Melville Douglas Global Growth Fund Limited Unaudited ...€¦ · Unaudited Interim Report and...

Melville Douglas Global Growth Fund Limited

Unaudited Interim Report and Financial StatementsFor the period 1 October 2014 to 31 March 2015

1


Contents

page

Administration 2

Report of the Directors 3

Investment Manager’s Report 5

Statements of Total Return 8

Statements of Changes in Shareholders’ Net Assets 8

Balance Sheets 9

Notes to the Financial Statements 10

Fund Statistics 20

Portfolio Statements 21

2


Administration

Directors

Graham Baillie Michael Farrow Helen Holmes Oliver Sonnbichler

Registered Office

Standard Bank House 47- 49 La Motte Street St. Helier Jersey JE2 4SZ Channel Islands

Manager and Secretary

STANLIB Fund Managers Jersey Limited Standard Bank House 47 - 49 La Motte Street St. Helier Jersey JE2 4SZ Channel Islands

Investment Manager

Standard Bank International Investments Limited Standard Bank House 47 - 49 La Motte Street St. Helier Jersey JE2 4SZ Channel Islands

Sub-Investment Manager

Melville Douglas Investment Management (Proprietary) Limited 8th Floor West Wing 30 Baker Street, Rosebank Johannesburg, 2196 South Africa

Custodian

Capita Trust Company (Jersey) Limited 12 Castle Street St. Helier Jersey JE2 3RT Channel Islands

Sub-Custodian and Banker

The Bank of New York Mellon SA/NV London Branch The Bank of New York Mellon Centre 160 Queen Victoria Street London EC4V 4LA United Kingdom

Administrator

BNY Mellon Fund Services (Ireland) Limited Guild House, Guild Street International Financial Services Centre Dublin 1 Ireland

Independent Auditors

PricewaterhouseCoopers One Spencer Dock North Wall Quay Dublin 1 Ireland

Legal Adviser

Ogier Ogier House The Esplanade St. Helier Jersey JE4 9WG Channel Islands

Melville Douglas is a registered business name of Standard Bank International Investments Limited. Standard Bank International Investments Limited, Standard Bank Jersey Limited and STANLIB Fund Managers Jersey Limited are regulated by the Jersey Financial Services Commission.

RMC2014.004

3


Report of the Directors

The directors submit their unaudited interim report and financial statements for the period 1 October 2014 to 31 March 2015.

Incorporation

Melville Douglas Global Growth Fund Limited (the “Company”) is an open-ended investment company incorporated by way of a continuance in Jersey on 31 March 2003 under the provisions of the Companies (Jersey) Law 1991. It was initially incorporated in the British Virgin Islands under the Mutual Funds Act 1996. The Company is a public company within the meaning of Article 16 of the Companies (Jersey) Law 1991. Participating shares may be issued and redeemed at prices based upon each class’s underlying net asset value.

Structure

The Company offers investors a choice of classes (each such class being referred to as a “Class Fund”) and the opportunity to switch from one Class Fund to another. As at 31 March 2015 there were 2 Class Funds available - US$ Balanced Class Fund and Pan Asian Class Fund. A separate Class Fund is established for each class of participating share and each Class Fund is managed separately and independently.

The assets, liabilities, income and expenses attributable to each class of participating share are applied to the Class Fund established for that class. If they are not attributable to any particular class of participating shares, they are allocated between all the Class Funds in such manner as the directors deem to be equitable. The Company is a single legal entity. As a result, although the assets, income, earnings, liabilities and expenses attributable to each Class Fund will be segregated and kept separate from those attributable to other Class Funds, in the event of the Company not being able to meet the liabilities attributable to any particular Class Fund out of the assets of such Class Fund, the excess liabilities may be met out of the assets attributable to other Class Funds.

Objective and investment policy

US$ Balanced Class Fund

The Class Fund is designed to provide long-term growth and to maximise investment returns in US dollars through investment in other funds for which Standard Bank International Investments Limited or any other Standard Bank Group Limited subsidiary or associate or Liberty Group Limited or any of its subsidiaries or associates acts as investment manager or adviser. For the avoidance of doubt the Class Fund may also invest in collective investment schemes and make other investments which are not prohibited by the investment restrictions set out in the Prospectus.

Pan Asian Class Fund

The Class Fund is designed to provide long-term growth and to maximise investment returns in US Dollars through investment in other funds for which Standard Bank International Investments Limited or any other Standard Bank Group Limited subsidiary or associate or Liberty Group Limited or any of its subsidiaries or associates acts as investment manager or adviser. The Class Fund is currently wholly invested in the Pan Asian Class of Melville Douglas Equity Fund Limited (the “Pan Asian Master Fund”). The investment objective of the Pan Asian Master Fund is to provide a long-term capital growth by investing primarily in one or more investment funds or managed accounts. For the avoidance of doubt the Pan Asian Master Fund may also invest in collective investment schemes and make other investments which are not prohibited by the investment restrictions applicable to the Pan Asian Master Fund set out in the Prospectus.

Results and dividends

The Company does not distribute income and capital gains realised by the Company on its Investments by way of dividend. Accordingly, income on Investments and increases in the capital value of the Investments of the Company will be reflected in the value of the Participating Shares.

4


Report of the Directors (continued)

Directors

The directors of the Company are set out on page 2.

All directors are non-executive. Graham Baillie and Helen Holmes are directors of the Investment Manager, Standard Bank International Investments Limited. Oliver Sonnbichler is an employee of the Investment Manager. Michael Farrow is an independent Non-Executive Director.

No director has a service contract with the Company or holds any interest in the capital of the Company.

Statement of Directors Responsibilities

The directors are responsible for preparing the financial statements in accordance with applicable Jersey law and United Kingdom Accounting Standards.

