RAYMOND JAMES ASSET MANAGEMENT INTERNATIONAL RAYMOND JAMES MICROCAPS

Transcription

1 RAYMOND JAMES ASSET MANAGEMENT INTERNATIONAL RAYMOND JAMES MICROCAPS Annual report MUTUAL FUNDS - MUTUAL FUNDS UNDER FRENCH LAW This translation is for information purpose only - Only the French version is binding YEAR ENDED:

2 contents Information about investments and management...3 activity report...7 report of the auditor...10 annual accounts...12 balance sheet...13 assets...13 liabilities...14 off-balance sheet...15 income statement...16 appendices...17 accounting rules and methods...17 changes net assets...20 additional information...21 inventory Mutual Fund - Annual Report - Year ended:

3 Management company Depositary and custodian Statutory auditor Distributor RAYMOND JAMES ASSET MANAGEMENT INTERNATIONAL 40, rue La Boétie Paris SOCIETE GENERALE Paris Cedex 18 PRICEWATERHOUSECOOPERS AUDIT 63, rue de Villiers Neuilly-sur-Seine Cedex RAYMOND JAMES ASSET MANAGEMENT INTERNATIONAL 40, rue La Boétie Paris Information about investments and management Classification: Equities from European Union member countries. Method of dertermination and appropriation of earnings: Full capitalisation of A and I units as well as net capital gains, recognition of accrued coupons. Investment objective: The management goal of this FCP is to outperform the equities market over the long term and seek Fund performance in excess of 7% on an average annual basis, after taking account of current expenses, over a period in excess of 5 years, through discretionary management of small stock market caps. The AMF reminds potential subscribers that the performance target of an average growth of 7% over a long period, indicated in the "Management goal" section, is based on the market hypotheses developed by the management company turning out to be accurate and in no way constitutes a promise of yield or performance by the "Fonds Commun de Placement" (FCP). Benchmark index : No existing index reflects the FCP's management objective. The investment strategy employed makes any comparisons with a benchmark index meaningless. However, for information purposes, the performance of the Fund may be subsequently compared to that of the MSCI Europe Micro Caps Daily Net TR Local (Bloomberg ticker: MSEIEMLN Index). The MSCI Europe Micro Caps index is an index that represents the trend of all the shares of European micro cap stocks denominated in euros. The performance of this index is calculated with dividends reinvested, daily at the close. Since management of this FCP is not based on tracking an index, the performance of the fund may be higher or lower than this benchmark indicator. Investment strategy: 1. Strategies employed: The portfolio is mainly specialised in discretionary management of "micro cap" equities (stock market capitalisations of less than 300 million euros at the time they enter the portfolio) listed on regulated markets or MTFs from any of the countries in the European Union without any particular geographic or sector based allocation and with at least 75% of net assets invested in securities eligible for the PEA-PME French equity savings plan, i.e. companies having less than 5,000 employees and turnover of less than 1.5 billion euros or a balance sheet total less than 2 billion euros. A maximum proportion of 10% of net assets may be invested in countries outside the European Union (OECD and emerging countries, in particular Switzerland, Norway, Turkey and east European countries). The securities picked are based on an investment process that takes account of a global macro-economic scenario enabling the preferred investment themes to be identified. The manager then selects securities that match the investment themes chosen. These themes are defined by a theme orientation committee meeting every two months. A financial analysis based on quantitative criteria (operational leverage, generation of cash flows, valuation ratios, equity profitability, discount on the ABV, yield, etc.) and 3 Mutual Fund - Annual Report - Year ended:

