BNP PARIBAS Annual Report DEVELOPPEMENT HUMAIN · BNP PARIBAS DEVELOPPEMENT HUMAIN – 5Annual Report at 30 June 2016 . Strategy . Due to its PEA eligibility, a minimum of 75% of

BNP PARIBAS DEVELOPPEMENT

HUMAIN

Annual Report

30 June 2016

Management company: BNP PARIBAS ASSET MANAGEMENT Custodian: BNP Paribas Securities Services

Registered office: 1, boulevard Haussmann, 75009 Paris, France

Publication of issue and redemption prices: available to unitholders at the management company

ADDITIONAL INFORMATION FOR INVESTORS IN THE FEDERAL REPUBLIC OF GERMANY

BNP Paribas Investment Partners Belgium S.A., Zweigniederlassung Deutschland, Europa-Allee 12, 60327 Frankfurt am Main, has undertaken the function of Information Agent in the Federal Republic of Germany (hereinafter the “German Information Agent”).

Applications for the redemptions and conversion of shares may be sent to BNP Paribas Securities Services Paris, 9, rue du Débarcadère, 93500 Pantin (hereinafter “the Paying Agent”). All payments to investors, including redemption proceeds and potential distributions may, upon request, be paid through the Paying Agent.

The prospectus, the key investor information documents, the management regulations and the annual and semi-annual reports may be obtained, free of charge, in hardcopy form at the office of the German Information Agent during normal opening hours.

The issue, redemption and conversion prices, the net asset value as well as any notices to investors are also available from the Paying Agent. In addition, the issue and redemption prices are published on www.bnpparibas-ip.de.

No units of EU UCITS will be issued as printed individual certificates.

In addition, communications to investors in the Federal Republic of Germany will be made available by means of a durable medium (section 167 of the Investment Code) in the following cases:

suspension of the redemption of the units,

termination of the management of the fund or its liquidation,

any amendments to the company rules which are inconstant with the previous investmentprinciples, which affect material investor rights or which relate to remuneration and reimbursementof expenses that may be paid or made out of the asset pool,

merger of the fund with one or more other funds and

the change of the fund into a feeder fund or the modification of a master fund.

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Contents

BNP PARIBAS DEVELOPPEMENT HUMAIN

MANAGEMENT REPORT

Identification ..................................................................... 3

Investment policy ............................................................. 8

ANNUAL FINANCIAL STATEMENTS

Assets .............................................................................. 22

Liabilities .......................................................................... 23

Off-balance sheet ............................................................. 24

Income Statement ............................................................ 25

ANNUAL FINANCIAL STATEMENTS - APPENDIX

Accounting Principles and Policies ................................... 26

Change in net assets ....................................................... 28

Additional information 1 .................................................... 29

Additional information 2 .................................................... 30

Breakdown by type of receivables and debts ................... 32

Breakdown of instruments by legal or economic type ......... 33

Breakdown by nature of rates of assets, liabilities and off-

balance sheet items ............................................................ 34

Breakdown by residual maturity of assets, liabilities and

off-balance sheet items ....................................................... 35

Breakdown by listing currency of assets, liabilities and

off-balance sheet items ....................................................... 36

Allocation of distributable income .................................. 37

Table of results and other characteristic items over the previous

five years ....................................................................... 41

Inventory of financial instruments at 30 June 2016 ....... 46

BNP PARIBAS DEVELOPPEMENT HUMAIN – Annual Report at 30 June 2016 2

Strategy

IDENTIFICATION

Classification: International equities

The Fund’s minimum exposure to equity markets is 90% of its net assets.

Management objective:

The aim of the Fund is to outperform the following index: MSCI Europe, with dividends reinvested, irrespective of its growth and in compliance with French equity savings plan (Plan d’Epargne en Actions – PEA) eligibility criteria, by investing in securities from issuers whose operations reflect social responsibility, environmental and sustainable development criteria.

Benchmark index:

The benchmark, MSCI EUROPE, is an index representing the equity markets in the most developed countries in Europe. The MSCI indices are published by Morgan Stanley Capital International Inc. It is denominated in euros, weighted by the free float (the fraction of capital held by the public) of the stocks that it comprises and is calculated on the basis of their closing prices with net dividends reinvested. The full construction methodology for the MSCI Standard indices is available on the MSCI website at www.msci.com.

Investment strategy:

The Fund’s portfolio is made up of the following asset classes and financial instruments:

1. STRATEGY USED TO ACHIEVE THE MANAGEMENT OBJECTIVE:

The Fund is eligible for the French equity savings plan (Plan d’Epargne en Actions – PEA). A minimum of 75% of the Fund’s net assets will be permanently invested in equities and a minimum of 90% of the Fund’s net assets will be exposed to equities.

The Fund follows a socially responsible investment (SRI) strategy.

The Fund’s investment strategy is based on an active management style that takes a disciplined approach to stock-picking by combining financial and non-financial analysis. The financial and non-financial analysis is based in particular on visits to companies and meetings with managers to obtain pertinent information about their business activities, strategy and company growth prospects. The portfolio favours companies whose products and services provide solutions to human and social challenges, including, but not limited to, poverty and access to basic needs, and the new challenges presented by an ageing population and sustainable socio-economic development.

Every stage of the investment strategy and management process is designed to identify the most attractive high-quality stocks (in terms of, for example, solutions to human and social challenges, profitability, financial health, quality of management, clarity of strategy) for achieving the management objective.

2. MAIN ASSET CLASSES USED (EXCLUDING EMBEDDED DERIVATIVES):

The Fund’s portfolio is made up of the following asset classes and financial instruments:

EQUITIES:

A minimum of 75% of the Fund’s net assets will be permanently invested in equities. The main geographic region is Europe. The Fund will invest at least 90% of its net assets in securities from large, mid- and small-cap companies.


http://www.msci.com/

Strategy

DEBT SECURITIES AND MONEY MARKET INSTRUMENTS:

For cash management purposes, the Fund may invest a maximum of 10% of its net assets in low-sensitivity eurozone money market instruments (negotiable debt securities and/or through money market and/or short-term money market UCIs).

UNITS OR SHARES OF UCIs:

Up to 10% of the Fund’s assets may be held in shares or units of French or European UCITS and AIFs that meet the criteria of Socially Responsible Investment (SRI).

3. DERIVATIVES:

The Fund may trade on French and/or foreign regulated or over-the-counter futures markets that are authorised by the Decree of 6 September 1989 and its amendments (for financial instrument contracts only).

The Fund may invest in the following products on these markets:

- futures (on equities/stock market indices)

- options (on equities/stock market indices)

to hedge the portfolio against market risks (equities and/or indices) and/or to expose it to such risks, and to fulfil the management objective.

As these financial instruments may be entered into with counterparties selected by the management company, these counterparties may therefore be companies affiliated with the BNP Paribas Group.

The eligible counterparty (counterparties) has (have) no influence over the composition or management of the Fund’s portfolio.

4. INSTRUMENTS WITH EMBEDDED DERIVATIVES:

Warrants and/or subscription rights received by the Fund following securities transactions and convertible bonds are authorised subject to a limit of 10% of the Fund’s net assets.

5. DEPOSITS:

None

6. CASH BORROWINGS:

In the normal course of operations, the Fund may have a temporary current account deficit and therefore need to borrow cash, subject to a limit of 10% of its net assets.

7. TEMPORARY PURCHASE AND SALE OF SECURITIES:

For cash management purposes, the Fund may, subject to a limit of 10% of its net assets and pursuant to the French Monetary and Financial Code (Code monétaire et financier), borrow securities and use reverse repurchase agreements. This limit may be raised to 100% for reverse repurchase transactions in cash executed in accordance with the provisions set out below in the section entitled “IV- Investment Rules”.

These transactions may be conducted with companies affiliated with the BNP Paribas Group.


Strategy

Further information about temporary purchases and sales of securities is provided in the section of the prospectus on “Charges and fees”.

8. INFORMATION RELATING TO THE UCITS’ COLLATERAL:

To guard against counterparty default, temporary purchases and sales of securities and over-the-counter derivatives transactions may involve the pledging of securities and/or cash as collateral.

The collateral received will have the characteristics set out in the table below. The eligibility of these securities is determined in accordance with investment constraints and according to a discount procedure determined by the management company’s risk departments.

Assets

Cash (EUR, USD and GBP) Interest rate instruments Securities issued or guaranteed by an eligible member country of the OECD The Fund may receive securities issued or guaranteed by an eligible OECD member country as collateral, for more than 20% of its net assets. The Fund may thus be fully guaranteed by securities issued or guaranteed by a single eligible OECD member country.

