annual report triodos microfinance fund 2014

TLIM

Triodos Microfinance FundAudited annual report 2014

Microfinance

is the provision of financial services to low-income people in developing countries. An inclusive financial sector, where the majority of people have access to financial services, provides a sustainable basis for balanced socio-economic development.

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Triodos Microfinance Fund is a Sub-Fund of Triodos SICAV II (Société d’Investissement à Capital Variable), which is established in the Grand Duchy of Luxembourg. Triodos SICAV II, including its Sub-Funds, is supervised by the Luxembourg regulator, the Commission de Surveillance du Secteur Financier (CSSF). Triodos Investment Management BV is the external alternative investment fund manager of Triodos SICAV II- Triodos Microfinance Fund. Triodos Investment Management BV is incorporated under the laws of the Netherlands and is a wholly-owned subsidiary of Triodos Bank NV. Triodos Investment Management BV is supervised by the Dutch regulator, Autoriteit Financiële Markten.

The value of investments may fluctuate. Past performance is no guarantee of future results.

No subscription can be accepted on the basis of the financial reports. Subscriptions are only valid if they are made on the basis of the latest published prospectus accompanied by the latest annual report and the most recent semi-annual report, if published thereafter. The prospectus is available free of charge at the registered office of Triodos SICAV II in Luxembourg and from Triodos Bank: www.triodos.com.

Triodos SICAV II -Triodos Microfinance FundAudited annual report 2014

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Key figures

(amounts in EUR) 2014 2013 2012 2011 2010

Total net asset value (end of reporting period) 220,383,152 163,470,832 122,404,100 91,679,563 59,977,763Income 11,646,611 7,964,260 7,049,159 4,844,089 3,062,474Expenses 4,166,043 3,281,801 2,402,639 1,598,322 1,181,811Net operating gain 7,480,568 4,682,459 4,646,520 3,245,767 1,880,663Realised and unrealised gains/losses on investments, swaps and foreign exchange contracts 4,995,123 4,648,688 3,959,727 1,337,110 616,267Net result 12,475,691 9,331,147 8,606,247 4,582,877 2,496,930

Ongoing charges per share class*I-cap (EUR) 2.05% 2.05% 2.08% 2.10% n.a.I-dis (EUR) 2.04% 2.03% 2.08% 2.10% n.a.B-cap (EUR) 2.50% 2.72% 2.90% 2.83% n.a.B-dis (EUR) 2.57% 2.80% 2.85% 2.84% n.a.R-cap (EUR) 2.72% 2.84% 2.79% 2.83% n.a.R-dis (EUR) 2.70% 2.82% 2.80% 2.83% n.a.KI-cap (GBP)** 2.00% 2.03% 2.07% 2.05% n.a.KI-dis (GBP)** 2.02% 2.03% 2.08% 2.11% n.a.KB-cap (GBP)** 2.64% 2.67% 2.78% 2.81% n.a.KB-dis (GBP)** 2.63% 2.79% 2.87% 2.82% n.a.KR-cap (GBP)** 2.63% 2.75% 2.64% 2.82% n.a.KR-dis (GBP)** 2.64% 2.65% 2.77% 2.84% n.a.KZ-cap (GBP)*** 2.26% 2.20% n.a. n.a. n.a.KZ-dis (GBP)*** 2.27% 2.10% n.a. n.a. n.a.Z-cap (EUR)*** 2.35% 2.29% n.a. n.a. n.a.Z-dis (EUR)*** 2.34% 2.27% n.a. n.a. n.a.

Net asset value (NAV) per share

(amounts in EUR or GBP) 31.12.2014 31.12.2013 31.12.2012 31.12.2011 31.12.2010

I-cap (EUR) 34.64 32.68 30.49 28.06 26.45I-dis (EUR) 29.18 28.57 27.68 26.54 25.91B-cap (EUR) 33.24 31.57 29.66 27.50 26.11B-dis (EUR) 28.98 28.35 27.47 26.35 25.80R-cap (EUR) 33.16 31.49 29.58 27.43 26.04R-dis (EUR) 29.01 28.39 27.51 26.39 25.77KI-cap (GBP)** n.a. 26.12 24.27 22.31 21.10KI-dis (GBP)** 22.24 21.71 20.96 19.71 20.97KB-cap (GBP)** 25.63 24.33 22.74 21.07 20.06

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KB-dis (GBP)** 23.06 22.53 21.79 20.65 19.77KR-cap (GBP)** n.a. 24.38 22.82 21.12 20.08KR-dis (GBP)** 22.25 21.72 20.97 19.76 20.81KZ-cap (GBP)** 21.78 20.57 n.a. n.a. n.a.KZ-dis (GBP)** 21.48 20.54 n.a. n.a. n.a.Z-cap (EUR) 26.91 25.45 n.a. n.a. n.a.Z-dis (EUR) 26.77 25.45 n.a. n.a. n.a.

Return*** based on NAV per share

Share class

1-year return p.a.

3-year return p.a.

5-year return p.a.

Return p.a. since inception

I-cap (EUR) 6.0% 7.3% 6.5% 5.8% I-dis (EUR) 6.0% 7.3% 6.5% 5.7% B-cap (EUR) 5.3% 6.5% 5.7% 5.2% B-dis (EUR) 5.3% 6.5% 5.7% 5.2% R-cap (EUR) 5.3% 6.5% 5.7% 5.3% R-dis (EUR) 5.3% 6.5% 5.7% 5.3% KI-dis (GBP)** 6.1% 7.5% 6.6% 5.8% KB-cap (GBP)** 5.3% 6.7% – 5.4% KB-dis (GBP)** 5.3% 6.7% – 5.0% KR-dis (GBP)** 5.4% 6.7% 5.8% 5.1% KZ-cap (GBP)** 5.9% – – 5.8% KZ-dis (GBP)** 6.0% – – 6.2% Z-cap (EUR)**** 5.8% 6.7% 5.9% 5.4% Z-dis (EUR)**** 5.8% 6.7% 5.9% 5.4%

* The ongoing charges reflect the total normalised expenses charged to the result, divided by the average net asset value.For the calculation of the average net asset value, each computation and publication of the net asset value is taken intoaccount. The ongoing charges are calculated over the twelve-month period ending at the end of the reporting period.** The GBP share classes are hedged against the euro. The NAV per share is stated in GBP.*** The return includes reinvestment of dividends, including costs.**** This share class was launched in 2013. Due to a limited history historic returns are based on the R-share class, which has an identical investment policy.

Net asset value (NAV) per share (continued)

(amounts in EUR or GBP) 31.12.2014 31.12.2013 31.12.2012 31.12.2011 31.12.2010

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Table of Contents Page

Introduction 7

Report of the Board of Directors 8

General information 28

Summary of annual accounts 2014 30

Report of the Réviseur d'Entreprises Agréé 52

Appendix: microfinance institutions and banks in the portfolio 54

Management and administration 58

Colophon 59

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An estimated 2.5 billion people, or close to half the world’s population, have no access to formal financial services. They are unable to open a bank account, negotiate a loan to start a business or buy insurance. Having access to these financial services has a fundamental impact on the lives of millions of people. It enables them to build their assets gradually, develop micro, small and medium-sized enterprises and improve their income earning capacity, create employment and provide a financial cushion for the future.

While there is still a long way to go to make sure that everyone everywhere has access to a diverse range of financial services, the past ten years have seen tremendous growth in financial services being offered to poorer people by an increasing number and variety of financial institutions. The industry has proved that low income populations are bankable and can be offered financial services in a sustainable way. On the back of the microfinance industry’s success, commercial banks in developing countries have partnered with microfinance institutions to reach lower income customers. In some markets, microfinance institutions (MFIs) have transformed into licensed banks, enabling them to further expand their services to small and medium-sized enterprises or provide mortgages.

Significant challenges remain, however, not least because millions of people are still excluded. As the microfinance sector becomes integrated into mainstream financial systems, it also inherits many of the industry’s existing problems. This means that as the industry matures it must address its challenges in a balanced way in order to shape an inclusive financial services industry that keeps the interests of its low-income clients at its core.

Mission

Triodos Microfinance Fund, established in 2009 as a sub-fund of Triodos SICAV II, enables investors to actively contribute to the development of the microfinance sector into an inclusive financial sector in which the majority of people have access to financial services. The fund provides loans and equity to microfinance institutions and banks that have a sustainable approach toward providing financial services to those traditionally excluded.

Triodos Microfinance Fund is an initiative of Triodos Investment Management, a wholly-owned subsidiary of Triodos Bank NV. Triodos Investment Management started investing in developing countries in 1994 because it recognised that sustainable development, and addressing poverty issues in particular, was a global issue. Since 1994, assets under management in the microfinance sector have increased to more than EUR 530 million, making Triodos Investment Management one of the leading investors in the industry. As an investor it wishes to contribute to the development of a sustainable financial sector in developing countries based on fair pricing, transparency, access for all and care for the earth.

Introduction

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Triodos SICAV II-Triodos Microfinance Fund’s net assets grew by 34.8% to EUR 220.4 million at the end of 2014, while its investment portfolio reached a value of EUR 192.9 million (87.5% of the fund’s net assets). The fund increased the number of its investments to 58 microfinance institutions (MFIs) and Small and Medium-sized Enterprise (SME) banks, two microfinance holding companies and one investment in a fund, covering 31 countries across Latin America, Asia, Africa, the Middle East and North Africa and Eastern Europe. The MFIs in the fund’s portfolio reached 8.2 million loan clients and served to review 6.4 million savers. In 2014 the return of the EUR-denominated institutional share classes was 6.0% and the three-year average annual return was 7.3%.

Market developments

Cautious recovery global economy

The world economy showed signs of recovery in 2014. Industrialised countries are now registering modest economic growth again, mainly driven by ample availability of cheap credit and reduced government retrenchments. Financial sectors remain vulnerable to shocks, as stricter capital requirements need to be put into effect. In 2014, developing countries and emerging markets benefited from the improving economic situation in industrialised countries. They still register positive growth rates of around 5%.1 This growth trend is expected to continue and will be driven mainly by South and South-East Asia, as well as sub-Saharan Africa.

Due to the economic expansion, demand for financial products and services in these countries and markets continues to grow. This contributed to the ongoing growth of MFIs and banks, including those represented in the portfolio of Triodos Microfinance Fund, in 2014. In most countries the quality of the credit portfolios of these institutions stabilised or improved. Over-crediting is still a risk and some institutions and countries show a slightly

elevated risk. Triodos Microfinance Fund considers this an important issue.

Development of the sector

The stable growth of investments in the microfinance sector continued in 2014. This is confirmed by Symbiotics’ annual sector report, which states growth rates ranging from 9% in South Asia and 13% in Latin America to 17% in Eastern Europe & Central Asia and 18% in East Asia. The investments in North Africa & the Middle East and sub-Saharan Africa are much smaller in size, but an important trend is that these investments do show substantial growth, i.e. 44% and 34%, respectively. This implies that MFIs and banks still have a considerable funding requirement. International investment funds are an important source of such funding. According to the report by Symbiotics, the investments by these funds totaled USD 9.9 billion (EUR 8.2 billion); 7.6% of these total investments was provided by the microfinance funds managed by Triodos Investment Management, including Triodos Microfinance Fund.

Below the surface of these growth figures we find a wide range of developments and diversity, which we will illustrate by means of a number of examples.

Technology as an important driver of institutional and market development

In order to distinguish themselves from other market players, it is increasingly important for MFIs to take advantage of technological possibilities. Smart use of the available technology allows organisations to better serve their clients with new products, but also enables them to manage their risks and operations more efficiently. In several countries we are seeing that organisations are able to expand their product offering or improve their access to rural areas by using technology. Especially in East Africa, the growing popularity of mobile banking is putting traditional business models under pressure. Even the poorest farming families in the most remote areas can now transfer money and save or borrow small amounts of money using their mobile

Report of the Board of Directors

1 Source: IMF, World Economic Outlook

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phones. This has a huge impact on their daily lives. Many of the MFIs and banks in the portfolio of Triodos Microfinance Fund use mobile phone technology to expand their client base. Technology also has an impact on the development of alternative distribution channels. Petrol stations and kiosks, for instance, are used as agents for MFIs, which allows less densely populated areas to be served more efficiently. In the sustainable energy and agricultural sectors technological development is also an important driver for the scalability of companies. When assessing investment opportunities, Triodos Microfinance Fund in particular considers the extent to which organisations take advantage of the opportunities provided by technology.

Regional developments in the Caucasus and Central Asia

Over the past years, the microfinance sector has evolved rapidly in the Caucasus and Central Asia. In order to bring about further growth and professionalisation, MFIs in these countries are particularly in need of equity capital. In 2014, Triodos Microfinance Fund became a shareholder in Credo in Georgia, Arvand in Tadjzikistan and KazMicroFinance in Kazachstan. Participations in the equity capital of financial institutions constitute an important pillar of Triodos Microfinance Fund's investment policy. Such participations enable the fund to establish a direct and long-term involvement in the strategic policy pursued by those institutions. Senior staff of Triodos Investment Management represent the fund on the supervisory boards of these institutions and thus contribute specific knowledge and experience with respect to sustainable banking. This contribution of banking expertise is what clearly distinguishes Triodos Microfinance Fund from other investors in the sector.

Currently, Central Asia is feeling the impact of the economic crisis in Russia, which could cause economic growth and the expansion of the financial sector in neighbouring countries to slow down. The IMF expects the Russian economy to stagnate in

2015. Georgia has no significant ties with Russia and is expected to grow by 5%. Other countries with more extensive economies ties include Azerbaijan (4.3% growth), Tajikistan (6%) and Kyrgyzstan (5%). Especially the latter two countries have seen many labourers emigrate to Russia. Rising unemployment among the labour immigrants in Russia may well cause the monthly transfers of money to their home countries to fall sharply.

Laws and regulations offer opportunities and threats

As in Europe and the United States, governments in developing countries and emerging markets are becoming increasingly active with respect to financial sector regulation. In general, the environment in which institutions operate is steadily improving - in terms of supervision as well as infrastructure, such as credit bureaus. The revival of the microfinance sector in India is remarkable. In 2010 the Indian central bank took decisive action in reaction to a crisis in the federal state of Andra Pradesh and imposed strict regulations with respect to pricing and client protection. During the past year, however, that same central bank presented a different face when it created the opportunity for MFIs to obtain a banking licence. Triodos Microfinance Fund welcomes this development in India, because this makes it possible for clients of MFIs in India to gain access to a wider product range and thus better fill their financial needs.

Another interesting development is that in 2012, after fifty years of isolation, Myanmar opened its doors to foreign investors. Triodos Microfinance

34.8%growth of the fund’s net assets in 2014

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Fund has since closely followed the developments in this country and at the end of 2014 made an initial investment in a participation aimed at setting up a new microfinance institution. Given the under-development of its financial sector, the country offers many interesting investment opportunities, both from a financial as from an impact perspective.

