Annual - Line Break

Transcription

Annual - Line Break

Annual report including audited financial statements
as at 30th June 2016
THE STRALEM FUND
Société d'Investissement à Capital Variable
organised under the laws of Luxembourg
R.C.S. Luxembourg B 140 180
No subscription can be received on the basis of this financial report. Subscriptions are only valid if made on the basis of the
current prospectus and the key investor information document ("KIID") supplemented by the latest annual report and the most
recent semi-annual report, if published thereafter.
THE STRALEM FUND
Contents
Organisation ...........................................................................................................................................2
General information ...............................................................................................................................5
Report on activities of the Board of Directors.....................................................................................8
Report of the réviseur d'entreprises agréé ........................................................................................12
Combined statement of net assets .....................................................................................................14
Combined statement of operations and other changes in net assets ............................................15
THE STRALEM FUND - US EQUITY ....................................................................................................16
Statement of net assets ......................................................................................................................16
Statement of operations and other changes in net assets .................................................................17
Statistical information ..........................................................................................................................18
Statement of investments and other net assets .................................................................................20
Industrial and geographical classification of investments ...................................................................21
Statement of changes in investments (unaudited) .............................................................................22
Notes to the financial statements .......................................................................................................23
Additional Information (unaudited) ....................................................................................................27
1
THE STRALEM FUND
Organisation
Domiciliary and registered office
11, rue Aldringen
L-1118 LUXEMBOURG
Board of Directors
Chairman
Serge D'ORAZIO
Head of Investment Funds & Global Custody Services
KBL EUROPEAN PRIVATE BANKERS S.A.
43, boulevard Royal
L-2955 LUXEMBOURG
Directors
Adam S. ABELSON
Chief Investment Officer
STRALEM & COMPANY INCORPORATED
645 Madison Avenue
NEW YORK, NY 10022
USA
Andrea BAUMANN LUSTIG
President
645 Madison Avenue
NEW YORK, NY 10022
USA
Stéphane RIES
Head of Business Development
43, boulevard Royal
L-2955 LUXEMBOURG
Management Company
KREDIETRUST LUXEMBOURG S.A.
11, rue Aldringen
L-2960 LUXEMBOURG
Board of Directors of the Management Company
Chairman
Olivier de JAMBLINNE de MEUX
Directors
Rafik FISCHER
Franck SARRE
Managing Director
Stefan VAN GEYT
2
THE STRALEM FUND
Organisation (continued)
Conducting officers of the Management Company
Aurélien BARON
Stefan VAN GEYT
Depositary and principal paying agent
43, boulevard Royal
L-2955 LUXEMBOURG
Delegated administrative, registrar and transfer agent
EUROPEAN FUND ADMINISTRATION S.A.
2, rue d’Alsace
L-1122 LUXEMBOURG
Investment manager
645 Madison Avenue
NEW YORK, NY 10022
USA
General distributor
CARNEGIE FUND SERVICES S.A.
11, rue du Général-Dufour
CH-1204 GENEVA
Swiss representative
CARNEGIE FUND SERVICES S.A.
11, rue du Général-Dufour
CH-1204 GENEVA
Paying agent in Switzerland
BANQUE CANTONALE DE GENÈVE
17, quai de l’Ile
CH-1204 GENEVA
3
THE STRALEM FUND
Organisation (continued)
Marketing coordinators
IPA INVESTMENT PRODUCTS ADVISORY S.A.
107 Kantonstrasse
CH-8807 FREIENBACH
AMIRA-CAPITAL GmbH
Goethestrasse, 26
D-63263 NEU-ISENBURG
Information and paying agent in Austria
ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN AG
Graben 21
A-1010 VIENNA
Information and paying agent in Belgium
PUILAETCO DEWAAY PRIVATE BANKERS S.A.
46, avenue Herrmann Debroux
B-1160 BRUSSELS
Centralising Correspondent in France
CM-CIC SECURITIES
6, avenue de Provence
F-75009 PARIS
Information and paying agent in Germany
MERCK FINCK & CO, PRIVATBANKIERS
Neuer Wall, 77
D-20354 HAMBURG
Facilities agent in the United Kingdom
GLOBAL FUNDS REGISTRATION LIMITED
7 Chertsey Road
GU21 5AB WOKING, SURREY
Cabinet de révision agréé
DELOITTE Audit
Société à responsabilité limitée
560, rue de Neudorf
L-2220 LUXEMBOURG
4
THE STRALEM FUND
General information
THE STRALEM FUND (the "Company"), incorporated on 8th July 2008 for an unlimited period, is
organised as a "société d'investissement à capital variable" in Luxembourg under the amended law of
10th August 1915 (the "1915 Law") and pursuant to Part I of the amended Law of 17th December 2010
relating to Undertakings for Collective Investment. The Company qualifies as an Undertaking for
Collective Investment in Transferable Securities (UCITS) under the Council Directive 2009/65/EC as
amended. The Directive 2014/91/EU of the European Parliament and of the Council of 23rd July 2014
amending the Directive 2009/65/EC had been transposed by the law of 10th May 2016 coming into force
on 1st June 2016 and amending the amended law of 17th December 2010.
The Articles of Incorporation were published in the "Mémorial C, Recueil des Sociétés et Associations"
on 30th July 2008. As from 1st June 2016, publications are made in the "Recueil électronique des
sociétés et associations ("RESA")" through the website of "Registre de Commerce et des Sociétés" of
Luxembourg.
The Company is an "umbrella fund".
At the date of the report, the following Sub-Fund is offered:
- THE STRALEM FUND - US EQUITY
expressed in USD
The Sub-Fund offers two different categories of shares: capitalisation shares and distribution shares.
