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M&G Global Dividend Fund
April 2012
Simon Bailey, Deputy Fund Manager
2
• Inception: July 2008
• Fund manager: Stuart Rhodes
• Fund size: € 3,262 million
• Benchmark: MSCI AC World Index
• Yield objective: Yield premium to the global average
• Performance objective: Total return (income and capital growth)in excess of the MSCI AC World Index
M&G Global Dividend FundFund facts
Source: M&G, as at 31 March 2012. Ratings as at 29 February 2012 and should not be taken as recommendation
3
M&G Global Dividend FundPerformance since launch
M&G Global Dividend Fund
MSCI AC World Index
Since Launch(18.07.08) %
Quartile ranking in Morningstar Global Large-Cap Value Equity sector
Global Large-Cap Value Equity sector average
3 years%
6 months%
14.1
1
46.4
27.5
60.9
1
109.4
78.3
17.2
1
21.2
21.1
Source: M&G, Morningstar as at 31 March 2012. Euro A class shares (Pan European database), bid to bid, net income reinvested.
1 year%
3.3
1
11.4
6.4
4
Agenda
• Dividend investing – our philosophy
• Investment process
• Fund update
5
Dividend investing – our philosophy
Source: M&G as at 31 December 2011
Div
iden
d (p
)
The power of long-term compounding
Div
iden
d (p
)
0
5
10
15
20
25
30
Dividend (stock yielding 6%, no growth) Dividend (stock yielding 4%, 10% growth)
Focus on dividend growth
6
• Long-term dividend growth requires disciplined growth in the business
• Rising dividends create cultureof discipline
• Dividends shouldn’t be an afterthought
– An integral part of good company management
Dividend investing – our philosophy
Source: Mergent’s Dividend Achievers, as at 29 February 2012
USdividend achievers
Capital discipline
7
Ret
urn
(%)
10
33
86
141
0
20
40
60
80
100
120
140
160
S&P500 CapitalReturn
S&P500 Total Return Dividend AchieversCapital Return
Dividend AchieversTotal Return
Dividend investing – our philosophy
Source: Mergent’s Dividend Achievers, as at 30 November 2011; Datastream as at 31 December 2011. US companies with a 25-year track record of consecutive dividend growth
Capital growth vs. total return: US returns over 10 years to December 2011
Dividends and growth are not mutually exclusive
Dividends and share prices go hand in hand
8
Agenda
• Dividend investing – our philosophy
• Investment process
• Fund update
9
Investment processEfficiency, discipline and conviction
Identifying stocks we would like to own at
some point
• Long-term dividend track record
• Long-term growth prospects
Investableuniverse
200 stocks
Screening
Eliminating stocks from the global universe of
15,000 stocks
• Focus on dividend-paying companies
• Focus on stocks with sufficient liquidity (market cap >$1 billion)
4,000 stocks
Portfolio construction
Constructing a portfolio that can outperform in all market conditions
• Picking stocks from three sources dividends
• Position size determined by conviction
Final portfolio50 stocks
10
-50
-40
-30
-20
-10
0
10
20
MSCI AC World MSCI World High Dividend Yield
Investment processRe
turn
(%)
Source: Bloomberg as 31 December 2011
Annual return (EUR): MSCI World High Dividend Yield Index vs. MSCI AC World Index
Understanding potential headwinds
High yield strategies tend to outperform in falling markets
11
Investment process
-10-505
101520253035404550
MSCI AC World MSCI World High Dividend Yield
Retu
rn (%
)
Source: Bloomberg as 31 March 2012
Annual return (EUR): MSCI World High Dividend Yield Index vs. MSCI AC World Index
Understanding potential headwinds
High yield strategies struggle to keep up in rising markets
12
Investment process
The importance of having a balance
Structural growth driven by geography or product line
