Audited Financial Statements Emerging Markets Equity Fund
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HARDING LOEVNER AUSTRALIAN DOMICILED Managed INVESTMENT SCHEME Audited Financial Statements Emerging Markets Equity Fund 30 June 2017 ARSN 604 215 296 Fundamental. Thinking. Worldwide. Harding Loevner Emerging Markets Equity Fund ARSN 604 215 296 Financial Statements for the year ended 30 June 2017 Contents Page Directors' report 2 Auditor’s independence declaration 5 Statement of profit or loss and other comprehensive income 6 Statement of financial position 7 Statement of changes in equity 8 Statement of cash flows 9 Notes to the financial statements 10 Directors' declaration 23 Independent auditor's report to the unit holders of Harding Loevner Emerging Markets Equity Fund 24 Harding Loevner Funds plc Emerging Markets Equity Fund Audited Financial Statements 30 June 2017 27 These financial statements cover Harding Loevner Emerging Markets Equity Fund as an individual entity. The Responsible Entity of Harding Loevner Emerging Markets Equity Fund is The Trust Company (RE Services) Limited (ABN 45 003 278 831) (AFSL 235150). The Responsible Entity’s registered office is: Level 18, Angel Place, 123 Pitt Street Sydney, NSW 2000. 1 Harding Loevner Emerging Markets Equity Fund Directors' report For the year ended 30 June 2017 Directors’ report The directors of The Trust Company (RE Services) Limited, the Responsible Entity of Harding Loevner Emerging Markets Equity Fund, present their report together with the financial statements of the Harding Loevner Emerging Markets Equity Fund (the "Scheme") for the year ended 30 June 2017. Scheme information The Scheme is an Australian Registered Scheme. The Trust Company (RE Services) Limited, the Responsible Entity of the Scheme, is incorporated in New South Wales and is domiciled in Australia. The registered office of the Responsible Entity is located at Level 18, Angel Place, 123 Pitt Street Sydney, NSW 2000. Directors The following persons held office as directors of the Responsible Entity during the year or since the end of the year and up to the date of this report: Christopher Green Michael Vainauskas Glenn Stephen Foster Andrew Cannane Rodney Garth Ellwood (Alternate director for Christopher Green) Andrew McIver (Alternate director for Michael Vainauskas) Neil Wesley (Alternate director for Glenn Stephen Foster) (retired 14 July 2017) Gillian Larkins (Alternate director for Glenn Stephen Foster) (appointed 14 July 2017) Vicki Riggio (Alternate director for Andrew Cannane) Principal activities The Scheme invests in unit trusts in accordance with the provisions of the Scheme's Product Disclosure Statement ("PDS"). During the year, the Scheme was and continues to be, substantially invested in AUD denominated Class F shares of The Harding Loevner Emerging Markets Equity Fund ("Underlying Sub-Fund"), a specific portfolio within the Harding Loevner Funds plc, which is an open-ended investment vehicle authorised in Ireland as an Undertaking for Collective Investments in Transferable Securities pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations. The Scheme's investment objective is to achieve long term capital appreciation by obtaining exposure to equities of companies based in emerging markets. The Scheme achieves the investment objective through an indirect exposure to equities of companies based in emerging markets, via its holding in the Underlying Sub-Fund. The 30 June 2017 audited financial statements of the Underlying Sub-Fund are affixed at the end of the Scheme's financial statements. Refer to the financial statements of the Underlying Sub-Fund for details on the companies in which the Underlying Sub-Fund invests, significant accounting policies of the Underlying Sub-Fund and risks. The Scheme did not have any employees during the year. There were no significant changes in the nature of the Scheme's activities during the year. 2 Harding Loevner Emerging Markets Equity Fund Directors' report For the year ended 30 June 2017 (continued) Directors’ report (continued) Review and results of operations The Scheme continued to invest funds in accordance with target asset allocations as set out in the governing documents of the Scheme and in accordance with the provisions of the Scheme’s PDS. The performance of the Scheme, as represented by the results of its operations, was as follows: Year ended Period ended 30 June 30 June 2017 2016 Profit/(loss) before finance costs attributable to unit holders ($’000) 3,041 658 Distributions paid and payable ($’000) - - Distributions (cents per unit) - - Significant changes in state of affairs In the opinion of the directors, there were no significant changes in the state of affairs of the Scheme that