io l f t r o y t r e r m p rospectus m &g property...

Prospectus M&G Property Portfolio

M&G Property Portfolio

Issued by M&G Securities Limited 2 April 2018

2

This document constitutes the prospectus for the M&G Property Portfolio(the ‘Company’) which has been prepared in accordance with the Open-Ended Investment Companies Regulations 2001 and the rules contained inthe Collective Investment Schemes Sourcebook published by the FCA aspart of its Handbook ofRules and Guidance.

This prospectus is dated and is valid as at 2 April 2018

Copies of this prospectus have been sent to the Financial Conduct Authorityand National Westminster Bank Plc as Depositary.

The prospectus is based on information, law and practice at the date hereofbut where it refers to any statutory provision or regulation this includes anymodification or re-enactment that has been made. The Company is notbound by any out of date prospectus when it has issued a new prospectusand potential investors should check that they have the most recentlypublished prospectus.

M&G Securities Limited, the Authorised Corporate Director of the Company,is the person responsible for the information contained in this prospectus. Tothe best of its knowledge and belief (having taken all reasonable care toensure that such is the case) the information contained in this documentdoes not contain any untrue or misleading statement or omit any mattersrequired by the Regulations to be included in it. M&G Securities Limitedaccepts responsibility accordingly. No person has been authorised by theCompany to give any information or to make any representations inconnection with the offering of Shares other than those contained in theprospectus and, if given or made, such information or representations mustnot be relied on as having been made by the Company. The delivery of thisprospectus (whether or not accompanied by any reports) or the issue ofShares shall not, under any circumstances, create any implication that theaffairs of the Company have not changed since the date of this prospectus.

The distribution of this prospectus and the offering of Shares in certainjurisdictions may be restricted. Persons into whose possession thisprospectus comes are required by the Company to inform themselves aboutand to observe any such restrictions. This prospectus does not constitute anoffer or solicitation by anyone in any jurisdiction in which such offer orsolicitation is not authorised or to any person to whom it is unlawful to makesuch offer or solicitation.

Warning: the contents of this document have not been reviewed by anyregulatory authority in Hong Kong. You are advised to exercise cautionin relation to this offer. If you are in any doubt about the contents of thisdocument you should obtain independent professional advice. Inparticular, no interest in the Company will be issued to any person other thanthe person to whom this document is addressed. In addition, (a) no offer orinvitation to subscribe for Shares in the Company may be made to the publicin Hong Kong; and (b) this document has not been approved by theSecurities and Futures Commission in Hong Kong or any other regulatoryauthority in Hong Kong and accordingly interests in the Company may notbe offered or sold in Hong Kong by means of this document, other than incircumstances which do not constitute an offer to the public for the purposesof the Hong Kong Companies Ordinance and the Hong Kong Securities andFutures Ordinance, as amended from time to time.

Shares in the Company are not listed on any investment exchange.

Potential investors should not treat the contents of this prospectus as advicerelating to legal, taxation, investment or any other matters and arerecommended to consult their own professional advisers concerning theacquisition, holding or disposal of Shares.

The provisions of the Instrument of Incorporation are binding on each of itsShareholders (who are taken to have notice of them).

This prospectus has been approved for the purpose of section 21(1) of theFinancial Services and Markets Act 2000 by M&G Securities Limited.

The Depositary is not a person responsible for the information contained inthis prospectus and accordingly does not accept any responsibility thereforeunder the Regulations or otherwise.

If you are in any doubt about the contents of this prospectus you shouldconsult your professional adviser.

Prospectus


PAIF/29092017/ENG/r01

3

Definitions 4

Operating Structure and Details 61 The Company 6

2 Company structure 6

3 Classes of Share 6

4 Management and administration 6

5 The Depositary 7

6 The Investment Manager 7

8 Administrator and Registrar 7

9 The Auditor 7

10 The Standing Independent Valuer 7

11 Register of Shareholders 8

12 Fund Accounting and Pricing 8

13 Collateral Management 8

14 Conflicts of Interest 8

15 Buying and selling Shares 8

16 Buying Shares 8

17 Selling Shares 9

18 Switching and Converting Shares 10

19 Dealing charges 10

20 Other dealing information 11

21 Suspension of dealings in the Company 12

22 Money laundering 12

23 Governing law 13

24 Valuation of the Company 13

25 Calculation of the Net Asset Value 13

26 Prices per Share in each Class 15

27 Pricing basis 15

28 Publication of prices 15

29 Risk factors 15

30 Charges and Expenses 15

31 Stocklending 17

32 Investment Accounting Fee 17

33 Shareholder meetings and voting rights 17

34 Taxation 18

35 Tax reporting 19

36 Income equalisation 19

37 Winding up of the Company 20

38 Accounting periods 20

39 Income allocations 20

40 Annual Reports 20

41 Documents of the Company 21

42 Risk Management and other information 21

43 Notices 21

44 Fair Treatment of Investors 21

45 Preferential Treatment 21

46 Complaints 21

47 Marketing outside the UK 21

48 Genuine diversity of ownership 22

49 Remuneration policy 22

50 Insurance 22

51 Professional Liability 22

52 Changes to the Funds 22

53 Rights against service providers 22

54 Risk factors 23

54 Risk factors 24

Appendix 1 – 25Details of the M&G Property Portfolio

Appendix 2 – 26Investment management and borrowing powers of the Company

Appendix 3 – 36Eligible markets

Appendix 4 – 37Performance bar charts and graphs

Appendix 5 – 38Other collective investment schemes of the ACD

Appendix 6 – 39List of Sub-Custodians

Directory 41

Contents


PAIF/29092017/ENG/r01

Customer Helpline: 0800 390 390

4

Accumulation Share: a Share in the Company in respect of which incomeallocated thereto is credited periodically to capital pursuant to theRegulations;

ACD: M&G Securities Limited, the Authorised Corporate Director of theCompany;

ACD Agreement: the agreement entered into between the Company and theACD authorising the ACD to manage the affairs of the Company;

AIF: refers to an alternative investment fund and has the same meaning aslisted in the glossary to the FCA Rules.

AIFM: refers to an alternative investment fund manager and has the samemeaning as listed in the glossary to the FCA Rules.

AIFMD: refers to the Alternative Investment Fund Managers Directive(2011/61/EU) and has the same meaning as listed in the glossary to the FCARules.

Approved Bank in relation to a bank account opened by the Company:

(a) if the account is opened at a branch in the United Kingdom;

(i) the Bank of England; or

(ii) the central bank of a member state of the OECD; or

(iii) a bank or a building society; or

(iv) a bank which is supervised by the central bank or otherbanking regulator of a member state of the OECD; or

(b) if the account is opened elsewhere:

(i) a bank in (a); or

(ii) a credit institution established in an EEA State other than inthe United Kingdom and duly authorised by the relevanthome state regulator; or

(iii) a bank which is regulated in the Isle of Man or the ChannelIslands; or

(c) a bank supervised by the South African Reserve Bank; or,

(d) any other bank that:

(i) is subject to regulation by a national banking regulator;

(ii) is required to provide audited accounts;

(iii) has minimum net assets of £5 million (or its equivalent in anyother currency at the relevant time) and has a surplusrevenue over expenditure for the last two financial years;and

(iv) has an annual audit report which is not materially qualified

Associate: an associate in accordance with the FCA Handbook of Rules andGuidance;

Base Currency: the base currency of the Company is Sterling;

Body Corporate: a body corporate incorporated in any jurisdiction (includingthe UK) or any entity treated as a body corporate for tax purposes in anyjurisdiction with which the UK has any form of double tax treaty or otheragreement to relieve double tax which has effect under the UK’s taxlegislation by Order in Council;

BCD Credit Institution: a credit institution under the Banking ConsolidationDirective;

Class or Classes: in relation to Shares, means (according to the context) all ofthe Shares related to the Company or a particular class or classes of Sharerelated to the Company;

COLL: refers to the appropriate chapter or rule in the COLL Sourcebookissued by the FCA;

COLL Sourcebook: the Collective Investment Schemes Sourcebook issued bythe FCA as amended or re-enacted from time to time;

Client Account: a bank account held by us in accordance with the FCAHandbook of Rules and Guidance;

Company or Fund:M&G Property Portfolio;

Dealing Day: Monday to Friday except for bank holidays in England andWales and other days at the ACD’s discretion;

Dealing Price: each price at which an instruction to purchase or redeemShares is carried out being the offer and bid prices respectively;

Depositary: National Westminster Bank Plc, the depositary of the Company;

Efficient Portfolio Management: means the use of techniques andinstruments which relate to transferable securities and approved money-market instruments and which fulfil the following criteria:

(a) they are economically appropriate in that they are realised in acost effective way; and

(b) they are entered into for one or more of the following specific aims:

- reduction of risk;

- reduction of cost;

- generation of additional capital or income for the scheme with a risk levelwhich is consistent with the risk profile of the scheme and the riskdiversification rules laid down in COLL

Eligible Institution: one of certain eligible institutions being a BCD creditinstitution authorised by its home state regulator or an Investment Firmauthorised by its home state regulator as defined in the glossary of definitionsin the FCA Handbook;

Feeder Fund: the M&G Feeder of Property Portfolio;

Fraction: a smaller denomination Share (on the basis that one thousandsmaller denomination Shares make one larger denomination Share);

FCA: the Financial Conduct Authority;

Income Share: a Share in the Company in respect of which income allocatedthereto is distributed periodically to the holders thereof pursuant to theRegulations;

Instrument of Incorporation: the instrument of incorporation of the Companyas amended from time to time;

Investment Manager:M&G Investment Management Limited;

Intermediate Unitholder: a firm whose name is entered in the register of theCompany, or which holds Shares indirectly through a third party acting as anominee, and which:

(a) is not the beneficial owner of the relevant Share; and

(b) does not manage investments on behalf of the relevant beneficialowner of the Share; or

(c) does not act as a depositary of a collective investment scheme oron behalf of such a depositary in connection with its role in holdingproperty subject to the scheme;

Investment Firm: an investment firm that provides investment services asdefined in the glossary of definitions in the FCA handbook;

ISA: an individual savings account under the Individual Savings AccountRegulations 1998 (SI 1998/1870 as amended from time to time);

mainly: within the investment objective, an amount greater than 70%;

Member State: those countries which are members of the European Unionor the European Economic Area at any given time;

Net Asset Value or NAV: the value of the Scheme Property of the Companyless the liabilities of the Company as calculated in accordance with theCompany’s Instrument of Incorporation;

PAIF: an open-ended investment company which is a Property AuthorisedInvestment Fund as defined in Part 4A of the Tax Regulations;

Property Assets: the Company’s immovable property investments as definedin the FCA Regulations;

Property Investment Business: as defined in the Tax Regulations, andsummarised in Appendix 2;

Property Manager:M&G Real Estate Limited;

the Regulations: the Open-Ended Investment Companies Regulations 2001and the rules contained in the COLL Sourcebook;

Definitions


PAIF/29092017/ENG/r01

5

Scheme Property: the property of the Company to be given to the Depositaryfor safekeeping, as required by the Regulations;

Share or Shares: a share or shares in the Company (including largerdenomination Shares and Fractions);

Shareholder: a holder of a registered Share in the Company;

Standing Independent Valuer: Knight Frank LLP;

Tax Regulations: the Authorised Investment Funds (Tax) Regulations 2006(SI 2006/964), as amended from time to time;

XD date: the XD (or Ex-Dividend) date is the date on which the income isremoved from the price of an Income Share pending the payment of adistribution.

Definitions


PAIF/29092017/ENG/r01

6

Prospectus


PAIF/29092017/ENG/r01

Operating Structure and Details

1 The Company

1.1 M&G Property Portfolio is an Open-Ended Investment Companywith variable capital, incorporated in England and Wales underregistered number IC000952 and authorised by the FinancialConduct Authority with effect from 16 October 2012. The Companyhas been established for unlimited duration.

1.2 The Company is a non-UCITS Retail Scheme. The Companyqualifies as a PAIF for tax purposes and an AIF for the purposes ofAIFMD.

1.3 The Head Office of the Company is at Laurence Pountney Hill,London EC4R 0HH and is also the address of the place in theUnited Kingdom for service on the Company of notices or otherdocuments required or authorised to be served on it.

1.4 The base currency of the Company is pounds sterling.

1.5 The maximum share capital of the Company is currently£250,000,000,000 and the minimum is £100. Shares in theCompany have no par value and therefore the share capital of theCompany at all times equals the Company’s current Net AssetValue.

1.6 Shareholders in the Company are not liable for the debts of theCompany.

2 Company structure

2.1 The investment objective, investment policy and other details of theCompany are set out in Appendix 1. The investment and borrowingpowers under the COLL Sourcebook applicable to the Companyare set out in Appendix 2 and the eligible markets on which theCompany can invest are set out in Appendix 3.

3 Classes of Share

3.1 Several Share Classes may be issued in respect of the Company.The Instrument of Incorporation allows gross Income and grossAccumulation Shares to be issued as well as net Income and netAccumulation Shares. Net Shares are Shares in respect of whichincome allocated to them is distributed periodically to the relevantShareholders (in the case of income Shares) or creditedperiodically to capital (in the case of Accumulation Shares), in eithercase in accordance with relevant tax law net of any tax deducted oraccounted for by the Company. Gross Shares are Income orAccumulation Shares where, in accordance with relevant tax law,distribution or allocation of income is made without any UK incometax being deducted or accounted for by the Company.

The Share Classes in issue are shown in Appendix 1.

3.2 The Company may make available such further Classes of Shareas the ACD may decide.

3.3 Holders of Income Shares are entitled to be paid the incomeattributed to such Shares on the relevant interim and annualallocation dates either gross or net of tax, as appropriate. The priceof such Shares immediately after the end of an accounting periodreduces to reflect these allocations of income.

3.4 Holders of Accumulation Shares are not entitled to be paid theincome attributable to such Shares but that income is automaticallytransferred to (and retained as part of) the capital assets of theCompany immediately after the relevant interim and / or annualaccounting dates. The price of such Shares continues to reflect thisretention of the income entitlement, which will be transferred eithergross or after deduction of applicable tax, as appropriate.

3.5 Where the Company has different Classes of Share available, eachClass may attract different charges and expenses and so moniesmay be deducted from Classes in unequal proportions. For this and

like reasons, the proportionate interests of the Classes within theCompany will vary from time to time.

3.6 Holders of Income Shares may convert all or some of their Sharesto Accumulation Shares of the same Class, and holders ofAccumulation Shares may convert all or some of their Shares toIncome Shares of the same Class. Details of this conversion facilityare set out in paragraph 18 of this document.

3.7 Sterling Class R Shares will be available only to IntermediateUnitholders or where the deal has been arranged by a financialadviser.

3.8 Sterling Class F Shares are available only to the Feeder Fund.

4 Management and administration

4.1 Authorised Corporate Director

4.1.1 The Authorised Corporate Director of the Company is M&GSecurities Limited which is a private company limited byshares incorporated in England and Wales under theCompanies Acts 1862 to 1900 on 12 November 1906. Theultimate holding company of the ACD is Prudential plc, acompany incorporated in England and Wales. M&GSecurities Limited is authorised by the FCA as a full scopeAIFM. The FCA reference number for M&G SecuritiesLimited is 122057.

4.1.2 Registered office and head office:

Laurence Pountney Hill, London EC4R 0HH.

Share capital:

Authorised £100,000

Issued and paid-up £100,000

Directors:

Mr Gary Cotton,

Mr Philip Jelfs,

Mr Graham MacDowall,

Mr Laurence Mumford,

Mr Neil Donnelly.

All of the directors have significant business activities whichare not connected to those of the ACD but of othercompanies within the M&G Group.

4.1.3 The ACD is responsible for managing and administeringthe Company’s affairs in compliance with the Regulations.Other collective investment schemes for which the ACDhas these responsibilities are set out in Appendix 5.

4.2 Terms of appointment

4.2.1 The ACD Agreement provides that the appointment of theACD is for an initial period of three years and thereaftermay be terminated upon 12 months written notice by eitherthe ACD or the Company although in certaincircumstances the agreement may be terminated forthwithby notice in writing by the ACD to the Company or theDepositary, or by the Depositary or the Company to theACD. The ACD cannot be replaced until the FCA hasapproved the appointment of another director in place ofthe retiring ACD. The ACD Agreement may be inspected atthe offices of the ACD during normal business hours by anyShareholder or any Shareholder’s duly authorised agent.Alternatively, a copy of the ACD Agreement may be sent toany Shareholder at his request within 10 days of theCompany’s receipt of such request.

4.2.2 The ACD is entitled to its pro rata fees and expenses to thedate of termination and any additional expensesnecessarily realised in settling or realising any outstanding

7

obligations. No compensation for loss of office is providedfor in the agreement. The ACD Agreement providesindemnities by the Company to the ACD other than formatters arising by reason of the ACD’s negligence, default,breach of duty or breach of trust in the performance of theACD’s duties and obligations.

4.2.3 The ACD is under no obligation to account to theDepositary or the Shareholders for any profit it makes onthe issue or re-issue of Shares or cancellation of Shareswhich it has redeemed. The fees to which the ACD isentitled are set out in paragraph 29.

5 The Depositary

National Westminster Bank Plc is the Depositary of the Company.The Depositary is a public limited company incorporated in Englandand Wales. Subject to the Regulations the Depositary isresponsible for the safekeeping of the property of the Companyentrusted to it and has a duty to take reasonable care to ensure thatthe Company is managed in accordance with the provisions of theCOLL Sourcebook relating to the pricing of, and dealing in, Sharesof the Company and to the allocation of the income of the Company.The appointment of the Depositary was made under an agreementbetween the Company, the ACD and the Depositary.

5.1 Registered office:

135 Bishopsgate, London, EC2M 3UR

5.2 Head office:

135 Bishopsgate, London, EC2M 3UR

5.3 Ultimate holding company:

The Royal Bank of Scotland Group plc.

5.4 Principal business activity:

The principal business activity of the Depositary is banking.

5.5 Terms of appointment:

5.5.1 The Depositary provides its services under the terms of adepositary agreement between the Company and theDepositary (the ‘Depositary Agreement’). Subject to theRegulations, the Depositary has full power under theDepositary Agreement to delegate (and authorise its sub-delegates to sub-delegate) all or any part of its duties asDepositary.

5.5.2 The Depositary Agreement may be terminated by threemonths notice given by either the Company or theDepositary, provided that the Depositary may notvoluntarily retire except on the appointment of a newDepositary.

5.5.3 The Depositary Agreement contains indemnities by theCompany in favour of the Depositary against (other than incertain circumstances) any liability incurred by theDepositary as a consequence of its safe keeping of any ofthe Scheme Property or incurred by it as a consequence ofthe safe keeping of any of the Scheme Property by anyoneretained by it to assist it to perform its functions of the safekeeping of the Scheme Property and also (in certaincircumstances) exempts the Depositary from liability.

5.5.4 The Depositary is entitled to the fees, charges andexpenses detailed under ‘Depositary’s Fee, Charges andExpenses’ in paragraph 32.

5.5.5 The Depositary has appointed firms of solicitors inappropriate jurisdictions to act as custodians of theProperty Assets.

5.5.6 The Depositary has appointed State Street Bank and TrustCompany to act as custodian of the non-Property Assets.The relevant arrangements prohibit State Street Bank andTrust Company as such custodian from releasing

documents of title into the possession of a third partywithout the consent of the Depositary.

6 The Investment Manager

The ACD has appointed M&G Investment Management Limited(“MAGIM”) to provide investment management and advisoryservices in respect of the Company. The Investment Manager hasauthority to make decisions on behalf of the Company and the ACDin respect of the acquisition and disposal of property and to advisein respect of the rights associated with the holding of such property.The Investment Manager has been appointed under an agreementbetween the ACD and the Investment Manager whereby the ACDaccepts responsibility for all these services provided by theInvestment Manager to the Company. The investmentmanagement agreement may be terminated on six months writtennotice by the Investment Manager or the ACD, or immediately if theACD believes this is in the best interests of Shareholders.

