Hermes Investment Funds Public Limited Company
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Hermes Investment Funds Public Limited Company (An umbrella investment company with variable capital and having segregated liability between its Sub- Funds incorporated with limited liability in Ireland) Annual Report and Audited Financial Statements For the financial year ended 31 December 2016 Company Registration Number: 463628 Hermes Investment Funds Public Limited Company Contents Management and Administration .......................................................................................................................... 3 Directors’ Report ................................................................................................................................................... 4 Investment Manager Information .......................................................................................................................... 8 Investment Manager’s Report ............................................................................................................................. 10 Custodian’s Report to the Shareholders ............................................................................................................. 37 Depositary’s Report to the Shareholders ............................................................................................................ 38 Independent Auditor’s Report ............................................................................................................................. 39 Portfolio Statements ........................................................................................................................................... 41 Balance Sheet .................................................................................................................................................. 130 Income Statement ............................................................................................................................................ 139 Statement of Changes in Net Assets Attributable to Holders of Redeemable Participating Shares ................................................................................................................... 147 Cash Flow Statement ....................................................................................................................................... 155 Notes to the Financial Statements .................................................................................................................... 164 Unaudited Schedule of Significant Portfolio Movements .................................................................................. 271 Unaudited Investment Manager Remuneration Disclosure .............................................................................. 297 Unaudited Securities Financing Transaction Regulation Disclosures .............................................................. 298 2 Hermes Investment Funds Public Limited Company Management and Administration Directors Registered Office Paul McNaughton (Chairman) (Irish)1 Georges Court Justin Egan (Irish)1 54-62 Townsend Street Brian Collins (Irish)1 Dublin 2 Joseph Kagan (British)2 Ireland Harriet Steel (British)2 Ian Kennedy (British)3 Ian Pascal (British)4 Investment Manager and Distributor Advisor on voting and engagement Hermes Investment Management Limited Hermes Equity Ownership Services Limited Lloyds Chambers Lloyds Chambers 1 Portsoken Street 1 Portsoken Street London E1 8HZ London E1 8HZ England ............................................................................ England Depositary/Custodian Administrator, Registrar, Transfer Agent and Secretary Northern Trust Fiduciary Services (Ireland) Limited Northern Trust International Fund Georges Court Administration Services (Ireland) Limited 54-62 Townsend Street Georges Court Dublin 2 54-62 Townsend Street Ireland Dublin 2 Ireland Independent Auditor Legal Advisor to the Company Deloitte Matheson (from 11 January 2016) Chartered Accountants & Statutory Audit Firm 70 Sir John Rogerson's Quay Deloitte & Touche House Dublin 2 Earlsfort Terrace ............................................................ Ireland Dublin 2 ....................................................................... Ireland ......................................................................... William Fry (up to 10 January 2016) Fitzwilton House Wilton Place Dublin 2 Ireland 1Non-executive Directors, independent of Investment Manager 2 Non-executive Directors 3 Ian Kennedy is an Alternate Director to Joseph Kagan 4 Ian Pascal is an Alternate Director to Harriet Steel 3 Hermes Investment Funds Public Limited Company Directors’ Report The Directors of Hermes Investment Funds Public Limited Company (the “Company”) present their Annual Report and the Audited Financial Statements of the Company for the financial year ended 31 December 2016. Statement of Directors' Responsibilities The Directors’ are responsible for preparing the Directors’ report and the financial statements in accordance with the Companies Act 2014 and the applicable regulations. Irish company law requires the Directors to prepare financial statements for each financial year. Under the law, the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“relevant financial reporting framework”). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Company as at the financial year end date and of the profit or loss of the Company for the financial year and otherwise comply with the Companies Act 2014. In preparing those financial statements, the Directors are required to: select suitable accounting policies for the Company financial statements and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether the financial statements have been prepared in accordance with applicable accounting standards, identify those standards, and note the effect and the reasons for any material departure from those standards; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for ensuring that the Company keeps or causes to be kept adequate accounting records which correctly explain and record the transactions of the Company, enable at any time the assets, liabilities, financial position and profit or loss of the Company to be determined with reasonable accuracy, enable to ensure that the financial statements and Directors’ Report comply with the Companies Act 2014 and with the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011 (“the UCITS Regulations”), as amended and Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015 (the "Central Bank UCITS Regulations”) and enable the financial statements to be audited. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Principal Activity The Company was incorporated on 23 October 2008 under the laws of the Republic of Ireland as an open ended umbrella type investment company with variable capital and limited liability in which different funds may be created from time to time. The Company is authorised by the Central Bank as an Investment Company pursuant to the Central Bank UCITS Regulations. Business Review Please refer to the Investment Manager Reports on pages 10 to 36 for a review of business. The principal risks and uncertainties faced by the Company are the investment risks associated with the portfolio of investments held for the account of each sub-fund (the term “sub-fund” relates to the sub funds listed on pages 164 to 168) and the operational risks associated with their management and administration (see note 7 to the Financial Statements). 4 Hermes Investment Funds Public Limited Company Directors’ Report (continued) Accounting Records The measures taken by the Directors to secure compliance with the requirements of sections 281 to 285 of the Companies Act 2014 with regard to the keeping of accounting records are the use of appropriate systems and procedures and employment of competent persons. The accounting records of the Company are maintained by Northern Trust International Fund Administration Services (Ireland) Limited, at Georges Court, 54-62 Townsend Street, Dublin 2, Ireland. Transactions Involving Directors There were no contracts or agreements of any significance in relation to the business of the Company in which the Directors had any interest, as defined in the Companies Act, 2014, at any time during the financial year, other than those set out in note 5 to the Financial Statements. Revenue The results of operations for the financial year are set out in the Income Statement on pages 139 to 142. Directors’ Interests in Shares of the Company No Director, nor the Company Secretary, had any beneficial interest in the shares of the Company throughout the financial year. Distributions Details of distributions paid and proposed are set out in note 12 to the Financial Statements. Independent Auditor The independent auditor, Deloitte, have indicated their willingness