For the year ended 30 September 2011

Jupiter Merlin FundsSociété d’Investissement à Capital Variable (SICAV)

Annual Review and Audited Financial Statements

For the year ended 30 September 2011

R.C.S. B 139.274

3

JUPITER MERLIN FUNDS

Contents

Contents

Investment Objectives 4

Management, Administration and Independent Auditor 5

Directors 6

Chairman’s Review 7

Independent Auditor’s Report 8

Statement of Net Assets 10

Statement of Operations 11

Statement of Changes in Net Assets 12

Statement of Changes in Shares Issued 13

Statistical Information 14

Review of the Portfolios

• Jupiter Merlin Funds – Jupiter Managed European Portfolio 17

• Jupiter Merlin Funds – Jupiter Merlin International Balanced Portfolio 19

• Jupiter Merlin Funds – Jupiter Merlin International Equities Portfolio 21

Notes to the Financial Statements 23

Notice of Meeting 27

Form of Proxy

4


Investment Objectives

Jupiter Merlin Funds – Jupiter Managed European Portfolio (‘Jupiter Managed European Portfolio’)

The investment objective of Jupiter Managed European Portfolio is to achieve long-term capital growth by investing predominantly inSICAVs, unit trusts, OEICs, Exchange Traded Funds and other collective investment schemes across several management groups.

Jupiter Merlin Funds – Jupiter Merlin International Balanced Portfolio (‘Jupiter Merlin International Balanced Portfolio’)

The investment objective of Jupiter Merlin International Balanced Portfolio is to achieve long-term capital growth with income by investing predominantly in SICAVs, unit trusts, OEICs, Exchange Traded Funds and other collective investment schemes across several management groups.

Jupiter Merlin Funds – Jupiter Merlin International Equities Portfolio (‘Jupiter Merlin International Equities Portfolio’)

The investment objective of Jupiter Merlin International Equities Portfolio is to achieve long-term capital growth by investing predominantly in SICAVs, unit trusts, OEICs, Exchange Traded Funds and other collective investment schemes across several management groups.

5


Management, Administration and Independent Auditor

■ Management, Administration and Independent Auditor

Directors Garth Lorimer Turner (appointed Chairman on 3 December 2010)Jacques Elvinger*Patrick Zurstrassen*Adrian Creedy (appointed on 3 December 2010)Jonathan Carey (Chairman) (resigned on 2 December 2010)

Registered Office 16, Boulevard d’AvranchesBP 413L-1160 Luxembourg

Administrator, Custodian, Paying Agent & Registrar

HSBC Securities Services (Luxembourg) S.A. 16, Boulevard d’Avranches BP 413L-1160 Luxembourg

Management Company RBS (Luxembourg) S.A. 33, rue de Gasperich – Building B L-5826 Hesperange , Luxembourg

Independent Auditor Ernst & Young S.A. 7, rue Gabriel LippmanParc d’Activité Syrdall 2L-5365 Munsbach, Luxembourg

Legal Advisers Elvinger Hoss & Prussen2, Place Winston ChurchillL-1340 Luxembourg

Investment Adviser Jupiter Asset Management Limited1 Grosvenor PlaceLondon SW1X 7JJUnited KingdomAuthorised and regulated by the Financial Services Authority

Investment Manager Jupiter Asset Management (Bermuda) LimitedCumberland House3rd Floor, 1 Victoria StreetHamilton HM11BermudaLicensed to conduct investment business in or from Bermuda by the Bermuda Monetary Authority

*Independent

6


Directors

■ Directors

Garth Lorimer Turner (Chairman) Garth Lorimer Turner (British) is Managing Director of Jupiter Asset Management(Bermuda) Limited. He is a Solicitor of the Supreme Court of England & Wales, a Solicitor ofthe Supreme Court of Hong Kong and a Bermuda Barrister & Attorney. He is a Director ofseveral investment companies and funds. Appointed Chairman on 3 December 2010.

Jacques Elvinger* Jacques Elvinger is a partner of the Luxembourg law firm of Elvinger Hoss & Prussen.

Patrick Zurstrassen* Patrick Zurstrassen is an independent director chairing the Luxembourg Institute of Directors.

Adrian Creedy Adrian Creedy (British) is the Chief Operating Officer and Company Secretary of JupiterFund Management plc. He is a Solicitor of the Supreme Court of England and Wales. He is also a Director of Jupiter Asset Management Limited. Appointed on 3 December 2010.

*Independent

7


Chairman’s Review

■ Chairman’s Review

Dear Shareholder,

Unexpected events with major consequences dominated the 2010/11 financial year. Initially, however, market anticipation of the US Federal Reserve’s intention to push hundreds of billions of dollars into its financial system in an attempt to revive the world’s biggest economy, proved correct. The Fed announced in November 2010 that it would buy another $600bn of longer-term Treasury securities by the end of the second quarter of 2011.

The announcement coincided with a final quarter of good US economic news flow, which continued into the opening months of 2011. As a result markets continued to make headway into the New Year; however, the sudden uprisings in Tunisia and Egypt did indeed take markets by surprise. Where Egypt leads, much of North Africa and the Middle East follow. The subsequent spread of political unrest, known as the Arab Spring, caused concerns about the oil supply and boosted the crude price.

March was scarred by the awful earthquake and subsequent tsunami which hit the eastern seaboard of Japan. This human tragedy affected Japanese nuclear operations and power generation, which in turn interrupted global supply chains. This disruption was blamed for unexpectedly weak economic data in the months that followed.

Throughout the year under review, the eurozone’s debt crisis continued to worsen. While European leaders continue to meet in an attempt to agree on whom should bear the losses, at the time of writing, a sustainable solution to the problem of state and bank insolvency has yet to be found.

After days of political wrangling over the summer, President Obama finally struck agreement with Congress about raising the self-imposed debt ceiling, but the delays pushed the nation to the brink of default. By the beginning of August, the US government was inches away from failing to meet some of its obligations and its debt was downgraded from its AAA rating for the first time in its history.

All these factors caused deep uncertainty during the period, which led to increased volatility. In the year to the end of September 2011, the FTSE World index fell by 4%* in euro terms. Investors’ flight from risk assets was accompanied by panic buying of perceived safe haven securities. For example, German government bond yields dropped to near all-time lows in October while the price of US Treasury bonds soared, despite the rating downgrade.

