ANNUAL REPORT & ACCOUNTS. Henderson Global Growth Fund. For the year ended 30 November 2016

Transcription

1 ANNUAL REPORT & ACCOUNTS For the year ended 30 November 2016 Henderson Global Growth Fund

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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 100.9bn* billion (30 September 2016). 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 Global Investors 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 2017, subject to requisite shareholder and regulatory approvals. 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 Fund Manager s report* Page 1 Authorised status* Page 1 Comparative tables Page 4 Ongoing charge figure Page 5 Risk and reward profile* Page 6 Portfolio statement* Page 7 Statement of Authorised Fund Manager s responsibilities Page 10 Statement of Trustee s responsibilities and report of the Trustee to the unitholders Page 10 Independent Auditors report to the unitholders Page 11 Financial statements Statement of total return Page 13 Statement of change in net assets attributable to unitholders Page 13 Balance sheet Page 14 Directors statement Page 14 Notes to the financial statements Page 15 Distribution table Page 27 Further information Page 28 * These collectively comprise the Authorised Fund Manager s report.

5 Henderson Global Growth Fund Authorised Fund Manager s report We are pleased to present the Annual Report & Accounts for Henderson Global Growth Fund (the fund ) for the year ended 30 November Authorised status The fund is an authorised unit trust scheme and a UCITS scheme operating under Chapter 5 of the Collective Investment Scheme sourcebook (COLL) issued by the Financial Conduct Authority (FCA). The fund was established in January 1982 and authorised by the FCA on 29 January Remuneration Following the implementation of the UCITS V in the UK from 18 March 2016, all authorised UCITS Management Companies are required to comply with the UCITS Remuneration Code in respect of the first full performance year following that date. Henderson Global Growth Fund s financial year end is 30 November and it is therefore anticipated that the UCITS remuneration policy and associated financial disclosures will be made within these Annual Reports from 30 November 2017 being the first relevant performance period for these purposes. Prior to this date Henderson Global Growth Fund would be part way through its first performance period and the information available would not be relevant or provide a proper basis for comparison. Service providers Authorised Fund Manager Directors of the Authorised Fund Manager Investment Manager Unitholder Administrator Trustee Independent Auditors Name Address Regulator Henderson Investment Funds Limited Member of the Investment Association The Ultimate Holding Company is Henderson Group plc M Skinner P Wagstaff G Kitchen C Chaloner H J de Sausmarez G Foggin (from ) 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 Henderson Global Growth Fund 1

6 Authorised Fund Manager s report Investment Fund Manager Ian Warmerdam Investment objective and policy To achieve above average long term capital growth. The fund will invest principally in a concentrated portfolio of global securities with a bias to those securities where innovation drives competitive advantage and where the Manager considers them to be under appreciated and which offer sustainably high levels of growth. The fund may also invest in other transferable securities, money market instruments, deposits and cash and near cash, units in collective investment schemes and forward foreign exchange contracts. Derivatives and foreign exchange contracts may be used for the purposes of efficient portfolio management only and cash and near cash will be used for the purposes of redemptions and efficient management only. It is not anticipated that the use of derivatives for these purposes will alter the risk profile of the fund. Performance summary 30 Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov 12 % % % % % Henderson Global Growth Fund MSCI All Country World Index Source: Morningstar, bid to bid and net of fees as at 12 noon valuation point, based on accumulation units. Benchmark values are 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 year ended 30 November 2016 Largest purchases 000 Largest sales 000 Colgate-Palmolive 6,535 NetEase.com ADR 12,666 Bank Pekao 6,017 Bayer 6,581 Activision Blizzard 5,534 Baidu ADS 6,390 Cognizant Technology Solutions 4,783 Netflix 5,352 American Express 3,097 RightMove 3,369 Housing Development Finance 2,928 Shoprite 3,292 CVS Health 2,743 Check Point Software 3,030 AmerisourceBergen 'A' 2,652 CVS Health 2,774 Cardinal Health 2,558 Roper Technologies 2,772 Shoprite 2,264 Willis Towers Watson 1,911 Total purchases 68,429 Total sales 68,574 2 Henderson Global Growth Fund