In some countries regulation also tends to focus on MFIs’ pricing, by setting interest rate ceilings. In recent years, this occurred in Zambia, Bolivia and various countries in West Africa. This could in theory have a positive impact in an environment in which interest rates are high, but regulations are often not specific enough and therefore often also have negative side-effects for the market and the development of organisations. This could, for instance, result in institutions focusing on clients that are easy to serve, as a result of which clients in rural areas find that their access to financial services is diminished. In Colombia, the interest rate ceiling is high, so there is no pressure to reduce interest rates and in practice the ceiling appears to result in less (price) competition.

Growing interest in the SME sector

In addition to lending to micro businesses, lending to SMEs is a growing focus area. Entrepreneurs in this sector, too, often find it difficult to get a loan. It is estimated that over half of the SMEs in develop-ping countries have little or no access to credit and financial institutions.2 The total funding requirement of this segment is estimated at USD 1 trillion (1,000 billion). MFIs play a part here, by growing in tandem with the small businesses in their portfolios. Other financial institutions actually focus more on the SME segment. SMEs are an important source of job creation in the economy and pay taxes, which are an income source for local governments. SME banks can also make an important contribution to making the financial sector more sustainable, among other things by also focusing on sustainable energy and the agricultural sector. Triodos Microfinance Fund therefore aims to fund MFIs as well as SME banks.

The important role of local funding

MFIs and SME banks increasingly attract local funding because more institutions are granted a licence to attract savings. Furthermore, we are seeing that in developing countries public confidence in the financial sector is growing, as a result of which the total amount of savings is increasing. Also, more financial institutions are now able to issue bonds in their local financial markets. Triodos Microfinance Fund plays an active part in promoting the mobilisation of savings. The growing balance sheet totals of the institutions and the increase in local funding also led more and more institutions trying to cover their remaining funding requirement by calling on a smaller number of strong (international) partners. In addition, there is still a substantial demand for equity investments. Triodos Microfinance Fund and the other funds managed by Triodos Investment Management together constitute a reliable, large and long-term partner that is capable of meeting these needs.

Investments

Triodos Microfinance Fund’s investment portfolio grew by 55.2% to EUR 192.9 million, which is 87.5% of the fund’s net assets (2013: EUR 124.3 million). The fund made 46 disbursements of both debt and equity investments in 2014 (2013: 50). The geographical spread was further diversified with the addition of eight new countries: Jordan, Indonesia, Nicaragua, Ivory Coast, Nigeria, Myanmar, Tunisia and Uzbekistan.

New debt investments

Asociacion Fondo de Desarrollo (FDL) is one of the largest MFIs in Nicaragua. It aims to improve the social and economic position of low-income groups, especially in rural areas.

With a population of over 170 million inhabitants, Nigeria is the largest microfinance market of Africa, where still 80 million people have no or limited access to financial services. AB Microfinance Bank

2 Source: IFC/World Bank

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Nigeria strives to meet this unmet demand and aims to be the leading provider of straightforward and transparent financial services to micro and small entrepreneurs.

Banco Itapúa is a niche bank in Paraguay with a strong focus on small and medium-sized agricultural producers, a group that is largely unattended by the larger banks. In many cases Banco Itapúa has been one of the first loan providers for farmers.

Banco Pichincha is Ecuador’s biggest bank. It has the most extensive branch and ATM network and is the country’s largest provider of micro- and SME finance. With Credifé it launched one of the first microfinance programs in the country.

Established in 2008, Crezcamos in Colombia supports rural development by offering a range of credit and insurance products to small businesses and entrepreneurs. By focusing on long-term relationships with these clients, Crezcamos has grown to serve over 68,000 clients across the rural provinces of northern Colombia.

Enda is the fund’s first investment in Tunisia. The company started its operations in 1995 with the objective of improving the quality of life for rural Tunisians. Almost 20 years later, Enda has become a leading MFI in Tunisia.

ESAF Microfinance and Investment Private Limited (EMFIL) is the leading MFI in the South Indian state of Kerala. The company provides its clients access to finance, low cost healthcare and housing, offers fair prices for their agro produce, and trains women in rural and tribal areas to make handicrafts.

Microfinance institution Financiera FAMA (FAMA) has been active in Nicaragua since 1991. FAMA specifically focuses on female entrepreneurs in the urban areas of Nicaragua.

Established in 1991, Hamkorbank provides clients access to a wide variety of financial products, including micro and SME loans. This is the first loan in Uzbekistan for Triodos Microfinance Fund.

Microfinance institution Mitra Bisnis Keluarga (MBK) in Indonesia issues group loans to female entrepreneurs. MBK focuses on the lowest income groups and is mainly active in West and Central Java.

Only 12% to 15% of the 23 million people in Ivory Coast have access to finance. MicroCred Ivory Coast offers a range of financial products and services, ranging from credit and savings products to ATM prepaid cards, remittances and micro insurance.

Sonata Finance (Sonata), founded in 2006, is a credit-only microfinance institution that operates in the northern states of India. Sonata offers mainly group loans to women living in rural areas. In addition, Sonata offers remittance services.

Utkarsh Microfinance (Utkarsh) is active in the north of India, where poverty is still a pervasive concern and demand for basic financial services is largely unmet. Utkarsh focuses on individual lending, in addition to its group lending activities.

Vitas Jordan is a non-bank financial institution founded as the Middle East Micro Credit Company and has since 1998 become one of the largest MFIs in the country. The institution offers a diverse selection of loan products, ranging from microloans to female entrepreneurs, to medium-sized loans to small factories.

Equity

The equity portfolio increased by 26.6% from EUR 32.5 million to EUR 41.2 million and represents 18.7% of the net assets of the fund at December 31, 2014 (19.9% at December 31, 2013).

The partial equity sale in February 2014 of 1.02% of the shares in ACLEDA Bank in Cambodia and the sale of the entire stake of 0.72% in Peruvian Mibanco resulted in a significant decline of the equity portfolio to below 15%. Through new equity investments, particularly in MFIs in Central Asia and the Caucasus, in the second half of the year, the

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fund has largely succeeded in compensating for both divestments.

Furthermore, the fund also participated in a capital call for India Financial Inclusion Fund (IFIF). The total exposure to ACLEDA Bank was reduced to 10.7% of the net asset value of the fund on December 31, 2014 (year-end 2013: 15.6%). The fund remains involved in Mibanco through a subordinated loan.

New equity investments

AccessHolding is a German holding company that provides financial services to micro and small and medium-sized enterprises. AccessHolding has a leading network, which includes six MFIs in Sub-Saharan Africa and two in Central Asia, and has a net loan portfolio of EUR 721 million. Through the investment, the fund will support AccessHolding’s growth by enabling it to scale up current operations and expand into new countries. A senior representative of Triodos will join the board of directors.

Microcredit Deposit-Taking Organisation Arvand LLC (Arvand) in Tajikistan is the fund’s first equity investment in Central Asia. The microfinance market opportunity is clearly present, as evidenced by low banking sector penetration (22%) and a high percentage of (micro-)entrepreneurs without access to credit. A senior co-worker of Triodos represents Triodos Microfinance Fund on the Board of Directors of Arvand.

Together with Triodos Fair Share Fund, AccessHolding and ResponsAbility, Triodos Microfinance Fund has acquired the ownership of Microfinance Organization Credo in Georgia. Credo is the leading microfinance organization in Georgia, with a nationwide network of 48 branches, a net loan portfolio of USD 149 million and 153,000 clients. Triodos Microfinance Fund holds a 9.9% equity stake and will join the board of directors.

Triodos Microfinance Fund has taken a 6.8% equity stake in Microcredit Organization KMF LLC and will play an active role in the governance of the institution. KMF is the largest microfinance

organization in Kazakhstan, with a wide regional network of 74 subdivisions and offices and 16 branches, and has a net loan portfolio of USD 118 million and over 98,000 clients. The additional funds will allow KMF to implement its development plan for the next five years aimed at offering a more diversified range of services to clients in Kazakhstan.

In anticipation of the microfinance licence for Early Dawn Microfinance, a new microfinance company in Myanmar, the fund also made a small equity investment in a Singapore holding company. The investment in Early Dawn is expected to materialize in the first quarter of 2015.

Provisions

PRIZMA Mikro in Bosnia-Herzegovina has been under intensive monitoring since early 2014. In spite of the efforts and collaboration with international and local lenders and management the company’s equity turned negative in September. The fund has provisioned 90% of the loan outstanding.

In recent months, the government of Azerbaijan has stepped up its offensive against human rights activists and non-governmental organisations (NGOs). As a result, bank accounts have been frozen on court orders. This has affected Azercredit, one of the fund’s investee companies in Azerbaijan. Triodos Microfinance Fund has entered into a standstill agreement together with all other international lenders while awaiting the outcome of the legal procedures. No provisions were taken during the course of 2014. Depending on the outcome of the legal procedures, this might change in 2015.

A quantitative description of the MFIs in the portfolio can be found on page 54. A short description of all MFIs can also be found under the header ‘Know where your money goes’ on www.triodos.com.

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Portfolio data December 31, 2014

Net Asset Value EUR 220,383,152Microfinance portfolio EUR 192,889,584Number of investment funds 1Number of MFIs 58Number of microfinance holdings 2Number of loans 83Number of subordinated loans 9Number of equity investments 8Number of countries 31

Source: Triodos Investment Management

Currency exposure (% of net asset value) December 31, 2014

Currency Percentage

USD 51.0%INR 6.1%EUR 4.9%PEN 4.4%KZT 4.2%GEL 2.0%GTQ 1.4%DOP 1.4%XOF 1.4%TJS 1.3%TND 1.2%PYG 1.1%AZN 1.0%BDT 0.9%MNT 0.9%IDR 0.8%NGN 0.7%UGX 0.7%JOD 0.6%KGS 0.5%COP 0.5%GHS 0.4%TZS 0.2%


Asset allocation (% of net asset value), December 31, 2014

debt 62.5%

equity 18.7%

liquidity and other current assets 12.5%

subordinated debt 6.3%


Five largest outstanding positions (% of net asset value), December 31, 2014

Institution Country Percentage

ACLEDA Bank Cambodia 10.7%Credo Georgia 4.4%KMF Kazakhstan 4.2%Compartamos Financiera Peru 3.4%Finca Azerbaijan Azerbaijan 3.0%


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KOMPANION FINANCIAL GROUP

With about 150 offices across the country and over 100,000 clients, Kompanion is one of the top microfinance institutions in Kyrgyzstan. The organisation has introduced expansive programmes that foster growth of micro-and small-businesses and preservation of natural resources, as well as good management practices.

Kompanion is closely tied to the communities it serves and has designed and implemented high impact community projects. It also offers technical support to clients with sustainable agriculture needs.

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Country allocation (% of net asset value), December 31, 2014

Country Percentage

Cambodia 13.6%Peru 8.3%India 7.9%Kyrgyzstan 5.8%Azerbaijan 5.6%Tajikistan 5.4%Paraguay 5.4%Georgia 4.3%Kazakhstan 4.2%Ecuador 3.8%Sri Lanka 3.6%Mongolia 2.4%Guatemala 1.8%Dominican Republic 1.4%Tunisia 1.2%Ivory Coast 1.1%Tanzania 1.1%Uganda 1.1%Uzbekistan 0.9%Laos 0.9%Bangladesh 0.9%Indonesia 0.8%Nigeria 0.7%Jordan 0.6%Nicaragua 0.5%Colombia 0.5%Ghana 0.4%Congo Democratic Republic 0.4%Senegal 0.2%Bosnia Herzegovina 0.1%Worldwide 2.6%

Total 87.5%

Source: Triodos Investment Management, all data as of December 31, 2014

Results

Financial results

The net result of Triodos Microfinance Fund for 2014 amounts to EUR 12.5 million (2013: EUR 9.3 million). The fund’s interest income from loan investments increased by 59.6% to EUR 10.4 million in 2014 (2013: EUR 6.5 million), which is in line with the growth rate of the portfolio. In addition, the fund received dividend income from two equity investments, amounting to EUR 0.8 million (2013: EUR 0.9 million).

The fund realised a gain on investments of EUR 5.1 million as a result of the sale of shares in ACLEDA Bank. The realised losses on investments are related to the sale of shares in Mibanco (EUR 1.5 million). The net increase in the value of the investments is an exceptional result: EUR 13.6 million. This amount consists of a gross EUR 20.8 million increase in valuations, of which EUR 14.5 million from exchange rate differences as a result of the volatile currency markets towards the end of 2014. The gross amount is adjusted for EUR 6.2 million, consisting of a reclassification of EUR 3.9 million to realised gains and losses resulting from the sale of the two equity investments and EUR 2.3 million provisions that have been taken on non-performing loans.

The fund made a net unrealised loss of EUR 11.7 million (2013: unrealised gains of EUR 3.4 million) on foreign exchange contracts during the same period. These losses have to a large extent nullified the appreciation of the portfolio as a result of foreign exchange fluctuations. Total expenses in 2014 came to EUR 4.2 million (2013: EUR 3.3 million). The bulk of these expenses relates to management, distribution and service fees, which rose to EUR 3.6 million (2013: EUR 2.9 million) and are in line with the growth of the assets under management.

Return

The return in the EUR-denominated institutional share class was 6.0% (2013: 7.2%). In the first six months of the year, the fund had relatively high

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liquidity levels as a result of the sale of the two equity investments and strong inflows from investors. This additional inflow was almost fully absorbed in the second half of the year, when disbursements of new investments peaked and led to a higher investment ratio and increased returns in the same period. The return was furthermore negatively affected by the provision on a non-performing loan in Bosnia Herzegovina. Differences in the performance of share classes are mainly attributable to the different cost bases, as explained below in the Costs section.

Liquidity

Triodos Microfinance Fund aims to retain a minimum of 10% of its net asset value in cash or cash equivalents, in order to facilitate redemptions in the fund. The fund’s liquidity and other current assets at

year-end was 12.5%. Liquidity levels were higher during the first 6 months of the year and came down during the last 6 months as the result of higher disbursement levels. The fund has approved and committed investments of EUR 8.7 million as per December 31, 2014, including EUR 7.7 million in new equity investments.

Costs

The largest item in the cost structure of Triodos Microfinance Fund is the management fee paid to the Investment Manager, Triodos Investment Management. Triodos Investment Management uses this fee primarily to cover staff costs, including travel expenses incurred in connection with providing new finance facilities and managing

Return* based on net asset value (NAV) per share

Share class

1-year return p.a.

3-year return p.a.

5-year return p.a.