The developed world faces a long march out of debt. However, we believe that the Federal Reserve will try to do everything possible to stop the US from falling into a Japanese-style cycle of deflation. Many emerging nations meanwhile are preoccupied with fighting inflation, but we have already seen signs that some of them are approaching the end of their rate tightening cycle, especially as inflation concerns begin to be replaced by expectations of a global slowdown. In our view, the longer term case for investing in these areas remains intact, as the middle classes expand and embrace aspirations to western lifestyles.

Global economic problems, moreover, contrast with the situation of many companies which have generated strong profits in the last year. In such a difficult environment, companies with strong balance sheets which pay decent dividends should command a premium and your managers continue to seek out these types of investments. While that might sound dull to some observers, they believe that such businesses have the strength to ride out the many hurdles facing the global economy.

The Board of Directors confirms adherence to the Association of the Luxembourg Fund Industry (‘ALFI’) Code of Conduct in the governance of the Jupiter Merlin Funds.

Garth Lorimer TurnerChairman

19 October 2011

*Source: FE, total return.

8


Independent Auditor’s Report

■ Independent Auditor’s Report

9


Independent Auditor’s Report

10


Statement of Net Assets

■ Statement of Net Assets as at 30 September 2011

NotesCombined

€

Jupiter Merlin Managed European Portfolio

€

Jupiter Merlin International

Balanced Portfolio

€


Equities Portfolio

€

AssetsInvestments in securities at cost 209,009,514 37,948,545 69,173,624 101,887,345

Unrealised appreciation 13,730,040 1,639,371 6,207,716 5,882,953

Investments in securities at fair value 2.d 222,739,554 39,587,916 75,381,340 107,770,298Other Assets Cash and short-term deposits 11,875,971 372,660 11,025,105 478,206

Due from brokers 1,685,512 – 1,685,512 –

Dividends receivable 779,793 – 550,574 229,219

Management fee rebates 2.g 344,054 100,647 85,681 157,726

Expense reimbursement receivable 8 102,692 – 56,932 45,760

Subscriptions receivable 480,954 – 301,479 179,475

Accounts receivable and accrued income 56,572 811 48,262 7,499

Other Assets 15,325,548 474,118 13,753,545 1,097,885Total Assets 238,065,102 40,062,034 89,134,885 108,868,183Liabilities Bank overdraft 202,621 – – 202,621

Due to brokers 3,371,881 – 3,371,881 –

Redemptions payable 969,564 290,872 243,905 434,787

Investment management fees payable 3 690,588 139,925 231,270 319,393

Dividend distributions payable 11 127,680 – 127,680 –

Accounts payable and accrued expenses 154,233 30,240 48,493 75,500

Total Liabilities 5,516,567 461,037 4,023,229 1,032,301Net Assets 232,548,535 39,600,997 85,111,656 107,835,882Number of shares outstanding:30 September 2011Class E Euro Shares 158,946 103,167 189,067

Class E Sterling Shares – 3,094 1,488

Class E US Dollar Shares – 2,572 –

Class L Euro Shares – 1,892,034 1,560,694

Class L Sterling Shares – 1,817,181 739,255

Class L US Dollar Shares – 573,964 2,586,651

Net Asset Value per Share:30 September 2011Class E Euro Shares €249.15 €280.75 €271.94

Class E Sterling Shares – £241.32 £234.17

Class E US Dollar Shares – $237.33 –

Class L Euro Shares – €11.45 €11.08

Class L Sterling Shares – £12.82 £14.37

Class L US Dollar Shares – $14.72 $13.81

The accompanying notes form an integral part of these financial statements.

11


Statement of Operations

■ Statement of Operations for the year ended 30 September 2011

NotesCombined

€


€


Balanced Portfolio

€


Equities Portfolio

€

Income

Income from investments 2.f 2,284,425 266,334 1,291,086 727,005

Deposit interest 2.f 9,652 1,797 6,209 1,646

Management fee rebates 2.g, 3 1,775,158 551,890 513,855 709,413

Other income 530,610 22,238 495,340 12,942

Total Income 4,599,845 842,349 2,306,490 1,451,006

Expenses 2.h

Investment management fees 3 4,483,855 994,653 1,399,710 2,089,492

Administration and custodian fees 5 265,622 47,962 96,286 121,374

Management company fees 4 187,070 37,260 62,894 86,916

Directors’ fees 6 75,000 14,842 24,851 35,307

Taxe d’abonnement 7 65,025 3,206 27,781 34,038

Professional fees 48,519 9,619 16,064 22,836

Registration fees 10,849 2,209 3,517 5,123

Bank charges and interest 12 3,685 1,214 1,020 1,451

Other expenses 82,717 20,414 28,259 34,044

Total Expenses 5,222,342 1,131,379 1,660,382 2,430,581

Expense reimbursements 8 (102,531) – (56,787) (45,744)

Total Expenses after Reimbursement 5,119,811 1,131,379 1,603,595 2,384,837

Net Operating (Loss)/Income for the year (519,966) (289,030) 702,895 (933,831)

Net realised gains/(losses) on:

Investments in securities 2.d 16,938,332 3,458,010 5,318,025 8,162,297

Forward foreign exchange contracts 2.e 302,720 – 25,377 277,343

Foreign exchange translations 2.c, 2.e (488,538) (5,007) 140,317 (623,848)

Net realised gains 16,232,548 3,163,973 6,186,614 6,881,961

Net change in unrealised (depreciation)/appreciation on:

Investments in securities 2.d (26,419,106) (8,314,237) (6,917,069) (11,187,800)

Forward foreign exchange contracts 2.e (331,824) – (107,492) (224,332)

Decrease in Net Assets from Operations (10,518,382) (5,150,264) (837,947) (4,530,171)


12


Statement of Changes in Net Assets

■ Statement of Changes in Net Assets for the year ended 30 September 2011

NotesCombined

€


€


Balanced Portfolio

€


Equities Portfolio

€

Decrease in Net Assets from operations (10,518,382) (5,150,264) (837,947) (4,530,171)

Capital Transactions

Received on issue of Shares 71,356,789 1,906,818 37,817,842 31,632,129

Paid on redemptions of Shares (67,043,657) (8,456,033) (33,122,470) (25,465,154)

