SANTANDER INTERNATIONAL FUND SICAV

Transcription

1 SANTANDER INTERNATIONAL FUND SICAV Société d'investissement à Capital Variable R.C.S. Luxembourg B ANNUAL REPORT INCLUDING THE AUDITED FINANCIAL STATEMENTS AS AT DECEMBER 31, 2017 Subscriptions cannot be received on the basis of the annual and the semi-annual reports. Subscriptions are valid only if made on the basis of the current prospectus and the Key Investor Information Document ( KIID ), supplemented by the last annual report including audited financial statements and the most recent semi-annual report if published thereafter.

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3 TABLE OF CONTENTS DIRECTORS AND ADMINISTRATION... 4 INFORMATION TO THE SHAREHOLDERS... 5 NET ASSET VALUE PER SHARE... 6 INVESTMENT MANAGER S REPORT OF THE SICAV... 7 REPORT OF THE REVISEUR D'ENTREPRISES AGREE... 9 COMBINED STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS SANTANDER MIXTO EUROPA STATEMENT OF NET ASSETS STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS STATISTICAL INFORMATION CHANGES IN THE NUMBER OF SHARES, OF NET ASSETS AND OF NET ASSET VALUE PER SHARE FUTURES CONTRACTS TAXES AND EXPENSES PAYABLE STATEMENT OF INVESTMENTS IN SECURITIES AND OTHER NET ASSETS GEOGRAPHICAL CLASSIFICATION OF THE INVESTMENTS IN SECURITIES ECONOMIC CLASSIFICATION OF THE INVESTMENTS IN SECURITIES STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS NOTES TO THE FINANCIAL STATEMENTS APPENDIX : UNAUDITED ADDITIONAL DISCLOSURES

4 DIRECTORS AND ADMINISTRATION BOARD OF DIRECTORS OF THE SICAV Chairman Mr Carlo MONTAGNA Independant Director 21st Century Building 19, rue de Bitburg L-1273 Luxembourg-Hamm, GRAND DUCHY OF LUXEMBOURG Directors Mrs Dolores YBARRA CASTAŇO * Global Chief Product and Client Solutions Officer of SAM Investment Holdings Limited Ciudad Grupo Santander E Boadilla del Monte, Madrid, SPAIN Mr Luis CAVERO General Manager of ALLFUNDS BANK INTERNATIONAL S.A. 30, boulevard Royal L-2449 Luxembourg, GRAND DUCHY OF LUXEMBOURG REGISTERED OFFICE MANAGEMENT COMPANY INVESTMENT MANAGER DEPOSITARY BANK AND PAYING AGENT ADMINISTRATIVE, REGISTRAR, CORPORATE AND DOMICILIARY AGENT DISTRIBUTOR MAIN NOMINEE CABINET DE REVISION AGREE/ INDEPENDENT AUDITOR OF THE SICAV LEGAL ADVISER 6, route de Trèves L-2633 Senningerberg, GRAND DUCHY OF LUXEMBOURG SANTANDER ASSET MANAGEMENT LUXEMBOURG S.A. 6, route de Trèves L-2633 Senningerberg, GRAND DUCHY OF LUXEMBOURG SANTANDER ASSET MANAGEMENT S.A., S.G.I.I.C. Calle Serrano, 69 E Madrid, SPAIN J.P. MORGAN BANK LUXEMBOURG S.A. 6, route de Trèves L-2633 Senningerberg, GRAND DUCHY OF LUXEMBOURG J.P. MORGAN BANK LUXEMBOURG S.A. 6, routes de Trèves L-2633 Senningerberg, GRAND DUCHY OF LUXEMBOURG BANCO SANTANDER S.A. 9-12, Paseo de Pereda E Santander, SPAIN ALLFUNDS BANK S.A. Plaza de la Fuente La Moraleja, Edificio 1, planta 1 E Alcobendas, Madrid, SPAIN DELOITTE AUDIT Société à responsabilité limitée 560, rue de Neudorf L-2220 Luxembourg, GRAND DUCHY OF LUXEMBOURG ELVINGER HOSS PRUSSEN 2, place Winston Churchill L-1340 Luxembourg, GRAND DUCHY OF LUXEMBOURG * Until December 31, 2017, Global Chief Executive Officer of SANTANDER ASSET MANAGEMENT S.A., S.G.I.I.C., Calle Serrano, 69, E Madrid, SPAIN 4

5 INFORMATION TO THE SHAREHOLDERS SANTANDER INTERNATIONAL FUND SICAV (the SICAV ) shall make available to the Shareholders within 4 months after the year-end an annual report including audited financial statements describing the assets, operations and results of the SICAV and its Sub-Fund, and, after the end of the first semi-annual period of each financial year, it shall make available to the Shareholders within 2 months an unaudited semi-annual report describing the net assets and operations of the SICAV during such period. The Net Asset Value (the NAV ), the issue price and the redemption and conversion price is available on each bank business day in Luxembourg at the registered office of the SICAV. The annual report including audited financial statements and all other periodical reports of the SICAV are made available to the Shareholders at the registered office of the Administrative, corporate and domiciliary agent of the SICAV. Shareholders' meetings are convened in accordance with Luxembourg law. The annual general meeting of Shareholders is held on the first Tuesday in June of each year at 2:00 p.m. A detailed schedule of changes in the portfolio of the Sub-Fund is available free of charge upon request at the registered office of the SICAV. The Board of Directors of the SICAV decided to transfer the Share Class C of the Sub-Fund to the Multilateral Trading Facility operated by the Luxembourg Stock Exchange (the Euro MTF ) with effect from June 12,