The Companies (Jersey) Law, 1991 requires the directors to prepare the financial statements for each financial period, which give a true and fair view of the state of affairs of the Company and of the results of the Company for that period. In preparing these financial statements, the directors are required to:

• selectsuitableaccountingpoliciesandthenapplythemconsistently;• makejudgementsandestimatesthatarereasonableandprudent;• statewhetherapplicableaccountingstandardshavebeenfollowedsubjecttoanymaterialdeparturesdisclosedandexplainedinthe

financialstatements;and• preparethefinancialstatementsonthegoingconcernbasisunlessitisinappropriatetoassumethattheCompanywillcontinueinbusiness.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law, 1991. They are also responsible for safeguarding the assets of the Company and hence taking reasonable steps for the prevention and detection of error, fraud and non-compliance with law or regulations.

Connected Parties

The Directors are satisfied that there are arrangements in place to ensure that transactions with connected parties entered into during the period were carried out as if negotiated at arm’s length and were in the best interests of shareholders.

STANLIB Fund Managers Jersey Limited Secretary 21 July 2015

5


Investment Manager’s Report

For the period ended 31 March 2015

US$ Balanced Class Fund (“the Class Fund”)

Investment objective

To provide long-term capital growth by investing in a combination of global equity, bond and income funds with a view to maximising investment returns in US Dollars.

Quantitative analysis

The Class Fund’s return for the period was 2.605%. The Class Fund’s benchmark is 50% MSCI World and 50% US dollar cash. The benchmark return was 1.879% for the period under review.

Commentary

Global markets were confronted by a number of factors during the period under review. The two most significant, were arguably the collapse in the oil price as well as the strengthening of the US Dollar on a trade weighted basis. The sudden and sharp drop in commodity prices stoked renewed fears of deflation and tepid growth prospects in Europe and other emerging economies. The latter fear was exacerbated by the release of further disappointing Chinese economic indicators that painted a poor picture for commodity demand. More recently, growth numbers out of the US have also been disappointing. Consumer spending related data in particular has been more lackluster than what we would have expected given an improvement in household income and lower fuel prices.

The large movement in currencies had a significant impact on the earnings outlook for American and European multinationals. The combination of the stronger US Dollar and lower oil prices have resulted in expected earnings for US listed companies being lowered by more than 10% since September. European businesses are enjoying the windfall of a much weaker Euro (lowest in 12 years) and are expected to grow profits this year in the high teens.

The European Central Bank kicked off their quantitative easing process in earnest during March. These actions are intended to reflate asset prices, raise economic growth and increase inflation expectations. The much lower oil price in conjunction with a weaker exchange rate and low interest rates appear to be having the desired effect. Consumer confidence and bank lending have turned positive and the economy is expected to grow by c. 2% during the first quarter, well in excess of US growth. It is also worth noting that earnings expectations for the region have turned outright positive for the first time in three years.

The opposite is true for the US. The world’s largest economy has yet again had a disappointing start to the year, due to a combination of factors such as bad weather and port strikes in the West Coast affecting the level of economic activity. Investment spending has continued to disappoint, although some of this could be explained by the knock on effects of lower oil price. Domestic demand is expected to remain robust on the back of continued improvement in employment and real disposable income, partly explained by the drop in fuel prices.

Supportive valuations and improving profitability resulted in a strong showing from Japanese equities. The MSCI Japan index outperformed global equity markets by more than 4%, followed by US and the rest of Asia-excluding Japan all outperforming the world market.

Consumer discretionary stocks outperformed as the market’s focus has shifted towards the benefits provided by a lower oil price to consumer spending with positive knock-on effects to economic growth and inflation. The Health Care and Information Technology sectors continued to perform well, supported by strong growth in profits.

6


Investment Manager’s Report (continued)

US$ Balanced Class Fund (“the Class Fund”) (continued)

Commentary (continued

ThefollowingchangesweremadewithintheequitycomponentoftheClassFund;

• ThefirstchangerelatestotheswitchoutoftheJOHambroJapanfundintoMSCIJapanETF.Japanisanexceptionallydifficultmarkettooutperform on a sustainable basis, given that most active funds focus on either large cap exporters or small/mid cap domestic businesses. This results in large swings in favour of one style at the expense of another. JOHambro’s focus is predominately small/mid cap domestic businesses and we have found the volatility in the fund too extreme for our investment style. We are of the opinion that the ETF will provide us with the best opportunity to capture the improved economic growth and earnings backdrop expected in Japan.

• WehaveclosedtheClassFund’sunderweightpositiontoEuropeandaddedtoourholdinginThreadneedle’sGrowthfund.Thischangewas predominantly funded from the exposure to US assets.

The Class Funds’ outperformance can largely be attributed to the overweight position in global equities. The underlying equity funds delivered a mixed performance against their respective benchmarks, but still managed to outperform the MSCI Global Equity Index. The non-equity component of the Class Fund performed as expected in an environment of low interest rates, and generated positive returns in US Dollars.

Forward thinking

We continue to see relatively better value in equities over bonds and cash. We are encouraged by the positive labour market developments in the US, which combined with historical low oil prices is expected to add to consumers disposable income. The optimism of consumers and SMEs in the US provides further evidence that the economic recovery is well entrenched. The policy push from Europe and Japan will continue until the desired employment outcomes (for Europe) and nominal growth sustainability (in Japan) are reached. We will continue to manage the Class Fund on the basis of the balance of risks we can see, and most importantly on the basis of valuation and margin of safety.

7


Investment Manager’s Report (continued)

Pan Asian Class Fund (the “Class Fund”)

Investment objective

To provide long-term capital growth by investing in listed equities in both the developed and emerging regions of Asia. The aim is to maximise investment returns in US Dollars.