Supranational securities and securities issued by government agencies

Securities issued or guaranteed by a government of another eligible country Debt securities and bonds issued by a company whose registered office is located in an eligible OECD member country

Convertible bonds issued by a company whose registered office is located in an eligible OECD member country

Units or shares of money market UCITS (1)

MMI (money market instruments) issued by companies whose registered office is located in an eligible member country of the OECD or in another eligible country. (1) UCITS managed by companies belonging to the BNP Paribas Investment Partners Group only.

Eligible indices & related shares Securitisations (2) (2) subject to the approval of the BNP Paribas Asset Management Risk Department

Collateral other than in cash should not be sold, reinvested or pledged as security.

Collateral received in cash may be reinvested in accordance with AMF position no. 2013-06. Cash received may therefore be held on deposit, invested in high-quality government bonds, used in repurchase transactions or invested in short-term money market UCITS.

Total risk

The method used by the management company to calculate the total risk of the UCI is the commitment method.

Risk profile:

Investors’ money will be primarily invested in financial instruments selected by the management company. These instruments will be subject to financial market fluctuations and risks.

BNP Paribas Développement Humain is classified as an “International Equities” Fund and involves risks associated with its investments in European countries.


Strategy

Due to its PEA eligibility, a minimum of 75% of the Fund’s net assets will be permanently invested in equities in European Union countries.

Consequently, investors are primarily exposed to the following risks:

- Equity market risk:

The minimum exposure to equity markets is 90% (with a minimum investment of 75% in securities eligible for the PEA). The principal risk to which investors are exposed is equity risk. Fluctuations in share prices may have a negative impact on the Fund’s net asset value. In periods of declining equity markets, the Fund’s net asset value is likely to fall.

Equity risk is also linked to the risk of small- and mid-cap companies, in which a minimum of 90% of the Fund’s net assets will be invested. The volume of securities listed on small and mid-cap markets is relatively low. In the event of liquidity issues, these markets may experience more significant and more rapid downturns than large-cap markets. If these markets suffer a downturn, the Fund’s net asset value may fall faster or more significantly.

- Currency risk:

This risk relates to unitholders in the eurozone. It relates to a drop in the listing currencies of the financial instruments used by the Fund, which may result in a fall in the net asset value.

- Risk of potential conflicts of interest:

This risk is associated with the conclusion of temporary purchases or sales of securities in which the Fund’s counterparty

and/or financial intermediary is an entity affiliated with the group to which the Fund’s management company belongs.

- Counterparty risk:

This risk is associated with the conclusion of contracts involving forward financial instruments (see the section on “Derivatives” above) or temporary purchases and sales of securities (see the section on “Temporary purchases and sales of securities” above) in the event that a counterparty with whom a contract has been concluded fails to honour its commitments (for example, payment or repayment), which may lead to a fall in the Fund’s net asset value.

- Capital risk:

Investors should be aware that the performance of the Fund may not meet their objectives and that there is no guarantee that they will recover the full amount of their capital invested.

In addition, investors may be exposed to other types of risks:

- Ancillary credit risk:

This is linked to an issuer’s ability to honour its debts and to the risk of an issue or issuer being downgraded, which may result in a drop in the value of the debt securities in which the Fund is invested.

- Ancillary interest rate risk:

Interest rate markets move in the opposite direction to that of interest rates. The Fund uses sensitivity criteria to measure the impact of a change in interest rates. Sensitivity measures the potential impact of a 1% change in interest rates on the Fund’s net asset value.

- Ancillary risk associated with convertible bonds:

These instruments are directly linked to equity markets and interest rate markets (term and credit) and, as such, the Fund’s net asset value may fall during periods of decline in the equity and interest rate markets.


Strategy

Provision is made for these ancillary risks up to a maximum of 10% of the Fund’s net assets.

Recommended minimum investment period:

Five years


Management Report

STATUTORY AUDITOR

PricewaterhouseCoopers

INVESTMENT POLICY

Q3 2015: The period of relief that followed the agreement between Greece and its partners in mid-July was short-lived for the markets, as concerns emanating from China became the main focus. The sharp fall in stock exchanges in mainland China from mid-June led the authorities to implement various support measures, with no tangible results. Doubts about the health of the Chinese economy were then fuelled by disappointing economic data. The surprise devaluation of the yuan against the dollar in three stages on 11, 12 and 13 August led to a dramatic rise in concerns, and the fall in commodity prices finally convinced investors that a major slowdown of the world economy was underway or on the horizon.

Against this backdrop, global equities fell back significantly in August. There was a huge fall on 24 August, with indiscriminate selling regardless of sectors and stocks, which resulted in sudden liquidation. The decision taken on 17 September by Janet Yellen to postpone the rise in key interest rates revived investors’ concerns, as they saw this decision as confirmation of their worries about global growth. The Fed subsequently reaffirmed its optimism as regards domestic demand in the United States, but it failed to ease investor concern, with pessimism reinforced by disappointing indicators in US industry. All of this led to a rapid rise in volatility on equity markets.

Over the period, the three sectors within MSCI Europe that performed best were consumer staples, healthcare and utilities. The three worst-performing sectors were materials, energy and consumer discretionary.

Against this backdrop, the Fund outperformed its benchmark index (MSCI Europe) and posted a performance close to that of its investment universe.

Compared to the index, the Fund benefited from the overweight in healthcare and consumer staples but was penalised by the overweight in materials and the underweight in utilities. The selection of securities was positive in financial stocks, materials and consumer discretionary, but it had an adverse effect in consumer staples.

Compared to the index, the Fund benefited from its underweight in industrial stocks and materials, but was penalised by the underweight in utilities. The selection of securities was positive in financial stocks and materials, but it proved detrimental in healthcare. We sold Galenica and reduced BASF, Compass and Coloplast. We strengthened Unilever, Novo Nordisk, Deutsche Wohnen and Air Liquide.

Over the period, we sold Galenica after a solid performance from this security. We introduced an overweight position in Unilever (we held a very encouraging meeting with the company, which has a history of transformation, from the mature food market to the more innovative personal care sector) and Novo Nordisk (where there are lots of developments in the pipeline in the coming months). We also strengthened Deutsche Wohnen (German real estate company), Valeo (on the dip) and Sampo (Finnish insurance company). We also reduced our underexposure to GlaxoSmithKline (a security offering a particularly attractive valuation and a better dividend than its fellow companies). Lastly, we strengthened several positions, including Air Liquide, Novartis, Croda and Carrefour. Meanwhile, we reduced the overweight in BASF (exposure to Asia), reduced Compass, which was on the rebound (having been affected more than expected by the joint deterioration in emerging countries and in activities related to oil) and switched from overweight to neutral in Coloplast (loss of confidence in management following the sharp upward revision of provisions for litigation in the United States).


Management Report

Q4 2015: Thanks to a very sharp increase in October, equity markets made good progress in the last quarter. At the very beginning of the period, there was a prevailing view that the Fed would not increase its interest rates before the end of the year, which gave significant support to risky assets. Hopes of a sharp easing of monetary policy following Mario Draghi’s remarks on 22 October further strengthened this rebound. Thereafter, without causing undue disruption to equity investors, the Fed managed to convince observers that it was to initiate an initial increase in its key interest rates in December. Market growth was stunted by the disappointment brought about by limited easing measures implemented in the eurozone, with market consolidation in November followed by correction in December.

The solid performance of the most cyclical sectors, particularly in the eurozone, emerged as a source of encouragement, as did large-scale mergers in the pharmaceutical and chemical sectors and significant capital increases in finance. Investor hesitation was reflected in the volatility of equities which, after scaling peaks during the summer, fell back, although they avoided dropping to the lows seen earlier in the year. Geopolitical issues also weighed on equities as a whole, primarily due to renewed weakness in oil prices from November. Renewed doubts over global demand, initially sparked by a drop in oil prices to less than USD $35 per barrel (WTI), played a more significant role than the tragic attacks in Paris and the growing terrorist threat. Nevertheless, both these events served to increase nervousness among stakeholders, as demonstrated by various bullish and bearish trading days, which alternated without any real justification.

The three sectors within MSCI Europe that performed best over the period were technology, consumer staples and industry. The three worst-performing sectors were energy, materials and financial stocks.

Against this backdrop, the Fund outperformed its benchmark index (MSCI Europe) and its investment universe.

