BEST CHOICE. SICAV with variable Capital under the Luxembourg law. Annual report, including audited financial statements as at December 31, 2016

Transcription

1 SICAV with variable Capital under the Luxembourg law Annual report, including audited financial statements as at December 31, 2016 R.C.S. Luxembourg B Database Publishing System: CO-Reporter by CO-Link, Belgium.

2 Table of contents Page Organisation of the SICAV 3 Board of Directors of the SICAV 4 Board of Directors of the Management Company 4 Day to Day Managers of the Management Company 5 General information 6 Management report 7 Independent auditor s report 9 Combined 11 BEST CHOICE - DYNAMIC 14 BEST CHOICE - BALANCED 19 BEST CHOICE - CONSERVATIVE 24 Notes to the financial statements 29 Supplementary information (unaudited) 34 No subscription can be received on the basis of this report. Subscriptions are only valid if made on the basis of the current prospectus accompanied by the latest annual report and the most recent semi-annual report, if published thereafter. Page 2

3 Organisation of the SICAV REGISTERED OFFICE PROMOTOR 1, rue du Potager, L-2347 Luxembourg, Grand Duchy of Luxembourg Optima Bank NV/SA Keizer Karelstraat 75, B-9000 Gent, Belgium (until June 15, 2016) MANAGEMENT COMPANY NOVACAP ASSET MANAGEMENT S.A. 1, rue du Potager, L-2347 Luxembourg, Grand Duchy of Luxembourg DEPOSITARY BANK CACEIS Bank, Luxembourg Branch * 5, allée Scheffer, L-2520 Luxembourg, Grand Duchy of Luxembourg PAYING AGENT, ADMINISTRATIVE AGENT, REGISTRAR AND TRANSFER AGENT AUDITOR DISTRIBUTOR CACEIS Bank, Luxembourg Branch * 5, allée Scheffer, L-2520 Luxembourg, Grand Duchy of Luxembourg Ernst & Young S.A. 35E, Avenue John F. Kennedy L-1855 Luxembourg Grand Duchy of Luxembourg Optima Bank NV/SA Keizer Karelstraat 75, B-9000 Gent, Belgium (until June 15, 2016) NOVACAP ASSET MANAGEMENT S.A. 1, rue du Potager, L-2347 Luxembourg, Grand Duchy of Luxembourg (since September 1, 2016) INVESTMENT ADVISOR Expert Timing Systems International EAFI SL 2-4, Urbanizacion La Cabana, Pozuelo de Alarcon E Madrid, Spain *CACEIS Bank Luxembourg until December 31, 2016 Page 3

4 Board of Directors of the SICAV CHAIRMAN Mr. Philip DE HULSTERS, Independent Director DIRECTORS Mr. Jan DE PAEPE, Independent Director (since June 16, 2016) Secretary General and Executive Director, Optima Bank NV/SA, Belgium (until June 15, 2016) Mr. Ludwig CALUWE, Independent Director (since June 16, 2016) Executive Director of Optima Bank NV/SA, Belgium (until June 15, 2016) Board of Directors of the Management Company CHAIRMAN Mr. Marc MICHIELS, CEO NOVACAP ASSET MANAGEMENT SA MEMBERS Mr. Gérard DÉJARDIN-VERKINDER, Independent Director Mr. Hugo KOWALEWSKI FERREIRA, Independent Director Mr. Jaime DE ORBEGOSO, Independent Director (until June 22, 2016) Page 4

5 Day to Day Managers of the Management Company Mr. Bart VAN WAGENBERG, Conducting Officer Mrs. Catherine GREYER, Conducting Officer Mr. Marc MICHIELS, Conducting Officer Mr. Hervé LEITE-FARIA (since June 8, 2016) Page 5

6 General information The financial year of BEST CHOICE (the "SICAV") ends on December 31 in each year. Annual report, including audited financial statements, of the SICAV made up to December 31 in each year are prepared in EUR, the SICAV s Reference Currency. The SICAV publishes Annual reports, including Audited Financial Statements, within four months of the end of the financial year and semi-annual reports, including unaudited financial statements within two months of the end of the reference period. The net asset value of each sub-fund, the issue and repurchase prices shall be made public after the calculation of the net asset value at the registered office of the SICAV. Copies of the articles of incorporation, the most recent Prospectus, the KIIDs and the latest financial reports may be obtained free of charge, on request at the registered office of the SICAV. Page 6