4 qualitative criteria (profile of the business sector, quality of management, durability of the business model) is used to select securities. To do this, the manager of the FCP will favour private meetings with listed companies. The FCP will hold a limited number of securities (around fifty). A maximum of 25% of the portfolio's net assets may be invested in bonds and other negotiable debt securities from a member state in the euro zone, in money market securities and equity warrants. The origin of the performance can come either from the management of the sector-specific allocation or the choice of securities. To a lesser extent, management of liquidities can also contribute to this added value. Equities are the favoured financial instrument in managing this Fund. The portfolio may be invested in UCITS of all types of classification within the maximum limit of 10% of net assets. The management company does not simultaneously take account of social, environmental and governance quality (ESG) criteria in determining the investment policy of this Fund. Assets (excluding derivatives): Equities: Raymond James MicroCaps is a PEA-PME eligible fund of which 75% at least of the net assets are invested in French or European Union equities. In respect of the regulations on PEA-PME equity savings plans, the Fund is invested mainly in equities and similar stock of companies from the European Union listed on regulated markets or MTFs, on the one hand, employing less than 5,000 employees and, on the other hand, with turnover not exceeding 1.5 billion or a total balance sheet not exceeding 2 billion. The investment is mainly in micro cap securities whose capitalisation does not exceed 300 million euros when they join the portfolio. The Fund may invest up to 100% of its net assets in listed equities from all countries of the European Union having a capitalisation of under 300 million euros. In all, the degree of exposure to the equities risk is between 75% and 100% of net assets. The Fund can invest at most 10% of net assets in securities from countries not belonging to the European Union. The manager will invest up to 10% of the net assets of the Fund in the emerging countries. The exchange rate risk will not be hedged. Raymond James MicroCaps can hold securities from companies whose business is mainly located in the countries of the European Union and listed on regulated markets or MTFs in the countries of the OECD. At most 10% of net assets will be invested in countries outside the European Union. Debt securities and money market instruments: Within a maximum limit of 25%, the Fund s net assets may be invested in bonds and other negotiable securities from a Eurozone member state with an Investment grade rating from at least one of the main rating agencies and in line with the management company s analyses, in monetary units and in share purchase warrants. The sensitivity of the portfolio will be between 0 and 3. In all, the degree of exposure to the interest rate risk is between 0% and 25% of net assets. The Fund will not invest in securities issued by private issuers and in speculative grade. Units or shares of other UCITS: The FCP may not invest more than 10% of its net assets in units or shares of UCITS governed by French or European law in compliance with the European Directive 2009/65/EC. These UCITS may be of any type of classification. The UCITS selected may be managed by Raymond James Asset Management International. 2. Derivative instruments: None. 3. Securities with embedded derivatives: None. 4. Deposits: For the purposes of liquidity management, the FCP can have recourse to deposits invested in the same credit institution for up to 10% of net assets. 5. Cash borrowing: The Fund may arrange temporary cash borrowings of up to 10% of the net asset value. 6. Temporary purchases and disposals of securities: None. 4 Mutual Fund - Annual Report - Year ended:

5 Risk profile: The FCP's risk profile is intended for an investment horizon in excess of 5 years. As for all financial investments, potential investors must be aware that the value of the FCP's assets is subject to market fluctuations and may vary greatly. Risk of capital loss: The Fund is not guaranteed or protected; the capital initially invested may not be recovered. Capital loss occurs when units are sold for less than the purchase price. Risk linked to discretionary management: The discretionary management style is based on the anticipation of developments on the various equity markets. There is a risk that the Fund may not be invested at all times in the highest performing markets. Risk linked to equity markets: The degree of exposure to the equities risk is between 75% and 100% of net assets. A drop in equity markets may lead to a drop in the Fund's net asset value. The attention of investors is drawn to the fact that the FCP's investments are concentrated on micro cap equities, small and medium sized businesses and intermediate sized businesses. Since the volume of these securities listed on the stock market is smaller, market movements, both up and down, are more pronounced and faster than for large caps. The net asset value of the FCP may therefore have the same behaviour. Liquidity risk: The lower volumes on small and mid-cap markets may present a liquidity risk. This type of investment may impact the valuation of the Fund and the price conditions at which the Fund may be forced to liquidate positions, particularly in the event of significant redemptions, or may even make it impossible to sell such positions resulting in a possible decline in the net asset value or a suspension thereof if securities cannot be priced. Interest rate risk: The degree of exposure to the interest rate risk is between 0% and 25% of net assets. The FCP may invest in bonds and will therefore be subject to interest rate changes. When rates rise, the value of rate products held in the portfolio falls. The rise in rates may therefore cause a drop in the net asset value of the UCITS. Credit risk: This is the risk that may result from the deterioration in the signature or the default of an issuer of debt securities, which may cause a drop in the value of its assets, and therefore the decline in the Fund's net asset value. Foreign exchange risk: The exchange risk is the risk of a fall in the value of investments in relation to the euro, the benchmark currency for the portfolio. The fluctuation in currencies with respect to the euro can have a negative influence on the value of these instruments and consequently lead to a drop in the net asset value of the FCP. The exchange risk is proportional to the share of assets invested in foreign transferable securities outside the euro zone (i.e. at most 100% of assets). Risk linked to investments in emerging markets: the attention of investors is drawn to the fact that up to 10% of the FCP's net assets may be invested in securities issued on emerging country markets whose operating and surveillance conditions may differ from those standards prevailing on the largest financial markets. Fluctuations in the prices of these securities can have a positive or negative influence on the value of these instruments and therefore lead to a rise or fall in the net asset value of the FCP. Eligible subscribers and typical investor profile: - A units: all subscribers, but especially physical persons - I units: all subscribers but especially institutional investors Fund units are eligible for the PEA and PEA-PME savings plans and Life Insurance contracts. The Fund is suited to investors seeking exposure to equity markets through micro caps to take advantage of the growth in Small and Medium sized Businesses (SMB) and Intermediate sized Businesses and who are aware of the risks related to market volatility. The amount that can be reasonably invested in the Fund depends on each investor's personal situation. To determine this amount, investors must take into account their personal assets, their current requirements, the recommended investment period but also their willingness to take risks given the inherent volatility of equity markets and the dynamic strategy of the Fund. It is also recommended that you sufficiently diversify your investments so as to avoid an exposure only to the risks of a single UCITS. Investment restrictions The units in this UCITS are not and will not be registered in the United States under the US Securities Act of 1933, as amended ("1933 Securities Act") nor allowed under any applicable law in a US state. Its units may not be sold or offered for sale directly or indirectly in the United States of America (including its territories or possessions), to any citizen of the United States of America (US Person and assimilated) such as that term is defined by the American "S Regulation" under the 1933 Act adopted by the US financial market regulation authority (the "Securities and Exchange Commission" or "SEC"). The FCP is not and will not be registered under the US Investment Company Act of Any resale or transfer of units in the United States of America or to any US Person may constitute a breach of US law. Recommended investment period: More than 5 years. Tax regime: The FCP is eligible for the PEA and PEA-PME French equity savings plans. As such, the management of this FCP meets the standards set for the PEA and PEA-PME. Therefore the portfolio will contain at least 75% of equities eligible for the PEA-PME. 5 Mutual Fund - Annual Report - Year ended:

6 This UCITS is eligible for the common law reduction scheme for the holding period and that can be operated on the net amount of the capital gain. The co-ownership structure of the Fund means it falls outside the scope of corporation tax. Furthermore, the law exempts capital gains on sales of securities carried out as part of the management of the Fund as long as no physical person, acting directly or through another person, holds more than 10 % of its units (article A, III-2 of the French Tax Code). In accordance with the transparency principle, the tax administration considers that the unit-holder is the direct holder of a fraction of the financial instruments and liquid assets held by the Fund. As the Fund only offers capitalisation units, in principle the tax regime is that applicable to capital gains on transferable securities in the holder's country of residence, depending on the holder's situation (physical person, legal entity subject to corporate tax, etc.). The rules applying to unit-holders residing in France are set by the French Tax Code. Depending on your tax regime, any capital gains and income deriving from ownership of units of the UCITS may be subject to tax. You are advised to find out more regarding this issue from your account officer or tax advisor. In no case may this service be billed either to the Fund or to the Management Company. For further information, the full prospectus is available on request from the management company. The net asset value is available from the management company. The prospectus and most recent annual and periodic reports, drafted in French, along with subscription and redemption procedures, are available free of charge by sending a written request to the portfolio Management Company: Raymond James Asset Management International - 40, rue La Boétie Paris. Tel.: These documents are also available on the site AMF approval date: 29 November Fund creation date: 17 December Mutual Fund - Annual Report - Year ended:

7 activity report 1) Macro-economic context: 2016 will have been a particularly volatile year, one rich in surprises for a certain economic rebalancing took place between emerging and developed economies, while a very full political calendar weighed on all asset classes and on investor morale. Points worth remembering for this financial year: The world economy fell back slightly below the hopes of a 3% growth rate (with 2.8% expected) in a wide-ranging movement to re-onshore in major developed economies while the current accounts of emerging economies were rebalanced in the wake of a rebound in raw materials and in the price of a barrel of oil. By major geographical area, the United States were affected by one-off events like strike action and drawing down inventories while growth in wages and corporate investment was below expectations. However, accelerating fourth quarter data with GDP up 3.5% (Quarter on Quarter), consumer spending up 3%, continuing residential investment, an unemployment rate of 4.6% and inflation at 2.1% reassured the FED enough that it raised interest rates at the end of the year, leaving the door open for three more rises during In the Eurozone, growth was in line with expectations at close to 1.6% (annual rate) driven by the resilience of the German economy and growth in Spain. Italy is the underperformer, mired in political issues and the necessary recapitalisation of the country s banking system. Inflation across the Eurozone rose from 0.3% in January to 1% in December, partly driven by rising oil prices, but it still did not reach the ECB s 2% target. The latter therefore retained its accommodating policies throughout the year, maintaining the non-conventional QE policy of asset purchases intended to underpin the cost of lending but specially to ensure consistent financing costs across the Eurozone economies (refinancing the PIGS, governments and the banking systems). At the end of the period, the announcement of a reduced rate of purchases, falling to 60 Billion Euros a month compared with 80 Billion previously, was aimed at preparing investors for a tapering-off by the ECB at the end of Within the emerging nations, raw material exporters (Russia, Brazil) returned to a path of economic growth, even if the road is still a long and fragile one. China stabilised its growth thanks to the latest growth package paid for by bank loans, but which in its dynamics impacts the financial balance and that of the banks. Furthermore, the country is facing continuing currency falls and capital flight. Its falling currency does not play well with its trading partners, especially the United States. Lastly, Japan, essentially lacking anything to power domestic growth, saw its growth slow to 0.6% in Nevertheless, control over lending rate trends by the Bank of Japan to put pressure on the Yen/Dollar rate and a new round of fiscal stimulus from the government should offer support to the economy. We will also remember 2016 as a big political year, bringing a degree of volatility to stock markets during the first ten months of the year. A desire to change austerity and immigration policies especially, with the rising strength of populism encouraged electoral upsets. After Brexit (the unanticipated result of the UK referendum that encouraged a return of inflation following the fall by sterling but with strong support for growth provided by the Bank of England), the Italian referendum (which led to Prime Minister Renzi resigning) and the US presidential elections (with the unexpected victory of Republican candidate Donald Trump with equally unexpected proposals). In the end, investor s worries quickly dissipated to leave room for a positive revision in prospects for growth and inflation in the wake of the appearance of policies calling for a fiscal stimulus. Regarding the price of a barrel of oil, the strong underlying force behind reflation, we should note that the year closed on a significant increase of 47% on an annual basis, at 52 dollars a barrel for WTI, boosted by hopes for an agreement between non- OPEC countries on a production freeze. This agreement still looks hard to implement and US production from shale gas and oil wells took advantage of rising oil prices to return to growth. This should of course weigh on the future balance price (the consensus view is $55 a barrel). Although restrained throughout the year, the markets finished the year with a strong upward move. That said, the uncertainties for the coming year remain: The coming impact of a potential Brexit, the results of the French, Dutch, German and possibly Italian elections, the implementation of a new and ambitious US Presidential policy program (with lower taxes, controls on immigration and offshoring policies, fiscal stimulus through infrastructure spending, introducing Customs duties, etc.). The election of the new US President at the end of the period accelerated the US Dollar s rise against other currencies (to $1.05 against the Euro). The fall on the bond markets in developed countries started at the end of July, in the wake of reflation phenomena (2.45% on the US 10-year treasury bond) allowing a rebound on all stock markets, which during the first nine months had favoured growth sectors and stocks. This ensured that at the end of the period a rotation took place in favour of cyclical and financial stocks. Lastly, we should restate that credit markets again turned in a good performance in the wake of action by the ECB. 7 Mutual Fund - Annual Report - Year ended:

