PARVEST SICAV ANNUAL REPORT at 31/12/2017 R.C.S. Luxembourg B 33 363 The asset manager for a changing world
The asset manager for a changing world
Table of contents Organisation 3 Information 5 Manager's report 6 Audit report 10 Financial statements at 31/12/2017 14 Key figures relating to the last 3 years 23 Securities portfolio at 31/12/2017 Bond Asia ex-japan 36 Bond Best Selection World Emerging 38 Bond USD 41 Bond USD Short Duration 44 Bond World 45 Bond World Emerging Local 49 Bond World High Yield 51 Bond World Inflation-Linked 56 Consumer Innovators 57 Convertible Bond Asia 58 Convertible Bond World 59 Disruptive Technology 61 Energy Innovators 62 Equity Best Selection Asia ex-japan 63 Equity Best Selection Euro 64 Equity Best Selection Europe 65 Equity Brazil 66 Equity China 67 Equity Europe Emerging 68 Equity Europe Growth 69 Equity Europe Mid Cap 70 Equity Europe Small Cap 71 Equity High Dividend Pacific 72 Equity High Dividend USA 73 Equity India 74 Equity Indonesia 75 Equity Japan 76 Equity Latin America 77 Equity Russia 78 Equity Russia Opportunities 79 Equity USA Growth 80 Equity USA Mid Cap 81 Page 1 Page
Table of contents Page Equity World Emerging 82 Equity World Low Volatility 83 Equity World Materials 85 Equity World Utilities 86 Finance Innovators 87 Green Tigers 88 Health Care Innovators 89 Multi-Asset Income Emerging 90 Real Estate Securities Pacific 94 Real Estate Securities World 95 Sustainable Equity High Dividend Europe 96 Notes to the financial statements 97 Unaudited appendix 137 No subscription can be received on the basis of the financial statements alone. Subscriptions are only valid if made on the basis of the current prospectus, accompanied by the latest annual report and the most recent semi-annual report, if published thereafter. Page 2
Organisation Registered office 10 Rue Edward Steichen, L-2540 Luxembourg, Grand Duchy of Luxembourg Board of Directors Chairman Mr. Philippe MARCHESSAUX, Head of Capital Partners and FundQuest Advisor, Paris Members Mr. Marnix ARICKX, Chief Executive Officer, BNP PARIBAS ASSET MANAGEMENT Belgium, Brussels Mr Emmanuel COLLINET DE LA SALLE, Head of Group Networks, BNP PARIBAS ASSET MANAGEMENT France, Paris (from 9 October 2017) Ms. Marianne DEMARCHI, Head of Group Networks, BNP PARIBAS ASSET MANAGEMENT France, Paris (until 30 June 2017) Mr. Anthony FINAN, Chief Marketing Officer & CSR Delegate, BNP PARIBAS ASSET MANAGEMENT France, Paris (until 29 November 2017) Mr. François HULLO, Head of External Distribution, BNP PARIBAS ASSET MANAGEMENT France, Paris Mr. Christian VOLLE, independent Director, Paris Managing Director Mr. Anthony FINAN, Chief Marketing Officer & CSR Delegate, BNP PARIBAS ASSET MANAGEMENT France, Paris (until 29 November 2017) Company Secretary (non-member of the Board) Mr. Stéphane BRUNET, Chief Executive Officer, BNP PARIBAS ASSET MANAGEMENT Luxembourg, Luxembourg Management Company BNP PARIBAS ASSET MANAGEMENT Luxembourg, 10 Rue Edward Steichen, L-2540 Luxembourg, Grand Duchy of Luxembourg BNP PARIBAS ASSET MANAGEMENT Luxembourg is a Management Company as defined in chapter 15 of the Law of 17 December 2010 concerning undertakings for collective investment, as amended. The Management Company performs the administration, portfolio management and marketing duties. Net asset value calculation, transfer and registrar agent are delegated to: BNP Paribas Securities Services - Luxembourg Branch, 60 Avenue J.F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg Portfolio management is delegated to: Management entities of the BNP Paribas Group Alfred Berg Kapitalförvaltning AB Nybrokajen 5, SE-10725 Stockholm, Sweden BNP PARIBAS ASSET MANAGEMENT France, 1 Boulevard Haussmann, F-75009 Paris, France BNP PARIBAS ASSET MANAGEMENT Brasil Ltda, Av. Juscelino Kubitchek 510-11 Andar, 04543-00 Sao Paulo SP, Brazil BNP PARIBAS ASSET MANAGEMENT Asia Ltd., 30/F Three Exchange Square, 8 Connaught Place, Central Hong Kong BNP PARIBAS ASSET MANAGEMENT Japan Ltd., Gran Tokyo North Tower, 9-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-6739, Japan Page 3
Organisation BNP PARIBAS ASSET MANAGEMENT Nederland N.V., Herengracht 595, PO box 71770, NL-1008 DG Amsterdam, The Netherlands BNP PARIBAS ASSET MANAGEMENT UK Ltd., 5 Aldermanbury Square, London EC2V 7BP, United Kingdom BNP PARIBAS ASSET MANAGEMENT USA, Inc., 200 Park Avenue, 11 th floor, New York, NY 10166, USA TEB Portföy Yönetimi A.Ş., Gayrettepe Mahallesi Yener Sokak n 1 Kat. 9 Besiktas 34353 Istanbul, Turkey Management entities not part of the Group: Fairpointe Capital LLC., One North Franklin Street, Suite 3300, Chicago, IL 60606, USA, Manager for the Equity USA Mid Cap sub-fund River Road Asset Management, LLC, 462 South Fourth Street, Suite 1600 Louisville, Kentucky 40202-3466, USA, Manager for the Equity High Dividend USA sub-fund The Company may also seek advice from the following investment advisors: FundQuest Advisor, 1 Boulevard Haussmann, F-75009 Paris, France, Advisor on the selection of portfolio managers from outside the Group TEB Portföy Yönetimi A.Ş., Gayrettepe Mahallesi Yener Sokak n 1 Kat. 9 Besiktas 34353 Istanbul, Turkey, Advisor for the Equity Europe Emerging sub-fund and the Turkish Equity in the Equity Emerging Europe pocket of the Multi-Asset Income Emerging sub-fund Depositary BNP Paribas Securities Services - Luxembourg Branch 60 Avenue J.F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg Auditor PricewaterhouseCoopers, Société coopérative, 2 Rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg, Grand Duchy of Luxembourg. Page 4