Dividend distributions 11 (126,983) – (126,983) –

Total (decrease)/increase in Net Assets for the year (6,332,233) (11,699,479) 3,730,442 1,636,804

Net Assets

Beginning of year 238,880,768 51,300,476 81,381,214 106,199,078

End of year 232,548,535 39,600,997 85,111,656 107,835,882


13


Statement of Changes in Shares Issued

■ Statement of Changes in Shares Issued for the year ended 30 September 2011



Balanced Portfolio


Equities Portfolio

Class E Euro

Shares outstanding, beginning of year 181,917 94,361 207,156

Shares issued 6,469 25,870 20,067

Shares redeemed (29,440) (17,064) (38,156)

Shares outstanding, end of year 158,946 103,167 189,067

Class E Sterling

Shares outstanding, beginning of year – – –

Shares issued – 3,761 1,488

Shares redeemed – (667) –

Shares outstanding, end of year – 3,094 1,488

Class E US Dollar

Shares outstanding, beginning of year – – –

Shares issued – 2,782 –

Shares redeemed – (210) –

Shares outstanding, end of year – 2,572 –

Class L Euro

Shares outstanding, beginning of year – 2,975,030 1,786,407

Shares issued – 547,113 176,589

Shares redeemed – (1,630,109) (402,302)

Shares outstanding, end of year – 1,892,034 1,560,694

Class L Sterling

Shares outstanding, beginning of year – 1,012,368 442,315

Shares issued – 1,109,476 468,164

Shares redeemed – (304,663) (171,224)

Shares outstanding, end of year 1,817,181 739,255

Class L US Dollar

Shares outstanding, beginning of year – 472,145 1,858,607

Shares issued – 451,006 1,330,933

Shares redeemed – (349,187) (602,889)

Shares outstanding, end of year – 573,964 2,586,651

14


Statistical Information

■ Statistical Information

Jupiter Managed European Portfolio

30 September 2011

30 September 2010

30 September 2009

Number of Shares outstanding:

Class E Euro Shares 158,946 181,917 214,224

Total Net Assets:

Class E Euro Shares €39,600,997 €51,300,476 €55,521,556

Net Asset Value per Share:

Class E Euro Shares €249.15 €282.00 €259.18

15




Jupiter Merlin International Balanced Portfolio

30 September 2011

30 September 2010

30 September 2009



Class E Sterling Shares* 3,094 – –

Class E US Dollar Shares** 2,572 – –

Class L Euro Shares 1,892,034 2,975,030 3,583,305

Class L Sterling Shares 1,817,181 1,012,368 300,765

Class L US Dollar Shares 573,964 472,145 252,024

Total Net Assets:


Class E Sterling Shares* £746,588 – –

Class E US Dollar Shares** $610,372 – –

Class L Euro Shares €21,670,991 €34,254,073 €34,973,389

Class L Sterling Shares £23,293,397 £13,000,620 £2,936,653

Class L US Dollar Shares $8,446,478 $7,059,211 $4,082,932



Class E Sterling Shares* £241.32 – –

Class E US Dollar Shares** $237.33 – –

Class L Euro Shares €11.45 €11.51 €9.76

Class L Sterling Shares £12.82 £12.84 £11.65

Class L US Dollar Shares $14.72 $14.95 $13.58

*Class E Sterling was launched on 13 December 2010

**Class E US Dollar was launched on 13 December 2010

16




Jupiter Merlin International Equities Portfolio

30 September 2011

30 September 2010

30 September 2009



Class E Sterling Shares*** 1,488 – –

Class L Euro Shares 1,560,694 1,786,407 135,211

Class L Sterling Shares 739,255 442,315 129,092

Class L US Dollar Shares 2,586,651 1,858,607 7,408

Total Net Assets:


Class E Sterling Shares*** £348,412 – –

Class L Euro Shares €17,290,720 €20,448,726 €1,275,838

Class L Sterling Shares £10,619,648 £6,506,698 £1,667,326

Class L US Dollar Shares $35,725,049 $26,811,093 $94,359



Class E Sterling Shares*** £234.17 – –

Class L Euro Shares €11.08 €11.45 €9.44

Class L Sterling Shares £14.37 £14.71 £12.92

Class L US Dollar Shares $13.81 $14.43 $12.74

***Class E Sterling were launched on 20 June 2011

17



■ Jupiter Managed European Portfolio

Performance

NAV 30.09.11 30.09.10 % Change

Class E Euro Shares €249.15 €282.00 (11.65)

Market and policy review

The year under review was challenging for European equity investors. Macroeconomic news dominated market activity. Initially the market was buoyed by a second round of ‘quantitative easing’ in the US and hopes that Europe might contain the debt crisis. The mood of cautious optimism was dampened in the first quarter of 2011, however, when the devastating earthquake and tsunami struck Japan and civil unrest intensified in the Middle East and North Africa, with the latter pushing up oil prices.

Most damaging for sentiment, however, was the impact of the deepening sovereign debt crisis in the eurozone where divisions grew between richer and poorer states. Over the summer, Greek bonds were de-rated to junk and fears grew about the spread of the crisis to Spain and Italy. Towards the end of the period it became evident that the eurozone crisis was contributing to a global economic slowdown. A slowdown in growth rates in Europe and the US and weakness in emerging market indicators resulted in some highly turbulent conditions in August and September.

Throughout this period of volatility there have been few hiding places and global growth and emerging market stocks have been particularly vulnerable, especially sectors such as capital goods and basic resources. Banks have remained very volatile as the debt crisis has unfolded, though they did stabilise somewhat in September.

Policy review

The Fund underperformed the market during the year, returning -11.6% compared to -10.2% for the benchmark, the FTSE World Europe in euro terms.

This was mainly due to the Fund’s allocation to equities during a period of risk aversion. While the majority of the Fund’s holdings have outperformed their respective benchmarks, those holdings with more cyclical and small cap exposure have fared less well than those with more defensive income strategies. The low cash level has detracted from performance over the course of the year. However, the Fund’s performance has benefited from those holdings with a total return strategy.

Investment Outlook

The global macroeconomic outlook remains highly uncertain. Earnings results for European companies have been mixed and super-imposed on a continuing merry-go round of macro developments that have tugged markets in different directions. However, at the time of writing, European leaders do appear to have laid the foundations for a solution to the problem. What we need to see now is the detail. So far the measures implemented have been focused on dealing with liquidity rather than insolvency issues. If the market believes the latest plan will tackle the insolvency of countries such as Greece, then it should be able to look through the prospect of economic slowdown and make progress.

