OPTIMUM INVESTMENT FUNDS

Transcription

1 OPTIMUM INVESTMENT FUNDS Annual Report as of June 30, 2017 Société d Investissement à Capital Variable R.C.S. Luxembourg B Administrative Agent:

2 OPTIMUM INVESTMENT FUNDS Table of Contents Organisation 3 Report of the Board of Directors 4 Derivative Exposure 4 Risk Management 4 Remuneration Policy of the Management Company 5 Report of the Portfolio Manager 6-7 Fund Structure 8 Statement of Net Assets 9-11 Derivatives Management Fees 14 Statement of Operations Statement of Changes in Net Assets 17 Statistical Information 18 Notes to the Financial Statements Report of the Réviseur d Entreprises agréé

3 OPTIMUM INVESTMENT FUNDS Organisation Company Depositary Bank, Paying Agent, Registrar and Transfer Agent OPTIMUM INVESTMENT FUNDS R.C.S. Lux B , rue de Flaxweiler, L Grevenmacher BROWN BROTHERS HARRIMAN (Luxembourg) S.C.A. 80, route d'esch, L Luxembourg Distributor Directors of the Company Chairman of the Board of Directors Optimum ASA, Bergen Chr Michelsens Gate 2a, NO Bergen Peter Tommerup Senior Manager at Universal-Investment-Luxembourg S.A. Portfolio Manager Members of the Board Rolf Tore Spjelkavik Vice President of Optimum ASA, Bergen Franklin Templeton Investment Management Limited The Adelphi 1-11 John Adam Street, London WC2N 6HT, United Kingdom Armin Clemens Head of Portfolio Management at Universal-Investment-Luxembourg S.A. Management Company, Domiciliary and Corporate Agent Réviseur d Entreprises agréé KPMG Luxembourg, Société coopérative Cabinet de révision agréé 39, avenue John F. Kennedy, L Luxembourg Universal-Investment-Luxembourg S.A. R.C.S. Lux B , rue de Flaxweiler, L Grevenmacher 3

4 OPTIMUM INVESTMENT FUNDS Report of the Board of Directors Dear Shareholders, With this report, we would like to give you an overview of the general economic environment and the performance of the OPTIMUM INVESTMENT FUNDS and its respective sub-fund Optimum Balanced Fund. OPTIMUM INVESTMENT FUNDS is organised in Luxembourg as a société d investissement à capital variable ("SICAV") and qualifies as a collective investment undertaking under Part I of the Luxembourg law of December 17, The Company was established on November 7, 2014 for an indefinite duration. OPTIMUM INVESTMENT FUNDS has the structure of an umbrella fund. The reference currency is the Norwegian Krone (NOK). As at June 30, 2017, the net asset value and the performance of the share price of the sub-fund during the reporting period were as follows: Sub-fund ISIN Net asset value of the share class in NOK Performance of the share price in % Optimum Balanced Fund LU ,489, Derivative Exposure (unaudited) The table below shows the derivative exposure as per June 30, 2017: Sub-fund Derivative exposure in % Optimum Balanced Fund Risk Management (unaudited) The global risk on derivatives has been determined according to the commitment approach during the reporting period from July 1, 2016 until June 30, The sum of these underlying equivalents must not exceed the net asset value of the fund. 4

5 OPTIMUM INVESTMENT FUNDS Remuneration Policy of the Management Company (unaudited) The fees of the employees are specified as follows (as of September 30, 2016): Total of paid remuneration 3.44 Mio. EUR - thereof fixed fee 3.18 Mio. EUR - thereof variable fee 0.26 Mio. EUR Number of employees Amount of paid carried Interest FTE n/a Total of paid fee to Risktaker 0.73 Mio. EUR - thereof Executive Managers 0.67 Mio. EUR - thereof other Risktaker 0.06 Mio. EUR The remuneration policy is compliant with the requirements of the Management Company. Details with regard to the remuneration system of the Management Company are availabe on the website of Universal-Investment-Gesellschaft mbh ( and in the Prospectus. There were no changes in the remuneration system during the reporting period compared to the prior period. 5