Compared to the index, the selection of securities was favourable (thanks to financial stocks and healthcare), while sector allocation proved negative. The Fund benefited from the overweight in consumer staples but was penalised by the strong overweight in healthcare and the absence of technology stocks from the investment universe.

Compared to the universe, the selection of securities was beneficial, while sector allocation proved disappointing. The Fund benefited from its overexposure to financials and its underexposure to materials, but it suffered from the overweight in consumer durables. The selection of securities was positive within consumer durables and consumer staples, as well as within financial and industrial stocks. It was negative in materials and healthcare.

Over the period, we introduced overweight positions in Ahold (a food distribution group with an extensive presence in the US and the Netherlands, which is expected to finalise its merger with Delhaize in 2016) and Legal & General (English insurance company). We strengthened our key convictions, in particular Reckitt Benckiser, Axa, Air Liquide, Unilever, Allianz, Aviva and Novo Nordisk. Meanwhile, we also reduced our underexposure to Danone and Sanofi.

The solid performance of Valeo, Reed Elsevier and Deutsche Wohnen gave us the chance to take profits on these securities. We also reduced our exposure to Generali, BASF, Henkel, Linde, Novartis and GlaxoSmithKline. Lastly, we sold Coloplast (loss of confidence in management following the sharp upward revision of provisions for litigation in the United States) and Tesco, a security in which we had an underweight position.

Q1 2016: Equity behaviour over the period was guided by four main factors: oil price trends, regarded – largely in error – as an indicator of the health of the global economy; the efficiency and adequacy of the various monetary policies implemented by central banks; doubts around the economic situation in emerging economies (particularly China); and lastly, disappointing indicators at the start of the quarter for activity in major developed economies. With a tendency to blow hot and cold, these factors initially generated a sharp fall, followed by a somewhat hesitant rebound from 11 February onwards, all of which resulted in a quarterly balance sheet that was generally down 8 to 10% for European markets. The eurozone markets underperformed the global markets due to the appreciation of the euro (up 4.8% against the dollar) and the difficulties encountered by the financial sector at the beginning of the period. This recovery does not seem to have sparked a return of investor confidence, as demonstrated by a more erratic rise from mid-March onwards. In summary, the “anxiety attack” earlier in the year had caused the major stock indices to drop to levels unjustified by economic reality. These excessive levels were corrected, but there was still some background concern around the topics listed above.


Management Report

Against this backdrop, the Fund underperformed its benchmark index and its investment universe.

Compared to the index, the selection of securities and sector allocation proved detrimental. The Fund benefited from the overweight in consumer staples and the underweight in financials (no banks in the investment universe), but it was penalised by the overweight in the healthcare sector.

Compared to the universe, the selection of securities and sector allocation proved detrimental. The Fund benefited from its overexposure to consumption and its underexposure to healthcare, but it suffered from the underweight in industrial stocks and the overweight in financials (insurance). The selection of securities was positive in industrial stocks, but proved detrimental in healthcare, consumer discretionary and financials (insurance).

In healthcare, we introduced a position in Bayer, strengthened Shire, reduced Novartis and sold GlaxoSmithKline. In other sectors, we continued to strengthen our key convictions (Reckitt Benckiser, Unilever, Compass and Air Liquide).

Q2 2016:

Against a global economic backdrop that was fairly unconvincing in spite of rising oil prices, the second quarter was marked by the Brexit referendum, which took place at the end of June but has long obscured the landscape. The signals from the economic environment have been unclear in most major economies and news continues to alternate between positive and negative, in terms of both the ongoing recovery and the expected increase in Federal Reserve interest rates. On 23 June, the UK population voted to leave the EU, leading to renewed increases in uncertainty following the referendum process itself and concerns about growth. The market reaction was swift: equity markets fell, the value of the pound plummeted and the UK’s debt rating was downgraded. The rebound that followed this unexpected news helped to limit the market decline over the quarter.

Against this backdrop, the Fund outperformed its benchmark index and underperformed its investment universe.

Compared to the index, the selection of securities and sector allocation proved favourable. The Fund benefited from the overweight in healthcare and consumer staples, but was penalised by its underexposure to the energy sector.

Compared to the universe, the selection of securities and sector allocation proved detrimental. The Fund benefited from its selection of securities in healthcare (underweight in Bayer, overweight in Merck and Shire) and its underexposure to the industry sector. The selection of securities in consumer discretionary (Valeo and Marks & Spencer) and the overexposure to insurance companies (Axa, Aviva, Legal & General and Sampo) proved detrimental.

Over the period, we strengthened our key convictions (Deutsche Wohnen, Shire, Compass, etc.) and sold our entire line in Croda.

Outlook: The consequences of Brexit are yet to be determined. Strictly speaking, the economic “shock” should be felt primarily in the UK and should be contained to that region, although the risk of contagion cannot be entirely ruled out. The central banks have committed to providing supplementary liquidity, if necessary, which does limit this risk. Investors are preparing to experience a period of uncertainty on many fronts. After the initial fall in risky assets, we may see adjustments, but the volatility and nervousness will not disappear in the short term. We remain true to our strategy of favouring companies that are leaders in their field of activity and with good visibility in terms of their potential for medium-term growth in business and results.

Annual performance

The Fund’s performance over the period was as follows: -5.10% for the Classic unit -4.46% for the I unit -4.09% for the R unit

Past performance is not an indication of the future performance of the UCI.


Management Report

Changes during the year

None.

ABERDEEN paragraph

In many European Union countries, dividends paid by companies are taxed differently when paid to domestic entities rather than foreign entities. When dividends are paid to a foreign entity, they may be subject to withholding at source, leading to different tax treatment, which impedes the free flow of capital and is thus contrary to European Union law. As a number of rulings by the European Court of Justice and the Council of State have been handed down in favour of foreign residents, the management company intends to apply for reimbursement of the withholding tax paid at source on dividends received from foreign companies when the prospect of reimbursement of the withholding tax is likely to be favourable to the funds concerned. As this involves claims against the tax authorities concerned, the outcome and timeline of such claims cannot be predicted.

PEA (FRENCH PERSONAL EQUITY SAVINGS PLANS)

The Fund complies with the ratio of 75% of the assets in securities or rights eligible for PEAs. This ratio can be provided by the management company upon request.

ETHICS

Group financial instruments invested in the UCI:

This information appears in the appendix to the annual report – Additional information 1.

As part of the management of collective investment schemes, transaction fees are invoiced when deals are executed on

financial instruments (purchases and sales of securities, reverse purchases, futures and swaps).

INCORPORATION OF ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CRITERIA

Pursuant to Article L.533-22-1 of the French Monetary and Financial Code, we hereby provide the information relating to the incorporation of environmental, social and governance (ESG) criteria into our investment policy. BNP Paribas Asset Management operates a Responsible Investment Policy that defines a certain number of ESG criteria applicable to our investment decisions. This policy adheres to the criteria of the United Nations Global Compact, an international framework based on international conventions relating to human rights, labour standards, respect for the environment and the fight against corruption. This global framework is supplemented by the definition and application of minimum ESG standards covering investments in certain business sectors that are considered sensitive, such as palm oil, nuclear facilities and coal-fired power plants. Lastly, in accordance with applicable regulations, investments in certain sectors such as controversial weapons (anti-personnel mines and cluster munitions) are prohibited. The investment criteria and the principles for implementing this Responsible Investment Policy are available on our website at www.bnpparibas-ip.com. * * *


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Management Report

INFORMATION ON THE COMPENSATION POLICY USED BY THE MANAGEMENT COMPANY

Information regarding the compensation policy adopted during the 2015 financial year is available from the management company: BNP Paribas Asset Management, TSA 47000, 75318 Paris Cedex 09, France, or at www.bnpparibas-am.com

*** In accordance with the provisions of Article 314-75-1 of the General Regulations of the Autorité des marchés financiers (the French financial markets authority – AMF), “information on the policy for selecting and evaluating services to aid investment decisions and order execution” at BNP Paribas Asset Management is available online at www.bnpparibas-ip.com (“www.bnpparibas-ip.com/en/mifid-directive/#selection/”).

* * * In accordance with the provisions of Article 314-82 (UCITS) and Article 319-18 (AIF) of the General Regulations of the Autorité des marchés financiers, the latest “statement of intermediation fees” is available at www.bnpparibas-ip.com.