Return p.a. since inception

B-cap (EUR) 5.3% 6.5% 5.7% 5.2%B-dis (EUR) 5.3% 6.5% 5.7% 5.2%I-cap (EUR) 6.0% 7.3% 6.5% 5.8%I-dis (EUR) 6.0% 7.3% 6.5% 5.7%R-cap (EUR) 5.3% 6.5% 5.7% 5.3%R-dis (EUR) 5.3% 6.5% 5.7% 5.3%Z-cap (EUR)** 5.8% 6.7% 5.9% 5.4%Z-dis (EUR)** 5.8% 6.7% 5.9% 5.4%KB-cap (GBP)*** 5.3% 6.7% - 5.4%KB-dis (GBP)*** 5.3% 6.7% - 5.0%KI-dis (GBP)*** 6.1% 7.5% 6.6% 5.8%KR-dis (GBP)*** 5.4% 6.7% 5.8% 5.1%KZ-cap (GBP)*** 5.9% - - 5.8%KZ-dis (GBP)*** 6.0% - - 6.2%

* The return includes reinvestment of dividends, including costs.**The Z-share class has a limited history. Historic returns are based on the similar R-share class which has an identical investment policy.*** The GPB-denominated share classes are hedged against the euro.Source: RBC Investor Services Bank S.A. and Triodos Investment Management

18

existing finance facilities. This is generally quite an intensive process, especially the management of the fund’s equity investments, which requires frequent trips to the countries where investments are made.

The ongoing charges for Triodos Microfinance Fund, which include the management fee, ranged from 2.00% to 2.05% for institutional share classes and from 2.26% to 2.72% for the other share classes. More detailed information on management fees and ongoing charges can be found on pages 42 and 43.

Sustainability as a core value

Triodos Microfinance Fund only invests in financial institutions that aim for a well-balanced mix between people, planet, and profit. This basis for the investment policy pursued by Triodos Microfinance Fund is anchored in the analysis and decision making process.

The fund uses a scorecard for this sustainability assessment. This tool was first developed in 2010. Since then, the sector has evolved and the fund invests in a broader range of institutions, from pure MFIs to banks that also provide loans to small and medium enterprises. To better assess these different institutions, the tool was reviewed and updated in 2014. The new version will be launched in 2015. As part of the review process, relevant industry initiatives, such as UNPRI Principles for Investors in Inclusive Finance, the Universal Standards for Social Performance Management, and the SMART Campaign’s Client Protection Principles were taken into account.

The new scorecard consists of 25 Environmental, Social and Governance (ESG) related questions, grouped in five dimensions: Governance, Management & Staff, Product Range, Responsible Finance and Environment.

Below, we describe in more detail how Triodos Microfinance Fund analyses and assesses these themes, using examples from the portfolio.

Transparency

Triodos Microfinance Fund analyses how the MFI handles over-indebtedness and transparency. The fund also assesses how the MFI aligns credits with the repayment capacity of clients, what policy the MFI pursues with respect to interest rates and how products and the related liabilities are communicated to the client. The Client Protection Principles provide a detailed description of these elements. 92% of the MFIs represented in the portfolio (2013: 88%) have signed these principles.

Fair and transparent interest rates

Triodos Microfinance Fund analyses how the MFI handles over-indebtedness and transparency. The fund also assesses how the MFI aligns credits with the repayment capacity of clients, what policy the MFI pursues with respect to interest rates and how products and the related liabilities are communicated to the client. The Client Protection Principles provide a detailed description of these elements. 92% of the MFIs represented in the portfolio (2013: 88%) have signed these principles.

Financial education

Financial education and training of (potential) clients is becoming increasingly important for MFIs. KMF LLC, in Kazakhstan, provides financial literacy training to both clients and non-clients, giving non-clients the opportunity to become clients after they complete the training.

47%percentage of clients in rural areas

19

Diverse product offering

Microfinance customers are interested in more than just taking out loans. They also want to be able to save, take out insurance and transfer money. A growing number of MFIs is able to meet these requirements. Caja Rural de Ahorra y Credito Quillabamba (CREDINKA) in Peru, for example, is active in regions where access to finance is limited and where poverty levels are among the highest in the country. The institution developed a community savings scheme for remote Indian communities in the Andes and a savings product for women in the Puno-Cusco corridor.

% of MFIs offering other financial services

Money transfer services 69%

Insurance products 67%

Savings products 56%


Small and medium-sized businesses

Triodos Microfinance Fund assesses whether MFIs provide loans to SMEs. Such businesses contribute directly to the development of the local economy through the employment that they provide and the taxes that they pay. A growing number of MFIs in the fund’s portfolio focus on this target group, including Advans Banque Congo. This young institution is part of the Advans network and started operations in 2009. It targets SMEs in and around Kinshasa.

Alternative distribution channels

Alternative distribution channels, such as mobile phones and service counters, are becoming increasingly important. These channels make financial services available for more people, also in less accessible areas, and at lower costs. Banco

Pichincha, in Ecuador, makes a great example of how this works in practice. In three years time, this bank implemented 15,000 non-bank correspondents in rural Ecuador and managed to give 300,000 previously unbanked people access to savings accounts and debit cards.

Portfolio allocation per market segment

Microcredit 35%

Loans to SMEs 31%

Consumer credit 21%

Other forms of credit 13%


Agricultural sector

A large part of the population of developing and emerging countries makes its income in the agricultural sector. This sector, in particular, has only very limited access to adequate financial products. Uncertain cash flows and higher risks, such as failed harvests and natural disasters, make MFIs cautious about providing credit to this sector. However, Triodos Microfinance Fund encourages MFIs to service this extremely important sector and uses its international network to support MFIs here.

As part of this initiative, the fund also highlights the importance of sustainable agricultural practices. Examples of institutions in the portfolio that focus specifically on this sector are ESAF Microfinance and Investment Private Limited in India (with 70% of its loan portfolio in agriculture), Kompanion in Kyrgyzstan (70%), and Contactar in Colombia (60%).

Attention for the environment

Triodos Microfinance Fund also considers the efforts by MFIs to make environmental protection a priority. Raising awareness is the first step. Many MFIs in the fund’s portfolio organise training

20

Microfinance portfolio Triodos Microfinance Fund31 December 2014

DOMINICAN REPUBLIC lBanco Ademi

GUATEMALA lFUNDEAGénesis Empresarial

NICARAGUA lFAMAFDL

COLOMBIA l Contactar Crezcamos

ECUADOR lBanco PichinchaBanco Solidario

PERU l Compartamos

Financiera CredinkaEdpyme Raíz MibancoProEmpresa

PARAGUAY l Banco ItapuaVisión Banco

BOSNIA ANDHERZEGOVINA lPrizma Mikro

TUNISIA lENDA

JORDAN l Vitas Jordan

GLOBALAccess Microfinance HoldingFINCA Microfinance Holding Company

SENEGAL l MicroCred

Sénégal

IVORY COAST lMicroCred

GHANA lAdvans Banque

Ghana

NIGERIA lAB Microfinance Bank

CONGO lAdvans Banque Congo

21

TAJIKISTAN lArvandBank EskhataFirst Microfinance

BankIMON

UZBEKISTAN lHamkor Bank

LAO PDR lACLEDA Bank Lao

CAMBODIA lACLEDA BankAmretPRASACSathapana

INDONESIA lMBK

MONGOLIA lXacBank

AZERBAIJAN lAccessBankAzer CreditFINCA Azerbaijan

KYRGYSTAN lBai TushumFINCA Kyrgyzstan Kompanion

GEORGIA lCredo

BANGLADESH lBRAC Bank

SRI LANKA lCommercial Leasing

CompanyLOLC Micro Credit

INDIA lEMFILGrameen Koota India Financial

Inclusion FundSonata Finance UtkarshVistaar Financial

Services

TANZANIA lAccessBank

TanzaniaBRAC Tanzania

UGANDA lBRAC Uganda Centenary Bank

KAZAKHSTAN lKMF LLC

22

courses and other activities in order to educate their clients about environmental protection and the contribution that they can make.

Triodos Microfinance Fund also analyses whether MFIs offer green products and services aimed at sustainable farming and energy production. Examples are loans for biogas installations, solar panels, and coffee tree renovation. Fondo de Desarrollo Local (FDL) in Nicaragua is a great example, with the highest score on environment in our sustainability scorecard and more than 10% of its loan portfolio in ‘green’ products.

The table on pages 54-57 shows a number of core indicators for each of the MFIs in the portfolio of Triodos Microfinance Fund. Examples include the number of savings and loan clients, the average loan amount and the percentage of female clients and clients in rural areas. The table below shows these indicators on the fund level.

% of MFIs in the portfolio focussing on the environment

Exclusion list* 85%

Green office procedures 58%

Donations for environmental protection 31%

Green credit products 29%

Environmental training for customers 27%

*List of exclusion criteria used by MFIs when deciding whether or not to provide loans to customers.Source: Triodos Investment Management

Core indicators MFIs in the portfolio of Triodos Microfinance Fund

2014 2013

Total number of loan clients reached by MFIs in the portfolio 8,186,334 5,771,464Total number of savings clients reached by MFIs in the portfolio 6,384,915 5,818,281Average loan (EUR) 1,390 1,456Percentage of female loan clients 70% 62%Percentage of clients in rural areas 47% 49%Number of people employed by MFIs in the portfolio 86,034 66,700


23

Risk

Triodos Microfinance Fund has a relatively high risk profile, mainly due to its sector-specific focus. The main risks that have been identified are described in detail in the fund’s prospectus. Some of the risks are highlighted below.

Country and political risk

Triodos Microfinance Fund invests in countries that may be subject to substantial political risks, countries that might be in an economic recession, with perhaps high and rapidly fluctuating inflation, countries that often have a poorly developed legal system and countries where the standards for financial auditing and reporting may not always be in line with internationally accepted standards.

To limit the country risk, Triodos Microfinance Fund has set the upper limit for investments in any country at 20% of its assets. The country with the highest exposure is currently Cambodia, where 13.6% of the fund´s assets are invested. This is less than in 2013, as a result of the partial exit of ACLEDA Bank. Country risks are mitigated by diversifying the

geographical exposure across a larger number of countries. In 2014, Triodos Microfinance Fund added eight new countries to the portfolio. The fund noticed a general increase in country risk in the Caucasus and central Asia as a side effect of the Ukraine-Russia crisis. The politically heightened attention for the role of foreign human rights NGOs in Azerbaijan has led to an investigation and blocking of the accounts of one of the MFIs in the portfolio. The portfolio management team is following the situation closely and has adjusted the outlook and exposure limits for countries in the region. Please refer to the table on page 16 for more details about the diversification across different countries.

Credit risk

Credit risk remains the most fundamental risk to which the lending industry in general and the microfinance industry in particular is exposed. Portfolio At Risk (PAR) ratios (the percentage of non-performing loans in the total loan portfolio) of MFIs in the Triodos Microfinance Fund portfolio are closely monitored on a continuous basis. At fund level, the weighted average PAR over thirty days

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140

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80

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Cumulative nominal amout expiring investments December 2014 (left-hand scale) Cumulative percentageof expiring investments Decmebr 2014 (right-hand scale)

Maturity of the funds' debt portfolio (as per December 31, 2014)


24

stood at 3.5% at year-end 2014, the same as at year-end 2013.

Liquidity risk

Triodos Microfinance Fund invests in assets that are not listed on a stock exchange and that are relatively illiquid. In view of its open-end structure (enabling subscription and redemption of shares on a monthly basis), this could potentially lead to a situation in which the fund needs to temporarily close for redemptions. There is also the risk that at some point in time the fund may be unable to obtain sufficient resources to fulfill its financial obligations. This risk is mitigated by maintaining at least 10% of its capital in liquid assets or arrange sufficient other guarantees. The fund conducts regular analysis on the maturity of the debt portfolio. The graph on page 23 shows that on December 31, 2014, the 70.9% of the value of the outstanding loan portfolio will be due within 30 months.

Currency risk

Triodos Microfinance Fund is exposed to possible losses as a result of fluctuations in the value of or income from assets denominated in foreign currencies. The fund may invest up to 90% of its total assets in non-EUR denominated investments with a maximum exposure of 60% in unhedged local currency investments (including the equity exposures). Triodos Microfinance Fund manages its currency exposure risk by hedging its net foreign currency exposure to the extent deemed appropriate and possible. As hedging is not always possible or cost-efficient, this implies a risk of additional volatility in case of large fluctuations on the international foreign exchange market. At year-end 2014, 31.7% (2013: 20.7%) of the fund’s net assets were invested in local currencies, while 17.0% (2013: 10.5%) of the fund’s net assets were exposed to open currency risk. The share classes denominated in sterling are hedged against the euro. In the last quarter of 2014, the US dollar and emerging market currencies were subject to sharp fluctuations that affected the fund’s performance. All major

currencies that the fund has invested in appreciated against the euro in 2014. The exchange rate gains on the investment portfolio were largely nullified by the losses on hedging contracts.

Outlook

In 2015, Triodos Microfinance Fund aims to grow its assets under management to EUR 265 million. The fund sees strong demand for financing and will continue to add new investments to the portfolio and further diversify its country exposure. New equity investments are expected to materialise, increasing the total equity share in the fund’s portfolio to approximately 20%. The fund will continue to target a broad range of institutions active in the financial inclusion sphere, such as (traditional) MFIs, SME banks and micro-leasing companies. The fund plans to further diversify its regional exposure, both in terms of debt and equity.

The fund expects a positive return that will be in line with the five year average annual return. The actual return will be determined partly by the change in value of participations, provisions and exchange rate results on unhedged local currencies.

General Developments Triodos SICAV II

Alternative Investment Fund Managers Directive (AIFMD)

Following the implementation of the Alternative Investment Fund Managers Directive (AIFMD) on July 22, 2014, the Board of Directors appointed Triodos Investment Management, having previously acted as the Investment Manager of Triodos SICAV II, as its external Alternative Investment Manager within the meaning of article 4 of the AIFM Law (the “AIFM”). The distribution structure has also been modified further to the appointment of the AIFM; the Board of Directors appointed Triodos Investment Management as distributor. The Board of Directors continued its relationship with RBC Investor Services Bank S.A. as depositary bank and paying

25

agent. The depositary bank and paying agent agreement as well as the investment fund services agreement with RBC Investor Services Bank S.A. have been updated to comply with the AIFM environment. An updated prospectus incorporating the AIFM changes was published on August 2014.

On October 16, 2014, an extraordinary general meeting of shareholders adopted the amendments to the articles of incorporation of Triodos SICAV II incorporating the required AIFM elements.

Foreign Accounting Tax Compliance Act (FATCA)

The FATCA is a law issued by the United States of America (US) and has been enacted to ensure that income earned and assets held by US persons in offshore accounts or indirectly through ownership of foreign entities is reported to the US tax authorities (IRS). FATCA achieves aforementioned via the requirement that US and foreign persons - being also entities and thus financial institutions, such as funds - identify and document payees and ultimately disclose information to the IRS. To mitigate foreign legal impediments due to FATCA compliance, intergovernmental agreements (IGA) with the US are being negotiated. Luxembourg has agreed an IGA with the US. Consequently and due to the specific nature of the IGA, which can be qualified as a model I, FATCA should become Luxembourg domestic legislation.