7 Management report The whole year 2016 was dominated worldwide by the activity of the central banks and their various policies for buying back assets as well as important political events. Volatility has been very variable during the last financial year of the Best Choice SICAV. The correlation between the different types of financial assets also varied strongly during the year, making the fund management complex. More than just high volatility, 2016 was marked in fact by a combination of events: fears about the slowdown in global economic growth, falling commodity prices and particularly oil, a possible devaluation of the currency Chinese and a mistrust of the monetary policies of central banks have made operators nervous. In January 2016, the Dow Jones had its worst first week since its creation, while Standard and Poor's had to go back to 1929 to find a start of the year as bad. The statements of Mario Draghi in February and the cautious statements of Janet Yellen have allowed the markets to confront their multiple fears and to recover themselves! Then during the month of June, the operators began to focus on the bookmakers' forecast regarding the referendum on a possible Brexit. Markets have experienced high volatility as bets evolve! On June 23, the markets had bet against the Brexit. The outcome of the referendum had the effect of a cold shower: some markets in continental Europe registered their biggest drop since autumn 2008! The Paris stock exchange lost 11% of its value in 2 days! The Brexit is a violent political phenomenon whose consequences remain very uncertain for the future of Europe and financial markets do not like the uncertainty. Of course the Brexit will have an economic impact on the world economy and on the European economy in particular. Mr. Draghi spoke of a negative impact on the growth of the euro area from 0.3% to 0.5% per year for 3 years. The result of the British referendum is, of course, bad news but it seems that the markets have reacted emotionally. However, it soon became apparent that the implementation of the Brexit was extremely complex and that although it is negative for the whole of Europe, it is indeed the United Kingdom which has the most to lose in this negotiation. A temporization seems obvious as if the British understood the enormous mistake made. But the financial markets very quickly integrated the results of the referendum and experienced a calmer and more positive summer. Even September (which is statistically the least favorable month for or equity markets) was very quiet! Markets have after been preparing for US elections! The biggest fear of many investors of seeing Trump becoming the 45 th President of the United States became reality. This was positively appreciated by the markets and an important rally in the US stocks followed his nomination. Markets also know that the main central banks will have to pursue their extremely accommodative monetary policies in order to stimulate final demand. In this context, the BOJ has innovated by setting a target rate for the Japanese bond at 10 years (around 0%), irrespective of the amounts injected and therefore the amount of money created. The BOJ already holds 34% of Japanese public debt outstanding and is the largest shareholder of 55 listed Japanese companies. The Japanese monetary authority explores unknown territories... Fortunately, the FED is not taking this route and the ECB, aware of the risk of a "Japanese-style" policy, is cautious. In Europe, the policy of negative rates shows its limits. It is therefore expected that financial markets will regularly test the determination of the monetary authorities: volatility will remain in the months to come. This unstable context reinforces our long-term conviction. The world economic situation is slowly improving, but the level of indebtedness of economic agents remains high (mainly Western states): the work of the central banks is far from finished! Page 7