6 NET ASSET VALUE PER SHARE The NAV per share is determined on each bank business day in Luxembourg. For reporting purposes, however, if the last day of the SICAV's financial year or of the half year is not a bank business day in Luxembourg, the reported NAV will be the Net Asset Value calculated the last day of the year or of the half year on the basis of the last price known for the year or for the half year. 6

7 INVESTMENT MANAGER S REPORT OF THE SICAV 2017 Review In our outlook last year, we expected the global economy to continue its sustained growth trajectory due to a continued improvement in fundamentals. This indeed proved to be the case over the course of 2017, which turned out to be the first year since 2007 where all the 46 economies tracked by the OECD experienced positive GDP growth. The year ended with the global economy transitioning to a phase of synchronized strength where spending, sentiment, and financial conditions generated positive feedback loops reflected in rising equity prices, narrowing credit spreads and rising business and household confidence. Inflation - despite widely held expectations to the contrary - once again failed to materialize in In light of the sustained and robust economic recovery started in 2009 after the Great Financial Crisis, historical evidence would have strongly suggested a return to inflation at this stage of the cycle. However, wage pressures remained absent throughout the year across regions leading to the apparent puzzle of very flat Phillips curves even with unemployment approaching multi-decade lows in the US, Japan, UK and falling fast in the Eurozone as well. Consistently with our outlook from last year, monetary policy divergence continued in The Fed raised rates three times and started its balance sheet reduction program in October, while the ECB remained accommodative and committed to its asset purchase program - albeit in reduced size for and the Bank of Japan remained engaged in unprecedented, very accommodative monetary policy. The Bank of England, finally, signaled its readiness to address any volatility and inflation surprises arising from Brexit and accordingly in November - concerned about an inflation spike - implemented its first rate hike in a decade. Global political risks, it turns out, appear to have been overstated in While the year saw significant potential sources of volatility - the first 12 months of the Trump presidency, with all its unprecedented developments; potential nuclear threats from North Korea; increasingly confused and delayed Brexit negotiations; the rise of populism in Eastern Europe and more - markets managed to shrug off any concerns with striking nonchalance. While fears remain about what anti-establishment movements will mean for the institutions that have underpinned post-cold War stability, in 2017 financial markets seemed to actually cheer populism perhaps hoping that it would be able to jolt policymakers out of their torpor, particularly on fiscal policy. Markets indeed delivered a strong year of risk-adjusted returns for multi-asset portfolios with Equities up double-digits across the Board of Directors of the SICAV - and Emerging Markets shining in particular, with +30% returns - while forecasts about US reflation or a stronger dollar proved misguided, as Bonds actually ended the year slightly up. Safe havens like gold and long duration assets also did well on the backdrop of a strong global economy, along with - consistently - tightening credit spreads and a moderate increase in oil prices. Past performance is not an indicator of current or future returns. 7

8 INVESTMENT MANAGER S REPORT OF THE SICAV (continued) 2018 Outlook Looking at 2018, we remain moderately pro-risk in our asset allocation given a favourable macroeconomic outlook comprised of sustained and broad-based economic growth, muted inflation and subdued expectations across regions, unemployment at multi-decade lows and elevated and rising confidence in both the business and consumer sectors. Our central case scenario remains one of continued expansion where economic activity persists unperturbed, confidence remains high and investment activity continues to improve. We also expect muted inflation for 2018, with price growth staying below but not too far from policy targets in the absence of significant wage pressure and no external shocks from energy prices or currency movements. Importantly - while such an environment would remain conducive to valuations picking up further - we are well aware of the more muted potential returns for diversified portfolios. In spite of such positive conditions, it is very important to highlight that we are nearing the longest bull market for balanced equity/bond portfolios in over a century, with risk-adjusted returns among the strongest on record also due to remarkably low macro volatility. Consequently, the recent bull market in everything has resulted in valuation frustration - i.e. assets are expensive across the Board of Directors of the SICAV- and, importantly, Equities, Bonds and Credit have been similarly expensive at the same time only in the Roaring 20s and the Golden 50s. On one hand, starting from such expensive valuations across assets, we should naturally expect a speed limit for returns in the medium term even in the context of our central scenario of continued expansion. Additionally, given very subdued inflation expectations and perhaps growing challenges to central banks credibility in 2018, we believe that the risks to inflation remain to the upside - namely, inflation might return and pick up faster than expected, surprising markets and likely causing significant drawdowns across asset classes. While a sustained and broad-based economic expansion like the one we are experiencing is unlikely to stop and quickly reverse into a global recession without a clear catalyst, we see an unforeseen return of inflation as one the key risks for April 24, 2018 THE INVESTMENT MANAGER OF THE SICAV Past performance is not an indicator of current or future returns. 8