At company level, the latest signals and outlook for the earnings cycle have created a number of opportunities. Earnings’ expectations have generally been too high. Cost inflation, a consumer under pressure and a high degree of consensus ownership in quality names has been a recipe for disappointment. In such an environment, we believe that companies with strong balance sheets and international reach that can emerge stronger from present conditions are likely to see these qualities reflected in their share prices.

Oliver Pearson-Lund

19 October 2011

18



■ Jupiter Managed European Portfolio Schedule of Investments as at 30 September 2011

Quantity

Description Transferable securities and money market instruments admitted to an official exchange listing

Fair Value

€

Fair Value as a

Percentage of Net Assets

%

Open Ended Funds

Germany 5,732,821 14.48

5,310,880 Schroder European Alpha Plus 5,732,821 14.48

Ireland 4,165,003 10.52

21,965 Odey Pan European 4,165,003 10.52

Luxembourg 17,690,322 44.67

7,620 Argos Investment Fund - Argonaut 952,317 2.40

165,000 The Jupiter Global Fund – European Absolute Return Fund* 1,582,351 4.00

612,500 The Jupiter Global Fund – European Growth Fund* 7,521,500 18.99

673,800 The Jupiter Global Fund – European Opportunities Fund* 7,634,154 19.28

United Kingdom 11,999,770 30.30

1,870,000 Blackrock Euro Dynamic 4,679,752 11.82

9,902,684 Jupiter European Income Fund* 3,691,258 9.32

1,063,470 Neptune European Opportunities 3,628,760 9.16

Total transferable securities and money market instruments admitted to an official exchange listing 39,587,916 99.97

Other Net Assets 13,081 0.03

Net Assets 39,600,997 100.00

*Related Party Fund


19



■ Jupiter Merlin International Balanced Portfolio

Performance

NAV 30.09.11 30.09.10 % Change



Class E US Dollar Shares** $237.33 – –

Class L Euro Shares €11.45 €11.51 (0.52)

Class L Sterling Shares £12.82 £12.84 (0.16)

Class L US Dollar Shares $14.72 $14.95 (1.54)

*Class E Sterling Share was launched on 13 December 2010 with an issue price of £250.00, performance for the period until 30 September 2011 is (3.47%)

**Class E US Dollar Share was launched on 13 December 2010 with an issue price $250.00, performance for the period until 30 September 2011 is (5.07%)

Introduction

The last 12 months have been increasingly dominated by political activity, though ‘inactivity’ may be a more appropriate description. The ruling elites on both sides of the Atlantic have had to contend with growing crises, largely of their own making. Like any animal presented with tough choices, paralysis tends to be the initial political response, until forced to react. At the heart of the Western economy’s travails is a simple problem – too much debt. Somewhat ironically, solving simple problems is never ‘simple’ when opposing ideologies collide. The harsh reality is that Western governments and consumers have lived increasingly beyond their financial means for decades, with their deficits funded by accumulating debts.

So far, all of the proposed solutions revolve around issuing more, or re-packaging the existing, debts. Ultimately, this will not resolve the structural inefficiencies that have developed in Western economies due to debt dependency. To do this, our leaders know that they face a menu of unpalatable choices; austerity, defaults or increased inflation, a default in all but name. True to form they are trying to delay the inevitable. The rest of the world has not been immune to the fallout from the above. Asset markets are doing what they are designed to do – discount future returns – and what they have recently signaled is that lower future returns will be the new normal until structural reforms are engaged.

Where does this leave investors? Companies are on the whole, probably with the exception of the banking industry, more disciplined than governments and consumers. Companies tend to benefit the most from the rigorous scrutiny of the market based system. Hence, many companies currently find themselves in rude health, efficient and with strong balance sheets. Granted, few are immune to the price volatility created by the current macro scenario, but on a long-term risk reward basis, investments in companies look, in our opinion, better value than in developed governments.

As investors, we find ourselves on the ‘weighing scales’ like never before; on one side we have a dark macro outlook, on the other undoubtedly many attractive asset valuations. The developing world now has cyclical issues: the boom and bust cycle lives on, and these areas will recover from their current healthy economic slowdown and excess investment returns will be generated as the secular growth of the middle classes continues. America and even Europe will also eventually recover, and we know that markets will move to discount this well in advance of all of their problems actually being resolved.

Big crises have a habit of creating big investment opportunities and Europe specifically has a very big crisis! At this stage we are minded to remain defensively positioned on your behalf, but the time will come when the scales start to tilt back to favour increasing the risk levels in the portfolios.

Strategy

Having an increasingly defensive stance over the past 12 months has been relatively beneficial to returns. At the beginning of the year we significantly reduced our exposure to financials, gold shares, Asia and Latin America. More recently we have added back at the margin to some of our favoured emerging markets on valuation grounds. We have also added to energy stocks, via the Blackrock World Energy Fund and to emerging market debt via the Threadneedle Emerging Market Bond Fund. Despite market volatility, we have endeavored to maintain exposure to the areas of the world that will benefit most from the emergence of the Asian and Latin American middle classes, specifically energy, technology, Latin American and Asian equities. We reduced our gold exposure in August to take advantage of spiking prices but we still view gold as a portfolio insurance policy and accord it a relatively high conviction. The fixed interest element of the Fund remains biased towards corporate bonds, while the cash weighting has been allowed to nudge up over the period. We are well aware of the potential European banking crisis unfolding and are particularly careful to ensure that the portfolio cash is deposited with only the strongest of institutions. We believe that the portfolio is currently well placed for the future and would like to thank you for your continued support.