The Investment Manager’s principal activity is acting as aninvestment manager and it is an Associate of the ACD by being asubsidiary of Prudential plc.

7.1 The Property Manager

The ACD has appointed M&G Real Estate Limited (“M&G RealEstate”) to act as property manager and undertake theimplementation of certain activities in respect of Property Assets.These include, but are not limited to, the implementation ofinvestment transactions, the formulation and implementation ofasset strategies, development and project management investmentbrokerage, accounting and financial reporting, and the appointmentand direction of specialist advisers and consultants. M&G RealEstate will also be responsible for the day to day management ofthe Property Assets, including collection of rents and otherpayments and payments of revenue expenses and for all leasingactivity in respect of the Property Assets. M&G Real Estate maydelegate these activities to specialist advisers. . M&G Real Estateapplies its Responsible Property Investment policy to PropertyAssets, and periodically agrees its strategy for the Company withthe ACD. The strategy sets out the responsible property investmentobjectives for the Company which seek to ensure that responsibleproperty investing is considered throughout the investment processincluding at acquisition, annual asset planning and budget setting,property management, and occupier engagement. The Company’sannual report includes a commentary on the Responsible PropertyInvestment strategy.

7.2 On occasion, M&G Real Estate may receive a fee for arranging thebuying or selling of Property Assets. M&G Real Estate is under noobligation to account to the Depositary or the Shareholders for anyprofit it makes on any transaction in Property Assets or the servicesthat it supplies to the Company.

8 Administrator and Registrar

The ACD employs DST Financial Services Europe Limited (‘DST’)to provide certain administration services and act as registrar to theCompany.

9 The Auditor

9.1 The auditor of the Company is Ernst & Young LLP of Atria One, 144Morrison Street, Edinburgh, EH3 8EX, United Kingdom.

9.2 The Auditors shall, with respect to the assets of the Company, carryout their duties in accordance with all applicable laws, rules andregulations, including the audit of the accounting informationcontained in the annual report of the Company.

10 The Standing Independent Valuer

The ACD has, with the approval of the Depositary, appointed KnightFrank LLP to act as the Company’s standing independent valuer tovalue the Property Assets as described under clause 25.

Prospectus


PAIF/29092017/ENG/r01

8

The Standing Independent Valuer must value all Property Assetsheld within the Scheme Property:

(i) on the basis of a full valuation with physical inspection (including,where the property is or includes a building, internal inspection), atleast once a year;

(ii) on the basis of a review of the last full valuation, at least once amonth; and,

(iii) by providing a valuation report prior to the purchase of aProperty Asset, except where circumstances require the valuationreport to be provided by an alternate appropriate valuer.

Knight Frank LLP are one of the largest surveying and real estateconsultants in the UK and their appointment is governed by therules of the Royal Institution of Chartered Surveyors, in particularthe Appraisal and Valuation Standards, as amended from time totime.

11 Register of Shareholders

The Register of Shareholders is maintained by DST at its office atDST House, St Nicholas Lane, Basildon, Essex SS15 5FS and maybe inspected at that address during normal UK business hours byany Shareholder or any Shareholder’s duly authorised agent.

12 Fund Accounting and Pricing

The ACD has appointed State Street Bank and Trust Company toundertake the fund accounting and pricing functions on behalf ofthe Company.

13 Collateral Management

Where the Company enters into OTC (Over The Counter)derivative transactions, JPMorgan Chase Bank, N.A. will provideadministrative services in connection with the collateralmanagement functions.

14 Conflicts of Interest

The ACD, the Depositary, the Investment Manager, the propertymanager and the standing independent valuer are or may beinvolved in other financial, investment and professional activitieswhich may, on occasion, cause conflicts of interest in themanagement of the Company. In addition, the Company may enterinto transactions at arm’s length with companies in the same groupas the ACD.

The Depositary may, from time to time, act as depositary of otherfunds.

Each of the parties will, to the extent of their ability and incompliance with the FCA Regulations, ensure that the performanceof their respective duties will not be impaired by any suchinvolvement.

15 Buying and selling Shares

15.1 The address for postal dealing is P.O. Box 9039, Chelmsford, CM992XG. Telephone deals can be placed between 8.00 am and 6.00pm UK time on each Dealing Day (except for Christmas Eve andNew Year’s Eve when the office closes early) for the sale andredemption of Shares. Subject to paragraphs 17.2 and 20.6.5,deals will be effected at prices determined at the next valuationpoint following receipt of the request, i.e. on a forward pricing basis.Requests may be made by post, telephone or any electronic orother means which the ACD may from time to time determine,either directly or via an authorised intermediary. Prices arecalculated every Dealing Day at the valuation point (12.00 noon UKtime).

15.2 Subject to paragraphs 17.2 and 20.6.5, postal deals received at ourpostal dealing address and requests communicated by othermeans to the ACD before the valuation point will be dealt with at theprice calculated on that Dealing Day; subject to 15.3, 17.2 and

20.6.5, requests received after the valuation point will be dealt withat the prices calculated on the next following Dealing Day.

15.3 Dealing requests received from the Feeder Fund on a Dealing Dayafter the valuation point but before 16.00 UK time, or such othertime as may be stipulated by the ACD and the Depositary, may stillbe accepted by the ACD and dealt with at the price calculated onthat Dealing Day.

16 Buying Shares

16.1 Procedure for investors in Sterling Share Classes

16.1.1 On any given Dealing Day the ACD will be willing to sellShares of at least one Class in the Company. Shares canbe bought as a lump sum investment.

16.1.2 Postal applications must be made on application formsobtained from the ACD. Alternatively, lump sum investmentcan be made under approved circumstances bytelephoning M&G’s Customer Dealing Line 0800 328 3196between 8.00am and 6.00pm UK time on Dealing Days orby visiting the ACD’s website: www.mandg.co.uk.

16.1.3 The ACD has the right to reject, on reasonable groundsrelating to the circumstances of the applicant, anyapplication for Shares in whole or part, and in this event theACD will return any money sent, or the balance of suchmonies, at the risk of the applicant. The ACD may alsocancel any previously accepted request for the issue ofShares in the event of either non-payment of the amountdue or undue delay in payment by the applicant, includingthe non-clearance of cheques or other documentspresented in payment.

16.1.4 The ACD also has the right to reject an application forShares of any amount if, with the agreement of theDepositary, it deems the transaction not to be in the bestinterests of the Shareholders.

16.1.5 Any subscription monies remaining after a whole numberof Shares has been issued may not be returned to theapplicant. Instead, Fractions may be issued in suchcircumstances. A Fraction is equivalent to one thousandthof a larger denomination Share.

16.1.6 Where Accumulation Shares are not issued, a Shareholdermay choose to have their distributions automatically re-invested in the Company. Shares purchased withreinvested distributions are bought at the price calculatedon the re-investment day, which falls fourteen days beforethe date on which the distribution is paid.

16.1.7 Shares may be registered in the joint names of up to fourindividuals. Shares bought for a minor’s benefit areregistered in an adult’s name and may also be designatedby the addition of the minor’s initials after the adult’s name.

16.1.8 Sterling Class R Shares are available only to IntermediateUnitholders or where the deal has been arranged by afinancial adviser.

16.1.9 Sterling Class F Shares are available only to the FeederFund.

16.2 Documentation

16.2.1 A contract note giving details of the Shares purchased andthe price used will be issued by the end of the business dayfollowing the valuation point by reference to which the priceis determined, together with, where appropriate, a notice ofthe applicant’s right to cancel.

16.2.2 Payment for Shares purchased by post must accompanythe application; until 20 November 2015 payment forShares purchased by other means must be made by nolater than four business days, and thereafter three

Prospectus


PAIF/29092017/ENG/r01

9

business days, after the valuation point following receipt ofthe instructions to purchase.

16.2.3 Currently Share certificates will not be issued in respect ofShares. Ownership of Shares will be evidenced by an entryon the Company’s Register of Shareholders. Statements inrespect of periodic allocations of income of the Companywill show the number of Shares held by the recipient in theCompany in respect of which the allocation is made.Individual statements of a Shareholder’s Shares will alsobe issued at any time on request by the registered holder(or, when Shares are jointly held, the first named holder).

16.3 Minimum subscriptions and holdings

16.3.1 The minimum initial lump sum subscriptions for Shares andthe minimum holding in the Company are set out inAppendix 1.

16.3.2 The ACD may at its discretion accept subscriptions forlower than the minimum amounts.

16.3.3 If at any time a Shareholder’s holding is below the specifiedminimum, the ACD reserves the right to sell the Shares andsend the proceeds to the Shareholder or at its absolutediscretion convert the Shares to another Share Classwithin the same Company.

16.4 Limited Issue Arrangements

16.4.1 The ACD reserves the right to limit the issue of any Sharesin circumstances where the liquidity within the Company isdeemed to be detrimental to the Company’s performance.

16.4.2 In such circumstances, the ACD may still issue Shareswhere the proceeds of that issue can be invested withoutcompromising the Company’s objective or materiallyprejudicing existing Shareholders, such as on thereinvestment of distribution income, or the investment ofregular contributions received by the ACD or an Associate.

16.4.3 The Manager will return any cheques and applicationforms received whilst the limited issue provision is in force.

16.5 Bodies Corporate and Nominees acquiring Shares

16.5.1 Bodies Corporate (excluding nominees acquiring Shares)that wish to invest in the Company may do so indirectlythrough the Feeder Fund.

16.5.2 The ACD permits investment in the Company by BodiesCorporate (whether or not through a custody or nomineearrangement) but only if the Body Corporate in questioncertifies that it holds:

16.5.2.1 all the Shares as beneficial owner; or

16.5.2.2 some or all of the Shares on behalf of oneor more other Bodies Corporate, in whichcase it must further certify that:

16.5.2.2.1 its own interest (if any) is less than 8% ofthe NAV;

16.5.2.2.2 the interest of each beneficial owner forwhich it holds Shares is less than 8% of theNAV; and

16.5.2.2.3 each of the other Bodies Corporate hasgiven the undertakings described in 16.5.3or 16.5.4 (as appropriate).

16.5.3 Any Body Corporate that acquires Shares and holds themother than as beneficial owner must undertake to discloseto the ACD the names and Shareholding of each BodyCorporate on whose behalf it is holding Shares.

16.5.4 Any Body Corporate that acquires Shares as beneficialowner (whether the Shares are registered in its name orthe name of a nominee or other person) must give thefollowing undertakings:

16.5.4.1 not to acquire 8% or more of the NAV; and,

16.5.4.2 on becoming aware that it has acquired orholds 8% or more of the NAV, to reduce itsholding to 6% or less of the NAV.

16.5.5 In the event that a Body Corporate is close to reaching the8% investment limit but wishes to remain invested in theCompany, it should contact the ACD with a view toswitching its Shares in the Company for units in the FeederFund.

17 Selling Shares

17.1 Procedure for investors in Sterling Share Classes

17.1.1 Subject to clauses 17.2 and 17.4 Shareholders have theright to sell Shares back to the ACD or require that the ACDarranges for the Company to buy their Shares on anyDealing Day unless the value of Shares which aShareholder wishes to sell will mean that the Shareholderwill hold Shares with a value less than the requiredminimum holding for the Company, in which case theShareholder may be required to sell the entire holding.

17.1.2 Requests to sell Shares may be made by post, telephone,or any electronic or other means which the ACD may fromtime to time determine, either directly or via an authorisedintermediary; the ACD may require telephonic or electronicrequests to be confirmed in writing.

17.2 Limited Redemption Arrangements

17.2.1 In order to protect the liquidity of the Company, requests forredemptions of Sterling Class D Shares are subject to anotice period. Redemption requests received by thevaluation point on a particular business day will beredeemed at the price calculated at the valuation point onthe first business day after 90 days from the date of receiptof the redemption request.

17.2.2 At its absolute discretion, the ACD may waive the relevantnotice period (in whole or in part) provided that there issufficient liquidity in the Company and provided that itensures that all redemption requests for Sterling Class DShares are completed in the order in which they arereceived.

17.2.3 Once a redemption request is submitted it cannot bewithdrawn or cancelled unless the ACD agrees to suchwithdrawal or cancellation.

17.3 Documents the seller will receive

17.3.1 A contract note giving details of the Shares sold and theprice used will be sent to the selling Shareholder (the firstnamed, in the case of joint Shareholders) or to anauthorised agent not later than the end of the business dayfollowing the valuation point by reference to which the priceis determined. Subject to paragraph 17.2 and 20.6.5, until20 November 2015, payment of proceeds will be made nomore than four business days and thereafter threebusiness days, after the later of:

• receipt by the ACD, when required, of sufficientwritten instructions duly signed by all the relevantShareholders and completed as to the appropriatenumber of Shares, together with any otherappropriate evidence of title; and

• the valuation point following receipt by the ACD ofthe request to sell.

17.3.2 The requirement for sufficient written instructions isnormally waived if all the following conditions are met:

• dealing instructions are given by the registeredholder in person;

Prospectus


PAIF/29092017/ENG/r01

10

• the holding is registered in a sole name;

• the sale proceeds are to be made payable to theregistered holder at their registered address, whichhas not changed within the previous 30 days; and

• the total amount payable in respect of sales by thatholder on one business day does not exceed£20,000.

17.4 Minimum redemption

Subject to the Shareholder maintaining the minimum holding statedin this prospectus, part of a Shareholder’s holding may be sold butthe ACD reserves the right to refuse a request to sell Shares if thevalue of the Class of Shares of the Company is less than the sumspecified in Appendix 1.

18 Switching and Converting Shares

18.1 Holders are entitled (subject to the restrictions described inparagraphs 16, 17 and 20.6.5, but excluding paragraph 17.2.2) toconvert all or part of their Shares in a Class for Shares in anotherClass in the Company provided they are eligible to hold Shares ofthat Class. Requests to convert between Share Classes must besubmitted using the appropriate form available from the ACD.Instructions to convert between Share Classes will be executedwithin three Dealing Days of receipt of a valid instruction, exceptwhere a Shareholder is requesting to convert out of Class D Sharesinto another Share Class (for example, Class I Shares). In this case,instructions to convert to another Share Class will be executed nosooner than 90 days after receipt of a valid instruction. The numberof new Shares issued will be determined by reference to therespective prices of new Shares and old Shares. These respectiveprices are calculated net of income tax. The impact of using netprices is that a conversion of Shares from one Class to anotherClass with a lower ACD’s annual remuneration (see Appendix 1) isthat the Company’s total tax charge will increase and this increasewill be borne by all Shareholders in the receiving Share Class. Thisapproach has been agreed with the Depository subject to the totalimpact to Shareholders being immaterial. Where the ACDdetermines at its absolute discretion that Share Class conversionsare materially prejudicial to the Shareholders of a Share Class,instructions to convert between Share Classes will only beexecuted on the Dealing Day following the relevant sub-fund’s XDdate. In such circumstances, instructions to convert between ShareClasses must be received by the ACD no sooner than ten businessdays before the sub-fund’s relevant XD date All conversions may besubject to a fee (see paragraph 19.3). For persons subject to UKtaxation, under current HM Revenue & Customs practice this willnot be a realisation for the purposes of capital gains taxation.

18.2 Where available, and at the discretion of the ACD, holders areentitled (subject to the restrictions described in paragraphs 16, 17and 20.6.5) to switch all or part of their Shares for units in theFeeder Fund provided they are eligible to hold those units. Thenumber of new units issued will be determined by reference to therespective prices of new units and old Shares at the valuation pointapplicable at the time the old Shares are repurchased and the newunits are issued. Such switches may be subject to a fee (seeparagraph 19.3). For persons subject to UK taxation, under currentHM Revenue & Customs rules this will not be a realisation for thepurposes of capital gains taxation.

18.3 Conversions of Income Shares to Accumulation Shares and ofAccumulation Shares to Income Shares of the same Class areundertaken by reference to the respective Share prices. Forpersons subject to UK taxation, under current HM Revenue &Customs practice this will not be a realisation for the purposes ofcapital gains taxation.

19 Dealing charges

19.1 Initial charge

The ACD may impose a charge on the buying of Shares. Thischarge is included in the price of Shares purchased. The currentlevel in relation to the Company is set out in Appendix 1 and isexpressed as a percentage of the subscription amount. The chargeis subject to discounts that the ACD at its absolute discretion mayapply from time to time. Increases from the current rates of chargecan only be made in accordance with the COLL Sourcebook andafter the ACD has revised the prospectus to reflect the increasedrate.

19.2 Redemption charge

19.2.1 The ACD may make a charge on the cancellation andredemption (including transfer) of Shares. Other Sharesissued and bought, and persons known to the ACD to havemade arrangements for the regular purchase of otherShares while this prospectus is in force, will not be subjectto any redemption charge introduced in the future inrespect of those Shares. Currently, those Shares deemedto carry a redemption charge will carry a reducingredemption charge calculated in accordance with the tablebelow. With Accumulation Shares, where any income isreinvested back into the share price, the valuation whencalculating a redemption will include the capital incrementassociated with this reinvested income. In relation to theimposition of a redemption charge as set out above, whereShares of the Class in question have been purchased atdifferent times by a redeeming Shareholder, the Shares tobe redeemed shall be deemed to be the Shares whichincur the least cost to the Shareholder and thereafter theShares purchased first in time by that Shareholder.

Redemption charge table

The deduction from the mid value for redemption beforethe following anniversaries on the Sterling Class X Incomeand Accumulation Shares would be:

1st year 4.5%

2nd year 4.0%

3rd year 3.0%

4th year 2.0%

5th year 1.0%

Thereafter Nil

19.2.2 The ACD may not introduce or increase a redemptioncharge on Shares unless:

19.2.2.1 the ACD has complied with the Regulationsin relation to that introduction or change;and

19.2.2.2 the ACD has revised the prospectus toreflect the introduction or change and thedate of its commencement and has madethe revised prospectus available.

19.2.3 In the event of a change to the rate or method of calculationof a redemption charge, details of the previous rate ormethod of calculation will be available from the ACD.

19.3 Switching and conversion fee

19.3.1 On the switching or conversion of Shares the ACDreserves the right to impose a fee. The fee will not exceedan amount equal to the aggregate of the then prevailingredemption charge (if any) in respect of Shares sold andthe initial charge (if any) in respect of new Shares (or units)and is payable to the ACD.

Prospectus


PAIF/29092017/ENG/r01

11

20 Other dealing information

20.1 Large Deal Provision

20.1.1 Where a person places a deal or series of deals that totalin excess of £50,000 for the same valuation point, theDealing Price may be calculated on a different basis fromthe usual Dealing Price. The ACD seeks to apply thispricing mechanism (the Large Deal Provision or “LDP”) tothe minimum number of deals possible to reduce thevolatility of prices. The process for deciding whether or notto apply the LDP (and how this is communicated tocustomers) depends on how and when dealing instructionsare received.

20.1.2 Instructions received electronically are subject to the LDPat the discretion of the ACD based on information availableat the valuation point. As a result, the ACD will not advise aperson dealing electronically that the LDP has beenapplied to their instruction in advance of the valuation point.

20.1.3 Instructions received by telephone will be assessed by theACD at the time the instruction is received based upon thedealing information available to the ACD at the time.Persons placing large deals by telephone will be advisedimmediately whether the ACD will apply the LDP.

20.1.4 Instructions received by fax will be subject to the LDP at thediscretion of the ACD based on information available to theACD at the time the instruction becomes known to it.Where the ACD intends to apply the LDP to an instructionplaced by fax, the ACD will attempt to contact the personplacing the deal prior to the valuation point on a reasonableendeavours basis to let them now that the LDP will beapplied.

20.1.5 Instructions received by post will be subject to the LDP atthe discretion of the ACD based on information available atthe time the instruction becomes known to it. Where theACD intends to apply the LDP to an instruction placed bypost, the ACD will attempt to contact the person placing thedeal prior to the valuation point on a reasonableendeavours basis to let them now that the LDP will beapplied.

