOR 17/05/2016 3,750,000 USD JP Morgan 3 Month USD-LIBOR 17/05/2020 900,000 USD JP Morgan 3 Month USD-LIBOR 17/05/2028 3,500,000 GBP JP Morgan 6 Month GBP-LIBOR 17/05/2023 69,000,000 EUR JP Morgan 6 Months EUR-EURIBOR 17/05/2016 42,000,000 EUR JP Morgan 6 Months EUR-EURIBOR 03/10/2020 13,000,000 EUR JP Morgan 6 Months EUR-EURIBOR 17/05/2028 3,200,000 EUR JP Morgan 6 Months EUR-EURIBOR 17/05/2033 16
Core Credit Fund
Portfolio as at 31 December 2013 (continued) Futures Contracts* (17) USD CBT Ultra Bond 20/03/2014 (60) USD CBT 2YR Note 31/03/2014 (879) USD CBT 5YR Note 31/03/2014 (740) USD CBT 10YR Note 31/03/2014 (745) EUR EUX Bobl 06/03/2014 (236) EUR EUX Bund 06/03/2014 (270) GBP LIFFE Long Gilt 27/03/2014 Other Net Assets Total Net Assets
31,742 29,813 1,473,566 1,977,188 933,155 445,932 1,138,896 6,030,292
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013 0.21 0.28 0.13 0.06 0.16 0.84
Description of Securities
Purchases
Sales
USD
USD
France Vivendi 6.625% 04/04/2018
3,745,184
7,486,496
The Netherlands Adecco 2.75% 15/11/2019 Deutsche Annington Finance 3.125% 25/07/2019 Cooperatieve Centrale Raiffeisen-Boerenleenbank 3.875% 25/07/2023
5,311,127 7,488,349 9,120,024
5,365,394 4,784,417 2,605,936
United Kingdom United Kingdom Gilt 2.25% 07/03/2014
24,313,324
----
United States Altria Group 9.7% 10/11/2018 United States Treasury 0.125% 31/08/2013 United States Treasury 1.75% 31/03/2014 United States Treasury 2.75% 31/10/2013 United States Treasury 3.125% 30/09/2013
7,023,176 20,003,125 15,075,586 20,044,531 20,149,219
4,246,016 -------------
Bonds
111,963,198 15.84 706,692,875 100.00
* Total Commitment USD (431,989,748).
Portfolio by Country Country United Kingdom United States The Netherlands France Australia Luxembourg Cayman Islands Sweden Ireland Jersey Mexico Norway New Zealand Germany British Virgin Islands Finland Switzerland United Arab Emirates Italy Canada Spain South Korea Investment in Securities Swap Contracts Futures Contracts Forward Foreign Exchange Contracts Other Net Assets Total Net Assets
Market Value USD 209,546,751 138,486,466 39,272,730 37,753,679 27,620,137 22,046,672 15,472,185 13,042,827 8,575,824 8,318,717 7,962,124 7,791,408 7,587,942 6,771,483 6,434,573 6,166,333 5,999,430 5,351,986 4,646,916 3,264,705 3,030,452 2,441,027
% of Net Assets 29.64 19.61 5.57 5.35 3.92 3.13 2.18 1.84 1.21 1.18 1.12 1.10 1.07 0.96 0.91 0.88 0.85 0.76 0.66 0.46 0.43 0.35
587,584,367 (737,794) 6,030,292 1,852,812 111,963,198 706,692,875
83.18 (0.12) 0.84 0.26 15.84 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
17
Euro Corporate Bond Fund Managers’ report for the six months to 31 December 2013
Fund Managers Chris Bullock and Stephen Thariyan The Fund outperformed its benchmark over the period returning 3.1% against the iBoxx Euro Corporate Bond Index of 2.2% and benefited from both asset allocation and stock selection. Credit markets experienced a strong recovery driven by central bank actions. The European Central Bank introduced accommodative forward rate guidance and reaffirmed its commitment to provide market liquidity, while the US Federal Reserve surprised markets by initially suspending the decision to taper its quantitative easing programme. The result was a renewed demand for fixed income securities, in particular corporate bonds, resulting in widespread spread compression, and providing fresh impetus to the new issue market. Lower-rated bonds benefited in particular, with BBB-rated, subordinated and high yield bonds outperforming. Financials continues to be the strongest sector, due in part to its higher beta, but also as a result of another year of significant net redemptions in outstanding bonds. The Fund benefited from both its current preference for BBB-rated bonds, overweight Lower Tier 2 financials, and allocation to high yield. We have also increased exposure to Europe’s ‘periphery’, moving back to a more neutral position as we recognise that investors’ concerns are dissipating, leaving many Spanish and Italian corporate bonds at attractive relative values. The Fund continued to experience net subscription growth, investing much of the proceeds in strong primary new issuance markets, in particular across non-financial corporates. In secondary markets, holdings across financials and high yield were the main contributors to relative outperformance, including upgrades back to investment grade for Lloyds Group subordinated bonds, and tyre maker Continental. A better-than-expected restructuring outcome for Royal Bank of Scotland and The Co-operative Group also benefited the portfolio. Mergers and acquisitions (M&A) activity has also come back on the radar; America Movil’s bid for KPN supported our holding in the latter’s hybrid securities. The Fund utilised derivatives within the period, both through the use of government futures (to manage the Fund’s duration position) and through the use of credit derivatives (as a liquid and cost-efficient approach to managing overall credit exposure). The credit derivative positions had a negligible impact on performance over the period. Looking ahead, the demand for corporate bonds remains strong and, fundamentally, we expect default rates to remain negligible, although this is partially reflected in credit spreads. We expect to continue to see opportunities from increased M&A activity and new underresearched issuers in the primary markets, particularly in the BBB segment. Credit spreads should provide a cushion for government bonds, but total returns will, to a large extent, depend on economic conditions and the resultant policy action. Within Europe, anaemic growth, low inflation, and accommodative central bank policy suggest a positive outlook is still warranted at this stage in the credit cycle.
18
Euro Corporate Bond Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (EUR)
For the period from 1 July 2013 to 31 December 2013 (EUR)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets
----
4,899 -------
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
3,026,015 1,132,023 ---496 1,634,092,055
Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
1,567,472,333 29,516,389 26,850,201 6,089,699
----
4,752
---28,979,166 ---3,547 ---28,982,713 151,635 7,106,346 747,233 431,320 225,089 196,872 2,450 ----
8,860,945
----
4,028,386 1,534,799 386,733 -------------
Net gain from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised gain on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange gain
20,121,768 7,856,641 (2,226,114) ---300,323 (1,703,542) ---488,588
Net realised gain
24,837,664
Increase in unrealised appreciation on investments Increase in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Increase in unrealised appreciation on futures contracts Increase in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
18,530,215 629,258
Net increase in assets as a result of operations
46,504,691
5,954,670
1,628,137,385
----
1,927,413 580,141 ----
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (EUR) Net assets at the beginning of the period Net gain from investment Net realised gain on investment Net realised currency exchange gain Proceeds from shares issued
1,350,766,557 20,121,768 4,227,308 488,588 600,562,022
Payments for shares redeemed Net equalisation received (note 13) Increase in unrealised appreciation on investments Dividends paid (note 14) Net assets at the end of the period
19
(368,391,838) 3,428,013 21,667,027 (4,732,060) 1,628,137,385
Euro Corporate Bond Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 A2 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
3,546,986.74 1,268,818.94 (948,005.76) 3,867,799.92
A2 HCHF (CHF) 106,748.48 49,053.00 (27,093.20) 128,708.28
Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
I1 872,060.15 355,662.36 (136,550.24) 1,091,172.27
I1 (USD) 21,951.00 13,190.49 (2,905.71) 32,235.78
X2 101,276.63 48,876.00 (41,157.23) 108,995.40
X1 25.00 7,584.76 (25.21) 7,584.55
H2 ---25.00 ---25.00
A2
A2 HCHF (CHF)
A2 (USD)
A1
Number of shares outstanding: Equivalent to a net asset value per share of:
3,867,799.92 137.68
128,708.28 113.17
A2 HSEK (SEK) 56,099.77 1,196.68
34,207.47 102.19
167,371.98 125.48
I1
I1 (USD)
Number of shares outstanding: Equivalent to a net asset value per share of:
1,091,172.27 127.73
32,235.78 104.76
X2 108,995.40 122.81
X1 7,584.55 100.23
H2 25.00 102.28
A2 HSEK (SEK) 69,142.47 29,620.67 (42,663.37) 56,099.77
A2 (USD)
A1
21,910.14 14,056.37 (1,759.04) 34,207.47
118,344.77 88,279.88 (39,252.67) 167,371.98
A1 HGBP (GBP) 73,699.85 49,148.45 (7,031.57) 115,816.73
I2 5,228,701.20 2,371,462.89 (1,517,106.40) 6,083,057.69
I2 HCHF (CHF) ---357,867.49 (2,685.00) 355,182.49
Net Asset Value Per Share As at 31 December 2013
The accompanying notes form an integral part of these financial statements.
20
A1 HGBP (GBP) 115,816.73 115.23
I2 6,083,057.69 139.90
I2 HCHF (CHF) 355,182.49 102.15
Euro Corporate Bond Fund
Portfolio as at 31 December 2013 Number of Securities
Market % of value Net EUR Assets
France (continued) 11,300,000 EUR 10,000,000 EUR 3,700,000 USD 6,100,000 EUR 8,000,000 EUR 8,400,000 EUR 3,982,000 EUR 4,200,000 EUR 9,100,000 EUR 5,000,000 EUR
Bonds Transferable securities and money market instruments admitted to an official exchange listing
Australia 5,120,000 4,500,000 4,920,000 8,520,000 7,300,000 15,750,000 7,665,000
5,545,855 3,639,739 5,004,747 8,351,915 7,419,337 17,740,898 7,672,473 55,374,964
0.34 0.22 0.31 0.51 0.46 1.09 0.47 3.40
6,639,772 6,216,760 12,856,532
0.41 0.38 0.79
Belgium 7,700,000 EUR Anheuser-Busch 2% 16/12/2019
7,739,637
0.48
Brazil 6,900,000 EUR Vale 4.375% 24/03/2018
7,521,000
0.46
8,728,841 8,783,255 17,512,096
0.54 0.54 1.08
4,655,343 9,194,405 13,849,748
0.29 0.56 0.85
GBP USD EUR EUR EUR EUR EUR
Commonwealth Bank of Australia 3% 04/09/2026 Goodman Funding 6.375% 15/04/2021 National Australia Bank 2.75% 08/08/2022 Origin Energy Finance 2.5% 23/10/2020 Origin Energy Finance 2.875% 11/10/2019 Santos Finance 8.25% 22/09/2070 Transurban Finance 2.5% 08/10/2020
Austria 6,800,000 EUR Erdoel-Lagergesellschaft 2.75% 20/03/2028 6,250,000 EUR OMV 1.75% 25/11/2019
Cayman Island 9,000,000 EUR Hutchison Whampoa Europe Finance 3.75% Perpetual 8,000,000 EUR Hutchison Whampoa Finance 4.75% 14/11/2016 Czech Republic 5,000,000 EUR CEZ 3% 05/06/2028 8,400,000 EUR EP Energy 5.875% 01/11/2019 Denmark 8,275,000 EUR Carlsberg Breweries 2.625% 03/07/2019 4,635,000 EUR Danske Bank 3.875% 04/10/2023 6,600,000 EUR TDC 4.375% 23/02/2018 Finland 13,705,000 EUR Citycon 3.75% 24/06/2020 6,591,000 EUR CRH 2.75% 15/10/2020 7,000,000 EUR Elisa 2.25% 04/10/2019 France 13,600,000 7,000,000 5,930,000 11,500,000 9,700,000 5,600,000 6,900,000 7,500,000 10,100,000 4,500,000 4,000,000 4,510,000 6,900,000 4,800,000 9,000,000 7,520,000 11,100,000 8,800,000 10,000,000
EUR EUR EUR EUR USD EUR USD EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR
ALD 2% 26/05/2017 Banque Federative du Credit Mutuel 2.625% 24/02/2021 BNP Paribas 1.5% 12/03/2018 BNP Paribas 2% 28/01/2019 BNP Paribas 3.25% 03/03/2023 BPCE 4.625% 18/07/2023 BPCE 5.7% 22/10/2023 Carrefour 1.875% 19/12/2017 Casino Guichard Perrachon 3.157% 06/08/2019 Casino Guichard Perrachon 3.311% 25/01/2023 Casino Guichard Perrachon 4.726% 26/05/2021 Compagine de saint Gobain 4.5% 30/09/2019 Electricite de France 3.875% 18/01/2022 Eutelsat 2.625% 13/01/2020 GDF Suez 1.5% 20/07/2017 GDF Suez 5.95% 16/03/2111 Gecina 4.75% 11/04/2019 HSBC France 1.875% 16/01/2020 Klepierre 2.75% 17/09/2019
8,428,970 4,723,529 7,286,907 20,439,406
0.52 0.29 0.45 1.26
13,850,342 6,620,775 6,954,612 27,425,729
0.85 0.40 0.43 1.68
13,534,638 7,083,907 5,918,713 11,624,526 6,694,809 5,902,680 5,183,557 7,599,725 10,480,534 4,518,510 4,483,334 5,042,939 7,557,558 4,755,744 9,116,775 9,467,755 12,307,403 8,712,528 10,270,283
0.83 0.44 0.36 0.71 0.41 0.36 0.32 0.47 0.64 0.28 0.28 0.31 0.46 0.29 0.56 0.58 0.76 0.54 0.63
12,014,861 Lagardere 4.125% 31/10/2017 Orange 1.875% 02/10/2019 9,837,000 Rhodia 6.875% 15/09/2020 2,977,963 Rhodia 7% 15/05/2018 6,450,707 RTE Reseau de Transport d'Electricite 2.125% 20/09/2019 8,103,374 Societe Fonciere Lyonnaise 4.625% 25/05/2016 9,014,098 Solvay 4.199% Perpetual 4,087,702 Valeo 4.875% 11/05/2018 4,716,250 Vivendi 2.375% 21/01/2019 9,081,573 Vivendi 4.875% 02/12/2019 5,608,675 222,148,121
0.74 0.60 0.18 0.40 0.50 0.55 0.25 0.29 0.56 0.34 13.64
Germany 5,400,000 11,000,000 3,270,000 4,695,000 10,350,000 5,200,000 6,500,000 6,835,000
EUR EUR EUR EUR EUR EUR EUR EUR
Allianz 5.625% 17/10/2042 Continental 3% 16/07/2018 Continental 3.125% 09/09/2020 Deutsche Post 2.875% 11/12/2024 Eurogrid 3.875% 22/10/2020 Unitymedia 5.5% 15/09/2022 Unitymedia 7.5% 15/03/2019 Vier Gas Transport 2% 12/06/2020
6,002,163 11,602,250 3,425,112 4,735,497 11,340,387 5,372,167 7,097,545 6,743,924 56,319,045
0.37 0.71 0.21 0.29 0.70 0.33 0.44 0.41 3.46
Ireland 3,260,000 5,900,000 7,050,000 9,250,000 4,510,000 4,450,000
EUR EUR GBP EUR EUR EUR
Cloverie 6.625% 01/09/2042 ESB Finance 3.494% 12/01/2024 ESB Finance 6.5% 05/03/2020 FGA Capital Ireland 4.375% 18/09/2014 GE Capital European Funding 2.875% 18/06/2019 Willow 2 Zurich Insurance 3.375% 27/06/2022
3,944,785 5,869,060 9,515,196 9,440,337 4,702,013 4,696,575 38,167,966
0.24 0.36 0.58 0.58 0.29 0.29 2.34
5,680,290
0.35
6,907,176 6,789,995 7,914,278 8,169,287 4,172,780 4,414,938 7,710,924 11,195,642 4,038,114 6,192,214 7,593,163 75,098,511
0.42 0.42 0.49 0.50 0.25 0.27 0.47 0.69 0.25 0.38 0.47 4.61
13,482,586
0.83
Israel 5,500,000 EUR Teva Pharmaceutical Finance 2.875% 15/04/2019 Italy 6,500,000 6,400,000 7,510,000 7,500,000 4,000,000 4,000,000 7,300,000 10,500,000 3,050,000 5,500,000 7,000,000
EUR EUR EUR EUR EUR EUR EUR EUR GBP EUR EUR
A2A 4.375% 10/01/2021 ACEA 3.75% 12/09/2018 Atlantia 3.625% 30/11/2018 Edison 3.875% 10/11/2017 Enel 3.5% 26/02/2016 Gtech 5.375% 05/12/2016 Intesa Sanpaolo 4.125% 19/09/2016 Intesa Sanpaolo 4.375% 15/10/2019 Telecom Italia 7.375% 15/12/2017 Telecom Italia 8.25% 21/03/2016 Unicredit 4.875% 07/03/2017
Jersey 13,525,000 EUR Atrium European Real Estate 4% 20/04/2020
21
Luxembourg 3,585,000 GBP 17,800,000 EUR 8,060,000 EUR 8,800,000 EUR 9,760,000 USD 4,200,000 EUR 9,675,000 EUR
Altice Financing 6.5% 15/01/2022 GELF Bond Issuer 3.125% 03/04/2018 Glencore Finance Europe 4.625% 03/04/2018 Prologis International Funding 2.75% 23/10/2018 Severstal OAO Via Steel Capital 6.7% 25/10/2017 Telenet Finance 6.25% 15/08/2022 Trafigura 5.25% 29/11/2018
3,622,632 18,342,010 8,834,606 8,831,733 7,656,440 4,469,527 9,900,863 61,657,811
0.22 1.13 0.54 0.55 0.47 0.27 0.61 3.79
Mexico 10,000,000 3,000,000 5,750,000 7,785,000
America Movil 3.125% 16/07/2022 America Movil 6.375% 06/09/2073 America Movil 6.375% 06/09/2073 Petroleos Mexicanos 3.125% 27/11/2020
6,728,287 3,740,591 6,129,500 7,872,581 24,470,959
0.41 0.23 0.38 0.48 1.50
USD GBP EUR EUR
Euro Corporate Bond Fund
Portfolio as at 31 December 2013 (continued) Spain 7,000,000 6,000,000 7,000,000 7,000,000 6,000,000 10,000,000 6,350,000 7,100,000 10,000,000
EUR EUR EUR EUR EUR EUR EUR EUR EUR
Banco Bilbao Vizcaya Argentaria 3.5% 05/12/2017 Banco Bilbao Vizcaya Argentaria 4.25% 18/01/2017 Banco Santander 2.875% 30/01/2018 CaixaBank 2.5% 18/04/2017 CaixaBank 4.625% 04/06/2019 Cajas Rurales Unidas 3.75% 22/11/2018 Ferrovial Emisiones 3.375% 07/06/2021 Gas Natural 6% 27/01/2020 Telefonica Emisiones 4.75% 07/02/2017
7,483,700 6,496,454 7,311,947 7,118,382 6,674,703 9,955,533 6,380,782 8,443,391 10,939,917 70,804,809
0.46 0.40 0.45 0.44 0.41 0.61 0.39 0.52 0.67 4.35
Sweden 4,350,000 8,000,000 4,000,000 8,325,000 4,450,000 6,000,000
EUR EUR EUR EUR EUR EUR
Nordea Bank 2.25% 05/10/2017 Securitas 2.25% 14/03/2018 Securitas 2.75% 28/02/2017 Skandinaviska Enskilda Banken 1.875% 14/11/2019 Svenska Handelsbanken 2.25% 14/06/2018 Svenska Handelsbanken 2.25% 27/08/2020
4,504,131 8,075,792 4,138,560 8,262,737 4,581,928 6,021,180 35,584,328
0.28 0.49 0.25 0.51 0.28 0.37 2.18
6,288,702
0.39
11,756,520 8,107,861 4,816,645 6,493,754 11,238,638 11,211,975 8,713,150 4,256,374 5,176,175 10,041,963
0.72 0.50 0.30 0.40 0.69 0.69 0.54 0.26 0.32 0.62
11,476,983
0.70
9,816,422
0.60
14,639,232 3,115,708 5,162,500 4,853,233 10,662,673 10,118,717 5,570,438 7,381,109 5,379,482 4,933,819 4,253,000 7,521,402 5,062,500 12,098,516 8,130,271 11,385,333 4,199,091 4,807,563 232,381,047
0.90 0.19 0.32 0.30 0.65 0.62 0.34 0.45 0.33 0.30 0.26 0.46 0.31 0.74 0.50 0.70 0.26 0.30 14.27
6,410,268 4,300,675 10,710,943
0.39 0.27 0.66
10,314,852 10,950,624 7,514,117 3,874,728 5,905,412
0.63 0.67 0.46 0.24 0.36
Switzerland 5,805,000 EUR Credit Suisse London 3.875% 25/01/2017 The Netherlands 12,000,000 EUR 7,000,000 EUR 4,000,000 EUR 6,500,000 EUR 10,150,000 EUR 10,000,000 EUR 7,500,000 EUR 4,290,000 EUR 5,000,000 EUR 10,000,000 EUR 9,341,000 GBP 8,700,000 EUR 14,300,000 3,035,000 5,000,000 4,000,000 10,050,000 10,000,000 5,000,000 6,900,000 5,300,000 4,500,000 4,000,000 7,485,000 5,000,000 9,200,000 6,600,000 10,000,000 3,800,000 4,850,000
EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR GBP EUR EUR GBP GBP EUR EUR EUR
ABN AMRO Bank 2.125% 26/11/2020 ABN AMRO Bank 6.375% 27/04/2021 ABN AMRO Bank 7.125% 06/07/2022 Adecco International Financial Services 2.75% 15/11/2019 Adecco International Financial Services 4.75% 13/04/2018 Allianz Finance 5.75% 08/07/2041 British American Tobacco 4.875% 24/02/2021 Coca-Cola 2.375% 18/06/2020 Conti-Gummi 2.5% 20/03/2017 Cooperatieve Centrale Raiffeisen-Boerenleenbank 3.875% 25/07/2023 Cooperatieve Centrale Raiffeisen-Boerenleenbank 4% 19/09/2022 Cooperatieve Centrale Raiffeisen-Boerenleenbank 4.75% 15/01/2018 Deutsche Annington 3.125% 25/07/2019 Deutsche Annington 3.625% 08/10/2021 Deutsche Post Finance 2.95% 27/06/2022 E.ON International 5.75% 07/05/2020 Enel Finance International 3.625% 17/04/2018 ING Bank 1.875% 27/02/2018 ING Bank 6.125% 29/05/2023 ING Verzekeringen 6.375% 07/05/2027 Koninklijke KPN 3.25% 01/02/2021 Koninklijke KPN 4.75% 17/01/2017 Koninklijke KPN 6.125% Perpetual LeasePlan Corp 2.375% 23/04/2019 Petrobras Global Finance 3.25% 01/04/2019 RWE Finance 5.5% 06/07/2022 Telefonica Europe 6.75% Perpetual TenneT Holding 4.5% 09/02/2022 UPC Holding 8.375% 15/08/2020 Wolters Kluwer 2.875% 21/03/2023
United Arab Emirates 6,350,000 EUR Xstrata Finance Dubai Ltd 1.75% 19/05/2016 4,250,000 EUR Xstrata Finance Dubai Ltd 2.625% 19/11/2018 United Kingdom 9,370,000 EUR 10,000,000 EUR 7,650,000 EUR 3,485,000 EUR 5,000,000 EUR
3i 5.625% 17/03/2017 Abbey National Treasury Services 3.625% 05/10/2018 Anglo American 2.875% 20/11/2020 Aviva PLC 6.125% 05/07/2043 Barclays Bank 6.625% 30/03/2022
United Kingdom (continued) 8,000,000 EUR BG Energy 3% 16/11/2018 7,245,000 GBP Co-operative Group Holdings 6.875% 08/07/2020 5,900,000 GBP Co-operative Group Holdings 7.5% 08/07/2026 14,480,000 GBP Firstgroup 5.25% 29/11/2022 10,260,000 EUR G4S 2.625% 06/12/2018 7,500,000 EUR G4S 2.875% 02/05/2017 10,170,000 GBP GKN Holdings 5.375% 19/09/2022 10,010,000 EUR Global Switch Holdings 5.5% 18/04/2018 11,100,000 EUR Hammerson 2.75% 26/09/2019 5,700,000 EUR HBOS 4.5% 18/03/2030 10,000,000 EUR HBOS 5.374% 30/06/2021 5,000,000 EUR HSBC 6% 10/06/2019 5,000,000 GBP Imperial Tobacco Finance 9% 17/02/2022 6,200,000 GBP Investec Bank 9.625% 17/02/2022 5,942,000 EUR Lloyds TSB Bank 11.875% 16/12/2021 8,887,000 EUR Mondi Finance 3.375% 28/09/2020 5,437,000 EUR Motability Operations 3.25% 30/11/2018 8,740,000 EUR Nationwide Building Society 4.125% 20/03/2023 5,000,000 EUR Nationwide Building Society 6.75% 22/07/2020 7,970,000 EUR NGG Finance 4.25% 18/06/2076 7,900,000 GBP Old Mutual 8% 03/06/2021 10,900,000 EUR Rentokil Initial 3.375% 24/09/2019 7,000,000 EUR Rio Tinto Finance 2% 11/05/2020 12,800,000 EUR Royal Bank of Scotland 4.625% 22/09/2021 5,400,000 EUR Royal Bank of Scotland 5.375% 30/09/2019 12,200,000 EUR Royal Bank of Scotland 6.934% 09/04/2018 5,800,000 GBP Scottish Widows 5.5% 16/06/2023 5,670,000 EUR SSE 2% 17/06/2020 5,000,000 EUR Standard Chartered 3.625% 23/11/2022 9,155,000 EUR Standard Chartered 4% 21/10/2025 9,575,000 EUR Virgin Media 6% 15/04/2021 9,375,000 EUR WPP 3% 20/11/2023 United States 13,050,000 EUR 5,000,000 EUR 2,410,000 USD 11,780,000 EUR 5,210,000 EUR 9,149,000 EUR 5,000,000 EUR 9,100,000 EUR 4,500,000 EUR 4,000,000 EUR 10,300,000 EUR 3,415,000 EUR 4,000,000 EUR 6,000,000 EUR 8,000,000 EUR 5,000,000 EUR 2,500,000 EUR 5,100,000 EUR 8,700,000 EUR 7,500,000 EUR 11,175,000 EUR 9,560,000 EUR 6,150,000 EUR 10,325,000 EUR 6,775,000 EUR 6,500,000 EUR 11,250,000 EUR 7,000,000 EUR 7,870,000 EUR 8,330,000 USD 7,570,000 EUR
American International 5% 26/06/2017 Amgen 2.125% 13/09/2019 AngloGold Ashanti 8.5% 30/07/2020 AT&T 3.55% 17/12/2032 AT&T Inc 2.65% 17/12/2021 Bank of America 2.5% 27/07/2020 Citigroup 4.25% 25/02/2030 Citigroup 5% 02/08/2019 Coca-Cola Enterprises 2% 05/12/2019 Coca-Cola Enterprises 2.375% 07/05/2025 DIRECTV 2.75% 19/05/2023 GE Capital Trust IV 4.625% 15/09/2066 General Electric Capital 4.625% 15/09/2066 Goldman Sachs 2.625% 19/08/2020 Goldman Sachs 3.25% 01/02/2023 Goldman Sachs 4.375% 16/03/2017 Goldman Sachs 4.75% 12/10/2021 Johnson & Johnson 4.75% 06/11/2019 JPMorgan chase 3.75% 15/06/2016 Metropolitan Life Global Funding I 2.375% 30/09/2019 Microsoft 2.125% 06/12/2021 Microsoft 2.625% 02/05/2033 Morgan Stanley 6.5% 28/12/2018 NASDAQ OMX Group 3.875% 07/06/2021 Oracle Corp 2.25% 10/01/2021 Pemex Project Funding Master Trust 5.5% 24/02/2025 Philip Morris International 2.125% 30/05/2019 Procter & Gamble 2% 16/08/2022 ProLogis LP 3% 18/01/2022 Verizon Communications Inc 5.15% 15/09/2023 Wells Fargo 2.625% 16/08/2022
Investment in Securities
22
8,454,400 8,961,998 7,286,510 17,733,825 10,272,380 7,675,875 12,748,159 11,295,383 11,351,690 5,428,442 10,446,180 5,810,386 7,954,112 8,237,083 7,413,982 9,047,410 5,814,138 9,087,904 5,895,343 8,086,621 10,129,034 11,287,341 6,932,042 12,869,274 6,241,518 13,866,154 6,996,979 5,595,836 4,874,948 9,122,454 11,861,426 9,302,437 326,640,997
0.52 0.55 0.45 1.09 0.63 0.47 0.78 0.69 0.70 0.33 0.64 0.36 0.49 0.51 0.46 0.56 0.36 0.56 0.36 0.50 0.62 0.69 0.43 0.79 0.38 0.85 0.43 0.34 0.30 0.56 0.73 0.57 20.06
14,575,227 5,019,518 1,816,353 11,291,915 5,252,253 9,197,383 4,937,875 10,462,531 4,456,683 3,697,260 9,646,122 3,505,441 4,112,576 6,002,550 8,086,667 5,435,648 2,666,917 6,015,565 9,281,669 7,634,496 11,081,018 8,699,122 7,434,993 10,648,052 6,817,005 7,464,080 11,401,631 6,785,648 7,772,294 6,529,058 7,589,556 225,317,106 1,567,472,333
0.90 0.31 0.11 0.69 0.32 0.56 0.30 0.64 0.27 0.23 0.59 0.22 0.25 0.37 0.50 0.34 0.16 0.37 0.57 0.47 0.68 0.53 0.46 0.65 0.42 0.46 0.70 0.42 0.48 0.40 0.47 13.84 96.27
Euro Corporate Bond Fund
Portfolio as at 31 December 2013 (continued) Nominal Value/ Number of Securities
Market % of value Net EUR Assets
Credit Default Swaps 12,000,000 EUR 01 Iberdrola 1.00% 20/12/2020 12,000,000 EUR 01 Repsol 1.00% 20/12/2020 5,000,000 EUR Barclays Capital UPC 5.0000% 20/12/2017 10,000,000 EUR Barclays Old Mutual 20/03/2019 10,000,000 EUR Barclays Schaeffler 5.00% 20/03/2019 2,000,000 EUR Citibank Credit Suisse 20/06/2017 35,000,000 EUR Citibank ITraxx 20/06/2018 8,000,000 EUR Citibank Rentokill 20/03/2019 700,000 EUR Credit Suisse Allianz 20/09/2021 14,000,000 USD Credit Suisse International Business 20/03/2019 800,000 EUR Credit Suisse Munich 20/09/2021 1,500,000 EUR Credit Suisse Rexam Plc 20/12/2016 2,500,000 EUR Credit Suisse Skandinavisk 1.0000% 20/06/2017 1,000,000 EUR Deutsche Bank Allianz 20/12/2016 10,000,000 EUR Deutsche Bank Barclays 1.00% 20/09/2018 1,000,000 EUR Deutsche Bank Munich 20/12/2016 3,000,000 EUR Goldman Sachs 1.00% Post NL 20/03/2019 3,700,000 EUR Goldman Sachs Deutsche Bank 20/09/2018 12,500,000 EUR Goldman Sachs Diageo 20/03/2019 12,500,000 USD Goldman Sachs Heinz 20/12/2018 3,700,000 EUR Goldman Sachs Itraxx 1.00% 20/06/2018 11,000,000 EUR Goldman Sachs Itraxx European Series 19 Version 1 1% 20/06/2018 18,000,000 USD Goldman Sachs Northrop 20/03/2019 5,000,000 EUR Goldman Sachs Societe Generale 3.0000% 20/03/2018 2,000,000 EUR JP Morgan Alstom 1.0000% 20/06/2017 3,000,000 USD JP Morgan AT&T 1.0000% 20/06/2017 8,000,000 EUR JP Morgan Santander UK 1.0000% 20/03/2018 8,000,000 EUR JP Morgan Standard Chartered 1.0000% 20/09/2018 11,000,000 EUR Merrill Lynch Deutsche Lufthansa 20/09/2018 11,700,000 EUR Merrill Lynch Renault 20/03/2019 5,000,000 EUR Merrill Lynch Societe Generale 3.0000% 20/12/2017 8,000,000 EUR Morgan Stanley GDF Suez 20/03/2018 5,950,000 EUR Morgan Stanley Post NL 1.00% 20/12/2018 11,000,000 EUR Societe Generale J Sainsbury 20/03/2019
Derivative Instruments Transferable securities and money market instruments admitted to an official exchange listing
Forward Foreign Exchange Contracts 60,968 EUR Buy Euro: Sell Swedish Krona 16/01/2014 3,180 EUR Buy Euro: Sell Swedish Krona 16/01/2014 57,248 EUR Buy Euro: Sell Swedish Krona 16/01/2014 2,005 EUR Buy Euro: Sell Swedish Krona 16/01/2014 290 EUR Buy Euro: Sell Swedish Krona 16/01/2014 67,512,383 SEK Buy Swedish Krona: Sell Euro 16/01/2014 254,665 SEK Buy Swedish Krona: Sell Euro 16/01/2014 636,128 SEK Buy Swedish Krona: Sell Euro 16/01/2014 11,796,579 CHF Buy Swiss Franc: Sell Euro 16/01/2014 125,495 CHF Buy Swiss Franc: Sell Euro 16/01/2014 1,144,150 CHF Buy Swiss Franc: Sell Euro 16/01/2014 1,245,091 CHF Buy Swiss Franc: Sell Euro 16/01/2014 10,188 CHF Buy Swiss Franc: Sell Euro 16/01/2014 260,420 CHF Buy Swiss Franc: Sell Euro 16/01/2014 109,701 EUR Buy Euro: Sell Sterling 16/01/2014 26,330 EUR Buy Euro: Sell Sterling 16/01/2014 13,357,752 GBP Buy Sterling: Sell Euro 16/01/2014 85,674 GBP Buy Sterling: Sell Euro 16/01/2014 40,301 GBP Buy Sterling: Sell Euro 16/01/2014 11,237,975 EUR Buy Euro: Sell Sterling 20/03/2014 47,168,218 EUR Buy Euro: Sell US Dollars 20/03/2014 69,774,819 EUR Buy Euro: Sell Sterling 20/03/2014 69,219,597 EUR Buy Euro: Sell Sterling 20/03/2014 1,292,254 GBP Buy Sterling: Sell Euro 20/03/2014 41,179 EUR Buy Euro: Sell US Dollars 16/01/2014 3,556,404 USD Buy US Dollars: Sell Euro 16/01/2014 35,926,521 CHF Buy Swiss Franc: Sell Euro 16/01/2014 385,734 CHF Buy Swiss Franc: Sell Euro 16/01/2014 15,025 CHF Buy Swiss Franc: Sell Euro 16/01/2014 331 EUR Buy Euro: Sell Swiss Francs 16/01/2014 6,086 EUR Buy Euro: Sell Swiss Francs 16/01/2014 13,688 EUR Buy Euro: Sell Swiss Francs 16/01/2014 1,581 EUR Buy Euro: Sell Swiss Francs 16/01/2014
(1,423) (76) (726) (40) (3) 174,545 555 1,377 (62,024) (660) (4,746) (665) (8) (413) (1,681) (406) 242,018 918 149 20,978 162,026 (364,297) (362,229) 4,741 60 (3,787) (188,894) (2,028) (27) 1 6 26 (386,733)
0.01 0.01 0.01 (0.02) (0.02) (0.01) (0.02)
Futures Contracts* (145) USD CBT 10 year note 27/03/14 (1,202) EUR Euro-Bobl 06/03/2014 (616) EUR Euro-Bund 06/03/2014 (175) GBP LIFFE Long Gilt 20/03/14 Other Net Assets Total Net Assets * Total commitments EUR (270,637,562). Any differences in the percentage of Net Asset figures are the result of roundings.
23
(316,407) (252,397) 453,593 87,179 1,537,310 38,133 (577,460) 4,017 4,395 (378,778) 5,968 (26,063) 44,101 (17,659) 82,673 (16,071) (12,835) 2,950 (371,549) 100,060 61,046 181,487
(0.02) (0.02) 0.03 0.01 0.09 (0.04) (0.02) 0.01 (0.02) 0.01 0.01
(518,971) 458,724 11,424 50,806 58,934 15,654 8,770 227,631 442,235 (190,372) (10,830) (55,675) 1,132,023
(0.03) 0.03 0.01 0.03 (0.01) 0.07
272,358 1,238,060 968,388 547,210 3,026,015
0.02 0.08 0.06 0.03 0.19
56,893,747 3.49 1,628,137,385 100.00
Euro Corporate Bond Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013 Description of Securities
Purchases
Sales
EUR
EUR
Bonds
Australia MacQuarie Bank 25% 18/09/2018
6,755,456
6,991,400
-
14,196,465
8,184,020
8,617,075
2,095,500 11,300,000
11,851,750 11,437,574
10,482,120 11,985,490
5,717,100 1,976,740
14,326,405 11,712,985
11,837,771
5,857,100
8,129,030
Germany Bundesrepublik Deutschland 3.25% 04/07/2015 Ireland Aquarius Plus 4.25% FRN 02/10/2043 Luxembourg Gazprom Neft 2.933% 26/04/2018 Gazprom Neft 3.984% 26/04/2018 The Netherlands ABN AMRO Bank 7.125% 06/07/2022 Cooperatieve Centrale Raiffeisen-Boerenleenbank 3.875% 25/07/2023 Deutsche Annington 3.125% 25/07/2019 PostNL 5.375% 14/11/2017 United Kingdom Barclays Bank 6.625% 30/03/2022
Portfolio by Country Country United Kingdom The Netherlands United States France Italy Spain Luxembourg Germany Australia Ireland Sweden Finland Mexico Denmark Cayman Islands Czech Republic Jersey Austria United Arab Emirates Belgium Brazil Switzerland Israel
Market Value EUR 326,640,997 232,381,047 225,317,106 222,148,121 75,098,511 70,804,809 61,657,811 56,319,045 55,374,964 38,167,966 35,584,328 27,425,729 24,470,959 20,439,406 17,512,096 13,849,748 13,482,586 12,856,532 10,710,943 7,739,637 7,521,000 6,288,702 5,680,290
% of Net Assets 20.06 14.27 13.84 13.64 4.61 4.35 3.79 3.46 3.40 2.34 2.18 1.68 1.50 1.26 1.08 0.85 0.83 0.79 0.66 0.48 0.46 0.39 0.35
Investment in securities Forward Foreign Exchange Contracts Credit Default Swaps Futures Contracts Other Net Assets Total Net Assets
1,567,472,333 (386,733) 1,132,023 3,026,015 56,893,747 1,628,137,385
96.27 (0.02) 0.07 0.19 3.49 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
24
Euro High Yield Bond Fund Managers’ report for the six months to 31 December 2013
Fund Managers Chris Bullock and Stephen Thariyan Over the period to 31December 2013 the Fund returned 9.6% outperforming the BofA ML European Currency Non-Financial High Yield Constrained Index of 7.44%. High yield markets enjoyed a very strong second half of the year and recovered sharply from weakness in May and June. The US Federal Reserve’s initial decision to defer tapering (reducing) its quantitative easing programme and then the announcement of plans to slow its asset purchases at a gradual pace throughout 2014 supported investor demand for fixed income, in particular the superior yields offered by high yield corporate bonds. This was reflected in new deals being heavily over-subscribed, and a record new issuance calendar with volumes more than double the prior year – a record for the European high yield market. The primary driver of outperformance was stock selection, via both the primary and secondary markets. In particular, positive performance came from telecoms company KPN, which received a bid from A-rated Mexican group America Movil, as well as cable issuers UPC, and Unity Media. The portfolio also benefited from exposure to Royal Bank of Scotland (its bonds rebounded as break-up fears receded), The Co-operative Group (which benefited from restructuring news) and new 10-year and 30-year US-dollar deals from Verizon Communications (to fund the buyout of its joint venture from Vodafone). The Fund grew strongly toward the end of the year, with assets under management up over 50% during the period. However, the relatively small size of the Fund continues to be supportive of its ability to invest in the smaller deals that are becoming common in the high yield market, as banks continue to de-lever their corporate balance sheets. While deal quality varies significantly, many of the better quality issues are under-researched and, in our opinion, priced relatively cheaply, providing the potential for capital upside for those teams that can put in the research analysis. Examples that we would place in this category include new deals from Italian corporates Astaldi and Snai, along with larger deals from CMA and T-Mobile USA. The Fund utilised derivatives within the period, both through the use of government futures (to manage the Fund’s duration position) and through the use of credit derivatives (as a liquid and cost-efficient approach to managing overall credit exposure). The credit derivative positions had a negligible impact on performance over the period. Although high yield credit valuations start the year considerably lower than 12 months ago, the demand for higher yielding bonds remains incredibly strong, given that default rates are at historically low levels. We expect to see opportunities arise from increased mergers and acquisitions activity, as well as seeing more new issuers raising finance in the primary markets. That said, investor positioning is relatively stretched and this will leave prices vulnerable to a sell-off if macro conditions lead to a change in capital flows. Much therefore depends on economic conditions, the resultant policy action, and whether the current status quo can be maintained. Within Europe, tepid growth, low inflation, and accommodative central bank policy suggests that a positive outlook is still warranted at this stage in the credit cycle.
25
Euro High Yield Bond Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (EUR)
For the period from 1 July 2013 to 31 December 2013 (EUR)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
48,871,921 2,927,397 935,491 2,914,067 436,587 ---75,705 ---109,012 159,486 ------56,429,666
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
----
77,020
---1,183,211 ---124 41,857 1,225,192 5,456 96,104 17,192 10,401 25,514 5,680 -------
160,347
3,473,300
155,807 1,258,747 ----------------
Net gain from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised gain on futures contracts Net realised gain on swap contracts Net realised loss on options contracts Net realised currency exchange loss
1,064,845 448,623 (218,144) ---46,354 48,623 ---(134,801)
Net realised gain
1,255,500
Increase in unrealised appreciation on investments Increase in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Increase in unrealised appreciation on futures contracts Increase in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
1,796,423 75,705
Net increase in assets as a result of operations
3,253,311
4,964,874
51,464,792
----
70,232 55,451 ----
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (EUR) Net assets at the beginning of the period Net gain from investment Net realised gain on investment Net realised currency exchange gain Proceeds from shares issued
33,509,330 1,064,845 325,456 (134,801) 31,971,171
Payments for shares redeemed Net equalisation received (note 13) Increase in unrealised appreciation on investments Dividends paid (note 14) Net assets at the end of the period
26
(17,507,823) 360,361 1,997,811 (121,558) 51,464,792
Euro High Yield Bond Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 A2 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
9,046.81 92,817.23 (4,038.95) 97,825.09
A2 HCHF (CHF) 640.00 7,040.00 ---7,680.00
A2 HUSD (USD) 63,445.02 23,031.34 (19,633.29) 66,843.07
A2 HCHF (CHF) 7,680.00 113.09
A2 HUSD (USD) 66,843.07 115.04
A1
I2
21,560.28 23,307.26 (1,030.44) 43,837.10
146,898.59 138,074.54 (140,978.53) 143,994.60
A1
I2
43,837.10 107.80
143,994.60 116.31
I2 HUSD (USD) ---17,311.55 ---17,311.55
Z2 HGBP (GBP) 76,829.67 1,744.34 ---78,574.01
I2 HUSD (USD) 17,311.55 100.30
Z2 HGBP (GBP) 78,574.01 117.83
Net Asset Value Per Share As at 31 December 2013 A2 Number of shares outstanding: Equivalent to a net asset value per share of:
97,825.09 115.75
The accompanying notes form an integral part of these financial statements.
