ANNUAL REPORT SEXTANT EUROPE. Performances. Unit A FR June 2018

Transcription

1 ANNUAL REPORT Unit A FR June 2018 SEXTANT EUROPE Market trends remain difficult to predict, while disappointing the bulls and frustrating the bears. As readers likely noted in our previous reports, we lean towards the bear camp and are somewhat puzzled by the market s ability to absorb the positive newsflow while overlooking the risks. Even Mr Trump s opponents have to admit that he is never boring. It was already difficult to navigate between the many possible consequences of a monetary policy that has no precedent, the caprices European politics (e.g. alliance between the extremist Northern League party and 5-Star movement in Italy, recent British government reshuffle over the Brexit question etc.), or very violent technological disruption. But now we must contend with the impact of Mr Trump s trade war, when he is not busy redrawing the defence budgets of NATO countries. A proponent of an inward-looking US, his decisions concerning the commercial penalties that his trading partners must pay seem to depend on nothing more than his humour. The stocks of German car manufacturers are still recovering In spite of all that, the markets remain undaunted. We would understand better if valuations were at the levels of , but that is far from the case. Indeed, on the basis of our preferred fundamental yardstick, European markets are trading at a 15% premium to their historical average, and the gap rises to 80% for the US market a level rarely seen in the past. However, we note some nervousness on individual situations. And reactions can be extremely violent, as we saw repeatedly with some companies usually small or mid caps such as Nexans, Econocom, Pandora and ICAP. The asset value of the fund rose only 0.6% in Q2, versus +4% for the Stoxx 600 NR. This poor showing wiped out the positive relative performance of Q1. We ended the first half down 1.8%, compared to a 0.3% slippage for the benchmark index. Sextant Europe did not participate in the market upswing, which was only partly due to the cautious stance that we chose to adopt (notably a near-10% average cash position for the quarter). Our portfolio experienced several setbacks that weighed on the performance. ILIAD tumbled another 20% in response to news of a fall in the number of fixed-line subscribers in Q1. We still expect the company to benefit from investments in fibre in the years ahead and the stock has several aces that have been overlooked by the market valuation (consolidation in France, entry into Italy, and a lower tax rate). These factors have prompted us to raise our exposure to the stock significantly, and it is now the portfolio s secondlargest position. Heidelberger Druckmachinen (HDD), a recent addition to the portfolio, fell 23% following publication of quarterly results which contained no solid evidence of the margin recovery expected in the medium term. We recommend patience, as the company is over the most difficult part of its restructuring, and concentration in the market for printing machines favours a margin recovery by the sector. Lastly, Bolloré (-10%) suffered when its CEO was investigated for some African dealings (although the group s transport activity is recovering strongly and Vivendi is preparing to monetise its stake in Universal Music) and BMW (-12%) was hit by Mr Trump s threats. On the other hand, the portfolio s performance was bolstered by stocks such as Criteo (+30%), Sixt (+11%) and Rocket Internet (+10%). Criteo is at last emerging from its stock-market purgatory thanks to publication of very good quarterly results and the return of its founder to the role of CEO. The market appears to be showing renewed interest in the fundamentals of a company that is one of the least expensive internet players in Europe. Not only is Criteo profitable, but the unique nature of its ad retargeting offering makes it an ideal partner for leading brands. Sixt has announced another upward revision of its earnings forecasts, and the stock is increasingly considered an e-mobility play rather than a car rental company. Lastly, Rocket Internet continued its good run of the first quarter: its listed shareholdings (Delivery Hero, HelloFresh) are performing very well and the IPO of furnishings website Home24 went well. This highlighted the stock s low valuation, with a significant part of capitalisation covered by cash holdings. In terms of changes to the portfolio, ILIAD and HelloFresh have moved into our top 5 at the expense of Bolloré and EasyJet (we reduced our holding of the airline following a good performance by the stock). We have already discussed ILIAD and we believe that the current share price is a rare opportunity to acquire the stock. Concerning HelloFresh, we think that this company s home delivery of «meal kits» has created a new segment in the food market that corresponds to the requirements of western consumers, short of time but long on practicality. Barriers to entry are higher than we thought previously (notably due to failure of food retailers to enter the segment), which has prompted us to raise our weighting of the stock. On the other hand, we divested several small positions (e.g. Europcar, Eutelsat), even though their valuations were not very high, but their strategies do not look solid enough in a market that is quick to punish disappointments severely. In a word, we have to be more demanding about valuations than in the past, and not in a hurry to sell issues that are gradually achieving the «growth stock» label. Sextant Europe (A) DJ Stoxx 600 NR 1 month -0.2% -0.6% 3 months 0.6% 4.0% 6 months -1.8% -0.3% 1 year -3.0% 2.9% 3 years 8.2% 8.3% 5 years 57.5% 52.8% Performances Sextant Europe (A) -16.0% 28.9% 24.6% 5.5% 21.0% -2.1% 10.3% DJ Stoxx 600 NR -8.5% 18.2% 20.8% 7.2% 9.6% 1.7% 10.6% % -0.3% Amiral Gestion rue de Grenelle Paris - T. +33 (0) F. +33 (0) Asset management company authorised by the Financial Markets Authority under the number GP / Insurance broker company registered with ORIAS under the number / Simplified joint-stock company with capital of RCS Paris VAT: FR

