INTERIM REPORT & ACCOUNTS. Henderson Investment Fund OEIC. For the six months ended 28 February 2017

Transcription

1 INTERIM REPORT & ACCOUNTS For the six months ended 28 February 2017 Henderson Investment Fund OEIC

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3 Who are Henderson Global Investors? Henderson is an independent global asset manager, specialising in active investment. Named after its first client and founded in 1934, Henderson is a client-focused global business with over 1,000 employees worldwide and assets under management (AUM) of 103.1bn* (31 March 2017). Its core areas of investment expertise are European equities, global equities, global fixed income, multi-asset and alternatives. Whilst the global headquarters are based in London, Henderson offers clients access to all major markets around the globe. Henderson has offices located in Chicago, Boston, Milwaukee, Philadelphia, Edinburgh, Paris, Madrid, Zurich, Luxembourg, Amsterdam, Frankfurt, Milan, Singapore, Beijing, Hong Kong, Tokyo, Melbourne and Sydney. The main Asia/Pacific operations are conducted out of Sydney and Singapore and the US operations out of Chicago. Equity investment professionals are also located in London, Edinburgh, Singapore, Sydney, Melbourne and Milwaukee, and additional fixed income investment professionals are located in Philadelphia and Melbourne. Distribution is conducted out of the majority of offices world-wide. With investment expertise across a broad range of asset classes, Henderson s investment managers have unique perspectives and operate unconstrained by a house view. Underpinning the fund management process is a comprehensive risk-control framework ensuring that investment views are translated into portfolios managed in line with investors risk and return requirements. Corporate strategy Henderson s five-year strategy focuses on growth and globalisation by delivering excellent performance and service to an increasingly diverse client base. The company aims to deliver a sustained period of organic growth, attracting net new money from clients at a higher rate than that of its industry peers. Henderson will supplement this organic growth with value accretive acquisitions. By 2018, Henderson will have established a truly global footprint, infrastructure and mind-set. Accelerating our growth potential In October 2016, Henderson announced an intention to merge with US investment house, Janus Capital. The combined group, Janus Henderson Group plc, will be a leading global active asset manager with AUM of more than US$320bn and a combined market capitalisation of approximately US$6bn. The pooled strengths of Janus and Henderson in the US and European markets will create a truly global asset manager with a diverse range of products, world class client service, depth and breadth in global distribution, and expanded geographic footprint. The merger is currently expected to close in the second quarter of What do we do? At Henderson Global Investors we do one thing and we do it really well investment management. As a company, we are totally focused on this core activity and it underpins everything we do. We do this by providing a range of investment products and services including: Open ended funds offshore funds, unit trusts, OEICs Investment trusts Individual Savings Accounts Pension fund management Management of portfolios for UK and international institutional clients Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. * Source: Henderson Global Investors

4 Contents Authorised Corporate Director s (ACD) report Page 1 Director s statement Page 1 Market review Page 3 Notes to the financial statements Page 5 Sub-funds financial statements Henderson European Growth Fund Page 6 Henderson Global Equity Income Fund Page 19 Henderson UK Alpha Fund Page 39 Appendix Page 51 Further information Page 55

5 Henderson Investment Fund OEIC Authorised Corporate Director s report We are pleased to present the Interim Report and Accounts for Henderson Investment Fund OEIC for the six months ended 28 February Authorised status Henderson Investment Fund OEIC is an open-ended investment company with variable capital incorporated in England and Wales under registered number IC106 and authorised by the Financial Conduct Authority (FCA) with effect from 18 May Shareholders are not liable for the debts of the company. Henderson Investment Fund OEIC is structured as an umbrella company. The assets of each sub-fund will be treated as separate from those of every other sub-fund and will be invested in accordance with the investment objective and policy applicable to that sub-fund. All of the sub-funds are classed as UCITS schemes. Fund liabilities Each sub-fund is treated as a separate entity and is a segregated portfolio of assets and those assets can only be used to meet the liabilities of, or claims against that sub-fund. Director s statement In accordance with the requirements of the Collective Investment Schemes sourcebook, as issued and amended by the Financial Conduct Authority, I hereby certify the investment report and financial statements on behalf of the Directors of Henderson Investment Funds Limited. Martin Skinner (Director) 27 April 2017 Henderson Investment Fund OEIC 1

6 Henderson Investment Fund OEIC Authorised Corporate Director s report (continued) Service providers Authorised Corporate Director (ACD) Directors of the ACD Investment Manager Shareholder Administrator Depositary Independent Auditors Name Address Regulator Henderson Investment Funds Limited Member of The Investment Association (formerly Investment Management Association) The ultimate holding company is Henderson Group plc G Foggin M Skinner P Wagstaff G Kitchen C Chaloner H J de Sausmarez Henderson Global Investors Limited The ultimate holding company is Henderson Group plc International Financial Data Services (UK) Limited National Westminster Bank plc The ultimate holding company is the Royal Bank of Scotland Group plc PricewaterhouseCoopers LLP Registered Office: 201 Bishopsgate London EC2M 3AE Registered in England No Telephone Dealing Enquiries Bishopsgate London EC2M 3AE IFDS House St Nicholas Lane Basildon Essex SS15 5FS 135 Bishopsgate London EC2M 3UR 141 Bothwell Street Glasgow G2 7EQ Legal Advisers Eversheds LLP One Wood Street London EC2V 7WS Authorised and regulated by the Financial Conduct Authority Authorised and regulated by the Financial Conduct Authority Authorised and regulated by the Financial Conduct Authority Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority Institute of Chartered Accountants in England and Wales The Law Society 2 Henderson Investment Fund OEIC

7 Market review for the six months ended 28 February 2017 Returns are in sterling total returns unless otherwise stated. Global equity markets rose over the six months to 28 February 2017 (MSCI World Index +13.7% in sterling, +8.1% in US dollars). Markets were boosted by higher fuel prices, decreased fear about the UK s impending exit from the European Union, and the unexpectedly positive global reaction to Donald Trump s US presidential election victory and potential pro-growth policies. In the UK, the FTSE All-Share Index rose (+8.6%). Economic data was generally promising, giving the impression that the summer s Brexit vote result was indeed absorbed by the economy at least with little tumult. The Bank of England (BoE) kept policy on hold throughout the period, comforted by encouraging economic indicators such as unemployment hitting an 11-year low, an upward revision to fourth-quarter GDP growth, and significantly higher inflation (driven by higher fuel prices). In February, Members of Parliament approved the bill that will enable the triggering of Article 50, which will in turn commence Brexit negotiations. However, the bill has yet to pass through the House of Lords. European equities were up during the period in sterling terms (FTSE World Europe ex UK +9.4% in sterling, 8.5% in euros). The changing tide of global politics enveloped the continent, with votes in Austria and Italy featuring populist movements with messages similar to those of Trump in the US. While Austria s far-right candidate was defeated, Italy voted no to Prime Minister Renzi s calls for constitutional reforms, paving the way for a more euro-sceptic party to rise to power. This represented a further threat to the make-up of the eurozone the euro sank to 20-month lows against the US dollar after the Italian result was announced. The European Central Bank (ECB) took action to support the economy, and extended the end date of its bond-buying programme (albeit at a lower rate of 60bn in purchases per month). Europe did record some positive economic data over the six months: GDP growth in the fourth quarter matched that of the third, and inflation moved steadily higher. US equities also gained strongly in the period (S&P % in sterling, +10.0% in US dollars). Domestic markets advanced, especially following November s presidential election. The result in favour of Donald Trump pushed equities higher as hopes that the new president s tax-reform plans and reflationary policies would come to fruition. Despite the political turmoil and subsequent social unrest within the US, economic data was broadly healthy: inflation reached a five-year high of 2.5% year-on-year in January, and the number of people applying for unemployment benefits dipped to a nearly 43-year low in February. The Federal Reserve saw fit to raise interest rates during the period, and provided hawkish rhetoric on potential rate rises in the first half of Asia-Pacific ex Japan equities advanced over the six months (MSCI AC Asia Pacific ex Japan +11.6% in sterling, +6.0% in US dollars). In China, fourth-quarter GDP expansion increased to an annualised 6.8%, exceeding estimates brought more encouraging data to the country: inflation hit its highest level since 2014 at 2.5% over the year to January, and exports increased by 7.9% year-on-year. In India, the inflation rate decreased steadily from August due to falling food prices. Indonesia saw GDP growth contract in the fourth quarter as consumer spending slowed. South Korean politics turned tumultuous in December when President Park Geun-hye was impeached over accusations of corruption. Australia saw a marked recovery in GDP from the third quarter to the fourth (-0.5% and +1.1%, respectively). Still, the central bank lowered growth forecasts for the fiscal year ending in June In Japan, inflation levels and the strength of the yen were much in focus in a strong six months for Japanese equities. According to the Topix Index, Japanese equities advanced by 13.5% in sterling and +16.7% in yen terms as a weakening in the yen versus the US dollar improved the prospects for Japanese exporters. In September, the central bank placed a sharper focus on controlling the yield curve. By October, the stubbornly strong yen had started to weaken somewhat, and consumer price inflation turned positive, remaining so throughout the rest of the period. January brought good news in the form of sharply improving exports, which increased by 5.4% over the year to December. In January the Bank of Japan raised its 2017 growth forecast to 1.5% from 1.3%. Henderson Investment Fund OEIC 3

8 Market review (continued) Emerging markets also strengthened (MSCI Emerging Markets +11.2% in sterling, +5.6% in US dollars). The Brazilian stock market exhibited particular strength. Russia recovered strongly, with positive newsflow regarding the country s talks with the Organization of the Petroleum Exporting Countries (OPEC) and improving inflation throughout the period. Mexico, and especially the peso, saw its fates closely tied to the US election. The currency lost ground as the prospect of a Trump administration grew, as the president often speaks of stricter trade regulations on both Mexico and China. As for central bank activity, Brazil made multiple rate cuts, and the Reserve Bank of India and Bank Indonesia also cut rates. Elsewhere in Asia, South Korea witnessed a political upset in the form of a presidential impeachment. Taiwan saw annual inflation fall precipitously at the end of the period, to 0.04% in February after a rise of 2.25% in January. Within fixed income, core government bond markets (US, UK, Germany, Japan) ended the six months on a positive note, but overall global government bonds were down (JPM Global Government Bond Index -1.7% in sterling, -6.6% in US dollars). In the US, 10-year Treasury yields rose very sharply in the weeks following the presidential election then traded in a fairly narrow range for the rest of the period. Ten-year gilt yields experienced a dip in late September (on suggestions from the BoE that rate cuts could be forthcoming) but subsequently increased, ending the six months to 28 February 2017 notably higher. In Germany, 10-year bund yields moved higher, ending the review period in positive territory. Elsewhere, corporate debt (Barclays Global Aggregate Corporate Bond -3.3% in sterling, -3.4% in US dollars) started 2017 with record-high issuance in the first days of the year. The asset class benefited from inclusion in both the BoE s and ECB s bond-buying programmes. Commodities market news was dominated by a long-awaited oil production-cut deal from OPEC, struck in November. The move proved widely supportive, and many countries around the world saw inflation increase in the following months owing to higher fuel prices. Brent crude oil ended the review period around US$55 per barrel, circa US$10 higher than it began. Copper experienced a boom in November; the potential for infrastructure improvements in the US and greater demand from China meant that higher prices were largely sustained into Gold plunged following Donald Trump s election as investors appetite for risk increased, and despite a recovery from late December the precious metal failed to recoup earlier losses. 4 Henderson Investment Fund OEIC

9 Notes to the financial statements as at 28 February 2017 Accounting policies The accounting policies, distribution policies and potential risks applied are consistent with those of the financial statements for the year ended 31 August 2016 and are described in those annual accounts, with the exception of those stated below. Crossholdings There are no cross holdings within any of the funds of Henderson Investment OEIC at the end of the period (31/08/16: nil). Henderson Investment Fund OEIC 5

10 Henderson European Growth Fund Authorised Corporate Director s report Investment Fund Manager Simon Rowe Investment objective and policy To achieve long-term capital growth. The fund will invest principally in the securities of European companies. In addition to ordinary shares, the fund may also invest in preference shares, debt securities convertible into ordinary stocks and shares, money-market instruments and deposits. The fund may also invest outside of Europe if the investment adviser believes that it is in the interest of the fund. Performance summary Cumulative performance Six One Five Since months year years launch 31 Aug Feb Feb Jul Feb Feb Feb Feb 17 % % % % Henderson European Growth Fund FTSE World Europe ex UK Index Discrete performance 29 Feb Feb Feb Feb Feb Feb Feb Feb Feb Feb 13 % % % % % Henderson European Growth Fund Source: Morningstar, bid to bid and net of fees as at 12 noon valuation point, based on performance of Class A accumulation. Benchmark values are at close of business. Please remember that past performance is not a guide to future performance. The value of an investment and the revenue from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. Significant portfolio changes for the six months ended 28 February 2017 Largest purchases 000 Largest sales 000 Royal Dutch Shell 'B' 23,165 Sodexo 22,535 Carlsberg 20,396 Nestlé 20,501 Danske Bank 19,750 Bayer 19,042 Tarkett 17,059 Novo Nordisk 'B' 18,620 Michelin 16,704 Air Liquide 17,419 SCOR 16,632 Sika 13,619 Koninklijke Philips 11,229 Aalberts Industries 13,450 Akzo Nobel 9,905 Wartsila 13,371 Leonardo 8,988 Novartis 13,081 Scandinavian Tobacco 7,460 Symrise 11,907 Total purchases 183,195 Total sales 262,722 6 Henderson European Growth Fund

11 Authorised Corporate Director s report (continued) Investment review After good performance in the first half of 2016, the Henderson European Growth Fund underperformed in the six months to February 2017, returning 5.2% against a gain of 9.5% for its benchmark. In terms of sectors, our industrial holdings, where we are overweight, were good contributors, as investors anticipated an uptick in activity and investment in the US in the wake of Trump s electoral victory. Those gains were offset by a sector rotation in the market away from defensive growth (where we have several holdings) and into value and in particular banks, which performed strongly in this period (after poor performance in the first half of 2016). Our largest holdings in banks, ING and Nordea, both rose strongly (up 15% and 26%, respectively). We also added Danske bank to the portfolio. Fund performance was also held back by our underweight position in healthcare, which bounced strongly after Trump s victory, celebrating the defeat of Hillary Clinton and her price-cutting plans. At an individual stock level, we had several notable successes, including French services group SPIE, which rose 32% after announcing a well-received acquisition in Germany. Two portfolio companies, French aerospace group Zodiac and vacuum pump specialist Pfeiffer Vacuum (a recent purchase) received bids during the period. Two other recent purchases, Tarkett and tractor maker CNH, both rose strongly, rising 25% and 33%, respectively. Construction chemicals group Sika gained 20%. These gains were offset by setbacks at a number of companies that have been good long term contributors; these included DCC, Kerry and Givaudan, which suffered from the sectoral rotation into value. Consumer packaging group Huhtamaki (a strong performer early in 2015 and early 2016) slipped on disappointing trading numbers, and Novo Nordisk retreated on a warning of lower growth. In terms of portfolio changes, we took partial profits in a number of high-quality companies that had performed well but where valuations had reached high levels: such holdings included DCC, Kerry, RELX, Fuchs, Huhtamaki, Wolters and Givaudan. We also took profits in a number of positions, such as Aalberts, Nestlé, Air Liquide Bayer and Sodexo. We opened positions in Michelin, which continues to improve returns through restructuring. We bought holdings in Carlsberg, another restructuring story, and Akzo Nobel, which looks inexpensive even though it is struggling to grow. We bought a holding in French-based flooring group Tarkett, which is consolidating the industry using managers from the car industry to improve performance at acquired companies. Another new position is SCOR, the smallest of the major reinsurers, which has an entrepreneurial management team and should benefit from any rise in interest rates. We also bought a holding in Royal Dutch Shell that we think will rerate (undergo a reassessment by the market) once it becomes clear that the dividend is sustainable. Additionally, we opened a number of smaller positions in companies where we have identified potential, including Scandinavian Tobacco, ferry group DFDS and sausage-casing maker Viscofan. We also topped up positions in CNH, Rockwool and Pfeiffer. Although there are political risks posed by the forthcoming elections in the Netherlands, France and Germany, together with the start of the UK negotiating to leave the European Union, we are optimistic that the outcome of these elections might be less worrying than some commentators suggest. We believe the current situation will produce a number of undervalued self-help stories offering very attractive cash returns that are much higher than those on offer from bonds. Henderson European Growth Fund 7

12 Comparative tables as at 28 February 2017 Net asset value per share Net asset Net asset Number of Net asset Net asset value value of shares in value per value per of fund shares issue share share ( ) ( ) (pence) % change 1 Class A accumulation 31/08/14 984,555, ,578, ,396, /08/15 927,918, ,796, ,018, /08/16 1,011,685, ,965, ,511, /02/17 1,021,690, ,878, ,309, Class I accumulation 31/08/14 984,555, ,738, ,333, /08/15 927,918, ,221,351 96,977, /08/16 1,011,685, ,020, ,151, /02/17 1,021,690, ,897, ,161, Class S income 31/08/14 984,555,444 21,073,584 10,432, /08/15 927,918,275 24,653,654 11,272, /08/16 1,011,685,806 31,351,168 11,896, /02/17 1,021,690,722 33,543,181 11,936, Class Z accumulation 31/08/14 984,555, , , /08/15 927,918, , , /08/16 1,011,685, , , /02/17 1,021,690, , , This is the percentage change in the net asset value per share from the beginning of the period to the close of the period. 8 Henderson European Growth Fund

13 Comparative tables (continued) Performance record Calendar year Net revenue Highest price Lowest price (pence per share) (pence per share) (pence per share) Class A accumulation Class I accumulation Class S income Class Z accumulation to 28 February Henderson European Growth Fund 9

14 Ongoing charge figure The annualised ongoing charge figure (OCF) of the fund is calculated as the ratio of the total ongoing charges to the average net asset value for twelve months. Ongoing charges are all expenses deducted from the assets of the fund during the period, except for expenses that are explicitly excluded by regulation. 28/02/17 31/08/16 % % Class A Class I Class S Class Z The OCF is calculated in accordance with guidelines issued by the European Securities and Markets Authority (ESMA). 10 Henderson European Growth Fund

15 Risk and reward profile The fund currently has 4 types of share class in issue; A accumulation, I accumulation, S income and Z accumulation. The risk and reward profile is the same for each type of share class and is as follows: Typically Lower potential risk/reward Typically Higher potential risk/reward Lower Risk Higher Risk The Synthetic Risk and Reward Indicator (SRRI) is calculated based on historical volatility over a rolling 5 year period; it is reviewed monthly and updated if volatility has changed materially to cause a movement in the SRRI level. The SRRI is an indicator and may not accurately reflect future volatility and market conditions. The value of an investment in the fund can go up or down. When you sell your shares, they may be worth less than you paid for them. The risk/reward rating above is based on medium-term volatility. In the future, the fund s actual volatility could be higher or lower and its rated risk/reward level could change. The share classes appear at 5 out of 7. Share classes in higher categories have shown greater and/or more frequent variations in share price in the past 5 years than those in lower categories. The lowest category does not mean risk free. The rating does not reflect the possible effects of unusual market conditions or large unpredictable events. Under normal market conditions the following risks may apply: Active management risk Active management techniques that have worked well in normal market conditions could prove ineffective or detrimental at other times. Counterparty risk The fund could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the fund. Derivatives risk Derivatives use exposes the fund to risks different from, and potentially greater than, the risks associated with investing directly in securities and may therefore result in additional loss, which could be significantly greater than the cost of the derivative. Equities risk Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result. Exchange rate risk Changes in currency exchange rates may cause the value of your investment and any income from it to rise or fall. Hedging risk Measures designed to reduce the impact of certain risks may not be available or may be ineffective. Liquidity risk Any security could become hard to value or to sell at a desired time and price, increasing the risk of investment losses. The full list of the fund s risks are contained in the Risk Warnings section of the fund s prospectus. The risk rating has changed from 6 to 5 for all share classes. The SRRI conforms to the ESMA guidelines for the calculation of the SRRI. Henderson European Growth Fund 11

16 Portfolio statement as at 28 February 2017 Holding Investment Market Percentage value of total 000 net assets % Equities 97.07% (31/08/2016: 99.67%) Austria 0.33% (31/08/2016: 0.00%) Basic Materials 0.33% (31/08/2016: 0.00%) 26,916 Lenzing 3, Belgium 1.63% (31/08/2016: 1.76%) Consumer Goods 1.39% (31/08/2016: 1.56%) 575,999 Ontex 14, Consumer Services 0.24% (31/08/2016: 0.20%) 59,464 Kinepolis 2, Cayman Islands 0.00% (31/08/2016: 2.07%) Industrials 0.00% (31/08/2016: 2.07%) Denmark 9.61% (31/08/2016: 6.13%) Consumer Goods 4.03% (31/08/2016: 1.09%) 286,119 Carlsberg 20, ,005 Royal Unibrew 13, ,245 Scandinavian Tobacco 7, , Financials 2.09% (31/08/2016: 0.00%) 794,304 Danske Bank 21, Health Care 1.22% (31/08/2016: 3.53%) 436,035 Novo Nordisk 'B' 12, Industrials 2.27% (31/08/2016: 1.51%) 118,928 DFDS 5, ,313 Rockwool International 'B' 17, , Finland 6.27% (31/08/2016: 7.94%) Financials 3.98% (31/08/2016: 3.99%) 1,108,116 Sampo 40, Industrials 2.29% (31/08/2016: 3.95%) 806,408 Huhtamaki 23, France 20.05% (31/08/2016: 16.04%) Basic Materials 0.00% (31/08/2016: 1.56%) Consumer Goods 1.71% (31/08/2016: 0.00%) 192,415 Michelin 17, Consumer Services 2.96% (31/08/2016: 5.15%) 1,674,605 Elior 30, Financials 1.78% (31/08/2016: 0.00%) 626,472 SCOR 18, Henderson European Growth Fund

17 Portfolio statement (continued) Holding Investment Market Percentage value of total 000 net assets % Health Care 1.65% (31/08/2016: 1.41%) 242,106 Sanofi 16, Industrials 11.95% (31/08/2016: 7.92%) 7,613 Dassault Aviation 6, ,517 Eiffage 12, ,149,776 Eurotunnel 8, ,021 Schneider Electric 18, ,423,274 SPIE 27, ,452 Tarkett 20, ,017 Vinci 10, ,112 Zodiac Aerospace 17, , Germany 11.48% (31/08/2016: 14.94%) Basic Materials 4.03% (31/08/2016: 7.04%) 370,594 Brenntag 17, ,954 Fuchs Petrolub Non-Voting Preference Shares 23, , Consumer Goods 2.72% (31/08/2016: 2.96%) 169,795 Continental 27, Consumer Services 1.37% (31/08/2016: 1.49%) 234,641 Fielmann 14, Industrials 3.36% (31/08/2016: 3.45%) 227,361 Duerr 15, ,504 Jungheinrich Preference 8, ,651 Pfeiffer Vacuum Technology 10, , Ireland 1.54% (31/08/2016: 2.53%) Consumer Goods 1.54% (31/08/2016: 2.53%) 253,625 Kerry 15, Netherlands 12.24% (31/08/2016: 10.13%) Basic Materials 2.43% (31/08/2016: 1.19%) 188,431 Akzo Nobel 10, ,097 IMCD 14, , Consumer Services 2.73% (31/08/2016: 3.86%) 844,633 Wolters Kluwer 27, Financials 3.11% (31/08/2016: 2.70%) 2,858,094 ING 31, Health Care 1.83% (31/08/2016: 0.00%) 765,943 Koninklijke Philips 18, Henderson European Growth Fund 13

18 Portfolio statement (continued) Holding Investment Market Percentage value of total 000 net assets % Industrials 0.00% (31/08/2016: 2.38%) Oil & Gas 2.14% (31/08/2016: 0.00%) 1,005,525 Royal Dutch Shell 'B' 21, Slovakia 0.00% (31/08/2016: 0.00%) Financials 0.00% (31/08/2016: 0.00%) 22,600 VUB Kupon~ - - Spain 0.67% (31/08/2016: 0.00%) Consumer Goods 0.67% (31/08/2016: 0.00%) 161,244 Viscofan 6, Sweden 10.21% (31/08/2016: 9.06%) Consumer Goods 3.00% (31/08/2016: 2.79%) 2,408,623 Dometic 14, ,303,407 Husqvarna 'B' 15, , Financials 3.38% (31/08/2016: 2.70%) 3,653,011 Nordea Bank 34, Industrials 3.83% (31/08/2016: 3.57%) 785,708 Atlas Copco 'A' 20, ,117,204 Trelleborg 'B' 18, , Switzerland 13.93% (31/08/2016: 19.12%) Basic Materials 3.46% (31/08/2016: 4.60%) 9,878 Givaudan 14, ,075 Syngenta 20, , Consumer Goods 0.00% (31/08/2016: 2.18%) Financials 2.56% (31/08/2016: 2.38%) 100,720 Cembra Money Bank 6, ,578,964 UBS 19, , Health Care 2.80% (31/08/2016: 4.75%) 249,772 Novartis 15, ,507 Roche Holdings 12, , Industrials 5.11% (31/08/2016: 5.21%) 17,264 Bucher Industries 3, ,014,278 OC Oerlikon 8, ,759 Sika 26, ,246 Sulzer 13, , Henderson European Growth Fund

19 Portfolio statement (continued) Holding Investment Market Percentage value of total 000 net assets % United Kingdom 9.11% (31/08/2016: 9.95%) Consumer Services 3.71% (31/08/2016: 4.34%) 2,656,711 RELX 37, Industrials 5.40% (31/08/2016: 5.61%) 2,436,932 CNH Industrial 18, ,663 DCC 29, ,132,691 Grafton 7, , ~ Suspended, delisted or unquoted securities Investment assets 991, Other net assets 29, Total net assets 1,021, Henderson European Growth Fund 15

20 Statement of total return (unaudited) for the six months ended 28 February /02/17 28/02/ Income Net capital gains 62,503 41,653 Revenue 1,742 4,655 Expenses (6,136) (5,999) Net expense before taxation (4,394) (1,344) Taxation 385 (185) Net expense after taxation (4,009) (1,529) Total return before distributions 58,494 40,124 Distributions - - Change in net assets attributable to shareholders from investment activities 58,494 40,124 Statement of change in net assets attributable to shareholders (unaudited) for the six months ended 28 February /02/17 28/02/ Opening net assets attributable to shareholders* 1,011, ,918 Amounts receivable on issue of shares 12,560 10,709 Amounts payable on cancellation of shares (61,049) (41,804) (48,489) (31,095) Change in net assets attributable to shareholders from investment activities 58,494 40,124 Closing net assets attributable to shareholders 1,021, ,947 * The opening net assets attributable to shareholders for the current period do not equal the closing net assets attributable to the comparative period as they are not consecutive periods. 16 Henderson European Growth Fund

21 Balance sheet (unaudited) as at 28 February 2017 Assets: 28/02/17 31/08/ Investments 991,757 1,008,394 Current assets: Debtors 4,074 6,101 Cash and bank balances 35,562 15,339 Total assets 1,031,393 1,029,834 Liabilities: Creditors: Bank overdrafts 7,070 - Distribution payable Other creditors 2,632 17,348 Total liabilities 9,702 18,148 Net assets attributable to shareholders 1,021,691 1,011,686 Henderson European Growth Fund 17

22 Notes to the financial statements Accounting policies The accounting policies, distribution policy and potential risks are consistent with those of the financial statements for the year ended 31 August 2016 and are described in those annual accounts. 18 Henderson European Growth Fund

23 Henderson Global Equity Income Fund Authorised Corporate Director s report Investment Fund Managers Andrew Jones and Ben Lofthouse Investment objective and policy To achieve an income in excess of that of the MSCI World Index with the potential for long-term capital growth. The fund will invest principally in global equities. In addition to ordinary shares, the fund may also invest in fixed interest securities, preference shares, debt securities convertible into ordinary stock, money market instruments, cash and near cash and deposits. Performance summary Cumulative performance Six One Five Since months year years launch 31 Aug Feb Feb Feb Feb Feb Feb Feb 17 % % % % Henderson Global Equity Income Fund MSCI World Index Discrete performance 29 Feb Feb Feb Feb Feb Feb Feb Feb Feb Feb 13 % % % % % Henderson Global Equity Income Fund Source: Morningstar, bid to bid and net of fees as at 12 noon valuation point, based on performance of Class A income. Benchmark values are in USD terms and as at close of business. Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. Significant portfolio changes for the six months ended 28 February 2017 Largest purchases 000 Largest sales 000 Japan Tobacco 12,381 NTT 12,034 Sumitomo Mitsui Financial 12,123 British American Tobacco 10,603 General Motors 11,956 Wolters Kluwer 10,001 Nordea Bank 11,004 SCOR 9,921 Samsung Electronics Preference Shares 9,909 BCE 9,568 Blackstone 9,753 KKR 7,815 SK Telecom 9,722 Sanofi 7,786 Crown Castle 9,683 Cheung Kong Property 7,700 Siemens 9,528 Munchener Ruckvers 7,571 Toyota Motor 9,005 Reynolds American 7,281 Total purchases 130,765 Total sales 147,243 Henderson Global Equity Income Fund 19

