STANLIB Funds Limited. Unaudited SemiAnnual Report for the. period ended 30 June Company Number 64639

Transcription

1 STANLIB Funds Limited Unaudited SemiAnnual Report for the period ended 30 June 2013 Company Number 64639

2 Copies of Annual and Semi-Annual Reports may be obtained at the Registered Office of the Company at Standard Bank House, La Motte Street, St Helier, Jersey JE2 4SZ. The financial statements must be read in conjunction with the detailed information contained in the prospectus.

3 Contents Management and Administration 1 Investment Manager s Report 6 Statement of Total Return Statements of Changes in Net Assets Attributable to Holders of Redeemable Participating Shares 9 Balance Sheet as at 31 December Notes to the Financial Statements 39 Portfolio Statement 168 Fund Statistics (unaudited) 170 Summary of Material Portfolio Changes (unaudited)

4 Management and Administration Directors Sidney Place * 49 Carlisle Avenue Hurlingham 2196, Republic of South Africa Martin Rabe STANLIB Asset Management Limited 17 Melrose Boulevard Melrose Arch 2196, Republic of South Africa Michael Farrow (Chairman) * Le Rondin, Les Chenolles St John, Jersey JE3 4FB Neil Deacon * Grassmere House La Rue Du Rondin St Mary, Jersey JE3 3AU * Independent Directors Manager STANLIB Fund Managers Jersey Limited Standard Bank House La Motte Street St Helier, Jersey JE2 4SZ Independent Auditors PricewaterhouseCoopers CI LLP One Spencer Dock North Wall Quay Dublin 1, Ireland Custodian (effective from 19 November 2012) Capita Trust Company (Jersey) Limited 12 Castle Street St Helier, Jersey JE2 3RT Custodian Capita Trust Company (Jersey) Limited 12 Castle Street St Helier, Jersey JE2 3RT Sub-Custodian and Bankers The Bank of New York Mellon SA/NV London Branch 160 Queen Victoria Street London EC4V 4LA Administrator BNY Mellon Fund Services (Ireland) Limited Guild House, Guild Street International Financial Services Centre Dublin 1, Ireland Investment Manager and Promoter STANLIB Asset Management Limited 17 Melrose Boulevard Melrose Arch 2196, Republic of South Africa Registered Office Standard Bank House La Motte Street St Helier, Jersey JE2 4SZ Sponsoring Broker J & E Davy Davy House 49 Dawson Street Dublin 2, Ireland Legal Advisers Bedell Cristin 26, New Street St Helier, Jersey JE2 3RA

5 Investment Manager s Report The following table sets out the results achieved since launch, net of fees, of the Funds managed by STANLIB Asset Management Limited. Annual Return since Launch Launch Date Class Fund Benchmark Excess Return STANLIB Global Property Fund* 1 September % 14.44% -0.92% STANLIB Multi-Manager Global Bond Fund 21 December % 4.95% 0.10% STANLIB Multi-Manager Global Equity Fund 21 December % 3.21% 1.59% STANLIB High Alpha Global Equity Fund 28 September % -0.66% -1.21% STANLIB Global Bond Fund 18 July % 3.68% 3.00% STANLIB Global Emerging Market Equity Fund** 06 December % % 2.77% * Performance since fully invested on 1 September 2009, Fund launched 1 July 2009 and return is 17.69% vs. benchmark of 22.06%. ** For the reporting period this portfolio was not approved to be promoted in South Africa, however at the time of publishing this report the portfolio is approved to be promoted in South Africa. Global Property Fund 1st Half 2013 () Benchmark Fund return -0.37% Benchmark return 2.83% UBS Global Real Estate Investors Index The benchmark returned around 2.8% for the first half of 2013 after being up nearly 16% for the year to date in early May. The global sell-off in yield oriented investments was sparked by markets discounting a possible tapering of bond buying by the Federal Reserve Bank in the US. Poor economic data from China also contributed to driving massive outflows from emerging markets equities, bonds and HK/China property developers in particular after a spike in Chinese interbank lending rates. The best performing stocks were Commonwealth REIT, Strategic Hotels and Resort and Omega Health Care Investors. The worst performing stocks were IVG Immobilien, Nomura Real Estate Office Fund and Conwert Immobilien Invest SE. The best performing regions during the first half of the year were Japan, North America and UK. The worst performing regions was Europe, Singapore and Oceania. Regions that made the biggest contribution to portfolio relative return were Europe, Hong Kong and Oceania. The biggest detractor to total attribution was from currency and allocation effect of off-benchmark holdings and cash. BR Malls and Iguatemi are the biggest off-benchmark holdings that are caught between extremely negative macroeconomic sentiment and the Brazilian Real depreciating relative to the US Dollar. Although the fundamentals for the Brazilian holdings are still sound and valuations looking attractive, share prices will probably remain depressed until flows to emerging markets turn around. BR Malls has implemented a share buy-back plan during the period to take advantage of artificially low share price. Listed property fundamentals remain healthy but negative sentiment will weigh on listed property in emerging markets in the near term. Positive earnings growth for the global listed property universe is expected. There is a high correlation between global listed property earnings growth and global GDP growth. Global GDP growth is expected to slow as growth in emerging and developed markets converge. Interest rates globally have probably bottomed as the US economy seems to be slowly but steadily recovering. The impact of higher interest rates on earnings will be muted over the near term as a high proportion of the debt of global listed property companies are fixed. Some of the biggest risks to the outlook include higher US Treasury yields, monetary tightening, a rotation out of yield oriented investments on a significantly faster than expected economic recovery and a credit crisis in China. Japanese retail investors are big holders of global listed property and could be forced to sell if they are impacted by a sudden and big change in financial markets such as a spike in bond yields. Global Listed Property Investors are currently trading at a discount to NAV of around 4.2%. The portfolio has an implied forward yield of around 3.9%. STANLIB Multi-Manager Global Bond Fund 1st Half 2013 () Benchmark Fund return -5.22% Benchmark return -4.63% Barclays Capital Multiverse Index A combination of central bank actions and re-emergence of tail risks dominated bond markets during Q1. Anticipation of new governors and expanded balance sheets in Japan and the UK pushed yields lower. Global yields then rose sharply in Q2 on the back of concerns the Fed would begin reducing QE. The upward move in yields began in early May following stronger US data and as reports surfaced the FOMC had mapped out an exit from its bond buying program, market conviction gathered momentum. Gilts lagged during the period under review, as the economic climate in the UK, characterized by slow growth and rising deficits, prompted a credit rating downgrade by Moody s. Japanese bond yields, which had already trended lower throughout 2012, declined further (albeit with a spike in May) on the back of announcements from the BOJ to expand its balance sheet aggressively. The Cyprus effect and hung parliament following Italian elections pretty much explains European bond market moves where safe haven German 10 year yields fell in Q1 whereas Italian bonds rose. 1