Information Establishment PARVEST (the Fund, the Company ) is an open-ended investment company (Société d Investissement à Capital Variable SICAV) incorporated under Luxembourg law on 27 March 1990 for an indefinite period. The Company is currently governed by the provisions of Part I of the law of 17 December 2010 governing undertakings for collective investment, as amended, as well as by Directive 2009/65 amended by Directive 2014/91. The Articles of Association have been modified at various times, most recently at the Extraordinary General Meeting on 25 April 2016, published in the Mémorial, Recueil Spécial des Sociétés et Associations on 17 June 2016. The latest version of the Articles of Association has been filed with the Trade and Companies Register of Luxembourg, where any interested party may consult it and obtain a copy. The Company is registered in the Luxembourg Trade and Companies Register under the number B 33 363. The minimum capital amounts to EUR 1 250 000. It is at all times equal to the total net of the various sub-funds. It is represented by fully paid-up shares issued without a designated par value. The capital varies automatically without the notification and specific recording measures required for increases and decreases in the capital of limited companies. Listing The shares of the Company are not listed on a Stock Exchange. Information to the Shareholders Net Asset Values and Dividends Net Assets values are calculated every full bank business day in Luxembourg. The Company publishes the legally required information in the Grand Duchy of Luxembourg and in all other countries where the shares are publicly offered. This information is also available on the website: www.bnpparibas-am.com. Financial Year The Company s financial year starts on 1 January and ends on 31 December. Financial Reports The Company publishes an annual report closed on the last day of the financial year, certified by the auditors, as well as a non-certified, semi-annual interim report closed on the last day of the sixth month of the financial year. The Company is authorised to publish a simplified version of the financial report when required. The financial reports of each sub-fund are published in the accounting of the sub-fund, although the consolidated accounts of the Company are expressed in euro. The annual report is made public within four months of the end of the financial year and the interim report within two months of the end of the half-year. Documents for Consultation The Articles of Association, the Prospectus, the KIID and periodic reports may be consulted at the Company s registered office and at the establishments responsible for the Company s financial service. Copies of the Articles of Association and the annual and interim reports are available upon request. Except for the newspaper publications required by Law, the official media to obtain any notice to shareholders from will be the website www.bnpparibas-am.com. Documents and information are also available on the website: www.bnpparibas-am.com. Page 5
Manager's report Economic context After a few disappointments at the start of the year, global growth picked up and became synchronised starting from the summer, causing both private forecasters and major international organisations to revise up their forecasts. The OECD projects 3.6% growth for 2017 and 3.7% for 2018, the highest rate since 2011. This growth comes with an upturn in global trade, which was good news for emerging economies and began driving oil stocks up in June. This trend was driven by producing countries determination to limit supply. In late 2017, with OPEC having just rolled over its output cut agreement (which took effect on 1 January 2017), WTI hit a high since mid-2015, at USD 60 vs. about USD 42 in June. Inflation stayed low worldwide, allowing some central banks in emerging countries to cut their key rates as their counterparts in major developed countries continue (US Federal Reserve) or will very cautiously begin (European Central Bank) to normalise their monetary policy. United States After very low growth in the first quarter (1.2% on an annualised basis), GDP growth settled at around 3%. Second and third quarter results (up 3.1% and 3.2% respectively), set to grow by approximately the same rate in the fourth quarter according to the available indicators, are a better reflection of the solidity of the labour market and the improvement in consumer confidence than the dip at the start of the year. The optimism of consumers and companies was boosted by the surprise outcome of the presidential election in November 2016 and has not yet waned. In November, small business confidence returned to its highest level since 1983. From a strictly economic perspective, the consequences of the hurricanes that hit Texas and Florida at the end of the summer had a short-term impact on activity (and especially construction and job figures), but this was very temporary and practically imperceptible on the scale of the US economy as a whole. In addition to the emergency funds released for reconstruction, the economy could benefit in 2018 from major tax cuts for both households and companies adopted in December after many months of delays. The steady fall in unemployment (from 4.8% in January to 4.1% as from October) has not yet resulted in wage growth. This fact has raised questions, including at the Fed, in an environment where inflation, which rose to 2.7% in February (representing a 5-year peak), significantly slowed, falling to 1.6% in June, and then only slightly picked up again (2.2% in November). Europe The recovery in the euro zone was consolidated as the months went by, with GDP growth of 0.6 % or 0.7% since the fourth quarter of 2016. The growth rate reached 2.6% year-on-year in the third quarter of 2017, a post-2011 record far exceeding its potential (around 1.5% according to the latest estimates). Based on business surveys, growth should stay solid in the fourth quarter, or even continue to gather pace. The economic sentiment index published