6 OPTIMUM INVESTMENT FUNDS Report of the Portfolio Manager Market Review The second half of 2016 started with financial markets recovering from a bout of volatility as economic data overturned investors worst fears for the global economy, supported by continued monetary stimulus from global central banks. Equity markets made strong gains through the autumn, despite political developments dominating financial markets during the fourth quarter An unexpected and narrow victory by Donald Trump in the US presidential election caused a significant reassessment of economic prospects, as markets believed that fiscal policy would become more expansionary, potentially leading to reflationary growth. This saw bond yields move appreciably higher as inflationary pressures increased. The early part of 2017 saw a continued advance in global equity markets as leading indicators pointed towards stronger growth. Corporate earnings were better than anticipated, which helped to sustain equity markets, despite geopolitical concerns. Bond markets participated in the gains, as yield curves flattened in response to easing inflation expectations and a decline in broad commodity prices. The US dollar weakened noticeably, reversing its gains against the euro, which continued to benefit from an easing in political concerns as Emmanuel Macron was elected as the new president of France. For the twelve month period, the MSCI World Index gained 18.99%, in Norwegian-krone terms. This rally saw many equity indices reach new all-time highs. The US dollar declined 2.60% against the euro, which continued to benefit from strong economic confidence indicators by period end. European stocks rose 21.95% in krone, well ahead of US equivalents that returned 18.15%, with Norwegian stocks gaining 16.20%. Emerging-market currencies recovered from weakness around the turn of the year to rise 1.62% against the dollar, but failed to keep pace with the euro. Emerging-market equities outperformed their developed-market peers, gaining 24.31% Norwegian-krone terms. Economic indicators moderated slightly across the world later in the review period, but confidence regarding the outlook for economic growth remained strongest in the eurozone. An acceleration in headline consumer price index (CPI) inflation early in 2017 largely reflected increases in energy prices, but also heightened the pressure on the European Central Bank (ECB) to slow the pace of balance-sheet expansion through asset purchases. However, core CPI rose 1.10% in the year to June; still well below the ECB s target of close to 2.00%. The Bank of Japan (BOJ) shifted monetary policy to targeting a specific level for bond yields but continued to offer significant monetary support, as the Japanese yen weakened somewhat. Norges Bank held its key policy rate at a record-low 0.50% throughout the period. Brent Crude oil remained below US$50 until later in the year, before moving sharply above this level as the Organization of the Petroleum Exporting Countries (OPEC) agreed to production cuts at its meeting at the end of November However, crude oil was unable to sustain these gains, as inventory levels remained elevated despite OPEC agreeing to extend production cuts for a further nine months, up to March The external value of the krone weakened, falling 2.70% against the euro, supporting the returns of international investments when viewed in Norwegian-krone terms. Having led the global bond sell off in the latter part of 2016, the US bond market made a modest recovery during the first half of 2017, despite the US Federal Reserve (Fed) delivering on widely anticipated increases in interest rates. The Fed tightened monetary policy three times, increasing the Fed funds rate by 75 basis points (bps), to the 1.00% 1.25% range. Ten-year US Treasury note yields ended the period 83 bps higher at 2.30%. Ten-year German Bund yields, having dipped into negative territory for a while, outperformed the broad bond market moves, to finish 60 bps higher at 0.47%. Ten-year Norwegian government bond yields broadly matched the move in German equivalents, to stand at 1.65% by period-end. Corporate bonds benefitted from generally strong earnings results, and proved more defensive as yield spreads narrowed, whilst high-yield bonds appreciated sharply from mid-november 2016, mirroring the stronger performance of equity markets. Local-currency EM sovereign bonds saw yields rise, but by less than in many developed markets, whilst EM hard-currency and corporate bonds outperformed developed-market credits. The threat of protectionist measures and the impact of a stronger US dollar appeared to present significant headwinds to emerging-market investments in the immediate aftermath of the US presidential election. However, a resumption of investment flows, which had supported emerging markets in the middle of 2016 saw this segment outperform sharply. The strongest gains were seen in Asia, with Taiwan and China posting notable gains. Country specific factors saw Philippines, Egypt and Qatar decline modestly whilst Mexico, Russia and Turkey underperformed broad emerging market gains. Performance Review The fund reported a net return of 5.90%, in Norwegian krone, in the 12 months to June 30, The portfolio s investments in equities generated strong positive returns overall, whilst bonds contributed more modestly. Developed-market sovereign bonds declined in krone terms after the effect of currency hedges was accounted for. Bonds and equities in emerging markets both contributed strongly to performance. Equity options detracted from returns whilst currency hedges made a more modest contribution. The portfolio's equity holdings posted larger gains than the market overall. Investments in domestic equities made strong gains, but lagged the market appreciation generally. Exposure to broader European equities appreciated sharply in absolute terms, and exceeded European market returns, boosted by exposure to a banks exchange-traded fund (ETF). US equities also posted gains, although exposure to a minimum volatility ETF lagged the broad market appreciation, as this investment style was out of favour, along with bonds, with which it shares certain characteristics, during the fourth quarter. 6

