Climate change and thematic investment: a different approach to

Perspectives /// June 2011 Natixis Asset Management

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expertiSe FOCUS /// climate change

Climate change and thematic investment: a different approach to equity management

climate change is a scientific fact, with both environmental and economic

consequences. Without forgoing economic growth, the worldwide objective is not to surpass 500 ppm(2) of co2 concentration in the atmosphere, the point of no return established by the scientific community(3).

since the industrial revolution, it has been observed that co2 emissions show a positive correlation to economic development. current levels of co2 concentration are over 430 ppm. We have even less room for maneuver now that the emerging nations are experiencing an economic boom which is obviously full of promise, but also a major cause of co2 emissions.

We must change the way we work, the way we live, or even the way we consume. this entails

new methods of production, transport, energy production and distribution. the emergence of new technologies, both in manufacturing processes and distribution formats, for instance, paves the way towards some interesting alternatives. conversely, when it comes to agriculture we would perhaps be better employed rediscovering the virtues of traditional methods, substituting our excessive utilization of pesticides and fertilizers by using the natural micro-organisms found in soil.

all in all, the challenge we face today is a huge one: producing for the 21st century a simultaneously dynamic and carbon-sober economic system.

What are the advantages of a thematic management for shareholders?

What are the present challenges of climate change?

Generally speaking, within a context where equity investors are seeking diversified

approaches, a thematic investment can prove an interesting alternative.

this method focuses on economic stakes that are often extremely specific. it is much easier to identify its catalyzers when proper resources are available in terms of specialized analyst teams. furthermore, investing in a long-term setup can

also constitute an interesting option to avoid over-exposure to market "nervousness".

climate change entails some major structural changes, as we are now seeing in new regulations for both developed and emerging markets. for instance, we have the recent heQ(4) standards in the european real estate market, or renewable energy quotas in china.

carlos JolY (1)

Chairman of the Climate Change Scientific Advisory Committee

eMManuel BourdeiX

CIO Equity, Asset Allocation & Structured Products Natixis Asset Management

(1) carlos Joly is an SRi specialist who made a major contribution to drawing up the PRi Principles for Responsible investment for the United nations. (2) ppm (parts per million): the number of greenhouse gas molecules per million dry air molecules. (3) target defined by the iPcc (intergovernmental Panel on climate change) and adopted in the Kyoto Protocol by the signatory countries. (4) heQ: high environmental Quality.

Natixis Asset Management Perspectives /// June 2011

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as determining the actual impacts of climate change in human, environmental, economic and financial terms is still a complex business, natixis asset Management relies on internal and external resources:n a team composed of 2 managers specialized in "sustainable investment" equities and 1 emerging market equity analyst;

n a climate change scientific advisory committee, a consultation body composed of 7 acknowledged experts with diverse and complementary profiles. chaired by carlos Joly, this committee aims to natixis asset Management's teams enlighten on the major stakes of climate change with respect to new regulations and also to problems of a purely scientific nature;

n an extra-financial research team boasting 10 sector-based quantitative and qualitative analysts to examine the various issues and challenges identified within each sector, and also to draw up sri recommendations for major emitters;n the sound expertise of 35 specialist equity managers and analysts of natixis asset Management.

Impact Climate Change expertise: specialists generating ideasPioneer with a commitment dating back for more than 25 years in Socially responsible Investment (SrI), Natixis asset management has proposed, since 2009, the Impact Climate Change expertise dedicated to climate change. To develop a relevant thematic management related to climate change issues and consequences, Natixis asset management deployed important means, leaning on both internal and external resources.

