# ANNUAL MANAGEMENT REPORT at 12/31/2021
Category: Eurozone equities
Management objective: With a horizon of more than five years and based on a fundamental analysis of the companies, the management objective is to generate a performance exceeding that of the MSCI EMU Mid Cap net total return (Bloomberg code M7EMMC Index), calculated with net dividends reinvested, by investing primarily in securities from the European Union, in accordance with PEA criteria (plan d’épargne actions, French share savings plans), by taking an approach to environmental, social and governance (ESG) risks and opportunities.
This UCITS promotes environmental or social and governance criteria (ESG) but does not pursue a sustainable development goal. It may partly invest in assets with a sustainable goal, for example as defined by the European Union classification.
- Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial servicessector (SFDR):In its capacity as a financial market participant, the UCI’s investment manager must comply with Regulation 2019/2088 of 27 November 2019 on sustainability-related disclosures in the financial services sector (Disclosure regulation or SFDR). This regulation sets out a standardized set of rules that apply to financial markets stakeholders on transparency on the integration of sustainability risks (article 6 of the Regulation), incorporation of adverse sustainability impacts, promoting environmental and social features in the investment process (article 8 of the Regulation) and sustainable investment goals (article 9 of the Regulation).

This UCI is categorized as Article 8 under this classification.
- Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (known as Taxonomy regulation):European Regulation 2020/852 known as Taxonomy regulation sets criteria to determine if an economic activity is sustainable from an environmental standpoint within the European Union. Under this regulation, an economic activity shall qualify as environmentally sustainable where it contributes substantially to one of the six environmental objectives set out under this regulation such as for example climate change mitigation, climate change adaptation, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems.

Additionally, this economic activity must adhere to the principle of “do no significant harm” (DNSH) to one of the five other objectives in the Taxonomy regulation; it must also be consistent with the human and social rights enshrined in international law (aligning with OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights) and comply with technical screening criteria established by the European Commission.
Reference indicator: MSCI EMU Mid Cap net total return index, calculated with dividends reinvested (Bloomberg code: M7EMMC Index).
Risk profile: The Fund invests in instruments that will be subject to the trends and fluctuations in eurozone equity markets. The Fund’s risk profile is compatible with an investment horizon of more than five years.
Net assets of the fund at 12/31/2021: €48,903,712.99
| 12/31/2021 | R unit (FR0013247749) | I unit (FR0013247764) | N unit (FR0013299195) | Q unit (FR0013392347) |
| --- | --- | --- | --- | --- |
| NAV | €97.38€ | €1,019.68 | €95.55 | €130.04 |
| Number of units | 21,195.813 | 26,773.399 | 11,601.968 | 141;720.5 |
| Net assets | €2,064,073.60 | €27,300,445.75 | €1,108,623.87 | €18,430,569.77 |

Valuation: daily – Inception date: 05/19/2017
In the first quarter of 2021, the extent of the economic recovery required to revisit pre-crisis activity did not look as challenging as most economists feared in 2020. A strong surge in vaccination campaigns worldwide pointed to coverage of at least 70% of the adult population in developed countries by the end of the summer. Despite Europe’s lag on the health front, investors continued to look optimistically to brighter days, with most companies on the continent already benefiting from renewed robust activity in Asia and the US.
These various aspects prompted positioning on assets that could best benefit from moves to open economies again.
In the second quarter, massive support along with investor risk appetite considerably pushed up valuations on the equity markets, yet demanding valuations did seem to fit with the overall environment comprising an economic recovery and negative real rates. However, after more than a year of robust recovery, investors were no longer surprised by the pace of the economic recovery, which was now broadly priced in. Additionally, a number of factors dampened activity again, including the Delta variant and bottlenecks. However, beyond these short-term uncertainties, belief in continued fundamentally positive momentum should win out, driven by
encouraging corporate earnings reports, which outstripped analysts’ projections, and ongoing vaccination programs. Lastly, continued low interest rates and the announcement of very gradual monetary policy tightening from the central banks acted to prop up the market. However, in September, the shock on energy prices, fears of a massive default in the Chinese real estate sector, and tension on interest rates combined to spark concerns on growth again. In this context, investors took profits particularly on shares exposed to the economic cycle and well-valued visible growth stocks, with few sectors spared.
In the fourth quarter, concerns on the Omicron variant and the Fed’s U-turn on the less ‘transitory’ nature of inflation failed to dampen fervor on the international stock-markets, as they ended the year close to fresh record highs. Investors were reassured on the one hand by the Omicron variant’s lesser severity than Delta and on the other hand by the Fed’s stance on inflation. Meanwhile in Europe, the ECB pursued its monetary policy accommodation.
In keeping with our scenario for a continuation in the economic boom in 2022, we maintained our upbeat stance on equities as the end of the year approached. The rally was showing signs of maturity and this merited moderate exposure in absolute terms, but the asset class remained attractive as compared with bonds. Inflation was the main risk scenario in our view, and we will pay close attention to the central banks’ monetary policy response.
2021 monthly performances:
| Jan. | Feb. | Mar. | Apr. | May | June | Jul. | Aug. | Sep. | Oct. | Nov. | Dec. | 2021 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Dorval Manageurs Smid Cap Euro I unit | -0.51% | +2.21% | +3.75% | +2.09% | -0.19% | +0.18% | +3.46% | +2.28% | -4.17% | +3.26% | -2.80% | +3.71% | +13.67% |
| MSCI EMU Mid Cap Euro | -0.54% | +1.37% | +3.97% | +2.31% | +1.87% | +1.55% | +2.06% | +2.58% | -4.03% | +2.13% | -1.26% | +3.55% | +16.42% |

Initial sales reports for FY 2020 were broadly satisfactory, regardless of the sector, for example in our portfolio this included Valeo, Alstom and Sartorius Stedim. Indications on profitability for 2020 were also encouraging. However, in view of the latest developments on the pandemic over recent weeks, companies were moderately optimistic for 2021, and mostly expected a recovery in business in the second half of the year.
In February, the markets were initially shored up by good news on the pandemic front. The situation remained challenging in Europe, but the vaccination campaign made strong headway in the US, with some states able to suspend certain restrictive measures. This improved outlook put pressure on yields, particularly in the US, where the 10-year ended the month close to 1.5%. This surge in yields fueled fears of a shift in the central banks’ position, although they maintained their accommodative stance for now.
February also saw a slew of companies report their earnings, with broadly very high-quality figures. 2020 sales performances admittedly came under pressure, but companies’ responsive approach and strong cost management led to better profitability than analysts had expected overall. Companies paid close attention to cashflow generation and we did not observe debt spiraling out of control, apart from sectors hardest hit by the Covid-19 crisis, such as airlines and hotels.
Dorval Manageurs Smid Cap Euro outperformed its reference indicator by close to 1% over the month, with the MSCI EMU Mid Cap NR ending on a gain of 1.4%. Our fund maintained its balanced positioning between stocks that should gain from economies opening up again along with the forthcoming recovery, as well as companies that should continue to benefit from society’s changing habits resulting from the pandemic.
In March, the markets were propped up by 1/ good news on the health front in the United States and the United Kingdom, which had made the most headway on their vaccination programs with numbers improving every week; 2/ approval of the stimulus program promised by Joe Biden, as well as the presentation of a massive infrastructure investment plan in the country; 3/ a sharp improvement in PMI stats, particularly for the manufacturing sector, across all geographies worldwide. In the prevailing environment, investor optimism held up well amidst developments in the health situation in Europe, which remained challenging: with delays in rolling out vaccines, Europe was experiencing a third Covid-19 wave, forcing countries to take fresh lockdown steps.