20.1.6 Persons contacted by the ACD prior to the valuation pointwill be given the option of cancelling their instruction oramending it.

20.2 In specie issues and redemptions

20.2.1 At its absolute discretion the ACD may agree or determinethat instead of payment in cash to, or from, the Shareholderfor Shares in the Company, the settlement of an issue orredemption transaction may be effected by the transfer ofproperty into or out of the assets of the Company on suchterms as the ACD shall decide in consultation with theInvestment Manager and the Depositary. In the case ofredemptions, the ACD shall give notice to the Shareholderprior to the redemption proceeds becoming payable of itsintention to transfer property to the Shareholder and, ifrequired by the Shareholder, may agree to transfer to theShareholder the net proceeds of the sale of such property.

20.2.2 The ACD may also offer to sell an investor’s property andinvest the proceeds by purchasing Shares in the Company,subject to detailed terms and conditions available uponrequest.

20.3 Client account

Cash may be held for investors in a client account in certaincircumstances. Interest is not paid on any such balances.

20.4 ACD dealing as principal

Where the ACD deals as principal in the Shares of the Company,any profits or losses arising from such transactions will accrue to

the ACD and not to the Company. The ACD is under no obligationto account to the Depositary, or to Shareholders for any profit itmakes on the issue or re-issue of Shares or cancellation of Shareswhich it has redeemed.

20.5 Bodies Corporate holding Shares

20.5.1 In accordance with HMRC rules, no Body Corporate maybe beneficially entitled directly or indirectly to 10% or moreof the NAV. However, in order to try and avoid breaches ofthis rule, the Company may operate such that no BodyCorporate may be beneficially entitled directly or indirectlyto 8% or more of the NAV.

20.5.2 If a Body Corporate should be or becomes beneficiallyentitled directly or indirectly to 8% or more of the NAV or theACD reasonably believes this to be the case, then the ACDmay, and must if the holding represents 10% or more ofNAV, treat a proportion of the Shares representing theexcessive holding (or the proportion it reasonably believesto be an excessive holding) as “affected Shares” for thepurposes of 20.7 and the provisions of that paragraph willapply to them except that for thirty days there shall besubstituted “as soon as reasonably possible”. Typically, theproportion of Shares treated as “affected Shares” will be anumber sufficient to reduce the holding to 6% of NAV.

20.5.3 In addition, the ACD at its discretion may transfer all or partof the Shareholding of a Body Corporate referred to in20.5.2 into the Feeder Fund in exchange for the issue tosuch Body Corporate of units in the Feeder Fund.

20.5.4 In accordance with COLL 6.2.23R, where the ACDbecomes aware that a Body Corporate holds more than10% of the NAV, it will notify the Body Corporate of that factand not pay any income distribution to them.

20.5.5 Additionally, in accordance with COLL 4.2.5R 22A(3), in theevent that the ACD reasonably considers that a BodyCorporate holds more than 10% of the NAV, the ACD isentitled to delay any redemption or cancellation of Sharesif the ACD reasonably considers such action to benecessary in order to enable an orderly reduction of theholding below 10%, and if it is in the interests ofShareholders as a whole.

20.6 Restrictions on dealing

20.6.1 The ACD may from time to time impose such restrictionsas it may think necessary for the purpose of ensuring thatno Shares are acquired or held by any person in breach ofthe law or governmental regulation (or any interpretation ofa law or regulation by a competent authority) of any countryor territory. In this connection, the ACD may, inter alia,reject in its discretion any application for the issue, sale,redemption, cancellation or switch of Shares or require themandatory redemption of Shares or transfer of Shares to aperson qualified to hold them.

20.6.2 The distribution of this prospectus and the offering ofShares in or to persons resident in or nationals of orcitizens of jurisdictions outside the UK or who arenominees of, custodians or trustees for, citizens ornationals of other countries may be affected by the laws ofthe relevant jurisdictions. Such Shareholders should informthemselves about and observe any applicable legalrequirements. It is the responsibility of any Shareholder tosatisfy himself as to the full observance of the laws andregulatory requirements of the relevant jurisdiction,including obtaining any governmental, exchange control orother consents which may be required, or compliance withother necessary formalities needing to be observed andpayment of any issue, transfer or other taxes or duties duein such jurisdiction. Any such Shareholder will beresponsible for any such issue, transfer or other taxes orpayments by whomsoever payable and the Company (and

Prospectus


PAIF/29092017/ENG/r01

12

any person acting on behalf of it) shall be fully indemnifiedand held harmless by such Shareholder for any suchissue, transfer or other taxes or duties as the Company(and any person acting on behalf of it) may be required topay.

20.6.3 If it comes to the notice of the ACD that any Shares(“affected Shares”) are owned directly or beneficially inbreach of any law or governmental regulation (or anyinterpretation of a law or regulation by a competentauthority) of any country or territory, which would (or wouldif other Shares were acquired or held in like circumstances)result in the Company incurring any liability to taxationwhich the Company would not be able to recoup itself orsuffering any other adverse consequence (including arequirement to register under any securities or investmentor similar laws or governmental regulations of any countryor territory) or by virtue of which the Shareholder orShareholders in question is/are not qualified to hold suchShares or if it reasonably believes this to be the case, theACD may give notice to the Shareholder(s) of the affectedShares requiring the transfer of such Shares to a personwho is qualified or entitled to own them or that a request inwriting be given for the redemption of such Shares. If anyShareholder upon whom such a notice is served does notwithin thirty days after the date of such notice transfer theiraffected Shares to a person qualified to own them orsubmit a written request for their redemption to the ACD orestablish to the satisfaction of the ACD (whose judgementis final and binding) that they or the beneficial owner arequalified and entitled to own the affected Shares, they shallbe deemed upon the expiration of that thirty day period tohave given a request in writing for the redemption orcancellation (at the discretion of the ACD) of all the affectedShares pursuant to the Regulations.

20.6.4 A Shareholder who becomes aware that they are holdingor own affected Shares shall forthwith, unless they havealready received a notice as aforesaid, either transfer alltheir affected Shares to a person qualified to own them orsubmit a request in writing to the ACD for the redemptionof all their affected Shares.

20.6.5 Where a request in writing is given or deemed to be givenfor the redemption of affected Shares, such redemption willbe effected in the same manner as provided for under theRegulations, if effected at all.

20.7 Excessive Trading

20.7.1 The ACD generally encourages Shareholders to invest inthe Company as part of a long-term investment strategyand discourages excessive, short term, or abusive tradingpractices. Such activities may have a detrimental effect onthe Company and other Shareholders. The ACD hasseveral powers to help ensure that Shareholder interestsare protected from such practices. These include:

20.7.1.1 refusing an application for Shares (seeparagraph 16.1.3);

20.7.1.2 fair value pricing (see paragraph 25); and,

20.7.1.3 the pricing policy (see paragraph 26).

20.7.2 The ACD monitors shareholder dealing activity and if itidentifies any behaviour that, in its view, constitutesinappropriate or excessive trading, the ACD may take anyof the following steps with the Shareholders it believes areresponsible:

20.7.2.1 issue warnings which if ignored may lead tofurther applications for Shares beingrefused;

20.7.2.2 restrict methods of dealing available toparticular Shareholders; and/or,

20.7.2.3 impose a switching fee (see paragraph19.3).

20.7.3 The ACD may take these steps at any time, without anyobligation to provide prior notice and without any liability forany consequence that may arise.

20.7.4 Inappropriate or excessive trading can sometimes bedifficult to detect particularly where transactions are placedvia a nominee account. The ACD therefore cannotguarantee that its efforts will be successful in eliminatingsuch activities and their detrimental effects.

21 Suspension of dealings in the Company

21.1 The ACD may with the agreement of the Depositary, or must if theDepositary so requires, temporarily suspend for a period the issue,sale, cancellation and redemption of Shares or any Class of Sharesin the Company if the ACD or the Depositary is of the opinion thatdue to exceptional circumstances there is good and sufficientreason to do so having regard to the interests of Shareholders.

21.2 The ACD will notify Shareholders as soon as is practicable after thecommencement of the suspension, including details of theexceptional circumstances which have led to the suspension, in aclear, fair and not misleading way and giving Shareholders detailsof how to find further information about the suspensions.

21.3 Where such suspension takes place, the ACD will publish, on itswebsite or other general means, sufficient details to keepShareholders appropriately informed about the suspension,including, if known, its possible duration.

21.4 During the suspension none of the obligations in COLL 6.2(Dealing) will apply but the ACD will comply with as much of COLL6.3 (Valuation and Pricing) during the period of suspension as ispracticable in light of the suspension.

21.5 Re-calculation of the Share price for the purpose of sales andpurchases will commence at the time the suspension is ended or atthe next relevant valuation point following the ending of thesuspension.

21.6 The exceptional circumstances in which the Manager or the Trusteemay require the temporary suspension of the issue, sale,cancellation and redemption of Shares, or any class of Shares inthe Fund include, but are not limited to the following:

21.6.1 during any period when, in the opinion of the Manager orthe Trustee, an accurate valuation of the Fund cannotoccur, including:

21.6.1.1 where one or more markets is unexpectedlyclosed or where dealing is suspended orrestricted;

21.6.1.2 during a political, economic, military or otheremergency; or

21.6.1.3 during any breakdown in the means ofcommunication or computation normallyemployed in determining the price or valueof any of the investments of the Fund or anyClasses of Shares;

21.6.2 upon the decision of the Manager, having given sufficientnotice to Shareholders, to wind up the Fund.

22 Money laundering

As a result of legislation in force in the United Kingdom to preventmoney laundering, firms conducting investment business areresponsible for compliance with money laundering regulations. TheACD may verify your identity electronically when you undertakecertain transactions. In certain circumstances investors may beasked to provide proof of identity when buying or selling Shares.Normally this will not result in any delay in carrying out instructionsbut, should the ACD request additional information, this may mean

Prospectus


PAIF/29092017/ENG/r01

13

that instructions will not be carried out until the information isreceived. In these circumstances, the ACD may refuse to sell or,redeem Shares, release the proceeds of redemption or carry outsuch instructions.

23 Governing law

The ACD treats a Shareholder’s participation in the Company asgoverned by the law of England and Wales. The English courtsshall have exclusive jurisdiction to settle any disputes or claimswhich may arise out of, or in connection with, a Shareholder’sparticipation in the Company. A number of European laws providefor the recognition and enforcement in England and Wales ofjudgements given in other European Union States. This means thatan investor based in any European Union country can enforce ajudgement obtained in England in their country of residence, or viceversa.

24 Valuation of the Company

24.1 The Company has been established as a dual-priced OEIC,meaning that its Shares may have different buying (offer) andselling (bid) prices. Each day we value the assets of the Fund onboth an ‘offer’ basis (how much they would cost to buy) and a ‘bid’basis (how much the Fund would receive if they were sold), asdetailed in section 25. The difference between the two pricesreflects the costs of buying and selling properties, in particularStamp Duty Land Tax paid on purchases which can account for upto 5% of the property value. The published dealing prices are basedon either the offer or bid valuation, depending on whether investorsare generally buying fund shares (the fund is in ‘net inflow’) orselling them (the fund is in ‘net outflow’). The pricing basis did notchange during 2017. However, a change in the pricing basis during2017 would have resulted in a price movement of between 5.51%and 6.26% (5.92% as at 7 March 2018).

24.2 The Scheme Property will normally be valued at 12:00 noon UKtime on each Dealing Day for the purpose of the re-calculation ofissue and cancellation prices and for determining the prices atwhich Shares in the Company may be purchased from orredeemed by the ACD. At the ACD’s discretion, bid and offer pricesmay be based on either the cancellation or the creation price,depending on whether the Company is experiencing net outflows ornet inflows of investments respectively.

24.3 The Manager may at any time during a Dealing Day carry out anadditional valuation if the Manager considers it desirable to do so.

25 Calculation of the Net Asset Value

25.1 The value of the Scheme Property shall be the value of its assetsless the value of its liabilities determined in accordance with thefollowing provisions.The valuation of the property of the Schemeshall consist of two parts, one on an issue basis and one on acancellation basis calculated, in accordance with the followingprovisions.

25.2 All the Scheme Property (including receivables) is to be included,subject to the following provisions.

25.3 The valuation of Scheme Property which is not cash (or sums heldin bank accounts or a contingent liability transaction) for that part ofthe valuation which is on an issue basis is as follows:

25.3.1 units or shares in a collective investment scheme:

25.3.1.1 if a single price for buying and selling unitsor shares is quoted, at that price plus anydealing costs (as defined below), anypreliminary charge payable by theCompany on the purchase of the units orshares, and any dilution levy which wouldbe added in the event of a purchase by theCompany of the units or shares in question(except that, where the ACD, or anassociate of the ACD, is also the manager

or authorised corporate director of thecollective investment scheme whose unitsor shares are held by the Company, thevaluation must not include any preliminarycharge payable in the event of a purchaseby the Company of those units or shares);or

25.3.1.2 if separate buying (offer) and selling (bid)prices are quoted, at the buying price, lessany expected discount (plus any dealingcosts as defined below), but where theACD, or an associate of the ACD, is alsothe manager or authorised corporatedirector of the collective investment schemewhose units or shares are held by theCompany, the issue price shall be takeninstead of the buying price; or

25.3.1.3 if, in the opinion of the ACD, the priceobtained is unreliable, or no recent tradedprice is available, or no recent traded priceexists, or if the most recent traded priceavailable does not reflect the ACD’s bestestimate of the value of the units or shares,at a price which in the opinion of the ACD isfair and reasonable;

25.3.2 Property Assets:

25.3.2.1 at a value determined by the StandingIndependent Valuer on the basis prescribedas a “market value” in the PracticeStatement in the edition of the RoyalInstitution of Chartered Surveyors’Valuation Standards (The Red Book) whichis current as at the date of the valuation;

25.3.2.2 on the basis of a full valuation with physicalinspection (including, where the immovableis or includes a building, internalinspection), at least once a year; and

25.3.2.3 on the basis of the last full valuation, at leastonce a month;

25.3.3 exchange-traded derivative contracts:

25.3.3.1 if a single price for buying and selling theexchange-traded derivative contract isquoted, and that price; or

25.3.3.2 if separate buying and selling prices arequoted, at the average of the two price;

25.3.4 over-the-counter derivative contracts shall be valued onthe basis of an up-to-date market valuation which the ACDand the Depositary have agreed is reliable or if this is notavailable, on the basis of a pricing model which the ACDand the Depositary have agreed;

25.3.5 any other investment:

25.3.5.1 the best available market dealing offer priceon the most appropriate market in astandard size (plus any dealing costs, asdefined below);

25.3.5.2 if, in the opinion of the ACD, the priceobtained is unreliable or no recent tradedprice is available or if the most recent pricedoes not reflect the ACD’s best estimate ofthe value, at a value which, in the opinion ofthe ACD, is fair and reasonable;

25.3.6 Scheme Property other than that described in 25.3.1,25.3.2, 25.3.3, 25.3.4 and 25.3.5 above:

Prospectus


PAIF/29092017/ENG/r01

14

25.3.6.1 at a value which, in the opinion of the ACD,is fair and reasonable (plus any dealingcosts, as defined below).

25.4 The valuation of Scheme Property which is not cash (or sums heldin bank accounts or a contingent liability transaction) for that part ofthe valuation which is on a cancellation basis is as follows:

25.4.1 units or shares in a collective investment scheme:

25.4.1.1 if a single price for buying and selling unitsor shares is quoted, at that price less anydealing costs as defined below, anyredemption charge payable by theCompany on the sale of the units or sharestaking account of any expected discount,and any dilution levy which would bededucted in the event of a sale by theCompany of the units or shares in question(except that, where the ACD, or anassociate of the ACD, is also the manageror authorised corporate director of thecollective investment scheme whose unitsor shares are held by the Company, anyvaluation must not include any redemptioncharge payable in the event of a sale by theCompany of those units or shares); or

25.4.1.2 if separate buying (offer) and selling (bid)prices are quoted, at the selling price, lessany dealing costs as defined below and anyredemption charge payable on the sale ofthe units or shares taking into account anyexpected discount (except that, where theACD, or an associate of the ACD, is alsothe manager or authorised corporatedirector of the collective investment schemewhose units or shares are held by theCompany, the cancellation price shall betaken instead of the selling price; or

25.4.1.3 if, in the opinion of the ACD, the priceobtained is unreliable, or no recent tradedprice is available, or no recent traded priceexists, or if the most recent traded priceavailable does not reflect the ACD’s bestestimate of the value of the units or shares,at a price which in the opinion of the ACD isfair and reasonable;

25.4.2 Property Assets:

25.4.2.1 at a value determined by the StandingIndependent Valuer on the basis prescribedas an “open market value” in the PracticeStatement in the edition of the RoyalInstitution of Chartered Surveyors’Valuation Standards (The Red Book) whichis current as at the date of the valuation;

25.4.2.2 on the basis if a full valuation with physicalinspection (including, where the immovableis or includes a building, internalinspection), at least once a year; and

25.4.2.3 on the basis of the last full valuation, at leastonce a month;

25.4.3 exchange-traded derivative contracts:

25.4.3.1 if a single price for buying and selling theexchange-traded derivative contract isquoted, and that price; or

25.4.3.2 if separate buying and selling prices arequoted, at the average of the two price;

25.4.4 Over-the-counter derivative contracts shall be valued onthe basis of an up-to-date market valuation which the ACDand the Depositary have agreed is reliable or if this is notavailable, on the basis of a pricing model which the ACDand the Depositary have agreed;

25.4.5 Any other investment:

25.4.5.1 the best available market dealing bid priceon the most appropriate market in astandard size (less any dealing costs, asdefined below);

25.4.5.2 if, in the opinion of the ACD, the priceobtained is unreliable or no recent tradedprice is available or if the most recent pricedoes not reflect the ACD’s best estimate ofthe value, at a value which, in the opinion ofthe ACD, is fair and reasonable;

25.4.6 Scheme Property other than that described in 25.3.1,25.3.2, 25.3.3, 25.3.4 and 25.3.5 above:

25.4.6.1 at a value which, in the opinion of the ACD,is fair and reasonable (less any dealingcosts, as defined below).

25.5 Cash and amounts held in current and deposit accounts and inother time-related deposits shall be valued at their nominal values.

25.6 In determining the value of the Scheme Property, all instructionsgiven to issue or cancel Shares shall be assumed to have beencarried out (and any cash paid or received) whether or not this isthe case.

25.7 Subject to paragraphs 25.8 and 25.9 below, agreements for theunconditional sale or purchase of Scheme Property which are inexistence but uncompleted shall be assumed to have beencompleted and all consequential action required to have beentaken. Such unconditional agreements need not be taken intoaccount if made shortly before the valuation takes place and, in theopinion of the ACD, their omission will not materially affect the finalnet asset amount.

25.8 Futures or contracts for differences which are not yet due to beperformed and unexpired and unexercised written or purchasedoptions shall not be included under paragraph 25.7.

25.9 All agreements are to be included under paragraph 25.7 which are,or ought reasonably to have been, known to the person valuing theScheme Property.

25.10 An estimated amount for anticipated tax liabilities (on unrealisedcapital gains where the liabilities have accrued and are payable outof the Scheme Property; on realised capital gains in respect ofpreviously completed and current accounting periods; and onincome where liabilities have accrued) including (as applicable andwithout limitation) capital gains tax, income tax, corporation tax,value added tax and stamp duty.

25.11 An estimated amount for any liabilities payable out of the SchemeProperty and any tax thereon treating periodic items as accruingfrom day to day will be deducted.

25.12 The principal amount of any outstanding borrowings wheneverrepayable and any accrued but unpaid interest on borrowings willbe deducted.

25.13 An estimated amount for accrued claims for tax of whatever naturewhich may be recoverable will be added.

25.14 Any other credits or amounts due to be paid into the SchemeProperty will be added.

25.15 A sum representing any interest or any income accrued due ordeemed to have accrued but not received will be added.

25.16 Currency or values in currencies other than the base currency shallbe converted at a rate of exchange that is not likely to result in any

Prospectus


PAIF/29092017/ENG/r01

15

material prejudice to the interests of Shareholders or potentialShareholders.