8 2) Management strategy: The fund s investment policy for 2016 matched the one defined during past years. The share investment ratio remained around 85% with the cash share remaining at a high level give the moderately liquid securities in the portfolio. It was however sometimes below the average level during the second part of the year due to high subscription levels in the fund. We should note that the fund saw three takeovers in 2016 which is practically cash in the portfolio. These takeovers were Ausy (1.55%), Heurthey Petrochem (1.35%) and Zetes (0.98%) at end December Hence fund exposure was 85.25% at end December 2016 or 81.37% if the takeovers are removed. After 2015, marked by the rerating of the MicroCaps asset class thanks to renewed growth in the Eurozone and a return of cashflows thanks to the SMI share funds, 2016 was a less volatile year than 2015 despite Brexit and Donald Trump s election. During the first part of the year, the market for small cap shares saw a fall, especially in June due to Brexit (with our indicator of reference for macro-economic improvement in the Eurozone down 5.63%. The MicroCaps market still recorded a rise of 19.38% during the first half of the year). The second half of the year was the opposite with the return of cashflows to the asset class, clearly outperforming the large cap share indexes. Early in the year, we lightened some of our holdings that saw significant rises as their valuation had been reached. This profit taken especially related to Exel industries, Store Electronic and S&T. The 1000Mercis, NextRadioTV, Vetoquinol, Doro, Visiativ, Solutions30, Econocom, Adler Modemarkte, Jacques Bogart holdings were also sold off in full. They no longer appeared to match our theme-based analysis or had reached our target valuation. Regarding buys, Raymond James Microcaps initiated eighteen new positions including one IPO which together came to 26.6% of net fund assets by end These new investment ideas were identified as part of our theme-based strategy. Hence, we took out positions in Environnement Sa and Groupe SFPI, while our Post-Crises Economy theme was especially relevant with the rebound of European SMIs. The Post-Crises Economy, Service Economy and Special Situations themes formed the main focus of our search for new investments. On 31 December 2016, the value of the Raymond James MicroCaps Fund, A Unit was and 145, for the I Unit. Over the period, unit values recorded a rise of 16.79% and 17.94% respectively. The reference index, the MSCI Europe Microcaps Net Local, for its part rose by 12.7%. Taking into account the rise in markets during 2016 and net subscriptions, net assets came in at million compared with 32.4 million at the end of Please note that the fund is now closed to all new subscriptions. Past performance achieved during the period is no guarantee of future UCITS results. The method used by the management company to calculate the overall risk is that of the commitment calculation. The report on brokerage fees for the 2016 financial year is available from the website at rjami.com. Assets eligible for PEA investments The proportion of investments in assets in shares or rights eligible for a PEA as of 31/12/2016 is 83.17% and those eligible for SMI PEA funds (PEA-PME) is 82.67%. Intermediary selection procedure Raymond James Asset Management International applies a formal procedure to approve and monitor investment service providers used to execute orders. This procedure is based on service appraisal criteria that take account of both qualitative and cost factors. Once approved, these providers are regularly reviewed to ensure service and execution quality is maintained at the highest possible level. Relations with these providers are formally set down in order execution agreements. The counterparty selection policy can be consulted on our web site rjami.com. Voting rights As the Fund's transferable securities are jointly owned, no voting rights are attached to the units held. The decisions concerning the Fund are taken by the management company in unit-holders' best interests. The voting policy can be consulted on the web site rjami.com. The conflict of interest management policy can be consulted on the rjami.com website. ESG information This UCITS does not simultaneously take account of social, environmental and governance quality (ESG) criteria. Compensation policy at Raymond James Asset Management International In line with Article of the French Financial Markets Authority (Autorité des Marchés Financiers) General Regulations and in line with AMF instruction , Raymond James Asset Management International has updated their compensation policy as part of their program of activities. 8 Mutual Fund - Annual Report - Year ended:

9 1. Compensation policy The compensation policy in place at Raymond James Asset Management International is compliant with the stipulations mentioned in Directive 2011/61/EU of the European Parliament and Council of 8 June 2011 on Alternative Investment Fund Managers and with the stipulations mentioned in Directive 2014/91/EU on UCITS managers. The policy implemented relating to compensation structures and practices is intended to contribute to reinforcing healthy and balanced management of risks weighing on both Raymond James Asset Management International and on the funds managed by the latter. The Compensation Committee at Raymond James Asset Management International comprising the President and CEO as well as the Deputy Managing Director and US representatives of Raymond James Financial, the core company, at its last meeting in January 2017, approved the policy applicable to financial year 2016, in line with the principles set out in the AIFM Directive and in the UCITS V directive. The compensation policy applicable for financial year 2017 will be reviewed during the next meeting scheduled for January Compensation amounts paid by Raymond James Asset Management International to its staff After validation of the compensation policy for the relevant staff (under the terms of the AIFM and UCITS V directives) for 2016, in line with the proposals made by the Compensation Committee, the variable compensation amounts for financial year 2016 were paid in January Information relative to variable compensation paid in 2017, for financial year 2016, is set out in the 2016 annual reports for the share funds and the UCITS. Year granted (All staff) 2015 In K 2016 In K 2017 In K (Budget) Comments Fixed salaries This amount includes any increases that may apply Total variable compensation (Differed + Non differed) Non differed variable compensation Differed variable compensation Amount assigned and paid in full in January for the previous year TOTAL Securities Financing Transactions Regulation (SFTR) In its day to day management, Raymond James Asset Management does not use securities financing operations and overall return exchange contracts. 9 Mutual Fund - Annual Report - Year ended:

10 report of the auditor STATUTORY AUDITOR S REPORT on the financial statements for the year ended December 31, 2016 RAYMOND JAMES MICROCAPS UCITS IN THE FORM OF A FONDS COMMUN DE PLACEMENT (FCP unincorporated mutual fund) Governed by the Financial and Monetary Code Fund managed by : RAYMOND JAMES ASSET MANAGEMENT INTERNATIONAL 40, rue La Boétie Paris To unitholders, In compliance with the assignment entrusted to us by authorised bodies of the management company, we hereby report to you, for the year ended December 31, 2016, on: - the audit of the accompanying financial statements of RAYMOND JAMES MICROCAPS; - the justification of our assessments; - the specific verifications and disclosures required by law. These financial statements have been approved by the management company. Our role is to express an opinion on these financial statements based on our audit. I. OPINION ON THE FINANCIAL STATEMENTS We conducted our audit in accordance with professional standards applicable in France; those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures, using sample techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as 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. In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as at December 31, 2016 and of the results of its operations for the year then ended in accordance with French accounting principles. II. JUSTIFICATION OF OUR ASSESSMENTS In accordance with the requirements of article L of the French Commercial Code (Code de Commerce) relating to the justification of our assessments, we inform you that the assessments we made related in particular to the accounting principles followed and significant estimates adopted. The assessments were made as part of our audit of the financial statements, taken as a whole, and therefore contributed to the opinion we formed which is expressed in the first part of this report. PricewaterhouseCoopers Audit, 63, rue de Villiers, Neuilly-sur-Seine Cedex T: +33 (0) , F: +33 (0) , Firm of Auditors, member of the Compagnie Regionale de Versailles. Limited Liability Company with capital of Registered offices: 63, rue de Villiers Neuilly-sur-Seine RCS Nanterre TVA n FR Siret Code APE 6920 Z. 10 Mutual Fund - Annual Report - Year ended:

11 III. SPECIFIC VERIFICATIONS AND DISCLOSURES We have also performed, in accordance with professional standards applicable in France, 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 report of the management company and in the documents addressed to the unitholders with respect to the financial position and the financial statements. Neuilly-sur-Seine, June 21, 2017 The Statutory Auditor PricewaterhouseCoopers Audit Didier Bénâtre Partner 11 Mutual Fund - Annual Report - Year ended:

12 annual accounts 12 Mutual Fund - Annual Report - Year ended:

13 BALANCE SHEET assets Currency Net assets Deposits Financial instruments , ,32 EQUITIES AND SIMILAR SECURITIES Traded on a regulated or similar market , ,27 Not traded on a regulated or similar market - - BONDS AND SIMILAR SECURITIES Traded on a regulated or similar market - - Not traded on a regulated or similar market - - DEBT SECURITIES Traded on a regulated or similar market Negotiable debt securities - - Other debt securities - - Not traded on a regulated or similar market - - MUTUAL FUNDS UCITS and general purpose AIF for non-professionals and equivalents in other countries , ,05 Other funds for non-professionals and equivalents in other European Union Member States - - Professional general purpose funds and equivalents in other European Union Member States and listed securitization bodies - - Other Professional Investment Funds and equivalents in other European Union Member States and unlisted securitization bodies - - Other non-european organisations - - TEMPORARY PURCHASES AND SALES OF SECURITIES Receivables representing financial repurchase agreements - - Receivables representing financial securities lendings - - Borrowed financial securities - - Repurchase financial agreements - - Other temporary purchases and sales - - FINANCIAL CONTRACTS Transactions on a regulated or similar market - - Other transactions - - OTHER FINANCIAL INSTRUMENTS - - Receivables - - Foreign exchange forward contracts - - Other - - Financial accounts , ,10 Cash and cash equivalents , ,10 Other assets Total assets , ,42 13 Mutual Fund - Annual Report - Year ended:

14 BALANCE SHEETliabilities Currency Equity Capital , ,88 Previous undistributed net capital gains and losses - - Retained earnings - - Net capital gains and losses for the financial year , ,10 Result , ,90 Total equity (amount representing net assets) , ,08 Financial instruments - - DISPOSALS OF FINANCIAL INSTRUMENTS - - TEMPORARY PURCHASES AND SALES OF FINANCIAL SECURITIES Debts representing financial repurchase agreements - - Debts representing financial securities borrowings - - Other temporary purchases and sales - - FINANCIAL CONTRACTS Transactions on a regulated or similar market - - Other transactions - - Debts , ,34 Foreign exchange forward contracts - - Other , ,34 Financial accounts - - Cash credit - - Borrowings - - Total liabilites , ,42 14 Mutual Fund - Annual Report - Year ended:

15 OFF-balance sheet Currency Hedging Commitments on regulated or similar markets - Futures market (Futures) Options market (Options) Credit derivatives Swaps Contracts for Differences (CFD) - - OTC commitments - Futures market (Futures) Options market (Options) Credit derivatives Swaps Contracts for Differences (CFD) - - Other commitments - Futures market (Futures) Options market (Options) Credit derivatives Swaps Contracts for Differences (CFD) - - Other transactions Commitments on regulated or similar markets - Futures market (Futures) Options market (Options) Credit derivatives Swaps Contracts for Differences (CFD) - - OTC commitments - Futures market (Futures) Options market (Options) Credit derivatives Swaps Contracts for Differences (CFD) - - Other commitments - Futures market (Futures) Options market (Options) Credit derivatives Swaps Contracts for Differences (CFD) Mutual Fund - Annual Report - Year ended:

16 INCOMEstatement Currency Income from financial transactions Income from deposits and financial accounts - 0,01 Income from equities and similar securities , ,18 Income from bonds and similar securities - - Income from debt securities - - Income from temporary purchases and disposals of financial securities - - Income from financial contracts - - Other financial income - - Total (I) , ,19 Expenses on financial transactions Expenses on temporary purchases and disposals of financial securities - - Expenses on financial contracts - - Expenses on financial debt ,35 - Other financial expenses - - Total (II) ,35 - Profit/loss on financial transactions (I - II) , ,19 Other income (III) - - Management fees and depreciation expense (IV) , ,28 Net income for the period (L ) (I - II + III - IV) , ,09 Income adjustments for the period (V) , ,19 Interim payments in terms of the period (VI) - - Income (I - II + III - IV +/- V - VI): , ,90 16 Mutual Fund - Annual Report - Year ended:

17 appendices1 accounting rules and methods a. Rules for evaluating assets 1- Valuation method Contracts: - Off-balance sheet transactions are valued at their market value. 2- Practical details The financial statements are presented in the form provided by the Regulation ANC that repealed Regulation CRC amended. Financial instruments and securities traded on a regulated market are evaluated at the market price. However, the instruments below are evaluated according to the following specific methods: - European bonds and equities are evaluated at the closing price, foreign securities at the last known price. - Equities and bonds that are subject to hedging or arbitrage by positions on futures markets are evaluated on the basis of the day's closing price. - Securities involving negotiable and similar receivables that are not the subject of significant transactions are assessed by application of an actuarial method, with the adopted rate being that of the issues of equivalent securities affected, as relevant, by a difference that is representative of the intrinsic characteristics of the security s issuer. However, negotiable debt instruments with a remaining maturity of less than three months may, in the absence of special considerations, be evaluated by reference to the straight-line method. - Negotiable debt securities with a lifetime of less than three months are valued at the purchase negotiation rate. The gain or loss is amortised using straight line depreciation over the lifetime of the negotiable debt securities. - Negotiable debt securities with a lifetime greater than three months are valued at the market rate. - The units or shares of UCITS will be valued at the last known net asset value. - Securities that are the subject of temporary sale or purchase contracts are valued in compliance with regulations in force under the terms of the original contract. This model aims at approaching a current value at a given instant failing the existence of transactions representative of a liquid market. This current value is calculated by applying a discount to the nominal value of the bonds in view of holding them to maturity. Financial instruments not traded on a regulated market are valued under the responsibility of the management company at their probable trading value. - Futures transactions will be valued at the clearing price and options transactions according to the security of the support. - The market value for forward contracts is the price of the security in euro multiplied by the number of contracts. - The market value for options transactions corresponds to the value of the underlying asset. - Interest rate swaps are valued at the market rate in compliance with contractual provisions. The financial instruments for which the price is not determined on the valuation date or for which the price was corrected are valued at their probable trading value under the responsibility of the management company's board of directors. These valuations and their justification are provided to the auditor at the time of the latter s verifications. The databases used are "Finalim", "Securities 3000" from Reuters and "Bloomberg". Search possibilities are completed by "Fin'xs" from Télékurs. - Asia-Oceania : afternoon extraction for a quote at the day's closing price. 17 Mutual Fund - Annual Report - Year ended:

18 appendices - America : morning extraction for a quote at the day before's closing price. end of afternoon extraction for a quote at the day's opening price. - Europe : morning extraction (D+1) for a quote at the day's closing price. start of afternoon extraction for a quote at the day's opening price. - Contributors : tailored extractions depending on price availability and the procedures defined by the Management Company. The fixing rate used for currencies is the ECB rate. b. Accounting methods Income from financial instruments is posted using the accrued coupon accounting method. Transaction fees are posted according to the fees included method. c. Method for evaluating off-balance sheet commitments - Off-balance sheet transactions are valued at their commitment value. - The commitment value for futures contracts is equal to the price (in the currency of the UCITS) multiplied by the number of contracts multiplied by the nominal amount. - The commitment value for options contracts is equal to the price of the underlying security (in the currency of the UCITS) multiplied by the number of contracts multiplied by the delta multiplied by the nominal amount of the underlying security. - The commitment value for swap contracts is equal to the nominal amount of the contract (in the currency of the UCITS). d. Operating and management costs These fees cover all costs charged directly to the UCITS, with the exception of transaction fees. Transaction fees include intermediation expenses (brokerage, stock exchange taxes etc.) and transfer fees, if applicable, which may be levied by the custodian and the management company. The following fees may also be charged in addition to operating and management fees: - outperformance fees. These are paid to the management company when the UCITS exceeds its targets, Therefore they are charged to the UCITS. - transfer fees charged to the UCITS. Costs charged to the UCITS Base Rate, schedule (1) Management costs and costs of management external to the management company (auditors, depositary, distribution, legal costs) Transfer fees (2) Outperformance fee Net assets Charge on each transaction Net assets A Unit: Maximum 2.34% incl. tax I Unit: Maximum 1.20% incl tax A maximum of 0.36% incl. VAT of the gross transaction amount except for bonds where it is only a maximum of 0.06% of the gross transaction amount A partir du 01/01/2013, 12,00% TTC de la performance annuelle du Fonds au-delà d une valorisation minimale nette de 7% sur un an (1)The Management Company denounced the option concerning VAT on 1 October 2015 pursuant to article L-260 B of the French Tax Code. (2) Service providers charging transfer fees: - The management company: between 90 and 100% - The depositary: between 0 and 10% Procedure to calculate the outperformance fee in place from 01/01/2013: The outperformance fee is based on the net absolute performance of the FCP. The first reference period will end on the last trading day in the month of December Each following reference period will correspond to the Fund's accounting year. The performance of the FCP over the reference period is calculated after charging operating and management fees and before outperformance fees. If, over the reference period, the net performance of the Fund is greater than 7%, the variable share of management fees will represent 12.00% incl. tax of the annual performance of the 18 Mutual Fund - Annual Report - Year ended:

19 appendices Fund beyond a minimum net valuation of 7% over a year. This variable share of management fees will be the subject of a provision for variable management fees when calculating the net asset value over the reference period. If, over the reference period, the performance of the Fund is either less than 7%, or negative, the variable share of management fees will be zero. In this case, any provision set aside previously will be re-adjusted with a write-back of provisions within the limit of the previous provision allowances made over the reference period. The outperformance fee is only definitively acquired and received by the management company at the close of each reference period if, during the past year, the net performance of the FCP is greater than 7%. In line with the "High Water Mark" principle, no outperformance fee is paid at the end of the year unless the net performance of the Fund exceeds 7% per year since the last outperformance fee was paid. In the event that units are redeemed, if a provision has been made for variable management fees, the part that is proportional to the redeemed units is paid to the management company. e. Accounting currency The UCITS accounts are kept in euros. f. Indication of accounting changes subject to special information to unitholders Changes that occurred: None. Changes to occur: None. g. Details of other changes which must be specifically notified to holders (Not certified by the statutory auditor) Changes that occurred: None. Changes to occur: None. h. Details and justification of changes in valuation and implementation procedures None. i. Details of the type of errors that have been corrected during the period None. j. Details of the rights and conditions attached to each unit class Capitalisation of the amounts available for distribution for the A and I units. 19 Mutual Fund - Annual Report - Year ended:

20 appendices Currency Net assets at the beginning of the period , ,67 Subscriptions (including the subscription fee allocated to the UCIT) Redemptions (with deduction of the redemption fee allocated to the UCIT) , , , ,47 Capital gains on deposits and financial instruments , ,82 Capital losses on deposits and financial instruments , ,87 Capital gains on financial contracts - - Capital losses on financial contracts - - Transaction fees -64, ,00 Foreign exchange differences , ,91 Changes in the estimate difference in deposits and financial instruments: , ,55 - Estimate difference period N , ,69 - Estimate difference period N , ,14 Changes in the estimate difference in financial contracts: Estimate difference period N Estimate difference period N Distribution over the previous year net capital gains and losses - - Prior period distribution - - Net income for the period before adjustment accounts , ,09 Deposit(s) paid(s) during the year net capital gains and losses 2changes net assets Interim payment(s) during the period - - Other items - - Net assets at the end of the period , ,08 20 Mutual Fund - Annual Report - Year ended:

21 appendices 3additional information 3.1. Financial instruments: breakdown by legal or economic type of instrument Breakdown of the "Bonds and similar securities" item by type of instrument Traded on a regulated or similar market Not traded on a regulated or similar market Indexed bonds - - Convertible bonds - - Fixed-rate bonds - - Variable-rate bonds - - Zero-coupon bonds - - Investments - - Other instruments Breakdown of the "Debt securities" item by legal or economic type of instrument Traded on a regulated or similar market Not traded on a regulated or similar market Treasury Bonds - - Commercial Papers - - Certificates of deposit - - MTN - - Other instruments Breakdown of the "Disposals of financial instruments" item by type of instrument Disposals of repurchase Disposals of borrowed agreements securities Disposals of acquired repurchase agreements Short sales Equities - Bonds - Debt securities - Other instruments - 21 Mutual Fund - Annual Report - Year ended:

22 Breakdown of the off-balance sheet sections by market type (in particular rates, securities) Rates Equities Foreign Exchange Other Hedging Commitments on regulated - or similar markets OTC commitments - appendices Other commitments - Other transactions Commitments on regulated - or similar markets OTC commitments - Other commitments Breakdown by rate type for asset, liability and off-balance sheets items Fixed rate Variable rates Rollover rate Other Assets Deposits - Bonds and similar securities - Debt securities - Temporary purchases and sales of financial securities - Financial accounts ,53 Liabilities Temporary purchases and sales of financial securities - Financial accounts - Off-balance sheet Hedging - Other transactions Breakdown by residual maturity for asset, liability and off-balance sheets items 0-3 months 3 months - 1 year 1-3 years 3-5 years > 5 years Assets Deposits - - Bonds and similar securities - - Debt securities - - Temporary purchases and sales of financial securities - - Financial accounts ,53 - Liabilities Temporary purchases and sales of financial securities - - Financial accounts - - Off-balance sheet Hedging - - Other transactions Mutual Fund - Annual Report - Year ended:

23 3.4. Breakdown by listing currency or evaluation for asset, liability and off-balance sheets items This breakdown is provided for the main listing and evaluation currencies, except for the currency in which the books are kept. appendices By main currency Autres devises Assets Deposits - Equities and similar securities - Bonds and similar securities - Debt securities - Collective investment undertakings - Temporary purchases and sales of financial securities - Receivables - Financial accounts - Other assets - Liabilities Disposal operations on financial - instruments Temporary purchases and sales of financial securities - Debts - Financial accounts - Off-balance sheet Hedging - Other transactions Receivables and Debts: breakdown by type Details on elements comprising the other receivables and other debts items, particulary the breakdown of foreign exchange forward contracts by type of operation (purchase/sale). Receivables Foreign exchange forward contracts: - Forward currency purchases - Total amount traded for forward currency sales - Other Receivables: Other transactions - Debts Foreign exchange forward contracts: ,10 Forward currency sales - Total amount traded for forward currency purchases - Other Debts: Deffered payment purchases ,55 Provisioned costs ,55 Transaction charges 1 142, Other transactions - 23 Mutual Fund - Annual Report - Year ended: