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M&G Global Dividend FundAnnual Long Report and audited Financial Statements for the year ended 31 March 2017

Please note that when this document was originally published the ‘Distributionsummary’ on page 3 showed incorrect figures for the distribution income of SterlingClass ‘A’ (Income) shares.

We would like to make you aware that these figures are correct in this version.

Contents

M&G Global Dividend Fund

Authorised Corporate Director’s Report Page 1

Financial highlights Page 8

Financial statements and notes Page 17

Directors’ statement Page 25

Depositary’s Responsibilities and Report Page 26

Independent Auditor’s Report Page 27

Other regulatory disclosures Page 28

Glossary Page 29

The Authorised Corporate Director (ACD) of M&G Global DividendFund presents its Annual Long Report and audited FinancialStatements for the year ended 31 March 2017.

Please note that we have included an explanation of key investmentterminology in the ‘Glossary’ (at the back of this report).

Company information

This Open-Ended Investment Company (OEIC) is an InvestmentCompany with Variable Capital (ICVC) incorporated under the Open-Ended Investment Companies Regulations 2001. It is authorisedand regulated by the Financial Conduct Authority (FCA) under theFinancial Services and Markets Act 2000. The Company is a UCITS(Undertakings for Collective Investment in Transferable Securities)scheme as defined in the Collective Investment Schemes sourcebook,as issued (and amended) by the FCA.

The Company was authorised on 9 July 2008 and the fund waslaunched on 18 July 2008.

The Company’s principal activity is to carry on business as an OEIC.

A shareholder is not liable for the debts of the Company and will neverbe liable to make any further payment to the Company after paying thepurchase price of the shares.

Fund manager

Stuart Rhodes is employed by M&G Limited which is an associate ofM&G Securities Limited.

ACDM&G Securities Limited, Laurence Pountney Hill, London EC4R 0HH, UKTelephone: 0800 390 390 (UK only)

(Authorised and regulated by the Financial Conduct Authority. M&GSecurities Limited is a member of the Investment Association andof the Tax Incentivised Savings Association.)

Directors of the ACDW J Nott (Chief Executive),G N Cotton, P R Jelfs, G W MacDowall, L J Mumford

Investment manager M&G Investment Management Limited, Laurence Pountney Hill, London EC4R 0HH, UKTelephone: +44 (0)20 7626 4588

(Authorised and regulated by the Financial Conduct Authority)

RegistrarInternational Financial Data Services (UK) Limited, IFDS House, St. Nicholas Lane, Basildon, Essex SS15 5FS, UK

(Authorised and regulated by the Financial Conduct Authority)

DepositaryNational Westminster Bank Plc, Trustee & Depositary Services,Younger Building, 3 Redheughs Avenue, Edinburgh EH12 9RH, UK

(Authorised by the Prudential Regulation Authority and regulated bythe Financial Conduct Authority and the Prudential RegulationAuthority)

Independent auditorErnst & Young LLPTen George Street, Edinburgh EH2 2DZ, UK

Important information

Please note that from 1 October 2016, M&G Global Dividend Fundbegan taking the annual management charge and administrationcharge from income in the case of Accumulation shares. Thesecharges continue to be charged to capital for Income shares.

This change will have no impact on the fund’s investment approach.The fund’s objective and policy will remain unchanged. All costsassociated with introducing the change will be borne by M&GSecurities Limited.

Please note that with effect from 16 December 2016:

• we have discounted the initial charge to zero on all newinvestments into sterling share classes that currently carry such acharge.

• we have waived the exit charges on future withdrawals from allSterling Class ‘X’ shares.

Investor information

The Prospectus, Instrument of Incorporation, Key Investor InformationDocuments, the latest Annual or Interim Investment Report andFinancial Statements as well as a list of purchases and sales areavailable free of charge on request from the following addresses. TheInstrument of Incorporation can also be inspected at our offices or atthe office of the Depositary.

Customer services and administration for UK clients:M&G Securities Limited,PO Box 9039, Chelmsford CM99 2XG, UK

Please remember to quote your name and M&G client reference andsign any written communication to M&G. Failure to provide this willaffect your ability to transact with us.

Telephone: 0800 390 390 (UK only)

For security purposes and to improve the quality of our service, wemay record and monitor telephone calls. You will require your M&Gclient reference. Failure to provide this will affect your ability to transactwith us.

Customer services and administration for non-UK clients:M&G International Investments Limited,mainBuilding, Taunusanlage 19, 60325 Frankfurt am Main, Germany

Please remember to quote your name and M&G client reference andsign any written communication to M&G. Failure to provide this willaffect your ability to transact with us.

Telephone: +49 69 1338 6767Email: [email protected]

For security purposes and to improve the quality of our service, wemay record and monitor telephone calls. You will require your M&Gclient reference. Failure to provide this will affect your ability to transactwith us.

1

M&G Global Dividend Fund Authorised Corporate Director’s Report

ANNUAL LONG REPORT AND AUDITED FINANCIAL STATEMENTS • March 2017

Austrian paying and information agent:Société Générale, Vienna Branch, Prinz Eugen-Strasse 8-10/5/Top 11, 1040 Wien, Austria

Belgian financial agent:Société Générale Private Banking NV, Kortrijksesteenweg 302, 9000 Gent, Belgium

Danish representative agent:Nordea Bank Danmark A/S, Client Relations DK, Investor Services & Solutions,Postbox 850, Reg.no.6428. HH. 6.1., 0900 København C, Denmark

French centralising agent:RBC Investor Services, Bank France S.A.,105 rue Réaumur, 75002 Paris, France

German information agent:M&G International Investments Limited,mainBuilding, Taunusanlage 19, 60325 Frankfurt am Main, Germany

Greek paying agent and distributor:Eurobank Ergasias S.A.,8, Othonos Street, 10557 Athens, Greece

Irish facilities agent:Société Générale S.A., Dublin Branch,3rd Floor IFSC House – The IFSC, Dublin 1, Ireland

Italian paying agents:Allfunds Bank, S.A., Via Santa Margherita 7, 20121 Milano, Italy

Banca Monte dei Paschi di Siena S.p.A., Piazza Salimbeni 3, 53100 Siena, Italy

Banca Sella Holding S.p.A.,Piazza Gaudenzio Sella 1, 13900 Biella, Italy

BNP PARIBAS Securities Services,Via Ansperto 5, 20123 Milano, Italy

RBC Investor Services Bank S.A., Milan BranchVia Vittor Pisani 26, 20124 Milano, Italy

State Street Bank S.p.A., Via Ferrante Aporti 10, 20125 Milano, Italy

Société Générale Securities Services S.A., Via Benigno Crespi 19A - MAC 2, 20159 Milano, Italy

Luxembourg paying and information agent:Société Générale Bank & Trust S.A., Centre operationel, 28-32, place de la Gare, 1616 Luxembourg,Grand Duchy of Luxembourg

Portuguese distributor:Best - Banco Electrónico de Serviço Total, S.A., Praça Marquês de Pombal, no. 3 - 3º, 1250-161 Lisboa, Portugal

Spanish representative:Allfunds Bank, S.A., Calle Estafeta, No 6 Complejo Plaza de la Fuente, La Moraleja 28109, Alcobendas, Madrid, Spain

Swedish paying agent:Nordea Bank AB (publ), Smålandsgatan 17, 105 71 Stockholm, Sweden

Swiss paying agent and representative:Société Générale, Paris, Zurich Branch, Talacker 50, P.O. Box 5070, 8021 Zurich, Switzerland

Authorised Corporate Director’sResponsibilities

The Authorised Corporate Director (ACD) is required to prepare annualand interim long and short reports for the Company. The ACD mustensure that the financial statements, contained in the Long Report, forthe fund are prepared in accordance with the Investment AssociationStatement of Recommended Practice for Financial Statements of UKAuthorised Funds (SORP) and UK Financial Reporting Standards, andgive a true and fair view of the net revenue or expenses and net capitalgains or losses for the accounting period, and the financial position atthe end of that period.

The ACD is required to keep proper accounting records, and to managethe Company in accordance with the Collective Investment Schemessourcebook, as issued (and amended) by the FCA, the Instrument ofIncorporation and the Prospectus, and to take reasonable steps for theprevention and detection of fraud or other irregularities.

2



Investor information

Investment objective

The fund aims to deliver a dividend yield above the market average,by investing mainly in a range of global equities. The fund aims to growdistributions over the long term whilst also maximising total return (the combination of income and growth of capital).

Investment policy

The fund aims to deliver a dividend yield above the market average,whilst aiming to increase annual distributions over the long term, byinvesting in a range of global equities. The fund’s exposure to globalequities may be gained through the use of derivatives. The fund mayinvest across a wide range of geographies, sectors and marketcapitalisations. The fund may also invest in other assets includingcollective investment schemes, other transferable securities, cash and near cash, deposits, warrants, money market instruments and derivatives.

Investment approach

The M&G Global Dividend Fund employs a bottom-up stockpickingapproach, driven by the fundamental analysis of individual companies.The fund manager seeks to invest in companies with excellent capitaldiscipline and the potential for long-term dividend growth. The fundmanager believes rising dividends create upward pressure on thevalue of shares. Dividend yield is not the primary consideration forstock selection.

The fund manager aims to create a diversified portfolio with exposureto a broad range of countries and sectors. He selects stocks withdifferent drivers of dividend growth to construct a portfolio that has thepotential to cope in a variety of market conditions. The fund will usuallyhold around 50 stocks, with a long-term investment view and a typicalholding period of three to five years. When attempting to growdistributions over the long term, the fund manager’s main focus is ondelivering an increase in sterling terms.

Risk profile

The fund invests globally in the shares of companies and is, therefore,subject to the price volatility of the global stockmarket and theperformance of individual companies. The fund may also be subjectto fluctuations in currency exchange rates.

The fund’s focus is on shares of companies that have the potential to grow their dividends over the long term. Income distributions fromthe fund’s holdings, however, are not guaranteed and may vary.Diversification across industries and market capitalisation is key inmanaging liquidity risk and reducing market risk. The fund’s risks aremeasured and managed as an integral part of the investment process.

The following table shows the risk number associated with the fundand is based on Sterling Class ‘A’ shares.

The above number:

• is based on the rate at which the value of the fund has moved up and down in the

past and is based on historical data so may not be a reliable indicator of the future

risk profile of the fund.

• is not guaranteed and may change over time and the lowest risk number does not

mean risk free.

• has changed during this period. From 1 April 2016 to 18 August 2016 the risk

number was 5. From 19 August 2016 to 30 December 2016 the risk number was

6. On 31 December 2016 the risk number became a 5.

Investment review

As at 3 April 2017, for the year ended 31 March 2017

Distribution summary

Over the 12-month review period to 3 April 2017, the fund distributedincome of 5.6702 pence per Sterling Class ‘A’ (Income) share. This is6.4% higher than the distribution in the previous financial year. Thepayout represented a yield (distributed income as a percentage of theshare price) of 2.81% versus a yield of 2.43% for the MSCI AC WorldIndex, a comparative index.

We are pleased that distributions for the fund have risen compared tolast year and, more importantly, at a faster pace than recent years.We are encouraged that the majority of our holdings continue todeliver dividend growth in the region of 5% to 15%, and it waspleasing to see higher dividends from a range of countries andsectors. (Dividends represent a share in the profits of a company andare paid out to the company’s shareholders at set times of the year.)Companies with defensive characteristics provided the bedrock ofdividend growth, with Medtronic and Johnson & Johnson in healthcareraising their dividends by 13% and 7% respectively in US dollars,alongside British American Tobacco (BAT) which reported a 10%increase in sterling, up from 4% in the previous year. (Defensivestocks are companies that tend to have stable earnings and are lessaffected by peaks and troughs in the economy.) The progress individends was by no means confined to defensive stocks. Companieswith more economic sensitivity delivered similar growth rates,including US Bancorp (10%) and JPMorgan Chase (9%) in banks,Kone (11%) in industrials and Keyera (6%) in energy.

The reporting season for calendar year 2016 also resulted in a numberof holdings delivering dividend growth of more than 15%. Pandora,the Danish jewellery company, surprised on the upside with respect to

Low risk High risk

Typically lower rewards Typically higher rewards

1 2 3 4 5 6 7

ANNUAL LONG REPORT AND AUDITED FINANCIAL STATEMENTS • March 2017 3


cash returns to shareholders by committing to a tripling of thedividends due in 2017 and announcing a new share buybackprogramme equivalent to almost 2% of the company’s market value.AIA, the life insurer based in Hong Kong, raised its final dividend by25%, up from 17% at the first-half stage, to increase the payment forthe full year by 23%. St. James’s Place, the UK wealth manager,reported a similar uptick in the rate of dividend growth with a 20%increase in the final dividend, resulting in 18% growth for the full year.Publicis, the media group based in France, also reported a meaningfuldividend increase with the annual payment 16% higher compared tolast year.

Not all of our holdings delivered growth, however. Methanex was oneof the very few to hold its dividend flat during the review period,although we are very confident that the methanol producer will resumedividend growth in the near future. Orica, an Australian business whichserves the mining industry, provided the only dividend cut during theperiod after the company changed its dividend policy. The stock isunder review.

We have also maintained a yield above that of the MSCI AC WorldIndex. We are very aware that the combination of a premium yield andrising distribution is important to many of our investors and remainfocused on meeting this objective.