25.17 For the purposes of this paragraph 25, “dealing costs” means anyfiscal charges, commission or other charges payable in the event ofthe Company carrying out the transaction in question (but excludingany preliminary charge payable by the Company on the purchaseof units or shares), assuming that the commission and charges(other than the fiscal charges) which would be payable by theCompany are the least that could reasonably be expected to bepaid in order to carry out the transaction.

25.18 Notwithstanding the provisions of paragraphs 25.3.2 and 25.4.2,where the ACD, the Depositary or the standing independent valuerhave reasonable grounds to believe that the most recent valuationof Property Assets does not reflect the current value of thatimmovable, the ACD should consult and agree with the standingindependent valuer a fair and reasonable value for the immovable.

26 Prices per Share in each Class

26.1 The ‘offer’ price and the ‘bid’ price are calculated every Dealing Dayunder rules laid down by statutory regulations.

26.2 The offer price cannot be more than the cost of creating a Share bybuying Scheme Property (the ‘issue’ price) plus any initial charge.The total of the issue price plus the initial charge is the ‘maximumpermitted offer’ price.

26.3 The bid price cannot be less than the proceeds of cancelling aShare by selling Scheme Property, called the ‘cancellation’ price.

26.4 When buying or redeeming Shares, you receive the relevantDealing Price which can lie in a range between a price calculatedon the basis of the offer (buying) prices of the Scheme Property,and a price calculated on the basis of the bid (selling) prices of theScheme Property. The ACD may change the pricing basis at itsdiscretion.

27 Pricing basis

The Company deals on a forward pricing basis. A forward price isthe price calculated at the next valuation point after the purchase orsale is agreed.

28 Publication of prices

28.1 The most recent prices of other Share Classes are available on theACD’s website, www.mandg.co.uk, on each day the Company isvalued. Shareholders can also obtain the price of their Shares bycalling M&G Customer Relations on 0800 390 390.

28.2 The most recent prices of the Sterling Class F Shares appear onM&G’s Intranet site.

29 Risk factors

Potential investors should consider the risk factors referenced inSection 54 before investing in the Company.

30 Charges and Expenses

30.1 The ACD’s Annual Management Charge

30.1.1 The ACD is permitted to take a charge from each ShareClass of the Company as payment for carrying out itsduties and responsibilities. This is known as the ACD’s“Annual Management Charge” (sometimes abbreviated to“AMC”).

30.1.2 The Annual Management Charge is based on apercentage of the Net Asset Value of each Share Class ofthe Company. The annual rate of this charge is set out forthe Company in Appendix 1.

30.1.3 Each day the ACD charges one-365th of the AnnualManagement Charge (or one-366th if it is a leap year). Ifthe day is not a Dealing Day, the ACD will take the charge

into account on the next Dealing Day. The ACD calculatesthis charge using the Net Asset Value of each Share Classon the previous Dealing Day.

30.1.4 Though the Annual Management Charge is calculated andtaken into account daily in each Share Class’s price, it isactually paid to the ACD every fortnight.

30.1.5 Where the Company invests in the units or shares ofanother fund managed by the ACD, or by an associate ofthe ACD, the ACD will reduce its Annual ManagementCharge by the amount of any equivalent charge that hasbeen taken on the underlying funds. Underlying funds willalso waive any initial or redemption charges which mightotherwise apply. That way, the ACD ensures thatShareholders are not charged twice.

30.2 The ACD’s Administration Charge

30.2.1 The ACD is permitted to take a charge from each ShareClass of the Company as payment for administrativeservices to the Company. This is called the AdministrationCharge. This covers costs such as the maintenance of theCompany’s register, the internal administrative costsinvolved in buying and selling shares in the Company, thepayment of the Company’s distributions, and the paymentof the fees of regulators in the UK or in other countrieswhere the Company is registered for sale.

30.2.2 The Administration Charge is based on a percentage of theNet Asset Value of each Share Class of the Company. Theannual rate of this charge is set out in Appendix 1 (plus anyvalue added tax if applicable).

30.2.3 The Administration Charge is calculated and taken intoaccount daily and is paid fortnightly to the ACD on thesame basis as described at 30.1.3 and 30.1.4 for theAnnual Management Charge.

30.2.4 If the cost of providing administrative services to theCompany is more than the Administration Charge taken inany period, the ACD will make up the difference. If the costof providing administrative services to the Company is lessthan the Administration Charge taken in any period, theACD will keep the difference.

30.3 The ACD’s Share Class Hedging Charge

30.3.1 The ACD is permitted to take a charge from each hedgedShare Class of the Company as payment for hedgingservices to that Share Class. This is called the Share ClassHedging Charge.

30.3.2 The Share Class Hedging Charge is a variable ratedetailed in Appendix 1 (plus any value added tax ifapplicable). The exact rate will vary within the specifiedrange depending upon the total amount of share classhedging activities across the entire range of OEICsmanaged by the ACD.

30.3.3 The Share Class Hedging Charge is calculated and takeninto account daily and paid fortnightly on the same basis asdescribed at 30.1.3 and 30.1.4 for the Annual ManagementCharge.

30.3.4 If the cost of providing share class hedging services to theCompany is more than the Share Class Hedging Chargetaken in any period, the ACD will make up the difference. Ifthe cost of providing share class hedging services to theCompany is less than the Share Class Hedging Chargetaken in any period, the ACD will keep the difference.

30.4 The Depositary’s Charges and Expenses

30.4.1 The Depositary takes a charge from the Company aspayment for its duties as depositary. This is called theDepositary’s Charge.

Prospectus


PAIF/29092017/ENG/r01

16

30.4.2 The Depositary’s Charge is based on the Net Asset Valueof the Company, and is charged on a sliding scale asfollows:

• 0.02% per annum of the first £200 million of theScheme Property;

• 0.01% per annum of the next £100 million of theScheme Property;

• 0.005% per annum of the balance.

This sliding scale is agreed between the ACD and theDepositary and may be changed. If it does change, theACD will inform you in accordance with the COLLSourcebook.

30.4.3 The Depositary’s Charge is calculated and taken intoaccount daily and is paid fortnightly to the Depositary onthe same basis as described at 30.1.3 and 30.1.4 for theAnnual Management Charge.

30.4.4 The Depositary may also make a charge for its services inrelation to:

• distributions,

• the provision of banking services,

• holding money on deposit,

• lending money,

• engaging in stock lending, derivative or unsecuredloan transactions,

• the purchase or sale, or dealing in the purchase orsale of, Scheme Property,

provided that the services are in accordance with theprovisions of the COLL Sourcebook.

30.4.5 The Depositary is also entitled to payment andreimbursement of all costs, liabilities and expenses it incursin the performance of, or in arranging the performance of,functions conferred on it by the Instrument of Incorporation,the COLL Sourcebook or by general law. Such expensesgenerally include, but are not restricted to:

• delivery of stock to the Depositary or custodian;

• collection and distribution of income and capital;

• submission of tax returns and handling tax claims;

• such other duties as the Depositary is permitted orrequired by law to perform.

30.5 Custody Charges

30.5.1 The Depositary is entitled to be paid a Custody Charge inrelation to the safe-keeping of the Company’s assets(“custody”).

30.5.2 The Custody Charge is variable depending upon thespecific custody arrangements for each type of asset. TheCustody Charge is a range between 0.00005% and 0.40%of the asset values per annum.

30.5.3 The Custody Charge is taken into account daily in eachShare Class’s price. It is calculated each month using thevalue of each asset type and it is paid to State Street Bankand Trust Company when it invoices the Company.

30.6 Custody Transaction Charges

30.6.1 The Depositary is also entitled to be paid CustodyTransaction Charges in relation to processing transactionsin the Company’s assets.

30.6.2 The Custody Transaction Charges vary depending on thecountry and the type of transaction involved. The Custody

Transaction Charges generally range between £4 and £75per transaction.

30.6.3 The Custody Transaction Charges are taken into accountdaily in each Share Class’s price. It is calculated eachmonth based on the number of transactions that havetaken place and it is paid to State Street Bank and TrustCompany when it invoices the Company.

30.7 Standing Independent Valuer’s Charge and Fees

30.7.1 The Standing Independent Valuer is permitted to take acharge from each Share Class of the Company aspayment for providing valuation services to the Company.This is called the Standing Independent Valuer’s Charge.

30.7.2 The Standing Independent Valuer’s Charge is based on apercentage of the Property Assets of each Share Class ofthe Company. The annual rate of this charge is 0.025%(plus any value added tax if applicable). This is payablequarterly, at one quarter of the annual rate, based on theaverage reported portfolio valuation over the previousthree months.

30.7.3 The Administration Charge is calculated and taken intoaccount daily and is paid every three months to the ACDon the same basis as described at [30.1.3 and 30.1.4] forthe Annual Management Charge.

30.7.4 The Standing Independent Valuer is also entitled to ad hocpayments as a result of preparing pre-purchase valuationreports. These ad hoc payments are made in accordancewith a sliding scale agreed from time to time by theInvestment Manager.

30.8 Investment Accounting Charge

30.8.1 M&G Investment Management Limited is currently entitledto receive £150,000 (plus any value added tax ifapplicable) for providing accountancy services to theCompany. Such services include carrying out the valuationand price calculation processes and maintaining theaccounts and records of the Company.

30.8.2 The Investment Accounting Charge is taken into accountdaily and is paid fortnightly to the Depositary on the samebasis as described at 30.1.3 and 30.1.4 for the AnnualManagement Charge.

30.9 Other Expenses

30.9.1 The costs and expenses relating to the authorisation andincorporation and establishment of the Company, the offerof Shares, the preparation and printing of this Prospectusand the fees of the professional advisers to the Companyin connection with the offer will be borne by the ACD.

30.9.2 The direct establishment costs of each Share Classcreated, may be borne by the Company or by the ACD atits discretion.

30.9.3 The Company may pay out of the property of the Companycharges and expenses incurred by the Company unlessthey are covered by the Administration Charge. Theseinclude the following expenses:

30.9.3.1 reimbursement of all out of pocketexpenses incurred by the ACD in theperformance of its duties;

30.9.3.2 broker’s commission, taxes and duties(including stamp duty), and otherdisbursements which are necessarilyincurred in effecting transactions for theCompany;

30.9.3.3 any fees or expenses of any legal or otherprofessional adviser of the Company;

Prospectus


PAIF/29092017/ENG/r01

17

30.9.3.4 any costs incurred in respect of meetings ofShareholders convened on a requisition byShareholders but not those convened bythe ACD or an associate of the ACD;

30.9.3.5 liabilities on unitisation, amalgamation orreconstruction including certain liabilitiesarising after transfer of property to theCompany in consideration for the issue ofShares as more fully detailed in theRegulations;

30.9.3.6 interest on borrowing and charges incurredin effecting or terminating such borrowing orin negotiating or varying the terms of suchborrowing on behalf of the Company;

30.9.3.7 taxation and duties payable in respect ofthe property of the Company or of the issueor redemption of Shares;

30.9.3.8 the audit fees of the Auditor (including valueadded tax) and any expenses of theAuditor;

30.9.3.9 if the Shares are listed on any stockexchange, the fees connected with thelisting (though none of the Shares arecurrently listed);

30.9.3.10 any costs incurred in taking out andmaintaining any insurance policy in relationto the Company;

30.9.3.11 any costs (including, but not limited to,survey costs, costs of obtainingenvironmental reports, stamp duty land taxand marketing costs) incurred in buying orselling Property Assets;

30.9.3.12 any payments properly required for themanagement, maintenance, repair,refurbishment, development orredevelopment of Property Assets ownedor leased by the Company;

30.9.3.13 any costs incurred in connection withbuying-in a leasehold interest, restructuringleasehold interests of the Company, projectfunding, and payments to propertyconsultants in respect of any PropertyAsset;

30.9.3.14 costs incurred in connection with letting anyvacant premises, undertaking rent reviews,renewing leases, actions as a result of atenant’s breach of covenant or eviction ofsquatters, and issuing notices to tenants;and,

30.9.3.15 any value added or similar tax relating toany charge or expense set out herein.

30.9.4 The cost and expenses relating to research servicesprovided to the Investment Manager by brokers, orindependent research providers, will be borne by theInvestment Manager

30.10 Allocation of charges

For each Share Class,the charges and expenses described in thissection are charged either to capital or income (or both) dependingupon whether they are Income Shares or Accumulation Shares. ForIncome Shares, most charges and expenses are charged to capital.This treatment of the charges and expense may increase theamount of income available for distribution to holders in the ShareClass concerned, but it will constrain capital growth. ForAccumulation Shares most charges and expenses are paid from

income, if there is insufficient income to fully pay those charges andexpenses, the residual amount is taken from capital.

Appendix 1 details which charges and expense are taken fromincome or capital for each of the company’s Income andAccumulation Shares.

31 Stocklending

31.1 The Company or the Depositary at the request of the Company,may enter into repo contracts or certain stocklending arrangementsin respect of the Company. The Company or the Depositarydelivers securities which are the subject of the stocklendingarrangement in return for an agreement that securities of the samekind and amount should be redelivered to the Company or theDepositary at a later date. The Company or the Depositary at thetime of delivery receives collateral to cover the risk of the futureredelivery not being completed. There is no limit on the value of theproperty of the Company which may be the subject of repocontracts or stocklending arrangements.

31.2 Stocklending arrangements must be an arrangement of the kinddescribed in Section 263B of the Taxation of Chargeable Gains Act1992. The arrangements must also comply with the requirements ofthe Regulations.

32 Investment Accounting Fee

M&G Investment Management Limited is currently entitled toreceive an annual fee of £150,000 (plus VAT thereon) for theprovision of accountancy services to the Company, includingcarrying out the valuation and price calculation processes andmaintaining the accounts and records of the Company.

33 Shareholder meetings and voting rights

33.1 Annual general meeting

In accordance with the provisions of the Open-Ended InvestmentCompanies (Amendment) Regulations 2005, the Company haselected not to hold annual general meetings.

33.2 Requisitions of meetings

33.2.1 The ACD or the Depositary may requisition a generalmeeting at any time.

33.2.2 Shareholders may also requisition a general meeting of theCompany. A requisition by Shareholders must state theobjects of the meeting, be dated, be signed byShareholders who, at the date of the requisition, areregistered as holding not less than one-tenth in value of allShares then in issue and the requisition must be depositedat the head office of the Company. The ACD must convenea general meeting no later than eight weeks after receipt ofsuch requisition.

33.3 Notice and quorum

Shareholders will receive at least 14 days’ notice of a Shareholders’meeting (other than an adjourned meeting where a shorter periodof notice can apply) and are entitled to be counted in the quorumand vote at such meeting either in person or by proxy. If after areasonable time from the time set for an adjourned meeting thereare not two Shareholders present in person or by proxy, the quorumfor the adjourned meeting shall be one Shareholder entitled to becounted in a quorum present at the meeting. Notices of meetingsand adjourned meetings will normally be given in writing to theShareholder’s registered address (or, at the discretion of the ACD,such other address which we may hold for the purposes ofcorrespondence).

33.4 Voting rights

33.4.1 At a meeting of Shareholders, on a show of hands everyShareholder who (being an individual) is present in personor (being a corporation) is present by its representativeproperly authorised in that regard, has one vote.

Prospectus


PAIF/29092017/ENG/r01

18

33.4.2 On a poll vote, a Shareholder may vote either in person orby proxy. The voting rights attaching to each Share aresuch proportion of the voting rights attaching to all theShares in issue that the price of the Share bears to theaggregate price(s) of all the Shares in issue as at a cut-offdate selected by the ACD which is a reasonable timebefore the notice of meeting is deemed to have beenserved.

33.4.3 A Shareholder entitled to more than one vote need not, ifthey vote, use all their votes or cast all the votes they usein the same way.

33.4.4 Except where the Regulations or the Instrument ofIncorporation of the Company require an extraordinaryresolution (which needs at least 75% of the votes validlycast at the meeting to be in favour for the resolution to bepassed) any resolution required will be passed by a simplemajority of the votes validly cast for and against theresolution.

33.4.5 The ACD may not be counted in the quorum for a meetingand neither the ACD nor any Associate of the ACD isentitled to vote at any meeting of the Company except inrespect of Shares which the ACD or Associate holds onbehalf of or jointly with a person who, if the registeredShareholder, would be entitled to vote and from whom theACD or Associate has received voting instructions.

33.4.6 ‘Shareholders’ in this context means Shareholders on acut-off date selected by the ACD which is a reasonabletime before the notice of the relevant meeting was deemedto have been served but excludes holders of shares whoare known to the ACD not to be Shareholders at the timeof the meeting.

33.4.7 Where an extraordinary resolution is required to conductbusiness at a meeting of Shareholders and everyShareholder is prohibited under COLL 4.4.8R(4) fromvoting, with the written agreement of the Depositary to theprocess, the resolution may instead be passed with thewritten consent of Shareholders representing at least 75%of the Shares in issue.

33.4.8 Investors in Share Classes whose holdings are registeredthrough M&G International Investments Nominees Limitedwill be offered a vote at general meetings when M&GInternational Investments Limited considers, at its solediscretion, that the investors’ interests may be materiallyaffected

33.5 Class meetings

The above provisions, unless the context otherwise requires, applyto Class meetings as they apply to general meetings ofShareholders.

33.6 Variation of Class rights

The rights attached to a Class may not be varied unless done sopursuant to the notification requirements of COLL 4.3R.

33.7 Gifts and Hospitality

The ACD and the Investment Manager may provide or receivehospitality or small business gifts from intermediaries who sell theirproducts, operators of other collective investment schemes in whichthey invest, or other counterparties with whom we deal. Thehospitality is typically a meal or attendance at a social engagementwhere the opportunity exists for participants to discuss businessissues such as market developments or the ACD’s and theInvestment Manager’s products. The ACD and the InvestmentManager may also provide assistance, such as providing aspeaker, or paying towards materials used at a business trainingevent or a conference organised by or for such firms. Such gifts andhospitality are in no way predicated on past, current, or futurebusiness activity. The ACD’s and the Investment Manager’sprocedures place controls on such arrangements to ensure that

there is no Shareholder disadvantage. Our normal limits perindividual events/items are £200 for hospitality and £100 for giftsper individual concerned.

34 Taxation

34.1 General

The following summary is intended as a general summary of UnitedKingdom (“UK”) tax law and HM Revenue & Customs practice, asat the date of this Prospectus, applicable to the Company and toindividual and corporate investors who are the absolute beneficialowners of a holding in the Company held as an investment andsubject to UK tax. The summary’s applicability will depend upon theparticular circumstances of each investor (and it will not apply topersons, such as certain institutional investors, who are subject toa special tax regime). It should not be treated as legal or tax advice.Accordingly, if investors are in any doubt as to their taxationposition, they should consult their professional adviser. Levels andbases of, and reliefs from, taxation are subject to change in thefuture.

34.2 The Company

The Company qualifies as a UK Property Authorised InvestmentFund (“PAIF”) for UK tax purposes. Accordingly, the incomegenerated by its Property Investment Business will be exempt fromtax. Any dividend income it receives from UK companies or, ingeneral, from non-UK companies will also be exempt from tax. TheCompany would, however, be subject to tax should there be a netbalance of other income, which will generally consist of interest butcould include other property income, less deductible expenses, thegross amount of any PAIF distributions (interest) made and any taxcharge that otherwise arises. The Company is generally exemptfrom UK tax on capital gains realised on the disposal of itsinvestments (including interest-paying securities and derivatives).

The Company must meet certain conditions to qualify as a PAIF, abrief summary of which is included below;

• the property investment business condition - the managermust ensure that the OEIC’s instrument of incorporation andprospectus states that its investment objectives are to carry ona property investment business and to manage the cashraised from investors for investment in the property investmentbusiness.

