CHAIRMAN’S REVIEW

It is once again a pleasure to announce to you all the continued outstanding performance of your Pacific Balanced Fund (PBF).

You will recall my Statement to you last year of the strong performance that was generated by PBF where fund value stood at K272.1m. This year, 2011, your Fund value has grown to K320.2m, a staggering growth of just over 15%. The continued growth of your Fund is driven  by several features which are;

1. an investment portfolio with assets in PNG’s top companies
2. a fast growing domestic economy, and
3. a strong and focused management approach by MTLS to ensure PBF gets its full value from its portfolio,

Another significant milestone achieved in 2011 was the continued reduction in the audit qualifications by independent auditors Deloittes. Since we started the clean up of your Fund at the end of 2008, we have worked extremely hard to set accounting and reporting principles to international standards and in line with best practice standards found in the fund management industry. I am happy to report that these 2011 accounts are now qualification free and we only have one matter outstanding relating to the reconciliation of the number of units holders on record.

A PBF Fund Administration Office was opened in July/August of 2010 with appropriate human, technological and financial resources to
pursue the verification of unit-holders in PBF and to up-date and upgrade personal records. To that end, several paid advertisements using both print media and radio broadcast commended early this year to raise awareness throughout the country on the need for unit-holders of the old ICPNG to come forward with their old share certificates so their records in our database system can be updated and upgraded to comply with current laws.

In addition to the media campaign, MTLS sponsored large national events like the Annual Tru Kai Fund Run to help in disseminating the news of the PBF office opening and verification Excise.

During 2011, the Fund Administration Office also conducted a Unitholder verification road show to the province of Enga, SHP, WHP, SIMBU, EHP, Morobe, Madang, WNBP, ENBP and the NIP to take the message and information of the cleanup excises in the account of PBF, and to reassure them of the integrity and the value of their units in PBF and taking the opportunity to verify and update their personal records in our database system. The result of this road show has been encouraging and further road-show are planned for the coming years.

In closing I would like to pay special word of thanks to all you unit-holders for your patience and understanding for this long and arduous process of cleaning up the accounts of the Fund and the use of world class accounting and auditing house such as PricewaterhouseCoopers, Deloittee and KPMG who have all contributed immensely in bring the financial records and accounts
of PBF to international accounting standards for which we can all be proud.

I also would like to take this opportunity to thank fellow Board Directors for their counsel, guidance and strong resolve to see through all the challenges associated with cleaning up your Fund. I
look forward to their continued support in the coming years. It would be remiss of to sign off without saying a big word of appreciation to the management of MTSL for their diligence and professionalism for the effort thus far. Whilst it has been possible without the huge effort put in by Kennedy and his team at MTSL and I stand proudly before you to pay gratitude to them for a job well done.

~ John Sanday | Chariman
Melanesian Trustee Services Limited

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