8 Management report (continued) The prudent management of the Fund enabled to protect the capital especially through the progressive reduction of the market exposure and a portfolio construction across the different eligible assets. Best Choice Conservative Best Choice Conservative is based on a conservative, multi-asset investment strategy. The main objective of the investment strategy is to limit shortfalls in downtrend markets, while participating in uptrend markets. Making use of a dynamic risk control, in the medium/long term, the investment strategy will deliver stable growth and should protect the capital. The environment for this low volatility strategy was very challenging during the year with the interventionism of central banks and the low yields in fixed income. The dynamism of the investment strategy allows the portfolio to adapt to market movements and, according to existing investment opportunities, the strategy will adapt its exposure to seize such opportunities or to protect itself against market risk. In the complex market of 2016, this did not deliver the expected returns, Best Choice Conservative maintained defensive positions in several period, even when the exposure should have been increased such as the post Trump rallye. As a consequence, the Fund finished the year slightly negative, which is also due to the important redemption the Fund faced. Best Choice Balanced Best Choice Balanced is based on a balanced, multi-asset investment strategy. The main objective of the investment strategy is to limit shortfalls in downtrend markets, while participating in uptrend markets. Making use of a dynamic risk control, in the medium/long term, the investment strategy will deliver stable growth. As a response to market uncertainty, Best Choice Balanced kept a conservative positioning during complex periods of the year. Making use of its dynamic risk control, the portfolio was able to limit shortfalls in downtrend markets, delivering a slight positive return in In terms of risk, both volatility and drawdown were controlled over the period. The strategy s strict risk control allowed the portfolio to significantly limit the impact of the important losses suffered by the international markets throughout the year. Best Choice Dynamic Best Choice Dynamic is based on a dynamic, multi-asset investment strategy. The main objective of the investment strategy is to limit shortfalls in downtrend markets, while participating in uptrend markets. Making use of a dynamic risk control, in the medium/long term, the investment strategy will deliver stable growth and make the invested capital increase. The environment was favourble for equities over the year even with an important volatility. As per what is described above, the equity exposure in the Fund was always high even though it was manage to try to absorb shocks as much as possible started quite violently and the Fund limited only a bit the drawdowns but all in all over the year the performances came back and the Fund benefited from the post Trump rallye. The performance of 2016 is positive and in line with expectations. Page 8

9 Ernst & Young Societe anonyme Building a better working world 35E, Avenue John F. Kennedy L-1855 Luxembourg Tel: B.P.780 L-2017 Luxembourg R.C.S. Luxembourg B TVA LU Independent auditor's report To the Shareholders BEST CHOICE 1, rue du Potager L Luxembourg of We have audited the accompanying financial statements of BEST CHOICE and of each of its sub-funds, which comprise the statement of net assets and the securities portfolio as at December 31, 2016, and the statement of operations and changes in net assets for the year then ended, and a summary of significant accounting policies and other explanatory notes to the financial statements. Responsibility of the Board of Directors of the SICA V for the financial statements The Board of Directors of the SICAV is responsible for the preparation and fair presentation of these financial statements in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements and for such internal control as the Board of Directors of the SICAV determines is necessary to enable the preparation and presentation of financial statements that are free from material misstatement, whether due to fraud or error. Responsibility of the "reviseur d'entreprises agree" Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted for Luxembourg by the "Commission de Surveillance du Secteur Financier". Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the judgement of the "reviseur d'entreprises agree", including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the "reviseur d'entreprises agree" considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors of the SICAV, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Page 9 A fllf;lnhe: f'rrn of Ernst & ~OU!lg Global Limited

10 Building a better working world Opinion In our opinion, the financial statements give a true and fair view of the financial position of BEST CHOICE and of each of its sub-funds as of December 31,2016, and of the results of their operations and changes in their net assets for the year then ended, in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements. Other matter Supplementary information included in the annual report has been reviewed in the context of our mandate but has not been subject to specific audit procedures carried out in accordance with the standards described above. Consequently, we express no opinion on such information. However, we have no observation to make concerning such information in the context of the financial statements taken as a whole. Ernst & Young Societe anonyme Cabinet de revision agree ~icks Luxembourg, April 4, 2017 Only the English version of the present Annual Report has been reviewed by the independent auditor. Consequently, the audit report only refers to the English version of the report; other versions result from a conscientious translation made under the responsibility of the Board of Directors of the SICAV. In case of difference between the English version and the translation, the English version should be retained. Page 10

11 Combined Page 11

12 Combined Financial Statements as at December 31, 2016 Statement of net assets as at December 31, 2016 Expressed in EUR Assets Investments in securities at market value Note 2 Securities at acquisition cost Net unrealised gain on investments Cash at banks and liquidities Note 1 Formation expenses Note 2 Liabilities Bank overdrafts Taxe d'abonnement payable Note 3 Redemptions payable Management and distribution fees payable Note 4 Other fees payable Note 8 Total net assets 5,246, ,610, ,568, , , , , , , , ,160, The accompanying notes form an integral part of these financial statements Page 12

