Edentree Investment Funds for Charities
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EDENTREE INVESTMENT FUNDS FOR CHARITIES Annual Report and Audited Financial Statements For the year ended 30 June 2017 Contents Management Contact Details 1 Report of the Authorised Corporate Director - Investment Environment 2 Investment Objectives and Policies 4 Risk Profile 4 Amity Global Equity Income Fund for Charities 5 Amity Balanced Fund for Charities 8 Authorised Status 11 Certification of Accounts 11 Statement of the Authorised Corporate Director’s Responsibilities 12 Statement of the Depositary’s Responsibilities 13 Report of the Depositary to the Shareholders of the Company 13 Portfolio Statements 14 Independent Auditor’s Report to the Shareholders 19 Statement of Total Return 21 Statement of Change in Net Assets Attributable to Shareholders 21 Balance Sheet 22 Notes to the Financial Statements 23 Distribution Statements 37 Management Contact Details Authorised Corporate Director Registrar The Authorised Corporate Director (ACD) is EdenTree Investment Management Limited (EIM). The investments Northern Trust Global Services Limited of EdenTree Investment Funds for Charities (EIFC) are managed by the ACD. The ACD has prepared financial 50 Bank Street, Canary Wharf, statements that comply with the Statement of Recommended Practice for Financial Statements of Authorised London E14 5NT Funds issued by the Investment Association in May 2014. Auditor EdenTree Investment Management Limited Deloitte LLP Beaufort House, Brunswick Road, Statutory Auditor Gloucester GL1 1JZ 110 Queen Street Glasgow G1 3BX Tel 0800 358 3010 Email [email protected] www.edentreeim.com Authorised and regulated by the Financial Conduct Authority Constitution EIFC (referred to as the “Company”) is an Open-Ended Investment Company (OEIC). It has variable capital and was incorporated with limited liability under the Open-Ended Investment Companies Regulations 2001 (OEIC Regulations) in Great Britain under registered number IC 000866. It is authorised and regulated by the Financial Conduct Authority as a non–UCITS retail scheme. The Company is an ‘umbrella’ company and comprises of two authorised investment securities sub-funds (individually referred to as the “Fund”). AIFMD Disclosures The provisions of the Alternative Investment Fund Managers Directive (“AIFMD”) took effect in full on 22 July 2014. That legislation requires the fund manager, EIM (the “AIFM”), to establish and maintain remuneration policies for its staff which are consistent with and promote sound and effective risk management. Directors of EdenTree Investment Management Limited MCJ Hews, BSc, FIA (Chairman) SJ Round RW Hepworth RDC Henderson IG Campbell Ultimate Parent Company of the ACD Allchurches Trust Limited Beaufort House, Brunswick Road, Gloucester GL1 1JZ Depositary BNY Mellon Trust and Depositary (UK) Limited The Bank of New York Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA Authorised and regulated by the Financial Conduct Authority EdenTree Investment Funds for Charities 1 Report of the Authorised Corporate Director - Investment Environment Investment Environment The UK equity market got off to a strong start but grew more volatile elections during the period. The French presidential election was the key Over the last twelve months, global investment markets have been as the year progressed amid increasing uncertainty surrounding the focus and sparked a relief rally in May following the convincing victory of heavily influenced by political events and the rhetoric of global central domestic economic outlook, political backdrop and the future path of the centrist and pro-EU candidate Emmanuel Macron, with his new party bankers. Investors witnessed the poll-defying election of Donald Trump monetary policy. The FTSE All-Share Index delivered a gain of 13.9%, also winning a significant proportion of seats in the legislative elections. as the forty-fifth president of the United States, heightened geo-political underperforming the global market, however, the FTSE 100 Index return Markets responded positively as this should enable him to push through tensions surrounding North Korea, the calling of a snap general election of 12.4% somewhat overshadowed the stronger performance delivered his reform agenda and the risk of a eurozone break-up has greatly in the UK, three interest rate hikes from the Federal Reserve and the by both the FTSE 250 Mid-Cap of 18.9% and FTSE Small-Cap of diminished. mould-breaking victory of the independent presidential candidate 24.9% indices. In terms of sector performance, Basic Materials led the At a country level, benchmarks in Spain and Italy were the strongest Emmanuel Macron in France. Through all of this, global equity markets gains, against the backdrop of more supportive