Trump s victory on 8 November was interpreted as a promise of robust budgetary and fiscal stimulus through ambitious infrastructure investments and substantial tax cuts. At the end of the year, the spectre of global deflation, which had been so daunting at the start of 2016, gave way to an expectation of global reflation.

In the midst of this heavy turbulence, the FRR benefited from cautious management of its interest rate positions, while its equities and high yield bonds, along with its emerging market debt holdings, ultimately delivered satisfactory performances, again highlighting the virtues of portfolio diversification.

The FRR completed some important tenders in 2016, renewing investment grade euro and dollar credit management mandates for a total of EUR 9 billion, and awarding three passive equity man- agement mandates incorporating ESG criteria.

Work to reduce the equity portfolios carbon footprint continued, and at the end of 2016 it was 28.9% less than that of its allocation s benchmark, showing further progress on 2015.

The FRR also decided to exclude companies that generate more than 20% of their revenue or energy production from coal, and drew up a pol- icy to completely avoid the tobacco industry. This will mostly be implemented in 2017.

Lastly, the FRR made some progress with its commitment to make unlisted investments of EUR 2 billion to help finance the French econ- omy, allocating EUR 600 million in unlisted debt mandates and moving forward with private equity mandates.

Pierre-René Lemas Chairman of the Management Board

At the end of 2016, the equity portfolios carbon footprint of the FRR was 28.9% less than that of its allocation s benchmark.