The fund’s distribution and distribution yield are shown in the ‘Specificshare class performance’ tables in this report. The distribution is subjectto a number of influences, including changes in the market environmentand movements in currency and, as a result, there is no guarantee thatthe fund will increase the distribution in every reporting period.

Performance against objective

Between 1 April 2016 (the start of the review period) and 3 April 2017,the M&G Global Dividend Fund delivered a positive total return (thecombination of income and growth of capital) across all of its shareclasses. The higher returns generated by the sterling share classesreflect sterling’s weakness against the world’s major currencies duringthe 12-month review period. The fund’s returns in sterling, euro andUS dollar were ahead of the MSCI AC World Index. (Over the 12months, returns from the index were 32.1%, 23.7%, 16.2% and 20.1%in sterling, euro, US dollar and Singapore dollar terms, respectively.)

The fund also delivered a dividend yield above the market averageduring the review period and continued to meet its aim to increasedistributions over the long term. Over five years, all share classes havedelivered positive total returns.[a]

Investment performance

The fund delivered positive returns during the 12 months under review,with contributions from a variety of sources. Methanex, in the materialssector, was the standout performer, returning 50% in US dollars. Themethanol producer benefited from a favourable environment ofgrowing demand and higher methanol prices, but we have a strongview that the shares are significantly undervalued. As a result, we tookthe decision in March to file a Schedule 13D document on our holdingwith the US Securities and Exchange Commission. A Schedule 13Dis a type of regulatory filing, unique to the US, which is required byshareholders who own more than 5% of the outstanding stock in aUS-listed company, and have a clear intention of engaging thecompany in an active way with the specific aim of influencingmanagement. We believe the shares are exceptionally cheap, basedon the significant discount to the replacement cost of assets. Giventhe potential for cash generation following the end of a capitalexpenditure programme, we believe very strongly that the companyshould be more aggressive in its approach to buying back stock andgo beyond the 5% of shares outstanding announced in early March.This is an exceptional circumstance which requires exceptional action.

Broadcom was the second-biggest contributor during the period witha return of more than 40% in US dollars. The technology companycontinued to deliver by growing consistently ahead of marketexpectations and remaining true to its dividend commitment. Thecompany doubled its quarterly payment in December and goes fromstrength to strength from an operational perspective, but we have takenprofits on valuation grounds.

Stock selection was positive across a broad range of sectors, inparticular healthcare. UnitedHealth, the managed care provider,returned 29% in US dollars as a result of robust growth in the business,which was reflected in the dividend increase of 25%. AbbVie andJohnson & Johnson also outperformed, bucking the negative trend ina defensive sector weighed down by concerns about US drug pricing.

Defensive sectors were out of favour for much of the review period;the perceived safe havens of utilities, telecommunications andconsumer staples underperformed acutely in November, when DonaldTrump’s victory in the US presidential election led to a reappraisal ofeconomic prospects. Hopes of an improvement in the economicclimate led to a strong rally in sectors with economic sensitivity, mostnotably industrials and financials, at the expense of defensive stockswhich sold off sharply. Against this backdrop, sector allocation had apositive effect, helped by the fund’s zero exposure to utilities,telecommunications and real estate, whose performance is closelytied with the safety associated with government bonds, and the largeexposure to materials, which led the markets higher during the 12months under review.

The headwind for defensive stocks did not leave our holdingsunscathed. Imperial Brands, the UK tobacco company, was the biggestdetractor during the period as it struggled to keep up in a rising market.Novartis, the Swiss pharmaceutical group, was similarly held back bynegative sentiment. We are comfortable with both stocks from a long-term perspective and they remain core holdings on fundamentalgrounds. We added to both holdings on share price weakness.



Distribution summary (continued)

Investment review

The underperformance of Pandora, however, was based onoperational performance, or more precisely, the perception ofoperational performance. The company’s results and guidance havebeen met with much scepticism during the course of the year, althoughwe believe that the business is making good progress and the long-term investment case remains intact. We have been increasing ourexposure to the stock.

Investment activities

We made 10 new purchases and 13 complete sales during the 12months under review – a level of turnover consistent with ourinvestment timeframe of three to five years.

Four of the new holdings belong to the fund’s ‘rapid growth’ category,where companies can typically sustain dividend growth of more than15%. We bought shares in Publicis, the advertising group which ownsSaatchi & Saatchi, in May. The company has made progress sinceits aborted merger with Omnicom, but the shares remain on avaluation discount to its peers. St. James’s Place was added to thefund in June in the immediate aftermath of the UK referendum. Theshock result triggered a sell-off in UK financials, which opened up abuying opportunity for a business that is growing quickly, with theability to compound that growth over time. We bought the stock on adividend yield of more than 4%. Nike joined the fund in November aswe capitalised on the weakness in US consumer-related stocks. Thisprovided the opportunity to invest in a strong global brand withpotential for international expansion, particularly in China. Finally, westarted a holding in Visa to complement our existing position inMasterCard. Both companies benefit from the structural growth inglobal payments as electronic transactions continue to replace cash,and the weakness in Visa’s share price in December presented uswith an attractive entry point for the US-listed company. We alsoadded to our holding in AIA on weakness to build up a meaningfulposition in a long-term beneficiary of the growth in life insuranceproducts in the Asia Pacific region.

We also bought five stocks with more economic sensitivity. Legrand,the industrials company based in France, has strong cashflowcharacteristics despite the fluctuations of underlying demand, whileTrinseo has significant scope to return cash to shareholders. The USmaterials company specialising in plastics, latex and synthetic rubberhas already bought back 9% of outstanding stock in 2016 and thedividend has potential to increase meaningfully from a low base.Schroders, the UK asset manager, was bought and sold in the 12-month period. The shares rallied more than 30% from their timelypurchase in the post-referendum sell-off, but we were unable to builda full position – which explains the unusually short holding period. Wealso bought two energy stocks, Helmerich & Payne and Schlumberger,towards the end of the review period. The US service providers arebenefitting from an improved operating environment and are wellplaced for an industry upturn. We continue to manage the fund’senergy-related exposure at about 20%, as a result of which we soldthe stake in Inter Pipeline, our least favourite among our Canadianinfrastructure holdings. We also reduced our holding in Methanex,albeit reluctantly, as the shares rallied strongly in the latter half of thereview period.

Novo Nordisk, the world’s leading provider of diabetes care and insulinproducts, was the only new purchase with defensive characteristics.We have been looking for opportunities in healthcare following thesector’s underperformance in 2016, and the downgrading of thecompany’s growth expectations provided an attractive entry point inFebruary. Novo Nordisk’s valuation and dividend profile look excellentcompared to the vast majority of other candidates in thepharmaceuticals industry, with the Danish company’s net cash positionmaking a considerable difference. Novo Nordisk reported a 19%dividend increase for 2016 and announced a new share buybackprogramme which could amount to as much as 2.5% of the company’smarket capitalisation over the next 12 months. The shares lookattractively valued on a historic yield of more than 3% with potentialfor strong growth in the dividend stream.

Sales during the year included three banks, led by Brazil’s BancoBradesco whose shares doubled in US dollars during 2016. Wecompleted the sale of the holding in Svenska Handelsbanken, theSwedish bank, in June after the shares performed well for the fund.We closed the position in Nordea, our other Scandinavian bankholding, in the same month to fund the purchases of St. James’s Placeand Schroders. We also sold the stake in Blackrock after the sharesperformed well and expectations became more demanding.

Outside financials, we sold a number of holdings with defensivecharacteristics. Roche was sold in June, having been one of the fund’soriginal holdings at launch in July 2008. Dividends from the Swisspharmaceutical company increased by 76% in local currency duringthat time and the stock added significant value, but dividend growthhas slowed significantly in recent years, which prompted us toreallocate the capital towards better ideas. Yum! Brands, the fast-foodbusiness, and Altria, the tobacco group, were sold at a profit and weexited VF, the branded apparel company, to back greater convictionelsewhere. Time Warner, the media and entertainment group, was soldafter its takeover by AT&T.

Eaton Corp and Cummins, both small holdings in US industrials, werealso sold as sources of cash.

As a result of these transactions, the number of holdings slipped to43, although we have no intention of remaining at this level for long.We would like to restore the number of holdings back up to our historiclevel of 50 over time. Global stockmarkets offer excellent opportunitiesfor stockpickers and we believe the potential for investors is bestcaptured by a conviction-based approach.

From a regional perspective, the fund continues to have a meaningfulexposure to the US with more than 50% of the portfolio invested in theworld’s biggest stockmarket. We have 15% of the fund invested in theUK, but the exposure is dominated by global businesses, such as BATand Compass, whose operational performance is little affected by theUK’s decision to leave the European Union. We continue to have noexposure to Japan where we struggle to find investment ideas whichmeet our criteria. The weighting in emerging markets, comprised ofdirect and indirect holdings, has fallen to less than 10% following thesale of Banco Bradesco.



Investment performance (continued)

Investment review

Outlook

Shares have made significant progress globally, with a number ofstockmarket indices reaching record highs, but we continue to seeexcellent opportunities at the stock level. The importance of beingselective cannot be emphasised enough. We still see wide disparity invaluations across the market and remain focused on identifyingdiscrepancies between company fundamentals and share prices. Wetake comfort from the market environment where valuation is startingto matter again and believe that the renewed focus on value is at itsearly stages.

We continue to avoid paying over the odds for safety and securityalone, and remain firmly of the view that the days of being rewardedfor the pursuit of safety for safety’s sake are over. We continue tostruggle with the high valuations attached to many defensive stocks.Our best ideas continue to be in areas with greater economicsensitivity, where value characteristics are most pronounced, and weremain excited by our recent additions to the ‘rapid growth’ category,where high rates of growth are available at attractive prices. The fund’sincreased exposure towards the latter certainly bodes well fordistribution growth in the future. We are encouraged by the dividendannouncements in the current reporting season where many of thecompanies we are invested in continue to deliver robust dividendgrowth eight years on from the financial crisis. Dividends are theultimate sign of management confidence and the dividend growth weare seeing across the portfolio reflects well on the long-term potentialand the financial health of the underlying holdings. The combinationof strong dividend growth and attractive valuation gives us confidencethat the rebound in fund performance we have seen over the past yearis just the beginning. We are grateful for our investors’ patience andcontinued support.

Stuart RhodesFund manager

An employee of M&G Limited which is an associate of M&G Securities Limited.

[a] For the performance of each share class, please refer to the ‘Long-term

performance by share class’ table in the ‘Fund performance’ section of this report.

Please note that the views expressed in this Report should not be taken as a

recommendation or advice on how the fund or any holding mentioned in the Report

is likely to perform. If you wish to obtain financial advice as to whether an investment

is suitable for your needs, you should consult a Financial Adviser.

Investments

Portfolio statement

as at 31 March 2017 2017 2016Holding £’000 % %

Denmark 299,628 4.35 2.07 4,242,973 Novo-Nordisk 117,480 1.71

2,059,343 Pandora 182,148 2.64

Finland 156,677 2.28 2.30 4,476,145 Kone 156,677 2.28

France 119,616 1.74 0.00 745,967 Legrand 35,861 0.52

1,504,397 Publicis Groupe 83,755 1.22

Norway 28,552 0.41 0.33 9,226,867 Prosafe 28,552 0.41

Sweden 0 0.00 1.98

Switzerland 179,737 2.61 3.89 2,994,614 Novartis (Regd.) 179,737 2.61

United Kingdom 1,042,460 15.15 13.42 36,543,475 Aberdeen Asset Management 96,438 1.40

9,120,732 British American Tobacco 482,395 7.01

5,128,860 Compass Group 76,882 1.12

6,680,197 Imperial Brands 258,290 3.75

12,118,370 St. James’s Place 128,455 1.87

Australia 317,196 4.61 4.56 15,964,067 Amcor 147,524 2.14

15,710,951 Orica 169,672 2.47

Hong Kong 139,869 2.03 1.10 27,393,600 AIA Group 138,722 2.01

308,400 Sands China 1,147 0.02

South Africa 140,902 2.05 1.70 14,220,700 Imperial Holdings 140,902 2.05

Canada 653,386 9.49 12.17 [a]

26,956,156 Gibson Energy 308,354 4.48

3,892,982 Keyera 91,804 1.33

9,986,900 Pembina Pipeline 253,228 3.68

United States 3,647,934 52.99 53.51 [a]

2,596,401 AbbVie 136,466 1.98

5,565,884 Arthur J. Gallagher & Co. 253,745 3.69

1,546,595 Broadcom 273,264 3.97

3,706,814 Cisco Systems 100,436 1.46

1,330,031 Helmerich & Payne 71,017 1.03

1,548,197 Johnson & Johnson 154,963 2.25

1,780,493 JPMorgan Chase 127,298 1.85

6,676,195 Las Vegas Sands 305,757 4.44

1,631,658 LyondellBasell 119,579 1.74

880,535 Mastercard 79,650 1.16

2,173,840 Medtronic 141,385 2.05

14,202,662 Methanex 549,744 7.99

4,873,866 Microsoft 257,147 3.74

1,610,531 Nike 72,466 1.05

4,012,318 Sabre 69,404 1.01

1,439,539 Trinseo 76,644 1.11

1,037,353 Union Pacific 89,078 1.29

1,682,373 UnitedHealth Group 222,866 3.24

4,628,202 US Bancorp 193,676 2.81

1,043,402 Visa 74,565 1.08

6,172,743 Wells Fargo 278,784 4.05



Investment review

Brazil 66,766 0.97 1.76 14,369,241 Ambev 66,766 0.97

Portfolio of investments 6,792,723 98.68 98.79

‘AAA’ rated money market funds [b] 60,150 0.87 0.67 60,150,000 Northern Trust Global Fund - Sterling 60,150 0.87

Total portfolio (notes 2c & 2d on pages 17 & 18) 6,852,873 99.55 99.46Net other assets / (liabilities) 30,827 0.45 0.54

Net assets attributable to shareholders 6,883,700 100.00 100.00

All securities are on an official stock exchange listing except where referenced.