13 Combined Statement of operations and changes in net assets from January 1, 2016 to December 31, 2016 Expressed in EUR Fees and expenses Amortisation of formation expenses Note 2 Management and distribution fees Note 4 Depositary fees Note 5 Taxe d'abonnement Note 3 Administrative expenses Note 6 Domiciliation fees Professional fees Bank interest on overdrafts Legal fees Transaction fees Note 2 Other expenses Net investment loss Net realised gain / loss on: - sales of investments in securities - foreign exchange Net realised loss Change in net unrealised appreciation / depreciation on: - investments in securities Decrease in net assets as a result of operations Proceeds from subscriptions of shares Cost of shares redeemed Decrease in net assets Net assets at the beginning of the year Net assets at the end of the year 445, , , , , , , , , , , , , , , , , , ,237, ,343, ,503, ,160, The accompanying notes form an integral part of these financial statements Page 13

14 - DYNAMIC Page 14

15 - DYNAMIC Financial Statements as at December 31, 2016 Statement of net assets as at December 31, 2016 Expressed in EUR Assets Investments in securities at market value Note 2 Securities at acquisition cost Net unrealised gain on investments Cash at banks and liquidities Note 1 Formation expenses Note 2 Liabilities Taxe d'abonnement payable Note 3 Management and distribution fees payable Note 4 Other fees payable Note 8 Total net assets 971, , , , , , , , , , Statistics Year ending as at: December 31, 2016 December 31, 2015 December 31, 2014 Total Net Assets EUR 959, ,210, ,187, BEST CHOICE - DYNAMIC - Class A Capitalisation shares Number of shares Net asset value per share EUR EUR EUR 9, , , The accompanying notes form an integral part of these financial statements Page 15

16 - DYNAMIC Statement of operations and changes in net assets from January 1, 2016 to December 31, 2016 Expressed in EUR Fees and expenses Amortisation of formation expenses Note 2 Management and distribution fees Note 4 Depositary fees Note 5 Taxe d'abonnement Note 3 Administrative expenses Note 6 Domiciliation fees Professional fees Bank interest on overdrafts Legal fees Transaction fees Note 2 Other expenses Net investment loss Net realised gain / loss on: - sales of investments in securities Net realised loss Change in net unrealised appreciation / depreciation on: - investments in securities Decrease in net assets as a result of operations Cost of shares redeemed Decrease in net assets Net assets at the beginning of the year Net assets at the end of the year 109, , , , , , , , , , , , , , ,227, ,251, ,210, , The accompanying notes form an integral part of these financial statements Page 16

17 - DYNAMIC Statement of investments and other net assets as at December 31, 2016 Expressed in EUR Quantity Description Quotation currency Securities at acquisition cost Market value (note 2) % of net assets Shares/Units in investment funds 841, , France 257, , ,305 AMUNDI ACTIONS USA ISR FCP -P- 3 DEC CAP EUR 85, , ,572 CPR ACTIVE US FCP -P- CAPITALISATION EUR 85, , MONDE GAN SICAV-N- 3 DEC EUR 85, , Luxembourg 584, , ,283 BRGF GLB DYNAMIC EQ FD -A2- EUR HDG CAP EUR 85, , ,530 BRGF US BASIC VALUE FD -A2- EUR HDG CAP EUR 83, , ,539 BRGF US FLEXIBLE EQ FD -A2- EUR HDG CAP EUR 84, , ,549 NN L EM EUR EQ PC -P- CAP EUR 83, , ,576 ROBECO K GROWTH FD US LARGE CAP EQ -DH- EUR 85, , ,289 UBAM SNAM JPN EQY VALUE IH EUR EUR 81, , ,164 UBS L GL SU IN - UNITS -P-ACC- CAP EUR 80, , Total investments 841, , Cash at bank/(bank liabilities) 88, Other net assets/(liabilities) -2, Total net assets 959, The accompanying notes form an integral part of these financial statements Page 17