Asset-backed cyclical companies
Disciplined companies with reliable growthQuality
Company characteristicsSources ofdividends
10 – 20%
20 – 30%
50 – 60%
Typical fundweighting
Assets
Rapid growth
Portfolio construction: mitigating our weaknesses
13
Investment process
Source: M&G, as at 31 March 2012
Fund
wei
ghtin
g (%
)Three sources of dividends
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Quality
Assets
Rapid growth
Sale at right price
Cash
14
Investment processDividend cuts will happen
Source: M&G, as at 31 March 2012
Evidence that the fund is taking enough risk
129
20
0
20
40
60
80
100
120
140
Dividend Increases Dividend Cuts
Num
ber o
f div
iden
d an
noun
cem
ents
Number of dividend increases/cuts since fund launch (18.07.08)
15
0
10
20
30
40
50
60
70
Jul-0
8
Sep-
08
Nov-
08
Jan-
09
Mar-0
9
May-
09
Jul-0
9
Sep-
09
Nov-
09
Jan-
10
Mar-1
0
May-
10
Jul-1
0
Sep-
10
Nov-
10
Jan-
11
Investment process
Source: Datastream, as at 28 February 2011
Shar
e pr
ice
(CA
D)
Purchased at fund launch:
yield 2.5%
Dividendcut
Acquisition of Fording Canadian
Coal TrustAdding to holding
below CAD 10
Dividendreinstated
Holding sold on valuation
grounds
Dividend cuts are NOT an automatic sell signal
16
Investment processDon’t sell on the news
Source: Bloomberg, as at 31 March 2012
59.2%
31.6%
0%
10%
20%
30%
40%
50%
60%
70%
Fund holdings (ex Teck) MSCI AC World
Returns since dividend cut (EUR)
Sell at the right price – valuation is key
17
17.0%
26.0%22.0%
28.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008* 2009 2010 2011
Investment process
A 50 stock portfolio with one or two stocks entering and leaving the fund each month Source: M&G, as at 31 December 2011. * Fund launched 18 July 2008
A long-term investment approach
18
Agenda
• Dividend investing – our philosophy
• Investment process
• Fund update
19
M&G Global Dividend Fund
US & Canada
Europe
UK
Asia ex Japan
AustraliaBrazil Cash
Region %
US & Canada 43.3
Europe 22.5
UK 14.3
Asia ex Japan 9.0
Australia 6.2
Brazil 2.4
Cash 2.3
Source: M&G, as at 31 March 2012
Geographic diversity
Structurally underweight in Japan
20
0
10
20
30
40
Global size Currency Region Global market (Beta) Sector Stock specific
Currency risk
M&G Global Dividend Fund: contribution to active risk
%
Source: Bespoke risk model relative to MSCI AC World Index as at 31 December 2011.
Minimal contribution to portfolio risk
21
Consumer staples 15.8 10.2 5.6
Financials 24.9 19.5 5.4
Materials 11.9 7.9 4.0
Healthcare 8.6 8.9 -0.3
Utilities 2.6 3.7 -1.1
Energy 9.5 11.4 -1.9
Information technology 10.1 13.1 -3.0
Telecommunication services 0.8 4.5 -3.7
Industrials 6.8 10.5 -3.7
Consumer discretionary 6.7 10.5 -3.8
Cash 2.3 0.0 2.3
MSCI AC WorldIndex (%)
Fund (%)
M&G Global Dividend Fund
Sector
Source: M&G, as at 31 March 2012
Relative (%)
Sector breakdown
22
M&G Global Dividend FundMarket cap split
Source: M&G, as at 31 March 2012
Company size Fund (%) MSCI AC World (%)
Mega cap ($50bn +) 30.7 36.7
Large cap ($10-$50bn) 44.1 39.2
Mid cap ($2-$10bn) 19.0 21.7
Small cap (<$2bn) 3.8 2.4
Cash 2.3 0.0
23
-25-20-15-10-505
10152025303540
MSCI AC World M&G Global Dividend Fund
M&G Global Dividend FundRe
turn
(%)
Source: Bloomberg as at 31 December 2011. Euro A class shares, bid to bid, net income reinvested. *Fund launched on 18 July 2008
M&G Global Dividend Fund: calendar year returns (EUR)
Outperforming in different market conditions
24
M&G Global Dividend Fund
Global average 3.1%
M&G Global Dividend Fund 3.8%
Source: Portfolio yield calculated by M&G using dividend forecasts to March 2012 as at 31March 2012. Global yield data from Societe Generale as at 2 April 2012.
Portfolio yield and dividend growth (prospective)
Yield Dividend growth
8%
8%
25
M&G Global Dividend FundThe power of long-term compounding
-30
-20
-10
0
10
20
30
40
2009/2010 2010/2011 2011/2012
Ret
urn
(%)
Dividend growth since launch
USJapanEuropeUK
M&G Global Dividend Fund
+9%
+13%
+9%
Source: M&G, as at 31 March 2012. Sterling A class shares. Historic US data from Standard & Poor’s, historic UK data from Capita Registrars; all other data from Societe Generale
26
Summary
• Focus on dividend growth, not yield
• Creating a balanced portfolio to outperform in different market conditions
• Dividend investing is an excellent way to build wealth
27
Appendix
28
Dividend Growers & Initiators ( )
Non Dividend-Paying Stocks ( )
S&P 500 Geometric Equal-Weighted Total Return Index ( )
10,000
1000
100
10
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2010
2002
2004
2006
2008
The power of dividends
Returns of S&P 500 stocks by dividend policy
Returns based on monthly equal-weighted geometric average of total returns of S&P 500 component stocks, with components reconstituted monthly.
A winning strategy
Copyright 2011 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved. . www.ndr.com/vendorinfo/ . For data vendor disclaimers refer to www.ndr.com/copyright.htmlSee NDR Disclaimer at
Monthly Data 31/1/1972 – 31/12/2011 (Log Scale)
5000
500
50
Dividends and share-price performance go hand in hand
2011
29
Share buybacks
Source: S&P 500 data from Bloomberg as at 31 December 2010, buyback data from Standard & Poor’s as at 23 March 2011
800
1000
1200
1400
1600
2001 2002 2003 2004 2005 2006 2007 2008 2009 20100
100
200
300
400
500
600
700
S&P 500 (Index level) Buybacks ($ billion)
S&P
500
Buybacks ($ billion)
Not the same as dividends
Cyclical by nature: buying shares at high prices is asource of huge value destruction
30
What are we looking for?Discipline and growth
Does the company invest capital wisely?
Can the company grow in a sustainable manner over time?
What yield can we get for this type of company?
Does the company have a long track record of dividend growth?
31
M&G Global Dividend Fund
Source: M&G, as at 31 March 2012.
Transactions over the past 12 months
New purchases
Quality
Svenska Handelsbanken
Intact Financial
Mattel
British American Tobacco
Assets
Blackrock
Occidental Petroleum
Siemens
CNOOC
Umicore
Prosafe
Rapid growth
Tod’s
CME Group
Campbell Brothers
Analog Devices
Chroma ATE
32
Umicore
Source: Bloomberg as at 31 December 2011
Assets
• World leader in materials technology based in Belgium
• Cyclical businesses with long-term growth in underlying markets
– Automotive catalysts
– Rechargeable batteries
– Precious metals recycling
• Consistent dividend history
– 2011 dividend increased by 25%
Dividend (€)
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
33
MattelQuality
• World’s leading toy company
– Strong brands
– Global footprint
• Long track record of profitable growth
– Innovation
– International expansion
• Commitment to shareholder returns
– 35% increase in 2012 dividend
Source: Mattel analyst presentation, 11 February 2011
34
M&G Global Dividend Fund
Source: M&G, as at 31 March 2012. *Spun off from ITT, **Spun from Foster’s Group
Complete sales
Transactions over the past 12 months
Quality
VF Corp
AES Tiete
Coca-Cola
Total
Foster’s Group
Souza Cruz
Assets
Rolls Royce
Diamond Offshore
Timken
Rapid growth
ITT
Johnson Matthey
Esprit
Cremer
Sale at right price
Xylem*
Bluescope Steel
Exelis*
Treasury Wine Estates**
Esprit
35
US & Canada 43.3 50.5 -6.2
Europe 22.5 15.7 6.8
UK 14.3 8.2 6.1
Japan 0.0 7.9 -7.9
Asia ex Japan 9.0 9.3 -0.3
Australia/NZ 6.2 3.1 3.1
Latin America 2.4 3.0 -0.6
EMEA 0.0 2.3 -2.3
Cash 2.3 0.0 2.3
MSCI AC WorldIndex (%)
Fund (%)
M&G Global Dividend Fund
Sector
Source: M&G, as at 31 March 2012
Regional breakdown
Relative (%)
36
M&G Global Dividend FundFu
nd w
eigh
ting
(%)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%US & Canada
Continental Europe
UK
Japan
Asia ex Japan
Australia
Latin America
EMEA
Cash
Geographic split
Source: M&G, as at 31 March 2012
37
M&G Global Dividend FundTop 10 holdings
Stock Fund (%)
Source: M&G, as at 31 March 2012
Chubb US 3.3
Methanex Canada 3.2
Novartis Switzerland 3.2
Prudential UK 3.2
Intel US 2.9
DSM Netherlands 2.8
HSBC Hong Kong 2.8
Reynolds American US 2.8
British American Tobacco UK 2.8
Analog Devices US 2.7
Country
38
Liquidity
A scalable investment process
Source: M&G, as at 12 December 2011
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
£10m+ £2m - 10m <£2m
Portfolio split by average daily volume
39
Sell disciplineTough competition for places in the portfolio
Better options Return % Disasters Return %Valuation Return %
Source: M&G, as at 31 January 2012. Returns relative to FTSE World Index.
3M 44.5Home Depot 42.4Astellas Pharma 39.5CNOOC 62.4Cochlear 61.3Massmart 65.2Souza Cruz 82.5Rolls Royce 89.9Johnson Matthey 44.1Coca-Cola 69.3
Carnival 11.4ING -15.8Credit Suisse 23.5BASF -17.5Teliasonera -1.0Pfizer 16.6Wells Fargo 18.9Philips Electronics -11.6Petrobras 44.3Tele2 5.8Tate & Lyle 6.4Holcim 32.3US Bancorp 10.6Billabong 21.8DuPont 7.2Microsoft 4.2Alliant Energy 6.8Vale 25.2America Movil 14.7Wellstream 32.1Corn Products 5.7Statoil -15.5Kellogg 14.4Teck 49.9Cremer -1.7Timken 116.7Foster’s Group 47.4Total -15.4Diamond Offshore -12.5
Aracruz -70.1Norsk Hydro -41.7E.ON -37.9Esprit -68.1Bluescope Steel -105.4
40
M&G Global Dividend Fund
Value added by stock relative to MSCI AC World Index (18.07.08 – 31.12.11)
Source: Xamin, as at 31 December 2011. Investment returns (gross of fees) relative to MSCI AC World, calculated in sterling
Diversified sources of performance
Returns driven by the investment approach, not just ahandful of names
-3
-2
-1
0
1
2
3
4
5
6
Cont
ribut
ion
to re
lative
per
form
ance
41
Attribution by source of dividends
0
5
10
15
Quality Assets Rapid Growth
Valu
e ad
ded
(%)
Attribution by source of dividends since fund launch (18.07.08)
Source: Xamin, as at 31 December 2011. Investment returns (gross of fees) relative to MSCI AC World Index, calculated in sterling
Diversified sources of performance
42
M&G Global Dividend Fund
Source: Xamin as at 31 March 2012. Investment returns (gross of fees) relative to MSCI AC World Index, calculated in sterling.
Bottom 10
Performance attribution by stock (One year to 31 March 2012)
Top 10
BHP Billiton -0.51
Banco Do Brasil -0.49
Bluescope Steel -0.48
HSBC -0.38
Telefonica -0.38
Yip’s Chemicals -0.34
Axa -0.33
Chroma ATE -0.21
ITT Corp -0.19
Diamond Offshore -0.17
VF Corp 0.88
Intel 0.76
Roche 0.65
Reynolds American 0.63
Chubb 0.51
Prosafe 0.47
Arthur J Gallagher 0.42
Taiwan Semiconductor 0.40
Methanex 0.38
Foster’s Group 0.36
Value added (%)
Value added (%)
43
M&G Global Dividend Fund
%
Performance attribution by region (One year to 31 March 2012)
-2
-1
0
1
2
3
4US
/ Can
ada
Euro
pe ex
UK UK
Japa
n
Asia
ex Ja
pan
Aust
ralia
/ NZ
Latin
Am
erica
EMEA
Stock selection Asset allocation
Source: Xamin as at 31 March 2012. Investment returns (gross of fees) relative to MSCI AC World Index, calculated in sterling.
44
M&G Global Dividend Fund
%
Performance attribution by sector (One year to 31 March 2012)
-1
0
1
2
3
Tech
nolo
gy
Fina
ncial
s
Utilit
ies
Telec
omm
unica
tion
serv
ices
Cons
umer
disc
retio
nary
Healt
hcar
e
Cons
umer
stap
les
Indu
stria
ls
Mate
rials
Ener
gy
Stock selection Asset allocation
Source: Xamin as at 31 March 2012. Investment returns (gross of fees) relative to MSCI AC World Index, calculated in sterling.