9 Deloitte Deloitte Audit SuLiele;, resµu 11sd bilile li111il ee 560, rue de Neudorf L Luxembourg BP 1173 L Luxembourg Tel : REPORT OF THE REVISEUR D'ENTREPRISES AGREE To the Shareholders of SANTANDER INTERNATIONAL FUND SICAV (Societe d'lnvestissement a Capital Variable) 6, route de Treves L-2633 Senningerberg Report on the Audit of the Financial Statements Opinion We have audited the financial statements of SANTANDER INTERNATIONAL FUND SICAV (the "SICAV") and of each of its Sub-Funds, which comprise the statement of net assets and the statement of investments in securities and other net assets as at December 31, 2017 and the statement of operations and 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 the SICAV and of each of its Sub-Funds as at December 31, 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 the Reviseur d'entreprises Agree for the Audit of the Financial Statements" section of our report. We are also independent of the SICAV 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 SICAV 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 Reviseur d'entreprises Agree 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 concluded that there is a material misstatement of this other information, we are required to report this fact. We have nothing to report in this regards. Societe a responsabilite lim1tee au ca pital de RCS Luxembourg B Autarisation d'etablissement

10 Deloitte REPORT OF THE REVISEUR D'ENTREPRISES AGREE (continued) Responsibilities of the Board of Directors of the SICAV and those charged with governance for the Financial Statements The Board of Directors of the SICAV is responsible for the preparation and fair presentation of the financial statements in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements, and for such internal control as the Board of Directors of the SICAV determines is necessary to enable the preparation 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 SICAV is responsible for assessing the SICAV'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 SICAV either intends to liquidate the SICAV or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the SICAV's financial reporting process. Responsibilities of the Reviseur d'entreprises Agree for the Audit of the Financial Statements Our objectives 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 Reviseur d'entreprises Agree 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 scepticism 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 SICAV'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 SICAV. Conclude on the appropriateness of Board of Directors of SICAV 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 SICAV'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 the Reviseur d'entreprises Agree 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 the Reviseur d'entreprises Agree. However, future events or conditions may cause the SICAV 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. 10

11 Deloitte. REPORT OF THE REVISEUR D'ENTREPRISES AGREE (continued) 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. ( abinet de Revision Agree EmmJnuelle Miette, R viseur d'entreprises Agree Partne} April 24,

12 COMBINED STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS For the year ended December 31, 2017 (in EUR) NET ASSETS AT THE BEGINNING OF THE YEAR 14,208, INCOME Income from investments Dividends, net (note 2.f, 10) 523, Other income 4, , EXPENSES Fees Management fees, Investment management fees and Advisory fees (note 3) 228, Depositary fees 4, Transaction costs (note 8) 4, Registrar and transfer agent fees 2, Other expenses Bank interest, net 6, Annual tax (note 5) 6, Audit and legal fees 50, Administration and other expenses 88, , NET RESULT OF INVESTMENTS 136, Net realised result on: Investments (note 2.d) 169, Foreign exchange (note 2.b) (3,400.37) Forward foreign exchange contracts (note 2.g) 1.81 Futures contracts (note 2.c) (707,102.71) Options contracts (note 2.e) (40,486.74) NET REALISED RESULT (581,685.18) Change in net unrealised appreciation/(depreciation) on: Investments 867, Foreign exchange (note 2.b) (11,421.82) Futures contracts 227, INCREASE IN NET ASSETS AS A RESULT OF OPERATIONS 638, MOVEMENTS IN CAPITAL Subscriptions of shares 667, Redemptions of shares (note 10) (1,915,071.39) (1,247,853.53) NET ASSETS AT THE END OF THE YEAR 13,598, The notes are an integral part of these financial statements. 12

13 SANTANDER MIXTO EUROPA STATEMENT OF NET ASSETS December 31, 2017 (in EUR) ASSETS Investments (note 2.a) Cost 10,679, Net unrealised result 1,179, ,858, Cash Cash at Bank (note 2.a) 1,015, Cash at Broker 641, Other assets Prepaid expenses 1, Net unrealised gain on futures contracts (note 2.c) 123, Other receivable 56, ,697, LIABILITIES Other liabilities Taxes and expenses payable 54, Amounts payable on redemptions 44, , TOTAL NET ASSETS 13,598, Total net assets Share Class C 13,598, Shares outstanding 12, Net asset value per share 1, The notes are an integral part of these financial statements. 13

14 SANTANDER MIXTO EUROPA STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS For the year ended December 31, 2017 (in EUR) NET ASSETS AT THE BEGINNING OF THE YEAR 14,208, INCOME Income from investments Dividends, net (note 2.f, 10) 447, , EXPENSES Fees Management fees, Investment management fees and Advisory fees (note 3) 228, Depositary fees 4, Transaction costs (note 8) 4, Registrar and transfer agent fees 2, Other expenses Bank interest, net 6, Annual tax (note 5) 6, Audit and legal fees 50, Administration and other expenses 83, , NET RESULT OF INVESTMENTS 61, Net realised result on: Investments (note 2.d) 169, Foreign exchange (note 2.b) (3,400.37) Forward foreign exchange contracts (note 2.g) 1.81 Futures contracts (note 2.c) (707,102.71) Options contracts (note 2.e) (40,486.74) NET REALISED RESULT (581,685.18) Change in net unrealised appreciation/(depreciation) on: Investments 867, Foreign exchange (note 2.b) (11,421.82) Futures contracts 227, INCREASE IN NET ASSETS AS A RESULT OF OPERATIONS 562, MOVEMENTS IN CAPITAL Subscriptions of shares 667, Redemptions of shares (1,839,156.67) (1,171,938.81) NET ASSETS AT THE END OF THE YEAR 13,598, The notes are an integral part of these financial statements. 14