2 ANNUAL REPORT Distribution by capitalisation size SEXTANT EUROPE Weight of the main holdings Distribution of holdings by sector Geographical distribution of holdings Main holdings Name Sector Country Net asset % Contrib. to quarterly performance Sixt pref. Services to individuals Germany 6.1% 78 bps Iliad Telecommunications France 5.5% -65 bps Criteo Media / Internet France 5.2% 128 bps Vivendi Communication France 4.9% 10 bps HelloFresh Retail Germany 4.7% 16 bps Indicators Main contributions to performance 3-years volatility Fund : 13.1 % Benchmark : 14.6% Number of lines 42 Average cap. of equities M Median cap. of equities M Name Criteo Sixt pref. Rocket Internet Wavestone Dignity Contrib. 128 bps 78 bps 41 bps 32 bps 27 bps Name Heidelberger Druck Iliad Société Générale Derichebourg Showroomprivé Contrib. -79 bps -65 bps -32 bps -29 bps -26 bps Legal form UCITS / French mutual fund Share category ISIN code Unit A all subscribers FR Bloomberg code AGSEURA FP AMF classification "European Union Equities" UCITS Benchmark DJ Stoxx 600 NR NAV / Net assets / M Share NAV period Daily based on prices at market close Risk profile Scale from 1 (lowest risk) to 7 (highest risk); category-1 risk does not mean a risk-free investment. This indicator may change over time. Notice Main characteristics Launch date Fund : 29/06/2011 Unit : 29/06/2011 Recom. invest. duration Over 5 years Centralis.-Settlem. /Delivery D at 10 AM / D + 2 Custodian CACEIS Bank Transfert agent CACEIS Bank Tax provisions Eligible PEA (French personal eq. savings plan) Entry charge 2.00% including tax maximum Exit charge 1.00% including tax maximum Fixed management fee 2.00% including tax 15%, incl. taxes of the common fund's perf. Performance fee beyond the perf. of the DJ STOXX 600 (reinvested dividends) index, on the condition that its performance is positive Source: Amiral Gestion at 29/06/2018 This commercial document aims to present the characteristics of the fund on a simplified basis.for further information, you may refer to the key information document for investors and to the prospectus, which are legal documents available on the management company's internet site or by request to the management company.the performances shown are not a reliable guide to future performance. Performance may vary over time. Amiral Gestion rue de Grenelle Paris - T. +33 (0) F. +33 (0) Asset management company authorised by the Financial Markets Authority under the number GP / Insurance broker company registered with ORIAS under the number / Simplified joint-stock company with capital of RCS Paris VAT: FR