27
Euro High Yield Bond Fund
Portfolio as at 31 December 2013 Number of Securities
Market % of value Net EUR Assets
Isle of Man 90,000 USD AngloGold Ashanti Holdings 8.5% 30/07/2020
Australia 600,000 EUR Santos Finance 8.25% 22/09/2070
675,844
1.31
Austria 250,000 EUR Sappi Papier Holding 6.625% 15/04/2018
266,925
0.52
Italy 460,000 450,000 350,000 500,000 200,000 450,000 250,000 900,000
EUR EUR GBP EUR EUR EUR EUR GBP
Belgium 200,000 EUR Barry Callebaut Services 5.625% 15/06/2021
222,897
0.43
Bermuda 550,000 USD Seadrill 6.125% 15/09/2020
400,498
0.78
Brazil 700,000
472,862
0.92
Jersey 460,000 600,000 300,000 100,000 434,000
GBP EUR EUR GBP GBP
400,000
0.78
347,800 434,827 161,498 944,125
0.68 0.84 0.31 1.83
273,643
0.53
333,500 455,605 789,105
0.65 0.89 1.54
418,671 729,972 453,640 285,703 230,091 667,587 241,456 547,148 427,990 4,002,258
0.81 1.42 0.88 0.56 0.45 1.30 0.47 1.06 0.83 7.78
248,655 716,215 369,722 432,299 200,000
0.48 1.39 0.72 0.84 0.39
516,555
1.00
2,483,446
4.82
692,312 240,197 183,164 748,337 337,663 218,003 311,703 2,731,379
1.35 0.47 0.36 1.45 0.66 0.42 0.61 5.32
Bonds Transferable securities and money market instruments admitted to an official exchange listing
USD Oi 5.75% 10/02/2022
Bulgaria 400,000 EUR Vivacom 6.625% 15/11/2018 Cayman Island 290,000 GBP Brakes Capital 7.125% 15/12/2018 350,000 GBP Petrobras International Finance 6.25% 14/12/2026 150,000 EUR UPCB Finance II 6.375% 01/07/2020 Czech Republic 250,000 EUR EP Energy AS 5.875% 01/11/2019 Finland 330,000 EUR Citycon OYJ 3.75% 24/06/2020 400,000 EUR Nokia OYJ 6.75% 04/02/2019 France 405,000 740,000 458,000 200,000 200,000 632,000 300,000 533,000 400,000
EUR EUR EUR GBP EUR EUR USD EUR EUR
Germany 220,000 670,000 330,000 400,000 200,000
EUR EUR EUR EUR EUR
Cegedim 6.75% 01/04/2020 CMA CGM 8.75% 15/12/2018 CMA CGM 8.875% 15/04/2019 Lafarge 10% 30/05/2017 Lafarge 6.625% 29/11/2018 Oberthur Technologies Holding S 9.25% 30/04/2020 Rhodia 6.875% 15/09/2020 Solvay Finance 4.199% Perpetual Wendel 4.875% 26/05/2016
Franz Haniel & Cie GmbH 7.125% 01/02/2017 Heidelberger Druckmaschinen 9.25% 15/04/2018 KraussMaffei Group GmbH 8.75% 15/12/2020 Rheinmetall 4% 22/09/2017 Unitymedia Hessen /Unitymedia NRW GmbH 5.125% 21/01/2023 500,000 EUR Unitymedia Hessen/ Unitymedia NRW GmbH 5.5% 15/09/2022
Ireland 650,000 240,000 173,000 700,000 310,000 200,000 300,000
EUR EUR EUR EUR EUR EUR EUR
Ardagh Glass Finance 8.75% 01/02/2020 Ardagh Packaging Finance 5% 15/11/2022 Baggot Securities 10.24% Perpetual Eircom Finance 9.25% 15/05/2020 Nara Cable Funding 8.875% 01/12/2018 Smurfit Kappa Acquisitions 5.125% 15/09/2018 Spring Finance II 9.5% 01/06/2019
Luxembourg 500,000 EUR 400,000 GBP 350,000 EUR 340,000 EUR 280,000 EUR 275,000 EUR 250,000 EUR 200,000 EUR 400,000 EUR 235,000 150,000 250,000 375,000 300,000 250,000 400,000 265,000 400,000
EUR EUR EUR EUR USD EUR EUR EUR EUR
67,831
0.13
Astaldi 7.125% 01/12/2020 Cerved Group 8% 15/01/2021 Enel 7.75% 10/09/2075 Intesa Sanpaolo 8.047% Perpetual Sisal Holding Istituto di Pamento 7.25% 30/09/2017 Snai 12% 15/12/2018 TeamSystem Holding 7.375% 15/05/2020 Telecom Italia 7.375% 15/12/2017
493,596 478,301 444,280 529,790 205,301 463,687 258,752 1,191,574 4,065,281
0.96 0.93 0.86 1.03 0.40 0.90 0.50 2.32 7.90
AA Bond 9.5% 31/07/2043 Atrium European Real Estate 4% 20/04/2020 Avis Budget Finance 6% 01/03/2021 Galaxy Finco 7.875% 15/11/2021 HBOS Sterling Finance Jersey 7.881% Perpetual
608,706 598,118 320,253 120,180 561,522 2,208,779
1.18 1.16 0.62 0.23 1.09 4.28
548,063 513,750 228,169 368,811 309,280 284,338 272,506 212,000 519,000
1.06 1.00 0.44 0.72 0.60 0.55 0.53 0.41 1.01
241,464 164,138 261,250 396,284 235,341 273,353 432,173 271,186 424,000 5,955,106
0.47 0.32 0.51 0.77 0.46 0.53 0.84 0.53 0.82 11.57
365,750
0.71
333,007 143,306 406,941 883,254
0.65 0.28 0.79 1.72
630,208 535,902 1,166,110
1.22 1.04 2.26
153,851
0.30
Altice Finco 9% 15/06/2023 Cabot Financial Luxembourg 8.375% 01/08/2020 Far East Capital Ltd 8.75% 02/05/2020 Fiat Finance & Trade 6.75% 14/10/2019 Findus Bondco 9.125% 01/07/2018 GCS Holdco Finance I 6.5% 15/11/2018 Geo Travel Finance 0.375% 01/05/2019 Gestamp Funding Luxembourg 5.875% 31/05/2020 HeidelbergCement Finance Luxembourg 95% 15/12/2018 INEOS Group Holdings 6.5% 15/08/2018 KION Finance 6.75% 15/02/2020 Mobile Challenger Intermediate Group 8.75% 15/03/2019 Servus Luxembourg Holding 7.75% 15/06/2018 Severstal OAO Via Steel Capital 6.7% 25/10/2017 Sunrise Communications Holdings 8.5% 31/12/2018 Telenet Finance Luxembourg 6.375% 15/11/2020 Trafigura Funding 5.25% 29/11/2018 Wind Acquisition Finance 7.375% 15/02/2018
Mexico 350,000 EUR America Movil SAB de CV 5.125% 06/09/2073 Spain 300,000 EUR Ence Energia y Celulosa S.A 7.25% 15/02/2020 135,000 EUR NH Hoteles 6.875% 15/11/2019 370,000 EUR Obrascon Huarte Lain 7.625% 15/03/2020 Sweden 550,000 EUR Ciech Group Financing 9.5% 30/11/2019 510,000 EUR Unils Subholding 8.5% 15/07/2018 Switzerland 200,000 USD Credit Suisse Group 7.5% Perpetual
28
Euro High Yield Bond Fund
Portfolio as at 31 December 2013 (continued) The Netherlands 220,000 EUR 350,000 EUR 367,000 EUR 600,000 EUR 400,000 EUR 900,000 GBP 200,000 USD 200,000 260,000 398,000 200,000 300,000 250,000 400,000
EUR EUR EUR GBP EUR EUR EUR
Adria Bidco 7.875% 15/11/2020 Bite Finance International FRN 15/02/2018 Cable Communications Systems 7.5% 01/11/2020 EDP Finance 4.125% 20/01/2021 Hertz Holdings Netherlands 4.375% 15/01/2019 Koninklijke KPN 6.875% 14/03/2073 LBC Tank Terminals Holding Netherlands 6.875% 15/05/2023 OI European Group 4.875% 31/03/2021 Schaeffler Finance 4.25% 15/05/2018 Schaeffler Holding Finance 6.875% 15/08/2018 Telefonica Europe 6.75% Perpetual Telefonica Europe 7.625% Perpetual UPC Holding 6.375% 15/09/2022 UPC Holding 6.75% 15/03/2023
United Kingdom 250,000 GBP 205,000 GBP 140,000 GBP 295,000 GBP 175,000 GBP 250,000 GBP 200,000 GBP 190,000 GBP 425,000 GBP 600,000 GBP 500,000 GBP 400,000 GBP 200,000 EUR 150,000 GBP 385,000 GBP 700,000 GBP 200,000 USD 185,000 GBP 150,000 GBP 390,000 GBP 340,000 GBP 320,000 GBP 500,000 GBP 235,000 GBP 250,000 GBP 400,000 EUR 200,000 GBP 250,000 GBP 800,000 EUR 140,000 USD 800,000 GBP 245,000 EUR 600,000 GBP
AA PIK Co LTD 9.5% 07/11/2019 Arqiva Broadcast Finance 9.5% 31/03/2020 Arrow Global Finance 7.875% 01/03/2020 Bakkavor Finance 2 8.75% 15/06/2020 Bond Mission Critical Services FRN 01/05/2019 Co-operative Group Holdings 2011 6.875% 08/07/2020 Co-operative Group Holdings 2011 7.5% 08/07/2026 DFS Furniture Holdings 7.625% 15/08/2018 EDU UK BondCo 8.875% 15/09/2018 Firstgroup 5.25% 29/11/2022 Gala Electric Casinos 11.5% 01/06/2019 GKN Holdings 5.375% 19/09/2022 HBOS 5.374% 30/06/2021 House of Fraser Funding 8.875% 15/08/2018 IDH Finance 8.5% 01/06/2019 Investec Bank 9.625% 17/02/2022 Juar Land Rover Automotive 4.125% 15/12/2018 Kelda Finance No 3 5.75% 17/02/2020 Lowell Group Financing 10.75% 01/04/2019 Nationwide Building Society 10.25% Perpetual NGG Finance 5.625% 18/06/2073 Odeon & UCI Finco 9% 01/08/2018 Old Mutual 8% 03/06/2021 Phosphorus Holdco 10% 01/04/2019 Provident Financial 8% 23/10/2019 Royal Bank of Scotland 4.625% 22/09/2021 Scottish Widows 5.5% 16/06/2023 Southern Water Greensands Financing 8.5% 15/04/2019 Thomas Cook Finance 7.75% 15/06/2020 Tullow Oil 6% 01/11/2020 Virgin Media Secured Finance 6% 15/04/2021 Vougeot Bidco FRN 15/07/2020 William Hill 4.25% 05/06/2020
United States 400,000 USD 600,000 EUR 150,000 EUR 150,000 EUR 54,000 USD 310,000 USD
CenturyLink Inc 5.8% 15/03/2022 Huntsman International 5.125% 15/04/2021 Jarden Corp 7.5% 15/01/2020 Rain CII Carbon 8.5% 15/01/2021 Sprint Corp 7.125% 15/06/2024 Verizon Communications 5.15% 15/09/2023
Investment in Securities
Derivative Instruments
222,556 360,675 378,010 607,106 401,628 1,118,085 151,810
0.43 0.70 0.73 1.18 0.78 2.17 0.29
210,500 271,050 427,358 246,372 332,625 258,267 411,988 5,398,030
0.41 0.53 0.83 0.48 0.65 0.50 0.80 10.48
306,248 273,558 179,005 387,471 203,607 309,248 247,000 244,609 532,570 734,827 661,242 501,403 208,924 197,345 471,023 929,993 146,725 229,111 205,098 536,953 412,806 389,588 641,078 274,483 332,436 402,165 241,275 335,258 872,900 103,725 991,033 250,491 701,710 13,454,908
0.60 0.53 0.35 0.75 0.40 0.60 0.48 0.48 1.03 1.43 1.28 0.97 0.41 0.38 0.92 1.81 0.29 0.45 0.40 1.04 0.80 0.76 1.25 0.53 0.65 0.78 0.47 0.65 1.70 0.20 1.93 0.49 1.36 26.17
287,639 604,042 162,570 152,998 39,812 242,978 1,490,039
0.56 1.17 0.32 0.30 0.08 0.47 2.90
48,871,921
94.98
Forward Foreign Exchange Contracts 75,962 EUR Buy Euro: Sell Sterling 16/01/2014 99,835 EUR Buy Euro: Sell US Dollar 16/01/2014 1,248,962 EUR Buy Euro: Sell US Dollar 16/01/2014 9,262,732 GBP Buy Sterling: Sell Euro 16/01/2014 116,756 CHF Buy Swiss Francs: Sell Euro 16/01/2014 1,277 CHF Buy Swiss Francs: Sell Euro 16/01/2014 280,913 CHF Buy Swiss Francs: Sell Euro 16/01/2014 73,111 CHF Buy Swiss Francs: Sell Euro 16/01/2014 393,553 CHF Buy Swiss Francs: Sell Euro 16/01/2014 8,858,398 USD Buy US Dollar: Sell Euro 16/01/2014 649,991 USD Buy US Dollar: Sell Euro 16/01/2014 2,500 USD Buy US Dollar: Sell Euro 16/01/2014 1,731,223 USD Buy US Dollar: Sell Euro 16/01/2014 2,760,445 EUR Buy Euro: Sell US Dollar 20/03/2014 17,417,493 EUR Buy Euro: Sell Sterling 20/03/2014 Futures Contracts* (4) USD CBT US 10 year note 20/03/14 (26) EUR Euro Bobl 06/03/14 (8) EUR Euro Bund 06/03/14 (30) GBP LIFFE Long Gilt 27/03/14 Credit Default Swaps 500,000 EUR Barclays Capital Fiat Industrial Finance 5% 20/12/2018 500,000 EUR Barclays Capital Old Mutual 0% 20/12/2018 150,000 EUR Credit Suisse Cable Wireless 5% 20/09/2018 350,000 EUR Credit Suisse Cable Wireless 5% 20/12/2018 300,000 EUR Credit Suisse Smurfit Kappa 5% 20/09/2018 50,000 EUR Goldman Sachs Brisa Conces 5% 20/03/2019 500,000 USD Goldman Sachs Heinz 0% 20/12/2018 250,000 EUR Goldman Sachs Itraxx 1% 20/06/2018 300,000 EUR Goldman Sachs Itraxx 1% 20/06/2018 300,000 EUR Goldman Sachs Lufthansa 0% 20/09/2018 250,000 EUR Goldman Sachs Wind Acquisition Finance 5% 20/12/2018 500,000 EUR Merill Lynch Arcelormitta 1% 20/12/2018 250,000 EUR Merill Lynch Lufthansa 0% 20/09/2018 50,000 EUR Merrill Lynch Brisa Conces 5% 20/03/2019 50,000 EUR Merrill Lynch Brisa Conces 5% 20/03/2019 50,000 EUR Merrill Lynch Brisa Conces 5% 20/03/2019 Other Net Assets Total Net Assets * Total Commitment EUR (1,930,133).
29
(1,164) 146 (8,534) 167,824 (614) (7) (1,016) (135) 29 (9,433) (3,000) (15) 8,534 8,563 (85,473) 75,705
0.00 0.00 (0.02) 0.33 0.00 0.00 0.00 0.00 0.00 (0.02) (0.01) 0.00 0.02 0.02 (0.17) 0.15
7,514 26,780 12,000 62,718 109,012
0.01 0.05 0.02 0.12 0.20
40,139 3,167 18,138 42,076 38,338 2,084 4,002 4,125 4,950 239 22,384
0.08 0.01 0.04 0.08 0.07 0.00 0.01 0.01 0.01 0.00 0.04
(26,606) 199 2,084 2,084 2,083 159,486
(0.05) 0.00 0.00 0.00 0.00 0.30
2,248,668 4.37 51,464,792 100.00
Euro High Yield Bond Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013 Description of Securities
Portfolio by Country Country
Purchases
Sales
EUR
EUR
France Societe Generale 8.25% 29/11/2049
528,023
525,245
Germany Continental 3% 16/07/2018 Rheinmetall 4% 22/09/2017
563,315 845,124
583,241 424,300
Ireland Eircom Finance 9.25% 15/05/2020
684,750
207,500
Italy Enel 7.75% 10/09/2075 Telecom Italia 7.375% 15/12/2017
583,390 1,106,893
181,010 129,805
Luxemborg Altice Finco 9% 15/06/2023
544,850
338,224
Portugal Galp Energia 4.125% 25/01/2019
497,215
508,250
United Kingdom EDU UK BondCo 8.875% 15/09/2018 Investec Bank 9.625% 17/02/2022
630,939 925,103
117,543 -
Bonds
United Kingdom Luxembourg The Netherlands Italy France Ireland Germany Jersey United States Sweden Cayman Islands Spain Finland Australia Brazil Bermuda Bulgaria Mexico Czech Republic Austria Belgium Switzerland Isle of Man Investment in Securities Forward Foreign Exchange Contracts Credit Default Swaps Futures Contracts Other Net Assets Total Net Assets
Market Value EUR 13,454,908 5,955,106 5,398,030 4,065,281 4,002,258 2,731,379 2,483,446 2,208,779 1,490,039 1,166,110 944,125 883,254 789,105 675,844 472,862 400,498 400,000 365,750 273,643 266,925 222,897 153,851 67,831
% of Net Assets 26.17 11.57 10.48 7.90 7.78 5.32 4.82 4.28 2.90 2.26 1.83 1.72 1.54 1.31 0.92 0.78 0.78 0.71 0.53 0.52 0.43 0.30 0.13
48,871,921 75,705 159,486 109,012 2,248,668 51,464,792
94.98 0.15 0.30 0.20 4.37 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
30
Global High Yield Bond Fund Managers’ report from 19 November 2013 to 31 December 2013
Fund Managers Chris Bullock and Kevin Loome The Fund launched on 19 November 2013 Outlook As we enter 2014, we are still seeing strong demand for global high yield, and we expect default rates to remain low. Although valuations are less compelling after the spread tightening experienced throughout 2013, the global high yield market appears only slightly rich compared with long-term averages. We expect mergers and acquisitions to pick up throughout 2014, as companies are enjoying easy access to new issue markets. Furthermore, we expect the composition of new issuance to migrate from pure refinancing toward more aggressive behaviour such as leveraged buyouts and leveraged dividends. Given the low absolute yields and somewhat stretched valuations across global high yield, our biggest risk is a macro-induced sell-off. Continued modest growth across the globe, coupled with low inflation and accommodative central bank policy, suggests a continued positive outlook at this point in the credit cycle. Within this environment, we aim to capture returns above the market through credit selection and relative value trades in both the primary and secondary markets.
31
Global High Yield Bond Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (USD)
For the period from 19 November 2013 to 31 December 2013 (USD)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
19,832,664 419,754 338,686 7,556 245,410 ---------27,912 ---------20,871,982
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
------243,210 22,986 ---46,046 -------
Net gain from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised gain on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange loss
7,617 ----
---21,968 66 703 ---249 -------
22,986 127,022 18,262 (87,072) ---1,074 ------(5,518)
319,859 Net realised gain
Net assets at the end of the period
---150,007 ---1 ---150,008
53,768
Increase in unrealised appreciation on investments Increase in unrealised depreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Increase in unrealised appreciation on futures contracts Increase in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
330,147 (46,046)
20,552,123
Net increase in assets as a result of operations
370,599
---127,022 (67,736) (5,518) 20,181,254
Payments for shares redeemed Net equalisation received (note 13) Increase in unrealised appreciation on investments Dividends received (note 14) Net assets at the end of the period
----
27,900 4,830 ----
Statement of Changes in Net Assets For the period from 19 November 2013 to 31 December 2013 (USD) Net assets at the beginning of the period Net gain from investment Net realised loss on investment Net realised currency exchange loss Proceeds from shares issued
32
---270 316,831 ---20,552,123
Global High Yield Bond Fund
Share Transactions For the period from 19 November 2013 to 31 December 2013 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A2 ---470.06 ---470.06
I2 ---185,624.47 ---185,624.47
A2 (EUR) ---1,640.50 ---1,640.50
I2 (EUR) ---10,000.00 ---10,000.00
A2 470.06 101.63
I2 185,624.47 101.67
A2 (EUR) 1,640.50 101.63
I2 (EUR) 10,000.00 101.67
Net Asset Value Per Share As at 31 December 2013 Number of shares outstanding: Equivalent to a net asset value per share of: The accompanying notes form an integral part of these financial statements.
33
Global High Yield Bond Fund
Portfolio as at 31 December 2013 Number of Securities
Market % of value Net USD Assets
The Netherlands 150,000 EUR Bite Finance International FRN 15/02/2018 130,000 EUR Cable Communications Systems 7.5% 01/11/2020 100,000 GBP Telefonica Europe 6.75% Perpetual
Bonds Transferable securities and money market instruments admitted to an official exchange listing
Bermuda 200,000 USD Digicel 8.25% 30/09/2020 200,000 USD Seadrill 6.125% 15/09/2020
208,500 200,500 409,000
1.01 0.98 1.99
Brazil 300,000 USD Oi 5.75% 10/02/2022
279,000
1.36
Canada 200,000 USD Garda World Security 7.25% 15/11/2021
202,500
0.99
Cayman Islands 160,000 GBP Brakes Capital 7.125% 15/12/2018
264,499
1.29
Czech Republic 100,000 EUR EP Energy AS 5.875% 01/11/2019
150,762
0.73
192,220 400,814 136,424 196,905 254,610 1,180,973
0.94 1.95 0.66 0.96 1.24 5.75
149,445 368,013 517,458
0.73 1.79 2.52
Bakkavor Finance 8.75% 15/06/2020 Co-Operative Group 5.625% 08/07/2020 EDU UK BondCo 8.875% 15/09/2018 Gala Electric Casinos 11.5% 01/06/2019 GKN Holdings 5.375% 19/09/2022 Nationwide Building Society 10.25% Perpetual Odeon & UCI Finco PLC 9% 01/08/2018 Thomas Cook Finance 7.75% 15/06/2020 Vedanta Resources 9.5% 18/07/2018 Virgin Media Secured Finance 6% 15/04/2021 William Hill 4.25% 05/06/2020
181,046 221,657 207,272 200,519 224,617 313,132 201,376 150,287 111,250 256,131 161,205 2,228,492
0.88 1.08 1.01 0.98 1.09 1.52 0.98 0.73 0.54 1.25 0.78 10.84
Ally Financial 7% Perpetual Alta Mesa Finance Services 9.625% 15/10/2018 Amkor Technology 6.625% 01/06/2021 Ancestry.com 9.625% 15/10/2018 BMC Software Finance 8.125% 15/07/2021 Caesars Entertainment Resort Property 8% 01/10/2020 Calumet Finance 7.625% 15/01/2022 Chassix 10% 15/12/2018 Chesapeake Energy 5.75% 15/03/2023 CIT 5.375% 15/05/2020 Claire's Stores 7.75% 01/06/2020 Clear Channel Communications 9% 01/03/2021 Clear Channel Worldwide 7.625% 15/03/2020 Coeur Mining 7.875% 01/02/2021 Consolidated Container Capital 10.125% 15/07/2020 Crestview 10% 01/09/2021 DISH DBS 6.75% 01/06/2021 Energy XXI Gulf Coast 7.5% 15/12/2021 Foresight Energy 7.875% 15/08/2021 Gardner Denver 6.875% 15/08/2021 HD Supply 7.5% 15/07/2020 Headwaters 7.25% 15/01/2019 Hockey 7.875% 01/10/2021 Hot Topic 9.25% 15/06/2021 ILFC E-Capital Trust II 6.25% 21/12/2065 JBS USA Finance 7.25% 01/06/2021 JLC Finance 6.875% 01/06/2020 Landry's 9.375% 01/05/2020 MPH Intermediate Holding 8.375% 01/08/2018 NCR Escrow 6.375% 15/12/2023 Nuance Communications 5.375% 15/08/2020 Onex USI Acquisition 7.75% 15/01/2021 Opal Acquisition 8.875% 15/12/2021 Pinnacle Operating 9% 15/11/2020 Pittsburgh Glass Works 8% 15/11/2018 Plastipak 6.5% 01/10/2021 RCN Capital 8.5% 15/08/2020 Reynold 9.875% 15/08/2019 Rite Aid 6.75% 15/06/2021 Sanchez Energy 7.75% 15/06/2021 Snoqualmie Entertainment Authority 9.125% 01/02/2015 Sprint 7.125% 15/06/2024 Swift Energy 7.875% 01/03/2022 Titan International 6.875% 01/10/2020 TMS International 7.625% 15/10/2021 Univision Communications 8.5% 15/05/2021 Walter Investment Management 7.875% 15/12/2021 Wok Acquisition 10.25% 30/06/2020
288,675 161,250 208,500 208,000 155,250 312,000 167,475 225,000 258,750 213,500 187,000 153,000 158,438 204,000 213,000 161,250 159,750 209,500 206,500 200,500 216,500 258,125 207,000 210,500 190,000 209,250 199,000 219,000 208,500 223,450 196,500 205,000 224,438 213,000 211,500 208,000 203,000 222,750 210,500 205,500 198,375 203,000 198,000 209,000 214,000 222,250 218,763 218,250 9,974,489
1.40 0.78 1.01 1.01 0.76 1.52 0.81 1.09 1.26 1.04 0.91 0.74 0.77 0.99 1.04 0.78 0.78 1.02 1.00 0.98 1.05 1.26 1.01 1.02 0.92 1.02 0.97 1.07 1.01 1.09 0.96 1.00 1.09 1.04 1.03 1.01 0.99 1.08 1.02 1.00 0.97 0.99 0.96 1.02 1.04 1.08 1.06 1.06 48.53
19,832,664
96.50
Ireland 100,000 100,000 170,000 200,000
EUR EUR EUR USD
Ardagh Glass Finance 8.75% 01/02/2020 Baggot Securities 10.24% Perpetual Eircom Finance 9.25% 15/05/2020 Nara Cable Funding 8.875% 01/12/2018
146,702 145,828 250,319 216,000 758,849
0.71 0.71 1.22 1.05 3.69
Italy 100,000 130,000 150,000 140,000 100,000
EUR EUR GBP EUR GBP
Astaldi 7.125% 01/12/2020 Cerved 8% 15/01/2021 Enel 7.75% perpetual Snai 12% 15/12/2018 Telecom Italia 7.375% 15/12/2017
147,795 190,317 262,453 198,695 182,495 981,755
0.72 0.93 1.28 0.97 0.89 4.78
237,118
1.15
301,951 265,555 215,000 145,553 198,750 148,814 1,275,623
1.47 1.29 1.05 0.71 0.97 0.72 6.21
221,000 152,890 219,315 593,205
1.08 0.74 1.07 2.89
211,810
1.03
Investment in Securities
EUR EUR EUR GBP EUR
Cegedim 6.75% 01/04/2020 CMA CGM 8.75% 15/12/2018 CMA CGM 8.875% 15/04/2019 Lafarge 10% 30/05/2017 Oberthur Technologies 9.25% 30/04/2020
Germany 100,000 EUR Faenza 8.25% 15/08/2021 250,000 EUR Heidelberger Druckmaschinen 9.25% 15/04/2018
Jersey 130,000 GBP AA Bond 9.5% 31/07/2019 Luxembourg 200,000 GBP 150,000 EUR 200,000 USD 100,000 EUR 200,000 USD 100,000 EUR
Altice 9% 15/06/2023 Cabot Financial Luxembourg 8.375% 01/08/2020 Intelt Luxembourg 7.75% 01/06/2021 Servus Luxembourg 7.75% 15/06/2018 Severstal Steel Capital 4.45% 19/03/2018 Telenet Finance Luxembourg 6.375% 15/11/2020
Spain 200,000 USD Cemex Espana Luxembourg 9.25% 12/05/2020 100,000 EUR Groupo Empresarial Ence 7.25% 15/02/2020 150,000 EUR NH Hoteles 6.875% 15/11/2019 Switzerland 200,000 USD Credit Suisse 7.5% Perpetual
34
1.04 0.90 0.83 2.76
United Kingdom 100,000 GBP 130,000 GBP 120,000 GBP 110,000 GBP 130,000 GBP 165,000 GBP 120,000 GBP 100,000 EUR 100,000 USD 150,000 GBP 100,000 GBP United States 300 USD 150,000 USD 200,000 USD 200,000 USD 150,000 USD 300,000 USD 165,000 USD 225,000 USD 250,000 USD 200,000 USD 200,000 USD 150,000 USD 150,000 USD 200,000 USD 200,000 USD 150,000 USD 150,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 250,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 218,000 USD 200,000 USD 200,000 USD 225,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 200,000 USD 215,000 USD 200,000 USD
France 135,000 295,000 100,000 100,000 175,000
212,905 184,428 169,798 567,131
Global High Yield Bond Fund
Portfolio as at 31 December 2013 (continued) Forward Foreign Exchange Contracts 107,003 EUR Buy Euro: Sell US Dollar 20/03/2014 59,038 EUR Buy Euro: Sell US Dollar 20/03/2014 142,034 GBP Buy GBP: Sell US Dollar 20/03/2014 2,846,232 USD Buy US Dollar: Sell Euro 20/03/2014 482,152 USD Buy US Dollar: Sell Euro 20/03/2014 2,343,004 USD Buy US Dollar: Sell GBP 20/03/2014 165,908 EUR Buy Euro: Sell US Dollar 16/01/2014 1,011,484 EUR Buy Euro: Sell US Dollar 16/01/2014 Credit Default Swaps 200,000 EUR FIAT 5% 20/12/2018 100,000 EUR Portugal Telecom 5% EUR 20/03/2019 50,000 EUR Portugal Telecom 5% EUR 20/03/2019 50,000 EUR Portugal Telecom 5% EUR 20/03/2019 Future Contracts* (4) EUR EUX Euro Bond 06/03/2014 (6) GBP LIFFE Long Gilt 27/03/2014 Other Net Assets Total Net Assets
Top ten changes in the securities portfolio from 19 November 2013 to 31 December 2013
287 464 3,806 (14,228) (1,439) (38,029) 414 2,679 (46,046)
0.00 0.00 0.02 (0.07) (0.01) (0.19) 0.00 0.01 (0.22)
22,114 (14,865) (7,433) (7,433) (7,617)
0.11 (0.07) (0.04) (0.04) (0.04)
5,675 22,237 27,912
0.03 0.11 0.14
Description of Securities
Purchases
Sales
USD
USD
218,000 220,000 461,100 271,500 225,000 227,700 436,000 435,000 435,000 320,000
215,500 222,475 463,275 281,685 228,375 229,900 190,650 446,120 221,375 321,200
Bonds
United States Algeco Scotsman Arch Coal 8% 15/01/2019 Ashtead 6.5% 15/07/2022 Barclays Bank FRN Perpetual Bev Pack Holdings 6% 15/06/2017 First Data 11.75% 15/08/2021 Headwaters 7.25% 15/01/2019 Salix Pharmaceuticals 6% 15/01/2021 Walter Investment Management 7.875% 15/12/2021 Wesco Distribution 6.5% 15/07/2022
Portfolio by Country Country United States United Kingdom Luxembourg France Italy Ireland Spain The Netherlands Germany Bermuda Brazil Cayman Islands Jersey Switzerland Canada Czech Republic
745,210 3.63 20,552,123 100.00
*Total commitments USD (1,743,391). Any differences in the percentage of Net Asset figures are the result of roundings.
Investment in Securities Forward Foreign Exchange Contracts Credit Default Swaps Futures Contracts Net Other Assets Net Asset Value
Market Value USD 9,974,489 2,228,492 1,275,623 1,180,973 981,755 758,849 593,205 567,131 517,458 409,000 279,000 264,499 237,118 211,810 202,500 150,762
% of Net Assets 48.53 10.84 6.21 5.75 4.78 3.69 2.89 2.76 2.52 1.99 1.36 1.29 1.15 1.03 0.99 0.73
19,832,664 (46,046) (7,617) 27,912 745,210 20,552,123
96.50 (0.22) (0.04) 0.14 3.63 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
35
Total Return Bond Fund Managers’ report for the six months to 31 December 2013
Fund Managers Joanna Murdock and Kevin Adams The Fund returned 1.1% over the period to 31 December 2013. Corporate bonds performed well, with high yield corporate bonds particularly strong. As economic data improved and investor optimism remained buoyant, markets shrugged off December’s announcement by the US Federal Reserve (the Fed) that it would begin to taper its quantitative easing (QE) programme. The allocation to corporate bonds was the largest contributor to returns. High yield corporate bond markets were very strong and the Fund’s exposure to this area added significant value, encouraged by the supportive economic backdrop, very low default levels, and strong investor demand. While investment-grade (higher quality and therefore lower yielding) and financial-sector corporate bonds also performed well, they failed to keep pace with lower quality bond issues in an environment dominated by a hunt for yield. During the period, we increased our holdings of high yield bonds to reflect the positive outlook and to partly replace the secured loans exposure that was removed due to changes in the regulatory setting. As credit markets rallied in the third quarter, we reduced the size of our credit derivative iTraxx Main, which we had held to reduce volatility in the portfolio, giving the Fund further exposure to the corporate bond markets. In developed market government bonds, overall exposure to fixed rate securities remained very low. Consequently, the poor performance of the sector did not materially impact performance. Inflation-linked holdings detracted slightly from performance as inflation pressures in the US were subdued. The ongoing weakness in emerging market government bonds had a small negative impact, although most of our exposure was to higher quality countries such as Mexico. Our allocation to secured credit was beneficial, with both secured loans and asset-backed securities performing well. New regulatory requirements that came into force during the period required us to trim our secured loans exposure to zero towards the end of the year. In currencies, our short euro and yen positions relative to the US dollar performed well. The improving US economy and the QE tapering announcement both supported the dollar over the period.
36
Total Return Bond Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (EUR)
For the period from 1 July 2013 to 31 December 2013 (EUR)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
520,313,839 78,792,889 5,239,499 168,300 ------11,168,061 ---1,238,755 5,168,245 1,494,760 ---623,584,348
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
10 2,750 363,181 159,900 4,651 ----------
---10,094,298 ---16,559 (767,229) 9,343,628 84,996 18,046 4,906 93,516 56,905 31,960 -------
290,329
Net gain from investment Net realised loss on investment Net realised gain on forward foreign exchange contracts Net realised loss on contracts for difference Net realised gain on futures contracts Net realised loss on swap contracts Net realised gain on options contracts Net realised currency exchange loss
9,053,299 (7,246,462) 10,616,951 ---2,081,896 (878,573) 299,604 (1,384,564)
Net realised gain
12,542,151
Increase in unrealised appreciation on investments Increase in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Increase in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
7,670,993 12,302,691
623,053,856
Net increase in assets as a result of operations
28,997,393
584,294,624 9,053,299 4,873,416 (1,384,564) 11,863,115
Payments for shares redeemed Net equalisation received (note 13) Increase in unrealised appreciation on investments Dividends paid (note 14) Net assets at the end of the period
-------
530,492
----
(476,267) 2,739,277 (5,781,452)
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (EUR) Net assets at the beginning of the period Net gain from investment Net realised gain on investment Net realised currency exchange loss Proceeds from shares issued
37
(2,146,912) 50,654 16,455,242 (5,018) 623,053,856
Total Return Bond Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 A2 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
9,585.06 303.66 (1,152.82) 8,735.90
A2 HUSD (USD) 38,201.20 1,900.19 (13,258.45) 26,842.94
A1
X2
X1
4,599.54 750.10 ---5,349.64
30.29 ------30.29
26.74 ------26.74
A1
X2
X1
5,349.64 97.73
30.29 98.67
26.74 97.62
Z HGBP (GBP) 4,635,724.60 91,703.71 (7,507.11) 4,719,921.20
Net Asset Value Per Share As at 31 December 2013 A2 Number of shares outstanding: Equivalent to a net asset value per share of:
8,735.90 105.85
The accompanying notes form an integral part of these financial statements.
38
A2 HUSD (USD) 26,842.94 106.67
Z HGBP (GBP) 4,719,921.20 109.35
Total Return Bond Fund
Portfolio as at 31 December 2013 Number of Securities
Market value EUR
% of Net Assets
10,751,147 16,536,701 503,755 165,526 111,056 1,511,898
1.72 2.65 0.08 0.03 0.02 0.24
795,367 1,611,343 1,607,216 666,585 304,904 1,576,969 486,326 355,346 140,362 37,124,501
0.13 0.26 0.26 0.11 0.05 0.25 0.08 0.06 0.02 5.96
195,287 719,099 914,386
0.03 0.12 0.15
504,004 245,196 780,140 1,529,340
0.08 0.04 0.13 0.25
700,940 728,178 1,429,118
0.11 0.12 0.23
Brazil 1,700,000 USD Oi 5.75% 10/02/2022
1,148,379
0.18
Bulgaria 1,600,000 EUR Vivacom 6.625% 15/11/2018
1,600,000
0.26
Bombardier 6.125% 15/05/2021 Canadian Government Bond 1.5% 01/12/2044 Toronto-Dominion Bank 1.4% 30/04/2018 Total Capital Canada 1.875% 09/07/2020
1,087,515 1,753,806 1,416,385 296,163 4,553,869
0.17 0.28 0.23 0.05 0.73
Brakes Capital 7.125% 15/12/2018 Carlyle High Yield Partners FRN 19/04/2022 Hutchison Whampoa 3.75% Perpetual Petrobras International Finance 4.875% 07/03/2018 Petrobras International Finance 7.875% 15/03/2019 Southern Water Services Finance 4.5% 31/03/2038 Thames Water Utilities Cayman Finance 3.25% 09/11/2016 UPCB Finance 7.625% 15/01/2020 Vale Overseas 5.625% 15/09/2019 Yorkshire Water Services Bradford 6% 24/04/2025
1,541,116 970,809 484,936 270,625
0.24 0.16 0.08 0.04
165,469
0.03
118,741 318,135
0.02 0.05
760,456 237,793 262,992 5,131,072
0.12 0.04 0.04 0.82
Bonds Transferable securities and money market instruments admitted to an official exchange listing
Australia 9,293,000 24,498,000 450,000 222,000 110,000 1,200,000
AUD AUD GBP USD EUR GBP
1,000,000 1,362,537 1,580,000 680,000 300,000 1,400,000 500,000 355,000 140,000
USD GBP EUR EUR EUR EUR EUR EUR EUR
Australia Government Bond 4% 20/08/2015 Australia Government Bond 4.25% 21/07/2017 BHP Billiton Finance 3.25% 25/09/2024 BHP Billiton Finance 5% 30/09/2043 CNOOC Curtis Funding 2.75% 03/10/2020 Commonwealth Bank of Australia 3.875% 14/12/2015 FMG Resources 6.875% 01/04/2022 Interstar Millennium Trust FRN 20/01/2038 National Australia Bank 2.75% 08/08/2022 Origin Energy Finance 2.5% 23/10/2020 Origin Energy Finance 2.875% 11/10/2019 Santos Finance 8.25% 22/09/2070 Telstra Corp Ltd 2.5% 15/09/2023 Transurban Finance 2.5% 08/10/2020 Wesfarmers 2.75% 02/08/2022
Austria 200,000 EUR Erdoel-Lagergesellschaft 2.75% 20/03/2028 1,000,000 USD Sappi Papier 6.625% 15/04/2021 Belgium 500,000 EUR Anheuser-Busch InBev 1.25% 24/03/2017 200,000 EUR Anheuser-Busch InBev 8.625% 30/01/2017 700,000 EUR Barry Callebaut Services 5.625% 15/06/2021 Bermuda 1,000,000 USD Digicel 6% 15/04/2021 1,000,000 USD Seadrill 6.125% 15/09/2020
Canada 1,000,000 2,266,000 2,000,000 300,000
EUR CAD USD EUR
Cayman Islands 1,285,000 GBP 1,377,871 USD 500,000 EUR 250,000 EUR 200,000 USD 100,000 GBP 300,000 EUR 700,000 EUR 300,000 USD 200,000 GBP
Number of Securities Bonds Transferable securities and money market instruments admitted to an official exchange listing
Colombia 1,841,000,000 COP Colombia Government International Bond 12% 22/10/2015 Curacao 300,000 EUR Teva Pharmaceutical Finance 2.875% 15/04/2019 Czech Republic 120,000,000 CZK Czech Republic Government Bond 1.5% 29/10/2019 Denmark 375,000 250,000 339,514 250,000
EUR EUR EUR EUR
Carlsberg Breweries 2.625% 03/07/2019 DONG Energy 6.5% 07/05/2019 ISS Holidings 8.875% 15/05/2016 TDC 4.375% 23/02/2018
Finland 530,000 EUR Citycon OYJ 3.75% 24/06/2020 227,000 EUR CRH Finland Services 2.75% 15/10/2020 1,000,000 EUR Nokia 6.75% 04/02/2019 France 900,000 EUR ALD International 2% 26/05/2017 300,000 EUR Autoroutes du Sud de la France 7.375% 20/03/2019 240,000 USD BPCE 5.7% 22/10/2023 350,000 EUR Casino Guichard Perrachon 4.379% 08/02/2017 1,610,000 EUR Cegedim 6.75% 01/04/2020 1,380,000 EUR CMA CGM 8.75% 15/12/2018 700,000 EUR CMA CGM 8.875% 15/04/2019 1,200,000 EUR Crown European Holdings 7.125% 15/08/2018 400,000 EUR Electricite de France 3.875% 18/01/2022 1,000,000 USD Electricite de France 5.25% Perpetual 200,000 EUR Eutelsat 2.625% 13/01/2020 400,000 EUR Fonciere Des Regions 3.875% 16/01/2018 5,883,000 EUR France Government Bond 0.1% 25/07/2021 400,000 EUR GDF Suez 5% 23/02/2015 100,000 EUR JCDecaux 2% 08/02/2018 1,400,000 EUR Lafarge 8.875% 24/11/2016 400,000 EUR Lagardere 4.125% 31/10/2017 300,000 EUR LVMH Moet Hennessy Louis Vuitton 3.375% 07/04/2015 852,000 EUR Oberthur Technologies Holding 9.25% 30/04/2020 300,000 GBP Orange 8% 20/12/2017 230,000 EUR RCI Banque 2.125% 24/11/2014 400,000 USD Rhodia 6.875% 15/09/2020 500,000 EUR Societe Des Autoroutes Paris-Rhin-Rhone FRN 18/01/2016 370,000 USD Societe Generale 7.875% Perpetual 250,000 EUR Sodexo 6.25% 30/01/2015 185,000 EUR Solvay Finance 4.199% Perpetual 300,000 EUR GDF Suez 4.078% 17/05/2021 400,000 EUR Total Capital 4.875% 28/01/2019 750,000 EUR Wendel 4.875% 26/05/2016 Germany 300,000 1,015,000 305,000 300,000 1,030,000 1,300,000 39
EUR EUR EUR EUR EUR EUR
Allianz 5.625% 17/10/2042 Continental 3% 16/07/2018 Deutsche Post 2.875% 11/12/2024 Eurogrid 3.875% 22/10/2020 Franz Haniel & Cie 7.125% 01/02/2017 Heidelberger Druckmaschinen 9.25% 15/04/2018
Market value EUR
% of Net Assets
781,092
0.12
309,834
0.05
4,372,679
0.70
381,977 306,833 346,983 276,019 1,311,812
0.06 0.05 0.06 0.04 0.21
535,621 228,025 1,139,013 1,902,659
0.09 0.04 0.18 0.31
895,675 379,329
0.14 0.06
180,298 380,762 1,664,347 1,361,298 693,336 1,282,600 438,119 722,567 198,156 423,049 5,798,867 419,900 100,968 1,661,302 425,305 310,431
0.03 0.06 0.27 0.22 0.11 0.21 0.07 0.12 0.03 0.07 0.93 0.07 0.02 0.27 0.07 0.05
899,975 434,024 232,245 321,942 504,435
0.14 0.07 0.04 0.05 0.08
271,106 264,686 189,911 333,172 463,201 802,481 22,053,487
0.04 0.04 0.03 0.05 0.07 0.13 3.54
333,453 1,070,571 307,631 328,707 1,164,155 1,389,375
0.05 0.17 0.05 0.05 0.19 0.22
Total Return Bond Fund
Portfolio as at 31 December 2013 (continued) Number of Securities Bonds Transferable securities and money market instruments admitted to an official exchange listing
Germany (continued) 300,000 EUR Henkel 5.375% 25/11/2104 100,000 EUR Kabel Deutschland Holding 6.5% 31/07/2017 500,000 EUR ThyssenKrupp 4.375% 18/03/2015 1,125,000 EUR Unitymedia Hessen 5.125% 21/01/2023 1,750,000 EUR Unitymedia Hessen 5.625% 15/04/2023 230,000 EUR Unitymedia Hessen 5.75% 15/01/2023 250,000 EUR Unitymedia Kabel 9.5% 15/03/2021 550,000 EUR Volkswagen 2.75% 13/07/2015 Ireland 1,700,000 960,000 1,000,000 700,000 655,087 631,000 2,340,000 1,595,753 115,000 982,017 1,090,000 255,000 1,200,000 1,700,000 150,000
EUR EUR EUR EUR EUR EUR EUR GBP EUR EUR EUR EUR EUR EUR EUR
ACA Euro FRN 15/06/2024 Ardagh Packaging Finance 5% 15/11/2022 Ardagh Packaging Finance 7.375% 15/10/2017 Ardagh Packaging Finance 9.25% 15/10/2020 Bacchus FRN 16/04/2022 Baggot Securities 10.24% Perpetual Clavos FRN 18/04/2023 Epic Culzean FRN 20/10/2019 ESB Finance 3.494% 12/01/2024 Forest Finance FRN 12/05/2018 GE Capital European Funding 2.25% 20/07/2020 GE Capital European Funding 2.875% 18/06/2019 Harvest FRN 05/04/2024 Smurfit Kappa 7.75% 15/11/2019 Willow 2 Zurich Insurance 3.375% 27/06/2022
Isle of Man 175,000 USD AngloGold Ashanti Holdings 8.5% 30/07/2020 Italy 100,000 850,000 490,000 425,000 930,000 1,000,000 Jersey 620,000 750,000 1,000,000 300,000
EUR EUR EUR EUR EUR EUR
EUR EUR GBP EUR
Luxembourg 800,000 EUR 1,000,000 USD 900,000 GBP 500,000 EUR 1,523,020 EUR 1,300,000 EUR 230,000 EUR 2,000,000 USD 880,000 EUR 1,150,000 EUR 1,700,000 EUR 520,000 EUR 550,000 EUR 280,000 EUR 688,000 USD 2,320,000 EUR
Market value EUR
% of Net Assets
319,509 107,791 516,604 1,125,000 1,783,180 238,756 291,588 566,782 9,543,102
0.05 0.02 0.08 0.18 0.29 0.04 0.05 0.09 1.53
1,599,188 960,787 1,074,775 764,289 648,147 668,071 2,286,180 1,901,814 114,397 955,396 1,084,861 265,857 1,080,000 1,861,534 158,312 15,423,608
0.26 0.15 0.18 0.12 0.10 0.11 0.37 0.31 0.02 0.15 0.17 0.04 0.17 0.30 0.03 2.48
131,893
Bonds Transferable securities and money market instruments admitted to an official exchange listing
Luxembourg (continued) 600,000 EUR HeidelbergCement Finance 9.5% 15/12/2018 975,000 EUR Ineos 6.5% 15/08/2018 1,000,000 USD Intelsat Luxembourg SA 7.75% 01/06/2021 750,000 EUR Kion 7.875% 15/04/2018 100,000 EUR Matterhorn Midco 7.75% 15/02/2020 990,000 EUR Matterhorn Mobile Holdings 8.25% 15/02/2020 1,500,000 EUR Matterhorn Mobile FRN 15/05/2019 320,000 EUR Prologis International Funding 2.75% 23/10/2018 100,000 USD Schlumberger Investment 2.4% 01/08/2022 1,190,000 EUR Servus Luxembourg Holding 7.75% 15/06/2018 1,400,000 EUR Sunrise Communications Holdings 8.5% 31/12/2018 1,630,000 EUR Telenet Finance Luxembourg 6.375% 15/11/2020 1,060,000 EUR Trafigura Funding 5.25% 29/11/2018 Mexico 250,000 226,803,700 174,910,000 295,000
0.02 0.15 0.08 0.08 0.15 0.16 0.64
Atrium European Real Estate 4% 20/04/2020 Avis Budget Finance 6% 01/03/2021 Galaxy Bidco FRN 15/11/2019 Heathrow Funding 4.375% 25/01/2019
618,056 800,633 1,209,288 326,946 2,954,923
0.10 0.13 0.19 0.05 0.47