Triodos SICAV II as a Foreign Financial Institution (FFI) is qualified as a participating FFI (PFFI). Triodos SICAV II has been registered with the IRS as a PFFI, which resulted in the issuance of a Global Intermediary Identification Number (GIIN). As of July 1, 2014 FATCA is in force and on boarding procedures are in place to identify (new) shareholders.

Risk profile

All investments in the sub-funds of Triodos SICAV II are exposed to a variety of risks. The sub-funds generally invest in risk-bearing, most often non-listed assets that cannot be made liquid in the short term. In most cases, added value in the sub-funds is generated over the longer term. Thus,

investments in a sub-fund of Triodos SICAV II require a medium- to long-term investment horizon of the investor.

In general, the sub-funds will only take on risks that are deemed reasonable to achieve their investment objectives. The sub-funds have different investment strategies and therefore different risk profiles. There is no guarantee that the sub-funds will achieve their goals, due to market fluctuations and other risks to which the investments are exposed.

Risk management

Triodos Investment Management has implemented an integral risk management framework throughout its organisation, in order to adequately monitor and manage the risks related to the sub-funds (as determined in the sub-funds’ Particulars in the prospectus of Triodos SICAV II). This risk management framework is based on the COSO (The Committee of Sponsoring Organisations of the Treadway Commission) framework for integral risk management, and furthermore contains policies and procedures designed in accordance with European regulations, best market practices and a permanent, independent risk management function, in compliance with the AIFMD.

The risk management framework describes, amongst others, the roles and responsibilities of the risk management function, risk governance (the ‘three-lines-of–defence’ model) at the level of both the Investment Manager and the sub-fund, and the risk management process to identify, measure, mitigate, monitor, report and evaluate all relevant risks related to the sub-funds.

The permanent risk management function is responsible for the implementation and execution of the risk management process and policies and serves as a risk consultant. The risk management function is functionally and hierarchically separated from the portfolio management function.

26

Valuation framework

Triodos Investment Management has implemented a comprehensive valuation framework of requirements to ensure a sound, independent, comprehensive and appropriate use of valuation methodologies and procedures. This framework sets out general requirements regarding the selection, the implementation and the application of valuation methodologies and techniques for all asset types, taking into account the different nature of asset types and the accompanying market practices in the valuation of these assets. In addition, this framework sets out the requirements for or with regard to the valuation function at the fund level. It ensures consistent procedures regarding the selection, implementation and application of valuation methodologies and, moreover, ensures a consistent approach of the valuation function, valuation committees and the use of external valuers at the fund level.

Given the special liquidity characteristics of the investments, the risk management function has a specific liquidity (risk) management policy framework applicable to the sub-funds (see Liquidity management).

Liquidity management

Triodos Investment Management has established a liquidity management policy framework, in accordance with European regulations and best market practices, to ensure that liquidity risk is appropriately measured, monitored and managed at sub-fund level. The framework contains policies and procedures to:• Ensure the availability of sufficient liquidity to

meet financial obligations and adequately manage excess liquidity to act in the best interest of investors in the sub-funds. Investors should carefully take note that given the type of assets, there is no guarantee that there are sufficient funds to pay for the redemption of shares of the sub-fund and there is no guarantee that the redemption can take place at the requested date.

• Assess the risk of insufficient liquidity by regularly

conducting tests under normal and exceptional (stress test) liquidity conditions.

• Provide adequate escalation measures in case of liquidity shortage or distressed situations (liquidity contingency plan).

• Ensure the coherence of the sub-funds’ investment strategy, their liquidity profile and their redemption policy.

Triodos Investment Management has implemented standardised methods to monitor the liquidity position of the sub-funds and to assess near-future developments regarding liquidity, including early warning parameters. The liquidity position of the sub-funds is monitored at both the sub-fund level and the Investment Manager level.

In accordance with the Law of 12 December 2013 on alternative investment fund managers, Triodos Investment Management conducts stress tests on a regular basis in order to evaluate and measure the liquidity risk of the sub-funds. Its manual for liquidity stress testing includes a standardised approach for conducting liquidity stress testing at the sub-fund level, simulating normal and exceptional liquidity circumstances.

The liquidity stress testing approach is derived from the Basel III legislation on liquidity management for banking. Several liquidity metrics are adjusted to be appropriate for the sub-funds and are subject to predetermined historical and/or hypothetical stress events and scenarios. These stress events and scenarios are determined by the risk management function together with the portfolio management function.

In accordance with the Law of 2013, both the liabilities side (funding) as the asset side (market) are subject to stress tests. A-typical redemption requests of investors and a shortage of (market) liquidity are, amongst others, simulated in the stress tests. However, given the relative illiquid nature of the sub-funds’ assets, the market side in terms of liquidity time and liquidity value is incorporated in a conservative manner.

27

Specific risk factors for the sub-funds

As the sub-funds differ significantly in their investment policy and associated risks, it is important to study the specific risk factors for each sub-fund. Please refer to the relevant sub-fund Particulars in the prospectus of Triodos SICAV II for specific risk factors applying to each sub-fund.

Remuneration policy

Based on Article 22(2) of the AIFMD and section XIII (Guidelines on disclosure) of the ‘ESMA Guidelines on sound remuneration policies under the AIFMD’, management companies are required to at least disclose information about their remuneration practices for employees whose professional activities have a material impact on its risk profile (so-called "identified staff").

All of the staff members of Triodos Investment Management are employed by Triodos Bank. Triodos Bank believes good and appropriate remuneration for all its employees is very important. The core elements of the international remuneration policy of Triodos Bank are set out in the Principles of Fund Governance, which can be accessed via www.triodos.com.

The following table shows the total remuneration, broken down into fixed and variable remuneration, for all the staff that works for Triodos Investment Management, categorized into senior management and other identified staff.

Luxembourg, March 31, 2015

The Board of Directors of Triodos SICAV II

Pierre Aeby (Chairman)Marilou van Golstein BrouwersPatrick GoodmanOlivier MarquetGarry Pieters Alexander Schwedeler (until May 12, 2014)

(amounts in EUR)

All staff of Triodos Investment

Management

“Identified staff” in senior management

positionsAll other

“Identified staff”

Number of staff (average over 2014) 113 6 28

RemunerationTotal fixed remuneration (over 2014) 8,916,911 995,936 2,581,671 Total variable remuneration (over 2014) 49,925 12,800 10,825

28

Structure

Triodos Microfinance Fund was launched in March 2009 as a sub-fund of Triodos SICAV II, the first Luxembourg investment company to be launched by Triodos Bank. The fund has an open-end fund structure and is not quoted on any stock market. Triodos Microfinance Fund has euro as well as British pound sterling share classes for retail, private banking and institutional investors.

The Board of Directors has appointed Triodos Investment Management BV as the external alternative investment fund manager of Triodos SICAV II. Triodos Investment Management BV is incorporated under the laws of the Netherlands and is wholly-owned subsidiary of Triodos Bank NV. Triodos Investment Management BV is supervised by the Dutch regulator, Autoriteit Financiële Markten.

The Annual General Meeting of Shareholders takes place in the city of Luxembourg, at a place specified in the notice of the meeting, each year on the last Wednesday in April. If such day is not a business day, the meeting will be held on the next business day. Notice of any General Meeting of Shareholders will be mailed to each registered Shareholder at least eight days prior to the meeting and will be published to the extent required by Luxembourg law in the Mémorial. Triodos SICAV II publishes an integrated detailed audited report annually. Triodos SICAV II also publishes an integrated detailed semi-annual report. In addition separate reports for each sub-fund of Triodos SICAV II are published. Copies may be obtained free of charge from the registered office of Triodos SICAV II and can be downloaded from Triodos Bank: www.triodos.com and www.triodos.nl.

Investment policy

Triodos Microfinance Fund invests, directly or indirectly, in microfinance institutions (MFIs) and other applicable financial institutions with a track record that have gone through the first phase of

rapid growth and are financially sustainable. The fund is also allowed to invest in greenfield MFIs. In most cases these institutions will be supervised by relevant local government authorities.

Triodos Microfinance Fund invests in equity, subordinated debt, convertible debt, senior debt and debt instruments in qualifying investments. The fund investment amount per investment project is assumed to be typically between EUR 1 million and EUR 10 million, but is bound by single client exposure and other investment restrictions as presented in the prospectus. The fund will generally take minority equity positions in its investees. Triodos Microfinance Fund will mainly invest in non-listed securities and investment instruments other than transferable securities. However, the fund may also, on an ancillary basis, invest in stock-listed companies. The equity investments of Triodos Microfinance Fund will primarily be in local currency, i.e. any currency other than US dollars and euros. For debt financing, the investments will be a mixture of local currency and investments in US dollars and euros. Investments in euros and in US dollars will be hedged to a large extent against the share classes’ reference currencies (perfect hedges of the interest and principal flows may not be economical). Investments in local currencies may be hedged where possible and where deemed appropriate. Cash and liquid assets will be mainly invested in euros or US dollars.

Triodos Microfinance Fund may enter into syndicated finance agreements with other funds managed by Triodos Group or managed by other entities.

Fiscal aspects

According to the law in force and current practice, Triodos Microfinance Fund is not subject to any Luxembourg tax on income and capital gains. Dividends paid by Triodos Microfinance Fund are not subject to any Luxembourg withholding tax. Since January 1, 2010, Triodos Microfinance Fund is no longer subject to any subscription tax. In addition,

General information

29

the issue of shares in the SICAV is not subject to any registration duties or other taxes in Luxembourg. Some dividend and interest income from Triodos Microfinance Fund’s portfolio may be subject to withholding taxes at variable rates in the countries of origin.

Shareholders in Triodos Microfinance Fund in principle do not have to pay any income and capital gains tax, any withholding tax, or any other form of tax in the Grand Duchy of Luxembourg (except with regard to (I) shareholders domiciled, resident or having a permanent establishment in Luxembourg, (II) some non-residents of Luxembourg who own 10% or more of the capital of the fund and who sell all or part of their shares within six months of their acquisition and (III) in some limited cases, some categories of former residents of Luxembourg if they own 10% or more of the capital of the SICAV). The above information is based on the law in force and current practice and is subject to change.

Investors should be aware that income or dividends received or profits realised may result in taxation in their country of origin, residence or domicile.

Triodos sustainability reporting

Triodos Microfinance Fund is managed by Triodos Investment Management B.V., a wholly-owned subsidiary of Triodos Bank N.V. The co-workers involved in the management of the funds are employed by Triodos Bank. The annual report of Triodos Bank is an integral sustainability report, which is applicable to all entities within the Triodos group of companies.

All social policy aspects, including the remuneration policy, are described in Triodos Bank’s annual report.

Triodos Bank has been using the guidelines drawn up by the Global Reporting Initiative (GRI) since 2001. GRI was established in 1997 by the United Nations and the Coalition for Environmentally Responsible Economies. GRI aims to establish a consistent framework for sustainability reporting and thus

make performances objective and easier to compare. Triodos Bank is one of GRI's organizational stakeholders.

In 2013, GRI introduced new guidelines aimed at making reporting more relevant for the sustainability impact of the institution and more useful for its stakeholders. This is done mainly by focusing attention on the issues that Triodos Bank and our stakeholders find the most important or essential for their activities. We have since enhanced this approach, which we first used in our report for 2013. In this report the G4 guidelines have been applied comprehensively. Further information about the application of the G4 guidelines can be found on www.annual-report-triodos.com.

Our reporting is based on internal and external data. This year's report was prepared partly on the basis of discussions, including a thinking session with a number of external parties organised specifically for this purpose.

Climate-neutral operations

Triodos Bank's environmental policy is based on the trias energetica. This means that the bank uses as little energy as possible, uses sustainable energy or sustainable resources whenever possible and offsets the climate impact of energy that is generated. The bank thus minimises and offsets its environmental impact. Triodos Bank is a climate neutral, CO2-neutral organisation.

For further information about the social and environmental performances of Triodos Bank and its investment funds we refer to the annual report of Triodos Bank.

30

Statement of net assets 31

Statement of operations 32

Statement of changes in net assets 33 Cash flow statement 35 Statement of changes in the number of shares outstanding 36

Notes to the financial statements 38

Summary of annual accounts 2014 Page

31

Statement of net assets as at December 31, 2014

(amounts in EUR)

Notes December 31, 2014

December 31, 2013

December 31, 2012

Assets

Fixed assets Investment in financial assets 2 192,889,584 124,319,850 90,777,902(Historic cost: EUR 172,029,935 as at December 31, 2014; EUR 117,010,403 as at December 31, 2013; EUR 84,344,803 as at December 31, 2012) Formation expenses 3 – 5,833 40,833

Current assets Cash and cash equivalents 33,446,935 34,886,216 31,571,194Net unrealised gain on swap contracts 11 113,559 506,440 –Net unrealised gain on forward foreign exchange contracts 10 – 2,774,366 –Interest receivable 2 3,910,343 1,917,792 1,481,443Other current assets – 15,372 –

Total assets 230,360,421 164,425,869 123,871,372

Liabilities

Liabilities due within one year Net unrealised loss on swap contracts 11 – – 110,453Net unrealised loss on forward foreign exchange contracts 10 8,791,472 – 672,221Investment management, distribution and service fees payable 6 997,474 807,988 583,237Accounts payable and accrued expenses 9 188,323 147,049 101,361

Total liabilities 9,977,269 955,037 1,467,272

Net assets 220,383,152 163,470,832 122,404,100

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

32

(amounts in EUR)

Notes December 31, 2014

December 31, 2013

December 31, 2012

Income:Dividend income 2 820,443 929,658 937,212Interest on loans 2 10,398,207 6,516,701 5,599,767Bank interest 33,752 215,765 337,803Other income 7 394,209 302,136 174,377

Total income 11,646,611 7,964,260 7,049,159

ExpensesAmortisation of formation expenses 3 5,833 35,000 35,000Investment management, distribution and service fees 6 3,623,353 2,883,454 2,069,307Administrative and custodian fees 5 282,597 209,753 160,185Audit and reporting expenses 76,357 61,485 65,290Interest paid 1,994 1,132 –Other expenses 8 175,909 90,977 72,857

Total expenses 4,166,043 3,281,801 2,402,639

Net operating income 7,480,568 4,682,459 4,646,520

Realised gain on investments 5,103,883 556,957 1,008,119Realised loss on investments (1,492,209) (7,065) (13,827)Realised gain/(loss) on swaps 72,249 (411,497) (135,213)Realised gain on foreign exchange contracts 1,898,854 2,317,758 1,710,669Realised loss on foreign exchange contracts (2,473,448) (2,843,675) (2,633,156)Realised gain on foreign exchange 445,640 205,984 97,430Realised loss on foreign exchange (151,329) (109,600) (138,073)Change in unrealised appreciation on investments 13,550,202 5,892,696 4,490,560Change in unrealised depreciation on investments – (5,016,350) (1,978,414)Change in unrealised appreciation on swap contracts – 616,983 215,369Change in unrealised depreciation on swap contracts (392,881) – –Change in unrealised appreciation on forward foreign exchange contracts 169,681 3,446,587 1,716,559Change in net unrealised appreciation/(depreciation) on forward foreign exchange contracts (11,735,519) – (380,296)

