CONCERTO IS€¦ · Chairman André LECOQ 94, Rue du Kiem L-1857 LUXEMBOURG Directors Marc L. CELLIER 19, Rue des Capucins L-1313 LUXEMBOURG Josée Lynda DENIS 13, Rue Jean-Pierre

Annual report including audited financial statements as at 31st December 2017

CONCERTO IS Société d'Investissement à Capital Variable

with multiple sub-funds Luxembourg

R.C.S. Luxembourg B 211279

No subscription can be received on the basis of this financial report. Subscriptions are only valid if made on the basis of the Prospectus and the Key Investors' Information Document (KIID) in force, accompanied by the subscription form, the latest annual report including audited financial statements and the most recent semi-annual report.

CONCERTO IS

Contents

1

Organisation ..................................................................................................................................................... 2

General information ......................................................................................................................................... 4

Report on activities of the Board of Directors............................................................................................... 6

Report of the réviseur d'entreprises agréé .................................................................................................... 8

Combined statement of net assets ............................................................................................................... 11

Combined statement of operations and other changes in net assets ...................................................... 12

CONCERTO IS - MC Bolero Global Allocation Fund ................................................................................... 13 Statement of net assets ................................................................................................................................ 13 Statement of operations and other changes in net assets ........................................................................... 14 Statistical information .................................................................................................................................... 15 Statement of investments and other net assets ........................................................................................... 16 Industrial and geographical classification of investments ............................................................................. 17

Notes to the financial statements ................................................................................................................. 18

Additional information (unaudited) .............................................................................................................. 23

CONCERTO IS

2

Organisation

Registered Office: 11, Rue Aldringen L-1118 LUXEMBOURG Board of Directors: Chairman Alexandre HECKLEN MC Square S.A. 94, Rue du Kiem L-1857 LUXEMBOURG Directors Raphaël EBER 6C, Rue Gabriel Lippmann L-5365 MUNSBACH Francesca DE BARTOLOMEO 46, Rue des muguets L-2167 LUXEMBOURG Management Company MC Square S.A. Société anonyme 94, Rue du Kiem L-1857 LUXEMBOURG Board of Directors of the Management Company Chairman André LECOQ 94, Rue du Kiem L-1857 LUXEMBOURG Directors Marc L. CELLIER 19, Rue des Capucins L-1313 LUXEMBOURG Josée Lynda DENIS 13, Rue Jean-Pierre Beicht L-1226 LUXEMBOURG Karl-Heinz DICK 53, Tontelerwee L-8552 OBERPALLEN Alexandre HECKLEN 94, Rue du Kiem L-1857 LUXEMBOURG Conducting officers of the André LECOQ Management Company Alexandre HECKLEN

CONCERTO IS

Organisation (continued)

3

Depositary and Paying agent KBL EUROPEAN PRIVATE BANKERS S.A. 43, Boulevard Royal L-2955 LUXEMBOURG Administrative, Registrar and EUROPEAN FUND ADMNISTRATION S.A. Transfer Agent 2, Rue d’Alsace L-1122 LUXEMBOURG Domiciliary agent KREDIETRUST LUXEMBOURG S.A. 11, Rue Aldringen L-1118 LUXEMBOURG Legal Advisor ELVINGER HOSS PRUSSEN 2, Place Winston Churchill L-1340 LUXEMBOURG Cabinet de révision agréé DELOITTE Audit Société à responsabilité limitée 560, Rue de Neudorf L-2220 LUXEMBOURG Centralisation Agent in France SOCIETE GENERALE 29, Boulevard Haussmann F-75009 PARIS (since 8th February 2017) CREDIT INDUSTRIEL ET COMMERCIAL Société Anonyme 6, Avenue de Provence F-75009 PARIS (until 31st January 2017)

CONCERTO IS

4

General information

CONCERTO IS (the "Fund") is organised as a société d'investissement à capital variable ("SICAV") under the laws of the Grand Duchy of Luxembourg. It qualifies as an undertaking for collective investment in transferable securities ("UCITS") under the European Parliament and Council Directive 2009/65/EC of 13th July 2009 and has been authorised by the Commission de Surveillance du Secteur Financier (the "CSSF") under Part I of the amended Luxembourg Law of 17th December 2010 relating to undertakings for collective investment (the "2010 Law"). The Directive 2014/91/EU of the European Parliament and of the Council of 23rd July 2014 amending the Directive 2009/65/EC had been transposed by the law of 10th May 2016 coming into force on 1st June 2016 and amending the amended law of 17th December 2010. The Fund is organised as a société d'investissement à capital variable in the Grand Duchy of Luxembourg. It is organised as a société anonyme under the amended Law of 10th August 1915 on commercial companies (the "1915 Law") and qualifies as an undertaking for collective investment in transferable securities under Part I of the amended 2010 Law. It was incorporated on 13th October 1988 under the name "Callander Fund" and under the form of a fonds commun de placement for an unlimited period. The Fund has changed its name into CONCERTO IS and has been transformed in a société d'investissement à capital variable on 29th November 2016 with effect as of 30th November 2016. The Board of Directors of the Fund (the "Board") has designated MC Square S.A. as Management Company of the Fund. At the date of the financial statement, the following Sub-Fund is active : - CONCERTO IS - MC Bolero Global Allocation Fund expressed in USD. At the date of the financial statements, the following Classes of Shares within CONCERTO IS - MC Bolero Global Allocation Fund are outstanding :