Jupiter Independent Funds Team

19 October 2011

20



■ Jupiter Merlin International Balanced Portfolio Schedule of Investments as at 30 September 2011

Quantity


Fair Value

€

Fair Value as a


%

Open Ended Funds

Channnel Islands 6,065,311 7.13

51,400 ETFS Physical Gold 6,065,311 7.13

Ireland 16,075,455 18.87

439,000 Findlay Park American Fund** 14,258,736 16.74

162,000 Findlay Park Latin American Fund 1,816,719 2.13

Luxembourg 10,544,940 12.39

12,021 Argos Investment Fund – Argonaut 1,502,323 1.77

216,000 BlackRock World Energy Fund 3,373,285 3.96

162,527 Franklin Templeton Global Bond Fund 2,113,911 2.48



1,000,000 CF Morant Wright Japan Fund 2,345,909 2.76

1,255,000 First State Asia Pacific Leaders 4,949,286 5.82

11,400,000 Jupiter Japan Income Fund* 6,595,966 7.75

3,600,000 Jupiter North American Fund* 2,356,143 2.77

15,000,000 Jupiter Strategic Bond Fund* 9,968,004 11.71

10,400,000 M&G Strategic Corporate Bond Fund 7,664,372 9.01

13,225,000 Threadneedle Emerging Market Bond Fund 8,815,954 10.36


Other Net Assets 9,730,316 11.43

Net Assets 85,111,656 100.00*Related Party Fund**Formerly ‘Findlay Park American Smaller Companies Fund’


21



■ Jupiter Merlin International Equities Portfolio

Performance

NAV 30.09.11 30.09.10 % Change



Class L Euro Shares €11.08 €11.45 (3.23)

Class L Sterling Shares £14.37 £14.71 (2.31)

Class L US Dollar Shares $13.81 $14.43 (4.30)

*Class E Sterling Share was launched on 20 June 2011 with an issue price of £250.00, performance for the period until 30 September 2011 is (6.33)%

Introduction

The last 12 months have been increasingly dominated by political activity, though ‘inactivity’ may be a more appropriate description. The ruling elites on both sides of the Atlantic have had to contend with growing crises, largely of their own making. Like any animal presented with tough choices, paralysis tends to be the initial political response, until forced to react. At the heart of the Western economy’s travails is a simple problem; too much debt. Somewhat ironically, solving simple problems is never ‘simple’ when opposing ideologies collide. The harsh reality is that Western governments and consumers have lived increasingly beyond their financial means for decades, with their deficits funded by accumulating debts.

So far, all of the proposed solutions revolve around issuing more, or re-packaging the existing, debts. Ultimately, this will not resolve the structural inefficiencies that have developed in Western economies due to debt dependency. To do this, our leaders know that they face a menu of unpalatable choices; austerity, defaults or increased inflation, a default in all but name. True to form they are trying to delay the inevitable. The rest of the world has not been immune to the fallout from the above. Asset markets are doing what they are designed to do – discount future returns – and what they have recently signaled is that lower future returns will be the new normal until structural reforms are engaged.

Where does this leave investors? Companies are on the whole, probably with the exception of the banking industry, more disciplined than governments and consumers. Companies tend to benefit the most from the rigorous scrutiny of the market based system. Hence, many companies currently find themselves in rude health, efficient and with strong balance sheets. Granted, few are immune to the price volatility created by the current macro scenario, but on a long-term risk reward basis, investments in companies look, in our opinion, better value than in developed governments.

As investors, we find ourselves on the ‘weighing scales’ like never before; on one side we have a dark macro outlook, on the other undoubtedly many attractive asset valuations. The developing world now has cyclical issues: the boom and bust cycle lives on and these areas will recover from their current healthy economic slowdown and excess investment returns will be generated as the secular growth of the middle classes continues. America and even Europe will also eventually recover, and we know that markets will move to discount this well in advance of all of their problems actually being resolved. Big crises have a habit of creating big investment opportunities and Europe specifically has a very big crisis! At this stage we are minded to remain defensively positioned on your behalf, but the time will come when the scales start to tilt back to favour increasing the risk levels in the portfolios.

Strategy

Having an increasingly defensive stance over the past 12 months has been relatively beneficial to returns. In the first half of this year we significantly reduced our exposure to financials, gold shares, Asia and Latin America. More recently we have added back at the margin to some of our favoured emerging markets on valuation grounds. We have also added some exposure to the energy market, via the Guinness Global Energy Fund. Despite market volatility, we have endeavoured to maintain exposure to the areas of the world that will benefit most from the emergence of the Asian and Latin American middle classes, specifically, energy, technology, Latin American and Asian equities. We reduced our gold exposure in August to take advantage of spiking prices but we still view gold as a portfolio insurance policy and accord it a relatively high conviction. We are well aware of the potential European banking crisis unfolding and are particularly careful to ensure that the portfolio cash is deposited with only the strongest of institutions. We believe that the portfolio is currently well placed for the future and would like to thank you for your continued support.

Jupiter Independent Funds Team

19 October 2011

22



■ Jupiter Merlin International Equities Portfolio Schedule of Investments as at 30 September 2011

Quantity


Fair Value

€

Fair Value as a


%

Open Ended Funds

Channel Islands 8,732,160 8.10

74,000 ETFS Physical Gold 8,732,160 8.10

Ireland 38,804,690 35.98

1,240,000 Guinness Global Energy Fund 7,728,439 7.17

600,000 Findlay Park American Fund** 19,488,025 18.07

480,000 Findlay Park Latin American Income Fund 5,382,872 4.99

640,000 Polar Capital Global Technology Fund 6,205,354 5.75

Luxembourg 5,957,049 5.52

18,032 Argos Investment Fund – Argonaut 2,253,484 2.09



1,178,000 Framlington UTM American Growth Fund 3,168,430 2.94

430,000 CF Morant Wright Japan B Fund 1,008,741 0.94

3,251,000 First State Asia Pacific Leaders B Fund 12,820,819 11.89

5,500,000 GLG Japan Core Alpha 5,390,600 5.00

822,000 Invesco Perpetual Income Fund 11,478,679 10.64

18,080,000 Jupiter Japan Income Fund* 10,460,971 9.70

15,200,000 Jupiter North American Fund* 9,948,159 9.23


Other Net Assets 65,584 0.06

Net Assets 107,835,882 100.00*Related Party Fund**Formerly ‘Findlay Park American Smaller Companies Fund’


23


Notes to the Financial Statements

■ Notes to the Financial Statements for the year ended 30 September 2011

1. General Information Jupiter Merlin Funds (the ‘Company’) is an open-ended

investment company which qualifies as an undertaking for collective investment in transferable securities (UCITS) under part I of the law of 17 December 2010 (previously law of 20 December 2002) regarding undertakings for collective investment. As from 1 July 2011, all UCITS are governed by the law of 17 December 2010. The Company was incorporated in Luxembourg as a société d’investissement à capital variable (SICAV) on 4 June 2008 for an unlimited duration.

