adames 1 duran 1 alfaro 1 lopez - supervalores.gob.pa · adames 1 duran 1 alfaro 1 lopez licenciada...

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ADAMES 1 DURAN 1 ALFARO 1 LOPEZ

Licenciada Zaida Llerena

28 de marzo de 2014

Sub Directora de Extra Situ Superintendencia Del Mercado De Valores Ciudad de Panamá Republica de Panamá

Ref .: Sociedad de Inversión extranjera CABEI CENTRAL AMERICAN FUND , PLC .

Estimada Licenciada Llerena ,

Por medio de la presente misiva y en referencia a nuestro aporte realizado el pasado 25 de marzo de 2014 mediante consecutivo de entrada No . 93165, tenemos a bien remitir por éste medio "Estados Financieros Originales auditados a l 31 de diciembre de 2013" de nuestra representada citada a l margen, debidamente notario y legalizado por Apostilla .

Únicamente anexamos El original puesto que las copias de éstos ya reposan en vuestro despacho ya que fueron r emitidas en la nota que se hace mención en el párrafo anter i or .

Sin otro particular por el momento, quedo de us ted .

SIJPERllAL 31MAR'14PH12:06

CONS: CJ 3 3 (, <.f. RECIBIDO POR: ífA,

Calle 50. Torre Global Oank, P1~0 24, Oficma 2406 Apartado P.O. Oox 0830.01 797. Panamá. Repllbhc" de Panan~ Tel. (507} 340·3059 Fax: (~7) 140--3064

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CABEI Central Ameri~an Fund pie - CABEI Central American Portfolio

ANNUAL REPORT & AUDTTED FINANCIAL STATEMENTS

For the year ended 31 December 2013

CABEI Central American Fund pie - CABEI Central American Portfolio

Contents

Organisation

Background to the Company

lnvestment Manager's Report

Directors' Report

Custodian's Report

Independent Auditor's Report

Statement ofComprehensive lncome

Statement ofFinancial Position

Statement ofChanges in Net Assets Attributable

to Holders of Redeemable Participating Shares

Statement ofCash Flows

Notes to the Financia! Statements

Schedule of lnvestments

Schedule of Portfolio Changes (Unaudited)

Annual Report and Audited Financia! Statements 2013

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CABEI Central American Fund pie- CABEI Central American Portfolio Annual Report and Audited Financia! Statements 2013

Orgaoisation

Registered Office ofthe Company 25/28 North WaU Quay Dublin 1 Ireland

Investment Manager Deutsche Asset & Wealth Management Investment GmbH * Mainzer Landstrasse 178-190 60327 Frankfurt am Main Gennany

Administrator, Registrar and Transfer Agent Northem Trust lntemational Fund Administration Services (Ireland) Limited Georges Court 54 - 62 Townsend Street Dublin 2 Ireland

Registered Address: Georges Court

54-62 Townsend Street Dublin 2 lreland

Secretary Goodbody Secretaria! Limited 25/28 North Wall Quay Dublin 1 lreland

Fuod Admioistratioo Services Lucy Robin & Co.,

41 Knapp Road

Pound Ridge New York NY 10576 USA

Spoosoring Broker J & EDavy Davy House 49 Dawson Street Dublin 2 lreland

Directors of the Company Walter Dostmann (German) (Chairman)

Directorsfrom Central American Bankfor Economic lntegration:

Alejandro Rodríguez (Costa Rican) Nick Rischbieth GIOe (Honduran)

Directorsfrom Deutsche Asset & Wea/th Management lnvestment GmbH: Markus Kohlenbach (German)

Other Directors: Per Ake Rydberg (Swedish) (Irish Resident) (resigned 5 November 2013) Michael Greene (Irish) Jaime Chavez (Honduran) Tom Geary (Irish) (appointed 29 August 2013)

Custodian Northern Trust Fiduciary Services (lreland) Limited Georges Court 54-62 Townsend Street Dublin 2

Ireland

Legal Advisor

A&L Goodbody International Financia! Services Centre 25/28 North Wall Quay Dublin l Ireland

lodependeot Auditor KPMG Chartered Accountants & Statutory Audit Firm

l Harbourmaster Place Intemational Financia! Services Centre Dublin l

lreland

*Previously operating under the name DWS lnvestment GmbH up to 8 September 2013.

Ree:istered No: 303448

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CABEI Central American Fuod pie- CABEI Central American Portfolio Annual Report and Audited Financia! Statements 20 13

Background to the Company

Oescriptioo

CABEI Central American Fund pie (the "Company"), incorporated on 12 March 1999 in Dublin, lreland with registered number 303448, is a designated, limited liability, open-ended investment company with variable capital. lt is an umbrella Company entitled to issue severa! classes of Shares to be invested in severa! portfolios. The Company has issued Shares in the CABEI Central American Portfolio (the "Portfolio"), which is the only curren! portfolio. The Company is administered by Northem Trust Intemational Fund Administration Services (lreland) Limited. The lnvestment Manager, Deutsche Asset & Wealth Management lnvestment GmbH , is an indirect subsidiary of Deutsche Bank AG. The Portfolio is denominated in US Dollars.

The Company is domiciled in lreland. lt is authorised in lreland as an investment company and is a designated investment Company pursuant to Section 256 of the Companies Act, 1990, of Jreland and is supervised by the Central Bank of lreland (the "Central Bank") as a Undertakings for Collective lnvestment in Transferable Securities ("UCJTS"). The shares of the Portfolio are listed on the lrish Stock Exchange (the " ISE").

Effective 4 January 2013, the Company registered with the Central Bank as a UCITS (Undertakings for Collective Jnvestment ofTransferable Securities) Fund.

lnvestment Objective and Policy

The Portfolio's investment objective is to generate a high real rate of retum. The Portfolio seeks to achieve this objective by investing primarily in debt and related instruments and equity and re lated instruments issued by sovereign issuers, their agents, state-owned issuers selected for privatisation, corporate issuers, supranational issuers, quasi-govemmental issuers, and any other issuer deemed lit for investment by the Directors, or a committee thereof. Countries for investment will include the five founding member countries ofthe Central American Bank for Economic Integration (CABEI), namely, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua; CAB El's seven extraregional members, namely, Argentina, Colombia, Dominican Republic, Mexico, Panama, Republic of China and Spain; and CABEI's single beneficiary member, Belize.

The Portfolio's investment and borrowing restrictions are detailed in the Offering Circular issued on 4 January 2013.

lnvestment Management

Deutsche Asset & Wealth Management lnvestment GmbH serves as Investment Manager pursuant toan investrnent management agreement dated 3 1 December 2004.

Net Asset Value

The Net Asset Yalue of the Portfolio is calculated daily for every day that is a business day in Dublin and New York. The Net Asset Value of the Portfo lio is calculated by dividing the value of the Portfolio's Net Assets (the value of its assets less its liabilities) by the total number of Shares outstanding. All securities held by the Portfolio, for which market quotations are readily available, are valued at the closing price on the primary exchange quoted for the securities. Debt securities are valued by independent pricing services approved by the Trustees ofthe Portfolio. lfthe pricing services are unable to provide valuations, the securities are valued at the most recent bid quotation or evaluated price as applicable, obtained from a broker-dealer. Such service may use various pricing techniques, which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes.

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Background to the Company (Continued)

Net Asset Value (Continued)


All other securities and assets, for which market quotations are not readily available, are taken at probable realisation value as determined in good faith by the Directors (or by a pricing committee of Directors established for the purpose) with the approval of the Custodian, although the actual calculation may be done by other competent and responsible persons. Any assets or liabilities, initially expressed in currencies other than US Dollars, are translated into US Dollars at the closing rate of exchange quoted by a recognised pricing service. The Portfolio's Net Asset Value per Share is published in the Financia! Times, and available on Thomson-Reuters and Bloomberg electronic platforms. The !SIN code ofthe Company is IE0006076388.

lssue and Repurchase of Shares

The procedures for the issue and repurchase of Shares are described in detail in the revised Offering Circular dated 4

January 20 13. The Portfol io's Deal ing Da y is every da y that is a business da y in Dubl in and New York.

lssue of Shares

Allotments of Shares are normally made with effect from a Dealing Day against applications received in Dublin by the Administrator by 9:00pm Dublin time on the preceding Business Day. Requests for the purchase of Shares may be made by facsimile, email or in writing to the Administrator. Transaction settlement occurs the business day following Dealing Day.

Repurchase ofShares

Requests for the repurchase ofShares must be received by the Administrator by 9.00pm Dublin time on a Business Day

which is at least two Business Days prior to the relevant Dealing Day and will then normally be dealt with on that Dealing Day. Requests for the repurchase of Shares may be made either by facsimile or in writing to the Administrator. Transaction settlement occurs the business day following Dealing Day.

Published lnformation

Shareholders will receive audited annual and unaudited semi-annual Reports of the Company on request. Notices of general meetings will be sent to Shareholders at least twenty-one days prior to meetings. The Net Asset Value per Share and dividend announcements, if any, are published in the Financia! Times. The subscription and redemption prices may be obtained from the registered office ofthe Company.

A statement of changes in the composition of the portfolio during the year will be made available to Shareholders on receipt of a written request.

Past performance is not necessarily a guide to future performance. lncome from the investment may tluctuate in value

in money terms. Changes in rates of exchange between currencies may cause the value of the shares to diminish or increase.

Enquiries to: Northern Trust lnternational Fund Administration Services ( lreland) Limited

Atto: John Dillon

Georges Court

54 - 62 Townsend Street

Dublin 2

lreland

Tel: 353 1 5422928, Fax: 353 1 5422920

The above details are in summary form only and must be read in conjunction with the detailed information contained in the Offering Circular dated 4 January 2013.

CABEI Central American Fund pie- CABEI Central American Portfolio

Iovestmeot Manager's Report


The net asset value of the CA BEI Central American Portfolio was down 3.02% in 2013. At the end of the annual period, the Fund had net assets of USO 98.89 mi Il ion and a net asset value of USO 1 ,964. 1 O per share.

Latin America

• Lower growth rates in 20 12/201 3. Weaker externa! trade, domestic demandas major growth driver.

• Unexpected slowdown in Mexico related to lower government spending, a decline in construction activity and sluggish demand from the US.

• In Brazil, growth was only temporarily picking up. Supply constraints and policy uncertainty in place.

• In most of the financially integrated economies (Chile, Colombia, Peru, Uruguay), growth expected to moderate to more sustainable levels.

• Oeteriorating current accounts due to stronger domestic demand and weaker terms-of-trade.

• Fiscal defi cits have deteriorated but remain manageable.

• While sorne progress made (e.g. energy reform in Mexico), broader structural reforms needed in Latin America (tax, labour, ... ).

• Growth expected to recover gradually in 20 14 amid externa! demand strengthening, but risks remaining on the downside.

Central America and the Caribbean

• Lower and diverging growth in Central America and the Caribbean

• After strong momentum in 2012 (real GOP growth of 5.2% year on year) economic activity in Costa Rica was somewhat sluggish in 2013 with domestic demand decelerating.

• El Salvador remains stuck in a low-growth-mode, with relatively weak investment and competitiveness levels.

• Guatemala's government retains a pro-growth stance. Comparably subdued business sentiment, however, constrains growth.

• In Honduras, a victory ofthe rightist party's presidential candidate might result in growth-enhancing initiatives.

• Lower but still so lid growth in Panama on the back of ongoing in frastructure projects.