by the European Commission is ending the year on a high not seen since October 2000, while the composite PMI, which reflects the opinions of purchasing managers in the manufacturing and service sectors, was at more than 58 in December, a threshold that may be associated with quarterly GDP growth of 0.8%. Domestic demand also seems to be increasingly solid, and the rebound in investment is set to continue, while household spending should benefit from the improvement in job figures. Concerns about the future of the euro zone, which became stronger before the first round of the presidential election in France in spring 2017, have considerably subsided. Although there are still some political unknowns (outcome of the Brexit negotiations, difficulties forming a coalition government in Germany, situation in Catalonia and upcoming parliamentary elections in Italy), the calmer climate is likely to encourage companies to invest more, while the capacity utilisation rate has continued to increase and the cost of credit is still very low. Inflation, which stood at 0.1% year-on-year in mid-2016, climbed to 2% in February 2017 due to base effects on energy prices. It then fell back down to 1.3% in July, before ending the year at 1.4%. At the same time, core inflation fluctuated at around 1%, amounting to 0.9% as from October 2017. These two measurements are largely below the 2% target. Japan GDP growth came to 2.5% on an annualised basis in the third quarter, whereas the growth rate was 2.9% in the second quarter and only 1.5% in the first quarter. The figures from the economic survey by the Bank of Japan (Tankan) have been constantly improving since the end of 2016 and fourth quarter results confirmed the improvement in the business activity of major manufacturing companies, with an index at a post-2006 high. Domestic demand is still fragile, however, as the steady fall in unemployment, from 3% in January to 2.7% in November (the lowest level since the end of 1993), has not boosted wage growth. Quite the contrary, as unions are more inclined to preserve working conditions than demand pay rises. The country is not managing to break free of deflation given this backdrop. With the exception of food and energy, inflation was at 0.1% yearon-year at the end of December, having spent a good part of the year in negative territory. Prime Minister Shinzo Abe s bet paid off, as the coalition that he leads retained a large majority following the early parliamentary elections held on 22 October. Page 6
Manager's report His victory makes economy policy more certain. This should include the presenting of fiscal stimulus measures before the end of the year; although it believes that the economy is improving, the BoJ is maintaining its highly accommodative monetary policy, which is supported by the Prime Minister. Emerging markets Although the economic indicators moderately improved until March, some elements could be viewed as disappointing. This impression dissipated at the end of the summer, with the growing signs of the synchronisation of the global economy, which was particularly promising for countries in emerging Asia. For several months, the OECD s lead indicators have pointed to a positive change in growth in China, and suggest a consolidation of growth in Brazil and stable growth in India and Russia. The most significant element, and the most favourable, is the slowdown of inflation, which has allowed many central banks (for example in India, Brazil, Russia and Indonesia) to substantially cut their key rates. In December, for instance, the Bank of Brazil reduced the SELIC to its lowest ever rate (7%). According to the IMF, emerging country growth (4.6% in 2017) should come out at 4.9% in 2018, despite a slight downturn in the Chinese economy, which is compatible with the aim, reiterated by Beijing, of achieving more balanced growth. Monetary policy Since March 2016, the European Central Bank has kept its key rates on hold (0% for the main refinancing rate, 0.25% for the marginal lending facility, and -0.40% for the deposit facility). The ECB intends to keep them very low for an extended period of time and well beyond the deadline for ending quantitative easing (QE). From April 2016 to March 2017, QE amounted to EUR 80 billion per month. It was lowered to EUR 60 billion in April and, in October 2017, the ECB announced a new reduction to EUR 30 billion monthly beginning in January 2018. QE, which has been in place since March 2015, will continue until at least September 2018 and will not be shut down suddenly. The 26 October monetary policy meeting was highly awaited by investors who feared a more hawkish tone, similar to the late June speech in Sintra, Portugal, given that the euro zone s economy, which was already good in June, had improved considerably since then. The recalibration (the expression used during the press conference) was quite modest and came with highly accommodative language. For example, the ECB reserved the option of increasing the size of the programme in terms of size and/or duration. In the following weeks, several governors more or less explicitly expressed their disagreement, with some even calling for a deadline on halting QE. The debate within the ECB is between those who believe growth is very solid and more shock-resistant and those who believe that inflation is still weak. Mario Draghi is clearly in the latter camp. He acknowledges that the risks of deflation have vanished and that there is less probability of inflation returning to 0.5% to 0.6% but concluded that it is difficult to go much beyond that. After raising key rates in December 2015 and then in December 2016, the US Federal Reserve undertook three 25bp hikes in 2017, in March, June and December. Since 13 December, the Fed Funds target rate has ranged between 