• the corporate ownership condition - corporate investors shouldnot hold 10% or more of the fund by net asset value.

• the loan creditor condition – the Company will be in breach ofthis condition if it is the debtor in a loan which is not a normalcommercial loan.

• the balance of business condition – the Company must deriveat least 60% of it’s income from the Property InvestmentBusiness and at least 60% of the assets of the Companyshould be assets of the Property Investment Business.

The Manager has put in place appropriate documentation andcontrols to ensure that these conditions are met.

The Company’s tax exempt property investment business is ringfenced and the net income from that business is exempt fromcorporation tax. The net income from the residual business is withinthe charge to corporation tax. Losses or allowances generated inthe tax-exempt part of the Company cannot be used against theresidual part.

The net income of the residual business is calculated by deductingfrom the net income of the Company:

(a) net income from the tax exempt business;

(b) any amounts allowed by the corporation tax Acts (includingany income from UK dividends); and

(c) the amount attributable to ‘PAIF distributions (interest)’ (seebelow).

Prospectus


PAIF/29092017/ENG/r01

19

Any remaining net income will be charged to corporation tax at thebasic rate of income tax for the tax year beginning in that financialyear (currently 20%).

A charge to corporation tax will also arise in the Company wherethere has been a breach of the corporate ownership condition suchthat the Company has failed to take reasonable steps to prevent adistribution being made to a Corporate Investor which has acquiredmore than 10% of the share capital of the Company. The charge istaxed on the net income of the tax exempt business that isdistributable multiplied by the percentage shareholding of therelevant Corporate Investor.

The Company’s distributions will be split into three streams for UKtax purposes:

i Property income distributions, representing income from itsProperty Investment Business;

ii PAIF distributions (interest), representing the net amount ofall other taxable income received; and

iii PAIF distributions (dividend), representing balance ofincome received by the Company.

To the extent that the Company receives income from, or realisesgains on investments in, foreign countries, it may be subject towithholding tax or other taxation in those jurisdictions. Dependingon the circumstances, some or all of that tax may be offset underdouble taxation relief arrangements against UK corporation taxpayable by the Company. The Company will generally be liable topay stamp duty land tax on purchases of property and may incurother property specific taxes.

34.3 Shareholders

The following summary is intended as a general summary of UnitedKingdom (“UK”) tax law and HM Revenue & Customs practice, asat the date of this Prospectus, applicable to individual and corporateinvestors who are the absolute beneficial owners of a holding in theCompany held as an investment and subject to UK tax. Thesummary’s applicability will depend upon the particularcircumstances of each investor (and it will not apply to persons,such as certain institutional investors, who are subject to a specialtax regime). It should not be treated as legal or tax advice.Accordingly, if investors are in any doubt as to their taxationposition, they should consult their professional adviser. Levels andbases of, and reliefs from, taxation are subject to change in thefuture.

34.4 Individuals

Property Income Distribution (“PID”)

Property Income Distributions will be paid net of basic rate forinvestors who do not have an automatic right to gross distribution orhave not certified that they are entitled to gross distributions underprevailing UK tax legislation. The ACD reserves the right to acquirefurther attestations of the right to gross distributions should changesin legislation or regulation require it to ensure the continuation ofgross distributions.

Individuals resident in the UK for and within the charge to basic rateincome tax (currently 20%) have no further liability to tax on the PID.Higher rate and additional rate taxpayers will be liable to further tax(40% and 45% respectively) but both will receive credit for taxdeducted at source.

PAIF distributions (interest)

From 6 April 2017, interest distributions from Authorised InvestmentFunds are paid without deduction of tax.

PAIF distributions (dividend)

From April 2016, UK taxpayers are entitled to a £5,000 tax freedividend allowance for all taxpayers, which replaces the 10% taxcredit applied in prior periods. For dividend income in excess of thisallowance, the applicable tax rate for basic rate taxpayers is 7.5%,

the rate for higher rate taxpayers is 32.5% and the rate foradditional taxpayers is 38.1%. The tax-free dividend allowance willbe reduced to £2,000 from April 2018.

Disposals

The disposal of any shares in the Company may be a taxable eventfor capital gains purposes for UK tax resident individuals. Any netgain that gives rise to a capital gains tax liability in the UK will becharged at a rate of either 10% and 20% depending on yourpersonal circumstances and based on current rates. Individuals areentitled to an annual exemption of £11,100 for 2016/2017 (£11,300for 2017/2018) in respect of chargeable gains arising in the year.

34.5 UK corporates

Property Income Distributions (“PIDs”)

Most corporate investors will be entitled to receive distributionswithout withholding of basic rate tax. For corporate beneficialowners, without reference to specific taxation rules, PIDs aregenerally charged to corporation tax as profits of a propertybusiness but are ring fenced from any other property business.

PAIF distributions (interest)

In a similar way to PIDs interest distributions are generally receivedgross by corporate investors within the charge to UK corporation taxand the corporate is treated as receiving a gross amount of yearlyinterest which is subject to corporation tax.

PAIF distributions (dividend)

Dividend distributions are treated in the same way as dividendsreceived from a UK resident company and are therefore generallyexempt from corporation tax. Corporate streaming rules whichapply commonly to authorised investment funds’ distributions donot apply to PAIF distributions (dividend).

Disposals

Corporation tax payers will be subject to capital gains rules inrelation to disposals of shares and may be liable to corporation taxon any gain made.

35 Tax reporting

35.1 As a result of UK legislation, the ACD may be required to obtainconfirmation of certain information, such as where a Shareholder isresident for tax purposes, their tax identification number, and theirplace and date of birth, or their tax status classification if they are acorporate body. Under certain circumstances (including where aShareholder does not supply the ACD with the information itrequests), the ACD will be obliged to report a Shareholder’spersonal details as well as the details of their holding to HMRevenue & Customs. This information may then be passed toother tax authorities.

36 Income equalisation

36.1 Income equalisation will be applied to Shares issued by theCompany.

36.2 Part of the purchase price of a Share reflects the relevant share ofaccrued income received or to be received by the Company. Thiscapital sum is returned to a Shareholder with the first allocation ofincome in respect of a Share issued during the relevant accountingperiod.

36.3 The amount of income equalisation is calculated by dividing theaggregate of the amounts of income included in the price of Sharesissued to or bought by Shareholders in a particular Share Class inan annual or interim accounting period by the number of thoseShares and applying the resultant average to each of the Shares inquestion.

36.4 Equalisation is a repayment of capital and as such does not carry atax credit or have income tax deducted. Any equalisation received

Prospectus


PAIF/29092017/ENG/r01

20

should be treated as a reduction in the purchase cost of Shares forcapital gains tax purposes.

37 Winding up of the Company

37.1 The Company will not be wound up except as an unregisteredcompany under Part V of the Insolvency Act 1986 or under theRegulations.

37.2 Where the Company is to be wound up under the Regulations, suchwinding up may only be commenced following approval by theFCA. The FCA may only give such approval if the ACD provides astatement (following an investigation into the affairs of theCompany) either that the Company will be able to meet its liabilitieswithin 12 months of the date of the statement or that the Companywill be unable to do so.

37.3 The Company may be wound up under the Regulations if:

37.3.1 an extraordinary resolution to that effect is passed byShareholders; or

37.3.2 the period (if any) fixed for the duration of the Company bythe Instrument of Incorporation expires, or the event (if any)occurs on the occurrence of which the Instrument ofIncorporation provides that the Company is to be wound up(for example, if the Share capital of the Company is belowits prescribed minimum ); or

37.3.3 on the date of effect stated in any agreement by the FCAto a request by the ACD for the revocation of theauthorisation order in respect of the Company.

37.4 On the occurrence of any of the above:

37.4.1 Regulations 6.2, 6.3 and 5 relating to Dealing, Valuationand Pricing and Investment and Borrowing will cease toapply to the Company;

37.4.2 the Company will cease to issue and cancel Shares andthe ACD shall cease to sell or redeem Shares or arrangefor the Company to issue or cancel them for the Company;

37.4.3 no transfer of a Share shall be registered and no otherchange to the register shall be made without the sanctionof the ACD;

37.4.4 where the Company is being wound up, the Company shallcease to carry on its business except in so far as it isbeneficial for the winding up of the Company;

37.4.5 the corporate status and powers of the Company and,subject to the provisions of paragraphs 37.4.1 and 37.4.2above, the powers of the ACD shall remain until theCompany is dissolved.

37.5 The ACD will, as soon as practicable after the Company falls to bewound up, realise the assets and meet the liabilities of theCompany and, after paying out or retaining adequate provision forall liabilities properly payable and retaining provision for the costs ofwinding up, arrange for the Depositary to make one or more interimdistributions out of the proceeds to Shareholders proportionately totheir rights to participate in the Scheme Property of the Company.When the ACD has caused all of the Scheme Property to berealised and all of the liabilities of the Company to be realised, theACD shall arrange for the Depositary also to make a finaldistribution to Shareholders as at (or prior to) the date on which thefinal account is sent to Shareholders of any balance remaining, ifapplicable, in proportion to their holdings in the Company.

37.6 On completion of a winding up of the Company, the Company willbe dissolved and any money which is legitimately the property ofthe Company (including unclaimed distributions) and standing tothe account of the Company, will be paid into court within onemonth of dissolution.

37.7 Following the completion of the winding up of the Company, theACD will provide written confirmation to the Registrar of Companiesand shall notify the FCA that it has done so.

37.8 Following the completion of a winding up of either the Company, theACD must prepare a final account showing how the winding up tookplace and how the Scheme Property was distributed. The auditor ofthe Company shall make a report in respect of the final accountstating their opinion as to whether the final account has beenproperly prepared. This final account and the auditor’s report mustbe sent to the FCA, to each Shareholder and, in the case of thewinding up of the Company, to the Registrar of Companies withintwo months of the termination of the winding up.

38 Accounting periods

The annual accounting period of the Company ends each year on30 September (the accounting reference date). The half-yearlyaccounting period ends each year on 31 March.

39 Income allocations

39.1 Allocations of income are made in respect of the income availablefor allocation in each annual accounting period and, each interimaccounting period (see Appendix 1).

39.2 Distributions of income are paid on or before the annual and interimincome allocation dates as set out in Appendix 1.

39.3 If a distribution remains unclaimed for a period of six years after ithas become due, it will be forfeited and will revert to the Company.

39.4 The amount available for allocation in any accounting period iscalculated by taking the aggregate of the income received orreceivable for the account of the Company in respect of that period,and deducting the charges and expenses of the Company paid orpayable out of income in respect of that accounting period. TheACD then makes such other adjustments as it considersappropriate (and after consulting the auditor as appropriate) inrelation to taxation, income equalisation, income unlikely to bereceived within 12 months following the relevant income allocationdate, income which should not be accounted for on an accrual basisbecause of lack of information as to how it accrues, transfersbetween the income and capital account and any other adjustmentswhich the ACD considers appropriate after consulting the auditor.

39.5 The amount initially deemed available in respect of any one Classof Share may be reduced if the income attributed to another Classof Share is less than the charges applicable to that Class of Share.

39.6 Income from debt securities is recognised on an effective yieldbasis. Effective yield is an income calculation that takes account ofamortisation of any discount or premium on the purchase price ofthe debt security over the remaining life of the security.

39.7 Distributions made to the first named joint Shareholder are aseffective a discharge to the Company and the ACD as if the firstnamed Shareholder had been a sole Shareholder.

39.8 Income produced by the Company’s investments accumulatesduring each accounting period. If, at the end of the accounting year,income exceeds expenses, the net income of the Company isavailable to be distributed to Shareholders. In order to conduct acontrolled dividend flow to Shareholders, interim distributions willbe, at the Investment Manager’s discretion, up to a maximum of thedistributable income available for the period. All remaining incomeis distributed in accordance with the Regulations.

39.9 Where Accumulation Shares are not issued, a Shareholder maychoose to have their income reinvested to purchase additionalShares of that Class. Where the reinvestment of income has beenpermitted, the ACD waives any initial charge due to it on such re-investment. Re-investment of allocations of income is madefourteen days before the relevant income allocation date.

40 Annual Reports

40.1 Annual reports of the Company are published within four months ofeach annual accounting period and half-yearly reports arepublished within two months of each half-yearly accounting periodand are available to Shareholders on request. Shareholders will

Prospectus


PAIF/29092017/ENG/r01

21

receive copies of the annual and half-yearly short reports onpublication.

40.2 In addition to the accounting information contained in the annualshort report of the Company, pursuant to the AIFMD the Managerwill disclose the following information in each annual long report:

40.2.1 the percentage of the Company’s assets which are subjectto special arrangements arising from their illiquid nature,including an overview of any special arrangements inplace, the valuation methodology applied to the assetswhich are subject to such arrangements and howmanagement and performance fees, if any, apply to theseassets;

40.2.2 if risk limits set for the Company by the Manager have beenor are likely to be exceeded and, where these risk limitshave been exceeded, a description of the circumstancesand the remedial measures taken;

40.2.3 the total amount of Leverage employed by the Company;and

40.2.4 any material changes to the following information:

40.2.4.1 the arrangements for managing the liquidityof the Company;

40.2.4.2 the risk management systems employed bythe Manager to manage the risks to whichthe Company is or may be exposed;

40.2.4.3 the current risk profile of the Company andthe maximum level of Leverage that may beemployed by the Company; and

40.2.4.4 where applicable, any right for re-use ofcollateral or any guarantee under theCompany’s leveraging arrangements aswell as the nature of such rights orguarantees.

41 Documents of the Company

41.1 The following documents may be inspected free of charge between9.00 am and 5.00 pm UK time every Dealing Day at the offices ofthe ACD at Laurence Pountney Hill, London EC4R 0HH:

41.1.1 the most recent annual and half-yearly reports of theCompany; and,

41.1.2 the Instrument of Incorporation (and any amendinginstrument of incorporation).

41.2 Shareholders may obtain copies of the documents listed in 45.1.1and 45.1.2, as well as the Prospectus, from the address in 45.1.The ACD may make a charge at its discretion for copies of certaindocuments, however the most recent annual and half-yearly reportsof the Company and the Prospectus are available to any personfree of charge.

42 Risk Management and other information

The following information is available from the ACD on request:

42.1 Risk Management

Information on the risk management methods used in relation to theCompany, the quantitative limits which apply to that riskmanagement and any developments in the risk and yields of themain categories of investment.

42.2 Execution Policy

The Investment Manager’s execution policy sets out the basis uponwhich the Investment Manager will effect transactions (other thandirect property transactions) and place orders in relation to theCompany whilst complying with its obligations under the FCAHandbook to obtain the best possible result for the ACD on behalfof the Company.

42.3 Exercise of voting rights

A description of the Investment Manager’s strategy for determininghow voting rights attached to ownership of Scheme Property are tobe exercised for the benefit of the Company. Details of action takenin respect of voting rights are also available.

43 Notices

Notices to Shareholders will normally be given in writing to theShareholder’s registered address (or, at the discretion of the ACD,such other address which we may hold for the purposes ofcorrespondence).

44 Fair Treatment of Investors

44.1 The ACD has procedures, arrangements and policies in place toensure compliance with the principles of fair treatment of investors.The principles of treating investors fairly include, but are not limitedto:

44.1.1 acting in the best interests of the sub-funds and of theinvestors;

44.1.2 executing the investment decisions taken for the account ofthe sub-funds in accordance with the objectives, theinvestment policy and the risk profile of the sub-funds;

44.1.3 ensuring that the interests of any group of investors are notplaced above the interests of any other group of investors;

44.1.4 ensuring that fair, correct and transparent pricing modelsand valuation systems are used for the sub-fundsmanaged;

44.1.5 preventing undue costs being charged to the sub-fundsand investors;

44.1.6 taking all reasonable steps to avoid conflicts of interestsand, when they cannot be avoided, identifying, managing,monitoring and, where applicable, disclosing thoseconflicts of interest to prevent them from adverselyaffecting the interests of Shareholders; and

44.1.7 recognising and dealing with complaints fairly.

45 Preferential Treatment

45.1 From time to time the ACD may afford preferential terms ofinvestment to certain groups of investors. In assessing whethersuch terms are afforded to an investor, the ACD will ensure that anysuch concession is not inconsistent with its obligation to act in theoverall best interests of the relevant sub-fund and its investors. Inparticular, the ACD may typically exercise its discretion to waive theinitial charge or investment minima for investment in a Class forinvestors that are investing sufficiently large amounts, either initiallyor are anticipated to do so over time, such as platform serviceproviders and institutional investors including fund of fund investors.The ACD may also have agreements in place with such groups ofinvestors which result in them paying a reduced annualmanagement charge. Additionally, the ACD may grant similarpreferential terms to the employees of companies within thePrudential Group of companies or their associates.

46 Complaints

If you wish to complain about any aspect of the service you havereceived or to request a copy of M&G’s complaints handlingprocedures, please contact M&G Customer Relations, PO Box9039, Chelmsford CM99 2XG. If your complaint is not dealt with toyour satisfaction, you can then complain to: The FinancialOmbudsman Service (FOS), Exchange Tower, London, E14 9SR.

47 Marketing outside the UK

47.1 The Company’s Shares are not marketed outside the UK.

Prospectus


PAIF/29092017/ENG/r01

22

47.2 The Shares in the Company have not been and will not beregistered under the United States Securities Act of 1933, asamended, or registered or qualified under the securities laws of anystate of the United States and may not be offered, sold, transferredor delivered, directly or indirectly, to any investors within the UnitedStates or to, or for the account of, US Persons except in certainlimited circumstances pursuant to a transaction exempt from suchregistration or qualification requirements. None of the Shares havebeen approved or disapproved by the US Securities and ExchangeCommission, any state securities commission in the United Statesor any other US regulatory authority, nor have any of the foregoingauthorities passed upon or endorsed the merits of the offering of theShares or the accuracy or adequacy of the prospectus. TheCompany will not be registered under the United States InvestmentCompany Act of 1940, as amended.

48 Genuine diversity of ownership

48.1 Shares in the Company are and will continue to be widely available.The intended categories of investors are retail and institutionalinvestors.

48.2 Shares in the Company are and will continue to be marketed andmade available widely to reach the intended categories of investorsand in a manner appropriate to attract those categories of investors.

49 Remuneration policy

The ACD applies a staff remuneration policy consistent with theprinciples outlined in the Undertakings for Collective Investment inTransferable Securities Directive (UCITS) (No. 2009/65/EC), asamended, the Alternative Investment Fund Managers Directive(AIFMD) (No. 2011/61/EU), as amended, and the FCA Handbookof Rules and Guidance. The remuneration policy is overseen by aremuneration committee and is designed to promote sound andeffective risk management by, amongst other things:

- identifying staff with the ability to have a material impact on the riskprofile of either the ACD or the Funds;

- ensuring that the remuneration of those staff is in line with the riskprofiles of the ACD and of the Funds, and that any relevant conflictsof interest are appropriately managed at all times;

- setting out the link between pay and performance for all of theACD’s employees, including the terms of annual bonus and long-term incentive plans and individual remuneration packages forDirectors and other senior employees.

Please visit the following website:http://www.mandg.com/en/corporate/about-mg/our-people/ for up-to-date details of the remuneration policy, including, but not limitedto:

- a description of how remuneration and benefits are calculated;

- the identities of persons responsible for awarding theremuneration, and,

- the composition of the remuneration committee

Alternatively, a paper copy can be obtained from our CustomerRelations Department free of charge on 0800 390 390.

50 Insurance

All Property Assets held by the Company are the subject of a blockinsurance policy which provides “all risks” cover for the building andtypically 3 years loss of rent.

51 Professional Liability

The Manager holds sufficient own funds to cover professionalliability risk.

52 Changes to the Funds

Where any changes are proposed to be made to the Companyincluding changes to the investment objective, policy or strategy,the ACD will assess whether the change is fundamental, significantor notifiable in accordance with COLL 4.3. If the change is regardedas fundamental, Shareholder approval will be required. If thechange is regarded as significant, not less than 60 days’ priorwritten notice will be given to Shareholders. If the change isregarded as notifiable, Shareholders will receive suitable notice ofthe change.