The capitalisation shares offer the following share categories:
- Category A shares, open to any investor;
- Category I shares, open to institutional investors.
The distribution shares offer the following share categories:
- Category DA shares, open to any investor;
- Category DI shares, open to institutional investors.
At the date of the report, Category A, I and DI shares are issued.
The Company’s financial year begins on 1st July and ends on 30th June of the next year.
Copies of the Articles of Incorporation of the Company, the current Prospectus, the Key Investor
Information Documents ("KIID"), the latest annual and semi-annual reports may be obtained free of
charge during normal office hours at the registered office of the Company in Luxembourg.
Additional information for investors in Austria:
1.
The Company has appointed ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN AG,
Graben 21, 1010 VIENNA, as paying and information agent of the Company in Austria in the sense
of § 141 InvFG 2011.
2.
Requests for redemption of shares can be submitted to the Austrian paying agent and redemptions
as well as the payment of redemption proceeds to Shareholders can be settled through the Austrian
paying agent.
3.
Information Documents ("KIID"), the latest annual and semi-annual reports may be obtained from
the Austrian paying agent at the above-mentioned address.
4.
Subscription and redemption prices for the shares of the Sub-Fund are published daily on
www.fundsquare.net.
5
THE STRALEM FUND
General information (continued)
5.
Please note that taxation according to Austrian Tax Law may differ significantly from the tax
situation described in the prospectus. Shareholders and interested persons should consult their tax
advisor with regard to the tax consequences arising from holding shares in the Sub-Fund.
Additional information for investors in Belgium:
The Company’s financial service is provided in Belgium by PUILAETCO DEWAAY PRIVATE BANKERS
S.A., registered offices at 46, avenue Herrmann Debroux, B-1160 BRUSSELS.
In Belgium the Company publishes all the information published in the Company’s country of origin.
Information Documents ("KIID"), the financial service agreement, the latest annual and semi-annual
reports including the list of changes in the securities portfolio during the period of the report are available
to the public at the premises of the Company’s financial service.
Additional information for investors in France:
CM-CIC SECURITIES S.A., 6, avenue de Provence, F-75009 PARIS assumes the function of the central
correspondent in France.
Additional information for investors in Germany:
1.
The paying and information agent in Germany is MERCK FINCK & CO, PRIVATBANKIERS, Neuer
Wall, 77, D-20354 HAMBURG.
2.
Redemptions of shares will be in the currency of the Sub-Funds. Redemption and conversion
orders for shares may be submitted to the German paying agent. Redemption and conversion
orders, if they are addressed to the Company or the paying agent in Germany, must arrive no later
than 5.00 p.m. Luxembourg time on the Transaction Day preceeding the Valuation Day. Copies of
the Articles of Incorporation of the Company, the current Prospectus, the Key Investor Information
Documents ("KIID"), the latest annual and semi-annual reports, as well as the subscription,
conversion and redemption prices may be obtained by Shareholders free of charge at MERCK
FINCK & CO, PRIVATBANKIERS. In addition, the Depositary and Paying Agent Agreements with
KBL EUROPEAN PRIVATE BANKERS S.A., LUXEMBOURG, the Domiciliary Agreement, the
Administrative Agent Agreement, the Registrar & Transfer Agent Agreement with KREDIETRUST
LUXEMBOURG S.A. and the Investment Management Agreement with STRALEM & COMPANY
INCORPORATED. may be inspected there.
3.
All payments by the Company to Shareholders in Germany (proceeds of redemptions, any
distributions and other payments) may be transferred via the paying agent MERCK FINCK & CO,
PRIVATBANKIERS. Publication in Germany of subscription and redemption prices and any other
important information to Shareholders will be in the "Handelsblatt".
6
THE STRALEM FUND
General information (continued)
4.
THE STRALEM FUND intends to fulfil its obligations to provide information which is included in the
requirements for taxation of Shareholders subject to taxation in Germany pursuant to Section 5 of
the German Investment Tax Act (InvStG) but assumes no liability for doing so. The prospectus
does not provide any information on the German taxation of Shareholders in respect of shares in
THE STRALEM FUND. It should, however, be noted that distributions by the Company, income
allocated for tax purposes but not distributed (including profits) in the Company, and the proceeds
from the sale, conversion or redemption of shares and from the assignment of claims arising from
the shares and equivalent cases are subject in Germany to taxation at the legally prescribed rates
and may also be subject to a deduction of tax (investment income tax plus solidarity surcharge).
Moreover, any other (German or non-German) taxation must be observed.
Investors are recommended to contact their tax advisor in respect of taxation details relating to
shares in THE STRALEM FUND.
Additional information for investors in Switzerland:
1.
CARNEGIE FUND SERVICES S.A., GENEVA has been appointed as the representative of the
Company in Switzerland. Copies of the Articles of Incorporation of the Company, the current
Prospectus, the Key Investor Information Documents ("KIID"), the latest annual and semi-annual
reports including the list of changes in the securities portfolio during the period of the report, can
be obtained free of charge from the representative in Switzerland. For the shares of the Company
distributed to non-qualified investors in and from Switzerland and for the shares of the Company
distributed to qualified investors in Switzerland, the place of jurisdiction is Geneva. Performance
data does not take account of the commissions and costs incurred on the issue and redemption of
shares.
2.
BANQUE CANTONALE DE GENEVE has been appointed as the Swiss paying agent for and by
the Company.
3.
All the publications of the Company in Switzerland, whether mandatory or not, will be made on
www.swissfunddata.ch. The issue and redemption prices of the shares of the Sub-Fund authorized
for public distribution in and from Switzerland will be published daily on www.swissfunddata.ch. The
published prices will be exclusive of commissions.