• Fiscal deftcits are unlikely to improve in Central America while there is sorne positive development in the Caribbean.

• In Costa Rica, the government has failed to narrow the large fiscal deficits and curb the rising debt burden. In El Salvador, the Fiscal Sustainability Accord which was signed with the opposition and called for a deficit of 2.7% ofGOP in 201 3 which was not met though.

• ln Honduras, reducing the deficit of 6% of GOP is of high importance in order to restore fiscal credibility. Guatemala sticks to its long-standing tradition of fiscal discipline.

• Panama's deficit has widened considerably. Fiscal credibility has suffered amid severa! adjustments of the Fiscal Responsibility Law. In contrast, in Oominican Republic, lower expenditures have led to a noticeable improvement of the fiscal balance.

• As elections are on the horizon in severa! countries (Honduras (Nov 13), Costa Rica (Feb 14), El Salvador (Feb 14), Panama (May 14)), rising government spending is likely.

Global emerging markets

• Emerging market growth rates projected to remain much above developed economies but below the elevated levels seen in recent years.

• Growth in developed markets gradually strengthening while emerging markets showing signs ofweakening.

• Slowdown in emerging markets reflecting both cyclical factors (commodity prices, financia! conditions) and a decrease in potential output growth (reforms).

• Growth mostly driven by domestic demand and hence toa lesser extent by (commodity) exports.

• Downside risks stemming from tapering in 2014, renewed uncertainty in the euro area and disappointing US growth.

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lnvestment Manager's Report (Continued)

Investment strategy


• In Central America, sovereign bonds of Costa Rica, Guatemala and El Salvador are the core investments in the fund. Honduras, a relatively new issuer, has also been added.

• In Costa Rica, the Fund has exposure to both USD and local currency paper. lnvestments in short-dated local bonds are based on an attractive carry and a comparably stable currency.

• In the Caribbean, Panama and the Dominican Republic account for a good portian ofthe fund.

• In addition, the Fund is invested in Mexico (USD and MXN bonds) and Colombia.

• The exposure in short- to mid-term bonds of quasi-sovereign issuers (e.g. ICE, Ecopetrol, Pemex) has been increased to profit from the higher carry.

• In general, duration is kept limited (were possible) in an environment of gradually tighter US monetary conditions.

• Investment opportunities in Central American local markets will be investigated further, including local currency bonds as well as local USD bonds of regional corporates.

On behalf of the lnvestment Manager Deutsche Asset & Wealth Management lnvestment GmbH

Stejanie Ebner, CFA Portjolio Manager

Dr. Xueming Song Portjolio Manger

22 January 2014


Directors' Report

Annual Report and Audited Financia! Statements 20 13

The Directors present herewith the Annual Report and audited Financia! Statements for the year ended 31 December 20 13.

Statement of Directors' Respoosibilities

The Directors are responsible for preparing the Annual Report and the Financia! Statements in accordance with lntemational Financia! Reporting Standards ("lFRS") and the lntemational Financia! Reporting Interpretations Committee ("IFRIC") as adopted by the European Union and the Companies Acts, 1963 to 2013.

lrish company law requires the Directors to prepare Financia! Statements for each financia! period which give a true and fa ir view of the state of affairs of the Company and of its profit or loss for that year.

In preparing each ofthe Financia! Statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state that the Financia! Statements comply with IFRS; and • prepare the Financia! Statements on the going concem basis unless it is inappropriate to presume that the

Company will continue in business

The Directors confirm that they have complied with the above requirements in preparing the Financia! Statements.

The Directors are responsible for keeping proper books of account that disclose with reasonable accuracy at any time the financia! position of the Company and enable them to ensure that its Financia! Statements comply with IFRS and the Companies Acts, 1963 to 2013 and the European Communities (Undertakings for Collective lnvestments in Transferable Securities) Regulations 2011 . The Directors have appointed Northem Trust [ntemational Fund Administration Services (Jreland) Limited to maintain proper books of account. The address at which this business is conducted is as follows:

Northern Trust lntemational Fund Administration Services (lreland) Limited Georges Court 54-62 Townsend Street Dublin 2 lreland

The Directors are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fTaud and other irregularities and in fulfilment of this responsibility they have entrusted the assets of the Company to the Custodian for safekeeping in accordance with the Memorandum and Articles of Association of the Company. In carrying out this duty, the Directors ha ve delegated custody of the Company's assets to Northem Trust Fiduciary Services {lreland) Limited. The address at which this business is conducted is as follows:

Northem Trust Fiduciary Services (Ireland) Limited Georges Court

54-62 Townsend Street

Dublin 2 lreland

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Directors' Report (Continued)

Statement of Directors' Responsibilities (Continued)


The Directors are also responsible for preparing a Directors' Report that complies with the requirements ofthe Companies Acts, 1963 to 2013.

Corporate Governance Statement

The European Communities (2006/46 EC) Regulations, 2009, were signed into law on 19 November 2009, introducing a requirement for the Directors of all companies with securities admitted for trading on a regulated market to make an annual statement on corporate govemance. The statement is required to include commentary on compliance with applicable codes of govemance, systems of risk management and interna! controls together with other details, including the operation of Board and arrangements for shareholder meetings.

A corporate govemance code ("the IFIA code") applicable to Irish domiciled collective investment schemes was issued by the Irish Funds lndustry Association in December 2011. The board has put in place a framework for corporate govemance which it believes is suitable for an Investment Company which enables the Company to comply voluntarily with the main requirements ofthe IFTA code, which set out principies of good governance anda code ofbest practice.

Relevant information on the Company's governance arrangements for the year ended 31 December 2013 are set out in this report. The Board is committed to providing shareholders with relevant and informative details of its approach to corporate governance, and propases to further review, and where appropriate refine, its Corporate Governance Statement for the year ended 31 December 20 13 in the light of experience of applying the new requirements and any relevant guidance or clarification oftheir requirements that may be issued.

The Board considers that the Company has complied with the main provisions contained in the lFIA code throughout this accounting year.

Interna/ Control and Risk Management Systems

The Company is responsible for establishing and maintaining adequate interna! control and risk management systems of the Company in relation to the financia! reporting process. Such systems are designed to manage rather than eliminate the risk of error or fraud in achieving the Company's financia! reporting objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Company has procedures in place to ensure all relevant accounting records are properly maintained and are readily available, including production of annual and half-yearly financia! statements. The annual and half-yearly financia! statements of the Company are required to be approved by the Board of Directors of the Company and filed with the Central Bank of lreland and the lrish Stock Exchange. The Statutory Financia! Statements are required to be audited by Independent Auditors who report annually to the Board on their fmdings.

The Board evaluates and discusses significant accounting and reporting issues as the need arises.



Corporate Governaoce Statement (Continued)


Opera/ion ofthe Shareho/der Meetings, the Key Powers ofthe Shareholder Meetings, Shareholders ' Rights and the Exerc ise ofSuch Rights

The convening and conduct of Shareholders' meetings are govemed by the Articles of Association of the Company and the Companies Acts. Although the Directors may convene an extraordinary general meeting of the Company at any time, the Directors are required to convene an annual general meeting of the Company every calendar year within nine months of the Company's financia! year-end and no more than fi fteen months from the date of the previous annual general meeting. Shareholders representing not less than one-tenth of the paid up share capital of the Company may also request the Directors to convene a shareholders' meeting. Not less than twenty one days notice, of every annua l general meeting and any meeting convened for the passing of a special resolution, must be given to shareholders and fourteen days' notice must be given in the case of any other general meeting unless the auditors of the Company and all the shareholders of the Company enti tled to attend and vote agree to shorter notice.

Two members present either in person or by proxy constitute a quorum ata general meeting provided that the quorum for a general meeting convened to consider any alteration to the class rights of shares is two shareholders holding or representing by proxy at least one third ofthe issued shares ofthe relevant fund or class.

Every member present in person or by proxy who votes on a show of hands is entitled to one vote. On a poli, every member is entitled to one vote in respect of each share held by him. The chairman of a general meeting of the Company or at least ti ve members present in person or by prox:y or any holder or holders of participating shares present in person or by prox:y representing at least one tenth of the shares in issue having the right to vote at such meeting m ay demand a poli.

Shareholders may resolve to sanction an ordinary resolution or special resolution at a shareholders ' meeting. An ordinary resolution of the Company or of the shareholders of a particular fund or c lass requires a simple majority of the votes cast by the shareholders voting in person or by proxy at the meeting at which the resolution is proposed. A special resolution of the Company or of the shareholders of a particular fund or class requires a majori ty of not less than 75% of the shareholders present in person or by proxy and voting in general meeting in order to pass a special resolution including a resolution to amend the Articles of Association.

Composition and Operation of the Board of Directors and the Committees of the Board of Directors

Unless otherwise determined by an ord inary resolution of the Company in general meeting, the number of Directors may not be less than two. Currently, the Board ofDirectors oflhe Company is composed of seven Directors, be ing those listed on page 1 of these Financia( Statements.

The business of the Company is managed by the Directors, who exercise all such powers of the Company as are not by the Companies Acts or by the Articles of Association of the Company required to be exercised by the Company in general meeting.

A Director may, and the Company Secretary ofthe Company on the requisition of a Director will, at any time summon a meeting of the Directors. Questions arising at any meeting of the Directors are determined by a majority of votes. In the case of an equality of votes, the Chairman has a sccond or casting vote. The quorum necessary for the transaction

of business at a meeting of the Directors is two.

There are currently two sub-committees ofthe Board, the Pricing Committee and the lnvestment Committee.

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CABEI Central American Fund pie- CABEl Central American Portfolio


Principal Activities


As ofthe date ofthese accounts the Company has been approved by the Central Bank asan investrnent company pursuant to Part XJII of the Companies Act, 1990.

The objective ofthe Company is to generate a high real rate ofreturn.

T he lnvestment Manager's Report contains a review ofthe factors which contributed to the performance for the year. The

Directors do not anticípate any changes in the structure or investment objective.

Risk Management objectives and policies

The main risks arising from the Company's financia! instruments are market, currency, interest rate, price, liquidity and counterparty credit risks. Further information on these are given in Note 2 to these Financia! Statements.

Significant Events Ouring the Year

Effective 4 January 20 13, the Company was authorised under the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011.

There were no other changes during the year.

Events since the ycar end

There have been no signiticant events affecting the Company since the year end.

Dividends

The Directors do not recommend the payment of a dividend.

Substantial Shareholdings

Central American Bank for Economic Integration hadan interest of99.3 1% (20 12: 87.57%) in the Shares ofthe Company at the year end.

Directors

The Directors who held oftice during the year under review were:

Alejandro Rodríguez (Costa Rican) Jaime Chavez (Honduran)

Markus Kohlenbach (German)

Michael Greene (Irish) Nick Rischbieth Gloe (Honduran) Per Áke Rydberg (Swedish) (lrish Resident) (resigned 5 November 20 13) Walter Dostmann (German) (Chairman)

Tom Geary (lrish) (appointed 29 August 2013)



Directors' lnterests in Shares and Contracts


Walter Dostmann holds one subscriber share. None ofthe other Directors listed above who held office at the year end had any interests in the Shares ofthe Company at that date or at any time during the financia! year.

Transactions lnvolving Directors

There are no contracts or arrangements of any significance in relation to the business of the Company in which the Directors or Company Secretary had any interest as defined in the Companies Act, 1990, at any time during the financia! year.