macroeconomic data, performers. These equity markets were buoyed by positive domestic continued to move higher, with the FTSE World Index registering a return most notably from China. The Financials sector also delivered strong economic developments, such as falling unemployment and rising of 16.5% (in dollar terms), with equity markets in emerging economies returns as a steepening yield curve and individual self-help initiatives economic output. The relative strength in the euro over the period also outperforming their counterparts in developed economies. Global bond improved the prospects for profitability for many of the constituents. provided a boost to peripheral economies, as these benchmarks are markets underperformed risk assets and concluded the year in negative The technology sector also performed strongly as many of the sector’s largely compiled of companies that are more reliant on the domestic territory, largely due to heightened levels of uncertainty surrounding constituents continued to deliver profit and cash flow growth at a higher economy rather than export-related demand. political developments and the future path of monetary policy. In terms of rate relative to the broader market. Conversely, Utilities was the major global commodity markets, performance was mixed, as industrial metal laggard over the period, as mounting political risk surrounding energy US prices rallied on renewed optimism surrounding global demand, while prices in the build-up to the general election negatively impacted the The US equity market barely paused for breath over the twelve month Brent crude fell 3.5% (in US dollar terms), reflecting the return of supply share prices of a number of the sector’s incumbents. period and at one point achieved 110 consecutive days without in countries such as Libya and Nigeria and the remarkable growth in US experiencing a daily fall of more than 1%, the longest streak of calm In broad terms, the UK fixed interest market has come off the boil Shale, where the number of active rigs has grown by 250 (or 50%) since since 1995. The S&P 500 Index generated a return of 15.5%, however since last summer, but held its ground better than many would have the OPEC cuts were announced. the dollar’s relative strength increased this for UK-based investors to anticipated at the beginning of the year. Yields soared as fears of 17.8%. The key support for the market was rising corporate profits UK “secular stagnation” turned into worries about higher inflation, with (versus expectations), most notably in the areas of the market such After an extended honeymoon period following the EU referendum President Trump’s reflationary policies in the US adding fuel to a as technology where a handful of companies like Google, Amazon, in June 2016, during which growth and confidence was better than recovering global economy just as headline inflation numbers were Facebook and Apple are able to derive oligopolistic profits in business anticipated, optimism began to wane in the later stages of the twelve bouncing along with commodity prices. The yield on the 10-year gilt areas that they dominate. month period, after the Prime Minister invoked Article 50 of the Lisbon jumped from 0.9% in June to 1.5% in January (having been as low Treaty, and the surprise decision by the UK prime minister to call a as 0.5% last August), but moved sharply higher to 1.23% in the later The underlying economic picture in the US remains reasonable. snap general election. At the time it was widely anticipated that the stages of the twelve month period following comments from central bank Consumer spending data remained resilient, adding to hopes the US Conservative Party would strengthen their majority, putting them on a leaders in the US, Europe and the UK, which were taken as signalling economy would bounce back in the second quarter following GDP stronger footing before the start of Brexit negotiations. However, a badly increased hawkishness. growth of 1.4% in Q1 (annualised). The economy is still creating new handled campaign and a resurgent Labour Party culminated in a hung employment opportunities, despite the unemployment rate standing at Europe parliament, with the Conservatives winning 318 out of the 326 seats a historically low level. Monetary policy was tightened at a manageable While the media and financial commentators remained transfixed by required to secure an absolute majority. pace over the period, with the US Federal Reserve raising interest rates political developments and the threat of disruptive populist agendas by a quarter of a percent on two occasions, in March and in June and Recent economic readings have indicated a more muted near-term across the continent, the Eurozone economy quietly continued on its the Federal Open Market Committee set out