7 OPTIMUM INVESTMENT FUNDS Report of the Portfolio Manager Bond holdings had a mixed impact on performance. Positions in US Treasury bonds were among a number of detractors, compounded by the decline of the dollar against the Norwegian krone. Domestic bonds also declined overall, reversing gains seen earlier in the period. Non-government bond sectors performed better than developed-market government bonds in general, with exposure to high-yield corporate bonds and a holding of Templeton Emerging Markets Bond Fund posting strong gains. Options on our US and European equity holdings aimed at hedging the fund's exposure in the event of a sharp equity market decline were closed towards the end of This year, we re-entered hedges covering part of the portfolio s exposure to US and European equities. Later in the period, following a period of strong returns and subdued volatility, but weaker economic data, we hedged a larger portion of the portfolio s US equity exposure. Overall, this strategy had a negative impact on performance, lessening the extent to which the portfolio benefitted from equity appreciation. In November 2016 we added hedges back to krone, to mitigate currency risk from the portfolio s Japanese yen-denominated exposure. In a period of notable yen weakness, this policy had a positive impact on performance. We maintained hedges more broadly and, in the case of the yen and the New Zealand and Australian dollars, this left the portfolio with no net exposure to these currencies. In the case of the US dollar, hedges covered all of the bond positions but only approximately one third of total dollar exposure. Overall, approximately one quarter of the total portfolio value was hedged back into Norwegian krone, boosting total krone exposure to around half of net assets. In a period of US dollar weakness, this policy had a positive impact on returns. Outlook and Strategy Norges Bank has held interest rates unchanged over the last year, and despite underlying inflation declining sharply, to a near four-year low in May 2017, the market believes that the central bank is unlikely to cut rates again this cycle. Parliamentary elections are scheduled for September 2017 and, in our view, Norway s government is likely to continue to look at structural measures to reduce its dependence on oil. Unemployment has rebounded somewhat this year, to 4.60% in April 2017, but remains below a decade-high of 5.00% in mid Leading indicators hint at stronger growth over the medium term, and global activity has improved. Reflecting these developments, and also in light of improving corporate fundamentals, we maintain a somewhat less cautious view of growth assets such as global equities and find limited value in developed-market government bonds. With global central banks following divergent monetary policies, we expect to find multi-asset investment opportunities. The highlights of our analysis include the following: The global economy remains in a period of modest growth overall, but with greater stability evident in key emerging markets. Markit's global Purchasing Managers Indices (PMIs) have moderated, but continue to show signs of a robust expansion, whilst fears over the delivery of US stimulus measures could result in disappointments. Measures of corporate earnings growth, positive surprises and momentum have improved. However, equities have appreciated and valuations based on price-to-earnings ratios in developed markets appear demanding and are elevated relative to their historical averages. Central banks in developed markets appear more constrained in their options, as appetite for unconventional policy appears to be diminishing amidst questions about its efficacy. The outlook for inflation is mixed, with US reflation moderating somewhat and persistently below-target core inflation in the eurozone and Japan. The prospect of interest rates remaining lower for longer continues to see developed-market sovereign bond yields trading at very low levels in many markets, presenting limited investment opportunities in sovereign bonds in our assessment. Although emerging market central banks appear to have more flexibility in monetary policy, the threat of protectionist measures and risks of a stronger US dollar could present headwinds to emerging-market investments. A period of significant uncertainty about the interaction between fiscal and monetary policy, and the pace with which these policy changes feed through to hard economic data, suggest that market measures of volatility may increase. For now, we may continue to see stronger returns from equities, especially where earnings are improving, despite demanding historic valuations. We remain bearish on those assets that we consider to be most overvalued, including developedmarket government bonds, generally, and eurozone sovereigns in particular. 7

8 Optimum Balanced Fund As the Company has only one active compartment as at June 30, 2017 and as the reference currency of the sole compartment is NOK, the accounts of the Company are the same as the accounts of the sole compartment. Fund structure as at 30/06/2017 Investment Focus Market Value in NOK % of fund assets *) I. Assets 449,737, Bonds 68,130, Investment funds 377,319, Derivatives 3,103, Bank balances 251, Other Assets 933, II. Liabilities -2,247, III. Fund Assets 447,489, *) There might be differences due to rounding. The accompanying notes form an integral part of the financial statements. 8