The Company may issue multiple classes of Shares in several Funds (the ‘Funds’). A separate pool of assets and liabilities is maintained for each Fund and is invested in accordance with the investment objective applicable to the relevant Fund. All liabilities attributable to a particular Fund are binding solely upon that Fund.

As at 30 September 2011, the Company comprises the following Funds:

• Jupiter Managed European Portfolio

• Jupiter Merlin International Balanced Portfolio

• Jupiter Merlin International Equities Portfolio

The Company currently offers Class L and E Shares for sale in all the Funds. Class E Shares are reserved for certain Institutional Investors, Class L is available for subscription by Retail Investors.

The principal investment objective of each Fund is to achieve long-term capital appreciation and the generation of income will not be an overriding consideration in determining investment policy. Unless a Class is identified as a ‘Distributing Fund’ or a dividend policy is otherwise specified in the relevant Information Sheet, all Classes of all Funds with the exception of Jupiter Merlin International Balanced Portfolio’s Class L Sterling and Jupiter Merlin International Equities Portfolio’s Class L Sterling, have an accumulation policy and, consequently, no dividends will be paid on those classes.

As at 30 September 2011, the Funds’ Share Classes have the following distribution policy:

• Jupiter Managed European Portfolio– Class E Euro: Accumulation of income

• Jupiter Merlin International Balanced Portfolio– Class E Euro, Class E Sterling, Class E US Dollar, Class

L Euro and Class L US Dollar: Accumulation of income– Class L Sterling: Annual dividend with

automatic reinvestment

• Jupiter Merlin International Equities Portfolio– Class E Euro, Class E Sterling, Class L Euro and Class L

US Dollar: Accumulation of income– Class L Sterling: Annual dividend with

automatic reinvestment

2. Summary of Significant Accounting Policiesa) Basis of preparation

The financial statements have been prepared in conformity with Luxembourg generally accepted accounting principles applicable to investment funds.

b) Financial Statements

Financial statements are presented for each Fund in the base currency of the Fund and the combined Statement of Net Assets, Statement of Operations and Statement of Changes in Net Assets of the Company are presented in Euro (€), based on the exchange rate ruling at the date of these financial statements.

c) Foreign currency translation

Assets and liabilities denominated in currencies other than the Fund’s base currency are translated into that base currency at exchange rates ruling at the date of these financial statements. Transactions occurring during the year in currencies other than the base currency are translated at rates of exchange ruling at the transaction dates. The exchange rates used for the financial statements as at 30 September 2011 are as follows:

• EUR/USD: 1.35006

• EUR/GBP: 0.86573

d) Investments

Securities are initially recognised at cost, being the fair value of the consideration given.

Securities, including open ended funds, listed on an official stock exchange or dealt in on any regulated market are valued at the last available price.

Closed ended funds are valued at their last available price. Units or shares in open-ended investment funds are valued at their last available net asset value. Wherever practicable, the last available net asset value is deemed to include the net asset value calculated on the same Valuation Day for any underlying Fund which itself has a valuation point at or before the Company’s Valuation Point being 1pm Luxembourg time.

In the event that any of the securities held by the Company’s portfolio on the relevant day are not listed on any stock exchange or dealt in on any regulated market or if, with respect to securities listed on any stock exchange or dealt in on any other regulated market, the basis of the price as determined above is not representative of the fair market value of the relevant securities, the value of such securities will be determined based on the reasonably foreseeable sales price determined prudently and in good faith by the Directors of the Company.

Gains or losses arising on the disposal of investments are calculated by reference to the net sales proceeds and the average cost attributable to those investments.

All purchases and sales of securities are recognised on the trade date, i.e. the date the Fund commits to purchase or sell the security.

24



■ Notes to the Financial Statements for the year ended 30 September 2011 (continued)

2. Summary of Significant Accounting Policies continued

e) Forward foreign exchange contracts

The Fund may enter into forward foreign exchange contracts to hedge against exposures to foreign currency fluctuations. The carrying value of these contracts is the gain or loss that would be realised if the position were closed out on the valuation date and is recorded as an unrealised gain or loss. Upon the closing of the contract, the gain or loss is recorded in the net realised gains or losses on foreign exchange contracts.

f) Income recognition

Interest income is recognised as the interest accrues unless collectability is in doubt.

Dividend income is recognised when the right to receive the dividend is established, on the ex-date.

Income is shown net of withholding taxes.

g) Management fee rebates

Management fee rebates from related party funds accrue on a monthly basis. Management fee rebates from third party funds are recognised on a cash receipts basis.

h) Expense recognition

Expenses are accounted for on an accrual basis. Expenses are charged to the Statement of Operations except for expenses incurred on the acquisition of an investment which are included within the cost of that investment. Expenses arising on the disposal of investments are deducted from the disposal proceeds.

i) Dividends payable

Dividends payable by the Company are recorded on the ex-date.

j) Net Asset Value per Share

The Net Asset Value per Share is calculated by dividing the net assets of the relevant Class of Shares in a Fund included in the Statement of Net Assets by the number of Shares of the relevant class in that Fund in issue at the year end.

k) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in Luxembourg requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported year. Actual results could differ from those estimates.

3. Investment Management Fees The Management Company appointed Jupiter Asset

Management (Bermuda) Limited (‘JAMB’) as Investment Manager to provide certain administrative and management services.

The Investment Management Fee is accrued at each Valuation Point and is calculated and payable monthly in arrears. The fee charged per annum and applicable to each Class of Shares as at 30 September 2011 is set below:

• Jupiter Managed European Portfolio Class L Shares 1.5% Class E Shares 2.0%

• Jupiter Merlin International Balanced Portfolio Class L Shares 1.5% Class E Shares 2.0%

• Jupiter Merlin International Equities Portfolio Class L Shares 1.5% Class E Shares 2.0%

Where a Fund invests in other funds managed by the same Investment Manager as the Company, the Fund will not be subject to additional management fees. These related management fee reimbursements are included in ‘Management fee rebates’ in the Statement of Operations and amounted to €1,058,928 for the year ended 30 September 2011.

None of the Funds are entitled to accrue a performance fee on any of the Classes of Shares.