In April, indices continued to gain, while the first quarter earnings reporting season went off smoothly, with several companies reporting figures that outstripped expectations. Fnac reported a 22% jump in revenues vs. 1Q 2020 and a 9% rise vs. 1Q 2019, generating 28% of sales online. Seb put in a 27% surge in sales, driven by strong momentum for its Consumer business: FY growth was expected to come to 10%. Trigano and Puma also exceeded projections. However, Atos disappointed investors on both growth – particularly in the US – and the audit on subsidiaries, with the share shedding 15% over the month. We maintained our position for valuation reasons, particularly for its Big Data and Cybersecurity businesses.
In May, share indices surged again. The fund underperformed due to the suspension of trading on Solutions30, followed by the share price plunge (-70%) when the market opened on May 24, after auditor EY stated it was not in a position to express its opinion on the 2020 financial statements. In keeping with our controversy management policy, we reduced the weighting of this position. After a performance of more than 100% and as economies have reopened, we took profits on HelloFresh. Conversely, we added to Verallia, once more on the back of economies reopening, as well as the shift in the market towards glass. We reduced our position on Reply due to its lofty valuations. Our portfolio comprised 53 positions at this stage, and the month’s events included reassuring comments from Fnac on its business and an encouraging valuation, while Nexity was set to benefit from the upturn in building permit issues.
In June, the markets ended on an upswing, apart from the MSCI EMU Mid Cap NR, which was hit by profit-taking after a solid showing year-to-date. Indices were shored up by the continued recovery in activity, easing fears on inflation with the drop on commodities, as well as by comments from the Fed. However, the latest developments in the pandemic and the resurgence in infections related to the new Delta variant fueled fears that a slowdown in the economic recovery lies ahead.
Over the month Dorval Manageurs Smid Cap Euro underperformed its reference indicator, the MSCI EMU Mid Cap NR. We made several arbitrage moves in the fund in June. However, in light of the latest developments, we maintained a balanced positioning between stocks that should benefit from economies reopening and companies that are poised to continue gaining from changes in behavior and habits resulting from the Covid-19 crisis.
In July, investors took fright as cases of the Delta variant skyrocketed, and indices slid some 4% in just a few days, although they soon made up these losses as central banks stepped in to express their support. The 1H earnings reporting season progressed well: connected home specialist
remains a key player for railway investment programs. Lastly, Akka Technologies is to be taken
over by Adecco with a 90% premium, driving the fund’s outperformance over the month.
In August, European indices had gained around 3%, buoyed by first-rate corporate earnings reports and continued vaccination programs worldwide. The earnings reporting season was phenomenal, with 57% of companies on the Stoxx 600 (290/305 of companies had reported at 08/23/2021) announcing higher EPS than expected for the second quarter (source: Société Générale). 2021 EPS was now projected to surge 45% for the Euro Stoxx 50. However, investors paid particularly close attention to companies’ comments: supply chains remained disrupted by semiconductor shortages, commodities, as well as freight costs that were hitting record highs. Almost 25% of the portfolio was invested in companies in the Societal transformation theme (Puma, Hellofresh), 20% in the Environmental and energy transition (Neoen, Wienerberger), 20% in Innovation and business transformation (Cancom, Alten), and 33% in Stock-picking (Bureau Veritas, Autogrill).
In September, share indices took a dip, with investors gripped by a number of misgivings i.e. default risk for Chinese real estate heavyweight Evergrande, the stance from central banks and the pace of rate increases for 2022/23, particularly in the United States, as well as the danger of pressure on corporate margins due to inflation and commodities shortages. Against this background, the fund performed in line with its indicator over the month. It is worth noting the investment style rotation between so-called growth stocks – deemed to be fully valued – and so- called value stocks, with our fund taking a balanced allocation approach at this stage in the economic cycle. Ipsos announced a management change this month, with the share price tumbling 10% after a divergence between the founder and the new CEO who was due to start her new role, further attesting to the importance of corporate governance. We kept the stock in our portfolio in light of the company’s growth outlook and after it opted for management continuity. Meanwhile we added Accel and Alfen to the portfolio: cargo bikes can offer a major growth source as cities pursue their quest for environmentally friendly mobility and as electric vehicles enjoy growing success.
