INVESTIMENTI

SOSTENIBILI

INVESTING TO TRANSFORM OUR WORLD

Impact Report 2016

INDEX

LETTER TO INVESTORS ................................................................................................................................................. 1

CURRENT BACKGROUND .............................................................................................................................................. 2

WHAT IMPACT INVESTING IS ........................................................................................................................................ 2

INVESTIMENTI SOSTENIBILI – THE FUND ................................................................................................................... 3

THE CONSTRUCTION OF A THREE DIMENSIONS INVESTMENT .............................................................................. 3

PORTFOLIO’S INSTRUMENTS ....................................................................................................................................... 3

IMPACT THEMES ............................................................................................................................................................. 4

PORTFOLIO ALLOCATION .............................................................................................................................................. 5

TRANSPARENCY ............................................................................................................................................................. 6

ENGAGEMENT ................................................................................................................................................................. 6

IMPACT REPORT ............................................................................................................................................................. 7

METHODOLOGY .............................................................................................................................................................. 7

THE POSITIVE IMPACT ON THE 17 SUSTAINABLE DEVELOPMENT GOALS ........................................................... 7

SELLA GESTIONI SGR Impact Report 2016 1

LETTER TO INVESTORS

2016 was the year where sustainability has settled its centrality as an essential requirement for the economic progress in respect to the environment and the people.

2016 was a year of positive accomplishments for Investimenti Sostenibili: continuous attention of the press to the product developments, numerous invitations at conferences on sustainable finance, and an extremely positive growth in the asset under management, increased by 64%.

An affirmative response of the investors gained through a dedicated renovation of Investimenti Sostenibili. In fact, the fund was launched in 1999, in line with the first notions of responsible finance it combined sectorial exclusion and philanthropic initiatives.

With the rise of ESG parameters in 2003, the fund improved its responsible strategy, incorporating environmental, social and governance criteria into the investment process.

In 2015, with the broadening of financial instruments that combine efficiently financial return and environmental and social benefits, the fund structured a new policy focused on the intentionality of generating concrete and measurable impact alongside financial return. Investimenti Sostenibili became the first impact investing fund in Italy.

In 2016, in partnership with LifeGate, a major reference for sustainability in Italy, one class of the fund was listed on the Italian Stock Exchange: adding another important step of innovation in the pattern of the fund and facilitating access to sustainable finance products to investors.

The world is facing several challenges as identified by the Sustainable Development Goals of the United Nations, where sustainable finance plays a key role role to their achievements.

Investimenti Sostenibili has a clear but ambitious goal: to actively contribute to the sustainable change of the economy while improving people living conditions and protecting the interests of future generations.

Thanks to the publication of the second Impact Report, Sella Gestioni confirms its concrete participation in the creation of environmental and social value and renew its commitment to the years to come, trusting in your precious support.

Thank you Sella Gestioni SGR

2 Impact Report 2016 SELLA GESTIONI SGR

CURRENT BACKGROUND

The current global challenges dictates new investment solutions. In recent years we have seen rapid and impactful environmental and social transformations, which have highlighted the difficulties of governments and international organizations to quickly adapt existing models to face new challenges.

The gap between problems and solutions is widening, leaving to financial market the responsibility of finding innovative answers. Thanks to Sustainable and Responsible Investment (SRI), finance supports the economic progress identified as investing in sustainable development opportunities and establishing long lasting value.

WHAT IMPACT INVESTING IS

Impact Investing is one of the Sustainable and Responsible Investment strategies.

FINANCIALS, SOCIAL, ENVIRONMENTAL GOVERNANCE

ESG

Selections based on

environmental, social and governance parameters

THEMATIC

Investments in specializes

companies in specific sectors

and area of business

Exclusion of

specific sectors,

corporates and

countries

EXCLUSIO N CRITERI A

Financials

No SRI

considerations

TraditionalInvestment S U S T A I N A B L E I N V E S T M E N T S Philanthropy

Social

Donations

TYPE

OB

JEC

TIV

ESF

OC

US

IM PACT

Investments with the aim of

generating social and environmental

impact

INCLUSION CRITERI A

Impact investments are investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return (GIIN). According to 2016 Eurosif study, the assets under management with this strategy have grown by 385% in the last two years.

