M&G Global Dividend Fund Interim Long Report and unaudited Financial Statements for the six months ended 30 September 2015

Transcription

1 Interim Long Report and unaudited Financial Statements for the six months ended 30 September 2015

2 Contents Please note that we have now included a glossary at the back of this report. M&G Global Dividend Fund Authorised Corporate Director s Report Page 1 Financial highlights Page 7 Financial statements and notes Page 14 Directors statement Page 14 Other regulatory disclosures Page 15 Glossary Page 16

3 Authorised Corporate Director s Report The Authorised Corporate Director (ACD) of M&G Global Dividend Fund presents its Interim Long Report and unaudited Financial Statements for the six months ended 30 September Company information This Open-Ended Investment Company (OEIC) is an Investment Company with Variable Capital (ICVC) incorporated under the Open-Ended Investment Companies Regulations It is authorised and regulated by the Financial Conduct Authority (FCA) under the Financial Services and Markets Act The Company is a UCITS (Undertakings for Collective Investment in Transferable Securities) scheme as defined in the Collective Investment Schemes sourcebook, as issued (and amended) by the FCA. The Company was authorised on 9 July 2008 and the fund was launched on 18 July The Company s principal activity is to carry on business as an OEIC. A shareholder is not liable for the debts of the Company and will never be liable to make any further payment to the Company after paying the purchase price of the shares. Fund manager Stuart Rhodes is employed by M&G Limited which is an associate of M&G Securities Limited. ACD M&G Securities Limited, Laurence Pountney Hill, London EC4R 0HH, UK Telephone: (UK only) (Authorised and regulated by the Financial Conduct Authority. M&G Securities Limited is a member of the Investment Association (formerly the Investment Management Association) and of the Tax Incentivised Savings Association.) Directors of the ACD W J Nott (Chief Executive), G N Cotton, P R Jelfs, M Lewis, G W MacDowall, L J Mumford Investment manager M&G Investment Management Limited, Laurence Pountney Hill, London EC4R 0HH, UK Telephone: +44 (0) (Authorised and regulated by the Financial Conduct Authority) Registrar International Financial Data Services (UK) Limited, IFDS House, St. Nicholas Lane, Basildon, Essex SS15 5FS, UK (Authorised and regulated by the Financial Conduct Authority) Depositary National Westminster Bank Plc, Trustee & Depositary Services, Younger Building, 3 Redheughs Avenue, Edinburgh EH12 9RH, UK (Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority) Investor information The Prospectus, Instrument of Incorporation, Key Investor Information Documents as well as the latest Annual or Interim Investment Report and Financial Statements are available free of charge on request from the following addresses. The Instrument of Incorporation can also be inspected at our offices or at the office of the Depositary. Customer Relations and administration for UK clients: M&G Securities Limited, PO Box 9039, Chelmsford CM99 2XG, UK Please remember to quote your name and M&G client reference and sign any written communication to M&G. Failure to provide this will affect your ability to transact with us. Telephone: (UK only) For security purposes and to improve the quality of our service, we may record and monitor telephone calls. You will require your M&G client reference. Failure to provide this will affect your ability to transact with us. Customer Relations and administration for non-uk clients: M&G International Investments Limited, mainbuilding, Taunusanlage 19, Frankfurt am Main, Germany Please remember to quote your name and M&G client reference and sign any written communication to M&G. Failure to provide this will affect your ability to transact with us. Telephone: iocs@mandg.co.uk For security purposes and to improve the quality of our service, we may record and monitor telephone calls. You will require your M&G client reference. Failure to provide this will affect your ability to transact with us. Austrian paying and information agent: Raiffeisen Bank International AG, Am Stadtpark 9, 1030 Wien, Austria Belgian financial agent: RBC Investor Services Belgium, Rogier Tower +10/43 Rogierplein 11 Place Rogier, B-1210 Brussel, Belgium Danish representative agent: Nordea Bank Danmark A/S, Issuer Services, Postboks 850, 0900 Copenhagen C, Denmark French centralising agent: RBC Investor Services, Bank France S.A., 105 rue Réaumur, Paris, France German paying and information agent: J.P. Morgan AG, Junghofstraße 14, Frankfurt am Main, Germany Irish facilities agent: BNY Mellon Fund Services (Ireland) Limited, Guild House, Guild Street, IFSC, Dublin 1, Ireland Independent auditor Ernst & Young LLP Ten George Street, Edinburgh EH2 2DZ, UK INTERIM LONG REPORT AND UNAUDITED FINANCIAL STATEMENTS September

4 Authorised Corporate Director s Report Investor information (continued) Italian paying agents: Allfunds Bank, S.A., Via Santa Margherita 7, Milano, Italy Banca Monte dei Paschi di Siena S.p.A., Piazza Salimbeni 3, Siena, Italy Banca Sella Holding S.p.A., Piazza Gaudenzio Sella 1, Biella, Italy BNP PARIBAS Securities Services, Via Ansperto 5, Milano, Italy RBC Investor Services Bank S.A., Milan Branch Via Vittor Pisani 26, Milano, Italy State Street Bank S.p.A., Via Ferrante Aporti 10, Milano, Italy Société Générale Securities Services S.A., Via Benigno Crespi 19A - MAC 2, Milano, Italy Authorised Corporate Director s Responsibilities The ACD is required to prepare annual and interim long and short reports for the Company. They must ensure that the financial statements are prepared in accordance with the Investment Association Statement of Recommended Practice for Financial Statements of UK Authorised Funds (SORP) and UK Financial Reporting Standards, contained in the Long Report give a true and fair view of their net revenue or expenses and their net capital gains or losses for the accounting period, and their financial position at the end of that period. The ACD is required to keep proper accounting records, and to manage the Company in accordance with the Collective Investment Schemes sourcebook, as issued (and amended) by the FCA, the Instrument of Incorporation and the Prospectus, and to take reasonable steps for the prevention and detection of fraud or other irregularities. Luxembourg paying and information agent: J.P. Morgan Bank Luxembourg S.A., European Bank & Business Center, 6 c route de Trèves, 2633 Senningerberg, Luxembourg Portuguese distributor: Best - Banco Electrónico de Serviço Total, S.A., Praça Marquês de Pombal, no. 3-3º, , Lisboa, Portugal Spanish representative: Allfunds Bank, S.A., Calle Estafeta, No 6 Complejo Plaza de la Fuente, La Moraleja 28109, Alcobendas, Madrid, Spain Swedish paying agent: Skandinaviska Enskilda Banken AB (publ), Sergels Torg 2, Stockholm, Sweden Swiss paying agent: JP Morgan Chase Bank, National Association, Columbus, Zurich Branch, Dreikönigstrasse 21, 8002 Zürich, Switzerland Swiss representative: Carnegie Fund Services S.A., 11, rue du Général-Dufour, 1204 Genève, Switzerland 2 INTERIM LONG REPORT AND UNAUDITED FINANCIAL STATEMENTS September 2015