4. Management Company Fee On 20 June 2008, the Management Company, RBS

(Luxembourg) S.A. was appointed in order to meet the requirements of the UCITS III (Undertakings for Collective Investment in Transferable Securities) Directive 85/611/EEC of 20 December 1985. The list of the Funds managed by the Management Company may be obtained, on request, at the registered office of the Management Company.

The Management Company is responsible on a day-to-day basis, under the supervision of the Directors of the Company, for providing administration, marketing and investment management services in respect of all Funds.

The Management Company delegates its investment management duties to Jupiter Asset Management (Bermuda) Limited, the Investment Manager of the Funds.

In the context of its administration functions, the Management Company has been permitted by the Company to delegate its administration functions to third parties authorised by the Company, comprising the Administrator.

In the context of its marketing function, the Management Company may enter into agreements with Distributors pursuant to which the Distributors agree to act as intermediaries or nominees for investors subscribing for Shares through their facilities.

The Management Company will monitor on a continual basis the activities of the third parties to which it has delegated functions. The agreements entered into between the Management Company and the relevant third parties provide that the Management Company can give at any time further instructions to such third parties, and that it can withdraw their mandate with immediate effect if this is in the interest of the Shareholders. The Management Company’s liability towards the Company is not affected by the fact that it has delegated certain functions to third parties.

RBS (Luxembourg) S.A. is entitled, for the provision of the Management Company services rendered to the Company, to receive the following fee per annum based on the Net Asset Values attributable to each Fund with an overall minimum annual fee for the Company of €10,000 per sub-fund.

25




Net Asset Value Fee€0 – €100,000,000 0.075%

€100,000,000 – €200,000,000 0.06%

€200,000,000 and above 0.05%

4. Management Company Fee continued

5. Administration and Custodian Fees HSBC, has been appointed to perform central administration duties for the Company pursuant to a delegation of such duties to it by the

Management Company.

HSBC Securities Services (Luxembourg) S.A. (‘HSBC’) as Administrator and Depository is entitled to receive fees in accordance with market practice in Luxembourg. This fee is calculated on the basis of the Net Asset Value of each Fund. Such fee does not include normal banking and brokerage fees and commissions on transactions relating to the assets and liabilities of the Fund or any reasonable out-of pocket expenses incurred in connection with the Company and chargeable to the Company.

HSBC is entitled to receive the following fees per annum based on the Net Asset Value of each Fund as the agreed remuneration for its transfer Agent, depositary bank and Administrator functions.

Custodian fees charged per annum are based on the assets of the country of the underlying fund together with certain transaction charges based on the number of transactions in a particular country.

6. Directors’ Fees, Expenses and Interests Mr. Garth Lorimer Turner is the Managing Director of the Investment Manager and also has an interest in the Investment Management

Agreement.

Mr. Jacques Elvinger is a partner of the Luxembourg law firm of Elvinger Hoss & Prussen, which provides legal services to the Company.

Mr. Adrian Creedy is a Director of the Investment Adviser and has an interest in the Investment Management Agreement.

Mr. Jonathan Carey was a Director of the Investment Manager and had an interest in the Investment Management Agreement until his resignation on 2 December 2010.

Each Director receives fees of €15,000 per annum. In addition, all Directors are entitled to reimbursement by the Company of any expenses directly incurred in the execution of their duties as Directors.

Directors insurance for the year ended 30 September 2011 was €14,620 and is included in the Statement of Operations in ‘Other expenses’.

Save as referred to above, no Director holds any shares in the Company nor has any interest in any transaction which, during the period under review, has been effected by the Company and is unusual in its nature or conditions, or is significant to the business of the Company.

7. Taxe d’abonnement The Company is liable in Luxembourg to a tax (taxe d’abonnement), such tax being payable quarterly and calculated on the Net Asset Value

of the Company at the end of the relevant calendar quarter. The taxe d’abonnement is levied at a rate of 0.01% per annum on Funds or Classes reserved to Institutional Investors (Class E) and at 0.05% per annum on other Funds or Classes (Class L). No such tax is payable in respect of the portion of the assets of each Fund invested in other Luxembourg collective investment undertakings. Under current law and practice, the Company is not liable to Luxembourg taxes on income or capital gains, nor are dividends paid by the Company liable to any Luxembourg withholding tax.

Interest, dividends and capital gains on securities may be subject to withholding or capital gains taxes in certain countries.

Net Asset ValueTransfer Agency

feeDepositary Bank

feeAdministration

fee€0 – €100,000,000 0.02% 0.01% 0.05%

€100,000,000 – €500,000,000 0.015% 0.01% 0.04%

€500,000,000 and above 0.01% 0.01% 0.03%

26




8. Expense Reimbursements The Investment Manager has agreed to bear the expenses of each Class L above a certain limit stated below (based on total expenses

excluding investment management fees and management fee rebates, as a percentage of average net assets):• Jupiter Managed European Portfolio 0.28%• Jupiter Merlin International Balanced Portfolio 0.23%• Jupiter Merlin International Equities Portfolio 0.23%

The expenses reimbursed to the Fund during the year ended 30 September 2011 amount to €102,531.

9. Transactions with Connected Parties All transactions with connected parties were carried out on an arm’s length basis. The Investment Manager and its affiliates, the Management

Company, the Directors and other related agents of the Company are considered connected parties.

10. Soft Dollar Arrangements The Investment Adviser and/or the Investment Manager of the Funds may from time to time receive goods and services which are paid for

out of broker commissions provided that they relate to execution and research services which meet the criteria laid down by United Kingdom’s Financial Services Authority Rules and the SFC Code on Unit Trusts and Mutual Funds.

There were no soft dollar benefits paid or accrued during the year ended 30 September 2011.

11. Dividend Distributions During the year ended 30 September 2011, the Directors declared the following dividends on Class L Sterling Shares:

12. Overdraft Credit Facility As from 1 October 2010, the Company has credit facilities with HSBC Bank Plc (as Lender, the ‘Bank’) and HSBC Securities Services

(Luxembourg) S.A. (as ‘Custodian’) as follows: Jupiter Merlin Managed European Portfolio: uncommitted overdraft credit facility equal to the lesser of USD 10,000,000 and 10% of Net Value

of Asset in Custody. Jupiter Merlin International Balanced Portfolio: uncommitted overdraft credit facility equal to the lesser of USD 9,000,000 and 10% of Net Value

of Asset in Custody. Jupiter Merlin International Equities Portfolio: uncommitted overdraft credit facility equal to the lesser of USD 17,000,000 and 10% of Net Value

of Asset in Custody. The overdraft balance bears interest at a rate of LIBOR + 1.5% per annum. In addition, each of the Funds pays the Bank a fee of USD 1,000

per annum, paid in advance on the date of agreement and each anniversary date of the agreement. The Facility has no fixed term and is secured by all existing security (if any) and any future security held by the Bank.