[a] The comparative weightings have been re-analysed to reflect changes to the

country classifications.

[b] Uncommitted surplus cash is placed into ‘AAA’ rated money market funds with the

aim of reducing counterparty risk.

Top ten portfolio transactions

for the year to 31 March 2017

Largest purchases £’000

Novo-Nordisk 116,890

AIA Group 105,236

St. James’s Place 103,885

Publicis Groupe 88,918

Imperial Brands 82,412

Trinseo 80,034

Helmerich & Payne 73,282

Sabre 73,215

Pandora 72,439

Nike 67,588

Other purchases 537,888

Total purchases 1,401,787

Largest sales £’000

Inter Pipeline 226,979

Blackrock 209,157

Time Warner 203,104

Broadcom 149,341

Altria Group 125,323

AbbVie 120,144

Svenska Handelsbanken 91,086

Banco Bradesco 89,253

Roche Holding ‘Genussscheine’ 87,095

Methanex 81,435

Other sales 675,089

Total sales 2,058,006

Purchases and sales exclude the cost and proceeds of ‘AAA’ rated money

market funds.



Investments

Portfolio statement (continued)

as at 31 March 2017 2017 2016Holding £’000 % %

Fund performance

Please note past performance is not a guide to future performanceand the value of investments, and the income from them, will fluctuate.This will cause the fund price to fall as well as rise and you may notget back the original amount you invested.

The following charts and tables show the performance for two of thefund’s share classes – Sterling Class ‘A’ (Accumulation) shares andSterling Class ‘I’ (Accumulation) shares.

We show performance for these two share classes because:

• The performance of the Sterling Class ‘A’ (Accumulation) share iswhat most individuals investing directly with M&G have received. Ithas the highest ongoing charge of all the share classes.Performance is shown after deduction of this charge. All investorsin the fund therefore received this performance or better.

• The performance of the Sterling Class ‘I’ (Accumulation) share isthe most appropriate to compare with the average performance ofthe fund’s comparative sector. It is the share class used by theInvestment Association in the calculation of the comparativesector’s average performance. This share class is available fordirect investment with M&G subject to minimum investment criteria,or via third parties who may charge additional fees. Theperformance shown takes the deduction of the ongoing charge forthis share class into account but it does not take account of chargesapplied by any other party through which you may have invested.

The fund is available for investment in different share classes, each with varying levels of charges and minimum investments; please refer to the Prospectus for M&G Global Dividend Fund, which is available free of charge either from our website atwww.mandg.co.uk/prospectuses or by calling M&G CustomerRelations.

Fund level performance

Fund net asset value

2017 2016 2015as at 31 March £’000 £’000 £’000

Fund net asset value (NAV) 6,883,700 5,764,638 8,520,024

Performance since launch

To give an indication of how the fund has performed since launch, thechart below shows total return of Sterling Class ‘A’ (Accumulation)shares and Sterling Class ‘I’ (Accumulation) shares.

Historic yield

The chart below shows the historic yield of Sterling Class ‘A’ (Income)shares against that of a comparative index.

80

100

90

260

230

200

180

160

140

120

300

752008 2009 2010 2011 2012 2013 2014 2015 2016 2017

July 2008 = 100, plotted monthly Chart date 3 April 2017

Sterling Class ‘A’ (Accumulation) shares*

MSCI AC World Index

Sterling Class ‘I’ (Accumulation) shares*

* Income reinvested Source: Morningstar, Inc. and M&G

Morningstar (IA) Global sector average*

2.0

2.5

3.0

4.0

3.5

4.5

5.0

20172008 2009 2010 2011 2012 2013 2014 2015 2016

Historic yield comparison from July 2008, plotted monthly Chart date 3 April 2017

Sterling Class ‘A’ (Income) shares yield

MSCI AC World Index yield Source: Morningstar, Inc. and M&G


M&G Global Dividend Fund Financial highlights

The chart below shows the historic yield of Sterling Class ‘I’ (Income)shares against that of a comparative index.

Historic yield: The historic yield reflects distributions declared over thepast twelve months as a percentage of the mid-market price, as at thedate shown. It does not include any preliminary charge and investorsmay be subject to tax on their distributions.

Distribution since launch

The charts below show the annual distribution of Sterling Class ‘A’(Income) shares and Sterling Class ‘I’ (Income) shares since launch.

2.0

2.5

3.0

4.0

3.5

4.5

5.0

20172008 2009 2010 2011 2012 2013 2014 2015 2016

Historic yield comparison from July 2008, plotted monthly Chart date 3 April 2017

Sterling Class ‘I’ (Income) shares yield

MSCI AC World Index yield Source: Morningstar, Inc. and M&G

1.0

5.0

4.0

3.0

2.0

6.0

0.02009* 2010 2011 2012 2013 2014 2015 2016 2017

Annual distributions since launch Chart date 3 April 2017

* Partial fund financial year distributions

Sterling Class ‘A’ (Income) shares

Year ending March

Source: M&G

To give an indication of the performance of the fund, the following tableshows the compound rate of return, per annum, over the period.Calculated on a price to price basis with income reinvested.

Long-term performance by share class

One Three Five Since year years years launch 01.04.16 03.04.14 03.04.12 % [a] % p.a. % p.a. % p.a.

Euro [b] Class ‘A’ +25.7 +9.3 +10.7 +10.8 [c]

Class ‘C’ +26.9 +10.4 +11.8 +11.9 [c]

Singapore dollar [b] Class ‘A’ +21.7 n/a n/a +8.0 [d]

Class ‘C’ +23.0 n/a n/a +9.1 [d]

Sterling [e] Class ‘A’ +34.4 +10.6 +11.5 +12.0 [c]

Class ‘I’ +35.5 +11.4 +12.3 +12.8 [c]

Class ‘R’ +35.1 +11.1 n/a +13.1 [f]

Class ‘X’ +34.4 +10.6 +11.5 +12.0 [c]

US dollar [b] Class ‘A’ +17.3 +0.4 +5.8 +5.9 [c]

Class ‘C’ +18.5 +1.4 +6.9 +7.0 [c]

[a] Absolute basis.

[b] Price to price with net income reinvested.

[c] 18 July 2008, the launch date of the fund.

[d] 16 January 2015, the launch date of the share class.

[e] Price to price with income reinvested.

[f] 3 August 2012, the launch date of the share class.

1.0

5.0

6.0

4.0

3.0

2.0

7.0

0.02009* 2010 2011 2012 2013 2014 2015 2016 2017

Annual distributions since launch Chart date 3 April 2017

Year ending March

* Partial fund financial year distributions

Sterling Class ‘I’ (Income) shares



Fund performance

Historic yield (continued)

Operating charges and portfoliotransaction costs

We explain below the payments made to meet the ongoing costs ofinvesting and managing the fund, comprised of operating charges andportfolio transaction costs.

Operating charges

Operating charges include payments made to M&G and to providersindependent of M&G:

• Investment management: Charge paid to M&G for investmentmanagement of the fund (also known as Annual ManagementCharge).

• Administration: Charge paid to M&G for administration servicesin addition to investment management – any surplus from thischarge will be retained by M&G.

• Oversight and other independent services: Charges paid toproviders independent of M&G for services which includedepositary, custody and audit.

The operating charges paid by each share class of the fund are shownin the following performance tables. Operating charges do not includeportfolio transaction costs or any entry and exit charges (also known asinitial and redemption charges). The charging structures of shareclasses may differ, and therefore the operating charges may differ.

Operating charges are the same as the ongoing charges shown in theKey Investor Information Document, other than where an estimate hasbeen used for the ongoing charge because a material change has madethe operating charges unreliable as an estimate of future charges.

For this fund there is no difference between operating charges andongoing charges figures, unless disclosed under the specific shareclass performance table.

Portfolio transaction costs

Portfolio transaction costs are incurred by funds when buying andselling investments. These costs vary depending on the types ofinvestment, their market capitalisation, country of exchange andmethod of execution. They are made up of direct and indirect portfoliotransaction costs:

• Direct portfolio transaction costs: Broker execution commissionand taxes.

• Indirect portfolio transaction costs: ‘Dealing spread’ – thedifference between the buying and selling prices of the fund’sinvestments; some types of investment, such as fixed interestsecurities, have no direct transaction costs and only the dealingspread is paid.

Investments are bought or sold by a fund when changes are made tothe investment portfolio and in response to net flows of money into orout of the fund from investors buying and selling shares in the fund.

To protect existing investors, portfolio transaction costs incurred as aresult of investors buying and selling shares in the fund are recoveredfrom those investors through a ‘dilution adjustment’ to the price theypay or receive. The table below shows direct portfolio transaction costspaid by the fund before and after that part of the dilution adjustmentrelating to direct portfolio transaction costs. To give an indication of theindirect portfolio dealing costs the table also shows the averageportfolio dealing spread.

Further information on this process is in the Prospectus, which isavailable free of charge on request either from our website atwww.mandg.co.uk/prospectuses or by calling M&G Customer Relations.

Portfolio transaction costs

for the year to 31 March 2017 2016 2015 Average [a]

Direct portfolio transaction costs [b] % % % %

Broker commission 0.03 0.06 0.07 0.05

Taxes 0.03 0.01 0.03 0.02

Costs before dilution adjustments 0.06 0.07 0.10 0.07

Dilution adjustments [c] (0.01) (0.01) (0.02) (0.01)

Total direct portfolio transaction costs 0.05 0.06 0.08 0.06

as at 31 March 2017 2016 2015 Average [a]

Indirect portfolio transaction costs % % % %

Average portfolio dealing spread 0.09 0.07 0.08 0.08

[a] Average of first three columns.

[b] As a percentage of average net asset value.

[c] In respect of direct portfolio transaction costs.



Fund performance

Specific share class performance

The following tables show the performance of each share class. All‘Performance and charges’ percentages represent an annual rateexcept for the ‘Return after operating charges’ which is calculated asa percentage of the opening net asset value per share (NAV). ‘Dilutionadjustments’ are only in respect of direct portfolio transaction costs.

Euro Class ‘A’ Income share performanceThe share class was launched on 12 July 2013.

for the year to 31 March 2017 2016 2015Change in NAV per share Euro ¢ Euro ¢ Euro ¢

Opening NAV 1,806.17 2,127.01 1,796.24

Return before operating charges and after directportfolio transaction costs 463.39 (218.60) 430.20

Operating charges (37.94) (36.86) (36.71)

Return after operating charges 425.45 (255.46) 393.49

Distributions (61.14) (65.38) (62.72)

Closing NAV 2,170.48 1,806.17 2,127.01

Direct portfolio transaction costs [a] Euro ¢ Euro ¢ Euro ¢

Costs before dilution adjustments 1.25 1.37 2.01

Dilution adjustments [b] (0.25) (0.27) (0.48)

Total direct portfolio transaction costs 1.00 1.10 1.53

Performance and charges % % %

Direct portfolio transaction costs 0.05 0.06 0.08

Operating charges 1.91 1.91 1.91

Return after operating charges +23.56 -12.01 +21.91

Historic yield 2.84 3.66 2.87

Effect on yield of charges offset against capital 1.91 1.91 1.91

Other information

Closing NAV (£’000) 157,882 76,114 95,186

Closing NAV percentage of total fund NAV (%) 2.29 1.32 1.12

Number of shares 8,480,882 5,334,407 6,165,858

Highest share price (Euro ¢) 2,252.86 2,221.48 2,177.33

Lowest share price (Euro ¢) 1,761.33 1,539.38 1,745.65

Euro Class ‘A’ Accumulation share performanceThe share class was launched on 18 July 2008.


Opening NAV 1,979.36 2,250.07 1,841.36




Distributions (45.64) (70.06) (64.98)

Retained distributions 45.64 70.06 64.98

Closing NAV 2,450.73 1,979.36 2,250.07









Historic yield [c] 1.11 3.58 2.82


Other information

Closing NAV (£’000) 1,690,840 1,382,502 1,957,154


Number of shares 80,439,916 88,414,847 119,844,868



Euro Class ‘C’ Income share performanceThe share class was launched on 8 August 2014.


Opening NAV 2,011.54 2,345.14 2,004.09




Distributions (68.48) (72.52) (53.65)

Closing NAV 2,441.43 2,011.54 2,345.14











Other information

Closing NAV (£’000) 21,802 16,113 20,001


Number of shares 1,041,165 1,014,009 1,175,071





Euro Class ‘C’ Accumulation share performanceThe share class was launched on 18 July 2008.


Opening NAV 2,134.55 2,402.35 1,946.46




Distributions (62.11) (75.31) (69.08)


Closing NAV 2,669.41 2,134.55 2,402.35











Other information

Closing NAV (£’000) 332,949 341,161 1,004,594


Number of shares 14,542,099 20,231,914 57,616,370



Singapore dollar Class ‘A’ Income share performanceThe share class was launched on 16 January 2015.

for the year to 31 March 2017 2016 2015Change in NAV per share Singapore ¢ Singapore ¢ Singapore ¢

Opening NAV 940.63 1,068.14 1,000.00




Distributions (31.30) (34.25) (10.38)

Closing NAV 1,101.55 940.63 1,068.14

Direct portfolio transaction costs [a] Singapore ¢ Singapore ¢ Singapore ¢






Operating charges 1.88 1.91 1.87*Return after operating charges +20.44 -8.73 +7.85



Other information

Closing NAV (£’000) 3 2 3


Number of shares 500 500 500

Highest share price (Singapore ¢) 1,137.00 1,097.03 1,097.47

Lowest share price (Singapore ¢) 900.23 825.09 1,000.00

* As the share class was not in existence for the full period in the year to 31.03.15,

1.91% is a more reliable estimate of the year to 31.03.15 ongoing charges.

Singapore dollar Class ‘A’ Accumulation share performanceThe share class was launched on 16 January 2015.


Opening NAV 984.12 1,078.52 1,000.00




Distributions (22.17) (34.99) (10.38)


Closing NAV 1,184.80 984.12 1,078.52










Other information

Closing NAV (£’000) 35 82 3


Number of shares 5,085 16,223 500








Singapore dollar Class ‘C’ Income share performanceThe share class was launched on 16 January 2015.


Opening NAV 951.85 1,070.34 1,000.00




Distributions (31.89) (34.54) (10.39)

Closing NAV 1,126.03 951.85 1,070.34










Other information

Closing NAV (£’000) 3 3 3


Number of shares 500 500 500





Singapore dollar Class ‘C’ Accumulation share performanceThe share class was launched on 16 January 2015.


Opening NAV 996.00 1,080.72 1,000.00




Distributions (28.53) (35.21) (10.40)


Closing NAV 1,213.81 996.00 1,080.72










Other information

Closing NAV (£’000) 88 368 126


Number of shares 12,614 71,670 23,727





Sterling Class ‘A’ Income share performanceThe share class was launched on 18 July 2008.

for the year to 31 March 2017 2016 2015Change in NAV per share UK p UK p UK p

Opening NAV 155.09 167.38 161.06




Distributions (5.67) (5.33) (5.19)

Closing NAV 202.85 155.09 167.38

Direct portfolio transaction costs [a] UK p UK p UK p










Other information

Closing NAV (£’000) 685,830 451,271 755,586


Number of shares 338,103,216 290,966,346 451,411,763

Highest share price (UK p) 210.29 173.71 172.04

Lowest share price (UK p) 149.30 131.55 150.73




Sterling Class ‘A’ Accumulation share performanceThe share class was launched on 18 July 2008.


Opening NAV 200.70 209.09 194.98




Distributions (5.30) (6.74) (6.35)


Closing NAV 270.48 200.70 209.09











Other information

Closing NAV (£’000) 575,907 498,569 867,233


Number of shares 212,924,207 248,412,651 414,761,964



Sterling Class ‘I’ Income share performanceThe share class was launched on 18 July 2008.


Opening NAV 164.12 175.80 167.89




Distributions (6.03) (5.62) (5.43)

Closing NAV 216.27 164.12 175.80











Other information

Closing NAV (£’000) 1,360,071 1,206,424 1,601,168


Number of shares 628,862,926 735,070,026 910,814,481



Sterling Class ‘I’ Accumulation share performanceThe share class was launched on 18 July 2008.


Opening NAV 212.33 219.54 203.19




Distributions (6.66) (7.11) (6.65)


Closing NAV 288.29 212.33 219.54











Other information

Closing NAV (£’000) 1,684,065 1,439,914 1,550,839


Number of shares 584,149,759 678,156,157 706,398,229



Sterling Class ‘R’ Income share performanceThe share class was launched on 3 August 2012.


Opening NAV 116.73 125.35 120.01




Distributions (4.28) (4.00) (3.88)

Closing NAV 153.44 116.73 125.35











Other information

Closing NAV (£’000) 9,741 9,773 14,873


Number of shares 6,348,533 8,372,314 11,865,472






Sterling Class ‘R’ Accumulation share performanceThe share class was launched on 3 August 2012.


Opening NAV 131.93 136.75 126.88




Distributions (3.92) (4.42) (4.15)


Closing NAV 178.68 131.93 136.75











Other information

Closing NAV (£’000) 3,862 3,662 5,642


Number of shares 2,161,369 2,775,800 4,126,138



Sterling Class ‘X’ Income share performanceThe share class was launched on 18 July 2008.


Opening NAV 155.16 167.45 161.13




Distributions (5.67) (5.33) (5.19)

Closing NAV 202.94 155.16 167.45











Other information

Closing NAV (£’000) 69,738 60,039 69,916


Number of shares 34,364,481 38,694,054 41,753,066



Sterling Class ‘X’ Accumulation share performanceThe share class was launched on 18 July 2008.


Opening NAV 200.81 209.20 195.08




Distributions (5.30) (6.75) (6.36)


Closing NAV 270.62 200.81 209.20











Other information

Closing NAV (£’000) 24,298 20,639 29,688


Number of shares 8,978,532 10,277,711 14,190,907



US dollar Class ‘A’ Income share performanceThe share class was launched on 8 August 2014.

for the year to 31 March 2017 2016 2015Change in NAV per share US ¢ US ¢ US ¢

Opening NAV 1,339.43 1,489.39 1,597.18

Return before operating charges and after directportfolio transaction costs 241.68 (75.60) (51.71)


Return after operating charges 214.83 (102.13) (70.79)

Distributions (43.24) (47.83) (37.00)

Closing NAV 1,511.02 1,339.43 1,489.39

Direct portfolio transaction costs [a] US ¢ US ¢ US ¢







Return after operating charges +16.04 -6.86 -4.43



Other information

Closing NAV (£’000) 5,965 4,813 6,655


Number of shares 491,545 517,462 661,340

Highest share price (US ¢) 1,545.10 1,578.28 1,671.61

Lowest share price (US ¢) 1,274.37 1,123.03 1,433.88




US dollar Class ‘A’ Accumulation share performanceThe share class was launched on 18 July 2008.


Opening NAV 1,421.29 1,525.60 1,603.76




Distributions (31.57) (49.52) (49.51)


Closing NAV 1,652.10 1,421.29 1,525.60











Other information

Closing NAV (£’000) 216,642 212,949 414,728


Number of shares 16,329,152 21,576,724 40,234,546



US dollar Class ‘C’ Income share performanceThe share class was launched on 8 August 2014.


Opening NAV 1,444.07 1,589.51 1,693.79




Distributions (46.90) (51.20) (39.36)

Closing NAV 1,645.45 1,444.07 1,589.51











Other information

Closing NAV (£’000) 4,195 2,512 2,921


Number of shares 317,458 250,548 272,026



US dollar Class ‘C’ Accumulation share performanceThe share class was launched on 18 July 2008.


Opening NAV 1,532.32 1,628.39 1,694.76




Distributions (42.69) (53.15) (52.60)


Closing NAV 1,799.04 1,532.32 1,628.39











Other information

Closing NAV (£’000) 39,784 37,728 123,705


Number of shares 2,753,741 3,545,696 11,243,583



[a] As a percentage of average net asset value.

[b] In respect of direct portfolio transaction costs.

[c] Current year figures have been estimated to reflect the change in charging

structure and therefore you may see variances between comparative and current

year figures.




Financial statements

Statement of total return

2017 2016for the year to 31 March Note £’000 £’000 £’000 £’000

Income

Net capital gains / (losses) 5 1,755,373 (540,049)

Revenue 7 217,626 245,998

Expenses 8 (83,809) (90,052) ______ ______Net revenue / (expense) beforetaxation 133,817 155,946

Taxation 9 (22,251) (21,722) ______ ______Net revenue / (expense) aftertaxation 111,566 134,224

Total return before distributions 1,866,939 (405,825)Distributions 10 (164,134) (224,269)

Change in net assets attributableto shareholders from investmentactivities 1,702,805 (630,094)

Statement of change in net assets attributable to shareholders

2017 2016for the year to 31 March £’000 £’000 £’000 £’000

Opening net assets attributable toshareholders 5,764,638 8,520,024Amounts received on issue of shares 581,668 584,656

Value of in specie transfers received 0 29,105

Amounts paid on cancellation of shares (1,265,266) (2,892,179) _______ _______ (683,598) (2,278,418)

Dilution adjustments 1,169 2,693

Stamp Duty Reserve Tax 0 (1)

Change in net assets attributable toshareholders from investment activities(see above) 1,702,805 (630,094)

Retained distributions on Accumulationshares 98,686 150,434

Closing net assets attributable toshareholders 6,883,700 5,764,638

Balance sheet

2017 2016as at 31 March Note £’000 £’000

Assets

Fixed assets Investments 6,852,873 5,733,715

Current assets Debtors 11 52,845 131,563

Cash and bank balances 12 47,161 19,487

Total assets 6,952,879 5,884,765

Liabilities

Creditors Distribution payable (24,215) (24,162)

Other creditors 13 (44,964) (95,965)

Total liabilities (69,179) (120,127)

Net assets attributable to shareholders 6,883,700 5,764,638

Notes to the financial statements

1 Statement of compliance

The financial statements have been prepared in compliance with UKFinancial Reporting Standard 102 (FRS 102) and in accordance withthe Statement of Recommended Practice (SORP) for AuthorisedFunds issued by the Investment Association in May 2014.

Amendments to FRS 102 ‘Fair value hierarchy disclosures’ effectivefor annual periods beginning on or after 1 January 2017 have beenearly adopted. These amendments improve the consistency of fairvalue disclosures for financial instruments with those required by EU-adopted International Financial Reporting Standards (IFRS).

2 Summary of significant accounting policies

a) Basis of preparation

The financial statements are prepared on a going concern basis,under the historical cost convention as modified by the revaluationof certain financial assets and liabilities measured at fair valuethrough profit and loss.

b) Functional and presentational currency

The functional and presentational currency of M&G GlobalDividend Fund is UK sterling.

c) Exchange rates

Transactions in currencies other than the fund’s functionalcurrency are translated at the rate of exchange ruling on the dateof the transaction and where applicable assets and liabilities aretranslated into the fund’s functional currency at the rate ofexchange ruling as at 12 noon on 31 March 2017 being the lastbusiness day of the accounting period.

d) Investments - recognition and valuation

The provisions of both Section 11 and Section 12 of FRS 102have been applied in full. All investments have been designatedas fair value through profit and loss and recognised initially at fair value, which is normally the transaction price (excludingtransaction costs and accrued interest).

At the end of the reporting period all investments have beenmeasured at their fair value using the prices and the portfolioholdings determined at 12 noon on 31 March 2017, being the lastvaluation point of the accounting period, as this is not materiallydifferent from a valuation carried out at close of business on thebalance sheet date.

Where separate bid and offer prices are available, the bid price isused for investment assets and the offer price for investmentliabilities. Otherwise, the single price or most recent transactionprice is used. Interest accrued is not included in the fair value. Themethods of determining fair value for the principal classes ofinvestment are:

• Equities and debt securities which are traded on an active marketare included at the quoted price, which is normally the bid price,excluding any accrued interest in respect of bonds.


M&G Global Dividend Fund Financial statements and notes

• Equities traded on the Alternative Investment Market (AIM), whoseliquidity cannot be guaranteed, are included at their quoted bidprice as this represents the most objective and appropriate methodof valuation.

• Collective investment schemes operated by the ACD are includedat either their cancellation price for dual priced funds or their singleprice for single priced funds.

• Collective investment schemes operated by another manager areincluded at either their bid price for dual priced funds or their singleprice for single priced funds.

• Other equities and debt securities which are unquoted or notactively traded on a quoted market are included at a valueestimated by the ACD using an appropriate valuation technique,excluding any accrued interest in respect of bonds.

• Exchange traded futures and options are included at the cost ofclosing out the contract at the balance sheet date.

• Over the counter equity options, credit default swaps, interest rateswaps, asset swaps and inflation swaps are included at a valueprovided by Markit Valuations Limited, an independent creditderivative price provider. Their fair value excludes any accruedinterest in respect of derivatives where the income is revenue innature.

• Forward currency contracts, for share class hedging andinvestment, are included at a value determined by reference tocurrent forward exchange rates for contracts with similar maturityprofiles.

e) Recognition of income and expenses

• Dividends, including ordinary stock dividends, from equityinvestments are recognised when the security is quoted ex-dividend.

• Distributions from collective investment schemes are recognisedwhen the scheme is priced ex-distribution.

• Interest income, including coupons from debt securities and bankinterest is recognised on an accruals basis.

• Underwriting commission is recognised when the issue takesplace.

• Revenue from derivatives is recognised on an accruals basis.

• Fee rebates from investing in other collective investment schemesare recognised on an accruals basis.

• Expenses are recognised on an accruals basis.

f) Treatment of income and expenses

• Any increases or decreases in the fair value of investments andgains and losses realised on sales of investments are treated ascapital and recognised in net capital gains / (losses).

• Ordinary equity dividends, including ordinary stock dividends aretreated as revenue.

• Special dividends, share buy backs or additional share issues maybe treated as revenue or capital depending on the facts of eachparticular case.

• The value of any enhancement to a stock dividend is treated ascapital.

• Distributions from collective investment schemes are treated asrevenue in nature, except for any element of equalisation, whichrepresents the average amount of income included in the pricepaid for the collective investment scheme, which is treated ascapital.

• Debt security interest comprises the coupon interest and thedifference between the purchase price and the expected maturityprice spread over its expected remaining life. This is treated asrevenue with the difference adjusting the cost of the shares andtreated as capital.

• Other interest income, such as bank interest is treated as revenue.

• Underwriting commission is treated as revenue, except where thefund is required to take up all or some of the shares underwritten,in which case a proportion of the commission received is deductedfrom the cost of the shares and treated as capital.

• The treatment of the income on derivative contracts depends uponthe nature of the transaction. Both motive and circumstances areused to determine whether the returns should be treated as capitalor revenue. Where positions are undertaken to protect or enhancecapital, and the circumstances support this, the returns arerecognised in net capital gains; similarly where the motives andcircumstances are to generate or protect revenue, and thecircumstances support this, the returns are included within netrevenue before taxation. Where positions generate total returns itwill generally be appropriate to apportion such returns betweencapital and revenue to properly reflect the nature of thetransaction.

• Expenses relating to the purchase and sale of investments aretreated as capital; all other expenses are treated as revenue.

• Rebates of charges from holdings in collective investmentschemes are treated as revenue or capital in accordance with theunderlying scheme’s distribution policy.

g) Tax

Dividends and similar income receivable are recognised at anamount that includes any withholding tax but excludesirrecoverable tax credits. Any withholding tax suffered is shown aspart of the tax charge.

Tax is accounted for at the appropriate rate of corporation tax withrelief for double taxation taken where appropriate. The taxaccounting treatment follows the principal amounts involved.

Deferred tax is recognised in respect of temporary timingdifferences that have originated but not reversed by the balancesheet date. Deferred tax is measured on a non-discounted basis,at the average rate of tax expected to apply in the period in whichit expects the deferred tax to be realised or settled. A deferred taxasset is only recognised to the extent that it is more likely than notthat the asset will be recovered.



2 Summary of significant accounting policies(continued)

d) Investments - recognition and valuation (continued)


h) Allocation of returns to share classes

The annual management charge, any share class hedging returnsand associated share class hedging charge are directlyattributable to individual share classes. All other returns areapportioned to the fund’s share classes pro-rata to the value ofthe net assets of the relevant share class on the day that theincome or expenses are recognised.

All available net revenue accounted for in accordance with theabove policies and distribution policy in note 4, is distributed toholders of Income shares or retained and reinvested for holdersof Accumulation shares. Should expenses and taxation togetherexceed revenue, there will be no distribution and the shortfall willbe met from capital.

Distributions which have remained unclaimed by shareholders formore than six years are credited to the capital property of the fund.

3 Risk management policies

The ACD is responsible for establishing, implementing and maintainingan adequate and documented risk management policy for identifying,measuring and managing all risks to which funds are or might beexposed.

The Company’s investment activities expose it to various types of riskwhich are associated with the financial instruments and markets inwhich it invests; market risk, credit risk and liquidity risk.

These financial statements are designed to enable users to evaluatethe nature and extent of those risks and how they are managed.

The following risk management policies are applicable to the fund, withspecific risk disclosures set out in notes 20 to 24 in this report.

Market risk

Market risk is the risk of loss resulting from fluctuations in the marketvalue of positions in a fund’s portfolio attributable to changes in marketvariables, such as interest rates, foreign exchange rates, equity andcommodity prices or an issuer’s creditworthiness.

In relation to market risk, processes are applied that take account ofthe investment objective and policy of each fund. All funds are subjectto an investment oversight process in accordance with the type andnature of the fund. In addition all funds are monitored for compliancewithin regulatory limits.

In measuring and monitoring market risk, the global exposure of a fundmay be calculated using a ‘commitment’ approach or ‘Value at Risk’(VaR) approach.

Commitment approach

The commitment approach is applied for funds investing only intraditional asset classes, namely equities, fixed income, money marketinstruments and collective investment schemes.

In addition, the approach is applied for funds which use or intend touse derivatives or instruments embedding derivatives, but only forefficient portfolio management purposes, or in a simple way notnecessarily restricted to efficient portfolio management.

Under the commitment approach the global exposure of funds ismeasured and monitored using a commitment (adjusted notional)methodology.

Market risk is considered on a daily basis and forms the foundation ofinvestment oversight analysis. This can include for each fund (but isnot limited to) the analysis of factors such as fund concentration; style,geographical, industry and market capitalisation biases; active,systematic and specific risk measurements; active money; and betacharacteristics.

Value at Risk approach

The Value at Risk (VaR) approach is a methodology for estimatingthe maximum potential loss due to market risk based on historicmarket volatilities and correlations. More particularly, the VaRapproach gives a broad indication of the maximum potential loss ata given confidence level (probability), over a specific time period undernormal market conditions.

Instrument and portfolio modelling techniques are based on marketaccepted practices and are subject to regular audit (back-testing).Market risk factors that are analysed include LIBOR / swap rates,government yield curves, equity prices, foreign exchange, marketvolatility, credit spreads and credit default swap (CDS) spreads.

The VaR model is based on a Monte Carlo process with actual VaRbeing reported on the basis of a 99% confidence interval over a onemonth period (20 business days). Risk factor history used in the MonteCarlo process is based on 250 business days. From the variance /covariance matrices, a parametric Monte Carlo scenario set of 5,000simulations is derived and applied to the fund.

VaR does have limitations in its ability to present valid levels of risk inextreme market conditions. Accordingly, the Risk Analysis team alsocarries out monthly stress testing and scenario based analysis. Stresstesting allows for extreme sets of market circumstances which maynot be reflected in historical data sets thereby enabling furtherassessment of combinations of market movements which may causeserious damage to portfolio values. The key element to the scenariobased analysis is challenging the correlation assumptions implicitwithin statistical based models such as VaR.

The stress test and scenario based analysis is customised for eachfund type and the VaR analysis is produced on a daily basis.

The table below shows funds using the ‘commitment’ approach andthose using the ‘Value at Risk (VaR)’ approach:

Fund Global exposure approach

M&G Global Dividend Fund Commitment




2 Summary of significant accounting policies(continued)

Liquidity risk

Liquidity risk is the risk that a fund’s holdings cannot be sold, liquidatedor closed out at limited cost in an adequately short time frame and thatthe ability of the scheme to comply at any time with its obligation tosell and redeem shares is thereby compromised.

The overall liquidity profile for each fund is reviewed and updatedregularly. The liquidity profile takes into account investment, cashflowand market liquidity considerations.

Investment liquidity considerations include an assessment of assetclass liquidity conditions, liquidity of underlying holdings, portfolioconstruction and concentration, the scale of individual stock ownershipand the nature of the investment strategy.

Cashflow liquidity is managed in each fund on a daily basis usingreports that include subscription and redemption information as wellas the impact of trading, derivative lifecycle events and corporateaction activity. In addition to the daily reporting, the fund managers areprovided with reporting that highlights the impact of reasonablypredictable events in the portfolio, including an allowance for thepotential future exposures that might result from derivative exposures.

Market (or distribution-related) considerations include an assessmentof asset demand, fund growth, client concentration and the persistencyof the client base. Supplementary to this, market liquidity stress testsare carried out on a monthly basis for all sophisticated funds.

Credit risk

For funds exposed to credit risk, the credit rating, yield and maturity ofeach interest bearing security is considered to determine if the yieldfully reflects the risk. The capital value of interest-bearing securitieswithin the funds will fall in the event of the default or perceivedincreased credit risk of an issuer.

The capital value of interest-bearing securities within a fund may alsobe affected by interest rate fluctuations such that when interest ratesrise, the capital value of the interest-bearing securities is likely to falland vice versa.

For funds in which they are used, credit default swaps are bought andsold in response to detailed credit research to take advantage ofanticipated movements in credit spreads on individual stocks andbaskets of securities. When a fund buys a credit default swap thedefault risk associated with the underlying security transfers to thecounterparty. When a fund sells a credit default swap the fundassumes the credit risk of the underlying security.

4 Distribution policy

With effect from 1 October 2016, the distribution policy has beenamended so that in determining the amount available for reinvestmentto Accumulation shares, the annual management charge andadministration charge are no longer offset against capital, reducingthe amount available for reinvestment. The audit, depositary, and safecustody charges continue to be offset against capital, increasing the

amount available for reinvestment, whilst restraining capitalperformance to an equivalent extent. In determining the amountavailable for distribution to Income shares, all expenses with theexception of overdraft interest continue to be offset against capital,increasing the amount available for distribution, whilst restrainingcapital performance to an equivalent extent.

Marginal tax relief has not been taken into account in respect ofexpenses offset against capital.

5 Net capital gains / (losses) 2017 2016for the year to 31 March £’000 £’000

Non-derivative securities 1,753,904 (540,027)

Currency gains / (losses) 1,484 (6)

Transaction charges (15) (16)

Net capital gains / (losses) 1,755,373 (540,049)

6 Portfolio transactions and associated costs

The following tables show portfolio transactions and their associatedtransaction costs. For more information about the nature of the costsplease see the section on ‘Operating charges and portfolio transactioncosts’ on page 10.

2017 % of 2016 % offor the year to 31 March £’000 transaction £’000 transaction

a) Purchases Equities Equities before transaction costs 1,399,383 1,912,435

Commissions 849 0.06 1,120 0.06

Taxes 1,555 0.11 807 0.04

Equities after transaction costs 1,401,787 1,914,362

Other asset classes Corporate actions 0 1,431

Total purchases after transactioncosts 1,401,787 1,915,793

b) Sales Equities Equities before transaction costs 2,059,527 4,097,939

Commissions (1,415) 0.07 (2,691) 0.07

Taxes (106) 0.01 (111) 0.00

Total sales after transaction costs 2,058,006 4,095,137

2017 % of 2016 % ofc) Direct portfolio transaction costs £’000 average NAV £’000 average NAV

Commissions paid Equities 2,264 0.03 3,811 0.06

Taxes paid Equities 1,661 0.03 918 0.01

Total direct portfolio transactioncosts [a] 3,925 0.06 4,729 0.07

d) Indirect portfolio transaction costs % %Portfolio dealing spread [b] 0.09 0.07

[a] Costs before dilution adjustments. Please refer to the ‘Financial highlights’ section

for the effect of dilution adjustments.

[b] Average portfolio dealing spread at the balance sheet date.




3 Risk management policies (continued)

7 Revenue 2017 2016for the year to 31 March £’000 £’000

Bank interest 359 140

Dividends from equity investments: non-taxable 213,268 235,570

Dividends from equity investments: taxable 2,675 3,343

HM Revenue & Customs interest 0 93

Interest distributions 239 262

Stock dividends 1,085 6,590

Total revenue 217,626 245,998

8 Expenses 2017 2016for the year to 31 March £’000 £’000

Payable to the ACD or associate Annual management charge 73,764 79,290

Administration charge 9,374 10,021

83,138 89,311

Payable to the Depositary or associate Depositary’s charge (including VAT) 212 224

Other expenses Audit fee (including VAT) 11 7

Interest payable 8 7

Safe custody charge 440 489

Tax fees (including VAT) 0 14

459 517

Total expenses 83,809 90,052

9 Taxation 2017 2016for the year to 31 March £’000 £’000

a) Analysis of charge in the year Corporation tax 0 0

Withholding tax 22,251 21,722

Deferred tax (note 9c) 0 0

Total taxation 22,251 21,722

b) Factors affecting taxation charge for the year Net revenue / (expense) before taxation 133,817 155,946

______ ______Corporation tax at 20% 26,763 31,189

Effects of:

Dividends from equity investments: non-taxable (42,654) (47,114)

Stock dividends not taxable (217) (1,318)

Current year expenses not utilised 16,173 17,358

Withholding tax 22,251 21,722

Withholding tax expensed (65) (115)

Total tax charge (note 9a) 22,251 21,722

c) Provision for deferred taxation Provision at the start of the year 0 0

Deferred tax in profit and loss account (note 9a) 0 0

Provision at the end of the year 0 0

The fund has not recognised a deferred tax asset of £95,447,000 (2016: £79,274,000)

arising as a result of having excess management expenses. We do not expect this

asset to be utilised in the foreseeable future.

10 Distributions 2017 2016for the year to 31 March Inc [a] Acc [b] Inc [a] Acc [b]

Dividend distributions £’000 £’000 £’000 £’000

First interim 12,858 27,533 15,073 36,443

Second interim 13,154 27,737 13,582 31,292

Third interim 13,984 12,609 14,022 31,295

Final 24,215 30,807 24,162 51,404

Total net distributions 162,897 217,273

Income deducted on cancellation of shares 3,241 9,686

Income received on issue of shares (2,004) (2,690)

Distributions 164,134 224,269

Net revenue / (expense) per statement of total return 111,566 134,224

Expenses offset against capital 52,568 90,045

Undistributed income brought forward 1 1

Undistributed income carried forward (1) (1)

Distributions 164,134 224,269

[a] Distributions payable on Income shares.

[b] Retained distributions on Accumulation shares.