9 Optimum Balanced Fund Statement of Net Assets as at 30/06/2017 Description ISIN Shares / Holdings Currency Price Market Value % % in /06/2017 in NOK of the Fundassets *) Portfolio holdings NOK 445,449, Exchange-traded securities NOK 62,959, Interest-bearing securities NOK 62,959, ,5000 % Australia, Commonwealth of... AD-Loan 2009(20) Ser. 126 AU3TB % 371 AUD ,550, ,2500 % Australia, Commonwealth of... AD-Loans 2014(26) AU000XCLWAI8 % 306 AUD ,227, ,2500 % Australia, Commonwealth of... AD-Treasury Bonds 2015(39) AU000XCLWAP3 % 133 AUD , ,5000 % Norwegen, Königreich NK-Anl. 2008(19) NO % 5,707 NOK ,123, ,7500 % Norwegen, Königreich NK-Anl. 2010(21) NO % 5,657 NOK ,264, ,0000 % Norwegen, Königreich NK-Anl. 2012(23) NO % 4,249 NOK ,436, ,0000 % Norwegen, Königreich NK-Anl. 2014(24) NO % 3,203 NOK ,543, ,7500 % Norwegen, Königreich NK-Anl. 2015(25) NO % 2,879 NOK ,939, ,5000 % Norwegen, Königreich NK-Anl. 2016(26) NO % 2,617 NOK ,605, ,7500 % Norwegen, Königreich NK-Anl. 2017(27) NO % 1,796 NOK ,814, ,0000 % New Zealand, Government of... ND-Bonds 2010(19) NZGOVDT319C0 % 1,039 NZD ,684, ,3750 % United States of America DL-Bonds 1997(27) US912810FA17 % 2,000 USD ,918, Securities admitted to or included in organised markets NOK 5,170, Interest-bearing securities NOK 5,170, ,5000 % New Zealand, Government of... ND-Bonds 2014(27) NZGOVDT427C1 % 392 NZD ,714, ,5000 % New Zealand, Government of... ND-Bonds 2015(33) NZGOVDT433C9 % 391 NZD ,455, Investment units NOK 377,319, db x-tr.nikkei 225 U.ETF (DR) Inhaber-Anteile 1D o.n. LU Shares 69,626 EUR ,607, Frank.Temp.I.Fds-Fr.Europ.Div. Namens-Ant.Y M Dis.EUR o.n. LU Shares 306,066 EUR ,919, FTIF-F.European Corporate Bond Namens-Ant. Y (Mdis) EUR o.n. LU Shares 74,904 EUR ,448, Invesco Pan Europ.Structur.Eq. Act. Nom. C o.n. LU Shares 83,050 EUR ,969, UBS-ETF-UBS-ETF MSCI EMU Sm.C. Inhaber-Anteile A o.n. LU Shares 11,686 EUR ,676, UBS(I)ETF-Fac.MSCI USA Qu.U.E. Reg. Shares A Dis. USD o.n. IE00BX7RRJ27 Shares 201,907 EUR ,150, DNB Kredittobligasjon Registered Units o.n. NO Shares 22,973 NOK 1, ,743, The accompanying notes form an integral part of the financial statements. 9

10 Optimum Balanced Fund Statement of Net Assets as at 30/06/2017 Pareto Investment Fund Registered Units C o.n. NO Shares 2,712 NOK 16, ,909, F.T.I.F.-Franklin GCC Bond Fd Namens-Anteile I Acc. USD o.n. LU Shares 63,234 USD ,832, Fr.Temp.Inv.Fds-F.U.S.Governm. Namens-Ant. I USD (acc.) o.n. LU Shares 193,275 USD ,486, Fr.Temp.Inv.Fds-F.U.S.Oppor.Fd Namens-Anteile Y(Mdis.)USD on LU Shares 174,932 USD ,176, Fr.Temp.Inv.Fds-T.Asian Sm.Cos Nam.-Ant.Y(Mdis)USD(INE)o.N. LU Shares 135,454 USD ,532, Fr.Temp.Inv.Fds-T.Em.Mkt.BdFd Namens-Ant. Y (Mdis.) USD o.n. LU Shares 63,676 USD ,317, Frank.Temp.IF-Fr.K2 L.S.Cr.Fd Namens-Anteile I Acc. USD o.n. LU Shares 109,185 USD ,447, ishs DL Corp Bond UCITS ETF Registered Shares o.n. IE Shares 16,089 USD ,598, ishs VII-Core S&P 500 U.ETF Reg. Shares USD (Acc) o.n. IE00B5BMR087 Shares 38,953 EUR ,489, ishs VII-MSCI EM Asia U.ETF Reg. Shares USD (Acc) o.n. IE00B5L8K969 Shares 13,380 EUR ,229, Man Funds-M.GLG Jap.CoreAl.Eq. Reg. Shares I USD o.n. IE00B3QXQG18 Shares 9,754 USD ,107, Robeco High Yield Bonds Act. Nom. Class IH DL o.n. LU Shares 3,457 USD ,678, Description ISIN Shares / Holdings Currency Price Market Value % % in /06/2017 in NOK of the Fundassets *) Total securities NOK 445,449, Derivatives NOK 3,103, Bank balances, non-securitised money market instruments and money market funds NOK 398, Bank balances NOK 398, Balances with Brown Brothers Harriman Trust Co. [Cayman] Ltd. (G) deposits callable prior to maturity 6.37 AUD NZD , USD 147, Balances with Brown Brothers Harriman (Luxembourg) S.C.A. (G) Balances in the Fund currency 251, NOK 251, The accompanying notes form an integral part of the financial statements. 10