5 Authorised Corporate Director s Report Investment objective The Fund aims to deliver a dividend yield above the market average, by investing mainly in a range of global equities. The Fund aims to grow distributions over the long term whilst also maximising total return (the combination of income and growth of capital). Investment policy The Fund aims to deliver a dividend yield above the market average, whilst aiming to increase annual distributions over the long term, by investing in a range of global equities. The Fund s exposure to global equities may be gained through the use of derivatives. The Fund may invest across a wide range of geographies, sectors and market capitalisations. The Fund may also invest in other assets including collective investment schemes, other transferable securities, cash and near cash, deposits, warrants, money market instruments and derivatives. Investment approach The M&G Global Dividend Fund employs a bottom-up stockpicking approach, driven by the fundamental analysis of individual companies. The fund seeks to invest in companies that understand capital discipline, have the potential to increase dividends over the long term and are undervalued by the stockmarket. Dividend yield is not the primary consideration for stock selection. The fund manager aims to create a diversified portfolio with exposure to a broad range of countries and sectors. He selects stocks with different drivers of dividend growth to construct a portfolio that can cope in a variety of market conditions. The fund will usually hold around 50 stocks, with a long-term investment view and a typical holding period of three to five years. When attempting to grow distributions over the long term, the fund manager s main focus is on delivering an increase in sterling terms. Risk profile The fund invests globally in the shares of companies and is, therefore, subject to the price volatility of the global stockmarket and the performance of individual companies. The fund may also be subject to fluctuations in currency exchange rates. The fund s focus is on shares of companies that have the potential to grow their dividends over the long term. Income distributions from the fund s holdings, however, are not guaranteed and may vary. Diversification across industries and market capitalisation is key in managing liquidity risk and reducing market risk. The fund s risks are measured and managed as an integral part of the investment process. The following table shows the risk number associated with the fund and is based on Sterling Class A shares. Low risk Typically lower rewards The above number: is based on the rate at which the value of the fund has moved up and down in the past and is based on historical data so may not be a reliable indicator of the future risk profile of the fund. is not guaranteed and may change over time and the lowest risk number does not mean risk free. has not changed during this period. Investment review As at 1 October 2015, for the six months ended 30 September 2015 Distribution summary Over the six-month review period, the fund distributed income of 2,15 pence per sterling class A (Income) share. This represents a decline of 10,6% on the same period in The payout, nevertheless, represented a yield (distributed income as a percentage of the share price) of 3,65% versus an average yield of 2,71% for the MSCI AC World Index [a]. We are hopeful that distributions will grow for the fund s full financial year, as a disproportionate number of the companies in the portfolio will be paying their dividends in the final quarter of the calendar year. (Dividends represent a share in the profits of a company and are paid out to the company s shareholders at set times of the year.) In addition, the fund continues to be supported by the vast majority of holdings continuing to deliver dividend growth in the region of 5% to 15%, in line with previous years. A key holding, Methanex, despite poor performance, has raised its dividend by 10% during the review period, UnitedHealth by 33% and Microsoft by 16%. Other top ten holdings, Johnson & Johnson and Wells Fargo, raised their dividends by 7%. Johnson & Johnson extended its long history of consecutive dividend increases to 53 years, while Wells Fargo continued to recover strongly from the financial crisis. In July, Cummins, the US engine manufacturer, raised its quarterly dividend by 25%. This is the fourth increase of this magnitude in as many years and builds on an impressive track record of dividend growth across economic cycles. Our focus remains on identifying those companies with the balance sheet strength, capital discipline and earnings growth prospects to increase the dividend over time. Investment performance High risk Typically higher rewards The M&G Global Dividend Fund produced a negative total return (the combination of income and growth of capital) over the six-month review period across all of its share classes. The fund s returns in all share classes lagged a comparative index, the MSCI AC World Index. (Returns from the index were -10,5%, -12,1% and -8,0% in sterling, euro and US dollar respectively over the six months.) INTERIM LONG REPORT AND UNAUDITED FINANCIAL STATEMENTS September