13. Purchase and Sales of Securities A listing of purchase and sales of securities during the year is available upon request at the registered office of the Fund.

14. Swing Pricing Under certain circumstances (for example, large volumes of deals) investment and/or disinvestment costs may have an adverse effect on the

Shareholders’ interests in a Fund. In order to prevent this effect, the Directors have the authority to allow for the Net Asset Value per Share to be adjusted by effective dealing and other costs and fiscal charges which would be payable on the effective acquisition or disposal of assets in the relevant Fund if the net capital activity exceeds, as a consequence of the sum of all subscriptions, redemptions or switches in such a Fund, such threshold percentage (the ‘Threshold’) as may be determined from time to time by the Directors, of the Fund’s total net assets on a given Valuation Day.

If the net capital activity on a given Valuation Day leads to a net inflow of assets in the relevant Fund, the Net Asset Value used to process all subscriptions, redemptions or switches in such a Fund is adjusted upwards by the swing factor that shall be determined from time to time by the Directors.

If the net capital activity on a given Valuation Day leads to a net outflow of assets in the relevant Fund, the Net Asset Value used to process all subscriptions, redemptions or switches in such a Fund is adjusted downwards by the swing factor that shall be determined from time to time by the Directors.

During the year under review, Swing Pricing is applied to Jupiter Merlin Managed European Portfolio, Jupiter Merlin International Balanced Portfolio and Jupiter Merlin International Equities Portfolio.

15. Subsequent Events There were no significant events after the reporting date.

Fund Ex-date Pay date £/shareJupiter Merlin International Balanced Portfolio 30 September 2011 31 December 2011 £0.060828

27


Notice of Meeting

■ Notice of Meeting of Annual General Meeting of Shareholders

NOTICE is hereby given to the shareholders in Jupiter Merlin Funds that the ANNUAL GENERAL MEETING of Jupiter Merlin Funds will be held at its registered office at 16, Boulevard d’Avranches, L-1160 Luxembourg at 10.30am (Luxembourg time) on 13 January 2012 for the purpose of considering and voting upon the following matters:

AGENDA

1 Acceptance of the Chairman’s Statement and Independent Auditor’s Report and approval of the financial statements for the year ended 30 September 2011.

2 Dividend distribution.

3 Discharge of the Board of Directors.

4 Re-election of Mr Adrian Creedy, Maître Jacques Elvinger, Mr Garth Lorimer Turner and Mr Patrick Zurstrassen as Directors.

5 Re-election of the Independent Auditor.

6 Approval of Directors’ fees of 60,000 Euro net from 1 January to 31 December 2012.

By Order of the Board of Directors

15 November 2011

Registered office:16, Boulevard d’AvranchesL-1160 Luxembourg

Notes:

1 If you cannot be personally present at the Annual General Meeting, please sign and date the enclosed form of proxy and return it to the administrator, HSBC Securities Services (Luxembourg) S.A., 16, Boulevard d’Avranches, L-1160 Luxembourg. To be valid, forms of proxy must be received by 11 January 2012. Completion and return of a form of proxy will not prevent a Shareholder from attending the meeting and voting in person.

2 Under Luxembourg law, there is no quorum requirement at the Annual General Meeting and to be validly passed, the resolutions require approval of a majority of the votes cast (whether in person or by proxy).

3 The Annual Report (which includes the Chairman’s Statement, the Independent Auditor’s Report and the financial statements) is available to Shareholders at the registered office of the Company, the Custodian and from every Paying Agent and Distributor and is also available at www.jupiterinternational.com


Form of Proxy

PLEASE COMPLETE IN BLOCK CAPITALS

I/We

of

Account no:

being a shareholder in Jupiter Merlin Funds hereby appoint the Chairman of the meeting or (see note iv) the following person:

to be

my/our proxy to vote on my/our behalf on the resolutions to be proposed at the Annual General Meeting of the Company to be held at 10.30am (Luxembourg time) on 13 January 2012 at 16, Boulevard d’Avranches, L-1160 Luxembourg and at any adjournment thereof. My/our proxy shall vote on the resolutions to be proposed at the Annual General Meeting as indicated below or in the absence of any such indication, my/our proxy shall vote or abstain as he thinks fit.

Please indicate with an ‘X’ in the spaces below how you wish your votes to be cast at the Annual General Meeting. Subject to any voting instructions so given, the proxy will vote on the resolution and such other business as may properly come before the meeting as he/she may think fit.

Notes:

(i) If there is more than one shareholder, the signature of any one holder will be sufficient but the names of ALL joint shareholders should be included in full.

(ii) Proxies need not be a shareholder. Completion and return of a form of proxy will not prevent a shareholder from attending the meeting and voting in person.

(iii) An instrument appointing a proxy must be in writing under the hand of the appointor or attorney authorised in writing, or if the appointor is a corporation, either under its seal or under the hand of the officer, attorney or other person authorised to sign it.

(iv) Shareholders wishing to appoint their own proxy, should cross out the words ‘the Chairman of the meeting or’ and then insert the name of their proxy. Any alteration should be initialled by the persons who sign this form.

(v) To be valid, this form of proxy must reach the office of HSBC Securities Services (Luxembourg) S.A., 16, Boulevard d’Avranches, L-1160 Luxembourg, no later than the close of business (Luxembourg time) 48 hours prior to the meeting.

■ Jupiter Merlin Funds (a société d’investissement à capital variable incorporated in, and under the law of, the Grand Duchy of Luxembourg with number B 139.274)

Form of Proxy for use at the Annual General Meeting of Shareholders in Jupiter Merlin Funds to be held on 13 January 2012

Resolution For Against

Report and accounts

Dividend distribution

Discharge of Directors

Re-election of Directors

Re-election of the Independent Auditor

Approval of Directors’ fees

Signed this day of 2011

Signature(s) of shareholder(s)

2950-11.11

For the year ended 30 September 2011

Documents

Transcript of For the year ended 30 September 2011