11 Optimum Balanced Fund Statement of Net Assets as at 30/06/2017 Description ISIN Shares / Holdings Currency Price Market Value % % in /06/2017 in NOK of the Fundassets *) Other Assets NOK 933, Interest receivables 701, NOK 701, Other receivables 146, NOK 146, Incorporation cost, net 85, NOK 85, Loan liabilities NOK -146, Loans with Brown Brothers Harriman Trust Co. [Cayman] Ltd. Loans in non-eu/eea currencies JPY , USD -146, Liabilities NOK -2,247, Management fee payable -1,648, NOK -1,648, Depositary Bank fee payable -45, NOK -45, Custody service expenses -19, NOK -19, Audit fee payable -124, NOK -124, Taxe d'abonnement -36, NOK -36, Other payables -374, NOK -374, Total net assets NOK 447,489, Optimum Balanced Fund Net Asset Value per share NOK 1, Redemption price NOK 1, Subscription price NOK 1, Number of shares in circulation Shares 395, *) There might be differences due to rounding. The accompanying notes form an integral part of the financial statements. 11

12 Optimum Balanced Fund Derivatives as at 30/06/2017 Statement of Forward Transactions as of June 30, 2017 Ccy Amount Ccy Amount Commitment Maturity Unrealised Counterparty in NOK Profit/ Loss in NOK Sell AUD -990, Buy NOK 6,353, , , JP Morgan Securities plc (OTC) London Buy AUD 155, Sell NOK -995, , , JP Morgan Securities plc (OTC) London Sell EUR -825, Buy NOK 7,872, ,880, , JP Morgan Securities plc (OTC) London Buy EUR 80, Sell NOK -757, , , JP Morgan Securities plc (OTC) London Sell JPY -314,000, Buy NOK 23,789, ,424, , Barclays Bank PLC London Buy JPY 16,000, Sell NOK -1,196, ,193, , Barclays Bank PLC London Sell NZD -2,100, Buy NOK 12,936, , , JP Morgan Securities plc (OTC) London Buy NZD 255, Sell NOK -1,563, , , JP Morgan Securities plc (OTC) London Sell USD -11,050, Buy NOK 93,317, ,319, , JP Morgan Securities plc (OTC) London Total Forward Transactions 1,318, The accompanying notes form an integral part of the financial statements. 12

13 Optimum Balanced Fund Derivatives as at 30/06/2017 Statement of Option Transactions as of June 30, 2017 Description Exp. Date No. Ccy Acqu. Price Curr. Price Curr. Val. Commitment Unreal. G&L Counterparty Contracts in Ccy in Ccy in NOK in NOK in NOK S+P 500 INDEX PUT BP 2200,00 CBOE USD , ,371, , Brown Brothers Harriman [Luxemburg] S.C.A. S+P 500 INDEX PUT BP 2425,00 CBOE USD ,364, ,000, , Brown Brothers Harriman [Luxemburg] S.C.A. Total Option Transactions 1,784, Total Derivatives 3,103, The accompanying notes form an integral part of the financial statements. 13

14 Optimum Balanced Fund Management fees as at 30/06/2017 Investment units ISIN MFs of Front end load target funds in % p.a. of target funds Management fees db x-tr.nikkei 225 U.ETF (DR) Inhaber-Anteile 1D o.n. LU none DNB Kredittobligasjon Registered Units o.n. NO none F.T.I.F.-Franklin GCC Bond Fd Namens-Anteile I Acc. USD o.n. LU none Fr.Temp.Inv.Fds-F.U.S.Governm. Namens-Ant. I USD (acc.) o.n. LU none Fr.Temp.Inv.Fds-F.U.S.Oppor.Fd Namens-Anteile Y(Mdis.)USD on LU none Fr.Temp.Inv.Fds-T.Asian Sm.Cos Nam.-Ant.Y(Mdis)USD(INE)o.N. LU none Fr.Temp.Inv.Fds-T.Em.Mkt.BdFd Namens-Ant. Y (Mdis.) USD o.n. LU none Frank.Temp.I.Fds-Fr.Europ.Div. Namens-Ant.Y M Dis.EUR o.n. LU n.a. none Frank.Temp.IF-Fr.K2 L.S.Cr.Fd Namens-Anteile I Acc. USD o.n. LU none FTIF-F.European Corporate Bond Namens-Ant. Y (Mdis) EUR o.n. LU none Invesco Pan Europ.Structur.Eq. Act. Nom. C o.n. LU none ishs DL Corp Bond UCITS ETF Registered Shares o.n. IE none ishs VII-Core S&P 500 U.ETF Reg. Shares USD (Acc) o.n. IE00B5BMR none ishs VII-MSCI EM Asia U.ETF Reg. Shares USD (Acc) o.n. IE00B5L8K none Man Funds-M.GLG Jap.CoreAl.Eq. Reg. Shares I USD o.n. IE00B3QXQG none Pareto Investment Fund Registered Units C o.n. NO none Robeco High Yield Bonds Act. Nom. Class IH DL o.n. LU none UBS-ETF-UBS-ETF MSCI EMU Sm.C. Inhaber-Anteile A o.n. LU none UBS(I)ETF-Fac.MSCI USA Qu.U.E. Reg. Shares A Dis. USD o.n. IE00BX7RRJ none The accompanying notes form an integral part of the financial statements. 14