Quantitative analysis

The Class Fund’s return was 3.98% for the period under review. The Class Fund’s benchmark is composed of 30% Topix (Japan) and 70% MSCI Asia Pacific ex-Japan. The benchmark return was 5.72% for the period.

Commentary

After a difficult year in 2014, investor sentiment towards Asian equities improved in the first few months of 2015, leading the Class Fund to a reasonable gain for the period, with strong absolute returns from both the Japanese and Asia ex-Japan allocations. The portfolio remains overweight Japanese equities and it is pleasing to note that Japanese equities are beginning to outperform after a frustrating period, however the results from the underlying Japanese managers were mixed, with the Martin Currie Japan Alpha Fund particularly disappointing on a relative basis.

There have been tangible signs of positive progress in Japan and this has led to a notable pick up in investor sentiment. One of the most encouraging developments has been the increase in above inflation pay rises for workers in some of the largest Japanese companies. For example, in the auto sector, Toyota, Nissan and Honda have all granted the biggest increases in pay for over a decade. There has also been progress in the key area of corporate governance and we are confident that a number of these initiatives will lead to improved capital allocation and profitability. Defensive, value driven investment strategies significantly outperformed, which was a headwind for our managers who tend to be more growth oriented.

Returns from our Asian managers were also reasonably strong, although performance in the underlying markets has been somewhat mixed, with investors favouring countries with long-term fiscally responsible growth initiatives and companies with the strongest fundamentals. Stock picking within the region therefore remains the key to success and we are confident that our blend of unconstrained stock picking strategies will outperform in the long term.

Forward thinking

Asian economies should continue to grow strongly in the medium to long term, driven by rising levels of urbanisation and higher incomes leading to a significant expansion in consumer spending. Reflation in Japan should be a positive for the region and we expect the combination of a recovering global economy and pro-growth domestic structural reforms to translate to strong corporate earnings growth. The Class Fund remains positioned to benefit from this scenario, however we continue to look for an appropriate Japanese manager to compliment the Aberdeen and JO Hambro funds as we look to exit our holding in the Martin Currie Japan Alpha Fund.

Standard Bank International Investments Limited Investment Manager 2 June 2015

Note: Statistics in the Investment Manager’s Report are based on reported Net Asset Values at 31 March 2015 which may be different from the financial statements, as shown in note 12.

8


Statements of Total Return

For the period 1 October 2014 to 31 March 2015

(Comparatives are for the period 1 October 2013 to 31 March 2014)

US$ Balanced Class Fund 31 March

2015 USD


2014 USD

US$ Income Class Fund*

31 March 2015 USD


31 March 2014 USD

Pan Asian Class Fund 31 March

2015 USD


2014 USD

Income Notes

Net capital gains/(losses) 3 2,587,735 3,604,899 – 1,029 303,189 (170,908)

Revenue 4 45,616 83,075 – – – 2

Expenses 5 (112,478) (112,270) – (13,696) (22,317) (18,341)

Net expenses before taxation (66,862) (29,195) – (13,696) (22,317) (18,339)

Net expenses after taxation (66,862) (29,195) – (13,696) (22,317) (18,339)

Change in net assets attributable to shareholders from investment activities

2,520,873 3,575,704 – (12,667) 280,872 (189,247)

All the above results are from continuing operations. There are no differences between the results above and those under historical cost with the exception of the effect of revaluation of investments.

*Terminated on 5 June 2014.

The notes on pages 10 to 19 form an integral part of these financial statements.

Statements of Changes in Shareholders’ Net Assets

For the period 1 October 2014 to 31 March 2015

(Comparatives are for the period 1 October 2013 to 31 March 2014)


2015 USD


2014 USD


31 March 2015 USD


31 March 2014 USD


2015 USD


2014 USD

Net assets at the start of the period 100,162,157 99,494,168 – 2,054,150 7,757,328 7,851,408

Movements due to issue and redemption of shares

Amounts receivable on issue of shares 2,051,807 5,437,760 – – – –

Amounts payable on redemption of shares (6,929,347) (2,354,781) – – (442,005) (166,570)

Change in net assets attributable to shareholders from investment activities

2,520,873 3,575,704 – (12,667) 280,872 (189,247)

Net assets at the end of the period 97,805,490 106,152,851 – 2,041,483 7,596,195 7,495,591



9


Balance Sheets

As at 31 March 2015

(Comparatives as at 30 September 2014)


2015 USD


30 September 2014 USD


2015 USD



Assets

Investments 87,312,772 91,109,011 7,592,461 7,994,282

Cash and bank balances 9,888,107 9,226,714 5,625 –

Revenue receivable 23,903 23,904 – –

Debtors on sale of investments 1,000,000 – 60,001 –

Total assets 98,224,782 100,359,629 7,658,087 7,994,282

Liabilities

Bank Overdraft – – – 221,814

Creditors for redemption of shares 388,652 164,578 48,577 –

Administration fees payable 13,325 14,001 1,019 1,099

Custodian fees payable 2,673 2,742 452 452

Sub-Custodian fee payable 1,113 1,258 525 81

Director fees payable 6,444 6,844 6,592 7,992

Audit fees payable 2,292 4,563 2,409 4,679

Other creditors and accrued fees 4,793 3,486 2,318 837

Total liabilities 419,292 197,472 61,892 236,954

Net assets attributable to shareholders 97,805,490 100,162,157 7,596,195 7,757,328

Net asset value per share 163.03 158.89 130.27 125.28

The financial statements were approved by the Board on 21 July 2015 and signed on its behalf by:

Director


10


Notes to the Financial Statements

1. Incorporation

The Company was originally incorporated in the British Virgin Islands on 19 November 1998 and was incorporated in Jersey, Channel Islands by way of a continuance on 31 March 2003.