6 Investment Manager s Report (continued) While Eurozone growth has been weak, peripheral bond spreads seem to indicate there is some degree of confidence that supportive ECB policies combined with economic reforms will eventually lead Europe to a better place. In general, spreads widened in both corporate credit and other risky assets, especially dollar and local currency EM bonds. Clarity from Bernanke on the Fed s intention to maintain its asset purchase program calmed nerves in June with the subsequent risk-on rally benefitting high yield bonds in particular. On the currency front, the greenback lost ground at the beginning of the year but recouped its losses as investors turned their attention back to dollar positive fundamentals, notably the impending divergence in monetary policy between America and other regions. The yen and sterling were the worst performing within the G10, while the rand was hit the hardest as it lost 14.7% against the dollar. The STANLIB Multi Manager Global Bond fund underperformed the Barclays Multiverse index (-5.22% vs %) in the first half of the year. The 12 month excess return is now 31bps, with a return of -1.4%. In absolute terms, an appreciating trade weighted dollar (+4.2% YTD) has been a key factor weighing on global bond returns in 2013, at least on an unhedged basis. Brandywine has been the top performer this year thanks to zero yen exposure, while short duration positions also contributed to returns. Blackrock was the next best as the GDP weighted benchmark they track outperformed. Columbia and Capital lagged the most due to their overweight positions in emerging market debt. Duration and security selection also detracted for Columbia. During the period under review steep sell-offs were seen particularly in Mexico (10 year yields up 1.8% intra quarter) and Brazil (2 year notes surged 2%) as a result of a sudden unwinding of carry trades and impacted all our active managers negatively. On average, the portfolio is anchored by high quality sovereign debt, balanced with relatively higher yielding opportunities in markets such as in Mexico and Poland. Managers favour currencies backed by more growth orientated economies with stronger balance of payments positions over core currencies. The recent sell of the aforementioned has seen our managers take the opportunity to increase their positions in these countries. Fed officials have suggested asset purchases can end if the costs prove prohibitively high or the efficacy becomes muted. Our interpretation of the FOMC is they are not specifying an imminent exit merely the pace of asset purchases could decrease, depending on incoming data. We think officials are bracing investors for more flexibility rather than changes in the fundamental direction of policy. At this point we believe purchases are likely to decline, but it s more important to consider the cause of the decline and what might accompany a change in policy. US growth has held up better than expected, as the positive wealth effect from higher asset prices appears to be offsetting increased fiscal drag. Conversely the cyclical picture across emerging markets has become mixed. A particular surprise has been the tepid pace of recovery in China, where the new leadership appears far more serious about balancing social objectives against the traditional desire for top line growth fueled by indiscriminate investment spending. A better balanced Chinese economy is positive for the global economy over the long run but the process of getting there creates some adverse effects for other countries in the short term, primarily via the knock on effects of weaker commodity prices and exports. Bond yields now seem closer to fair value after the market rout and much of the damage from the tapering story has been done. We see global yields rising further next year, but in a far more moderate fashion. At the same time we do worry about the long term effect of QE (purchases by the Fed and BOJ are about 7% and 14% of their respective annual GDP) as there is no precedent for what central banks are doing and the truth is we are flying blind in terms of historical evidence. We are living in fascinating times and believe these moves cannot be without consequence. If it really is as easy as printing money then central banks would have done it long ago. That such a period is unprecedented should serve as a warning. Given the ambiguity around how this unfolds we are confident a more diversified strategy such as ours will be appropriate in navigating through these uncertain times. STANLIB Multi-Manager Global Equity Fund 1st Half 2013 () Benchmark Fund return 6.25% Benchmark return 6.40% MSCI AC World Investable Market Index Equity markets got off to a flying start in 2013, with strong positive returns in most regions during the first quarter. A last minute resolution to the US fiscal cliff was the catalyst for the rally at the beginning of the year and this followed through most of February before losing momentum in March in light of the chaotic Italian election and the Cypriot crisis in Europe. Unfortunately the second quarter also ended poorly after the Fed indicated the reduction of monetary stimulus might begin earlier than anticipated. The immediate concerns relating to the potential economic outcome of a less supportive monetary environment caused an increase in volatility and equity markets fell. A broadening recovery in the US resulted in the S&P 500 outperforming while the other outstanding feature of markets has been the continued rally in Japanese equities. Up 50% in late May, the Topix has since fallen back to end H1 up 33% in yen. Half of the rise has however been offset by a depreciating yen. The worst performance has come from emerging markets where the prospect of a stronger dollar, coupled with an obvious slowdown in China, has hit resource prices, to which emerging economies tend to be closely correlated. The result was a massive 20% decline of stocks in Brazil while the rest of the BRICS also lagged with China, India and Russia falling 13%, 9% and 14% respectively in dollar terms. Sector-wise, defensives have done well, benefiting from their steady yields in a low interest rate environment. This effect was particularly evident in Q1, when consumer staples and healthcare led markets upwards, despite their low beta qualities. While healthcare proved resilient in Q2, staples and utilities sold off as bond yields rose. Consumer discretionary has performed best overall during the period under review but other cyclical sectors have struggled with energy lagging once again while materials (-15.7%) underperformed the most. Small cap stocks continue to lead the way and from a style perspective, value outperformed growth reflecting the sensitivity of growth valuations to rising long rates. 2

