Aberdeen World Equity Enhanced Index Fund Annual short report for the period ended 31 December 2015 Investment objective and policy The Fund aims to achieve long-term capital growth by investing in equity and equity-related securities of companies worldwide. The investment policy of the Fund is to invest primarily in equities and equity-related securities of companies that are constituents of the MSCI World Index. The Fund will use a variety of quantitative techniques and adopt a disciplined approach to stock selection whilst seeking to maintain a level of risk similar to that of the MSCI World Index. Equity-related securities include but are not limited to depository receipts, convertible securities, equity linked notes (debt securities linked to the performance of an equity security) warrants, and bonds convertible into common or preferred shares. The Fund may also invest in other transferable securities, money market instruments, cash, near cash, deposits, shares in collective investment schemes (including other funds managed by the Investment Adviser or its affiliates) and derivatives. It is not currently intended that derivatives will be used for any purpose other than the efficient portfolio management of the Fund, although derivatives may, subject to the ACD obtaining and maintaining the requisite permissions from the FCA under the Financial Services and Markets Act 2000 and on giving not less than 60 days notice to shareholders in the Fund, use derivatives in pursuit of its investment objective as well as hedging in the future. If derivatives are used for the purpose of meeting the investment objective of the Fund as well as hedging it is not intended that the use of derivatives would raise the risk profile. Market review Global equity markets were down over the reporting period. At the regional level, emerging markets and Asia Pacific were among the worst performers, while the US and Japan performed comparatively well. For most of 2015, investors in US equities focused their attention on whether the Federal Reserve (the Fed) would indeed move to increase US interest rates. When it came, the Fed s move to raise interest rates (the first since 2006) was modest and in line with expectations. Market commentators reaction to the increase, which takes the official overnight lending rate for banks to a range between 0.25% and 0.5%, was relatively muted. Instead, they turned their attention to the timing and size of the next hike. Meanwhile, UK equity markets fell over the reporting period. In part, this was due to weakness in energy and commodity prices. This has had a negative influence throughout 2015 because of the large number of global oil and mining companies that are listed in the UK.
In the Eurozone, the central bank recently announced plans to raise the amount it is currently charging banks to look after their cash deposits in an effort to encourage them to lend more money. Unfortunately, investors were left unimpressed by the increase of just 0.1%. The decision to extend the length of the monetary authority s bond purchase scheme, but without increasing the value of the monthly transactions, was also met with indifference. Turning to Asia, consumer prices remained far from the Bank of Japan s inflation target. In November, the core index (which includes fresh food) rose just 0.1% compared to the same month in 2014. In addition, household spending fell for the third month in a row, weakening hopes that strong consumption will be the catalyst for stronger inflation in Japan. Meanwhile, attention also focused on the Chinese renminbi, which weakened to multi-year lows against the US dollar as the government continued to loosen its grip on the exchange rate. The Chinese central bank also announced that it plans to measure the renminbi against a basket of currencies, rather than just the US dollar. Portfolio review Over the period, the Fund benefited from its comparative lack of exposure to Kinder Morgan, the largest pipeline operator in North America. Kinder Morgan s share price slumped during the reporting period, driven by the collapse in the oil price and bearish reports from the Energy Information Administration on crude oil supplies. The company registered a negative score according to our measures of analyst sentiment. Conversely, an overweight position in discount retailer Wal-Mart Stores acted as a detractor to performance over the reporting period. An announcement that higher wages would lead to a sharp drop in earnings per share caused the share price to fall. Wal-Mart had a positive score according to our measures of prudent management. Outlook Global equities and non-fuel commodity prices have both fallen by more than 10% since May 2015. In the past, this pattern has often been associated with recession. For now, however, such fears seem overdone. The developed economies still look resilient, with few signs of falling real activity or confidence. Policy settings are also expansionary in the Eurozone, Japan and China. Industry is a problem area, but services are proving more robust and should be supported this year by tightening labour markets. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions. 2 Aberdeen World Equity Enhanced Index Fund