45
M&G Global Dividend FundComprehensive support infrastructure for fund managers
7 PCR team members (Equities)
9 Investment Specialists (Equities)
M&G Equities Investment Team
M&G Global Equities Team22 investment professionals
Equity Research
Investment Specialists
Fund Manager Assistants (FMAs)
6 FMAs (Equities)
Equities Dealing Team
Portfolio Construction& Risk
Head of Equity Research:
James Alexander
11 Analysts
Head of Dealing: Daniel Riches
5 Dealers
M&G Global DividendFund Manager: Stuart Rhodes
Deputy Fund Managers: Simon Bailey, Aled Smith
M&G Global DividendKotaro Miyata
Susanne Grabinger
M&G Global DividendJames Doogan
Adam Jones
Source: M&G as at 23 January 2012.
M&G Global DividendMaria AsprouliRitu Vohora
Dave FishwickHead of Macro and Equity Investment
David McGillverayHead of
InvestmentOversight
Gary CottonChief Executive
- Equities
Arvind SabharwalDirector of Investment
- Equities
Prices may fluctuate and you may not get back your original investment.This document is designed for investment professionals’ use only, not for onward distribution to any other person or entity. For Switzerland: Distribution of this document inor from Switzerland is not permissible with the exception of the distribution to qualified investors according to the Swiss Collective Investment Schemes Act, the SwissCollective Investment Schemes Ordinance and the respective Circular issued by the Swiss supervisory authority ("Qualified Investors"). Supplied for the use by the initialrecipient (provided it is a Qualified Investor) only. In Spain the M&G Investment Funds are registered for public distribution under Art. 15 of Act 35/2003 on Collective InvestmentSchemes as follows: M&G Investment Funds (1) reg. no 390, M&G Investment Funds (2) reg. no 601, M&G Investment Funds (3) reg. no 391, M&G Investment Funds (5) reg. no 972,M&G Investment Funds (7) reg. no 541, M&G Investment Funds (9) reg. no 930, M&G Global Dividend Fund reg. no 713 M&G Dynamic Allocation Fund reg. no 843, M&G Global MacroBond Fund reg. no 1056 and M&G Optimal Income Fund reg. no 522. The collective investment schemes referred to in this document (the "Schemes") are open-ended investmentcompanies with variable capital, incorporated in England and Wales. In the Netherlands, all funds referred to, with the exception of M&G Investment Funds (2), M&G Investment Funds(5), M&G Investment Funds (9) and the M&G Dynamic Allocation Fund, are registered with the Dutch regulator, the AFM. This information is not an offer or solicitation of an offer for thepurchase of investment shares in one of the Funds referred to herein. Purchases of a Fund should be based on the current prospectus. The prospectus, Key Investor InformationDocument (KIID), annual report and subsequent semi-annual report, are available free of charge, in paper form, from the ACD: M&G Securities Limited, Laurence Pountney Hill, London,EC4R 0HH, GB, or one of the following: M&G International Investments Limited, German branch, Bleidenstraße 6-10, D-60311 Frankfurt am Main, the German paying agent J.P. MorganAG, Junghofstraße 14, D-60311 Frankfurt am Main, the Austrian paying agent, Raiffeisen Bank International A.G., Am Stadtpark 9, A-1030 Wien, the Luxembourg paying agent, J.P.Morgan Bank Luxembourg S.A., European Bank & Business Center, 6 c route de Treves, 2633 Senningerberg, Luxembourg, Allfunds Bank, Calle Estafeta, No 6 Complejo Plaza de laFuente, La Moraleja 28109, Alcobendas, Madrid, M&G International Investments Limited, 34 Avenue Matignon, 75008, Paris, France or from the French centralising agent of the Fund:RBC Dexia Investors Services Bank France. For Switzerland: Please refer to M&G International Investments Ltd., Bleidenstraße 6-10, D-60311 Frankfurt am Main or, for Sweden, fromthe paying agent, Skandinaviska Enskilda Banken AB (publ), Sergels Torg 2, 106 40 Stockholm, Sweden. For Italy, they can also be obtained from one of the appointed paying agents,details of which can be found by visiting the contact section on the following website: www.mandg-investments.it. Before subscribing you should read the prospectus, which includesinvestment risks relating to these funds. This financial promotion is published by M&G International Investments Ltd. Registered Office: Laurence Pountney Hill, London EC4R 0HH,authorised and regulated by the Financial Services Authority and registered with the CNMV in Spain. Past performance is not a guide to future performance. Performance stats arequoted gross of Italian tax on capital gains
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