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all periods presented. These financial statements have been prepared on a going concern basis under the historical cost convention as modified by the measurement at fair value of investments in accordance with applicable accounting standards. A summary of the more important accounting policies is set out below.

The US$ Income Class Fund fully redeemed and closed on 5 June 2014.

2. Accounting Policies

a. Basis of Accounting

The financial statements have been prepared, in accordance with United Kingdom Accounting Standards and the Statement of Recommended Practice for Authorised Funds (“SORP”) issued by the Investment Management Association (“IMA”) in October 2010.

There are no significant developments in UK Generally Accepted Accounting Principles (“UK GAAP”) that would impact the financial statements of the Company for the period ended 31 March 2015.

b. Investments

Investments are recognised at cost on the trade date, being the date on which the Class Fund commits to purchase the investment and becomes party to the contractual provisions of the securities. Transaction costs are recognised as part of the consideration and capitalised in the purchase cost.

Subsequent to initial recognition, all investments are valued at closing bid-market prices. Financial liabilities are valued at offer price. Gains and losses arising from the valuation of investments are recognised within net movement in unrealised investment reserves in the Statement of Total Return. Gains and losses on sales of investments are calculated on an average cost basis and are recognised within net realised gain or loss on investments in the Statement of Total Return in the period in which the Class Fund commits to dispose of the securities.

Investments are derecognised when the Class Fund become party to contractual provisions of the securities that give rise to transfer of substantial rights and obligations arising from the securities.

c. Cash and bank balances

Cash is valued at cost, which approximates fair value.

Cash is held in accounts at The Bank of New York Mellon SA/NV London Branch which allows the Class Funds instant access to their accounts. Term deposits are deposits held with various financial institutions bearing fixed or variable interest rates payable at maturity.

d. Income

Interest income is accounted for on an accruals basis using the effective yield basis. Dividend income is accounted for on the ex-dividend date. Dividend income is reported gross of withholding tax deducted at source and the related withholding tax is disclosed separately as a tax changes in the Statement of Total Return.

e. Foreign currencies

Transactions in foreign currencies are translated into the reporting currency of the Class Funds at the rates of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the reporting currency of the Class Funds at the rates of exchange ruling at the Balance Sheet date. The reporting currencies of the Class Funds are US Dollars.

Differences arising on translation are included in the Statement of Total Return within net capital gain in the period in which they arise.

11


Notes to the Financial Statements (continued)

2. Accounting Policies (continued)

f. Share issues and redemptions

Shares in the Company may be issued at the issue price and redeemed at the redemption price on subscription days at the prices calculated in accordance with the Articles of Association and based on the value of the underlying investments held in the relevant Class Fund. The directors’ present policy is that:

i. On the issue of shares, the amount received is credited to the share capital account.ii. On redemption, the amount paid is debited to the share capital account. Should that account be fully utilised, the amount payable

on redemption is debited to realised reserves.

g. Expenses

The Company is responsible for the payment of management, custodian, sub-custodian and administration fees, which are accrued for on each subscription day (see notes 5 & 9). The Company is also responsible for the payment of auditors’ and directors’ remuneration together with reporting expenses and operational costs in accordance with the prospectus. All expenses are accounted for on an accruals basis.

h. Cash Flow Statement

The Company is exempt from preparing a cash flow statement as it meets the following exemption criteria in FRS 1 - “Cash Flow Statements”:

• SubstantiallyalloftheCompany’sinvestmentsarehighlyliquid; • Theinvestmentsaremeasuredandreportedatfairvalue;and • TheCompanypreparesaStatementofChangesinNetAssets.

i. Total Expense Ratio

The Total Expense Ratio (“TER”) is calculated and disclosed as per the guidelines issued by the Investment Management Association (“IMA”). The ratio expresses the sum of all costs charged on an ongoing basis to the Class Funds taken retrospectively as a percentage of the Class Fund’s average net assets. For clarity, when the Class Fund is investing in other funds, the ongoing cost of these funds is not incorporated in the calculation of the TER.

j. Distribution policy

The Company’s policy is to not distribute any income on its participating shares.

k. Aggregation

The Statement of Recommended Practice for Authorised funds states that Umbrella Funds should produce an aggregation of financial statements of each Sub-Fund. The directors do not believe that the aggregation of the Class Funds would be of any benefit to the users of the financial statements and, therefore this has not been provided.

12



3. Net capital movement


2015 USD


2014 USD


31 March 2015 USD


31 March 2014 USD


2015 USD


2014 USD

Non-derivative securities:

Net realised gain on investments 2,199,363 247,618 – 265 134,756 32,526

Net movement in unrealised investment reserves 396,993 3,343,895 – 764 168,433 (203,434)

2,596,356 3,591,513 – 1,029 303,189 (170,908)

Derivative securities:

Net realised (loss)/gain on foreign currency contracts (8,621) 13,386 – – – –

(8,621) 13,386 – – – –

Net capital gain 2,587,735 3,604,899 – 1,029 303,189 (170,908)

4. Revenue


2015 USD


2014 USD


31 March 2015 USD


31 March 2014 USD


2015 USD


2014 USD

Bond interest 9,236 – – – – –

Bond interest 36,380 53,476 – – – –

Deposit interest – 29,599 – – – 2

Total Revenue 45,616 83,075 – – – 2

5. Expenses

The Company is responsible for the payment of custodian, sub-custodian, administration, auditors’ and directors’ fees together with reporting expenses and operational costs. The fees of the Investment Manager will be met by the Manager out of its fees.