ArcelorMittal 10.625% 03/06/2016 ArcelorMittal 6.75% 25/02/2022 Cabot Financial Luxembourg 8.375% 01/08/2020 CNH Industrial Finance Europe 5.25% 11/03/2015 Compartment FRN 21/07/2018 ConvaTec Healthcare 10.875% 15/12/2018 Elior Finance 6.5% 01/05/2020 Far East Capital 8% 02/05/2018 Fiat Finance & Trade SA 6.75% 14/10/2019 FMC Finance 6.5% 15/09/2018 Gateway IV FRN 25/04/2023 GCS 6.5% 15/11/2018 GELF Bond Issuer 3.125% 03/04/2018 Geo Debt Finance 7.5% 01/08/2018 Glencore Finance European 7.5% Perpetual Harvest II FRN 21/05/2020
960,447 793,551 1,155,937 521,299 1,523,588 1,469,049 251,865 1,300,188 954,570 1,357,000 1,575,050 537,658 566,748 298,929 544,541 2,169,200
0.15 0.13 0.19 0.08 0.24 0.24 0.04 0.21 0.15 0.22 0.25 0.09 0.09 0.05 0.09 0.35
EUR MXN MXN EUR
America Movil 4.125% 25/10/2019 Mexican Bonos 10% 05/12/2024 Mexican Bonos 7.75% 13/11/2042 Petroleos Mexicanos 3.125% 27/11/2020
Market value EUR
% of Net Assets
778,500 1,001,817 780,839 793,925 104,001 1,084,463 1,524,975 321,154 66,651 1,257,541 1,530,774
0.12 0.16 0.13 0.13 0.02 0.17 0.25 0.05 0.01 0.20 0.25
1,761,106 1,084,746 28,070,112
0.28 0.17 4.51
276,250 16,116,607 9,933,659 298,319 26,624,835
0.04 2.59 1.59 0.05 4.27
296
-
676,568
0.11
762,737
0.12
1,439,305
0.23
5,601
-
3,781,998
0.61
2,922
-
185,760
0.03
1,110,022 650,714 1,760,736
0.18 0.10 0.28
98,496 996,510 673,031 356,495 669,952
0.02 0.16 0.10 0.06 0.11
669,270 1,819,710 987,741 253,761 6,524,966
0.11 0.29 0.16 0.04 1.05
Peru 1,000 PEN Peruvian Government International Bond 7.84% 12/08/2020 Philippines 39,000,000 PHP Philippine Government International Bond 4.95% 15/01/2021 44,000,000 PHP Philippine Government International Bond 6.25% 14/01/2036
0.02
106,094 912,080 516,378 478,799 958,287 1,035,007 4,006,645
ACEA 3.75% 12/09/2018 Astaldi 7.125% 01/12/2020 Atlantia 3.625% 30/11/2018 Buzzi Unicem 6.25% 28/09/2018 Snai 12% 15/12/2018 TeamSystem Holding 7.375% 15/05/2020
Number of Securities
Poland 23,000 PLN Poland Government Bond 5.75% 25/04/2014 Russia 168,000,000 RUB Russian Federal Bond 7.5% 27/02/2019 Singapore 5,000 SGD Singapore Government Bond 3.625% 01/07/2014 South Korea 185,000 EUR Korea Gas 2.375% 15/04/2019 Spain 1,000,000 EUR Ence Energia y Celulosa 7.25% 15/02/2020 613,000 EUR NH Hoteles 6.875% 15/11/2019
40
Sweden 100,000 1,000,000 650,000 500,000 675,000
EUR EUR EUR USD EUR
650,000 2,500,000 940,000 250,000
EUR USD EUR EUR
Akzo Nobel Sweden Finance 2.625% 27/07/2022 Nordea Bank 1.375% 12/04/2018 Nordea Bank 2.25% 05/10/2017 Skandinaviska Enskilda Banken 1.75% 19/03/2018 Skandinaviska Enskilda Banken 1.875% 14/11/2019 Svenska Handelsbanken 2.25% 14/06/2018 Swedbank 2.125% 29/09/2017 Unilabs Subholding 8.5% 15/07/2018 Vattenfall 4.25% 19/05/2014
Total Return Bond Fund
Portfolio as at 31 December 2013 (continued) Number of Securities Bonds Transferable securities and money market instruments admitted to an official exchange listing
Switzerland 250,000 USD Credit Suisse Group 7.5% Perpetual 1,800,000 USD Credit Suisse New York 3.5% 23/03/2015 2,700,000 EUR UBS AG Jersey 4.28% Perpetual The Netherlands 600,000 USD 2,000,000 EUR 2,300,000 EUR 530,000 EUR 250,000 EUR 250,000 EUR 300,000 EUR 400,000 EUR 400,000 EUR 1,633,000 EUR 236,761 EUR 250,000 EUR 2,500,000 EUR 300,000 EUR 330,000 EUR 200,000 USD 250,000 EUR 500,000 1,800,000 797,946 2,000,000 1,250,000 270,000 300,000 1,100,000 300,000 1,000,000 250,000 756,758 1,443,598 600,000 1,500,000 250,000 800,000 800,000 222,000 400,000 1,500,000 250,000 400,000 2,500,000 1,250,000 600,000 1,200,000 1,000,000 150,000 1,199,522 500,000 1,450,000
EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR GBP EUR USD EUR EUR EUR EUR USD EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR
ABN AMRO Bank 1.375% 22/01/2016 ABN AMRO Bank 2.125% 26/11/2020 Adagio FRN 21/11/2019 Adria Bidco 7.875% 15/11/2020 BASF Finance Europe 5.125% 09/06/2015 Bayer Capital Corp 4.625% 26/09/2014 Bite Finance International 15/02/2018 BMW Finance 4.25% 22/01/2014 British American Tobacco 4.875% 24/02/2021 Cable Communications Systems 7.5% 01/11/2020 CELF Loan Partners FRN 18/07/2021 Daimler International Finance 7.875% 16/01/2014 Dalradian European FRN 11/04/2023 Deutsche Annington Finance 3.125% 25/07/2019 Deutsche Annington Finance 3.625% 08/10/2021 Deutsche Annington Finance 5% 02/10/2023 Deutsche Telekom International Finance 4.75% 31/05/2016 E.ON International Finance 5.25% 06/06/2014 EDP Finance 4.125% 20/01/2021 Grosvenor Place FRN 28/03/2023 Harbourmaster FRN 08/05/2023 HeidelbergCement Finance 8% 31/01/2017 Heineken 2.875% 04/08/2025 Heineken 3.5% 19/03/2024 Hertz Holdings Netherlands 4.375% 15/01/2019 HIT Finance 5.75% 09/03/2018 Jubilee FRN 30/07/2024 Koninklijke 6.5% 15/01/2016 Lambda Finance FRN 20/09/2031 GBP Lambda Finance FRN 20/09/2031 EUR LBC Tank Terminals 6.875% 15/05/2023 Leopard FRN 24/07/2023 Linde Finance 3.125% 12/12/2018 OI European 4.875% 31/03/2021 OI European 6.75% 15/09/2020 Petrobras Global 3% 15/01/2019 RWE Finance 5% 10/02/2015 Schaeffler Finance 8.75% 15/02/2019 Shell International Finance 4.5% 09/02/2016 Siemens Financier 5.25% 14/09/2066 Storm FRN 22/01/2054 ThyssenKrupp Finance Nederland 8.5% 25/02/2016 TMF Group Holding 9.875% 01/12/2019 UPC Holding 6.75% 15/03/2023 UPC Holding 8.375% 15/08/2020 Wolters Kluwer 2.875% 21/03/2023 Wood Street FRN 29/03/2021 Ziggo Bond 8% 15/05/2018 Ziggo Finance 6.125% 15/11/2017
United Arab Emirates 285,000 USD Abu Dhabi National Energy 2.5% 12/01/2018
Market value EUR
% of Net Assets
192,313 1,354,167 2,732,562 4,279,042
0.03 0.22 0.44 0.69
439,413 1,959,420 2,281,600 536,158 266,267 257,613 309,150 400,777 464,701 1,681,990 234,180 250,619 2,382,140 307,117 338,776 144,698 273,255
0.07 0.31 0.37 0.09 0.04 0.04 0.05 0.06 0.07 0.27 0.04 0.04 0.38 0.05 0.05 0.02 0.04
509,820 1,821,317 782,546 1,748,200 1,464,459 262,656 314,652 1,104,477 343,658 905,000 276,612 880,487 1,399,244 455,429 1,335,000 268,862 842,000 932,940 151,476 419,086 1,708,125 270,118 431,108 2,559,131 1,411,821 652,370 1,235,964 1,105,024 148,688 1,178,530 531,257 1,502,854 41,480,785
0.08 0.29 0.13 0.29 0.24 0.04 0.05 0.18 0.06 0.15 0.04 0.15 0.23 0.07 0.21 0.04 0.14 0.15 0.02 0.07 0.27 0.04 0.07 0.41 0.23 0.10 0.20 0.18 0.02 0.19 0.09 0.24 6.66
208,048
0.03
Number of Securities Bonds Transferable securities and money market instruments admitted to an official exchange listing
United Kingdom 500,000 EUR Abbey National Treasury Services 1.75% 15/01/2018 300,000 EUR Abbey National Treasury Services 2.625% 16/07/2020 350,000 EUR Anglo American Capital 2.875% 20/11/2020 250,000 EUR Anglo American Capital 5.875% 17/04/2015 200,000 GBP Anglo American Capital 6.875% 01/05/2018 250,000 GBP Arqiva Financing 4.04% 30/06/2035 1,250,000 EUR Aviva 4.7291% Perpetual 385,000 EUR Aviva 6.125% 05/07/2043 270,000 GBP Aviva 6.125% 14/11/2036 1,085,000 GBP Bakkavor Finance 8.75% 15/06/2020 1,000,000 EUR Barclays Bank 6.625% 30/03/2022 290,000 USD BAT International Finance 3.25% 07/06/2022 400,000 EUR BAT International Finance 5.875% 12/03/2015 1,990,000 GBP Bond Mission Critical Services FRN 01/05/2019 450,000 EUR BP Capital Markets 2.994% 18/02/2019 250,000 EUR Brambles Finance 4.625% 20/04/2018 550,000 EUR British Telecommunications 6.5% 07/07/2015 450,000 GBP BSKYB Finance UK 5.75% 20/10/2017 100,000 GBP BUPA Finance 5% 25/04/2023 957,516 GBP Business Mortgage Finance B FRN 20/07/2036 882,702 GBP Business Mortgage Finance M FRN 20/07/2036 632,838 GBP Business Mortgage Finance B FRN 15/02/2037 300,000 GBP Business Mortgage Finance M FRN 15/02/2037 400,000 USD Centrica 4% 16/10/2023 200,000 USD Centrica 5.375% 16/10/2043 200,000 GBP Centrica 6.375% 10/03/2022 300,000 EUR Compass Group 3.125% 13/02/2019 200,000 GBP Co-operative Group 6.875% 08/07/2020 200,000 GBP Co-operative Group 7.5% 08/07/2026 1,500,000 EUR Coventry Building Society 2.25% 04/12/2017 1,300,000 EUR Coventry Building Society 2.5% 18/11/2020 350,000 GBP Coventry Building Society 6% 16/10/2019 200,000 GBP Daily Mail & General Trust 10% 09/04/2021 1,100,000 GBP Daily Mail & General Trust 5.75% 07/12/2018 953,070 GBP DECO 8-UK Conduit FRN 27/04/2018 1,000,000 GBP DFS Furniture Holdings 7.625% 15/08/2018 1,500,000 GBP DFS Furniture Holdings FRN 15/08/2018 2,059,378 GBP Eddystone Finance FRN 19/04/2021 1,125,000 GBP EDU 8.875% 15/09/2018 250,000 GBP EE Finance 4.375% 28/03/2019 1,160,000 GBP ENW Finance 5.875% 21/06/2021 1,050,000 GBP Epic More London FRN B 15/07/2017 1,344,000 GBP Epic More London FRN C 15/07/2017 900,000 GBP Equiniti Newco 7.125% 15/12/2018 1,500,000 GBP Equiniti Newco FRN 15/12/2018 1,915,438 GBP Eurosail FRN 10/06/2044 1,100,000 EUR Eurosail FRN 10/09/2044 978,367 GBP Eurosail FRN 10/12/2044 350,000 USD Experian Finance 2.375% 15/06/2017 250,000 EUR Experian Finance 4.75% 04/02/2020 230,000 GBP Firstgroup 5.25% 29/11/2022 350,000 GBP Firstgroup 8.125% 19/09/2018 2,133,047 EUR Fosse Master Issuer FRN 18/10/2054 340,000 EUR G4S International Finance 2.625% 06/12/2018 175,000 EUR G4S International Finance 2.875% 02/05/2017 800,000 GBP Gala Electric Casinos 11.5% 01/06/2019 990,000 GBP GKN Holdings 5.375% 19/09/2022 400,000 EUR GlaxoSmithKline Capital 3.875% 06/07/2015 600,000 EUR GlaxoSmithKline Capital 4% 16/06/2025 688,052 GBP Gosforth Funding FRN 24/04/2047 644,147 EUR Granite Master Issuer FRN 20/12/2054 386,488 EUR Granite Master Issuer FRN 20/12/2054
41
Market value EUR
% of Net Assets
501,474
0.08
302,006
0.05
343,783 265,643 273,289 299,362 1,268,875 428,055 338,663 1,425,107 1,181,082 202,271 424,430 2,315,299 475,391 278,565 597,129 605,818 118,877 1,153,469 1,062,200 749,755 359,655 284,226 147,638 282,296 318,060 247,398 247,000 1,533,151 1,288,553 481,379 310,273 1,434,730 1,126,428 1,287,416 1,827,544 2,423,339 1,409,744 308,882 1,450,709 1,252,831 1,602,188 1,144,285 1,826,852 2,215,381 972,228 1,110,130 250,793 283,758 281,684 495,467 2,149,803 340,410 179,104 1,057,988 1,240,971 419,600 660,826 836,198 639,270 383,831
0.06 0.04 0.04 0.05 0.20 0.07 0.05 0.23 0.19 0.03 0.07 0.37 0.08 0.04 0.10 0.10 0.02 0.19 0.17 0.12 0.06 0.05 0.02 0.05 0.05 0.04 0.04 0.25 0.21 0.08 0.05 0.23 0.18 0.21 0.29 0.39 0.23 0.05 0.23 0.20 0.26 0.18 0.29 0.36 0.16 0.18 0.04 0.05 0.05 0.08 0.35 0.05 0.03 0.17 0.20 0.07 0.11 0.13 0.10 0.06
Total Return Bond Fund
Portfolio as at 31 December 2013 (continued) Number of Securities Bonds Transferable securities and money market instruments admitted to an official exchange listing
United Kingdom (continued) 2,592,061 EUR Granite Mortgages FRN 20/07/2043 1,145,710 GBP Great Hall Mortgages FRN 18/06/2039 400,000 EUR Hammerson 2.75% 26/09/2019 1,100,000 GBP Heathrow Finance 7.125% 01/03/2017 13,665,878 GBP Henderson Credit Alpha Z Gross 1,550,000 EUR HSBC 1.844% 30/09/2020 750,000 EUR HSBC 3.375% 10/01/2024 126,000 GBP IDH Finance 6% 01/12/2018 250,000 GBP IDH Finance 8.5% 01/06/2019 385,000 GBP IDH Finance FRN 01/12/2018 200,000 USD Imperial Tobacco Finance 2.05% 11/02/2018 100,000 GBP Imperial Tobacco Finance 7.75% 24/06/2019 350,000 EUR Imperial Tobacco Finance 8.375% 17/02/2016 750,000 GBP Infinis 7% 15/02/2019 150,000 GBP InterContinental Hotels 3.875% 28/11/2022 710,000 EUR Investec Tier 7.075% Perpetual 315,000 USD Jaguar Land Rover Automotive 4.125% 15/12/2018 2,039,199 EUR Juno Eclipse FRN 20/11/2022 1,000,000 GBP Kelda Finance 5.75% 17/02/2020 1,000,000 EUR Lloyds TSB Bank 11.875% 16/12/2021 500,000 GBP Lowell Group Financing 10.75% 01/04/2019 160,000 GBP Marks & Spencer 4.75% 12/06/2025 400,000 EUR National Grid 6.5% 22/04/2014 1,305,000 GBP Nationwide Building Society 10.25% Perpetual 1,200,000 EUR Nationwide Building Society 4.125% 20/03/2023 3,097,382 GBP Newgate Funding FRN 01/12/2050 140,000 GBP NGG Finance 5.625% 18/06/2073 250,000 GBP Northumbrian Water Finance 6% 11/10/2017 1,150,000 GBP Odeon & UCI Finco 9% 01/08/2018 500,000 GBP Old Mutual 8% 03/06/2021 2,148,525 GBP Opera Finance Metrocentre FRN 02/02/2017 392,425 GBP Paragon Mortgages FRN 15/05/2034 315,000 USD Pearson Funding Five PLC 3.25% 08/05/2023 200,000 USD Pearson Funding Four PLC 3.75% 08/05/2022 3,153,000 GBP Permanent Master Issuer FRN 15/07/2042 505,000 GBP Phosphorus Holdco 10% 01/04/2019 500,000 GBP Prudential 1.25% 16/11/2015 580,000 GBP Prudential 5.7% 19/12/2063 200,000 GBP Prudential 6.125% 19/12/2031 350,000 GBP Reed Elsevier Investments 5.625% 20/10/2016 400,000 EUR Rentokil Initial 3.375% 24/09/2019 455,000 USD Rio Tinto Finance 2.25% 14/12/2018 1,230,365 GBP Rmac FRN 12/06/2043 700,335 EUR Rmac FRN 12/06/2043 1,444,080 GBP Rmac FRN 12/09/2037 1,484,895 EUR Rmac FRN 12/06/2044 1,800,000 EUR Royal Bank of Scotland 4.625% 22/09/2021 500,000 EUR Royal Bank of Scotland 6.934% 09/04/2018 1,250,000 GBP RSA Insurance Group 9.375% 20/05/2039 600,000 GBP Scottish Widows 5.125% Perpetual 720,000 GBP Scottish Widows 7% 16/06/2043 2,500,000 EUR Sherwood Castle FRN 15/03/2016 1,200,000 GBP Silverstone Master Issuer FRN 21/01/2055 504,380 GBP Southern Pacific Financing FRN 10/12/2042 1,475,220 GBP Southern Pacific Financing FRN 10/06/2043 617,099 GBP Southern Pacific Securities FRN 10/12/2042 1,000,000 GBP Southern Water Greensands Financing 8.5% 15/04/2019 100,000 GBP SP Manweb 4.875% 20/09/2027 156,000 EUR SSE 2% 17/06/2020 200,000 GBP Standard Chartered Bank 7.75% 03/04/2018 1,500,000 USD Standard Chartered 4% 12/07/2022 720,000 EUR Standard Chartered 4% 21/10/2025
Market value EUR
% of Net Assets
2,577,905 1,284,959 409,070 1,455,188 27,000,714 1,522,625 764,788 153,392 305,859 470,083 143,970 145,117 402,935 964,748 177,110 712,474 231,092 1,990,017 1,238,437 1,247,725 683,659 189,656 407,176 1,796,726 1,247,767 3,564,769 169,979 341,277 1,400,080 641,078 2,569,978 435,179 207,149 138,230 3,828,458 589,846 598,611 698,915 267,938 461,452 414,214 329,937 1,393,970 640,407 1,629,967 1,291,234 1,809,742 568,285 1,769,888 722,155 952,168 2,498,895 1,488,529 543,745 1,702,997 749,994 1,341,031
0.41 0.21 0.07 0.23 4.34 0.24 0.12 0.02 0.05 0.08 0.02 0.02 0.06 0.15 0.03 0.11 0.04 0.32 0.20 0.20 0.11 0.03 0.07 0.29 0.20 0.57 0.03 0.05 0.22 0.10 0.41 0.07 0.03 0.02 0.61 0.09 0.10 0.11 0.04 0.07 0.07 0.05 0.22 0.10 0.26 0.21 0.29 0.09 0.28 0.12 0.15 0.41 0.24 0.09 0.27 0.12 0.22
121,925 153,960 279,378 1,102,851 717,440
0.02 0.02 0.04 0.18 0.12
Number of Securities Bonds Transferable securities and money market instruments admitted to an official exchange listing
United Kingdom (continued) 350,000 GBP Standard Life 5.5% 04/12/2042 360,000 GBP Tate & Lyle International Finance 6.75% 25/11/2019 500,000 GBP Tesco 5% 24/02/2014 950,000 GBP Thames Water Kemble Finance 7.75% 01/04/2019 1,300,000 EUR Thomas Cook Finance 7.75% 15/06/2020 1,025,000 GBP Towergate Finance FRN 15/02/2018 710,000 USD Tullow Oil 6% 01/11/2020 1,430,000 GBP United Kingdom Gilt Inflation Linked 0.125% 22/03/2029 26,621,000 GBP United Kingdom Gilt Inflation Linked 0.125% 22/03/2024 2,856,000 GBP United Kingdom Gilt Inflation Linked 2.5% 26/07/2016 1,350,000 GBP Virgin Media Finance 8.875% 15/10/2019 750,000 GBP Virgin Media Secured Finance 6% 15/04/2021 200,000 GBP Wales & West Utilities Finance 5.125% 02/12/2016 1,000,000 GBP William Hill 4.25% 05/06/2020 1,000,000 GBP William Hill 7.125% 11/11/2016 290,000 EUR WM Morrison Supermarkets 2.25% 19/06/2020 265,000 EUR WPP Finance 2013 3% 20/11/2023 500,000 GBP Yorkshire Building Society FRN 23/03/2016 United States 146,000 USD 700,000 USD 1,200,000 USD 500,000 USD 300,000 USD 210,000 EUR 220,000 EUR 250,000 EUR 1,000,000 USD 296,000 EUR 2,250,000 USD 500,000 GBP 1,000,000 USD 200,000 USD 574,000 USD 1,000,000 USD 889,000 USD 500,000 USD 1,000,000 USD 1,000,000 USD 2,000,000 USD 1,000,000 USD 1,000,000 USD 200,000 EUR 1,000,000 USD 300,000 GBP 500,000 USD 500,000 USD 500,000 USD 1,000,000 USD 1,000,000 USD 1,000,000 USD 428,000 USD 320,000 USD 1,000,000 USD 500,000 USD 1,750,000 GBP 1,000,000 USD
42
21st Century Fox America 5.4% 01/10/2043 Altria Group 2.95% 02/05/2023 Amkor Technology 6.625% 01/06/2021 Antero Resources Finance 5.375% 01/11/2021 Apple 2.4% 03/05/2023 AT&T 2.65% 17/12/2021 AT&T 3.55% 17/12/2032 AT&T 6.125% 02/04/2015 Ball 5% 15/03/2022 Bank of America 2.5% 27/07/2020 Bank of America 4.5% 01/04/2015 Bank of America 5.75% 12/12/2014 Biomet 6.5% 01/08/2020 Boeing 0.95% 15/05/2018 Bristol-Myers Squibb1.75% 01/03/2019 Caesars Entertainment Resort 8% 01/10/2020 Calpine 7.5% 15/02/2021 CenturyLink 7.6% 15/09/2039 Chesapeake Energy 5.75% 15/03/2023 Community Health Systems 8% 15/11/2019 Citigroup 1.75% 01/05/2018 Claire's Stores 6.125% 15/03/2020 Clear Channel Worldwide 7.625% 15/03/2020 Coca-Cola Enterprises 2.375% 07/05/2025 Coeur Mining Inc 7.875% 01/02/2021 Comcast 5.5% 23/11/2029 Darling Escrow 5.375% 15/01/2022 DaVita HealthCare Partners 5.75% 15/08/2022 DaVita HealthCare Partners 6.625% 01/11/2020 Dish 5.875% 15/07/2022 Endo Health Solutions 7.25% 15/01/2022 Energy XXI Gulf Coast 7.5% 15/12/2021 First Data11.25% 31/03/2016 First Quality Finance 4.625% 15/05/2021 Gardner Denver 6.875% 15/08/2021 Goldman Sachs Group 2.9% 19/07/2018 Goldman Sachs Group 6.125% 14/05/2017 Gray Television 7.5% 01/10/2020
Market value EUR
% of Net Assets
432,212 504,011
0.07 0.08
603,555 1,245,161 1,418,463 1,229,431 526,032 1,812,330
0.10 0.20 0.23 0.20 0.08 0.29
33,523,517
5.38
11,611,672
1.86
1,774,417 929,093 262,219 1,169,517 1,365,398 285,032 262,949 613,482 195,949,896
0.28 0.15 0.04 0.19 0.22 0.05 0.04 0.10 31.45
107,563 463,808 908,679 368,856 196,664 211,703 210,885 266,873 722,730 297,565 1,710,480 625,516 764,496 139,593 408,098 755,417 707,081 325,955 751,785 791,735 1,431,401 700,940 767,220 184,863 740,890 393,703 365,451 369,537 391,782 726,362 784,017 760,864 312,437 220,814 728,178 370,231 2,312,765 773,576
0.02 0.07 0.15 0.06 0.03 0.03 0.03 0.04 0.12 0.05 0.27 0.10 0.12 0.02 0.07 0.12 0.11 0.05 0.12 0.13 0.23 0.11 0.12 0.03 0.12 0.06 0.06 0.06 0.06 0.12 0.13 0.12 0.05 0.04 0.12 0.06 0.37 0.12
Total Return Bond Fund
Portfolio as at 31 December 2013 (continued) Number of Securities Bonds Transferable securities and money market instruments admitted to an official exchange listing
United States (continued) 1,250,000 USD HCA 6.5% 15/02/2020 150,000 GBP Health Care REIT Inc 4.8% 20/11/2028 500,000 USD Hertz 6.75% 15/04/2019 1,000,000 USD Hot Topic 9.25% 15/06/2021 1,500,000 EUR Huntsman International 5.125% 15/04/2021 1,000,000 USD Infor US 9.375% 01/04/2019 1,050,000 EUR Jarden Corp 7.5% 15/01/2020 750,000 EUR Johnson & Johnson 4.75% 06/11/2019 2,000,000 USD JPMorgan Chase 3.7% 20/01/2015 900,000 GBP JPMorgan Chase 4.25% 25/01/2017 1,000,000 USD Landry 9.375% 01/05/2020 250,000 USD Levi Strauss & Co 6.875% 01/05/2022 700,000 EUR Levi Strauss & Co 7.75% 15/05/2018 1,400,000 EUR Metropolitan Life Global Funding 2.375% 30/09/2019 225,000 EUR Microsoft 2.625% 02/05/2033 500,000 EUR Morgan Stanley 3.75% 21/09/2017 2,500,000 USD Morgan Stanley 5.625% 23/09/2019 1,000,000 USD Murphy Oil USA 6% 15/08/2023 245,000 EUR NASDAQ OMX Group 3.875% 07/06/2021 1,000,000 USD Nuance Communications 5.375% 15/08/2020 230,000 EUR Oracle 3.125% 10/07/2025 1,000,000 USD Party City 8.875% 01/08/2020 500,000 EUR Pfizer 4.75% 03/06/2016 500,000 EUR Pfizer 5.75% 03/06/2021 300,000 EUR Philip Morris International 2.875% 30/05/2024 1,000,000 USD Plastipak 6.5% 01/10/2021 460,000 USD Praxair 1.25% 07/11/2018 355,000 EUR ProLogis 3% 18/01/2022 1,000,000 USD Quiksilver 7.875% 01/08/2018 250,000 EUR Rain CII Carbon 8.5% 15/01/2021 500,000 USD Sally 5.5% 01/11/2023 304,000 EUR SES Global Americas Holdings 1.875% 24/10/2018 1,000,000 USD Sinclair Television Group 6.375% 01/11/2021 1,000,000 USD Snoqualmie Entertainment Authority 9.125% 01/02/2015 806,000 USD Sprint 7.125% 15/06/2024 1,000,000 USD Staples 2.75% 12/01/2018 310,000 USD Tenet Healthcare 6% 01/10/2020 1,000,000 USD Tenet Healthcare 8% 01/08/2020 1,000,000 USD Titan International 6.875% 01/10/2020 1,000,000 USD T-Mobile 6.731% 28/04/2022 200,000 GBP Toyota Motor Credit 4% 07/12/2017 28,000,000 USD United States Treasury 0.125% 15/01/2022 8,905,000 USD United States Treasury 0.125% 15/07/2022 6,973,000 USD United States Treasury 0.125% 15/01/2023 847,000 USD United States Treasury 0.75% 15/02/2042 3,336,000 USD United States Treasury 2.375% 15/01/2027 3,140,000 USD United States Treasury 2.5% 15/01/2029 450,000 USD Verizon Communications 6.55% 15/09/2043 600,000 USD WEA Finance 6.75% 02/09/2019 1,000,000 USD WellCare Health Plans 5.75% 15/11/2020 1,800,000 USD Wells Fargo 1.5% 01/07/2015 430,000 EUR Wells Fargo 2.625% 16/08/2022 870,000 GBP Wells Fargo 3.5% 12/09/2029 Investment in Securities
Market value EUR
% of Net Assets
994,208 175,300 393,144 764,496 1,510,104 820,789 1,137,990 884,642 1,503,552 1,145,948 795,367 200,204 747,250 1,425,106
0.16 0.03 0.06 0.12 0.24 0.13 0.18 0.14 0.24 0.18 0.13 0.03 0.12 0.23
204,739 535,798 2,065,245 731,810 252,666 713,651 233,247 817,158 547,362 617,908 299,746 755,417 320,111 350,593 791,735 254,997 360,457 301,986 755,417 720,461
0.03 0.09 0.33 0.12 0.04 0.11 0.04 0.13 0.09 0.10 0.05 0.12 0.05 0.06 0.13 0.04 0.06 0.05 0.12 0.12
594,230 737,913 235,446 790,827 759,049 759,957 259,916 20,220,714 6,308,913 4,853,707 516,296 3,252,059 2,930,571 385,773 518,225 747,245 1,326,371 431,111 949,698 93,777,138
0.10 0.12 0.04 0.13 0.12 0.12 0.04 3.25 1.01 0.78 0.08 0.53 0.48 0.06 0.08 0.12 0.21 0.07 0.15 15.05
520,313,839
83.51
Number of Securities Derivative instruments Transferable securities and money market instruments admitted to an official exchange listing
Forward Foreign Exchange Contracts 23,600,000 AUD Buy Australian Dollar: Sell Euro 20/03/2014 40,324,084 CAD Buy Canadian Dollar: Sell Euro 20/03/2014 5,549,851,935 COP Buy Colombian Peso: Sell Euro 20/03/2014 5,855,960,000 COP Buy Colombian Peso: Sell Euro 20/03/2014 50,000,000 CZK Buy Czech Republic Koruna: Sell Euro 20/03/2014 37,407,527 EUR Buy Euro: Sell Australian Dollar 20/03/2014 6,264,544 EUR Buy Euro: Sell Australian Dollar 20/03/2014 1,180,224 EUR Buy Euro: Sell Australian Dollar 20/03/2014 27,680,436 EUR Buy Euro: Sell Canadian Dollar 20/03/2014 2,017,074 EUR Buy Euro: Sell Canadian Dollar 20/03/2014 111,938 EUR Buy Euro: Sell Canadian Dollar 20/03/2014 5,060,552 EUR Buy Euro: Sell Czech Republic Koruna 20/03/2014 18,592,261 EUR Buy Euro: Sell Japanese Yen 20/03/2014 132,887 EUR Buy Euro: Sell Japanese Yen 20/03/2014 3,460,000 EUR Buy Euro: Sell Malaysian Ringgit 20/03/2014 8,548,833 EUR Buy Euro: Sell Mexican Peso 20/03/2014 14,495,055 EUR Buy Euro: Sell Mexican Peso 20/03/2014 1,700,000 EUR Buy Euro: Sell Phillippine Peso 20/03/2014 1,100,000 EUR Buy Euro: Sell Polish Zloty 20/03/2014 1,580,255 EUR Buy Euro: Sell Russian Rouble 20/03/2014 2,267,980 EUR Buy Euro: Sell Russian Rouble 20/03/2014 2,321,262 EUR Buy Euro: Sell Singapore Dollar 20/03/2014 36,692,661 EUR Buy Euro: Sell Sterling 20/03/2014 1,947 EUR Buy Euro: Sell Sterling 16/01/2014 238,591 EUR Buy Euro: Sell Sterling 20/03/2014 609,805 EUR Buy Euro: Sell Sterling 20/03/2014 1,790,335 EUR Buy Euro: Sell Sterling 20/03/2014 1,108,191 EUR Buy Euro: Sell Sterling 20/03/2014 6,053,709 EUR Buy Euro: Sell Sterling 20/03/2014 4,274,791 EUR Buy Euro: Sell Sterling 16/01/2014 12,191,487 EUR Buy Euro: Sell Sterling 20/03/2014 11,727,911 EUR Buy Euro: Sell Sterling 20/03/2014 14,113,059 EUR Buy Euro: Sell Sterling 20/03/2014 26,746,524 EUR Buy Euro: Sell Sterling 20/03/2014 37,436,223 EUR Buy Euro: Sell Sterling 20/03/2014 34,231,758 EUR Buy Euro: Sell Sterling 20/03/2014 1,730,000 EUR Buy Euro: Sell Turkish Lira 20/03/2014 39,501,984 EUR Buy Euro: Sell US Dollar 20/03/2014 5,112,242 EUR Buy Euro: Sell US Dollar 20/03/2014 38,252,990 EUR Buy Euro: Sell US Dollar 20/03/2014 980,607 EUR Buy Euro: Sell US Dollar 20/03/2014 15,334,446 EUR Buy Euro: Sell US Dollar 20/03/2014 7,831,515 EUR Buy Euro: Sell US Dollar 20/03/2014 79,379 EUR Buy Euro: Sell US Dollar 20/03/2014 85,589 EUR Buy Euro: Sell US Dollar 16/01/2014 34,804 EUR Buy Euro: Sell US Dollar 16/01/2014 4,651 EUR Buy Euro: Sell US Dollar 16/01/2014 245,643 EUR Buy Euro: Sell US Dollar 20/03/2014 5,145,390,000 KRW Buy Korean Won: Sell Euro 20/03/2014 2,183,304,000 KRW Buy Korean Won: Sell Euro 20/03/2014 15,585,653 MYR Buy Malaysian Ringgit: Sell Euro 20/03/2014 44,731,683 MXN Buy Mexican Peso: Sell Euro 20/03/2014 32,029,834 MXN Buy Mexican Peso: Sell Euro 20/03/2014 13,137,744 PHP Buy Philippine Peso: Sell Euro 20/03/2014 9,480,149 PLN Buy Polish Zloty: Sell Euro 20/03/2014 4,780,000 PLN Buy Polish Zloty: Sell US Dollar 20/03/2014 932,648 SGD Buy Singapore Dollar: Sell Euro 20/03/2014 518,234,504 GBP Buy Sterling: Sell Euro 16/01/2014 344,278 GBP Buy Sterling: Sell Euro 20/03/2014 539,000 GBP Buy Sterling: Sell Euro 20/03/2014 709,623 GBP Buy Sterling: Sell Euro 20/03/2014 131,060 GBP Buy Sterling: Sell Euro 16/01/2014 89,318 GBP Buy Sterling: Sell Euro 20/03/2014
43
Market value EUR
% of Net Assets
67,276 (144,933) (5,214) (7,731) 15,469 722,322 130,936 23,099 181,879 17,569 702 (19,081) 691,118 5,068 10,376 113,565 96,257 8,324 (3,580) 19,392 (2,126) 20,567 179,468 (18) (1,346) (4,764) (9,195) (13,155) (27,278) (65,520) (66,387) (68,070) (81,236) (126,457) (139,272) (196,138) 76,359 601,922 16,328 10,062 6,000 2,897 1,502 551 498 51 1 (232) (12,262) (1,595) (48,949) (34,141) (34,337) (1,345) 19,595 11,461 (3,751) 9,389,479 4,503 3,375 1,911 888 684
0.01 (0.02) 0.12 0.02 0.03 0.11 0.02 0.02 0.03 (0.01) (0.01) (0.01) (0.01) (0.02) (0.02) (0.03) 0.01 0.10 (0.01) (0.01) (0.01) 1.50 -
Total Return Bond Fund
Number of Securities Derivative instruments Transferable securities and money market instruments admitted to an official exchange listing
Forward Foreign Exchange Contracts (continued) 4,891,169 TRY Buy Turkish Lira: Sell Euro 20/03/2014 1,485,161 USD Buy US Dollar: Sell Czech Republic Koruna 20/03/2014 15,037 USD Buy US Dollar: Sell Euro 16/01/2014 112,786 USD Buy US Dollar: Sell Euro 20/03/2014 3,013,108 USD Buy US Dollar: Sell Euro 16/01/2014 1,334,506 USD Buy US Dollar: Sell Euro 20/03/2014 693,443 USD Buy US Dollar: Sell Euro 20/03/2014 1,837,612 USD Buy US Dollar: Sell Euro 20/03/2014 11,550,000 USD Buy US Dollar: Sell Euro 20/03/2014 Credit Default Swaps 1,500,000 EUR Barclays Capital Fiat 5% 20/03/2019 500,000 EUR CreditSuisse Virgin Medial 5% 20/09/2018 150,000 EUR Goldman Sachs PostNL 1% 20/03/2019 800,000 EUR Merrill Lynch Acelormitta 1% 20/03/2019 500,000 EUR Merrill Lynch Glencore 1% 20/03/2019 250,000 EUR Morgan Stanley PostNL 1% 20/12/2018 Inflation Rate Swaps 12,200,000 EUR Deutsche Bank 1.8850% 06/05/2023 24,400,000 EUR Deutsche Bank 2.2900% 14/05/2028 24,400,000 EUR Deutsche Bank FRCPIX 14/05/2023 12,200,000 EUR JP Morgan 1.88375% 14/05/2023 9,550,000 GBP Merrill Lynch 3.6000% 12/06/2033 Interest Rate Swaps 90,550,000 EUR Citibank 01.5670% EUR 27/06/2017 64,200,000 USD Citibank 2.24% USD-LIBOR 13/03/2019 42,000,000 EUR Citibank 3.046% EUR-EURIBOR 23/10/2043 20,000,000 GBP Citibank 3.4175% GBP-LIBOR 22/08/2063 60,000,000 ZAR Citibank 7.3% ZAR-JI 20/12/2018 111,000,000 CHF Deutsche Bank 0.7125% CHF-SF 19/11/2017 83,600,000 USD Deutsche Bank 0.925% USD-LIBOR 10/12/2016 83,600,000 USD Deutsche Bank 0.925% USD-LIBOR 11/12/2016 2,500,000 CAD Deutsche Bank 2.6825% CAD-BA 19/09/2042 16,100,000 USD Deutsche Bank 3.766% USD -LIBOR 09/02/2044 89,100,000 USD Deutsche Bank 4.165% USD-LIBOR 11/12/2020 89,100,000 USD Deutsche Bank 4.18% USD-LIBOR 10/12/2020 40,050,000 MXN Deutsche Bank 8.43% MXN-TI 28/11/2023 40,050,000 MXN Deutsche Bank 8.56% MXN-TI 29/11/2023 60,500,000 CHF HSBC 2.3950% CHF-SF 19/11/2023 138,000,000 ZAR HSBC 6.92% ZAR-JI 03/12/2015 9,850,000 GBP JP Morgan 3.46% GBP-LIBOR 06/09/2063 37,200,000 CHF UBS 1.0425% CHF-SF 14/09/2017 Futures Contract (342) GBP (51) EUR (34) USD (16) USD (5) USD (4) EUR
LIF Long Bond 27/03/2014 EUX Bund 06/03/2014 CBT 5 Year Note 31/03/2014 CBT 10 Year Note 20/03/2014 CBT Ultra Bond 20/03/2014 EUX Bobl 06/03/2014
Market value EUR
% of Net Assets
(82,243) (3,986)
(0.01) -
(69) (562) (3,209) (3,662) (3,744) (5,016) (62,789) 11,168,061
(0.01) 1.79
(12,417) 40,694 (642) (455) (48,405) 115,494 94,269
0.01 (0.01) 0.02 0.02
250,876 924,404 (735,623) 249,191 106,252 795,100
0.04 0.15 (0.12) 0.04 0.02 0.13
689,989 (795,108) (231,655) (207,159) (14,907) 143,193 185,342 186,493 297,293 (262,970) (139,743) (121,666) (7,043) 2,935 (362,757) 20,298 (152,822) (208,981) (979,268)
0.11 (0.14) (0.04) (0.03) 0.02 0.03 0.03 0.05 (0.04) (0.02) (0.02) (0.06) (0.02) (0.03) (0.16)
1,057,116 104,040 38,748 27,148 6,583 5,120 1,238,755
0.17 0.02 0.01 0.20
Number of Securities Derivative instruments Transferable securities and money market instruments admitted to an official exchange listing
FX Options at Market Value** (25,000,000) AUD FX Option AUD/USD Put 0.75 Expiry 31/07/2014 25,000,000 AUD FX Option AUD/USD Put 0.85 Expiry 31/07/2014 13,000,000 USD FX Option USD/CHF Call 0.975 Expiry 01/09/2014 (13,000,000) USD FX Option USD/CHF Call 1.10 Expiry 01/09/2014 (19,125,000) USD FX Option USD/AUD Call 0.85 Expiry 04/04/2014 21,375,000 USD FX Option AUD/USD Call 0.95 Expiry 04/04/2014 20,000,000 USD FX Option USD/CHF Call 0.965 Expiry 27/02/2014 (20,000,000) USD FX Option USD/CHF Call 1.05 Expiry 27/02/2014 Options at Market Value*** (571,000) USD US Bond Call 135 21/02/2014 571,000 USD US Bond Call 132 21/02/2014 Swaptions**** (90,000,000) USD 90,000,000 USD (45,000,000) USD 45,000,000 USD 30,000,000 EUR (30,000,000) EUR (73,000,000) EUR 73,000,000 EUR 127,000,000 EUR (127,000,000) EUR
Swaption 06/07/2015 USD 3 Month 5.500% Swaption 06/07/2015 USD PFIX 4.5000% Swaption 05/07/2016 USD 3 Month 5.900% Swaption 05/07/2016 USD PFIX 4.9000% Swaption 06/08/2018 EUR PFIX 2.8500% Swaption 06/08/2018 EUR 6 Month EURIBOR Swaption 23/09/2015 EUR 6 Month EURIBOR Swaption 23/09/2015 EUR 3.3500% Swaption 10/10/2016 EUR 4.5500% Swaption 10/10/2016 EUR 6 Months EURIBOR
Other Net Assets Total Net Assets * Total Commitment of EUR (56,182,128) ** Total commitments EUR (49,627,392) *** Total commitments EUR (55,991,637) *** Total commitments EUR (1,690,298,520)
44
Market value EUR
% of Net Assets
(65,311) 327,027 64,664 (12,304) (110,883) 1,134,220 8,876 (581) 1,345,708
(0.01) 0.05 0.01 (0.02) 0.19 0.22
(51,844) 200,896 149,052
(0.01) 0.03 0.02
(407,729) 1,187,232 (421,784) 935,482 4,193,640 (1,983,900) (407,340) 1,289,545 1,608,328 (735,330) 5,258,144
(0.07) 0.19 (0.07) 0.15 0.68 (0.32) (0.07) 0.21 0.26 (0.12) 0.84
83,670,196 623,053,856
13.43 100.00
Total Return Bond Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013 Description of Securities
Portfolio by Country Country
Purchases
Sales
EUR
EUR
Australia Australia Government Bond 4.25% 21/07/2017
32,186,470
14,406,864
Canada Canadian Government Bond 4.25% 01/12/2021
----
26,633,190
France French Government Bond 2% 12/07/2015
----
32,343,086
Germany Bundesschatzanweisungen Deutschland 0.25% 13/03/2015
----
32,119,835
14,666,671 11,443,115
-------
5,903,481
5,935,039
---23,951,474 11,435,166
29,633,340 -------
Bonds
Mexico Mexican Bonos 10% 05/12/2024 Mexican Bonos 7.75% 13/11/2042 Thailand Thailand Government Bond 3.25% 16/06/2017 United Kingdom Henderson Secured Loans Z United Kingdom Gilt Inflation Linked 0.125% 22/03/2024 United Kingdom Gilt Inflation Linked 2.5% 26/07/2016
United Kingdom United States The Netherlands Australia Luxembourg Mexico France Ireland Germany Sweden Cayman Islands Canada Czech Republic Switzerland Italy Russia Jersey Finland Spain Bulgaria Belgium Bermuda Philippines Denmark Brazil Austria Colombia Curacao South Korea United Arab Emirates Isle of Man Poland Singapore Peru Investment in Securities Forward Foreign Exchange Contracts Swap Contracts Futures Options Swaptions Other Net Assets Total Net Assets
Market Value EUR 195,949,896 93,777,138 41,480,785 37,124,501 28,070,112 26,624,835 22,053,487 15,423,608 9,543,102 6,524,966 5,131,072 4,553,869 4,372,679 4,279,042 4,006,645 3,781,998 2,954,923 1,902,659 1,760,736 1,600,000 1,529,340 1,429,118 1,439,305 1,311,812 1,148,379 914,386 781,092 309,834 185,760 208,048 131,893 5,601 2,922 296
% of Net Assets 31.45 15.05 6.66 5.96 4.51 4.27 3.54 2.47 1.53 1.05 0.82 0.73 0.70 0.69 0.64 0.61 0.47 0.31 0.28 0.26 0.25 0.23 0.23 0.21 0.18 0.15 0.12 0.05 0.03 0.03 0.02 -
520,313,839 11,168,061 (89,899) 1,238,755 1,494,760 5,258,144 83,670,196 623,053,856
83.51 1.79 0.20 0.23 0.84 13.43 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
45
American Equity Fund Managers’ report for the six months to 31 December 2013
Fund Managers Nicholas Cowley and Antony Gifford The Fund’s total return during the six-month period was 16.1% in US dollar terms, compared with the S&P 500, which produced a total return of 16.3%. US equities rose strongly during the review period, as ongoing improvements in the unemployment rate and strong third-quarter gross domestic product (GDP) growth overshadowed political uncertainty and the beginning of the US Federal Reserve (Fed)’s reduction in its asset purchase programme (‘tapering’). For the second time in 2013, disagreements over budget decisions between the Republican-led House of Representatives and the Democrat-led Senate threatened to curtail the economic recovery. However, despite the first federal government shutdown since the late 1990s, the economy proved resilient and consumer spending and industrial output continued to grow. It was partly as a result of this resilience that the Fed took the decision in December to scale back its US$85 billion per month bond-purchasing programme, albeit by a relatively minor US$10 billion. This pushed US 10-year treasury yields above 3% for the first time since 2011. Consumer stocks were among the best performers during the period, as consumer spending proved resilient even during periods of uncertainty, such as the government shutdown in October. Within the portfolio, this meant retail stocks with a significant domestic exposure such as L Brands and VF Corp outperformed. Following the announcement from the Fed in May that it was considering scaling back quantitative easing, defensive, highly geared sectors such as utilities and telecoms lagged the wider market. A notable exception to this was healthcare, which outperformed during the period despite being a traditionally defensive sector, as a result of strong balance sheets and improving drug pipelines. Given the re-rating on earnings multiples that the US equity market has undergone, new positions during the period tended towards companies that were lowly rated or where short-term factors were causing excessive pressure on the share price. For example, a new position was added in agricultural machinery manufacturer Deere, which remains attractively valued on measures such as price to earnings despite being a high-quality manufacturer that is extremely cash generative. Shortly after the position was added, Deere announced that it would undertake a share buyback consisting of over 25% of the market cap, illustrating the level of free cash flow available to return to shareholders. A new position was also added in Google as, despite significant potential for earnings growth from its core online search business, the shares remain attractively valued (especially when the net cash balance sheet is taken into consideration). During the period we trimmed a number of positions that had performed well, such as Nielsen and Walgreen. We still see value in both of these names over the medium term. However, they have undergone a period of multiple expansion, and therefore it was prudent to take some profits. The portfolio remains underweight in defensive sectors such as utilities, telecommunications and consumer staples. While these sectors have underperformed in the second half of 2013, we are yet to find value sufficient to justify adding to positions. Conversely, we have added to the weighting in technology, which remains attractively valued despite strong balance sheets and earnings growth potential. We are encouraged by moves in the technology sector to return more cash to shareholders – Qualcomm and Microsoft, both held in the portfolio, have announced sizeable dividend increases and share buybacks during the course of 2013. The majority of US equity market returns during 2013 were a result of multiple expansion rather than earnings growth. While earnings multiples for companies held in the portfolio remain reasonable, earnings growth will need to accelerate in 2014 in order to justify these multiples over the medium term. The increasing momentum in the economic recovery is, therefore, increasingly key to investment returns.
46
American Equity Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (USD)
For the period from 1 July 2013 to 31 December 2013 (USD)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
115,787,761 1,320,582 39,579 294,003 ----
----
780,028 ------16 16,377 796,421
-------
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
---------37,752 117,479,677 ----
-------
378,762 43,255 ----------------
422,017
117,057,660
5,570 622,246 163,480 39,402 33,459 18,309 ----
---882,466
Net loss from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange gain
(86,045) 5,490,737 ---------------732
Net realised gain
5,405,424
Increase in unrealised appreciation on investments Decrease in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
10,845,394
Net increase in assets as a result of operations
16,250,818
----
----------
----
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (USD) Net assets at the beginning of the period Net loss from investment Net realised gain on investment Net realised currency exchange gain Proceeds from shares issued
100,970,971 (86,045) 5,490,737 732 25,912,957
Payments for shares redeemed Net equalisation paid (note 13) Increase in unrealised appreciation on investments Dividends received (note 14) Net assets at the end of the period
47
(26,062,394) (14,692) 10,845,394 ---117,057,660
American Equity Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A2 4,021,229.44 438,002.89 (795,319.53) 3,663,912.80
I2 2,518,716.30 1,115,122.58 (790,549.93) 2,843,288.95
X2 32,485.90 1,254.62 (6,755.77) 26,984.75
A2 3,663,912.80 17.43
I2 2,843,288.95 18.55
X2 26,984.75 16.77
Net Asset Value Per Share As at 31 December 2013 Number of shares outstanding: Equivalent to a net asset value per share of: The accompanying notes form an integral part of these financial statements.