Additional information for investors in UK:
GLOBAL FUNDS REGISTRATION LIMITED, 7 Chertsey Road, GU21 5AB WOKING, SURREY
assumes the function of the facilities agent in the United Kingdom.
7
THE STRALEM FUND
Report on activities of the Board of Directors
Dear Shareholders,
THE STRALEM FUND - US EQUITY (the "Company") closed the year ending 30th June 2016, with
USD 54.8 million in assets under management at the close of its eighth year of business.
The Company is now authorized for sale in Austria, Belgium, France, Germany, Holland, Luxembourg,
the UK, Singapore* and Switzerland.
Stralem & Company (the Investment Manager and the Sponsor) have agreed to extend the fixed Total
Expense Ratio cap ("TER Cap") for the accounting period 1st July 2016 - 30th June 2017. The TER Cap
on Class A and DA Shares will continue to be 2.19 % and the TER Cap will continue to be 1.53 % on Class
I and DI Shares. The Sponsor has agreed to bear the risk of any Class of shares exceeding its defined TER
Cap.
We would like to take this occasion to thank the shareholders for their continued confidence in THE
STRALEM FUND - US EQUITY. We look forward to serving your investment objectives in the
U.S. market during the year to come.
On behalf of the Board,
Serge D'ORAZIO
Adam S. ABELSON
Stéphane RIES
Andrea Baumann LUSTIG
André SCHMIT
*For institutional investors only.
8
THE STRALEM FUND
Report on activities of the Board of Directors (continued)
Investment Managers Report
Review
For the year ended 30th June 2016, THE STRALEM SICAV - US EQUITY Class I shares (STRALFI)
returned 6.73% before taxes (net after fees and expenses), Class DI shares (STRALFDI) returned
6.74% before taxes (net after fees and expenses) and Class A shares (STRALFA) returned 6.06%
before taxes (net after fees and expenses) vs. the S&P500 Total Return Index which returned 3.98%
(gross-no fees or expenses) for a relative outperformance of 2.75%, 2.76% and 2.08% respectively.
Stralem & Company’s ("Stralem") goal is to provide "Participation with Protection." Preserving capital in
a down-market is far more impactful to long-term investment returns than outperforming during market
advances. This tenant is the basis of Stralem’s investment discipline. Stralem’s investment approach is
designed to participate in market advances but with a view towards preserving capital when the market
declines and is evidenced in the portfolio’s allocation to both Up Market and Down Market stocks.
In fiscal 2016 Stralem Investment Fund’s (the "Company") outperformance was equally driven by the
portfolio’s "Up Market stocks, with their emphasis on growth of capital and its "Down Market" stocks,
with their emphasis on capital preservation. The past year’s low-single digit return for the equity market
belies the underlying turbulence and re-emergence of volatility that occurred during the period. Market
gains were punctuated by precipitous drawdowns: -11.2% in August 2015, touched off by a decline in
the Chinese stock market and concerns over Chinese economic growth; -12.0% in January/February
2016, due to profit-taking, and BOJ and ECB actions that fell short of investors’ hopes; and -5.3% in
June 2016, in the two days following the surprise result of the "Brexit" referendum in the U.K.
The seesawing market action and momentum over the course of the fiscal year is further affirmation in
Stralem’s view of a "normalization" of market conditions from those that had occurred for the six years
following the Financial Crisis. Soon after the Financial Crisis of ’08-’09, the market environment
experienced a confluence of three extraordinary conditions (extraordinary annual stock-market returns
of 17%, volatility at the extreme lower end of the historical range, and a sustained high level of
correlations of stock returns with the benchmark index) which together created a "rising-tide" that
seemed to lift all stocks together. This unsustainable situation benefited any investor who owned U.S.
equities - regardless of how the underlying businesses were performing. It proved unfavorable to
fundamentally-driven, active managers in general as well as to Stralem’s relative performance during
this unique period. Fortunately, this confluence of market conditions began to break down in earnest
early in calendar 2015 and the trend toward normalization continues today. No longer are stocks all
rising together regardless of fundamentals. Today, investors are being far more discriminating and
punishing stocks that are not delivering in this turbulent and challenging environment.
The resurgence of volatility notwithstanding, the U.S. stock market has shown tremendous resilience
and is at an all-time high as of this writing. Indeed, global central bank liquidity is still proving to be a
powerful propellant of financial asset markets. U.S.-based "dominant companies" continue to innovate,
drive into new markets and pull the many strategic and operational levers at their disposal in order to
meet growth targets. However, several factors urge prudence and a continued emphasis on the capital
preservation element of investment portfolios. Among them are the potential for diminished efficacy of
monetary policy in a negative interest rate environment, the wavering perception that central banks can
control financial market outcomes, and the fact that political risk is rising as a new crop of populist and
xenophobic leaders worldwide threatens to reverse existing global trade agreements and create a more
hostile business environment. It always has been, and continues to be, difficult to predict the catalyst
that could possibly cause the stock market to stumble - however it is always critical to remain prepared.
Stralem’s portfolio, with an allocation to both Up Market and Down Market stocks is well-suited to
navigate the current market volatility, providing a smoother ride and "Participation with Protection".
9
THE STRALEM FUND
Portfolio Trades
During the September quarter two trades were made within the Down Market sector. In the High Yield
category, Southern Company was sold and replaced with Duke Energy (both regulated utilities), and in
the Low Price to Cash Flow category, the energy company Apache was replaced with the property and
casualty insurance company Ace Ltd (now Chubb Ltd).