1.25% and 1.50%. This faster pace compared to the two previous years reflects the Fed s conviction that the economy is in the process of meeting its dual objectives of full employment and price stability. The optimistic scenario for economic activity is fully supported by the steady decline in the unemployment rate and solid GDP growth. Things are less clear on inflation, given the modest wage growth and fluctuating consumer prices. In December, Janet Yellen acknowledged that inflation has run lower than we expected. However, the Fed reiterated its intention to stick with its key rate hikes, including three in 2018, even though inflation remains moderate and is not expected to meet the 2% target until 2020. The Fed announced in September that in October it would begin shrinking its balance sheet. The Fed had begun to flag this new phase of normalisation in monetary policy during the spring, and operations consisting in no longer reinvesting all proceeds from maturing securities (Tnotes and MBS) are proceeding normally. When her term expires in February, Janet Yellen will be replaced as Fed chairman by Jay Powell, who appears to be the choice of continuity. During the vetting process Donald Trump sent out mixed signals, even hinting that he could reappoint Yellen while mentioning persons more likely to worry observers. Forex markets In early January, following the spike in the dollar after the surprise election of Donald Trump in November, the EUR/USD fell below 1.04, a level not seen since early 2003. It then consolidated, ranging between 1.05 and 1.09 until April, as it tracked expectations of Fed and ECB monetary policy, before beginning an upward phase that continued until September. After stalling at about 1.18, it crossed the 1.20 threshold against a backdrop of geopolitical risks. At first, the dollar had been weakened by vicissitudes within the Trump administration and its difficult relations with Congress during the first months of the new president s term. The euro began to strengthen in late June, tracking a change in the ECB s tone. During a colloquium in Sintra, Portugal, Mario Draghi said that deflationary pressures had vanished, which was interpreted as flagging an imminent shift in monetary policy. During the rest of the year, the ECB chairman returned to a more accommodative tone but other Governing Council members were more critical. In this environment, the EUR/USD was rather erratic in the fourth quarter, as Page 7
Manager's report fickle market participants put a different spin on events from week to week. For example, there were divergent reactions to Fed and ECB monetary policy decisions. In late October, Draghi s accommodative tone triggered a drop in the euro to 1.16 dollar, while the dollar did not derive much support from greater expectations of Fed key rate hikes and the actual announcement on 13 December. The EUR/USD returned to above USD 1.20 at the very end of the year. In 12 months the euro gained 13.7% vs. the dollar, the biggest gain among G10 currencies. As was the case for the EUR/USD, the USD/JPY in early 2017 reflected a pause for breath after the wide swings following Donald Trump s election in November 2016. From 117 at the start of the year, the USD/JPY turned back down, while managing to hold at thresholds that are less unfavourable for Japanese exporters at between 108 and 115 beginning in March and for almost the rest of the year. In September, the yen temporarily recovered its normal role as a safe haven, as geopolitical tensions ramped-up with North Korean nuclear tests, sending the exchange rate briefly below 108, a low on the year. In late October and early November, Shinzo Abe s victory in the 22 October parliamentary elections weakened the yen, with the prime minister still in favour of the Bank of Japan s highly accommodative monetary policy, which Governor Kuroda intends to stick to. The USD/JPY ended the year at 112.65, with the yen up 3.6%. Bond markets The 10-year T-note yield, which came to 2.44% at the end of 2016, ended 2017 at 2.41%. The 10-year yield ranged between 2.30% and 2.65% until the end of March and then moved a little lower but still directionless, until September, and once again around 2.40% until year-end. The yield peaked on the day before the 14-15 March FOMC meeting. The key rate hike had already been priced in, but observers feared a hawkish tone from the Fed, which ultimately did not happen. Until summer, dips (to about 2.10%) were mainly in response to political concerns in the broadest sense (US airstrikes in Syria, tensions with North Korea, a presidential election in France, and talk of impeaching the US president). A low on the year was hit in September, at less than 2.05% in the midst of a flight to safety after North Korea s announcement of a new nuclear test. Some reassurance was provided by the prompt international reaction, with the UN Security Council voting unanimously in favour of sanctions. The 10-year T-note yield then turned up, a trend amplified by hopes that the Trump administration s tax reform would be passed. It moved above 2.45% in October when it seemed that Congress could approve tax cuts by year-end. It then traded directionless as trading thinned, returning to 2.50% in December before pulling back after Christmas. The 2-year yield reacted to the key rate hike, causing a significant flattening in the curve, with a 52bp spread vs. the 10-year yield, a low since October 2007. After a rough ride, tracking economic news, shifts in US long bond yields, questions on the ECB s intentions, and political considerations, the 10-year Bund ended the year at 0.43 %, 22bp higher than at the end of 2016. Political considerations played a major role until the first round of the French presidential elections, based on polls that had non-resident investors