3 ANNUAL REPORT Unit I FR June 2018 SEXTANT EUROPE Market trends remain difficult to predict, while disappointing the bulls and frustrating the bears. As readers likely noted in our previous reports, we lean towards the bear camp and are somewhat puzzled by the market s ability to absorb the positive newsflow while overlooking the risks. Even Mr Trump s opponents have to admit that he is never boring. It was already difficult to navigate between the many possible consequences of a monetary policy that has no precedent, the caprices European politics (e.g. alliance between the extremist Northern League party and 5-Star movement in Italy, recent British government reshuffle over the Brexit question etc.), or very violent technological disruption. But now we must contend with the impact of Mr Trump s trade war, when he is not busy redrawing the defence budgets of NATO countries. A proponent of an inward-looking US, his decisions concerning the commercial penalties that his trading partners must pay seem to depend on nothing more than his humour. The stocks of German car manufacturers are still recovering In spite of all that, the markets remain undaunted. We would understand better if valuations were at the levels of , but that is far from the case. Indeed, on the basis of our preferred fundamental yardstick, European markets are trading at a 15% premium to their historical average, and the gap rises to 80% for the US market a level rarely seen in the past. However, we note some nervousness on individual situations. And reactions can be extremely violent, as we saw repeatedly with some companies usually small or mid caps such as Nexans, Econocom, Pandora and ICAP. The asset value of the fund rose only 0.6% in Q2, versus +4% for the Stoxx 600 NR. This poor showing wiped out the positive relative performance of Q1. We ended the first half down 1.8%, compared to a 0.3% slippage for the benchmark index. Sextant Europe did not participate in the market upswing, which was only partly due to the cautious stance that we chose to adopt (notably a near-10% average cash position for the quarter). Our portfolio experienced several setbacks that weighed on the performance. ILIAD tumbled another 20% in response to news of a fall in the number of fixed-line subscribers in Q1. We still expect the company to benefit from investments in fibre in the years ahead and the stock has several aces that have been overlooked by the market valuation (consolidation in France, entry into Italy, and a lower tax rate). These factors have prompted us to raise our exposure to the stock significantly, and it is now the portfolio s secondlargest position. Heidelberger Druckmachinen (HDD), a recent addition to the portfolio, fell 23% following publication of quarterly results which contained no solid evidence of the margin recovery expected in the medium term. We recommend patience, as the company is over the most difficult part of its restructuring, and concentration in the market for printing machines favours a margin recovery by the sector. Lastly, Bolloré (-10%) suffered when its CEO was investigated for some African dealings (although the group s transport activity is recovering strongly and Vivendi is preparing to monetise its stake in Universal Music) and BMW (-12%) was hit by Mr Trump s threats. On the other hand, the portfolio s performance was bolstered by stocks such as Criteo (+30%), Sixt (+11%) and Rocket Internet (+10%). Criteo is at last emerging from its stock-market purgatory thanks to publication of very good quarterly results and the return of its founder to the role of CEO. The market appears to be showing renewed interest in the fundamentals of a company that is one of the least expensive internet players in Europe. Not only is Criteo profitable, but the unique nature of its ad retargeting offering makes it an ideal partner for leading brands. Sixt has announced another upward revision of its earnings forecasts, and the stock is increasingly considered an e-mobility play rather than a car rental company. Lastly, Rocket Internet continued its good run of the first quarter: its listed shareholdings (Delivery Hero, HelloFresh) are performing very well and the IPO of furnishings website Home24 went well. This highlighted the stock s low valuation, with a significant part of capitalisation covered by cash holdings. In terms of changes to the portfolio, ILIAD and HelloFresh have moved into our top 5 at the expense of Bolloré and EasyJet (we reduced our holding of the airline following a good performance by the stock). We have already discussed ILIAD and we believe that the current share price is a rare opportunity to acquire the stock. Concerning HelloFresh, we think that this company s home delivery of «meal kits» has created a new segment in the food market that corresponds to the requirements of western consumers, short of time but long on practicality. Barriers to entry are higher than we thought previously (notably due to failure of food retailers to enter the segment), which has prompted us to raise our weighting of the stock. On the other hand, we divested several small positions (e.g. Europcar, Eutelsat), even though their valuations were not very high, but their strategies do not look solid enough in a market that is quick to punish disappointments severely. In a word, we have to be more demanding about valuations than in the past, and not in a hurry to sell issues that are gradually achieving the «growth stock» label. Sextant Europe (I) DJ Stoxx 600 NR 1 month -0.1% -0.6% 3 months 0.9% 4.0% 6 months -1.3% -0.3% 1 year -2.0% 2.9% 3 years 9.9% 8.3% 5 years 59.9% 52.8% Performances Sextant Europe (I) 29.0% 24.6% 5.6% 21.1% -1.9% 11.0% DJ Stoxx 600 NR 18.2% 20.8% 7.2% 9.6% 1.7% 10.6% % -0.3% Amiral Gestion rue de Grenelle Paris - T. +33 (0) F. +33 (0) Asset management company authorised by the Financial Markets Authority under the number GP / Insurance broker company registered with ORIAS under the number / Simplified joint-stock company with capital of RCS Paris VAT: FR

4 ANNUAL REPORT Distribution by capitalisation size SEXTANT EUROPE Weight of the main holdings Distribution of holdings by sector Geographical distribution of holdings Main holdings Name Sector Country Net asset % Contrib. to quarterly performance Sixt pref. Services to individuals Germany 6.1% 78 bps Iliad Telecommunications France 5.5% -65 bps Criteo Media / Internet France 5.2% 128 bps Vivendi Communication France 4.9% 10 bps HelloFresh Retail Germany 4.7% 16 bps Indicators Main contributions to performance 3-years volatility Fund : 13.1 % Benchmark : 14.6% Number of lines 42 Average cap. of equities M Median cap. of equities M Name Criteo Sixt pref. Rocket Internet Wavestone Dignity Contrib. 128 bps 78 bps 41 bps 32 bps 27 bps Name Heidelberger Druck Iliad Société Générale Derichebourg Showroomprivé Contrib. -79 bps -65 bps -32 bps -29 bps -26 bps Legal form UCITS / French mutual fund Share category ISIN code Unit I institutional investors FR Bloomberg code AGSEURI FP AMF classification "European Union Equities" UCITS Benchmark DJ Stoxx 600 NR NAV / Net assets / M Share NAV period Daily based on prices at market close Risk profile Scale from 1 (lowest risk) to 7 (highest risk); category-1 risk does not mean a risk-free investment. This indicator may change over time. Notice Main characteristics Launch date Fund : 29/06/2011 Unit : 29/06/2011 Recom. invest. duration Over 5 years Centralis.-Settlem. /Delivery D at 10 AM / D + 2 Custodian CACEIS Bank Transfert agent CACEIS Bank Tax provisions Eligible PEA (French personal eq. savings plan) Entry charge 5.00% including tax maximum Exit charge % including tax maximum Fixed management fee 1.00% including tax 15%, incl. taxes of the common fund's perf. Performance fee beyond the perf. of the DJ STOXX 600 (reinvested dividends) index, on the condition that its performance is positive Source: Amiral Gestion at 29/06/2018 This commercial document aims to present the characteristics of the fund on a simplified basis.for further information, you may refer to the key information document for investors and to the prospectus, which are legal documents available on the management company's internet site or by request to the management company.the performances shown are not a reliable guide to future performance. Performance may vary over time. Amiral Gestion rue de Grenelle Paris - T. +33 (0) F. +33 (0) Asset management company authorised by the Financial Markets Authority under the number GP / Insurance broker company registered with ORIAS under the number / Simplified joint-stock company with capital of RCS Paris VAT: FR

5 ANNUAL REPORT JUNE 2018 SEXTANT EUROPE Main changes made during the financial year, or forthcoming Additional information On 29 December 2017, creation of a new category known as N shares (clean share) available to all subscribers, but especially for: Marketing networks that have received the prior consent of the fund management company Distributors and/or intermediaries who have received the prior consent of the fund management company and providing the following services: - Independent advice as defined by the MIF2 regulation - Individual management under mandate Share of assets invested in securities eligible for an equity-saving plan (PEA): 81,46% Cash holdings at end of the financial year: 2,32% Percentage of the portfolio divestible in more than 30 days: 0% - Liquidity is controlled by the Density Technologies portfolio tracking tool. Frequency of transactions (rotation rate): 131,33% Possible steps taken by the custodian to exonerate himself from responsibility: NA Policy for selecting intermediaries: As a fund management company, Amiral Gestion selects service providers whose execution policy makes it possible to obtain the best possible result when orders are placed for its UCITs or clients. The company also users service providers that help with investment decisions and execution of orders. The policy is available on the Amiral Gestion website: Commission: Information about commission is available on the Amiral Gestion website: Policy of use of voting rights In accordance with article of the AMF s General Regulation, Amiral Gestion has drawn up a policy for the exercise of voting rights attached to the shares held by mutual funds that it manages. This policy is available on the Amiral Gestion website: A report on voting right is available on request from the fund management company. Criteria concerning the Environment, Social issues and Governance quality (ESG): Amiral Gestion does not simultaneously consider social, environmental and governance quality (ESG) criteria when deciding to buy or divest securities. However, Amiral Gestion does take account of extra-financial criteria in its investment policy. A quality rating is attributed to each investment based on qualitative criteria such as governance quality (respect for minorities, training, employee profit-sharing, quality of relations with suppliers etc) and respect for social and environmental objectives, even if this is not specifically a SRI policy. The policy describing the criteria for respect of social, environmental and governance quality issues is available on the Amiral Gestion website: Method for calculating global risk: The method for assessing the global risk for SEXTANT Europe is the commitment calculation method. Remuneration policy: Amiral Gestion implements a remuneration policy that respects the requirements of the AIFM and UCITS V directives and the ESMA guidelines. This remuneration policy is coherent and promotes sound and efficient risk management and does not encourage risk-taking that would be incompatible with the risk profiles, the regulations and the constitution documents of the mutual funds that it manages. This policy is also tailored to the interests of the mutual funds and their investors. Amiral Gestion employees are remunerated on a fixed and a variable basis. However, the variable part remains marginal relative to the overall remuneration paid to persons who have been identified as risk-takers or equivalent, as defined by the regulations.

6 All employees benefit from profit-sharing and an incentive scheme. All employees are also Amiral Gestion shareholders. Their shareholdings rise gradually and depend on each person s contribution to the company. As a result, the interests of Amiral Gestion investors and employees are aligned: the objective being to achieve the best possible long-term performance and to sustain the company. All company employees have a direct interest in the success of its funds and the company results, in order to discourage any dangerous risk-taking. Breakdown of remuneration paid in 2017 Category of employee Type of remuneration Managers and others who have a direct impact on the risk profile or an equivalent remuneration Compliance, Managers (non-fund) and department heads No. of employees 16 3 Fixed remuneration Total variable remuneration per category Maximum 100,000* - Incentive scheme - Dividends - 266K in bonuses Maximum 100,000 - Incentive scheme - Dividends - 50K 35,000 to 100,000 - Incentive scheme Other employees and non-risk takers 10 - Dividends - 138K * Except for one employee, in whose case a regularisation was necessary Full details of Amiral Gestion s remuneration policy are available on request, by simply writing to your manager at AMIRAL GESTION, 103 rue de Grenelle, Paris Transparence of transactions involving securities and re-use of financial instruments SFTR regulation in the currency of the mutual fund (EUR): During the financial year, the fund made no transactions that were subject to SFTR regulations. Amount of leverage available to the fund: Nil Full details of Amiral Gestion s remuneration policy, as well as total remunerations paid during the financial year, broken down according to the regulatory criteria, are available on request by simply writing to your manager at AMIRAL GESTION, 103 rue de Grenelle, Paris