- Class R Shares: shares whose minimum initial subscription amount is specified in the annex of the prospectus.

- Class G Shares: shares distinguished from Class R by a different fees and commissions

structure and are reserved for entities linked to MC Square S.A. and/or the investment manager that could be appointed by the Management Company from time to time. Access to this class of Shares is subject to the approval of the Management Company. In addition, this class of Shares is reserved for institutional investors within the meaning of Article 174 (2) of the 2010 Law.

The Net Asset Value of CONCERTO IS - MC Bolero Global Allocation Fund is determined on each Wednesday. At the end of each year, the Fund published an audited annual report and at the end of each half-year, on 30th June, an unaudited semi-annual report. Copies of the prospectus and the last financial reports of the Fund may be obtained free of charge upon request at the registered office of the Fund. Copies of the following documents are available for inspection during usual business hours on any weekday (Saturdays, Sundays and public holidays excepted) at the registered office of the Fund:

Management Company Agreement;

Depositary Agreement;

Domiciliary Services Agreement;

Administrative Agent and Registrar and Transfer Agent Agreement;

Paying Agency Agreement;

the Articles of Incorporation;

CONCERTO IS

General information (continued)

5

the latest Prospectus of the Fund;

the latest KIIDs;

the latest annual and semi-annual reports of the Fund; and

the risk management process of the Fund.

CONCERTO IS

6

Report on activities of the Board of Directors

Market environment

The political picture turned out to be less dramatic than many had feared at the start of the year. The political shocks of 2016 – the vote for Brexit and the election of Donald Trump as US President – have not had the deleterious effects that almost all predicted. The US new administration had a difficult time delivering on its campaign promises but in the end succeeded in passing a major tax bill. Fears of

protectionist trade measures proved to be overdone. The centrist pro‐Europe candidate Emmanuel Macron became the new president of France and his party gained a majority in parliament. His

appetite for reform is encouraging. As expected, Angela Merkel was re‐elected as German chancellor although coalition talks with the Greens and Liberals failed. Another grand coalition of CDU/CSU and the SPD may now be established. Japan’s Prime Minister Shinzo Abe’s Liberal Democratic Party won

the snap election in October and kept its two‐thirds majority in parliament. Hence, the continuation of Abenomics seems assured for the next four years while the Bank of Japan can move on with its accommodative monetary policy. Global economic activity surprised on the upside in 2017 with global economic growth reaching its most favourable state in more than a decade in 2017. Business investment picked up thanks to accelerating earnings growth and rising confidence while emerging markets joined the developed

markets in the growth recovery. This created a very broad‐based recovery in global economic activity. The policy focus of the Chinese authorities shifted to lowering macro imbalances while limiting the

negative impact on growth. Targeted credit tightening has succeeded in stabilizing the debt‐to‐ GDP

ratio and reforms are carried out to make the state‐owned enterprises sector more resilient. The share of consumption in the Chinese GDP is clearly on the rise, with momentum in consumption growth being driven by improving income equality, strength in ecommerce and ongoing urbanization. Inflation has remained subdued everywhere. Underlying inflation rate in most developed countries (excepted UK) remained below central bank targets. The subdued inflation picture was the main reason why the Fed and the ECB could stay on a path of very gradual policy normalisation, despite the strong recovery in economic data. The Fed clearly telegraphed three rate hikes in March, June and December and announced in September the roll‐off of its balance sheet. The ECB slowly prepared the market for its announcement in October of the tapering of its asset purchase program from EUR 60 billion per month to EUR 30 billion from January to September 2018. Over the year, global equities rose 23.1% in US dollars and 8.1% in euro terms. Emerging markets were by far the best performing region, gaining 37% in US dollar terms, topping developed markets (+22%). Emerging markets got a boost from improving economic momentum and earnings growth as well as the rising share of the IT sector in the EM benchmark. Performances of the other main regions ranged between +7.1% for US equities and +10.9% for European equities. The latter were especially strong in the run-up to the French elections, but softened afterwards partly as a result of a strengthening euro. Cyclical sectors clearly outperformed their defensive counterparts. Information technology led by a wide margin followed by materials, industrials and consumer discretionary. As the oil price was weak in particularly the first half of the year, the energy sector was a notable underperformer, losing 7%. The oil price recovered in the second half of the year, due to steadily growing demand, stabilising US shale oil production and an extension of the deal on production cuts between OPEC and other oil producing countries. Valuations have increased slightly above long term averages but not extreme if we take into account the low/negative level of real interest rates and the point in the earnings cycle. Relative to fixed income assets, equity valuations are in line with or more attractive than historical averages. Fixed income markets defied widely predictions at the beginning of this year that fixed income would deliver a negative return and that the USD would strengthen, hurting emerging markets. Contrary to popular opinion, neither rising US Treasury yields nor a strong dollar materialized as the Trump reflation trade was called in to question. Reduced expectations of US protectionism also helped to undermine dollar strength.