6 Authorised Corporate Director s Report Investment review (continued) Investment performance (continued) The six months under review was a particularly volatile period for global stockmarkets. Investors concerns over the strength of the Chinese economy, the timing of a rise in US interest rates and falling oil and commodity prices saw share prices across most stockmarkets fall sharply. Oil and commodity prices had, to an extent, stabilised earlier in the period before declining at a more severe rate, along with share prices, after fears of a slowdown in the Chinese economy intensified during August. This had an adverse effect on the fund s performance, as poor sentiment in the energy and materials industries dragged down our energy-related holdings. The period under review has been difficult, but we continue to distinguish between the holdings where share price falls are justified and where they are not. With regard to the latter, we have not wavered in our conviction where the cashflows and dividend growth are not yet reflected in the share price. Many of these stocks are held in energy and materials sectors, and a great deal of the fund s underperformance can be attributed to stocks in these areas, particularly the latter. Although we hold none of the major oil companies, our energy holdings and those materials stocks that behave like energy holdings and are valued accordingly by the market have fallen indiscriminately with the price of oil. Methanol producer and supplier Methanex is one such example of an energy-like materials stock that has fallen in sympathy with the oil price. We are of the opinion that the stock has come under excessive selling pressure due to the company s perceived sensitivity to the oil price, as 60% of global demand for methanol has nothing to do with energy. As a consequence, we believe there is currently a wide disparity between the company s fundamentals and its valuation, a view supported by management s recent decision to raise the company s dividend by 10% and announce a new share buyback programme to purchase 5% of the shares in issue. We do not believe such a gap between dividend growth and capital growth can be maintained and expect the share price to recover in due course. As a sign of our confidence in the company s long-term prospects, we took this opportunity to add meaningfully to the fund s position in the stock. Shares of Canadian mid-stream energy holding Gibson Energy also suffered indiscriminate selling, as investor sentiment turned negative. As with Methanex, this is a high-conviction position within the fund and as a steady, cash-generative business, we do not believe this underperformance can last. Oil infrastructure companies Pembina and Inter Pipeline detracted as well, despite having limited exposure to the oil price due to their use of what are known as take-or-pay contracts. What this means is that these companies are paid regardless of the oil price or how much the oil companies use their facilities. Cashflows in these companies are on the rise, but their share prices have underperformed those of the major oil companies. In our opinion, there is no logic in such poor performance and we expect both Pembina and Inter Pipeline s share prices to catch up with their cashflows and dividend growth once investor pessimism begins to recede. We have added to both positions during the period under review. Stock selection among financials stocks also detracted, with UK bank Standard Chartered and Aberdeen Asset Management among the fund s worst-performing holdings. The former reported a sharp drop in profits and cut its dividend by 50%; we sold the stock in September. Consumer discretionary was another costly sector and casino operator Las Vegas Sands and its Hong Kong-listed subsidiary Sands China were among the worst-performing positions in the fund. Sands operates a number of casinos in Macau where Chinese authorities introduced measures that have limited the scope of the gaming industry on the island, and this has adversely affected revenues from the VIP customer base. However, the long-term investment case of the company, based on the development of Macau as a mass market destination, remains very much intact and we used the share price weakness as a buying opportunity. Underperformance in the sector was mitigated to an extent by our position in Pandora, the Danish jeweller, whose share price has risen due to positive results during the period. We have covered in some detail the issues raised by the fund s energyrelated holdings. Although the effect on the portfolio has been pronounced, 80% of our holdings lie in other sectors and have performed very differently. Stock selection in the consumer staples sector, for example, has added value, particularly among tobacco companies. UK tobacco companies British American Tobacco and Imperial Tobacco Group both proved resilient in a tough environment and reported solid results during the period. The fund s holdings in information technology featured highly among the positive contributors. Leading designer and manufacturer of electronic components, Avago Technologies added the most value on the back of continued growth in the business. Xilinx, a world leader in programmable semiconductors, also added value on the back of merger & acquisition (M&A) activity. Technology giant Microsoft was another strong performer and announced a dividend increase of 16% in September. In healthcare, newcomer to the portfolio UnitedHealth added value. The company raised its quarterly dividend by 33% in June, building on an impressive track record from the company; dividend growth has been at least 30% in each of the past five years. Looking at valuations in the healthcare sector, UnitedHealth compares favourably with the fund s other healthcare holdings. Investment activities There were nine new additions to the portfolio during the past six months and 12 complete sales, as we continue in our efforts to create a more concentrated portfolio of only our highest-conviction ideas. New positions included railroads company Union Pacific, health insurer UnitedHealth (as discussed above) and financial group US Bancorp, all very different US businesses that offer long-term growth at reasonable valuations. The US owner of KFC and Pizza Hut, Yum! Brands, was also added to the fund towards the end of the period under review. In addition, we initiated a holding in Kone, a leading player in the global elevator and escalator industry. The company, based in Finland, is a beneficiary of long-term themes, including urbanisation and safety, and has a strong business model with almost 50% of sales derived from maintenance and modernisation. The company is highly cashgenerative, has a strong balance sheet and has delivered good economic growth across economic cycles. 4 INTERIM LONG REPORT AND UNAUDITED FINANCIAL STATEMENTS September 2015

7 Authorised Corporate Director s Report Investment review (continued) Investments Investment activities (continued) Compass Group, a UK-based catering company with a global footprint, was added to the portfolio in August. The company is a cashgenerative business with a track record of returning excess cash to shareholders. A negative reaction to its third-quarter trading statement (it has a September year-end) provided an opportunity to buy back into a stock the fund has owned in the past, and to do so at a time when many defensive stocks are looking expensive. Elsewhere, we sold UK advertising and public relations company WPP and US postal service UPS on the back of strong performance. WPP returned 65% in sterling terms since its purchase in 2012 and UPS returned 40% in US dollar terms in the past three years. We also sold the holding in US-based semiconductor manufacturer Analog Devices, after the company returned 58% in US dollar terms during the four years it was in the fund. Other sales included US consulting group Accenture, which was also sold following a run of strong performance, and French pharmaceutical company Sanofi, due to slowing dividend growth. Lastly, a holding in Nokian Tyres, the Finnish premium tyre manufacturer with exposure to Russia, left the portfolio as we believe a significant part of the long-term growth outlook has been damaged by the economic uncertainty in Russia, caused by the lower oil price. Outlook We acknowledge that the six months under review has been a difficult period for the fund. Indeed, since July 2014, we have struggled to maintain the levels of performance we have enjoyed for much of the fund s existence. However, we remain committed to the fund s investment strategy and have not wavered in our approach during this period of underperformance. The fact that many of the companies in the portfolio have increased their dividends by more than 10% and we have only seen one dividend cut during the period under review is evidence that our investment process continues to identify quality companies with growing distributions. However, share price growth has lagged dividend growth in a number of sectors, particularly energy and materials where profitable companies with strong cashflows have suffered indiscriminate falls as a result of falling oil prices. We believe that this discrepancy cannot last. We also believe there are strong companies in the portfolio today that are currently undervalued and can make a difference in the future. These stocks are not cheap because the businesses are struggling; these companies are cash-rich, profitable and raising their dividends year on year. We remain committed to our investment strategy in the belief that the share price performance of such companies should eventually catch up with the growth in their dividends. Stuart Rhodes Fund manager An employee of M&G Limited which is an associate of M&G Securities Limited. [a] For the specific performance of your share class, please refer to the Specific share class performance tables in the Financial highlights section of this report. Please note that the views expressed in this Report should not be taken as a recommendation or advice on how the fund or any holding mentioned in the Report is likely to perform. If you wish to obtain financial advice as to whether an investment is suitable for your needs, you should consult a Financial Adviser. Portfolio statement Value Holding 000 % % Denmark 1,38 0, Pandora ,38 Finland 1,30 0, Kone ,30 France 0,00 3,75 Netherlands 2,88 1, LyondellBasell ,88 Norway 1,39 1, Prosafe ,39 Sweden 2,59 2, Svenska Handelsbanken A ,59 Switzerland 3,81 6, Novartis (Regd.) , Roche Holding Genussscheine ,88 United Kingdom 16,05 17, Aberdeen Asset Management , British American Tobacco , Compass Group , Imperial Tobacco , Prudential [a] , Rio Tinto ,62 Australia 3,89 3, Amcor , Orica ,32 Hong Kong 0,63 1, Sands China ,63 South Africa 1,89 1, Imperial Holdings ,89 Canada 16,10 16, Gibson Energy , Inter Pipeline , Methanex , Keyera , Pembina Pipeline ,87 United States 44,89 39, AbbVie , Altria Group , Amgen , Arthur J. Gallagher & Co , Avago Technologies , Blackrock , Cisco Systems , Cummins , Eaton , HollyFrontier , Johnson & Johnson , Las Vegas Sands , Microsoft , Time Warner , Union Pacific , UnitedHealth Group , US Bancorp , Wells Fargo , Xilinx , Yum! Brands ,50 INTERIM LONG REPORT AND UNAUDITED FINANCIAL STATEMENTS September