15 Optimum Balanced Fund Statement of Operations (including income equalisation) for the period from 01/07/2016 to 30/06/2017 I. Income - Interest on securities NOK 2,332, Interest on liquidity investments NOK 2, Income from investment units NOK 11,312, Other income NOK Total income NOK 13,648, II. Expenses - Interest on bank overdraft NOK -71, Management Company fee NOK -7,635, Depositary Bank fee NOK -761, Custody service expenses NOK -133, Auditing and publication expenses NOK -181, Subscription tax ("Taxe d`abonnement") NOK -201, Registrar and Transfer Agent fee NOK -349, Incorporation expenses NOK -53, Equalisation of ordinary expenses NOK 3,318, Other expenses NOK -458, Total Total expenses NOK -6,528, III. Ordinary net result NOK 7,120, *) The interest on liquidity investments are including negative interests of 5, NOK. The accompanying notes form an integral part of the financial statements. 15

16 Optimum Balanced Fund Statement of Operations (including income equalisation) for the period from 01/07/2016 to 30/06/2017 IV. Realised profit/loss on 1. Realised profit on NOK 64,241, Securities NOK 50,679, Forward exchange transactions NOK 7,078, Option transactions NOK 5,198, Futures transactions NOK 92, Foreign exchange transactions NOK 1,191, Realised loss on NOK -44,997, Securities NOK -21,853, Forward exchange transactions NOK -7,999, Option transactions NOK -14,144, Futures transactions NOK -55, Foreign exchange transactions NOK -944, Total realised profit/loss NOK 19,244, V. Net change in unrealised profit/loss - Net change in unrealised profit NOK -18,532, Net change in unrealised loss NOK 19,988, Total net change in unrealised profit/loss NOK 1,455, VI. Result of operations for the period NOK 27,820, Total The accompanying notes form an integral part of the financial statements. 16

17 Optimum Balanced Fund Statement of Changes in Net Assets 2016/2017 I. Net assets at the beginning of the period NOK 744,335, Distribution for the previous year NOK Interim distributions NOK Net cash flow NOK -334,556, a) Proceeds from shares issued NOK 38,347, b) Proceeds from shares redeemed NOK -372,904, Income/expense equalisation NOK 9,890, Result of operations for the period NOK 27,820, II. Net assets at the end of the period NOK 447,489, The accompanying notes form an integral part of the financial statements. 17

18 Optimum Balanced Fund Statistical information Financial year Shares in circulation at Total net assets at Net Asset Value per share at end of the financial year end of the financial year end of the financial year 2014/2015 *) Shares 523, NOK 558,245, NOK 1, /2016 Shares 697, NOK 744,335, NOK 1, /2017 Shares 395, NOK 447,489, NOK 1, *) Inception: 07/11/2014 Changes in the number of shares outstanding Units Number of shares outstanding at the beginning of the period 697, Number of shares issued 35, Number of shares redeemed -336, Number of shares outstanding at the end of the period 395, The accompanying notes form an integral part of the financial statements. 18

19 OPTIMUM INVESTMENT FUNDS Notes to the Financial Statements 1. General OPTIMUM INVESTMENT FUNDS (the "Company") is organised in Luxembourg as a société d investissement à capital variable ("SICAV") and qualifies as a collective investment undertaking under Part I of the Luxembourg law of December 17, The Company qualifies as an undertaking for collective investment in transferable securities under article 1(2) of the Directive 2009/65/EC and is presently structured as an umbrella fund. The Company has been established for an indefinite term. 2. Significant accounting policies The reference currency of the Company is the Norwegian Krone (NOK). The net asset value per sub-fund, net asset value per share, net asset value per class, the redemption price of shares and the issue price of shares shall be determined on each valuation date, at least twice a month. The valuation dates for each sub-fund are indicated in the relevant appendix of the fund's prospectus. The net asset value of each sub-fund and the net asset value of the relevant class shall be expressed in the currency of each sub-fund as described in the relevant appendix of the fund's prospectus. Whilst the reporting currency of the Company is the Euro, the net asset value is made available in the currency of each sub-fund as described in the relevant appendix of the fund's prospectus. The net asset value shall be determined on each valuation date separately for each share of each subfund and for each class dividing the total net asset value of the relevant sub-fund and of the relevant class by the number of outstanding shares of such sub-fund and of the relevant class. The net asset value shall be determined by subtracting the total liabilities of the sub-fund or class from the total assets of such sub-fund or class in accordance with the principles laid down in the Company s articles of incorporation and in such further valuation regulations as may be adopted from time to time by the Board of Directors. Investments shall be valued as follows: 1) 2) 3) 4) 5) 6) The value of any cash in hand or on deposit, discount notes, bills and demand notes and accounts receivable, prepaid expenses, cash dividends and interest declared or accrued and not yet received shall be deemed to be the full amount thereof, unless in any case the same is unlikely to be paid or received in full, in which case the value thereof shall be arrived at after making such provision as the Company may consider appropriate in such case to reflect the true value thereof. The value of all securities which are listed on an official stock exchange is determined on the basis of the last available prices. If there is more than one stock exchange on which the securities are listed, the Board of Directors may in its discretion select the stock exchange which shall be the principal stock exchange for such purposes. Securities traded on a regulated market are valued in the same manner as listed securities. Securities which are not listed on an official stock exchange or traded on a regulated market shall be valued by the Company in accordance with valuation principles decided by the Board of Directors, at a price no lower than the bid price and no higher than the ask price on the relevant valuation date. Derivatives and repurchase agreements which are not listed on an official stock exchange or traded on a regulated market shall be valued by the Company in accordance with valuation principles decided by the Directors on the basis of their marked-to-market price. Term deposits shall be valued at their present value. 7) Traded options and futures contracts to which the Company is a party which are traded on a stock, financial futures or other exchange shall be valued by reference to the profit or loss which would arise on closing out the relevant contract at or immediately before the close of the relevant market. 19