Climate Change scientific Advisory committee

An experienced management team

extra-financial research “emerging markets” committee

Pierre Pedrosaanalyst for 5 years

Suzanne Sénellartportfolio manager for 20 years

Clotilde Basselierportfolio manager for 22 years

10 analystsmanaged by H. Guez

This includes economists, strategists, allocators,

portfolios managers and analysts

Pierre Radanne

energy Management

AnneGouyon

Forestry and Agroforestry

Yves Le Bars

Waste, Natural disasters

RichardKlein

Adaptation to climate change

MiklosKonkoly Thege

certification, sea transport

Matthieu Wemaëre

internationalenvironmental law

Carlos Joly

chairman of the climate change

scientific Advisory committee

iNvestMeNt cAsecouNtrY AllocAtioN

extrA-FiNANciAl ANAlYsis

GeNerAtioN oF ideAs

AdvisorytheMAtic

eNliGhteNMeNtscieNtiFic reseArch


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Impact Funds Climate Change: come back on an innovative fund, with a 360° approach to climate change

our special feature is a 360° approach to the issue, enabling us to invest in a large

number of countries(2) and sectors. this way, we can surpass the over-simplification and greater risk of single-sector funds or funds concentrating on markets in the developed bloc. over and above industries with connections to clean forms of energy, we might add that impact Funds climate change enlarges its investment universe to sectors which are encouraged by consumer trends, such as suppliers of products or services facilitating communication with no heavy-duty transpor-tation, or eco-transport facilities.

impact Funds climate change helps us pinpoint companies which are ideal candidates for the logic inherent to the three key macro-themes we have identified:

n reduction in greenhouse gas emissions

n adaptation of infrastructures and consumer behavior patterns to the inevitable consequences of climate change

n and a better management of natural resources

Because the question of climate change is a global phenomenon, natixis asset Management aims to provide a global answer.

With impact Funds climate change, we adapt an approach to 360° (any countries

sectors) organized around 3 macro-themes, among which "better management of natural resources".

on this particular theme, we concentrate for example our research on values bringing concrete and innovative solutions to the vulnerability of emerging countries in front of climate change. then, Jain irrigation systems

ltd, indian society specialized in micro-irrigation, is present within our portfolio.indeed, its systems of micro-irrigation allow to increase the agricultural efficiency and to reduce the dependence of the production to the monsoon.

such a technology allows to save water ressources thanks to a management system of the selling of water towards the root of plants.

You are a co-portfolio manager of Impact Funds Climate Change, what makes your approach so original?

suzanne senellart

Head of the "Sustainable Investment" management department , Natixis AM

Co-portfolio manager, Impact Funds Climate Change(1)

How can you transform thematic challenges into specific investment themes?

The company has good financial prospects, with an excellent EBITDA margin(3) of around 30% in its national business, and net self-financing should be positive by 2012.

Jain Irrigation Systems Ltd in brief:

(1) impact Funds climate change emerging markets is a sub-fund of the luxembourg SicaV “impact Funds” authorized for sale in France by amF (management company : natixis global associates / investment manager : natixis asset management). (2) impact Funds climate change is a global equity fund. the fund's exposure to emerging markets accounts for an indicative maximum of 25% of net assets. (3) eBitDa: earnings Before interest, taxes, Depreciation and amortization. also known as gross Operating margin (gOm). (4) Performance of the i (c) eUR unit from October 5, 2009 to april 30, 2011. Past performance is not a reliable indicator of future performance. (5) impact Funds climate change is not a benchmarked fund. the mSci World DnR index, however, may be used for standard performance comparison.

n inception date: October 2009

n Net annualized performance(4): 24.96% vs. 28.42% on the MSCI World index, the indicative benchmark(5)

n Multi-reward expertise: n The Special "Innovation" Jury Prize - AGEFI Actifs du Patrimoine Awards 2010 n 1st Prize in the "European Fund Launch of the Year" Category - Funds Europe Awards 2010

overvieW oF iMPAct FuNds cliMAte chANGe

Source: natixis am at 30/04/2011.