8 Authorised Corporate Director s Report Investments Portfolio statement (continued) Value Holding 000 % % Brazil 1,67 2, Ambev , Banco Bradesco ,75 Portfolio of investments ,47 98,76 AAA rated money market funds [b] 0,98 1, Northern Trust Global Fund - Sterling ,98 Total portfolio ,45 99,86 Net other assets ,55 0,14 Net assets attributable to shareholders ,00 100,00 All securities are on an official stock exchange listing except where referenced. [a] Related party to the fund. [b] Uncommitted surplus cash is placed into AAA rated money market funds with the aim of reducing counterparty risk. Top 10 portfolio transactions for the six months ended 30 September 2015 Largest purchases 000 UnitedHealth Group US Bancorp Pembina Pipeline Union Pacific Avago Technologies Blackrock Methanex Inter Pipeline Kone Compass Group Other purchases Total purchases Largest sales 000 HollyFrontier Sanofi WPP United Parcel Service B Analog Devices Novartis (Regd.) Bank of Montreal Vinci Standard Chartered Prudential [a] Other sales Total sales [a] Related party to the fund. 6 INTERIM LONG REPORT AND UNAUDITED FINANCIAL STATEMENTS September 2015

9 Financial highlights Fund performance Please note past performance is not a guide to future performance and the value of investments, and the income from them, will fluctuate. This will cause the fund price to fall as well as rise and you may not get back the original amount you invested. Fund level performance Fund Net Asset Value Fund Net Asset Value (NAV) Performance since launch To give an indication of how the fund has performed since launch, the graph below shows total return of Sterling Class A (Accumulation) shares July 2008 = 100, plotted monthly Chart date 1 October 2015 To give an indication of how the results of the investment activities during the period have affected the performance of the fund the following table shows the compound rate of return, per annum, over the period. Calculated on a price to price basis with net income reinvested. Long-term performance Six months Three years Five years Since launch % [a] % p.a. % p.a. % p.a. Euro Class A -16,1 +7,2 +9,0 +9,2 [b] Class C -15,7 +8,3 +10,0 +10,2 [b] Singapore dollar Class A -9,3 n/a n/a -2,9 [c] Class C -8,8 n/a n/a -2,2 [c] Sterling Class A -15,0 +4,6 +5,7 +8,3 [b] Class I -14,7 +5,4 +6,5 +9,1 [b] Class R -14,8 +5,2 n/a +4,9 [d] Class X -15,0 +4,6 +5,7 +8,3 [b] US dollar Class A -13,0 +2,2 +4,5 +4,0 [b] Class C -12,6 +3,2 +5,6 +5,0 [b] [a] Absolute basis. [b] 18 July 2008, the launch date of the fund. [c] 16 January 2015, the launch date of the share class. Absolute basis. [d] 3 August 2012, the launch date of the share class Sterling Class A (Accumulation) shares* * Net income reinvested Source: M&G INTERIM LONG REPORT AND UNAUDITED FINANCIAL STATEMENTS September