15 SANTANDER MIXTO EUROPA STATISTICAL INFORMATION For the year ended December 31, 2017 SHARES Class C Shares outstanding at the beginning of the year 13, Subscriptions of shares Redemptions of shares (1,674.44) Shares outstanding at the end of the year 12, NET ASSET VALUE PER SHARE (in EUR) Highest during the year 1, (03/11/2017) Lowest during the year 1, (31/01/2017) At the end of the year 1, (31/12/2017) The notes are an integral part of these financial statements. 15

16 SANTANDER MIXTO EUROPA CHANGES IN THE NUMBER OF SHARES, OF NET ASSETS AND OF THE NET ASSET VALUE PER SHARE 31/12/ /12/ /12/2017 Share Class C - EUR Number of shares outstanding 15, , , Net asset value per share 1, , , Total net assets 16,391, ,208, ,598, FUTURES CONTRACTS As at December 31, 2017, the following futures contracts were outstanding: Description Currency Maturity Date Commitment (in EUR) Unrealised gain/(loss) (in EUR) Purchase of 1 EUR/SEK FUTURE CROSS CURRENCY KRPH8 SEK 19/03/ , (991.71) Purchase of 1 EURO/CHF FUTURE CURRENCY RFH8 CHF 19/03/ , Purchase of 4 SWISS MARKET IX FUTURE EQUITY INDEX SMH8 CHF 16/03/ , Sale of 17 OMXS30 IND FUTURE EQUITY INDEX QCF8 SEK 19/01/2018 (272,207.84) 5, Sale of 137 EURO STOXX 50 EQUITY INDEX VGH8 EUR 16/03/2018 (4,785,410.00) 115, Sale of 190 BANCO BILBAO VA STOCK FUTURE BBVA EUR 16/03/2018 (135,090.00) 2, , The counterparty of these futures contracts is Banco Santander S.A.. TAXES AND EXPENSES PAYABLE (in EUR) Administration and other expenses (note 6) 32, Depositary fees (note 6) 1, Annual tax (note 5) 2, Management fees (note 3) 18, , The notes are an integral part of these financial statements. 16

17 SANTANDER MIXTO EUROPA STATEMENT OF INVESTMENTS IN SECURITIES AND OTHER NET ASSETS December 31, 2017 (in EUR) Quantity/ Nominal value Description Ccy Cost Market price per share/ unit Market value (note 2) % of net assets TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL EXCHANGE LISTING OR DEALT IN ON ANOTHER REGULATED MARKET EQUITIES BELGIUM 3,826 ANHEUSER-BUSCH INBEV SA/NV EUR EUR 117, , ,450 SOLVAY S.A. NPV EUR 163, , , , FRANCE 433 AIR LIQUIDE EUR 16, , ,911 AXA EUR 160, , ,359 BNP PARIBAS EUR 258, , ,216 CARREFOUR SA EUR 224, , ,694 ENGIE EUR 310, , ,198 ESSILOR INTERNATIONAL SA EUR 95, , GROUPE DANONE EUR 32, , HERMES INTERNATIONAL NPV EUR 10, , ,233 L'OREAL EUR 82, , ,448 LVMH MOET HENNESSY LOUIS EUR 98, , VUITTON 1,014 PUBLICIS GROUPE EUR 62, , SAFRAN EUR 54, , ,210 SANOFI-AVENTIS EUR 400, , ,544 SCHNEIDER ELECTRIC SA EUR 226, , ,262 SOCIETE GENERALE SA EUR 254, , ,155 TOTAL EUR 535, , UNIBAIL-RODAMCO SE REIT EUR 104, , ,695 VINCI EUR 260, , ,189, ,821, The notes are an integral part of these financial statements. 17