CONCERTO IS

Report on activities of the Board of Directors (continued)

7

Government bond yields in developed markets on balance bond yields moved more or less sideways in 2017. The US 10-year dropped in August to a low of 2.05% yield (despite two rate hikes) amid soft inflation data, continued reshuffling at the White House and escalating tensions between the US and North Korea. Yields rebounded later in the year the market started to worry about monetary policy

normalization, which was especially the case with the German Bund yield. In the US, the 2‐year bond yield increased steadily due to the rate hikes by the Fed as well as rising rate expectations. The high yield segment posted solid return, supported by an improving macroeconomic backdrop and the expectation that central banks, faced with subdued inflation, would remain gradual in their policy normalization kept default rates low and corporate fundamentals solid. In 2017, EUR HY returned 6.35 according to Bloomberg data, which was roughly double market expectations. However, it underperformed US high yield 7.5% (5.35% hedged to EUR) and emerging market high yield 8.4% (6.37% hedged to EUR).BB rated bonds outperformed B rated paper (6.6% v. 5.8%). The emerging market debt also performed strongly despite three US interest rate hike as the synchronized global economic recovery coupled with muted inflationary pressures created a “goldilocks” environment for emerging market debt, leading to a continuation of strong inflows. The continued upswing in the Chinese economy driven by the recovery of the housing market, rising credit growth and infrastructure spending lent support towards both commodities and emerging market assets in general.

Portfolio activity

Despite politics continuing to make headlines with the new administration coming into power in the United States, elections looming in Europe and Britain awaiting formal divorce with the EU, we decided at the start of the year to ignore the political noise and focus on fundamentals. The outlook for accelerating growth and muted inflationary pressures made us comfortable to keep the portfolio highly geared to risky assets, with an Overweight in Equities (mainly US, Europe and Asia ex-Japan,) versus bonds. Exposure to cyclical sectors like Technology, consumer discretionary and industrials contributed positively, while an Underweight in Energy and more defensive sectors also helped on a relative basis. India, our favourite bet in Asia, performed strongly as the Indian economy bounced back from the short term disruptions created by demonetisation and the Good and Services Tax (GST), necessary rforms that paved the ground for an acceleration in GDP and earnings growth. We were bearish on government bonds in the developed world as were expecting them to deliver negative total returns in 2017. We preferred credit with a lower duration, particularly the US high yield segment where default rates were expected to stay low by historical standards with attractive yields compensating for the risk. We were also bullish about the emerging debt on supportive fundamentals and valuations. Thanks to exposure to the best performing asset classes this year, the fund returned a net performance of 6.32% in dollar terms. The Euro class hedged posted a return of 4.40% due to the cost of hedging. The performance of the portfolio was nevertheless a story of two halves, with most of the performance generated in the first half of the year. Third quarter was dominated by geopolitical tensions between the US and North Korea, which led to a renewed flight to safe-haven assets. With political risks receding in Europe decreasing following the election of Emmanuel Macron in France, yet rising in the US with the Trump Administration struggling to pass legislation, and with the US Federal Reserve starting to appear hesitant at the prospect of interest rate hikes, the euro has rallied sharply against the dollar this year, hurting European equities. Luxembourg, 6th April 2018 The Board of Directors Note: The information in this report represents historical data and is not an indication of future results.

Deloitte.