BNP PARIBAS ASSET MANAGEMENT (BNPP AM) BEST SELECTION AND BEST EXECUTION POLICY

A. Our best selection and best execution policy

The purpose of this document is to set out our current practices and future intentions regarding our policy on the best selection of financial intermediaries and best execution on their part. It also summarises the consequences of the receipt and transmission of orders and, where appropriate, our policy regarding the negotiation of orders when we are acting as a counterparty in the trade.

This document provides information on our policy as it currently stands. This policy is subject to change following consultation with, and any subsequent decisions taken by, institutions such as the Autorité des marchés financiers (AMF) in France or other European regulatory bodies, in particular the European Securities and Markets Authority (ESMA). Our policies and procedures may be amended in order to take account of changes implemented by the various member states or by any other supervisory body.

The Markets in Financial Instruments Directive (MiFID) gives BNP Paribas Investment Partners the opportunity to clarify our investment decision implementation and execution process as it applies to managing our clients’ mandates and investment funds, by defining and putting into operation an execution policy covering the selection of intermediaries, the processes undertaken and the reporting systems.

This policy sets out:

the principles for selecting the intermediaries used to execute orders;

the order execution principles according to the type of investment process, the type of financial instrument, and the execution criteria referred to in the directive (type of order, price, costs, probability and speed of execution, size of the order and all other relevant criteria).

BNP Paribas Investment Partners (BNPP IP) regards best execution as a continuous process and has established a permanent monitoring body through the Global Counterparty Committee to enable BNPP IP entities to achieve the best possible outcomes for our clients.

As asset management stakeholders, BNPP IP entities are required to monitor the effectiveness of this policy, to adapt it and, where necessary, to expand it.


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Management Report

B. Scope and classification of our clients

BNPP IP entities offer portfolio management services on behalf of third parties. As such, they transmit financial instrument orders in the context of the investment processes that they have developed in order to carry out the financial management of the mandates and investment funds for which they are responsible.

BNPP IP entities transmit their orders relating to financial instruments either directly or through the intermediary of BNP Paribas Dealing Services, a subsidiary of the BNP Paribas Group authorised to operate as a credit institution by the French Credit Institutions and Investment Firms Committee (Comité des établissements de crédit et des entreprises d’investissement, CECEI). The main financial instruments that may be involved are equities, interest rate instruments, and derivatives traded on a regulated or over-the-counter market.

The obligations of this selection and execution policy apply to all our clients, who are in principle deemed to be “professional clients” within the meaning of MiFID.

This policy aims to define the most appropriate means to ensure best execution for each category of financial instrument in accordance with the investment policies defined and the execution venues selected.

C. BNPP IP selects its intermediaries and monitors their execution policy in the interests of its clients

BNPP IP has a formal methodology for selecting intermediaries based on their qualities in providing services according to the instrument traded, in terms of best advice, best execution price, best execution quality and even suitability of technology platform where applicable, and so on.

This selection process is reviewed at least once a year. However, BNPP IP continually monitors the quality of its intermediaries and any issues can be escalated to the Global Counterparty Committee, which meets on a quarterly basis.

BNPP IP entities have established a series of trading functions (which must be aligned with those of BNP Paribas Dealing Services). These enable it to choose from among the selected intermediaries, according to the financial instrument and portfolio concerned. We look for the intermediary who can provide execution in line with our best execution procedure on the basis of the following three criteria: financial instrument, management policy applied to the mandate or investment fund, and type of order.

On behalf of their clients, BNPP IP entities have drafted different policies specific to each management team and the nature of their investment processes.

Each team applies an investment process and an order-placing procedure that selects the criteria, sets the priorities and, if necessary, defines the execution venues for the financial instruments concerned.

If necessary, additional agreements may apply to capital transactions, particularly to initial public offerings, private placements and secondary public offerings.

D. BNPP IP entities act or may act as a counterparty in certain financial instruments

In accordance with market practices and the management processes that they have undertaken to adhere to, BNPP IP entities may, either directly or through BNP Paribas Dealing Services, act as a trader in some jurisdictions, in particular for interest rate and over-the-counter instruments on cash platforms.

In practice, this means that for such transactions, particularly in interest rate instruments or over-the-counter products, BNPP IP entities and/or BNP Paribas Dealing Services may act as a direct counterparty of a market maker. BNPP IP undertakes, in


Management Report

the sense defined by the European Directive, to “take all reasonable steps to obtain the best execution for its clients”.

Where possible, BNPP IP uses and will give preference to the use of a tender process for instruments traded bilaterally, as a pre-condition to the negotiation of a transaction.

E. Commitments, checks and compliance

BNPP IP undertakes to take all reasonable steps to enable it to obtain the best execution for its clients, either by selecting its intermediaries or by acting as counterparty in the trades concerned. BNPP IP is happy to share with clients the details of all the execution procedures for all orders executed for them and to demonstrate how these procedures adhere to the execution policy.

Whenever BNPP IP receives specific instructions from the client regarding the execution of orders in its mandate or dedicated investment fund, BNPP IP will follow these instructions and, in so doing, may be released from its best execution obligations applicable to the scope affected by the specific instructions. These specific instructions must be compatible with the contractual provisions specified previously, when the reciprocal commitments of a mandate or investment fund were signed.

F. Review of our selection and execution policy

The Global Counterparty Committee is the forum for debate, decisions and actions for commercial, operational, legal and risk-related issues regarding eligible counterparties.

This committee is chaired by the Head of Risk Control or, in their absence, by the Head of Compliance. Moreover, BNPP IP has established a formal review and control system that includes a review conducted at least annually of the best selection and best execution policy.

G. Clients’ consent to our selection and execution policy

BNPP IP must obtain the consent of its clients regarding the implementation of the policy in the context of our relationship. This policy is an integral part of the contractual relationship between BNPP IP entities and their clients. BNPP IP will assume that consent is implicitly given if the client does not express a specific objection within a month of receiving the policy in an appropriate form.

H. Who to contact at BNPP IP?

For more information about this, please contact your sales team.

* * * REPORT ON THE EXERCISE OF VOTING RIGHTS (2015)

In accordance with Chapter 3 of the rules of professional conduct for UCIs and individual portfolio management mandates, and the provisions of the General Regulations of the AMF, we hereby report on our system for exercising voting rights and an overview of our voting in 2015.

1. VOTING POLICY AT GENERAL MEETINGS

BNPP AM believes that promoting good corporate governance practices is an essential part of its responsibilities vis-à-vis shareholders. Corporate governance refers to the system used to manage and control a company. It relates to the functioning of the management board and its supervision and control mechanisms, as well as stakeholder relations. Good


Management Report

corporate governance creates the framework that ensures that the company is managed in the long-term interest of shareholders. BNPP AM expects all companies in which it invests to comply with best corporate governance practices.

Voting at general meetings is an important aspect of communication with the companies in which we invest on behalf of our clients and is an integral part of the BNPP AM management processes. We are committed1 to ensuring the exercise of voting rights associated with securities held by undertakings for collective investment in transferable securities (UCITS), alternative investment funds (AIFs), foreign investment funds and management mandates where these rights have been delegated to us.

BNPP AM publishes a document entitled “Governance and voting policy”, which explains what we expect from listed companies and how we exercise our responsibilities as shareholders.

This policy sets out the main principles of corporate governance that we encourage, our voting process, and the guidelines setting out, for each type of resolution, the “best practices” and the situations that may result in voting against a resolution or abstaining from voting.

We ensure that we exercise our voting rights according to the specific circumstances of the company.

The Governance and voting policy document is available online at www.bnpparibas-ip.com.

2. MAIN CHANGES TO THE VOTING POLICY IN 2015

Our voting policy and guidelines are reviewed each year to take into account any changes in governance codes and marketplace practices.

The main changes to the voting policy in 2015 were as follows:

• Clarification of our approach in terms of commitment

• Update to the concept of dialogue and exchanges between the Board of Directors and investors

• Clarification of our expectations in terms of compensation

• Clarification on various provisions of the voting policy and on their application 3. VOTING SCOPE FOR 2015

In 2015, we voted on around 400 UCIs representing more than €30 billion in assets under management.

We exercise our voting rights in relation to companies for which the aggregated positions meet one of the following three conditions:

• Represent 90% of the cumulative total of our equity positions

• Constitute 1% or more of the company’s market capitalisation

• On demand (ad hoc)

This scope accounts for more than 30% of the companies held by all our UCIs.

1 Taking into account technical and regulatory aspects



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Selecting securities with voting rights fulfils a dual objective: to focus our efforts on shareholdings representing a significant portion of assets under management and to take part in the general meetings of companies in which our collective management strategies hold a substantial amount of the capital.