2015 USD


2014 USD


31 March 2015 USD


31 March 2014 USD


2015 USD


2014 USD

Custodian fees 14,769 15,013 – 2,493 2,494 2,493

Sub-Custodian fees 5,935 4,847 – 364 711 1,463

Administration fees 73,711 77,792 – 2,781 5,552 5,762

Directors' fees 9,100 5,978 – 5,978 9,100 5,978

Audit fees 2,229 1,820 – 1,820 2,229 1,820

Sundry expenses 6,734 6,820 – 260 2,231 825

Total expenses 112,478 112,270 – 13,696 22,317 18,341


13



6. Investment Purchases, Investment Sales and Commissions


2015 USD




31 March 2015 USD




2015 USD



Purchases in period before transaction costs 7,866,686 33,081,301 – – – –

Commissions 9,408 3,465 – – – –

Gross purchases total 7,876,094 33,084,766 – – – –

Sales in period before transaction costs 14,249,734 34,408,606 – 2,075,321 705,000 232,000

Commissions – (2,623) – – – –

Net sales total 14,249,734 34,405,983 – 2,075,321 705,000 232,000


7. Taxation

For the purposes of Jersey taxation, the Company will fall under Article 123C of the Income Tax (Jersey) Law 1961, as amended, as a Jersey resident Company which is neither a “utility company” nor a “financial services company” and as such will be charged to Jersey income tax at a rate of 0% on its income (other than on any rental income or property development profits arising in respect of Jersey situs real property or land). The Company will not be subject to tax in Jersey on any capital arising to it.

Under applicable foreign tax laws, withholding taxes may be deducted from interest, dividends and capital gains attributable to the Company, at various rates. The Company pays withholding tax on dividends, which is deducted at source. This is shown separately as a taxation charge in the Statement of Total Return. There was no tax paid during the period ended 31 March 2015 or period ended 31 March 2014.

8. Share capital

The Company is authorised to issue 100 management shares of USD1.00 each and an unlimited number of participating shares of no par value.

The management shares exist solely to comply with Jersey Law, which requires that participating redeemable preference shares (“participating shares”) must have a preference over another class of capital. The holders of the management shares are entitled to receive notice of general meetings of the Company and to attend and vote thereat. On a poll a holder of management shares is entitled to one vote for each management share held by him. Management shares carry no right to a dividend and are not redeemable. In a winding up, they rank only for a return of paid up nominal capital out of the assets of the Company (before the return of nominal capital paid up on participating shares).

Participating shares carry the right to a proportionate share in the assets of the relevant Class Fund and to any dividends that may be declared. Holders of the shares are entitled to receive notice of all general meetings of the Company and to attend and vote thereat. The holder of each share is entitled to one vote for each share of which he is a holder. Shares are redeemable by shareholders at prices based on the value of the net assets of the relevant Class Fund as determined in accordance with its Articles of Association.

14



8. Share capital (continued)

Management shares

The management shares have been issued to the Manager at par and the proceeds of the issue are represented by a separate management fund. Details of the management fund at the Balance Sheet date are as follows:

31 March 2015USD

30 September 2014USD

Current account 100 100

Management shares of USD1.00 each

Authorised, issued and fully paid 100 100

The management fund is not reflected in the Balance Sheet.

Movements of participating shares

The following tables show the movement in participating shares during the period ended 31 March 2015 and year ended 30 September 2014.

US$ Balanced Class Fund 31 March 2015

US$ Balanced Class Fund 30 September 2014

US$ Income Class Fund* 31 March 2015

US$ Income Class Fund* 30 September 2014

At the beginning of the period 630,379 659,716 – 15,788

Issued during the period 12,707 56,541 – –

Redeemed during the period (43,171) (85,878) – (15,788)

At the end of the period 599,915 630,379 – –


Pan Asian Class Fund 31 March 2015

Pan Asian Class Fund 30 September 2014

At the beginning of the period 61,917 65,259

Issued during the period – –

Redeemed during the period (3,608) (3,342)

At the end of the period 58,309 61,917

9. Related Party Transactions

STANLIB Fund Managers Jersey Limited (the “Manager”), Standard Bank International Investments Limited (the “Investment Manager”), Melville Douglas Investment Management (Proprietary) Limited (the “Sub-Investment Manager”), Capita Trust Company (Jersey) Limited (the “Custodian”) and all directors of the Company are related parties of the Company.

The Manager is considered a related party by virtue of its contractual arrangements. The Investment Manager and the directors are considered related parties to the Company as they make key operating decisions for the Company.

The Manager has the primary responsibility for the management and administration of the Company. The Manager has appointed the Investment Manager to provide it with investment management services in relation to the Company. The fees of the Investment Manager are paid by the Manager out of its fees. The Manager does not currently charge a management fee on any of the Global Growth Class Funds.

The Manager is entitled to an annual administration fee at a rate of 0.15% of the net asset value of each Class Fund subject, to an annual minimum fee of USD7,000 per Class Fund per annum, out of which the administrator will be paid.

The fees of the Custodian shall be calculated as follows, subject to an overall minimum fee in respect of each Class Fund of USD5,000 per annum.

15



9. Related Party Transactions (continued)

0.035%perannumonanyandallamountsuptoUSD50millionoftheNetAssetValueofthatClassFund;0.025%perannumonanyandallamountsaboveUSD50millionoftheNetAssetValueofthatClassFundbutonlyuptoUSD100million;0.010%perannumonanyandallamountsaboveUSD100millionoftheNetAssetValueofthatClassFundbutonlyuptoUSD500million;and0.005% per annum on any and all amounts above USD500 million of the Net Asset Value of that Class Fund.

Such fees shall accrue daily and shall be payable to the Custodian by monthly payments in arrears becoming due on the first Business Day of each month in respect of the preceding month.

The Custodian is also entitled to be reimbursed out of the Class Funds for charges and transaction fees levied on it by the Sub-Custodian and other sub-custodians which shall be at rates which have been negotiated on an arm’s length basis or are otherwise on commercial terms.

The above amounts accrue on each subscription day and are payable to the Sub-Custodian by monthly payments in arrears.