7 Investment Manager s Report (continued) STANLIB Multi-Manager Global Equity Fund 1st Half 2013 () (continued) The STANLIB Multi Manager Global Equity Fund gained 6.24% after fees, versus the MSCI ACWI IMI index which rose 6,4% in H1. Marathon (+10.5%) continued to outperform largely due to their Japan bias and corresponding underweight in Emerging Markets. YTD they are 410bps ahead of the benchmark which is particularly pleasing as the average aggressive manager in the peer group has underperformed significantly. On the face of it, this might appear strange, given global equities have risen. The explanation lies in the outperformance of defensive stocks. Higher beta sectors such as materials and energy lagged significantly, while underperformance of technology in particular will have hurt aggressive managers. Given the aforementioned and outperformance of consumer staples and healthcare, it also seems strange defensive managers have on average underperformed. An obvious explanation is the higher cash balances many defensive managers have been running. It is pleasing to note our manager in this space (Veritas +8.7%) outperformed. Their heavy overweight in healthcare (+18%) has been a significant driver of relative returns. Particularly unhelpful has been high cash, ranging between 7% and 10%. The manager performance despite this cautious positioning testifies to strong stock selection, as well as good timing, including profit taking on successful positions as markets peaked in late May. On the downside Aberdeen has been a big detractor with the portfolio being restrained by a half benchmark weight to the US. Underweighting consumers and overweighting materials and energy has also hurt. In characteristic fashion, the manager has been buying cyclicals on weakness, funded both from cash and by taking profits in defensives. Clearly growth managers have struggled for the aforementioned reasons and to that end Fidelity have surprised on the upside by outperforming. This can be attributed to their small cap bias and overweight in the US. Conversely Capital was marginally behind but this needs to be seen in the context of significant outperformance over the last 12 months following the restructure of their global team. From a total portfolio perspective, one of the largest relative contributions came from our double overweight in Microsoft which was given a boost (up 31% during the first half) when a US judge sided with the company in the first round of a patent dispute against Google. A significant underweight in Apple also contributed with the shares falling 25%. At the other end of the contribution table, the largest negative influence came from our overweight s in Vale and Banco Bradesco which were negatively affected by the decline in emerging markets. Growing confidence in the US economy has resulted in record highs for the S&P 500, while the Fed continues to provide support to the market through its policy of unlimited QE - despite recent talk of tapering. It is unclear what might follow this period of unprecedented policy response, or how the policy can be withdrawn without shock to the system. Valuations are not cheap following a re-rating and we would expect to see price movements influenced more by earnings growth. In this regard our main concern is companies reporting profitability near historic highs in an environment characterized by peaking lead indicators which suggests the pace of economic expansion is likely to moderate. We also note the outperformance of defensives in a rising market. It is an unusual phenomenon and given valuation relative to cyclicals, implies investors are concerned about longer term prospects. The aforementioned could be related to fears of the US economy having to deal with automatic spending cuts over the next ten years along with the consumer facing additional tax burdens. On the upside the US is benefitting from its pro-growth policies and recovery in the housing sector. Likewise, in Japan, aggressive stimulus measures have resulted in signs of economic recovery. We also think it is unlikely the ECB or BoE will follow the Fed in any tightening maneuver in the coming months. At a regional level Europe appears relatively cheap versus the US and other major markets. The portfolio maintains an overweight position to these markets with a corresponding underweight to the US (44.5% vs. 53.5%). On aggregate the portfolio is underweight large caps and we have a lower beta than the market. This is due to sector positioning where the fund s biggest overweight is healthcare (+3.6%) and underweight financials (-4.8%). The overall portfolio currently trades at a slight discount to the market (PE of 15.9 vs. 16.5) with a dividend yield which is in line with the index at 2.6%. High Alpha Global Equity Fund 1st Half 2013 () Benchmark Fund return - Class A 8.72% Fund return - Class B 8.93% Benchmark return 6.05% MSCI World AC Index The assets in this fund are managed solely by Threadneedle Asset Management who is the appointed sub-investment manager. Global equity markets rallied in the first quarter and ended the second quarter approximately flat. Markets where impacted in June after the US Federal Reserve (the Fed) confirmed that it was likely to reduce, and then end, quantitative easing (QE). 3