4. VOTING STATISTICS IN 2015

4.1 Geographic breakdown

Within the scope described above, we voted at 1,262 general meetings, mainly in Europe and North America, which together amounted to just over 73% of our total voting.

Number of general meetings Geographic breakdown

Europe 609 48.3%

North America 317 25.1%

Japan 66 5.2%

Other areas 270 21.4%

Total 1,262 100%

4.2 Voting results

Within the scope described above, of the 1,262 general meetings that held votes:

We supported all the proposed resolutions at 329 general meetings

We abstained from or voted against at least one resolution at 933 general meetings i.e. 73.9% of meetings (versus 70.9% in 2014)

Of the 16,243 resolutions voted on, 15,753 were proposed by the companies and 490 were proposed by the shareholders.

Of the resolutions put forward by the companies (excluding shareholder resolutions):

We supported 12,758 resolutions, i.e. 81.0% of our voting

We abstained from or voted against 2,995 resolutions, i.e. 19.0% of our voting in 2015, versus 17.8% in 2014

Of those that we opposed, we abstained in 863 cases (5.5% of our voting) and voted against in 2,132 cases (13.5% of our voting).

Notwithstanding our slightly higher total opposition in 2015, we cannot discern any overall trend: the level of opposition and changes compared with 2014 vary according to the geographic area and type of resolution.


Management Report

Geographic area Resolutions voted on

Number of votes ‘for’

Number of votes ‘against’

Number of abstentions

Percentage of abstentions or votes ‘against’

Europe 9,050 3,320 902 2,481 18.9%

North America 7,336 2,921 518 1,983 12.0%

Japan 1,364 250 129 389 42.6%

Other areas 350 149 255 109 20.1%

Total 15,753 12,758 2,132 863 19.0%

Analysis

Our level of opposition was very high in Japan due to weak structural governance with, in particular, very low levels of independence on boards of directors, even though we are seeing improvements year after year.

In contrast, our level of opposition was lower in North America due to the high level of independence on boards of directors, and an absolute vote mainly concerned with the election of directors. However, our opposition is greatest in this area on compensation matters.

Lastly, in Europe, our opposition mainly concerned resolutions relating to financial operations and executives’ compensation.

5. OPPOSITION ACCORDING TO THE TYPE OF RESOLUTION

5.1 Resolutions put forward by the companies

The following table shows the abstention and opposition rate by type of resolution.

Number of resolutions voted on

Number of votes ‘for’

Number of abstentions or votes ‘against’

Percentage of abstentions or votes ‘against’

Compensation of directors or executives

1,573 826 747 47.5%

Financial operations 2,274 1,395 879 38.7%

Appointment of directors 6,183 5,302 881 14.2%

Appointment and remuneration of auditors

1,077 935 117 10.9%

Approval of the financial

statements 2,227 2,094 133 6.0%


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Change to articles of association

971 915 56 5.8%

Other resolutions 1,448 1,291 182 12.6%

Total 15.753 12,758 2,995 100%

Three topics thus form the main focus of our opposition: executives’ compensation, financial operations, and the appointment of directors.

5.1.1 Compensation of directors or executives

These are mainly requests for stock options, bonus shares or severance benefits as well as votes on “say-on-pay” compensation policies:

• either the compensation policy was insufficiently transparent (volume, nature of performance conditions and targets to

be achieved, etc.);

• or the compensation practices would not be in stakeholders’ interests, with the amounts deemed to be excessive or disproportionate in terms of the performance of the company in question;

• or the compensation criteria are considered as non-binding, enabling a payment in the event of failure;

• or lastly, the compensation is not long-term oriented.

5.1.2 Financial operations

These are mainly requests for capital increases:

• either the total volume is considered too large when total authorisations exceed 50% of the share capital;

• or the authorisation requested was to increase the capital without preferential subscription rights and without a specific purpose, which could lead to excessive dilution for existing shareholders (more than 5% of the capital).

We also voted consistently against anti-takeover measures.

5.1.3 Board structure

This mainly relates to requests to appoint directors in companies with unbalanced governance and power dynamics:

• either with directors deemed to have a conflict of interest and who are insufficiently independent (50% in uncontrolled companies and 33% in controlled companies);

• or with directors whose availability is deemed insufficient.


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5.2 Shareholder resolutions

With regard to shareholder resolutions, our opposition was also considerable, although it resulted from a different logic.

Shareholder resolutions are mainly a North American phenomenon and are often not approved by the board. Thus, a vote “for” is a vote against the company’s position. We voted “for” when the resolution was consistent with the company’s long-term interests and relevant in terms of the company’s practices. However, we abstained when the resolution was not relevant for the company or when it had already been applied in practice.

Support for shareholder resolutions is up compared to 2014 (61% in 2015 versus 50.2% in 2014), with greater support for environmental resolutions in particular.

Number of resolutions voted on

Votes ‘against’

Abstentions Votes ‘for’ Percentage of votes ‘for’

Shareholder resolutions

490 103 88 299 61.0%

6. DIALOGUE WITH ISSUERS AND PROMOTION OF ENVIRONMENTAL AND SOCIAL TRANSPARENCY

6.1 Process of dialogue with issuers

The aim of maintaining a relationship with issuers is to enhance the long-term value of our holdings and promote best practices in the area of governance and social and environmental responsibility.

The process of dialogue with companies can be initiated at our request or at the issuers’ request and is focused on our main positions.

The purpose of engagement is:

• to communicate our voting policy, to promote corporate governance best practices and to prepare for future general meetings

• to obtain additional information on draft resolutions

• to share any reservations we have on resolutions that run contrary to our voting policy.

In 2015, we engaged in dialogue with 74 companies.

6.2 Evaluation of dialogue with issuers

We believe that dialogue has been fruitful:

• when a resolution is withdrawn by an issuer;

• when we change our vote to vote for the resolution following an amendment by the issuer, or as a result of additional information.

In 2015, we had 19 successes as part of our ongoing dialogue, representing 23% of cases. This rate remained stable compared with 2014.


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The following are some successful examples of our engagement:

• A change to or disclosure of the performance criteria used for bonus share or stock option plans

• The establishment of a “long-term” vision in the compensation policy, with performance conditions measured over three years

However, we believe that dialogue should not be evaluated solely on the basis of changes in our voting intentions:

• Dialogue prior to setting the agenda for the general meeting can encourage a company to align resolutions with our voting policy

• Companies may modify their practices at general meetings in subsequent years.

6.3 Encouraging issuers to ensure environmental and social transparency

BNPP AM believes that promoting environmental, social and governance (ESG) best practices is part of its investor responsibilities. Indeed, companies’ compliance with ESG criteria helps us to ensure that the companies in which we invest are managed in the long-term interests of the various stakeholders. In accordance with our voting policy, we abstained from voting on resolutions to approve financial statements when the companies had not provided sufficient information about environmental and social issues. In 2015, we did this on 10 occasions.

We informed the companies concerned of the reasons for our abstention, in order to increase their awareness of ESG issues and to encourage them to become more transparent, particularly on environmental and social issues.

It will only be possible to determine whether such a dialogue has been successful if these companies improve their environmental and social communication over the coming years.

6.4 Commitment with respect to joint initiatives

We play an active role in two joint initiatives on topics relating to governance:

• The PRI2 initiative on appointing directors

This initiative, focused on the US and French markets, aims to encourage companies to improve the process of appointing directors and forming the Board of Directors. In September 2015, BNPP AM was an official speaker on this topic at the PRI’s annual conference in London.

• The FIR3 and CorDial4 initiative on the distribution of added value

The aim of this commitment is to establish a constructive dialogue on the issue of distributing added value between managers, employees and shareholders, with particular focus on how the median annual employee compensation relates to the annual compensation of their managers.

In 2015, six companies were the subject of individual dialogue at the initiative of BNPP AM.

2 United Nations Principles for Responsible Investment 3 The French Social Investment Forum (Forum pour l’Investissement Responsable – FIR), a multi-stakeholder association for the promotion of socially responsible investment (SRI). 4 CorDial, for “Corporate Dialogue”, is a platform for dialogue with companies on matters of Sustainable Development and Corporate Social Responsibility (CSR).