Report of the reviseur d'entreprises agree

To the Shareholders of CONCERTO IS

Report on the Audit of the Financial Statements

Opinion

Deloitte Audit Societe a responsabilite limitee 560, rue de Neudorf L-2220 Luxembourg BP 1173 L-1011 Luxembourg

Tel: +352 451 451 www.deloitte.lu

We have audited the financial statements of CONCERTO IS (the "Fund") and of each of its subfunds, which comprise the statement of net assets and the statement of investments and other net assets as at 31st December 2017 and the statement of operations and other changes in net assets for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of CONCERTO IS and of each of its sub-funds as at 31st December 2017, and of the results of their operations and changes in their net assets for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements.

Basis for Opinion

We conducted our audit in accordance with the Law of 23rd July 2016 on the audit profession (Law of 23rd July 2016) and with International Standards on Auditing (ISAs) as adopted for Luxembourg by the "Commission de Surveillance du Secteur Financier" (CSSF). Our responsibilities under those Law and standards are further described in the "Responsibilities of the Reviseur d'Entreprises Agree for the Audit of the Financial Statements" section of our report. We are also independent of the Fund in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the financial statements, and have fulfilled our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other information

The Board of Directors of the Fund is responsible for the other information. The other information comprises the information included in the annual report but does not include the financial statements and our report of Reviseur d'Entreprises Agree thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon .

Socitte 3 responsabiltte limitee au capital de 35JXXJ { RCS Luxembourg B 67.895 Autorisation d'itablissement 10022179

8

Deloitte. Report of the reviseur d'entreprises agree (continued)

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we concluded that there is a material misstatement of this other information, we are required to report this fact. We have nothing to report in this regards.

Responsibilities of the Board of Directors of the Fund for the Financial Statements

The Board of Directors of the Fund is responsible for the preparation and fair presentation of the financial statements in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements, and for such internal control as the Board of Directors of the Fund determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors of the Fund is responsible for assessing the Fund's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors of the Fund either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so.

Responsibilities of the Reviseur d'Entreprises Agree for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report of Reviseur d'Entreprises Agree that includes our opinion . Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Law of 23rd July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the Law of 23rd July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identity and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors of the Fund.

9

Deloitte. Report of the reviseur d'entreprises agree (continued)

• Conclude on the appropriateness of Board of Directors of the Fund's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report of the Reviseur d'Entreprises Agree to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report of Reviseur d'Entreprises Agree. However, future events or conditions may cause the Fund to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

13th April 2018

10

CONCERTO IS

Combined statement of net assets (in EUR) as at 31st December 2017

The accompanying notes are an integral part of these financial statements.

11

Assets Securities portfolio at market value 4,165,206.20 Cash at banks 299,450.66 Unrealised gain on forward foreign exchange contracts 6,785.06 Other receivables 9,972.50 Prepaid expenses 4,575.35

Total assets 4,485,989.77

Liabilities Expenses payable 39,440.26 Other liabilities 6,657.29

Total liabilities 46,097.55

Net assets at the end of the year 4,439,892.22

CONCERTO IS

Combined statement of operations and other changes in net assets (in EUR) from 1st January 2017 to 31st December 2017


12

Income Dividends, net 21,281.23 Interest on bank accounts 58.13 Other commissions received 2,135.07

Total income 23,474.43

Expenses Management fees 49,491.42 Performance fees 8,894.72 Depositary fees 12,184.89 Banking charges and other fees 2,017.40 Transaction fees 4,605.26 Central administration costs 19,949.38 Professional fees 19,427.89 Other administration costs 37,172.59 Subscription duty ("taxe d'abonnement") 1,088.00 Bank interest paid 121.72 Other expenses 34,084.95

Total expenses 189,038.22

Net investment loss -165,563.79

Net realised gain/(loss) - on securities portfolio 195,824.79 - on futures contracts -78,117.92 - on forward foreign exchange contracts 125,392.06 - on foreign exchange -1,223.09

Realised result 76,312.05

Net variation of the unrealised gain/(loss) - on securities portfolio 340,313.84 - on forward foreign exchange contracts 22,581.35

Result of operations 439,207.24

Subscriptions 1,760,503.93

Redemptions -842,386.88

Total changes in net assets 1,357,324.29

Total net assets at the beginning of the year 3,510,052.82

Revaluation difference -427,484.89

Total net assets at the end of the year 4,439,892.22

CONCERTO IS - MC Bolero Global Allocation Fund

Statement of net assets (in USD) as at 31st December 2017


13

Assets Securities portfolio at market value 5,001,787.87 Cash at banks 359,595.32 Unrealised gain on forward foreign exchange contracts 8,147.84 Other receivables 11,975.48 Prepaid expenses 5,494.31

Total assets 5,387,000.82

Liabilities Expenses payable 47,361.84 Other liabilities 7,994.41

Total liabilities 55,356.25

Net assets at the end of the year 5,331,644.57

Breakdown of net assets per share class

Share class Number of

shares

Currency of

share class

NAV per share in currency of

share class

Net assets per share class

(in USD)