18 SANTANDER MIXTO EUROPA STATEMENT OF INVESTMENTS IN SECURITIES AND OTHER NET ASSETS December 31, 2017 (in EUR) (continued) Quantity/ Nominal value Description Ccy Cost Market price per share/ unit Market value (note 2) % of net assets TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL EXCHANGE LISTING OR DEALT (continued) IN ON ANOTHER REGULATED MARKET EQUITIES (continued) GERMANY 2,336 ALLIANZ N SE-NOM EUR 706, , ,715 BASF SE EUR 119, , ,300 BAYER AG EUR 212, , ,610 BAYERISCHE MOTORENWERKE EUR 147, , ,610 DAIMLERCHRYSLER EUR 146, , ,576 DEUTSCHE BANK AG NOM EUR 361, , ,966 DEUTSCHE POST AG-NOM EUR 131, , ,068 DEUTSCHE TELEKOM AG NOM EUR 85, , FRESENIUS SE & CO KGAA EUR 26, , MUENCHENER EUR 242, , RUECKVERSICHERUNGS AG NOM 4,727 SAP AG EUR 190, , ,054 SIEMENS AG-NOM EUR 90, , ,013 UNIPER SE COMMON STOCK EUR EUR 25, , VOLKSWAGEN AG EUR 203, , ,690, ,024, IRELAND 3,925 CRH PLC EUR 74, , , , ITALY 6,963 ASSICURAZIONI GENERALI EUR 167, , ,706 ENEL SPA EUR 292, , ,521 ENI SPA EUR 168, , The notes are an integral part of these financial statements. 18

19 SANTANDER MIXTO EUROPA STATEMENT OF INVESTMENTS IN SECURITIES AND OTHER NET ASSETS December 31, 2017 (in EUR) (continued) Quantity/ Nominal value Description Ccy Cost Market price per share/ unit Market value (note 2) % of net assets TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL EXCHANGE LISTING OR DEALT (continued) IN ON ANOTHER REGULATED MARKET EQUITIES (continued) ITALY (CONTINUED) 74,756 INTESA SANPAOLO SPA EUR 308, , ,432 TELECOM ITALIA SPA EUR 227, , ,630 UNICREDIT SPA COMMON STOCK EUR EUR 566, , ,731, ,037, LUXEMBOURG 242 APERAM EUR 8, , , , SPAIN 32,583 BANCO DE BILBAO VIZCAYA EUR 224, , ARGENTA 97,594 BANCO SANTANDER SA EUR 563, , ,429 INDITEX SA EUR 120, , ,949 TELEFONICA SA EUR 312, , ,221, ,183, SWEDEN 4,897 ATLAS COPCO AB SEK 0.64 SEK 100, , , , SWITZERLAND 941 SCHINDLER HLDG AG PTG CERT CHF 104, , , , The notes are an integral part of these financial statements. 19

20 SANTANDER MIXTO EUROPA STATEMENT OF INVESTMENTS IN SECURITIES AND OTHER NET ASSETS December 31, 2017 (in EUR) (continued) Quantity/ Nominal value Description Ccy Cost Market price per share/ unit Market value (note 2) % of net assets TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL EXCHANGE LISTING OR DEALT (continued) IN ON ANOTHER REGULATED MARKET EQUITIES (continued) THE NETHERLANDS 3,089 AIRBUS GROUP NV EUR 155, , ,948 ASML HOLDING N.V. EUR 133, , ,875 ING GROEP NV COMMON STOCK EUR 329, , EUR ,873 ROYAL PHILIPS ELECTRONICS NV EUR 152, , ,459 UNILEVER CVA EUR 268, , ,039, ,567, UNITED KINGDOM 28,109 GKN ORD GBP 130, , ,395 VODAFONE GROUP PLC GBP 107, , , , TOTAL EQUITIES 10,679, ,858, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL EXCHANGE LISTING OR DEALT IN ON ANOTHER REGULATED MARKET 10,679, ,858, TOTAL INVESTMENTS 10,679, ,858, CASH AT BANKS AND BROKER 1,656, OTHER NET ASSETS 83, TOTAL NET ASSETS 13,598, The notes are an integral part of these financial statements. 20

21 SANTANDER MIXTO EUROPA GEOGRAPHICAL CLASSIFICATION OF THE INVESTMENTS IN SECURITIES December 31, 2017 COUNTRIES % OF NET ASSETS France Germany The Netherlands Spain 8.70 Italy 7.63 Belgium 3.86 United Kingdom 1.58 Switzerland 1.33 Sweden 1.30 Ireland 0.86 Luxembourg 0.08 TOTAL INVESTMENTS IN SECURITIES OTHER NET ASSETS (INCLUDING CASH AT BANK) TOTAL The notes are an integral part of these financial statements. 21

22 SANTANDER MIXTO EUROPA ECONOMIC CLASSIFICATION OF THE INVESTMENTS IN SECURITIES December 31, 2017 ECONOMIC SECTORS % OF NET ASSETS Banks Chemicals Food and beverage 7.52 Full line insurance 6.26 Oil and gas 5.50 Automobiles 5.28 Telecommunications 4.12 Software 3.25 Electricity 3.16 Heavy construction 2.94 Clothing and accessories 2.84 Electrical components and equipment 2.56 Aerospace and defense 2.37 Diversified industrials 2.26 Semiconductors 2.08 Personal products 1.68 Marine transportation 1.45 Electronic equipment 1.33 Apparel retailers 1.16 Reinsurance 1.10 Health care 1.01 Building materials and fixtures 0.86 Real estate services 0.78 Publishing 0.42 Steel 0.08 TOTAL INVESTMENTS IN SECURITIES OTHER NET ASSETS (INCLUDING CASH AT BANK) TOTAL The notes are an integral part of these financial statements. 22