Management Report

6.5 Other aspects of dialogue

Dialogue also takes place in other ways, such as:

• Active participation as a member of the “Corporate Governance” committee of the French Management Association (Association Française de Gestion – AFG)

• Active participation as a member of the International Corporate Governance Network (ICGN) and the Shareholder Rights Committee

• Active participation in the early stages of the revision of the Shareholder Rights Directive

• Participation at conferences and in public deliberation on topics relating to governance

• Ongoing dialogue with proxy advisers to improve the quality and relevance of their studies

• Indirect dialogue with issuers through proxy solicitors

• Physical voting at 14 general meetings in 2015 (eight French, six foreign)

• Other forms of commitment and dialogue as part of the Responsible Investor Policy (in particular for breaches of the principles of the United Nations Global Compact and BNP Paribas’ sector policy).


Annual Financial Statements

Assets

Financial year 30/06/2016


1Net fixed assets - -

Deposits - -

Financial instruments 1,044,356,589.15 1,019,799,768.60 0Equities and equivalent securities 1,013,178,875.22 963,097,338.38

Traded on a regulated or equivalent market 1,013,178,875.22 963,097,338.38

Not traded on a regulated or equivalent market - -

Bonds and equivalent debt instruments - -

Traded on a regulated or equivalent market - -


Debt securities - -

Traded on a regulated or equivalent market – Negotiable debt securities - -

Traded on a regulated or equivalent market – Other debt securities - -


Securities in undertakings for collective investment 31,177,713.93 56,702,430.22 Retail UCITS and AIFs and their equivalents from other member states of the European Union intended for non-professional investors 31,177,713.93 56,702,430.22

Other funds and their equivalents from other member states of the European Union intended for non-professional investors - -

Professional retail investment funds and their equivalents from other member states of the European Union and listed securitisation undertakings - -

Other professional investment funds and their equivalents from other member states of the European Union and unlisted securitisation undertakings - -

Other non-European undertakings - - Temporary securities transactions - -

Receivables representing securities received under repurchase agreements - -

Receivables representing loaned securities - -

Borrowed securities - -

Securities assigned under repurchase agreements - -

Other temporary transactions - - Forward financial instruments - -

Transactions on a regulated or equivalent market - -

Other transactions - -

Other financial instruments - -

Receivables 849,589.07 1,576,343.53 Forward foreign exchange transactions

Other 849,589.07 1,576,343.53

Financial accounts 1,464,729.00 1,494,644.72

Cash 1,464,729.00 1,494,644.72

TOTAL ASSETS 1,046,670,907.22 1,022,870,756.85



Liabilities Financial year

30/06/2016 Financial year

30/06/2015

Shareholders’ equity

Capital 1,031,528,847.07 961,545,690.17

Undistributed previous net capital gains and losses (a) - - Retained earnings (a) - - Net capital gains and losses for the year (a, b) 4,072,484.75 47,288,387.29 Income for the year (a, b) 9,888,461.56 12,762,571.28

Total shareholders’ equity 1,045,489,793.38 1,021,596,648.74 (= Amount representative of net assets)

Financial instruments - -

Disposals of financial instruments - -

Temporary securities transactions - - Debts representing securities assigned under repurchase agreements - -

Debts representing borrowed securities - -

Other temporary transactions - -

Forward financial instruments - - Transactions on a regulated or equivalent market - -

Other transactions - -

Debts 1,181,112.01 1,273,332.39 Forward foreign exchange transactions - -

Other 1,181,112.01 1,273,332.39

Financial accounts 1.83 775.72

Bank loans and overdrafts 1.83 775.72 Borrowings - -

TOTAL LIABILITIES 1,046,670,907.22 1,022,870,756.85

(a) Including accruals and deferrals (b) Less interim payments made during the year



Off-balance sheet

Financial year

30/06/2016 Financial year

30/06/2015

HEDGING TRANSACTIONS None None

Commitments on regulated or equivalent markets - -

- -

Over-the-counter commitments - - - -

Other commitments - -

- -

OTHER TRANSACTIONS None None Commitments on regulated or equivalent markets - -

- -

Over-the-counter commitments - -

- -

Other commitments - -

- -



Income statement Financial year Financial year

30/06/2015 30/06/2016

Income on financial transactions

Income on equities and equivalent securities 25,721,881.31 23,559,445.11

Income on bonds and equivalent securities - -

Income on debt securities - -

Income on temporary purchases and sales of securities - -

Income on forward financial instruments - -

Income on deposits and financial accounts - -

Other financial income - -

Total I 25,721,881.31 23,559,445.11

Expenses on financial transactions

Expenses on temporary purchases and sales of securities - - Expenses on forward financial instruments - -

Expenses on financial debts -817.64 -481.87

Other financial expenses - -

Total II -817.64 -481.87

Income on financial transactions (I+II) 25,721,063.67 23,558,963.24

Other income (III) - -

Management fees and provisions for depreciation (IV) -15,289,942.13 -11,340,491.12

Net income for the financial year (I+II+III+IV) 10,431,121.54 12,218,472.12

Accrued income for the financial year (V) -542,659.98 544,099.16

Interim dividends paid during the financial year (VI) - -

Income (I+II+III+IV+V+VI) 9,888,461.56 12,762,571.28


Accounting Principles and Policies

The undertaking is compliant with ANC (French national accounting standards authority) Regulation 2014-01 of 14 January 2014 relating to the chart of accounts for open-ended undertakings for collective investment.

The accounting currency is the euro.

All transferable securities held in the portfolio are recognised at historical cost, excluding charges.

Securities, futures and options held in the portfolio denominated in a foreign currency are converted into the accounting currency based on the exchange rates in Paris on the valuation day.

The portfolio’s value is appraised whenever the net asset value is calculated and at the end of the accounting period using the following methods:

Transferable securities:

- listed securities: at stock market value – including accrued coupons (at the day’s closing price).

However, transferable securities for which the price is not established on the valuation day or for which the price has been adjusted, and securities that are not traded on a regulated market, are valued under the responsibility of the management company (or the Board of Directors for a SICAV), at their likely trading value. Prices are adjusted by the management company based on its knowledge of the issuers and/or markets.

- UCIs: at their last known net asset value, or if unavailable, at their last estimated value. The net asset values of the securities of foreign undertakings for collective investment valued on a monthly basis are confirmed by the fund administrators. Valuations are updated weekly based on the estimate issued by the administrators of these UCIs and validated by the fund manager.

- debt securities and equivalent negotiable securities that are not subject to significant transactions are valued using the actuarial method at a rate applicable to issues of equivalent securities and, where applicable, assigned a variance representative of the intrinsic features of the issuer. In the absence of sensitivity, securities with a residual term of three months are valued at the most recent rate until maturity, and for those acquired for periods of less than three months, the interest is calculated on a straight-line basis.

Temporary purchases and sales of securities: - Securities lending: the receivable representing the securities lent is valued at the securities’ market value. - Securities borrowing: the securities borrowed and their corresponding debt are valued at the securities’ market value. - Collateral: with regard to securities received as collateral when lending securities, the UCI has chosen to include these securities in the balance sheet using the value of the debt corresponding to the repayment commitment.

- Repurchase agreements with a residual duration of three months or less: individualisation of the receivable based on the contract price. In this case, the remuneration is calculated on a straight-line basis. - Long-term repurchase agreements: these are recorded and valued at their nominal amount, even if their maturity exceeds three months. Any associated accrued interest is added to this amount. However, some contracts specify special terms in the event of early repayment in order to take into account the impact of the increase in the counterparty’s financing curve. Accrued interest may then be reduced by this impact, with no applicable floor. The impact is proportional to the residual term of the agreement and the difference between the contractual margin and the market margin for a given maturity date. - Reverse repurchase agreements with a residual maturity of three months or less: stock market value. The debt valued on the basis of the contractual value is recorded as a balance sheet liability. In this case, the remuneration is calculated on a straight-line basis.

Forward financial instruments and options

Futures: at the day’s settlement price. The off-balance sheet valuation is calculated on the basis of the nominal value, its settlement price and, where appropriate, the exchange rate.


Accounting Principles and Policies

Options: the closing price for the day or, failing this, the last known price.

OTC options: these options are valued at their market value, based on prices communicated by the counterparties. These valuations are subject to audits by the management company. The off-balance sheet valuation is calculated as an underlying equivalent based on the delta and the price of the underlying asset and, where appropriate, the exchange rate.

Management fees - Maximum 1.50% incl. tax for the Classic unit. - Maximum 0.80% incl. tax for the I unit. - Maximum 0.40% incl. tax for the R unit.