In October, concerns on inflation, which was driven by the surge in commodities and energy prices, seemed to ease at the end of the month. The pandemic situation seemed to be under control, although some countries were experiencing an uptick in cases – UK, China, etc. – but these were not accompanied by a rise in hospital admissions at this stage. The fund was buoyed again by earnings reports from its holdings, and outperformed in October. Momentum in services
In November, after trading on record highs, world share indices were stopped dead in their tracks by the fifth Covid-19 wave in Europe, along with the emergence of the Omicron variant and uncertainty as to how effective vaccines were in tackling it. The fund dipped more than the MSCI EMU Mid Cap EUR NR over the month (-1.3%), although less than the MSCI EMU Large Cap NR (- 3.8%). Companies that are most exposed to the reopening of economies (travel/tourism, with investments in Melia and Autogrill) were hardest hit, while firms in the digitalization theme and healthcare business were commended (BioMérieux and Cancom). Our view is that Covid and its different variants will continue to fuel volatility over the months ahead, with a "stop and go" situation that companies will have to manage both in terms of their supply chains – rising commodities and logistics costs – and demand i.e. lockdown, travel restrictions, etc. Our approach involves singling out stocks with highly differentiating factors that operate in buoyant markets and meet the ESG requirements in our DRIVERS model. We added Worldline to the portfolio this month, after it took an excessive dent in the third quarter. We also incorporated Synlab, European leader in diagnostic services, which was listed on the stock-market in April 2021, as the Covid-19- related blow to revenues should not be as severe as expected. 2022 EPS growth for companies in our portfolio is expected to come out at 27% on P/E of 19.5x.
In December, concerns on the effectiveness of Covid vaccines in combating the new Omicron variant eased somewhat. Our fund outperformed the MSCI Mid Cap NR EUR, with gains of more than 12% in 2021. The fund is more exposed to cyclical stocks and had underperformed since the China-US trade war in 2019 and the Covid-19 crisis in 2020, but soared 80% between March 2020 and end-2021, in line with the MSCI EMU Mid Cap NR EUR. After a recovery in the world economy in 2021, the growth outlook remains upbeat for 2022. EPS for small- and mid-caps comprising the fund is expected to surge 20%. In line with our management process and following the half-year review for our investment universe based on our proprietary DRIVERS model, some companies were excluded on the basis of our ESG screening. However our portfolio management team is committed to supporting companies to enhance non-financial reporting, which we feel will be a key performance driver for the future. We incorporated LISI into the portfolio this month, as 2022 is set to see an upturn in the aviation business. We also added to Orpea as part of our strategy to balance cyclical and defensive stocks: the share is currently undervalued compared to its growth outlook.
- R unit
- N unit
- Q unit – inception on 12/27/2018

| Performances since inception | Performance 2019 | Performance 2020 | Performance 2021 |
| --- | --- | --- | --- |
| +30.04% | +16.69% | -2.84% | +14.69% |

Past performances are not a reliable indicator of future performances. Performance calculations are made with net dividends reinvested for the UCITS. Performance calculations for the reference indicator are made with net dividends reinvested.

Translation (ENFR, 2021-12-31):
# RAPPORT DE GESTION ANNUEL au 31/12/2021
principes directeurs de l’OCDE et de l’Organisation des Nations Unies relatifs aux entreprises et aux droits de l’homme) et doit être conforme aux critères d’examen technique établis par la Commission européenne.
Le processus de sélection des investissements sous-jacents du Fonds ne s’appuie pas sur les critères de l’Union européenne fixé par le règlement Taxonomie en matière d’activités économiques durables sur le plan environnemental. Pour autant, la politique ESG de Dorval AM peut conduire dans le futur à ce que le Fonds détienne des investissements alignés sur ces critères et soient donc considérés comme « durables ».