Michael Farrow is entitled to receive GBP4,000 per annum as director fees. Helen Homes, Graham Baillie and Oliver Sonnbichler are entitled to USD10,000 per director per annum.

All transactions with related parties above are at arm’s length.

The fees incurred during the period ended 31 March 2015 and 31 March 2014 are disclosed in the Statement of Total Return with the amounts outstanding at the period end disclosed in the Balance Sheet.

The Company invests in other Melville Douglas Funds, which also receive services from the Manager, Investment Manager, Custodian and Sub-Custodian of the Company. The Company held investments in other Melville Douglas funds during the period. These funds are under the common management of Standard Bank International Investments Limited, the Investment Manager. The investments were made on an arms length basis in the ordinary course of business. Please refer to the portfolio statement on page 21 and onward.

10. Financial risk management

Consistent with the investment objectives, as noted in the Report of the Directors, the Company’s financial instruments comprise mainly collective investment schemes. In addition, the Company holds cash and liquid assets and various items such as debtors and creditors that arise directly from its operations.

The main risks arising from the Company’s financial instruments are market risk (comprising market price risk, interest rate risk and currency risk), credit risk and liquidity risk. The Board of directors reviews and agrees with the Manager and Investment Manager policies for managing each of these risks and they are summarised below.

10.1. Market risk

Market risk is a risk that the fair value of, or future cash flows arising from, financial instruments will fluctuate because of the changes in market variables. Market risk comprises three types of risks: market price risk, interest rate risk, and currency risk.

Market price risk

Market price risk arises mainly from uncertainty about future prices of equity and equity-linked financial instruments. It represents the potential loss the Company may suffer due to movements in securities prices.

Market price risk is mainly reduced through diversification. While some Class Funds have one investment, these investments are in collective investment funds which achieve the diversification. These are usually the relevant matching Class Funds of other Melville Douglas Funds. Investment restrictions are in place to ensure that the impact of market price risk is minimised. In particular, the following restrictions/guidelines are applicable:


• Notmorethan10%ofthenetassetvalueoftheClassFundshallbeinvestedinthesecuritiesofanyoneissuer(excludingopenendedfunds);

• TheassetsoftheClassFundshallbeinvestedinatleastthreecollectiveinvestmentschemes.Notmorethan70%ofthenetassetvalueoftheClassFundshallbeinvestedinanyonesinglecollectiveinvestmentscheme;

• Notmorethat10%ofthenetassetvalueoftheClassFundshallbeinvestedinanyonesinglerealpropertyfund;and

• Notmorethan5%ofthenetassetvalueoftheClassFundshallbeinvestedinanyonesingleWarrantFund,LeveragedFund,Futures&Options Fund or geared Futures & Options Fund.

16



10. Financial risk management (continued)

10.1. Market risk (continued)

Market price risk (continued)

US$ Income Class Fund

The Class Fund terminated on 5 June 2014.


The assets of the Class Fund shall not be invested in collective investment schemes whereby the investment policies and objectives are materially inconsistent with the investment policies of the Class Fund. The Class Fund is currently wholly invested in the Pan Asian Class of Melville Douglas Equity Fund Limited (the “Pan Asian Master Fund”), hence the Mater Fund Policies apply. Such policies include:

• Notmorethan10%ofthenetassetvalueofthePanAsianMasterFundshallbeinvestedincollectiveinvestmentschemeswhicharenotopenendedcollectiveinvestmentschemes;

• TheassetofthePanAsianMasterFundshallbeinvestedinatleasttwocollectiveinvestmentschemes,andnotmorethan75%ofthenetasset value of the Pan Asian Master Fund may be invested in any one collective investment scheme.

Full details regarding the investment restrictions can be obtained from the prospectus.

Interest rate risk

Interest rate risk is the risk that fair value of, or future cash flows arising from, the financial instruments will fluctuate because of changes in market interest rates.

The Company is exposed to interest rate risk from cash held on deposit. Market forces (in terms of a general increase or decrease in interest rates in a particular currency) may therefore have a detrimental or positive effect on the cash flows from cash deposits. As cash deposits are available on demand, there is no fair value risk from interest rates. The Company does not actively manage interest rate risk as it is considered insignificant given the level of cash held.

The below details provide analysis of fixed and floating rate financial assets for the US$ Balanced Class Fund.

US$ Balanced Class Fund31 March 2015

Fixed rate financial assets

Floating rate financial assets

Net assets not carrying interest Total

USD 1,822,201 – 95,983,289 97,805,490

1,822,201 – 95,983,289 97,805,490

US$ Balanced Class Fund30 September 2014

Fixed rate financial assets

Floating rate financial assets

Net liabilities not carrying interest Total

USD 1,834,137 – 98,328,020 100,162,157

1,834,137 – 98,328,020 100,162,157

17




10.1. Market risk (continued)

Currency risk

Currency risk is the risk that the fair value of, or future cash flows from, financial instruments will fluctuate because of changes in foreign exchange rates.

The Class Funds’ assets and liabilities may be denominated in currencies other than the reporting currency of the Class Fund. Therefore the value of such assets and liabilities may be affected favourably or unfavourably by fluctuations in currency rates.

The Company may enter into derivative transactions for the purposes of hedging against currency risk on behalf of the Class Funds, subject to various maximum exposure limits.

The net assets of the Pan Asian Class Fund are denominated in the functional currency of the Class Fund and are not directly affected by currency movements. Although the funds in which this Class Fund invests in may have foreign currency exposure from their underlying portfolio of investments, this is reflected in the net asset values of such funds and therefore considered as part of market price risk.

A proportion of the net assets of the US$ Balanced Class Fund is denominated in currencies other than US Dollars, the functional currency of the Class Fund. As a result, the performance of the Class Fund can be affected by currency movements relative to the US Dollar.