worried. The 10-year Bund yield hit a low on the year, at 0.16 % on 18 April in a flight to safety as pre-election polls suggested that Eurosceptic parties were picking up votes, while French yields exceeded 1.10%. Investors cheered the outcome of the first round and Emmanuel Macron s 7 May victory. The most decisive moment came at the very end of the first half, with a shift in the ECB s tone. On 27 June, Mario Draghi reiterated his confidence in the European economy and said that the return of inflation to the target was more likely than a few years previously. His words triggered steep declines on the German market from clearly overvalued levels, given that the 10-year Bund had fallen below 0.25% in mid-june. It hit 0.60 % on 13 July, a high on the year. Mario Draghi then managed to provide reassurance. In October, the recalibration of quantitative easing left the ECB s monetary policy highly accommodative, which pushed long bond yields down further. Until year-end, yields were erratic, tracking long US yields. Note, however, that the pre-christmas US pullback did not spill over into the euro zone, which may be the sign that investors believe the ECB has spent its last QE ammunition. Equity markets The year got off to a flying start, continuing the rally that began immediately after Donald Trump s election, which investors felt would quickly lead to a more expansionary fiscal policy. In two months global equities gained 5.4% (as measured by the MSCI AC World index in dollars) and emerging equities, 8.6% (as seen in the MSCI Emerging Market index in dollars). The markets then became a little more tentative, raising questions on the relevance of the reflation story in light of Congressional Republicans inability to reform healthcare and unexpected developments within the Trump administration. While the markets did pause for breath, they resumed and strengthened their rally on the day after the first round of the French presidential election, cheering the victory of Emmanuel Macron, a candidate deemed pro-european. During summer, the only real alert in equities came from the geopolitical front, when investors were spooked by the verbal escalation between Pyongyang and Washington after North Korea s new nuclear and missile tests. The markets soon recovered their bearings, however, and volatility rose only slightly before the rally resumed, gathering strength at year-end when it became clear that the Trump Page 8
Manager's report administration s promised tax cuts would at last be passed. In September, the VIX, which measures implied volatility on S&P 500 options, fell to a low. These trends reflect a favourable macroeconomic environment. Microeconomic aspects were a crucial source of support in 2017 with the release of very solid corporate results on both top and bottom lines. Inflation did not accelerate, allowing major central banks to stick to accommodative monetary policies while beginning to move them cautiously back to normal. Lastly, after keeping a nervous eye on geopolitical events last summer, investors chose to focus on the good political news. In 12 months, international equities gained 21.6% (their best showing since 2009) and emerging markets, 34.4% after underperforming for several years and only slightly outperforming developed market equities in 2016. Emerging Asia outperformed by far. Major developed markets turned in the following performances: +19.4% by the S&P 500, which set one all-time record after another; +19.1% by the Nikkei 225, which on 25 December hit a high since early 1992; and just +6.5% by the EuroStoxx 50, which took a hit from the stronger euro (+13.7% vs. the dollar) and was unable to fully price in economic indicators that routinely outstripped expectations (index price changes are given in local currencies, without reinvested dividends). On the global level, tech stocks were particularly sought out by investors while defensive sectors underperformed on the whole. The Board of Directors Luxembourg, 26 January 2018 Note: The information stated in this report is historical and not necessarily indicative of future performance. Page 9
Audit report To the Shareholders of PARVEST Our opinion In our opinion, the accompanying financial statements give a true and fair view of the financial position of PARVEST and of each of its sub-funds (the Fund ) as at 31 December 2017, and of the results of their operations and changes in their net for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements. What we have audited The Fund s financial statements comprise: the statement of net as at 31 December 2017; the securities portfolio as at 31 December 2017; the statement of operations and changes in net for the year then ended ; and the notes to the financial statements, which include a summary of significant accounting policies. Basis for opinion We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession (Law of 23 July 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 Réviseur d entreprises agréé for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We are 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. We have fulfilled our other ethical responsibilities under those ethical requirements. PricewaterhouseCoopers, Société coopérative, 2 rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg T: +352 494848 1, F:+352 494848 2900, www.pwc.lu Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n 10028256) R.C.S. Luxembourg B 65 477 - TVA LU25482518 Page 10
Other information The Board of Directors of the Fund is responsible for the other information. The other information comprises the information stated in the annual report but does not include the financial statements and our audit report 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 identified above 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 that fact. We have nothing to report in this regard. Responsibilities of the Board of Directors of the Fund for the financial statements The Board of Directors of the Fund 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 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. Page 11