10 Financial highlights Operating charges and portfolio transaction costs We explain below the payments made to meet the ongoing costs of investing and managing the fund, comprised of operating charges and portfolio transaction costs. Operating charges Operating charges include payments made to M&G and to providers independent of M&G: Investment management: Charge paid to M&G for investment management of the fund (also known as Annual Management Charge). Administration: Charge paid to M&G for administration services in addition to investment management any surplus from this charge will be retained by M&G. Oversight and other independent services: Charges paid to providers independent of M&G for services which include depositary, custody and audit. The operating charges paid by each share class of the fund are shown in the following performance tables. Operating charges do not include portfolio transaction costs or any entry and exit charges (also known as initial and redemption charges). The charging structures of share classes may differ, and therefore the operating charges may differ. Operating charges are the same as the ongoing charges shown in the Key Investor Information Document, other than where an estimate has been used for the ongoing charge because a material change has made the operating charges unreliable as an estimate of future charges. For this fund there is no difference between operating charges and ongoing charges figures. Portfolio transaction costs Portfolio transaction costs are incurred by funds when buying and selling investments. These costs vary depending on the types of investment, their market capitalisation, country of exchange, method of execution and the quality of research provided. They are made up of direct and indirect portfolio transaction costs: Direct portfolio transaction costs: Broker execution commission, taxes, and costs of research from brokers and other research providers. Indirect portfolio transaction costs: Dealing spread the difference between the buying and selling prices of the fund s investments; some types of investment, such as fixed interest securities, have no direct transaction costs and only the dealing spread is paid. Investments are bought or sold by a fund when changes are made to the investment portfolio and in response to net flows of money into or out of the fund from investors buying and selling shares in the fund. Further information on this process is in the Prospectus, which is available free of charge on request either from our website at or by calling M&G Customer Relations. Direct portfolio transaction costs [a] Three year average % % % % Broker commission 0,04 0,07 0,07 0,06 Taxes 0,01 0,03 0,05 0,03 Costs before dilution adjustments 0,05 0,10 0,12 0,09 Dilution adjustments [b] (0,01) (0,02) (0,04) (0,02) Total direct portfolio transaction costs 0,04 0,08 0,08 0,07 [a] As a percentage of average net asset value. [b] In respect of direct portfolio transaction costs. Specific share class performance The following tables give the performance of each share class. Euro Class A Income share performance The share class was launched on 12 July Change in NAV per share Euro Euro Euro Opening NAV 2.127, , ,80 direct portfolio transaction costs (353,96) 430,20 94,22 Operating charges (19,57) (36,71) (24,33) Return after operating charges (373,53) 393,49 69,89 Distributions (27,31) (62,72) (44,45) Closing NAV 1.726, , ,24 Direct portfolio transaction costs [a] Euro Euro Euro Costs before dilution adjustments 1,02 2,01 2,19 Dilution adjustments [b] (0,27) (0,48) (0,62) Total direct portfolio transaction costs 0,75 1,53 1,57 Operating charges 1,91 1,91 1,91 Return after operating charges -17,56 +21,91 +4,16 Historic yield 3,30 2,87 3,14 Effect on yield of charges offset against capital 1,91 1,91 1,91 Closing NAV ( 000) Closing NAV percentage of total fund NAV (%) 1,23 1,12 0,57 Number of shares Highest share price (Euro ) 2.221, , ,33 Lowest share price (Euro ) 1.722, , ,19 To protect existing investors, portfolio transaction costs incurred as a result of investors buying and selling shares in the fund are recovered from those investors through a dilution adjustment to the price they pay or receive. The table below shows direct portfolio transaction costs paid by the fund before and after that part of the dilution adjustment relating to direct portfolio transaction costs. 8 INTERIM LONG REPORT AND UNAUDITED FINANCIAL STATEMENTS September 2015

11 Financial highlights Specific share class performance Euro Class A Accumulation share performance The share class was launched on 18 July Change in NAV per share Euro Euro Euro Opening NAV 2.250, , ,08 direct portfolio transaction costs (376,78) 446,80 153,08 Operating charges (20,80) (38,09) (33,80) Return after operating charges (397,58) 408,71 119,28 Closing NAV 1.852, , ,36 Retained distributions 29,01 64,98 57,27 Direct portfolio transaction costs [a] Euro Euro Euro Costs before dilution adjustments 1,08 2,08 2,20 Dilution adjustments [b] (0,29) (0,50) (0,63) Total direct portfolio transaction costs 0,79 1,58 1,57 Operating charges 1,92 1,91 1,91 Return after operating charges -17,67 +22,20 +6,93 Historic yield 3,23 2,82 3,14 Effect on yield of charges offset against capital 1,91 1,91 1,91 Closing NAV ( 000) Closing NAV percentage of total fund NAV (%) 23,69 22,97 19,93 Number of shares Highest share price (Euro ) 2.350, , ,79 Lowest share price (Euro ) 1.835, , ,50 Euro Class C Income share performance The share class was launched on 8 August Change in NAV per share Euro Euro Euro Opening NAV 2.345, ,09 n/a direct portfolio transaction costs (391,87) 407,17 n/a Operating charges (10,26) (12,47) n/a Return after operating charges (402,13) 394,70 n/a Distributions (30,20) (53,65) n/a Closing NAV 1.912, ,14 n/a Direct portfolio transaction costs [a] Euro Euro Euro Costs before dilution adjustments 1,12 3,47 n/a Dilution adjustments [b] (0,30) (0,83) n/a Total direct portfolio transaction costs 0,82 2,64 n/a Direct portfolio transaction costs 0,04 0,08 n/a Operating charges 0,91 0,91 [c] n/a Return after operating charges -17,15 +19,69 n/a Historic yield 3,28 2,80 n/a Effect on yield of charges offset against capital 0,91 0,91 n/a Closing NAV ( 000) n/a Closing NAV percentage of total fund NAV (%) 0,29 0,24 n/a Number of shares n/a Highest share price (Euro ) 2.450, ,81 n/a Lowest share price (Euro ) 1.908, ,13 n/a Euro Class C Accumulation share performance The share class was launched on 18 July Change in NAV per share Euro Euro Euro Opening NAV 2.402, , ,25 direct portfolio transaction costs (403,85) 475,19 161,22 Operating charges (10,71) (19,30) (17,01) Return after operating charges (414,56) 455,89 144,21 Closing NAV 1.987, , ,46 Retained distributions 31,13 69,08 60,27 Direct portfolio transaction costs [a] Euro Euro Euro Costs before dilution adjustments 1,16 2,21 2,31 Dilution adjustments [b] (0,31) (0,53) (0,66) Total direct portfolio transaction costs 0,85 1,68 1,65 Operating charges 0,91 0,91 0,91 Return after operating charges -17,26 +23,42 +8,00 Historic yield 3,22 2,80 3,12 Effect on yield of charges offset against capital 0,91 0,91 0,91 Closing NAV ( 000) Closing NAV percentage of total fund NAV (%) 8,57 11,79 16,98 Number of shares Highest share price (Euro ) 2.510, , ,40 Lowest share price (Euro ) 1.969, , ,36 Singapore dollar Class A Income share performance The share class was launched on 16 January Change in NAV per share Singapore Singapore Singapore Opening NAV 1.068, ,00 n/a direct portfolio transaction costs (106,54) 82,56 n/a Operating charges (10,04) (4,03) n/a Return after operating charges (116,58) 78,52 n/a Distributions (14,35) (10,38) n/a Closing NAV 937, ,14 n/a Direct portfolio transaction costs [a] Singapore Singapore Singapore Costs before dilution adjustments 0,53 1,12 n/a Dilution adjustments [b] (0,14) (0,27) n/a Total direct portfolio transaction costs 0,39 0,85 n/a Direct portfolio transaction costs 0,04 0,08 n/a Operating charges 1,91 1,91 [c] n/a Return after operating charges -10,91 +7,85 n/a Historic yield 3,30 2,87 n/a Effect on yield of charges offset against capital 1,91 1,91 n/a Closing NAV ( 000) 2 3 n/a Closing NAV percentage of total fund NAV (%) 0,00 0,00 n/a Number of shares n/a Highest share price (Singapore ) 1.097, ,47 n/a Lowest share price (Singapore ) 939, ,00 n/a INTERIM LONG REPORT AND UNAUDITED FINANCIAL STATEMENTS September