8 Investment Manager s Report (continued) High Alpha Global Equity Fund 1st Half 2013 () (continued) Portfolio Risk Analysis: High Alpha Global Equity Fund June 2013 Fund Size ( m) 535 Fund Index Active Portfolio Beta (ex-ante) 1.02 Portfolio Tracking Error (ex-ante) 2.83 Systematic Risk (%) 36.20% Stock Specific Risk % 63.80% No. of Dct Hdgs Active Position (%) 87.5 Dividend Yield (%) PE (CY0:Prev Yr Reported Earnings) PB (Latest Reported Book Value) PCF (Latest Reported Cash Flow) Ave Market Cap (GBP) Millions 44,050 47,693 (3,643) The economic outlook is now particularly divergent, with the US and Japan improving while Asia, Europe and the emerging markets are challenged. Market volatility in response to central bank commentary surrounding QE seems a certainty in the months ahead; however, it remains our view that interest rates will remain relatively low for years to come, given the modest growth outlook. The portfolio s large underweight position in emerging markets has been an important contributor to performance and the manager will be looking to identify attractive opportunities in these countries. STANLIB Global Bond Fund 1st Half 2013 () Benchmark Fund return * -3.87% Benchmark return -4.83% Barclays Capital Aggregate Bond Index The assets in this fund are managed solely by Brandywine Global who is the appointed sub-investment manager. The STANLIB Global Bond Fund returned -3.87% compared to the benchmark return of -4.83% during the six month period review from December 31, 2012 through June 28, The relative outperformance of 96 basis points was attributed to both currency and yield curve effects. We have decreased the portfolio s effective duration during this time period, to significantly less than the benchmark s effective duration of 6.06 years on June 28, The portfolio has also maintained a higher yield profile than the benchmark, which has a yield to maturity of 2.09%. With respect to currency exposures, the fund has an underweight exposure to the Japanese Yen, Euro, and Canadian Dollar which contributed to relative outperformance while overweight exposures to higher yielding currencies like the South African Rand, the Polish Zloty, and Brazilian Real weighed on performance. Our overweight to the British pound sterling detracted from performance during the first half of Our views on the yen have not changed much, although the pricing anomaly in the currency has largely disappeared with the decline during the second quarter. The Japanese authorities continue to march ahead with the implementation of Abenomics. The July elections left the prime minister with a majority in both houses and the political clout to advance the final and most difficult leg of his growth strategy which is structural reform of the labor market. This could give another push lower in the yen in addition to the Bank of Japan fulfilling its commitment to an expansion in its balance sheet in the pursuit of higher inflation. Information risk is clearly skewed to the side of a weaker yen even though the tailwind of a meanreverting overvaluation in the currency has dissipated. The euro has been i n a holding pattern ever since last year, roughly in line with our estimates of long-term equilibrium. However, we think that the currency may be starting to give way as the U.S. economy continues its advance and as the European Central Bank (ECB) scrambles for ways to counteract the contraction in bank lending and obvious signs of deflation. The ECB s reflation strategy has put considerable weight on the credibility of the president first with his Outright Monetary Transaction commitment and most recently his shift toward forward guidance. We doubt that this commitment alone will be enough to send the euro lower. There are no good reasons for wanting to own this currency based on European fundamentals but a slide lower may require the ECB to make a concrete easing move. We remain invested in other European currencies, including the sterling, zloty, and Hungarian forint. There is no doubt that these currencies would be doing better if they were not so closely aligned with the euro. Given our concerns on the euro we decreased our exposure not only to the euro but also to the zloty during the first half of

9 Investment Manager s Report (continued) Stanlib Global Bond Fund 1st Half 2013 () (continued) Credit spreads widened in all credit markets and new issuance volume collapsed at the end of the second quarter in reaction to the steep rise in interest rates, diminished summer liquidity, and sharp volatility. Our underweight to US Corporates contributed to relative outperformance. Non agency mortgages produced similarly weak performance, though the fundamental picture of U.S. housing the strength of the collateral behind the loans continued to improve. Our underweight to non-agency mortgages also contributed to relative out performance. STANLIB Global Emerging Market Equity Fund 1st Half 2013 () Benchmark Fund return * -5.05% Benchmark return % MSCI Emerging Market Index The assets in this fund are managed solely by Threadneedle Asset Management who is the appointed sub-investment manager. Threadneedle has now delivered the first 6 months since taking over management of this portfolio. The portfolio positioning reflects: Љ Љ Overweight consumer sector as a structural growth theme in emerging markets ЉЉ Overweight tech to benefit from a cyclical rebound ЉЉ Underweight financials in the countries with increased macroeconomic and regulatory risks ЉЉ Concentrate on quality companies with strong balance sheet, good cash flow generation, dividend yield support ЉЉ Focus on structurally attractive markets of Mexico, Thailand and Philippines The manager is of the opinion that following the recent sell off, valuations in emerging markets appear attractive in both relative and absolute terms. However, there are significant variations in earnings revisions between sectors and countries. This should provide good opportunities for active managers. STANLIB Asset Management Limited Investment Manager July