53 Rights against service providers

Investors will only be able to exercise their rights directly against theCompany and the Manager and will not have any direct rightsagainst the service providers of the Company appointed from timeto time.

Prospectus


PAIF/29092017/ENG/r01

Risk factors


23PAIF/29092017/ENG/r01

54 Risk factors

M&G Prope

rty Portfolio

Risk to capital & Income will vary

The investments of the Fund are subject to normal market fluctuations and other risks inherent in investing in property, shares, bondsand other stock market related assets. These fluctuations may be more extreme in periods of market disruption and other exceptionalevents. There can be no assurance that any appreciation in value of investments will occur or that the investment objective willactually be achieved. The value of investments and the income from them will fall as well as rise and investors may not recoup theoriginal amount they invested.

Shares in the Fund should generally be regarded as long term investments. The Fund is therefore suitable for persons who have capitalwhich may be committed on a long term basis.

Past performance is not a guide to future performance. The level of income is not fixed and may vary.

�

Charges to Capital The charges and expenses attributable to the Fund’s Income Shares are taken from capital, in whole or in part, and as a result capitalgrowth for that share class will be constrained.

�

Liquidity Risk

The investments of the Fund are subject to normal market fluctuations and other risks inherent in investing in property, shares, bondsand other stock market related assets. These fluctuations may be more extreme in periods of market disruption and other exceptionalevents. There can be no assurance that any appreciation in value of investments will occur or that the investment objective willactually be achieved. The value of investments and the income from them will fall as well as rise and investors may not recoup theoriginal amount they invested.

Shares in the Fund should generally be regarded as long term investments. The Fund is therefore suitable for persons who have capitalwhich may be committed on a long term basis.

Past performance is not a guide to future performance. The level of income is not fixed and may vary.

�

Suspension of dealing in shares Investors are reminded that in exceptional circumstances their right to sell or redeem Shares may be temporarily suspended. �

Cancellation Risks When cancellation rights are applicable and are exercised, the full amount invested may not be returned if the price falls before weare informed of your intention to cancel.

�

Inflation A change in the rate of inflation may affect the real value of your investment. �

Taxation

The current tax regime applicable to investors in collective investment schemes in their country of residence or domicile and the UKschemes themselves, including the regime applicable to PAIFs, is not guaranteed and may be subject to change. Any changes mayhave a negative impact on returns received by investors.

If the Fund should breach any of the statutory conditions required for PAIF status, then depending upon the nature of the breach andthe number of breaches that have occurred, this may result in a corporation tax liability arising or HM Revenue & Customs terminatingthe Fund’s PAIF status. Termination of the Fund’s PAIF status would result in the distributions paid by the Fund having a different taxtreatment.

�

Tax developments

The tax regulations which M&G Funds are subject to constantly change as a result of

(i) technical developments – changes in law regulations;

(ii) interpretative developments – changes in the way tax authorities apply law and (iii) market practice – whilst tax law is in place,there may be difficulties applying the law in practice (e.g. due to operational constraints).

Any changes to the tax regimes applicable to M&G Funds and investors in their country of residence or domicile may impactnegatively on the returns received by investors.

�

Cyber Event Risk

Like other business enterprises, the use of the internet and other electronic media and technology exposes M&G Funds, its serviceproviders, and their respective operations, to potential risks from cyber-security attacks or incidents (collectively, “cyber-events”).Cyber-events may include, for example, unauthorised access to systems, networks or devices (such as, for example, through “hacking”activity), infection from computer viruses or other malicious software code, and attacks which shut down, disable, slow or otherwisedisrupt operations, business processes or website access or functionality. In addition to intentional cyber-events, unintentional cyber-events can occur, such as, for example, the inadvertent release of confidential information. Any cyber-event could adversely impacta fund and its Shareholders. A cyber-event may cause a fund, or its service providers to lose proprietary information, suffer datacorruption, lose operational capacity (such as, for example, the loss of the ability to process transactions, calculate the Net Asset Valueof a fund or allow Shareholders to transact business) and/or fail to comply with applicable privacy and other laws. Among otherpotentially harmful effects, cyber-events also may result in theft, unauthorised monitoring and failures in the physical infrastructureor operating systems that support a fund and its service providers. In addition, cyber-events affecting issuers in which a fund investscould cause the fund’s investments to lose value.

�

Shareholder liability Shareholders are not liable for the debts of the Fund. A Shareholder is not liable to make any further payment to the Fund after payingthe purchase price of Shares.

�

Counterparty RiskWhilst the Investment Manager will place transactions, hold positions (including OTC derivatives) and deposit cash with a range ofcounterparties, there is a risk that a counterparty may default on its obligations or become insolvent, which may put the Fund's capitalat risk.

�

General risks Risk warning

Risk factors


24 PAIF/29092017/ENG/r01

54 Risk factors


Rental growth not guaranteed Although it is anticipated that rental growth will take place, this is not guaranteed. Rent default could have an adverse impact on theperformance of the Fund.

�

Investment opportunities may belimited

The supply of new investment opportunities may be limited from time to time. There is therefore the possibility that a portion of theScheme Property remains uninvested in Property Assets. If this situation persists, it may serve to constrain the performance of the Fund.

�

Redemption Sterling D share classRedemptions in Sterling Class D Shares are subject to a 90 day notice period to protect the interests of other Shareholders. Any suchredemption will receive the price calculated at the Valuation Point on the day of the redemption, not the price calculated at the ValuationPoint next following receipt of the redemption instruction. The proceeds of any such redemption will be subject to our usual requirements.

�

Purchase of shares may be limited It may not always be possible to invest in the Fund as the issue of Shares may be limited in certain circumstances. �

Valuation Risk The value of Property Assets is generally determined by the opinion of the standing independent valuer and is therefore subjective. �

Funds investing in a specificcountries, regions, sectors andassets classes

Funds investing in specific sectors, such as those investing primarily in a geographic region or specific asset class or sector, such asproperty, will have more concentrated portfolios and will therefore be more volatile and carry a higher risk to capital than a morediversified portfolio. This is because these funds are more vulnerable to general market sentiment concerning the region or asset classin which they invest than those which invest across several regions or asset classes.

�

Specialist sector Property investment is a specialist sector. You should contact a financial adviser if you have any doubts about the suitability of thisFund for your needs.

�

Forced disposals If the Fund suffers significant redemptions the ACD may be forced to dispose of Property Assets. Sales of this nature may result in aless than favourable price being obtained in the market.

�

Diversification risk If the size of the Fund falls significantly, diversification of risk may be compromised as the Fund may hold fewer Property Assets. �

Exchange rate risk The values, in pounds sterling terms, of any Scheme Property that is not denominated in pounds sterling may rise and fall purely onaccount of exchange rate fluctuations, which will have a related effect on the price of Shares.

�

Large Deals For deals in excess of £50,000, the dealing price investors receive may be different from the published price. If investors are buyingShares, they may receive a price that is higher than the quoted offer price. If investors are selling Shares, they may receive a price thatis lower than the quoted bid price.

�

Bid-Offer Spread

Each day we value the assets of the Fund on both an ‘offer’ basis (how much they would cost to buy) and a ‘bid’ basis (how muchthe fund would receive if they were sold). The difference between the two prices reflects the costs of buying and selling properties, inparticular Stamp Duty Land Tax paid on purchases which can account for up to 5% of the property value. The published dealing pricesare on either the ‘offer’ basis or ‘bid’ basis, depending on whether people are generally buying fund shares (the fund is in ‘net inflow’)or selling shares (the fund is in ‘net outflow’). The pricing basis did not change during 2017.However, a change in the pricing basisduring 2017 would have resulted in a price movement of between 5.51% and 6.26% (5.92% as at 7 March 2018).

�

Derivatives used for investmentpurposes (unsophisticated funds,non complex use of derivatives)

The Fund may undertake transactions in derivatives and forward transactions, both on exchange and over the counter (OTC), for thepurposes of meeting the investment objective, protecting the risk to capital, currency, duration and credit management, as well as forhedging. The Risk Management Process document sets out the approved derivative strategies.

Derivative positions are fully covered by liquid assets or cash held in the Fund.

�

Correlation (Basis risk) Correlation risk is the risk of loss due to divergence between two rates or prices. This applies particularly where an underlying positionis hedged through derivative contracts which are not the same as (but may be similar to) the underlying position.

�

Valuation

Valuation risk is the risk of differing valuations of derivatives arising from different permitted valuation methods. Many derivatives,in particular non-exchange traded (“OTC”) derivatives, are complex and often valued subjectively and the valuation can only beprovided by a limited number of market professionals who are often also the counterparty to the transaction. As a result, the dailyvaluation may differ from the price that can actually be achieved when trading the position in the market.

�

LiquidityLiquidity risk exists when a particular instrument is difficult to purchase or sell. Derivative transactions that are particularly large ortraded off market (i.e. over the counter) may be less liquid and therefore not readily adjusted or closed out. Where it is possible to buyor sell, this may be at a price that differs from the price of the position as reflected in the valuation.

�

"Daylight Risk" to Counterparty Certain derivative types may require the establishment of a long term exposure to a single counterparty, which increases risk ofcounterparty default or insolvency.

�

Delivery The Fund’s ability to settle derivative contracts on their maturity may be affected by the illiquidity of the underlying asset. In suchcircumstances, there is a risk of loss to the Fund.

�

Volatility It is not intended nor anticipated that the use of these derivative instruments will not have a material impact on the risk profile orvolatility of the Fund. Extreme market events, counterparty default or insolvency may, however, result in loss to the Fund.

�

Legal risk

New Derivative transactions are typically undertaken under separate legal arrangements. In the case of over the counter ("OTC")derivatives, a standard International Swaps and Derivatives Association (ISDA) agreement is used to govern the trade between the fundand the counterparty. The agreement covers situations such as a default of either party and also the delivery and receipt of collateral.

As a result, There is a risk of loss to M&G PAIF where liabilities in those agreements are challenged in a court of law.

�

Fund Specific Risk warning

Derivatives risks Risk warning

25

Investment Objective

The investment objective of the Fund is to carry on Property InvestmentBusiness and to manage cash raised from investors for investment in theProperty Investment Business. In so doing, the Fund aims to maximise longterm total return (the combination of income and growth of capital) throughinvestment mainly in commercial property.

Investment Policy

The Fund invests in a diversified portfolio of commercial property mainly inthe UK, seeking to add value through strategic asset allocation, stockselection and asset management. The Fund may also invest in otherproperty related assets, including collective investment schemes,transferable securities, derivatives and debt instruments, as well asgovernment debt, money market instruments and cash. Derivatives may beused for investment purposes as well as for efficient portfolio management.

Strategy for achieving the Objective

The M&G Property Portfolio aims to maximise long-term total return throughdirect investment in commercial property. The fund is diversified acrossdifferent property sectors (such as retail, offices and industrial). This is doneby reviewing the structural and portfolio risk implications of holding variousassets within the fund and when acquiring new assets for the fund. Inresearching properties and therefore the associated risk, the managerconsiders location, property type, rent review and lease expiry pattern,tenant, industry sector, tenure, lease covenants and physical andenvironmental factors.

Accounting reference date: 30 September

Income allocation dates: On or before 31 January (Final); 30 April (Interim);31 July (Interim); 31 October (Interim)

Available Share Classes/types: Sterling Class A Shares (Income andAccumulation)Sterling Class X Shares (Income)Sterling Class R Shares (Income andAccumulation)Sterling Class I Shares (Income andAccumulation)Sterling Class D Shares (Income andAccumulation)Sterling Class F* Shares (Income)

Investment minima

Lump sum initial investment Sterling Class A: £500Sterling Class X: £500Sterling Class R: £500Sterling Class I: £500,000Sterling Class D: £500,000Sterling Class F*: Nil

Lump sum subsequent investment Sterling Class A: £100Sterling Class X: £100Sterling Class R: £100Sterling Class I: £10,000Sterling Class D: £10,000Sterling Class F*: Nil

Lump sum holding Sterling Class A: £500Sterling Class X: £500Sterling Class R: £500Sterling Class I: £500,000Sterling Class D: £500,000Sterling Class F*: Nil

Redemption Sterling Class A: £100Sterling Class X: £100Sterling Class R: £100Sterling Class I: £10,000Sterling Class D: £10,000Sterling Class F*: Nil

Charges and Expenses

Initial charge Sterling Class A: NilSterling Class X: NilSterling Class R: NilSterling Class I: NilSterling Class D: NilSterling Class F*: N/A

Redemption charge Sterling Class A: N/ASterling Class X: N/ASterling Class R: N/ASterling Class I: N/ASterling Class D: N/ASterling Class F*: N/A

Annual Management Charge Sterling Class A: 1.50%Sterling Class X: 1.50%Sterling Class R: 1.00%Sterling Class I: 0.75%Sterling Class D: 0.60%Sterling Class F*: N/A

Administration Charge Class A: 0.15%Class X: 0.15%Class R: 0.15%Class I: 0.15%Class D: 0.15%Class F: 0.15%

* Sterling Class F Shares are available only to the Feeder Fund.

Allocation of Charges

Accumulation Shares Income SharesAnnual Management Charge 100% to Income 100% to CapitalAdministration Charge 100% to Income 100% to CapitalShare Class Hedging Charge N/A N/ADepositary’s Charge 100% to Income 100% to IncomeCustody Charge 100% to Income 100% to IncomeStanding Independent Valuer’s Charge 100% to Income 100% to IncomeInvestment Accounting Charge 100% to Income 100% to IncomeCustody Transaction Charges 100% to Capital 100% to CapitalExpenses 100% to Income 100% to IncomePortfolio Transaction Charges 100% to Capital 100% to Capital

Investor Profile

The Company is suitable for retail and institutional investors seeking totalreturn over the long term from investments mainly in property but whoappreciate that their capital will be at risk and that the value of theirinvestment and any derived income may fall as well as rise.

Other information

Launch date: 18 January 2013

Valuation point: 12:00 UK time

Product Reference Number: 581211

Appendix 1 –

Details of the M&G Property Portfolio

PAIF/29092017/ENG/r01

26

1 General rules of investment

1.1 The Company is intended to be a PAIF at all times. HM Revenue &Customs has provided confirmation to the ACD that the Companymeets the requirements to qualify as a PAIF under Regulation 69Oof the Tax Regulations (SI 2006/964, as amended).

1.2 The property of the Company will be invested with the aim ofachieving its investment objective subject to the limits oninvestment set out in Chapter 5 of the COLL Sourcebook (COLL5.6) that are applicable to Non-UCITS Retail Schemes and therelevant provisions of the Tax Regulations. These limits apply assummarised below.

1.3 As a result of 1.1, the net income of the Company deriving fromProperty Investment Business will be at least 60% of theCompany’s net income in each of its accounting periods, and thevalue of the assets involved in Property Investment Business will beat least 60% of the total value of the assets held by the Companyat the end of each of its accounting periods. For this purpose, netincome means the amount falling to be dealt with under the heading“net revenue/expenses before taxation” in the Company’sstatement of total return for the period.

1.4 The Company’s investment policy may mean that at times, where itis considered appropriate, its property will not be fully invested andthat prudent levels of liquidity will be maintained.

2 Property Investment Business

2.1 “Property Investment Business” is defined in the Tax Regulations atthe time of this prospectus as property rental business (meaningproperty rental business within the meaning given by section S19Corporation Tax Act 2010, and the property rental business of anyintermediate holding vehicle), owning shares in UK real estateinvestment trusts (REITS) and shares or units in non-UK REITs.

3 Prudent spread of risk

3.1 The ACD must ensure that, taking account of the investmentobjective and policy of the Company, the property of the Companyaims to provide a prudent spread of risk.

4 Treatment of obligations

4.1 Where the COLL Sourcebook allows a transaction to be enteredinto or an investment to be retained only if possible obligationsarising out of the investment transactions or out of the retentionwould not cause any breach of any limits in COLL 5, it must beassumed that the maximum possible liability of the Company underany other of those rules has also to be provided for.

4.2 Where a rule in the COLL Sourcebook permits an investmenttransaction to be entered into or an investment to be retained onlyif that investment transaction, or the retention, or other similartransactions, are covered:

4.2.1 it must be assumed that in applying any of those rules, theCompany must also simultaneously satisfy any otherobligation relating to cover; and

4.2.2 no element of cover must be used more than once.

5 Non-UCITS Retail Schemes – general

5.1 Subject to the investment objectives and policy of the Company, theScheme Property must, except where otherwise provided inChapter 5 of the COLL Sourcebook, only consist of any or all of:

5.1.1 transferable securities;

5.1.2 money market instruments;

5.1.3 deposits;

5.1.4 units in collective investment schemes;

5.1.5 derivatives and forward transactions;

5.1.6 immovables; and

5.1.7 gold (up to a limit of 10% in value of the Scheme Property).

5.2 The requirements on spread and investment in government andpublic securities do not apply during any period during which it is notreasonable to comply provided that the requirement to maintainprudent spread of risk is complied with.

5.3 It is not intended that the Company will invest directly in gold.

6 Immovable Property

6.1 The Company may be fully invested in situations of land orbuildings in the United Kingdom, the Channel Islands and the Isleof Man. The ACD must take reasonable care to determine that thetitle to such property is a good marketable title. An immovable mustbe a freehold or leasehold interest (if in England and Wales orNorthern Ireland) or any interest or estate in or over land orheritable right including a long lease (if in Scotland) or an equivalentinterest (if in neither of those jurisdictions).

6.2 For each investment in an immovable the ACD must have receiveda report from an appropriate valuer which:

6.2.1 contains a valuation of the immovable (with and withoutany relevant subsisting mortgage) and states that in theappropriate valuer’s opinion the immovable would, ifacquired by the Company, be capable of being disposed ofreasonably quickly at that valuation; or

6.2.2 states that the immovable is adjacent to or in the vicinity ofanother immovable included in the Scheme Property or isanother legal interest, as referred to in 6.1, in an immovablewhich is already included in the Scheme Property and inthe opinion of the appropriate valuer, the total value of bothimmovables would at least equal the sum of the pricepayable for the immovable and the existing value of theother immovable.

6.3 An immovable must:

6.3.1 be bought or be agreed by enforceable contract to bebought within six months of the report of the appropriatevaluer;

6.3.2 not be bought if it is apparent that the report in 6.3.1 couldnot be relied upon; and,

6.3.3 not be bought at more than 105% of the valuation for therelevant immovable in the report in 6.2.

6.4 An appropriate valuer must be a person who has knowledge of andexperience in the valuation of immovables of the relevant kind in therelevant area, is qualified to be a standing independent valuer of anon-UCITS retail scheme or is considered by the Company’sstanding independent valuer to hold an equivalent qualification, isindependent of the Depositary and each of the directors of the ACDand Depositary and has not engaged himself or any of hisassociates in relation to the finding of the immovable for theCompany or the finding of the Company for the immovable.

6.5 Not more than 15% in value of the Scheme Property is to consist ofone immovable. Immovables adjacent to or in the vicinity of anotherimmovable included in the Scheme Property, or another legalinterest in an immovable which is already in the Scheme Property,shall be deemed to be one immovable provided, in the opinion ofan appropriate valuer, the total value of both immovables would atleast equal the sum of the price payable for the immovable and theexisting value of the other immovable. The figure of 15% may beincreased to 25% once the immovable has been included in theScheme Property.

6.6 Income received from any one group in an accounting period mustnot be attributable to immovables comprising:

6.6.1 more than 25%; or

Appendix 2 –

Investment management and borrowing powers of the Company

PAIF/29092017/ENG/r01

27

6.6.2 in the case of a government or public body, more than 35%of the value of the Scheme Property.

6.7 Not more than 20% in value of the Scheme Property is to consist ofmortgaged immovables and any mortgage must not secure morethan 100% of the valuation received from an appropriate valuer.

6.8 The aggregate of mortgaged property, borrowings (subject to thelimit set out in 30.1 below) and any transferable securities which arenot approved securities must not exceed 20% in value of theScheme Property.