12 Financial highlights Specific share class performance Singapore dollar Class A Accumulation share performance The share class was launched on 16 January Change in NAV per share Singapore Singapore Singapore Opening NAV 1.078, ,00 n/a direct portfolio transaction costs (108,36) 82,55 n/a Operating charges (10,15) (4,03) n/a Return after operating charges (118,51) 78,52 n/a Closing NAV 960, ,52 n/a Retained distributions 14,55 10,38 n/a Direct portfolio transaction costs [a] Singapore Singapore Singapore Costs before dilution adjustments 0,53 1,12 n/a Dilution adjustments [b] (0,14) (0,27) n/a Total direct portfolio transaction costs 0,39 0,85 n/a Direct portfolio transaction costs 0,04 0,08 n/a Operating charges 1,90 1,91 [c] n/a Return after operating charges -10,99 +7,85 n/a Historic yield 3,23 2,82 n/a Effect on yield of charges offset against capital 1,90 1,91 n/a Closing NAV ( 000) 2 3 n/a Closing NAV percentage of total fund NAV (%) 0,00 0,00 n/a Number of shares n/a Highest share price (Singapore ) 1.107, ,47 n/a Lowest share price (Singapore ) 955, ,00 n/a Singapore dollar Class C Income share performance The share class was launched on 16 January 2015 Change in NAV per share Singapore Singapore Singapore Opening NAV 1.070, ,00 n/a direct portfolio transaction costs (107,39) 82,57 n/a Operating charges (4,69) (1,84) n/a Return after operating charges (112,08) 80,73 n/a Distributions (14,42) (10,39) n/a Closing NAV 943, ,34 n/a Direct portfolio transaction costs [a] Singapore Singapore Singapore Costs before dilution adjustments 0,53 1,13 n/a Dilution adjustments [b] (0,14) (0,27) n/a Total direct portfolio transaction costs 0,39 0,86 n/a Direct portfolio transaction costs 0,04 0,08 n/a Operating charges 0,89 0,94 [c] n/a Return after operating charges -10,47 +8,07 n/a Historic yield 3,27 3,11 n/a Effect on yield of charges offset against capital 0,89 0,94 n/a Closing NAV ( 000) 2 3 n/a Closing NAV percentage of total fund NAV (%) 0,00 0,00 n/a Number of shares n/a Highest share price (Singapore ) 1.100, ,46 n/a Lowest share price (Singapore ) 946, ,00 n/a Singapore dollar Class C Accumulation share performance The share class was launched on 16 January Change in NAV per share Singapore Singapore Singapore Opening NAV 1.080, ,00 n/a direct portfolio transaction costs (109,04) 82,80 n/a Operating charges (4,82) (2,08) n/a Return after operating charges (113,86) 80,72 n/a Closing NAV 966, ,72 n/a Retained distributions 14,55 10,40 n/a Direct portfolio transaction costs [a] Singapore Singapore Singapore Costs before dilution adjustments 0,53 1,15 n/a Dilution adjustments [b] (0,14) (0,27) n/a Total direct portfolio transaction costs 0,39 0,88 n/a Direct portfolio transaction costs 0,04 0,08 n/a Operating charges 0,91 0,94 [c] n/a Return after operating charges -10,54 +8,07 n/a Historic yield 3,21 3,11 n/a Effect on yield of charges offset against capital 0,91 0,94 n/a Closing NAV ( 000) n/a Closing NAV percentage of total fund NAV (%) 0,01 0,00 n/a Number of shares n/a Highest share price (Singapore ) 1.111, ,46 n/a Lowest share price (Singapore ) 962, ,00 n/a Sterling Class A Income share performance The share class was launched on 18 July Change in NAV per share UK p UK p UK p Opening NAV 167,38 161,06 158,53 direct portfolio transaction costs (25,60) 14,23 10,36 Operating charges (1,35) (2,72) (2,67) Return after operating charges (26,95) 11,51 7,69 Distributions (2,15) (5,19) (5,16) Closing NAV 138,28 167,38 161,06 Direct portfolio transaction costs [a] UK p UK p UK p Costs before dilution adjustments 0,08 0,17 0,20 Dilution adjustments [b] (0,02) (0,04) (0,06) Total direct portfolio transaction costs 0,06 0,13 0,14 Operating charges 1,67 1,66 1,66 Return after operating charges -16,10 +7,15 +4,85 Historic yield 3,27 3,01 3,23 Effect on yield of charges offset against capital 1,67 1,66 1,66 Closing NAV ( 000) Closing NAV percentage of total fund NAV (%) 7,25 8,87 11,19 Number of shares Highest share price (UK p) 173,71 172,04 169,35 Lowest share price (UK p) 138,22 150,73 152,46 10 INTERIM LONG REPORT AND UNAUDITED FINANCIAL STATEMENTS September 2015