11 Debtors 2017 2016as at 31 March £’000 £’000

Amounts receivable on issues of shares 6,827 51,458

Currency deals outstanding 0 14,929

Distributions receivable 11 11

Dividends receivable 18,728 18,252

Sales awaiting settlement 13,071 32,437

Withholding tax recoverable 14,208 14,476

Total debtors 52,845 131,563

12 Cash and bank balances 2017 2016as at 31 March £’000 £’000

Cash held as bank balances 47,161 19,487

Total cash and bank balances 47,161 19,487

13 Other creditors 2017 2016as at 31 March £’000 £’000

ACD’s annual management charge payable 4,112 3,181

Administration charge payable 515 406

Amounts payable on cancellation of shares 29,784 70,189

Currency deals outstanding 0 14,976

Expenses payable 139 123

Purchases awaiting settlement 10,414 7,090

Total other creditors 44,964 95,965

14 Contingent assets, liabilities and outstandingcommitments

There were no contingent assets, liabilities or outstandingcommitments at the balance sheet date (2016: same).




15 Shares in issue

The following table shows each class of share in issue during the year.Each share class has the same rights on winding up however theymay have different charging structures as set out in note 16.

Opening Movements ClosingShare class 01.04.16 Issued Cancelled 31.03.17

Euro Class ‘A’ Income (Net) 5,334,407 3,698,860 (552,385) 8,480,882

Class ‘A’ Accumulation (Net) 88,414,847 5,619,636 (13,594,567) 80,439,916

Class ‘C’ Income (Net) 1,014,009 236,821 (209,665) 1,041,165

Class ‘C’ Accumulation(Net) 20,231,914 2,389,578 (8,079,393) 14,542,099

Singapore dollar Class ‘A’ Income (Net) 500 0 0 500

Class ‘A’ Accumulation (Net) 16,223 13,714 (24,852) 5,085

Class ‘C’ Income (Net) 500 0 0 500

Class ‘C’ Accumulation (Net) 71,670 1,232 (60,288) 12,614

Sterling Class ‘A’ Income(Net) 290,966,346 72,873,276 (25,736,406) 338,103,216


Class ‘I’ Income (Net) 735,070,026 57,289,487 (163,496,587) 628,862,926

Class ‘I’ Accumulation (Net) 678,156,157 7,250,452 (101,256,850) 584,149,759

Class ‘R’ Income (Net) 8,372,314 510,295 (2,534,076) 6,348,533

Class ‘R’ Accumulation (Net) 2,775,800 485,392 (1,099,823) 2,161,369

Class ‘X’ Income (Net) 38,694,054 772,920 (5,102,493) 34,364,481

Class ‘X’ Accumulation (Net) 10,277,711 305,252 (1,604,431) 8,978,532

US dollar Class ‘A’ Income (Net) 517,462 210,402 (236,319) 491,545


Class ‘C’ Income (Net) 250,548 67,410 (500) 317,458

Class ‘C’ Accumulation (Net) 3,545,696 155,787 (947,742) 2,753,741

16 Charging structure

The table below sets out the charging structure for each class of share.The charging structure is the same for both Income and Accumulationshares of each class.

Annual Entry Exit management charge charge chargeShare class % % %

Euro Class ‘A’ 4.00 n/a 1.75

Class ‘C’ 1.25 n/a 0.75

Singapore dollar Class ‘A’ 4.00 n/a 1.75

Class ‘C’ 1.25 n/a 0.75

Sterling Class ‘A’ 4.00 [a] n/a 1.50

Class ‘I’ 1.00 [a] n/a 0.75

Class ‘R’ 1.00 [a] n/a 1.00

Class ‘X’ nil 4.50 [b] 1.50

US dollar Class ‘A’ 4.00 n/a 1.75

Class ‘C’ 1.25 n/a 0.75

[a] With effect from 16 December 2016, the entry charge has been discounted to

zero on all new investments into sterling share classes.

[b] With effect from 16 December 2016, the exit charge has been waived on future

withdrawals from all Sterling Class ‘X’ shares.

17 Related parties

M&G Securities Limited, as Authorised Corporate Director (ACD),is a related party and acts as principal on all the transactions ofshares in the fund except with in specie transactions, where M&GSecurities Limited acts as an agent. The aggregate monies receivedthrough issues, and paid on cancellations, are disclosed in the‘Statement of change in net assets attributable to shareholders’ andnote 10. Amounts due to / from M&G Securities Limited in respectof share transactions at the year end are disclosed in notes 11 and13 where applicable.

Amounts paid to M&G Securities Limited in respect of the ACD’sannual management charge and administration charge are disclosedin note 8. Amounts due at the year end in respect of the ACD’sannual management charge and administration charge are disclosedin note 13.

During the year, there were transactions in shares in related parties ofPrudential plc with a total value of £nil (2016: £310,578,000).

At the balance sheet date, shareholders from within Prudential plc, ofwhich M&G Securities Limited is a wholly owned subsidiary, haveholdings totalling 1.82% (2016: 1.73%) of the fund’s shares.

18 Events after the balance sheet date

There were no events after the balance sheet date to disclose.

19 Portfolio fair value analysis

Financial instruments have been measured at their fair value and havebeen classified below using a hierarchy that reflects the significanceof the inputs used in measuring their fair value:

Level 1: Quoted prices for identical instruments in active markets

This includes instruments such as publicly traded equities; highly liquidbonds (e.g. Government bonds) and exchange traded derivatives (e.g.futures) for which quoted prices are readily and regularly available.

Level 2: Valuation techniques using observable market data

This includes publicly traded corporate bonds and instruments whichhave been valued using models with observable market data inputssuch as quoted prices for similar instruments, interest rates, yieldcurves or credit spreads. Over-the-counter instruments have also beenincluded in the category.

Level 3: Valuation techniques using non-observable market data

This refers to instruments which have been valued using models withnon-observable market data inputs. This includes private equity,unlisted closed-ended funds and investment analyst recommendedprices where the market price is deemed to not be a truerepresentation of fair value. However no such financial instrumentswere held.

Assets Liabilities Assets Liabilitiesas at 31 March 2017 2017 2016 2016Valuation technique £’000 £’000 £’000 £’000

Level 1 6,792,723 0 5,695,042 0

Level 2 60,150 0 38,673 0

Level 3 0 0 0 0

6,852,873 0 5,733,715 0




In accordance with FRS 102 (22.4a) the shares in issue for each classmeet the definition of a puttable instrument as the shareholders havethe right to sell the shares back to the issuer. The shares in the fundmay be issued and redeemed on any business day at the quoted price.These shares are not traded on an exchange. However, the price isobservable and transactions within the fund take place regularly at thatprice. The shares in issue as detailed in note 15 meet the definition ofa level 2 financial instrument ‘Valuation techniques using observablemarket data’.

20 Market risk sensitivity

A five per cent increase in the value of the fund’s investment portfoliowould have the effect of increasing the return and net assets by£342,644,000 (2016: £286,686,000). A five per cent decrease wouldhave an equal and opposite effect.

21 Currency risk sensitivity 2017 2016as at 31 March £’000 £’000

Currency exposure in respect of the fund Australian dollar 317,904 266,414

Brazilian real 66,766 102,847

Canadian dollar 659,708 710,129

Danish krone 300,476 119,904

Euro 275,230 134,960

Hong Kong dollar 139,869 63,427

Norwegian krone 28,552 19,108

Singapore dollar (32) 24

Sterling 1,110,216 783,812

South African rand 142,726 100,229

Swedish krona 0 115,132

Swiss franc 190,534 232,438

Taiwan dollar 298 0

US dollar 3,651,453 3,116,214

Total 6,883,700 5,764,638

22 Foreign currency risk sensitivity

A five per cent increase in the value of the fund’s foreign currencyexposure would have the effect of increasing the return and net assetsby £344,185,000 (2016: £288,232,000). A five per cent decreasewould have an equal and opposite effect.

23 Interest rate risk sensitivity

As the majority of the fund’s financial assets are non-interest bearing,the risk is not considered significant and is therefore not disclosed.

24 Credit risk sensitivity

Credit risk is not considered significant for the fund and is thereforenot disclosed.

25 Dividend distribution tables

This fund pays quarterly ordinary distributions and the following tablesets out the distribution periods.

Quarterly distribution periods Start End Xd Payment

First interim 01.04.16 30.06.16 01.07.16 31.08.16

Second interim 01.07.16 30.09.16 03.10.16 30.11.16

Third interim 01.10.16 31.12.16 03.01.17 28.02.17

Final 01.01.17 31.03.17 03.04.17 31.05.17

The following tables set out for each distribution the rates per sharefor both Group 1 and Group 2 shares.

Group 1 shares are those purchased prior to a distribution period andtherefore their net revenue rate is the same as the distribution rate.

Group 2 shares are those purchased during a distribution period andtherefore their distribution rate is made up of net revenue andequalisation. Equalisation is the average amount of revenue includedin the purchase price of all Group 2 shares and is refunded to theholders of these shares as a return of capital. Being capital it is notliable to Income Tax. Instead, it must be deducted from the cost ofshares for Capital Gains Tax purposes. The tables below show thesplit of the Group 2 rates into the net revenue and equalisationcomponents.

Euro Class ‘A’ Income shares

Ordinary distributions Group 2 Group 1 & 2for the year Net revenue Equalisation Distributionto 31 March 2017 2017 2017 2016

¢ ¢ ¢ ¢First interim 7.3706 5.3795 12.7501 14.5678

Second interim 7.9226 4.8269 12.7495 12.7448

Third interim 5.8864 7.2919 13.1783 14.1614

Final 11.6358 10.8256 22.4614 23.9020

Euro Class ‘A’ Accumulation shares


¢ ¢ ¢ ¢First interim 9.3461 4.6269 13.9730 15.4330

Second interim 7.8436 6.2240 14.0676 13.5774

Third interim 1.6759 2.4346 4.1105 15.1944

Final 10.3834 3.1010 13.4844 25.8516

Euro Class ‘C’ Income shares


¢ ¢ ¢ ¢First interim 7.6837 6.5393 14.2230 16.0943

Second interim 5.8927 8.3637 14.2564 14.1105

Third interim 3.3679 11.3999 14.7678 15.7159

Final 15.6270 9.6083 25.2353 26.5958




19 Portfolio fair value analysis (continued)

Euro Class ‘C’ Accumulation shares


¢ ¢ ¢ ¢First interim 11.5068 3.5856 15.0924 16.5739Second interim 9.7709 5.4608 15.2317 14.5554Third interim 6.0772 4.3880 10.4652 16.3243Final 15.1664 6.1539 21.3203 27.8540

Singapore dollar Class ‘A’ Income shares



Singapore dollar Class ‘A’ Accumulation shares



Singapore dollar Class ‘C’ Income shares



Singapore dollar Class ‘C’ Accumulation shares



Sterling Class ‘A’ Income shares


p p p pFirst interim 0.8079 0.3378 1.1457 1.1261Second interim 0.6582 0.5418 1.2000 1.0206Third interim 0.3432 0.8568 1.2000 1.1305Final 1.2450 0.8795 2.1245 2.0519

Sterling Class ‘A’ Accumulation shares


p p p pFirst interim 1.0240 0.4586 1.4826 1.4060

Second interim 0.9357 0.6278 1.5635 1.2841

Third interim 0.2470 0.3389 0.5859 1.4321

Final 0.9703 0.6995 1.6698 2.6207

Sterling Class ‘I’ Income shares



Second interim 0.8486 0.4251 1.2737 1.0754

Third interim 0.7291 0.5467 1.2758 1.1931

Final 1.2574 1.0062 2.2636 2.1700

Sterling Class ‘I’ Accumulation shares



Second interim 1.1000 0.5591 1.6591 1.3525

Third interim 0.5209 0.5786 1.0995 1.5115

Final 1.5019 0.8250 2.3269 2.7707

Sterling Class ‘R’ Income shares



Second interim 0.6438 0.2612 0.9050 0.7660

Third interim 0.3441 0.5618 0.9059 0.8492

Final 0.9962 0.6101 1.6063 1.5437

Sterling Class ‘R’ Accumulation shares



Second interim 0.7612 0.2686 1.0298 0.8415

Third interim 0.2390 0.3445 0.5835 0.9400

Final 1.0174 0.3118 1.3292 1.7218

Sterling Class ‘X’ Income shares



Second interim 0.5975 0.6030 1.2005 1.0212

Third interim 0.6349 0.5657 1.2006 1.1309

Final 1.4552 0.6701 2.1253 2.0529




25 Dividend distribution tables (continued)

Sterling Class ‘X’ Accumulation shares



Second interim 0.9048 0.6596 1.5644 1.2848

Third interim 0.3338 0.2525 0.5863 1.4332

Final 1.1632 0.5075 1.6707 2.6222

US dollar Class ‘A’ Income shares


¢ ¢ ¢ ¢First interim 9.0102 0.2478 9.2580 10.7357

Second interim 7.7838 1.5435 9.3273 9.3171

Third interim 2.8447 6.0775 8.9222 10.0550

Final 8.6659 7.0709 15.7368 17.7250

US dollar Class ‘A’ Accumulation shares


¢ ¢ ¢ ¢First interim 5.4539 4.3751 9.8290 10.9026

Second interim 4.8872 5.0779 9.9651 9.6111

Third interim 2.1568 0.4971 2.6539 10.4462

Final 7.7262 1.4006 9.1268 18.5629

US dollar Class ‘C’ Income shares


¢ ¢ ¢ ¢First interim 10.0033 0.00 10.0033 11.3150

Second interim 0.6191 9.4775 10.0966 9.9864

Third interim 2.3631 7.3158 9.6789 10.8023

Final 14.5999 2.5223 17.1222 19.0930

US dollar Class ‘C’ Accumulation shares


¢ ¢ ¢ ¢First interim 8.9821 1.6323 10.6144 11.6413

Second interim 7.0585 3.7283 10.7868 10.3007

Third interim 2.9047 3.9336 6.8383 11.2171

Final 12.6601 1.7915 14.4516 19.9955

Directors’ statement

This report has been prepared in accordance with the requirementsof the Collective Investment Schemes sourcebook, as issued andamended by the Financial Conduct Authority.