7 Warning For more information, please refer to the Key Investor Information Document (KIID), the prospectus, and the relevant legal, Documents which are available on the company website or on request to the fund management company. Past performances are not a guide to future performances and are not constant over time. Amiral Gestion rue de Grenelle Paris - T. +33 (0) F (0) A portfolio management company approved by the AMF under the number GP / An insurance brokerage company registered with the ORIAS under the number / A simplified joint stock company with share capital of 629,983 Paris Company Registry: VAT: FR

8 SEXTANT EUROPE STATUTORY AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS For the year ended 29 June 2018 This is a free translation into English of our statutory auditor s report, the original of which was prepared in French for signature. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information therein, the original language version of our report takes precedence over this translation.

9 STATUTORY AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS For the year ended 29 June 2018 SEXTANT EUROPE OPCVM CONSTITUE SOUS FORME DE FONDS COMMUN DE PLACEMENT Governed by the French Monetary and Financial Code (Code monétaire et financier) Management company AMIRAL GESTION 103 rue de Grenelle PARIS Opinion In compliance with the assignment entrusted to us by the management company, we conducted an audit of the accompanying financial statements of SEXTANT EUROPE for the year ended 29 June In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the fund at 29 June 2018 and of the results of its operations for the year then ended, in accordance with French accounting principles. Basis of our opinion Audit standards We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Our responsibilities under these standards are described in the section "Statutory Auditor's responsibilities for the audit of the financial statements" in this report. Independence We conducted our audit engagement in accordance with the applicable rules on independence, from 30 June 2017 and up to the date of this report, and in particular we did not provide any non-audit services prohibited by the auditors' professional code of ethics. PricewaterhouseCoopers Audit, 63, rue de Villiers Neuilly-sur-Seine Cedex, France T: +33 (0) , F: +33 (0) , Société d expertise comptable inscrite au tableau de l ordre de Paris - Ile de France. Société de commissariat aux comptes membre de la compagnie régionale de Versailles. Société par Actions Simplifiée au capital de Registered office: 63 rue de Villiers Neuilly-sur-Seine. RCS Nanterre TVA n FR Siret Code APE 6920 Z. Bureaux : Bordeaux, Grenoble, Lille, Lyon, Marseille, Metz, Nantes, Nice, Paris, Poitiers, Rennes, Rouen, Strasbourg, Toulouse.

10 SEXTANT EUROPE Justification of our assessments In accordance with the requirements of articles L of the French Commercial Code (Code de commerce) relating to the justification of our assessments, we bring to your attention that the assessments we made related in particular to the accounting principles followed and significant estimates adopted. These assessments were made in the context of our audit of the financial statements, taken as a whole, and therefore contributed to the expression of the opinion in the first part of this report. Verification of the management report and other documents addressed to unit-holders In accordance with professional standards applicable in France, we have also performed the specific verifications required by French law. We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report, and in the documents addressed to the unit-holders with respect to the financial position and the financial statements. PricewaterhouseCoopers Audit, 63, rue de Villiers Neuilly-sur-Seine Cedex, France T: +33 (0) , F: +33 (0) , Société d expertise comptable inscrite au tableau de l ordre de Paris - Ile de France. Société de commissariat aux comptes membre de la compagnie régionale de Versailles. Société par Actions Simplifiée au capital de Registered office: 63 rue de Villiers Neuilly-sur-Seine. RCS Nanterre TVA n FR Siret Code APE 6920 Z. Bureaux : Bordeaux, Grenoble, Lille, Lyon, Marseille, Metz, Nantes, Nice, Paris, Poitiers, Rennes, Rouen, Strasbourg, Toulouse.

11 SEXTANT EUROPE Responsibilities of management and those charged with governance for the financial statements It is the management company's responsibility to prepare the fund's financial statements presenting a true and fair view in accordance with French accounting principles and to implement the internal control that it deems appropriate for the preparation of financial statements that do not contain material misstatements, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the fund's ability to continue as a going concern, disclosing in the financial statements, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the fund or to cease operations. These financial statements have been prepared by the management company. Statutory auditor's responsibilities for the audit of the financial statements Audit purpose and approach It is our responsibility to prepare a report on the financial statements. Our objective is to obtain reasonable assurance about whether the financial statements, taken as a whole, are free of material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As indicated in article L of the French Commercial Code, our statutory audit of the financial statements is not to guarantee the viability or the quality of your management. PricewaterhouseCoopers Audit, 63, rue de Villiers Neuilly-sur-Seine Cedex, France T: +33 (0) , F: +33 (0) , Société d expertise comptable inscrite au tableau de l ordre de Paris - Ile de France. Société de commissariat aux comptes membre de la compagnie régionale de Versailles. Société par Actions Simplifiée au capital de Registered office: 63 rue de Villiers Neuilly-sur-Seine. RCS Nanterre TVA n FR Siret Code APE 6920 Z. Bureaux : Bordeaux, Grenoble, Lille, Lyon, Marseille, Metz, Nantes, Nice, Paris, Poitiers, Rennes, Rouen, Strasbourg, Toulouse.