10 Statement of Total Return For the period 1 January 2013 to 30 June 2013 (Comparatives are for the period 1 January 2012 to 30 June 2012) Global Property Fund STANLIB Multi-Manager Global Bond Fund STANLIB Multi-Manager Global Equity Fund High Alpha Global Equity Fund 30 June December June December June December June December 2012 Notes Net capital gains/(losses) on investments 3 (2,614,328) 4,784,693 (23,644,148) (836,712) 84,582,206 49,810,060 54,332,797 17,349,037 Revenue 4 1,924, ,030 5,123,698 10,329,072 28,818,857 26,344,245 8,793,338 8,359,744 Expenses 5 (320,152) (141,276) (1,720,692) (1,255,887) (8,117,779) (6,829,974) (2,746,020) (2,730,950) Finance costs: Interest (248) (8,675) (30) Net income for the period before taxation 1,603, ,506 3,403,006 9,073,185 20,701,078 19,505,596 6,047,318 5,628,764 Taxation (373,267) (129,762) (416,833) (80,274) (5,791,811) (4,150,629) (1,804,512) (1,446,930) Net income for the period after taxation 1,230, ,744 2,986,173 8,992,911 14,909,267 15,354,967 4,242,806 4,181,834 Change in net assets attributable to shareholders from investing activities (1,383,736) 5,510,437 (20,657,975) 8,156,199 99,491,473 65,165,027 58,575,603 21,530,871 Statements of Changes in Net Assets Attributable to Holders of Redeemable Participating Shares For the period 1 January 2013 to 30 June 2013 (Comparatives are for the period 1 January 2012 to 30 June 2012) Global Property Fund STANLIB Multi-Manager Global Bond Fund STANLIB Multi-Manager Global Equity Fund High Alpha Global Equity Fund 30 June December June December June December June December 2012 Notes Net assets at the start of the period 79,084,541 33,557, ,143, ,653,440 1,484,745,052 1,367,888, ,100, ,842,969 Amounts receivable on issue of shares 44,699,774 26,224,883 48,814,598 29,721, ,995, ,680,404 94,042,436 58,485,753 Amounts payable on redemption of shares (19,436,409) (4,087,345) (243,529,474) (6,551,370) (372,842,878) (579,907,238) (30,913,562) (164,927,333) Change in net assets attributable to shareholders from investment activities (1,383,736) 5,510,437 (20,657,975) 8,156,199 99,491,473 65,165,027 58,575,603 21,530,871 Dilution Levy 7 52,044 1,961,951 Net assets at the end of the period 102,964,170 61,205, ,770, ,031,640 1,861,389,513 1,271,788, ,805, ,932,260 The notes on pages 10 to 38 form an integral part of the financial statements. 6

11 Statement of Total Return For the period 1 January 2013 to 30 June 2013 (Comparatives are for the period 1 January 2012 to 30 June 2012) STANLIB Global Bond Fund STANLIB Global Emerging Markets Fund* Aggregated Fund 30 June December June December June December 2012 Notes Net capital (losses)/gains on investments 3 (3,525,010) 931,170 (5,945,703) 103,185,814 72,038,248 Revenue 4 981,793 2,535,390 1,357,836 46,999,533 48,565,481 Expenses 5 (328,328) (304,316) (345,212) (13,578,183) (11,262,403) Finance costs: Interest (248) (9,201) Net income for the period before taxation 653,465 2,230,826 1,012,624 33,421,350 37,293,877 Taxation (109,115) (23,657) (147,337) (8,642,874) (5,831,252) Net income for the period after taxation 544,350 2,207, ,287 24,778,476 31,462,625 Change in net assets attributable to shareholders from investing activities (2,980,660) 3,138,339 (5,080,416) 127,964, ,500,873 Statements of Changes in Net Assets Attributable to Holders of Redeemable Participating Shares For the period 1 January 2013 to 30 June 2013 (Comparatives are for the period 1 January 2012 to 30 June 2012) STANLIB Global Bond Fund STANLIB Global Emerging Markets Fund* Aggregated Fund 30 June December June December June December 2012 Net assets at the start of the period 73,176,742 88,149,916 2,587,118,908 2,663,504,317 Amounts receivable on issue of shares 36,744,126 9,551, ,093, ,439, ,187,383 Amounts payable on redemption of shares (36,035,864) (32,481,105) (907,914,796) (892,714,256) Change in net assets attributable to shareholders from investment activities 25,296 2,525,838 1,888,858 Dilution Levy 7,926,379 7,956,329 2,255, ,090,111 (127,747,394) Net assets at the end of the period 81,836,679 73,176, ,348,932 2,972,259,578 2,587,118,908 *Launched on 6 December The notes on pages 10 to 38 form an integral part of the financial statements. 7