R EUR hedged 19,406.867 EUR 99.14 2,310,495.44 R USD 29,023.552 USD 104.09 3,021,149.13

5,331,644.57


Statement of operations and other changes in net assets (in USD) from 1st January 2017 to 31st December 2017


14

Income Dividends, net 25,555.57 Interest on bank accounts 69.80 Other commissions received 2,563.90

Total income 28,189.27

Expenses Management fees 59,431.77 Performance fees 10,681.23 Depositary fees 14,632.22 Banking charges and other fees 2,422.59 Transaction fees 5,530.23 Central administration costs 23,956.21 Professional fees 23,329.98 Other administration costs 44,638.71 Subscription duty ("taxe d'abonnement") 1,306.53 Bank interest paid 146.17 Other expenses 40,930.91

Total expenses 227,006.55

Net investment loss -198,817.28

Net realised gain/(loss) - on securities portfolio 235,156.20 - on futures contracts -93,807.90 - on forward foreign exchange contracts 150,577.05 - on foreign exchange -1,468.75

Realised result 91,639.32

Net variation of the unrealised gain/(loss) - on securities portfolio 408,665.87 - on forward foreign exchange contracts 27,116.81

Result of operations 527,422.00

Subscriptions 2,114,101.15

Redemptions -1,011,580.28

Total changes in net assets 1,629,942.87

Total net assets at the beginning of the year 3,701,701.70

Total net assets at the end of the year 5,331,644.57


Statistical information (in USD) as at 31st December 2017


15

Total net assets Currency 31.12.2015 31.12.2016 31.12.2017

USD - 3,701,701.70 5,331,644.57

Net asset value per share Currency 31.12.2015 31.12.2016 31.12.2017

G EUR hedged EUR - 101.51 - R EUR hedged EUR - 94.96 99.14 R USD USD - 97.90 104.09

Number of shares outstanding at the

beginning of the year

issued redeemed outstanding at the end of the year

G EUR hedged 174.572 - -174.572 - R EUR hedged 23,461.958 1,846.605 -5,901.696 19,406.867 R USD 13,620.506 18,451.976 -3,048.930 29,023.552


Statement of investments and other net assets (in USD) as at 31st December 2017


16

Currency Number / nominal value

Description Cost Market value % of total net assets

Investments in securities

Transferable securities admitted to an official stock exchange listing

Shares

EUR 600 SAP SE 57,012.70 67,331.66 1.26 EUR 420 SEB SA 76,392.17 77,897.94 1.46

133,404.87 145,229.60 2.72

USD 500 Estée Lauder Companies Inc A 62,985.00 63,620.00 1.19 USD 350 Home Depot Inc 48,741.99 66,335.50 1.24 USD 750 Visa Inc A 66,680.00 85,515.00 1.60

178,406.99 215,470.50 4.03

Total shares 311,811.86 360,700.10 6.75

Open-ended investment funds

Investment funds (UCITS)

EUR 135 Cogefi Rendement I Cap 210,987.20 216,227.03 4.06 EUR 200 Kirao Smallcaps A Cap 42,689.93 43,492.39 0.82 EUR 550 Ulysses LT Fds European General A EUR Cap 155,035.53 210,173.97 3.94

408,712.66 469,893.39 8.82

USD 11,000 Aberdeen Global Emerging Mks Corp Bond Fd I2 USD Cap 143,673.30 157,604.70 2.96 USD 600 Alma Cap Inv Fds Eikoh Japan Large Eq I (USD Hedged) Cap 108,726.00 111,582.00 2.09 USD 840 Alquity SICAV Indian Subcontinent Fd M Cap 145,944.00 157,424.40 2.95 USD 760 AXA World Fds US High Yield Bonds F Cap 161,939.02 172,763.20 3.24 USD 7,500 BlackRock Global Fds US Flexible Eq A2 Cap 217,973.95 257,775.00 4.83 USD 8,000 BlackRock Global Fds USD Short Duration Bond D2 Cap 107,360.00 107,200.00 2.01 USD 6,500 Franklin Templeton Inv Fds Emerging Markets A Cap 242,870.00 284,505.00 5.34 USD 2,700 Franklin Templeton Inv Fds India Z Cap 36,558.00 46,548.00 0.87 USD 72,000 Hermes Inv Fds PLC Asia Ex-Japan Equity F USD Cap 224,423.10 261,964.80 4.91 USD 1,300 Muzinich Fds Enhancedyield Short-Term Units A Hedged USD Cap 215,330.34 224,809.00 4.22 USD 21,000 Neuberger Berman Inv Fds Plc Em Mk Debt Hard Cur I USD Cap 266,290.00 281,820.00 5.29 USD 80 NN (L) US Cred P Cap 108,980.80 110,344.80 2.07 USD 9,000 Nordea 1 SICAV US High Yield Bond Fd BI Base Currency Cap 173,580.00 183,600.00 3.44 USD 2,000 Polar Capital Fds Biotechnology I USD Dist 38,720.00 44,520.00 0.84 USD 7,500 Polar Capital Fds Plc Global Technology R USD Dist 259,580.00 280,800.00 5.27