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 an audit report 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 23 July 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 23 July 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 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 the Board of Directors of the Fund s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our audit report 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 audit report. 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. Page 12
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. PricewaterhouseCoopers, Société coopérative Luxembourg, 12 April 2018 Represented by Thierry Blondeau Page 13
Financial statements at 31/12/2017 Bond Asia ex-japan Bond Best Selection World Emerging Bond USD Bond USD Short Duration Expressed in USD USD USD USD Notes Statement of net Assets 229 651 155 231 376 805 92 690 616 116 240 059 Securities portfolio at cost price 225 257 577 214 554 627 94 804 824 110 615 125 Unrealised gain/(loss) on securities portfolio 15 788 4 553 312 (7 488 208) (1 257 560) Securities portfolio at market value 2 225 273 365 219 107 939 87 316 616 109 357 565 Options at market value 2,14 0 1 179 872 47 421 0 Net Unrealised gain on financial instruments 2,10,11,12, 1 586 420 504 637 841 877 116 594 13 Cash at banks and time deposits 56 891 3 882 061 1 837 783 1 591 611 Other 2 734 479 6 702 296 2 646 919 5 174 289 Liabilities 1 485 233 4 902 109 20 504 744 6 186 962 Options at market value 2,14 9 450 0 0 0 Bank overdrafts 0 0 0 0 Net Unrealised loss on financial instruments 2,10,11,12 0 0 0 0 Other liabilities 1 475 783 4 902 109 20 504 744 6 186 962 Net asset value 228 165 922 226 474 696 72 185 872 110 053 097 Statement of operations and changes in net Income on investments and 9 859 801 15 029 053 5 462 249 2 505 195 Management and advisory fees 3 2 489 027 2 107 073 436 448 375 621 Bank interest 12 846 63 476 5 288 0 Interest on swaps and CFD 2 35 441 2 018 604 171 361 0 Other fees 5 628 846 485 785 207 378 238 822 Taxes 6 104 655 109 577 38 905 44 918 Distribution fees 4 1 063 8 541 2 281 5 691 Transaction fees 21 2 175 1 268 14 081 570 Total expenses 3 274 053 4 794 324 875 742 665 622 Net result from investments 6 585 748 10 234 729 4 586 507 1 839 573 Net realised result on: Investments securities 2 740 697 3 684 959 (683 085) (520 965) Financial instruments 11 444 203 9 808 818 42 665 688 534 Net realised result 18 770 648 23 728 506 3 946 087 2 007 142 Movement on net unrealised gain/(loss) on: Investments securities 3 493 333 7 956 063 (506 852) (382 492) Financial instruments 458 057 1 152 455 (654 901) 76 681 Change in net due to operations 22 722 038 32 837 024 2 784 334 1 701 331 Net subscriptions/(redemptions) (79 205 897) 55 786 696 (53 407 423) 29 342 779 Dividends paid 7 (3 052 923) (2 432 959) (614 340) (18 665) Increase/(Decrease) in net during the year/period (59 536 782) 86 190 761 (51 237 429) 31 025 445 Net at the beginning of the financial year/period 287 702 704 140 283 935 123 423 301 79 027 652 Reevaluation of opening NAV 0 0 0 0 Reevaluation of opening consolidated NAV 0 0 0 0 Net at the end of the financial year/period 228 165 922 226 474 696 72 185 872 110 053 097 Page 14
Bond World Bond World Emerging Local Bond World High Yield Bond World Inflation- Linked Consumer Innovators Convertible Bond Asia EUR USD EUR EUR EUR USD 102 790 923 626 014 878 148 552 031 70 598 337 132 766 787 45 402 818 98 803 821 591 256 074 135 893 542 66 774 728 98 404 146 43 228 022 (7 513 664) 3 279 567 (4 076 087) (810 540) 31 605 269 1 954 903 91 290 157 594 535 641 131 817 455 65 964 188 130 009 415 45 182 925 73 757 3 561 272 0 0 0 0 1 144 759 3 706 375 2 017 590 268 147 0 0 9 493 747 7 745 350 12 365 091 3 366 062 2 481 499 136 309 788 503 16 466 240 2 351 895 999 940 275 873 83 584 2 735 347 13 928 041 1 231 166 589 294 520 575 106 999 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 735 347 13 928 041 1 231 166 589 294 520 575 106 999 100 055 576 612 086 837 147 320 865 70 009 043 132 246 212 45 295 819 4 749 092 44 271 901 8 607 250 753 195 1 571 730 217 519 630 576 3 375 846 1 579 309 588 105 1 807 183 513 005 25 534 210 507 36 186 4 591 5 356 98 329 243 5 104 772 0 0 0 0 277 989 1 143 483 441 332 248 132 506 813 158 122 44 823 149 950 83 174 46 813 74 534 28 676 1 200 38 043 2 862 25 316 11 326 14 117 12 791 2 339 0 5 764 72 379 0 1 322 156 10 024 940 2 142 863 918 721 2 477 591 714 018 3 426 936 34 246 961 6 464 387 (165 526) (905 861) (496 499) (1 323 257) (999 602) 4 221 559 (2 680 327) 9 952 484 2 494 022 (1 159 365) 13 130 248 11 321 780 1 970 385 (72 914) (107 069) 944 314 46 377 607 22 007 726 (875 468) 8 973 709 1 890 454 (8 767 712) 31 781 887 (18 608 152) (2 033 222) 6 387 724 2 631 014 1 294 684 6 205 950 381 195 3 634 785 3 365 7 583 (6 528 714) 84 365 444 3 780 769 726 095 15 364 798 4 529 051 (11 920 364) 175 821 094 (23 733 831) (19 811 875) (16 256 733) (7 452 729) (262 499) (3 228 532) (5 413 980) 0 (448 990) (51 267) (18 711 577) 256 958 006 (25 367 042) (19 085 780) (1 340 925) (2 974 945) 118 767 153 355 128 831 172 687 907 89 094 823 133 587 137 48 270 764 0 0 0 0 0 0 0 0 0 0 0 0 100 055 576 612 086 837 147 320 865 70 009 043 132 246 212 45 295 819 Page 15