48
American Equity Fund
Portfolio as at 31 December 2013 Number of Securities
Market value USD
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013
% of Net Assets
Description of Securities
Shares Transferable securities and money market instruments admitted to an official exchange listing
Canada 66,000 Ireland 40,900
Dorel Industries Covidien
United Kingdom 27,000 Liberty Global United States 75,500 36,658 37,907 6,197 55,000 42,400 23,456 137,000 59,239 19,400 15,000 51,000 42,700 13,659 51,500 106,374 3,400 36,000 63,500 21,923 127,690 37,725 28,500 45,000 100,969 41,478 74,000 28,700 102,000 49,100 21,136 42,835 33,200 20,200 28,554 43,800 24,800 48,700
American International American Tower Anadarko Petroleum Apple ARRIS Baxter International Celanese Cisco Systems Citigroup Cummins Deere Delphi Automotive Dollar General Equinix Fair Isaac General Electric Google Intuit JPMorgan Chase Kansas City Southern Industries KKR L Brands Las Vegas Sands Mattel Microsoft National Oilwell Varco Nielsen Holdings Norfolk Southern Pfizer PNC Financial Services Praxair Qualcomm Stanley Black & Decker Time Warner Cable United Parcel Service UnitedHealth VF Corporation Walgreen
Investment in Securities Other Net Assets Total Net Assets
Purchases
Sales
USD
USD
Shares
2,535,272
2.17
2,788,971
2.38
2,414,880
2.06
3,871,640 2,913,028 3,003,372 3,464,743 1,337,050 2,940,863 1,301,808 3,044,825 3,079,539 2,727,834 1,364,025 3,067,650 2,594,452 2,369,563 3,241,410 2,967,303 3,764,633 2,755,260 3,694,748 2,707,819 3,076,052 2,333,102 2,235,968 2,146,275 3,769,678 3,278,006 3,411,770 2,663,360 3,128,850 3,812,861 2,746,412 3,165,721 2,699,326 2,733,565 3,001,454 3,283,029 1,546,280 2,805,364 108,048,638
3.31 2.49 2.57 2.96 1.14 2.51 1.11 2.60 2.63 2.33 1.17 2.62 2.22 2.02 2.77 2.53 3.22 2.35 3.16 2.31 2.63 1.99 1.91 1.83 3.22 2.80 2.91 2.28 2.67 3.26 2.35 2.70 2.31 2.34 2.56 2.80 1.32 2.40 92.30
115,787,761 1,269,899 117,057,660
98.92 1.08 100.00
United Kingdom Liberty Global
2,152,818
-
United States Deere Delphi Automotive First Cash Financial Services Google Kinder Morgan Microsoft Norfolk Southern Time Warner Cable Walgreen
1,277,247 2,843,685 3,034,085 332,237 584,569 222,720 402,803
2,353,149 2,813,496 957,730 1,029,891 1,357,895 1,062,970
Portfolio by Sector Sector Technology Financials Consumer Services Industrials Health Care Consumer Goods Oil & Gas Basic Materials Investment in Securities Other Net Assets Total Net Assets
Market Value USD 26,912,882 20,447,867 18,529,101 15,431,795 12,141,714 11,994,804 6,281,378 4,048,220
% of Net Assets 22.98 17.48 15.83 13.18 10.36 10.25 5.37 3.47
115,787,761 1,269,899 117,057,660
98.92 1.08 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
Any differences in the percentage of Net Asset figures are the result of roundings.
49
Asian Dividend Income Fund Manager’s report for the six months to 31 December 2013
Fund Manager Michael Kerley The Fund returned 5.3% over the review period against the MSCI AC Asia Pacific ex-Japan Index’s return of 9.9% in US dollar terms. The markets recovered sharply during the period under review following a sell-off in May and June 2013, when investors shifted away from assets perceived as being riskier in anticipation of a reduction (tapering) of US quantitative easing (QE). Federal Reserve (the Fed) comments relating to the potential tapering of its bond-buying programme once again dominated with ASEAN markets most impacted by fund withdrawals from both bonds and equities. The weakening currencies in India and Indonesia were driven by a worsening growth outlook, which was compounded by trade and current account deficits. The political uncertainty in Syria also contributed to a volatile market. However, sentiment turned more positive in September on the realisation that liquidity conditions would continue to remain supportive in the short term as the Fed moderated some of its earlier rhetoric. Lower political risk in Syria and positive Chinese macroeconomic data helped support the market recovery in September. This was positive for the information technology and materials sectors, two of the strongest performing sectors in the period under review. Inevitably, defensive sectors such as utilities and telecommunication services underperformed in an environment where yielding equities came under pressure from a steepening yield curve. Asian markets continued to move ahead in October following a resolution to the negotiations over the US debt ceiling, which averted the possibility of a US default. China and Hong Kong were two of the best performing markets in the period, supported by a positive economic reform agenda announced in November following the Third Plenum in China. This aimed at improving medium-term growth prospects by addressing sustainability of growth through supply-side reforms. The areas highlighted were market deregulation and financial reform alongside state-owned enterprise reform and anti-corruption initiatives. The Fed’s decision in December to announce the tapering of its purchases of long-term debt securities was a focal point for markets and confirms the view that US macro conditions are improving. The market response was much more muted than the violent moves in mid-2013 when the idea was first mooted. While the Fed’s planned reduction of its asset-purchase programme may lead to further market volatility in the region, the taper is dependent on improving US economic growth, which in turn will benefit trade with Asia. In the midst of this volatility, we expect interest rates to continue to remain low, which will benefit yielding equities. With Indonesia, Thailand and India holding elections in 2014, this should usher in a period of relative stability given recent political uncertainty. Recent strides to address the macro headwinds in these countries have been relatively effective. For example, the Indian government announced several measures to stem the rupee’s depreciation, such as increasing the foreign direct investment limits in key sectors. The Fund underperformed the index over the period as investors switched their focus to global cyclicals and exporters, which outperformed more traditional defensive areas, where the fund tends to have a greater bias. Our underweight in ASEAN markets such as India and Indonesia was beneficial, but were offset by weakness in Thailand during the period. Underweight positions in Korea and Australia, two of the best performers, also detracted from performance. By sector, the underweight positions in information technology and financials were detrimental for performance as both sectors performed well. During the period, we continued to find attractive opportunities in China, adding companies such as Skyworth Digital Holdings, Giant Interactive, Beijing Capital International Airport, and Sinopec Engineering. These companies offer unique business models with compelling valuations and yield, and are set to benefit from the increase in Chinese disposable income. We also initiated a position in Japan for the first time in a number of years, following some very strong results from the banking sector. We believe the investment in Mizuho Bank will lead to greater dividend distribution over time as excess capital builds, with the bank being a direct beneficiary of the improvement in the Japanese economy. Overall, our positive view on Asia is unchanged in the medium to long term as we continue to see attractive company valuations and improving macroeconomic trends in key markets such as China. However, external factors have the potential to unsettle Asian markets in the short term. We continue to focus on attractive names with strong capital upside and growing yield characteristics and use short-term volatility to add to our preferred names.
50
Asian Dividend Income Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (USD)
For the period from 1 July 2013 to 31 December 2013 (USD)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
408,608,135 1,704,659 572,645 616,318 ----
---456,313 ----
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
---------51,078 412,009,148 103,952
1,228,362 ----
1,234,213 1,546,990 ----
Net gain from investment Net realised loss on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised gain on options contracts Net realised currency exchange gain
---------13,859
4,127,376
Net realised gain
Net assets at the end of the period
9,478,521 ------1,508 776,446 10,256,475
407,881,772
81,413 2,095,486 587,691 143,030 143,602 68,110 ----
---3,119,332 7,137,143 (3,393,178) ------------800,892 29,483 4,574,340
Increase in unrealised appreciation on investments Increase in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
16,365,989
Net increase in assets as a result of operations
20,885,805
456,313
----------
(510,837)
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (USD) Net assets at the beginning of the period Net gain from investment Net realised loss on investment Net realised currency exchange gain Proceeds from shares issued
361,212,425 7,137,143 (2,592,286) 29,483 159,379,879
Payments for shares redeemed Net equalisation received (note 13) Increase in unrealised appreciation on investments Dividends paid (note 14) Net assets at the end of the period
51
(128,525,846) 342,539 16,311,465 (5,413,030) 407,881,772
Asian Dividend Income Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A1 9,841,154.45 2,536,573.99 (3,666,457.56) 8,711,270.88
X2 39,133.00 23,926.24 (3,732.09) 59,327.15
A2 (EUR) 1,014,955.46 142,077.45 (776,964.23) 380,068.68
AI (EUR) 3,532,695.98 934,469.31 (3,852,708.46) 614,456.83
A1 (SGD) 514,498.72 18,084.45 (32,723.23) 499,859.94
A2 2,519,139.22 265,291.21 (583,989.59) 2,200,440.84
12 4,565,482.20 1,778,870.17 (459,776.03) 5,884,576.34
Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A2 (SGD) 280,555.87 40,421.55 (51,409.95) 269,567.47
I1 (GBP) 2,626,902.59 401,772.70 (69,962.62) 2,958,712.67
H2 ---211,055.18 (6,993.61) 204,061.57
C2 252,165.26 191,168.03 ---443,333.29
H2 (EUR) ---139,433.50 (26,284.00) 113,149.50
H1 (EUR) ---3,202,765.36 (252,855.58) 2,949,909.78
H1 ---656,736.18 (30,247.00) 626,489.18
Number of shares outstanding: Equivalent to a net asset value per share of:
A1 8,711,270.88 11.91
X2 59,327.15 16.94
A2 (EUR) 380,068.68 12.82
AI (EUR) 614,456.83 8.64
A1 (SGD) 499,859.94 15.03
A2 2,200,440.84 17.61
12 5,884,576.34 18.40
Number of shares outstanding: Equivalent to a net asset value per share of:
A2 (SGD) 269,567.47 22.24
I1 (GBP) 2,958,712.67 7.55
H2 204,061.57 10.93
C2 443,333.29 101.54
H2 (EUR) 113,149.50 9.73
H1 (EUR) 2,949,909.78 9.73
H1 626,489.18 9.88
Net Asset Value Per Share As at 31 December 2013
The accompanying notes form an integral part of these financial statements.
52
Asian Dividend Income Fund
Portfolio as at 31 December 2013 Number of Securities
Market value USD
% of Net Assets
8,313,106 8,494,286 8,171,560 6,005,785 918,858 8,146,492 6,392,477 7,383,882 6,467,175 8,975,694 69,269,315
2.04 2.08 2.00 1.47 0.22 2.00 1.57 1.81 1.59 2.20 16.98
12,658,572 4,620,294 8,968,808 7,195,773 6,098,907 8,078,505 10,021,892 57,642,751
3.10 1.13 2.20 1.76 1.50 1.98 2.46 14.13
7,650,259 7,296,378 11,260,174 11,192,157 7,648,971 6,976,446 7,655,446 59,679,831
1.88 1.79 2.76 2.74 1.87 1.71 1.88 14.63
6,301,190
1.54
Number of Securities
China 27,417,000 5,902,000 865,500 638,206 4,159,200 6,566,000 6,699,000
Amcor Commonwealth Bank of Australia Dexus Property Myer Holdings Orora Santos Seven West Media Suncorp Telstra Westfield Retail Trust
Bank of China Beijing Capital International Airport China Mobile Giant Interactive Group Guangzhou R&F Properties Jiangsu Expressway Sinopec Engineering Group
Hong Kong 6,515,000 4,806,723 3,077,000 3,341,000 13,906,000 551,000 1,001,000
Digital China Holdings NWS Holdings Shanghai Industrial Holdings SJM Holdings Skyworth Digital Holdings Sun Hung Kai Properties Wharf Holdings
Indonesia 35,461,500
Telekomunikasi Indonesia
Taiwan 1,184,000 848,000 3,552,000 7,645,000 565,348
Mizuho Bank
9,833,374
2.41
New Zealand 4,386,797
Telecom New Zealand
8,338,759
2.04
Philippines 113,965
Philippine Long Distance Telephone
6,848,295
1.68
Singapore 4,599,000 5,239,000 608,657 9,398,000 2,416,000 2,778,000
Ascendas Real Estate Investment Trust CapitaMall Trust DBS Mapletree Greater China Commercial Trust SATS Sembcorp Marine
8,027,097 7,879,316 8,226,590 6,230,269 6,157,995 9,752,420 46,273,687
1.97 1.93 2.02 1.53 1.51 2.38 11.34
South Korea 283,540 99,016 292,730 1,041,119 499,886
Grand Korea Leisure Hyundai Motor Kangwon Land Macquarie Korea Infrastructure Fund SK Telecom
10,834,084 12,173,521 8,577,889 6,032,541 12,299,695 49,917,730
2.656 2.985 2.103 1.479 3.016 12.24
7,697,086 5,527,005 5,747,489 11,844,516 9,935,991 40,752,087
1.89 1.36 1.41 2.90 2.44 10.00
7,078,031
1.74
8,940,275
2.19
305,339
0.07
7,700,085
1.89
1,665,468
0.41
9,365,553
2.30
6,678,798 10,007,819 7,460,330 3,914,971 28,061,918
1.64 2.45 1.83 0.96 6.88
408,608,135
100.17
(487)
(0.00)
(13,372)
(0.00)
(13,859)
(0.00)
(712,504) 407,881,772
(0.17) 100.00
Catcher Technology Cleanaway CTCI Taiwan Cement Taiwan Seminductor Manufacturing
United Kingdom 652,000 HSBC Holdings Bonds The Netherlands 10,605,032 Morgan Stanley 0% 15/07/2014 Unlisted Securities China 8,164,000 India 1,473,780 318,767
Thailand 1,098,700 10,357,700 14,812,475 8,326,600
China Forestry Holdings Cairn (Barclays Bank 22/01/2016 equity linked certificate) Cairn (Barclays Bank 28/10/2016 Participatory notes)
Advanced Information Service Charoen Pokphand Foods Krung Thai Bank LPN Development - Foreign
Investment in Securities
Japan 4,537,400
% of Net Assets
Shares Transferable securities and money market instruments admitted to an official exchange listing
Shares Transferable securities and money market instruments admitted to an official exchange listing
Australia 882,003 122,000 9,070,000 2,442,218 882,003 623,545 3,041,926 629,119 1,377,535 3,390,968
Market value USD
Derivative Instruments Sold / Bought Options at Market Value* (451,000) (1,650,000)
Giant Iinteractive JAN14 PUT 8.25 Expiry 10/01/2014 SJM Holdings JAN14 CALL 28.5483 Expiry 21/01/2014
Other Net Liabilities Total Net Assets
Any differences in the percentage of Net Asset figures are the result of roundings. *Total commitment USD (9,795,745)
53
Asian Dividend Income Fund
Top ten changes in the securities portfolio from 1 July 2013 to 30 December 2013 Description of Securities
Purchases
Sales
USD
USD
Shares
Australia Commonwealth Bank of Australia Dexus Property National Australia Bank Sonic Healthcare
16,186,024 8,410,569 8,280,301 8,675,971
8,004,249 6,121,196 12,633,597 8,559,609
-
10,689,207
Hong Kong Cheung Kong Holdings Sun Hung Kai Properties
977,748 9,895,409
9,788,737 2,655,842
Japan Mizuho Financial Group Inc
9,792,724
-
-
9,268,151
8,281,252
960,046
China Spreadtrum Communications
Malaysia Malayan Banking Japan HSBC Holdings
Portfolio by Country Country Australia Hong Kong China South Korea Singapore Taiwan Thailand Japan India The Netherlands New Zealand United Kingdom Philippines Indonesia Investment in Securities Options Other Net Liabilities Total Net Assets
Market Value USD 69,269,315 59,679,831 57,948,090 49,917,730 46,273,687 40,752,087 28,061,918 9,833,374 9,365,553 8,940,275 8,338,759 7,078,031 6,848,295 6,301,190 408,608,135
% of Net Assets 16.98 14.63 14.20 12.24 11.34 10.00 6.88 2.41 2.30 2.19 2.04 1.74 1.68 1.54 100.17
(13,859)
-
(712,504) 407,881,772
(0.17) 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
54
Asian Growth Fund Managers’ report for the six months to 31 December 2013
Fund Managers John Crawford and Marc Franklin The Fund returned 13.3% in US dollar terms over the six months under review against the MSCI All Countries Asia (ex Japan) Index return of 9.5%. The half-year period saw positive performance from global equity markets. Asian markets rose steadily as a result of improving macroeconomic data and conditions, both in key developed markets, such as the US and certain parts of the eurozone, and in China, where a gradual easing of lending and investment policy, as well as the emergence of a broad agenda for economic reform and deregulation, also boosted sentiment. This was further supported by aggressive monetary stimulus from the Bank of Japan, which served to improve global liquidity conditions. The surprise decision by the US Federal Reserve (Fed) at its September meeting not to begin tapering (reducing) its quantitative easing (QE) programme initially boosted Asian market sentiment. When the Fed finally decided to begin tapering in December, however, regional markets reacted positively, as the decision was underpinned by a period of further improvement in US macroeconomic data, which increased confidence in the outlook for global growth. South-East Asian markets, notably Indonesia, Thailand, and the Philippines, lagged the overall region significantly. In these markets, anticipation that the Fed would taper its QE programme, and then the actual decision itself, precipitated the steepening of the US dollar yield curve and higher risk-free rates. This prompted a weakening of currencies and an aggressive sell-off in these equity markets, which were seen as having benefited the most from fund flows brought about by the Fed’s loose monetary policy over the previous three years. In Indonesia’s case, its large current-account deficit was also a focal point of risk aversion. In Thailand, underperformance was exacerbated by renewed political instability. In contrast, Korea and China outperformed, thanks to improved macroeconomic momentum in both the West and China underpinning a better outlook for export recovery. This provided a catalyst for the rerating of two markets that had become cheap in absolute and relative terms. Performance was strong over the period, driven primarily by stock selection. Vipshop, a Chinese online flash-discount apparel retailer, and Baidu, the Chinese search-engine leader, had strong half-year performance because of surging growth in China’s e-commerce and mobile internet activity. Sands China, the Macau casino operator, was also a major positive contributor, owing to continued impressive earnings performance and improved volume data from the broader Macau gaming market. In contrast, LT Group, the Philippines consumer and banking conglomerate, was the most notable laggard as it was caught up in the South-East Asian market sell-off and was also hit by concerns over the competitive outlook for its tobacco and liquor businesses. Chipbond Technology, a Taiwanese provider of chip-packaging services, was another disappointing performer as evidence of a slower growth outlook for smartphones and high-end TVs in China combined with price cuts to hit sentiment and the outlook for the company’s earnings growth. Asset allocation saw limited change over the six-month review period. Key stock acquisitions included Vocation Limited, an Australian provider of professional-services education and training, on the grounds of attractive valuations and the long-term potential for enrolment and programme expansion. Given the positive outlook for dry-bulk shipping rates in 2014, we also bought a position in Pacific Basin, a dry-bulk shipping company. To gain further exposure to the high-conviction growth story in Macau gaming, we added Melco Crown, a Macau casino operator. Key sales to fund these purchases included Total Access Communications, the Thai mobile telecommunications player, over fears of heightened competitive intensity. We also sold Chipbond Technology after we lost conviction in the dominance of the company’s competitive position. In China, we sold Xinyi Glass, a manufacturer of automobile and construction glass, on valuation grounds. This followed a strong rally on an expected step-up in earnings. Although valuations for the Asian region remain reasonable and the outlook for global growth appears positive, regional markets and intraregional performance may see volatility over the course of 2014. Macroeconomic data in the US has continued its path of improvement, which will support externally facing parts of the Asian economy, but regional currencies and bond markets continue to be sensitive to any material reversal in global fund flows. Some signs of a tightening of liquidity in China’s financial system have also emerged recently, which could arrest the recent positive momentum in its pace of growth of economic activity.
55
Asian Growth Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (USD)
For the period from 1 July 2013 to 31 December 2013 (USD)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
34,035,609 904,578 ---379 453,686 ------------------1,427 35,395,679 208,423 ---565,811 169,675 230,953 ---------------1,174,862
34,220,817
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
308,491 ------20 7,092 315,603
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
32,705 290,586 87,156 17,213 21,826 8,721 ------458,207
Net loss from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange loss
(142,604) 2,300,488 ---------------(72,519)
Net realised gain
2,085,365
Increase in unrealised appreciation on investments Decrease in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
2,118,156 ----------------
Net increase in assets as a result of operations
4,203,521
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (USD) Net assets at the beginning of the period Net loss from investment Net realised gain on investment Net realised currency exchange loss Proceeds from shares issued
32,692,574 (142,604) 2,300,488 (72,519) 763,450
Payments for shares redeemed Net equalisation paid (note 13) Increase in unrealised appreciation on investments Dividends received (note 14) Net assets at the end of the period
56
(3,434,099) (4,629) 2,118,156 ---34,220,817
Asian Growth Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A2 360,027.08 7,250.66 (36,164.61) 331,113.13
A2 (EUR) 27,176.77 352.55 (1,561.36) 25,967.96
X2 2,579.55 ---(258.80) 2,320.75
X2 (EUR) 1,102.82 433.39 (543.18) 993.03
A2 331,113.13 90.29
A2 (EUR) 25,967.96 153.05
X2 2,320.75 87.00
X2 (EUR) 993.03 150.98
Net Asset Value Per Share As at 31 December 2013 Number of shares outstanding: Equivalent to a net asset value per share of: The accompanying notes form an integral part of these financial statements.
57
Asian Growth Fund
Portfolio as at 31 December 2013 Number of Securities
Market value USD
% of Net Assets
Number of Securities
Shares Transferable securities and money market instruments admitted to an official exchange listing
Australia 335,405
Vocation
China 2,293,000 77,500 4,142 951,000 120,000 1,032,000 448,000 268,000 670,000 74,500 933,000 428,000 1,352,000
Market value USD
% of Net Assets
Shares
Transferable securities and money market instruments admitted to an official exchange listing 613,360
1.79
Agricultural Bank of China Anhui Conch Cement Baidu Sponsored ADR China Cinda Asset Management China Mengniu Dairy China Petroleum & Chemical First Tractor Guangzhou Automobile Hilong Holding Ping An Insurance Sihuan Pharmaceutical Sinopec Engineering Trigiant
1,128,185 288,106 720,874 591,779 568,749 843,156 350,421 293,098 571,592 669,445 853,721 640,300 461,195 7,980,621
3.30 0.84 2.11 1.73 1.66 2.46 1.02 0.86 1.67 1.96 2.49 1.87 1.35 23.32
Hong Kong 128,600 38,000 166,000 57,000 20,141 988,000 150,000 132,000 218,500
AIA Cheung Kong China Resources Gas Hutchison Whampoa Melco Crown Entertainment Pacific Basin Shipping Shanghai Industrial Holdings SJM Holdings Techtronic Industries
644,753 600,591 573,753 776,284 782,579 707,820 548,920 442,192 619,244 5,696,136
1.88 1.76 1.68 2.27 2.29 2.07 1.60 1.29 1.81 16.65
India 203,180 14,357 183,234 27,126
Dabur India ICICI Bank Motherson Sumi Systems Tech Mahindra
560,712 530,850 539,808 806,149 2,437,519
1.64 1.55 1.58 2.36 7.12
Indonesia 3,769,000 7,729,500
Tiga Pilar Sejahtera Food Waskita Karya Persero
444,414 258,814 703,228
1.30 0.76 2.05
Luxembourg 56,603
Sun Pharmaceutical
520,464
1.52
Macau 53,600
Sands China
439,128
1.28
Malaysia 592,200
Barakah Offshore Petroleum
275,717
0.81
Singapore 53,000 503,200 320,000
DBS Group Holdings Ezion Holdings First Resources
716,346 888,243 540,797 2,145,386
2.09 2.60 1.58 6.27
South Korea 16,070 22,890 19,672 752 3,127 1,479 34,278
Cheil Worldwide Hana Financial Group i-SENS NAVER NCSoft Samsung Electronics SK Telecom
418,367 951,626 776,833 516,250 735,564 1,418,949 843,410 5,660,999
1.22 2.78 2.27 1.51 2.15 4.15 2.46 16.54
Taiwan 1,692,000 324,000 57,000 20,000 60,073 1,216,000
CTBC Financial Holding Hon Hai Precision Industry MediaTek St Shine Optical Taiwan Semiconductor Manufacturing Yuanta Financial
1,153,889 870,240 847,728 570,739 1,055,783 727,271 5,225,650
3.37 2.54 2.48 1.67 3.09 2.13 15.27
Thailand 977,100
Krung Thai Bank
492,118
1.44
United States 174,900 7,730
Samsonite International Yum! Brands Inc
532,333 579,093 1,111,426
1.56 1.69 3.25
733,857
2.14
34,035,609 185,208 34,220,817
99.46 0.54 100.00
United Kingdom 67,600 HSBC Holdings Investment in Securities Other Net Assets Total Net Assets
Any differences in the percentage of Net Asset figures are the result of roundings.
58
Asian Growth Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013 Description of Securities
Purchases
Sales
USD
USD
948,874
1,413,912
2,321,923 1,171,609 1,349,223
1,379,628 1,134,487 740,787
Indonesia Bank Mandiri
839,259
1,172,231
South Korea Kia Motors Samsung Electronics
790,553 784,543
1,982,314 1,116,581
Taiwan Taiwan Semiconductor Manufacturing Turvo International
1,277,209 933,687
1,043,367 989,482
United Kingdom HSBC Holdings PLC
1,000,748
1,009,632
Shares
Australia National Australia Bank China Agricultural Bank of China Ltd Baidu Inc Ping An Insurance Group Co of China
Portfolio by Country Country China Hong Kong South Korea Taiwan India Singapore United States United Kingdom Indonesia Australia Luxembourg Thailand Macau Malaysia Investment in Securities Other Net Assets Total Net Assets
Market Value USD 7,980,621 5,696,136 5,660,999 5,225,650 2,437,519 2,145,386 1,111,426 733,857 703,228 613,360 520,464 492,118 439,128 275,717
% of Net Assets 23.32 16.65 16.54 15.27 7.12 6.27 3.25 2.14 2.05 1.79 1.52 1.44 1.28 0.81
34,035,609 185,208 34,220,817
99.46 0.54 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
59
Euroland Fund Manager’s report for the six months to 31 December 2013
Fund Manager Nick Sheridan During the six months under review, the Fund returned 23.1% against the MSCI EMU Index return of 20.1% in euro terms. Even after the good performance of European equities during 2013, we find ourselves with a European market that stands in aggregate on a cyclically adjusted price to earnings ratio of about 14x – so still not expensive; the US remains in elevated territory at around 25x. History shows that at some stage this will correct as European earnings or markets rise relative to those of the US. One way this could happen is for internationally minded investors to sell the US and buy Europe. In addition, European markets appear supported on a yield basis. In aggregate, the yield on European equities at 3.2% is in excess of quality corporate and government bonds, as shown by the 10-year German bund yield at 1.9% and the BBB Euro Corporate Bond Index at 2.8%. These figures understate the attraction of the aggregate equity yield, as the income stream on equities will show growth, unlike that of fixed interest vehicles, and, in addition, is somewhat protected if inflation begins to rise. From a valuation perspective it is difficult not to like Europe, and with an economic recovery forecast the argument gains weight. However, we must remember that these low relative valuations are a response to stresses within the eurozone. In response to these stresses, the European Central Bank (ECB) has announced that its monetary policy stance will remain accommodative for as long as needed. The US, on the other hand, has begun to taper its quantitative easing, which further strengthens our argument that European assets are attractive. The euro may not be perfect, but the ECB appears to have put in place an effective backstop to remove the remaining – if unlikely – risk that has plagued European markets. One of the major risks is that of political complacency in the face of economic recovery. Looking at performance for the period in more detail, stock selection was, broadly speaking, the major driver of the Fund’s outperformance. Good relative performance came from holdings such as Azimut and Banca Generali (increases in funds under management), Smurfit Kappa (recovery in core markets and cost cutting) and Deutsche Post (good results).
60
Euroland Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (EUR)
For the period from 1 July 2013 to 31 December 2013 (EUR)
Assets Investments in securities at market value Cash at bank (Note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
153,458,500 6,542,275 41,700 2,751,128 ------189 ------------77,997 162,871,789 ------1,920,942 565,320 147,647 ---------------2,633,909
160,237,880
461,348 ------60 26,094 487,502
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
13,482 818,476 227,885 44,504 32,008 29,383 ------1,165,738
Net loss from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange loss
(678,236) 6,876,488 ---------------(16,871)
Net realised gain
6,181,381
Increase in unrealised appreciation on investments Increase in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
10,500,235 189 -------------
Net increase in assets as a result of operations
16,681,807
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (EUR) Net assets at the beginning of the period Net loss from investment Net realised gain on investment Net realised currency exchange loss Proceeds from shares issued
56,437,477 (678,236) 6,876,488 (16,871) 123,609,140
Payments for shares redeemed Net equalisation received (note 13) Increase in unrealised appreciation on investments Dividends received (note 14) Net assets at the end of the period
61
(36,730,497) 239,953 10,500,426 ---160,237,880
Euroland Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013
Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A2
X2
1,918,646.02 3,229,542.43 (1,056,825.38) 4,091,363.07
4,031.77 210,269.07 (14,210.16) 200,090.68
A2 4,091,363.07 36.10
I2
H2 HGBP (GBP)
----
----
540,000.00
250.00
----
----
540,000.00
250.00
X2
I2
200,090.68 34.79
540,000.00 10.31
H2 HGBP (GBP) 250.00 12.29
Net Asset Value Per Share As at 31 December 2013
Number of shares outstanding: Equivalent to a net asset value per share of: The accompanying notes form an integral part of these financial statements.
62
Euroland Fund
Portfolio as at 31 December 2013 Number of Securities
Market value EUR
% of Net Assets
697,218
0.44
Number of Securities Shares Transferable securities and money market instruments admitted to an official exchange listing
Shares Transferable securities and money market instruments admitted to an official exchange listing
Austria 8,622
Schoeller-Bleckmann Oilfield
Belgium 72,742
Ageas
2,256,560
1.41
Denmark 157,561 20,289
Pandora Royal UNIBREW
6,208,668 2,000,413 8,209,081
3.87 1.25 5.12
3,430,358 1,918,123 5,348,481
2.14 1.20 3.34
5,845,374 4,565,320 4,273,292 2,667,330 4,071,142 2,449,264 1,871,136 1,967,564 720,567 4,337,305 32,768,294
3.64 2.85 2.67 1.66 2.54 1.53 1.17 1.23 0.45 2.71 20.45
Finland 96,075 95,667
Sampo Tikkurila Oyj
France 290,057 80,638 155,860 19,523 158,549 121,627 32,040 25,631 9,783 97,309
AXA BNP Paribas Bouygues Christian Dior Electricite de France Plastic Omnium Renault Sanofi Sodexo Total
Germany 24,056 23,444 36,324 18,568 144,420 22,607 283,913 350,741 24,293 65,382 20,546 105,720 38,564 152,529 22,781 69,232
Allianz Amadeus Fire Bayer BMW Commerzbank Continental Deutsche Post Infineon Technologies Jungheinrich Metro Norma Group ProSiebenSat.1 Media AG Siemens Talanx Tipp24 Wincor Nixdorf
3,138,105 1,273,830 3,709,589 1,586,914 1,690,436 3,605,817 7,557,054 2,725,608 1,145,172 2,308,802 744,433 3,806,184 3,838,275 3,758,391 1,108,751 3,486,177 45,483,538
1.96 0.79 2.32 0.99 1.05 2.25 4.72 1.70 0.71 1.44 0.46 2.38 2.40 2.35 0.69 2.18 28.39
Ireland 130,205 1,722,492 92,127
DCC Greencore Group Smurfit Kappa Group
4,626,231 4,582,820 1,644,237 10,853,288
2.89 2.86 1.03 6.78
Italy 215,845 183,349 56,189 167,906 456,059
Azimut Holding Banca Generali Industria Macchine Automatiche MARR Recordati
4,281,286 4,130,853 1,570,483 2,029,144 4,758,976 16,770,742
2.67 2.58 0.98 1.27 2.97 10.47
Market value EUR
% of Net Assets
1,198,190
0.75
Luxembourg 50,911
SES
Spain 257,013 99,123 178,274 238,447
ACS Amadeus IT Holding Distribuidora Internacional de Alimentacion Gas Natural
6,423,397 3,083,717 1,161,009 4,442,268 15,110,391
4.01 1.92 0.72 2.77 9.42
The Netherlands 241,877 121,348 330,077 100,171
Koninklijke Ahold Koninklijke Philips Reed Elsevier Ziggo
3,155,890 3,214,509 5,077,409 3,314,909 14,762,717
1.97 2.00 3.17 2.07 9.21
153,458,500
95.78
0.63 (0.13) 179.85 8.91 0.11 189
0.00 0.00 0.00 0.00 0.00 0.00
6,779,191 160,237,880
4.22 100.00
Investment in Securities Derivative Instruments Forward Foreign Exchange Contracts 597,417 DKK Buy Danish Krone: Sell Euro 03/01/14 183,192 DKK Buy Danish Krone: Sell Euro 03/01/14 95,454 GBP Buy Sterling: Sell Euro 03/01/14 2,500 GBP Buy Sterling: Sell Euro 03/01/14 34 GBP Buy Sterling: Sell Euro 03/01/14 Other Net Assets Total Net Assets
Any differences in the percentage of Net Asset figures are the result of roundings.
63
Euroland Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013 Description of Securities
Purchases
Sales
EUR
EUR
France BNP Paribas Bouygues EDF
3,815,328 4,359,011 4,258,822
1,189,378 158,255
Ireland DCC
3,188,155
842,831
Germany Infineon Technologies Porsche Auto Deutsche Post Talanx Siemens
4,322,072 2,567,592 4,517,103 4,064,017 3,837,616
1,854,296 2,770,100 199,819 194,761
Spain ACS
5,603,619
257,344
Shares
Portfolio by Country Country Germany France Italy Spain Netherlands Ireland Denmark Finland Belgium Luxembourg Austria Investment in Securities Forward Foreign Exchange Contracts Other Net Assets Total Net Assets
Market Value EUR 45,483,538 32,768,294 16,770,742 15,110,391 14,762,717 10,853,288 8,209,081 5,348,481 2,256,560 1,198,190 697,218
% of Net Assets 28.39 20.45 10.47 9.42 9.21 6.78 5.12 3.34 1.41 0.75 0.44
153,458,500 189 6,779,191 160,237,880
95.78 0.00 4.22 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
64
European Growth Fund Managers’ report for the six months to 31 December 2013
Fund Managers Richard Pease and Simon Rowe The Horizon European Growth Fund rose 11.5% against a gain of 16.3% on the FTSE World Europe ex UK Total Return Index (total return in euro terms). Equities recovered well in the second half of 2013, brushing aside fears about the US Federal Reserve (the Fed) winding down its bondpurchase programme, which had frightened the market in May and June. Investors were cheered by slightly more encouraging economic data from Europe and signs that the slowdown in China was stabilising. After months of poor economic news from Southern Europe, the rate of Spanish economic contraction appeared to be slowing and there were the first signs of improvement to European labour markets for more than two years. These developments, combined with improvements in German manufacturing indicators and slight improvements in consumer sentiment, led some observers to believe that Europe was starting to pull out of its long recession. August saw markets take a slight pause for breath, partly because of worries about economic developments in emerging markets, many of whose currencies had fallen in anticipation of a change in US monetary policy. In October, European stock markets rose on the growing belief that the worst was over, especially in Southern Europe. Shares then marked time in November partly because of mixed signals from the corporate sector (uneven third quarter results and cautious outlook statements) and partly because of mixed economic news. But in December, equities shrugged off the Fed’s decision to trim its bond buying to finish a strong year in confident form. Many of the important recent trends remained intact: bond yields in peripheral Europe continued to decline amid signs of financial stabilisation in Ireland and Spain. Meanwhile, Ireland managed to exit its European Union bailout and has returned to the bond market. The Fund underperformed the index, particularly in September and October 2013, a period which saw rallies in stocks where we are underweight, mainly cyclical and over-indebted stocks such as utilities, telecoms and banks. In November and December, our higher-quality stocks started to outperform, and the Fund’s return outpaced the index. Over the course of the second half of 2013, there were several bright spots, including tyre and automobile-electronics specialist Continental, which jumped 55% on pleasing results and expectations of a recovery in car demand in Europe. Royal Unibrew added 46% on strong earnings and buying Heineken’s Finnish operation. Our more cyclical holding, Dutch-based Aalberts, gained 35% and Konecranes climbed 18%. Construction-materials supplier Sika rose 30% while professional publishers Reed Elsevier and Wolters Kluwer added 20% and 28%, respectively. Gains were partly offset by Schindler after it announced disappointing figures and, within chemicals, Syngenta, Linde, and Air Liquide trod water as investors looked for more cyclical stocks elsewhere. Performance was also held back by pump-maker Sulzer, which disappointed on first-half profits; and margins at aero-engine maker MTU were hit by weaker demand for spares and growth in low-margin new engines. Prosafe slipped back on fears of new entrants into the accommodation rigs market. In terms of changes, we switched from Dutch supermarket Ahold, after a strong run, into Nestle, which had lagged. We swapped our position in Akzo, where the turnaround story was taking too long, for a holding in Volkswagen, which appeared to us to be undervalued given the share of its profits coming from luxury cars. We also purchased Atlas Copco, which predominately makes compressors for a huge variety of end applications, and makes a large part of profits from after-market sales. We also bought a new position in Nordea Bank, where we think main shareholder Sampo will push for higher dividends. The Fund disposed of Rheinmetall and Fresenius Medical Care. We trimmed Air Liquide to buy more Syngenta, as we believe the growth rate is higher on what we see as a slightly cheaper valuation. European equities have enjoyed a strong year despite mixed economic signals: German exports marched on, while both Spain and Ireland regained competitiveness by cutting labour costs. But many structural problems remain in France and Italy, and the recently announced banking union is unhelpful. Valuations have risen significantly faster than underlying earnings in 2013, partly because of confidence that the euro will not implode, and partly because investors are increasingly interested in the cash returns from equities at a time when the long bull market in bonds appears to have ended. We believe these major trends will continue in 2014.
65
European Growth Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (EUR)
For the period from 1 July 2013 to 31 December 2013 (EUR)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
67,606,851 1,151,722 ---457,180 ---------------------69,753 69,285,506 31,848 ------180,329 431,939 11,532 ------------655,648
68,629,858
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
128,096 ------3,566 9,150 140,812
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
17,919 546,654 13,155 30,349 18,033 16,937 ------643,047
Net loss from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange gain
(502,235) 3,901,532 (189,112) ------------20,551
Net realised gain
3,230,736
Increase in unrealised appreciation on investments Decrease in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
4,246,033 (103,869) -------------
Net increase in assets as a result of operations
7,372,900
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (EUR) Net assets at the beginning of the period Net loss from investment Net realised gain on investment Net realised currency exchange gain Proceeds from shares issued
66,840,198 (502,235) 3,712,420 20,551 9,892,215
Payments for shares redeemed Net equalisation received (note 13) Increase in unrealised appreciation on investments Dividends paid (note 14) Net assets at the end of the period
66
(15,039,864) 16,016 4,142,164 (451,607) 68,629,858
European Growth Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013
Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A2
I2
I1
B1
R1
476,365.76 132,321.58 (318,791.92) 289,895.42
783,328.40 73,457.00 (653,654.83) 203,130.57
218,307.06 34,565.99 ---252,873.05
191,060.47 6,358.18 (1,513.90) 195,904.75
3,596,137.12 239,882.18 (219,350.24) 3,616,669.06
A2
I2
I1
B1
R1
289,895.42 12.78
203,130.57 12.92
252,873.05 12.17
195,904.75 29.31
3,616,669.06 12.72
R1 HUSD (USD) 391,811.79 400,332.46 (29,462.15) 762,682.10
H1 ---11,350.49 (260.00) 11,090.49
Net Asset Value Per Share As at 31 December 2013
Number of shares outstanding: Equivalent to a net asset value per share of: The accompanying notes form an integral part of these financial statements.
67
R1 HUSD (USD) 762,682.10 13.26
H1 11,090.49 10.35
European Growth Fund
Portfolio as at 31 December 2013 Number of Securities
Market value EUR
% of Net Assets
995,852
1.45
Number of Securities
Schoeller-Bleckmann Oilfield Equipment AG
Denmark 439,599 16,167 17,662
G4S PLC Novo Nordisk Royal Unibrew
1,377,772 2,153,688 1,741,401 5,272,861
2.01 3.14 2.54 7.69
Finland 42,536 31,646 27,443 87,801 18,834
Kone Konecranes Metso Sampo Wartsila
1,394,968 818,840 852,105 3,134,935 673,881 6,874,729
2.03 1.19 1.24 4.57 0.98 10.01
France 13,265 22,191 18,532 18,682
Air Liquide Sanofi Schneider Electric Zodiac Aerospace
1,361,321 1,703,492 1,173,817 2,404,840 6,643,470
1.98 2.48 1.71 3.50 9.67
Germany 9,570 9,102 39,081 4,819 18,131 85,544 6,617 13,794
Brenntag Continental Fuchs Petrolub Linde MTU Aero Engines Holding Symrise Volkswagen Wincor Nixdorf
1,287,883 1,451,769 2,782,958 734,054 1,297,273 2,868,932 1,352,846 694,597 12,470,312
1.88 2.12 4.06 1.07 1.89 4.18 1.97 1.01 18.18
Norway 44,499 77,595
Fred Olsen Energy Prosafe
1,312,872 434,612 1,747,484
1.91 0.63 2.54
Sweden 97,763 233,143
Atlas Copco Nordea Bank
1,974,337 2,286,820 4,261,157
2.88 3.33 6.21
Switzerland 48,816 2,034 16,184 37,973 6,528 17,372 510 2,915 3,437 6,735
GAM Holding Givaudan Nestle Novartis Roche Holding Schindler Holding Sika Swatch Group Syngenta Zurich Insurance
689,380 2,111,412 861,104 2,203,056 1,325,758 1,858,541 1,318,433 1,400,107 994,980 1,418,578 14,181,349
1.00 3.08 1.25 3.21 1.93 2.71 1.92 2.04 1.45 2.07 20.66
% of Net Assets
1,408,018 1,512,043 1,116,664 1,944,476 2,058,132 2,531,342 10,570,675
2.05 2.20 1.63 2.83 3.00 3.69 15.40
67,606,851
98.50
159 34 (10,135) (79) (668) (472) (408) 60 (23) (11,532)
(0.01) (0.01)
1,034,539 68,629,858
1.51 100.00
Shares Transferable securities and money market instruments admitted to an official exchange listing
Shares Transferable securities and money market instruments admitted to an official exchange listing
Austria 12,315
Market value EUR
The Netherlands 60,417 34,898 19,558 54,047 133,797 122,169
Aalberts Industries Fugro Koninklijke DSM Nutreco Holding Reed Elsevier Wolters Kluwer
Investment in Securities Derivative Instruments Forward Foreign Exchange Contracts 108,606 EUR Buy Euro : Sell US Dollar 16/01/14 5,564 EUR Buy Euro : Sell US Dollar 16/01/14 9,516,719 USD Buy US Dollar : Sell Euro 16/01/14 116,987 USD Buy US Dollar : Sell Euro 16/01/14 124,033 USD Buy US Dollar : Sell Euro 16/01/14 110,996 USD Buy US Dollar : Selll Euro 16/01/14 113,538 USD Buy US Dollar : Sell Euro 16/01/14 129,074 USD Buy US Dollar : Sell Euro 16/01/14 106,999 USD Buy US Dollar : Sell Euro 16/01/14 Other Net Assets Total Net Assets
Any differences in the percentage of Net Asset figures are the result of roundings.
68
European Growth Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013 Description of Securities
Purchases
Sales
EUR
EUR
Finland Kone Sampo
274,698
1,882,460 1,017,037
France Air Liquide
291,216
1,281,535
Germany Volkswagen
1,250,806
34,643
669,174
693,778
Switzerland Nestle Novartis Sulzer
1,046,501 -
225,084 1,296,993 1,194,949
Sweden Atlas Copco Nordea Bank
2,179,934 2,143,069
53,099 -
Shares
The Netherlands Aalberts Industries
Portfolio by Country Country
Market Value EUR 14,181,349 12,470,312 10,570,675 6,874,729 6,643,470 5,272,861 4,588,962 4,261,157 1,747,484 995,852
% of Net Assets 20.66 18.18 15.40 10.01 9.67 7.69 6.69 6.21 2.54 1.45
Investment in Securities
67,606,851
98.50
Forward Foreign Exchange Contracts Other Net Assets Total Net Assets
(11,532) 1,034,539 68,629,858
(0.01) 1.51 100.00
Switzerland Germany The Netherlands Finland France Denmark Ireland Sweden Norway Austria
Any differences in the percentage of Net Asset figures are the result of roundings.
69
Japanese Equity Fund Manager’s report for the six months to 31 December 2013
Fund Manager Michael Wood-Martin The total return for the period, excluding any initial charges paid on investment, with gross income reinvested, was a rise of 8.0% in US dollar terms. The MSCI Japan index rose by 9.2% in US dollar terms over the same period. The portfolio gave back part of the outperformance against the index gained in the first half of the year. Having suffered a setback in May following a stellar rise over the previous several months, stocks began a gradual recovery and ended the year on a high, providing investors with a return of over 50% in yen terms for 2014. It was thus a vintage year, propelled by policy initiatives to weaken the currency, which buoyed sentiment towards equities. Returns surpassed those of 2005, another strong year associated with the affable Prime Minister Koizumi, but fell short of the tech-fuelled gains of 1999. Despite this move, equities remain well below the levels attained in the aforementioned periods, which points to the latent potential within the market. Over the latest six-month period, the yen weakened against major currencies, which enhanced Japan’s competitive position and spurred equities higher. Meanwhile, a rise in bond yields reflected a growing belief in economic recovery. The gain in the market was led by cyclical stocks, with the more defensive areas taking a back seat. From an economic perspective, news flow improved and the fall-back in the currency buoyed sentiment, as reflected in the recent Economy Watchers and Reuters surveys, which bodes well for future levels of activity. Within the portfolio there were several stand-out performances from positions across an array of sectors. Keyence (sensors) gained the most, rising by more than 40% as business momentum proved stronger than anticipated. Other impressive performers included Daiwa Securities (which is market-sensitive), Inpex (oil exploration, cheap valuations), Murata Manufacturing (components, a currency beneficiary), Suzuki Motor (on strength in subsidiary Maruti India) and Rakuten (e-commerce, expanding marketplace). The more lacklustre performers included Sony (electronics), as forecasts were lowered, and Japan Airlines, as the price of fuel rose in yen terms. Shimamura (retail) was also poor, following an interim slowdown in business. This was not a hugely active period, with the only complete disposal from the portfolio being TDK (electronics), on the basis that technological progression may leave the company at a disadvantage. We bought a holding in DISCO, a semiconductor-related company, as a direct play on the proliferation of NAND memory in gadgets such as computer tablets and smartphones. Elsewhere, we added to Suzuki Motor and Japan Airlines, to bring them up to more meaningful holdings: the former on the basis that Indian subsidiary Maruti Suzuki will continue to perform; the latter on the belief that the drag from yen weakness has been discounted and as passenger numbers continue to rise. The period also afforded a small level of trading. We both increased and reduced positions in the likes of Murata Manufacturing and Sekisui Chemical, taking some profits after strong share-price performances. The shape of the portfolio has not changed much, with the emphasis still on an anticipated increase in domestic activity as the benefits of yen depreciation filter through to the broader economy. The financial and consumer-discretionary areas are major commitments within the portfolio. After a tremendous year for Japanese equities, it will be important to disentangle what has been discounted by the market from what has yet to be achieved by economic policy. With regard to the latter, the government has achieved a remarkable result in weakening the currency, thus providing the platform for an impressive recovery in corporate earnings. From here, the onus to propel growth will fall on the private sector. The outlook is encouraging, as reflected in the expansion in bank lending and the recovery in housing. One caveat is how well the impact of the VAT increase in April is handled. Equities have travelled a long way and may need to consolidate, although with government policy remaining supportive, the outlook for both economy and stock market is favourable.