7 Authorised Manager s report (continued) Investment review Overview Over the year to 30 November 2016, the Henderson Global Growth Fund underperformed its benchmark, the MSCI AC World Index. The fund returned 18.7% versus 25.6% for the benchmark in sterling terms, net of fees. Performance The year under review was certainly turbulent, and the sterling fund s returns do little to enhance the understanding of events, skewed as they are by sterling s precipitous fall against its main trading partners, particularly the dollar and euro. While our level of absolute return was satisfactory, our relative performance was negatively impacted by our structural underweight of more commodity driven, cyclical sectors such as energy and materials which enjoyed a strong run. The consumer staples sector was the primary driver of positive relative performance over the year whilst the health care and consumer discretionary sectors detracted. The fund s healthcare holdings were a source of underperformance over the year. The US market remains the key profit driver for many global health care companies and has been the focus of intense media and political attention in what has been a highly eventful presidential election year. Drug pricing in particular was in sharp focus, with legitimate questions being posed as to why prices in the US are multiples of what are paid elsewhere. Our preference in this sector is typically for service companies rather than drug manufacturers however some of these holdings have not escaped some of the wider issues. Wholesale drug distributors AmerisourceBergen and Cardinal Health were among the largest detractors, with growth in their core logistics businesses slowing from elevated levels. These companies provide an essential link in delivering drugs from manufacturers to dispensers and we continue to view them as attractive long term investments. Other detractors at the stock level included Delphi, a US-listed automotive supplier and ProSieben, the leading free to air TV broadcaster in Germany. On the positive side, one of the largest contributors was Cognex, one of the global leaders in machine vision technology. Machine Vision systems are used on production lines to guide manufacturing equipment, identify items and inspect quality, resulting in improved throughput. During the year, we had the opportunity to visit the company at their headquarters in Natick, Massachusetts, seeing the products up close and spending time with the impressive management team. We continue to like the company s positioning in the industry, with a large intellectual property portfolio and research & development budget providing a sustainable competitive advantage and a very strong balance sheet that should protect the company should it encounter a leaner spell of orders. Our holdings in emerging markets performed strongly and we continued to add selectively to our favoured positions, particularly in Africa, where we are encouraged by the long term opportunity we see for well managed franchises to benefit from a growing middle class population. Portfolio Activity In line with our long-term investment philosophy, portfolio turnover was low over the year. Colgate Palmolive, a stock which has long sat on our monitor list, was bought in January 2016 as a wider market fall afforded us an opportune entry point into the world s leading toothpaste brand. We also bought Activision Blizzard, which is a leading publisher of video games in what has become an increasingly consolidated and profitable market. Sales over the year included Bayer, Netflix and NetEase. Outlook Many participants will be drawn into attempts to predict the short term course of the market. We do not try to predict political events, nor do we attempt to second guess the market s reaction when the unexpected unfolds. While we don t wish to be naive about the implications, we believe there are much more predictable trends to be studied in the quieter domain of the long term investor e.g. the penetration rate of e-commerce or the adoption of active safety systems in vehicles. We remain entirely focussed on uncovering undervalued securities that are exposed to strong secular tailwinds of growth. By sticking to this strategy, we aim to continue generating significant absolute and relative returns over the longer term. Henderson Global Growth Fund 3

8 Comparative tables for the year ended 30 November 2016 Accumulation (pence per (pence per (pence per unit) unit) unit) Change in net assets per unit Opening net asset value per unit 2, , , Return before operating charges* Operating charges (46.32) (42.02) (36.15) Return after operating charges* Distributions on accumulation units Retained distributions on accumulation units Closing net asset value per unit 2, , , * after direct transaction costs of: Performance Return after charges 18.01% 8.02% 15.94% Other information Closing net asset value ( 000s) 272, , ,357 Closing number of units 10,992,705 12,385,049 14,903,942 Operating charges 2.09% 2.09% 2.09% Direct transaction costs 0.05% 0.10% 0.12% Prices Highest unit price (pence) 2, , , Lowest unit price (pence) 1, , , Class I accumulation (pence per (pence per (pence per unit) unit) unit) Change in net assets per unit Opening net asset value per unit Return before operating charges* Operating charges (1.58) (1.43) (1.21) Return after operating charges* Distributions on accumulation units Retained distributions on accumulation units (0.69) - - Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 19.48% 9.38% 17.40% Other information Closing net asset value ( 000s) 153, ,936 56,543 Closing number of units 73,290,836 61,770,995 35,391,616 Operating charges 0.85% 0.85% 0.85% Direct transaction costs 0.05% 0.10% 0.12% Prices Highest unit price (pence) Lowest unit price (pence) Performance values are at close of business and may differ from the performance summary. Operating charges Operating charges are expenses associated with the maintenance and administration of the fund on a day-to-day basis that are actually borne by the unit class. 4 Henderson Global Growth Fund

9 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 year, except for expenses that are explicitly excluded by regulation % % Accumulation I accumulation The OCF is calculated in accordance with guidelines issued by the European Securities and Markets Authority (ESMA). Henderson Global Growth Fund 5

10 Risk and reward profile The fund currently has 2 types of unit class in issue; accumulation and I accumulation. The risk and reward profile 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 units 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 lowest category does not mean risk free. The fund s risk level reflects the following: As a category shares are, in general, more volatile than either bonds or money market instruments. Fluctuations in exchange rates may cause the value of your investment to rise or fall. The rating does not reflect the possible effects of unusual market conditions or large unpredictable events which could amplify everyday risk and trigger other risks. 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 in the year for accumulation class The SRRI conforms to the ESMA guidelines for the calculation of the SRRI. 6 Henderson Global Growth Fund

11 Portfolio statement as at 30 November 2016 Holding Investment Market Percentage value of total 000 net assets % Equities 96.94% (2015: 93.08%) Austria 2.15% (2015: 1.99%) Industrials 2.15% (2015: 1.99%) 221,794 Andritz 9, China 1.35% (2015: 6.95%) Consumer Staples 1.35% (2015: 1.24%) 3,487,000 China Mengniu Dairy 5, Information Technology 0.00% (2015: 5.71%) France 1.87% (2015: 1.68%) Consumer Discretionary 1.87% (2015: 1.68%) 177,837 Valeo 7, Germany 6.20% (2015: 8.82%) Consumer Discretionary 2.67% (2015: 3.46%) 41,073 Continental 5, ,641 ProSiebenSat.1 Media 5, , Health Care 3.53% (2015: 5.36%) 74,019 Draegerwerk Preference Shares 4, ,677 Fresenius 10, , India 2.24% (2015: 1.49%) Financials 2.24% (2015: 1.49%) 644,842 Housing Development Finance 9, Ireland 2.96% (2015: 2.59%) Health Care 2.96% (2015: 2.59%) 207,562 Icon 12, Israel 1.66% (2015: 2.20%) Information Technology 1.66% (2015: 2.20%) 107,384 Check Point Software 7, Italy 1.36% (2015: 0.00%) Financials 1.36% (2015: 0.00%) 255,827 Bank Pekao 5, Netherlands 0.61% (2015: 0.56%) Information Technology 0.61% (2015: 0.56%) 75,720 ASM International 2, South Africa 6.79% (2015: 5.11%) Consumer Discretionary 1.67% (2015: 1.76%) 60,535 Naspers 'N' 7, Henderson Global Growth Fund 7

12 Portfolio statement (continued) Holding Investment Market Percentage value of total 000 net assets % Consumer Staples 5.12% (2015: 3.35%) 1,073,757 Shoprite 11, ,041 Tiger Brands 10, , South Korea 0.37% (2015: 0.30%) Information Technology 0.37% (2015: 0.30%) 107,241 Wonik IPS 1, United Kingdom 5.44% (2015: 6.88%) Consumer Discretionary 0.00% (2015: 2.57%) 164,000 ET-China.com* - - Consumer Staples 0.76% (2015: 0.79%) 1,049,424 PZ Cussons 3, Information Technology 3.25% (2015: 2.09%) 1,664,076 Auto Trader 6, ,314 RightMove 7, , Materials 1.43% (2015: 1.43%) 2,410,955 Elementis 6, United States 63.94% (2015: 54.51%) Consumer Discretionary 12.23% (2015: 12.39%) 22,610 Amazon.com 13, ,850 Comcast 'A' Special 10, ,911 Delphi Automotive 9, ,592 Priceline.com 12, ,721 The Walt Disney Company 5, , Consumer Staples 3.70% (2015: 2.62%) 128,246 Colgate-Palmolive 6, ,796 CVS Health 9, , Financials 3.52% (2015: 3.33%) 160,915 American Express 9, ,982 Willis Towers Watson 5, , Health Care 10.01% (2015: 8.41%) 136,418 AmerisourceBergen 'A' 8, ,542 Cardinal Health 11, ,486 Cooper 11, ,855 Mednax 10, , Industrials 5.29% (2015: 7.26%) 53,273 FedEx 8, ,300 Roper Industries 6, ,041 Spirit Airlines 7, , Henderson Global Growth Fund

13 Portfolio statement (continued) * Manually priced Holding Investment Market Percentage value of total 000 net assets % Information Technology 26.86% (2015: 20.50%) 262,523 Activision Blizzard 7, ,031 Alphabet 'A' 2, ,789 Alphabet 'C' 11, ,650 Apple 15, ,211 Cognex 9, ,264 Cognizant Technology Solutions 13, ,600 Facebook 8, ,407 Fidelity National Information 9, ,578 F5 Networks 9, ,473 Mastercard 9, ,370 Visa 9, ,893 Wex 7, , Real Estate 2.33% (2015: 0.00%) 121,196 American Tower 9, Derivatives 0.00% (2015: (0.01%) Forward Foreign Exchange Contracts 0.00% (2015: (0.01%)) Investment assets 412, Other net assets 12, Total net assets 425, Henderson Global Growth Fund 9

14 Statement of Authorised Fund Manager s responsibilities of Henderson Global Growth Fund (the fund ) for the year ended 30 November 2016 The Financial Conduct Authority s Collective Investment Schemes Sourcebook requires the Authorised Fund Manager to prepare financial statements for each annual accounting year which give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the financial affairs of the fund and of its revenue for the year. In preparing the financial statements the Authorised Fund Manager is required to: select suitable accounting policies and then apply them consistently; comply with the requirements of the Statement of Recommended Practice for Authorised Funds issued by the Investment Management Association (IMA) in May 2014; follow generally accepted accounting principles and applicable accounting standards; keep proper accounting records which enable it to demonstrate that the financial statements, as prepared by Henderson Investment Funds Limited, comply with the above requirements; make judgements and estimates that are reasonable and prudent; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the fund will continue in operation for the foreseeable future. The Authorised Fund Manager is responsible for the management of the fund in accordance with its Trust Deed, Prospectus and the Regulations. The Authorised Fund Manager is also responsible for taking reasonable steps for the prevention and detection of fraud and other irregularities. Statement of the Trustee s Responsibilities and Report of the Trustee to the Unitholders of Henderson Global Growth Fund (the Scheme ) for the year ended 30 November 2016 The Trustee must ensure that the Scheme is managed in accordance with the Financial Conduct Authority s Collective Investment Schemes Sourcebook, the Financial Services and Markets Act 2000, as amended, (together the Regulations ), the Trust Deed and Prospectus (together the Scheme documents ) as detailed below. The Trustee must in the context of its role act honestly, fairly, professionally, independently and in the interests of the Scheme and its investors. The Trustee is responsible for the safekeeping of all custodial assets and maintaining a record of all other assets of the Scheme in accordance with the Regulations. The Trustee must ensure that: the Scheme s cash flows are properly monitored (this requirement on the Depositary applied from 18 March 2016) and that cash of the Scheme is booked into the cash accounts in accordance with the Regulations; the sale, issue, redemption and cancellation of units are carried out in accordance with the Regulations; the value of units of the Scheme are calculated in accordance with the Regulations; any consideration relating to transactions in the Scheme s assets is remitted to the Scheme within the usual time limits; the Scheme s income is applied in accordance with the Regulations; and the instructions of the Authorised Fund Manager ( the AFM ) are carried out (unless they conflict with the Regulations). The Trustee also has a duty to take reasonable care to ensure that the Scheme is managed in accordance with the Regulations and the Scheme documents in relation to the investment and borrowing powers applicable to the Scheme. Having carried out such procedures as we consider necessary to discharge our responsibilities as Trustee of the Scheme, it is our opinion, based on the information available to us and the explanations provided, that in all material respects the Scheme, acting through the AFM: (i) has carried out the issue, sale, redemption and cancellation, and calculation of the price of the Scheme s units and the application of the Schemes income in accordance with the Regulations and the Scheme documents, and (ii) has observed the investment and borrowing powers and restrictions applicable to the Scheme. National Westminster Bank plc London 3 February Henderson Global Growth Fund

15 Independent Auditors report to the unitholders of Henderson Global Growth Fund (the fund ) for the year ended 30 November 2016 Our opinion In our opinion the financial statements, defined below: give a true and fair view of the financial position of the fund as at 30 November 2016 and of the net expenses and the net capital gains of the scheme property of the fund for the year then ended; and have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, the Statement of Recommended Practice for Authorised Funds, the Collective Investment Schemes sourcebook and the Trust Deed. This opinion is to be read in the context of what we say in the remainder of this report. What we have audited The financial statements of Henderson Global Growth Fund (the fund ), which are prepared by Henderson Investment Funds Limited (the Authorised Fund Manager ), comprise: the balance sheet of the fund as at 30 November 2016; the statement of total return of the fund for the year then ended; the statement of change in net assets attributable to unitholders of the fund for the year then ended; the notes to the fund s financial statements, which include a summary of significant accounting policies and other explanatory information; and the distribution table. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), the Statement of Recommended Practice Financial Statements of Authorised Funds issued by the Investment Management Association (the Statement of Recommended Practice for Authorised Funds ), the Collective Investment Schemes sourcebook and the Trust Deed. In applying the financial reporting framework, the Authorised Fund Manager has made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events. What an audit of financial statements involves We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) ( ISAs (UK & Ireland) ). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the fund s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Authorised Fund Manager; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Henderson Global Growth Fund Annual Report & Accounts (the Annual Report ) to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinions on matters prescribed by the Collective Investment Schemes sourcebook In our opinion: we have obtained all the information and explanations we consider necessary for the purposes of the audit; and the information given in the Authorised Fund Manager s report for the financial year for which the financial statements are prepared is consistent with the financial statements. Henderson Global Growth Fund 11

16 Independent Auditors report to the unitholders of Henderson Global Growth Fund (the fund ) (continued) Other matters on which we are required to report by exception Propriety of accounting records and information and explanations received Under the Collective Investment Schemes sourcebook we are required to report to you if, in our opinion: proper accounting records have not been kept; or the financial statements are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. Responsibilities for the financial statements and the audit Our responsibilities and those of the Authorised Fund Manager As explained more fully in the Statement of Authorised Fund Manager s responsibilities set out on page 10, the Authorised Fund Manager is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the fund s unitholders as a body in accordance with paragraph of the Collective Investment Schemes sourcebook and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Glasgow 3 February 2017 Notes: (a) The maintenance and integrity of the Henderson Global Investors website is the responsibility of the Authorised Fund Manager; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. (b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 12 Henderson Global Growth Fund

17 Statement of total return for the year ended 30 November Note Income Net capital gains 4 70,051 31,843 Revenue 5 5,401 3,191 Expenses 6 (6,551) (6,544) Interest payable and similar charges 7 - (1) Net expense before taxation (1,150) (3,354) Taxation 8 (602) (339) Net expense after taxation (1,752) (3,693) Total return before distributions 68,299 28,150 Distributions 9 (508) - Change in net assets attributable to unitholders from investment activities 67,791 28,150 Statement of change in net assets attributable to unitholders for the year ended 30 November Opening net assets attributable to unitholders 367, ,900 Amounts receivable on issue of units 47,249 35,035 Amounts payable on cancellation of units (58,156) (41,412) (10,907) (6,377) Change in net assets attributable to unitholders from investment activities 67,791 28,150 Retained distributions on accumulation units Closing net assets attributable to unitholders 425, ,673 Henderson Global Growth Fund 13

18 Balance sheet as at 30 November 2016 Assets: Note Investment assets 412, ,200 Current assets: Debtors ,392 Cash and bank balances 11 14,689 28,457 Total assets 427, ,049 Liabilities Investment liabilities - 20 Creditors Bank overdrafts 1,609 3,463 Other creditors ,893 Total liabilities 2,437 5,376 Net assets attributable to unitholders 425, ,673 Directors statement In accordance with the requirements of the Collective Investment Schemes sourcebook as issued and amended by the Financial Conduct Authority, we hereby certify the investment report and financial statements on behalf of the Directors of Henderson Investment Funds Limited. C Chaloner (Director) M Skinner (Director) 3 February Henderson Global Growth Fund

19 Notes to the financial statements for the year ended 30 November Accounting policies (a) Basis of preparation The financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments, and in accordance with the Statement of Recommended Practice Financial Statements of UK Authorised Funds issued by the Investment Management Association ( IMA ) in May 2014 (the SORP ), the Financial Reporting Standard 102 ( FRS102 ), the Financial Conduct Authority s Collective Investment Schemes Sourcebook ( COLL ) and the Trust Deed. The financial statements have been prepared on a going concern basis. In applying United Kingdom Generally Accepted Accounting Practice ( UK GAAP ), and as a result of preparing the financial statements in compliance with FRS 102 for the first time, changes in the presentation of the financial statements have been made and additional disclosures have been included. These changes and additions have no impact on the net asset value, net revenue or distributions in either the current or prior year. (b) Basis of valuation of investments The valuation of listed investments has been at fair value, which is generally deemed to be bid market price, at close of business on the last valuation day of the accounting year (30 November 2016) in accordance with the provisions of the scheme particulars. Suspended, defaulted, delisted, unquoted or manually priced securities are valued by the Authorised Fund Manager ( AFM ) taking into account, where appropriate, latest dealing prices, valuations from reliable sources, financial performance and other relevant factors. Derivative assets and liabilities are valued at the fair value price to close out the contract at the Balance sheet date, using available market prices or an assessment of fair value based on counterparty valuations and appropriate pricing models. (c) Revenue recognition Dividends receivable from quoted equity and non equity units are credited to revenue, net of attributable tax credits, when the security is quoted ex-dividend. Dividends on unquoted stocks are credited to revenue when the dividend is announced. Prior to 6 April 2016, UK dividend revenue is disclosed net of any tax related tax credit. From 6 April 2016 UK dividend revenue is disclosed gross. Overseas dividends are disclosed gross of any foreign tax suffered, the tax element being separately disclosed in the tax note. Bank interest is recognised on an accruals basis. If any revenue receivable at the Balance sheet date is not considered recoverable, a provision is made for the relevant amount. (d) Treatment of expenses (including AFM expenses) All expenses (other than those relating to the purchase and sale of investments) are charged against revenue on an accruals basis. Annual Management Charge ( AMC ) In payment for carrying out its duties and responsibilities the AFM is entitled to take an annual fee out of the fund property, calculated as a percentage of the relevant value of the property of each class of each fund. The AMC is accrued on a daily basis by reference to the net asset value of each unit class on that Dealing Day and the amount due for each month is payable on the last working day of the month. General Administration Charge All fees with the exception of the annual management charge, Trustee and safe custody fees have been replaced by a single ad valorem charge, the General Administration Charge ( GAC ). The AFM believes that this creates more efficiency around the charging process than more traditional methods. The GAC is calculated as a percentage of the scheme property and the amount each unit class in each fund will pay will depend on the costs attributable to each unit class based on whether the class is a retail class or an Institutional class. The GAC accrues on a daily basis and is payable to the AFM by each unit class monthly. For further details please refer to the Prospectus. Henderson Global Growth Fund 15

20 Notes to the financial statements (continued) 1 Accounting policies (d) Treatment (continued) Allocation of revenue and expenses to multiple unit classes With the exception of the annual management charge and the GAC which are directly attributable to individual unit classes, all revenue and expenses are allocated to unit classes pro rata to the value of the net assets of the relevant unit class on the day that the revenue or expense is incurred. For further details please refer to the Prospectus. (e) Exchange rates Foreign currency transactions are translated into sterling at the exchange rate ruling at the date of the transaction. Assets and liabilities denominated in foreign currencies at the end of the accounting year are translated into sterling at the exchange rates prevailing at close of business on the last valuation day of the accounting year. (f) Taxation Provision is made for tax at the current rates on the excess of taxable revenue over allowable expenses, with relief for overseas taxation taken where appropriate. Until 5 April 2016, UK dividend revenue is disclosed net of any related tax credit. From 6 April 2016 UK dividend revenue is disclosed gross. Overseas dividends continue to be disclosed gross of any foreign tax suffered, the tax element being separately disclosed in the tax note. Corporation tax is charged at 20% of the revenue liable to corporation tax less expenses. Deferred tax is provided on all timing differences that have originated but not reversed at the balance sheet date other than those recorded as permanent differences. Deferred tax is provided at the average rate of tax expected to apply. Deferred tax assets and liabilities are not discounted to reflect the time value of money. Deferred tax assets are only recognised to the extent it is regarded as more likely than not that there will be taxable profits against which the future reversal of underlying timing differences can be offset. (g) Cash flow statement The fund is not required to produce a cash flow statement as it meets the exemption criteria set out in FRS102.7.IA. (h) Treatment of derivatives In pursuing its investment objectives, the fund may hold a number of financial instruments. Derivative transactions are accounted for on a trade date basis. Where such transactions are used to protect or enhance revenue and the circumstances support it, the revenue and expenses derived there from are included in Revenue in the Statement of total return on an accruals basis. Where such transactions are used to protect or enhance capital and the circumstances support it, the gains and losses derived there from are included in Net capital gains/(losses) in the Statement of total return. Forward foreign currency contracts Open forward currency contracts are shown in the portfolio statement at fair value and the net gains/(losses) are reflected in Forward currency contracts in Net capital gains/(losses) on investments. 16 Henderson Global Growth Fund

21 Notes to the financial statements (continued) 2 Distribution Policy The distribution policy of the funds is to accumulate all available revenue, after the deduction of expenses properly chargeable against revenue, subject to any of the AMC or other expense which may currently be transferred to capital. The fund pays dividend distributions. Revenue attributed to accumulation unitholders is retained at the end of each distribution period and represents a reinvestment of revenue. Gains and losses on investments and currencies, whether realised or unrealised, are taken to capital and are not available for distribution. In the event that the amount of income to be accumulated is less than 1% of the value of the fund s property the Authorised Fund Manager reserves the right to carry the income over to the next accumulation. When the revenue from investments exceeds the expenses, a distribution will be made. Should expenses exceed revenue there will be no distribution and the shortfall will be transferred from capital at the year end. The fund makes an annual distribution (31 January) to unitholders. All distributions unclaimed for a period of six years after having become due for payment shall be forfeited and shall revert to the funds. Dividend distributions paid to unitholders after 6 April 2016 are paid gross as the government has abolished the dividend tax credit. Equalisation Currently no income equalisation is applied to the fund. 3 Risk In pursuing its investment objective the fund holds a number of financial instruments. These financial instruments comprise securities and other investments, cash balances, debtors and creditors arising from the fund s operations. The fund may also enter into derivatives and forward transactions for the purpose of efficient portfolio management only. The risk management policy and process for the fund is designed to satisfy the regulatory requirements for a UCITS fund; associated regulatory technical standards and guidelines; and local regulations. The framework for risk controls and limits for the fund is documented within the Authorised Fund Manager s Risk Management Policy and Process document, which outlines for each main risk category the controls and risk measures in place, including stress tests for assessing sensitivity to the most relevant risks. This risk framework includes setting of limits and monitoring against those limits. In the normal course of business, the fund s activities expose it to various types of risk which are associated with the financial instruments and markets in which it invests. These financial risks: market risk (comprising currency risk, interest rate risk and other market price risk), credit and counterparty risk and liquidity risk and the approach to the management of these risks, are set out below and remain unchanged from the previous accounting year. For a detailed explanation of these and further risks involved in investing in the fund, reference should be made to the Prospectus, investors and prospective investors are recommended to discuss all potential risks with their own legal, tax and financial advisors. The risk management systems to which the Henderson Risk, Compliance and Operations teams have access for independent monitoring and risk measurement purposes include: Charles River system s Compliance module for investment restrictions monitoring; ArcLogics operational risk database; RiskMetrics, UBS Delta, Style Research, FinAnalytica and Barra Aegis for market risk measurement; and Bloomberg for market data and price checking. These are supplemented by an in-house development, the Henderson Derivatives Risk and Compliance database. Henderson Global Growth Fund 17

22 Notes to the financial statements (continued) 3 Risk (continued) (a) Market risk Market risk is the risk of loss resulting from fluctuations in the market value of positions in the fund attributable to changes in market variables such as interest rates, foreign exchange rates or an issuer s creditworthiness. The investments of the fund are subject to normal market fluctuations and other risks inherent in investing in securities, in pursuance of the investment objective and policy as set out in the Prospectus. Whilst equity investments carry potential for attractive returns over the longer term, the volatility of these returns can be relatively high. The fund may hold a relatively concentrated portfolio, as such the returns may be impacted more by fluctuations in the value of underlying securities and be more volatile. Also, the fund may invest in technology stocks, where potential volatility may increase the risk to the value of these investments in which above average price movements can be expected. Technology and technology-related industries may also be subject to greater government regulation than many other industries. Accordingly, changes in government policies and the need for regulatory approvals may have a materially adverse affect on these industries. Additionally, these companies may be subject to risks of developing technologies, competitive pressures and the risk of obsolescence caused by other scientific advances. Many companies in the technology sector are smaller companies whose securities may be less liquid than those of larger companies, as a result of inadequate trading volume or restrictions on trading. Securities in smaller companies may possess greater potential for capital appreciation, but also involve risks, such as limited product lines, markets and financial or managerial resources and trading in such securities may be subject to more abrupt price movements than trading in securities of larger companies. The global exposure of the fund is measured using the commitment approach; the commitment approach means that financial derivative instruments are converted into the market value of the equivalent position in the underlying asset(s). The fund may use derivatives and foreign exchange contracts for the purposes of efficient portfolio management only, it is not expected that the use of derivatives for this purpose will alter the risk profile of the fund. The fund does not employ significant leverage; this is consistent with the prior year. Currency risk Currency risk is the risk that the value of the fund s investments will fluctuate as a result of changes in foreign currency exchange rates. When a proportion of the fund s assets and income are denominated in currencies other than sterling the fund s financial statements can be affected by movements in exchange rates. The fund s exposure to foreign currency risk is considered significant. The following table details the net exposure of the principal foreign currencies the fund was exposed to, including any instruments used to hedge foreign currencies. Investment assets Other net assets Total net assets Currency Canadian dollar Euro 46, ,534 Hong Kong dollar 5,721-5,721 Indian rupee 9,538-9,538 Japanese yen Korean won 1,560-1,560 Polish zloty 5,771-5,771 South African rand 28,853-28,853 Swiss franc UK sterling 23,136 12,275 35,411 US dollar 291, ,672 Total 412,071 12, , Henderson Global Growth Fund

23 Notes to the financial statements (continued) 3 Risk (continued) Currency risk (continued) Investment assets including Other net assets/ investment liabilities (liabilities) Total net assets Currency Euro 47, ,581 Hong Kong dollar 4,575-4,575 Indian rupee 5,470-5,470 Japanese yen Korean won 1,093-1,093 South African rand 20,083 (1,287) 18,796 Swiss franc UK sterling 23,998 25,986 49,984 US dollar 238, ,170 Total 342,180 25, ,673 Interest rate risk Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Some securities such as bonds are directly impacted by interest rate movements but others are indirectly affected. The majority of the fund s financial assets are investments which neither pay interest nor have a maturity date. The fund s exposure to interest rate risk is considered insignificant. This is consistent with the exposure in the prior year. Other market price risk Other price risk is the risk that the value of the fund s investments will fluctuate as a result of changes in market prices caused by factors other than interest rate or foreign currency movement. The risk arises mainly from uncertainty about future prices of financial instruments the fund might hold. It represents the potential loss the fund might suffer through holding market positions in the face of price movements. The fund s investment portfolio is exposed to market price fluctuations, which are monitored by the Authorised Fund Manager in pursuance of the investment objective and policy as set out in the Prospectus. Sensitivity analysis The sensitivity of the fund to market risk is calculated by using the Value-at-Risk (VAR) approach. VaR is a mathematical-statistical concept and is commonly used as a standard measure of risk in the financial sector. The maximum potential loss that the fund could suffer in normal market conditions within a given time horizon and a certain degree of confidence is estimated. In these calculations all positions in the investment portfolio are taken into consideration including those undertaken for efficient portfolio management purposes. An absolute VaR is calculated using a Monte Carlo simulation approach with the following parameters applied as a minimum: a one-tailed 99% confidence interval, a holding period equivalent to one month (20 business days), effective observation period (history) of risk factors of at least 1 year (250 business days), quarterly data set updates and daily calculation. The actual VaR, internal limit and utilisation of internal limit are summarised in the table below: Actual VaR in year ended 30th November VaR internal Utilisation of VaR internal limit Minimum Maximum Average Limit Minimum Maximum Average % % % % % % % % 11.88% 10.17% 20% 43.15% 59.39% 50.86% % 10.82% 9.20% 20% 40.76% 54.11% 46.01% Henderson Global Growth Fund 19