occurred during the year. Likely developments and expected results of operations The Scheme will continue to be managed in accordance with the investment objectives and guidelines as set out in the governing documents of the Scheme and in accordance with the provisions of the Scheme’s PDS. The results of the Scheme’s operations will be affected by a number of factors, including the performance of the Underlying Sub-Fund in which the Scheme invests. Investment performance is not guaranteed and future returns may differ from past returns. As investment conditions change over time, past returns should not be used to predict future returns. Further information on likely developments in the operations of the Scheme and the expected results of those operations have not been included in this report because the Responsible Entity believes it would be likely to result in unreasonable prejudice to the Scheme. Indemnification and insurance of officers and auditors No insurance premiums were paid for out of the assets of the Scheme in regards to insurance cover provided to either the officers of the Responsible Entity or the auditors of the Scheme. So long as the officers of the Responsible Entity act in accordance with the Scheme’s PDS and the Corporations Act 2001 , the officers remain indemnified out of the assets of the Scheme against losses incurred while acting on behalf of the Scheme. The auditors of the Scheme are in no way indemnified out of the assets of the Scheme. Fees paid to and interests held in the Scheme by the Responsible Entity and its associates Fees paid to the Responsible Entity and its associates out of Scheme property during the year are disclosed in note 11 of the financial statements. No fees were paid out of Scheme property to the directors of the Responsible Entity during the year. The number of interests in the Scheme held by the Responsible Entity or its associates as at the end of the year are disclosed in note 11 of the financial statements. Interests in the Scheme The movement in units on issue in the Scheme during the year are disclosed in note 5 to the financial statements. The value of the Scheme’s assets and liabilities is disclosed on the statement of financial position and derived using the basis set out in Note 2 of the financial statements. 3 Deloitte Touche Tohmatsu A.B.N. 74 490 121 060 Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Sydney NSW 1217 Australia DX 10307SSE Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au The Board of Directors The Trust Company (RE Services) Limited As the Responsible Entity of Harding Loevner Emerging Markets Equity Fund Level 13, 123 Pitt Street Sydney, NSW 2000 26 September 2017 Dear Board Members Harding Loevner Emerging Markets Equity Fund In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of the Harding Loevner Emerging Markets Equity Fund. As lead audit partner for the audit of the financial statements of Harding Loevner Emerging Markets Equity Fund for the financial year ended 30 June 2017, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. Yours sincerely DELOITTE TOUCHE TOHMATSU Declan O’Callaghan Partner Chartered Accountants Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited. Harding Loevner Emerging Markets Equity Fund Statement of profit or loss and other comprehensive income for the year ended 30 June 2017 Statement of profit or loss and other comprehensive income Year ended Period ended 30 June 30 June 2017 2016 Note $'000 $'000 Investment income Net gains on financial instruments held at fair value through 3 3,221 745 profit or loss Total net investment income/(loss) 3,221 745 Expenses Management fees 11 88 69 Other expenses 92 18 Total expenses 180 87 Net profit for the year / period 3,041 658 Finance costs attributable to unit holders (Increase) in net assets attributable to unit holders 5 (3,041) (658) Profit/(loss) for the year / period attributable to unit holders - - Other comprehensive income for the year / period attributable to unit holders - - Total comprehensive income for the year / period attributable to unit holders - - The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 6 Harding Loevner Emerging Markets Equity Fund Statement of financial position As at 30 June 2017 Statement of financial position As at 30 June 30 June 2017 2016 Note $'000 $'000 Assets Cash and cash equivalents 6 - - Receivables 8 54 93 Financial assets held at fair value through profit or loss 7 18,707 15,664 Total assets 18,761 15,757 Liabilities Payables 9 62 98 Total liabilities (excluding net assets attributable to unit holders) 62 98 Net assets attributable to unit holders - liability 5 18,699 15,659 The above statement of financial position should be read in conjunction with the accompanying notes.