12 Balance Sheet as at 30 June 2013 (Comparatives as at 31 December 2012) Global Property Fund STANLIB Multi-Manager Global Bond Fund STANLIB Multi-Manager Global Equity Fund High Alpha Global Equity Fund 30 June December June December June December June December 2012 Notes Assets Investments 100,827,643 76,693, ,902, ,431,063 1,793,618,491 1,431,042, ,842, ,386,282 Cash and bank balances 1,705,906 2,885,783 20,825,529 51,686,036 74,332,644 57,615,632 13,861,548 8,169,451 Unrealised gain on forward foreign currency contracts 12 2,534, ,461 Unrealised gain on futures contracts 18,239 Revenue receivable 304, ,899 3,069,046 5,156,077 3,174,612 1,661,307 1,101, ,711 Amounts due from brokers 1,559, ,858 11,693,906 5,915,637 9,110, ,463 Sundry debtors 12,943 4,425 36,006 18,670 76,854 53,899 41,444 Total assets 104,411,394 80,577, ,025, ,633,280 1,880,255,363 1,490,701, ,859, ,381,888 Equity Non-redeemable founders' shares 7 (100) (100) Total equity (100) (100) Liabilities Bank Overdraft (840,447) (212,442) Unrealised loss on forward foreign currency contracts 12 (1,250,880) (938,801) (1,018) (2,154) Unrealised loss on futures contracts (50,628) Amounts due to brokers (1,321,608) (1,201,230) (26,559,075) (39,630,153) (16,178,475) (1,359,496) Amounts due on redemptions (100,000) (1,298,042) Management fees payable (107,510) (270,561) (338,931) (1,010,696) (2,322,042) (4,056,223) (904,842) (756,312) Custodian fees payable (11,212) (5,308) (31,797) (30,287) (142,365) (71,002) (86,737) (34,760) Directors fees payable (1,214) (1,474) (14,459) (12,995) (20,864) (42,502) (22,158) (22,007) Audit fees payable (591) (811) (7,678) (6,645) (8,336) (22,279) (7,665) (9,965) Other creditors and accrued fees (5,089) (13,494) (51,774) (19,636) (42,022) (190,143) (33,347) (160,048) Total liabilities (1,447,224) (1,492,878) (28,254,594) (42,489,660) (18,865,750) (5,956,241) (1,054,749) (2,281,134) Net assets attributable to unitholders 102,964,170 79,084, ,770, ,143,620 1,861,389,513 1,484,745, ,805, ,100,754 Net asset value per Share 1, , , , , , The notes on pages 10 to 38 form an integral part of the financial statements. 8

13 Balance Sheet as at 30 June 2013 (Comparatives as at 31 December 2012) STANLIB Global Bond Fund STANLIB Global Emerging Markets Fund* Aggregated Fund 30 June December June December June December 2012 Notes Assets Investments 70,073,843 77,823,590 90,618,608 98,841,435 3,160,883,483 2,880,218,722 Cash and bank balances 1,029,927 3,456,216 3,865,635 4,735, ,621, ,548,411 Unrealised gain on forward foreign currency contracts 12 1,197, ,714 3,732, ,175 Unrealised gain on futures contracts 18,239 Revenue receivable 617, , ,683 40,283 8,512,173 8,870,801 Amounts due from brokers 1,325,024 3,148, ,415 26,838,714 7,144,373 Sundry debtors 20,840 12, , , ,760 Total assets 82,378,075 74,484, ,843,426 3,025,515,481 2,618,307,792 Equity Non-redeemable founders shares 7 (100) (100) Total equity (100) (100) Liabilities Bank Overdraft (55,748) (1,108,637) Unrealised loss on forward foreign currency contracts 12 (199,581) (242,941) (1,451,479) (1,183,896) Unrealised loss on futures contracts (50,628) - Amounts due to brokers (400,040) (3,253,956) (377,280) (47,713,154) (42,568,159) Amounts due on redemptions (100,000) (1,298,042) Management fees payable (94,059) (230,272) (96,675) (43,779) (3,864,059) (6,367,843) Custodian fees payable (12,220) (6,292) (12,964) (4,417) (297,295) (152,066) Directors fees payable (2,596) (2,443) (410) (261) (61,701) (81,682) Audit fees payable (355) (652) (1,740) (221) (26,365) (40,573) Other creditors and accrued fees (16,987) (3,048) (70,260) (68,536) (219,479) (454,905) Total liabilities (725,838) (541,396) (3,436,005) (494,494) (53,784,160) (53,255,803) Net assets attributable to unitholders 73,538,717 81,836,679 94,601, ,348,932 3,262,069,434 2,972,259,578 Net asset value per unit 1, , , * Launched on 6 December The notes on pages 10 to 38 form integral part of the financial statements. Notes to the Financial Statements 9