P JELFS }DirectorsL J MUMFORD

18 May 2017




25 Dividend distribution tables (continued)


M&G Global Dividend Fund Depositary’s Responsibilities and Report

Statement of the Depositary’sResponsibilities and Report of theDepositary to the Shareholders of M&G Global Dividend Fund (‘theCompany’) for the period ended 31 March 2017

The Depositary must ensure that the Company is managed inaccordance with the Financial Conduct Authority’s CollectiveInvestment Schemes sourcebook, the Open-Ended InvestmentCompanies Regulations 2001 (SI2001/1228) (the OEIC Regulations),as amended, the Financial Services and Markets Act 2000, asamended, (together ‘the Regulations’), the Company’s Instrument ofIncorporation and Prospectus (together ‘the Scheme documents’) asdetailed below.

The Depositary must in the context of its role act honestly, fairly,professionally, independently and in the interests of the Company andits investors.

The Depositary is responsible for the safekeeping of all custodialassets and maintaining a record of all other assets of the Companyin accordance with the Regulations.

The Depositary must ensure that:

• the Company’s cashflows are properly monitored (this requirementon the Depositary applied from 18 March 2016) and that cash ofthe Company is booked into the cash accounts in accordance withthe Regulations;

• the sale, issue, redemption and cancellation of shares are carriedout in accordance with the Regulations;

• the value of shares in the Company is calculated in accordancewith the Regulations;

• any consideration relating to transactions in the Company’s assetsis remitted to the Company within the usual time limits;

• the Company’s income is applied in accordance with theRegulations; and

• the instructions of the Authorised Fund Manager (‘the AFM’) arecarried out (unless they conflict with the Regulations).

The Depositary also has a duty to take reasonable care to ensure thatthe Company is managed in accordance with the Regulations and theScheme documents in relation to the investment and borrowingpowers applicable to the Company.

Having carried out such procedures as we consider necessary todischarge our responsibilities as Depositary of the Company, it is ouropinion, based on the information available to us and the explanationsprovided, that in all material respects the Company, acting throughthe AFM:

(i) has carried out the issue, sale, redemption and cancellation, andcalculation of the price of the Company’s shares and theapplication of the Company’s income in accordance with theRegulations and the Scheme documents of the Company, and

(ii) has observed the investment and borrowing powers andrestrictions applicable to the Company.

Edinburgh National Westminster Bank Plc18 May 2017 Trustee and Depositary Services

Independent Auditor’s Report to the shareholders of M&G GlobalDividend FundWe have audited the financial statements of the M&G Global DividendFund (‘the Company’) for the year ended 31 March 2017 whichcomprise the Statement of Total Return, Statement of Change in NetAssets attributable to shareholders, Balance Sheet, and the relatednotes 1 to 25. The financial reporting framework that has been appliedin their preparation is applicable law and United Kingdom AccountingStandards (United Kingdom Generally Accepted Accounting Practice)including FRS102 ‘The Financial Reporting Standard applicable to theUK and the Republic of Ireland’.

This report is made solely to the Company’s members, as a body,pursuant to Paragraph 4.5.12 of the rules of the Collective InvestmentSchemes sourcebook of the Financial Conduct Authority. Our auditwork has been undertaken so that we might state to the Company’smembers those matters we are required to state to them in an auditor’sreport and for no other purpose. To the fullest extent permitted by law,we do not accept or assume responsibility to anyone other than theCompany and the Company’s members as a body, for our audit work,for this report, or for the opinions we have formed.

Respective responsibilities of theAuthorised Corporate Director andAuditorAs explained more fully in the Authorised Corporate Director’sresponsibilities statement set out on page 2, the Authorised CorporateDirector is responsible for the preparation of the financial statementsand for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financialstatements in accordance with applicable law and InternationalStandards on Auditing (UK and Ireland). Those standards require usto comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financialstatementsAn audit involves obtaining evidence about the amounts anddisclosures in the financial statements sufficient to give reasonableassurance that the financial statements are free from materialmisstatement, whether caused by fraud or error. This includes anassessment of:

• whether the accounting policies are appropriate to the Company’scircumstances and have been consistently applied and adequatelydisclosed;

• the reasonableness of significant accounting estimates made bythe Authorised Corporate Director; and

• the overall presentation of the financial statements.

In addition, we read all the financial and non-financial information inthe annual investment report and accounts to identify material

inconsistencies with the audited financial statements and to identifyany information that is apparently materially incorrect based on, ormaterially inconsistent with, the knowledge acquired by us in thecourse of performing the audit. If we become aware of any apparentmaterial misstatements or inconsistencies we consider the implicationsfor our report.

Opinion on the financial statementsIn our opinion:

• the financial statements give a true and fair view of the financialposition of the Company as at 31 March 2017 and of the netrevenue and the net capital gains on the scheme property of theCompany for the year then ended; and

• the financial statements have been properly prepared in accordancewith United Kingdom Generally Accepted Accounting Practice.

Opinion on other matters prescribedby the rules of the CollectiveInvestment Schemes sourcebook of the Financial Conduct AuthorityIn our opinion:

• the financial statements have been properly prepared in accordancewith the Statement of Recommended Practice relating to AuthorisedFunds, the rules of the Collective Investment Schemes sourcebookof the Financial Conduct Authority and the Instrument ofIncorporation;

• the information given in the Authorised Corporate Director’s reportfor the financial year for which the financial statements are preparedis consistent with the financial statements;

• there is nothing to indicate that proper accounting records have notbeen kept or that the financial statements are not in agreement withthose records; and

• we have received all the information and explanations which, to thebest of our knowledge and belief, are necessary for the purposesof our audit.

Edinburgh Ernst & Young LLP18 May 2017 Statutory Auditor

The financial statements are published at www.mandg.co.uk/reports, which is a

website maintained by M&G Securities Limited and M&G Financial Services Limited

(M&G). The maintenance and integrity of the M&G website is the responsibility of the

directors; 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.

Legislation in the United Kingdom governing the preparation and dissemination of

financial statements may differ from legislation in other jurisdictions.

M&G Global Dividend Fund Independent Auditor’s Report


28 ANNUAL LONG REPORT AND AUDITED FINANCIAL STATEMENTS • March 2017

M&G Global Dividend Fund Other regulatory disclosures

Remuneration

In line with the requirements of the Undertakings for CollectiveInvestment in Transferable Securities (UCITS) V, the Manager issubject to a remuneration policy which is consistent with the principlesoutlined in SYSC19E of the FCA Handbook (UCITS RemunerationCode).

The remuneration policies are designed to ensure that any relevantconflicts of interest can be managed appropriately at all times and thatthe remuneration of its staff is in line with the risk policies andobjectives of the UCITS it manages. Further details of theremuneration policy applicable at an M&G Limited level can be foundhere: http://www.mandg.com/en/corporate/about-mg/our-people/.

Implementation of the UCITS Remuneration Code remains ongoingand will apply in full for the first time for M&G’s 2017 performance year.Quantitative remuneration disclosures will be made followingcompletion of the 2017 performance year (the relevantdata/information to make these disclosures will only be available atthis time).

Swiss investor information

For funds registered in Switzerland we are required by FINMA todisclose the Total Expense Ratio (TER).

For this fund the TERs are the same as the operating chargesdisclosed in the fund’s financial highlights section.

29

Glossary


Accumulation shares: A type of share where distributions areautomatically reinvested and reflected in the value of the shares.

Accumulation units: A type of unit where distributions areautomatically reinvested and reflected in the value of the units.

Asset: Anything having commercial or exchange value that isowned by a business, institution or individual.

Asset allocation: Apportioning a portfolio’s assets according torisk tolerance and investment goals.

Asset class: Category of assets, such as cash, company shares,fixed income securities and their sub-categories, as well as tangibleassets such as real estate.

Bond: A loan in the form of a security, usually issued by agovernment or company, which normally pays a fixed rate of interestover a given time period, at the end of which the initial amountborrowed is repaid.

Bond issue: A set of fixed income securities offered for sale to thepublic by a company or government. If the bonds are sold for thefirst time, it is called a ‘new issue’.

Bottom-up selection: Selecting stocks based on theattractiveness of a company.

Bunds: Fixed income securities issued by the German government.

Capital: Refers to the financial assets, or resources, that acompany has to fund its business operations.

Capital growth: Occurs when the current value of an investmentis greater than the initial amount invested.

Capital return: The term for the gain or loss derived from aninvestment over a particular period. Capital return includes capitalgain or loss only and excludes income (in the form of interest ordividend payments).

Cash equivalents: Deposits or investments with similarcharacteristics to cash.

Comparative sector: A group of funds with similar investmentobjectives and/or types of investment, as classified by bodies suchas the Investment Association (IA) or Morningstar™. Sectordefinitions are mostly based on the main assets a fund should investin, and may also have a geographic focus. Sectors can be the basisfor comparing the different characteristics of similar funds, such astheir performance or charging structure.

Consumer Prices Index (CPI): An index used to measureinflation, which is the rate of change in prices for a basket of goodsand services. The contents of the basket are meant to berepresentative of products and services we typically spend ourmoney on.

Convertible bonds: Fixed income securities that can beexchanged for predetermined amounts of company shares atcertain times during their life.

Corporate bonds: Fixed income securities issued by a company.They are also known as bonds and can offer higher interestpayments than bonds issued by governments as they are oftenconsidered more risky.

Coupon: The interest paid by the government or company that hasraised a loan by selling bonds.

Credit: The borrowing capacity of an individual, company orgovernment. More narrowly, the term is often used as a synonymfor fixed income securities issued by companies.

Credit default swaps (CDS): Are a type of derivative, namelyfinancial instruments whose value, and price, are dependent on oneor more underlying assets. CDS are insurance-like contracts thatallow investors to transfer the risk of a fixed income securitydefaulting to another investor.

Credit rating: An independent assessment of a borrower’s abilityto repay its debts. A high rating indicates that the credit ratingagency considers the issuer to be at low risk of default; likewise, alow rating indicates high risk of default. Standard & Poor’s, Fitchand Moody’s are the three most prominent credit rating agencies.Default means that a company or government is unable to meetinterest payments or repay the initial investment amount at the endof a security’s life.

Credit rating agency: A company that analyses the financialstrength of issuers of fixed income securities and attaches a ratingto their debt. Examples include Standard & Poor’s and Moody’s.

Credit risk: Risk that a financial obligation will not be paid and aloss will result for the lender.

Credit selection: The process of evaluating a fixed incomesecurity, also called a bond, in order to ascertain the ability of theborrower to meet its debt obligations. This research seeks to identifythe appropriate level of default risk associated with investing in thatparticular bond.

Credit spread: The difference between the yield of a corporatebond, a fixed income security issued by a company, and a governmentbond of the same life span. Yield refers to the income received froman investment and is expressed as a percentage of the investment’scurrent market value.

Default:When a borrower does not maintain interest payments orrepay the amount borrowed when due.

Default risk: Risk that a debtholder will not receive interest andfull repayment of the loan when due.

Derivatives: Financial instruments whose value, and price, aredependent on one or more underlying assets. Derivatives can beused to gain exposure to, or to help protect against, expectedchanges in the value of the underlying investments. Derivatives maybe traded on a regulated exchange or traded over the counter.

Developed economy/market:Well-established economies witha high degree of industrialisation, standard of living and security.

Dilution adjustments: The dilution adjustment is used to protectongoing investors against the transaction charges incurred ininvesting or divesting in respect of creations and cancellations. Thedilution adjustment is made up of the direct and indirect transactioncharges. In the financial statements the direct transaction chargesas a percentage of average NAV will be disclosed. This percentagewill take account of those direct transaction charges that have beenrecovered through the dilution adjustment leaving a percentage thatjust represents the costs incurred in portfolio management.


Glossary

Distribution: Distributions represent a share in the income of thefund and are paid out to Income shareholders or reinvested forAccumulation shareholders at set times of the year (monthly,quarterly, half-yearly or annually). They may either be in the form ofinterest distributions or dividend distributions.

Distribution yield: Expresses the amount that is expected to bedistributed by the fund over the next 12 months as a percentage ofthe share price as at a certain date. It is based on the expectedgross income less the ongoing charges.

Diversification: The practice of investing in a variety of assets. Thisis a risk management technique where, in a well-diversified portfolio,any loss from an individual holding should be offset by gains in otherholdings, thereby lessening the impact on the overall portfolio.

Dividend: Dividends represent a share in the profits of a companyand are paid out to the company’s shareholders at set times of the year.