6.9 The Company may invest up to 50% of the Scheme Property inimmovables which are unoccupied and non-income producing or inthe course of substantial development, redevelopment orrefurbishment.

6.10 The Company may grant an option to a third party to buy animmovable in the Scheme Property provided the value of therelevant immovable does not exceed 20% of the value of theScheme Property together with, where appropriate, the value ofinvestments in

6.10.1 unregulated collective investment schemes; and

6.10.2 any transferable securities which are not approvedsecurities.

6.11 Any furniture, fittings or other contents of any building may beregarded as part of the relevant immovable.

7 Transferable securities

7.1 A transferable security is an investment falling within article 76(Shares etc), article 77 (Instruments creating or acknowledgingindebtedness), article 78 (Government and public securities), article79 (Instruments giving entitlement to investments) and article 80(Certificates representing certain securities) of the RegulatedActivities Order.

7.2 An investment is not a transferable security if the title to it cannot betransferred, or can be transferred only with the consent of a thirdparty.

7.3 In applying paragraph 7.2 to an investment which is issued by abody corporate, and which is an investment falling within articles 76(Shares, etc) or 77 (Instruments creating or acknowledgingindebtedness) of the Regulated Activities Order, the need for anyconsent on the part of the body corporate or any members ordebenture holders of it may be ignored.

7.4 An investment is not a transferable security unless the liability of theholder of it to contribute to the debts of the issuer is limited to anyamount for the time being unpaid by the holder of it in respect of theinvestment.

7.5 Not more than 5% in value of the Company is to consist of warrants.

8 Transferable securities and money marketinstruments generally to be admitted or dealt inon an Eligible Market

8.1 Transferable securities and approved money market instrumentsheld by the Company must be:

8.1.1 admitted to or dealt on an eligible market (as described inparagraph 12); or

8.1.2 for an approved money market instrument not admitted toor dealt in on an eligible market, within 9.1; or

8.1.3 recently issued transferable securities provided that:

8.1.3.1 the terms of issue include an undertakingthat application will be made to be admittedto an eligible market; and

8.1.3.2 such admission is secured within a year ofissue.

8.2 However, the Company may invest no more than 20% of theScheme Property in transferable securities and approved money-market instruments other than those referred to in 8.1.

9 Money-market instruments with a regulatedissuer

9.1 In addition to instruments admitted to or dealt in on an eligiblemarket, the Company may invest in an approved money-marketinstrument provided it fulfils the following requirements:

9.1.1 the issue or the issuer is regulated for the purpose ofprotecting investors and savings; and

9.1.2 the instrument is issued or guaranteed in accordance withparagraph 9 (Issuers and guarantors of money marketinstruments).

9.2 The issue or the issuer of a money-market instrument, other thanone dealt in on an eligible market, shall be regarded as regulatedfor the purpose of protecting investors and savings if:

9.2.1 the instrument is an approved money-market instrument;

9.2.2 appropriate information is available for the instrument(including information which allows an appropriateassessment of the credit risks related to investment in it), inaccordance with paragraph 10 (Appropriate information formoney market instruments); and

9.2.3 the instrument is freely transferable.

10 Issuers and guarantors of money-marketinstruments

10.1 The Company may invest in an approved money-market instrumentif it is:

10.1.1 issued or guaranteed by any one of the following:

10.1.1.1 a central authority of an EEA State or, if theEEA State is a federal state, one of themembers making up the federation;

10.1.1.2 a regional or local authority of an EEAState;

10.1.1.3 the European Central Bank or a centralbank of an EEA State;

10.1.1.4 the European Union or the EuropeanInvestment Bank;

10.1.1.5 a non-EEA State or, in the case of a federalstate, one of the members making up thefederation;

10.1.1.6 a public international body to which one ormore EEA States belong; or

10.1.2 issued by a body, any securities of which are dealt in on aneligible market; or

10.1.3 issued or guaranteed by an establishment which is:

10.1.3.1 subject to prudential supervision inaccordance with criteria defined byEuropean Community law; or

10.1.3.2 subject to and complies with prudentialrules considered by the FCA to be at leastas stringent as those laid down byEuropean Community law.

10.2 An establishment shall be considered to satisfy the requirement in10.1.3.2 if it is subject to and complies with prudential rules, andfulfils one or more of the following criteria:

10.2.1 it is located in the European Economic Area; or,

10.2.2 it is located in an OECD country belonging to the Group ofTen; or

Appendix 2 –


PAIF/29092017/ENG/r01

28

10.2.3 it has at least investment grade rating; and

on the basis of an in-depth analysis of the issuer, it can bedemonstrated that the prudential rules applicable to thatissuer are at least as stringent as those laid down byEuropean Community law.

11 Appropriate information for money-marketinstruments

11.1 In the case of an approved money-market instrument within 10.1.2or issued by a body of the type referred to in COLL 5.2.10E(G); orwhich is issued by an authority within 10.1.1.2 or a publicinternational body within 10.1.1.6 but is not guaranteed by a centralauthority within 10.1.1.1, the following information must beavailable:

11.1.1 information on both the issue or the issuance programme,and the legal and financial situation of the issuer prior to theissue of the instrument, verified by appropriately qualifiedthird parties not subject to instructions from the issuer;

11.1.2 updates of that information on a regular basis andwhenever a significant event occurs; and

11.1.3 available and reliable statistics on the issue or the issuanceprogramme.

11.2 In the case of an approved money-market instrument issued orguaranteed by an establishment within 10.1.3, the followinginformation must be available:

11.2.1 information on the issue or the issuance programme or onthe legal and financial situation of the issuer prior to theissue of the instrument;

11.2.2 updates of that information on a regular basis andwhenever a significant event occurs; and

11.2.3 available and reliable statistics on the issue or the issuanceprogramme, or other data enabling an appropriateassessment of the credit risks related to investment inthose instruments.

11.3 In the case of an approved money-market instrument:

11.3.1 within 10.1.1.1, 10.1.1.4 or 10.1.1.5; or

11.3.2 which is issued by an authority within 10.1.1.2 or a publicinternational body within 10.1.1.6 and is guaranteed by acentral authority within 10.1.1.1;

information must be available on both the issue or theissuance programme, and on the legal and financialsituation of the issuer prior to the issue of the instrument.

12 Eligible markets regime: purpose

12.1 To protect investors the markets on which investments of theCompany are dealt in or traded on should be of an adequate quality(“eligible”) at the time of acquisition of the investment and until it issold.

12.2 Where a market ceases to be eligible, investments on that marketcease to be approved securities. The 20% restriction on investingin non-approved securities applies and exceeding this limit becausea market ceases to be eligible will generally be regarded as aninadvertent breach.

12.3 A market is eligible for the purposes of the rules if it is:

12.3.1 a regulated market; or

12.3.2 a market in an EEA State which is regulated, operatesregularly and is open to the public.

12.4 A market not falling within paragraph 12.3 is eligible for thepurposes of Chapter 5 of the COLL Sourcebook if:

12.4.1 the ACD, after consultation and notification with theDepositary, decides that market is appropriate forinvestment of, or dealing in, the Scheme Property;

12.4.2 the market is included in a list in the prospectus; and

12.4.3 the Depositary has taken reasonable care to determinethat:

12.4.3.1 adequate custody arrangements can beprovided for the investment dealt in on thatmarket; and

12.4.3.2 all reasonable steps have been taken bythe ACD in deciding whether that market iseligible.

12.5 In paragraph 12.4.1 a market must not be considered appropriateunless it is regulated, operates regularly, is recognised as a marketor exchange or as a self-regulating organisation by an overseasregulator, is open to the public, is adequately liquid and hasadequate arrangements for unimpeded transmission of income andcapital to or for the order of investors.

12.6 The eligible markets for the Company are set out in Appendix 3.

13 Spread: general

13.1 This paragraph on spread does not apply in respect of atransferable security or an approved money-market instrument towhich COLL 5.2.1R (Spread: government and public securities)applies.

13.2 Not more than 20% in value of the Scheme Property is to consist ofdeposits with a single body.

13.3 Not more than 10% in value of the Scheme Property is to consist oftransferable securities or money market instruments issued by anysingle body subject to COLL 5.6.23R (Schemes replicating anindex)

13.4 The limit of 10% in 13.3 is raised to 25% in value of the SchemeProperty in respect of covered bonds.

13.5 In applying paragraph 13.3 certificates representing certainsecurities are treated as equivalent to the underlying security.

13.6 The exposure to any one counterparty in an OTC derivativetransaction must not exceed 10% in value of the Scheme Property.

13.7 Not more than 10% in value of Scheme Property is to consist ofunits of any one collective investment scheme.

13.8 For the purpose of calculating the limit in paragraph 13.6, theexposure in respect of an OTC derivative may be reduced to theextent that collateral is held in respect of it if the collateral meets thefollowing conditions:

13.8.1 the collateral is marked-to-market on a daily basis andexceeds the value of the amount at risk;

13.8.2 is exposed only to negligible risks (e.g. government bondsof first credit rating or cash) and is liquid;

13.8.3 is held by a third party custodian not related to the provideror is legally secured from the consequences of a failure ofa related party; and

13.8.4 can be fully enforced by the Company at any time.

13.9 For the purpose of calculating the limit in paragraph 13.6, OTCderivative positions with the same counterparty may be nettedprovided that the netting provisions comply with the conditions setout in COLL 5.6.7R(9).

13.10 In applying this paragraph 13, all derivatives transactions aredeemed to be free of counterparty risk if they are performed on anexchange where the clearing house is backed by an appropriateperformance guarantee and is characterised by a daily mark-to-market valuation of the derivative positions and an at least dailymargining.

Appendix 2 –


PAIF/29092017/ENG/r01

29

14 Spread: Government and public securities

14.1 This section applies in respect of a transferable security or anapproved money-market instrument (“such securities”) that isissued by:

14.1.1 an EEA State;

14.1.2 a local authority of an EEA State;

14.1.3 a non-EEA State; or

14.1.4 a public international body to which one or more EEAStates belong.

14.2 Where no more than 35% in value of the Scheme Property of theCompany is invested in such securities issued by any one body,there is no limit on the amount which may be invested in suchsecurities or in such securities issued by any one body or of anyone issue.

14.3 A Company may invest more than 35% in value of the SchemeProperty in such securities issued by any one body provided that:

14.3.1 the ACD has before any such investment is madeconsulted with the Depositary and as a result considersthat the issuer of such securities is one which is appropriatein accordance with the investment objectives of theCompany;

14.3.2 no more than 30% in value of the Scheme Propertyconsists of such securities of any one issue;

14.3.3 the Scheme Property includes such securities issued bythat or another issuer, of at least six different issues.

14.4 In relation to such securities:

14.4.1 issue, issued and issuer include guarantee, guaranteedand guarantor; and

14.4.2 an issue differs from another if there is a difference as torepayment date, rate of interest, guarantor or other materialterms of the issue.

15 Investment in collective investment schemes

15.1 Up to 15% of the value of the Scheme Property of the Companymay be invested in units or shares in other collective investmentschemes (“second scheme”) provided that the investment ispermitted under paragraphs 15.2 to 15.5.

15.2 The second scheme is a scheme which:

15.2.1 complies with the conditions necessary for it to enjoy therights conferred by the UCITS Directive; or

15.2.2 is a Non-UCITS Retail Scheme; or

15.2.3 is recognised under the provisions of section 264, 270 or272 of the Financial Services and Markets Act 2000(Schemes constituted in other EEA states, Schemesauthorised in designated countries or territories andIndividually Recognised Schemes); or

15.2.4 is constituted outside the United Kingdom and theinvestment and borrowing powers of which are the sameor more restrictive than those of a Non-UCITS RetailScheme; or

15.2.5 is a scheme not falling within paragraphs 15.2.1 to 15.2.4and in respect of which no more than 10% in value of theScheme Property (including any transferable securitieswhich are not approved securities) is invested.

15.3 The second scheme operates on the principle of the prudent spreadof risk.

15.4 The second scheme is prohibited from having more than 15% invalue of the Scheme Property consisting of units in collectiveinvestment schemes.

15.5 The participants in the second scheme must be entitled to havetheir units redeemed in accordance with the scheme at a pricerelated to the net value of the property to which the units relate anddetermined in accordance with the scheme.

15.6 Where the second scheme is an umbrella, the provisions inparagraphs 15.3, 15.4 and 15.5 and COLL 5.6.7R (Spread:general) apply to each sub-fund as if it were a separate scheme.

15.7 In accordance with 5.6.11R of the COLL Sourcebook (Investment inother group schemes) the Company may invest in collectiveinvestment schemes managed or operated by (or, if it is an open-ended investment company has as its authorised corporatedirector), the ACD or an associate of the ACD.

15.8 The Company must not invest in or dispose of units in anothercollective investment scheme (the second scheme), which ismanaged or operated by (or in the case of an open-endedinvestment company has as its authorised corporate director), theACD, or an associate of the ACD, unless:

15.8.1 there is no charge in respect of the investment in or thedisposal of units in the second scheme; or

15.8.2 the ACD is under a duty to pay to the Company by theclose of business on the fourth business day next after theagreement to buy or to sell the amount referred to inparagraphs 15.8.3 and 15.8.4;

15.8.3 on investment, either:

15.8.3.1 any amount by which the considerationpaid by the Company for the units in thesecond scheme exceeds the price thatwould have been paid for the benefit of thesecond scheme had the units been newlyissued or sold by it; or

15.8.3.2 if such price cannot be ascertained by theACD, the maximum amount of any chargepermitted to be made by the seller of unitsin the second scheme;

15.8.4 on disposal, the amount of any charge made for theaccount of the authorised fund manager or operator of thesecond scheme or an associate of any of them in respectof the disposal; and

15.9 In this paragraph:

15.9.1 any addition to or deduction from the consideration paid onthe acquisition or disposal of units in the second scheme,which is applied for the benefit of the second scheme andis, or is like, a dilution levy, is to be treated as part of theprice of the units and not as part of any charge; and

15.9.2 any switching charge made in respect of an exchange ofunits in one sub-fund or separate part of the secondscheme for units in another sub-fund or separate part ofthat scheme is to be included as part of the considerationpaid for the units.

16 Investment in nil and partly paid securities

16.1 The Company must not invest in nil and partly paid securitiesunless the investment complies with the conditions in COLL5.2.17R (Investment in nil and partly paid securities).

17 Investment in deposits

17.1 The Company may invest in deposits only with an Approved Bankand which are repayable on demand or have the right to bewithdrawn, and maturing in no more than 12 months.

18 Derivatives - General

Under the COLL Sourcebook derivatives are permitted for Non-UCITS Retail Schemes for investment purposes and derivative

Appendix 2 –


PAIF/29092017/ENG/r01

30

transactions may be used for the purposes of hedging, or efficientportfolio management or meeting the investment objective.

It is anticipated that the use of these derivative instruments will notincrease the risk profile of the Company and will therefore notincrease the volatility of the Net Asset Value.

18.1 A transaction in derivatives or a forward transaction must not beeffected for the Company unless the transaction is of a kindspecified in paragraph 19 below (Permitted transactions(derivatives and forwards)); and the transaction is covered, asrequired by paragraph 26 (Cover for transactions in derivatives andforward transactions).

18.2 Where the Company invests in derivatives, the exposure to theunderlying assets must not exceed the limits set out in COLL inrelation to spread (COLL 5.6.7 R Spread: general and COLL 5.6.8R Spread: government and public securities) except for indexbased derivatives where the rules below apply.

18.3 Where a transferable security or money market instrument embedsa derivative, this must be taken into account for the purposes ofcomplying with this section.

18.4 Where a scheme invests in an index based derivative, provided therelevant index falls within COLL 5.6.23 the underlying constituentsof the index do not have to be taken into account for the purposesof the rules on spread in COLL. The relaxation is subject to the ACDcontinuing to ensure that the Scheme Property provides a prudentspread of risk.

19 Permitted transactions (derivatives andforwards)

19.1 A transaction in a derivative must be in an approved derivative; orbe one which complies with paragraph 23 (OTC transactions inderivatives).

19.2 A transaction in a derivative must have the underlying consisting ofany or all of the following to which the scheme is dedicated:transferable securities, permitted money market instruments,deposits, permitted derivatives under this paragraph, collectiveinvestment scheme units permitted under paragraph 15(Investment in collective investment schemes), permittedimmovables, financial indices, interest rates, foreign exchangerates and currencies or all of the attributes thereof.

19.3 A transaction in an approved derivative must be effected on orunder the rules of an eligible derivatives market.

19.4 A transaction in a derivative must not cause the Company todiverge from its investment objectives as stated in the Instrumentconstituting the scheme and the most recently published version ofthis Prospectus.

19.5 A transaction in a derivative must not be entered into if the intendedeffect is to create the potential for an uncovered sale of one ormore, transferable securities, money market instruments, units incollective investment schemes, or derivatives.

19.6 Any forward transaction must be with an Eligible Institution or anApproved Bank.

20 Financial indices underlying derivatives

20.1 The financial indices referred to in paragraph 19.2 are those whichsatisfy the following criteria:

20.1.1 the index is sufficiently diversified;

20.1.2 the index represents an adequate benchmark for themarket to which it refers; and

20.1.3 the index is published in an appropriate manner.

20.2 A financial index is sufficiently diversified if:

20.2.1 it is composed in such a way that price movements ortrading activities regarding one component do not undulyinfluence the performance of the whole index;

20.2.2 where it is composed of assets in which the scheme ispermitted to invest, its composition is at least diversified inaccordance with the requirements with respect to spreadset out in this Appendix; and

20.2.3 where it is composed of assets in which the schemecannot invest, it is diversified in a way which is equivalentto the diversification achieved by the requirements withrespect to spread set out in this Appendix.

20.3 A financial index represents an adequate benchmark for the marketto which it refers if:

20.3.1 it measures the performance of a representative group ofunderlyings in a relevant and appropriate way;

20.3.2 it is revised or rebalanced periodically to ensure that itcontinues to reflect the markets to which it refers, followingcriteria which are publicly available; and

20.3.3 the underlyings are sufficiently liquid, allowing users toreplicate it if necessary.

20.4 A financial index is published in an appropriate manner if:

20.4.1 its publication process relies on sound procedures tocollect prices, and calculate and subsequently publish theindex value, including pricing procedures for componentswhere a market price is not available; and

20.4.2 material information on matters such as index calculation,rebalancing methodologies, index changes or anyoperational difficulties in providing timely or accurateinformation is provided on a wide and timely basis.

20.5 Where the composition of underlyings of a transaction in aderivative does not satisfy the requirements for a financial index,the underlyings for that transaction shall where they satisfy therequirements with respect to other underlyings pursuant toparagraph 19.2 be regarded as a combination of those underlyings.

21 Transactions for the purchase of property

21.1 A derivative or forward transaction which will or could lead to thedelivery of property for the account of the Company may be enteredinto only if that property can be held for the account of theCompany, and the ACD having taken reasonable care determinesthat delivery of the property under the transaction will not occur orwill not lead to a breach of the rules in the COLL Sourcebook.

22 Requirement to cover sales

22.1 No agreement by or on behalf of the Company to dispose ofproperty or rights may be made unless the obligation to make thedisposal and any other similar obligation could immediately behonoured by the Company by delivery of property or theassignment (or, in Scotland, assignation) of rights, and the propertyand rights above are owned by the Company at the time of theagreement. This requirement does not apply to a deposit.

22.2 Paragraph 22.1 does not apply where:

22.2.1 the risks of the underlying financial instrument of aderivative can be appropriately represented by anotherfinancial instrument and the underlying financial instrumentis highly liquid; or

22.2.2 the ACD or the Depositary has the right to settle thederivative in cash and cover exists within the SchemeProperty which falls within one of the following assetClasses:

22.2.2.1 cash; or

Appendix 2 –


PAIF/29092017/ENG/r01

31

22.2.2.2 liquid debt instruments (e.g. governmentbonds of first credit rating) with appropriatesafeguards (in particular, haircuts); or

22.2.2.3 other highly liquid assets having regard totheir correlation with the underlying of thefinancial derivative instruments, subject toappropriate safeguards (e.g. haircuts whererelevant).