Investimenti Sostenibili’s approach embraces four pillars:

gradual increase

of capital invested

over a

medium-term

horizon

FINANCIAL RETURN

generate a

positive

environmental and

social impact

INTENTIONALITY

8 themes to

effectively address

the most urgent

challenges

IMPACT THEMES

quantify the

environmental and

social impact in

total transparency

IMPACT MEASUREMENT

SELLA GESTIONI SGR Impact Report 2016 3

INVESTIMENTI SOSTENIBILI – THE FUND

Investimenti Sostenibili is especially meant for those who pursue a financial return aligned with sustainable progress of environment and economy. The fund supports sustainable growth of developed and emerging economies by investing in efficient use of natural resources and in fair access to sustainable products facilitating people’s needs.

Investimenti Sostenibili is the first fund in Italy to adopt an impact investment policy with daily NAV and liquidity. It is also the first fund in Italy that publish an Impact Report and the first sustainable fund to be listed on the Italian Stock Exchange.

Investimenti Sostenibili donates yearly a percentage of 0.5% of the A share Class assets in favor of philanthropic initiatives. Since 1999, a total amount of € 1,707,000 was provided in support of numerous solidarity projects in Italy and abroad.

THE CONSTRUCTION OF A THREE DIMENSIONS INVESTMENT

The selection process excludes from the investment universe financial instruments issued by companies that have a negative impact on the environment and society, and states where there is no respect of human rights and individual freedom. Exclusion criteria are complemented by the inclusion ones based on ESG (environmental, social and governance) and impact analysis.

The ESG analysis rewards companies that operate in conformity with the environment and the community.

The impact analysis extends the generation of sustainable value of financial instruments considering parameters such as: competition, inclusion, innovation, intentionality, additionality and measurability.

Macroeconomic variables and fundamental analysis are also considered in the decision making process.

The goal is to evaluate each investment’s capability to address an environmental and social problem. The instrument must generate a positive and measurable value and a financial performance in line with

the risk profile of the investment strategy. The result is a portfolio built on three dimensions: Risk, Performance and Impact.

PORTFOLIO’S INSTRUMENTS

GREEN AND SOCIAL BOND

are bonds enabling capital-rising and investment for transparent projects with sustainability benefits. A green bond has equivalent features to conventional ones and the issuer adheres to the Green Bond Principles: Guidelines of Transparency and Reporting.

EQUITY AND BOND FROM IMPACT COMPANIES

identified as companies that operate according to the best ESG practices while a substantial share of their profits comes from products or services able to provide a concrete help to achieve the Sustainable Development Goals.

THEMATIC FUNDS

invest in companies with best Sustainable practices in a determined sector or area of business. The choice of thematic funds guarantees a more efficient impact allocation, especially for those sectors or services that require a high level of specialization.

4 Impact Report 2016 SELLA GESTIONI SGR

IMPACT THEMES

NATURAL RESOURCE MANAGEMENT Natural resource and waste management is essential to end the indiscriminate exploitation of natural resources and the release of harmful substances into the environment, actions that have brought to an unprecedented environmental degradation, with tangible consequences both on climate change and on people’s health.

RENEWABLE ENERGIES Meeting the growing energy needs without creating irreparable negative externalities on the environment and on people's health is now possible thanks to renewable energies that take advantages of natural resources such as sun, wind, earth and water.

ENERGY EFFICIENCY There are numerous solutions, technologies and products that can drive energy efficiency and reduce CO2 emissions, which are necessary and complementary to the management of natural resources and use of renewable energies in order to achieve an harmonious compromise between people’s needs and respect for the environment.

ACCESS TO FINANCE Facilitating access to financial services to low income people, micro-entrepreneurs and small and medium-sized enterprises is a key element in the development of the economic while generating prosperity and long-term progress.

HEALTH CARE The possibility of receiving adequate medical care is a fundamental human right. Every year, millions of people under the poverty threshold die for treatable diseases without having enough resources to access to medicines. In many areas of the world, there is also a lack of health facilities that can provide primary needs for the community.

FOOD Feeding the world growing population is one of the most pressing challenges of the new millennium, the bet is not just on boosting more production, but also promoting healthy eating and the implementation of sustainable farming practices that will ensure proper exploitation of the soil and labor practices.

EDUCATION Education is the most powerful weapon to fight disparities and promote progress. Even today, in emerging countries, many students have no access to adequate education and often children in developing countries are forced to abandon their studies and work to help the family.

SUSTAINABLE BUILDING Sustainable building uses ecodesigns, biocompatible materials, consumption reduction systems and emission control. Social housing helps providing concrete housing for people with low incomes and people with physical disabilities.

SELLA GESTIONI SGR Impact Report 2016 5

PORTFOLIO ALLOCATION

PORTFOLIO ALLOCATION BY THEMES

Natural Resource Management

14%

Renewable Energies

28%

Energy Efficiency

28%

Access to Finance

10%

Health Care

4%

Food

4%

Education 1%Sustainable Building

9%Others

2%

Investimenti Sostenibili identifies eight Impact Themes to support the Sustainable Development Goals of the United Nations:

• Energy Efficiency

• Renewable Energies

• Natural Resource Management

• Access to Finance

• Sustainable Building

• Health Care

• Food

• Education

Data 2016/12/30. Source: Sella Gestioni SGR

In 2016, the impact allocation had been stable with a predominance of environmental themes: Renewable

Energy, Energy Efficiency and Natural Resource Management. This happened because the investment

horizon must be long-term in order to ensure effective environmental and social benefits, while on the

other hand, market opportunities are mainly focused on environmental issues.

An appreciable increase has affected the theme of Sustainable Building, financing the construction of an

airport, commercial and residential buildings with zero impact. Access to Finance has remained steady

even though new investments have expanded the geographic impacts. Health Care has maintained a

regular weight and a strong focus on children vaccinations in developing countries.

Education and Food have a small and stable weight, two important themes on which certainly will set our

attention during 2017.

6 Impact Report 2016 SELLA GESTIONI SGR

TRANSPARENCY

Transparency is a key element for establishing and maintaining a trusting relationship with investors.

Sella Gestioni publishes on its website periodic updates of all the financial information related its

funds. Additionally for Investimenti Sostenibili, it is available a specific section providing details on

portfolio construction, objectives pursued, impact themes and projects supported by philanthropic

activities of the A share Class.

As evidence of its commitment to transparency, Investimenti Sostenibili has obtained the Transparency

Code by Eurosif.

The European SRI Transparency logo signifies that Sella Gestioni SGR commits to provide accurate, adequate and timely information to enable stakeholders, in particular consumers, to understand the Sustainable Responsible Investment (SRI) policies and practices relating to the fund. Detailed information about the European SRI Transparency Code can be found on www.eurosif.org, and information of the SRI policies and practices of Investimenti Sostenibili can be found at: www.sellagestioni.it. The Transparency Code are managed by Eurosif, an independent organisation. The European SRI Transparency Logo reflects the fund manager’s commitment as detailed above and should not be taken as an endorsement of any particular company, organisation or individual.

ENGAGEMENT

The term "engagement" classifies a whole set of activities carried out by the management company in order to build a constructive dialogue on environmental, social and governance issues with financial operators and companies in portfolio.

Investimenti Sostenibili attends road shows of sustainable bond issues, contacts companies in portfolio in order to receive more information on the impact of the instrument in which it is invested and on the sustainable activities of the

company itself. During the interaction, particular focus is posted on governance and sustainable reporting.

In 2016 Investimenti Sostenibili was not directly invested in equity, therefore the participation in the assemblies and the exercise of the right to vote was not possible. The fund, however, examines the voting campaigns of the equity funds in which it is invested and holds cyclically interaction with local representatives and portfolio managers.

Sella Gestioni promotes the progress of a responsible financial culture and collaborates with all financial operators to implement sustainability and ethical practices in the financial world.

Sella Gestioni is a member of the Italian Sustainable Investment Forum and Assogestioni while is actively involved in their working groups. In 2016, the main topics covered were: sustainable finance and climate change, integration of sustainability in foundations, European directive on non-financial reporting, 2016 Eurosif study, Stewardship policies, "ethical" fund definition.

SELLA GESTIONI SGR Impact Report 2016 7

IMPACT REPORT

The Impact Report is an annual statement describing environmental and social outcomes achieved by the investments of Investimenti Sostenibili during the reference solar year.

The Impact Report arises from the need to represent the overall performance of the fund, since the peculiarity of the strategy, financial data alone are not explanatory of the results achieved.

Furthermore, the report publication offers tangible evidences that the fund creates competitive financial return and positive environmental and social impact.

METHODOLOGY

Impact outcomes are the result of a detailed process of collection, evaluation, calculation and finally data aggregation. During the collection phase, only documents directly published by the issuers and authorized third parties are taken in consideration. Information evaluation is based on three criteria: quality, credibility and timeliness. The ‘actual’ impact is calculated for each instrument with a formula that breaks down and relates the data to three variables: time of reference, invested capital and holding period. The ‘actual’ impacts of each security is aggregated for data of the same type. It should be emphasized that quantitative data are a numerical precision of the impact generated, which clearly has an extension much broader but hardly measurable.

THE POSITIVE IMPACT ON THE 17 SUSTAINABLE DEVELOPMENT GOALS

“On September 25, 2015, 193 world leaders signed 17 global targets to reach three extraordinary goals over the next 15 years. Put an end to extreme poverty. Fighting inequality and injustice. To remedy climate change. But because they work, everyone must be aware of it.

Goals are important, changing the world requires cooperation between governments, international organizations and world leaders. Does it seem impossible for a common person to have an impact? NO! The change starts with each one of us! Each of us, even the most lazy person, can be part of the solution”.

Source: United Nations

By investing in Investimenti Sostenibili, everyone can take part in the change and contribute, even with a small capital, to achieving the United Nations goals.

8 Impact Report 2016 SELLA GESTIONI SGR

17 GOALS TO TRANSORM OUR WORLD

2016 investment impacts generated

1.748 FINANCING people with low income and small entrepreneurs

1,6 HECTARS of farmland irrigated for the first time in Emerging Countries

ACCESS TO DEVELOPED MARKETS for small local producers in Emerging Countries

120.528 people have improved their HEALTH CONDITIONS

24.600 children VACCINATED, contributing to the reduction in child mortality

206 students have had access to EDUCATION and school supplies

MORE THAN 60% of loans supplied are for WOMEN

2.856.589 m3 of POTABLE WATER produced

equal to the annual consumption of about 14.283 ITALIAN FAMILIES

47,3 MW of Green Energy installed

enough to meet the annual consumption of about 1.752 ITALIAN FAMILIES

78.686 MWh of Green Energy produced

equal to the annual consumption of about 29.143 ITALIAN FAMILIES

EMPLOYMENT INCREASE with the creation of

82 new jobs

SELLA GESTIONI SGR Impact Report 2016 9

5 SUSTAINABLE Buildings built

1 new eco-friendly airport Co-financed and under construction

621 people had first access to POTABLE WATER

6.013 people had access to ELETTRICITY for the first time

945 people for whom PUBLIC TRANSPORT has improved

2.108 people who have benefited from WATER RECYCLING

6.024 tons of RECYCLED WASTES

equal to the production of about 8.252 ITALIAN FAMILIES

4.936 MWh of saved energy

equal to the annual consumption of about 1.828 ITALIAN FAMILIES

107.855 tons of reduced greenhouse gases

equal to 4.494 CARS of medium capacity FOR ONE YEAR CIRCULATION

70.597 M3 of purified water to protect flora and fauna

equal to approximately 28 olympic pools

FIGHT FOR DESERTIFICATION

AND DEFORESTMENT

32 new trees

Exclusion of states that do not respect human rights

Exclusion of companies that exploit child labor

Engagement activities with companies in portfolio and financial operators

Data 2016/12/30. Source: Sella Gestioni SGR. Any detail about the calculation method

is available on demand at Sella Gestioni SGR.

Prior to investing we strongly recommend you to read the information contained in the Prospectus and the Key Investor Information which are available from the distributors in Italy or on the website www.sellagestioni.it.The Documents of the share class listed in Borsa Italiana are also available on www.borsaitaliana.it.

Industry Professionals for over 30 years Sella Gestioni SGR is the Asset Management Company of Banca Sella Group, and has been operating since 1983. Sella Gestioni SGR offers Mutual Funds, Luxembourg Sicav, Pension Fund and Asset Under Advisory.

EXPERIENCE INNOVATION

In tradition we recognize our value We are specialist in the Asset Management since 1983

We always believe in new prospective We invest in technology in order to offer the best products and services to protect the investments of our clients

INDEPENDENCE IDENTITY

Our culture gives voice to an autonomous thought Being part of a private and independent group allow us to work towards our clients interests

We are customer centricity We are 100% Made in Italy

TRANSPARENCY SUSTAINABILITY

Transparency is our choice of trust We are led by transparency principles, quality and expertise.

We support responsible and sustainable investment We promote the progress of a responsible financial culture and collaborates with all financial operators to implement sustainability and ethical practices in the financial world

Investimenti Sostenibili, is a Mutual Fund managed by Sella Gestioni SGR and

is available in the following share classes:

Investimenti Sostenibili A, with charitable devolution

Investimenti Sostenibili C, for institutional investors only

Investimenti Sostenibili LIFEGATE, listed on Borsa Italiana

Investimenti Sostenibili LIFEGATE SG

Filippo Sassetti 32/2 20124 Milan - Italy www.sellagestioni.it 800.10.20.10 +39 02 6714 161 info@sellagestioni.it