14 1. Incorporation STANLIB Funds Limited (the Company ) was incorporated as Liberty International Funds Limited in Jersey on 18 March The name of the Company since 16 May 2006 has been STANLIB Funds Limited. The Company is an open-ended investment company in that it may issue and redeem participating shares. The Company is listed on the Irish Stock Exchange. As at 30 June 2013, participating shares were offered in the Company as shares of the Global Property Fund, STANLIB Multi-Manager Global Bond Fund, STANLIB Multi-Manager Global Equity Fund, High Alpha Global Equity Fund, STANLIB Global Bond Fund and the STANLIB Global Emerging Markets Fund. 2. Accounting policies Basis of accounting The financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the fair valuation of investments, financial assets and financial liabilities, and in accordance with United Kingdom Accounting Standards and with the Statement of Recommended Practice ( SORP ) for financial statements of Authorised Funds issued by the Investment Management Association ( IMA ) in October 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 unless otherwise stated in the following text. Comparatives The classification of certain prior year figures has changed to conform to the current year s presentation. These changes are strictly for presentational purposes and have no affect on the net assets of the Company. The changes were made to the note 11 Financial instruments and associated risks and note 5 Expenses. Specifically, for note 11 the currency risk disclosure was updated to only include significant currency positions. The liquidity risk note was also changed. Details of which can be found in note 11. For note 5 the Administration fee is included in the Management fee as these are paid by the Manager out of their fees. Investments Investments listed on a recognised stock exchange or any other organised market are valued at bid price, or in the event that there are several such markets, on the basis of the last available bid price on the main market for the relevant investment on the balance sheet date. If the last available bid price for a given investment does not truly reflect its value, then the investment is valued on the basis of the probable sale price which the Company s Board of Directors deems prudent to assume. No such estimates have been included in the financial statements as at 30 June 2013 and 31 December Purchases and sales of investments are recognised on trade date the date on which the Company commits to purchase or sell the asset. Investments are initially recognised at fair value, and transaction costs for all financial assets and financial liabilities carried at fair value through profit or loss are expensed as incurred. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all risks and rewards of ownership. Gains and losses arising from changes in the fair value of the Investments category are included in the Statement of Total Return in the year in which they arise. All related realised and change in unrealised gains and losses are included in the Statement of Total Return as they arise. Derivative financial instruments Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in fair value are recognised immediately in the Statement of Total Return. Income Dividends on equities are accounted for on an ex-dividend basis. Bank and deposit interest are accounted for on an accrual basis. Interest from debt securities is recognised as revenue using the effective interest method by reference to the purchase price. Expenses The Company is responsible for its own operating expenses, including audit and legal fees and charges incurred on the acquisition and realisation of investments. Such operating expenses will be borne by the Class funds as the Directors shall determine, and usually pro rata if not clearly attributable to a specific Class Fund. The expenses of introducing new Share Classes will be charged to the relevant share class as provided for in the fund rules. The Manager may, at its discretion and without recourse to the Company, pay commissions directly to investors or to investors agents in respect of subscription for Shares, subject to the general overriding requirement to treat Shareholders equally. All expenses, including Operating expenses, Custodian fees, Administration fees, Directors fees and Management fees are accounted for on an accruals basis. Share issues and redemptions Participating shares in the Company may be issued and redeemed at prices calculated at each valuation date in accordance with the Articles of Association and Prospectus. 10

15 Notes to the Financial Statements (continued) Foreign currency translation Assets and liabilities in all other currencies different from the functional currency, being, are translated based on the exchange rates in effect at the date of the financial statements. Income and expenses in all other currencies different from the functional currency are translated based on the exchange rates in effect at the date of the transaction. Foreign currency translation gains or losses are credited or charged to the Statement of Total Return. The exchange rates were: 30 June December 2012 /GBP /EUR Dividend policy Dividends may be declared on individual Share Classes from time to time provided sufficient net income is available in the proportions attributable to that Share Class in the relevant Class Fund. The Fund Rules for each Share Class may also specify whether or not dividends may be paid. Swing Pricing To the extent that the Directors consider that it is in the best interest of the Company, given the prevailing market conditions and the level of certain subscriptions or redemptions requested by Shareholders in relation to the size of any Class Fund on any business day, an adjustment, as determined by the Directors at their discretion, may be reflected in the net asset value per share of the Class Funds for such sum as may represent the percentage estimate of costs and expenses which may be incurred by the relevant Class Fund under such conditions. The adjustment, where applied, is included within the dealing price available to Shareholders and is disclosed separately under Swing pricing in the Statement of Changes in Net Assets Attributable to Holders of Redeemable Participating Shares in accordance with SORP. Related party disclosures In compliance with FRS 8, Related party disclosures all related party transactions and balances are disclosed in the financial statements. Cash flow statement The Company is exempt from the requirement to prepare a cash flow statement, as it is an open-ended investment fund, which meets the conditions for exemption stated under Financial Reporting Standards ( FRS ) 1, Cash Flow Statements. Total expense ratio 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 each Class Fund s assets (operating expenses) taken retrospectively as a percentage of each Class Fund s average net assets. Operating expenses exclude transaction costs and commissions in connection with transactions on the Class Fund s portfolio. 11

16 Notes to the Financial Statement (continued) 3. Net capital movement (Comparatives are for the period 1 January 2012 to 30 June 2012) Global Property Fund STANLIB Multi-Manager Global Bond Fund STANLIB Multi-Manager Global Equity Fund High Alpha Global Equity Fund 30 June June June June June June June June 2012 Non-derivative securities Net realised gain on investments 2,784, ,941 4,520,421 3,200,749 96,366,803 20,172,416 23,360,528 20,311,309 Net movement in unrealised gain or (loss) on investments (5,255,099) 4,510,617 (27,576,403) (113,603) (10,902,142) 31,679,389 31,093,654 (1,910,862) (2,470,203) 4,843,558 (23,055,982) 3,087,146 85,464,661 51,851,805 54,454,182 18,400,447 Derivative securities Net realised loss on forward foreign exchange contracts (151,751) (58,865) (2,439,879) (3,866,401) (812,654) (1,907,779) (128,588) (1,051,410) Net movement in unrealised gain or loss on forward foreign exchange contracts 7,626 1,851,713 (57,457) (69,801) (133,966) 7,203 (144,125) (58,865) (588,166) (3,923,858) (882,455) (2,041,745) (121,385) (1,051,410) Net capital (loss)/gain (2,614,328) 4,784,693 (23,644,148) (836,712) 84,582,206 49,810,060 54,332,797 17,349,037 12