24 Authorised Corporate Director s report (continued) Investment review The fund s total return in sterling over the six months was 8.3%, compared with the total return of the MSCI World Index of 13.7% in sterling over the same period. The US market outperformed following the Republican victory in the presidential election on the expectation that there may be corporate tax reform and higher infrastructure spending to come. Other notable moves during the period included a higher oil price following an agreement from the Organisation of the Petroleum Exporting Countries to curb production and a further rise in government bond yields following the election. This was due to the expectation that if expansionary fiscal policy is pursued by the Republicans at a time of already high employment, this could cause an increase in inflation. The fund underperformed the benchmark during the period. This was primarily a result of country allocation, in particular the underweight position in the US market as a result of its low dividend yield. The best performing holdings during the six months were predominantly financials, including Synchrony Financial, JP Morgan, ING and Wells Fargo. If interest rates and bond yields move sustainably higher, this should positively impact margins for financial companies following years of margin pressure and earnings downgrades as a result of the low interest rate environment. Among the weakest performers were tobacco companies Imperial Brands and Japan Tobacco, both of which were impacted by the broader rotation in the market away from defensive sectors. In addition, the holdings in the pharmaceutical sector detracted from returns following continued scrutiny over drug pricing in the US. These concerns have resulted in excessive weakness, in our opinion, and stocks such as Roche and Pfizer continue to offer excellent value on a long term basis. During the period, new positions were added in Samsung Electronics and General Motors (GM). Samsung is a diversified, global technology leader which is lowly rated on a cashflow and earnings basis and is returning more of its surplus cashflow to shareholders. As a result, there should be good dividend growth in the future. GM s management have also been more focussed on cash returns to shareholders over recent years via dividends and share buybacks, and the shares are attractively valued on metrics such as their price to earnings ratio and dividend yield. These positions were funded by exiting the positions in Canadian telecom operator BCE and professional publishing company Wolters Kluwer following good long term performance. Within the asset management sector, the position in KKR was sold and a new position was added in Blackstone. While they trade at similar valuation levels, in our view, there is greater potential for earnings, and therefore dividend growth, at Blackstone given their substantial growth in assets under management Corporate tax reforms and greater infrastructure spending in the US driving higher economic growth should be positive for US and global equities. Higher economic growth should allow greater sales and earnings growth for companies, ultimately driving higher dividend growth for shareholders. We will continue with our existing strategy of identifying companies that pay an attractive and sustainable dividend and that have capacity to grow over the medium to long term. 20 Henderson Global Equity Income Fund

25 Comparative tables as at 28 February 2017 Net asset value per share Net asset Net asset Number of Net asset Net asset value value of shares in value per value per of fund shares issue share share ( ) ( ) (pence) % change 1 Class A accumulation 31/08/ ,800, ,281,430 67,235, /08/ ,569, ,808,136 60,695, /08/ ,963, ,616,833 51,080, /02/ ,130, ,347,028 49,440, Class A income 31/08/ ,800, ,463, ,438, /08/ ,569, ,612, ,829, (0.29) 31/08/ ,963, ,400, ,810, /02/ ,130, ,780, ,614, Class G accumulation 31/08/ ,963,170 4,181,156 3,458, n/a 28/02/ ,130,619 5,847,041 4,440, Class G income 31/08/ ,963,170 19,536,936 16,625, n/a 28/02/ ,130,619 22,250,562 17,599, Class I accumulation 31/08/ ,800,443 6,120,537 5,979, n/a 31/08/ ,569,670 15,892,343 14,927, /08/ ,963,170 38,583,547 29,312, /02/ ,130,619 42,876,407 29,929, Class I income 31/08/ ,800,443 39,736,486 40,344, /08/ ,569,670 65,669,904 66,371, /08/ ,963, ,512, ,403, /02/ ,130, ,418, ,750, Class S income 31/08/ ,800,443 1,543,950 1,573, /08/ ,569,670 1,793,170 1,805, /08/ ,963,170 2,426,929 2,036, /02/ ,130,619 2,473,059 1,922, Class A Euro accumulation 31/08/ ,800, , /08/ ,569, , /08/ ,963,170 1,157 2, /02/ ,130, ,905 1,278, Class A Euro income 31/08/ ,800, , , /08/ ,569, , , (0.30) 31/08/ ,963, ,166 1,521, /02/ ,130,619 1,198,118 2,158, Class A US Dollar accumulation 31/08/ ,800,443 1, /08/ ,569,670 1, /08/ ,963,170 84,804 21, /02/ ,130,619 96,295 22, Henderson Global Equity Income Fund 21

26 Comparative tables (continued) Net asset Net asset Number of Net asset Net asset value value of shares in value per value per of fund shares issue share share ( ) ( ) (pence) % change 1 Class A US Dollar income 31/08/ ,800, , , /08/ ,569, , , (0.30) 31/08/ ,963, ,052 1,769, /02/ ,130, ,195 1,807, Class I Euro accumulation 31/08/ ,800, , /08/ ,569,670 65,370 68, /08/ ,963,170 76,580 64, /02/ ,130,619 83,767 64, Class I Euro income 31/08/ ,800, , /08/ ,569, , /08/ ,963,170 1,055 1, /02/ ,130,619 1,141 1, Class I US Dollar accumulation 31/08/ ,800,443 84, , /08/ ,569,670 18,732 25, /08/ ,963,170 23,167 25, /02/ ,130, , Class I US Dollar income 31/08/ ,800, , /08/ ,569, , /08/ ,963,170 32,584 40, /02/ ,130, , , This is the percentage change in the net asset value per share from the beginning of the period to the close of the period. 2 Launched 29 January Launched 17 January Henderson Global Equity Income Fund

27 Comparative tables (continued) Performance record Calendar year Net revenue Highest price Lowest price (pence per share) (pence per share) (pence per share) Class A accumulation * Class A income * Class G accumulation * Class G income * Class I accumulation * Class I income * Class S income * Calendar year Net revenue Highest price Lowest price (Euro cents per share) (Euro cents per share) (Euro cents per share) Class A Euro accumulation * Henderson Global Equity Income Fund 23