Net increase in net assets resulting from operations 12,475,691 9,331,147 8,606,247


Statement of operations for the year ended December 31, 2014

33

(amounts in EUR) December 31,

2014 December 31,

2013 December 31,

2012

OperationsNet operating income 7,480,568 4,682,459 4,646,520Realised gain on investments 5,103,883 556,957 1,008,119Realised loss on investments (1,492,209) (7,065) (13,827)Realised gain/(loss) on swaps 72,249 (411,497) (135,213)Realised gain on foreign exchange contracts 1,898,854 2,317,758 1,710,669Realised loss on foreign exchange contracts (2,473,448) (2,843,675) (2,633,156)Realised gain on foreign exchange 445,640 205,984 97,430Realised loss on foreign exchange (151,329) (109,600) (138,073)Change in unrealised appreciation on investments 13,550,202 5,892,696 4,490,560Change in unrealised depreciation on investments – (5,016,350) (1,978,414)Change in unrealised appreciation on swap contracts – 616,983 215,369Change in unrealised depreciation on swap contracts (392,881) – –Change in unrealised appreciation on forward foreign exchange contracts 169,681 3,446,587 1,716,559Change in unrealised depreciation on forward foreign exchange contracts (11,735,519) – (380,296)

Net increase in net assets resulting from operations 12,475,691 9,331,147 8,606,247

Capital transactions

Capital subscriptionsI Capitalisation Share Class (EUR) 38,437,110 14,380,824 9,955,011I Distribution Share Class (EUR) 8,347,640 1,148,240 2,531,552B Capitalisation Share Class (EUR) 233,106 492,760 1,272,209B Distribution Share Class (EUR) 2,855,523 21,452,647 12,982,922R Capitalisation Share Class (EUR) 3,407,045 3,212,131 536,460R Distribution Share Class (EUR) 1,921,845 1,700,325 821,422K-Institutional Capitalisation Share Class (GBP) – – –K-Institutional Distribution Share Class (GBP) 1,314,545 358,584 567,986K-B Capitalisation Share Class (GBP) – – –K-B Distribution Share Class (GBP) 15,948 213,231 248,230K-Retail Capitalisation Share Class (GBP) – – 60,275K-Retail Distribution Share Class (GBP) 5,418 5,661 4,651K-Z Capitalisation Share Class (GBP) 209,510 238,248 –K-Z Distribution Share Class (GBP) 145,904 188,576 –Z- Capitalisation Share Class (EUR) 1,626,917 500 –Z- Distribution Share Class (EUR) 65,549,598 500 –

Total subscriptions 124,070,109 43,392,227 28,980,718


Statement of changes in net assets for the year ended December 31, 2014

34


2014 December 31,

2013 December 31,

2012

Capital redemptionsI Capitalisation Share Class (EUR) (10,708,400) (3,229,407) (2,438,417)I Distribution Share Class (EUR) (40,957) – –B Capitalisation Share Class (EUR) (1,261,897) (1,138,241) (17,232)B Distribution Share Class (EUR) (56,298,132) (3,169,208) (1,632,113)R Capitalisation Share Class (EUR) (431,312) – –R Distribution Share Class (EUR) (637,330) (146,384) (56,175)K-Institutional Capitalisation Share Class (GBP) (2,319,579) – –K-Institutional Distribution Share Class (GBP) (27,520) (524,321) (32,106)K-B Capitalisation Share Class (GBP) (104,694) (359,364) (189,088)K-B Distribution Share Class (GBP) (187,780) – (61,637)K-Retail Capitalisation Share Class (GBP) (71,332) (1,094) (155,484)K-Retail Distribution Share Class(GBP) (67,288) (255,958) (156,738)K-Z Capitalisation Share Class (GBP) – – –K-Z Distribution Share Class (GBP) – – –Z- Capitalisation Share Class (EUR) (84,899) – –Z- Distribution Share Class (EUR) (5,343,024) – –

Total redemptions (77,584,144) (8,823,977) (4,738,990)

Net increase in net assets resulting from capital transactions 46,485,965 34,568,250 24,241,728

Net assetsNet assets at the beginning of the year 163,470,832 122,404,100 91,679,563Total increase in net assets 58,961,656 43,899,397 32,847,975Dividend distribution (2,049,336) (2,832,665) (2,123,438)

Net assets at the end of the year 220,383,152 163,470,832 122,404,100


Statement of changes in net assets for the year ended December 31, 2014

35


2014 December 31,

2013 December 31,

2012

Cash provided by operating activities

Profit after taxation 12,475,691 9,331,147 8,606,247(-) (increase) in unrealised gains and losses on investments and forward foreign exchange contracts (1,591,483) (4,939,826) (4,063,778)(-) decrease/(+) increase in receivables and other assets (1,971,346) (416,721) 145,857(+) increase/(-) decrease in payables 230,760 270,438 216,553

Net cash provided by operating activities 9,143,622 4,245,038 4,904,879

Cash provided by financing activities

(+) proceeds from shares issued 124,070,109 43,392,227 30,549,803(-) decrease from shares redeemed (77,584,144) (8,823,978) (5,005,654)(-) distributions paid to shareholders (2,049,336) (2,832,665) (2,123,438)

Net cash provided by financing activities 44,436,629 31,735,584 23,420,711

Cash provided from investing activities

(-) acquisitions of financial assets (55,019,532) (32,665,600) (17,047,114)

Net cash used by investing activities (55,019,532) (32,665,600) (17,047,114)

Cash

Net increase/(decrease) in cash and cash equivalents (1,439,281) 3,315,022 11,278,476Cash at the beginning of the year 34,886,216 31,571,194 20,292,718

Cash at the end of the year 33,446,935 34,886,216 31,571,194


Cash flow statement for the year ended December 31, 2014

36

December 31,

2014 December 31,

2013 December 31,

2012

Number of Shares outstanding at the beginning of the yearI Capitalisation Share Class (EUR) 1,715,520.458 1,363,943.639 1,115,102.313I Distribution Share Class (EUR) 947,608.782 906,615.976 814,546.885B Capitalisation Share Class (EUR) 46,080.221 66,655.172 23,383.015B Distribution Share Class (EUR) 1,913,893.000 1,253,099.000 830,920.000R Capitalisation Share Class (EUR) 166,243.191 60,532.331 41,821.479R Distribution Share Class (EUR) 147,122.402 90,999.422 62,180.921K–Institutional Capitalisation Share Class (GBP) 73,880.300 73,880.300 73,880.300K–Institutional Distribution Share Class (GBP) 390,581.346 397,315.029 376,645.774K–B Capitalisation Share Class (GBP) 30,060.455 42,882.088 49,991.988K–B Distribution Share Class (GBP) 29,841.123 21,575.757 14,690.809K–Retail Capitalisation Share Class (GBP) 2,327.424 2,367.424 6,101.300K–Retail Distribution Share Class (GBP) 18,109.626 27,780.607 34,021.460K–Z Capitalisation Share Class (GBP) 10,149.940 – –K–Z Distribution Share Class (GBP) 8,242.587 – –Z– Capitalisation Share Class (EUR) 20.000 – –Z– Distribution Share Class (EUR) 20.000 – –

Subscriptions over the yearI Capitalisation Share Class (EUR) 1,155,975.331 452,994.652 333,105.081I Distribution Share Class (EUR) 291,789.528 40,992.806 92,069.091B Capitalisation Share Class (EUR) 7,340.357 16,368.733 43,872.157B Distribution Share Class (EUR) 100,507.000 775,135.000 483,057.000R Capitalisation Share Class (EUR) 106,537.870 105,710.860 18,710.852R Distribution Share Class (EUR) 67,738.000 61,393.815 30,913.504K–Institutional Capitalisation Share Class (GBP) - – –K–Institutional Distribution Share Class (GBP) 49,091.319 14,151.426 21,916.755K–B Capitalisation Share Class (GBP) - – –K–B Distribution Share Class (GBP) 589.199 8,265.366 9,356.915K–Retail Capitalisation Share Class (GBP) - – 2,367.424K–Retail Distribution Share Class (GBP) 207.621 229.019 183.688K–Z Capitalisation Share Class (GBP) 8,053.995 10,149.940 –K–Z Distribution Share Class (GBP) 5,534.325 8,242.587 –Z– Capitalisation Share Class (EUR) 63,531.613 20.000 –Z– Distribution Share Class (EUR) 2,568,085.860 20.000 –


Statement of changes in the number of shares outstanding for the year ended December 31, 2014

37

December 31,

2014 December 31,

2013 December 31,

2012

Redemptions over the yearI Capitalisation Share Class (EUR) 319,154.909 101,417.833 84,263.755I Distribution Share Class (EUR) 1,446.558 – –B Capitalisation Share Class (EUR) 39,750.000 36,943.684 600.000B Distribution Share Class (EUR) 1,982,343.000 114,341.000 60,878.000R Capitalisation Share Class (EUR) 13,547.210 – –R Distribution Share Class (EUR) 22,657.009 5,270.835 2,095.003K–Institutional Capitalisation Share Class (GBP) 73,880.300 – –K–Institutional Distribution Share Class (GBP) 1,039.250 20,885.109 1,247.500K–B Capitalisation Share Class (GBP) 3,425.234 12,821.633 7,109.900K–B Distribution Share Class (GBP) 6,934.205 – 2,471.967K–Retail Capitalisation Share Class (GBP) 2,327.424 40.000 6,101.300K–Retail Distribution Share Class (GBP) 2,425.000 9,900.000 6,424.541K–Z Capitalisation Share Class (GBP) – – –K–Z Distribution Share Class (GBP) – – –Z– Capitalisation Share Class (EUR) 3,287.613 – –Z– Distribution Share Class (EUR) 208,313.083 – –

Number of Shares outstanding at the end of the yearI Capitalisation Share Class (EUR) 2,552,340.880 1,715,520.458 1,363,943.639I Distribution Share Class (EUR) 1,237,951.752 947,608.782 906,615.976B Capitalisation Share Class (EUR) 13,670.578 46,080.221 66,655.172B Distribution Share Class (EUR) 32,057.000 1,913,893.000 1,253,099.000R Capitalisation Share Class (EUR) 259,233.851 166,243.191 60,532.331R Distribution Share Class (EUR) 192,203.393 147,122.402 90,999.422K–Institutional Capitalisation Share Class (GBP) – 73,880.300 73,880.300K–Institutional Distribution Share Class (GBP) 438,633.415 390,581.346 397,315.029K–B Capitalisation Share Class (GBP) 26,635.221 30,060.455 42,882.088K–B Distribution Share Class (GBP) 23,496.117 29,841.123 21,575.757K–Retail Capitalisation Share Class (GBP) – 2,327.424 2,367.424K–Retail Distribution Share Class (GBP) 15,892.247 18,109.626 27,780.607K–Z Capitalisation Share Class (GBP) 18,203.935 10,149.940 –K–Z Distribution Share Class (GBP) 13,776.912 8,242.587 –Z– Capitalisation Share Class (EUR) 60,264.000 20.000 –Z– Distribution Share Class (EUR) 2,359,792.777 20.000 –


Statement of changes in the number of shares outstanding for the year ended December 31, 2014

38

1. General

Triodos Microfinance Fund is a Sub-Fund of Triodos SICAV II.

Triodos SICAV II (the ‘‘SICAV’’) has been incorporated under the laws of the Grand Duchy of Luxembourg as a “société d’investissement à capital variable” (SICAV) under the form of a “société anonyme” on April 10, 2006 for an unlimited period. Triodos SICAV II is governed by Part II of the Luxembourg Law of December 17, 2010. The SICAV is an alternative investment fund (“AIF”) subject to the requirements of the Directive 2011/61/EU of 8 June 2011 on Alternative Investment Fund Managers Directive (“AIFMD”) as implemented in Luxembourg through the law of 12 July 2013 on alternative investment fund managers (the “Law of 2013”).

The Registered Office of the SICAV is established at 11/13, Boulevard de la Foire, L-1528 Luxembourg.

The Articles have been deposited with the Chancery of the District Court of Luxembourg on April 27, 2006 and published in the Mémorial C, Recueil des Sociétés et Associations (the “Mémorial”). The SICAV has been registered with the Companies Register of the District Court of Luxembourg under number B 115.771. The Articles were last amended at the extraordinary general meeting of shareholders held on October 16, 2014 and published in the Mémorial.

The SICAV is structured as an umbrella fund, which provides both institutional and retail investors with a variety of Sub-Funds, each of which relates to a separate portfolio of assets permitted by law and managed within specific investment objectives.

As at December 31, 2014 the SICAV has three Sub-Funds: Triodos Renewables Europe Fund, Triodos Microfinance Fund and Triodos Organic Growth Fund.

Triodos Microfinance Fund, to which the separate annual report relates, does not constitute a separate legal entity, but there are two other Sub-Funds which together with Triodos Microfinance Fund form a single entity. An annual report which includes a complete description of the three Sub-funds of the SICAV has been issued and can be obtained from Triodos Bank. For the purpose of the relations between shareholders, each Sub-Fund is deemed to be a separate entity.

The overall objective of Triodos SICAV II - Triodos Microfinance Fund (the “Sub-Fund”) is to offer investors a financially and socially sound investment in the microfinance sector, mainly through investments in microfinance institutions (MFIs). The Sub-Fund offers the prospect of an attractive financial return combined with the opportunity for investors to make a pro-active, measurable and sustainable contribution to the development of the microfinance sector into an inclusive financial sector in which the majority of people have access to financial services.

The first subscription period ended on February 27, 2009 and the first NAV was calculated on March 31, 2009.

Shares may be subscribed once a month, on the Business Day preceding the Valuation Date. The Sub-Fund is semi open-ended, i.e. shares may be redeemed in principle once a month subject to a notice period. However, the SICAV is entitled to (temporarily) stop trading and thus the execution of the redemption applications received, if trading is not possible, in accordance with the stipulations of the Prospectus.

The Sub-Fund may offer Shares of the following Classes:- Euro-denominated Class “R” Shares Capitalisation - Euro-denominated Class “R” Shares Distribution- Euro-denominated Class “Z” Shares Capitalisation - Euro-denominated Class “Z” Shares Distribution

Notes to the financial statements

39

- Euro denominated Class “B” Shares Capitalisation - Euro denominated Class “B” Shares Distribution - Euro-denominated Class “I” Shares Capitalisation- Euro-denominated Class “I” Shares Distribution - British Pound-denominated Class “K-Retail” Shares Capitalisation - British Pound-denominated Class “K-Retail” Shares Distribution- British Pound-denominated Class “K-Z” Shares Capitalisation- British Pound-denominated Class “K-Z” Shares Distribution - British Pound-denominated Class “K-B” Shares Capitalisation - British Pound-denominated Class “K-B” Shares Distribution - British Pound-denominated Class “K-Institutional” Shares Capitalisation - British Pound-denominated Class “K-Institutional” Shares Distribution - Euro-denominated Class “P” Shares Capitalisation (not yet launched as per December 31, 2014)

• Class “R” Shares is open to certain retail investors, dependent on their country of residence.• Class “Z” Shares is open to certain retail investors, dependent on their country of residence.• Class “B” Shares is open to clients of private banks and other investors, who do not have access to Class “I”

Shares or to Class “R” Shares.• Class “I” Shares is restricted to Institutional Investors.• Class “K-Retail” Shares was offered to certain retail investors resident in the United Kingdom. Following

the implementation of the Retail Distribution Review, no new “K-Retail” Shares have been or will be issued after December 31, 2012. This Class of Shares is hedged towards the Euro.