70
Japanese Equity Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (USD)
For the period from 1 July 2013 to 31 December 2013 (USD)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
48,043,532 1,577,841 60,817 818,230 ------------------------50,500,420 ---------108,807 157,575 ---------------266,382
50,234,038
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
360,262 ------4 914 361,180
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
12,111 284,121 112,240 22,912 14,619 11,731 ------457,734
Net loss from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange gain
(96,554) 818,910 ---------------15,957
Net realised gain
738,313
Increase in unrealised appreciation on investments Decrease in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
2,670,105 ----------------
Net increase in assets as a result of operations
3,408,418
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (USD) Net assets at the beginning of the period Net loss from investment Net realised gain on investment Net realised currency exchange gain Proceeds from shares issued
43,521,286 (96,554) 818,910 15,957 19,544,250
Payments for shares redeemed Net equalisation received (note 13) Increase in unrealised appreciation on investments Dividends received (note 14) Net assets at the end of the period
71
(16,255,258) 15,342 2,670,105 ---50,234,038
Japanese Equity Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A2 3,432,649.86 1,448,653.75 (1,304,959.93) 3,576,343.68
I2 227,488.58 120,880.40 (21,022.18) 327,346.80
X2 11,527.24 6,067.08 (2,380.83) 15,213.49
A2 3,576,343.68 12.74
I2 327,346.80 13.70
X2 15,213.49 12.17
Net Asset Value Per Share As at 31 December 2013 Number of shares outstanding: Equivalent to a net asset value per share of: The accompanying notes form an integral part of these financial statements.
72
Japanese Equity Fund
Portfolio as at 31 December 2013 Number of Securities
Market value USD
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013
% of Net Assets
Description of Securities
Shares Transferable securities and money market instruments admitted to an official exchange listing
Japan 64,200 60,600 89,000 194,000 14,100 158,800 28,800 4,250 523,200 404,000 879,700 16,400 12,100 29,100 80,700 11,850 27,200 39,853 157,900 20,700 147,000 25,900 8,200 51,700 49,300 67,800 53,800 572,400 69,500
2,035,012 1,596,469 1,724,468 1,939,538 936,866 2,037,661 1,423,882 1,819,838 3,458,926 1,822,281 1,906,470 1,459,166 1,613,717 1,569,002 1,459,865 1,124,325 859,595 882,859 2,356,278 955,878 1,805,030 1,030,695 769,421 899,055 2,543,077 1,825,223 1,800,167 1,875,738 1,407,214 46,937,716
4.05 3.18 3.43 3.86 1.87 4.06 2.84 3.62 6.89 3.63 3.80 2.91 3.21 3.12 2.91 2.24 1.71 1.76 4.69 1.90 3.59 2.05 1.53 1.79 5.06 3.63 3.58 3.73 2.80 93.44
1,105,816
2.20
48,043,532 2,190,506 50,234,038
95.64 4.36 100.00
Canon Credit Saison Daiwa House Daiwa Securities Disco Inpex Japan Airlines Keyence Mitsubishi UFJ Financial Mitsui O.S.K Lines Mizuho Financial Murata Manufacturing Nintendo Nippon Telegraph & Telephone Nippon TV Network Nitori Holdings Nomura Research Institute NS Solutions Rakuten Sankyo Sekisui Chemical Seven & I Holdings Shimamura Sony Sumitomo Mitsui Financial Suzuki Motor Tokio Marine Holdings Yamada Denki Yamato Holdings
Japan Canon Credit Saison Daiwa House Disco Japan Airlines Mitsubishi UFJ Financial Mitsui Osk Lines Murata Manufacturing Sekisui Checmical TDK
Suntory Beverage & Food
Investment in Securities Other Net Assets Total Net Assets
Sales
USD
USD
512,934 479,271 588,841 926,893 410,114 538,946 510,199 468,876 597,997 144,023
262,681 468,559 211,357 139,925 246,070 229,197 118,443 558,994 525,214 1,497,843
Portfolio by Sector Sector Financials Consumer Services Consumer Goods Industrials Technology Oil & Gas Telecommunications Investment in Securities Other Net Assets Total Net Assets
Market Value USD 13,244,647 10,996,082 8,973,309 7,445,365 3,777,466 2,037,661 1,569,002
% of Net Assets 26.37 21.89 17.85 14.83 7.52 4.06 3.12
48,043,532 2,190,506 50,234,038
95.64 4.36 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
Unlisted Securities
Japan 34,600
Purchases
Shares
Any differences in the percentage of Net Asset figures are the result of roundings.
73
Pan European Equity Fund Manager’s report for the six months to 31 December 2013
Fund Manager Tim Stevenson The Fund returned 16.1% in the six months to the end of December 2013 against the FTSE World Europe Index of 15.4%. The increase was due in part to continued optimism that European economies were beginning to recover, and in part to the continued rehabilitation of European equities for both domestic and global investors. While the US economy has revived to the extent that the Federal Reserve has at last begun to reduce the scale of its quantitative easing (QE), in Europe the threats are of low growth and deflation. The European Central Bank (ECB) is clearly concerned by this, and has made the widely welcomed decision to cut interest rates to 0.25%. Evidence suggests that the recovery in Europe is gaining pace (even though France remains a laggard), and it is good to see that unemployment has started to decline in peripheral Europe (especially Spain), where economies have had to make the sharpest adjustments. Performance has been good, with the Fund outstripping the market’s gains. During the early part of the period, it was our more cyclical exposure that added to returns. These stocks included our largest holding, Deutsche Post (express logistics), as well as Maersk (shipping and oil), ITV (UK broadcasting), Valeo (automotive components), and Commerzbank. The Horizon Pan European Equity Fund will always be growth biased, but we have argued for some time that it is important to have some value/cyclical names alongside our longstanding growth stalwarts. By having this flexibility, we should be able to benefit from the economic recovery as gross domestic product (GDP) growth improves; we saw this happen in the second half of 2013. Toward the end of the period, some of our more traditional names reasserted themselves. Fresenius moved higher as we received clarity from the US on Medicare reimbursement rates. Now that this regulatory uncertainty has been removed, we expect the market to focus once again on the quality of the business, its high market share in the growing area of dialysis care, and the national footprint the company now has in Germany, following the acquisition of 43 hospitals from competitor Rhoen Klinikum. We also saw strong returns from GDS and software company Amadeus, which has continued to gain market share as well as making an important acquisition in the area of IT services for hotels. At the sector level, our biggest overweights continue to be industrials and IT, where we are finding some great companies. At the opposite end, our biggest underweights are consumer staples, where valuations remain high, and energy, where production growth is clearly slowing. At the stock level, we have added engineering support services company Babcock, which is well positioned to benefit from increased defence outsourcing and nuclear decommissioning work in the UK and overseas. We also added fast-growing jewellery retailer Pandora. Banks have recovered sharply as confidence in economic growth has risen, but the next few months could see some uncertainty caused by potential capital increases in response to the ECB’s asset quality review (AQR). We added a position in Lloyds Bank as the UK government began its retreat from its holding, and because the UK economy looks to be improving more quickly than most other areas of Europe. We sold Sanofi and ENI – the former following a profit warning, the latter due to operational issues potentially harming cash generation. Equity investors are considerably upbeat about 2014, alongside a view that bonds remain vulnerable to further setbacks. From a valuation perspective, European markets rerated sharply in 2013, finishing the year on about 13.4x estimated 2014 average earnings per share (EPS). That is forecast to fall to 12.4x on 2015’s estimates, but that is obviously a long way ahead. It may be more relevant to look at dividend yields, where equities still yield more than government bonds and BBB corporate bonds. In general, most companies have been sounding more optimistic about the outlook for 2014, so we expect markets to at least begin the year well. However, we expect numerous political and economic challenges as the year progresses, not least of which will be the elections to the European Parliament in May. European equity markets should be able to make further gains in 2014, albeit we expect these to be less than in 2013, where some of the strong market returns were due to a ‘bounce back’ from very depressed levels. The good news is that European economies, along with their global counterparts, appear to be recovering. And with most companies in a strong financial position, it seems reasonable to assume that capital expenditure will increase, creating a virtuous circle of growth and higher tax receipts for the period. But it will not all be plain sailing. Politicians are nervous – hardly surprising with unemployment at high levels. Worries persist that the European elections in May will see a huge protest vote, just at a time when the pain of the last few years’ adjustments is beginning to ease. Furthermore, while inflation fears subside, has deflation become a threat? There is, effectively, no pricing power and the devaluation of the Japanese yen shows how difficult it could be for European companies to compete on the global stage. Finally, how sharply will emerging markets slow down as QE ends in the US? My view is that further progress can be made, supported by a continuation of inflows into European equities by both domestic and international investors, and with neither bonds nor cash offering an attractive alternative. As always, it is unlikely to be a smooth journey, but investors can take courage from the quality of European companies.
74
Pan European Equity Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (EUR)
For the period from 1 July 2013 to 31 December 2013 (EUR)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
2,821,003,742 71,959,876 1,650,279 15,296,820 ---------------------2,630,985 2,912,541,702
Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
---------7,890,768 4,256,530 9,401 -------------
Net loss from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange gain
12,156,699
Net realised gain
Net assets at the end of the period
2,900,385,003
6,772,739 ------104,368 253,854 7,130,961
123,703 15,844,896 3,404,036 843,350 503,976 427,321 ------21,147,282 (14,016,321) 83,060,707 (26,206) ------------1,396,013 70,414,193
Increase in unrealised appreciation on investments Decrease in unrealised depreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
292,509,978 (9,401) -------------
Net increase in assets as a result of operations
362,914,770
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (EUR) Net assets at the beginning of the period Net loss from investment Net realised gain on investment Net realised currency exchange gain Proceeds from shares issued
2,037,929,216 (14,016,321) 83,034,501 1,396,013 1,072,725,247
Payments for shares redeemed Net equalisation received (note 13) Increase in unrealised appreciation on investments Dividends paid (note 14) Net assets at the end of the period
75
(573,502,798) 1,089,424 292,500,577 (770,856) 2,900,385,003
Pan European Equity Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A2 47,306,645.61 18,180,966.76 (15,238,789.32) 50,248,823.05
A2 (USD) 8,423,788.40 4,991,433.76 (737,057.72) 12,678,164.44
A1 5,784,185.78 1,745,151.13 (1,774,008.79) 5,755,328.12
I2 35,205,972.20 15,937,479.68 (8,297,377.89) 42,846,073.99
I2 (USD) 221,408.37 471,076.00 (43,434.86) 649,049.51
H2
G2
45,000.00 12,942,349.96 (160,275.71) 12,827,074.25
---5,707,639.71 (241,334.81) 5,466,304.90
A2 HUSD (USD) ---264,040.24 (250.00) 263,790.24
I2 HUSD (USD) ---552,488.63 ---552,488.63
X2 HUSD (USD) ---1,366.20 ---1,366.20
A2 50,248,823.05 22.73
A2 (USD) 12,678,164.44 15.58
A1 5,755,328.12 21.34
I2 42,846,073.99 24.53
I2 (USD) 649,049.51 13.59
H2
G2
12,827,074.25 11.58
5,466,304.90 10.43
A2 HUSD (USD) 263,790.24 10.68
I2 HUSD (USD) 552,488.63 10.40
X2 HUSD (USD) 1,366.20 10.02
X2 439,479.22 220,113.53 (125,491.76) 534,100.99
C2 4,147,044.86 135,819.47 (25,816.00) 4,257,048.33
M2 8,355,595.53 901,581.72 (352,774.83) 8,904,402.42
X2 534,100.99 21.83
C2 4,257,048.33 16.02
M2 8,904,402.42 16.05
Net Asset Value Per Share As at 31 December 2013 Number of shares outstanding: Equivalent to a net asset value per share of:
Number of shares outstanding: Equivalent to a net asset value per share of:
The accompanying notes form an integral part of these financial statements.
76
Pan European Equity Fund
Portfolio as at 31 December 2013 Number of Securities
Market value EUR
% of Net Assets
96,643,571 34,433,568 35,452,547 166,529,686
3.33 1.19 1.22 5.74
32,405,866
1.12
Number of Securities
AP Moller - Maersk Novo Nordisk Pandora
Finland 5,570,411
Nokia
France 907,015 385,822 2,496,513 403,920 1,101,300 4,731,800 418,379 1,183,622 286,482 806,641 722,885
Airbus Arkema AXA BIC Cie de St-Gobain Credit Agricole Essilor Legrand L'Oreal Sodexo Valeo
50,566,086 32,657,903 50,310,978 35,682,293 43,919,844 44,090,912 32,405,545 47,392,225 36,504,969 59,413,143 58,199,471 491,143,369
1.74 1.13 1.73 1.23 1.51 1.52 1.12 1.63 1.26 2.05 2.01 16.93
Germany 517,886 334,784 269,659 566,261 4,380,328 4,791,712 750,343 933,125 5,905,550 316,442 557,500 201,081
Adidas Allianz Brenntag Deutsche Boerse Deutsche Post Deutsche Telekom Fresenius Fresenius Medical Care Infineon Technologies Linde SAP Volkswagen
47,964,012 43,672,573 36,289,360 34,040,780 116,593,381 59,728,690 83,925,865 48,209,903 45,892,029 48,202,028 34,866,050 41,111,010 640,495,681
1.65 1.51 1.25 1.17 4.02 2.06 2.89 1.66 1.58 1.66 1.20 1.42 22.08
Italy 6,513,164
UniCredit
35,057,105
1.21
Spain 2,259,690 277,386
Amadeus IT Holding Inditex
70,298,956 33,036,673 103,335,629
2.42 1.14 3.56
Sweden 3,835,175 1,978,903
Ericsson Svenska Cellulosa
Switzerland 835,891 507,200 1,036,299 974,737 389,163 17,487 102,101 4,813,397 213,824
Adecco Cie Financiere Richemont Nestle Novartis Roche Holding Sgs Syngenta UBS Zurich Insurance
34,098,376 44,369,801 78,468,177
1.18 1.53 2.71
48,086,552 36,691,943 55,138,514 56,550,706 79,034,286 29,227,938 29,557,311 66,366,175 45,037,270 445,690,695
1.66 1.27 1.90 1.95 2.72 1.01 1.02 2.29 1.55 15.37
% of Net Assets
40,822,137 67,069,280 64,379,601 172,271,018
1.41 2.31 2.22 5.94
43,079,808 32,561,973 37,827,645 73,117,237 31,122,874 42,845,894 48,473,199 36,247,472 56,790,617 38,967,367 238,513 46,362,274 81,358,207 31,684,925 54,928,511 655,606,516
1.49 1.12 1.30 2.52 1.07 1.48 1.67 1.25 1.96 1.34 0.01 1.60 2.81 1.09 1.89 22.60
2,821,003,742
97.26
66 17 (4,088) (495) (196) 21 (402) (1,401) (202) (234) (229) (95) (2,929) (165) 13 918 (9,401)
-
79,390,662 2,900,385,003
2.74 100.00
Shares Transferable securities and money market instruments admitted to an official exchange listing
Shares Transferable securities and money market instruments admitted to an official exchange listing
Denmark 12,240 258,481 899,700
Market value EUR
The Netherlands 600,458 ASML Holding 6,681,871 ING 2,430,336 Koninklijke Philips United Kingdom 3,265,639 2,003,476 8,323,784 5,871,158 1,608,447 18,513,745 18,100,652 38,328,894 3,530,725 2,547,143 198,703,172 5,379,382 18,943,191 3,080,094 19,229,084
ARM Babcock BT Capita GlaxoSmithKline ITV Legal & General Lloyds Prudential Rolls-Royce Holdings Rolls-Royce Holdings 'C' Sports Direct International Standard Life Tullow Oil Vodafone
Investment in Securities Derivative Instruments Forward Foreign Exchange Contracts 44,748 EUR Buy Euro: Sell US Dollar 16/01/2014 11,234 EUR Buy Euro: Sell US Dollar 16/01/2014 3,838,919 USD Buy US Dollar: Sell Euro 16/01/2014 91,879 USD Buy US Dollar: Sell Euro 16/01/2014 54,310 USD Buy US Dollar: Sell Euro 16/01/2014 45,019 USD Buy US Dollar: Sell Euro 16/01/2014 1,770,991 USD Buy US Dollar: Sell Euro 16/01/2014 1,315,866 USD Buy US Dollar: Sell Euro 16/01/2014 298,967 USD Buy US Dollar: Sell Euro 16/01/2014 239,880 USD Buy US Dollar: Sell Euro 16/01/2014 42,641 USD Buy US Dollar: Sell Euro 16/01/2014 26,219 USD Buy US Dollar: Sell Euro 16/01/2014 650,704 USD Buy US Dollar: Sell Euro 16/01/2014 35,938 USD Buy US Dollar: Sell Euro 16/01/2014 29,374 USD Buy US Dollar: Sell Euro 16/01/2014 186,262 USD Buy US Dollar: Sell Euro 16/01/2014 Other Net Assets Total Net Assets
Any differences in the percentage of Net Asset figures are the result of roundings.
77
Pan European Equity Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013 Description of Securities
Purchases
Sales
EUR
EUR
France Cie de St-Gobain Valeo
42,119,264 43,362,798
311,144 496,550
Germany Infineon Technologies SAP
42,850,159 36,731,051
50,387,231
Italy Telecom Italia Spa
29,030,407
28,847,059
Sweden Ericsson
38,735,636
26,735,317
Switzerland UBS
20,995,422
27,298,504
United Kingdom G4S Legal & General Royal Bank of Scotland
27,318,905 46,375,279 31,961,575
27,525,600 309,983 52,480,057
Shares
Portfolio by Sector Country United Kingdom Germany France Switzerland The Netherlands Denmark Spain Sweden Italy Finland
Market Value EUR 655,606,516 640,495,681 491,143,369 445,690,695 172,271,018 166,529,686 103,335,629 78,468,177 35,057,105 32,405,866
% of Net Assets 22.60 22.08 16.93 15.37 5.94 5.74 3.56 2.71 1.21 1.12
Investment in Securities Forward Foreign Exchange Contracts
2,821,003,742 (9,401)
97.26 -
Other Net Assets Total Net Assets
79,390,662 2,900,385,003
2.74 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
78
Asia-Pacific Property Equities Fund Manager’s report for the six months to 31 December 2013
Fund Manager Tim Gibson The Fund returned 2.3% in US dollar terms over the six months under review against the FTSE EPRA NAREIT Pure Asia Index return of 5.2%. The second half of 2013 again saw macroeconomic issues coming to the fore, as concerns in the US over its fiscal situation and the tapering of quantitative easing (QE) plagued markets over the period. Towards the middle of the period, the near-term satisfactory resolution of the fiscal situation in the US and the dovish tone of Janet Yellen, the chair-elect of the US Federal Reserve (Fed), prompted rate-sensitive equities to rally. Asia decoupled, however. Even an aggressive Chinese reform package could only cheer Asian markets temporarily. Shortly after that, signs of improvement in the US economy prompted markets to further price in the event of QE tapering, which eventually happened in December. Asian markets remained relatively calm after the announcement, however, as the Fed also took pains to assuage market concerns about tightened monetary conditions by indicating that short-term interest rates will be kept near zero for a considerable time. The initial strong performance of Asian property equities was pegged back and ended the period up 5.5%. Japan (+14.4%) was especially strong, thanks to the Olympic effect and improving fundamentals, as Tokyo registered its lowest office-vacancy numbers in over two years. Japanese developers (+18.2%) also outperformed, as investors bet that the Bank of Japan would crank up its monetary stimulus soon even as the US Fed kicks the habit. Despite robust monthly sales and better macroeconomic numbers, as well as a surprisingly ambitious reform package, which was positive for the country’s medium-to-long-term outlook, China (+3.7%) was held back by the additional cooling measures for the property market that were unveiled in a number of major cities. Hong Kong (+1.5%) was up only slightly, in spite of cheap valuations and improving residential sales, as investors worried about margin contraction after a slew of price cuts in the primary market. Cheap valuations notwithstanding, Singapore (-0.2%) came in only flat, as the premium valuations enjoyed by Singaporean real estate investment trusts (REITs) were eroded against a backdrop of expanding long yields. The sector was dragged further down as signs of moderation in the residential market became more evident. Although residential sales picked up because of the effects of interest rates cuts, Australia (-4.0%) was particularly weak on a busy period of primary and secondary equity issuance. A significant portion of the weakness is also a result of the depreciation of the Australian dollar. With macroeconomic news flow dominating investment decisions, the Fund underperformed over the period. Stock-picking was a mitigating factor, as our overweights in China Overseas Land, Nomura Real Estate and Sumitomo Realty and Development, as well as our underweights in CapitaMall Asia Trust, CapitaLand, Stockland, and Westfield Retail Trust contributed positively. Our positions in Hongkong Land, Japan Real Estate, Suntec REIT, Dexus Property, and Westfield Group detracted from returns, however, as did our underweight in Global Logistic Properties. In the first half of the period, we were most active in Japan, taking profits in Japanese developers at the beginning of the period and rotated the proceeds into Japanese REITs. We subsequently switched out of Japanese REITs on a tactical basis, however, after some strong outperformance over a period of three to four months. Trading activity was light in the second half of the period, with our only strategic trade being more profit-taking in Japanese developers. In Singapore we switched from OUE to CapitaLand on valuation grounds. We also took part in the initial public offering of GDI Property Group, funding it from profits taken in Australia, Japan, and Hong Kong. After the Fed’s decision to taper at the end of 2013, the cloud that has been hanging over markets has started to clear. In this regard, it would be pertinent to note that while the US central bank’s balance sheet will be expanding at a slower pace, the consensus is for rates to stay at current low levels for the next few years. In contrast to what is happening in the US, we believe that monetary policy in the rest of the developed world will surprise on the dovish side. The European Central Bank is expected to expand its balance sheet, but we think that the Bank of Japan will be the most dovish of them all – with a distinct possibility of an expansion of QE in the first quarter to include the purchases of foreign bonds. Fundamentals in the Japanese real estate sector should also continue to improve at a faster pace. After a year of consolidation, Tokyo office occupancy, rents, and condominium sales should continue to accelerate positively into the upward cycle. The main area of concern for us remains the bubbling geopolitical issues with China, which could threaten stability in the region. For the time being, areas of excitement outside Japan remain more difficult to spot. Real estate markets in Hong Kong and Singapore remain troubled, and we believe that it’s too early in the cycle to take a positive of these markets, even though we acknowledge that valuations are beginning to become more attractive.
79
Asia-Pacific Property Equities Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (USD)
For the period from 1 July 2013 to 31 December 2013 (USD)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
395,613,245 4,466,587 1,780,643 138,138 807,026 ------------------1,633 402,807,272 328 ------768,309 815,916 ---------------1,584,553
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
5,527,773 ------1,355 11,568 5,540,696
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
88,859 2,274,886 503,929 136,690 88,861 59,916 ------3,153,141
Net gain from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange loss
2,387,555 2,297,788 ---------------(162,199)
Net realised gain
4,523,144
Increase in unrealised appreciation on investments Decrease in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
7,743,699 ----------------
Net increase in assets as a result of operations
401,222,719
12,266,843
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (USD) Net assets at the beginning of the period Net gain from investment Net realised gain on investment Net realised currency exchange loss Proceeds from shares issued
464,546,745 2,387,555 2,297,788 (162,199) 38,611,143
Payments for shares redeemed Net equalisation paid (note 13) Increase in unrealised appreciation on investments Dividends paid (note 14) Net assets at the end of the period
80
(112,903,509) (610,488) 7,743,699 (688,015) 401,222,719
Asia-Pacific Property Equities Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A2 7,973,500.42 996,414.88 (3,885,088.59) 5,084,826.71
A2 (EUR) 558,291.19 403,808.63 ---962,099.82
H1 ---41,613.13 (5.00) 41,608.13
A1 5,788,163.86 377,988.68 (1,571,185.73) 4,594,966.81
H2 ---9,805.93 (3,474.00) 6,331.93
I2 13,119,831.59 438,079.15 (1,337,993.90) 12,219,916.84
I2 (EUR) 838,631.30 76,376.42 (82,169.57) 832,838.15
X2 76,735.93 3,197.01 (13,891.64) 66,041.30
A2 (EUR) 962,099.82 11.95
H1 41,608.13 9.87
A1 4,594,966.81 14.86
H2 6,331.93 9.87
I2 12,219,916.84 17.77
I2 (EUR) 832,838.15 12.91
X2 66,041.30 15.69
Net Asset Value Per Share As at 31 December 2013 Number of shares outstanding: Equivalent to a net asset value per share of:
A2 5,084,826.71 16.46
The accompanying notes form an integral part of these financial statements.
81
Asia-Pacific Property Equities Fund
Portfolio as at 31 December 2013 Number of Securities
Market value USD
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013
% of Net Assets
Description of Securities
Shares Transferable securities and money market instruments admitted to an official exchange listing
Australia 12,704,960 8,389,680 3,378,743 10,145,555 2,209,566
Dexus Property GDI Property Goodman Mirvac Westfield Retail Trust
China 2,216,000
China Overseas Land & Investment
Hong Kong 695,000 3,088,000 1,989,284 6,334,406 3,309,500 2,429,420 2,810,000
Cheung Kong Holdings Hong Kong Land Holdings Link Real Estate Investment Trust New World Development Shimao Property Holdings Sun Hung Kai Properties Wharf Holdings
11,446,455 6,620,835 14,321,422 15,241,852 5,848,592 53,479,156
2.85 1.65 3.57 3.80 1.46 13.33
6,223,141
1.55
10,984,489 18,234,640 9,646,425 8,001,881 7,605,921 30,759,924 21,490,314 106,723,594
China China Overseas Land & Investment China Resources Land
2.74 4.54 2.40 1.99 1.90 7.67 5.36 26.60
India 3,860,444
Eredene Capital
526,315
0.13
Indonesia 56,843,000
Pakuwon Jati
1,249,425
0.31
13,297,832 937,703 5,644,919 14,101,452 36,341,936 34,640,245 18,089,906 10,361,228 36,419,430 11,667,777 12,980,477 194,482,905
3.31 0.23 1.41 3.51 9.06 8.63 4.51 2.58 9.08 2.91 3.24 48.47
13,437,843 9,331,018 10,159,848 32,928,709
3.35 2.33 2.53 8.21
395,613,245 5,609,474 401,222,719
98.60 1.40 100.00
Singapore 5,612,000 6,022,000 8,321,000
Activia Properties AEON Real Estate Investment Trust Hulic Japan Real Estate Investment Corporation Mitsubishi Estate Mitsui Fudosan Nippon Building Fund Nomura Real Estate Holdings Sumitomo Realty & Development Tokyo Tatemono United Urban Investment
CapitaLand CapitaMalls Asia Suntec Real Estate Investment Trust
Investment in Securities Other Net Assets Total Net Assets
Sales
USD
USD
6,796,188 8,947,076
9,696,088 9,023,834
Hong Kong Hang Lung Properties Henderson Land Developments Sun Hung Kai Properties Wharf Holdings
11,956,944 967,957 4,237,849 11,987,900
11,604,093 17,894,318 16,378,461 4,606,155
Japan East Japan Railways Mitsubishi Estate Mitsui Fudosan Sumitomo Realty & Development
10,946,333 3,912,922 3,752,033
11,210,374 13,389,290 18,778,027 17,196,996
Portfolio by Country Country
Japan 1,690 761 381,200 2,620 1,214,000 962,000 3,108 460,000 731,000 1,050,000 9,027
Purchases
Shares
Japan Hong Kong Australia Singapore China Indonesia India
Market Value USD 194,482,905 106,723,594 53,479,156 32,928,709 6,223,141 1,249,425 526,315
Investment in Securities Other Net Assets Total Net Assets
395,613,245 5,609,474 401,222,719
Any differences in the percentage of Net Asset figures are the result of roundings.
Any differences in the percentage of Net Asset figures are the result of roundings.
82
% of Net Assets 48.47 26.60 13.33 8.21 1.55 0.31 0.13 98.60 1.40 100.00
China Fund Managers’ report for the six months to 31 December 2013
Fund Managers Andrew Mattock and Caroline Maurer The Fund outperformed its benchmark over the review period to 31 December 2013, returning 23.4% versus the MSCI China Total Return Index return of 16.4%. In the second half of 2013, China’s equity market recovered from the sell-off in June 2013, which was driven by interbank market rate hikes. Interbank rates eased off significantly after the People’s Bank of China (PBoC) confirmed credit injections at the beginning of July. Market sentiment also improved, given an improving macro picture and the announcement of reform plans following the Third Plenum meeting towards the year-end. The Fund delivered decent returns in this volatile environment. 2013 has been a year of stock picking. Quality growth sectors such as IT, utilities, and healthcare have outperformed the ‘old economy’ sectors such as industrials, financials and materials by a large distance. The Fund remained overweight to the consumer discretionary and IT sectors, and was underweight to banks and materials throughout the review period. However, we added more Chinese insurance and property exposure from July as these stocks sold off very aggressively in the first half of the year and valuations were extremely attractive. The key performance contributors were long positions in Chongqing Changan Auto, Nexteer, SJM and our short position in Belle. The Macau gaming sector delivered strong performance as Macau gaming revenues hit new record highs and the sector’s re-rating continued. We are expecting this momentum to carry into 2014 and have stayed invested in this sector with holdings in both SJM and Sands China. The major detractors were long positions in Wharf, Inner Mongolia Yili, and Baoye. We have disposed of the position in Baoye as we prefer to hold other property names in a similar valuation range but with better liquidity. Wharf corrected almost 10% in six months in a rising market due to concerns over a slowdown in retail sales growth in Hong Kong and the effect of US tapering. However, the company’s operations in both Hong Kong and China still remain solid and of a high quality. Therefore, value started to emerge after the recent shareprice fall. We are likely to add to our position on weakness. The Fund’s strategy for 2014 is to remain focused on stock picking in quality growth sectors. We remain constructive as the market’s valuation is pretty cheap at below 10x for 2014’s estimated price to earnings ratio. Market consensus is for corporate earnings growth of 10-15% in 2014 and we see potential upside. Local government deleveraging will be the key focus for the next few years. On 30 December 2013, the national audit office reported that the audited local government debt amounted to 17.9 trillion RMB as at the end of June 2013. This debt level, though manageable, has been an overhang for the market due to concerns about the sustainability of local public financing. The opening up of the municipal bond market will provide local governments with a new source of long-term financing outside of traditional bank loans, which would help ease the market’s concerns about the duration mismatch of debt terms and infrastructure project cash-flow generation cycles (ie, meeting liabilities when they fall due). This also involves the selling of government-owned assets to private companies. China’s new leadership for the next decade is now in place and we are confident that this new government is serious about economic reforms and anti-corruption measures. We certainly acknowledge that reforming China is a huge project – and impossible to complete in a span of one year – but we remain hopeful that investors continue to believe in the reform agenda.
83
China Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (USD)
For the period from 1 July 2013 to 31 December 2013 (USD)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
163,221,079 41,775,630 93,549 1,852,204 923,115 ------409,825 ------------208,275,402 465,275 ---8,678,091 545,396 845,204 ----------------
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
1,044,563 ---85,596 5,663 ---1,135,822
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
46,050 1,061,013 405,582 83,101 48,954 42,605 ---481,104 2,168,409
Net loss from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised gain on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange loss
10,533,966
Net realised gain
Net assets at the end of the period
197,741,436
(1,032,587) 6,945,449 ---5,038,818 ---(1,167,553) (75,635) 9,708,492
Increase in unrealised appreciation on investments Decrease in unrealised appreciation on forward foreign exchange contracts Increase in unrealised appreciation on contracts for difference Increase in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Increase in unrealised appreciation on options contracts
24,876,022 ---1,605,505 1 ---1,120,633
Net increase in assets as a result of operations
37,310,653
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (USD) Net assets at the beginning of the period Net loss from investment Net realised gain on investment Net realised currency exchange loss Proceeds from shares issued
166,007,690 (1,032,587) 10,816,714 (75,635) 53,025,232
Payments for shares redeemed Net equalisation paid (note 13) Increase in unrealised appreciation on investments Dividends received (note 14) Net assets at the end of the period
84
(58,600,086) (2,053) 27,602,161 ---197,741,436
China Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A2 9,884,012.75 2,668,722.19 (3,422,681.55) 9,130,053.39
A2 (EUR) 836,188.86 188,463.70 (335,827.76) 688,824.80
A2 (SGD) 1,005,109.85 821,950.37 (383,653.27) 1,443,406.95
A1 950,766.49 134,239.68 (157,872.48) 927,133.69
I2 1,867,024.26 298,468.29 (289,289.65) 1,876,202.90
X2 276,993.84 18,451.78 (69,139.58) 226,306.04
A2 9,130,053.39 13.74
A2 (EUR) 688,824.80 9.99
A2 (SGD) 1,443,406.95 17.35
A1 927,133.69 13.70
I2 1,876,202.90 14.54
X2 226,306.04 12.90
Net Asset Value Per Share As at 31 December 2013 Number of shares outstanding: Equivalent to a net asset value per share of: The accompanying notes form an integral part of these financial statements.
85
China Fund
Portfolio as at 31 December 2013 Number of Securities
Market value USD
% of Net Assets
Number of Securities
Shares Transferable securities and money market instruments admitted to an official exchange listing
China 12,892,000 23,000 16,270,000 1,300,000 5,300,000 6,845,000 35,000 4,800,000 6,880,000 5,000,000 800,000 1,500,000 951,500 2,500,000 7,026,000 10,960,000 1,262,000 5,480,000 6,608,000 1,200,000 11,042,000 4,850,000 3,082,000 260,500 1,887,000 1,624,000 10,000 980,000
Agricultural Bank of China Baidu Bank of China Boer Power China Communications Services China Galaxy Securities Co China Lodging Group China Modern Dairy Holdings China Petroleum & Chemical China Telecom Dongjiang Environmental Golden Eagle Retail Great Wall Motor Co Huadian Fuxin Energy Huaneng Renewables Industrial and Commercial Bank of China Intime Department Store Group Lenovo Group Sany Heavy Equipment Sinopec Engineering Sinopec shanghai Petrochemical Sinotrans SPT Energy Tencent Holdings Tenwow International Holdings Xinyi Solar Holdings YY Inc Zhuzhou CSR Times Electric
Hong Kong 810,000 2,016,000 1,042,000 9,800,000 256,000 4,276,000 1,282,000 820,000 11,000,000 78,000 380,000 2,850,000 1,198,000 1,586,500 700,000 250,000 1,624,000
AIA Beijing Enterprises Brilliance China Automotive Holdings Chaoda Modern Agriculture Cheung Kong Holdings China Gas Holdings China Merchants holdings China Overseas Land & Investment China WindPower Dah Sing Financial Holdings Hutchison Whampoa Sinopec Kantons Holdings SJM Holdings Techtronic Industries Vinda International Holdings Wharf Holdings Xinyi Glass Holdings
Macau 408,000
Sands China
United States 1,870,000 310,500 6,061,000 611,000 180,000
Daqin Railways Company Inner Mongolian Yili Industrials Nexteer Automotive Group Samsonite International Qingdao Haier
Investment in Securities
Market value USD
% of Net Assets
14,730 (15,252) 434,109 334,648 (56,831) (148,785) 797,444 (164,104) 1,196,468 (219,564) 121,652 21,117 1,901,298 68,564 (110,012) 163,175 (290,479) 193,408 46,971 134,451 96,284 104,557 1,953 (1,043) 297,070 (162,910) (77,836) (148,464) 783,237 (92,048) (12,875) (136,547) (4,678,777) 14,216 409,825
0.01 (0.01) 0.22 0.17 (0.03) (0.08) 0.40 (0.08) 0.61 (0.11) 0.06 0.01 0.97 0.04 (0.05) 0.08 (0.15) 0.10 0.02 0.07 0.05 0.05 0.15 (0.08) (0.04) (0.08) 0.40 (0.05) (0.01) (0.07) (2.37) 0.01 0.21
34,110,532 197,741,436
17.25 100.00
Derivative Instruments
6,343,027 4,002,920 7,511,944 1,192,051 3,280,944 5,989,700 1,064,000 2,596,898 5,621,042 2,530,996 2,651,581 1,979,013 5,252,116 986,605 3,366,268 7,420,815 1,319,150 6,678,733 2,062,373 1,795,234 3,182,783 1,829,571 1,824,429 16,650,251 865,154 334,063 497,300 3,535,720 102,364,681
3.21 2.02 3.80 0.60 1.66 3.03 0.54 1.31 2.84 1.28 1.34 1.00 2.66 0.50 1.70 3.75 0.67 3.38 1.04 0.91 1.61 0.93 0.92 8.42 0.44 0.17 0.25 1.79 51.77
4,061,039 1,268,797 1,708,028 315,971 4,046,085 6,286,723 4,674,901 2,302,787 872,468 447,899 5,175,225 3,166,517 4,013,231 4,496,253 1,166,386 1,911,950 1,428,408 47,342,668
2.05 0.64 0.87 0.16 2.05 3.18 2.36 1.16 0.44 0.23 2.62 1.60 2.03 2.27 0.59 0.97 0.72 23.94
3,342,617
1.69
2,282,703 1,990,787 3,458,910 1,859,666 579,047 10,171,113
1.15 1.01 1.75 0.94 0.29 5.14
163,221,079
82.54
Contracts for Difference* 400,000 Anhui (1,800,000) Anton Oilfield (160,000) ASM (800,000) Belle (400,000) Cheng Shin 11,987,160 China Construction Bank 2,089,000 China Life 2,600,000 China National Building Material 1,818,000 China Oilfield 832,000 China Resources Power 6,874,328 China Resourses Cement (5,095,450) China Steel 2,560,000 Chongqing Changon Automobile (1,800,000) Chunghwa (300,000) Citic Pacific (660,000) CLP 1,613,000 CNOOC (925,000) Formosa Petrochemical 3,182,000 Goodbaby (380,000) Haitian (1,200,000) Hong Kong & China Gas (1,200,000) Li & Fung 2,672,000 Li Ning (380,000) Link Real Estate Investment Trust 200,000 Mediatek (1,000,000) MTR 2,200,000 Nine Dragons Paper Holdings 2,800,000 Petrochina 818,000 Ping An Insurance 387,000 Shimao Property 600,000 Taiwan Semiconductor (2,000,000) Uni-president China 16,469,000 Zhejiang Glass (282,500) Zhongsheng Other Net Assets Total Net Assets
Any differences in the percentage of Net Asset figures are the result of roundings. *Total Commitment USD (26,316,999)
86
China Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013 Description of Securities
Purchases
Sales
USD
USD
7,786,719 2,651,335 4,097,087 6,521,895 905,879 3,804,255
6,704,440 13,842,621 5,985,915 5,019,529 1,873,221 7,111,703 4,085,497
11,176,884 4,832,306 4,992,937
22,824,966 5,184,376 3,669,701
Shares
China China Communications Services China Construction Bank China Petroleum & Chemical China Telecom Great Wall Motor Co Huaneng Power International Petrochina Hong Kong China Mobile Hengan International Hutchison Whampoa
Portfolio by Sector Country
Market Value USD 40,035,246 31,110,148 27,190,146 22,282,636 20,599,042 13,162,212 3,182,783 3,127,870 2,530,996
% of Net Assets 20.25 15.72 13.75 11.27 10.42 6.66 1.61 1.58 1.28
Investment in Securities
163,221,079
82.54
Contracts for Difference Other Net Assets Total Net Assets
409,825 34,110,532 197,741,436
0.21 17.25 100.00
Financials Technology Industrials Consumer Goods Oil & Gas Consumer Services Basic Materials Utilities Telecommunications
Any differences in the percentage of Net Asset figures are the result of roundings.
87
Global Opportunities Fund Manager’s report for the six months to 31 December 2013
Fund Manager Matthew Beesley The Fund outperformed its benchmark over the review period to 31 December 2013, returning 18.3% (net of fees) versus the MSCI World Index return of 17.1%. Global equity markets resumed their upwards trajectory in the second half of 2013 following a correction between May and June. Improving global economic data and the continued support of central bank stimulus underpinned this rally, the MSCI World Index reaching all-time highs. Developed market equities finished the period on a positive note, led by European and North American bourses. This came despite a reduction (tapering) in the size of the US Federal Reserve’s asset purchase programme and reluctance from the European Central Bank to tackle weak growth and low inflation. It appears that market participants have grown more comfortable with reduced central bank monetary stimulus and more attentive to corporate and economic data. Global emerging market equities underperformed developed markets given concerns over slowing growth, US tapering, and Chinese monetary tightening. Shares in North American and Japanese companies added the most to returns while the Fund’s small overweight allocation to emerging markets detracted. At the sector level outperformance was driven by the Fund’s consumer discretionary and financials positions, although gains were offset somewhat by underperforming positions in information technology and healthcare. At the stock level, leading Belgian bank KBC Groep was a standout performer, rising over 50% thanks to improved revenues, lower costs, and falling impairment charges. While the bank is still in debt to the Flemish state over aid provided during the financial crisis, KBC’s solid capital adequacy and earnings power means the bank appears on track to make its debt repayment ahead of schedule. Similarly, UK retail bank Lloyds outperformed. Our view has been that many investors have underappreciated the bank’s earnings power and overemphasised its non-performing loan book. With the strengthening UK economy providing a tailwind recent quarters have seen Lloyds report solid earnings and lower impairment charges. Strong portfolio returns extended beyond European banks with positive relative returns distributed regionally and by sector. In North America, broadcaster CBS, internet services firm priceline.com, and industrials Pentair and Parker Hannifin reported solid results. In Japan, retailers Don Quijote and Ryohin Keikaku outperformed. In the UK, broadcaster ITV has been successfully reducing the company’s indebtedness, finding efficiency savings across the business, and lowering the exposure to advertising revenues by growing the more stable production division. The position in Volvo detracted over the period; earnings were led lower by restructuring costs and weaker than expected European truck demand. We expect the company’s restructuring efforts to yield improved profitability for the truck and bus manufacturer in future quarters. Underperformance also came from US software solutions firm Citrix, which reported lower than expected earnings due to weak enterprise spending. Over recent quarters our outlook for the growth of Citrix’s key virtual desktop business has been lowered and we have consequently sold the position. New positions were added in the information technology sector, namely Arris and Baidu. Following its transformative acquisition of video and broadband delivery specialist Motorola Home, Arris may be on the cusp of an accelerated sales cycle as home cable TV viewing moves to incorporate online functionality. With the Chinese consumer searching for more content online, Baidu’s dominant market position in both PC and mobile search has positioned the company as the number one player in an industry that is experiencing secular growth. We also added positions in two Italian companies: UniCredit and Mediaset. The weak economic environment in Italy saw both companies implementing significant restructuring and cost-cutting measures. We believe UniCredit is now more conservatively provisioned than its discount-to-book value would imply, while Mediaset should be in a strong position to benefit from operational leverage as revenues recover. We closed positions in a number of holdings that had reached our fair value price targets, including Don Quijote, Praxair, Makita, and Centrica. Elsewhere, a combination of stock-specific weaknesses and slowing emerging market growth prompted us to sell our holdings in Nestle and Unilever. We appear be in the midst of a synchronised global economic expansion, albeit a rather tepid one, and in our opinion all the evidence suggests that this is likely to continue. For equity markets to rise meaningfully, however, we would argue that the expectation of growth in corporate profits needs to become a reality. Profit margins are at all-time highs in the US, but there should be room for a meaningful recovery in Europe and Japan. It would be our expectation that after five years of aggressive cost-cutting in Europe – and longer in Japan – that any top-line recovery leverages into some more impressive bottom-line growth. This could positively surprise not just investors, but in some cases management teams too. However, with valuations having already increased in anticipation of this, any disappointments here could have negative consequences.
88
Global Opportunities Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (USD)
For the period from 1 July 2013 to 31 December 2013 (USD)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
7,430,380 335,994 1,328 100,308 ---------------------913 7,868,923
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
1,253 ------120,008 25,749 ----------------
Net loss from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange loss
147,010
9,280 138,552 17,208 3,303 2,374 1,778 ------172,495 (144,189) 407,084 ---------------(3,232)
Net realised gain
259,663
Increase in unrealised appreciation on investments Decrease in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
844,759 ----------------
Net increase in assets as a result of operations
7,721,913
23,130 ------5 5,171 28,306
1,104,422
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (USD) Net assets at the beginning of the period Net loss from investment Net realised gain on investment Net realised currency exchange loss Proceeds from shares issued
5,863,781 (144,189) 407,084 (3,232) 1,065,356
Payments for shares redeemed Net equalisation received (note 13) Increase in unrealised appreciation on investments Dividends paid (note 14) Net assets at the end of the period
89
(311,387) ---844,759 (259) 7,721,913
Global Opportunities Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A1 9,779.36 11,356.32 (4,721.65) 16,414.03
I2 1,580.74 3,200.00 ---4,780.74
X2 13,087.21 1,559.02 (788.62) 13,857.61
A2 329,503.80 40,659.98 (11,930.39) 358,233.39
A1 16,414.03 19.74
I2 4,780.74 21.36
X2 13,857.61 19.02
A2 358,233.39 19.63
Net Asset Value Per Share As at 31 December 2013 Number of shares outstanding: Equivalent to a net asset value per share of: The accompanying notes form an integral part of these financial statements.
90
Global Opportunities Fund
Portfolio as at 31 December 2013 Number of Securities
Market value USD
% of Net Assets
Number of Securities
Shares Transferable securities and money market instruments admitted to an official exchange listing
Treasury Wine Estates
171,835
2.23
Belgium 4,305
KBC Groep
244,252
3.16
Baidu
175,383
2.27
France 45,076
Alcatel-Lucent
202,306
2.62
Germany 15,168
Infineon Technologies
162,350
2.10
Hong Kong 43,965
AIA
220,417
2.85
2.90 1.00 1.62 5.52
178,922 230,894 130,327 159,258 255,970 132,269 78,610 233,694 235,586 254,565 240,272 233,465 145,868 217,649 226,622 266,045 226,228 202,635 226,377 150,464 4,025,720
2.32 2.99 1.69 2.06 3.31 1.71 1.02 3.03 3.05 3.30 3.11 3.02 1.89 2.82 2.93 3.45 2.93 2.62 2.93 1.95 52.13
Mediaset UniCredit
233,727 181,426 415,153
3.03 2.35 5.38
Daiwa Securities Ebara Ryohin Keikaku Sumitomo Mitsui Financial
159,038 134,008 227,362 239,979 760,387
2.06 1.74 2.94 3.11 9.85
Investment in Securities
7,430,380
96.22
Other Net Assets Total Net Assets
291,533 7,721,913
3.78 100.00
United States 7,360 2,877 4,121 2,830 4,019 5,100 1,760 1,662 4,335 5,560 217 3,775 3,907 2,754 2,386 2,061 7,375 175 1,676 2,612
Italy
Japan 15,900 20,800 2,100 4,650
224,107 77,147 125,320 426,574
United Kingdom 171,966 Lloyds Banking Group 24,047 ITV 65,380 Rentokil Initial
China
49,229 24,472
% of Net Assets
Shares Transferable securities and money market instruments admitted to an official exchange listing
Australia 40,092
990
Market value USD
South Korea 120
Samsung Electronics
155,948
2.02
Sweden 15,995
Volvo
209,853
2.72
Switzerland 3,346
Pentair
260,202
3.37
Arris Bed Bath & Beyond Blackstone BorgWarner CBS Charles Schwab Crown Cummins eBay Fortune Brands Home & Security Google Limited Brands Microsoft National Oilwell Varco Occidental Petroleum Parker Hannifin Pfizer Priceline PVH Walgreen
Any differences in the percentage of Net Asset figures are the result of roundings.