28 Comparative tables (continued) Performance record Calendar year Net revenue Highest price Lowest price (Euro cents per share) (Euro cents per share) (Euro cents per share) Class A Euro income * Class I Euro accumulation * Class I Euro income * Net revenue Highest price Lowest price (USD cents per share) (USD cents per share) (USD cents per share) Class A US Dollar accumulation * Class A US Dollar income * Class I US Dollar accumulation * Class I US Dollar income * * to 28 April + to 28 February 1 Launched 29 January Launched 17 January Launched 19 July Launched 19 July Henderson Global Equity Income Fund

29 Ongoing charge figure The annualised ongoing charge figure (OCF) of the fund is calculated as the ratio of the total ongoing charges to the average net asset value for twelve months. Ongoing charges are all expenses deducted from the assets of the fund during the period, except for expenses that are explicitly excluded by regulation. 28/02/17 31/08/16 % % Class A Class G * Class I Class S Class A Euro Class A US Dollar Class I Euro Class I US Dollar The OCF is calculated in accordance with guidelines issued by the European Securities and Markets Authority (ESMA). *Class G launched on 29 January 2016 and this is an estimated figure. Henderson Global Equity Income Fund 25

30 Risk and reward profile The fund currently has 15 types of share class in issue; A income, A accumulation, I income, I accumulation, G accumulation, G income, S income, A US Dollar income, A US Dollar accumulation, A Euro income, A Euro accumulation, I Euro income, I Euro accumulation, I US Dollar income and I US Dollar accumulation. The risk and reward profile is the same for each type of share class and is as follows: Typically Lower potential risk/reward Typically Higher potential risk/reward Lower Risk Higher Risk The Synthetic Risk and Reward Indicator (SRRI) is calculated based on historical volatility over a rolling 5 year period; it is reviewed monthly and updated if volatility has changed materially to cause a movement in the SRRI level. The SRRI is an indicator and may not accurately reflect future volatility and market conditions. The value of an investment in the fund can go up or down. When you sell your shares, they may be worth less than you paid for them. The risk/reward rating above is based on medium-term volatility. In the future, the fund s actual volatility could be higher or lower and its rated risk/reward level could change. The share classes appear at 5 out of 7. Share classes in higher categories have shown greater and/or more frequent variations in share price in the past 5 years than those in lower categories. The lowest category does not mean risk free. The rating does not reflect the possible effects of unusual market conditions or large unpredictable events. Under normal market conditions the following risks may apply: Active management risk Active management techniques that have worked well in normal market conditions could prove ineffective or detrimental at other times. Counterparty risk The fund could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the fund. Derivatives risk Derivatives use exposes the fund to risks different from, and potentially greater than, the risks associated with investing directly in securities and may therefore result in additional loss, which could be significantly greater than the cost of the derivative. Equities risk Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result. Exchange rate risk Changes in currency exchange rates may cause the value of your investment and any income from it to rise or fall. Hedging risk Measures designed to reduce the impact of certain risks may not be available or may be ineffective. Liquidity risk Any security could become hard to value or to sell at a desired time and price, increasing the risk of investment losses. The full list of the fund s risks are contained in the Risk Warning section of the fund s prospectus. There have been no changes to the risk rating in the period. The SRRI conforms to the ESMA guidelines for the calculation of the SRRI. 26 Henderson Global Equity Income Fund

31 Portfolio statement as at 28 February 2017 Holding Investment Market Percentage value of total 000 net assets % Equities % (31/08/2016: %) Australia 0.51% (31/08/2016: 0.00%) Consumer Discretionary 0.51% (31/08/2016: 0.00%) 7,492,153 Fairfax Media 4, Canada 0.00% (31/08/2016: 1.25%) Telecommunication Services 0.00% (31/08/2016: 1.25%) France 7.49% (31/08/2016: 10.35%) Energy 1.39% (31/08/2016: 1.33%) 295,759 Total 11, Financials 2.50% (31/08/2016: 3.24%) 410,264 AXA 7, ,113,188 Natixis Banques Populare 13, , Health Care 0.00% (31/08/2016: 0.85%) Industrials 0.00% (31/08/2016: 0.92%) Real Estate 1.89% (31/08/2016: 2.06%) 146,021 Icade 8, ,853 Nexity 7, , Telecommunication Services 1.71% (31/08/2016: 1.95%) 1,201,071 Orange 14, Germany 7.87% (31/08/2016: 7.35%) Financials 1.17% (31/08/2016: 2.06%) 144,942 Deutsche Boerse 10, Health Care 1.71% (31/08/2016: 1.56%) 164,367 Bayer 14, Industrials 3.39% (31/08/2016: 1.98%) 661,115 Deutsche Post 18, ,776 Siemens 10, , Telecommunication Services 1.60% (31/08/2016: 1.75%) 984,597 Deutsche Telekom 13, Hong Kong 1.37% (31/08/2016: 2.39%) Financials 0.00% (31/08/2016: 0.96%) Industrials 1.37% (31/08/2016: 1.43%) 1,179,000 CK Hutchison Holdings 11, Henderson Global Equity Income Fund 27