The fees are calculated on the basis of net assets, less deductions made for UCIs. These fees, not including transaction fees, are charged directly to the Fund’s income statement. These fees cover all of the costs invoiced directly to the UCITS, except for transaction costs. Transaction costs include intermediary fees (brokerage, stock market taxes, etc.) as well as transaction fees, if any, which may be charged by the depositary and the management company in particular. Performance fee:

None

Retrocession on management fees:

None Method used to recognise interest Interest received. Allocation of income

Accumulation for the Classic unit. Accumulation for the I unit. Accumulation for the R unit.

Allocation of net realised capital gains

Accumulation for the Classic unit. Accumulation for the I unit. Accumulation for the R unit. Changes during the year: None.


Notes to the financial statements

Change in net assets

Financial year Financial year

30/06/2015 30/06/2016

Net assets at the beginning of the financial year 1,021,596,648.74 464,506,926.41

Subscriptions (including subscription fees paid to the UCI) 316,118,731.90 518,532,432.70

Redemptions (after deduction of redemption fees paid to the UCI) -236,803,706.09 -82,387,936.16

Capital gains realised on deposits and financial instruments 24,329,917.37 42,380,139.93

Capital losses realised on deposits and financial instruments -22,284,077.11 -1,607,539.18

Capital gains realised on forward financial instruments - -

Capital losses realised on forward financial instruments - -

Transaction charges -1,343,192.92 -2,375,450.82

Exchange differences 3,632,525.74 3,726,860.39

Changes in the valuation differences of financial instruments and deposits -70,188,175.79 66,602,743.35

Valuation difference, financial year N 62,579,620.78 132,767,796.57

Valuation difference, financial year N-1 -132,767,796.57 -66,165,053.22

Change in the valuation difference of forward financial instruments - -

Valuation difference, financial year N - -

Valuation difference, financial year N-1 - - Distribution from the previous financial year on net capital gains and losses - -

Distribution from the previous financial year on income - -

Net income for the financial year before accruals and deferrals 10,431,121.54 12,218,472.12

Interim payment(s) during the financial year on net capital gains and losses - -

Interim payment(s) during the financial year on income - -

Other items - -

Net assets at the end of the financial year 1,045,489,793.38 1,021,596,648.74



Additional information 1 Financial year

30/06/2016

Commitments received or given

Commitments received or given (capital surety or other commitments) (*) -

Current value of financial instruments registered in the portfolio constituting guarantee deposits None

Financial instruments received as collateral and not recorded on the balance sheet -

Financial instruments given as collateral and kept under the original item -

Financial instruments in the portfolio issued by the provider or entities in its group

Deposits -

Equities -

Interest rate securities -

UCIs 31,177,713.9300

Temporary purchases and sales of securities -

Swaps (nominal) -

Current value of financial instruments under a repurchase agreement None

Securities sold under repurchase agreements -

Securities borrowed under repurchase agreements -

Borrowed securities -

(*) For guaranteed UCIs, the information appears in the accounting principles and policies



Additional information 2 Financial year

30/06/2016

% of avg net assets

Issues and redemptions during the financial year Number of securities

CLASSIC class (Currency: EUR)

Number of securities issued 1,526,149.254

Number of securities redeemed 1,357,550.842

I class (Currency: EUR)

Number of securities issued 3,822.813

Number of securities redeemed 1,697.915

R class (Currency: EUR)

Number of securities issued 261,081.038

Number of securities redeemed 73,048.399

Subscription and/or redemption fees Amount (EUR)

Subscription fees paid to the UCI -

Redemption fees paid to the UCI -

Subscription fees received and shared 2,568.67

Redemption fees received and shared -

Management fees Amount (EUR)

CLASSIC class (Currency: EUR)

Operating and management fees (*) 14,841,902.72 1.45

Performance fees - -

Other charges - -

I class (Currency: EUR)

Operating and management fees (*) 355,053.36 0.77


Other charges - -

R class (Currency: EUR)

Operating and management fees (*) 92,986.05 0.39


Other charges - -


Retrocessions on management fees (all units) - -

(*) For UCIs with a financial year that is not 12 months, the percentage of average net assets

corresponds to the average annualised rate.



Breakdown by type of receivables and debts Financial year

30/06/2016

Breakdown by type of receivables

Deposit – EUR -

Deposit – Other currencies -

Cash collateral -

Valuation of purchases of currency futures -

Exchange value of forward sales -

Other miscellaneous debtors -

Coupons receivable

849,589.07

TOTAL RECEIVABLES

849,589.07

Breakdown by type of debt

- Deposit – EUR

Deposit – Other currencies -

Cash collateral -

Provisions for loan charges -

Valuation of sales of currency futures -

Exchange value of forward purchases -

Costs and expenses not yet paid 1,181,112.01

Other miscellaneous payables -

Provision for market liquidity risk -

TOTAL DEBTS 1,181,112.01



Breakdown of instruments by legal or economic type


Assets None

Bonds and equivalent debt instruments -

Index-linked bonds -

Convertible bonds -

Equity securities -

Other bonds and equivalent securities -

Debt securities

-

Traded on a regulated market -

Treasury bills -

Other negotiable debt securities -

Other debt securities -

Not traded on a regulated market -

Liabilities None

Disposals of financial instruments -

Equities -

Bonds -

Other -

Off-Balance Sheet None

Hedging transactions

Interest rates -

Equities -

Other -

Other transactions

Interest rates -

Equities -

Other -



Breakdown by nature of rates of assets, liabilities and off-balance sheet items

Fixed rate Variable rate Adjustable rate Other

Assets None None None

Deposits - - - -

Bonds and equivalent debt instruments - - - -

Debt securities - - - -

Temporary securities transactions - - - -

Financial accounts - - - 1,464,729.00

Liabilities None None None

Temporary securities transactions - - - -

Financial accounts - - - 1.83

Off-Balance Sheet None None None None

Hedging transactions - - - -

Other transactions - - - -



Breakdown by residual maturity

[0 - 3 months] [3 months - 1

year] [1 - 3 years] [3 - 5 years] > 5 years

Assets None None None None

Deposits - - - - -

Bonds and equivalent debt instruments - - - - -

Debt securities - - - - -

Temporary securities transactions - - - - -

Financial accounts 1,464,729.00 - - - -

Liabilities None None None None

Temporary securities transactions - - - - -

Financial accounts 1.83 - - - -

Off-Balance Sheet None None None None None

Hedging transactions - - - - -

Other transactions - - - - -



Breakdown by listing currency

CHF DKK GBP SEK

Assets

Deposits

Equities and equivalent securities 159,828,708.45 69,640,048.46 241,045,350.08 8,206,809.78

Bonds and equivalent debt instruments

Debt securities

UCI securities

Temporary securities transactions

Other financial instruments

Debt securities 849,589.07

Financial accounts

Liabilities None None None

Disposals of financial instruments

Temporary securities transactions

Debts

Financial accounts 1.83

Off-Balance Sheet None None None None

Hedging transactions

Other transactions

Only the five currencies that are most representative of the net asset component are included in this table.



Allocation of distributable income

Class: CLASSIC (Currency: EUR)

Allocation table of distributable amounts relating to income


30/06/2016 30/06/2015

Amounts still to be allocated

Retained earnings - -

Income (1) 8,387,273.64 12,057,004.01

TOTAL 8,387,273.64 12,057,004.01

Allocation

Distribution - -

Balance carried forward for the financial year - -

Accumulation (1) 8,387,273.64 12,057,004.01

TOTAL 8,387,273.64 12,057,004.01

Information relating to securities with distribution rights

Number of securities

Distribution per unit - -

Tax credits and tax benefits attached to allocation of income

Total tax credits and tax assets attached to the distribution of income: - - Originating in the year - -

Originating in year N-1 - -




(1) The “P” unit became the “Classic” unit on 12/06/2015


Allocation table of distributable amounts relating to net capital gains and losses


30/06/2016 30/06/2015


Undistributed previous net capital gains and losses - -

Net capital gains or losses for the year 3,741,789.74 45,719,850.08

Interim payments on net capital gains or losses for the year - -

TOTAL 3,741,789.74 45,719,850.08

Allocation

Distribution - -

Undistributed net capital gains and losses - -

Accumulation 3,741,789.74 45,719,850.08

TOTAL 3,741,789.74 45,719,850.08


Number of securities - -



Class: I (Currency: EUR)



30/06/2016 30/06/2015



Income 739,696.64 336,605.05

TOTAL 739,696.64 336,605.05

Allocation

Distribution - -


Accumulation 739,696.64 336,605.05

TOTAL 739,696.64 336,605.05




Tax credits and tax assets attached to the distribution of income Total tax credits and tax assets attached to the distribution of income: - -