Financial statements at 31/12/2017 Convertible Bond World Disruptive Technology Energy Innovators Equity Best Selection Asia ex-japan Expressed in USD EUR EUR USD Notes Statement of net Assets 1 469 385 901 174 354 415 206 264 867 532 479 393 Securities portfolio at cost price 1 269 139 599 155 159 346 205 547 849 383 890 485 Unrealised gain/(loss) on securities portfolio 87 346 762 16 110 153 (1 757 151) 142 043 607 Securities portfolio at market value 2 1 356 486 361 171 269 499 203 790 698 525 934 092 Options at market value 2,14 2 042 988 0 0 0 Net Unrealised gain on financial instruments 2,10,11,12, 9 801 173 0 0 45 646 13 Cash at banks and time deposits 57 271 266 2 657 317 1 409 200 5 465 078 Other 43 784 113 427 599 1 064 969 1 034 577 Liabilities 50 627 102 1 023 393 2 771 807 2 310 636 Options at market value 2,14 0 0 0 0 Bank overdrafts 908 335 0 0 0 Net Unrealised loss on financial instruments 2,10,11,12 0 0 0 0 Other liabilities 49 718 767 1 023 393 2 771 807 2 310 636 Net asset value 1 418 758 799 173 331 022 203 493 060 530 168 757 Statement of operations and changes in net Income on investments and 10 373 620 1 355 471 4 680 328 10 767 884 Management and advisory fees 3 7 876 460 1 915 701 2 414 562 5 990 542 Bank interest 134 581 4 737 6 811 11 749 Interest on swaps and CFD 2 14 280 0 0 0 Other fees 5 3 059 223 558 988 669 692 1 799 348 Taxes 6 269 793 90 104 98 408 285 195 Distribution fees 4 174 16 304 26 158 23 253 Transaction fees 21 671 188 138 608 241 568 812 620 Total expenses 12 025 699 2 724 442 3 457 199 8 922 707 Net result from investments (1 652 079) (1 368 971) 1 223 129 1 845 177 Net realised result on: Investments securities 2 69 599 097 23 670 582 (6 108 962) 40 097 854 Financial instruments 93 684 214 (31 260) 109 781 65 108 Net realised result 161 631 232 22 270 351 (4 776 052) 42 008 139 Movement on net unrealised gain/(loss) on: Investments securities 71 550 148 (75 858) (21 142 045) 103 875 801 Financial instruments (9 513 638) 0 (4 844) 46 788 Change in net due to operations 223 667 742 22 194 493 (25 922 941) 145 930 728 Net subscriptions/(redemptions) (114 027 390) 31 163 797 58 740 237 (38 586 213) Dividends paid 7 (1 598 903) (218 620) (1 386 884) (1 437 786) Increase/(Decrease) in net during the year/period 108 041 449 53 139 670 31 430 412 105 906 729 Net at the beginning of the financial year/period 1 310 717 350 120 191 352 172 062 648 402 239 420 Reevaluation of opening NAV 0 0 0 22 022 608 Reevaluation of opening consolidated NAV 0 0 0 0 Net at the end of the financial year/period 1 418 758 799 173 331 022 203 493 060 530 168 757 Page 16
Equity Best Selection Euro Equity Best Selection Europe Equity Brazil Equity China Equity Europe Emerging Equity Europe Growth EUR EUR USD USD EUR EUR 1 587 271 651 1 403 936 525 220 404 317 236 435 580 109 845 942 659 001 359 1 238 979 013 1 163 199 856 193 685 825 163 632 267 102 162 264 553 243 774 345 069 534 235 732 727 15 178 511 70 335 883 6 763 322 105 519 297 1 584 048 547 1 398 932 583 208 864 336 233 968 150 108 925 586 658 763 071 0 0 0 0 0 0 0 0 0 0 0 0 1 1 204 3 511 704 1 831 032 517 776 1 372 3 223 103 5 002 738 8 028 277 636 398 402 580 236 916 22 024 610 6 490 083 3 898 895 679 384 271 079 2 908 710 0 0 0 0 0 0 0 0 0 0 0 0 88 952 0 0 0 0 43 662 21 935 658 6 490 083 3 898 895 679 384 271 079 2 865 048 1 565 247 041 1 397 446 442 216 505 422 235 756 196 109 574 863 656 092 649 38 111 737 39 833 453 5 486 458 3 780 072 4 650 287 13 874 612 16 572 696 13 893 938 3 771 616 3 340 215 1 544 818 5 296 779 3 736 2 148 5 699 1 234 3 198 1 815 0 0 0 0 0 0 5 171 131 4 943 009 868 597 841 634 404 850 1 671 219 669 882 501 155 134 328 135 072 54 090 185 297 14 828 74 785 24 703 103 253 10 917 5 729 1 257 221 1 341 735 994 124 464 356 271 950 879 870 23 689 494 20 756 770 5 799 067 4 885 764 2 289 823 8 040 709 14 422 243 19 076 683 (312 609) (1 105 692) 2 360 464 5 833 903 54 653 383 123 130 785 28 779 486 17 639 001 9 346 990 21 785 350 (319 374) (245 743) (932) (13 558) (61 766) (449 460) 68 756 252 141 961 725 28 465 945 16 519 751 11 645 688 27 169 793 100 914 885 40 792 905 8 193 800 69 231 000 (3 770 707) 30 336 940 731 (1 311) 0 0 0 11 538 169 671 868 182 753 319 36 659 745 85 750 751 7 874 981 57 518 271 146 636 825 (714 027 104) (960 304) (21 212 792) (7 335 274) 69 975 469 (3 531 819) (6 009 679) (192 679) (258 276) (269 497) (3 714 252) 312 776 874 (537 283 464) 35 506 762 64 279 683 270 210 123 779 488 1 252 470 167 1 934 729 906 180 998 660 171 476 513 109 304 653 532 313 161 0 0 0 0 0 0 0 0 0 0 0 0 1 565 247 041 1 397 446 442 216 505 422 235 756 196 109 574 863 656 092 649 Page 17
Financial statements at 31/12/2017 Equity Europe Mid Cap Equity Europe Small Cap Equity High Dividend Pacific Equity High Dividend USA Expressed in EUR EUR USD USD Notes Statement of net Assets 73 220 678 1 847 860 096 106 165 125 57 525 598 Securities portfolio at cost price 56 367 239 1 510 766 955 90 798 665 48 763 594 Unrealised gain/(loss) on securities portfolio 16 811 958 289 452 476 14 812 517 7 380 217 Securities portfolio at market value 2 73 179 197 1 800 219 431 105 611 182 56 143 811 Options at market value 2,14 0 0 0 0 Net Unrealised gain on financial instruments 2,10,11,12, 0 0 3 928 149 166 13 Cash at banks and time deposits 180 28 994 905 392 361 1 094 171 Other 41 301 18 645 760 157 654 138 450 Liabilities 262 945 18 362 799 365 080 151 969 Options at market value 2,14 0 0 0 0 Bank overdrafts 0 0 0 0 Net Unrealised loss on financial instruments 2,10,11,12 0 137 001 0 0 Other liabilities 262 945 18 225 798 365 080 151 969 Net asset value 72 957 733 1 829 497 297 105 800 045 57 373 629 Statement of operations and changes in net Income on investments and 2 378 050 39 427 752 4 511 924 1 814 841 Management and advisory fees 3 1 121 393 17 672 485 864 875 1 001 580 Bank interest 162 2 919 974 300 Interest on swaps and CFD 2 0 0 0 0 Other fees 5 302 116 4 353 365 329 749 249 642 Taxes 6 43 132 499 346 77 424 36 571 Distribution fees 4 21 542 123 294 1 557 11 338 