18 - DYNAMIC Geographical classification of investments ( in % of net assets) Luxembourg France Industrial classification of investments ( in % of net assets) Units of investment funds Page 18

19 - BALANCED Page 19

20 - BALANCED Financial Statements as at December 31, 2016 Statement of net assets as at December 31, 2016 Expressed in EUR Assets Investments in securities at market value Note 2 Securities at acquisition cost Net unrealised gain on investments Cash at banks and liquidities Note 1 Formation expenses Note 2 Liabilities Taxe d'abonnement payable Note 3 Redemptions payable Management and distribution fees payable Note 4 Other fees payable Note 8 Total net assets 3,812, ,402, ,391, , , , , , , , ,747, Statistics Year ending as at: December 31, 2016 December 31, 2015 December 31, 2014 Total Net Assets EUR 3,747, ,841, ,635, BEST CHOICE - BALANCED - Class A Capitalisation shares Number of shares Net asset value per share EUR EUR EUR 37, , , The accompanying notes form an integral part of these financial statements Page 20

21 - BALANCED Statement of operations and changes in net assets from January 1, 2016 to December 31, 2016 Expressed in EUR Fees and expenses Amortisation of formation expenses Note 2 Management and distribution fees Note 4 Depositary fees Note 5 Taxe d'abonnement Note 3 Administrative expenses Note 6 Domiciliation fees Professional fees Bank interest on overdrafts Legal fees Transaction fees Note 2 Other expenses Net investment loss Net realised gain / loss on: - sales of investments in securities Net realised loss Change in net unrealised appreciation / depreciation on: - investments in securities Decrease in net assets as a result of operations Proceeds from subscriptions of shares Cost of shares redeemed Decrease in net assets Net assets at the beginning of the year Net assets at the end of the year 241, , , , , , , , , , , , , , , , , ,068, ,094, ,841, ,747, The accompanying notes form an integral part of these financial statements Page 21

22 - BALANCED Statement of investments and other net assets as at December 31, 2016 Expressed in EUR Quantity Description Quotation currency Securities at acquisition cost Market value (note 2) % of net assets Shares/Units in investment funds 3,391, ,402, France 491, , GROUPAMA CASH PARTS CAP 4 DEC EUR 323, , MANDARINE VALEUR -4- DEC -S- EUR 167, , Luxembourg 2,900, ,911, AMUNDI BOND EURO INFLATION -AE- CAP EUR 50, , ,636 AXA FIIS EU SHY -F- CAP EUR 211, , ,783 AXA WORLD FRAMLINGTON JUNIOR ENERGY -A- EUR 171, , ,520 BRGF US BASIC VALUE FD -A2- EUR HDG CAP EUR 195, , ,396 BRGF US FLEXIBLE EQ FD -A2- EUR HDG CAP EUR 194, , DK-INS LIQUID G - UNITS -CF (T)- CAP EUR 207, , ,011 NN L EM EUR EQ PC -P- CAP EUR 173, , NN L GL BD OPP PC -P- CAP EUR 322, , ,464 N1 CIM ENV EQ -BI- BASE CUR CAP EUR 195, , ,178 R CAPITAL HIGH YIELD BD EUR -SHS D-CAP EUR 163, , ,440 SCHRODER INT SEL EME EUROPE -A- CAP EUR 172, , ,727 SCHRODER INT SEL JAPANESE EQ -A HDG- CAP EUR 173, , ,135 UBAM SNAM JPN EQY VALUE IH EUR EUR 201, , UBS L BD FD FCP EURO HY -P- CAP EUR 163, , UBS L BOND FUND CO EUROPE-B-CAP EUR 108, , ,662 UBS L GL SU IN - UNITS -P-ACC- CAP EUR 194, , Total investments 3,391, ,402, Cash at bank/(bank liabilities) 393, Other net assets/(liabilities) -48, Total net assets 3,747, The accompanying notes form an integral part of these financial statements Page 22

23 - BALANCED Geographical classification of investments ( in % of net assets) Luxembourg France Industrial classification of investments ( in % of net assets) Units of investment funds Page 23