12 SEXTANT EUROPE As part of an audit conducted in accordance with professional standards applicable in France, the statutory auditor uses professional judgement throughout the entire audit. He also: identifies and assesses the risks of material misstatement of the financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence that is sufficient and appropriate to provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; obtains an understanding of internal control relevant to the audit 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 company's internal control; evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management in the financial statements; concludes on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the fund's ability to continue as a going concern. Such conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the company to cease to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are not provided or inadequate, to issue a qualified opinion or a disclaimer of opinion; evaluates the overall presentation of the financial statements and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Given the time necessary to obtain necessary further information to finalise our work, the present report has been prepared at the date of electronic signature. Neuilly sur Seine, 26 november 2018 The Statutory Auditor PricewaterhouseCoopers Audit Frédéric SELLAM

13 SEXTANT EUROPE ANNUAL ACCOUNTS 06/29/18

14 BALANCE SHEET - ASSET ON 06/29/18 IN EUR 06/29/18 06/30/17 Fixed Assets, net Deposits Financial instruments 30,421, ,354, Equities and similar securities 28,954, ,354, Traded in a regulated market or equivalent 28,954, ,354, Not traded in a regulated market or equivalent Bonds and similar securities Traded in a regulated market or equivalent Not traded in a regulated market or equivalent Credit instruments Traded in a regulated market or equivalent Negotiable credit instruments (Notes) Other credit instruments Not traded in a regulated market or equivalent Collective investment undertakings 1,406, General-purpose UCITS and alternative investment funds intended for 1,406, non-professionals and equivalents in other countries Other Funds intended for non-professionals and equivalents in other EU Member States General-purpose professional funds and equivalents in other EU Member States and listed securitisation entities Other professional investment funds and equivalents in other EU Member States and listed securitisation agencies Other non-european entities Temporary transactions in securities Credits for securities held under sell-back deals Credits for loaned securities Borrowed securities Securities sold under buy-back deals Other temporary transactions Hedges 60, Hedges in a regulated market or equivalent 60, Other hedges Other financial instruments Receivables 925, , Forward currency transactions Other 925, , Financial accounts 505, ,203, Cash and cash equivalents 505, ,203, Total assets 31,853, ,617,592.13

15 BALANCE SHEET - LIABILITIES ON 06/29/18 IN EUR 06/29/18 06/30/17 Shareholders' funds Capital 29,997, ,245, Allocation Report of distributed items (a) 1,498, Brought forward (a) Allocation Report of distributed items on Net Income (a,b) 617, ,357, Result (a,b) 529, , Total net shareholders' funds (net assets) 31,144, ,399, Financial instruments Transfers of financial instruments Temporary transactions in securities Sums owed for securities sold under buy-back deals Sums owed for borrowed securities Other temporary transactions Hedges Hedges in a regulated market or equivalent Other hedges Payables 641, , Forward currency transactions Other 641, , Financial accounts 67, Short-term credit 67, Loans received Total liabilities 31,853, ,617, (a) Including adjusment (b) Decreased interim distribution paid during the business year

16 OFF-BALANCE SHEET ON 06/29/18 IN EUR 06/29/18 06/30/17 Hedges Contracts in regulated markets or similar OTC contracts Other commitments Other operations Contracts in regulated markets or similar Options S&P 500 INDEX 12/2018 PUT , OTC contracts Other commitments

17 INCOME STATEMENT ON 06/29/18 IN EUR 06/29/18 06/30/17 Revenues from financial operations Revenues from deposits and financial accounts Revenues from equities and similar securities 754, , Revenues from bonds and similar securities Revenues from credit instruments Revenues from temporary acquisition and disposal of securities Revenues from hedges Other financial revenues Total (1) 754, , Charges on financial operations Charges on temporary acquisition and disposal of securities Charges on hedges Charges on financial debts Other financial charges Total (2) Net income from financial operations (1-2) 754, , Other income (3) Management fees and depreciation provisions (4) 218, , Net income of the business year (L ) ( ) 536, , Revenue adjustment (5) -6, , Interim Distribution on Net Income paid during the business year (6) Net profit ( ) 529, ,392.14