91
Global Opportunities Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013 Description of Securities
Portfolio by Country Country
Purchases
Sales
USD
USD
Australia Treasury Wine Estates
181,319
-
China Baidu
165,587
-
Italy Mediaset UniCredit
210,662 158,527
-
Shares
Japan Daiwa Securities Don Quijote Makita
153,993 78,133.85 -
225,025.46 148,363
United States Arris Citrix Systems Praxair
152,641 13,042 16,809
166,206 233,440
Market Value USD 4,025,720 760,387 426,574 415,153 260,202 244,252 220,417 209,853 202,306 175,383 171,835 162,350 155,948
% of Net Assets 52.13 9.85 5.52 5.38 3.37 3.16 2.85 2.72 2.62 2.27 2.23 2.10 2.02
Investment in Securities
7,430,380
96.22
Net Other Assets Total Net Assets
291,533 7,721,913
3.78 100.00
United States Japan United Kingdom Italy Switzerland Belgium Hong Kong Sweden France China Australia Germany South Korea
Any differences in the percentage of Net Asset figures are the result of roundings.
92
Global Property Equities Fund Managers’ report for the six months to 31 December 2013
Fund Managers Patrick Sumner and Guy Barnard The total return for the six-month period to 31 December 2013, excluding any initial charges paid on investment, with gross income reinvested, was 0.1% in dollar terms. The FTSE EPRA NAREIT Developed Index gained 1.6%. Equity markets recovered from an early setback and were driven upwards by a combination of positive global macroeconomic data and guidance from the Federal Reserve (Fed) that interest rates would remain low even as it scaled back its quantitative easing (QE) programme. However, listed property stocks failed to keep pace with wider equity markets as investors rotated from yield to more cyclical growth stocks. North American property stocks lagged other regions, with concerns over the impact of rising bond yields on real estate cap rates (property yields) leading investors to shun the sector. Asia Pacific property equities saw mixed performance, with Japan once again outperforming as investors continued to look for yield and sought real assets in anticipation of rising inflation. However, stocks in Singapore and Hong Kong suffered as a slowdown in residential markets became increasingly apparent following government cooling measures. In Europe, listed property benefited from improving confidence in the macroeconomic situation and greater risk appetite from investors. A surprise interest rate cut by the European Central Bank in the fourth quarter of 2013 provided an additional tailwind. The Fund slightly underperformed its index during the period. Stock selection added value in Europe, but was neutral in North America and lagged in Asia Pacific. Regional allocation also detracted, with an overweight to North America detrimental. The strong performance of Europe (+16.6%) was largely driven by the UK and Sweden, where improving economies and increased lending appetite led to greater occupational and investor demand. Conversely, stocks in Switzerland, Germany, and the Netherlands lagged. We finished the period with a small overweight position in the region, where we continue to favour Northern Europe, most notably Scandinavia and the UK. We added to UK exposure through large-cap Land Securities and some deeper value small-cap names. Stock selection added significant value through holdings in residential-focused Grainger, Quintain, and Safestore. Capital and Regional also aided performance following a re-pricing of secondary assets. In Sweden, we increased exposure through existing holding Wihlborgs Fastigheter and a new position in Balder. Elsewhere, we rotated out of German office landlord Alstria, initiating a new position in residential-focused Gagfah, given its deep valuation discount and restructuring potential. We have remained underweight in the Continental retail space, where constrained consumer spending, the impact of online shopping and low inflation are all likely to restrict growth prospects in the short term. Asia-Pacific property stocks (+4.2%) had a mixed second half to the year. Japanese developers continued to benefit from the country’s aggressive easing policies, with real estate values in the country rising in advance of expected rental growth. However, there is less growth elsewhere in the region and, as a result, we reduced exposure, finishing the period around 4% underweight. Within the region, asset allocation added value through our overweight in Japan, although this was somewhat offset by stock selection, which detracted. In Japan, we increased existing holdings in large caps Mitsubishi Estates and Mitsui Fudosan and initiated a new position in Hulic. In Hong Kong, we reduced exposure to the weaker office and residential markets, selling New World Development and preferring exposure to the more stable retail market through Wharf Holdings and Chinese developers, China Overseas Land and Shimao Properties, which have de-rated despite strong results. In Australia, we bought into the GDI Property initial public offering in December. North American property stocks fell (-3.86%) following the Fed’s tapering announcement in May 2013 and have lacked momentum since. Despite this, property fundamentals have showed no signs of deteriorating, with a lack of new supply and an improving economy boosting occupational demand and healthy competition for assets leading yields to tighten further. We maintained our overweight to the region during the period and made changes within sectors based on relative valuation. Holdings in non-benchmark holdings American Tower, Iron Mountain, and Weyerhaeuser were beneficial. Conversely, our position in datacentre landlord Digital Realty detracted after the company cut its earnings guidance. Within the portfolio, we rotated from Digital Realty to DuPont Fabros Technology in the datacentre space, from Starwood Hotels to Hyatt Hotels in the lodging sector, and from Avalonbay Communities to Mid-America Apartment Communities in the apartment sector. In healthcare, we sold Ventas, adding to Health Care REIT and initiating new positions in small-caps LTC Properties and National Health Investors. We also liquidated our position in American Tower later in the period in favour of cell tower Crown Castle International (CCI), in anticipation of CCI’s impending REIT conversion. In Canada, we reduced our exposure to the region in favour of US stocks with higher earnings and dividend-growth prospects. While it is difficult to gauge the attitude of investors to REITs and property companies given the uncertainty over rising bond yields and interest rates, the balances of supply and demand in occupational and physical property investment markets give us confidence in the underlying returns that listed property companies should be able to generate for the next year or two. Recovering economies are likely to lead to greater demand from tenants, benefiting the landlords in which we invest. The pricing of shares in the sector currently strikes us as ‘fair’ in light of expected growth, even if bond yields and interest rates start to rise. The big unknown is how the whole process of QE will unravel, and how governments and central banks will go about reducing support without putting the brakes on growth. However, we expect that short-term rates will stay low for some time yet, which should be supportive of the sector. All other returns relate to the regional benchmarks of the EPRA/NAREIT Global Total Return Index in US dollars. The base source for performance and indices statistics is Micropal.
93
Global Property Equities Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (USD)
For the period from 1 July 2013 to 31 December 2013 (USD)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets
1,196,265,280 6,781,600 4,026,061 2,751,053 1,837,618 ---14,704 ------------173,150 1,211,849,466
Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
25,490 ---694,825 2,197,129 4,093,587 ---------------7,011,031
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
15,247,218 ------2,128 55,064 15,304,410
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
131,838 7,280,315 2,548,425 548,524 329,998 258,203 ------11,097,303
Net gain from investment Net realised loss on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange gain
4,207,107 (17,802,619) ---------------2,144,429
Net realised loss
(11,451,083)
Increase in unrealised appreciation on investments Increase in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts Net assets at the end of the period
Net increase in assets as a result of operations
1,204,838,435
16,867,461 2,431,246 ------------7,847,624
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (USD) Net assets at the beginning of the period Net gain from investment Net realised loss on investment Net realised currency exchange gain Proceeds from shares issued
1,329,041,351 4,207,107 (17,802,619) 2,144,429 455,311,336
Payments for shares redeemed Net equalisation paid (note 13) Increase in unrealised appreciation on investments Dividends paid (note 14) Net assets at the end of the period
94
(584,123,367) (1,254,969) 19,298,707 (1,983,540) 1,204,838,435
Global Property Equities Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 A2
A2 (EUR)
A2 (GBP) 1,233,237.47 109,610.63 (209,448.89) 1,133,399.21
A2 HCHF (CHF) 2,153,775.11 146,232.34 (1,721,866.35) 578,141.10
A2 HEUR (EUR) 4,092,761.90 498,054.83 (2,560,124.06) 2,030,692.67
Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
41,850,984.36 8,856,433.74 (20,721,802.17) 29,985,615.93
6,090,801.19 464,673.55 (3,465,900.19) 3,089,574.55
Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
I2 HEUR (EUR) 276,543.03 ---(247,724.00) 28,819.03
I1 (EUR)
I1 (GBP)
X2
G2
---60,273.00 ---60,273.00
3,695,914.15 524,971.47 (162,903.89) 4,057,981.73
885,270.05 146,729.91 (395,283.72) 636,716.24
---2,886,347.22 (68,342.00) 2,818,005.22
Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
H2 (EUR) ---2,609.50 (1.29) 2,608.21
H1 ---16,820.00 ---16,820.00
A2
A2 (EUR)
A2 (GBP)
29,985,615.93 16.26
3,089,574.55 11.80
1,133,399.21 9.82
A2 HCHF (CHF) 578,141.10 10.57
A2 HEUR (EUR) 2,030,692.67 10.56
Number of shares outstanding: Equivalent to a net asset value per share of:
I1 (EUR)
I1 (GBP)
X2
G2
Number of shares outstanding: Equivalent to a net asset value per share of:
I2 HEUR (EUR) 28,819.03 12.04
60,273.00 91.76
4,057,981.73 8.57
636,716.24 15.58
2,818,005.22 9.53
Number of shares outstanding: Equivalent to a net asset value per share of:
H2 (EUR) 2,608.21 10.04
H1 16,820.00 10.29
A1
I2
10,662,893.65 985,550.18 (2,132,042.50) 9,516,401.33
12,706,717.18 2,405,073.75 (4,117,259.47) 10,994,531.46
G2 HCHF (CHF) ---1,850,716.48 (97,771.85) 1,752,944.63
G2 HEUR (EUR) ---2,834,033.24 (210,597.08) 2,623,436.16
A1
I2
9,516,401.33 14.41
10,994,531.46 17.75
G2 HCHF (CHF) 1,752,944.63 9.51
G2 HEUR (EUR) 2,623,436.16 9.52
H2 HEUR (EUR) ---250.00 ---250.00 H2 ---12,253,102.28 (286,766.28) 11,966,336.00
Net Asset Value Per Share As at 31 December 2013
The accompanying notes form an integral part of these financial statements.
95
H2 HEUR (EUR) 250.00 10.26 H2 11,966,336.00 10.39
Global Property Equities Fund
Portfolio as at 31 December 2013 Number of Securities
Market value USD
% of Net Assets
Number of Securities
Shares Transferable securities and money market instruments admitted to an official exchange listing
GDI Property Goodman Mirvac Westfield Group
12,239,563 10,715,230 12,311,589 20,058,169 55,324,551
1.02 0.89 1.02 1.66 4.59
Canada 1,613,500
Killam Properties
15,914,437
1.32
France 115,000 108,000
ICADE Unibail-Rodamco
10,703,613 27,724,129 38,427,742
0.89 2.30 3.19
Germany 340,908 877,372 170,000
DIC Asset GAGFAH LEG Immobilien
3,138,720 12,945,568 10,050,918 26,135,206
0.26 1.07 0.83 2.16
Hong Kong 2,800,000 3,456,000 3,110,000 2,222,892 2,525,000
China Overseas Land & Investment Hongkong Land Holdings Shimao Property Holdings Sun Hung Kai Properties Wharf Holdings
7,862,935 20,407,680 7,147,210 28,144,125 19,310,101 82,872,051
0.65 1.69 0.59 2.34 1.60 6.87
Indonesia 143,374,500
Pakuwon Jati
3,151,411
0.26
Japan 222,400 2,098,000 1,595,000 6,022 804,200 3,243
Hulic Mitsubishi Estate Mitsui Fudosan Nippon Building Fund Nomura Real Estate Holdings Nomura Real Estate Office Fund
3,294,933 62,835,028 57,461,046 35,067,355 18,122,764 15,152,545 191,933,671
0.27 5.22 4.77 2.91 1.50 1.26 15.93
Jersey 4,250,000
LXB Retail Properties
8,991,962
0.75
Singapore 8,788,000 10,930,000
CapitaMalls Asia Suntec Real Estate Investment Trust
13,617,728 13,346,216 26,963,944
1.13 1.11 2.24
7,464,224 4,495,538 12,999,017 24,958,779
0.62 0.37 1.08 2.07
5,224,652
0.43
Fabege Fastighets AB Balder Wihlborgs Fastigheter
The Netherlands 123,942 Eurocommercial Properties
% of Net Assets
6,767,316 7,076,924 9,523,516 658,690 7,749,829 12,388,443 28,303,663 6,558,223 2,403,027 4,336,782 85,766,413
0.56 0.59 0.79 0.05 0.64 1.03 2.35 0.54 0.20 0.36 7.11
23,969,090 25,091,530 23,116,680 24,246,088 18,452,559 9,388,160 16,875,013 18,267,810 470,137 29,246,255 39,675,496 16,247,103 14,679,482 9,933,818 10,995,716 23,463,336 11,269,955 2,005,675 38,920,024 40,175,050 23,617,334 25,897,107 72,546,778 27,918,600 13,883,706 13,654,902 8,821,742 25,399,601 6,598,602 15,624,457 630,451,806
1.99 2.09 1.92 2.01 1.53 0.78 1.40 1.53 0.04 2.43 3.29 1.36 1.22 0.82 0.91 1.95 0.94 0.17 3.23 3.33 1.96 2.15 6.02 2.32 1.15 1.13 0.73 2.11 0.55 1.30 52.36
iO Adria
148,655
0.01
Investment in Securities
1,196,265,280
99.29
Shares Transferable securities and money market instruments admitted to an official exchange listing
Australia 15,500,000 2,526,409 8,190,027 2,222,777
Sweden 625,000 437,477 725,000
Market value USD
United Kingdom 650,000 9,505,000 230,931 4,825,557 2,300,000 1,250,000 1,775,000 4,200,000 900,000 650,000
British Land Capital & Regional Derwent London Eredene Capital Grainger Great Portland Estates Land Securities Quintain Estates & Development Safestore Unite
United States 916,600 1,369,625 1,636,000 418,036 729,062 128,000 689,198 433,400 4,636 1,447,118 744,800 757,794 294,414 324,900 307,100 383,200 199,380 64,336 1,045,675 266,510 1,494,768 1,735,731 471,895 300,200 678,578 1,444,199 208,947 1,085,685 114,311 495,464
Apartment Investment & Management BioMed Realty Trust Brandywine Realty Trust Camden Property Trust Chesapeake Lodging Trust Crown Castle DuPont Fabros Technology Extra Space Storage Federal Realty Investment Trust General Growth Properties Health Care Retail Estate Investment Trust Healthcare Realty Trust Hyatt Hotels Iron Mountain LTC Properties Mid-America Apartment Communities National Health Investors Pebblebrook Hotel Trust Prologis Public Storage Ramco-Gershenson Properties Trust Retail Opportunity Investments Simon Property Group SL Green Realty STAG Industrial Strategic Hotels & Resorts Sun Communities UDR Ventas Weyerhaeuser
Unlisted Securities Bermuda 1,079,280
Any differences in the percentage of Net Asset figures are the result of roundings.
96
Global Property Equities Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013
Portfolio as at 31 December 2013 Number of Securities
Market value USD
% of Net Assets
Description of Securities
Derivative Instruments Transferable securities and money market instruments admitted to an official exchange listing
Forward Foreign Exchange Contracts 455,313 EUR Buy Euro: Sell US Dollar 16/01/14 7,470 EUR Buy Euro: Sell US Dollar 16/01/14 5,765 EUR Buy Euro: Sell US Dollar 16/01/14 7,214 EUR Buy Euro: Sell US Dollar 16/01/14 3,442 EUR Buy Euro: Sell US Dollar 16/01/14 50 EUR Buy Euro: Sell US Dollar 16/01/14 27,669,289 EUR Buy Euro: Sell US Dollar 16/01/14 454,143 EUR Buy Euro: Sell US Dollar 16/01/14 3,601 EUR Buy Euro: Sell US Dollar 16/01/14 347,095 EUR Buy Euro: Sell US Dollar 16/01/14 623,870 EUR Buy Euro: Sell US Dollar 16/01/14 30,370 EUR Buy Euro: Sell US Dollar 16/01/14 434,699 EUR Buy Euro: Sell US Dollar 16/01/14 1,917 EUR Buy Euro: Sell US Dollar 16/01/14 33,167,647 EUR Buy Euro: Sell US Dollar 16/01/14 549,245 EUR Buy Euro: Sell US Dollar 16/01/14 418,588 EUR Buy Euro: Sell US Dollar 16/01/14 4,545 EUR Buy Euro: Sell US Dollar 16/01/14 520,559 EUR Buy Euro: Sell US Dollar 16/01/14 13,003 EUR Buy Euro: Sell US Dollar 16/01/14 5,617,559 CHF Buy Swiss Franc: Sell US Dollar 16/01/14 157,181 CHF Buy Swiss Franc: Sell US Dollar 16/01/14 908,381 CHF Buy Swiss Franc: Sell US Dollar 16/01/14 74,607 CHF Buy Swiss Franc: Sell US Dollar 16/01/14 101,907 CHF Buy Swiss Franc: Sell US Dollar 16/01/14 17,972,213 CHF Buy Swiss Franc: Sell US Dollar 16/01/14 502,979 CHF Buy Swiss Franc: Sell US Dollar 16/01/14 8,756 CHF Buy Swiss Franc: Sell US Dollar 16/01/14 229,413 CHF Buy Swiss Franc: Sell US Dollar 16/01/14 286,327 CHF Buy Swiss Franc: Sell US Dollar 16/01/14 116,891 USD Buy US Dollar: Sell Euro 16/01/14 3,430 USD Buy US Dollar: Sell Euro 16/01/14 11,138 USD Buy US Dollar: Sell Euro 16/01/14 72,216 USD Buy US Dollar: Sell Euro 16/01/14 38,089 USD Buy US Dollar: Sell Euro 16/01/14 45,229 USD Buy US Dollar: Sell Euro 16/01/14 112,630 USD Buy US Dollar: Sell Euro 16/01/14 37,988 USD Buy US Dollar: Sell Euro 16/01/14 27,067 USD Buy US Dollar: Sell Euro 16/01/14 15,889 USD Buy US Dollar: Sell Swiss Franc 16/01/14 30,378 USD Buy US Dollar: Sell Swiss Franc 16/01/14 11,852 USD Buy US Dollar: Sell Swiss Franc 16/01/14 22,707 USD Buy US Dollar: Sell Swiss Franc 16/01/14 6,611 USD Buy US Dollar: Sell Swiss Franc 16/01/14 141,729 USD Buy US Dollar: Sell Swiss Franc 16/01/14 Net Other Assets Total Net Assets
Purchases
Sales
USD
USD
22,082,784 6,249,307 46,699,403 49,433,311 14,435,572 31,774,232 33,926,793 23,208,298 25,369,174
21,813,111 41,445,108 38,962,474 42,021,902 7,681,892 29,793,041 37,428,138 8,521,455 57,810,949 33,549,214
Shares
877 15 40 (22) 2 53,316 875 10 2,427 4,988 (57) (1,322) (3) 63,910 1,059 2,927 (8) (1,582) (20) (26,830) (751) 5,739 392 (497) (85,837) (2,402) 55 1,205 (1,397) (91) (38) (110) (279) (30) (497) (1,113) (291) (296) 55 153 (71) (97) (50) 350 14,704
0.01 (0.01) -
8,558,451 1,204,838,435
0.71 100.00
United States Alexandria Real Estate AvalonBay Communities Digital Realty Trust Health Care Retail Estate Investment Trust Public Storage Sabra Health Care Retail Estate Investment Trust SL Green Realty UDR Ventas Vornado Realty Trust
Portfolio by Country Country United States Japan United Kingdom Hong Kong Australia France Singapore Germany Sweden Canada Jersey The Netherlands Indonesia Bermuda
Market Value USD 630,451,806 191,933,671 85,766,413 82,872,051 55,324,551 38,427,742 26,963,944 26,135,206 24,958,779 15,914,437 8,991,962 5,224,652 3,151,411 148,655
% of Net Assets 52.36 15.93 7.11 6.87 4.59 3.19 2.24 2.16 2.07 1.32 0.75 0.43 0.26 0.01
Investment in Securities
1,196,265,280
99.29
14,704
-
8,558,451 1,204,838,435
0.71 100.00
Forward Foreign Exchange Contracts Other Net Assets Total Net Assets
Any differences in the percentage of Net Asset figures are the result of roundings.
97
Global Technology Fund Managers’ report for the six months to 31 December 2013
Fund Managers Ian Warmerdam and Stuart O’Gorman The Henderson Horizon Global Technology Fund underperformed its benchmark, the MSCI All Countries IT World Index, returning 20.1% versus 21.1%, respectively. At the sector level, stock selection within internet catalogue & retail and IT services proved beneficial to performance, while stock selection within computers & peripherals and software detracted from performance. At the stock level, Cognizant Technology Solutions performed well during the period. The IT consulting company reported strong revenues driven by growth in its healthcare and Continental European divisions. Priceline also contributed positively to performance. The online travel site benefited from market share gains in the underpenetrated European market. IBM, to which we are underweight, was also a positive contributor to performance as the company reported revenues that fell short of market expectations. Yahoo!, the US internet company, performed well as speculation mounted of a potential listing of Alibaba, China’s largest e-commerce site, in which Yahoo! has a large stake. The holding in Amazon outperformed, as the stock rose following good results – the company saw solid units, increased active customer growth and a reacceleration in average revenue spend per user (ARPU), all of which boosted its top line. Apple, to which we are underweight due to its greater than 10% index weighting, was the largest detractor from the Fund on a relative basis. The company reported results that were ahead of expectations, driven in part by a solid backlog for its latest iPhone refresh. We remain relatively optimistic about Apple given its large cash balance, optionality on new product segments and valuation. Cisco Systems detracted from performance during the period. The communications equipment company fell as management guided about revenues that were below what the market had previously anticipated. Elsewhere, Equinix, the network-independent datacentre operator, underperformed following weak second quarter numbers. Major sales include Adobe, which we sold as the stock breached our valuation target. Elsewhere, we added Facebook as we began to see positive signs of the monetisation of its mobile platform and increased adoption by advertisers. Equity markets have rallied strongly, driven by better macroeconomic data and very strong inflows into the equity market. This was despite lacklustre sales and earnings growth overall. To sustain upward momentum, at some stage earnings will need to start surprising on the upside. US and European demand does seem to be improving, however, while emerging market economies continue to be the major risk. We believe our overall bias towards companies with strong barriers to entry should cushion the portfolio from macroeconomic volatility. Our valuation-aware process focuses on underappreciated areas of secular growth that we believe should offer strong returns over the long term. The Fund remains biased to our preferred themes of E-commerce, Online Advertising, Connectivity, Paperless Payment and Rational Commodities (a new theme that we added in 2013). This theme focuses on the improving fundamentals of stocks perceived as operating in commodity markets (e.g. hard disk drives and memory) as consolidation leads to more rational behaviour, particularly around the additional new capacity.
98
Global Technology Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (USD)
For the period from 1 July 2013 to 31 December 2013 (USD)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets
2,774,967,925 121,899,897 348,634 14,257,602 4,533,217 ------------------470,021 2,916,477,296
Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
------1,369,876 5,037,888 5,108,148 8,675 ------------11,524,587
2,904,952,709
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
11,186,179 ------790 3,189 11,190,158
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
133,742 14,821,949 5,574,833 1,167,532 802,632 606,221 ------23,106,909
Net loss from investment Net realised gain on investment Net realised gain on forward foreign exchange contracts Net realised loss on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange loss
(11,916,751) 115,889,031 258,084 ------------(74,576)
Net realised gain
104,155,788
Increase in unrealised appreciation on investments Decrease in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
377,613,813 (261,622) -------------
Net increase in assets as a result of operations
481,507,979
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (USD) Net assets at the beginning of the period Net loss from investment Net realised gain on investment Net realised currency exchange loss Proceeds from shares issued
2,368,058,830 (11,916,751) 116,147,115 (74,576) 1,346,656,301
Payments for shares redeemed Net equalisation paid (note 13) Increase in unrealised appreciation on investments Dividends paid (note 14) Net assets at the end of the period
99
(1,291,229,360) (25,549) 377,352,191 (15,492) 2,904,952,709
Global Technology Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 A2 43,693,456.31 10,811,443.29 (21,458,898.28) 33,046,001.32
A2 (EUR) 3,593,448.39 1,214,685.08 (2,870,602.83) 1,937,530.64
A2 (GBP) 105,853.18 14,793.00 (22,438.21) 98,207.97
A2 HSGD (SGD) 4,707.45 16,738.48 (900.00) 20,545.93
3,535,934.21 1,113,928.93 (761,415.48) 3,888,447.66
I1
X2
C2
H2
Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
1,821,596.93 377,474.09 (253,810.08) 1,945,260.94
718,710.28 319,337.74 (155,789.87) 882,258.15
X2 (EUR) 92,611.68 50,476.56 (22,329.54) 120,758.70
2,832,301.70 4,707.45 (2,826,701.70) 10,307.45
59,899.94 30,993,986.83 (173,293.66) 30,880,593.11
Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
M2 2,065,944.20 ------2,065,944.20
A2 (GBP) 98,207.97 33.38
A2 HSGD (SGD) 20,545.93 114.29
A1
33,046,001.32 45.96
A2 (EUR) 1,937,530.64 40.95
3,888,447.66 45.96
I1
X2
C2
H2
Number of shares outstanding: Equivalent to a net asset value per share of:
1,945,260.94 48.02
882,258.15 43.25
X2 (EUR) 120,758.70 38.53
10,307.45 11.28
30,880,593.11 12.06
Number of shares outstanding: Equivalent to a net asset value per share of:
M2 2,065,944.20 12.49
Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A1
A2 HCHF (CHF) ---500.00
I2
500.00
6,653,712.52 1,302,999.60 (2,546,290.53) 5,410,421.59
H2 (EUR) ---7,393,919.56 (766,931.17) 6,626,988.39
H1 (USD) ---4,900.00 ---4,900.00
A2 HCHF (CHF) 500.00 99.96
I2 5,410,421.59 48.14
H2 (EUR) 6,626,988.39 10.92
H1 (USD) 4,900.00 10.20
I1 (GBP) 4,125.81 113,563.40 (3,650.00) 114,039.21 G2 ---24,170,574.45 (4,294,751.40) 19,875,823.05
Net Asset Value Per Share As at 31 December 2013 A2 Number of shares outstanding: Equivalent to a net asset value per share of:
The accompanying notes form an integral part of these financial statements.
100
I1 (GBP) 114,039.21 34.72 G2 19,875,823.05 10.63
Global Technology Fund
Portfolio as at 31 December 2013 Number of Securities
Market value USD
% of Net Assets
Number of Securities
Shares Transferable securities and money market instruments admitted to an official exchange listing
51 Job Baidu Netease.com ADR
5,217,119 25,158,667 28,188,046 58,563,832
0.18 0.87 0.97 2.02
Finland 2,222,923
Nokia
17,811,779
0.61
France 1,589,575
Alcatel-Lucent
7,134,199
0.25
Germany 1,874,496 347,230
Infineon Technologies SAP
20,063,557 29,910,358 49,973,915
0.69 1.03 1.72
Ireland 615,261
Accenture
50,534,462
1.74
Japan 1,046,600 4,187,000 35,400 1,369,800
Alps Electric Hitachi Nuflare Technology Rakuten
11,914,832 31,744,186 4,411,294 20,450,720 68,521,032
0.41 1.09 0.15 0.70 2.35
Russia 480,535
Mail Ru Sponsored ADR
21,429,458
0.74
South Korea 92,799 13,881 584,470
Samsung Electronics Samsung Electronics Preference SK Hynix
120,598,687 13,317,394 20,394,283 154,310,364
4.15 0.46 0.70 5.31
Sweden 1,597,349
Ericsson
19,480,134
0.67
Taiwan 10,899,000 370,181 1,412,000 9,242,625 1,352,317
Advanced Semiconductor Engineering Himax Technologies MediaTek Taiwan Semiconductor Taiwan Semiconductor ADR
10,120,624 5,419,450 20,999,862 32,640,022 23,638,501 92,818,459
0.35 0.19 0.72 1.12 0.81 3.19
43,901,322 15,756,296 59,657,618
1.51 0.54 2.05
10,667,039 28,372,727 39,039,766
0.37 0.98 1.35
United Kingdom 587,167 Arm Holdings 626,651 Rightmove
% of Net Assets
18,223,818 5,732,171 22,000,509 248,100,066 27,701,586 15,988,568 14,896,110 84,407,461 22,282,950 49,094,420 20,307,551 38,599,569 53,996,176 21,861,429 18,081,059 87,438,775 24,303,375 25,560,298 19,736,644 215,942,671 40,247,960 27,210,382 32,359,174 78,601,029 5,677,022 76,285,450 33,382,207 140,785,394 23,349,665 101,293,256 13,994,176 26,636,677 101,713,604 7,732,506 19,333,386 31,640,179 34,858,467 18,861,242 48,904,854 5,407,316 15,119,932 20,474,100 86,203,244 16,063,724 35,262,540 18,613,766 41,426,449 2,135,692,907
0.63 0.20 0.76 8.53 0.95 0.55 0.51 2.91 0.77 1.69 0.70 1.33 1.86 0.75 0.62 3.01 0.84 0.88 0.68 7.42 1.39 0.94 1.11 2.71 0.20 2.63 1.15 4.85 0.80 3.49 0.48 0.92 3.50 0.27 0.67 1.09 1.20 0.65 1.68 0.19 0.52 0.70 2.97 0.55 1.21 0.64 1.43 73.53
2,774,967,925
95.53
Shares Transferable securities and money market instruments admitted to an official exchange listing
China 66,899 142,015 357,898
The Netherlands 468,385 ASML Holding 368,784 Yandex
Market value USD
United States 280,388 212,894 55,737 443,749 1,577,090 294,503 1,055,339 3,797,861 351,577 488,526 391,320 710,269 2,143,556 126,017 199,868 1,605,707 1,011,166 432,712 171,273 195,027 1,439,741 670,289 1,243,866 420,214 87,900 91,516 1,533,052 3,770,869 564,206 2,653,740 523,049 23,004 1,376,275 136,665 349,704 447,464 1,480,504 463,706 1,111,853 39,958 117,977 249,806 389,197 506,902 421,599 187,705 1,033,981
ACI Worldwide Adtran Amazon.com Apple Applied Materials Arrow Electronics Cadence Design Systems Cisco Systems Citrix Systems Cognizant Technology Solutions Comcast Ebay EMC Equinix F5 Networks Facebook Finisar Fiserv FleetCor Technologies Google Hewlett-Packard HomeAway Intel IBM KLA-Tencor Mastercard Micron Technology Microsoft NetApp Oracle Pandora Media Priceline.com Qualcomm Red Hat Salesforce.com SanDisk Symantec Synopsys Texas Instruments Time Warner Cable Towers Watson & Co TripAdvisor Visa Web.com Group Western Digital WEX Yahoo!
Investment in Securities
Any differences in the percentage of Net Asset figures are the result of roundings.
101
Global Technology Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013
Portfolio as at 31 December 2013 Number of Securities
Market value USD
% of Net Assets
Description of Securities
Derivative Instruments Transferable securities and money market instruments admitted to an official exchange listing
Forward Foreign Exchange Contracts 141,120 EUR Buy Euro: Sell US Dollar 02/01/2014 2,344,608 SGD Buy Singapore Dollar: Sell US Dollar 16/01/2014 49,994 CHF Buy Swiss Franc: Sell US Dollar 16/01/2014 27,244 USD Buy US Dollar: Sell Euro 31/12/2013 96,204 USD Buy US Dollar: Sell Singapore Dollar 02/01/2014 98,920 USD Buy US Dollar: Sell GBP Sterling 02/01/2014 29,130 USD Buy US Dollar: Sell Singapore Dollar 03/01/2014 56,376 USD Buy US Dollar: Sell Swiss Franc 03/01/2014 299,613 USD Buy US Dollar: Sell Euro 03/01/2014 554,690 USD Buy US Dollar: Sell GBP Sterling 03/01/2014 14,687 USD Buy US Dollar: Sell Singapore Dollar 16/01/2014 Other Net Assets Total Net Assets
Purchases
Sales
USD
USD
Finland Nokia
38,790,264
25,370,191
South Korea Samsung Electronics
18,572,768
26,990,346
United States Apple Applied Materials Ciena Cisco Systems Facebook Google Microsoft Qualcomm
87,994,458 27,585,987 20,933,307 17,489,778 59,195,883 15,086,415 11,842,734 10,494,767
12,898,622 18,981,401 43,740,698 7,221,006 28,479,865 20,112,086 24,037,105
Shares
(260) (7,241) (256) 80 (381) (369) (81) 255 31 (521) 68 (8,675)
-
129,993,459 2,904,952,709
4.47 100.00
Portfolio by Country Country United States South Korea Taiwan Japan The Netherlands China Ireland Germany United Kingdom Russia Sweden Finland France
Market Value USD 2,135,692,907 154,310,364 92,818,459 68,521,032 59,657,618 58,563,832 50,534,462 49,973,915 39,039,766 21,429,458 19,480,134 17,811,779 7,134,199
% of Net Assets 73.53 5.31 3.19 2.35 2.05 2.02 1.74 1.72 1.35 0.74 0.67 0.61 0.25
Investment in Securities
2,774,967,925
95.53
(8,675)
-
129,993,459 2,904,952,709
4.47 100.00
Forward Foreign Exchange Other Net Assets Total Net Assets
Any differences in the percentage of Net Asset figures are the result of roundings.
102
Japanese Smaller Companies Fund Manager’s report for the six months to 31 December 2013
Fund Manager Yun Young Lee The total return for the period, excluding any initial charges paid on investment with gross income reinvested, was 15.6% in US dollar terms. The Tokyo SE Second Section Index (TSE2) increased 12.8% in US dollar terms over the same period. The Japanese market continued to advance strongly during the six months as Shinzo Abe, who was elected prime minister by a huge margin in December 2012, pursues a multi-year programme of fiscal, monetary and economic stimulus to overcome almost 20 years of stagnation. Helped by a weakening yen, corporate Japan delivered robust earnings growth, which supported the market. Japanese smaller companies outperformed their larger counterparts over the period. Major positive contributors to fund performance during the period included Tokyo Steel (construction steel manufacturer), Chudenko (construction), Makino Milling Machine (machinery), Round One (amusement facilities operator) and Mixi (internet). We held Tokyo Steel and Chudenko as we expected robust domestic construction demand related to reconstruction in the Tohoku area, and government fiscalspending-driven demand. After stronger-than-expected earnings results, the share prices of both firms advanced strongly. We trimmed our position in Chudenko during the period. Our position in Makino Milling is driven by expectations of a recovery in Japanese corporate capital expenditures; the stock advanced strongly following better-than-anticipated monthly order-takings and we trimmed the position. We held Round One because we expected a recovery in domestic consumption via increasing disposable incomes. The share price appreciated strongly after the company delivered improving monthly store sales. We purchased Mixi because we believed there were several catalysts that could drive the stock following a significant share-price correction. The share price leapt successively during the period after one of its games achieved rapid growth in download numbers; we sold out of our position after the stock reached our target price. Major detractors included Towa (semiconductor equipment) and Nichii Gakkan (nursing homes). Towa underperformed as the industry’s recovery was slower than expected. After meeting with the management, we reconfirmed that Towa is one of the most cost-competitive players in its sector and should benefit from a rebound within the industry. Nichii Gakkan underperformed because its new business was weaker than expected. However, our meeting with management confirmed that its core business is still prospering, and that its earnings growth profile for the next few years should be better than the industry average. During the period, new purchases included Hitachi Zosen (infrastructure), Tachi-S (auto parts), Endo Lighting (lighting equipment), OKK (machinery), FANCL (cosmetics), Moshi Moshi Hotline (call-centre operator) and J Trust (financials). We attended several management meetings with these companies, identifying that they were undervalued compared to their earnings growth potential. Misguided economic policies over the last decade manifested themselves in a soaring currency, mounting deflation, and weak stock prices. However, we now believe this trend is changing. First, the Bank of Japan’s aggressive monetary easing stance should lead to a weaker yen in the medium term; secondly, structural changes implemented by corporate Japan over recent years (eg, reducing excess capacity and labour) should bring stronger profits growth when the economy rebounds. It follows that these catalysts should push stock prices higher as foreign purchases increase incrementally – the Japanese market is currently the most under-owned among the major markets. Since the shock of Lehman Brothers’ collapse in 2008, the coverage of Japanese smaller companies has materially reduced. This under-coverage of smaller companies generates a large number of mispricing situations. We therefore believe that bottom-up fundamental analysis is the route to uncovering such opportunities.
103
Japanese Smaller Companies Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (USD)
For the period from 1 July 2013 to 31 December 2013 (USD)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
74,331,464 1,753 138,254 379,546 1,260,118 ---------------------76,111,135 104,925 ---245,953 440,645 287,554 ---------------1,079,077
75,032,058
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
629,000 ------2 2,969 631,971
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
17,662 624,160 136,969 29,082 17,979 14,598 ------840,450
Net loss from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange loss
(208,479) 7,470,600 ---------------(129,865)
Net realised gain
7,132,256
Increase in unrealised appreciation on investments Decrease in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
2,411,475 ----------------
Net increase in assets as a result of operations
9,543,731
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (USD) Net assets at the beginning of the period Net loss from investment Net realised gain on investment Net realised currency exchange loss Proceeds from shares issued
64,841,304 (208,479) 7,470,600 (129,865) 31,947,756
Payments for shares redeemed Net equalisation paid (note 13) Increase in unrealised appreciation on investments Dividends received (note 14) Net assets at the end of the period
104
(31,277,090) (23,643) 2,411,475 ---75,032,058
Japanese Smaller Companies Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A2 1,557,016.84 417,830.44 (560,943.36) 1,413,903.92
A2 (JPY) 51,801.59 159,847.01 (104,700.00) 106,948.60
I2 451,788.85 350,891.98 (260,741.96) 541,938.87
X2 53,710.57 13,611.48 (15,091.84) 52,230.21
A2 1,413,903.92 35.22
A2 (JPY) 106,948.60 3,698.38
I2 541,938.87 36.39
X2 52,230.21 33.31
Net Asset Value Per Share As at 31 December 2013 Number of shares outstanding: Equivalent to a net asset value per share of: The accompanying notes form an integral part of these financial statements.
105
Japanese Smaller Companies Fund
Portfolio as at 31 December 2013 Number of Securities
Market value USD
% of Net Assets
1,471,320 1,232,200 834,632 1,535,819 2,630,705 2,040,106 2,823,681 2,003,715 2,036,656 1,236,161 1,731,236 2,459,987 1,351,197 2,152,941 1,247,554 1,223,758 486,693 3,897,231 991,426 969,888 868,500 3,384,044 339,989 2,291,206 709,883 843,629 1,640,988 2,410,751 1,802,715 271,482 1,401,335 2,245,653 415,530 2,022,848 3,738,093 251,488 1,126,754 1,290,851 591,784 1,920,648 2,277,085 594,457 1,413,703 1,189,635 1,549,747 1,409,216 835,866 1,136,679 74,331,465
1.96 1.64 1.11 2.05 3.51 2.72 3.76 2.67 2.71 1.65 2.31 3.28 1.80 2.87 1.66 1.63 0.65 5.19 1.32 1.29 1.16 4.51 0.45 3.05 0.95 1.12 2.19 3.21 2.40 0.36 1.87 2.99 0.55 2.70 4.98 0.34 1.50 1.72 0.79 2.56 3.03 0.79 1.88 1.59 2.07 1.88 1.11 1.51 99.07
74,331,465 700,593 75,032,058
99.07 0.93 100.00
Shares Transferable securities and money market instruments admitted to an official exchange listing
Japan 103,520 187,600 45,836 220,400 157,400 102,200 260,700 104,000 156,000 182 225,900 374,800 85,550 494,000 87,600 217,000 42,700 774,100 115,000 28,400 25,700 830,000 39,700 213,700 108,000 102,500 169,300 300,200 1,328,000 112,200 147,400 230,100 30,600 251,300 304,900 40,000 267,000 93,100 50,200 170,000 438,600 64,700 763,000 259,900 231,415 235,000 46,000 59,100
Alpha Systems Asahi Broadcasting Chudenko DCM Japan Holdings Doutor Nichires Holdings Endo Lighting Fancl Fields Futaba Denshi Global One Real Estate Investment Trust Hitachi Zosen Ines IT Holdings Itoham Foods J Trust Kandenko Katakura Industries Kitz Makino Milling Machine Mani Maruwa Meisei Industrial Mimasu Semiconductor Industry Moshi Moshi Hotline Net One Systems Neturen Nichicon Nichii Gakkan OKK OncoTherapy Science OPT Otsuka Kagu Roland Round One Saizeriya Sanki Engineering Sapporo Holdings Tachi-S Tecmo Koei Holdings T-Gaia Tokyo Steel Manufacturing Toppan Forms Topy Industries Towa TSI Holdings Tsugami Warabeya Nichiyo Xebio
Investment in Securities Other Net Assets Total Net Assets
Any differences in the percentage of Net Asset figures are the result of roundings.
106
Japanese Smaller Companies Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013 Description of Securities Shares
Japan Chudenko Endo Lighting Fancl Hitachi Zosen Mixi Moshi Moshi Hotline Nichii Gakkan Round One Sumitomo Oskak Tokyo Steel Manufacturing
Portfolio by Sector Sector
Purchases
Sales
USD
USD
2,249,708 2,855,957 2,437,457 1,084,226 2,308,667 1,350,852 1,959,800 1,107,014
2,124,548 735,921 2,172,342 1,366,071 2,225,344 2,561,417 1,692,564
Industrials Consumer Services Consumer Goods Technology Basic Materials Financials Health Care Investment in Securities Other Net Assets Total Net Assets
Market Value USD 24,977,494 20,238,253 12,235,476 10,034,443 3,120,714 2,483,715 1,241,370
% of Net Assets 33.29 26.97 16.30 13.38 4.17 3.31 1.65
74,331,465 700,593 75,032,058
99.07 0.93 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
107
Pan European Alpha Fund Managers’ report for the six months to 31 December 2013
Fund Managers Léopold Arminjon and John Bennett Over the six months to 31 December 2013 the Fund returned 9.5% (A2 Class, net of fees) compared with a rise of 15.7% in the MSCI Europe Index (euro, total return). Performance was strong over the period with the winning sectors being information technology and financials. On the short side we had success with the energy sector. The largest contributor to the Fund on the long side was Alcatel as its management team cut costs and focused the business on the profitable networking technologies segment. Airline International Consolidated Group, which continues its restructuring, also contributed. Jewellery producer and retailer Pandora pre-released Q3 figures evidencing that the company’s recovery is progressing with organic sales growth of 33%. The main detractors on the long side were Ryanair and eSure, both of which announced profit warnings over the period. On the short side we had success with Technip following disappointing Q1 subsea operating margins. The main laggards on the short side were index futures hedges and Spanish stocks Banco Santander and Telefonica. Our gross exposure has fluctuated throughout the period as we have responded to market events and taken profits to recycle capital into new names. Overall we have been pleased with the level of return we have generated given our net exposure has averaged 0.28%. Given that correlations have fallen and good stock picking is being rewarded we expect to continue with a similar level of net exposure. 2013 was the first year which looked like and felt like a bull market. It was a stock picker’s feast, as evidenced by the fact that the Fund delivered 20.3% net of fees despite a net exposure of 30%-40% while the MSCI Europe Total Return Index delivered 20.5%. Dispersion was a key feature of 2013. That said, the bull market is quite old now if we look at the US market which had its fifth consecutive positive year (2011 was flat in all fairness). The two previous bull markets, 1995-1999 and 2003-2007 were followed by pretty sharp corrections. Let’s hope we are now in a different configuration. Much depends on what happens in the fixed income world, as ever. How controlled the return to interest rates normality is the key for 2013. Some will think that we are in a ‘new normal’ environment, which is a difficult and dangerous starting point. The ‘new normal’ is not really ‘normal’ in our view. Even if the central bank cycle is more favourable in Europe than in the US (the ECB was late to the game and can probably still help), there is no point believing that Europe will be immune to what happens to the US stock market. We are all bearish emerging markets, but we are emerging markets. European stock markets have more often than not, and will most likely continue to behave as a leveraged play on the US: if Spain and Italy are peripheral to Europe, Europe is peripheral to the US. What happens there is more important than what happens here. Sad, but that is where the money which makes a difference comes from (and eventually returns). We would not like to lead our readers to believe that we have a bleak outlook for 2014 nonetheless. We are excited by many specific stock stories, but we don’t feel like getting carried away just because ‘the market is going up’. We are trying to stick to our target which is to deliver a good adjusted risk/return with minimal drawdown – we are trying not to be less careful than we were.
108
Pan European Alpha Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (EUR)
For the period from 1 July 2013 to 31 December 2013 (EUR)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
202,036,407 192,024,935 222,610 6,318,232 ---------68,830 ---------193,031 400,864,045
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
4,348 49,754 3,680,601 1,900,556 338,602 284,382 279,105 ------6,537,348
394,326,697
235,763 434 114,301 538 23,450 374,486
47,462 2,151,557 293,686 71,692 143,472 43,625 ---266,586 3,018,080
Net loss from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised gain on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange gain
(2,643,594) 15,109,535 (802,310) 5,730,979 (5,462,554) ------254,668
Net realised gain
12,186,723
Increase in unrealised appreciation on investments Decrease in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
10,254,278 (304,513) (306,365) (220,117) -------
Net increase in assets as a result of operations
21,610,006
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (EUR) Net assets at the beginning of the period Net loss from investment Net realised gain on investment Net realised currency exchange gain Proceeds from shares issued
121,020,634 (2,643,594) 14,575,650 254,668 296,213,545
Payments for shares redeemed Net equalisation paid (note 13) Increase in unrealised appreciation on investments Dividends received (note 14) Net assets at the end of the period
109
(44,498,259) (19,229) 9,423,283 ---394,326,697
Pan European Alpha Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 A2 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
2,777,317.31 6,716,012.33 (727,422.43) 8,765,907.21 Z2
Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
52,962.28 ---(10,228.36) 42,733.92
A2 HUSD (USD) 303,897.14 2,155,506.34 (264,369.09) 2,195,034.39
A1
I2
S2
125,594.18 1,298,368.24 (57,024.63) 1,366,937.79
4,695,953.99 9,444,058.94 (1,806,153.90) 12,333,859.03
109,911.70 ---(26,431.03) 83,480.67
I2 HUSD (USD) ---1,732,001.82 (252,546.90) 1,479,454.92
X2 HUSD (USD) ---107,239.12 ---107,239.12
A2 HUSD (USD) 2,195,034.39 12.31
A1
I2
S2
1,366,937.79 14.18
12,333,859.03 14.76
83,480.67 12.92
I2 HUSD (USD) 1,479,454.92 10.97
X2 HUSD (USD) 107,239.12 10.23
S2 HSGD (SGD) 230,859.63 16,454.85 (52,765.40) 194,549.08
S2 HUSD (USD) 63,645.60 1,863.01 (1,924.53) 63,584.08
S2 HSGD (SGD) 194,549.08 12.70
S2 HUSD (USD) 63,584.08 11.82
X2 584,720.32 1,495,487.79 (121,778.01) 1,958,430.10
Net Asset Value Per Share As at 31 December 2013 A2 Number of shares outstanding: Equivalent to a net asset value per share of:
8,765,907.21 14.16 Z2
Number of shares outstanding: Equivalent to a net asset value per share of:
42,733.92 144.96
The accompanying notes form an integral part of these financial statements.