Le principe consistant à « ne pas causer de préjudice important » tel que défini par le Règlement
(UE) 2020/852 ne s’applique pas aux investissements sous-jacents de ce produit financier.
Indicateur de référence : indice MSCI EMU Mid Cap net total return, calculé dividendes réinvestis (code Bloomberg : M7EMMC Index).
Profil de risque : Le fonds investit dans des instruments qui connaîtront les évolutions et aléas des marchés d’actions de la zone euro. Le profil de risque du fonds est adapté à un horizon d'investissement supérieur à 5 ans.
Actif net du fonds au 31/12/2021 : 48 903 712, 99€
| 30/06/2021 | Part R (FR0013247749) | Part I (FR0013247764) | Part N (FR0013299195) | Part Q (FR0013392347) |
| --- | --- | --- | --- | --- |
| VL | 97, 38€ | 1 019, 68€ | 95, 55€ | 130, 04€ |
| Nombre de parts | 21 195, 813 | 26 773, 399 | 11 601, 968 | 141 720, 5 |
| Actif net | 2 064 073, 60€ | 27 300 445, 75€ | 1 108 623, 87€ | 18 430 569, 77€ |

Valorisation : quotidienne - Date de création : 19/05/2017
grandes entreprises du vieux continent profitant déjà du fort niveau d’activité retrouvé en Asie et aux Etats-Unis.
Tous ces éléments ont plaidé pour un positionnement vers les actifs les plus à même de bénéficier de la réouverture des économies.
Sur le deuxième trimestre, les soutiens massifs et l’appétit pour le risque des investisseurs ont nettement renchéri les marchés des actions. Les valorisations élevées ont semblé cependant en phase avec le contexte général de reprise économique et de taux réels négatifs. Toutefois, après plus d’un an de forte reprise, les investisseurs ont arrêté d’être positivement surpris par la force de la reprise économique, celle-ci est en effet largement dans les cours. De plus, certains facteurs limitent l’activité, dont le variant Delta et les goulets d’étranglement. Mais au-delà de ces incertitudes de court terme, la foi dans la poursuite d’une dynamique fondamentalement positive devrait l’emporter. Celle-ci pourrait en effet se nourrir de la vaccination généralisée, du relâchement progressif des contraintes d’offre, de la situation financière exceptionnelle des ménages occidentaux et des plans publics d’investissement.
Dans ce contexte Dorval Asset Management a privilégié les thématiques de diffusion de la croissance (petites et moyennes valeurs, diversification sectorielle), les entreprises et filières qui s’inscrivent dans la dynamique du « plus et mieux » des programmes de relance verte, et les valeurs qui gardent un potentiel pour bénéficier d’un monde qui finirait par être débarrassé du Covid (tourisme, banques, etc.).
Sur le troisième trimestre, les marchés sont restés dans un premier temps bien orientés en raison des résultats encourageants sur le front des publications des entreprises supérieures aux attentes des analystes, de la poursuite des programmes de vaccination. Enfin le contexte de maintien des taux bas et l'annonce d'un resserrement très progressif de la politique monétaire des banques centrales ont constitué autant de facteurs de soutien du marché. Toutefois en septembre la combinaison d’un choc sur les prix de l’énergie, la crainte d’un défaut majeur dans l’immobilier chinois et d’une tension sur les taux d’intérêt ont ravivé les inquiétudes sur la croissance. Dans ce contexte, les investisseurs ont pris des bénéfices surtout sur les valeurs sensibles au cycle économique et les valeurs à croissance visible bien valorisées. Peu de secteurs ont ainsi été épargnés.
Sur le quatrième trimestre, ni les incertitudes liées au variant Omicron, ni le virage de la Fed sur l’aspect moins « transitoire » de l’inflation n’auront eu raison de la vigueur des marchés actions qui ont terminé l’année 2021 proches de nouveaux plus hauts. Les investisseurs ont été rassurés