13 Financial highlights Specific share class performance Sterling Class A Accumulation share performance The share class was launched on 18 July Change in NAV per share UK p UK p UK p Opening NAV 209,09 194,98 185,83 direct portfolio transaction costs (32,18) 17,43 12,31 Operating charges (1,67) (3,32) (3,16) Return after operating charges (33,85) 14,11 9,15 Closing NAV 175,24 209,09 194,98 Retained distributions 2,69 6,35 6,12 Direct portfolio transaction costs [a] UK p UK p UK p Costs before dilution adjustments 0,10 0,21 0,24 Dilution adjustments [b] (0,03) (0,05) (0,07) Total direct portfolio transaction costs 0,07 0,16 0,17 Operating charges 1,66 1,66 1,66 Return after operating charges -16,19 +7,24 +4,92 Historic yield 3,21 2,95 3,17 Effect on yield of charges offset against capital 1,66 1,66 1,66 Closing NAV ( 000) Closing NAV percentage of total fund NAV (%) 10,81 10,18 12,38 Number of shares Highest share price (UK p) 217,02 212,67 200,41 Lowest share price (UK p) 173,88 185,17 178,71 Sterling Class I Income share performance The share class was launched on 18 July Change in NAV per share UK p UK p UK p Opening NAV 175,80 167,89 164,03 direct portfolio transaction costs (26,99) 14,90 10,74 Operating charges (0,77) (1,56) (1,52) Return after operating charges (27,76) 13,34 9,22 Distributions (2,26) (5,43) (5,36) Closing NAV 145,78 175,80 167,89 Direct portfolio transaction costs [a] UK p UK p UK p Costs before dilution adjustments 0,08 0,18 0,21 Dilution adjustments [b] (0,02) (0,04) (0,06) Total direct portfolio transaction costs 0,06 0,14 0,15 Operating charges 0,91 0,91 0,91 Return after operating charges -15,79 +7,95 +5,62 Historic yield 3,26 3,00 3,22 Effect on yield of charges offset against capital 0,91 0,91 0,91 Closing NAV ( 000) Closing NAV percentage of total fund NAV (%) 20,10 18,79 16,80 Number of shares Highest share price (UK p) 182,49 180,66 175,39 Lowest share price (UK p) 145,61 157,77 158,01 Sterling Class I Accumulation share performance The share class was launched on 18 July Change in NAV per share UK p UK p UK p Opening NAV 219,54 203,19 192,22 direct portfolio transaction costs (33,89) 18,26 12,79 Operating charges (0,96) (1,91) (1,82) Return after operating charges (34,85) 16,35 10,97 Closing NAV 184,69 219,54 203,19 Retained distributions 2,83 6,65 6,36 Direct portfolio transaction costs [a] UK p UK p UK p Costs before dilution adjustments 0,10 0,22 0,25 Dilution adjustments [b] (0,03) (0,05) (0,07) Total direct portfolio transaction costs 0,07 0,17 0,18 Operating charges 0,91 0,91 0,91 Return after operating charges -15,87 +8,05 +5,71 Historic yield 3,20 2,94 3,15 Effect on yield of charges offset against capital 0,91 0,91 0,91 Closing NAV ( 000) Closing NAV percentage of total fund NAV (%) 21,03 18,20 13,46 Number of shares Highest share price (UK p) 227,92 223,27 208,27 Lowest share price (UK p) 183,13 193,76 185,17 Sterling Class R Income share performance The share class was launched on 3 August Change in NAV per share UK p UK p UK p Opening NAV 125,35 120,01 117,56 direct portfolio transaction costs (19,23) 10,63 7,55 Operating charges (0,70) (1,41) (1,26) Return after operating charges (19,93) 9,22 6,29 Distributions (1,61) (3,88) (3,84) Closing NAV 103,81 125,35 120,01 Direct portfolio transaction costs [a] UK p UK p UK p Costs before dilution adjustments 0,06 0,13 0,15 Dilution adjustments [b] (0,02) (0,03) (0,04) Total direct portfolio transaction costs 0,04 0,10 0,11 Operating charges 1,16 1,16 1,16 Return after operating charges -15,90 +7,68 +5,35 Historic yield 3,27 3,00 3,22 Effect on yield of charges offset against capital 1,16 1,16 1,16 Closing NAV ( 000) Closing NAV percentage of total fund NAV (%) 0,18 0,17 0,05 Number of shares Highest share price (UK p) 130,11 128,82 125,64 Lowest share price (UK p) 103,72 112,62 113,16 INTERIM LONG REPORT AND UNAUDITED FINANCIAL STATEMENTS September

14 Financial highlights Specific share class performance Sterling Class R Accumulation share performance The share class was launched on 3 August Change in NAV per share UK p UK p UK p Opening NAV 136,75 126,88 120,34 direct portfolio transaction costs (21,09) 11,38 7,84 Operating charges (0,76) (1,51) (1,30) Return after operating charges (21,85) 9,87 6,54 Closing NAV 114,90 136,75 126,88 Retained distributions 1,76 4,15 3,97 Direct portfolio transaction costs [a] UK p UK p UK p Costs before dilution adjustments 0,07 0,14 0,15 Dilution adjustments [b] (0,02) (0,03) (0,04) Total direct portfolio transaction costs 0,05 0,11 0,11 Operating charges 1,16 1,16 1,16 Return after operating charges -15,98 +7,78 +5,43 Historic yield 3,20 2,94 3,16 Effect on yield of charges offset against capital 1,16 1,16 1,16 Closing NAV ( 000) Closing NAV percentage of total fund NAV (%) 0,06 0,07 0,07 Number of shares Highest share price (UK p) 141,96 139,08 130,18 Lowest share price (UK p) 113,95 120,83 115,85 Sterling Class X Income share performance The share class was launched on 18 July Change in NAV per share UK p UK p UK p Opening NAV 167,45 161,13 158,61 direct portfolio transaction costs (25,63) 14,23 10,35 Operating charges (1,33) (2,72) (2,67) Return after operating charges (26,96) 11,51 7,68 Distributions (2,15) (5,19) (5,16) Closing NAV 138,34 167,45 161,13 Direct portfolio transaction costs [a] UK p UK p UK p Costs before dilution adjustments 0,08 0,17 0,20 Dilution adjustments [b] (0,02) (0,04) (0,06) Total direct portfolio transaction costs 0,06 0,13 0,14 Operating charges 1,66 1,66 1,66 Return after operating charges -16,10 +7,15 +4,84 Historic yield 3,27 3,01 3,23 Effect on yield of charges offset against capital 1,66 1,66 1,66 Closing NAV ( 000) Closing NAV percentage of total fund NAV (%) 0,95 0,82 0,77 Number of shares Highest share price (UK p) 173,78 172,12 169,42 Lowest share price (UK p) 138,28 150,79 152,52 Sterling Class X Accumulation share performance The share class was launched on 18 July Change in NAV per share UK p UK p UK p Opening NAV 209,20 195,08 185,94 direct portfolio transaction costs (32,19) 17,45 12,31 Operating charges (1,67) (3,33) (3,17) Return after operating charges (33,86) 14,12 9,14 Closing NAV 175,34 209,20 195,08 Retained distributions 2,69 6,36 6,12 Direct portfolio transaction costs [a] UK p UK p UK p Costs before dilution adjustments 0,10 0,21 0,24 Dilution adjustments [b] (0,03) (0,05) (0,07) Total direct portfolio transaction costs 0,07 0,16 0,17 Operating charges 1,66 1,66 1,66 Return after operating charges -16,19 +7,24 +4,92 Historic yield 3,21 2,95 3,17 Effect on yield of charges offset against capital 1,66 1,66 1,66 Closing NAV ( 000) Closing NAV percentage of total fund NAV (%) 0,36 0,35 0,46 Number of shares Highest share price (UK p) 217,13 212,79 200,52 Lowest share price (UK p) 173,98 185,27 178,80 US dollar Class A Income share performance The share class was launched on 8 August Change in NAV per share US US US Opening NAV 1.489, ,18 n/a direct portfolio transaction costs (193,13) (51,20) n/a Operating charges (14,25) (19,59) n/a Return after operating charges (207,38) (70,79) n/a Distributions (20,05) (37,00) n/a Closing NAV 1.261, ,39 n/a Direct portfolio transaction costs [a] US US US Costs before dilution adjustments 0,74 1,66 n/a Dilution adjustments [b] (0,20) (0,40) n/a Total direct portfolio transaction costs 0,54 1,26 n/a Direct portfolio transaction costs 0,04 0,08 n/a Operating charges 1,92 1,91 [c] n/a Return after operating charges -13,92-4,43 n/a Historic yield 3,30 3,13 n/a Effect on yield of charges offset against capital 1,92 1,91 n/a Closing NAV ( 000) n/a Closing NAV percentage of total fund NAV (%) 0,07 0,08 n/a Number of shares n/a Highest share price (US ) 1.578, ,61 n/a Lowest share price (US ) 1.261, ,44 n/a 12 INTERIM LONG REPORT AND UNAUDITED FINANCIAL STATEMENTS September 2015

15 Financial highlights Specific share class performance US dollar Class A Accumulation share performance The share class was launched on 18 July Change in NAV per share US US US Opening NAV 1.525, , ,42 direct portfolio transaction costs (199,58) (47,71) 240,00 Operating charges (14,64) (30,45) (28,66) Return after operating charges (214,22) (78,16) 211,34 Closing NAV 1.311, , ,76 Retained distributions 20,51 49,51 49,06 Direct portfolio transaction costs [a] US US US Costs before dilution adjustments 0,76 1,66 1,86 Dilution adjustments [b] (0,20) (0,40) (0,53) Total direct portfolio transaction costs 0,56 1,26 1,33 Operating charges 1,92 1,91 1,91 Return after operating charges -14,04-4,87 +15,18 Historic yield 3,23 3,13 3,09 Effect on yield of charges offset against capital 1,92 1,91 1,91 Closing NAV ( 000) Closing NAV percentage of total fund NAV (%) 4,23 4,87 5,70 Number of shares Highest share price (US ) 1.616, , ,15 Lowest share price (US ) 1.301, , ,89 US dollar Class C Accumulation share performance The share class was launched on 18 July Change in NAV per share US US US Opening NAV 1.628, , ,77 direct portfolio transaction costs (214,11) (50,95) 252,37 Operating charges (7,50) (15,42) (14,38) Return after operating charges (221,61) (66,37) 237,99 Closing NAV 1.406, , ,76 Retained distributions 21,94 52,60 51,62 Direct portfolio transaction costs [a] US US US Costs before dilution adjustments 0,82 1,77 1,96 Dilution adjustments [b] (0,22) (0,42) (0,56) Total direct portfolio transaction costs 0,60 1,35 1,40 Operating charges 0,91 0,91 0,91 Return after operating charges -13,61-3,92 16,34 Historic yield 3,21 3,11 3,08 Effect on yield of charges offset against capital 0,91 0,91 0,91 Closing NAV ( 000) Closing NAV percentage of total fund NAV (%) 1,13 1,45 1,64 Number of shares Highest share price (US ) 1.727, , ,37 Lowest share price (US ) 1.396, , ,45 [a] As a percentage of average net asset value. [b] In respect of direct portfolio transaction costs. [c] An estimate of the charges, as the share class had not been in existence for a full financial year. US dollar Class C Income share performance The share class was launched on 8 August Change in NAV per share US US US Opening NAV 1.589, ,79 n/a direct portfolio transaction costs (207,25) (54,98) n/a Operating charges (7,21) (9,94) n/a Return after operating charges (214,46) (64,92) n/a Distributions (21,30) (39,36) n/a Closing NAV 1.353, ,51 n/a Direct portfolio transaction costs [a] US US US Costs before dilution adjustments 0,79 2,48 n/a Dilution adjustments [b] (0,21) (0,59) n/a Total direct portfolio transaction costs 0,58 1,89 n/a Direct portfolio transaction costs 0,04 0,08 n/a Operating charges 0,91 0,91 [c] n/a Return after operating charges -13,49-3,83 n/a Historic yield 3,27 3,11 n/a Effect on yield of charges offset against capital 0,91 0,91 n/a Closing NAV ( 000) n/a Closing NAV percentage of total fund NAV (%) 0,04 0,03 n/a Number of shares n/a Highest share price (US ) 1.686, ,06 n/a Lowest share price (US ) 1.353, ,01 n/a INTERIM LONG REPORT AND UNAUDITED FINANCIAL STATEMENTS September