Southern had been suffering from a series of cost overruns at its new, state-of-the-art coal-gasification
plant in Mississippi, and there had been indications of cost overruns at its expanded Vogtle nuclear plant
in Georgia. These are large-scale, ambitious projects that weighed on Southern’s stock price and
introduced a level of earnings risk that became unacceptable. Duke Energy, another quintessential
regulated utility in the faster-growing southeast part of the U.S., has fewer large-scale generation
projects in the pipeline and its investment is more skewed towards electricity transmission - the more
stable and recurring business segment. This is an attractive investment given the increase in alternative
energy generation and the need for a more robust and diverse transmission infrastructure in order to
consistently deliver this type of power to Duke’s customer base.
Apache was sold because it was no longer living up to its reputation as a best-in-class onshore E&P
"factory driller" and had not been providing investors with sufficient transparency and disclosure of the
shifting cost profile and profitability of its core basins in North America. As the price of oil dropped
significantly and rapidly, Stralem lost confidence in Apache management’s ability to deliver consistent
results in a very difficult environment. The company was replaced with one of the premier commercial
P&C insurance companies, Ace Ltd that was merging with another premier insurer, Chubb. The
combined company, now Chubb Ltd, is attractive due to the fact that the business-line mix is
complementary, there are opportunities for cost efficiencies, and the merged company has further
inorganic growth opportunities under the outstanding leadership of CEO Evan Greenberg. Premier P&C
companies have historically exhibited down-market resilience because of the recurring nature of
premium payments and the ability to control pricing.
During the December quarter, Discovery Communications and United Technologies were sold from the
Dominant Companies category within the Up Market sector and were replaced with Mondelez and
Intercontinental Exchange.
Discovery was sold because the fast-evolving landscape of the TV ecosystem had been stripping the
company of its competitive advantage as the best-in-class media creator and distributor. With cracks
appearing in ad-supported "linear TV" business model, Discovery had been operationally doing all the
right things to get its content on the new digital distribution platforms and get paid for that content.
However, the behavioural shift of viewers from "indifferent" to "intentional" as well as the rapid transition
of advertising from TV to internet and mobile rendered Discovery thematically impaired and forced us
to exit the position.
United Technologies had been showing a weakening RGV (Relative Growth Valuation) score for some
time, but the company’s new CEO (former CFO) had been seen as extremely capable, and the company
appeared to be gearing up for some aggressive strategic moves. However, United Technology’s Q2
2015 earnings report included a material cut to the full-year profit view, tied to problems forecasting
sales of after-market aerospace parts. This pushed the stock’s RGV score to an unacceptable level,
prompting the sale of United Technologies from the LCES portfolio.
International snacking powerhouse Mondelez was added because CEO Irene Rosenfeld had been
successfully carrying out the company’s plan for overhauling antiquated production facilities, improving
efficiency and expanding operating margins in a slow, but stable, revenue growth environment.
Rosenfeld has successfully reinvigorated top-line growth at some of the company’s "Power Brands"
through targeted advertising and focused innovation and now is successfully carrying out the blocking
and tackling work required to expand corporate operating margins. These efforts, combined with
reinvestment of a portion of the cost savings into its brands, are bringing about a virtuous cycle of growth
that promises to continue for some time.
10
THE STRALEM FUND
Intercontinental Exchange is an operator of security and commodity exchanges (including the NYSE)
that has been the market share leader in energy and interest rate futures and is growing its presence in
its derivatives business, as well as clearinghouse operations and its fast-growing (and highly recurringrevenue) data services business. "ICE" was added for its robust earnings growth and reasonable
valuation, as well as its leading market position and its exposure to the secular trends of increased
volatility and growth in exchange-traded futures and derivatives contracts.
Today, global financial markets are more interconnected and complex than ever before and the
macroeconomic environment in both Developed and Emerging Markets are turbulent and difficult to
forecast. However, it is a market environment like this where a manager like Stralem can add so much
value. The Stralem Fund portfolio seeks to enable investors to capture the upside in markets, while still
maintaining a focus on downside protection, and given the recent resurgence in global market volatility,
this would seem to be prudent positioning. Given how far the stock market has come since 2009, how
much multiples have expanded while earnings growth has slowed, it is critical at this juncture not to lose
sight of the value of downside protection. The Stralem strategy will therefore continue to maintain its
Down Market allocation and focus on large, high-quality companies in the Up Market sector as well.
Stralem & Company remains steadfast in the view that the optimal way to achieve superior returns over
the long run is to adhere to the discipline that has served the firm incredibly well for nearly 50 years of
managing U.S. large capitalization equities. That discipline is based on remaining invested in what
Stralem views to be high-quality, rigorously-researched, fundamentally-advantaged companies
structured within a portfolio that focuses on both growth and preservation of capital. It is this focus on
identifying growth while protecting against downside risk that enables the portfolio to provide strong
returns in Up Markets and preserve capital in Down Markets so as to start compounding from a higher
base when markets resume an upward trajectory. This approach - the tortoise, not the hare, in Stralem’s
view, ultimately, wins the race and builds long term wealth.
On behalf of the Investment Manager,
Stralem & Company Incorporated
The Investment Manager’s Report reflects Stralem & Company Incorporated’s current views and
opinions. These views are subject to change at any time based upon market or other conditions. Past
performance is not indicative of future results.
The Board of Director’s Report reflects the views and opinions of the Company’s Board, as of 30th June
2016. Going forward, these views are subject to change at any time based upon market or other
conditions. The information was prepared for the shareholders of the Company. It is not authorized for
distribution to prospective investors in the Company unless it is accompanied by a current prospectus
which describes the Company’s objectives, risks, policies, expenses and other important information.
Prospective investors are advised to read the prospectus carefully before investing. Past performance
is not indicative of future results. Future performance may be lower or higher than the data contained
herein The Company can suffer losses as well as gains.
Luxembourg, 1st August 2016
The Board of Directors
11
Deloitte Audit
Société à responsabilité limitée
560, rue de Neudorf
L-2220 Luxembourg
B.P. 1173
L-1011 Luxembourg
Report of the réviseur d'entreprises agréé
Tel: +352 451 451
Fax: +352 451 452 992
www.deloitte.lu
To the Shareholders of
THE STRALEM FUND
Following our appointment by the general meeting of the shareholders, we have audited the
accompanying financial statements of THE STRALEM FUND (the "Company") and its sub-fund, which
comprise the statement of net assets and the statement of investments and other net assets as at
30th June 2016 and the statement of operations and other changes in net assets for the year then ended,
and a summary of significant accounting policies and other explanatory notes to the financial statements.
Responsibility of the Board of Directors of the Company for the financial statements
The Board of Directors of the Company is responsible for the preparation and fair presentation of these
financial statements in accordance with Luxembourg legal and regulatory requirements relating to the
preparation of the financial statements and for such internal control as the Board of Directors of the
Company determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
Responsibility of the réviseur d’entreprises agréé
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing as adopted for Luxembourg
by the Commission de Surveillance du Secteur Financier. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the réviseur d’entreprises agréé’s
judgement, including the assessment of the risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, the réviseur d’entreprises agréé
considers internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control.
Société à responsabilité limitée au capital de 35.000 EUR
RCS Luxembourg B 67.895
12
Report of the réviseur d'entreprises agréé (continued)
An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Board of Directors of the Company, as well as
evaluating the overall presentation of the financial statements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of THE
STRALEM FUND and its sub-fund as of 30th June 2016, and of the results of its operations and changes
in its net assets for the year then ended in accordance with Luxembourg legal and regulatory
requirements relating to the preparation of the financial statements.
Other matter
Supplementary information included in the annual report has been reviewed in the context of our
mandate but has not been subject to specific audit procedures carried out in accordance with the
standards described above. Consequently, we express no opinion on such information. However, we
have no observation to make concerning such information in the context of the financial statements
taken as a whole.
For Deloitte Audit
Cabinet de révision agréé
Philippe Lenges, Réviseur d’entreprises agréé
Partner
28th September 2016
560, rue de Neudorf
L-2220 LUXEMBOURG
13
THE STRALEM FUND
Combined statement of net assets (in USD)
Assets
Securities portfolio at market value
Cash at banks
Income receivable on portfolio
Other receivables
Prepaid expenses
52,657,055.00
2,132,665.36
92,580.75
1,351.67
2,523.72
Total assets
54,886,176.50
Liabilities
Bank overdrafts
Interest payable on bank overdrafts
Expenses payable
387.74
7.32
123,152.36
Total liabilities
123,547.42
Net assets at the end of the year
54,762,629.08
The accompanying notes are an integral part of these financial statements.
14
THE STRALEM FUND
Combined statement of operations and other changes in net assets (in USD)
from 1st July 2015 to 30th June 2016
Income
Dividends, net
983,739.90
Total income
983,739.90
Expenses
Management Company and Investment Management fees
Depositary fees
Banking charges and other fees
Transaction fees
Administration costs
Professional fees
General Distribution and Marketing fees
Publication and database expenses
National authorities costs (of the distribution countries) and agent fees
Subscription duty ("taxe d'abonnement")
Interest paid on bank overdrafts
Other expenses
602,108.74
30,490.49
14,229.98
12,226.99
113,747.88
25,472.05
141,762.43
11,866.30
33,609.09
14,030.83
16.25
42,626.20
Total expenses
1,042,187.23
Net investment loss
-58,447.33
Net realised gain/(loss)
- on securities portfolio
- on foreign exchange
2,480,780.05
-690.30
Realised result
2,421,642.42
Net variation of the unrealised gain/(loss)
74,402.77
Result of operations
2,496,045.19
Subscriptions
938,127.06
Redemptions
-25,239,733.57
Total changes in net assets
-21,805,561.32
Total net assets at the beginning of the year
76,568,190.40
Total net assets at the end of the year
54,762,629.08
15
THE STRALEM FUND - US EQUITY
Statement of net assets (in USD)
Assets
Securities portfolio at market value
Cash at banks
Income receivable on portfolio
Other receivables
Prepaid expenses
52,657,055.00
2,132,665.36
92,580.75
1,351.67
2,523.72
Total assets
54,886,176.50
Liabilities
Bank overdrafts
Interest payable on bank overdrafts
Expenses payable
387.74
7.32
123,152.36
Total liabilities
123,547.42
Net assets at the end of the year
54,762,629.08
Number of Category A Shares outstanding
Net asset value per Category A Share
129,987.263
146.36
Number of Category DI Shares outstanding
Net asset value per Category DI Share
59,251.398
153.54
Number of Category I Shares outstanding
Net asset value per Category I Share
173,544.691
153.51
16
Statement of operations and other changes in net assets (in USD)
Income
Dividends, net
983,739.90
Total income
983,739.90
Expenses
Management Company and Investment Management fees
Depositary fees
Banking charges and other fees
Transaction fees
Administration costs
Professional fees
General Distribution and Marketing fees
Publication and database expenses
National authorities costs (of the distribution countries) and agent fees
Subscription duty ("taxe d'abonnement")
Interest paid on bank overdrafts
Other expenses
602,108.74
30,490.49
14,229.98
12,226.99
113,747.88
25,472.05
141,762.43
11,866.30
33,609.09
14,030.83
16.25
42,626.20
Total expenses
1,042,187.23
Net investment loss
-58,447.33
Net realised gain/(loss)
- on foreign exchange
2,480,780.05
-690.30
Realised result
2,421,642.42
Net variation of the unrealised gain/(loss)
74,402.77
Result of operations
2,496,045.19
Subscriptions
938,127.06
Redemptions
-25,239,733.57
Total changes in net assets
-21,805,561.32
Total net assets at the beginning of the year
76,568,190.40
Total net assets at the end of the year
54,762,629.08
17
Statistical information (in USD)
Total net assets
- as at 30.06.2016
- as at 30.06.2015
- as at 30.06.2014
54,762,629.08
76,568,190.40
132,067,172.44
Number of Category A Shares
- outstanding at the beginning of the year
- issued
- redeemed
- outstanding at the end of the year
210,225.176
3,203.274
-83,441.187
129,987.263
Net asset value per Category A Share
- as at 30.06.2016
- as at 30.06.2015
- as at 30.06.2014
146.36
138.00
137.52
Performance of Category A Share (in %)
- as at 30.06.2016
- as at 30.06.2015
- as at 30.06.2014
6.06
0.35
19.05
TER per Category A Share (in %)*
- as at 30.06.2016
2.14
Number of Category DI Shares
- issued
- redeemed
59,251.398
0.000
0.000
59,251.398
Net asset value per Category DI Share
- as at 30.06.2016
- as at 30.06.2015
- as at 30.06.2014
153.54
143.84
142.46
Performance of Category DI Share (in %)
- as at 30.06.2016
- as at 30.06.2015
- as at 30.06.2014
6.74
0.97
19.75
TER per Category DI Share (in %)*
- as at 30.06.2016
1.53
Number of Category I Shares
- issued
- redeemed
271,392.559
3,491.132
-101,339.000
173,544.691
Net asset value per Category I Share
- as at 30.06.2016
- as at 30.06.2015
- as at 30.06.2014
153.51
143.83
142.46
*see note 7
Annual returns were calculated for the last 3 consecutive financial years. For Sub-Funds / share types launched or liquidated
during the financial year, the corresponding annual return has not been calculated.
The historical performance is not an indication of current or future results. The performance data do not take account of the
commissions and costs incurred on the issue and redemption of shares of the Company.
18
Statistical information (in USD) (continued)
Performance of Category I Share (in %)
- as at 30.06.2016
- as at 30.06.2015
- as at 30.06.2014
6.73
0.96
19.75
TER per Category I Share (in %)*
- as at 30.06.2016
1.52
*see note 7
Annual returns were calculated for the last 3 consecutive financial years. For Sub-Funds / share types launched or liquidated
during the financial year, the corresponding annual return has not been calculated.
The historical performance is not an indication of current or future results. The performance data do not take account of the
commissions and costs incurred on the issue and redemption of shares of the Company.
19
Statement of investments and other net assets (in USD)
Currency
Number /
nominal value
Description
Cost
Market value
% of
total net
assets
Investments in securities
Transferable securities admitted to an official stock exchange listing
Shares
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
24,000
14,400
1,800
6,900
42,100
9,600
14,700
12,100
35,900
15,900
16,700
22,100
31,000
20,300
15,800
16,600
9,800
52,800
6,050
10,800
35,700
21,700
28,900
25,600
35,600
34,300
50,100
16,700
43,600
20,200
25,600
8,100
13,600
20,000
13,700
Abbott Laboratories
Adobe Systems Inc
Alphabet Inc A
Amgen Inc
AT&T Inc
Celgene Corp
Chevron Corp
Chubb Ltd N
Coca-Cola Co
CVS Health Corp
Danaher Corp
Dominion Resources Inc
Dow Chemical Co
Duke Energy Corp
EOG Resources Inc
Exxon Mobil Corp
Fedex Corp
General Electric Co
Intercontinental Exchang Inc
Johnson & Johnson
Johnson Controls Inc
Lowe's Companies Inc
Merck & Co Inc
Microsoft Corp
Mondelez Intl Inc
Oracle Corp
Pfizer Inc
Philip Morris Intl Inc
PPL Corp
Schlumberger Ltd
Starbucks Corp
Thermo Fisher Scientific Inc
United Health Group Inc
Visa Inc A
Walt Disney Co (The)
800,608.15
1,096,876.53
901,198.42
776,656.21
1,266,264.66
391,446.28
1,368,334.42
1,342,238.97
1,217,697.46
1,643,775.39
812,529.84
1,115,334.38
988,282.27
1,512,551.99
1,597,626.48
1,264,689.85
961,244.52
973,149.07
1,446,331.15
1,135,029.24
1,644,441.79
1,633,417.62
1,178,936.50
713,379.14
1,584,961.84
1,056,076.72
1,004,288.11
1,446,217.63
1,161,923.56
1,541,143.11
978,054.94
501,518.01
1,496,165.13
885,815.43
909,246.17
40,347,450.98
Total investments in securities
Cash at banks
Bank overdrafts
Other net assets/(liabilities)
Total
20
943,440.00
1,379,376.00
1,266,354.00
1,049,835.00
1,819,141.00
946,848.00
1,541,001.00
1,581,591.00
1,627,347.00
1,522,266.00
1,686,700.00
1,722,253.00
1,541,010.00
1,741,537.00
1,318,036.00
1,556,084.00
1,487,444.00
1,662,144.00
1,548,558.00
1,310,040.00
1,580,082.00
1,717,989.00
1,664,929.00
1,309,952.00
1,620,156.00
1,403,899.00
1,764,021.00
1,698,724.00
1,645,900.00
1,597,416.00
1,462,272.00
1,196,856.00
1,920,320.00
1,483,400.00
1,340,134.00
52,657,055.00
1.72
2.52
2.31
1.92
3.32
1.73
2.81
2.89
2.97
2.78
3.08
3.14
2.81
3.18
2.41
2.84
2.72
3.03
2.83
2.39
2.89
3.14
3.04
2.39
2.96
2.56
3.22
3.10
3.01
2.92
2.67
2.19
3.51
2.71
2.45
96.16
2,132,665.36
3.89
-387.74
0.00
-26,703.54
-0.05
54,762,629.08
100.00
Industrial and geographical classification of investments
Industrial classification
(in percentage of net assets)
Pharmaceuticals and biotechnology
16.21 %
Food, beverage and tobacco
11.70 %
Energy
10.98 %
Software and services
9.78 %
Utilities
9.33 %
Capital goods
6.11 %
Diversified financial services
5.54 %
Health care equipment and services
3.51 %
Telecommunication services
3.32 %
Retailing
3.14 %
Automobiles and components
2.89 %
Insurance
2.89 %
Raw materials
2.81 %
Food retailing, drugstores and pharmacies
2.78 %
Transportation
2.72 %
Media
2.45 %
Total
96.16 %
Geographical classification
(by domicile of the issuer)
(in percentage of net assets)
United States of America
90.35 %
Curacao
2.92 %
Switzerland
2.89 %
Total
96.16 %
21
Statement of changes in investments (unaudited)
Currency
Description
Purchases
Sales
Other
Shares
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
Abbott Laboratories
Adobe Systems Inc
Alphabet Inc A
Amgen Inc
Apache Corp
AT&T Inc
Celgene Corp
Chevron Corp
Chubb Ltd N
Coca-Cola Co
CVS Health Corp
Danaher Corp
Discovery Communication Inc
Dominion Resources Inc
Dow Chemical Co
Duke Energy Corp
EOG Resources Inc
Exxon Mobil Corp
Fedex Corp
General Electric Co
Google Inc A
Intercontinental Exchang Inc
Johnson & Johnson
Johnson Controls Inc
Lowe's Companies Inc
Merck & Co Inc
Microsoft Corp
Mondelez Intl Inc
Oracle Corp
Pfizer Inc
Philip Morris Intl Inc
PPL Corp
Schlumberger Ltd
Southern Co
Starbucks Corp
Thermo Fisher Scientific Inc
United Health Group Inc
United Technologies Corp
Visa Inc A
Walt Disney Co (The)
0
0
0
0
0
0
0
0
17,800
0
0
0
0
0
0
30,600
0
0
0
0
0
6,950
0
0
0
0
0
36,800
0
0
0
0
0
0
0
0
0
0
0
0
22
9,300
12,100
550
3,000
28,700
27,300
4,800
3,400
5,700
21,600
7,400
10,700
69,500
11,100
13,100
10,300
4,800
5,400
3,500
32,800
1,200
900
4,900
9,400
9,400
9,800
15,400
1,200
10,100
19,800
11,600
25,800
4,400
53,100
20,200
3,900
6,700
19,700
14,300
6,900
0
0
2,350
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-2,350
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
THE STRALEM FUND
Notes to the financial statements
Note 1 - Significant accounting policies
a) Presentation of the financial statements
The financial statements of the Company are established in accordance with Luxembourg legal and
regulatory requirements (Luxembourg GAAP) concerning Undertakings for Collective Investment.
b) Valuation of assets
1) The valuation of any transferable securities traded or listed on a stock exchange is made on the
basis of the closing price as at the Valuation Day unless such price is not representative.
2) The value of any transferable securities traded on another regulated market is determined on
the basis of the closing price as at the Valuation Day.
3) If transferable securities on a dedicated Valuation Day are neither officially traded nor listed on
an exchange or regulated market, or in the case where, for securities officially listed or traded on
a stock exchange or another regulated market, the price as determined pursuant to paragraphs
1 and 2 here above is not representative of the true value of such transferable securities, the
valuation is made on the basis of their likely value of realisation, estimated with due care and
good faith by the Board of Directors of the Company.
c) Acquisition cost of securities in the portfolio
The acquisition cost of the securities held by the Sub-Fund that are denominated in currencies other
than the reference currency of the Sub-Fund is converted into this currency at the exchange rate
prevailing on the date of purchase.
d) Net realised gain / (loss) on sales of securities
The realised gains and losses on sales of securities are determined on the basis of the average
acquisition cost.
e) Investment income
Dividend income is recorded at the ex-date, net of any withholding tax.
f) Conversion of foreign currencies
Cash at banks, other net assets and liabilities and the market value of the securities in portfolio
expressed in currencies other than the currency of the Sub-Fund are converted into this currency at the
exchange rate prevailing on the date of the report. Income and expenses expressed in currencies other
than the currency of the Sub-Fund are converted into this currency at the exchange rate prevailing on
the date of the transaction. Exchange gains or losses are recorded in the statement of operations and
other changes in net assets.
23
THE STRALEM FUND
Notes to the financial statements (continued)
g) Combined financial statements
The combined financial statements of the Company are expressed in USD and are equal to the
corresponding items in the financial statements of the Sub-Fund.
h) Transaction fees
Transaction costs disclosed under the item "Transaction fees" in the expenses of the statement of
operations and other changes in net assets are mainly composed of broker fees incurred by the
Company relating to purchases or sales of securities.
Note 2 - Management Company and Investment Management fees
The Board of Directors of the Company has appointed KREDIETRUST LUXEMBOURG S.A. as the
Management Company to provide management and administration services.
In consideration of its services, the Management Company is entitled to a Management Company fee
payable monthly and calculated on the basis of the average net assets of the Sub-Fund at the annual
rate of 0.03% with an annual minimum of EUR 20,000.
The Management Company has appointed STRALEM & COMPANY INCORPORATED as the
Investment Manager of the assets of the Company.
The Investment Manager is entitled to an Investment Management fee payable monthly and calculated
on the basis of the average net assets of the Sub-Fund at an effective annual rate of 1.3% for Category
A shares and 0.8% for Category I and Category DI shares.
The Investment Management fee is recorded in the statement of operations and other changes in net
assets under the item "Management Company and Investment Management fees" together with the
Management Company fee.
Note 3 - Marketing coordinator fee
The Company and the Management Company have appointed two Marketing Coordinators
(IPA INVESTMENT PRODUCTS ADIVSORY S.A., FREIENBACH and AMIRA-CAPITAL GmbH,
NEU-ISENBURG) who, acting under the oversight of the Management Company and under direction of
the Board of Directors of the Company, assist in the development of the Company by proposing new
marketing initiatives and ideas for entry into new markets. The Marketing Coordinators also help produce
and maintain marketing support materials such as product literature and technical guides for
Distributors.
For their services during the past fiscal year, the Marketing Coordinators receive an incentive fee of
0.2% on the contributed net assets p.a. for Category A shares and 0.144% on the contributed net assets
p.a. for Category I and Category DI shares.
This fee is recorded in the statement of operations and other changes in net assets under the item
"General Distribution and Marketing fees".
24
THE STRALEM FUND
Note 4 - General distributor fee
The Management Company has appointed CARNEGIE FUND SERVICES S.A. as the General
Distributor of the shares of the Company.
The General Distributor is entitled to an annual fee payable monthly and calculated on the basis of the
average net assets of the Sub-Fund at the annual rates of 0.08% for Category A shares and 0.055% for
Category I and Category DI shares.
This fee is recorded in the statement of operations and other changes in net assets under the item
"General Distribution and Marketing fees".
Note 5 - Administration costs
The item "Administration costs" disclosed in the statement of operations and other changes in net assets
is mainly composed by the fees incurred for the administration of the Company.
Note 6 - Subscription duty ("taxe d’abonnement")
The Company is governed by Luxembourg law.
Pursuant to the legislation and regulations in force, the Company is subject to an annual subscription
duty ("taxe d’abonnement") of 0.05% for Category A shares and 0.01% for Category I and Category DI
shares (reserved to Institutional Investors) which is payable quarterly and calculated on the basis of the
net assets of each category of shares on the last day of each quarter.
Note 7 - Total expense ratio ("TER")
The TER disclosed under "Statistical information" of this report is calculated in accordance with the
"Guidelines on the calculation and disclosure of the TER of collective investment schemes" issued by
the Swiss Funds & Asset Management Association "SFAMA" on 16th May 2008 as modified on
20th April 2015.
The TER is calculated for the last 12 months preceding the date of this report.
Transaction fees are not taken into account in the calculation of the TER.
By way of a circular resolution taken by the Board of Directors on 7th June 2011, the Board of Directors
of the Company decided to implement a limitation of the fees borne by the Company through the use of
a Total Expense Ratio Cap ("TER Cap").
By way of a circular resolution taken by the Board of Directors on 11th August 2015, the TER Cap
percentages are fixed for the accounting year 1st July 2015 - 30th June 2016 as follows:
TER Cap Category A and DA shares: 2.19%,
TER Cap Category I and DI shares: 1.53%.
The TER Cap is expressed as a percentage of the Net Asset Value for each Category of shares. The
defined TER Cap includes any and all fees paid by the Company with respect to each Category of
shares (notably the Investment Management fees, the General Distribution and Marketing fees, the
Management Company, Depositary and Administrative Agent fees, as well as all other costs and
expenses borne by the Company) excluding the transaction costs relating to purchases on sales of
securities.
25
THE STRALEM FUND
The Sponsor has agreed to bear the risk of any Category of shares exceeding its defined TER Cap. If
the TER actually incurred for a given Category of share exceeds its TER Cap, the Sponsor will reimburse
the difference to the Company. In the event that the TER actually incurred for a given Category of shares
falls below its TER Cap, the residual amount of the TER after deduction of all fees paid by the Company
and costs and expenses borne by the Company shall be used to reimburse any outlays made by the
Sponsor during the fiscal year. Any residual amount not used to reimburse the actual outlays of the
Sponsor shall remain in favour of the Company. The TER of a given Category of shares will in no event
exceed such Category of share’ TER Cap.
During the year ending 30th June 2016 the effective TER exceeded the “TER Cap”. The Sponsor will
reimburse the exceeding amount of EUR 1,351.67 concerning the DI shares to the Company.
Note 8 - Subsequent event
Based on the Board of Directors’ resolution dated 5th July 2016, the TER Cap has been extended for
the period 1st July 2016 - 30th June 2017 as follows:
TER Cap Category A and DA shares: 2.19%,
TER Cap Category I and DI shares: 1.53%.
26
THE STRALEM FUND
Additional Information (unaudited)
Note 1 : Risk management
As required by Circular CSSF 11/512, the Board of Directors needs to determine the global risk exposure
of the Company either by applying the commitment approach or the VaR approach. In terms of risk
management, the Board of Directors of the Company decided to adopt the commitment approach as a
method of determining the global risk exposure.
Note 2 - Remuneration
The Management Company has approved and adopted a UCITS V Remuneration Policy Statement in
conjunction with the remuneration policy of the Fund. In accordance with the European Securities and
Markets Authority (“ESMA”) Guidelines, the UCITS V Remuneration requirements have come into effect
on 1st June 2016. However it will be reported for the first time on 30th June 2017 following the first
performance period of the Management Company in which it has to comply with articles 14a and 14b of
the UCITS Directive.
27

Annual - Line Break

Transcription

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