24 - CONSERVATIVE Page 24

25 - CONSERVATIVE Financial Statements as at December 31, 2016 Statement of net assets as at December 31, 2016 Expressed in EUR Assets Investments in securities at market value Note 2 Securities at acquisition cost Net unrealised loss on investments Cash at banks and liquidities Note 1 Formation expenses Note 2 Liabilities Bank overdrafts Taxe d'abonnement payable Note 3 Management and distribution fees payable Note 4 Other fees payable Note 8 Total net assets 463, , , , , , , , , Statistics Year ending as at: December 31, 2016 December 31, 2015 December 31, 2014 Total Net Assets EUR 453, ,450, ,626, BEST CHOICE - CONSERVATIVE - Class A Capitalisation shares Number of shares Net asset value per share EUR EUR EUR 5, , , The accompanying notes form an integral part of these financial statements Page 25

26 - CONSERVATIVE Statement of operations and changes in net assets from January 1, 2016 to December 31, 2016 Expressed in EUR Fees and expenses Amortisation of formation expenses Note 2 Management and distribution fees Note 4 Depositary fees Note 5 Taxe d'abonnement Note 3 Administrative expenses Note 6 Domiciliation fees Professional fees Bank interest on overdrafts Legal fees Transaction fees Note 2 Other expenses Net investment loss Net realised gain / loss on: - sales of investments in securities - foreign exchange Net realised loss Change in net unrealised appreciation / depreciation on: - investments in securities Decrease in net assets as a result of operations Cost of shares redeemed Decrease in net assets Net assets at the beginning of the year Net assets at the end of the year 94, , , , , , , , , , , , , , ,941, ,997, ,450, , The accompanying notes form an integral part of these financial statements Page 26

27 - CONSERVATIVE Statement of investments and other net assets as at December 31, 2016 Expressed in EUR Quantity Description Quotation currency Securities at acquisition cost Market value (note 2) % of net assets Shares/Units in investment funds 334, , France 40, , AMUNDI OBLIG INTERNATIONALES -P- 3 DEC C EUR 40, , Luxembourg 294, , AXA WORLD FD SICAV US HY BD -A- CAP USD 59, , GENERALI INV VAR EUE HY BD -B- CAP EUR 49, , ,000 N1 US HY BD -BP- CAP USD 69, , PARV EQ EUR GR -CLASSIC- CAP EUR 30, , PETERCAM L FD BONDS HIGHER YIELD -F- CAP EUR 53, , ,037 SCHRODER INT SEL JPN SMALLER CIE -C- CAP JPY 30, , Total investments 334, , Cash at bank/(bank liabilities) 117, Other net assets/(liabilities) 1, Total net assets 453, The accompanying notes form an integral part of these financial statements Page 27

28 - CONSERVATIVE Geographical classification of investments ( in % of net assets) Luxembourg France Industrial classification of investments ( in % of net assets) Units of investment funds Page 28