18 NOTES TO THE ANNUAL ACCOUNTS ACCOUNTING RULES AND METHODS The annual accounts are presented as provided by the ANC Regulation repealing Regulation CRC as amended. General accounting principles apply, viz: - fair picture, comparability, ongoing business, - proper practice & trustworthiness, - prudence, - no unreported change in methods from one period to the next. Revenues from fixed-yield securities are recognized on the basis of interest actually received. Acquisitions and disposals of securities are recognized exclusiveof costs. The accounting currency of the portfolio is the EURO. The accounting period reported on is 12 months. Asset valuation rules: Financial instruments are initially recognized at historic cost and carried on the Balance Sheet at their current value: this is their latest known market value or, in the absence of a market, is determined by any external means or by recourse to financial models. Differences between the securities current values determined as above and their original historic cost are recognized in the accounts as differences on estimation. Securities denominated in a currency other than that of the portfolio are valued in accordance with the above principle and then converted into the currency of the portfolio at the exchange rate obtained on the valuation date. Deposit: Deposits maturing in three months or sooner are valued according to the linear method. Equities, bonds and other securities traded in a regulated market or equivalent: When calculating the NAV, the equities and other securities traded in a regulated market or equivalent are valued based on the day s closing market price. Bonds and similar securities are valued at the closing price notified by various financial service providers. Interest accrued on bonds and similar securities is calculated up to the date of asset valuation. Equities, bonds and other securities not traded in a regulated market or equivalent: Securities not traded in a regulated market are valued by the Fund Manager using methods based on net equity and yield, taking into account the prices retained in significant recent transactions.. Negotiable credit instruments (Notes): Negotiable credit instruments which are not actively traded in significant amounts are actuarially valued on the basis of a reference rate as specified below, plus any enhancement to represent the issuer s intrinsic characteristics: Notes maturing in one year s time or less: euro interbank offered rate (Euribor); Notes maturing in more than one year s time: the prevailing rate on medium-term interest-bearing Treasury notes (BTAN) or, for the longest Notes, on near-term fungible Treasury bonds (OAT); Negotiable credit instruments maturing in three months or sooner may be valued according to the linear method. French Treasury notes are valued using the market rate published daily by the Banque de France. UCITS held: UCITS units or shares are valued at the latest known NAV. Temporary transactions in securities:

19 Securities held under sell-back deals are carried in Assets under credits for securities held under sell-back deals at the amount provided for in the contract, plus accrued interest receivable. Securities sold under buy-back deals are booked to the buying portfolio at their current value. The corresponding debt is booked to the selling portfolio at the value set in the contract plus accrued interest payable. Loaned securities are valued at their current value and carried in Assets under credits for loaned securities at their current value plus accrued interest receivable. Borrowed securities are carried in Assets under borrowed securities at the amount provided for in the contract, and in Liabilities under debts for borrowed securities at the amount provided for in the contract plus accrued interest payable. Hedges: Hedges traded in a regulated market or equivalent: Hedge instruments traded in regulated markets are valued at the day s settlement price. Hedges not trades in a regulated market or equivalent: Swaps: Rate swaps and/or forward currency transactions are valued at their market value according to the price calculated by discounting future interest streams at market interest (and/or exchange) rates. This price is adjusted for default risk. Index swaps are valued actuarially on the basis of a reference rate provided by the counterparty. Other swaps are valued at their market value or are estimated as specified by the Fund Manager. Off-Balance Sheet Commitments: Firm hedging contracts are stated among Off-Balance Sheet Commitments at their market value at the rate used in the portfolio. Conditional hedges are converted into their underlying equivalents. Swap commitments are stated at their nominal value or at an equivalent amount, where there is no nominal value. Management fees: Management fees are calculated on the nominal capital on each valuation. These fees are imputed to the fund s Income Statement. Management fees are paid in full to the Fund Manager, which bears all the fund s operating costs. The management fees do not include dealing costs. The percentage of nominal capital charged is % including taxes. Allocation of net profit: The net profit (loss) for the period is the total of interest, arrears, premiums, allotments and dividends, plus income on ready cash, minus management fees and financial dealing costs. Latent or realised capital gains or losses are not counted as revenue; nor are subscription/redemption fees. The amounts available for distribution are the net profit for the period, plus any sums brought forward, plus or minus the balance of any revenue adjustment accounts relating to the financial period in question. Gains and losses: The net realised gains (deducted from management fees and realised losses) from the financial year will increase the same type of net realized gains from earlier financial years, if the fund hasn t distributed or accumulated its gains and will also increase or reduce the equalization accounts for realised gains. Appropriation methods for the distributable amounts: Distributable amounts Allocation of the net income Unit: Accumulation and/ or distribution and / or carry forward a decision taken by the management

20 Allocation of the net realized gains and losses Accumulation and/ or distribution and / or carry forward a decision taken by the management

21 2. CHANGES IN NET ASSETS 06/29/18 IN EUR 06/29/18 06/30/17 Net assets in start of period 31,399, ,395, Subscriptions (including subscription fees received by the fund) 9,929, ,110, Redemptions (net of redemption fees received by the fund) -9,367, ,740, Capital gains realised on deposits and financial instruments 3,469, ,122, Capital losses realised on deposits and financial instruments -1,957, , Capital gains realised on hedges Capital losses realised on hedges -121,29 Dealing costs -184, , Exchange gains/losses -182, , Changes in difference on estimation (deposits and financial instruments) -2,370, ,607, Difference on estimation, period N 1,350, ,721, Difference on estimation, period N-1-3,721, , Changes in difference on estimation (hedges) -6, Difference on estimation, period N -6, Difference on estimation, period N-1 Net Capital gains and losses Accumulated from Previous business year Distribution on Net Capital Gains and Losses from previous business year Net profit for the period, before adjustment prepayments 536, , Allocation Report of distributed items on Net Income Interim Distribution on Net Income paid during the business year Other items Net assets in end of period 31,144, ,399,547.60