• Class “K-Z” Shares is open to certain retail investors who are resident in the United Kingdom. This Class of Shares is hedged towards the Euro.

• Class “K-B” Shares was offered to investors, who do not have access to Class “K-Institutional” Shares or to Class “K-Retail” Shares and who are resident in the United Kingdom. Following the implementation of the Retail Distribution Review, no new “K-B” Shares have been or will be issued after December 31, 2012. This class of Shares is hedged towards the Euro.

• Class “K-Institutional” Shares is open to Institutional Investors, which are resident in the United Kingdom. This class is hedged towards the Euro.

• Class “P” Shares (when launched) is open to entities of Triodos Group. Class “P” Shares gives the right, in accordance with the Articles, to propose to the general meeting of Shareholders a list containing the names of candidates for the position of director of the SICAV from which a majority of the Directors must be appointed.

Classes of Shares of the capitalisation type do not distribute any dividend; income earned in these classes is reinvested.

Classes of Shares of the distribution type pay out dividend.

Initially, Shares are issued in registered form. At a later stage, Shares may also be issued in bearer form.

Shares may be subscribed once a month, on the Business Day preceding the Valuation Date.The financial year end of the SICAV is end of December each year.

Triodos SICAV II, including the Sub-Fund, is supervised by the Luxembourg supervisory authority, the Commission de Surveillance du Secteur Financier (CSSF).

40

Triodos SICAV II, including the Sub-Fund, is also registered with the Dutch Supervisory authorities, the Autoriteit Financiële Markten (AFM).

2. Summary of significant accounting principles

Investments are valued at their fair value. The fair value is determined as follows:

(a) The valuation of private equity investments (such as equity, subordinated debt and other types of mezzanine finance) are based on the International Private Equity and Venture Capital Valuation Guidelines, as published from time to time by the International Private Equity and Venture Capital Association, and is conducted with prudence and in good faith.

In the Sub-Fund, the subordinated debt investments are valued on the basis of the cost value less repayments and adjustments for any impairment. The private equity investments and the underlying investment funds are valued at fair value on the basis of adapted valuation models.

Other assets are valued according to the following rules:

(b) Senior debt instruments, invested in/granted to companies not listed or dealt in on any stock exchange or any other Regulated Market, are valued at fair market value, deemed to be the nominal value, increased by any interest accrued thereon; such value is adjusted, if appropriate, to reflect the appraisal of the Advisor of the Sub-Fund on the creditworthiness of the relevant debtor. The Board of Directors uses its best endeavors to continually assess this method of valuation and recommend changes, where necessary, to ensure that debt instruments are valued at their fair value as determined in good faith by the Board of Directors.

The senior debt instruments held by the Sub-Fund are valued on the basis of the cost value less repayments and adjustments for any impairment.

(c) The value of money market instruments not listed on any stock exchange or dealt in on any other Regulated Market and with a remaining maturity of less than 12 months is deemed to be the nominal value thereof, increased by any interest accrued thereon.

(d) The value of securities which are admitted to official listing on any stock exchange is based on the latest available price or, if appropriate, on the average price on the stock exchange which is normally the principal market of such securities, and each security dealt on any other Regulated Market is based on the last available price. In the event that this price is, in the opinion of the Board of Directors, not representative of the fair market value of such securities, for example in the case of illiquid securities and/or stale prices, the directors value the securities at fair market value according to their best judgment and information available to them at that time.

(e) Units or shares of open-end UCIs are valued at their last official net asset values, as reported or provided by such UCI or their agents, or at their last unofficial net asset values (i.e. estimates of net asset values) if more recent than their last official net asset values, provided that due diligence has been carried out by the relevant Advisor, in accordance with instructions and under the overall control and responsibility of the Board of Directors, as to the reliability of such unofficial net asset values.

41

(f) The liquidating value of futures, forward or options contracts not admitted to official listing on any stock exchange or dealt on any other Regulated Market means their net liquidating value is determined, pursuant to the policies established prudently and in good faith by the Board of Directors, on a basis consistently applied for each different variety of contracts.

(g) The value of any cash at hand or on deposit, bills and demand notes and accounts receivable, prepaid expenses, cash dividends declared and interest accrued, and not yet received are deemed to be the full amount thereof, unless, however, the same is unlikely to be paid or received in full, in which case the value thereof is determined after making such discounts as the Board of Directors may consider appropriate to reflect the true value thereof.

(h) Swaps, as far as credit swaps are concerned, are valued at fair market values as determined prudently and in good faith by the Board of Directors. Cross-currency interest rate swaps are valued on the basis of the prices provided by the counterparty.

(i) All other securities and assets are valued at fair market value as determined in good faith pursuant to procedures established by the Board of Directors.

(j) Placements in foreign currency are quoted in euros with due observance of the currency exchange rates most recently known.

(k) Realised and non-realised changes in the value of investments are incorporated in the profit and loss account.

(l) The principle for determination of profit is based on the attribution of income and expenses to the relevant period. The income from payments of profit on equity participations is accounted for in the year in which they are made payable. Prepaid costs and costs still to be paid are taken into account in determining the expenses.

(m) Other assets and liabilities are recorded at nominal value after deduction of any provision in respect of anticipated non-recovery.

(n) The costs of investments expressed in currencies other than EUR are translated into EUR at the exchange rate prevailing at purchase date.

(o) Interest income is accrued pursuant to the terms of the underlying investment. Income is recorded net of respective withholding taxes, if any.

(p) Gains and losses arising from un-matured forward foreign exchange contracts are determined on the basis of the applicable forward exchange rates at the valuation date and are booked in the profit and loss accounts.

(q) Dividend income is recognised on cash basis, net of any withholding taxes.

(r) Equity investments of Triodos SICAV II are excluded from consolidation due to exemptions by temporary holding, size and time window.

42

3. Formation expenses

The total formation expenses of the Sub-Fund will be amortised over a period of five years and amount to EUR 175,000.

4. Taxation

According to the law in force and current practice, the SICAV, including the Sub-Fund, is not subject to any Luxembourg tax on income and capital gains nor are dividends paid by the SICAV subject to any Luxembourg withholding tax.

However, each of the SICAV’s Sub-Funds is subject to a subscription tax (taxe d’abonnement) at an annual rate of 0.05% p.a. Such rate may be decreased to 0.01% p.a. for certain Sub-Funds or Classes of Shares which are restricted to Institutional Investors as specified in the relevant Sub-Fund Particulars. This tax is calculated and payable quarterly on the basis of the Net Asset Value of each Sub-Fund at the end of each quarter. This tax is not due on that portion of the SICAV’s assets invested in other Luxembourg UCIs.

Since January 1, 2010 microfinance funds are no longer subject to any subscription tax. The Sub-Fund, qualifying as a microfinance fund, is thus no longer subject to subscription tax.

In addition, the issue of Shares in the SICAV is not subject to any registration duties or other taxes in Luxembourg.

5. Administrative and depositary fees

The Depositary and Paying Agent, the Administrative Agent, the Domiciliary and Corporate Agent and the Registrar and Transfer Agent are entitled to receive fees in accordance with usual practice in Luxembourg and payable monthly.

The administrative and depositary fees comprise the following:

Currency (EUR) 2014 2013 2012

Domiciliary agency fee 3,437 4,827 4,683Administrative fee 85,005 63,623 45,986Transfer agency fee 104,431 73,270 63,998Depositary fee 89,724 68,033 45,518 Total 282,597 209,753 160,185

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6. Investment management, distribution and service fees

For the services it provides, the Investment Manager is entitled to an annual fee payable quarterly and calculated as described in the Sub-Fund’s Particulars.

The Sub-Fund pays for the provision of investment management services and supporting services an annual fee of 1.75% for Class “I” Shares, Class “K-Institutional” Shares and Class “P” Shares (when launched), an annual fee of 2.50% for Class “R” Shares, Class “B” Shares, Class “K-Retail” Shares and Class “K-B” Shares and an annual fee of 1.95% for Class “Z” Shares and Class “K-Z” Shares, calculated on the relevant Class’ Net Assets, accrued monthly and payable quarterly.

The costs for marketing and distribution activities related to retail investors and attributable to Class “R” Shares, Class “B” Shares, Class “K-Retail” Shares and Class “K-B” Shares will only be borne by Class “R” Shares, Class “B” Shares, Class “K-Retail” Shares and Class “K-B” Shares and will be charged to the management fee. The costs for marketing activities incurred by the Investment Manager related to retail investors and attributable to Class “Z” Shares and Class “K-Z” Shares will only be borne by Class “Z” Shares and Class “K-Z” Shares and may amount to maximum 0.20% (on an annual basis) of the relevant Share Class’ Net Assets.

7. Other income

The other income comprises the following:

Currency (EUR) 2014 2013 2012

Administrative fee income on loans granted by the Fund 392,697 302,136 174,377Other income 1,512 – –

Total 394,209 302,136 174,377

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8. Other expenses

The other expenses comprise the following:

Currency (EUR) 2014 2013 2012

Supervisory fee (CSSF) 2,000 3,000 2,500Remuneration of the Board of Directors/Managers 6,667 10,000 8,750Legal fees 85,712 44,128 30,217Consulting fees 5,406 – –Bank fees 4,635 11,806 7,015Portfolio transaction costs 38,383 – –Other expenses 33,107 22,043 24,375

Total 175,910 90,977 72,857

9. Accounts payable and accrued expenses

As at December 31, 2014, the accounts payable and accrued expenses mainly include the following expenses: administrative fees, audit fees, custodian fees, domiciliary agency fees, legal fees and transfer agency fees.

10. Forward foreign exchange contracts

As at December 31, 2014 outstanding forward foreign exchange contracts are composed of:

Maturity date Purchase Sale Unrealised gain/

(loss) in EUR

06.01.2015 EUR 1,697,101 USD (2,500,000) (115,882)06.01.2015 EUR 1,132,161 USD (1,500,000) 44,45806.01.2015 EUR 374,195 USD (500,000) 11,62506.01.2015 EUR 1,150,108 USD (1,500,000) 62,41906.01.2015 EUR 603,005 USD (750,000) (15,251)07.01.2015 EUR 909,992 USD (1,239,000) (111,542)07.01.2015 EUR 2,169,051 USD (2,953,000) (265,648)12.01.2015 EUR 1,331,880 USD (1,650,000) (28,122)13.01.2015 GBP 665,315 EUR (843,387) 13,790 13.01.2015 GBP 523,124 EUR (663,138) 10,843 13.01.2015 GBP 9,488,763 EUR (12,028,434) 196,679 13.01.2015 GBP 340,824 EUR (432,046) 7,064 13.01.2015 GBP 385,746 EUR (488,992) 7,996 13.01.2015 GBP 285,713 EUR (362,184) 5,922 05.02.2015 EUR 1,512,974 USD (2,000,000) (135,418)

45


(loss) in EUR

05.02.2015 EUR 748,923 USD (1,000,000) 23,94405.02.2015 EUR 539,599 USD (671,299) (13,590)05.03.2015 EUR 581,311 USD (800,000) (77,953)23.03.2015 EUR 5,804,841 USD (7,500,000) (374,047)07.04.2015 EUR 554,590 USD (750,000) 11,12907.04.2015 EUR 1,479,399 USD (2,000,000) 30,17107.04.2015 EUR 744,879 USD (1,000,000) 20,27207.04.2015 EUR 558,659 USD (750,000) 15,20407.04.2015 EUR 751,371 USD (1,000,000) 26,77407.04.2015 EUR 2,109,051 USD (2,739,551) 124,05607.04.2015 EUR 816,504 USD (1,125,000) (110,415)07.04.2015 EUR 363,399 USD (500,000) (48,564)07.04.2015 EUR 362,621 USD (500,000) (49,344)07.04.2015 EUR 359,144 USD (500,000) (52,833)07.04.2015 EUR 2,247,611 USD (2,824,101) (78,568)07.04.2015 EUR 4,372,617 USD (5,494,150) (152,851)07.04.2015 EUR 1,088,672 USD (1,500,000) (146,851)13.04.2015 EUR 393,611 USD (500,000) (18,208)27.04.2015 EUR 504,586 USD (700,000) (72,075)27.04.2015 EUR 257,339 USD (357,000) (36,758)06.05.2015 EUR 2,587,621 USD (3,246,300) (85,561)07.05.2015 EUR 635,666 USD (873,500) (83,815)21.05.2015 EUR 1,820,326 USD (2,500,000) (238,600)05.06.2015 EUR 5,485,564 USD (7,500,000) (690,291)05.06.2015 EUR 1,946,837 USD (2,658,162) (242,009)09.06.2015 EUR 284,835 USD (386,720) (33,583)22.06.2015 EUR 366,361 USD (500,000) (45,265)02.07.2015 EUR 730,180 USD (1,000,000) (92,992)03.07.2015 EUR 1,100,594 USD (1,500,000) (134,172)04.08.2015 EUR 920,471 USD (1,239,000) (98,985)06.08.2015 EUR 1,199,616 USD (1,500,000) 114,36524.08.2015 EUR 577,119 USD (765,000) (52,074)03.09.2015 EUR 2,911,526 USD (4,000,000) 17,74204.09.2015 EUR 453,553 USD (592,000) (33,216)04.09.2015 EUR 1,105,535 USD (1,443,000) (80,965)04.09.2015 EUR 1,094,292 USD (1,428,324) (80,141)04.09.2015 EUR 383,068 USD (500,000) (28,054)08.09.2015 EUR 1,158,122 USD (1,500,000) (75,170)08.09.2015 EUR 1,158,749 USD (1,500,000) (74,540)22.09.2015 EUR 1,544,282 USD (2,000,000) (99,648)22.09.2015 EUR 281,549 USD (365,000) (18,470)25.09.2015 EUR 1,175,641 USD (1,500,000) (57,142)05.10.2015 EUR 594,967 USD (750,000) (21,274)