110
X2 1,958,430.10 13.84
Pan European Alpha Fund
Portfolio as at 31 December 2013 Number of Securities
Market value EUR
Number of Securities
% of Net Assets
% of Net Assets
(178,007) (365,392) 390,368 28,248 262,010 209,292 (306,575) (244,953) 92,033 409,978 192,452 (114,121) (68,350) 896,523 (103,722) (28,286) (285,554) (21,931) (249,869) 18,194 (111,943) (176,958) (42,242) 447,288 (220,905) (263,534) (164,007) (49,773) (181,318) 691,839 (345,234) 169,763 (288,451) 194,731 116,193 57,795 (283,065) (219,761) (32,056) 29,683 24,324 129,554 (88,386) 140,942 (219,457) 265,913 266,737 (235,652) (75,528) 68,830
(0.05) (0.09) 0.10 0.01 0.07 0.05 (0.08) (0.06) 0.02 0.10 0.05 (0.03) (0.02) 0.23 (0.03) (0.01) (0.07) (0.01) (0.06) (0.03) (0.04) (0.01) 0.11 (0.06) (0.07) (0.04) (0.01) (0.05) 0.18 (0.09) 0.04 (0.07) 0.05 0.03 0.01 (0.07) (0.06) (0.01) 0.01 0.01 0.03 (0.02) 0.05 (0.06) 0.07 0.07 (0.06) (0.02) 0.01
Derivative Instruments Transferable securities and money market instruments admitted to an official exchange listing
Shares Transferable securities and money market instruments admitted to an official exchange listing
Austria 310,995
Market value EUR
Any differences in the percentage of Net Asset figures are the result of roundings. Erste Group Bank AG
7,865,064
1.99
Belgium 189,083
KBC Groep
7,776,511
1.97
Denmark 153,062
Pandora
6,031,386
1.53
France 259,438
Numericable Group
6,804,410
1.73
Germany 220,403 60,759 551,359 231,514
Metro AG Daimler AG Freenet AG ProSiebenSat.1 Media AG
7,782,981 3,834,500 11,989,301 8,335,083 31,941,865
1.97 0.97 3.04 2.11 8.09
Greece 402,277 652,771 190,926 2,642,752
Hellenic Telecommunications Organization SA Jumbo SA OPAP SA Piraeus Bank SA
3,892,030 7,670,059 1,868,211 3,937,700 17,368,000
0.99 1.95 0.47 1.00 4.41
Italy 1,104,483
UniCredit SpA
5,944,880
1.51
Spain 249,417 1,040,568 520,504 2,843,339
Atresmedia Corp de Medios de Comunicaion S.A. CaixaBank SA Grifols SA Bankia SA
3,006,722 3,917,739 13,691,967 3,490,199 24,106,627
0.76 0.99 3.47 0.89 6.11
Sweden 58,932 606,359 657,791 900,916 173,366
Autoliv Inc Eniro AB Skandinaviska Enskilda Banken AB Telefonaktiebolaget LM Ericsson Hexagon AB
3,929,375 3,405,039 6,316,039 8,010,005 3,996,123 25,656,581
1.00 0.86 1.60 2.03 1.01 6.50
Switzerland 38,035 380,242 72,585 362,408 248,836 171,185
Zurich Insurance Group AG Novartis AG Adecco SA Credit Suisse Group AG Meyer Burger Technology AG Cembra Money Bank AG
8,011,227 22,060,262 4,175,619 8,057,228 2,155,089 8,173,369 52,632,794
2.03 5.59 1.06 2.04 0.55 2.07 13.34
7,894,576 8,013,713 15,908,289
2.00 2.03 4.03
202,036,407
51.21
The Netherlands 298,021 Koninklijke Philips NV 242,161 Ziggo NV Investment in Securities
Contracts for Difference* (115,550) Accor (313,703) Arcelormittal 179,864 Astrazeneca (194,033) Atlas 96,246 Atos 771,493 Aviva (908,817) Banco Santander Hispano (404,800) BSkyB 858,444 BT 163,445 Cap Gemini 213,820 Carrefour (175,645) Deutsche Bank (268,014) Deutsche Lufthansa 218,857 EADS (355,399) Elekta (77,739) Essilor (1,060,463) Fiat (769,776) France Telecom (7,459) Givaudan (137,795) Heidelbergcement (66,631) Inditex (90,908) K&S (113,436) Kone 110,223 Lafarge (5,936,217) Lloyds TSB (203,936) Luxottica 103,262 Michelin (36,649) Muenchener (452,224) Prosegur 122,907 Publicis 130,057 Renault 151,439 Royal Dutch Shell (89,148) RTL 290,348 Smurfit Kappa (433,949) Subsea 7 (204,640) Suedzucker (463,578) Suez Environment (16,316) Swatch (20,162) Syngenta 554,883 Talktalk (76,609) Technip (1,012,005) Telefonica (1,013,602) Tesco 194,941 Total (270,737) Unilever 435,424 Vivendi 2,816,887 Vodafone (107,896) Wartsila (117,861) Yara International
111
Pan European Alpha Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013
Portfolio as at 31 December 2013 Number of Securities
Market value EUR
% of Net Assets
Description of Securities
Derivative Instruments Transferable securities and money market instruments admitted to an official exchange listing
Forward Foreign Exchange Contracts 5,768,625 EUR Buy Euro: Sell Norwegian Krone 27/02/2014 4,365 EUR Buy Euro: Sell Singapore Dollar 16/01/14 385,608 EUR Buy Euro: Sell Sterling 27/02/2014 2,969,481 EUR Buy Euro: Sell Swedish Krona 27/02/2014 3,137,949 EUR Buy Euro: Sell Swiss Francs 27/02/2014 255,457 EUR Buy Euro: Sell US Dollar 16/01/14 977,052 EUR Buy Euro: Sell US Dollar 27/02/2014 480,749 NOK Buy Norwegian Krone: Sell Euro 27/02/2014 373 SGD Buy Singapore Dollar: Sell Euro 16/01/14 264,293 GBP Buy Sterling: Sell Euro 27/02/2014 1,732,404 SEK Buy Swedish Krona: Sell Euro 27/02/2014 1,793,904 CHF Buy Swiss Francs: Sell Euro 27/02/2014 114,212 USD Buy US Dollar: Sell Euro 16/01/14 1,163,400 USD Buy US Dollar: Sell Euro 27/02/2014
50,293 242 (3,587) (202,965) (78,531) 527 62,778 (40,331) (8,657) 1,610 7,144 (1,066) (52,818) (19,023) (284,382)
0.01 (0.05) (0.02) 0.02 (0.01) (0.01) (0.06)
(279,105)
(0.07)
192,784,947 394,326,697
48.91 100.00
Futures Contracts** 116 DAX Eurex 15/03/2013 Other Net Assets Total Net Assets
Purchases
Sales
EUR
EUR
Denmark TDC A/S
10,296,332
10,591,135
Germany Deutsche Telekom
18,198,812
21,494,651
Italy Intesca Saopaolo UniCredit SpA
9,710,991 16,257,335
10,357,850 11,302,662
Spain BBVA
11,730,146
12,230,238
Switzerland Credit Suisse Group AG Novartis AG UBS
19,159,204 27,674,878 16,770,170
11,242,946 10,961,737 19,381,038
The Netherlands Ahold (Kon) NV Koninklijke Philips NV
11,675,280 13,509,937
14,255,845 8,597,413
Shares
Any differences in the percentage of Net Asset figures are the result of roundings.
Portfolio by Country
* Commitments EUR (66,428,956) ** Commitments EUR (7,729,621)
Country Switzerland Germany Sweden Spain Greece Netherlands Austria Belgium France Denmark Italy Investment in Securities Forward Foreign Exchange Contracts Contracts for Difference Futures Contracts Other Net Assets Total Net Assets
Market Value EUR 52,632,794 31,941,865 25,656,581 24,106,627 17,368,000 15,908,289 7,865,064 7,776,511 6,804,410 6,031,386 5,944,880
% of Net Assets 13.34 8.09 6.50 6.11 4.41 4.03 1.99 1.97 1.73 1.53 1.51
202,036,407 (284,382) 68,830 (279,105) 192,784,947 394,326,697
51.21 (0.06) 0.01 (0.07) 48.91 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
112
Pan European Property Equities Fund Managers’ report for the six months to 31 December 2013
Fund Managers Guy Barnard and Patrick Sumner The total return for the six-month period, excluding any initial charges paid on investment, with gross income reinvested, was 14.7% in euro terms. The FTSE EPRA/NAREIT Europe Capped index gained 10.4% in euro terms over the period. Equity markets posted strong gains in the second half of 2013, with investors relieved by guidance from the US Federal Reserve in December that interest rates would stay low even as it scaled back its quantitative easing programme. European stocks benefited from improving confidence in the macroeconomic situation and greater risk appetite from investors. Listed property stocks also made strong gains, helped in the fourth quarter of 2013 by a surprise European Central Bank (ECB) rate cut. Demand for physical assets has increased significantly through the course of 2013, with real estate, like equities, benefiting from the rotation out of bonds into other yielding asset classes. This demand has also broadened – it is no longer focused on only the best assets in the safest markets, but is increasingly targeting more secondary assets and looking again at countries and cities that were off-limits 12 months ago. The Fund significantly outperformed its index over the period, with both stock selection and asset allocation contributing. Our overweight position in the UK added further value, as did our underweight to the Continent. Adding to Sweden in September and cutting exposure to Switzerland was also beneficial. Conversely, a lack of Austrian names detracted following stronger performance in the fourth quarter. Stock selection was particularly positive in the UK, where smaller and non-benchmark holdings generated strong returns. Of particular note was retail-focused Capital & Regional and those companies benefiting from the improving residential market: Inland Homes, Grainger, and Quintain Estates and Development. London-focused Great Portland Estates also made a positive impact once again. In Germany, residential landlord GSW Immobilien made a strong contribution after it received a takeover approach from listed peer Deutsche Wohnen. GAGFAH (added during the period) also re-rated as management was able to successfully renegotiate its debt on more favourable terms. In Sweden, residential developer JM was boosted by a healthy Stockholm housing market. New holding Balder also benefited from robust residential rental demand. However, stock selection detracted in France, where residential developer Nexity lagged given concerns over government stimulus measures. Geographically, our portfolio remains focused on Northern Europe, with 94% of the Fund exposed to assets in the UK, France, Germany, and Scandinavia. We expect strong returns from the UK property market in 2014, with both London and the regions benefiting from strong investor demand and a return of bank lending. An improving economy is also driving rental growth, with London office rents expected to rise further this year. However, we are more cautious about the outlook for retail rents, particularly on the Continent, where constrained consumer spending, the impact of online shopping and low inflation are all likely to restrict growth prospects in the short term. We are therefore likely to wait for signs of stronger economic growth, particularly in France, before we turn more constructive on this sector. Likewise, the Paris office market is expected to see further declines in rental values in 2014. Elsewhere, Sweden remains a robust market and our portfolio is focused on the stronger markets of Stockholm, Malmo, and Gothenburg. German residential landlords should also show further rental growth in their portfolios this year and there is the possibility of further consolidation in the sector. We made a number of portfolio changes in the period. In the UK, we added industrial-focused Segro, funding the purchase through a sale of retail landlord Hammerson. We also added Countrywide to take advantage of an improving housing market. In the secondary space, we initiated positions in CLS Holdings and Max Property. In Germany, we participated in the rights issue of commercial developer DIC, with the stock trading at an undemanding valuation. Meanwhile, we sold our holding in Swiss stock PSP, rotating the proceeds into Sweden. Elsewhere in Scandinavia, we sold our position in Sponda (Finland) on valuation grounds. We also took advantage of trading opportunities, with profits generated from holdings in Foxtons, Redefine International, Deutsche Annington, and Nieuwe Stein over the period. Looking ahead, the macro and political backdrop remains uncertain and, despite signs of improvement, economic growth across much of Europe is still well below trend. However, the income return on property looks relatively attractive, even with the recent rise in bond yields, and has the important advantage of being a real asset and a reasonable inflation hedge. A lack of new development since the financial crisis and modest vacancy rates in most property markets mean that rental growth should follow any more sustained pick-up in economic activity – we are already seeing signs of this in the UK. As a result, we think the medium-term outlook for property, even in a modestly rising rate environment, is healthy. Equity-market volatility may return, but with an attractive dividend yield and access to capital markets, the companies in which we invest look well-placed to benefit and valuations appear fair for this point in the cycle. * Represents Class A Accumulation Shares. The base source for performance and indices statistics is Micropal.
113
Pan European Property Equities Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (EUR)
For the period from 1 July 2013 to 31 December 2013 (EUR)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
359,624,180 690,308 562,354 996,623 2,149,008 ------------------290,520 364,312,993 ---------855,114 2,070,540 ---------------2,925,654
361,387,339
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
2,741,000 11,468 ---1,108 25,060 2,778,636
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
18,726 2,173,215 813,953 169,874 94,703 83,305 ------3,353,776
Net loss from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised loss on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange loss
(575,140) 13,112,795 ---------------(18,847)
Net realised gain
12,518,808
Increase in unrealised appreciation on investments Decrease in unrealised appreciation on forward foreign exchange contracts Decrease in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
36,561,855 ----------------
Net increase in assets as a result of operations
49,080,663
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (EUR) Net assets at the beginning of the period Net loss from investment Net realised gain on investment Net realised currency exchange loss Proceeds from shares issued
344,533,347 (575,140) 13,112,795 (18,847) 54,154,019
Payments for shares redeemed Net equalisation paid (note 13) Increase in unrealised appreciation on investments Dividends paid (note 14) Net assets at the end of the period
114
(85,877,936) (258,285) 36,561,855 (244,469) 361,387,339
Pan European Property Equities Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A1 618,407.74 59,472.32 (27,672.33) 650,207.73
X2 23,695.96 10,937.65 (1,866.51) 32,767.10
I2 1,804,191.51 579,698.89 (1,228,304.38) 1,155,586.02
H2 ---66,256.05 (750.02) 65,506.03
A2 12,618,069.71 1,417,947.81 (2,094,291.86) 11,941,725.66
H1 ---5,000.00 (2,500.00) 2,500.00
A1 650,207.73 22.67
X2 32,767.10 24.94
I2 1,155,586.02 28.36
H2 65,506.03 22.33
A2 11,941,725.66 26.09
H1 2,500.00 20.79
Net Asset Value Per Share As at 31 December 2013 Number of shares outstanding: Equivalent to a net asset value per share of: The accompanying notes form an integral part of these financial statements.
115
Pan European Property Equities Fund
Portfolio as at 31 December 2013 Number of Securities
Market value EUR
Number of Securities
% of Net Assets
Vib Vermoegen 4.5% 27/11/2015
2,867,000
Technopolis
France 20,000 255,000 90,000 189,000 Germany 1,100,000 477,272 280,000 Jersey 7,200,000 405,000
9,074,200
2.51
32,002,494 915,593 9,291,834 2,712,401 4,172,711 17,185,771 12,198,557 20,363,488 5,121,708 35,112,188 7,610,069 6,731,300 10,099,445 4,348,268 4,608,219 5,929,060 178,403,106
8.86 0.25 2.57 0.75 1.15 4.76 3.38 5.63 1.42 9.72 2.11 1.86 2.79 1.20 1.28 1.64 49.37
iO Adria
1,500,202
0.42
Investment in Securities Net Other Assets Total Net Assets
359,624,180 1,763,159 361,387,339
99.51 0.49 100.00
The Netherlands 295,000 Eurocommercial Properties
0.79
Shares Transferable securities and money market instruments admitted to an official exchange listing
Finland 1,613,114
% of Net Assets
Bonds Transferable securities and money market instruments admitted to an official exchange listing
Bonds Transferable securities and money market instruments admitted to an official exchange listing
Germany 2,867,000
Market value EUR
7,025,111
1.94
CFI Cie Fonciere Internationale Icade Nexity Unibail Rodamco
1,075,100 17,129,624 2,459,475 35,125,650 55,789,849
0.30 4.74 0.68 9.72 15.44
Alstria Office Real Estate Investment Trust DIC Asset LEG Immobilien
10,102,950 3,190,325 12,019,000 25,312,275
2.80 0.88 3.33 7.01
United Kingdom 4,242,000 8,029,172 17,250,000 165,000 589,944 580,000 5,000,000 2,850,000 9,078,395 3,055,000 6,700,000 3,475,000 2,500,000 1,000,000 3,750,000 1,224,301
British Land Camper & Nicholsons Marina Investments Capital & Regional Properties CLS Holdings Countrywide Derwent London Grainger Great Portland Estates Inland Homes Land Securities Quintain Estates & Development Safestore Holdings Segro St. Modwen Properties Tritax Big Box Real Estate Investment Trust Unite
Unlisted Securities
LXB Retail Properties Max Property Group
11,062,426 735,289 11,797,715
3.06 0.20 3.26
Luxembourg 1,510,000
GAGFAH
16,175,875
4.48
Sweden 840,000 1,460,000 787,457 300,000 1,330,000
Castellum Fabege Fastighets Balder JM Wihlborgs Fastigheter
9,521,680 12712001 5,899,425 6,160,507 17,385,234 51,678,847
2.63 3.52 1.63 1.70 4.81 14.29
Bermuda 15,002,015
Any differences in the percentage of Net Asset figures are the result of roundings.
116
Pan European Property Equities Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013 Description of Securities Shares
Germany LEG Immobilien Deutsche Wohnen Luxembourg GAGFAH Switzerland PSP Swiss Property The Netherlands Eurocommercial Properties United Kingdom British Land Hammerson Segro Hansteen Holdings Great Portland Estates
Portfolio by Country Country
Purchases
Sales
EUR
EUR
8,265,475 -
3,820,235 9,134,458
15,157,431
868,673
-
12,071,295
185,361
8,743,784
9,556,150 11,887,668 2,006,646
8,847,965 17,065,253 2,363,463 9,230,373 7,090,530
United Kingdom France Sweden Germany Luxembourg Jersey The Netherlands Finland Bermuda Investment in Securities Net Other Assets Total Net Assets
Market Value EUR 178,403,106 55,789,849 51,678,847 28,179,275 16,175,875 11,797,715 9,074,200 7,025,111 1,500,202
% of Net Assets 49.37 15.44 14.29 7.80 4.48 3.26 2.51 1.94 0.42
359,624,180 1,763,159 361,387,339
99.51 0.49 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
117
Pan European Smaller Companies Fund Manager’s report for the six months to 31 December 2013
Fund Manager Ollie Beckett The Fund performed strongly over the review period, returning 25.6% versus the HSBC Smaller Companies Pan European index return of 22.5%. European smaller companies performed well in the second half of 2013. Leading economic indicators continued to point in a positive direction and asset allocators increased their weighting to equities, especially smaller companies. Despite this, the European Central Bank (ECB) chose to cut interest rates to 0.25%. Employment and inflation have remained stubbornly low and we find it encouraging that the ECB has shown its intention to prevent a deflationary scenario becoming established. Towards the end of the period, the Federal Reserve (Fed) decided to start ‘tapering’ (reducing) the amount of its open-market bond purchases. Investors largely took the Fed’s decision as good news, choosing to focus on the central bank’s flexible rhetoric and the strength of the global economy rather than the withdrawal of liquidity. The strongest performances came from a number of retail-related stocks, namely Pandora (jewellery), SuperGroup (UK clothing retailer), YOOX (online luxury goods) and Sports Direct (online sporting goods). We purchased Pandora following a significant fall in the share price; the company had unsuccessfully attempted to move the brand up the pricing scale. Now with new management, and a focus on its core charm-bracelet products, the company has returned to growth. SuperGroup is a similar recovery story. Having grown too quickly, the company encountered a number of operational issues. Under new management, it has seen infrastructure improvements, better focus on product offerings and the start of expansion outside the UK – this has led to strong share price performance. Luxury fashion e-tailer YOOX is one of the Fund’s high-growth stocks; an increasing number of luxury consumers are transacting online and the company continues to sign up premium fashion labels. Sports Direct has come to dominate sports retail in the UK and, with planned expansion into Europe, looks likely to continue to grow at an impressive rate. We have also seen the tentative signs of a pick-up in mergers and acquisitions activity with a number of deals occurring in 2013. One of our bigger contributions came from AZ Electronic Materials, which was bid for by Merck at a 50% premium to the share price. We expect to see more activity in 2014, especially in the smaller companies space. On the negative side was a holding in Perform Group, which announced a profit warning, reducing the share price by 50%; the media company was disappointing on both revenue and costs. We have sold our small holding. Another negative contributor was French property company Nexity, where a lack of social housing policies from the government and a generally lacklustre French economy weighed on sentiment. We continue to believe the stock offers good value. Activity primarily comprised profit-taking after a strong period for equity markets. We sold Sacyr (Spanish real estate), LSL Property Services (UK residential services), Wacker Chemie (speciality chemicals) and National Express (bus operator) as a part of this process. Other sales include Duro Felguera, as its South American contracts become less profitable, and Aixtron as the widespread adoption of organic lightemitting diode technology is taking longer than many expected. We participated in two initial public offerings (IPOs) toward the end of the period: Moncler and Sanitec. Moncler is achieving high levels of growth through its fashion label while Swedish bath and toilet maker Sanitec looks set to benefit from the cyclical recovery we are seeing in Europe. Although both positions are small they added to returns. We also added COLT, as we believe its telecoms infrastructure is undervalued. In the UK, we bought Balfour Beatty (engineering contractor) and Oxford Instruments (industrial analysis devices), both of which look set for a period of sustained earnings growth. Online retailer CDON entered the portfolio; after a difficult couple of years the company looks set to return to profit in 2014, led by its sports and fashion divisions. As we approach 2014, we remain confident that good returns can be achieved by European smaller companies. While we may only be returning to modest growth with many hurdles to overcome, not least a strong euro, we feel that, ultimately, things are getting better rather than worse. On a relative basis, valuations are still supportive, especially as we expect a return to corporate earnings growth.
118
Pan European Smaller Companies Fund
Statement of Net Assets
Statement of Operations
As at 31 December 2013 (EUR)
For the period from 1 July 2013 to 31 December 2013 (EUR)
Assets Investments in securities at market value Cash at bank (note 15) Interest and dividends receivable Subscriptions receivable Receivable for investments sold Reorganisation and formation expenses, net of amortisation (note 3) Net unrealised gain on forward foreign exchange contracts Net unrealised gain on contracts for difference Net unrealised gain on futures contracts Net unrealised gain on swap contracts Purchased options at market value Other assets Total assets
1,047,241,328 47,294,841 237,716 1,116,507 139,915 ------9,528,667 ---------746,049 1,106,305,023
Liabilities Bank overdrafts (note 15) Interest and dividends payable Payable for investments purchased Taxes and expenses payable Redemptions payable Net unrealised loss on forward foreign exchange contracts Net unrealised loss on contracts for difference Net unrealised loss on futures contracts Net unrealised loss on swap contracts Sold options at market value Other liabilities Total liabilities
Net assets at the end of the period
4,253,833 ------5,182,454 2,023,942 ---------------11,460,229
1,094,844,794
Income Dividend income Bond interest income Interest received on contracts for difference Bank interest Other income Total income
3,048,146 ------83,141 127,707 3,258,994
Expenses Custodian fee Management fee (note 6) Shareholder servicing fee and distribution fee (note 7 and note 8) Administration fee Operations expenses Annual tax (note 9) Amortisation of reorganisation and formation expenses Interest paid on contracts for difference Total expenses
85,355 6,412,796 952,073 260,175 129,578 132,713 ---3,706 7,976,396
Net loss from investment Net realised gain on investment Net realised loss on forward foreign exchange contracts Net realised gain on contracts for difference Net realised loss on futures contracts Net realised loss on swap contracts Net realised loss on options contracts Net realised currency exchange gain
(4,717,402) 33,147,070 ---2,082,190 ---------684,157
Net realised gain
31,196,015
Increase in unrealised appreciation on investments Decrease in unrealised appreciation on forward foreign exchange contracts Increase in unrealised appreciation on contracts for difference Decrease in unrealised appreciation on futures contracts Decrease in unrealised appreciation on swap contracts Decrease in unrealised appreciation on options contracts
146,781,983 ---4,160,129 ----------
Net increase in assets as a result of operations
182,138,127
Statement of Changes in Net Assets For the period from 1 July 2013 to 31 December 2013 (EUR) Net assets at the beginning of the period Net loss from investment Net realised gain on investment Net realised currency exchange gain Proceeds from shares issued
585,565,797 (4,717,402) 35,229,260 684,157 497,146,807
Payments for shares redeemed Net equalisation received (note 13) Increase in unrealised appreciation on investments Dividends paid (note 14) Net assets at the end of the period
119
(170,687,037) 688,581 150,942,112 (7,481) 1,094,844,794
Pan European Smaller Companies Fund
Share Transactions For the period from 1 July 2013 to 31 December 2013 Shares outstanding at the beginning of the period Shares issued during the period Shares redeemed during the period Shares outstanding at the end of the period
A2 7,751,461.63 9,769,392.00 (4,010,804.55) 13,510,049.08
I1 915.00 292,202.83 (5,074.48) 288,043.35
X2 259,561.53 319,498.99 (103,409.08) 475,651.44
I2 5,732,102.13 5,755,629.18 (1,417,870.60) 10,069,860.71
H2 ---38,449.27 (251.00) 38,198.27
Z2 16,411,776.97 ------16,411,776.97
A2 13,510,049.08 32.51
I1 288,043.35 33.48
X2 475,651.44 31.27
I2 10,069,860.71 34.76
H2 38,198.27 11.58
Z2 16,411,776.97 17.10
Net Asset Value Per Share As at 31 December 2013 Number of shares outstanding: Equivalent to a net asset value per share of: The accompanying notes form an integral part of these financial statements.
120
Pan European Smaller Companies Fund
Portfolio as at 31 December 2013 Number of Securities
Market value EUR
% of Net Assets
Number of Securities
Shares Transferable securities and money market instruments admitted to an official exchange listing
Market value EUR
% of Net Assets
Shares Transferable securities and money market instruments admitted to an official exchange listing
Austria 71,637 139,335 1,131,369
Mayr Melnhof Karton Schoeller-Bleckmann Oilfield Equipment UNIQA Insurance Group
6,445,539 11,267,325 10,440,839 28,153,703
0.59 1.03 0.95 2.57
Belgium 281,113 489,619 13,664
Mobistar Tessenderlo Chemie Tessenderlo Chemie Strip
3,883,576 9,297,865 13,181,441
0.35 0.85 0.00 1.20
Denmark 218,962 391,856
FLSmidth & Co Pandora
8,694,209 15,441,028 24,135,237
0.79 1.41 2.20
Finland 487,770 920,751 1,600,000
Cramo Sanitec Sanoma
7,499,464 7,054,507 10,212,000 24,765,971
0.68 0.64 0.93 2.25
France 1,726,718 366,982 679,540 564,173 883,378 380,000 48,692 197,104 325,000 484,489 794,104
Altran Eiffage GameLoft Haulotte Hi-Media Ipsen LISI Mersen Nexans Nexity Societe Television Francaise
11,019,051 15,327,003 5,541,649 6,109,994 1,647,500 13,044,450 5,241,694 4,935,484 11,916,125 13,239,873 11,071,795 99,094,618
1.01 1.40 0.51 0.56 0.15 1.19 0.48 0.45 1.09 1.21 1.01 9.06
Germany 519,617 4,221 312,820 65,921 234,369 872,515 92,767 735,132 205,000 176,604 166,518 219,060 87,000 205,000 1,944,667 136,166 305,000 1,055,692 252,860 680,743 495,000 102,990 673,175 92,832 322,491 89,031
Aareal Bank ADVA Optical Networking Bauer Carl Zeiss Meditec CTS Eventim Dialog Semiconductor Eckert & Ziegler GAGFAH GFK KION Krones LPKF Laser & Electronics Manz NORMA Group QSC R Stahl Rheinmetall SAF-Holland SHW Stroeer Media Suss Microtec Tipp24 Tom Tailor Holding Vossloh Wirecard XING
15,032,520 15,738 5,854,426 1,600,397 8,611,889 13,628,684 2,668,443 7,875,102 8,324,025 5,452,207 10,414,036 4,054,801 5,413,575 7,427,663 8,378,598 5,121,203 13,647,225 11,433,144 11,844,595 8,769,672 3,177,405 5,012,523 11,104,022 6,735,890 9,246,623 6,613,223 197,457,629
1.37 0.00 0.53 0.15 0.79 1.24 0.24 0.72 0.76 0.50 0.95 0.37 0.49 0.68 0.77 0.47 1.25 1.04 1.08 0.80 0.29 0.46 1.01 0.62 0.84 0.60 18.02 121
Greece 622,463 431,936 447,302
Frigoglass Metka Titan Cement
3,227,471 5,003,979 8,793,957 17,025,407
0.29 0.46 0.80 1.55
Ireland 2,795,955
C&C
11,959,698
1.09
Italy 900,000 4,637,931 352,500 849,163 348,545 4,812,881 4,617,451 277,232 860,000 4,907,466 1,106,470 303,697
Banca Popolare dell'Emilia Romagna Banco Popolare Danieli & C Officine Meccaniche De'Longhi Industria Macchine Automatiche Maire Tecnimont Moleskine Moncler Safilo Group Sorin Trevi Finanziaria Industriale YOOX
6,248,250 6,467,595 5,733,413 10,122,023 9,741,833 7,835,370 7,397,157 4,370,562 14,581,300 10,192,807 6,943,099 9,894,448 99,527,857
0.57 0.59 0.52 0.92 0.89 0.72 0.68 0.40 1.33 0.93 0.63 0.90 9.08
Norway 1,618,186 2,248,055
Odfjell Drilling Storebrand
7,045,638 10,187,432 17,233,070
0.64 0.93 1.57
Portugal 1,504,647
Zon Optimus
8,056,632
0.74
Spain 1,616,034 320,774 751,896 1,240,370
Gamesa Corp Tecnologica Grupo Catalana Occidente Indra Sistemas Melia Hotels International
12,208,329 8,386,636 9,154,334 11,643,973 41,393,272
1.12 0.77 0.84 1.06 3.79
Sweden 268,456 3,788,681 1,096,016 2,199,174 855,000
AF CDON Lindab International Nobia Seamless
6,797,791 13,542,679 7,854,067 13,548,027 4,790,155 46,532,719
0.62 1.24 0.72 1.24 0.44 4.26
Switzerland 292,743 43,174 34,181 1,145,000 1,057,937 33,468 1,450,000 816,236 156,429 109,426
AFG Arbonia-Forster Bucher Industries Burckhardt Compression Holding Clariant EFG International Kuoni Reisen Holding Meyer Burger Technology Micronas Semiconductor Holding Swissquote Tecan
7,510,613 9,123,556 10,883,483 15,217,713 10,930,270 11,017,926 12,557,987 4,713,882 5,004,723 9,374,462 96,334,615
0.69 0.83 0.99 1.39 1.00 1.01 1.15 0.43 0.46 0.86 8.81
Pan European Smaller Companies Fund
Portfolio as at 31 December 2013 Number of Securities
Market value EUR
Number of Securities
% of Net Assets
-
-
1,047,241,328
95.62
2,739,490 2,816,137 3,973,040 9,528,667
0.25 0.26 0.36 0.87
38,074,799 1,094,844,794
3.51 100.00
Unlisted Securities
ASM International Delta Lloyd Fugro PPHE Hotel
United Arab Emirates 11,000,000 Polarcus United Kingdom 2,500,000 780,967 6,800,000 3,600,000 1,951,262 475,376 2,454,058 1,141,457 1,477,147 1,807,536 2,200,000 3,586,148 8,833,333 3,550,000 987,818 2,643,614 619,862 2,715,222 2,503,527 5,200,000 8,156,000 988,000 3,116,318 1,358,786 440,000 525,984 180,562 595,404 941,896 2,450,000 3,602,289
% of Net Assets
Shares Transferable securities and money market instruments admitted to an official exchange listing
Shares Transferable securities and money market instruments admitted to an official exchange listing
The Netherlands 580,991 593,662 205,217 707,536
Market value EUR
Balfour Beatty Betfair Colt Esure Fenner Galliford Try HellermannTyton Hunting IG Holding Intermediate Capital Jupiter Fund Management London Mining Monitise NCC Group Northgate Optimal Payments Oxford Instruments Pace Paragon QinetiQ Rentokil Initial SDL Senior Sports Direct International Stolt-Nielsen SuperGroup Ted Baker Ultra Electronics Holdings Waterlogic Wolfson Microelectronics Xchanging
13,906,020 10,653,265 8,891,540 2,569,105 36,019,930
1.27 0.97 0.81 0.23 3.28
6,157,849
0.56
Spain 315,506
Pescanova
Investment in Securities Derivative Instruments
8,639,519 10,128,972 10,553,957 10,716,725 11,324,524 6,644,842 8,795,945 10,694,004 10,820,302 9,100,705 10,110,188 4,842,712 6,998,040 7,824,707 5,996,816 11,154,016 13,188,310 10,359,420 11,156,466 13,566,596 11,366,253 4,267,922 11,500,697 11,710,715 8,802,567 8,959,068 4,935,115 13,818,593 1,102,340 4,326,737 6,804,907 280,211,680
Contracts for Difference* 90,670 Dufry 582,572 Kudelski 1,372,087 OC Oerlikon
0.79 0.93 0.96 0.98 1.03 0.61 0.80 0.98 0.99 0.83 0.92 0.44 0.64 0.71 0.55 1.02 1.20 0.95 1.02 1.24 1.04 0.39 1.05 1.07 0.80 0.82 0.45 1.26 0.10 0.40 0.62 25.59
Other Net Assets Total Net Assets
Any differences in the percentage of Net Asset figures are the result of roundings. * Total commitment EUR 32,991,716
122
Pan European Smaller Companies Fund
Top ten changes in the securities portfolio from 1 July 2013 to 31 December 2013 Description of Securities
Portfolio by Country Country
Purchases
Sales
EUR
EUR
16,239,567
824,956
Germany Aurelius DMG Mori Sieki
6,958,638 7,367,542
9,137,860 9,539,530
Italy Autogrill Banco Populare
6,396,612 8,897,924
6,275,444 9,432,565
Switzerland Cembra Money
8,854,103
9,574,681
5,150,447 9,960,631 12,101,522 12,470,293
14,965,930 9,825,989 1,907,090 -
Shares
France Eiffage
United Kingdom AZ Electronics Countrywide Jupiter Fund Management QinetiQ
United Kingdom Germany Italy France Switzerland Sweden Spain The Netherlands Austria Finland Denmark Norway Greece Belgium Ireland Portugal United Arab Emirates
Market Value EUR 280,211,680 197,457,629 99,527,857 99,094,618 96,334,615 46,532,719 41,393,272 36,019,930 28,153,703 24,765,971 24,135,237 17,233,070 17,025,407 13,181,441 11,959,698 8,056,632 6,157,849
% of Net Assets 25.59 18.02 9.08 9.06 8.81 4.26 3.79 3.28 2.57 2.25 2.20 1.57 1.55 1.20 1.09 0.74 0.56
Investment in Securities Total Contracts for Difference Other Net Assets Total Net Assets
1,047,241,328 9,528,667 38,074,799 1,094,844,794
95.62 0.87 3.51 100.00
Any differences in the percentage of Net Asset figures are the result of roundings.
123
Notes to the Financial Statements As at 31 December 2013
1. General Henderson Horizon Fund (the “Fund”) was incorporated in Luxembourg on 30 May 1985 and is qualified, under Part I of the law of 17 December 2010, as a “Société d’Investissement à Capital Variable” (SICAV). On 2 July 2013 the Pan European Alpha Fund launched USD Hedged Class I accumulation shares. On 11 July 2013 the Global Technology Fund launched EUR Class H accumulation shares. On 12 July 2013 the Global Property Equities Fund launched EUR Class I income shares. On 24 July 2013 the Euro Corporate Bond Fund launched CHF Hedged Class I accumulation shares On 28 August 2013 the Asian Dividend Income Fund launched USD Class H accumulation shares. On 28 August 2013 the Global Property Equities Fund launched USD Class H accumulation shares. On 28 August 2013 the Global Property Equities Fund launched EUR Class H accumulation shares. On 28 August 2013 the Pan European Property Equities Fund launched Class H accumulation shares. On 28 August 2013 the Pan European Smaller Companies Fund launched EUR Class H accumulation shares. On 28 August 2013 the Euro Corporate Bond Fund launched EUR Class H accumulation shares On 14 October 2013 Asian Dividend Income Fund launched EUR Class H income and USD Class H income shares. On 14 October 2013 the Pan European Property Equities Fund launched USD Hedged Class A accumulation shares. On 22 October 2013 the Global Property Equities Fund launched USD G accumulation shares, EUR Hedged Class G accumulation shares and CHF Hedged Class G accumulation shares. On 22 October 2013 the Global Technology Fund launched EUR Class H income shares. On 22 October 2013 the Global Technology Fund launched Class G accumulation shares. On 22 October 2013 the Pan European Alpha Fund launched USD Hedged Class X accumulation shares. On 30 October 2013 the Pan European Equity Fund launched USD Hedged Class I accumulation shares. On 8 November 2013 the Asia Pacific Property Equities launched Class H income and Class H accumulation shares. On 18 November 2013 the Euroland Fund launched EUR Class I accumulation shares. On 19 November Global High Yield Bond Fund launched USD Class A accumulation shares, Class I accumulation shares, EUR Hedge Class A accumulation shares and EUR Hedged Class I accumulation shares. On 26 November 2013 the Asian Dividend Fund launched EUR Class H accumulation shares. On 9 December 2013 the European Growth Fund launched EUR Class H income shares. On 18 December 2013 the Global Property Equities Fund launched EUR Hedged Class H accumulation shares. On 18 December 2013 the Pan European Property Fund launched Class H income shares. On 20 December 2013 the Euroland Fund launched GBP Hedged Class H accumulation shares. On 20 December 2013 Euro High Yield Bond launched USD Hedged Class I accumulation shares. On 27 December the Global Technology Fund launched CHF Hedged Class A accumulation shares. On 30 December 2013 the Pan European Equity Fund launched USD Hedged Class X accumulation shares.
124
Notes to the Financial Statements (continued) As at 31 December 2013
As at 31 December 2013 , the Fund was composed of the twenty one following sub-funds: Bond Funds Core Credit Fund Euro Corporate Bond Fund Euro High Yield Bond Fund Global High Yield Bond Fund Total Return Bond Fund
Specialist Funds Asia-Pacific Property Equities Fund China Fund Global Opportunities Fund Global Property Equities Fund Global Technology Fund Japanese Smaller Companies Fund Pan European Alpha Fund Pan European Property Equities Fund Pan European Smaller Companies Fund
Regional Funds American Equity Fund Asian Dividend Income Fund Asian Growth Fund Euroland Fund European Growth Fund Japanese Equity Fund Pan European Equity Fund
125
Notes to the Financial Statements (continued) As at 31 December 2013
2. Presentation of Financial Statements The accompanying financial statements present the assets and liabilities of the individual Funds and of the Fund taken as a whole. The financial statements of each individual Fund are expressed in the currency designated in the prospectus for that particular Fund and the financial statements of the Fund are expressed in United States Dollars. The financial statements have been prepared in accordance with the format prescibed by Luxembourg legal and regulatory requirements for undertakings for collective investment. A separate pool of assets is maintained for each Fund and is invested in accordance with the investment objective applicable to the Fund. The liabilities are segregated on a Fund-by-Fund basis with third party creditors having recourse only to the assets of the Fund concerned. 3. Significant Accounting Policies The following is a summary of the significant accounting policies followed by the Fund: Valuation of Investment Securities The investments of each fund will normally be valued on the basis of either the last available mid- market price (the mid point between the quoted bid and offer prices) or, for certain markets, the last traded price on the principal stock exchange or market on which the investments are quoted, listed or normally dealt in as at 1.00pm Luxembourg time on the relevant Dealing Day with the exception of the Global High Yield Bond Fund, Global Opportunities Fund, the Global Technology Fund, the Global Property Equities Fund, the Core Credit Fund and the American Equity Fund which are valued as at 4pm Luxembourg time. All other assets, including restricted and not readily marketable securities, will be valued in such manner as the Directors consider appropriate to reflect their fair value. In the event that net subscriptions or redemptions on any Dealing Day represent a material proportion of the Shares in issue, or in such other circumstances as the Directors consider appropriate, the investments may be valued on an offer or bid basis, as appropriate, taking into account the applicable dealing costs, or in such a manner as the Directors deem appropriate, to reflect more fairly the value of the investments in the circumstances. The last Dealing Day of the current period was 31 December 2013 and the investments have been valued based on the relevant market or traded price attributable to that Dealing Day. As a result of time variations in certain markets the prices applied to certain funds do not necessarily reflect the closing market prices for the same calendar day as the relevant Dealing Day. Forward foreign exchange contracts The valuation of forward foreign exchange contracts is based on the relevant exchange rate. Open forward foreign exchange contracts which are all covered are shown in the portfolio at fair value and the net gains/(losses) are reflected in net realised gain/(loss) on forward foreign exchange contracts in the statement of operations. Financial futures contracts Financial future contracts are valued at the exchange quoted price at 1.00pm Luxembourg time with the exception of the Global High Yield Bond Fund, Global Opportunities Fund, the Global Technology Fund, the Global Property Equities Fund, the Core Credit Fund and the American Equity Fund which are valued as at 4.00pm Luxembourg time. Initial margin deposits are made in cash upon entering into futures contracts. During the period the future contract is open, changes in the value of the contract are recognised as unrealised gains and losses by marking to market on a daily basis to reflect the market value of the contract at the end of each day’s trading. Variation margin payments are made or received, depending upon whether unrealised losses or gains are incurred. Variation margin payments are recorded in the Futures margin account in the statement of net assets. When the 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 opening transaction. Options When the Sub-Fund purchases an option, it pays a premium and an amount equal to that premium is recorded as an investment. When the Sub-Fund writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The investment or liability is adjusted daily to reflect the current market value of the option. If an option expires unexercised, the Sub-Fund realises a gain or loss to the extent of the premium received or paid. Option premiums are treated as revenue and distributed accordingly. This applies only to Asian Dividend Income. Swap contracts Sub-Funds may enter into Credit Default Swaps and other types of swap agreements such as interest rate swaps, swaptions and inflation linked swaps. Gains or losses resulting from swap contracts are recognised in the statement of operations and changes in net assets. The premiums received resulting from Credit Default Swaps are recognised under other income in the statement of operations. Swaps are
126
Notes to the Financial Statements (continued) As at 31 December 2013
valued at fair market value as determined in good faith pursuant to procedures established by the Management Company. Contracts For Difference For contracts for difference, changes in the value of the contracts are recognised as unrealised gains or losses in the statement of operations by «marking-to-market» the value at the balance sheet date, using prices supplied by independent pricing services that are based on the closing prices of the underlying securities on the recognised exchanges. When a contract is closed, the difference between the proceeds from (or cost of) the closing transaction and the original transaction is recorded as a realised gain or loss in the statement of operations. Realised Gains & Losses on Sale of Investments The computation of realised gains and losses on sales of investments is made on the basis of average cost. Income Dividends are recognised as income on the dates that securities are first quoted as «ex-dividend» to the extent information thereon is reasonably available to the Fund. Interest is accrued on a daily basis. Dividend and interest income is disclosed net of irrecoverable withholding tax where applicable. Designated Currencies As permitted by Luxembourg law, the books of the Fund are kept in United States dollars (“USD”) with the exception of the Euroland Fund, the European Growth Fund, the Pan European Smaller Companies Fund, the Pan European Property Equities Fund, the Pan European Equity Fund, the Pan European Alpha Fund, the Euro Corporate Bond Fund, the Euro High Yield Bond Fund and the Total Return Bond Fund which are kept in euros (“EUR”). Foreign currency items are translated into these currencies at the rates of exchange ruling at the balance sheet date for assets and liabilities, and for transactions at the rates ruling when they arose. The EUR figures have been converted into USD dollars in order to produce consolidated combined financial statements to comply with Luxembourg regulations. Realised and Unrealised exchange differences on the re-evaluation of foreign currencies are taken to the statements of operations. Reorganisation and Formation Expenses Each Fund itself bears the costs incurred in obtaining authorisation for distribution in Chile, Germany, Italy, Ireland and Lichtenstein, and the cost of obtaining a stock exchange listing in Amsterdam, these costs are amortised over 5 years. Expenses relating to the reorganisation of the Henderson Horizon Fund have been allocated to all funds effected and are being amortised over 5 years. Expenses relating to the formation of Euro Corporate Bond Fund are being amortised over 5 years. 4. Risk policies The Management Company employs a risk management process that identifies the risks to which the individual funds and the Fund taken as a whole are or might be exposed and how such risks are assessed, monitored and managed, ensuring compliance with relevant regulation. This enables it to monitor and measure at any time the risk of the portfolio positions and their contribution to the overall risk profile of the relevant fund, thereby ensuring that the global exposure of the underlying assets, including derivative instruments, shall not exceed the total net value of the relevant fund. In accordance with the Law of 17 December 2010 and the applicable regulatory requirements of the Commission de Surveillance du Secteur Financier (“CSSF”) the management company reports to the CSSF on a regular basis on the risk management process. Method The global exposure of a fund is calculated by using either the commitment approach or value-at-risk approach by reference to its risk profile. The commitment approach means that financial derivative instruments are converted into the market value of the equivalent position in the underlying asset(s). Value-at-Risk (“VaR”) is a mathematical-statistical concept and is commonly used as a standard measure of risk in the financial sector. The VaR approach is used, in general, for funds using derivative instruments or techniques within their investment strategies to generate additional leverage or market risk exposure. Funds using the VaR approach For such funds, the maximum potential loss that a fund could suffer in normal market conditions within a given time horizon and a certain degree of confidence is estimated. In these calculations all positions in the relevant portfolio are taken into consideration including those undertaken for efficient portfolio management purposes. For the purpose of calculating global exposure by VaR either a relative VaR approach or absolute VaR approach can be used; the selection of relative or absolute VaR methodology is determined by the availability of a reference portfolio appropriate for a fund in meeting its investment objective. 127
Notes to the Financial Statements (continued) As at 31 December 2013
VaR model VaR has been calculated using a Monte Carlo simulation approach. As a control mechanism, Monte Carlo results are compared to the parametric model for validation purposes within the daily monitoring process. Parameters The following parameters are applied as a minimum: a one-tailed 99% confidence interval, a holding period equivalent to one month (20 business days), effective observation period (history) of risk factors of at least 1 year (250 business days), quarterly data set updates and daily calculation. Limits For funds which have a suitable reference portfolio, the regulatory limit is that the VaR of the total portfolio’s positions shall not be greater than twice the VaR of the portfolio’s reference portfolio. For those funds which are unable or for which it is not appropriate to determine a reference portfolio (e.g. absolute return type funds) an absolute VaR is calculated on all of the portfolio’s positions. Absolute monthly VaR on such funds is not to exceed a regulatory maximum threshold of 20%. The VaR method, limits and utilisation of those limits for the year 1 July 2012 to 31 December 2013 are summarised in the table below: VaR Results - for the period ended 31 December 2013 Sub-Fund
Global Exposure Calculation basis
Reference Portfolio
VaR Limit
Utilisation of VaR Limit
Minimum
Maximum
Average
Asian Dividend Income Fund
Relative VaR
MSCI All Countries Asia Pacific Ex Japan Index
200%
35.77% 42.97% 39.88%
China Fund
Relative VaR
MSCI China Index
200%
37.12% 59.19% 49.08%
Euro Corporate Bond Fund
Relative VaR
iBoxx Euro Corporates Index
200%
45.56% 56.82% 51.47%
Euro High Yield Bond Fund
Relative VaR
BofA Merrill Lynch European Currency NonFinancial High Yield Constrained Index
200%
49.55% 66.90% 57.42%
Global High Yield Bond Fund (launched 19/11/13)
Relative VaR
BofA Merrill Lynch Global High Yield Constrained Index
200%
43.59% 58.88% 51.73%
Core Credit Fund
Absolute VaR
n/a
20%
4.71%
Pan European Alpha Fund
Absolute VaR
n/a
20%
10.87% 29.94% 19.29%
Total Return Bond Fund
Absolute VaR
n/a
20%
5.82%
19.42% 6.86%
8.29%
6.84%
Leverage For those funds measuring and monitoring global exposure using the VaR approach, the level of leverage arising from the use of derivative instruments is disclosed in the table below as a percentage of each fund’s total Net Asset Value. The calculation is based on the sum of notional exposures of financial derivative instruments in the investment portfolio including those held for risk reduction purposes. Please note this level of leverage is explicitly not an investment limit for the relevant fund and will vary over time under differing market conditions to ensure that the relevant fund meets its investment objective.