Auditors

In accordance with Section 160(2) ofthe Companies Act 1963, KPMG, Chartered Accountants and Statutory Audit Firm, will continue in office.

On Behalf of the Board of Direct~

Director

Director

19 March 2014

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Report of tbe Custodian to the Shareholders


We have enquired into the conduct ofthe CABEI Central American Fund pie- CABET Central American Portfolio (the "Company") for the year ended to 31 December 2013, in our capacity as Custodian to the Company.

This report including the opinion has been prepared for and solely for the shareholders in the Company as a body, in accordance with the Central Bank's UCITS Notice 4, and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose orto any other person to whom this report is shown.

Responsibilities of the Custodian

Our duties and responsibilities are outlined in the Central Bank UCITS Notice 4. One ofthose duties is to enquire into the conduct of the Company in each annual accounting period and report thereon to the shareholders.

Our report shall state whether, in our opinion, the Company has been managed in that period in accordance with the provisions of the Company's Memorandum and Articles of Association and the UCITS Regulations. It is the overall responsibility ofthe Company to comply with these provisions. Ifthe Company has not so complied, we as Custodian must state why this is the case and outline the steps which we ha ve taken to rectify the situation.

Basis of Custodian Opinion

The Custodian conducts such reviews as it, in its reasonable opinion, considers necessary in order to comply with its duties as outlined in UCITS Notice 4 and to ensure that, in all material respects, the Company has been managed, (i) in accordance with the limitations imposed on its investment and borrowing powers by the provisions of its constitutional documentation and the appropriate regulations, and, (ii) otherwise in accordance with the Company's constitutional documentation and the appropriate regulations.

Opinion

In our opinion, the Company has been managed during the period, in all material respects:

(i) in accordance with the limitations imposed on the investment and borrowing powers of the Company by the Memorandum & Articles of Association and by the European Communities (Undertakings for Collective lnvestment in Transferable Securities) Regulations 2011, as amended (the ' Regulations' ); and

(ii) otherwise in accordance with the provisions of the Memorandum & Articles of Association and the Regulations.