46


(loss) in EUR

05.10.2015 EUR 3,966,444 USD (5,000,000) (141,829)26.10.2015 EUR 301,441 USD (385,000) (14,803)26.10.2015 EUR 516,243 USD (642,000) (11,017)05.11.2015 EUR 735,565 USD (1,000,000) 12,77305.11.2015 EUR 396,212 USD (500,000) (14,389)01.12.2015 EUR 1,115,786 USD (1,399,531) 104,98701.12.2015 USD 1,399,528 PEN (4,000,000) 47,73104.12.2015 EUR 1,989,294 USD (2,750,000) 2,33415.12.2015 EUR 1,986,729 USD (2,500,000) (64,344)04.01.2016 USD 4,762,072 PEN (13,600,000) 187,80406.01.2016 EUR 3,692,673 USD (4,762,072) 254,78506.01.2016 EUR 1,850,481 USD (2,500,000) 45,22306.01.2016 EUR 280,778 USD (375,000) 10,00504.02.2016 EUR 1,486,878 USD (2,000,000) 43,30404.02.2016 EUR 377,209 USD (500,000) 16,34501.04.2016 USD 1,717,530 PEN (4,750,000) 120,63906.04.2016 EUR 1,285,336 USD (1,717,530) 46,87006.04.2016 EUR 2,139,610 USD (2,800,000) 120,87706.04.2016 EUR 944,697 USD (1,250,000) 43,41207.04.2016 EUR 360,438 USD (500,000) (178)05.05.2016 EUR 747,496 USD (1,000,000) 26,75606.06.2016 EUR 1,124,838 USD (1,500,000) 44,33907.07.2016 EUR 1,133,166 USD (1,500,000) 53,31812.07.2016 EUR 281,021 USD (378,409) 8,59205.08.2016 EUR 1,866,438 USD (2,500,000) 67,46505.08.2016 EUR 1,114,579 USD (1,500,000) 35,15204.11.2016 EUR 757,805 USD (1,000,000) 39,59104.11.2016 EUR 1,801,672 USD (2,500,000) 5,21706.12.2016 EUR 2,912,427 USD (4,000,000) 40,23607.02.2017 EUR 362,043 USD (500,000) 3,64907.02.2017 EUR 360,295 USD (500,000) (44,107)07.02.2017 EUR 543,459 USD (750,000) (63,071)06.06.2017 EUR 1,518,027 USD (2,000,000) 91,48320.06.2017 EUR 2,375,100 INR (237,500,000) (442,194) 13.07.2017 EUR 435,476 USD (594,643) 11,31507.08.2017 EUR 755,744 USD (1,000,000) 43,33118.09.2017 EUR 2,055,324 INR (196,000,000) (257,973)12.01.2018 EUR 648,088 USD (891,964) 16,89807.11.2019 EUR 441,761 USD (600,000) 31,207

Total (8,791,472)

The counterparties linked to the forward foreign exchange contracts are:- RBC Investor Services Bank S.A- Triodos Bank NV

47

11. Swap contracts

As at December 31, 2014 outstanding cross currency interest rate swap contracts are composed of:

Description Maturity date

Notional in EUR

Counterparty MFX Currency Risk Solutions

Notional in currency

Unrealised gain/(loss)

in EUR

CIRS MFX EUR/KZT 01.07.2015 1,504,194 KZT 282,653,000 437,117 CIRS MFX EUR/KZT 01.07.2015 984,514 KZT 185,000,000 286,612 CIRS MFX EUR/GHS 01.11.2016 407,830 GHS 2,500,000 (23,863)CIRS MFX EUR/INR 31.01.2017 1,568,998 INR 166,000,000 (359,690)CIRS MFX EUR/INR 01.07.2016 2,252,461 INR 208,532,839 (240,657)CIRS MFX EUR/INR 25.11.2016 2,349,182 INR 250,000,000 (579,617)CIRS MFX EUR/KGS 03.05.2016 853,812 KGS 81,650,000 (71,928)CIRS MFX EUR/KZT 03.07.2017 1,117,381 KZT 283,189,165 270,671 CIRS MFX EUR/KZT 03.09.2018 1,555,694 KZT 550,560,000 164,790 CIRS MFX EUR/KZT 01.10.2018 585,216 KZT 199,500,000 86,894 CIRS MFX EUR/NGN 01.08.2017 346,021 NGN 100,000,000 64,504 CIRS MFX EUR/TJS 04.01.2016 830,471 TJS 7,248,600 48,503 CIRS MFX EUR/TJS 03.04.2017 766,667 TJS 7,141,500 147,669 CIRS MFX EUR/USD 01.01.2021 730,727 USD 1,000,000 (117,448)

Total 113,559

12. Dividend distributions

During the year ended December 31, 2014 the following dividends were paid by the Sub-Fund Triodos SICAV II - Triodos Microfinance Fund:

Class: “R” Shares Distribution (EUR)Ex-date: May 30, 2014Payment date: June 6, 2014Dividend per share: EUR 0.84

Class: “B” Shares Distribution (EUR)Ex-date: May 30, 2014Payment date: June 6, 2014Dividend per share: EUR 0.83

Class: “I” Shares Distribution (EUR)Ex-date: May 30, 2014Payment date: June 6, 2014Dividend per share: EUR 1.04

48

Class: “K-Retail” Shares Distribution (GBP)Ex-date: May 30, 2014Payment date: June 6, 2014Dividend per share: EUR 0.75 (GBP 0.61)

Class: “K-B” Shares Distribution (GBP)Ex-date: May 30, 2014Payment date: June 6, 2014Dividend per share: EUR 0.78 (GBP 0.63)

Class: “K-Institutional” Shares Distribution (GBP)Ex-date: May 30, 2014Payment date: June 6, 2014Dividend per share: EUR 0.93 (GBP 0.76)

Class: “K-Z” Shares Distribution (GBP)Ex-date: May 30, 2014Payment date: June 6, 2014Dividend per share: EUR 0.35 (GBP 0.28)

Class: “Z” Shares Distribution (EUR)Ex-date: May 30, 2014Payment date: June 6, 2014Dividend per share: EUR 0.13

13. Off-balance sheet commitments

As at December 31, 2014 the Sub-Fund has committed to invest in the following companies:

Client Country Amount

Kompanion Kyrgyzstan KGS 117,297,135BancoSol Bolivia BOB 48,313,739BancoSol Bolivia USD 300,000Janalakshmi Financial Services India INR 200,000,000India Financial Inclusion Fund India USD 460,588Early Dawn Microfinance Myanmar USD 735,000

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14. Ongoing charges ratios

12 months ending

December 31, 2014

12 months ending

December 31, 2013

12 months ending

December 31, 2012

B Capitalisation Share Class (EUR) 2.50% 2.72% 2.90%B Distribution Share Class (EUR) 2.57% 2.80% 2.85%I Capitalisation Share Class (EUR) 2.05% 2.05% 2.08%I Distribution Share Class (EUR) 2.04% 2.03% 2.08%K-B Capitalisation Share Class (GBP) 2.64% 2.67% 2.78%K-B Distribution Share Class (GBP) 2.63% 2.79% 2.87%K-Institutional Capitalisation Share Class (GBP)* 2.00% 2.03% 2.07%K-Institutional Distribution Share Class (GBP) 2.02% 2.03% 2.08%K-Retail Capitalisation Share Class (GBP)** 2.63% 2.75% 2.64%K-Retail Distribution Share Class (GBP) 2.64% 2.65% 2.77%K-Z Capitalisation Share Class (GBP)*** 2.26% 2.20% n.a.R Capitalisation Share Class (EUR) 2.72% 2.84% 2.79%R Distribution Share Class (EUR) 2.70% 2.82% 2.80%K-Z Distribution Share Class (GBP)*** 2.27% 2.10% n.a.Z- Capitalisation Share Class (EUR)*** 2.35% 2.29% n.a.Z- Distribution Share Class (EUR)*** 2.34% 2.27% n.a.

* This share class has been active until January 2014. Ongoing charges are based on best estimate** This share class has been active until June 2014. Ongoing charge are based on best estimate*** Ongoing charges 2013 is based on best estimate

The ongoing charges reflect the total normalized expenses charged to the result, divided by the average net asset value. For the calculation of the average net asset value, each computation and publication of the net asset value is taken into account. The ongoing charges are calculated over the twelve month period ending at the end of the reporting period.

50

15. Exchange rate

The exchange rates used as at December 31, 2014 are:

1 EUR = 94.292060 BDT1 EUR = 53.606078 DOP1 EUR = 0.776046 GBP 1 EUR = 3.890311 GHS 1 EUR = 9.194909 GTQ 1 EUR = 76.382401 INR1 EUR = 110.128646 KES1 EUR = 220.852345 KZT1 EUR = 3.601714 PEN1 EUR = 5,602.083333 PYG1 EUR = 6.422771 TJS1 EUR = 3,342.679558 UGX1 EUR = 1.210050 USD1 EUR = 655.835659 XOF1 EUR = 2,874.228029 COP1 EUR = 2,291.761364 MNT

16. Other information

As at December 31, 2014, Mr. Patrick Goodman and Mr. Pierre Aeby both hold shares in Triodos Microfinance Fund. The other directors do not hold shares in Triodos Microfinance Fund.

17. Transaction costs

The following table presents the transaction costs related to the portfolio of investments over 2014.

Currency (EUR) 2014

Triodos Microfinance Fund* 95.518

*This amount includes transaction costs related to disposition of equity investments during 2014. Also included are transaction costs which relate to equity investments that are currently being acquired. These will be capitalized on the cost price when the investments materialize.

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18. Leverage

The leverage effect is determined by the AIFMD as being any method by which the AIFM increases the exposure of Triodos Microfinance Fund, whether through borrowing of cash or securities leverage embedded in derivative positions, or by any other means. The leverage creates risks Triodos Microfinance Fund.

The leverage is calculated on a frequent basis and shall not exceed such thresholds as further described in the Sub-Funds Particulars in the prospectus of Triodos SICAV II, using both the ‘gross method’ and the commitment method’. The gross method gives the overall exposure of Triodos Microfinance Fund, whereas the commitment method gives insight in the hedging and netting techniques used by the AIFM.

Based upon the leverage ratio calculated by the commitment method as per year-end 2014 Triodos Microfinance Fund is unleveraged. In implementing the investment policy Triodos Microfinance Fund will generally not make use of leverage. The Sub-Fund can only use leverage for short term liquidity requirements as described in the prospectus. This was not the case in 2014.

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To the Shareholders of Triodos SICAV II - Triodos Microfinance Fund11/13 Boulevard de la Foire, L-1528 Luxembourg

We have audited the accompanying financial statements of Triodos SICAV II – Triodos Microfinance Fund, Sub-Fund of Triodos SICAV II (the ‘‘SICAV’’), which comprise the statement of net assets as at December 31, 2014, and the statement of operations, the statement of changes in net assets and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Responsibility of the Board of Directors of the SICAV

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

Responsibility of the réviseur d’entreprises agréé

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the judgement of the Réviseur d’Entreprises agréé, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, the Réviseur d’Entreprises agréé considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors of the SICAV, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of Triodos SICAV II- Triodos Microfinance Fund as at December 31, 2014, and of the results of its operations, changes in its net assets and the cash flow statement for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the financial statements.

Emphasis of matter

Without qualifying our opinion, we draw your attention to note 1 to the financial statements which describes that Triodos Microfinance Fund is a Sub-Fund of Triodos SICAV II and does not constitute a separate legal entity from Triodos SICAV II.

Other matter

Supplementary information included in the annual report has been reviewed in the context of our mandate but has not been subject to specific audit procedures carried out in accordance with the standards described above. Consequently, we

Report of the Réviseur d'Entreprises Agréé

53

express no opinion on such information. However, we have no observation to make concerning such information in the context of the financial statements taken as a whole.

Luxembourg, March 31, 2015

KPMG Luxembourg, Société CoopérativeCabinet de révision agréé

Jane WilkinsonPartner

54

as at December 31, 2014 and 2013

Number of borrowers Percentage women Loan portfolio (EUR x 1,000) Average loan (EUR) % clients in rural areas Number of saving clients

Microfinance institution Country 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013

AB Microfinance Bank Nigeria Nigeria 37,927 * 64% * 41,203 * 1,086 * 0% * 86,121 *Access Bank Tanzania Ltd. Tanzania 27,516 24,281 33% 38% 58,006 40,175 2,108 1,655 0% 0% 165,908 128,040AccessBank Azerbaijan 157,146 147,601 20% 23% 859,278 583,261 5,468 3,952 13% 17% 335,277 165,107ACLEDA Bank Cambodia 339,627 335,627 53% 54% 1,648,226 1,068,262 4,853 3,183 86% 84% 1,424,590 1,105,167ACLEDA Bank Lao Laos 18,685 16,711 49% 48% 68,612 64,343 3,672 3,850 53% 39% 44,881 33,667Advans Banque Congo Congo 6,135 5,835 38% 37% 23,904 15,298 3,896 2,622 0% 0% 18,487 15,478

Advans Ghana Ghana 11,702 11,818 51% 58% 8,957 6,852 765 580 0% 0% 26,685 24,912

AMRET Cambodia 304,211 285,828 79% 80% 237,557 147,992 781 518 88% 98% 123,060 90,627Arvand Tajikistan 32,080 * 41% * 31,812 * 992 * 53% * 10,842 *Asociacion Fondo de Desarrollo Nicaragua 61,555 * 50% * 61,540 * 1,000 * 68% * ** *AzerCredit Azerbaijan 79,305 74,372 34% 35% 71,635 52,314 903 703 82% 77% ** **Bai Tushum Kyrgyzstan 28,847 24,112 40% 37% 88,391 61,851 3,064 2,565 69% 74% 30,978 7,445