23 MAJUELO (note 1) STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS For the year ended December 31, 2017 (in EUR) NET ASSETS AT THE BEGINNING OF THE YEAR - INCOME Income from investments Dividends, net (note 10) 75, Other income 4, , EXPENSES Other expenses Bank interest, net Administration and other expenses 4, , NET RESULT OF INVESTMENTS 75, INCREASE IN NET ASSETS AS A RESULT OF OPERATIONS 75, MOVEMENTS IN CAPITAL Redemptions of shares (note 10) (75,914.72) (75,914.72) NET ASSETS AT THE END OF THE YEAR - The notes are an integral part of these financial statements. 23

24 NOTES TO THE FINANCIAL STATEMENTS December 31, 2017 NOTE 1 - GENERAL SANTANDER INTERNATIONAL FUND SICAV (the SICAV ) is organised under the laws of the Grand Duchy of Luxembourg as a Société d lnvestissement à Capital Variable (SICAV) with several Sub-Funds each linked to a separate portfolio of investments. It qualifies as an undertaking for collective investment under Part I of the amended Luxembourg law of December 17, 2010 (the Law of 2010 ). All Shareholders rank equally in proportion to their shareholding and their rights are represented by share certificates. Each share carries one vote in the meeting of Shareholders. The initial Articles of Incorporation of the SICAV adopted on April 27, 1992, amended on October 21, 1992 were published in the Recueil électronique des sociétés et associations du Grand-Duché de Luxembourg (the RESA ) on June 6, 1992 and on January 19, In 1996, the SICAV changed its name from SANTANDER EUROPA to its present name SANTANDER INTERNATIONAL FUND SICAV and adopted the structure of a multiple classes of shares Fund (umbrella Fund). The articles of incorporation were amended for the last time with effect on May 2, 2014 published in the Mémorial on May 30, The Articles of Association have been amended for the last time on January 17, 2006 and the changes were published in the Mémorial on April 11, The SICAV is registered at the Luxembourg Register of Commerce and Companies under the number B As at December 31, 2017, the shares of the following Sub-Fund is offered for issue and sale: SANTANDER MIXTO EUROPA Share Class C, in Euro (EUR). On July 18, 2016, the Board of Directors of the SICAV resolved to put dormant the Sub-Fund MAJUELO with the last NAV date of July 20, The Sub-Fund was not reactivated during the year ended December 31, Details are disclosed in Note 9. The SICAV s financial year ends on December 31 of each year. The objective of the Sub-Fund SANTANDER MIXTO EUROPA is to invest its assets in a diversified portfolio of securities, including fixed and variable income securities of European issuers quoted or traded on European official stock exchanges or regulated markets while seeking to control economic and monetary risks. 24

25 NOTES TO THE FINANCIAL STATEMENTS December 31, 2017 (continued) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared in conformity with legal and regulatory requirements and with generally accepted accounting principles in Luxembourg applicable to undertakings for collective investments, including the following significant accounting policies: a) Valuation of investments assets The value of any cash at hand or on deposit, bills and demand notes and accounts receivable, prepaid expenses, cash dividends and interest declared or accrued as aforesaid and not yet received are 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 is arrived at after making such discount as the Board of Directors of the SICAV may consider appropriate in such case to reflect the true value thereof. Portfolio securities and/or money market instruments, which are listed on an official stock exchange or traded on another regulated market are valued at the last available closing price on the principal market on which such securities and/or money market instruments are traded, as furnished by a pricing service approved by the Board of Directors of the SICAV. If since the close of business, there has been a material change in the quotations on the markets on which a substantial portion of the Sub-Fund s investment is dealt or quoted, such securities and/or money market instruments, as well as all other permitted assets, are valued at the fair value at which it is expected that they may be resold, as determined in good faith by and under the direction of the Board of Directors of the SICAV. Investments in open-ended UCIs are valued on the basis of the last available net asset value of the units or shares of such UCIs. Any assets or liabilities in currencies other than the Dealing Currencies of the relevant Sub-Fund are converted in the relevant Dealing Currencies using the relevant spot rate quoted by a bank or other responsible financial institution. b) Foreign currency translation Assets and liabilities expressed in currencies other than the Sub-Fund s currency are translated into the Sub-Fund s currency at the exchange rates prevailing as of December 31, Income and expenses in currencies other than the Sub-Fund s currency are translated into the Sub-Fund s currency at the exchange rates prevailing at the transaction date. Transactions in foreign currencies are translated at rates of exchange on the transaction date. Gains and losses on foreign exchange are recorded in the statement of operations and changes in net assets for the year. The following exchange rates have been used as at December 31, 2017: 1 EUR = CHF 1 EUR = GBP 1 EUR = SEK 1 EUR = USD 25