22 3. FURTHER DETAILS 3.1. BREAKDOWN OF FINANCIAL INSTRUMENTS BY LEGAL OR COMMERCIAL TYPE Amount % Assets Bonds and similar securities Total bonds and similar securities Credit instruments Total credit instruments Liabilities Transactions involving transfer of financial instruments Total transactions involving transfer of financial instruments Off-balance sheet Hedges Total hedges Other operations Equities 739, Total other operations 739,

23 3.2. BREAKDOWN OF ASSET, LIABILITY AND OFF-BALANCE SHEET ITEMS, BY TYPE Fixed rate % Variable rate % Rate subject to review % Other % Assets Deposits Bonds and similar securities Credit instruments Temporary transactions in securities Financial accounts 505, Liabilities Temporary transactions in securities Financial accounts 67, Off-balance sheet Hedges Other operations 3.3. BREAKDOWN OF ASSET, LIABILITY AND OFF-BALANCE SHEET ITEMS, BY TIME TO MATURITY < 3 Months % ]3 Months - 1 Year] % ]1-3 Years] % ]3-5 Years] % > 5 Years % Assets Deposits Bonds and similar securities Credit instruments Temporary transactions in securities Financial accounts 505, Liabilities Temporary transactions in securities Financial accounts 67, Off-balance sheet Hedges Other operations All hedges are shown in terms of time to maturity of the underlying securities.

24 3.4. BREAKDOWN OF ASSET, LIABILITY AND OFF-BALANCE SHEET ITEMS, BY LISTING OR VALUATION CURRENCY GBP USD CHF Other currencies Amount % Amount % Amount % Amount % Assets Deposits Equities and similar securities 2,968, ,618, , Bonds and similar securities Credit instruments Mutual fund units Temporary transactions in securities Liabilities 33, Financial accounts Liabilities Transactions involving transfer of financial instruments Temporary transactions in securities Financial accounts 67, Off-balance sheet Hedges Other operations 739, RECEIVABLES AND PAYABLES: BREAKDOWN BY TYPE 06/29/18 Receivables Sales deferred settlement 721, Subscription receivable 62, Coupons and dividends in cash 140, Total receivables 925, Payables Purchases deferred settlement 624, Management fees 16, Variable management fees Total of Payables 641,487.30

25 3.6. SHAREHOLDERS FUNDS Number of units issued or redeemed Units Value SEXTANT EUROPE A Units subscribed during the period 43, ,190, Units redeemed during the period -35, ,602, Net Subscriptions / Redemptions 8, ,588, SEXTANT EUROPE I Units subscribed during the period ,161, Units redeemed during the period ,225, Net Subscriptions / Redemptions ,063, SEXTANT EUROPE Z Units subscribed during the period , Units redeemed during the period , Net Subscriptions / Redemptions , SEXTANT EUROPE PART N Units subscribed during the period , Units redeemed during the period 0 Net Subscriptions / Redemptions , Subscription and/or redemption fees SEXTANT EUROPE A Value Total of redemption fees received Total of subscription fees received Total of subscription and/or redemption fees received SEXTANT EUROPE I Total of redemption fees received Total of subscription fees received Total of subscription and/or redemption fees received SEXTANT EUROPE Z Total of redemption fees received Total of subscription fees received Total of subscription and/or redemption fees received SEXTANT EUROPE PART N Total of redemption fees received Total of subscription fees received Total of subscription and/or redemption fees received

26 3.7.MANAGEMENT FEES 06/29/18 SEXTANT EUROPE A Underwriting commission Fixed management fees Percentage of management charges Variable management fees Trailer fees 191, SEXTANT EUROPE I Underwriting commission Fixed management fees Percentage of management charges Variable management fees Trailer fees 19, SEXTANT EUROPE Z Underwriting commission Fixed management fees Percentage of management charges Variable management fees Trailer fees 7, SEXTANT EUROPE PART N Underwriting commission Fixed management fees Percentage of management charges Variable management fees Trailer fees

27 3.8. COMMITMENTS RECEIVED AND GIVEN Guarantees received by the fund : None Other commitments received and/or given : None

28 3.9. FURTHER DETAILS Stock market values of temporarily acquired securities 06/29/18 Securities held under sell-back deals Borrowed securities Stock market values of pledged securities 06/29/18 Financial instruments pledged but not reclassified Financial instruments received as pledges but not recognized in the Balance Sheet Group financial instruments held by the Fund Isin code Name of security 06/29/18 Equities Bonds Notes UCITS Hedges