The currency exposure of the US$ Balanced Class Fund as at 31 March 2015 and 30 September 2014 were as follows:


Exposure currency31 March 2015

InvestmentsUSD

CashUSD

Other net assets

USDTotal net

assets USD% of net

assets

EUR – 151 – 151 0.00

GBP 4,900,057 18 – 4,900,075 5.01

USD 82,412,715 9,887,938 604,611 92,905,264 94.99

87,312,772 9,888,107 604,611 97,805,490 100.00


Exposure currency30 September 2014

InvestmentsUSD

CashUSD

Other net liabilities

USDTotal net

assets USD% of net

assets

EUR – 177 – 177 0.00

GBP 4,065,400 20 – 4,065,420 4.06

USD 87,043,611 9,226,517 (173,568) 96,096,560 95.94

91,109,011 9,226,714 (173,568) 100,162,157 100.00

The following sensitivity analysis shows the change in the net assets of the Class Fund given a 5% increase or decrease in the value of a foreign currency relative to the Class Funds’ reporting currency for all significant foreign currency positions of the Class Fund (5% is considered to be a reasonable possible change in foreign currency rates).

Change in net assets Change in net assets

31 March 2015 30 September 2014

US$ Balanced Class Fund USD USD

EUR +/-5% 8 9

GBP +/-5% 245,004 203,271

Currency risk is not managed in its separate form. Significant currency risk arises from the portfolio of investments denominated in foreign currencies and this affects the carrying value of the securities, hence is considered as part of price risk.

18




10.2. Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet its liabilities as they fall due. This also relates to the risk that the Company may not be able to realise its investments at current market values in time to meet its obligations.

Shareholders have the right to redeem their shares in the Company at every subscription day. The Company therefore needs to have adequate liquid resources to meet these redemptions and the maturity profile of the Company’s investments may affect the Company’s liability to meet the redemptions if the weighted average days to maturity is longer than the weighted average days to redemption.

The prospectus permits the redemptions in any one Class Fund be limited to 10% of the shares in issue at any one subscription day and in order to enable the Class Funds to pay redemptions, each Class Fund may borrow up to 10% of its net asset value.

10.3. Credit risk

Credit risk is the risk that the counterparties to the Company may be unable or unwilling to meet their obligations to the Company under the contractual or agreed terms. The Company’s credit risk arises from the amounts on deposits and debtors.


The main credit risk derives from its investments in bonds and cash and cash equivalents. The risk mainly arises from the possibility of default from the institutions in paying the interest and capital when due and also the inability by the custodians of cash and cash equivalents to make available the cash to the Class Fund on demand. This risk can be managed as part of the ongoing management of the portfolio using credit rating data.


Credit risk arising from deposits and debtors is considered minimal and therefore not actively managed. Significant debtors may arise from outstanding sales receipts. This is controlled by ensuring that securities are not transferred before settlement. Debtors arising from interest are not considered material for the purpose of credit risk exposure.

The Custodian, Capita Trust Company (Jersey) Limited is not rated with Standard & Poor’s, Moody’s or Fitch.

For the period ended 31 March 2015 the Sub-Custodian and Banker, The Bank of New York Mellon SA/NV London Branch has a credit rating of AA- (2014 : AA-) with Standard & Poor’s, Aa2 (2014 : Aa2) with Moody’s and AA- (2014 : AA-) with Fitch.

11. Total Expense Ratio

US$ Balanced Class Fund 31 March 2015 31 March 2014

Total Expense Ratio 0.23% 0.22%

Pan Asian Class Fund 31 March 2015 31 March 2014

Total Expense Ratio 0.60% 0.48%

19



12. Reconciliation of net asset value

The following tables reconcile the difference between the Class Funds’ net assets for financial reporting purposes and its net assets for shareholder dealing purposes for the period ended 31 March 2015 and year ended 30 September 2014.

US$ Balanced Class Fund31 March

2015 USD



Pan Asian Class Fund31 March

2015 USD



Net asset value per financial statements 97,805,490 100,162,157 7,596,195 7,757,328

Pricing differences1 9,250 8,899 – –

Net asset value for shareholder dealing 97,814,740 100,171,056 7,596,195 7,757,328

Net asset value per share for reporting purposes 163.03 158.89 130.27 125.28

Net asset value per share for shareholder dealing purposes

163.05 158.91 130.27 125.28

1 The adjustment is the difference between the mid value of investments on the valuation date and the bid value of investments on the final trading day of the fiscal year. The SORP and United Kingdom Accounting Standards require investments in long positions to be valued at bid price where available. Investments are

valued at mid-price where available for the purpose of shareholder dealing valuation in accordance with the prospectus.

13. Exchange Rates

The following exchange rates at 31 March 2015 and 30 September 2014 were used to translate foreign currency assets and liabilities:

31 March 2015 30 September 2014

EUR / USD 0.93109 0.79163

GBP / USD 0.67363 0.61685

14. Significant events during the period

There were no significant events during the period that require disclosure in these financial statements.

15. Post Balance Sheet events

There were no significant post balance sheet events during the period that require disclosure in these financial statements.

16. Approval of Financial Statements

The financial statements were approved by the Directors on 21 July 2015.