26 NOTES TO THE FINANCIAL STATEMENTS December 31, 2017 (continued) c) Futures contracts NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued) Outstanding futures contracts are valued at the closing date at the last available market price of the instruments. The unrealised gains/losses on futures contracts are included in the statement of net assets under the heading Net Unrealised gain/loss on futures contracts. Net realised result and change in unrealised appreciation and depreciation are included in the statement of operations and changes in net assets. d) Net realised gain or loss on sales of investments Realised gains or losses on sales of investments are calculated on the basis of average cost of the investments sold. e) Options contracts The market value of options traded on stock markets is based on the closing price published by the stock exchanges on which the Sub-Funds concluded the contracts. The settlement value of options that are not traded on a stock exchange is determined according to valuation rules established by the Board of Directors of the SICAV, according to uniform criteria for each type of contracts. Net realised result and change in unrealised appreciation and depreciation are included in the statement of operations and changes in net assets. f) Revenues Dividends, net of any unrecoverable withholding taxes, net are recorded at ex-date. Interest is recorded on an accrual basis. g) Forward foreign exchange contracts Outstanding forward foreign exchange contracts are valued on the basis of forward exchange rates prevailing at the relevant valuation date. Realized result and change in unrealised gains or losses are included in the Statement of operations and changes in net assets. h) Combined statement of net assets and statement of operations and changes in net assets The combined statement of operations and changes in net assets of the SICAV is equal to the sum of the corresponding items in the statement of operations and changes in net assets of the different Sub-Funds and expressed in EUR. The combined statement of net assets is not presented on the current annual report because the Sub-Fund MAJUELO doesn t have any material assets at the end of the year. NOTE 3 - MANAGEMENT FEE AND INVESTMENT MANAGER a) Appointment of the Management Company On December 16, 2005, SANTANDER ASSET MANAGEMENT LUXEMBOURG S.A. has been appointed Management Company of the SICAV. 26

27 NOTES TO THE FINANCIAL STATEMENTS December 31, 2017 (continued) NOTE 3 - MANAGEMENT FEE AND INVESTMENT MANAGER (continued) SANTANDER ASSET MANAGEMENT LUXEMBOURG S.A. is a management company entitled to the management of several Luxembourg undertakings for collective investment and the administration of their assets and activities in accordance with the provisions of the Chapter 15 of the Luxembourg law of 2010, as amended. The Management Company is in charge of the management, on a day-to-day basis, of the securities and other assets constituting the Sub-Funds of the SICAV. b) Approval of the delegation from the Management Company to an Investment Manager As of January 1, 2012, SANTANDER ASSET MANAGEMENT LUXEMBOURG S.A. has appointed SANTANDER ASSET MANAGEMENT S.A., S.G.I.I.C., as Investment Manager, under an Investment Management Agreement. The Management Company delegates to the Investment Manager the management, on a day-to-day basis, of the securities and other net assets constituting the Sub-Funds of the SICAV. c) Management fee and Shareholding services fee The Management Company SANTANDER ASSET MANAGEMENT LUXEMBOURG S.A. is entitled to receive from the SICAV a management fee calculated and charged monthly in arrears based on the net asset value of each Sub-Fund as of each Valuation Day at the rate of 1.65% per annum for the Sub-Fund SANTANDER MIXTO EUROPA. Based on an appendix to the Collective Portfolio Management Agreement dated January 1, 2012 and in consideration for the shareholding services rendered by the Management Company, the SICAV shall pay to the Management Company an annual shareholding services fee of 0.03% per annum of the average net asset of each Sub-Fund of the SICAV over each elapsed month. NOTE 4 - SUBSCRIPTION, REDEMPTION AND CONVERSION OF SHARES Shares are offered on each Dealing Day (being the Luxembourg Bank Business Day preceding the Valuation Day). The offering price (the Offering Price ) is the Net Asset Value per Share calculated on the next Valuation Day plus a sales charge of up to 5.00% thereon, payable to the SICAV and / or the Share-Distributors, as relevant. Shareholders may request at any time the redemption of their Shares, the redemption price being the Net Asset Value per Share calculated on the following Valuation Day less a redemption fee of up to 2.00% thereon, provided that the total of the sales charge and the redemption fee will not for any Shareholders exceed 5.00%. No conversion of shares is possible from or into the Sub-Fund. NOTE 5 - ANNUAL TAX Under the Law of 2010, the SICAV is not liable to any Luxembourg income tax nor are dividends paid by the SICAV liable to any Luxembourg withholding tax. The SICAV is, however, liable in Luxembourg to a tax of 0.05% per annum of its net assets, such tax being payable quarterly on the basis of the Value of the Net Assets of the SICAV at the end of each quarter. No more subscription tax is paid on the assets held by the SICAV in other UCITS already subject to that tax in Luxembourg. No stamp duty or other tax is payable in Luxembourg on the issue of shares except a once-and-for-all tax of EUR 1, paid by the SICAV upon its incorporation. 27