128
Notes to the Financial Statements (continued) As at 31 December 2013
Leverage - for the six months to 31 December 2013 Sub-Fund Minimum Asian Dividend Income Fund
Leverage Maximum
Average
1.18%
5.87%
3.63%
China Fund
49.65%
81.45%
62.31%
Euro Corporate Bond Fund
32.73%
68.26%
44.03%
Euro High Yield Bond Fund
53.43%
171.54%
82.21%
Global High Yield Bond Fund (launched 19/11/13)
29.01%
128.23%
70.54%
Core Credit Fund
85.70%
226.25%
117.89%
84.72%
164.49%
113.40%
242.76%
516.53%
356.42%
Pan European Alpha Fund Total Return Bond Fund
Funds using Commitment Approach The global exposure for those funds not specified in the table above has been determined according to the commitment approach during the reporting period from 1 July 2013 to 31 December 2013. For such funds, each fund’s total commitment to derivatives is limited to 100% of the relevant fund’s total net value, being quantified as the sum as an absolute value of the individual commitments, after consideration of the possible effects of appropriate netting and hedging arrangements. 5. Rates of Exchange The rates of exchange used for the conversion into USD of assets and liabilities of the Fund denominated in other currencies as at 31 December 2013 are as follows: USD1=AUD 1.1182718 USD1=BRL 2.3592327 USD1=CAD 1.0631448 USD1=CHF 0.8911077 USD1=CNY 6.0539167 USD1=COP 1932.0001513 USD1=DKK 5.4184745 USD1=EUR 0.7263623 USD1=GBP 0.6051254 USD1=HKD 7.7538652
USD1=HUF 215.7696288 USD1=IDR 12170.0015128 USD1=ILS 3.4694866 USD1=INR 61.8550120 USD1=JPY 104.9750083 USD1=KRW 1055.3500348 USD1=MXN 13.0952467 USD1=MYR 3.2754833 USD1=NOK 6.0724335 USD1=NZD 1.21654413
129
USD1=PHP 44.3825300 USD1=PLN 3.0146138 USD1=RUB 32.8787631 USD1=SEK 6.4111525 USD1=SGD 1.2633203 USD1=THB 32.8600042 USD1=TRY 2.1393604 USD1=TWD 29.8034855 USD1=ZAR 10.5325104
Notes to the Financial Statements (continued) As at 31 December 2013
6. Management Fee On 31 March 2005, the Directors signed a Fund Management and Advisory Agreement appointing Henderson Management S.A.as Investment Adviser and Henderson Fund Management (Luxembourg) S.A., a company incorporated under the laws of Luxembourg on 18 February 2005, as the Management Company. For the period ended 31 December 2013 the management fees, as a percentage per annum on the total net assets of the relevant fund, were as follows: Class A and Class X*
Class H
Class R
Class S
Class I
Class Class IB G
Class IR
Class B
Class C
Class M
Bond Funds Core Credit Fund Euro Corporate Bond Fund Euro High Yield Bond Fund Global High Yield Bond Fund Total Return Bond Fund
1.00% 0.75% 0.75% 0.75% 1.00%**
0.38% 0.38% 0.38% 0.38% 0.38%
0.75% 0.65% 0.75% 0.75% 0.75% 0.65%
0.15%
1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20%
0.60% 0.60% 0.60% 0.60% 0.60% 1.75% 0.60% 0.60%
1.00% 1.00% 0.85% 1.00% 1.00% 1.00% 0.85% 1.00% 1.00% 0.85% 1.20%
1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20%
0.60% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60%
0.75%
Regional Funds American Equity Fund Asian Dividend Income Fund Asian Growth Fund Euroland Fund European Growth Fund Japanese Equity Fund Pan European Equity Fund
1.50% 1.00% 1.00%
1.00% 1.20% 1.00%
Specialist Funds Asia-Pacific Property Equities Fund China Fund Global Opportunities Fund Global Property Equities Fund Global Technology Fund Japanese Smaller Companies Fund Pan European Alpha Fund Pan European Property Equities Fund Pan European Smaller Companies Fund
1.00% 1.00% 1.00% 2.00% 1.00% 2.00% 1.00% 1.00% 2.00% 1.00% 1.00% 1.00%
0.85%
1.50%
0.85% 0.85% 1.20%
1.50% 1.20% 1.00%
0.85%
1.50% 1.50%
** On 1 November 2013 the AMC of the Class A share changed to 0.75%. Additional fees and expenses will be charged to Shareholders of Class C Shares of the Pan European Equity Fund and Global Technology Fund, Class G Shares, Class I Shares and Class IB Shares and Class M Shares, as part of the management fee subject to the limit on the relevant management fee set out in “Management Fees” above. All additional fees and expenses that the Company can not recover from the Shareholders of Class C Shares of the Pan European Equity Fund and Global Technology Fund, Class G Shares, Class I Shares and Class IB Shares and Class M shares through the management fee shall be borne by the Investment Manager. The management fee for Class Z Shares is agreed between the investor and the Company and is not payable out of the property of the Fund. The Investment Manager is also entitled to performance fees on all funds (excluding the Total Return Bond Fund, the Core Credit Fund, Class B and Class R shares on the European Growth Fund and excluding Class C, Class IB, Class M or Class Z shares of the relevant Funds) as detailed in the prospectus. At 31 December 2013 the following accruals were made for performance fees: Pan European Alpha Fund EUR 949,459, European Growth Fund EUR 4, Asian Dividend Income Fund USD 89, American Equity Fund USD 26,041, Global Opportunities Fund USD 98,873, Pan European Equity Fund EUR 2,698,502, Pan European Smaller Companies Fund EUR 3,082,644, Euroland Fund EUR 281,315, Euro Corporate Bond Fund EUR 1,842,614, Japanese Smaller Companies Fund USD 230,890, Asian Growth Fund USD 84,026, Pan European Property Equities Fund EUR 1,337, Global Property Equities Fund USD 1,319, Global High Yield Bond Fund USD 5,755 and Euro High Yield Bond Fund EUR 9,577. * Class X shares are distributed only in Italy and Spain and only to retail investors in these countries.
130
Notes to the Financial Statements (continued) As at 31 December 2013
7. Shareholder Servicing Fee A shareholder servicing fee with respect to each sub-class of Class A Shares, Class H and Class X Shares (note 10) is payable out of the assets of each fund to the Distributor at the annual rate of 0.5% per annum for the Regional and Specialist Funds (note 2) and 0.25% per annum for the Bond Funds of the relevant fund’s average daily net assets, accrued daily and payable monthly in arrears. The fee is payable to the Distributor for the provision of the following services; responding to existing investors’ queries, maintenance of records of shareholders’ accounts, issuance and delivery of periodic account statements to shareholders and assistance in handling purchases, exchanges and redemption of shares. 8. Distribution Fee A distribution fee is payable to the distributor in respect of Class X shares out of the assets of each fund at the rate of 0.6% per annum for the Regional and Specialist funds, and 0.35% per annum for the Bond funds of the relevant fund’s average daily net assets, accrued daily and payable monthly in arrears. The fee is payable to the Distributor as remuneration for providing distribution-related services to the funds with respect to Class X shares. 9. Taxation Under current Luxembourg lax, there are no Luxembourg income, witholding or capital gains taxes payable by the Company. The Company is, however, subject to the tax on Luxembourg undertakings for collective investment (“annual tax”). Calculated and payable quarterly, on the aggregate net asset value of each Fund at the end of each quarter being 0.05% per annum on the Regional, Specialist and Bond Funds and 0.01% on Class G, Class I, Class IB, Class IR, Class B, Class C, Class Z and Class M Shares. No such tax is due on the portion of the Company’s assets invested in other Luxembourg undertakings for collective investment. Under current legislation, Shareholders are not subject to any capital gains, income, inheritance or other taxes in Luxembourg (except for Shareholders domiciled, resident or having a permanent establishment in Luxembourg). In accordance with the provisions of the European Union Savings Directive (“EUSD”) which came into force on 1 July 2005, withholding tax applies when a Luxembourg paying agent makes distributions from and redemptions of Shares in certain Funds and where the beneficiary of these proceeds is an individual or a residual entity residing in another Member State or in certain EU dependent or associated territories. In respect of those sub funds which are in scope of the EUSD, such distributions and the realised capital gains upon redemption of shares are subject to withholding tax at a rate of 35%. 10. Share Capital The Company offers the following share classes for each of its Funds:- Class A Class B Class C Class G Class H Bond Funds Core Credit Fund Euro Corporate Bond Fund Euro High Yield Bond Fund Global High Yield Bond Fund Total Return Bond Fund Regional Funds American Equity Fund Asian Dividend Income Fund Asian Growth Fund Euroland Fund European Growth Fund Japanese Equity Fund Pan European Equity Fund Specialist Funds Asia-Pacific Property Equities Fund China Fund Global Opportunities Fund Global Property Equities Fund Global Technology Fund Japanese Smaller Companies Fund Pan European Alpha Fund Pan European Property Equities Fund Pan European Smaller Companies Fund
Class I
n/a n/a n/a n/a n/a
n/a n/a n/a n/a n/a
n/a √ n/a n/a
n/a √ √ √
n/a √ √ √
√
√
√ √ n/a n/a n/a n/a
n/a √ n/a n/a √ n/a
√
n/a n/a n/a n/a √ n/a n/a
√
√
n/a
√ √ √ √ √
Class IB Class IR Class M Class R Class S Class X Class Z √ n/a n/a n/a n/a
n/a n/a n/a √ n/a
n/a n/a n/a n/a n/a
n/a n/a n/a n/a n/a
n/a √ √ √
√ √ √ √
√
n/a n/a n/a n/a n/a
√
√
√ √ √ √ √ √
√ √ √ √ √ √
n/a n/a n/a n/a n/a n/a
n/a √ n/a n/a n/a n/a
√
√
√
n/a n/a n/a n/a n/a n/a n/a
√ √ √ √ √ √
√
n/a n/a n/a n/a √ n/a n/a
√ √ √ √ √ √
√
n/a n/a n/a n/a n/a n/a n/a
√
√
√
√
√
√
n/a
n/a
n/a
n/a
n/a
√
√
n/a n/a n/a n/a n/a
n/a n/a √ √ n/a
n/a n/a √ √ n/a
√ √ √ √ √
√ √ √ √ √
n/a n/a n/a √ n/a
n/a n/a n/a n/a n/a
n/a n/a n/a √ n/a
n/a n/a n/a n/a n/a
n/a n/a √ √ n/a
√ √ √ √ √
√ √ √ √ √
√ √
n/a n/a
n/a √
n/a √
√ √
√ √
n/a n/a
n/a n/a
n/a n/a
n/a n/a
√ n/a
√ √
√ √
√
n/a
√
n/a
√
√
n/a
n/a
√
n/a
n/a
√
√
√ √ √ √
√ √ √ √ √ √ √
131
Notes to the Financial Statements (continued) As at 31 December 2013
There are two sub-classes of Shares, “sub-class 1 Shares” or “Distribution Shares” and “sub-class 2 shares” or “Accumulation Shares”. These sub-classes of Shares are abbreviated in the financial statements as “A1” and “A2”, “I1” and “I2”. Class C, Class IB,Class S and Class X offer only accumulation shares. The European Growth Fund only Distribution Shares are available for Class B and Class R. The fee structure is described in notes 6, 7 and 8. Sub-class 1 Shares or Distribution Shares entitle the shareholder to the periodical distribution of net income and/or realised capital gains. Sub-class 2 Shares or Accumulation Shares do not entitle the shareholder to the distribution of net income or realised capital gains, which instead are accumulated.” All shares of the Fund are of no par value and, subject to the restrictions of Luxembourg law, are each entitled to one vote at all meetings of the Shareholders. Shareholders may switch all or part of their shareholdings from one or more of the funds into the same Class of one or more of the other funds on any Business Day. Switches into Class I, Class IB, Class IR, Class B, Class C, Class M and or Class Z Shares are not permitted, unless the investor switching into Class I is an institutional investor within the meaning of Article 174 of the law of 17 December 2010. Switches into Class X shares are only permitted if the investor is a retail investor and an Italian or Spanish resident. Class B and Class R Shares are closed to investments from new investors in these Classes. 11. Charges and Expenses In addition to the charges described in notes 6, 7, 8 and 9 above, global operating and other expenses of the Fund are charged to the funds on a pro-rata basis calculated on the net asset value of each fund. The fees of the Registrar, Transfer Agent and Administrator comprise transaction based fees and asset based fees and do not exceed 0.3% p.a. of the Net Asset Value of the relevant fund. Additional fees and expenses will be charged to shareholders of Class G, Class I, Class IB, Class M and Class C shares of Pan European Equity Fund and Global Technology Fund as part of the Investment Adviser's and Management Company's management fee subject to the limit on the relevant Investment Adviser's and Management Company's management fee set out above (note 6). 12. Net Asset Value The net asset value is calculated on each business day in Luxembourg. 13. Equalisation An equalisation account is operated in connection with the issue and redemption of shares. The income element of the issue and redemption prices of the Portfolio is taken to the statement of changes in net assets. 14. Dividends Paid During the period dividends were declared and were paid on the following funds:
Share Class
Pay Date
Amount paid in Sub-Fund Currency
No of shares
Rate per share in Sub-Fund Currency
I1 I1 GBP I1 EUR
21/10/2013 21/10/2013 21/10/2013
USD 826,645 USD 949,192 USD 764,985 USD 2,540,821
2,201,052.09 1,600,000.00 1,600,002.84
0.375568 0.593245 0.478114
Euro Corporate Bond Fund
A1 I1 A1 GBP I1 USD X1 X1
21/10/2013 21/10/2013 21/10/2013 21/10/2013 21/10/2013 20/01/2014
EUR 385,872 EUR 3,898,854 EUR 413,568 EUR 28,015 EUR 999 EUR 4,752 EUR 4,732,060
116,574.04 1,082,391.40 109,025.46 26,084.60 1,539.96 7,584.55
3.310105 3.602074 3.793312 1.073988 0.648815 0.626564
Euro High Yield Bond Fund
A1 EUR Hedge A1 EUR Hedge
21/10/2013 20/01/2014
EUR 44,538 EUR 77,020 EUR 121,558
25,298.64 43,837.10
1.760508 1.756960
A1 EUR X1 EUR A1 EUR X1 EUR
21/10/2013 21/10/2013 20/01/2014 20/01/2014
EUR 2,259 EUR 9 EUR 2,740 EUR 10 EUR 5,018
5,349.64 26.82 5,349.64 26.90
0.422254 0.318046 0.512206 0.381412
Sub-Fund Core Credit Fund
Total Return Bond Fund
132
Notes to the Financial Statements (continued) As at 31 December 2013
Share Class
Pay Date
Amount paid in Sub-Fund Currency
No of shares
Rate per share in Sub-Fund Currency
A1 A1 EUR A1 SGD I1 GBP A1 A1 EUR A1 SGD I1 GBP H1 EUR H1
21/10/2013 21/10/2013 21/10/2013 21/10/2013 20/01/2014 20/01/2014 20/01/2014 20/01/2014 20/01/2014 20/01/2014
USD 2,523,457 USD 869,887 USD 118,708 USD 672,610 USD 635,634 USD 47,346 USD 36,341 USD 227,768 USD 244,642 USD 36,637 USD 5,413,030
10,825,598.01 3,730,986.43 509,521.79 2,761,636.47 8,704,926.97 614,456.83 499,859.94 2,994,162.67 2,952,730.78 626,489.18
0.233101 0.233152 0.232980 0.243555 0.073020 0.077052 0.072702 0.076070 0.082852 0.058479
I1 R B R (USD Hedge)
21/10/2013 21/10/2013 21/10/2013 21/10/2013
EUR 34,066 EUR 339,290 EUR 34,736 EUR 43,515 EUR 451,607
218,307.06 3,658,503.78 190,427.30 612,626.79
0.156044 0.092740 0.182412 0.071031
Pan European Equity Fund
A1
21/10/2013
EUR 770,856
4,823,641.32
0.159808
Asia-Pacific Property Equities Fund
A1
21/10/2013
USD 688,015
5,060,236.46
0.135965
Global Opportunities Fund
A1
21/10/2013
USD 259
13,234.95
0.019596
A1 I1 (GBP)
21/10/2013 21/10/2013
USD 1,714,372 USD 269,168 USD 1,983,540
10,225,778.56 3,981,241.88
0.167652 0.067609
I1
21/10/2013
USD 15,492
1,958,094.96
0.007912
A1
21/10/2013
EUR 244,469
600,956.87
0.406799
I1
21/10/2013
EUR 7,481
123,485.00
0.060579
Sub-Fund Asian Dividend Income Fund
European Growth Fund
Global Property Equities Fund
Global Technology Fund Pan European Property Equities Fund Pan European Smaller Companies Fund
133
Notes to the Financial Statements (continued) As at 31 December 2013
15. Cash at Bank and Bank Overdraft Cash at Bank and Bank Overdraft as at 31 December 2013 comprised of: Sub-Fund Core Credit Fund Current Accounts Margin Account (Futures)
Euro Corporate Bond Fund Current Accounts Margin Account (Futures)
Euro High Yield Bond Current Accounts Margin Account (Futures)
Global High Yield Bond Current Accounts Margin Account (Futures)
Total Return Bond Fund Current Accounts Margin Account (Futures) Bank overdraft
Sub-Fund
Amount in Fund Currency USD 98,504,343 2,397,181 100,901,524
Pan European Equity Fund Current Accounts
EUR 27,400,571 2,115,818 29,516,389 EUR 2,850,257 77,140 2,927,397
USD 1,320,582
Asian Dividend Income Fund Current Accounts Bank overdraft
USD 1,704,659 (103,952) 1,600,707
Asian Growth Fund Current Accounts Bank overdraft
USD 904,578 (208,423) 696,155
Euroland Fund Current Accounts
EUR 6,542,275
European Growth Fund Current Accounts Bank overdraft
EUR 1,151,722 (31,848) 1,119,874
Japanese Equity Fund Current Accounts
USD 1,577,841
USD 4,466,587 (328) 4,466,259
China Fund Current Accounts Margin Account (Contracts for Difference) Bank overdraft
USD 20,440,282 21,335,348 (465,275) 41,310,355
Global Property Equities Fund Current Accounts Bank overdraft
EUR 78,050,941 741,948 (10) 78,792,879
American Equity Fund Current Accounts
Asia-Pacific Property Equities Fund Current Accounts Bank overdraft
Global Opportunities Fund Current Accounts Bank overdraft
USD 360,767 58,986 419,754
Global Technology Fund Current Accounts Japanese Smaller Companies Fund Current Accounts Bank overdraft
Pan European Alpha Fund Current Accounts Margin Account (Contracts for Difference) Term Deposits Bank overdraft
Pan European Property Equities Fund Current Accounts Pan European Smaller Companies Fund Current Accounts Margin Account (Contracts for Difference) Bank overdraft
134
Amount in Fund Currency EUR 71,959,876
USD 335,994 (1,253) 334,741 USD 6,781,600 (25,490) 6,756,110 USD 121,899,897 USD 1,753 (104,925) (103,172) EUR 42,052,465 30,463,396 119,509,074 (4,348) 192,020,587 EUR 690,308 EUR 45,311,297 1,983,544 (4,253,833) 43,041,008
Notes to the Financial Statements (continued) As at 31 December 2013
16. Securities Lending Henderson has entered into securities lending agreements for a number of equity and Fixed income Sub-Funds. In return for making securities available for loan throughout the year, the Sub-Funds participating in the programmes received fees which are reflected in the Financial Statements of each participating Sub-Fund under the ‘’other income’’ caption. The Fund has appointed BNP Paribas Securities Service UK Limited (BP2S UK), acting through its London branch as agent for the equity and fixed income lending program. As remuneration for this agency role, BP2S UK receives a percentage of the variable fees from the associated program. All securities are full collaterised. As at 31 December 2013, the market value of the securities lent is as follows: Fund Description
Counterparty
Currency
Nominal
Price
Market Value Collateral USD
Euro Corporate Bond Fund Anglo American 2.875% 20/11/2020 Barclays Bank AngloGold Ashanti 8.5% 30/07/2020 Barclays Bank AT&T 3.55% 17/12/2032 Goldman Sachs AT&T 3.55% 17/12/2032 Goldman Sachs AT&T Inc 2.65% 17/12/2021 Goldman Sachs Banco Santander 2.875% 30/01/2018 Barclays Bank BPCE 4.625% 18/07/2023 Goldman Sachs Citigroup 4.25% 25/02/2030 Barclays Bank Citigroup 4.25% 25/02/2030 Barclays Bank Citigroup 4.25% 25/02/2030 Barclays Bank Continental 3% 16/07/2018 Barclays Bank Deutsche Post 2.875% 11/12/2024 Barclays Bank Deutsche Post 2.875% 11/12/2024 Barclays Bank Global Switch Holdings 5.5% 18/04/2018 Goldman Sachs Goldman Sachs 2.625% 19/08/2020 Goldman Sachs ING Verzekeringen 6.375% 07/05/2027 Barclays Bank Intesa Sanpaolo 4.375% 15/10/2019 Barclays Bank Koninklijke KPN 3.25% 01/02/2021 Barclays Bank Microsoft 2.125% 06/12/2021 Goldman Sachs NASDAQ OMX Group 3.875% 07/06/2021 Goldman Sachs NASDAQ OMX Group 3.875% 07/06/2021 Goldman Sachs Oracle Corp 2.25% 10/01/2021 Barclays Bank Pemex Project Funding Master Trust 5.5% 24/02/2025 Goldman Sachs Petrobras Global Finance 3.25% 01/04/2019 Goldman Sachs Petrobras Global Finance 3.25% 01/04/2019 Goldman Sachs Scottish Widows 5.5% 16/06/2023 Barclays Bank Scottish Widows 5.5% 16/06/2023 Barclays Bank Solvay 4.199% Perpetual Goldman Sachs Solvay 4.199% Perpetual Goldman Sachs Telefonica Emisiones 4.75% 07/02/2017 Barclays Bank Valeo 4.875% 11/05/2018 Barclays Bank Willow 2 Zurich Insurance 3.375% 27/06/2022 Barclays Bank TOTAL American Equity Fund KKR Goldman Sachs TOTAL Asian Dividend Income Fund Myer Holdings Deutsche Bank Myer Holdings Morgan Stanley Sembcorp Marine Goldman Sachs Sembcorp Marine Merrill Lynch Sembcorp Marine Deutsche Bank SK Telecom Deutsche Bank SK Telecom Deutsche Bank Skyworth Digital Holdings Deutsche Bank TOTAL 135
Value
USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD
6,000,000 2,200,000 2,700,000 970,000 200,000 1,000,000 200,000 900,000 1,000,000 1,300,000 2,700,000 2,700,000 1,600,000 800,000 2,921,000 1,000,000 3,900,000 400,000 200,000 105,000 200,000 5,900,000 50,000 1,500,000 2,750,000 1,700,000 1,100,000 3,280,000 100,000 1,500,000 1,000,000 4,227,000
EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR GBP GBP EUR EUR EUR EUR EUR
135.81 107.68 132.47 132.47 139.52 147.85 147.29 140.99 140.99 140.99 146.68 138.48 138.48 161.08 139.13 154.38 148.11 143.43 136.70 142.30 142.30 140.01 164.18 142.75 142.75 170.80 170.80 142.27 142.27 156.52 158.98 147.70
8,148,430 2,369,067 3,576,701 1,284,963 279,045 1,478,532 294,583 1,268,947 1,409,941 1,832,923 3,960,352 3,739,072 2,215,746 1,288,624 4,063,909 1,543,849 5,776,260 573,725 273,391 149,413 284,596 8,260,558 82,091 2,141,228 3,925,585 2,903,543 1,878,763 4,666,418 142,269 2,347,869 1,589,847 6,243,214 79,993,457 85,253,584
USD
120,000
USD
24.00
2,880,000 2,880,000 3,039,201
USD USD USD USD USD USD USD USD
300,000 2,000,000 1,000,000 556,000 640,000 100,000 50,000 5,000,000
USD USD USD USD USD USD USD USD
2.45 2.45 3.51 3.51 3.51 24.60 24.60 0.55
735,364 4,902,426 3,507,804 1,950,339 2,244,995 2,460,000 1,230,000 2,753,382 19,784,309 21,008,786
Notes to the Financial Statements (continued) As at 31 December 2013
Fund Description Asian Growth Fund Trigiant TOTAL European Growth Fund Kone Kone TOTAL Japanese Equity Fund Canon Yamada Denki TOTAL Japanese Smaller Companies Fund OPT OPT Otsuka Kagu Towa TOTAL
Counterparty
Currency
Merrill Lynch
USD
Nominal
1,000,000
Price
USD
Market Value Collateral
0.34
USD
Value
339,175 339,175
355,515
Deutsche Bank AG Deutsche Bank AG
USD USD
20,000 20,000
EUR EUR
45.16 45.16
903,131 903,131 1,806,261 1,897,728
Deutsche Bank AG Deutsche Bank AG
USD USD
60,900 49,470
USD USD
31.69 3.27
1,929,654 161,927 2,091,581 2,192,810
Morgan Stanley Deutsche Bank AG Goldman Sachs Morgan Stanley
USD USD USD USD
4,800 40,000 25,000 95,500
USD USD USD USD
9.51 9.51 9.76 4.76
45,627 380,227 244,065 436,177 1,106,096 1,186,229
All collateral is held in the form of securities. The aggregate value of collateral at the year end was USD 114,933,854. 17. Transactions with Connected Persons During the period under review, the following transactions were entered into by the Fund with the following connected persons of the Fund: (1) The Management Company and Investment Adviser – Note 6 documents the percentages of management fees and the performance fees relevant to each fund. The total amount paid by the Fund to the Management Company, Henderson Fund Management (Luxembourg) S.A., and the Investment Adviser, Henderson Management SA, during the period in respect of these fees was USD 78,444,159 (June 2013: USD 116,261,791). Out of the fees of the Investment Adviser and Management Company, the Investment Manager was entitled to fees at the rate of 25% of the Manager’s management fee for the Equity funds (except for the Pan European Property Equities Fund) and 12.5% of the Investment Adviser’s and Management Company’s management fee for the Bond funds and the Pan European Property Equities Fund. The total amount paid by the Manager to the Investment Manager during the period in respect of fees was USD 13,544,224 (June 2013: USD 23,420,654). (2) The Distributor – as from 19 November 2001, fees paid to the Distributor were up to 0.5% per annum of the average total net assets (excluding those assets attributable to shareholders of the I shares, B shares, R Shares, S Shares, Z shares and A GBP Shares) of the Equity funds and 0.25% per annum for the Bond funds. The total amount paid by the Fund to the Distributor during the period in respect of these fees was USD 18,699,619 (June 2013: USD 26,797,039). Further, a Distribution fee at the annual rate of 0.6% per annum for the Regional and Specialist Funds and 0.35% per annum for the Bond Funds of the Fund’s average daily net assets is payable to the Distributor. The total amount paid by the Fund to the Distributor during the period in respect of these fees was USD 351,060 (June 2013: USD 360,958). (3) The Directors fees payable to the Directors were USD 72,622 (June 2013: USD 58,729). These transactions were entered into in the ordinary course of business and on normal terms. 18. Soft Commission Henderson operates Commission Share Agreements (CSAs) with certain executing brokers in order to introduce greater transparency to the use of commission generated from dealing. CSAs are used to purchase third party investment research in accordance with relevant regulatory guidelines. Goods or services excluded by the FCA rules may not be purchased out of commission share. Henderson considers the use of CSAs, in conjunction with its broker review arrangements, will reduce the potential for conflict between the choice of broker for execution or other services they may provide.
136
Notes to the Financial Statements (continued) As at 31 December 2013
19. Withholding tax reclaims Withholding tax reclaims (WHT) have been filed in respect of WHT applied on French, German, Italian, Spanish and Swedish dividends during the years 2004 to 2012. The likely outcome of these reclaims cannot be assessed at the current point in time and consequently no amounts in respect of these reclaims have been included in these financial statements. The legal costs of pursuing the WHT reclaims will be borne by the Fund. Should all of the claims be successful, the effect on each of the impacted sub-funds (expressed in percentage of Net Assets as at 31 December 2013) would be as follows: Fund Total (EUR) % Weighting of Total Net Assets Euroland Fund 1,120,665 0.70% European Growth 12,882 0.02% Global Opportunities Fund 62,113 1.11% Global Property Equities Fund 357,112 0.04% Global Technology Fund 204,048 0.01% Pan European Alpha Fund 183,805 0.05% Pan European Equity Fund 6,528,874 0.23% Pan European Property Equities Fund 2,413,266 0.67% Pan European Smaller Companies Fund 1,794,375 0.16% Funds closed Pan European Equity Dividend Fund1 Industries of the Future Fund2
397,798 2,796
9.10% 0.10%
An amount of €2,347,554 has been received for reclaims of Swedish dividends for years 2003 to 2007 in June 2013 and subsequently included in the financial statements at the year end. 1 2
Pan European Equity Dividend Fund is closed. The total assets used in the weighting percentage is as at 29 June 2012. Industries of the Future Fund is closed. The total net assets used in the weighting percentage is as at 31 January 2012.
20. Purchases and Sales of Securities A listing of purchases and sales of securities during the period is available upon request at the registered office of the Fund. 21. Special Information for Swiss Investors TER before Performance Fund Core Credit Fund
Euro Corporate Bond Fund
Euro High Yield Bond Fund
TER after Performance
Share Class
fee
fee
IR1 (USD) IR1 HGBP (GBP) IR1 HEUR (EUR) A1 (EUR) A2 HCHF (CHF) A1 HGBP (GBP) A2 HSEK (SEK) I1 (EUR) I2 (EUR) A2 (EUR) X1 (EUR) X2 (EUR) A2 HUSD (USD) I1 (USD) I2 HCHF (CHF) H2 (EUR) A1(EUR) A2 (EUR) A2 HCHF (CHF) A2 HUSD (USD) I2 (EUR) I2 HUSD (USD) Z2 HGBP (GBP)
0.21% 0.21% 0.21% 1.20% 1.20% 1.20% 1.20% 0.75% 0.75% 1.20% 1.55% 1.55% 1.20% 0.75% 0.75% 0.83% 1.32% 1.32% 1.32% 1.32% 0.75% 0.75% 0.21%
0.21% 0.21% 0.21% 1.40% 1.38% 1.44% 1.50% 1.00% 1.01% 1.42% 1.56% 1.73% 1.32% 0.84% 0.94% 1.03% 1.36% 1.40% 1.36% 1.42% 0.81% 0.75% 0.21%
137
Notes to the Financial Statements (continued) As at 31 December 2013
Fund Global High Yield Bond Fund
Total Return Bond Fund
American Equity Fund
Asian Dividend Income Fund
Asian Growth Fund
Euroland Fund
European Growth Fund
Japanese Equity Fund
TER before Performance
TER after Performance
Share Class
fee
fee
A2 (USD) I2 (USD) A2 (EUR) I2 (EUR) A1(EUR) Z HGBP (GBP) X1 (EUR) A2 HUSD (USD) A2(EUR) X2 (EUR) A2 (USD) I2 (USD) X2 (USD) A1 (USD) X2 (USD) A2 (EUR) A1 (EUR) A1 (SGD) A2 (USD) I2 (USD) A2 (SGD) I1 (GBP) C2 (USD) H1(USD) H2 (USD) H2 (EUR) H1 (EUR) A2 (USD) A2 (EUR) X2 (USD) X2 (EUR) A2 (EUR) X2 (EUR) I2 (EUR) H2 HGBP (GBP) A2 (EUR) I1 (EUR) B1 (EUR) R1 (EUR) R1 HUSD (USD) I2 (EUR) H1 (EUR) A2 (USD) I2 (USD) X2 (USD)
1.15% 0.75% 1.15% 0.75% 1.37% 0.09% 1.80% 1.37% 1.37% 1.80% 1.92% 1.00% 2.52% 1.96% 2.56% 1.96% 1.96% 1.96% 1.96% 1.00% 1.96% 1.00% 1.00% 1.36% 1.36% 1.36% 1.36% 2.16% 2.16% 2.76% 2.76% 1.95% 2.55% 1.00% 1.35% 1.95% 1.00% 1.14% 2.00% 2.00% 1.00% 1.35% 1.96% 1.00% 2.56%
1.32% 1.00% 1.36% 1.00% 1.37% 0.09% 1.80% 1.37% 1.37% 1.80% 1.92% 1.11% 2.52% 1.96% 2.56% 1.96% 1.96% 1.96% 1.96% 1.00% 1.96% 1.00% 1.00% 1.36% 1.36% 1.42% 1.36% 2.61% 2.96% 2.76% 3.29% 2.57% 2.55% 3.11% 1.35% 1.95% 1.00% 1.14% 2.00% 2.00% 1.00% 1.42% 1.96% 1.00% 2.56%
138
Notes to the Financial Statements (continued) As at 31 December 2013
Fund Pan European Equity Fund
Asia-Pacific Property Equities Fund
China Fund
Global Opportunities Fund
Global Property Equities Fund
TER before Performance
TER after Performance
Share Class
fee
fee
A1 (EUR) X2 (EUR) C2 (EUR) A2 (USD) A2 (EUR) I2 (EUR) I2 (USD) H2 (EUR) M2 (EUR) G2 (EUR) A2 HUSD (USD) I2 HUSD (USD) A1 (USD) I2 (USD) X2 (USD) I2 (EUR) A2 (USD) A2 (EUR) H1 (USD) H2 (USD) A1 (USD) I2 (USD) X2 (USD) A2 (EUR) A2 (USD) A2 (SGD) A1 (USD) A2 (USD) I2 (USD) X2 (USD) A1 (USD) X2 (USD) A2 HEUR (EUR) A2 (USD) A2 (GBP)
1.90% 2.50% 1.20% 1.90% 1.90% 1.00% 1.00% 1.30% 1.00% 0.85% 1.90% 1.00% 1.93% 1.00% 2.53% 1.00% 1.93% 1.93% 1.33% 1.33% 1.95% 1.00% 2.55% 1.95% 1.95% 1.95% 2.20% 2.20% 1.00% 2.80% 1.92% 2.52% 1.92% 1.92% 1.92%
2.07% 2.62% 1.20% 2.08% 2.08% 1.28% 1.28% 2.00% 1.00% 1.80% 2.54% 2.46% 1.93% 1.00% 2.53% 1.00% 1.93% 1.93% 1.33% 1.33% 1.95% 1.00% 2.55% 1.95% 1.95% 1.95% 3.56% 5.35% 1.70% 3.41% 1.92% 2.52% 1.92% 1.92% 1.92%
A2 (EUR) I2 HEUR (EUR) A2 HCHF (CHF) I2 (USD) H2 HEUR (EUR) I1 (EUR) H1 (USD) H2 (USD) I1 (GBP) H2 (EUR) G2 HCHF (CHF) G2 HEUR (EUR) G2 (USD)
1.92% 1.00% 1.92% 1.00% 1.32% 1.00% 1.32% 1.32% 1.00% 1.32% 0.85% 0.85% 0.85%
1.92% 1.00% 1.92% 1.00% 1.32% 1.00% 1.32% 1.33% 1.00% 1.34% 0.85% 0.85% 0.85%
139
Notes to the Financial Statements (continued) As at 31 December 2013
Fund Global Technology Fund
Japanese Smaller Companies Fund
Pan European Alpha Fund
Pan European Property Equities Fund
Pan European Smaller Companies Fund
TER before Performance
TER after Performance
Share Class
fee
fee
A1 (USD) A2 (EUR) A2 (GBP) I1 (USD) I1 (GBP) X2 (USD) X2 (EUR) C2 (USD) M2 (USD) A2 (USD) I2 (USD) H1 (USD) H2 (EUR) H2 (USD) A2 HCHF (CHF) H1 (USD) G2 (USD) A2 HSGD (SGD) A2 (JPY) A2 (USD) I2 (USD) X2 (USD) A1 (EUR) X2 (EUR) S2 HSGD (SGD) A2 (EUR) S2 (EUR) I2 (EUR) Z2 (EUR) S2 HUSD (USD) A2 HUSD (USD) I2 HUSD (USD) X2 HUSD (USD) A1 (EUR) I2 (EUR) X2 (EUR) A2 (EUR) H2 (EUR) H1 (EUR) A2 (EUR) I1 (EUR) X2 (EUR) I2 (EUR) Z2 (EUR) H2 (EUR)
1.92% 1.92% 1.92% 1.00% 1.00% 2.52% 2.52% 1.20% 1.00% 1.92% 1.00% 1.32% 1.32% 1.32% 1.92% 1.32% 0.85% 1.92% 1.95% 1.95% 1.00% 2.55% 1.92% 2.52% 2.22% 1.92% 2.22% 1.00% 0.11% 2.22% 1.92% 1.00% 2.52% 1.91% 1.00% 2.51% 1.91% 1.31% 1.31% 1.90% 1.00% 2.50% 1.00% 0.09% 1.30%
1.92% 1.92% 1.92% 1.00% 1.00% 2.52% 2.52% 1.20% 1.00% 1.92% 1.00% 1.32% 1.32% 1.32% 1.92% 1.32% 0.85% 1.92% 2.54% 2.23% 2.61% 4.00% 2.63% 3.12% 2.89% 2.62% 2.93% 1.93% 0.11% 2.92% 2.63% 1.83% 3.57% 1.91% 1.00% 2.51% 1.91% 2.34% 2.75% 2.90% 1.69% 2.77% 2.05% 0.09% 1.85%
140
Notes to the Financial Statements (continued) As at 31 December 2013
22. Portfolio Turnover Rates Fund Core Credit Fund European Corporate Bond Fund Euro High Yield Bond Fund Global High Yield Bond Fund Total Return Bond Fund American Equity Fund Asian Dividend Income Fund Asian Growth Fund Euroland Fund European Growth Fund Japanese Equity Fund Pan European Equity Fund Asia - Pacific Property Equities Fund China Fund Global Opportunities Fund Global Property Equities Fund Global Technology Fund Japanese Smaller Companies Fund Pan Euro Alpha Fund Pan European Property Equities Fund Pan European Smaller Companies Fund
Portfolio Turnover Rate % 28.00 69.62 85.50 145.44 215.03 8.87 15.30 629.21 59.94 12.14 (97.70) 15.81 207.44 192.18 131.52 136.69 (40.32) 42.67 613.97 38.57 (13.78)
141
Notes to the Financial Statements (continued) As at 31 December 2013
23. Transaction Costs Transaction costs included in the Purchases and Sales within the Financial Statements Sub-Fund
Core Credit Fund Commission Taxes Total Euro Corporate Bond Fund Commission Taxes Total
Amount in Fund Currency USD -
EUR -
EUR -
Global High Yield Bond Fund Commission Taxes Total
USD
Total Return Bond Fund Commission Taxes Total
EUR -
Asian Dividend Income Fund Commission Taxes Total Asian Growth Fund Commission
-
-
-
USD 44,462 43 44,505 USD 407,977 110,814 518,790
Total
USD 182,315 96,155 278,470
Euroland Fund Commission Taxes Total
EUR 90,764 82,882 173,646
Taxes
European Growth Fund Commission Taxes Total Japanese Equity Fund Commission Taxes Total
- Pan European Equity
Euro High Yield Bond Commission Taxes Total
American Equity Fund Commission Taxes Total
Sub-Fund
Fund Commission Taxes Total
Amount in Fund Currency EUR 20,585 6,437 27,022 USD 15,918 15,918
Asia-Pacific Property Equities Fund Commission Taxes Total
443,693 161,749 605,442
China Fund Commission Taxes Total
USD 464,458 262,027 726,486
Global Property Equities Fund Commission Taxes Total
142
Global Technology Fund Commission Taxes Total Japanese Smaller Companies Fund Commission Taxes Total
Amount in Fund Currency USD 981,683 93,045 1,074,728 USD 95,722 95,722
EUR 1,553,016 1,330,930 2,883,946
Global Opportunities Fund Commission Taxes Total
Sub-Fund
Pan European Alpha Fund Commission Taxes Total
EUR 942,033 942,033
USD
USD 5,105 781 5,886 USD 1,227,322 270,837 1,498,159
Pan European Property Equities Fund Commission Taxes Total Pan European Smaller Companies Fund Commission Taxes Total
EUR 234,788 167,568 402,356 EUR 794,174 649,250 1,443,424
General Information
Henderson Horizon Fund (the “Fund”) is an open-ended investment company incorporated in Luxembourg as a société d’investissement à capital variable (SICAV) on 30 May 1985 and is a recognised collective investment scheme for the purposes of Section 76 of the United Kingdom Financial Services Act 1986. Potential investors in the United Kingdom are advised that all, or most, of the protections afforded by the United Kingdom regulatory system will not apply to an investment in the Fund and that compensation will not be available under the Financial Services Compensation Scheme. This Report is issued by Henderson Global Investors Limited (regulated by the FCA), the Investment Manager. Henderson Global Investors Limited has its registered office at 201 Bishopsgate, London EC2M 3AE. Tel +44 207 818 1818. The Fund provides a simple and cost effective way of investing in world equity and bond markets. The Fund, through its twenty one funds, provides investors with access to sixteen equity funds and five bond funds. Applications for shares may be made on any business day in Luxembourg to the Registrar and Transfer Agent between 9.00am and 6.00pm (local time), or to the Distributor in London between 9.00am and 5.00pm (local time). Applications should be made on the application form circulated with the Prospectus or by fax, telephone or in writing and may be made in any major currency. If you are sending applications by fax or telex, you should also subsequently send the original form by post. Applications are accepted by telephone only from existing investors who have previously been issued with a Personal Service Number. For full information, including a copy of the Prospectus and the Key Investor Information Document (KIID), please write to the Registrar and Transfer Agent or Distributor at the addresses shown on page 1. Alternatively, contact the main dealing desk on Luxembourg +352 2696 2050 or visit the Fund’s website: www.henderson.com/horizon. Please remember that past performance is not necessarily a guide to future performance and do not take into account fees or commissions that may occur on subscription and redemption. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. Tax assumptions may change if the law changes and the value of tax relief will depend upon individual circumstances. Please refer to the Prospectus for information on the Henderson Horizon Fund.
143
Henderson Global Investors
Established in 1934 to administer the estates of Alexander Henderson, the first Lord Faringdon, Henderson Global Investors (Henderson) is a leading independent global asset management firm. The company provides its institutional, retail and high net-worth clients with access to skilled investment professionals representing a broad range of asset classes, including equities, fixed income, property and private equity. With its principal place of business in London, Henderson is one of Europe’s largest investment managers, with €84.7 (USD114)† billion assets under management (as at 30 September 2013†) and employs around 1000 people worldwide. In Europe, Henderson has offices in Amsterdam, Dublin, Edinburgh, Frankfurt, Luxembourg, Madrid, Milan, Paris, Vienna, Zurich and London. Henderson has had a presence in North America since 1999, when it acquired US real estate investment manager Phoenix Realty Advisers, and has offices in Chicago and Hartford. In Asia, Henderson has offices in New Delhi, Singapore (Asia headquarters), Hong Kong, Tokyo and Beijing as well as Sydney in Australia. In April 2009 New Star Asset Management Group PLC was acquired by Henderson Group plc. In April 2011 Gartmore Group Limited was also acquired by Henderson Group plc. With investment expertise across every asset class, Henderson’s skillful investment managers invest in every major market around the globe. They are supported by a global team of researchers and economists who have a keen understanding of the economic forces driving the security markets and who undertake rigorous sector and theme analysis. Underpinning this process is a comprehensive risk-control framework to ensure that investment views are translated into portfolios managed in line with investors risk and return requirements. What do we do? At Henderson Global Investors we do one thing and we do it really well - investment management. As a company, we are totally focused on this core activity and it underpins everything we do. We do this by providing a range of investment products and services including: • Open ended funds - offshore funds, unit trusts, OEICs • Investment trusts • Individual Savings Accounts • Pension fund management • Management of portfolios for UK and international institutional clients †
Source: Henderson Global Investors.
144
Issued by Henderson Global Investors. Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355) (incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London, EC2M 3AE and authorised and regulated by the Financial Services Authority) provide investment products and services. Past performance may not be a reliable guide to future performance. The value of an investment and the income from it can fall as well as rise significantly. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. Please refer to the Prospectus for further information on the Henderson Horizon Fund. A copy of the Fund’s full and simplified prospectuses, articles of incorporation, annual and semi-annual reports can be obtained free of cost from the local offices of Henderson Global Investors: 201 Bishopsgate, London, EC2M 3AE for UK, Swedish and Scandinavian investors; Via Agnello 8, 20121, Milan, Italy, for Italian investors and J.W. Brouwersstraat 12, 1071 LJ, Amsterdam, The Netherlands for Dutch investors; and the Fund’s: Austrian Paying Agent Raiffeisen Zentralbank Österreich AG, Am Stadtpark 9, A-1030 Vienna; French Paying Agent BNP Paribas Securities Services, 3, rue d’Antin, F-75002 Paris; German Information Agent Marcard, Stein & Co, Ballindamm 36, 20095 Hamburg; Belgian Financial Service Provider Dresdner Van Moer Courtens S.A./N.V. Société de bourse, Drève du Prieuré 19, 1160 Bruxelles; Spanish Representative Allfunds Bank S.A. Estafeta, 6 Complejo Plaza de la Fuente, La Moraleja, Alcobendas 28109 Madrid; or Swiss Representative BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich who are also the Swiss Paying Agent. RBC Dexia Trust Services Hong Kong Limited, a subsidiary of the joint venture UK holding company RBC Dexia Investor Services Limited, 51/F Central Plaza, 18 Harbour Road, Wanchai, Hong Kong, Tel: +852 2978 5656 is the Fund’s Representative in Hong Kong. H007012_0114