29 Notes to the financial statements Page 29

30 NOTE 1 GENERAL BEST CHOICE Notes to the financial statements as at December 31, 2016 BEST CHOICE (the "SICAV") was incorporated in Luxembourg on December 19, 2012, for an unlimited duration as an open-ended investment company with variable share capital (Société d Investissement à Capital Variable) organised as a multi-compartment investment fund in the form of a public limited liability company (société anonyme) and currently qualifies as an undertaking for a collective investment in transferable securities ("UCITS") governed by Part I of the amended Luxembourg Law of December 17, 2010 (the "Law"). The SICAV is registered with the register of commerce and companies of Luxembourg under the number B At all times, the SICAV s capital will be equal to the net asset value and will not fall below the minimum capital of EUR 1,250,000. As at December 31, 2016, the SICAV includes three sub-funds in activity, all of them denominated in Euro (EUR): BEST CHOICE - DYNAMIC BEST CHOICE - BALANCED BEST CHOICE - CONSERVATIVE Following the bankruptcy of Optima Bank N.V. on 15 June 2016, the Board of Directors has decided to appoint, Novacap Asset Management S.A. with effect from September 1, 2016 as the global distributor in replacement of Optima bank N.V. with which the distribution agreement was terminated on June 30, A new Financial Services Agent is being appointed in Belgium. Any subscription, redemption or conversion request shall be temporarily submitted directly to CACEIS Bank, Luxembourg branch, the SICAV's transfer agent. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Presentation of financial statements The financial statements are prepared and presented in accordance with generally accepted accounting principles and legal reporting requirements in Luxembourg. The reference currency of the SICAV is the EUR. b) Valuation of assets The value of these assets shall be determined as follows: 1) The value of cash at hand and bank deposits, drafts and bills of exchange payable at sight and receivables, prepaid expenses and dividends and interest notified or due for payment but not yet received, shall be constituted by the nominal value of the said assets, unless it is unlikely that it would be possible to realise that value; in the latter case, the value shall be determined by subtracting the amount that the SICAV considers adequate in order to arrive at the real value of the assets in question. 2) The value of any security admitted to official listing on a stock exchange or any other regulated market which operates regularly and is recognised and open to the public is based on the last known price in Luxembourg on the Valuation Day and, if that security is dealt on several markets, on the basis of the last known price on the principal market on which the security is dealt in; if the last known price is not representative, the valuation shall be based on the probable sale value that the Board of Directors of the SICAV shall determine in good faith in accordance with the principle of prudence. 3) Securities that are not listed or are not dealt in on a stock exchange or any other regulated market which operates regularly and is recognised and open to the public shall be valued on the basis of the probable sale value estimated in good faith in accordance with the principle of prudence. Page 30

31 Notes to the financial statements as at December 31, 2016 (continued) 4) Shares or units of UCITS (including shares issued by the SICAV sub-funds that may be held by another sub-fund of the SICAV) and UCIs will be valued on the basis of the last available net asset value. 5) Securities denominated in a currency other than the currency in which the class concerned is denominated shall be converted at the exchange rates prevailing on the days and at the time when the net asset value of the shares is determined. 6) The Board of Directors of the SICAV may, at its sole discretion, authorise the use of another valuation method if it considers that such a valuation reflects more accurately the market value of any asset owned by a sub-fund. c) Net realised gain/loss on sales of investments securities Realised gains or losses on the sales of investments are calculated on the basis of the average cost of the investments sold. d) Cost of investment securities The cost of investment securities in currencies other than the currency of the sub-fund is translated into the currency of the sub-fund at the exchange rate applicable at purchase date. e) Transaction fees The transaction fees represent the costs incurred by each sub-fund in connection with purchases and sales of investments. They include brokerage fees as well as bank commissions, tax, depositary fees and other transaction fees, and are included in the statement of operations and change in net assets. f) Formation expenses Formation expenses are amortised on a straight line basis over a period of 5 years. NOTE 3 TAXATION Taxation of the SICAV The SICAV is subject in Luxembourg to an annual tax representing 0.05% of the net asset value. This tax is payable quarterly on the basis of the SICAV net assets, calculated at the end of the quarter to which the tax relates. The value of assets represented by units held in other UCIs which are already subject to the subscription tax provided for in article 174 of the Law of 2010 is exempt from the subscription tax. No duties or taxes are payable in Luxembourg when the SICAV shares are issued. Certain income of the SICAV portfolio in the form of dividends and interest payments may be subject to variable rate withholding tax in the country where they are generated. NOTE 4 MANAGEMENT AND DISTRIBUTION FEES The Management Company is entitled to receive for the services provided as management company including the investment manager function, on a monthly basis, a global fee not exceeding 0.37% p.a. of the average Net Asset Value of the relevant sub-fund as determined during the relevant month. The Management Company applies a minimum fee per sub-fund of EUR 15, per year. The Distribution fees will not exceed 1.25% p.a. of the average Net Asset Value of the relevant sub-fund. All amounts charged are shown in the SICAV's statement of operations and changes in net assets. Page 31