17 Notes to the Financial Statement (continued) 3. Net capital movement (contined) (Comparatives are for the period 1 January 2012 to 30 June 2012) STANLIB Global Bond Fund STANLIB Global Emerging Markets Fund* Aggregated Fund 30 June June June June June June 2012 Non-derivative securities Net realised gain/(loss) on investments 948, ,631 (1,320,981) 126,660,347 44,953,046 Net movement in unrealised gain or (loss) on investments (5,113,257) 705,186 (4,606,804) (22,360,051) 34,870,727 (4,164,577) 1,640,817 (5,927,785) 104,300,296 79,823,773 Derivative securities Net realised loss on forward foreign exchange contracts (475,749) (1,219,647) (23,503) (4,032,124) (8,104,102) Net movement in unrealised gain or loss on forward foreign exchange contracts 1,115, ,000 5,585 2,917, , ,567 (709,647) (17,918) (1,114,482) (7,785,525) Net capital (loss)/gain (3,525,010) 931,170 (5,945,703) 103,185,814 72,038,248 *Launched on 6 December Revenue (Comparatives are for the period 1 January 2012 to 30 June 2012) Global Property Fund STANLIB Multi-Manager Global Bond Fund STANLIB Multi-Manager Global Equity Fund High Alpha Global Equity Fund 30 June June June June June June June June 2012 Dividend income 1,913, ,996 28,813,707 26,338,618 8,793,338 8,344,622 Bond interest 5,109,074 10,327,796 Deposit interest ,279 5,627 Other income 10,650 14, ,122 Total Revenue 1,924, ,030 5,123,698 10,329,072 28,818,857 26,344,245 8,793,338 8,359,744 13

18 Notes to the Financial Statement (continued) 4. Revenue (continued) STANLIB Global Bond Fund STANLIB Global Emerging Markets Fund* Aggregated Fund 30 June June June June June June 2012 Dividend income 1,357,835 40,878,241 35,680,236 Bond interest 981,764 2,535,390 6,090,838 12,863,186 Deposit interest 29 4,308 6,340 Other income 1 26,146 15,719 Total Revenue 981,793 2,535,390 1,357,836 46,999,533 48,565,481 * Class Fund launched on 6 December Expenses (Comparatives are for the period 1 January 2012 to 30 June 2012) Global Property Fund STANLIB Multi-Manager Global Bond Fund STANLIB Multi-Manager Global Equity Fund High Alpha Global Equity Fund 30 June June June June June June June June 2012 Management fees 292, ,341 1,540,817 1,183,813 7,540,417 6,342,969 2,560,829 2,537,016 Custodian fees 24,216 5, ,164 56, , , , ,839 Sundry expenses 1,603 1,333 20,339 9,744 45,474 35,341 19,085 20,395 Audit fees ,422 1,478 68,826 35,328 9,575 3,699 Directors' fees 1, ,950 4,666 23,984 15,213 11,317 8,001 Total expenses 320, ,276 1,720,692 1,255,887 8,117,779 6,829,974 2,746,020 2,730,950 14

19 Notes to the Financial Statement (continued) 5.Expenses (continued) (Comparatives are for the period 1 January 2012 to 30 June 2012) STANLIB Global Bond Fund STANLIB Global Emerging Markets Fund* Aggregated Fund 30 June June June June June June 2012 Management fees 297, , ,131 12,530,317 10,480,051 Custodian fees 25,752 17,673 30, , ,443 Sundry expenses 2,091 2,336 13, ,305 69,149 Audit fees 1, ,520 90,495 41,188 Directors' fees 1, ,795 49,589 29,572 Total expenses 328, , ,212 13,578,183 11,262,403 *Launched on 6 December

20 Notes to the Financial Statement (continued) 6. 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 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. 7. Share capital Authorised 100 Founders Shares of 1 each 5,000,000 Unclassified Shares of 1 each Unclassified Shares 30 June December ,000,000 5,000,000 5,000,100 5,000,100 The Articles of Association of the Company provide that the unclassified shares may be issued as participating shares or nominal shares. Under FRS 25, Financial Instruments: Disclosure and Presentation, each class of share capital falls under the definition of non equity as participating shares can be redeemed at the direction of the participating shareholders or when the rights of other shareholders are restricted. Net assets attributable to holders of the redeemable participating shares represent a liability in the Balance Sheet, carried at the redemption amount that would be payable at the balance sheet date if the holder exercised the right to redeem the shares from the Company. Participating shares may be redeemed either out of the proceeds of the issue of nominal shares, or out of the income of the Class Fund, which would otherwise be available for dividend. On redemption of participating shares out of the income of the Class Fund, a sum equal to the nominal value of the shares redeemed is transferred to a capital redemption reserve account. Nominal shares are subscribed and paid for by the Manager and may be converted to participating shares upon the payment of the appropriate premium. Classes of Shares The founders shares are not redeemable and do not carry any rights to dividends. As at 30 June 2013 and 31 December 2012, 100 founders shares were issued and outstanding. The founders shares and participating shares are entitled to one vote in respect of each share held. The holder of the nominal shares is entitled to one vote irrespective of the number of shares held. All shares are entitled to participate in the property of the Fund on a winding-up as disclosed in the Prospectus. Movements in Share Capital and Share Premium Number of shares at 31 December 2012 Issued during the period Redeemed during the period Global Property Fund 41,135 22,193 (9,597) 53,731 STANLIB Multi-Manager Global Bond Fund 258,448 3,847 (99,726) 162,569 STANLIB Multi-Manager Global Equity Fund 801, ,066 (135,677) 946,236 High Alpha Global Equity Fund Class A 180,980 24,003 (20,348) 184,635 High Alpha Global Equity Fund Class B 637,147 75,974 (13,807) 699,314 STANLIB Global Bond Fund 56,857 2,987 (6,714) 53,130 STANLIB Global Emerging Markets Fund 101,093 8,343 (11,907) 97,529 Number of shares at 30 June