2,451,948.51 2,683,260.90 50.33

Total investment funds (UCITS) 2,860,661.17 3,153,154.29 59.15

Tracker funds (UCITS)

EUR 1,750 iShares Core DAX UCITS ETF (DE) Cap 234,105.66 235,723.85 4.42 EUR 3,900 Lyxor UCITS ETF CAC 40 (DR) D EUR 221,915.45 244,164.63 4.58

Total tracker funds (UCITS) 456,021.11 479,888.48 9.00

Tracker funds (UCI)

USD 3,100 Health Care Select Sector SPDR Fd (The) 232,844.98 256,308.00 4.81 USD 1,020 iShares Core S&P500 ETF 256,322.70 274,227.00 5.14 USD 3,500 Select Sector SPDR (The) Trust Fin Select Sector Fd 81,314.80 97,685.00 1.83 USD 1,000 Select Sector SPDR Trust Consumer Staples Sel Sec Fd 51,400.00 56,890.00 1.07 USD 3,000 Select Sector SPDR Trust Industrial Fd (The) Dist 197,318.84 227,010.00 4.26 USD 1,500 Select Sector SPDR Trust Technology Fd 84,720.00 95,925.00 1.80

Total tracker funds (UCI) 903,921.32 1,008,045.00 18.91

Total investments in securities 4,532,415.46 5,001,787.87 93.81

Cash at banks 359,595.32 6.74

Other net assets/(liabilities) -29,738.62 -0.55

Total 5,331,644.57 100.00


Industrial and geographical classification of investments as at 31st December 2017

17

Industrial classification

(in percentage of net assets)

Investment funds 87.06 %

Cyclical consumer goods 2.70 %

Financials 1.60 %

Technologies 1.26 %

Non-cyclical consumer goods 1.19 %

Total 93.81 %

Geographical classification

(by domicile of the issuer) (in percentage of net assets)

Luxembourg 33.74 %

United States of America 22.94 %

Ireland 20.53 %

France 10.92 %

Germany 5.68 %

Total 93.81 %

CONCERTO IS

Notes to the financial statements as at 31st December 2017

18

Note 1 - Principal accounting methods a) Presentation of the financial statements

The financial statements of the Fund are prepared in accordance with Luxembourg legal and regulatory requirements concerning undertakings for collective investment and with generally accepted accounting principles in Luxembourg.

b) Valuation of assets

The value of any cash balances or deposits, bills and demand notes and accounts receivable, prepaid expenses, cash dividends and interest declared or accrued as aforesaid and not yet received shall be deemed to be the full amount thereof, unless in any case the same is unlikely to be paid or received in full, in which case the value thereof shall be arrived at after making such discount as the Fund may consider appropriate in such case to reflect the true value thereof. The value of securities, money market instruments and/or financial derivative instruments which are listed on any official stock exchange or dealt in on any other regulated market are valued at the last available price in accordance with the Fund’s current accounting policies. In the event that any of the securities, including money market instruments or financial derivative instruments held by the Fund’s portfolio on the relevant day are not listed on any stock exchange or dealt in on any other regulated market or if, with respect to securities, money market instruments and/or financial derivative instruments listed on any stock exchange or dealt in on any other regulated market, the basis of the price as determined pursuant to paragraph above is not representative of the fair market value of the relevant securities, the value of such securities is determined based on the reasonably foreseeable sales price determined prudently and in good faith. The financial derivative instruments which are not listed on any official stock exchange or traded on any other regulated market is valued in a reliable and verifiable manner on a daily basis and verified by a competent professional appointed by the Fund in accordance with market practice. Units or shares in open-ended investment funds are valued at their last available net asset value reduced by any applicable redemption charge. In the event that the above mentioned calculation methods are inappropriate or misleading, the Board of Directors of the Fund may adjust the value of any investment or permit another method of valuation to be used for the assets of the Fund. In circumstances where the interests of the Fund or its Shareholders so justify (for example, the avoidance of market timing practices), the Board of Directors of the Fund have delegated to the Management Company the discretion to take appropriate measures, such as applying a fair value pricing methodology, to adjust the value of the Fund’s assets. Any assets or liabilities expressed in terms of currencies other than the reference currency of the relevant Sub-Fund are translated into the reference currency at the prevailing market rate at the time of valuation.

c) Acquisition cost of securities in the portfolio

The acquisition cost of the securities held by each Sub-Fund that are denominated in currencies other than the reference currency of the Sub-Fund is converted into this currency at the exchange rate prevailing on the date of purchase.