32 Notes to the financial statements as at December 31, 2016 (continued) NOTE 5 DEPOSITARY FEES The appointed Depositary Bank is entitled to receive from the SICAV, on a monthly basis, an annual safekeeping services fee not exceeding 0.03% p.a. of the average Net Asset Value of the relevant sub- fund, as determined during the relevant month. The Depositary Bank reserves the right to apply a minimum fee per sub-fund of EUR 3, per year. NOTE 6 ADMINISTRATIVE EXPENSES The Administrative Agent is entitled to receive from the SICAV on a monthly basis, an annual services fee not exceeding 0.04% p.a. of the average Net Asset Value of the relevant sub-fund, as determined during the relevant month with a minimum of EUR 12, per sub-fund per year. For its function as domiciliary agent of the SICAV, the Management Company is entitled to receive a fixed fee of EUR 15, per year for the Fund. NOTE 7 PERFORMANCE FEE The Management Company is entitled to a performance fee in relation to each sub fund. The performance fee is calculated in respect of each performance period. A performance period is the period from January 1 to December 31 in any year. A provision for the above mentioned performance fee is made each Valuation Day in the Net Asset Value of the Class of Share. In case of redemption during the relevant quarter, the accrued performance fee at the relevant Valuation Day on which the relevant shares are redeemed, corresponding to the net number of shares redeemed is due to the Management Company in remuneration of its performance of the portfolio management function. The performance fee in respect to each sub-fund will be paid if the difference between the performance of the Net Asset Value per Share over the performance period and the performance of the benchmark in the case it is an index or a composition of indices or the daily compounded accrued income of the benchmark in the case it is a money market rate, is positive (positive spread). The spread (cumulated and annual) will be reset every time a performance fee is charged. However, the spread will be carried forward should it be negative. This will ensure a high water mark structure on the spread. The cumulated spread will then be the basis for the performance fee. Performance fee is only then charged should the cumulated spread be positive. The spread will then be reset again. The performance fee will be 10% over the annual outperformance of the corresponding benchmark for the following sub-funds: - BEST CHOICE - DYNAMIC - BEST CHOICE - BALANCED - BEST CHOICE - CONSERVATIVE As at December 31, 2016 no performance fee was paid accrued. NOTE 8 OTHER FEES PAYABLE As at December 31, 2016, the other fees payable include mainly administration, custody and other operating fees. Page 32

33 Notes to the financial statements as at December 31, 2016 (continued) NOTE 9 CHANGES IN THE COMPOSITION OF THE PORTFOLIO The report on the changes in the statement of investments is available upon request at the registered office of the Management Company of the SICAV free of charge. NOTE 10 SECURITIES FINANCING TRANSACTIONS AND OF REUSE REGULATION ( SFTR ) The Fund does not use any instruments falling into the scope of SFTR. Page 33

34 Additional information (unaudited) INFORMATION ON RISK MEASUREMENT All sub-funds global risk exposure is monitored by using the Commitment approach. In that respect, financial derivatives instruments are converted into their equivalent position in the underlying asset. The global risk exposure shall not exceed the sub-fund s net asset value. UCITS V The Management Company has implemented a Remuneration Policy that is designed as not to encourage taking excessive risks. In that context, it integrates in its performance management system, risk criteria, specific to the activities of the business units concerned. The Management Company has implemented a series of safeguards that refrain to staff taking undue risk compared to the activity profile. The governance structure of the Remuneration Policy aims at preventing internal conflicts of interest. The Policy is formulated by Executive Management and approved by the Board of Directors. The Policy follows a defined process establishing the principles, the approval, communication, implementation, review and update of the Policy which involves the Board of Directors, Executive Management, Human Resources, Internal Audit and other control functions. Performance is assessed on Group and Management Company level. Individual staff assessments are based on a weighting of financial and nonfinancial targets linked to the specific job scope and role. As such, the principle of individual performance assessment is based on an assessment of objectives reached as well an appreciation of the employee s long-term value creation. Furthermore, the performance reflects an assessment of business and interpersonal skills and is linked to the achievement of the individual. The criteria applied to establish fixed remuneration are job complexity, level of responsibility, performance and local market conditions. The Management Company s remuneration policy is available upon simple request on: info@novacap-am.com. Page 34