20 OPTIMUM INVESTMENT FUNDS Notes to the Financial Statements All securities or other assets for which the valuation in accordance with the above sub-paragraphs would not be possible or practicable, or would not be representative of their fair realisation value, will be valued at their fair realisation value as determined in good faith and prudently pursuant to the procedures established by the Board of Directors. Amounts determined in accordance with such valuation principles shall be translated into the currency of the sub-fund s accounts at the respective exchange rates, using the relevant rates quoted by a bank or another first class financial institution. The liabilities of the Company shall be deemed to include: 1) 2) 3) 4) 5) all borrowings, bills and other amounts due; all administrative expenses due or accrued including (but not limited to) the costs of its constitution and registration with regulatory authorities, as well as legal and audit fees and expenses, the costs of legal publications, the cost of listing, prospectus, financial reports and other documents made available to shareholders, translation expenses and generally any other expenses arising from the administration of the Company; all known liabilities, due or not yet due including all matured contractual obligations for payments of money or property, including the amount of all dividends declared by the Company which remain unpaid until the day these dividends revert to the Company by prescription; any appropriate amount set aside for taxes due on the date of the valuation of the net asset value and any other provision of reserves authorised and approved by the Board; and any other liabilities of the Company of whatever kind towards third parties. For the purposes of valuation of its liabilities, the Company may duly take into account all ongoing or periodic administrative and other expenses by valuing them for the entire year or any other period and by dividing the amount concerned proportionately for the relevant fractions of such period. Amounts determined in accordance with such valuation principles shall be translated into the currency of the sub-fund s accounts at the respective exchange rates, using the relevant rates quoted by a bank or another first class financial institution. 3. Foreign exchange rate As of June 30, 2017, positions denominated in foreign currencies were valuated at the following exchange rates (WM-Company/Fixing 5:00 CET): NOK - AUD NOK - EUR NOK - JPY NOK - NZD NOK - USD Management Company fee The Management Company receives remuneration in the amount of up to 1.50% p.a. of the net asset value of the sub-fund, minimum up to EUR 50, p.a., currently not subject to Luxembourg VAT. The remuneration of the Management Company shall be calculated on each valuation day and paid to the Management Company monthly. The Management Company can accept a lower fee or waive the fee. 20

21 OPTIMUM INVESTMENT FUNDS Notes to the Financial Statements 5. Portfolio Manager fee The Portfolio Manager receives remuneration in the amount of up to 0.30% p.a. of the net asset value of the sub-fund. The remuneration of the Portfolio Manager shall be calculated and paid to the Portfolio Manager on a quarterly basis retroactively on the daily average net sub-fund assets. The Portfolio Manager fee will be paid out of the Management Company and Administration fee. The Portfolio Manager can accept a lower fee or waive the fee. 6. Domiciliary and Corporate Agency Services fee, Registrar and Transfer Agency fee The Domiciliary Agent receives remuneration in the amount of EUR 6, p.a. The Corporate Agency Services fee amounts to EUR 12, p.a. The Transfer Agent is entitled to a minimum fee up to EUR 24, p.a. Any additional services, including collection of data elements and compilation into Board Packs, will be subject to negotiation; in addition, like the aforementioned, any further external costs will be charged on top (and be borne by the fund). The remuneration is payable monthly on a pro rata basis. Transaction costs will be charged to the sub-fund assets separately. 7. Depositary Bank fee and Paying Agency fee The Depositary Bank is entitled to receive out of the assets of the Company a fee calculated in accordance with customary banking practice in Luxembourg and as detailed for each sub-fund in the appendix of the fund's prospectus. In addition, the Depositary bank is entitled to be reimbursed out of the assets of the relevant sub-fund for its reasonable out-of-pocket expenses and disbursements and for the charges of any correspondents. The Depositary Bank receives remuneration in the amount of up to 0.07% p.a. of the net asset value of the sub-fund, minimum up to EUR 24, p.a. plus Luxembourg VAT; depending on the transaction amount the fee can also be higher. 8. Subscription tax ("taxe d abonnement") The Company is subject to an annual tax of 0.05% p.a. (0.01% p.a. for the institutional share classes) of the net asset value as valued at the end of each quarter, and which is payable quarterly. To the extent that parts of the company s assets are invested in other Luxembourg UCITS which are subject to the tax, such parts are not taxed. 9. Transaction cost The following transaction cost which is limited to brokerage commission occurred during the corresponding period: Sub-fund Optimum Balanced Fund Reporting period July 1, 2016 until June 30, 2017 Transaction cost in NOK 890,