CONCERTO IS

Notes to the financial statements (continued) as at 31st December 2017

19

d) Net realised gain/(loss) on securities portfolio

The realised gains and losses on securities portfolio are calculated on the basis of the average acquisition cost. The net realised gains and losses on securities portfolio are disclosed net in the statement of operations and other changes in net assets.

e) Investment portfolio income

Dividend income is recorded at the ex-date, net of any withholding tax.

f) Valuation of forward foreign exchange contracts

Forward foreign exchange contracts are valued at forward market rates for the remaining period from valuation date to the maturity of the contracts. Unrealised gains or losses are disclosed in the statement of net assets. Net variation of the unrealised gains or losses and net realised gains or losses are disclosed in the statement of operations and other changes in net assets.

g) Valuation of futures contracts

Open futures contracts are valued at the last settlement or close price on the stock exchanges or regulated markets. Unrealised gains or losses of open contracts are disclosed in the statement of net assets. Net variation of the unrealised gains or losses and net realised gains or losses are disclosed in the statement of operations and other changes in net assets.

h) Formation expenses

Formation expenses were amortised on a straight line basis over a period of five years. i) Conversion of foreign currencies

Cash at banks, other net assets, liabilities and the market value of the securities in portfolio expressed in currencies other than the reference currency of the Sub-Funds are converted into this currency at the exchange rate prevailing on the date of the financial statements. Income and expenses expressed in currencies other than the reference currency of the Sub-Funds are converted into this currency at the exchange rate prevailing on the date of the transaction. Net realised gains or losses are disclosed in the statement of operations and other changes in net assets.

j) Combined financial statements

The combined financial statements of the Fund is expressed in EUR and are equal to the sum of the corresponding items in the financial statements of each Sub-Fund. At the date of the financial statements, the exchange rates used for the combined financial statements are the following:

1 EUR = 1.2008500 USD US Dollar k) Revaluation difference

The item "Revaluation difference" in the combined statement of operations and other changes in net assets represents the valuation difference of the net asset of the Sub-Fund with the exchange rate applicable at the date of the financial statements.

CONCERTO IS


20

l) Transaction fees

Transaction costs disclosed under the item "Transaction fees" in the expenses of the statement of operations and other changes in net assets are mainly composed of broker fees incurred by the Fund of fees relating to liquidation of transactions paid to the depositary as well as of transaction fees on financial instruments and derivatives and of fees relating to term deposits.

Note 2 - Management fee The Board has appointed MC Square S.A. to serve as designated management company of the Fund within the meaning of the 2010 Law (the "Management Company"). The Management Company was incorporated in the form of a société anonyme on 7 October 1998 for an unlimited duration. The Management Company is approved as management company in accordance with Chapter 15 of the 2010 Law. The Management Company is responsible, subject to the overall supervision of the Board, for the provision of investment management services, administrative services and marketing services to the Fund. The management fee is accrued daily on the basis of the average net assets attributable to a share class and is to be paid monthly :

- R USD : 1.5% - R EUR Hedged : 1.5%

Note 3 - Perfomance fee 5% of the annual positive growth of the Net Asset Value per Share (i.e. the positive difference between the Net Asset Value calculated at the close of the financial year and the highest Net Asset Value among all the Net Asset Values calculated at the close of previous financial years) multiplied by the average number of shares in issue during the financial year in question. On each Valuation Day, the performance fee is estimated and provision is made in the Net Asset Value. This fee is payable on a yearly basis during the month following the end of the financial year. No performance fee is payable for as long as the Net Asset Value calculated at the close of the financial year is lower than the highest Net Asset Value among all the Net Asset Values at the close of previous financial years. At the date of the financial statements, the performance fee were recorded for the following Sub-Funds and amounted to :

CONCERTO IS - MC Bolero Global Allocation Fund USD 10,681.23 Note 4 - Management fee of the target funds The management fee of the target funds in which the Sub-Fund invests rises to maximum 1.6 % p.a., calculated on the net assets invested in the target fund.