28 NOTES TO THE FINANCIAL STATEMENTS December 31, 2017 (continued) NOTE 6 - DEPOSITARY, ADMINISTRATION AND OTHER EXPENSES In its capacity as Depositary, Administrative, Corporate & Domiciliary Agent J.P. MORGAN BANK LUXEMBOURG S.A. is entitled to receive as remuneration for the services rendered to the SICAV and the Management Company an annual fee depending on the nature of the investments of the different Sub-Funds in a range from 0.05% to 0.30% of the Net Asset Values of the assets of the different Sub-Funds, as reflected in more detail in the SICAV s financial reports. Such fee is calculated and accrued daily and is paid monthly in arrears to the Depositary by the SICAV out of the assets of each Sub-Fund. It should be noted that a minimum annual fee for administration services (EUR 15,000) and fiduciary services (EUR 9,200) shall be payable by the Fund to J.P. Morgan Bank in remuneration of its fund accounting, valuation and fiduciary services in case the fees rates agreed for these services (expressed in percentage per annum) do not reach the annual minima considering the level of assets under management of the relevant Sub-Fund over the relevant year. Administration and fiduciary fees (rate expressed in basis points with an annual minimum) are calculated and accrued in the funds on daily basis and payable to the Depositary, Administrative, Corporate and Domiciliary Agent on quarterly basis. NOTE 7 - STATEMENT OF CHANGES IN THE COMPOSITION OF THE PORTFOLIO DURING THE YEAR The statement of changes in the composition of the portfolio during the year is made available free of charge to Shareholders at the registered office of the SICAV. NOTE 8 - TRANSACTION COSTS For the year ended December 31, 2017, the SICAV incurred transaction costs which have been defined as brokerage fees, relating to purchase or sale of transferable securities, money market instruments, derivatives, or other eligible assets. The SICAV also incurred transaction costs charges by the Custodian Agent and relating to purchase and sale of transferable securities. Depositary transaction costs are included in Depositary fees in the Statement of Operations and changes in net assets. Brokerage Depositary Total fees transaction costs transaction costs SANTANDER MIXTO EUROPA EUR 6, , , For fixed income securities, transaction costs are not separately recognizable from the purchase price of the security and therefore cannot be disclosed separately. Transaction costs on derivatives are included directly in the transaction price. NOTE 9 - MAJUELO The Sub-Fund MAJUELO has been put dormant with last NAV date of July 20, As at December 31, 2017, the cash accounted presents an amount of EUR The Sub-Fund has not been reactivated and the Board of Directors of the SICAV is planning to liquidate it. 28

29 NOTES TO THE FINANCIAL STATEMENTS December 31, 2017 (continued) NOTE 10 - WITHHOLDING TAX RECLAIM During the year 2017, withholding tax claims have been filed in respect of the withholding tax applied on dividends paid during the recent years in selected European countries. The decision to file a claim is taken by the Board of Directors of the SICAV based on the analysis of costs to be borne and maximum potential amount refunded. The costs for pursuing the reclaims are borne only by the Sub-Funds potentially entitled to the refunds and are recorded under Administration and other expenses in the Statement of Operations and Changes in Net Assets. During the year ended December 31, 2017, the following withholding tax reclaim income was earned and recorded under Dividends, net in the Statement of Operations and Changes in Net Assets: Sub-Fund Currency Amount SANTANDER MIXTO EUROPA EUR 99, MAJUELO EUR 75, The refunds received by the dormant Sub-Fund MAJUELO was transferred back to the former final investor. 29

30 APPENDIX : UNAUDITED ADDITIONAL DISCLOSURES APPENDIX 1 - GLOBAL RISK MANAGEMENT In terms of risk management, the Board of Directors of the SICAV selected the commitment approach in order to determine the global risk exposure for all the Sub-Funds of the SICAV. APPENDIX 2 - REMUNERATION OF THE MEMBERS OF THE MANAGEMENT COMPANY OF THE SICAV The Management Company of the SICAV has adopted a Remuneration Policy, which is in accordance with the principles established by the law of May 10, 2016, amending the law of December 17, 2010 ( the UCITS Law ). The Management Company of the SICAV has established remuneration policies for those categories of staff, including senior management, risk takers, control functions, and any employees within the Management Company of the SICAV receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers and whose professional activities have a material impact on the risk profiles of the Management Company of the SICAV, that: are compliant with and promote a sound and effective risk management and do not encourage risk-taking which is inconsistent with the risk profiles of the SICAV or with its Articles of Incorporation; are in line with the business strategy, objectives values and interests of the Management Company of the SICAV and which do not interfere with the obligation of the Management Company of the SICAV to act in the best interests of the SICAV and of its investors; include an assessment process based on the longer-term performance of the SICAV; and appropriately balance fixed and variable components of total remuneration. The Director position of the Management Company of the SICAV is not remunerated from the accounts of the Management Company of the SICAV. Conducting Persons who are not employees of the Santander Group in return for their duties performed, received an aggregate fixed remuneration of EUR 72,000. There are not variable remuneration nor performance-related. Conducting Persons who are employees of the Santander Group are not entitled to receive remuneration from the accounts of the Management Company of the SICAV. The Management Company of the SICAV is not aware of any deficiency in the remuneration policy. Moreover, the remuneration policy has not been updated in the course of the financial year ended December 31, Details of the remuneration policy of the Management Company of the SICAV, including, but not limited to, a description of how remuneration and benefits are calculated and the identity of persons responsible for awarding the remuneration and benefits is available at A paper copy will be made available free of charge upon request. APPENDIX 3 - SECURITIES FINANCING TRANSACTIONS REGULATION ( SFTR ) As at December 31, 2017, the SICAV is in the scope of the requirements of the Regulation (EU) 2015/2365 on transparency of Securities Financing Transactions and of Reuse. Nevertheless, no corresponding transactions were carried out during the year referring to the financial statements. 30