22 OPTIMUM INVESTMENT FUNDS Notes to the Financial Statements 10. Portfolio Turnover Ratio (PTR) The PTR was calculated using the following formula: Turnover = [Total 1 - Total 2] * 100 M Total 1 = Total purchases + Total sales of securities Total 2 = Total subscription + Total redemption M = Average Assets (daily) Sub-fund Reporting period PTR in % Optimum Balanced Fund July 1, 2016 until June 30, Ongoing Charges Ongoing Charges - the ongoing charges figure shall include all types of cost borne by the UCITS, whether they represent expenses necessarily incurred in its operation, or the remuneration of any party connected with it or providing services to it. Sub-fund Optimum Balanced Fund Reporting period Ongoing Charges in % *) Ongoing Charges in % July 1, 2016 until June 30, *) excluding Ongoing Charges of underlying investment units 12. Changes in Portfolio Composition Details of purchases and sales of investments are available free of charge from the registered office of the Company. 13. Disclosures according to Regulation (EU) 2015/2365 of the European Parliament and of the Council of November 25, 2015 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/ Disclosure as per Section A During the reporting period no securities financing transactions and total return swaps as defined in the above mentioned regulation occurred. 22

23 KPMG Luxembourg, Société coopérative Tel.: , avenue John F. Kennedy Fax: L Luxembourg info@kpmg.lu Internet: To the Shareholders of OPTIMUM INVESTMENT FUNDS BERICHT DES REVISEUR D ENTREPRISES AGREE Opinion We have audited the accompanying financial statements of OPTIMUM INVESTMENT FUNDS and each of its sub-funds ( the Fund ), which comprise the statement of net assets and the statement of investments and other net assets as at June 30, 2017 and the statement of operations and the statement of changes in net assets for the year then ended and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of OPTIMUM INVESTMENT FUNDS and each of its sub-funds as at June 30, 2017, and of the results of their operations and changes in their net assets for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements. Basis for opinion We conducted our audit in accordance with the Law of July 23, 2016 on the audit profession ( Law of July 23, 2016 ) and with International Standards on Auditing ( ISAs ) as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier ( CSSF ). Our responsibilities under those Law and standards are further described in the «Responsibilities of Réviseur d Entreprises agréé for the Audit of the Financial Statements» section of our report. We are also independent of the Fund in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the financial statements, and have fulfilled our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information The Board of Directors of the Fund is responsible for the other information. The other information comprises the information included in the annual report but does not include the financial statements and our report of Réviseur d Entreprises agréé thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report this fact. We have nothing to report in this regard. KPMG Luxembourg, Société coopérative, a Luxembourg entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. T.V.A. LU R.C.S. Luxembourg B

24 Responsibilities of Board of Directors of the Fund and Those Charged with Governance for the financial statements The Board of Directors of the Fund is responsible for the preparation and fair presentation of these financial statements in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements, and for such internal control as the Board of Directors of the Fund determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors of the Fund is responsible for assessing the Fund s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors of the Fund either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Fund s financial reporting process. Responsibilities of the Réviseur d Entreprises agréé for the audit of the financial statements The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report of Réviseur d Entreprises agréé that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Law of July 23, 2016 and with ISAs as adopted for Luxembourg by the CSSF 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 part of an audit in accordance with the Law of July 23, 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our 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. Obtain 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 Fund s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors of the Fund. Conclude on the appropriateness of Board of Directors of the 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. If we conclude that a material uncertainty exists, we are required to draw attention in our report of Réviseur d Entreprises agréé to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report of Réviseur d Entreprises agréé. However, future events or conditions may cause the Fund to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Luxembourg, September 29, 2017 KPMG Luxembourg, Société coopérative Cabinet de révision agréé S. Kraiker