CONCERTO IS


21

Note 5 - Management fee retrocession Management fee retrocessions received by the Fund and related to its investments in UCITS or other UCIs are recorded under the "Other commissions received" in the statement of operations and other changes in net assets. Note 6 - Depositary fee The compensation for account services and conversion of shares and compensation for the depositary services are recorded in the item “Depositary fees” in the statement of operations and other changes in net assets. Note 7 - Central administration costs The item "Central administration costs" disclosed in the statement of operations and other changes in net assets is mainly composed of administrative agent fees. Note 8 - Subscription, redemption and conversion fees Entry free : Maximum 1% of the subscribed amount payable to the entities and agents active in the marketing and placement of the shares. Exit free : Maximum 2% of the reimbursed amount payable to the placement agent and/or the Management Company. There is no conversion fees. Note 9 - Subscription duty The Fund is governed by Luxembourg law. Pursuant to the legislation and regulations in force, the Fund is subject to an annual subscription duty "taxe d’abonnement" of 0.05% which is payable quarterly and calculated on the basis of the net assets of each sub-fund on the last day of each quarter. Pursuant to Article 175 (a) of the amended law of 17th December 2010, the net assets invested in undertakings for collective investment already subject to the "taxe d’abonnement" are exempt from this tax. A reduced subscription tax rate of 0.01% per annum is applicable for Class Shares reserved to one or more institutional investors.

CONCERTO IS


22

Note 10 - Forward foreign exchange contracts As at date of the financial statements, the following Sub-Fund is committed in the following forward foreign exchange contracts with KBL EUROPEAN PRIVATE BANKERS S.A. :

CONCERTO IS - MC Bolero Global Allocation Fund Currency Purchases Currency Sales Maturity Unrealised result

(in USD)

Forward foreign exchange contracts EUR 250,000.00 USD 296,062.50 31.01.2018 4,634.06 USD 1,397,740.50 EUR 1,170,000.00 31.01.2018 -9,519.41

-4,885.35 Forward foreign exchange contracts linked to Class R EUR hedged shares EUR 2,200,000.00 USD 2,628,450.00 31.01.2018 17,679.75 USD 296,050.00 EUR 250,000.00 31.01.2018 -4,646.56

13,033.19

Note 11 - Changes in investments The statement of changes in investments for the reporting period referring to the report is available free of charge at the registered office of the Fund.

CONCERTO IS

Additional information (unaudited) as at 31st December 2017

23

1 - Risk management As required by Circular CSSF 11/512, the Board of Directors of the Fund needs to determine the global risk exposure of the Fund by applying either the commitment approach or the VaR (“Value at Risk”) approach. 2 - Remuneration

1. General

MC Square has implemented a remuneration policy to define the conditions relating to the remuneration and the assessment of the employees of MC Square in its capacity as management company governed by chapter 15 of the Luxembourg Law of 17 December 2010 on undertakings for collective investments and as authorized alternative investment fund manager under the Luxembourg law of 12 July 2013 on alternative investment fund managers. MC Square established a remuneration policy which is consistent and promotes sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profile and articles of incorporation of the UCITS/AIFs that MC Square manages. MC Square ensures that where remuneration is performance-related:

a) The total amount of remuneration is based on a combination of the assessment of the

performance of:

a. The individual

b. The business unit concerned

c. And the overall results of MC Square and

b) The assessment of performance is set in a multi-year framework appropriate to the holding

period recommended to the investors

c) When assessing individual performance, financial as well as non-financial criteria are taken

into account.

2. Quantitative information

The table below provides aggregated information on the remuneration of all staff employed on December 31, 2017 which is the financial year end of MC Square, and performing activities for MC Square during the year 2017, including all identified staff. The figures are expressed and based on the UCITS managed by MC Square pro rata to the total AuM managed by MC Square. Aggregate fixed and variable remuneration for the performance year 2017

Fixed and variable remuneration awarded in relation to the performance year 2017 and on basis of AuM of UCITS managed by MC Square

Amounts in EUR and gross Identified staff All staff – excluding identified staff

Number of employees 5 4

Fixed remuneration 52.006 15.782

Variable remuneration N/A N/A

Aggregate of fixed and variable remuneration

52.006 15.782

CONCERTO IS


24

3 - Information concerning the transparency of securities financing transactions and of reuse of cash collateral (regulation EU 2015/2365, hereafter "SFTR") During the reporting period, the Company did not engage in transactions which are subject to the publication requirements of SFTR. Accordingly, no Information concerning the transparency of securities financing transactions and of reuse of cash collateral should be reported.

Documents

CONCERTO IS€¦ · Chairman André LECOQ 94, Rue du Kiem L-1857 LUXEMBOURG Directors Marc L. CELLIER 19, Rue des Capucins L-1313 LUXEMBOURG Josée Lynda DENIS 13, Rue Jean-Pierre