(

~~~ For aod o o behalf of:

Northern Trust Fiduciary Services (lreland) Limited

19 March 2014

CABEI Central American Fund pie- CABE I Central American Portfolio Annual Report and Audited Financia! Statements 20 13

lndependent Auditor's Report to the Members of CA BEI Central American Fund pie- CABEI Central American Portfolio (tbe " Company")

We have audited the English language version of the financia! statements of CABEI Central American Fund Pie for the year ended 3 1 December 2013 which comprise the Statement of Comprehensive lncome, the Statement of Financia! Position, Statement of Changes in Net Assets Attributable to Holders of Redeemable Participating S hares, Statement of Cash Flows and the related notes. The financia! reporting framework that has been applied in their preparation is lrish law and lntemational Financia! reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company's members, as a body, in accordance with Section 193 ofthe Companies Act, 1990 and the UCITS Notices issued by the Central Bank of lreland. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assurne responsibility to anyone other than the company and the Company's members as a body, for our audit work, for this report, or for the opinions we ha ve formed.

Respective responsibilities of Directors and AudHors

As explained more fully in the Statements of Directors' Responsibilities set out on pages 6 and 7 the Directors are responsible for the preparation of the financia! statements giving a true and fa ir view. Our responsibility is to audit and express an opinion on the financia! statements in accordance with lrish law and lntemational Standards on Auditing (UK and lreland). Those standards require us to comply with the Ethical Standards for Auditors issued by the Auditing Practices Board.

Seo pe of the audit of the financia l statements

An audit involves obtaining evidence about the amounts and disclosures in the financia! statements sufficient to give reasonable assurance that the financia( statements are free rrom material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and ha ve been consistently applied and adequately d isclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financia! and nonfinancia! information in the annual report to identify material inconsistencies with the audited financia! statements. If we become aware ofany apparent material misstatements or inconsistencies we consider the implications for our report.

O pinion on financia! statements

In our opinion:

• the financia! statements give a true and fair view, in accordance with IFRSs as adopted by the EU, ofthe state of the company's affairs as at 31 December 2013 and of its changes in net assets attributable to holders of redeemable participating shares for the year then ended; and

• the financia! statements ha ve been properly prepared in accordance with the Companies Acts, 1963 to 201 3 and the European Communities (Undertakings for Collective lnvestment in Transferable Securities) Regulations, 20 11 .

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KPMG Audit 1 Harbourmaster Place IFSC Dublin 1 lreland

Independent Auditor's report to the members ofCABEI Central American Fund plc - CABEI Central American Portfolio (the "Company")

We have audited the English language version of the financia! statements of CABEI Central American Income Fund pie for the year ended 31 December 2013 which comprise the Statement of Comprehensive lncome, the Statement of Financia! Position, the Statement of Cash Flows, the Statement of Changes in Net Assets attributable to holders of redeemable participating shares and the related notes. The financia! reporting framework that has been applied in their preparation is lrish law and lnternational Financia! Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company' s members, as a body, in accordance with Section 193 of the Companies Act, 1990 and the UCITS Notices issued by the Central Bank of Ireland. Our audit work has been undertaken so that we might state to the company' s members those matters we are required to state to them in an auditor' s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibi lity to anyone other than the company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fu lly in the Statement of Directors' Responsibi lities set out on pages 6 and 7, the Directors are responsible for the preparation of the financia! statements giving a true and fair view. Our responsibility is to audit and express an opinion on the financia! statements in accordance with lrish law and International Standards on Auditing (UK and lreland). Those standards require us to comply with the Ethical Standards for Auditors issued by the Auditi ng Practices Board.

Scope of tbe audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financia! statements sufficient to give reasonable assurance that the financia! statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company' s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financia! statements. In addition, we read atl the financia! and non-financia! information in the annual report to identify material inconsistencies with the audited financia! statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

O pinion on financia! statements

In our opinion:

• the financia! statements give a true and fair view, in accordance with IFRSs as adopted by the EU, of the state of the company' s affairs as at 3 1 December 20 13 and of its changes in net assets attributable to holders of redeemable participating shares for the year then ended; and

• the financia! statements have been properly prepared in accordance with the Companies Acts, 1963 to 2013 and the European Communities (Undertakings for Collective lnvestment in Transferable Securities) Regulations, 2011.

,.

Independent Auditor's report to the members of CABE! Central American Fund plc - CABE! Central American Portfolio (the "Company") (Continued)

Matters on wbich we are required to report by the Companies Acts 1963 to 2013

We have obtained all the information and explanations which we consider necessary for the purposes of our aud it.

In our opinion the financia! statements are in agreement with the books of account and, in our opinion proper books of account have been kept by the company.

ln our opinion the information given in the directors ' report is consistent with the financia! statements.

Matters on which we are required to report by exception

We have nothing to report in respect ofthe provisions in the Companies Acts 1963 to 2013, which require us to report to you if, in our opinion, the disclosures of Directors' remuneration and transactions specified by law are not made.

1/ , AkáU Niamh Marshall For and on behalf of KPMG Chartered Accountants, Statutory Audit Firm 19 March 2014 1 Harbourmaster Place lnternational Financia! Services Centre Dubli n 1

.. .

CABEI Central American Fund pie- CABEI Central American Portfolio Annual Report and Audited Financia! Statements 2013

Statement of Comprehensive lncome


In come Operating income Net (losses)/gains on financia! assets and liabilities at fair value through profit or loss

Total investment (expense)/income

Operating expenses Performance fee

Net (expense)/income

(Loss)/profit for the year

(Decrease)/increase in Net Assets Attributable to Holders of Redeemable Participating Shares resulting from operations

Year Ended

Notes 31 December 2013 US$

4

5

6 12

799

(1,952,320)

(1 ,951 ,521 )

(1 ,355,423)

(1 ,355,423)

{3,306,944)

(3,306,944)

{3,306,944)

Year Ended

31 December 2012 US$

789

11,277,949

11 ,278,738

(1 ,426,302) {730,07Q

(2, 156,373)

9,122,365

9,122,365

9,122,365

There are no recognised gains or losses arising in the year other than the increase in Net Assets Attributable to Holders of Redeemable Participating Shares resulting from operations ofthe Company. In arriving at the results ofthe financia! year, all amounts above relate to continuing operations.

The accompanying notes forman integral part ofthe Financia! Statements.

19 March 2014

Thll lrl!,tfUmtlnt WQ$ ocknowl~r¡ed befor~ nw A

thl~o~Zi. .. dDyof..!~~.(. .• 2of..~ .. by .. (.0..~ .. ~ ~ whose signa tu re and ldentlty 1 outh~nticote { ~ In wltness whereof 1 herewlth set m y hond ~ :....o~

Ond officio/ SN/ (

CABEI Central American Fund pie - CABEI Central American Portfolio Annual Report and Audited Financial Statements 2013

lodependent Auditor's Report to the Members of CABEI Centra l American Fund pie - CA BEI Central American Portfolio (the " Company") (Cootioued)

Matters oo which we a re required to report by tbe Compaoies Acts 1963 to 201 3

We ha ve obtained all the information and explanations which we consider necessary for the purposes of our audít.

In our opinion the financia! statements are in agreement with the books of account and, in our opiníon proper books of account ha ve been kept by the Company.

In our opinion the information given in the directors' report is consistent with the tinancial statements.

Matters on which we a re required to report by exception

We have nothing to report in respect of the provisions in the Companies Acts 1963 to 201 3, which require us to report to you if, in our opinion, the disclosures of Directors' remuneration and transactions specified by law are not made.

Niamb Marshall

For aod oo behalf of KPMG

Cbartered Accountants and Statutory Audit Firm

1 Harbourmaster Place lntemational Financia! Services Centre Dublin 1 19 March 2014

l. Country: Pays!País:

'Tbis public document Le présent acte public 1 El

2. has l)t!en signed by a été signé par ha sido firmado por

3. acting in tbe capacity of agissant en qualité de quien actúa en calidad de

4 . bears the sea! / stamp of est revetu du sceau / timbre de y está revesúdo del sello 1 timbre de

S. al a/ en

7. by Department ofForeign Affairs and par 1 por

S.No 2117892014

' ..

, ..


Statement of Financia! Position

As at 31 December 2013

Annual Report and Audited Financia( Statements 2013

As at As at Notes 31 December 2013 31 December 2012

Assets

Cash at bank 7

Receivables 8

Debt instruments at fair value through profit or loss 1 (b)

Unrealised gain on forward foreign currenc~ exchange contracts at fa ir value through profit or loss 1 (b)

Total Assets

Liabilities

Payables (amounts falling due within one year) 9

Total Liabilities (excluding net assets attributable to Holders of Redeemable Participating S ha res)

Net Assets Attributable to Holders of Redeemable Participating Shares

Net Asset Value perA Share Class 11

On Behalf of the Board of Directo rs

Director Director

19 March 2014

Thls /n.srrumti1~'!J ctcknowltd9•d before, mi!

thls • .:t..r.:doyof .. L~.«Jg,~t.;t..2o.L~ .. by .• IÜ.s.~ ;r~Q o W? ~ whose slgnoture ctnd ldentlty 1 authenticate --r-~ '-f ~ In wltness whereof 1 htr«wlth set my hand ~ /

ond o clol seal

US$ US$

2,255.808 12.457.098

20.493 10. 159

96.740.010 104.253,514

47,814

99,064,125 116,720,771

(1 72,225) ( 1, 09 1.79 1 )

(172,225) (1 ,091.791)

98,891.900 115.628.980

1,964.10 2,025.20

CABEI Central American Fund pie - CABEI Central American Portfolio Annual Report and Audited Financia! Statements 20 13

Statement of Changes in Net Assets Attributable to Holders of Redeemable Participating S bares


Net Assets Attributable to Holders ofRedeemable Participating Shares at beginning of year

(Decrease )/In crease in Net Assets Attributable to Holders of Redeemable Participating Shares resulting from operations

Amounts received on issue ofRedeemable Participating Shares

Amounts paid on redemption ofRedeemable Participating Shares

(Decrease)llncrease in Net Assets resulting from Share transactions

Net (decrease)/increase in shareholders' funds

Net Assets Attributable to Holders ofRedeemable Participating Shares at end ofyear

The accompanying notes forman integral part ofthe Financia! Statements.

Year Ended 31 December 2013

U S$

115,628,980

(3,306,944)

36,244,180

(49,674,3 16)

(13,430, 136)

(16,737,080)

98,891,900

Year Ended 31 December 2012

U S$

92,479,501

9,122,365

91,576,334

(77,549,220)

14,027,114

23,149,479

1 1 5,628,980

. \


Statement of Casb Flows

For tbe year ended 31 December 2013

Annual Report and Audited Financial Statements 2013

Year Ended Year Ended 31 December 2013 31 December 2012

Cash flows from operating activities Proceeds from sale of investments Purchase of investments Interest received Other operating expenses paid

Net cash frornl(used in) operating activities

Share transactions Proceeds from issue of redeemable participating shares resulting from operations Payments of redemptions of redeemable participating shares resulting from operations

Net cash (used in)/from financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at beginning ofyear* Exchange (losses)/gains on cash and cash equivalents

Cash and cash equivalents at end ofyear

The accompanying notes forman integral part ofthe Financia( Statements.

*Cash and cash equivalents include cash at bank, cash in hand and bank overdrafts.

US$ US$

78,943,345 56,098,354 (73,380,335) (57,443,273)

966 656 (2,285,490) (1 ,319,537)

3,278,486 (2,663,800)

36,244, 180 91,576,334 (49,674,316) (77,549,220)

(13,430,136) 14,027,114

( 1 O, 151 ,650) 11 ,363,314

12,457,098 1,076,476 (49,640) 17,308

2,255,808 12,457,098

CABEI Central American Fund pie -CABE! Central American Portfolio

Notes to tbe Financia! Statements

For tbe year ended 3 1 Oecember 2013

l . Significan( Accou ntin g Policies

a) Basis of preparation


These Financia! Statements have been prepared in accordance with lnternational Financia! Reporting Standards ("IFRS") and lnternational Financia! Reporting lnterpretations Committee ("1 FRIC") interpretations endorsed by the European Union (EU) and the Companies Act, 1963 to 2013 and the European Communities (Undertakings for Collective lnvestments in Transferable Securities) Regulations 2011. The Financia! Statements are prepared under the historical cost convention as modified by the revaluation of financia! assets and financia! liabilities at fair value through protit or loss.

The preparation of Financia! Statements in conformity with IFRS requires the use of certain critica! estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Financia! Statements and the reported amounts of revenues and expenses during the reporting period. Actual results ultimately may differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period when the estimates are revised and in any future periods affected. lnformation about significant areas of estimation, uncertainty and critica! judgements in applying accounting policies that ha ve the most significant effect on the amounts recognised in the Financia! Statements are described in note 3.

All references to Net Assets throughout this document refer to Net Assets Attributable to Holders of Redeemable Participating Shares, unless otherwise stated.

The Financia! Statements are prepared in US Dollars and rounded to the nearest US Dollar.

Accounting Standards

Standards effective after 1 January 20/3 that have been adopted by the Fund

1 FRS 13, ' Fa ir value measurement', effective for annual periods beginning on or after 1 January 2013, has been adopted. The standard improves consistency and reduces complexity by providing a precise definition of fa ir value and a single source of fair value measurement and disclosure requirements for use across JFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within fFRS. If an asset or a liability measured at fair value has a bid price and an ask price, the standard requires valuation to be based on a price within the bid-ask spread that is most representative of fair value and allows the use of mid-market pricing or other pricing conventions that are used by market participants as a practica! expedient for fair value measurement within a bid-ask spread. On adoption of the standard, the Fund changed its valuation inputs for listed financia! assets and liabilities to last traded prices to be consistent with the inputs prescribed in the Fund's offering document for the calculation of its per share trading value for subscriptions and redemptions. The use of Iast traded prices is recognised as a standard pricing convention within the industry. The change in valuation inputs is considered to be a change in estímate in accordance with lAS 8.

New standards, amendments and interpretations effective after 1 January 2013 and have not been early adopted

A number of new standards, amendments to standards and interpretations including IFRS 9, 'Financial lnstruments', are effective for annual periods beginning after 1 January 2013, and have not been applied in preparing these financia! statements.

The Company is currently reviewing the impact ofthese standards on the Financia! Statements.

·. '\


Notes to tbe Financia! Statements (Continued)


l. Significant Accounting Policies (Continued)

b) lnvestments

(i) Classification, Recognition and Derecognition


lAS 39 sets at the requirements for recognition and measurement of all financia! assets and financia! liabilities including derivative instruments. The Company has classified all financia! instruments as financia! assets or financialliabilities at fair value through profit or loss.

The category of financia! assets and financialliabilities at fair value through profit or loss comprises:

-Financia! instruments held for trading. These include futures and liabilities from short sales of financia! instruments included as financia! derivative instruments on the Statement of Financia! Position. All derivatives in a net receivable position (positive fair value), as well as options purchased, are reported as fmancial assets held for trading. All derivatives in a net payable position (negative fair value), as well as options written, are reported as financialliabilities held for trading.

- Financia! instruments designated at fair value through profit or loss upon initial recognition. These include financia! assets that are not held for trading purposes and which may be so id.

The Company has classified all its investments as financia! instruments held for trading.

The Company recognises fmancial assets and financia! liabilities on the date it becomes a party to the contractual provisions of the instrument, and all significant rights and access to the benefits from the assets, and the exposure to the risks inherent in those benefits, are transferred to the Company. A financia! asset is derecognised when a contractual right to receive cash flows from the fmancial asset has expired or the Company has transferred substantially all risks and rewards of ownership. A fmancial liability is derecognised when the obligation specified in the contract has been discharged, cancelled or expired.

Financia! assets that are classified as loans and receivables include deposits and accounts receivable. Financia! liabilities that are not at fair value through profit or loss include accounts payable and financia! liabilities arising on Redeemable Participating Shares.

A regular way purchase of fmancial assets is recognised using trade date accounting. From this date, any gains and losses, arising from changes in fair value ofthe financia! assets or financialliabilities, are recorded.

(ii) Measurement

Financia! instruments at fair value through profit or loss are measured initially at fair value. Transaction costs on financia! assets and financia! liabilities at fair value through profit or loss are expensed immediately, while on other financia( instruments they are amortised.

Subsequent to initial recognition, all instruments classified at fair value through profit or loss are measured at fair value with changes in their fa ir value recognised in the Statement of Comprehensive Income.

Financia! assets and Financia! liabilities, other than those at fair value through profit or loss, are measured at amortised cost using the effective interest rate method, less impairment loss, if any.

Financia! liabilities, arising from the Redeemable Participating Shares issued by the Company, are carried at the redemption amount representing the Investors' right to a residual interest in the Company's Assets.


Notes to tbe Financial Statements (Contioued)

For the year ended 31 Oecember 2013

l. Sigoificant Accounting Policies (Cootioued)

b) lnvestments (continued)

(iii) Fair value measurement principies


The fa ir value of financial instruments is based on their quoted, interest inclusive market prices (i.e. the price that includes the present value of all future cash flows, including interest accruing on the next coupon payment) at the statement of financia! position date without any deduction for estimated future selling costs. Financial assets are priced at last traded prices, while financialliabil ities are priced at current asking prices.

lf a quoted market price is not available on a recognised stock exchange or from a broker/ dealer for nonexchange-traded financia! instruments, the fair value of the instrument is estimated using valuation techniques, including use of recent arm's length market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow techniques, option pricing models or any other valuation technique that provides a reliable estímate of prices obtained in actual market transactions.

The fair value of derivatives, that are not exchange traded, is estimated at the amount that the Company would receive or pay to termínate the contract at the reporting date, taking into account current market conditions (volatility, appropriate yield curve) and the current creditworthiness of the counterparties. Realised gains and losses on investment disposals are calculated using the average cost method.

(iv) lmpairment

Financial assets that are stated at cost or amortised cost are reviewed at each reporting date to determine whether there is objective evidence of impairrnent. lf any such indication exists, an impairrnent loss is recognised in the Statement of Comprehensive lncome as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financia! asset's original effective interest rate.

lf in a subsequent period the amount of an impairrnent loss recognised on a financia! asset carried at amortised cost decreases and the decrease can be linked objectively to an event occurring after the write-down, the writedown is reversed through the Statement ofComprehensive lncome.

(v) Offsetting Financia) lnstruments

Financia( assets and liabilities are offset and the net amount reported in the Statement ofFinancial Position when, and only when, there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the assets and settle the liability simultaneously.

(vi) Cash and Cash Equivalents

Cash comprises current deposits with banks. Deposits are measured at amortised cost. Cash equivalents are shortterrn highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-terrn cash commitments rather than for investment or other purposes. Bank overdrafts that are repayable on demand and forro an integral part of the Fund's cash management are included as a component of cash and cash equivalents for the purpose of the Statement of Cash tlows.

(vii) Forward currency contracts

The unrealised gain or loss on open forward currency contracts is calculated as the difference between the original contracted rate and the rate to close out the contract at that point in time. Realised gains or losses on foreign currency include gains on contracts which have been settled. Forward foreign exchange contracts are entered into to attempt to hedge the non US Dollar currency exposure. Gains/losses arising from such contracts are directly attributable solely to the classes to which they relate.

..

CABEI Central American Fund pie - CABEI Central Amer ican Portfolio

Notes to the Financia! Sta tements (Continued)

For the year ended 31 December 201 3

l. Significant Accounting Policies (Continued)

b} lnvestments (continued)

(viii) Transaction costs


Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financia) asset or liability. An incremental cost is one that would not have been incurred if the entity had not acquired, issued or disposed of the financia) instrument. When a financia) asset or liability is recognised initially, an entity shall measure it at its fair value through profit or loss plus transaction costs that are directly attributable to the acquisition or issue ofthe financia! asset or liability.

Transaction costs on the purchase and sale of bonds and forwards are included in the purchase and sale price of the investment. They cannot be practically or reliably gathered as they are embedded in the cost ofthe investment and cannot be separately verified or disclosed.

e) lncome

Bank interest income is accounted for on an effective yield basis. Coupon interest is included in realised and unrealised gains/losses on investments in the Statement ofComprehensive lncome on an effective yield basis.

d) Fees and charges

Management fees, administration fees, custody fees and other operating expenses are charged to the Statement of Comprehensive lncome on an accruals basis.

e) Redeemable Participating Shares

Redeemable Participating Shares are redeemable at the Shareholder's option and are classified as financia) liabilities. Any distributions on these participating shares are recognised in the Statement of Cornprehensive lncorne as finance costs.

f) Gains and Losses on lnvestments

Realised gains or losses on disposal of investrnents during the year and unrealised gains and losses on valuation of investrnents held at the year end are dealt with in the Staternent of Comprehensive Incorne.

g) Foreign Exchange

The functional currency ofthe Cornpany is US Dollars. The Directors have deterrnined that this reflects the Cornpany's prirnary econornic environrnent, as the rnajority of the Cornpany's Net Assets Attributable to Holders of Redeernable Participating Shares are in US Dollars.

Foreign exchange gains and losses on financia) assets and financia! liabilities at fair value through profit and loss are recognised together with other changes in the fair value. Net currency gainsl(losses) as set out in Note 5, are net foreign exchange gains and losses on rnonetary financia! assets and liabilities other than those classified at fair value through profit or loss.

Assets and liabilities denominated in foreign currencies, other than the functional currency ofthe Company, have been translated at the rate of exchange prevailing at 31 December 20 13. Transactions in foreign currencies are translated into US Dollars at the exchange rate prevailing at the date of the transaction. Gains and losses on foreign exchange transactions are recognised in the Staternent of Cornprehensive !neo me in deterrnining the result for the year.


Notes to tbe Financial Statements (Contioued)

For tbe year ended 3 1 December 2013

l. Significa nt Accounting Policies (Contioued)

h) Foreign Excha nge


The following exchange rates were used to convert investments, assets and liabilities to the functional currency of the Company:

Costa Rican Colon (CRC) Euro (EUR) Mexican Peso (MXN)

2. Fina ncia l Risk Ma nageme nt

Stra tegy in using Financial Iostrumeots


US$1= 501.4050

0.7257 13.0972


US$1= 508.1950

0.7585 12.9860

In pursuing its investment objective, the Company is exposed to a variety of financia] risks: market risk (including market price risk, interest rate risk and currency risk), credit risk and liquidity risk that could result in a reduction in the Company's net assets. The Company's overall risk management policy focuses on the unpredictability of financia) markets and seeks to minimise potential adverse etfects on the Fund's financia! performance.

The nature and extent of the financia) instruments outstanding at the statement of financia) position date and the risk management policies employed by the Company are discussed below.

Market price risk

Market price risk is the risk that the fair value of future cash flows of a financia! instrument will fluctuate because of changes in market prices.

The Portfolio's investment objective is to generate a high real rate of return. The Portfolio seeks to achieve this objective by investing primarily in debt and related instruments and equity and related instruments issued by sovereign issuers, their agents and instrumentalities, state-owned issuers selected for privatisation, corporate issuers, supranational issuers, quasi-governmental issuers, and any other issuer deemed fit for investment by the Directors, or a committee thereof.

The Portfolio's debt securities are susceptible to market price risk arising from uncertainties about future prices of the instruments. The lnvestment Manager moderates this risk through a careful selection of securities within specified limits. The Portfo lio Manager reviews the accuracy and the movement in prices on a daily basis. After this review, if necessary the Portfolio Manager may consult the Pricing Committee. The Fund's pricing committee is advised by the Administrator of any individual securities that have a price movement greater than 3% from one business day to the next. After consultat ion with the Fund's pricing committee, the price movements may be agreed upon or amended if the committee can provide sufficient back up (two recognised price sources) that the security should be priced at a ditferent level.

The maximum risk resulting from financia! instruments is determined by the fa ir value of the financia! instruments. The Board of the Company manage the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the lnvestment Manager. The Board is informed of any unusual price variation on a timely basis. The Board meets twice yearly and at each meeting reviews investment performance and overall market positions. They monitor the lnvestment Manager's compliance with the Company's objectives.

..


Notes to the Financial Statements (Continued)


2. Financia( Risk Management (Continued)

Market price risk (continued)


Details of the nature of the Company's investment portfolio at the statement of financial position date are disclosed in the Schedule of Investments on pages 40 and 41.

At 31 December 2013, the Company's market risk is affected by three main components: changes in actual market prices, interest rates and foreign currency movements. Interest rate and foreign currency movements are covered in the separate sections on the pages following.

Va/ue-at-Risk (VaR)

Value-at-risk is currently used to derive a quantitative measurement for a fund's market risk under normal market conditions. VaR is calculated every day. The Investment Manager uses RiskMetrics Risk Manager as the engine for calculating VaR. Suitable stress tests are carried out on a weekly basis. Back-testing, for reviewing the predictive quality ofthe VaR model, is performed daily.

The Investment Manager receives a daily results report from Risk Manager. This report shows the VaR ofthe fund and its reference fund, including, where appropriate, sensitivity data. The results of stress tests are provided weekly. The Investment Manager uses these reports every day to check that statutory and contractual market-risk limits (i.e. the VaR of the Fund may not be more than twice (200%) as high as the VaR of the derivative-free comparable reference) have been observed. Their findings are to be properly taken into account in investrnent decisions.

The statistical VaR process is used to derive a quantitative measurement for a fund's market risk under normal market conditions. The result of the VaR calculation indicates the potential future losses for a fund (based on the market value) that will not be exceeded under normal market conditions, for a specified holding period and confidence level (e.g. 99%). The VaR method is a consistent, standard measurement that can be applied to all trading transactions and products. This enables the calculated market risk to be compared with both a specific time period and the actual return.

The Investment Manager's policy is to use historical calculation for monitoring regulatory requirements whilst VaR figures from Monte Cario (MC) simulation are calculated for information only. Historical simulation is used because it is more transparent. Historical simulation applies the changes in market data over the previous twelve months to the current market environment. MC simulation is a model that calculates the profit or loss made by a fund in a large number of different market scenarios (generally 10,000 scenarios).

The following quantitative specifications apply to the VaR model:-99% confidence leve!

- 10 day holding period - one year historical time series - equally weighted daily returns.

The main market risks addressed include: interest rate risk, credit spreads risk, equity price risk, exchange rate risk, vega risk, and their associated correlations.


Notes to the Financia! Statements (Continued)

For the year ended 31 December 201 3

2. Financia( Risk Management (Continued)

Market price risk (Continued)

Assumptions and Limitations ofVaR


The standard YaR calculation is currently based on the historical market events of the last 253 trading dates. Market events not conta ined within this time window are not taken into account to assess potential future losses. A prerequisite to calculating VaR properly is the availability of sufficient data. VaR works well for instruments whose input variables, i.e. risk factors, are market observables or can at least be easily derived from the market. VaR relies on the availability of high-quality time series ofthe risk factors.

Correlations among all risk factors are calculated ad-hoc. Another important issue is changing correlation - for example, securities or asset classes which have been previously uncorrelated, might suddenly become highly correlated.

The lnvestment Manager calculates daily the YaR with two methods simultaneously, i.e., historical simulation and Monte Cario simulation. However, the Monte Cario VaR calculation is based on the assumption that returns of risk factors are normally distributed with a constant variance o ver time. This is a simplification of reality and "fat tails" and greater market events are underestimated.

The VaR calculation is subject to statistical sampling error. The actual losses experienced by any individual fund m ay be greater than the Ya R. 1 fa 99% confidence level is selected, it is expected that movement in price for 1% of observations will be outside of the VaR parameters. In a highly volatile market the VaR may underestimate the risk in the fund.

YaR Analysis

At 3 1 December 20 13, utilising the Investment Manager's proprietary risk model, under normal market conditions the ten day historical VaR for the CABEI Central American Portfolio is approximately 3.234%/ US$3,206,253 (3 1 December 20 12: l. 707%/ US$2,000,232) at the 99% confidence leve l. That is, under normal market conditions and assuming no changes to shareholder capital, there is estimated to be a greater than 99% probability that the val u e of this Portfolio would not decrease by more than 3.234%/ US$3,206,253 (3 1 December 20 12: l . 707%/ US$2,000,232) over ten days.

CABEI Central American Portfolio didn't breach YaR estimates in the current year. (zero times during the year ended 31 December 2012 so called Backtesting-Outlier were calculated based on the 1 day Fund profit and loss and the 1 day historical YaR).

The average level of leverage employed by the Portfolio during year was 3.83% (3 1 December 2012 3.52%).

The table below shows the level of utilisation ofthe YaR limit during for the year:

2013 VaR Utilisation

Portfolio Highest Lowest Average

CABE! Central American Portfolio 84.760% 41.593% 64.241%

2012 VaR Uti lisation

Portfolio Highest Lowest Average

' \


~otes to the Financia! Statements (Continued)

<or the yearended 31 December2013

Financia! Risk Management (Continued)

Interest rate risk


The Fund's interest bearing financia! assets and liabilities exposes it to risks associated with the effects offluctuations in the prevailing levels of market interest rates on their financia! position and cash flows.

lnterest rate risk is rnanaged, in part, by the security selection process of the lnvestment Manager which includes predictions of future events and their impact on interest rates, diversification and duration. ln accordance with Company policy, the lnvesonent Manager monitors the Portfolio's overall intenest sensitivity on a daily basis. The Directors rely oo the lnvesonent Manager to keep them informed of any material event. There were no material changes to the Company's policies and processes for managing intenest rate risk and the methods used to measure risk since the prior year end.

The tables below surnmarise tbe Fund's exposure to interest rate risk. It includes the Fund's assets and trading liabilities at fair value, categorised by the earlier of contractual re-pricing or maturity dates.


Assets Debt instruments classified at fair value through Prolit and Loss Unrealised gain on fonvard foreign currency exchange contracts at fair va1ue through profit or loss Receivab1es Cash and cash equivalents Total assets

Liabilities Payables Redeemable participating shares Totalliabilities

Total ioterest seositivity gap


Assets Debt instruments classified at fair value through Prolit and Loss Receivables Cash and cash equivalents Total assets

Liabilities Bank overdraft Payables Redeemable participating shares Totalliabilities

Total ioterest scositivity gap

Less thao 1 mootb 1 mooth -1 year

uss uss

3,073,771 2,047,628

2,255,808 5,329,579 2,047,628

5,329¡579 2,047,628

Less than 1 montb 1 montb - 1 year

uss uss

6,480,250

12,457,098 18,937,348

18,937,348

1- S years > S years uss USS

26,264,062 65,354,549

26,264,062 65,354,549

26,264,062 65,354,549

1 - 5 years > 5 years USS uss

16,033,278 81,739,986

16,033,278 81,739,986

16,033,278 81,739,986

Noo-ioterest bearing

uss

47,814 20,493

68307

(172,225) {98,891,900) (99,064,125)

(98,995,818)

Noo-interest bearing

uss

10,159

10,159

(1,091 ,791) ( 115,628,980) (1 16,720,771)

(1 16,710,612)

Total uss

96,740,010 47,814 20,493

2,255,808 99,064,125

(172,225) (98,891,900) (99,064,125)

Total uss

104,253,514 10,159

12,457,098 116,720,771

(1,091,791) (115,628,980) (116,720,771)

2!:

:ABEI Central American Fund pie- CABEI Central American Portfolio

otes to the Financia! Statements (Continued)

Ir the year ended 31 December 2013

Financia! Rísk Management (Continued)

C urrency risk


Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Certain of the Portfolio's assets and liabilities are denominated in currencies other than US Oollars, the functional currency. lt is, therefore, exposed to currency risk as the value of the securities denominated in other currencies will fluctuate due to changes in exchange rates. Income denominated in foreign currencies is con verted to US Oollars on receipt.

In accordance with Company policy, the Investment Manager monitors the Portfolio's currency position on a daily basis. The Directors ofthe Company rely on the Investment Manager to keep them informed ofany material event There were no material changes to the Company's policies and processes for managing currency risk and the methods used to measure risk since the prior year end.

The tables below documents the Fund's exposure to currency risk, measured in US$ equivalents:

31 December 2013

Financia! Assets- stated in US Dollars Debt instruments classified at fa ir value through Profit and Loss Cash and cash equivalents T ota 1 assets

Financia] Liabilities - stated in US Dollars Debt instruments classified at fair value through Profit and Loss Paya bies Totalliabilities

31 December 2012

Financia! Assets- stated in US Dollars Debt instruments classified at fair value through Profit and Loss Cash and cash equivalents Total assets

Financia! Liabilities- stated i.n US Dollars Bank overdraft Payables Total Jiabilities

CRC 4,275,701

4,275,701

CRC

CRC 3,575,661

3,575,661

CRC

MXN 4,201,756

158,606 4,360,362

MXN (4, 193,577)

(4,193,577)

MXN 3,918,262

39,280 3,957,542

MXN

EUR

9,646 9,646

EUR

EUR

81,082 81,082

EUR

Total uss

8,477,457 168,252

8,645;7o9

Total US$

( 4, 193,577)

(4,193,577)

Total USS

7,493,923 120,362

7,614,ill

Total U S$

2E

..

1 :

CABEI Central American Fund pie- CABEI Central American Portfolio Annual Report and Audited Financia! Statements 20 13



2 Financia! Risk Management (Continued)

C redit risk

The Company takes on exposure to credit risk, which is the risk that a counterparty or an issuer will be unable to pay amounts in fui! when due.

The carrying amounts of financia! assets as disclosed in the Statement of Financia! Position best represent the maximum credit risk exposure at the statement of financia! position date. This relates also to financia! assets carried at amortised cost, as they have a short-term to maturity.

The Fund's financia! assets exposed to credit risk amounted to the following:

Debt instruments classified at fair value through Profit or Loss

As at 31 Oecember 2013

US$

96,740,010

Amounts in the above tableare based on the carrying value ofthe instruments.

The Fund's financia! assets exposed to credit risk were concentrated in the following se·ctors:

CRC Denominated: Supranationals

MXN Denominated: Government Fixed

US$ Denominated: Government Fixed

US$ Denominated: Supranationals

As at

31 Oecember2013

%

4.47

4.40

86.73

4.40

100.00


US$

1 04.253,514

As at

31 Oecember 2012

%

3.47

3.81

87.35

5.37

100.00

Other than outlined above, there were no significant concentrations of credit risk to counterparties at 31 December 2013 or 31 December 2012.

Credit risk arising on debt instruments is mitigated by investing primarily in financia! assets which have an investment grade as rated by well-known rating agencies. For unrated assets, the lnvestment Manager assigns a rating using an approach that is consistent with rating agencies. At 31 December 20 13, the Fund was invested in debt securities with the credit quality shown overleaf.



For the year ended 31 Dcccmber 2013

2. Fioancial Risk Management (Cootinued)

Credit Risk (Continued)

Portfolio by Standard & Poor's rating catcgory

Rating

A

A-

888+

888

888-88+

88 88-8+

Not rated

Total

As at

31 Deccmber 2013

%

5.86

8.41

12.49

26.87

22.99

9.13

14.25

100.00


As at

31 Dccember2012

%

1.44

3.76

18.03

2.95

13.19

22.06

22.17

3.37

13.03

100.00

In accordance with the Company's policy, the lnvestment Manager monitors the Fund's credit position on a daily

basis, and the Board of Directors review it on a twice yearly basis. There were no material changes to the Company's policies and processes for managing credit risk and the methods used to measure risk since the prior year end.

All transactions in securities are settled/paid for upon delivery using approved brokers. The risk of default is considered minimal, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its obligation.

Substantially all of the cash assets are held with the Northem Trust Company, London Branch (NTC). Cash deposited with NTC is deposited as banker and is held on its Statement of Financia! Position. Accordingly, in accordance with usual banking practice, NTC's liability to the Fund in respect of such cash deposits shall be that of debtor and the Fund will rank as a general creditor of NTC. The financia! assets are he ld with the Custodian, Northem Trust Fiduciary Services (Ireland) Limited as at 3 1 December 2013. These assets are held distinct and separately from the proprietary assets ofthe Custodian. Securities are clearly recorded to ensure they are held on behalf ofthe Fund. Bankruptcy or insolvency ofthe Custodian and or one of it's agents or affi liates may cause the Funds' rights with respect to securities held by the Trustee to be delayed or limited.

Both Northem Trust Fiduciary Services (lreland) Limited and the Northem Trust Company, London Branch are wholty owned subsidiaries of Northem Trust Corporation. Northem Trust Corporation is rated A+ for long term debt as at 31 December 2013 by Standard & Poors (31 December 2012: A+).

As at 31 December 2013, the Sub-Custodians used by the Fundare as follows: Citibank Mexico (3.21% of investments), JP Morgan (21.79% of investments) and Euroclear (74.99% of investments). As at 31 December 2013, the Sub-Custodians are rated as follows: Citibank Mexico, Baa2 (Moody's), JP Morgan, Aa3 (Moody's), and Euroclear, AA+ (Fitch).


Notes to the Financial Statements (Continued)


2 Financia( Risk Management (Continued)

Credit risk (Continued)


As at 31 December 20 12, the Sub-Custodians used by the Fund are as follows: Citibank Mexico ( 1.3% of investments), JP Morgan (12.24% of investments) and Euroclear (84.46% of investments). As at 31 December 2012, the Sub-Custodians are rated as follows: Citibank Mexico, Baa2 (Moody's), JP Morgan, Aa3 (Moody's), and Euroclear, AA+ (Fitch).

Northem Trust acts as its own sub-custodian in the U.S., the U.K., Ireland and Canada. In all other markets, Northem Trust appoints a local sub-custodian. Northern Trust continually reviews its sub-custodian network to ensure clients have access to the most efficient, creditworthy and cost effective provider in each market

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financia! liabilities.

The Fund hada cash position of2.28% to net assets on 31 December 2013 (31 December 2012: 10.85%).

The Fund is exposed to daily cash redemptions of redeemable shares. The Fund generally retains a certain portion of its assets in cash, which is available to satisfy redemptions. The Fund invests the majority of its assets in investments that are traded in an active market and can be readily disposed of.

In accordance with Company policy, the lnvestment Manager monitors the Fund's liquidity position on a daily basis. The Directors of the Company rely on the lnvestment Manager to keep them informed of any material event The Board is informed of any unusual liquidity issues on a timely basis. There were no material changes to the Company' s policies and processes for managing liquidity risk and the methods used to measure risk since the prior year end.

The tables below analyse the Portfolio's financia( liabilities into relevant maturity groupings based on the remaining period at the statement of financia! position date to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows. Balances due within twelve months equal their carrying balances as the impact of discounting is not significant. All amounts are stated in US Dollars.


Payables

Redeemable participating shares

Total financialliabilities


Payables

Redeemable participating shares

Total financialliabilities

Less than

1 month

US$

98,891 ,900

98,891,900

Less than

1 month

U S$

115,628,980

115,628,980

Redeemable Participating Shares are redeemed on demand at the holder's option.

More than

1 month

US$

172,225

172,225

More than

1 month

US$

1,091,791

1,091 ,791

Total

US$

172,225

98,891,900

99,064,125

Total

US$

1,091 ,791

115,628,980

116,720,771

CABEI Central Amer ican Fund pie- CABEI Centra l American Portfolio


For t he year ended 3 1 Decem ber 2013

3. Fair Value

Fair Value Disclosure

Annual Report and Audited Financia( Statements 20 13

The fair value of financia! assets and liabilities traded in active markets (such as publicly traded derivatives and trading securities) are based on quoted market prices at the close of trading on the year end date. The Fund adopted IFRS 13, ' Fair value measurement', from 1 January 2013 and changed its fair valuation inputs to utilise the last traded market price for both financia! assets and financialliabilities.

An active market is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

The fair value of financia! assets and liabilities that are not traded in an active market is determined by using valuation techniques. The Fund uses a variety of methods and makes assumptions that are based on market conditions existing at each year end date. Valuation techniques used for non-standardised financia! instruments where relevant, such as options, currency swaps and other over-the-counter derivatives, include the use of comparable recent arm 's length transactions, reference to other instruments that are substantially the same, discounted cash tlow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity-specific inputs.

For instruments for which there is no active market, the Fund may use intemally developed models, which are usually based on valuation methods and techniques generally recognised as standard within the industry. Valuation models are used primarily to value unlisted equity, debt securities and other debt instruments for which markets were or have been inactive during the financia! year. Sorne of the inputs to these models may not be market observable and are therefore estimated based on assumptions.

The output of a model is always an estímate or approximation of a value that cannot be determined with certainty, and valuation techniques employed may not fully retlect all factors relevant to the positions the Fund holds. Valuations are therefore adjusted, where appropriate, to allow for additional factors including model risk, liquidity risk and counterparty risk.

The carrying value less impairment provision of other receivables and payables are assumed to approximate their fair values. The fair value of financia( liabilities for disclosure purposes is estimated by discounting the future contractual cash tlows at the curren! market interest rate that is available to the Fund for similar fmancial instruments.

The fair value hierarchy has the following levels: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the

entity can access at the measurement date; • Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or

liability, either directly or indirectly; and • Level 3 inputs are unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significan! to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. lf a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or 1 iabi lity.

The determination of what constitutes 'observable' requires significan! judgement by the Fund. The Fund considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

: '

CABEl Central American Fund pie- CABE! Central American Portfolio



3. Fair Value (Continued)

Fair Value Disclosure (Continued)


The following table analyses within the fair value hierarchy the Fund's assets and liabilities (by class) measured at fair value at 31 December 2013.

Levell Level2 Level3 Total

US$ U S$ US$

Assets Financia! Assets held for trading: Debt instruments Costa Rican Colon

Government Bond 4,275,700 4,275,700

Mexican Peso Government Bond 4,201 ,710 4,201 ,710

United States Dollar

Government Bond 84,020,200 84,020,200

Superanationa1 4,242,399 4,242,399

Forward Currency Contracts 47,814 47,814

Subtotal 96,787,823 96,787,823

The following is a reconciliation of the fair valuations using significant unobservab1e inputs (Leve! 3) for the Fund during the year ended 31 December 2012:

Levell Level2 Level3 Total

US$ US$ US$

Assets Financia! Assets held for trading: Debt instruments Costa Rican Colon

Government Bond 3,575,661 3,575,661

Mexican Peso Govemment Bond 3,918,048 3,918,048

United States Dollar Government Bond 91 ,177,069 91 ,177,069 Superanational 2,521 ,571 3,061,165 5,582,736

Subtotal 1 o 1 ' 192,349 3,061 ,165 104,253,514

lnvestments whose values are based on quoted market prices in active markets, and therefore classified within Level 1, include active listed equities, exchange traded futures contracts. The Fund does not adjust the quoted price for these instruments.

Financia! instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotat ions or alternative pricing sources supported by observable inputs are classified within Leve! 2. The Leve! 2 amounts above represent bonds.

The Leve! 3 amounts above represent bonds that are priced by a pricing committee and are based on unobservable inputs.


Notes to tbe Financia! Statements (Continued)


3. Fair Value (Continued)

Fa ir Value Disclosure (Continued)


The table below is a reconciliation of the fair valuations using significant unobservable inputs (Leve! 3) for the Fund during the year ended 31 December 2013:

Oebt Securities Total

US$ US$

Opening Balance 3,024,453 3,024,453

Purchases

Sales (2,884,615) (2,884,615)

Transfers into Level 3

Total gains and losses recognised in profit and loss (139,838) (139,838)

Closing Balance

The total loss for the year included in the Statement of Comprehensive Income for the assets held at year end, is US$139,838.

The table below is a reconciliation of the fair valuations using significant unobservable inputs (Leve! 3) for the Fund during the year ended 31 December 2012:

Debt Securities Total

USS US$

Opening Balance 4,061 ,077 4,061,077

Purchases

Sales ( 1' 153,846) (1,153,846)

Transfers into Leve! 3

Total gains and losses recognised in profit and loss 117,222 117,222

Closing Balance 3,024,453 3,024,453

The total gains for the year included in the Statement ofComprehensive lncome for the assets held at year end. is US$1 17,223. The Leve! 3 reconciliation, above, does not include accrued income of US$36,712 which is reflected in the Statement of Financia! Position total.

There were no transfers between Leve! 1, Level2 and Leve! 3 during the year.

Fair Value Measurement

The fair value of the following security had been estimated with care and good faith by the pricing committee: the CABEI Floating Rate Note linked to ICE Costa Rica (Central American Bank for Economic Integration FRN 25/04/2015) was valued by the Administrator as per the methodology determined by the pricing committee and used input values from Bloomberg and approved by the Board. CABEI Floating Rate Note linked to ICE Costa Rica (Central American Bank for Economic lntegration FRN 25/04/20 15) was valued bi-weekly by CABEI. The security was complete! y disposed of in the year under review.

.· '

CABEI Central American Fund pie- CABEI Central American Portfotio


For the year ended 31 Oecembcr 2013

4. Operating lncome

Deposit interest

S. Net (Losses)/Gains on Financia! Assets and Liabilities at Fair Value Through Profit or Loss

Realised gains on sale of investments

Net currency (losses)/gains

et change in unrealised (depreciation)/appreciation

on investments

6. Operating Expenses

Administration fees

Auditors' fees

Custody fees

Directors' expenses

Di rectors' fees

Directors' liability insurance

Fees to the Central Bank of lreland

lnvestment management fees

Legal expenses

Marketing expenses

Other expenses*

Printing/publishing fees

Professional fees

*Net of VAT Reimbursemcnt


Year ended 31 December 2013

uss

799

799

Year ended

31 Oecember 2013

US$

5.129.270

(229,973)

(6,851 ,617)

(1,952,320)

Year ended

31 Oecember 2013

USS

126.267

30.811

28.054

nJ84

144.961

7.380

1.923

765.979

12.290

32.745

12.401

49.788

100.440

1.355.423

Year ended 31 Oecember2012

US$

789

789

Year ended

31 Oecember 2012

uss

7,210,489

376,729

3,690,731

11.277.949

Year ended

31 Oecember 20 12

US$

111.473

39.599

24.810

40.220

130.000

7.248

2.7 16

783.056

85.043

56.207

30,906

19.505

95.519

1,426.302


Notes to the Financia! Statemeots (Continued)


7. Cash at bank

orthem Trust Fiduciary Services (Ireland) Limited

8. Receivables

Deposit interest

Prepaid insurance

9. Payables (amounts falling due witbin one year)

Administration fees

Auditors' fees

Custodia! fees

Directors' expenses

Directors' fees

Investment management fees

Legal expenses

Marketing expenses

Other expenses

Performance fees

Printing!publishing fees

Professional fees

Annual Report and Audited Financia) Statements 20 13

As at As at

31 December 2013 31 December 2012

US$ uss

2,255,808 12,457,098

As at As at

31 December2013 31 December 2012

U S$ U S$

46 213

20,447 9,946

20,493 10,159

As at As at

31 December2013 31 December 2012

U S$ USS

8,580 9,32 1

41 ,759 39,399

7,018 5,726

9,459 3,259

81 ,390

45,070 77,451

30,997 91 ,868

14,937 27,732

3,773 18,090

730,071

2,134 451

8,498 7,033

172,225 1,091 ,791

CABE! Central American Fund pie- CABE! Central American Portfolio

Notes to tbe Financia) Statements (Continued)


10. Sbare Capital

Subscriber Sbares - Equity


Tbe Company has equity share capital of EUR40,000 divided into 40,000 Subscriber Shares of EURl each (of which EUR10,005.25 has been paid up and which are beneficially owned by the lnvestment Manager). The Subscriber Shares do not form part ofthe Net Asset Value ofthe Company.

They are, thus, disclosed in the Financia! Statements by way ofthis note only. In the opinion ofthe Directors, this disclosure reflects the nature of the Company's investment business. The Holders of Subscriber Shares are entitled to one vote only in respect of all their Subscriber Shares.

Redeemable Participating Sbares- Liabilities

The Company has 500,000,000,000 Shares ofno par value initially designated as unclassified Shares.

The Participating Shares are classified as liabilities, in accordance with lntemational Accounting Standard 32

'Financia! Tnstruments Presentation' (lAS 32), as they are redeemable at the request of the Holders. The Shares are available as fully paid Redeemable Participating Shares ofthe Company. They carry voting rights. The Shares issued by the Company are ITeely transferable and entitled to participate equally in the protits and dividends ofthe Company and in its Net Assets upon liquidation. The Shares carry no preferential or pre-emptive rights and are entitled to one vote each at all meetings of the relevant class of Shareholders. All Shares rank pari-passu.

[n accordance with the objectives listed in the Directors Report and the risk management policies in Note 2, the Company strives to invest the subscriptions of redeemable participating shares in appropriate investments, while maintaining sufficient liquidity to meet Shareholder redemptions. The Company also invests in short-term comrnercial

paper and debt and disposes of listed securities, when necessary, to meet liquidity needs.

The Company does not ha ve any externally imposed capital requirements.

Shares in Issue Year ended Year ended Year ended

31 Oecember 2013 31 Oecember 2012 31 Oecember 2011

Number of Class A Shares

lssued and Fully Paid

Balance at beginning ofyear 57,095 50,167 53,821

lssued during year 17,541 45,928 4

Redeemed during year (24,286) (39,000) (3,658)

Total number of Class A Shares

in issue at end of year 50,350 57,095 50,167




11. Net Asset Value

Net Asset Value

Net Asset Value perA Share Class

12. Fees


U S$

98,891 ,900

1,964.10


As at

31 December 2012

U S$

115,628,980

2,025.20

As at

31 December 2011

U S$

92,479,501

1,843.43

The lnvestment Manager is entitled to receive an lnvestment Management fee fi'om the Company, payable monthly in arrears of0.70% per annum, ofthe average daily Net Asset Value ofthe Portfolio.

The lnvestment Manager is also entitled to receive a Performance Fee of20% ofthe Net Asset Value's percentage outperformance ofthe Hurdle Rate during the relevant year. The 'Hurdle Rate' is a 12 month Libor plus 200 basis points per annum retum of the Net Asset Value at the beginning of the relevant year, adjusted for subscriptions and redemptions on a time apportioned basis.

The Performance fees charged to the CABEI Central American Portfolio pie in 2013 was US$Nil (31 December 2012: US$730,071) as the Company did not exceed the performance Hurdle Rate.

The Custodian is entitled to a fee which is accrued daily and paid monthly in arrears at an annual rate ranging from 0.02% to 0.35% of Net Asset Value for the assets held, subject to a mínimum monthly fee of US$1,500. The Administrator is entitled toa fee which is accrued daily and paid monthly in arrears atan annual rate ofO.ll5% ofNet Assets for the first US$1 00 mi Ilion of net assets and 0.07% of the Net Asset Value in excess thereof, subject to a mínimum monthly fee of US$5,000 as applicable.

13. Efficient Portfolio Management

The Investment Manager may utilise derivatives and other techniques and instruments (including, but not limited to, options, swaps, futures and forwards) whether the intention of providing protection against risks of gaining exposure to certain markets, sectors or securities, or otherwise of increasing the return on the Assets of the Portfolio. Such derivatives and other techniques and instruments will only be used for efficient portfolio management purposes in accordance with the conditions and limits laid down by the Central Bank of lreland. The Investment Manager may also, when facilities become available in the relevant markets, lend the Portfolio securities andlor purchase securities subject to repurchase agreements.

During the year, the lnvestment Manager has generally only used financial derivative instruments in the portfolio for the purpose of efficient portfolio management. This includes forward foreign currency exchange contracts. Risks arising fi'om the use ofthese financia! derivative instruments at the year end are consistent with those set out in the risk notes to these financia! statements.

Open financia! derivative instrument contracts at the year end are disclosed in the Schedule of lnvestments, including the relevant counterparty and unrealized gain/loss on the contract at the year end.

t "

.,




14. Related Party Transactions


lAS 24 "Related Party Transactions" requires the disclosure of infonnation relating to material transactions with parties who are deemed to be related to the reporting entity.

Investment Manager Related parties include the Investment Manager. Amounts earned by the Investment Manager are disclosed in Note 6 and Note9.

Directors' fee Effective 1 January 2012, the Directors fees were increased toUS$25,000 per annum. The total Directors' fee is disclosed in Note 6 and Note 9.

Sbarebolding of related parties Central American Bank for Economic Tntegration ("CABEI") had an interest of 99.31% (20 12: 87.57%) in the Shares of the Company at the year en d. During the year to 31 December 2013 CABE! subscribed 17,350 shares into the fund (31 December 2012: 39,000 shares) and redeemed 17,350 shares (31 December 2012: 39,000 shares). Transactions for the year ended 31 December 2013 were done on an arms length basis. Walter Dostmann (Company Chairman) holds one subscriber share.

BCTE Fondo de Prestaciones Sociales hadan interest ofNil% (2012: 12.13%) in the Shares ofthe Company at the year end. During the year to 31 December 2013 BCTE Fondo de Prestaciones Sociales subscribed Nil shares into the fund (3 1 December 2012: 6,928 shares).

Investments The Company had investments in the notes ofCentral American Bank for Economic Integration, who is a significant shareho1der in the Company. These investments are disclosed in the Schedule ofTnvestments on pages 40 and 41. These investments were made in the normal course ofbusiness on an arms length basis. The CABEI investments held during the year were all sold for $2,884,615 (31 December 2012: $1,153,846) realising a loss of $80,214 (31 December 2012: Loss $32,806). There were no purchases made during the prior year.

15. Auditor Remuneration

As required by Statutory Instrument 220 (SI 220), the remuneration for all work carried out by the statutory audit finn in respect ofthe financia! year is as follows:

Statutory audit of the Company accounts

Other assurance services

Tax advisory services

Other non-audit services

Year ended

31 December 2013

US$

30,811

30,811

Yearended

31 December 2012

US$

30,811

8,789

39,600

CABE I Central American Fund pie- CABEI Central American Portfolio


For the year ended 31 D ecem ber 2013

16. Taxation


The Company will not be liable for tax in respect of its income and gains, other than on the occurrence of a chargeable

event A chargeable event includes any distribution or any redemption or transfer ofShares.

A chargeable event does not include:

i) Any transactions in relation to Redeemable Participating Shares held in a recognised clearing system as

designated by order ofthe Revenue Commissioners oflreland; or,

ii) An exchange of Redeemable Participating Shares representing one Sub-fund for another Sub-fund of the

Company; or,

iii) An exchange of Redeemable Participating Shares arising on a qualifying amalgamation or reconstruction of

the Company with another fund.

A chargeable event will not occur in respect of Redeemable Participating Shareholders who are neither resident nor

ordinarily resident in lreland and who have provided the Company with a relevant declaration to that effect There

were no chargeable events during the year.

Jn the absence of an appropriate declaration, the Company wi 11 be liable for lrish tax on the occurrence of a chargeable

event and the Company reserves its right to withhold such taxes from payments to relevan! shareholders.

Capital gains, dividends and interest received may be subject to withholding taxes imposed by the country of

origin and such taxes may not be recoverable by the Company or its Shareholders. A chargeable event includes any distribution payment lo shareholders or any encashment, redemption or transfer of shares or an ending of a relevant period.

17. Soft Com mission Arra ngcm ents

There are no soft commission arrangements affecting the Company during the year, or in the prior year.

18. Compa ra tive Fig ures

The comparative information presented for the Statement of Financia! Position is as at 31 December 2012. The

comparative information presented for the Statement of Comprehensive Income, the Statement of Changes in Net Assets and the Statement ofCash Flows is for the year from 1 January 2012 to 31 December20 12.

19. Significant Events Ouring thc Year

Effective from 4 January 2013 the Company registered with the Central Bank as a UCITS (Undertakings for

Collective Investment ofTransferable Securities) Fund.

There were no other changes during the year ended 31 December 2013.

20. Events since t he year e nd

There have been no events subsequent to the year end, which, in the opinion of the Directors of the Company, may

have hadan impact on the Financia! Statements for the year ended 31 December 20 13.

'•



For the year ended 31 Oecember 2013

21. Approval of Financia! Statements

The Financia! Statements were approved by the board on 19 March 2014.





Annual Report and Audited Financial Statements 20 13

The percentages in brackets show the equivalent country and sector holdings at 31 December 20 12.

Fair Value % of Holdings Financia! assets at fair value through profit or loss US$ Net Assets

Bonds: 96.38% (2012: 88.22%)- Principal Amount (a)

Costa Rican Colon: 4.30% (2012: 3.09°/o)- deoominated

Government Bonds: 4.30% (2012: 3.09%) CRC 250,000,000 Republic ofCosta Rica 7.80%24/09/2014 508,097 0.51 CRC 1,800,000,000 Republic of Costa Rica 9.66% 24/0612015 3,750,382 3.79

Total Costa Ricao Colon 4,258,479 4.30

Mexican Pesos: 4.24% (2012: 3.38%)

MXN 50,000,000 Mexican Bonos 7.75% 14/1212017 4,191 ,026 4.24

Total Mexican Pesos 4,191,026 4.24

United States Dollar: 87.84% (2012: 82.35°/o)- denominated

Government Bonds: 83.60% (2012: 77.58%) 1,000,000 Banco de Bogota 5.375% 19/02/2023 980,000 0.99 3,000,000 Banco de Costa Rica 5.25% 12/08/2018 2,992,500 3.03

250,000 Bancolombia4.25% 12/01/2016 260,000 0.26 7,000,000 Costa Rica Govemment lnternational Bond 4.25%26/01 /2023 6,422,500 6.49 1,000,000 Costa Rica Govemment lnternational Bond 4.375% 30/04/2025 879,000 0.89 3,500,000 Costa Rica Government lnternational Bond 9.995% O 1/08/2020 4,401 ,250 4.45 4,000,000 Dominican Republic lnternational Bond 7.5% 06/05/2021 4,370,000 4.42 3,934,717 Dominican Republic lntematiooal Bond 9.04%23/01/2018 4,257,364 4.31

750,000 Ecopetroi4.2S% 18/09/2018 792,375 0.80 13,000,000 El Salvador Govemment lntemational Bond 7.375%01/12/201 9 14,235,000 14.39 7,000,000 El Salvador Government lnternational Bond 7.75% 24/01/2023 7,689,500 7.78

500,000 Guatemala Govemment Bond 4.875% 13/02/2028 455,000 0.46 13,000,000 Guatemala Government Bond 5.75%06/06/2022 13,494,000 13.64 5,000,000 Instituto Costarricense de Electricidad 6.95% 10/11/2021 5,142,500 5.20 3,000,000 Mexico Govemmentlntemational Bond 5.875% 15/0 1/2014 2,992,500 3.03 1,500,000 Mexico Govemment lnternational Bond 5.875% 17/02/2014 1,496,250 1.51 1,000,000 Mexico Govemment lntemational Bond 5.95% 19/03/2019 1,155,000 1.17 1,000,000 Panama Bonos del Tesoro 5.625% 25/0712022 1,065,000 1.08 2,000,000 Panama Govemment lntemational Bond 5.2%30/01/2020 2,175,000 2.20 4,000,000 Panama Govemment lntemational Bond 7.25% 15/03/2015 4,310,000 4.35

600,000 Panama Govemment lntemational Bond 9.375% 16/01/2023 778,500 0.79 1,000,000 Pemex Project Funding Master Trust 5. 75% O 1103/2018 1, 115,000 1.13 1,000,000 Petroleas Mexicanos 8% 03/05/2019 1,2 15,000 1.23

'"

( ' ~ ..





The percentages in brackets show the equivalent country and sector holdings at 31 Oecember 2012.

Holdings Financia! assets at fa ir value tbrougb profit or loss

Bonds (Continued): 96.38% (2012: 88.22%)- Principal Amount (a)

United States Dollar (Continued): 87.84% (2012: 82.35%)- denominated

Supranational: 4.24% (2012: 4.77%) 2,700,000 Banco Latinoamericano de Comercio Exterior 3.75%04/04/2017 1,400,000 Central American Bank for Economic Integration 3.875% 09/02/2017

Counterparty

Citibank

Total United States Dollar- denominated

Total Bonds

Open Forward Foreign Currency Exchange Contracts: 0.05% (2012: 0.00%)

Currency Currency Currency Maturity Buys Sells Rate Date

uso 4,241,391 MXN 55,000,000 0.0771 22/01/2014

Unrealised Gain on Forward Foreign Curreocy Excbange Contracts

Total Financia! assets at fa ir value tbrougb profit or loss

Accrued lncome oo Financia! Assets at Fair Value tbrougb Profit or Loss (2012: 1.34%)

Total Value oflnvestments (Cost: US$ 95,725,978)

Casb and casb equivalents*

Other Net Liabilities

Net Assets Attributable to Holders of Redeemable Participatiog Sbares

•AII cash holdings are held with Northem Trust Company, London Branch. (a) in US Dollar, unless noted.

Analysis ofTotal Assets (unaudited)

Transferable Securities admitted to an official Stock Exchange Listing or traded on regulated market Over the counter financia! derivative instruments Other Assets

(a) in US Dollar. unless noted

Fair Value uss

2,754,000 1,442,532

86,869,771

95,319.276

Unrealised Gain

47,814

47,814

95,367,090

1,420,734

96,787,824

2.255,808

(151,732)

98,891,900

0/o of Net Assets

2.78 1.46

87.84

96.38

%of Net Assets

0.05

0.05

96.43

1.44

97.87

2.28

(0.15)

100.00

%of Total Assets

97.65 0.05 2.30

100.00

CABEJ Central American Fund pie - CABEl Central American Portfolio

Schedule of Portfolio C hanges (Uoaudited)

For tbe year ended 3 1 December 2013

Largest Purchases

9,000,000 7,400,000

MXN 50,000,000 4,153,312 4,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 2,600,000 2,500,000 2,500,000 2,000,000 2,000,000 1,500.000 1,700.000 1,500,000 1,000,000 1,000,000

Largest Sales

7,000,000 6,000,000 5,000,000 3,500,000

CRC 3,500,000 3,000,000 2,884,615 2,000,000 2,500,000 2,000,000 2,000,000 2,000,000 2,000,000 2,500,000 2,000,000 1,500,000 1,500,000

MXN 20,000,000 2,000,000 1,500,000

El Salvador Government lnternational Bond 7.375%01 /12/2019 Guatemala Government Bond 5.75%06/06/2022 Mexican Bonos 7.75% 14/12/2017 Dominican Republic lnternational Bond 9.04% 23/01/2018 Pan ama Government lnternational Bond 7.25% 1 5/03/2015 Mondelez International 2.625% 08/05/20 13 - Not Listed Panama Government International Bond 5.2% 30/01/2020 Mexico Government International Bond 5.875% 17/02/2014 Mexico Government lnternational Bond 5.875% 15/01/2014 Republic of Costa Rica 5.25% 12/08/2018 Guatemala Government Bond 5.75%06/06/2022 Honduras Government lnternational Bond 7.5% 15/03/2024 Guatemala Government Bond 4.875% 13/02/2028 Costa Rica Government lntemational Bond 4.25% 26/01/2023 Costa Rica Govemment Intemational Bond 4.375% 30/04/2025 Mexico Governrnent International Bond 5.95% 19/03/20 19 Banco Latinoamericano de Comercio Exterior 3. 75% 04/04/2017 Mexico Government lnternational Bond 5.625% 1 5/01 /2017 Pemex Project Funding Master Trust 5.75%01/03/2018 Mexico Government lntemationa1 Bond 4.75%08/03/2044

Guatemala Government Bond 8.125% 06/1 0/20 14 Guatemala Government Bond 9.25% O 1/08/20 13 El Salvador Government lnternational Bond 5.875% 30/01/2025 Guatemala Government Bond 5.75%06/06/2022 Republic of Costa Rica 6.548% 20/03/2014 Panama Government 1ntemational Bond 5.2% 30/01/2020 Central American Bank for Economic lntegration FRN 25/04/2015 Panama Government 1nternationa1 Bond 9.375% 16/01/2023 Petroleas Mexicanos 4.875%24/01/2022 El Salvador Government lnternational Bond 7.75%24/01/2023 Panama Government 1nternational Bond 70 125% 29/01/2026 Mexico Government lnternationa1 Bond 4.75%08/03/2044 Dominican Repub1ic lnternationa1 Bond 7.5% 06/05/2021 Honduras Govemrnent 1nternational Bond 7.5% 15/03/2024 El Salvador Government International Bond 7.65% 15/06/2035 Mexico Government lnternational Bond 5.95% 19/03/2019 Petroleas Mexicanos 8%03/05/2019 Mexican Bonos 7.75% 14/ 12/2017 Guatemala Government Bond 4.875% 13/02/2028 Mexico Government Internationa1 Bond 5.625% 15/01/2017

Annual R<..: Financia! Sr ..

· .<\udited 2013

Cost U S$

10,033,400 7,832,700 4,658,726 4,584,929 4,372,000 3,373,200 3,301 ,400 3,090,000 3,078,000 3,039,995 2,654,800 2,521,000 2,476,304 2,069,800 2,015,000 1,818,750 1,755,250 1,672,500 1,122,400 1,098,800

Proceeds U S$

8,710,000 6,119,750 4,792,125 3,692,500 3,608,500 3,488,766 2,884,615 2,630,000 2,498,750 2,446,000 2,438,600 2,189,905 2,178,500 2,017,500 1,934,61 o 1,840,500 1,807,500 1,792,009 1,775,000 1,677,000

..

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