Portfolio breakdown As at 31/12/15 Portfolio of investments % United States 50.91 Japan 9.76 United Kingdom 5.35 Switzerland 4.66 France 4.06 Netherlands 3.52 Ireland 3.12 Canada 3.09 Australia 2.35 Germany 1.61 Bermuda 1.58 Sweden 1.50 Jersey 1.35 Spain 1.25 Singapore 0.89 Hong Kong 0.86 Finland 0.70 Israel 0.61 Denmark 0.47 Norway 0.37 Curacao 0.22 Papua New Guinea 0.19 Cayman Islands 0.17 Austria 0.16 Belgium 0.16 Isle Of Man 0.14 Italy 0.11 Derivatives 0.09 Portugal 0.04 New Zealand 0.02 Investment assets 99.31 Net other assets 0.69 Total net assets 100.00 aberdeen-asset.co.uk 3
Fund facts Interim/annual accounting dates Income payment dates 30 June and 31 December 31 August and 28 February Ongoing charges figure % as at 31/12/15 B Accumulation 0.37 The ongoing charges figure (OCF) is the total expenses paid by each share class in the period, annualised against its average net asset value. This includes the annual management charge, the other operating expenses and any material synthetic element to incorporate the ongoing charges of any underlying collective investments. The OCF can fluctuate as underlying costs change. Where underlying costs have changed, the OCF disclosed in the Key Investor Information Document will be updated to reflect current changes. Distribution summary Total distribution (p) for the year to 31/12/15 B Accumulation 1.6906 Performance summary Net asset value as at 31/12/15 pence per share B Accumulation 96.86 Net of tax and expenses. Performance record Calendar year Highest share price (p) Lowest share price (p) 2015 B Accumulation 104.80 87.95 Share class B Accumulation was launched 6 March 2015 4 Aberdeen World Equity Enhanced Index Fund
Risk profile Synthetic risk and reward indicator: The Risk and Reward Indicator table demonstrates where the Fund ranks in terms of its potential risk and reward. The higher the rank the greater the potential reward but the greater the risk of losing money. It is based on past data, may change over time and may not be a reliable indication of the future risk profile of the Fund. The highlighted area in the table below shows the Funds ranking on the Risk and Reward Indicator. The synthetic risk and reward indicator shown here is accurate as at 31 December 2015 and there has been no change to this ranking during the year. Typically lower rewards, lower risk Typically higher rewards, higher risk 1 2 3 4 5 6 7 This Fund is ranked at 5 because funds of this type have experienced medium to high rises and falls in value in the past. Please note that even the lowest risk class can lose you money and that extreme market circumstances can mean you suffer severe losses in all cases. The indicator does not take into account the following risk of investing in this Fund: Exchange Rates: Investing globally can bring additional returns and diversify risk. However, currency exchange rate fluctuations may have a positive or negative impact on the value of your investment. A full list of risks applicable to this Fund can be found in the Prospectus. The latest risk and reward profile can be found on the Key Investor Information Document (KIID) for this Fund which is available on our website at aberdeen-asset.co.uk aberdeen-asset.co.uk 5
Important information The value of investments, and the income from them, can go down as well as up and you may get back less than the amount invested. Past performance is not a guide to future results. A full list of risks applicable to this Fund can be found in the Prospectus. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. You should obtain specific professional advice before making any investment decision. Significant Events The following changes were made to the Fund and were duly reflected in the Prospectus of Aberdeen Investment Funds UK ICVC II: On 6 March 2015 the fund was launched with a quantitative strategy. On 4 May 2015 a number of administrative changes took effect: Aberdeen Fund Managers Limited ( AFML ) became the Authorised Corporate Director International Financial Data Services (UK) Limited ( IFDS ) became the registrar Aberdeen Asset Managers Limited ( AAML ) became the investment adviser A deferred redemption policy of 10% was introduced, whereby on any dealing day AFML may limit the total number of shares sold in any sub-fund to 10% of the sub-fund s net assets Investor statement reporting dates became 5 April and 5 October The AFML contact details changed to: Telephone: 0345 300 2890 Fax: 0870 888 3037 Email: customer.services@aberdeen-asset.com Website: aberdeen-asset.co.uk Customer Services are available from 9 am to 5 pm, Monday to Friday, excluding public holidays. Further information about the above changes can be found in the Prospectus, which is available on our website or by contacting Customer Services. 6 Aberdeen World Equity Enhanced Index Fund
What if I have a complaint? If you need to complain about any aspect of our service, you should write to the Complaints Team, Aberdeen Fund Managers Limited, 10 Queen s Terrace, Aberdeen, AB10 1YG, who will initiate our formal complaints procedure. If you prefer, you may call the Complaints Team on 01224 404490 or email complaints@aberdeen-asset.com in the first instance. A leaflet detailing our complaints procedure is available on request. If the complaint is not resolved by us to your satisfaction then you may take your complaint to the Financial Ombudsman Service. In order to contact the Financial Ombudsman Service or obtain details of the compensation scheme you should write to The Financial Ombudsman Service, Exchange Tower, London, E14 9SR or telephone 0300 1239 123 or 0800 023 4567. A copy of the Prospectus is available on request. Literature and Fund information Our website contains a wealth of information on our funds and investment approach, including the Prospectus, Supplementary Information Document and Application forms for the Aberdeen Investment Funds UK ICVC II. You can invest online and access fund performance and pricing information. Please visit: aberdeen-asset.co.uk Alternatively please contact our Customer Services Team on: Tel: 0345 300 2890 Email: customer.services@aberdeen-asset.com Report and accounts Long reports are available on our website or by contacting Customer Services. Aberdeen World Equity Enhanced Index Fund is a sub-fund of Aberdeen Investment Funds UK ICVC II. aberdeen-asset.co.uk 7
Appointments Authorised Corporate Director Aberdeen Fund Managers Limited Registered Office and Head Office Bow Bells House 1 Bread Street London EC4M 9HH Correspondence Address: PO Box 9029 Chelmsford CM99 2WJ Investment Adviser Aberdeen Asset Managers Limited Registered Office: 10 Queen s Terrace Aberdeen AB10 1YG Correspondence Address: Bow Bells House 1 Bread Street London EC4M 9HH Auditors KPMG LLP 191 West George Street Glasgow G2 2LJ Depositary State Street Trustees Limited Registered Office 20 Churchill Place Canary Wharf London E14 5HJ Correspondence Address: 525 Ferry Road Edinburgh EH5 2AW Registrar International Financial Data Services (UK) Limited IFDS House St. Nicholas Lane Basildon Essex SS15 5FS (the register of shareholders can be inspected at this address) Contact us Phone (Lines are open 9:00am to 5:00pm, Mondays to Fridays, excluding bank holidays) Dealing 0800 833 580 Customer Services 0345 300 2890 Broker Desk 0800 592 487 Post All enquiries Aberdeen Fund Managers Limited, PO Box 9029, Chelmsford, CM99 2WJ For more information on Aberdeen Asset Management PLC and our product range please visit aberdeen-asset.com 8 Aberdeen World Equity Enhanced Index Fund
Cert no. SA-COC-1605
The Fund is a sub-fund of Aberdeen Investment Funds UK ICVC II, an authorised open-ended investment company (OEIC). The Authorised Corporate Director is Aberdeen Fund Managers Limited. Nothing herein constitutes investment, legal, tax or other advice and is not to be relied upon in making an investment or other decision. No recommendation is made, positive or otherwise, regarding individual securities mentioned. This is not an invitation to subscribe for shares in the Fund and is by way of information only. Subscriptions will only be received and shares issued on the basis of the current Prospectus, relevant Key Investor Information Document (KIID) and Supplementary Information Document (SID) for the Fund. These can be obtained from Aberdeen Fund Managers Limited, Freepost RLTZ-CKGZ-ESTA, PO Box 9029, Chelmsford, CM99 2WJ. Issued by Aberdeen Fund Managers Limited. Authorised and regulated by the Financial Conduct Authority in the United Kingdom. 121023097 01/16