Banco AdemiDominican Republic

217,425 175,328 50% 51% 219,655 180,394 1,010 1,029 5% 4% 235,625 194,170

Banco Itapúa Paraguay 13,553 * 25% * 193,188 * 14,254 * 4% * 32,080 *Banco Solidario Ecuador 384,990 382,027 51% 54% 517,539 441,458 1,344 1,156 3% 13% 88,171 91,790Bank Eskhata Tajikistan 54,750 35,896 38% 38% 135,764 89,134 2,480 2,483 30% 27% 88,545 74,038Bhartiya Samruddhi Finance India *** 360,447 *** 67% *** 55,518 *** 154 *** 93% *** **BRAC Bank Bangladesh 223,225 201,647 18% 17% 1,061,788 1,083,886 4,757 5,375 33% 33% 652,031 641,973BRAC Tanzania Tanzania 113,959 101,068 97% 99% 19,941 15,151 175 150 66% 64% ** **BRAC Uganda Uganda 158,833 129,108 98% 98% 26,402 17,324 166 134 82% 68% ** **Caja Rural de Ahorro y Crédito Credinka S.A. Peru 35,539 30,266 49% 49% 125,773 103,406 3,539 3,417 32% 30% 42,790 38,095Centenary Bank Uganda 155,821 142,606 24% 24% 245,846 188,455 1,578 1,322 33% 56% 1,057,181 984,557Commercial Leasing Company Sri Lanka 53,810 54,329 20% 20% 200,013 158,615 3,717 2,920 27% 59% ** **Compartamos Financiera Peru 238,361 198,362 70% 63% 261,544 219,254 1,097 1,105 0% 0% 5,890 1,409Contactar Colombia 72,095 66,386 46% 47% 52,639 44,193 730 666 84% 82% ** **Credo Georgia 178,132 139,428 45% 42% 136,936 96,440 769 692 73% 73% ** **Crezcamos Colombia 73,369 * 54% * 52,501 * 716 * 58% * ** *Edpyme Raíz Peru 96,702 97,152 47% 48% 143,315 128,720 1,482 1,325 11% 10% ** **Edpymes Proempresa S.A. Peru 49,311 45,073 50% 50% 81,540 67,007 1,654 1,487 29% 30% 5,076 540EMFIL India 492,067 * 100% * 102,728 * 209 * 85% * ** *Enda Tunisia 246,788 * 67% * 100,225 * 406 * 43% * ** *FAMA Nicaragua 48,044 * 73% * 32,002 * 666 * 35% * ** *FINCA Azerbaijan Azerbaijan 156,879 152,825 28% 30% 201,836 153,440 1,287 1,004 64% 62% ** **FINCA MicroCredit Company Kyrgyzstan 126,537 128,341 60% 62% 104,913 81,503 829 635 59% 59% ** **First Microfinance Bank Tajikistan 20,236 * 33% * 45,953 * 2,271 * 45% * 43,777 *FUNDEA Guatemala 23,897 30,998 43% 51% 23,508 22,399 984 723 77% 77% ** **Génesis Empresarial Guatemala 115,306 145,831 65% 63% 71,831 65,207 623 447 83% 90% ** **Grameen Koota India 717,283 425,589 100% 100% 146,750 65,074 205 153 69% 65% ** **Hamkorbank Uzbekistan 52,631 * 36% * 397,247 * 7,548 * 21% * 114,671 *

Appendix: microfinance institutions and banks in the portfolio

55




AB Microfinance Bank Nigeria Nigeria 37,927 * 64% * 41,203 * 1,086 * 0% * 86,121 *Access Bank Tanzania Ltd. Tanzania 27,516 24,281 33% 38% 58,006 40,175 2,108 1,655 0% 0% 165,908 128,040AccessBank Azerbaijan 157,146 147,601 20% 23% 859,278 583,261 5,468 3,952 13% 17% 335,277 165,107ACLEDA Bank Cambodia 339,627 335,627 53% 54% 1,648,226 1,068,262 4,853 3,183 86% 84% 1,424,590 1,105,167ACLEDA Bank Lao Laos 18,685 16,711 49% 48% 68,612 64,343 3,672 3,850 53% 39% 44,881 33,667Advans Banque Congo Congo 6,135 5,835 38% 37% 23,904 15,298 3,896 2,622 0% 0% 18,487 15,478

Advans Ghana Ghana 11,702 11,818 51% 58% 8,957 6,852 765 580 0% 0% 26,685 24,912

AMRET Cambodia 304,211 285,828 79% 80% 237,557 147,992 781 518 88% 98% 123,060 90,627Arvand Tajikistan 32,080 * 41% * 31,812 * 992 * 53% * 10,842 *Asociacion Fondo de Desarrollo Nicaragua 61,555 * 50% * 61,540 * 1,000 * 68% * ** *AzerCredit Azerbaijan 79,305 74,372 34% 35% 71,635 52,314 903 703 82% 77% ** **Bai Tushum Kyrgyzstan 28,847 24,112 40% 37% 88,391 61,851 3,064 2,565 69% 74% 30,978 7,445

Banco AdemiDominican Republic

217,425 175,328 50% 51% 219,655 180,394 1,010 1,029 5% 4% 235,625 194,170

Banco Itapúa Paraguay 13,553 * 25% * 193,188 * 14,254 * 4% * 32,080 *Banco Solidario Ecuador 384,990 382,027 51% 54% 517,539 441,458 1,344 1,156 3% 13% 88,171 91,790Bank Eskhata Tajikistan 54,750 35,896 38% 38% 135,764 89,134 2,480 2,483 30% 27% 88,545 74,038Bhartiya Samruddhi Finance India *** 360,447 *** 67% *** 55,518 *** 154 *** 93% *** **BRAC Bank Bangladesh 223,225 201,647 18% 17% 1,061,788 1,083,886 4,757 5,375 33% 33% 652,031 641,973BRAC Tanzania Tanzania 113,959 101,068 97% 99% 19,941 15,151 175 150 66% 64% ** **BRAC Uganda Uganda 158,833 129,108 98% 98% 26,402 17,324 166 134 82% 68% ** **Caja Rural de Ahorro y Crédito Credinka S.A. Peru 35,539 30,266 49% 49% 125,773 103,406 3,539 3,417 32% 30% 42,790 38,095Centenary Bank Uganda 155,821 142,606 24% 24% 245,846 188,455 1,578 1,322 33% 56% 1,057,181 984,557Commercial Leasing Company Sri Lanka 53,810 54,329 20% 20% 200,013 158,615 3,717 2,920 27% 59% ** **Compartamos Financiera Peru 238,361 198,362 70% 63% 261,544 219,254 1,097 1,105 0% 0% 5,890 1,409Contactar Colombia 72,095 66,386 46% 47% 52,639 44,193 730 666 84% 82% ** **Credo Georgia 178,132 139,428 45% 42% 136,936 96,440 769 692 73% 73% ** **Crezcamos Colombia 73,369 * 54% * 52,501 * 716 * 58% * ** *Edpyme Raíz Peru 96,702 97,152 47% 48% 143,315 128,720 1,482 1,325 11% 10% ** **Edpymes Proempresa S.A. Peru 49,311 45,073 50% 50% 81,540 67,007 1,654 1,487 29% 30% 5,076 540EMFIL India 492,067 * 100% * 102,728 * 209 * 85% * ** *Enda Tunisia 246,788 * 67% * 100,225 * 406 * 43% * ** *FAMA Nicaragua 48,044 * 73% * 32,002 * 666 * 35% * ** *FINCA Azerbaijan Azerbaijan 156,879 152,825 28% 30% 201,836 153,440 1,287 1,004 64% 62% ** **FINCA MicroCredit Company Kyrgyzstan 126,537 128,341 60% 62% 104,913 81,503 829 635 59% 59% ** **First Microfinance Bank Tajikistan 20,236 * 33% * 45,953 * 2,271 * 45% * 43,777 *FUNDEA Guatemala 23,897 30,998 43% 51% 23,508 22,399 984 723 77% 77% ** **Génesis Empresarial Guatemala 115,306 145,831 65% 63% 71,831 65,207 623 447 83% 90% ** **Grameen Koota India 717,283 425,589 100% 100% 146,750 65,074 205 153 69% 65% ** **Hamkorbank Uzbekistan 52,631 * 36% * 397,247 * 7,548 * 21% * 114,671 *

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IMON Tajikistan 90,099 70,363 35% 39% 111,033 73,725 1,232 1,048 65% 63% 3,772 1,015Kenya Women Finance Trust DTM Kenya *** 256,640 *** 100% *** 125,728 *** 490 *** 70% *** 371,512KMF LLC Kazakhstan 128,757 98,374 67% 70% 126,675 84,929 984 863 66% 67% ** **Kompanion Kyrgyzstan 115,167 108,596 76% 80% 66,490 59,259 577 546 98% 99% ** **LOLC Micro Credit Sri Lanka 229,364 185,782 73% 70% 150,906 111,860 658 602 0% 90% ** **Mibanco Peru 300,827 364,575 56% 55% 1,158,280 1,177,126 3,850 3,229 25% 23% 394,641 713,843MicroCred Ivory Coast Ivory Coast 19,638 * 46% * 52,371 * 2,667 * 0% * ** *MicroCred Senegal Senegal 35,287 28,538 43% 46% 60,506 39,999 1,715 1,402 0% 0% 131,543 98,623Mitra Bisnis Keluarga Indonesia 492,991 * 100% * 47,870 * 97 * 90% * ** *PRASAC Cambodia 251,112 196,906 86% 85% 479,792 275,293 1,911 1,398 89% 88% 360,349 302,917Prizma Mikro Bosnia Herzegovina 14,428 35,801 56% 55% 28,456 36,826 1,972 1,029 57% 59% 35,799 35,799Sathapana Cambodia 94,852 78,862 58% 58% 257,352 132,134 2,713 1,676 55% 53% 87,376 58,115Sonata India 361,873 * 100% * 60,826 * 168 * 72% * ** *Utkarsh Microfinance India 504,567 * 99% * 76,449 * 152 * 69% * ** *Visión Banco Paraguay 242,604 275,808 44% 44% 640,219 488,273 2,639 1,770 1% 2% 284,068 229,082Vistaar Financial Services India 46,212 22,211 83% 80% 53,906 22,648 1,166 1,020 73% 76% ** **Vitas Jordan Jordan 7,511 * 60% * 13,137 * 1,749 * 0% * ** *XacBank Mongolia 26,766 80,116 50% 57% 95,775 458,202 3,578 5,719 37% 40% 454,701 410,360

Grand total 8,186,334 5,771,464 11,380,541 8,402,930 6,384,915 5,818,281

* Not financed in 2013** Not applicable*** Repayment in 2014

Appendix: microfinance institutions and banks in the portfolio

57




IMON Tajikistan 90,099 70,363 35% 39% 111,033 73,725 1,232 1,048 65% 63% 3,772 1,015Kenya Women Finance Trust DTM Kenya *** 256,640 *** 100% *** 125,728 *** 490 *** 70% *** 371,512KMF LLC Kazakhstan 128,757 98,374 67% 70% 126,675 84,929 984 863 66% 67% ** **Kompanion Kyrgyzstan 115,167 108,596 76% 80% 66,490 59,259 577 546 98% 99% ** **LOLC Micro Credit Sri Lanka 229,364 185,782 73% 70% 150,906 111,860 658 602 0% 90% ** **Mibanco Peru 300,827 364,575 56% 55% 1,158,280 1,177,126 3,850 3,229 25% 23% 394,641 713,843MicroCred Ivory Coast Ivory Coast 19,638 * 46% * 52,371 * 2,667 * 0% * ** *MicroCred Senegal Senegal 35,287 28,538 43% 46% 60,506 39,999 1,715 1,402 0% 0% 131,543 98,623Mitra Bisnis Keluarga Indonesia 492,991 * 100% * 47,870 * 97 * 90% * ** *PRASAC Cambodia 251,112 196,906 86% 85% 479,792 275,293 1,911 1,398 89% 88% 360,349 302,917Prizma Mikro Bosnia Herzegovina 14,428 35,801 56% 55% 28,456 36,826 1,972 1,029 57% 59% 35,799 35,799Sathapana Cambodia 94,852 78,862 58% 58% 257,352 132,134 2,713 1,676 55% 53% 87,376 58,115Sonata India 361,873 * 100% * 60,826 * 168 * 72% * ** *Utkarsh Microfinance India 504,567 * 99% * 76,449 * 152 * 69% * ** *Visión Banco Paraguay 242,604 275,808 44% 44% 640,219 488,273 2,639 1,770 1% 2% 284,068 229,082Vistaar Financial Services India 46,212 22,211 83% 80% 53,906 22,648 1,166 1,020 73% 76% ** **Vitas Jordan Jordan 7,511 * 60% * 13,137 * 1,749 * 0% * ** *XacBank Mongolia 26,766 80,116 50% 57% 95,775 458,202 3,578 5,719 37% 40% 454,701 410,360

Grand total 8,186,334 5,771,464 11,380,541 8,402,930 6,384,915 5,818,281

* Not financed in 2013** Not applicable*** Repayment in 2014

58

Board of Directors

Pierre Aeby (Chair)Chief Financial Officer and member of the Executive Board of Triodos Bank NV

Marilou van Golstein BrouwersManaging Director of Triodos Investment Management BV

Patrick GoodmanIndependent, Partner of Innpact S.à r.l.

Olivier MarquetManaging Director of Triodos Bank NV (Belgian branch)

Garry PietersIndependent, Associate The Directors’ Office Luxembourg

Alexander Schwedeler (until May 12, 2014) Managing Director of Triodos Bank NV (German branch)

Alternative Investment Fund Manager

Triodos Investment Management BV Nieuweroordweg 1P.O. Box 553700 AB ZeistThe Netherlands

Distributor

Triodos Investment Management BV Nieuweroordweg 1P.O. Box 553700 AB ZeistThe Netherlands

Registered Office

11-13, Boulevard de la FoireL-1528 LuxembourgLuxembourg

Depositary, Paying Agent, Domiciliary, Corporate and Administrative Agent

RBC Investor Services Bank S.A.14, Porte de FranceL-4360 Esch-sur-AlzetteLuxembourg

Registrar and Transfer Agent

RBC Investor Services Bank S.A.14, Porte de FranceL-4360 Esch-sur-AlzetteLuxembourg

Réviseur d’Entreprises Agréé

KPMG Luxembourg, Société Coopérative39, Avenue John F. KennedyL-1855 LuxembourgLuxembourg

Legal Advisor in Luxembourg

Arendt & Medernach14, rue Erasme, B.P. 39L-2010 LuxembourgLuxembourg

Fund Manager

Femke Bos has been Fund Manager of Triodos Microfinance Fund since the funds' inception in 2009. Before, she was Fund Manager of Triodos Sustainable Finance Foundation (formerly Triodos Doen). Femke Bos is also Regional Manager for Asia and responsible for a number of equity investments there. She served on the Board of Directors of XacBank in Mongolia from 2005-2009 and is currently a member of the Board of Directors of ACLEDA Bank in Cambodia and ACLEDA Bank Lao in Lao PDR. Femke Bos joined Triodos Bank in 2002 as a Senior Investment Officer Asia. Before that, she held several (management) positions with ABN AMRO Bank in the Netherlands. She has a Master’s degree in Law from the University of Amsterdam.

As at December 31, 2014, the fund manager does not hold shares in Triodos Microfinance Fund.

Management and administration

Colophon

Triodos SICAV II - Triodos Microfinance Fund annual report 2014

PublishedMarch 2015

TextTriodos Investment Management, Zeist, The Netherlands

PhotographyPhotos in this annual report have been provided by microfinance institutions in which Triodos Microfinance Fund invests.

DesignMichael Nash Associates, London, United Kingdom

LayoutVia Bertha, Utrecht, The Netherlands

PrintingDrukkerij Pascal, Utrecht, The Netherlands

Circulation200 copies

ContactIf you have comments or questions about this report, please contact Triodos Investment Management.

This document can be downloaded from: www.triodos.com.

TLEn

Rated by: The Luxembourg Fund Labelling Agency (LuxFLAG) is an independent, non-profit association. The Agency, founded in 2006, aims to promote the raising of capital for Responsible Investment sectors by awarding a recognisable label to investment funds. Its objective is to reassure investors that the applicant investment fund invests, directly or indirectly, in the responsible investment sector. The applicant fund may be domiciled in any jurisdiction that is subject to a level of national supervision equivalent to that available in European Union countries.

http://www.triodos.com.

annual report triodos microfinance fund 2014

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