Originating in the year - -







30/06/2016 30/06/2015



Net capital gains or losses for the year 181,972.15 840,793.50


TOTAL 181,972.15 840,793.50

Allocation

Distribution - -


Accumulation 181,972.15 840,793.50

TOTAL 181,972.15 840,793.50


Number of securities - -



Class: R (Currency: EUR)



30/06/2016 30/06/2015



Income 761,491.28 368,962.22

TOTAL 761,491.28 368,962.22

Allocation

Distribution - -


Accumulation 761,491.28 368,962.22

TOTAL 761,491.28 368,962.22




Tax credits and tax assets attached to the distribution of income Total tax credits and tax assets attached to the distribution of income: - -

Originating in the year - -







30/06/2016 30/06/2015



Net capital gains or losses for the year 148,722.86 727,743.71


TOTAL 148,722.86 727,743.71

Allocation

Distribution - -


Accumulation 148,722.86 727,743.71

TOTAL 148,722.86 727,743.71


Number of securities -




Table of results and other characteristic items over the previous five years


30 Jun. 15 (1) 30 Jun. 16

Net asset value (in EUR)

C units 154.65 146.76

Net assets (€K) 985,016.76 959,495.67


C units 6,369,226.457 6,537,824.869

Payment date 30/06/2015 30/06/2016

Distribution per unit on net capital gains and losses

- -

(including interim dividends) (in €)

Distribution per unit on income - -


Tax credit per unit (*) - -

individuals (in €)

Accumulation per unit on net capital gains or losses

C units 7.17 0.57

Accumulation per unit on income

C units 1.89 1.28

(1) The “P” unit became the “Classic” unit on 12/06/2015



29 Jun. 12


C units 94.48

Net assets (€K) 167,033.51


C units 1,767,916.699

Payment date 29/06/2012

Distribution per unit on net capital gains or losses

-


Distribution per unit on income

-


Tax credit per unit (*) -



C units -


C units 1.53


Class: I (Currency: EUR)

28 Jun. 13 30 Jun. 14 30 Jun. 15 30 Jun. 16


C units 10,665.05 12,478.54 14,695.34 14,040.18

Net assets (€K) 3,526.29 8,170.19 18,157.38 47,181.84


C units 330.640 654.739 1,235.587 3,360.485

Payment date 28/06/2013 30/06/2014 30/06/2015 30/06/2016


- - - -



- - - -


Tax credit per unit (*) - - - -



C units 54.78 325.48 680.48 54.15


C units 206.98 259.30 272.42 220.11


Class: P (Currency: EUR)

28 Jun. 13 30 Jun. 14


C units 113.82 132.21

Net assets (€K) 312,702.19 456,336.74


C units 2,747,336.138 3,451,453.141

Payment date 28/06/2013 30/06/2014


- -



- -





C units 10.42 3.45


C units 1.45 1.91


Class: R (Currency: EUR) 16 Dec. 14 (1) 30 Jun. 15 30 Jun. 16


C units 100.00 117.24 112.44

Net assets (€K) 0.10 18,422.50 38,812.29


C units 1.000 157,128.861 345,161.500

Payment date 30/06/2015 30/06/2016

Distribution per unit on net capital gains and losses

- -


Distribution per unit on income - -





C units 4.63 0.43


C units 2.34 2.20

(1) date of first NAV

(*) The tax credit per unit is calculated on the payment date, in accordance with the French tax instruction of 04/03/93 (Inst.4 K-1-93). The theoretical amounts, calculated in accordance with the rules applicable to individuals, are shown here for indicative purposes. “Instruction 4 J-2-99 of 08/11/99 also specifies that beneficiaries of tax credit who are not natural persons may, under their own responsibility, calculate the tax credits they are owed.”



Inventory of financial instruments at 30 June 2016

Asset items and description of securities Quantity Price Listing currency Current value Rounded %

of net assets

Equities and equivalent securities 1,013,178,875.22 96.91

Traded on a regulated or equivalent market

AIR LIQUIDE 370,168.00 94.06 EUR 34,818,002.08 3.33 ALLIANZ SE-REG 300,360.00 127.80 EUR 38,386,008.00 3.67 ASSICURAZIONI GENERALI ORD. 351,706.00 10.55 EUR 3,710,498.30 0.35

ASTRAZENECA 733,130.00 44.67 GBP 39,406,674.81 3.77

AVIVA 2,540,866.00 3.94 GBP 12,043,163.67 1.15

AXA 1,796,924.00 17.81 EUR 31,994,231.82 3.06 BASF NOM. 400,906.00 68.64 EUR 27,518,187.84 2.63

BAYER 214,179.00 90.00 EUR 19,276,110.00 1.84

CARREFOUR 901,282.00 22.21 EUR 20,017,473.22 1.91

COMPASS GROUP PLC 2,056,224.00 14.22 GBP 35,183,809.98 3.37

DANONE 226,848.00 63.41 EUR 14,384,431.68 1.38

DEUTSCHE WOHNEN PORT. 687,012.00 30.53 EUR 20,971,041.30 2.01

ELIOR SCA - W/I 677,628.00 19.63 EUR 13,298,449.50 1.27

HENKEL PF 191,309.00 109.55 EUR 20,957,900.95 2.00

IPSEN 228,099.00 55.43 EUR 12,643,527.57 1.21

KERRY GROUP CL.A 271,782.00 79.86 EUR 21,704,510.52 2.08

KONINKLIJKE AHOLD NV 1,446,166.00 19.90 EUR 28,778,703.40 2.75

KON.PHILIPS ELECTRONICS 242,836.00 22.40 EUR 5,438,312.22 0.52

LEGAL AND GENERAL GROUP 3,939,555.00 1.91 GBP 9,040,047.40 0.86

LINDE 54,639.00 125.35 EUR 6,848,998.65 0.66

MARKS SPENCER GROUP NEW 2,226,688.00 3.19 GBP 8,539,142.84 0.82

MERCK KGAA 241,587.00 91.05 EUR 21,996,496.35 2.10

MUNCHENER RUCKVERSICHERUNGS 40,667.00 150.25 EUR 6,110,216.75 0.58

NESTLE NOM. 682,311.00 75.15 CHF 47,376,579.18 4.53

NOVARTIS 643,169.00 80.15 CHF 47,630,042.83 4.56

NOVO NORDISK A/S-B 1,446,825.00 358.10 DKK 69,640,048.46 6.66

OREAL 131,873.00 172.00 EUR 22,682,156.00 2.17

RECKITT BENCKISER GROUP 582,827.00 74.90 GBP 52,528,418.63 5.02

REED ELSEVIER 1,879,804.00 15.61 EUR 29,343,740.44 2.81

ROCHE HOLDING BJ 214,374.00 256.10 CHF 50,726,398.78 4.85

SAMPO A 482,203.00 36.53 EUR 17,614,875.59 1.68

SANOFI 537,313.00 74.92 EUR 40,255,489.96 3.85

SHIRE P.L.C 869,716.00 46.41 GBP 48,569,303.36 4.65

SWEDISH ORPHAN BIOVITRUM 751,446.00 102.80 SEK 8,206,809.78 0.78

SWISS RE NOM. 180,009.00 84.75 CHF 14,095,687.66 1.35

UNILEVER 1,235,249.00 41.91 EUR 51,769,285.59 4.95

UNILEVER 829,768.00 35.79 GBP 35,734,789.39 3.42

VALEO 596,544.00 40.13 EUR 23,939,310.72 2.29


UCI securities 31,177,713.93 2.98

Retail UCITS and AIFs and their equivalents from other member states of the European Union intended for non-professional investors

31,177,713.93 2.98

BNP PARIBAS MOIS ISR I CLASS C 552.57 23,164.09 EUR 12,799,713.93 1.22

PARV.HUMAN.DEVELOPMENT.I.CAP 200,000.00 91.89 EUR 18,378,000.00 1.76

Forward financial instruments 0.00 0.00

Margin calls 0.00 0.00

0.00 0.00

Swaps 0.00 0.00

0.00 0.00

Receivables 849,589.07 0.08

Debts -1,181,112.01 -0.11

Deposits

Other financial accounts 1,464,727.17 0.14

TOTAL NET ASSETS 1,045,489,793.38 100.00


Documents

BNP PARIBAS Annual Report DEVELOPPEMENT HUMAIN · BNP PARIBAS DEVELOPPEMENT HUMAIN – 5Annual Report at 30 June 2016 . Strategy . Due to its PEA eligibility, a minimum of 75% of