Transaction fees 21 72 961 1 652 855 56 734 36 136 Total expenses 1 561 306 24 304 264 1 331 313 1 335 567 Net result from investments 816 744 15 123 488 3 180 611 479 274 Net realised result on: Investments securities 2 8 048 738 124 498 176 4 779 472 5 798 034 Financial instruments 12 801 (354 032) (20 085) 1 239 775 Net realised result 8 878 283 139 267 632 7 939 998 7 517 083 Movement on net unrealised gain/(loss) on: Investments securities 3 337 131 129 857 895 10 745 004 (1 290 185) Financial instruments 0 (56 224) 3 928 42 519 Change in net due to operations 12 215 414 269 069 303 18 688 930 6 269 417 Net subscriptions/(redemptions) (32 803 628) 225 049 872 (9 612 321) (46 679 823) Dividends paid 7 (116 917) (1 529 834) (3 673 864) (134 771) Increase/(Decrease) in net during the year/period (20 705 131) 492 589 341 5 402 745 (40 545 177) Net at the beginning of the financial year/period 93 662 864 1 336 907 956 95 185 874 97 918 806 Reevaluation of opening NAV 0 0 5 211 426 0 Reevaluation of opening consolidated NAV 0 0 0 0 Net at the end of the financial year/period 72 957 733 1 829 497 297 105 800 045 57 373 629 Page 18
Equity India Equity Indonesia Equity Japan Equity Latin America Equity Russia Equity Russia Opportunities USD USD JPY USD EUR USD 987 939 531 69 943 041 60 249 489 865 103 521 327 1 146 854 171 174 970 619 741 730 767 58 369 037 49 268 260 588 96 454 078 1 108 696 984 158 214 541 218 934 960 8 756 285 7 244 855 326 4 380 780 7 618 006 14 035 461 960 665 727 67 125 322 56 513 115 914 100 834 858 1 116 314 990 172 250 002 0 0 0 0 0 0 0 0 313 040 123 0 0 0 11 209 034 2 370 580 661 016 923 1 355 092 11 111 320 1 317 231 16 064 770 447 139 2 762 316 905 1 331 377 19 427 861 1 403 386 17 388 477 267 999 2 037 791 214 1 986 709 10 294 884 1 086 751 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 17 388 477 267 999 2 037 791 214 1 986 709 10 294 884 1 086 751 970 551 054 69 675 042 58 211 698 651 101 534 618 1 136 559 287 173 883 868 9 198 784 1 231 641 1 035 713 654 2 579 144 60 059 503 8 147 341 12 628 291 1 047 663 472 541 525 1 597 825 14 604 598 2 104 602 93 21 2 263 759 1 007 18 570 596 0 0 0 0 0 0 2 891 702 241 461 179 345 167 413 132 3 489 330 539 961 326 299 34 227 20 575 631 63 016 410 245 66 609 146 446 597 3 661 383 26 894 67 005 91 788 3 972 292 173 030 201 053 658 481 895 3 395 576 572 335 19 965 123 1 496 999 879 441 123 2 583 769 21 985 324 3 375 891 (10 766 339) (265 358) 156 272 531 (4 625) 38 074 179 4 771 450 86 637 493 1 743 073 12 200 243 754 9 238 308 59 644 534 20 949 022 (386 643) (1 226) 868 530 189 (30 003) (1 751 423) (46 260) 75 484 511 1 476 489 13 225 046 474 9 203 680 95 967 290 25 674 212 274 706 459 9 280 946 1 673 067 547 7 846 648 (164 605 710) (8 658 400) 0 0 390 494 830 0 0 0 350 190 970 10 757 435 15 288 608 851 17 050 328 (68 638 420) 17 015 812 (266 960 077) (7 503 285) (14 687 214 972) (10 024 972) 227 302 394 (4 756 598) (163 430) (121 295) (19 660 979) (223 208) (2 074 000) (377 522) 83 067 463 3 132 855 581 732 900 6 802 148 156 589 974 11 881 692 887 483 591 66 542 187 57 629 965 751 94 732 470 979 969 313 162 002 176 0 0 0 0 0 0 0 0 0 0 0 0 970 551 054 69 675 042 58 211 698 651 101 534 618 1 136 559 287 173 883 868 Page 19
Financial statements at 31/12/2017 Equity USA Growth Equity USA Mid Cap Equity World Emerging Equity World Low Volatility Expressed in USD USD USD EUR Notes Statement of net Assets 980 481 306 737 895 356 1 269 200 551 413 575 893 Securities portfolio at cost price 721 006 507 637 029 061 828 623 362 391 289 137 Unrealised gain/(loss) on securities portfolio 256 372 270 56 372 977 368 163 982 20 818 153 Securities portfolio at market value 2 977 378 777 693 402 038 1 196 787 344 412 107 290 Options at market value 2,14 0 0 0 0 Net Unrealised gain on financial instruments 2,10,11,12, 377 929 337 189 0 0 13 Cash at banks and time deposits 1 816 600 42 271 272 66 425 421 637 389 Other 908 000 1 884 857 5 987 786 831 214 Liabilities 1 862 753 4 482 987 5 107 503 1 245 197 Options at market value 2,14 0 0 0 0 Bank overdrafts 0 0 0 0 Net Unrealised loss on financial instruments 2,10,11,12 0 0 0 0 Other liabilities 1 862 753 4 482 987 5 107 503 1 245 197 Net asset value 978 618 553 733 412 369 1 264 093 048 412 330 696 Statement of operations and changes in net Income on investments and 9 593 262 7 286 982 14 220 720 9 611 429 Management and advisory fees 3 9 660 755 12 408 651 9 665 097 5 573 608 Bank interest 1 829 780 711 3 632 Interest on swaps and CFD 2 0 0 0 0 Other fees 5 3 023 274 2 671 377 3 576 137 1 500 030 Taxes 6 354 613 395 568 370 728 208 063 Distribution fees 4 23 077 21 643 42 378 20 651 Transaction fees 21 239 450 252 367 1 947 917 380 862 Total expenses 13 302 998 15 750 386 15 602 968 7 686 846 Net result from investments (3 709 736) (8 463 404) (1 382 248) 1 924 583 Net realised result on: Investments securities 2 57 476 998 37 316 363 11 247 903 23 469 266 Financial instruments 4 622 071 3 162 501 (14 602) (25 274) Net realised result 58 389 333 32 015 460 9 851 053 25 368 575 Movement on net unrealised gain/(loss) on: Investments securities 173 573 386 50 346 115 332 109 933 (10 883 085) Financial instruments (431 790) 112 540 (3 410) 0 Change in net due to operations 231 530 929 82 474 115 341 957 576 14 485 490 Net subscriptions/(redemptions) (139 269 228) (140 316 649) 26 371 097 (54 825 802) Dividends paid 7 (486 640) (401 982) (176 019) (725 665) Increase/(Decrease) in net during the year/period 91 775 061 (58 244 516) 368 152 654 (41 065 977) Net at the beginning of the financial year/period 886 843 492 791 656 885 895 940 394 453 396 673 Reevaluation of opening NAV 0 0 0 0 Reevaluation of opening consolidated NAV 0 0 0 0 Net at the end of the financial year/period 978 618 553 733 412 369 1 264 093 048 412 330 696 Page 20