References to a ranking or a prize should not be interpreted as indications of the future performance of the UcitS or of the management company.

n the world's leading micro-irrigation companyn 24 plants n 110 offices worldwide n + 55% market share in india

Natixis Asset Management Perspectives /// June 2011

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The Impact Funds Climate Change Emerging Markets Fund(1) focuses Impact Climate Change management strategy on emerging countries. What are the reasons behind this choice?

as essential investment zones for diversified asset allocation, emerging nations are equally essential

components of the climate change theme. after the fashion of events observed among the industrialized nations, it seems that the impact of climate change has not become a factor in equity prices here yet. this offers some genuine investment opportunities in emerging markets since the leading players in this area are carving out a sustainable competitive edge for themselves.

the climate change theme particularly affects emerging markets for two reasons: n solid economic growth entails a considerable increase in their co2 emissions, n secondly, they are extremely vulnerable to climate disruptions in view of their location in high-risk zones

Well aware of the need to reconcile steady growth and sustainable development, the governments of these countries experiencing an economic boom are implementing ambitious domestic policies to reduce their co2 emissions by the year 2020, and decisive regulations to commit to such policies. one surprising fact: economic crisis has even acted as a catalyst because priority has been given to environment-related challenges in the various stimulus packages. in china, for example, plans are ongoing to make environmentally clean industries account for 15% of GdP by 2020, as against 3% at the present time, and to reduce co2 emissions by 40-45% against GdP by 2020.

Could you tell us a little more about Impact Funds Climate Change Emerging Markets?

as its big brother impact Funds climate change, impact Funds climate change emerging markets follows the same 360° approach with a specific focus on emerging markets.

the fund's investment universe comprises approximately 250 stocks. here it shows a clear difference with respect to the Msci emerging Markets index since around 85% of stocks in the fund's universe do not form part of this index.

the fund has a clear small and mid cap focus, and also a strong sector-based slant.

in terms of geographic areas, the fund concentrates on the Bric nations (Brazil, russia, india and china)(2).

the end, impact Funds climate change emerging markets is considerably more concentrated than its "big brother" impact Funds climate change, since the portfolio is condensed among 40 - 50 stocks, representing the management team's most solid convictions.

Impact Funds Climate Change Emerging Markets (1): changing economic landscape brings out new leaders

Funds specifics

n A conviction-based approach supported by scientific research

n A fund at the crux of climate change in the emerging market space

n A 360° approach to climate change: broad sector coverage

Fund features

Management company: Natixis Global Associates

delegated financial manager: Natixis Asset Management

legal format: sub-fund of the Luxembourg SICAV IMPACT FUNDS

Minimum recommended investment period: 5 years

benchmark: None. The MSCI Emerging Markets DNR index may be used for comparison purposes.

inception date: March 17, 2011

Net assets: EUR 5.3 million at April 29, 2011

isiN code: LU0522854370- Share I (C) EUR)

Fees

Maximum operating and management fees, including tax: 1.25% of net assets

Maximum subscription fee: 4 %

Performance fee including taxes: None

Minimum initial subscription: EUR 50,000 (Share I (C) EUR)

Co-portfolio managers

n Suzanne Sénellart

n Clotilde Basselier

The fund in brief


saM richMond-BroWn

Product Specialist, Equities Natixis Asset Management

Impact Funds Climate Change Emerging Markets(1): climate change at the core of emerging markets

(1) impact Funds climate change emerging markets is a sub-fund of the luxembourg SicaV “impact Funds” authorized for sale in France by amF (management company : natixis global associates / investment manager : natixis asset management). (2)the main risks of the fund are relative to its equity and emerging markets exposure. the fund has a 75% minimum exposure to equity emerging markets.

Further informationwww.am.natixis.com /climatechange/en

new


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InvESTED.extrA

G o i N G b e Y o N d F i N A N c i A l P e r F o r M A N c e

a pioneer in socially responsible investment for the last 25 years, natixis asset Management boasts an extra-financial and pragmatic research to develop its sri asset management.With the natixis impact product range, natixis asset Management offers investors a well-established offering which covers the main sri approaches (corporate social responsibility, esG selection, thematic…).

With €298bn of assets under management as of 31st March 2011, natixis asset Management offers its clients new value generating solutions.

European expert of Natixis Global Asset Management

www.am.natixis.com

CORPORATE AND INVESTMENT BANKING / iNvestMeNt sOLUtiONs / SPECIALIZED FINANCIAL SERVICES

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Climate change and thematic investment: a different approach to