A closer look at your fund A comprehensive explanation of performance and the outlook for your fund

A closer look at your fund A comprehensive explanation of performance and the outlook for your fund To accompany the M&G Fund of Investment Trust Shares Annual Short Report August 2014 for the year ended 30 June 2014 All figures show capital performance during the review period between 1 July 2013 and 1 July 2014 unless otherwise stated. The long-term performance shown below is simulated past performance that has been recalculated to take account of the con version from unit trust to OEIC sub-fund and is based on Sterling Class A (Income) shares. Simulated past performance is not a guide to future performance. Sterling Class A has an initial charge of 4% and an ongoing charge of 1.19%. Long-term performance 4,000 3,000 2,000 1,500 1,000 800 600 400 300 200 150 100 80 60 40 May 1968 = 100, plotted annually Chart date 1 July 2014 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Sterling Class A (Income) shares FTSE All-Share Equity Investment Instruments Index Source: M&G Statistics Department UK Retail Prices Index CAPITAL PERFORMANCE [a] six months one year five years since (02.01.14) (01.07.13) (01.07.09) launch [b] % % % p.a. [c] % p.a. [c] Sterling Class A M&G Fund of Investment Trust Shares [d] +4.3 +11.3 +11.7 +8.0 FTSE World Index +2.4 +7.3 +11.2 n/a FTSE All-Share Equity Investment Instruments Index +1.7 +8.5 +11.1 +7.4 [a] Excludes reinvested income. [b] 10 May 1968, the end of the initial offer period of the predecessor unit trust. [c] Shows the compound rate of return, per annum, over the period. [d] Bid to bid. SINGLE YEAR PERFORMANCE (5 YEARS ENDING JUNE) From 01.07.13 01.07.12 01.07.11 01.07.10 01.07.09 To 30.06.14 30.06.13 30.06.12 30.06.11 30.06.10 % % % % % Sterling Class A M&G Fund of Investment Trust Shares +12.0 +21.7-9.0 +21.5 +19.9 FTSE World Index +10.0 +22.1-3.5 +22.4 +22.9 FTSE All-Share Equity Investment Instruments Index +11.6-19.9-7.4 +23.5 +25.2 Source: Morningstar, Inc., bid to bid with net income reinvested. The tables above compare Sterling Class A (Income) shares against comparable indices. Past performance is not a guide to future performance. The value of stockmarket investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested. The fund can invest in assets priced in currencies that differ from the currency in which the fund is valued. Such assets are converted into the fund s currency, therefore any currency fluctuations will have an impact on the fund s value. Fund performance summary Between 1 July 2013 (the start of the review period) and 1 July 2014, the M&G Fund of Investment Trust Shares rose 11.3% in terms of capital performance. This was above the rise of 7.3% from a comparable index, the FTSE World Index. In terms of total return (capital performance with net income reinvested) the fund produced 12.0% over the review period while the index produced 10.1%. Past performance is not a guide to future performance. Factors affecting performance For much of the period under review, investors were preoccupied over precisely when the US Federal Reserve (Fed) planned to start scaling back, or tapering, its supportive measures in the economy. This led to phases of stockmarket weakness throughout the second half of 2013 before tapering began in January 2014. The Fed did, however, indicate that interest rates would remain low for some time to come, which was welcomed by investors. Nevertheless, the Fed s action resulted in turmoil in emerging market assets and currencies as investors feared the shift in monetary policy would lead to capital outflows from the region. Investors in a number of Asian markets were also unnerved by the prospect of a slowdown in China s economic growth. Furthermore, there were concerns that the competitiveness of some export-oriented Asian countries would suffer relative to

their Japanese counterparts because of the weakness of the Japanese yen over this period. Meanwhile, economic data from the UK, the US and, to a lesser extent, the eurozone, has been largely favourable. Europe, the US and the UK were among the strongest markets over the 12 month-review period, while Asia ex Japan generated more muted gains, all in sterling terms. Meanwhile, Japanese equities, or company shares, produced solid returns in local currencies, but the yen s weakness against the British pound held back returns from the Japanese market. Emerging market performance was very mixed, with strong gains in Egypt and Poland, while equity markets in Russia and Chile fell. In terms of the portfolio, European holdings featured prominently among the contributors to performance. Although economic growth in the eurozone is only anaemic, investors have greater confidence about prospects for the region; in particular, the continued supportive stance of the European Central Bank (ECB) has done much to bolster sentiment. For example, the ECB cut the deposit rate for banks from zero to -0.1%, while the key interest rate was cut from 0.25% to 0.15%. Holdings that added value include The European Investment Trust, the Fidelity European Values and the JPMorgan European Investment Trust (income shares). The pace of economic expansion in the UK has been particularly encouraging, with services, production and construction driving activity, although agriculture remains weak. Inflation and unemployment levels in the country are also moving in the right direction. The UK component of the fund produced some solid performances, with the Value & Income Trust, Keystone Investment Trust and Hansa Trust supporting returns. Meanwhile, the US stockmarket enjoyed a significant rally during the review period, on the back of encouraging economic news and the expectation of continued low interest rates, although returns were dampened by the weakness of the US dollar. Contributors from the North American allocation in the portfolio included the JPMorgan American Investment Trust and the Middlefield Canadian Income Trust. Small- and medium-sized companies tend to appeal to investors with a healthy attitude to risk and this grouping generally outperformed their larger counterparts over the period under review. Significant contributors from the portfolio s investments with a focus on smaller businesses included the JPMorgan European Smaller Companies Investment Trust and the North Atlantic Smaller Companies Investment Trust, while the Montanaro UK Smaller Companies Investment Trust and Baillie Gifford Shin Nippon, which invests in smaller Japanese firms, also added some value. Property continued to be a beneficial investment for the fund and the TR Property Investment Trust (Sigma shares) was a notable contributor to returns over the period under review. Elsewhere, contributors from the global growth section of the portfolio, which focuses on businesses that can benefit from faster economic expansion, included the Scottish Mortgage Investment Trust, Caledonia Investments and Monks Investment Trust. Value also came from the Biotech Growth Trust and the Ecofin Water & Power Opportunities, which invests in utilities. Performance from the fund s Asian holdings was mixed; the Weiss Korea Opportunity Fund was a notable contributor, while the Aberdeen Asian Income Fund and the Asian Total Return Investment Company were modest detractors. The health of the Chinese economy and the winding down of stimulus measures in the US are likely to continue to affect sentiment for investors in Asian markets. However, policymakers in China and India seem keen to address the challenges their economies face. Moreover, Asian exporters stand to benefit from increased demand as the rest of the world economy picks up. Emerging markets too were affected by economic growth concerns and tapering in the US. Various domestic political risks had an impact on sentiment too. For example, public protests in Brazil and Thailand as well as a government corruption investigation in Turkey led to unease. The fund s exposure to emerging markets via the Advance Developing Markets Trust and the Templeton Emerging Markets Investment Trust added slightly to returns while a holding in the Aberdeen Latin American Income Fund disappointed. The slowdown in the rate of economic expansion in China affected some mining stocks as the country represents a major market for companies in the sector. The fund s position in mining investment company Golden Prospect Precious Metals was broadly flat. However, the holding in BlackRock World Mining Trust added value. Other detractors included the Ruffer Investment Company, a wealth preservation fund, and Better Capital PCC, which focuses on providing investment capital for the acquisition and operational turnaround of underperforming businesses. Outlook The global economic recovery is continuing, although progress is only slight in the eurozone and growth is slowing in parts of Asia. However, the economic situation in the UK is

Portfolio information more encouraging, with solid expansion forecast for 2014 and 2015. The Bank of England has hinted that interest rates may rise earlier than expected, although the pace and extent of increases are likely to be very modest. Meanwhile, the Fed and European Central Bank have indicated that interest rates should remain low for some time, which may be supportive for economic activity. Naturally, risks for the fortune of the world s stockmarkets remain in the form of any unforeseen events that may disrupt the progress of global economies. Geopolitical tensions, such as the recent unrest in the Middle East and events in Ukraine, may well unsettle investor confidence at times too. The M&G Fund of Investment Trust Shares is invested in a wide range of geographies, sectors and different company sizes. In our view, this broad diversification enables us to take advantage of the full range of investment opportunities available. Importantly, this strategy means we have only limited exposure to unexpected disappointments, while also being able to enjoy the benefits of any strongly performing assets. Richard O Connor Fund manager An employee of M&G Limited which is an associate of M&G Securities Limited. The views expressed in this document should not be taken as a recommendation, advice or forecast. We are unable to give financial advice. (If you are unsure about the suitability of your investment, speak to your financial adviser.) YIELD The net historic yields on 1 July 2014 were as follows: Historic % Sterling Class A 0.60 Class X 0.14 Historic yield: The historic yield reflects distributions declared over the past twelve months as a percentage of the mid-market price, as at the date shown. It does not include any preliminary charge and investors may be subject to tax on their distributions. The level of any income earned by the fund will fluctuate. Past performance is not a guide to future performance. SHARE PRICES On 1 July 2014 the share prices were as follows: Income Accumulation p p Sterling Class A 1,665.92 xd 3,769.45 Class X 1,674.27 xd 3,578.26 Portfolio information The following tables have been extracted from the Investment Report and Financial Statements for M&G Investment Funds (3), which is for the financial year ended 30 June 2014. PORTFOLIO STATEMENT as at 30 June 2014 Value 30.06.14 30.06.13 Holding 000 % % Global growth 20.15 18.55 144,000 Alliance Trust 642 1.94 522,720 BACIT Investment Trust 627 1.90 31,000 Caledonia Investments 689 2.08 490,000 Miton Worldwide Growth Investment Trust 747 2.26 242,170 Monks Investment Trust 936 2.83 1,250 Personal Assets Trust 417 1.26 51,347 RIT Capital Partners 678 2.05 679,555 Scottish Mortgage Investment Trust 1,420 4.30 230,000 World Trust Fund 506 1.53 Global growth & income 3.54 4.75 300,000 Midas Income & Growth Trust 405 1.23 377,436 Ruffer Investment Company Red. Pref. shares 763 2.31 UK growth 7.95 7.21 201,737 Artemis Alpha Trust 595 1.80 18,818 Artemis Alpha Trust (Subscription shares) 8 0.02 430,555 Better Capital PCC 431 1.30 50,000 Hansa Trust A shares 464 1.40 40,000 Keystone Investment Trust 696 2.11 30,000 Mercantile Investment Trust 436 1.32 UK growth & income 4.71 4.59 113,400 Finsbury Growth & Income Trust 583 1.76 483,870 Troy Income & Growth Trust 316 0.96 251,710 Value & Income Trust 658 1.99 UK smaller companies 1.20 0.99 87,000 Montanaro UK Smaller Companies Investment Trust 398 1.20 Europe 6.36 5.57 600,000 Fidelity European Values 946 2.86 300,000 JPMorgan European Investment Trust (income shares) 375 1.13 100,000 The European Investment Trust 782 2.37 European smaller companies 2.43 2.48 72,000 JPMorgan European Smaller Companies Investment Trust 804 2.43 North America 4.47 4.42 386,055 JPMorgan American Investment Trust 951 2.88 460,000 Middlefield Canadian Income Trust Red. Pref. Shares 527 1.59 North American smaller companies 2.23 2.49 42,000 North Atlantic Smaller Companies Investment Trust 737 2.23 Global emerging markets 5.48 4.18 88,323 Advance Developing Markets Trust 375 1.13 75,000 Fundsmith Emerging Equities Trust 803 2.43 113,000 Templeton Emerging Markets Investment Trust 633 1.92

PORTFOLIO STATEMENT (continued) as at 30 June 2014 Value 30.06.14 30.06.13 Holding 000 % % Latin America 0.49 0.83 203,292 Aberdeen Latin American Income Fund 161 0.49 Asia Pacific - excluding Japan 7.37 8.48 395,000 Aberdeen Asian Income Fund 791 2.39 139,000 Asian Total Return Investment Company 243 0.74 340,000 Edinburgh Dragon Trust 881 2.67 382,500 Weiss Korea Opportunity Fund 520 1.57 Japan 2.39 2.61 15,000 Aberdeen Japan Investment Trust 54 0.16 206,400 Baillie Gifford Japan Trust 734 2.23 Japanese smaller companies 3.89 4.98 206,000 Baillie Gifford Shin Nippon 668 2.02 315,000 JPMorgan Japanese Smaller Companies Investment Trust 618 1.87 Private equity 4.21 4.36 318,000 F&C Private Equity Trust 704 2.13 60,000 Pantheon International Participations 689 2.08 Property securities 3.15 2.62 407,262 TR Property Investment Trust 1,043 3.15 Specialist 11.21 11.38 608,980 Bilfinger Berger Global Infrastructure Fund 722 2.18 157,249 Biotech Growth Trust 777 2.35 161,296 BlackRock World Mining Trust 749 2.27 399,487 CATCo Reinsurance Opportunities Fund 256 0.77 519,643 Golden Prospect Precious Metals 191 0.58 259,821 Golden Prospect Precious Metals (Subscription shares) 0 0.00 350,000 JPMorgan Global Convertibles Income Fund 390 1.18 130,000 Polar Capital Technology Trust 620 1.88 Split capital 2.37 1.82 465,000 Ecofin Water & Power Opportunities 782 2.37 AIM quoted 3.46 3.64 1,080,678 Advance Frontier Markets Fund 632 1.91 278,000 Utilico Emerging Markets 512 1.55 Unquoted / unlisted 0.00 0.00 75,000 Bioscience Investment Trust 0 0.00 26,744 Thompson Clive Investment Trust 0 0.00 Futures 0.04 (0.05) 18 E-Mini S&P 500 Sep 2014 14 0.04 AAA rated money market funds [a] 2.55 3.85 844,000 Northern Trust Global Fund - Sterling 844 2.55 Portfolio of investments 32,943 99.65 99.75 Net other assets 116 0.35 0.25 Net assets attributable to shareholders 33,059 100.00 100.00 PORTFOLIO TRANSACTIONS for the year ended 30 June 2014 Purchases 000 E-Mini S&P 500 Dec 2013 [a] 1,809 E-Mini S&P 500 Mar 2014 [a] 1,309 E-Mini S&P 500 Jun 2014 [a] 1,220 E-Mini S&P 500 Sep 2014 [a] 1,191 E-Mini S&P 500 Sep 2013 [a] 845 Fundsmith Emerging Equities Trust 750 Bilfinger Berger Global Infrastructure Fund 663 BACIT Investment Trust 600 Better Capital PCC 190 Aberdeen Japan Investment Trust 107 Miton Worldwide Growth Investment Trust 88 CATCo Reinsurance Opportunities Fund 76 Polar Capital Technology Trust 58 Alliance Trust 56 Montanaro UK Smaller Companies Investment Trust 54 Asian Total Return Investment Company 41 Northern Trust Global Fund - Sterling [b] 3,879 Total purchases 12,936 Largest sales 000 E-Mini S&P 500 Sep 2013 [a] 1,981 E-Mini S&P 500 Dec 2013 [a] 1,845 E-Mini S&P 500 Mar 2014 [a] 1,335 E-Mini S&P 500 Jun 2014 [a] 1,252 Impax Asian Environmental Markets 772 Biotech Growth Trust 317 Alliance Trust 298 Advance Developing Markets Trust 270 Prospect Japan Fund 255 Edinburgh Dragon Trust 246 JPMorgan European Smaller Companies Investment Trust 227 Ruffer Investment Company Red. Pref. shares 218 North Atlantic Smaller Companies Investment Trust 209 E-Mini S&P 500 Sep 2014 [a] 172 Scottish Mortgage Investment Trust 164 Baillie Gifford Japan Trust 154 World Trust Fund 119 Baillie Gifford Shin Nippon 96 F&C Private Equity Trust 90 Value & Income Trust 77 Northern Trust Global Fund - Sterling [b] 4,228 Other sales 600 Total sales 14,925 [a] Purchases and sales of Futures have been included at the value of their exposure. [b] Uncommitted surplus cash is placed into AAA rated money market funds with the aim of reducing counterparty risk. All securities are on an official stock exchange listing except where referenced. [a] Uncommitted surplus cash is placed into AAA rated money market funds with the aim of reducing counterparty risk. All investments are valued at their bid price, excluding any accrued interest, as at 12 noon on 30 June 2014, being the last business day of the financial year.

Additional information Details of the latest estimated yields and prices for the fund are available on our website at www.mandg.co.uk where you can also register for My Account and have access to the latest valuation of your holding 24 hours a day, seven days a week. The latest estimated yields and prices can also be obtained by calling our Customer Relations team on 0800 390 390. Shares may be purchased or sold at any time by giving your instructions to us either in writing or by calling our Dealing Line on 0800 328 3196. We are open for dealing each business day between 8.00am and 6.00pm Monday to Friday. Before investing, always read the up-to-date version of the Key Investor Information Document (KIID) in conjunction with the Important Information for Investors document. The KIID, the Important Information for Investors document and the Prospectus are available free of charge on request from our Customer Relations team. All literature will be provided in English. 46024_MP_310815