20


Fund Statistics

Net assetvalue

Net assetvalue per

share

% changein period

**Number of

shares in issueHighest

Price* LowestPrice*

US$ Balanced Class Fund USD USD USD USD

26 September 2003 23,960,780 94.82 - 252,707 101.59 87.95

24 September 2004 27,097,903 104.17 9.86 260,142 112.84 95.64

30 September 2005 31,073,605 115.51 10.89 269,022 121.75 104.50

29 September 2006 34,463,600 128.16 10.95 268,917 138.36 112.10

28 September 2007 55,175,112 146.08 13.98 377,711 155.92 128.16

26 September 2008 60,171,719 125.87 (13.83) 478,062 157.64 124.32

30 September 2009 59,977,517 122.45 (2.72) 489,817 123.82 98.59

30 September 2010 70,884,216 129.60 5.84 546,942 131.44 119.41

30 September 2011 81,901,978 123.26 (4.89) 664,492 144.47 123.26

30 September 2012 84,723,340 142.04 15.24 596,474 142.16 124.15

30 September 2013 99,494,168 150.81 6.17 659,716 151.77 138.99

30 September 2014 100,162,157 158.89 5.46 630,379 162.22 148.58

31 March 2015 97,805,490 163.03 2.61 599,915 164.48 154.36

Pan Asian Class Fund USD USD USD USD

29 September 2006 3,329,664 100.72 - 33,060 118.35 92.32

28 September 2007 6,414,747 140.31 39.31 45,718 147.63 100.41

26 September 2008 5,925,208 94.32 (32.78) 62,820 158.67 89.51

30 September 2009 9,485,085 96.45 2.26 98,342 97.49 64.19

30 September 2010 12,120,261 102.73 6.51 117,984 104.08 90.59

30 September 2011 9,162,623 96.85 (5.72) 94,606 113.68 95.73

30 September 2012 7,336,096 109.92 13.50 66,743 110.68 95.18

30 September 2013 7,851,408 120.31 9.45 65,259 124.94 108.56

30 September 2014 7,757,328 125.29 4.14 61,917 129.92 112.90

31 March 2015 7,596,195 130.27 3.97 58,309 130.84 120.22

* Based on reported net asset value which may be different from the financial statements.

** Performance figures are based on the net asset value for financial reporting. This differs from the performance figures disclosed in the Investment Manager’s Report, which are based on the net asset value for shareholder dealing.

The performance data in this table covers the period from incorporation by way of a continuance in Jersey to date. Performance data for previous periods can be found in the fact sheets issued by the Investment Manager.

21


Portfolio Statements


As at 31 March 2015

(Comparatives are as at 30 September 2014)

Nominal holding

CostUSD

Market ValueUSD

% of NetAssets

Transferable Securities Admitted to an Official Exchange Listing or Dealt in on Another Regulated Market

Investment Companies

Ireland 9.98% (2014 : 11.57%)

Vulcan Value Equity Fund - U2 AC 74,878 8,422,356 9,757,677 9.98

9,757,677 9.98

Jersey 67.24% (2014 : 69.16%)

Melville Douglas Equity Fund Limited - African Opportunities Class 106,597 1,065,970 956,452 0.98

Melville Douglas Equity Fund Limited - Pan Asian Class 19,206 3,306,784 4,023,178 4.11

Melville Douglas Equity Fund Limited - US$ Global Property Class 153,969 1,569,954 2,055,974 2.10

Melville Douglas Select Fund Limited - Global Equity Class 2,752,096 28,742,355 34,207,722 34.98

Melville Douglas Income Fund Limited - US$ Income Class 90,739 14,718,934 14,839,480 15.17

Standard Bank International Funds Limited - Multi Manager Absolute Return Fund USD

1,029,232 9,776,166 9,683,938 9.90

65,766,744 67.24

Luxembourg 4.21% (2014 : 4.34%)

WP Stewart Holdings Fund 12,457 3,425,960 4,113,321 4.21

4,113,321 4.21

United Kingdom 5.01% (2014 : 4.06%)

Threadneedle Investment Funds ICVC - European Select Fund 2,200,987 4,646,684 4,900,057 5.01

4,900,057 5.01

United States 0.97% (2014 : 0.00%)

iShares MSCI Japan ETF 76,100 979,824 952,772 0.97

952,772 0.97

Total Investment Companies 87.41% (2014 : 89.13%) 85,490,571 87.41

Corporate Bonds

South Africa 1.86% (2014 : 1.83%)

FirstRand Bank Ltd 4.375% 09/06/2016 1,772,000 1,777,876 1,822,201 1.86

1,822,201 1.86

22


Portfolio Statements (continued)

US$ Balanced Class Fund (continued)

As at 31 March 2015


Nominal holding

CostUSD

Market ValueUSD

% of NetAssets

Total Corporate Bonds 1.86% (2014 : 1.83%) 1,822,201 1.86

Total Investments 89.27% (2014 : 90.96%) 78,432,863 87,312,772 89.27

Total Transferable Securities Admitted to an Official Exchange Listing or Dealt in on Another Regulated Market

87,312,772 89.27

Total Investments 87,312,772 89.27

Net current assets 10,492,718 10.73

Total net assets 97,805,490 100.00

23


Portfolio Statements (continued)


As at 31 March 2015


Nominal holding

CostUSD

Market ValueUSD

% of NetAssets

Transferable Securities Admitted to An Official Stock Exchange Listing or Dealt in on Another Regulated Market

Investment Companies

Jersey 99.95% (2014 : 103.05%)

Melville Douglas Equity Fund Limited - Pan Asian Class Fund 36,245 5,774,381 7,592,461 99.95

Total Investment Companies 99.95% (2014 : 103.05%) 7,592,461 99.95

Total Investments 99.95% (2014 : 103.05%) 5,774,381 7,592,461 99.95

Total Transferable Securities Admitted to An Official Stock Exchange Listing or Dealt in on Another Regulated Market

7,592,461 99.95

Net current assets 3,734 0.05

Total net assets 7,596,195 100.00

Melville Douglas Global Growth Fund Limited Unaudited ...€¦ · Unaudited Interim Report and...

Documents

Transcript of Melville Douglas Global Growth Fund Limited Unaudited ...€¦ · Unaudited Interim Report and...