Duration: A measure of the sensitivity of a fixed income security,also called a bond, or bond fund to changes in interest rates. Thelonger a bond or bond fund’s duration, the more sensitive it is tointerest rate movements.

Duration risk: The longer a fixed income security, also called abond, or bond fund’s duration, the more sensitive and therefore atrisk it is to changes in interest rates.

Emerging economy or market: Economies in the process ofrapid growth and increasing industrialisation. Investments inemerging markets are generally considered to be riskier than thosein developed markets.

Equities: Shares of ownership in a company.

Exchange traded: Usually refers to investments traded on anexchange, such as company shares on a stock exchange.

Ex-dividend, ex-distribution or XD date: The date on whichdeclared distributions officially belong to underlying investors.

Exposure: The proportion of a fund invested in a particularshare/fixed income security, sector/region, usually expressed as apercentage of the overall portfolio.

Fixed income security: A loan in the form of a security, usuallyissued by a government or company, which normally pays a fixedrate of interest over a given time period, at the end of which theinitial amount borrowed is repaid. Also referred to as a bond.

Floating rate notes (FRNs): Securities whose interest (income)payments are periodically adjusted depending on the change in areference interest rate.

Foreign exchange: The exchange of one currency for another, orthe conversion of one currency into another currency. Foreignexchange also refers to the global market where currencies aretraded virtually around the clock. The term foreign exchange isusually abbreviated as ‘forex’ and occasionally as ‘FX’.

Foreign exchange (FX) strategy: Currencies can be an assetclass in its own right, along with company shares, fixed incomesecurities, property and cash. Foreign exchange strategy cantherefore be a source of investment returns.

Forward contract: A contract between two parties to buy or sell aparticular commodity or financial instrument at a pre-determinedprice at a future date. Examples include foward currency contracts.

Fundamentals (company): A basic principle, rule, law, or the like,that serves as the groundwork of a system. A company’sfundamentals pertain specifically to that company, and are factorssuch as its business model, earnings, balance sheet and debt.

Fundamentals (economic): A basic principle, rule, law, or the like,that serves as the groundwork of a system. Economic fundamentalsare factors such as inflation, employment, economic growth.

Futures:A futures contract is a contract between two parties to buy orsell a particular commodity or financial instrument at a pre-determinedprice at a future date. Futures are traded on a regulated exchange.

Gilts: Fixed income securities issued by the UK government.

Government bonds:Fixed income securities issued by governments,that normally pay a fixed rate of interest over a given time period, atthe end of which the initial investment is repaid.

Hedging: A method of reducing unnecessary or unintended risk.

High water mark (HWM): The highest level that a fund’s NAV(net asset value) has reached at the end of any 12-monthaccounting period.

High yield bonds: Fixed income securities issued by companieswith a low credit rating from a recognised credit rating agency. Theyare considered to be at higher risk of default than better quality, iehigher-rated fixed income securities but have the potential for higherrewards. Default means that a company or government is unable tomeet interest payments or repay the initial investment amount at theend of a security’s life.

Historic yield: The historic yield reflects distributions declared overthe past 12 months as a percentage of the share price, as at thedate shown.

Income yield: Refers to the income received from an investmentand is usually expressed annually as a percentage based on theinvestment’s cost, its current market value or face value.

Index: An index represents a particular market or a portion of it,serving as a performance indicator for that market.

Income shares: A type of share where distributions are paid outas cash on the payment date.

Income units: A type of unit where distributions are paid out ascash on the payment date.

Index tracking: A fund management strategy that aims to matchthe returns from a particular index.

Index-linked bonds: Fixed income securities where both thevalue of the loan and the interest payments are adjusted in linewith inflation over the life of the security. Also referred to asinflation-linked bonds.

Inflation: The rate of increase in the cost of living. Inflation isusually quoted as an annual percentage, comparing the averageprice this month with the same month a year earlier.

Inflation risk: The risk that inflation will reduce the return of aninvestment in real terms.

Initial public offering (IPO): The first sale of shares by a privatecompany to the public.

Interest rate risk: The risk that a fixed income investment will losevalue if interest rates rise.


Glossary

Interest rate swap: An agreement between two parties to swapa fixed interest payment with a variable interest payment over aspecified period of time.

Investment Association (IA): The UK trade body that representsfund managers. It works with investment managers, liaising withgovernment on matters of taxation and regulation, and also aims tohelp investors understand the industry and the investment optionsavailable to them.

Issuer: An entity that sells securities, such as fixed income securitiesand company shares.

Investment grade bonds: Fixed income securities issued by acompany with a medium or high credit rating from a recognisedcredit rating agency. They are considered to be at lower risk fromdefault than those issued by companies with lower credit ratings.Default means that a company or government is unable to meetinterest payments or repay the initial investment amount at the endof a security’s life.

Issuer: An entity that sells securities, such as fixed income securitiesand company shares.

Leverage: When referring to a company, leverage is the level of acompany’s debt in relation to its assets. A company with significantlymore debt than capital is considered to be leveraged. It can alsorefer to a fund that borrows money or uses derivatives to magnifyan investment position.

Liquidity: A company is considered highly liquid if it has plenty ofcash at its disposal. A company’s shares are considered highly liquidif they can be easily bought or sold since large amounts areregularly traded.

Long position: Refers to ownership of a security held in theexpectation that the security will rise in value.

Macroeconomic: Refers to the performance and behaviour of aneconomy at the regional or national level. Macroeconomic factorssuch as economic output, unemployment, inflation and investmentare key indicators of economic performance. Sometimes abbreviatedto ‘macro’.

Maturity: The length of time until the initial investment amount of afixed income security is due to be repaid to the holder of the security.

Modified duration: A measure of the sensitivity of a fixed incomesecurity, called a bond, or bond fund to changes in interest rates.The longer a bond or bond fund’s duration, the more sensitive it isto interest rate movements.

Monetary easing:When central banks lower interest rates or buysecurities on the open market to increase the money in circulation.

Monetary policy: A central bank’s regulation of money incirculation and interest rates.

Monetary tightening: When central banks raise interest rates orsell securities on the open market to decrease the money in circulation.

Morningstar™: A provider of independent investment research,including performance statistics and independent fund ratings.

Near cash: Deposits or investments with similar characteristicsto cash.

Net asset value (NAV): A fund’s net asset value is calculatedby taking the current value of the fund’s assets and subtractingits liabilities.

Open-ended investment company (OEIC): A type of managedfund, whose value is directly linked to the value of the fund’sunderlying investments.

Options: Financial contracts that offer the right, but not theobligation, to buy or sell an asset at a given price on or before agiven date in the future.

Over-the-counter (OTC): Whereby financial assets are tradeddirectly between two parties. This is in contrast to exchange trading,which is carried out through exchanges set up specifically for thepurpose of trading. OTC is also known as off-exchange trading.

Overweight: If a fund is ‘overweight’ a stock, it holds a largerproportion of that stock than the comparable index or sector.

Payment date: The date on which distributions will be paid by thefund to investors, usually the last business day of the month.

Physical assets: An item of value that has tangible existence, forexample, cash, equipment, inventory or real estate. Physical assetscan also refer to securities, such as company shares or fixedincome securities.

Portfolio transaction cost: The cost of trading, such as brokerage,clearing, exchange fees and bid-offer spread as well as taxes suchas stamp duty.

Preference shares: Preference shares are a loan to a company thatmay be traded in the same way as ordinary shares, but generally havea higher yield and pay dividends on fixed dates. Preference shareshave varying characteristics as to the treatment of the principal andthe dividend payment, which includes ranking them above ordinaryshares when it comes to dividend payments.

Principal: The face value of a fixed income security, which is theamount due back to the investor by the borrower when the securityreaches the end of its life.

Private placement:An offer of sale of securities to a relatively smallnumber of investors selected by the company, generally investmentbanks, mutual funds, insurance companies or pension funds.

Real yield: The return of an investment, adjusted for changes inprices in an economy.

Retail Prices Index (RPI): A UK inflation index that measures therate of change in prices for a basket of goods and services in theUK, including mortgage payments and council tax.

Risk: The chance that an investment’s return will be different to whatis expected. Risk includes the possibility of losing some or all of theoriginal investment.

Risk management: The term used to describe the activities thefund manager undertakes to limit the risk of a loss in a fund.

Risk premium: The difference between the return from a risk-freeasset, such as a high-quality government bond or cash, and thereturn from an investment in any other asset. The risk premium canbe considered the ‘price’ or ‘pay-off’ for taking on increased risk. Ahigher risk premium implies higher risk.

Risk-free asset: An asset that notionally carries no risk of non-payment by the borrower such as a high-quality fixed incomesecurity issued by a government or cash.


Risk/reward ratio: A ratio comparing the expected returns of aninvestment with the amount of risk undertaken.

Safe-haven assets: Refers to assets that investors perceive to berelatively safe from suffering a loss in times of market turmoil.

Security: Financial term for a paper asset – usually a share in acompany or a fixed income security also known as a bond.

Share class: Each M&G fund has different share classes, such asA, R and I. Each has a different level of charges and minimuminvestment. Details on charges and minimum investments can befound in the Key Investor Information Documents.

Share class hedging: Activities undertaken in respect of hedgedshares to mitigate the impact on performance of exchange ratemovements between the fund’s currency exposure and the investor’schosen currency.

Short position: A way for a fund manager to express his or herview that the market might fall in value.

Short selling: This often refers to the practice whereby an investorsells an asset they do not own. The investor borrows the asset fromsomeone who does own it and pays a fee. The investor musteventually return the borrowed asset by buying it in the open market.If the asset has fallen in price, the investor buys it for less than theysold it for, thus making a profit. The contrary may also occur.

Short-dated corporate bonds: Fixed income securities issuedby companies and repaid over relatively short periods.

Short-dated government bonds: Fixed income securitiesissued by governments and repaid over relatively short periods.

Sovereign debt: Debt of a government. Also referred to asgovernment bonds.

Sub-investment grade bonds: Fixed income securities issuedby a company with a low rating from a recognised credit ratingagency. They are considered to be at higher risk from default thanthose issued by companies with higher credit ratings. Default meansthat a company or government is unable to meet interest paymentsor repay the initial investment amount at the end of a security’s life.

Top-down investing: An investment approach that analyseseconomic factors, ie surveys the ‘big picture’, before selecting whichcompanies to invest in. The top-down investor will look at whichindustries are likely to generate the best returns in certain economicconditions and limit the search to that area.

Total return: The term for the gain or loss derived from aninvestment over a particular period. Total return includes income (inthe form of interest or dividend payments) and capital gains.

Treasuries: Fixed income securities issued by the US government.

Triple A or AAA rated: The highest possible rating a fixed incomesecurity, also called a bond, can be assigned by credit ratingagencies. Bonds that are rated AAA are perceived to have thelowest risk of default. Default means that a company or governmentis unable to meet interest payments or repay the initial investmentamount at the end of a security’s life.

UCITS: Stands for Undertakings for Collective Investment inTransferable Securities. This is the European regulatory frameworkfor an investment vehicle that can be marketed across the EuropeanUnion and is designed to enhance the single market in financialassets while maintaining high levels of investor protection.

Unconstrained: The term used to describe the mandate of a fundwhereby the manager has the freedom to invest according to his orher own strategy, not being obliged to allocate capital according tothe weightings of any index, for example.

Underlying value: The fundamental value of a company,reflecting both tangible and intangible assets, rather than the currentmarket value.

Underlying yield: Refers to the income received by a managedfund, and is usually expressed annually as a percentage based onthe fund’s current value.

Underweight: If a portfolio is ‘underweight’ a stock, it holds asmaller proportion of that stock than the comparable index or sector.

Unit trust: A type of managed fund, whose value is directly linkedto the value of the fund’s underlying investments.

Unit/share type: Type of units/shares held by investors in a trustor fund (unit/share types differ by features such as whether incomeis to be paid out as cash or reinvested on the payment date).

Valuation: The worth of an asset or company based on its currentprice.

Volatile: When the value of a particular share, market or sectorswings up and down fairly frequently and/or significantly, it isconsidered volatile.

Volatility: The degree to which a given security, fund, or indexrapidly changes. It is calculated as the degree of deviation from thenorm for that type of investment over a given time period. The higherthe volatility, the riskier the security tends to be.

Warrant: A security issued by a company that gives the holder theright to buy shares in that company at a specified price and within acertain timeframe.

Yield: This refers to either the interest received from a fixed incomesecurity or to the dividends received from a share. It is usuallyexpressed as a percentage based on the investment’s costs, itscurrent market value or its face value. Dividends represent a sharein the profits of the company and are paid out to a company’sshareholders at set times of the year.

Yield (equity): Refers to the dividends received by a holder ofcompany shares and is usually expressed annually as a percentagebased on the investment’s cost, its current market value or facevalue. Dividends represent a share in the profits of the companyand are paid out to a company’s shareholders at set times of theyear.

Yield (bonds): This refers to the interest received from a fixedincome security and is usually expressed annually as a percentagebased on the investment’s cost, its current market value or its facevalue.

Yield (income): Refers to the income received from an investmentand is usually expressed annually as a percentage based on theinvestment’s cost, its current market value or face value.

M&G Securities Limited is authorised and regulated by the Financial Conduct

Authority and provides investment products. The Company’s registered office is

Laurence Pountney Hill, London EC4R 0HH. Registered in England number 90776.

Glossary

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