22.3 In the asset classes referred to in 22.2.2, an asset may beconsidered as liquid where the instrument can be converted intocash in no more than seven business days at a price closelycorresponding to the current valuation of the financial instrument onits own market.

23 OTC transactions in derivatives

23.1 Any transaction in an OTC derivative under paragraph 19 must be:

23.1.1 in a future or an option or a contract for differences;

23.1.2 with an approved counterparty; A counterparty to atransaction in derivatives is approved only if thecounterparty is an Eligible Institution or an Approved Bank;or a person whose permission (including any requirementsor limitations), as published in the FCA Register or whoseHome State authorisation, permits it to enter into thetransaction as principal off-exchange;

23.1.3 on approved terms; the terms of the transaction inderivatives are approved only if the ACD:

23.1.3.1 carries out, at least daily, a reliable andverifiable valuation in respect of thattransaction corresponding to its fair valueand which does not rely on marketquotations by the counterparty; and,

23.1.3.2 can enter into one or more furthertransactions to sell, liquidate or close outthose transactions at any time, at its fairvalue; and

23.1.4 capable of reliable valuation; a transaction in derivatives iscapable of reliable valuation only if the ACD having takenreasonable care determines that, throughout the life of thederivative (if the transaction is entered into), it will be ableto value the investment concerned with reasonableaccuracy: on the basis of an up-to-date market value whichthe ACD and the Depositary have agreed is reliable; or ifthis value is not available, on the basis of a pricing modelwhich the ACD and the Depositary have agreed uses anadequate recognised methodology; and

23.1.5 subject to verifiable valuation; a transaction in derivatives issubject to verifiable valuation only if, throughout the life ofthe derivative (if the transaction is entered into) verificationof the valuation is carried out by an appropriate third partywhich is independent from the counterparty of thederivative, at an adequate frequency and in such a waythat the ACD is able to check it; or a department within theACD which is independent from the department in chargeof managing the Scheme Property and which is adequatelyequipped for such a purpose.

23.2 For the purposes of this paragraph, “fair value” is the amount forwhich as asset could be exchanged, or a liability settled, betweenknowledgeable, willing parties in an arm’s length transaction.

24 Valuation of OTC derivatives

24.1 For the purposes of paragraph 23.1.2, the ACD must:

24.1.1 establish, implement and maintain arrangements andprocedures which ensure appropriate, transparent and fairvaluation of the exposures of a Fund to OTC derivatives;and

24.1.2 ensure that the fair value of OTC derivatives is subject toadequate, accurate and independent assessment.

24.2 Where the arrangements and procedures referred to in paragraph24.1.1 involve the performance of certain activities by third parties,the ACD must comply with the requirements in SYSC 8.1.13 R(Additional requirements for a management company) and COLL6.6A.4 R (4) to (6) (Due diligence requirements of AFMs of UCITSschemes).

24.3 The arrangements and procedures referred to in this rule must be:

24.3.1 adequate and proportionate to the nature and complexityof the OTC derivative concerned; and

24.3.2 adequately documented.

25 Risk management

25.1 The ACD uses a risk management process, as reviewed by theDepositary, enabling it to monitor and measure as frequently asappropriate the risk of the Company’s positions and theircontribution to its overall risk profile.

25.2 The following details of the risk management process must beregularly notified by the ACD to the FCA and at least on an annualbasis:

25.2.1 a true and fair view of the types of derivatives and forwardtransactions to be used within a Company together withtheir underlying risks and any relevant quantitative limits;and

25.2.2 the methods for estimating risks in derivative and forwardtransactions.

25.3 The ACD has established a liquidity management policy whichenables it to identify, monitor and manage the liquidity risks of eachsub-fund and to ensure the liquidity profile of the investments ofeach sub-fund will facilitate compliance with its underlyingobligations.

The ACD’s liquidity policy takes into account the investmentstrategy, the liquidity profile, redemption policy and other underlyingobligations of each sub-fund. The liquidity management systemsand procedures include appropriate escalation measures toaddress anticipated or actual liquidity shortages or other distressedsituations of each sub-fund.

In summary, the liquidity management policy monitors the profile ofinvestments held by each sub-fund and ensures that suchinvestments are appropriate to the redemption policy as set out inthis Prospectus. Further, the liquidity management policy includesdetails of measures taken by the ACD to manage the liquidity riskof each sub-fund in exceptional and extraordinary circumstances.

The liquidity management systems and procedures allow the ACDto apply various tools and arrangements necessary to ensure thateach sub-fund is sufficiently liquid to respond appropriately toredemption requests normally. In normal circumstances,redemption requests will be processed as set out in 14 ‘SellingShares’.

Other arrangements may also be used in response to redemptionrequests, including, in exceptional circumstances, the temporarysuspension of the sale and redemption of Shares or any class ofUnits. This would restrict the redemption rights Shareholdersbenefit from in normal circumstances as set out above under 21‘Suspension of dealings in the Company’.

26 Derivatives exposure

26.1 The Company may invest in derivatives and forward transactionsas long as the exposure to which the Company is committed by thattransaction itself is suitably covered from within its SchemeProperty. Exposure will include any initial outlay in respect of thattransaction.

Appendix 2 –


PAIF/29092017/ENG/r01

32

26.2 Cover ensures that the Company is not exposed to the risk of lossof property, including money, to an extent greater than the net valueof the Scheme Property. Therefore, the Company must holdScheme Property sufficient in value or amount to match theexposure arising from a derivative obligation to which the Companyis committed. Paragraph 27 (Cover for transactions in derivativesand forward transactions) sets out detailed requirements for coverof the Company.

26.3 Cover used in respect of one transaction in derivatives or forwardtransaction must not be used for cover in respect of anothertransaction in derivatives or a forward transaction.

27 Cover for transactions in derivatives and forwardtransactions

27.1 A transaction in derivatives or forward transaction is to be enteredinto only if the maximum exposure, in terms of the principal ornotional principal created by the transaction to which the scheme isor may be committed by another person is covered globally.

27.2 Exposure is covered globally if adequate cover from within theScheme Property is available to meet the scheme’s total exposure,taking into account the value of the underlying assets, anyreasonably foreseeable market movement, counterparty risk, andthe time available to liquidate any positions.

27.3 Cash not yet received into the Scheme Property but due to bereceived within one month is available as cover.

27.4 Property the subject of a stock lending transaction is only availablefor cover if the ACD has taken reasonable care to determine that itis obtainable (by return or re-acquisition) in time to meet theobligation for which cover is required.

27.5 The total exposure relating to derivatives held in the Company maynot exceed the net value of the Scheme Property.

28 Daily calculation of global exposure

28.1 The ACD must calculate the global exposure of the Company on atleast a daily basis.

28.2 For the purposes of this section, exposure must be calculatedtaking into account the current value of the underlying assets, thecounterparty risk, future market movements and the time availableto liquidate the positions.

29 Calculation of global exposure

29.1 The ACD must calculate the global exposure of the Company itmanages either as:

29.1.1 the incremental exposure and leverage generated throughthe use of derivatives and forward transactions (includingembedded derivatives as referred to in paragraph 18(Derivatives: general), which may not exceed 100% of theNet Asset Value of the scheme property of the Company,by way of the commitment approach; or

29.1.2 the market risk of the scheme property of the Company, byway of the value at risk approach.

29.2 The ACD must ensure that the method selected above isappropriate, taking into account:

29.2.1 the investment strategy pursued by the Company;

29.2.2 the types and complexities of the derivatives and forwardtransactions used; and

29.2.3 the proportion of the scheme property comprisingderivatives and forward transactions.

29.3 Where a Company employs techniques and instruments includingrepo contracts or stock lending transactions in accordance withparagraph 41 (Stock lending) in order to generate additionalleverage or exposure to market risk, the ACD must take thosetransactions into consideration when calculating global exposure.

29.4 For the purposes of paragraph 29.1, value at risk means a measureof the maximum expected loss at a given confidence level over thespecific time period.

30 Commitment approach

30.1 Where the ACD uses the commitment approach for the calculationof global exposure, it must:

30.1.1 ensure that it applies this approach to all derivative andforward transactions (including embedded derivatives asreferred to in paragraph 18 (Derivatives: general)), whetherused as part of the Company’s general investment policy,for the purposes of risk reduction or for the purposes ofEfficient Portfolio Management in accordance withparagraph 41 (Stock lending); and

30.1.2 convert each derivative or forward transaction into themarket value of an equivalent position in the underlyingasset of that derivative or forward (standard commitmentapproach).

30.2 The ACD may apply other calculation methods which are equivalentto the standard commitment approach.

30.3 For the commitment approach, the ACD may take account ofnetting and hedging arrangements when calculating globalexposure of the Company, where these arrangements do notdisregard obvious and material risks and result in a clear reductionin risk exposure.

30.4 Where the use of derivatives or forward transactions does notgenerate incremental exposure for the Company, the underlyingexposure need not be included in the commitment calculation.

30.5 Where the commitment approach is used, temporary borrowingarrangements entered into on behalf of the Company in accordancewith paragraph 34 need not form part of the global exposurecalculation.

31 Cover and borrowing

31.1 Cash obtained from borrowing, and borrowing which the ACDreasonably regards an Eligible Institution or an Approved Bank tobe committed to provide, is available for cover under the previousparagraph 27 (Cover for transactions in derivatives and forwardtransactions) as long as the normal limits on borrowing (see below)are observed.

31.2 Where, for the purposes of this paragraph the Company borrows anamount of currency from an Eligible Institution or an Approved Bankand keeps an amount in another currency at least equal to suchborrowing for the time on deposit with the lender (or his agent ornominee), then this applies as if the borrowed currency, and not thedeposited currency, were part of the Scheme Property, and thenormal limits on borrowing under paragraph 33 (General power toborrow) do not apply to that borrowing.

32 Cash and near cash

32.1 Cash and near cash must not be retained in the Scheme Propertyexcept to the extent that, where this may reasonably be regardedas necessary in order to enable:

32.1.1 the pursuit of the Company’s investment objectives; or

32.1.2 the redemption of Shares; or

32.1.3 efficient management of the Company in accordance withits investment objectives; or

32.1.4 other purposes which may reasonably be regarded asancillary to the investment objectives of the Company.

32.2 During the period of the initial offer the Scheme Property mayconsist of cash and near cash without limitation.

Appendix 2 –


PAIF/29092017/ENG/r01

33

33 General power to borrow

33.1 The Company may, in accordance with this paragraph andparagraph 28 (Borrowing limits), borrow money on terms that theborrowing is to be repayable out of the Scheme Property. Thispower to borrow is subject to the obligation of the Company tocomply with any restriction in the Instrument of Incorporation.

33.2 The Company may borrow under paragraph 33.1 only from anEligible Institution or an Approved Bank.

34 Borrowing limits

34.1 The ACD must ensure that Company’s borrowing does not, on anybusiness day, exceed 10% of the value of the Scheme Property.

34.2 These borrowing restrictions do not apply to “back to back”borrowing for currency hedging purposes.

35 Restrictions on lending of money

35.1 None of the money in the Scheme Property may be lent and, for thepurposes of this prohibition, money is lent by the Company if it ispaid to a person (“the payee”) on the basis that it should be repaid,whether or not by the payee.

35.2 Acquiring a debenture is not lending for the purposes of paragraph30; nor is the placing of money on deposit or in a current account.

35.3 Paragraph 35.1 does not prevent the Company from providing anofficer of the Company with funds to meet expenditure to beincurred by him for the purposes of the Company (or for thepurposes of enabling him properly to perform his duties as an officerof the Company) or from doing anything to enable an officer toavoid incurring such expenditure.

36 Restrictions on lending of property other thanmoney

36.1 The Scheme Property other than money must not be lent by way ofdeposit or otherwise.

36.2 Transactions permitted by paragraph 41 (Stocklending) are notlending for the purposes of paragraph 36.1.

36.3 Nothing in this paragraph prevents the Company or the Depositaryat the request of the Company from lending , depositing, pledgingor charging Scheme Property for margin requirements wheretransactions in derivatives or forward transactions are used for theaccount of the Company in accordance with any other of theprovisions in the Appendix.

37 General power to accept or underwrite placings

37.1 Any power in Chapter 5 of the COLL Sourcebook to invest intransferable securities may be used for the purpose of entering intotransactions to which this section applies, subject to compliancewith any restriction in the Instrument of Incorporation.

37.2 This section applies, subject to paragraph 37.3, to any agreementor understanding:

37.2.1 which is an underwriting or sub-underwriting agreement; or

37.2.2 which contemplates that securities will or may be issued orsubscribed for or acquired for the account of a sub-fund.

37.3 Paragraph 37.2 does not apply to:

37.3.1 an option; or

37.3.2 a purchase of a transferable security which confers a right:

37.3.2.1 to subscribe for or acquire a transferablesecurity; or

37.3.2.2 to convert one transferable security intoanother.

37.4 The exposure of the Company to agreements and understandingswithin paragraph 37.2 must, on any business day:

37.4.1 be covered in accordance with the requirements of COLL5.3.3R of the COLL Sourcebook; and

37.4.2 be such that, if all possible obligations arising under themhad immediately to be met in full, there would be no breachof any limit in Chapter 5 of the COLL Sourcebook.

38 Guarantees and indemnities

38.1 The ACD or the Depositary, for the account of the Company, mustnot provide any guarantee or indemnity in respect of the obligationof any person.

38.2 None of the Scheme Property may be used to discharge anyobligation arising under a guarantee or indemnity with respect to theobligation of any person.

38.3 Paragraphs 38.1 and 38.2 do not apply in respect of the Companyto an indemnity given for margin requirements where derivatives orforward transactions are being used in accordance with COLL 5,and:

38.3.1 any indemnity or guarantee given for margin requirementswhere the derivatives or forward transactions are beingused in accordance with the FCA rules;

38.3.2 an indemnity falling within the provisions of regulation 62(3)(Exemptions from liability to be void) of the OEICRegulations;

38.3.3 an indemnity (other than any provision in it which is voidunder regulation 62 of the OEIC Regulations) given to theDepositary against any liability incurred by it as aconsequence of the safekeeping of any of the SchemeProperty by it or by anyone retained by it to assist it toperform its function of the safekeeping of the SchemeProperty; and

38.3.4 an indemnity given to a person winding up a scheme if theindemnity is given for the purposes of arrangements bywhich the whole or part of the property of that schemebecomes the first property of the Company and the holdersof units in that scheme become the first Shareholders in theCompany.

39 Efficient portfolio management techniques

The Company may use property to enter into transactions for the purposesof hedging and may use efficient portfolio management techniques (as setout below).

39.1 Permitted transactions for these purposes (excluding stock lendingarrangements) are transactions in derivatives (i.e. options, futuresforward transactions or contracts for differences) dealt in or tradedon an eligible derivatives market; off-exchange options or contractsfor differences resembling options; or synthetic futures in certaincircumstances. Eligible derivatives markets are those which theInvestment Manager after consultation with the Depositary hasdecided are appropriate for the purpose of investment of or dealingin the Scheme Property with regard to the relevant criteria set outin the COLL Sourcebook and the formal guidance on eligiblemarkets issued by the FCA as amended from time to time.

39.2 The eligible derivatives markets for the Company are set out inAppendix 3.

39.3 Any forward transactions must be with an approved counter-party(Eligible Institutions, money market institutions etc).A derivatives orforward transaction which would or could lead to delivery ofScheme Property to the Depositary in respect of the Company maybe entered into only if such Scheme Property can be held by theCompany, and the ACD reasonably believes that delivery of theproperty pursuant to the transaction will not lead to a breach of theCOLL Sourcebook.

Appendix 2 –


PAIF/29092017/ENG/r01

34

39.4 There is no limit on the amount of the Scheme Property which maybe used for hedging and efficient portfolio management but thetransactions must satisfy three broadly-based requirements:

39.4.1 A transaction must be reasonably believed by the ACD tobe economically appropriate to the efficient portfoliomanagement of the Company. This means that, fortransactions undertaken to reduce risk or cost (or both), thetransaction alone or in combination will diminish a risk orcost of a kind or level which it is sensible to reduce. For thepurposes of this paragraph 39 efficient portfoliomanagement techniques must not include speculativetransactions.

39.4.2 The purpose of any transaction within this paragraph 39 forthe Company must be to achieve one of the following inrespect of the Company:

39.4.2.1 Reduction of risk. This allows for the use ofthe technique of cross-currency hedging inorder to switch all or part of the SchemeProperty away from a currency the ACDconsiders unduly prone to risk, to anothercurrency. This aim also permits the use oftactical asset allocation.

39.4.2.2 Reduction of cost. The aims of reduction ofrisk or cost, together or separately, allow theACD on a temporary basis to use thetechnique of tactical asset allocation.Tactical asset allocation permits the ACD toundertake a switch in exposure by use ofderivatives, rather than through the saleand purchase of Scheme Property. If atransaction for the Company relates to theacquisition or potential acquisition oftransferable securities, the ACD mustintend that the Company should invest intransferable securities within a reasonabletime and the ACD must thereafter ensurethat, unless the position has itself beenclosed out, that intention is realised withinthat reasonable time.

39.4.2.3 The generation of additional capital orincome for the Company (so called“enhancement strategies”) with no, or anacceptably low level of, risk. There is anacceptably low level of risk in any casewhere the ACD reasonably believes thatthe Portfolio is certain (or certain barringevents which are not reasonablyforeseeable) to derive a benefit. Thegeneration of additional capital or incomemay arise out of taking advantage of priceimperfections or from the receipt of apremium for writing of covered call orcovered put options (even if the benefit isobtained at the expense of the chance ofyet greater benefit) or pursuant tostocklending arrangements as permitted bythe COLL Sourcebook.

39.4.3 The relevant purpose must relate to Scheme Property;Scheme Property (whether precisely identified or not)which is to be or is proposed to be acquired for theCompany; and anticipated cash receipts of the Company,if due to be received at some time and likely to be receivedwithin one month.

39.4.4 The efficient portfolio management technique transactionsmust, as a minimum standard of cover, be covered“globally” (i.e. after providing cover for existing efficientportfolio management technique transactions there isadequate cover for another transaction within the SchemeProperty, so there can be no gearing) but may be covered

individually if the Investment Manager deems thisappropriate following its assessment of the risk profile ofthe Company. Scheme property and cash can easily beused only once for cover and, generally, Scheme Propertyis not available for cover if it is the subject of a stocklendingarrangement. The lending transaction in a back to backcurrency borrowing does not require cover.

40 Scheme replicating an index

40.1 The Company may invest up to 20% in value of the SchemeProperty in shares and debentures which are issued by the samebody where the aim of the investment policy of the Company asstated in its most recently published prospectus is to replicate theperformance or composition of an index within 40.2.

40.2 The index must:

40.2.1 have a sufficiently diversified composition;

40.2.2 be a representative benchmark for the market to which itrefers; and

40.2.3 be published in an appropriate manner.

40.3 The limit in 40.1 may be raised for a particular scheme up to 35%in value of the Scheme Property, but only in respect of one bodyand where justified by exceptional market conditions.

41 Stock lending

41.1 As an extension of efficient portfolio management techniquesexplained above, the ACD or the Depositary at the request of theACD, may enter into certain repo contracts or stock lendingarrangements in respect of the ACD. Briefly, such arrangements arethose where the ACD or the Depositary delivers securities whichare the subject of the transaction to a third party in return for whichit is agreed that those securities or securities of the same kind andamount should be redelivered to the ACD or the Depositary at alater date. The ACD or the Depositary at the time of deliveryreceives collateral to cover against the risk of the future redeliverynot being completed. There is no limit on the value of the propertyof the Company which may be the subject of stock lendingarrangements.

41.2 Such arrangements must always comply with the requirements ofthe Taxation of Chargeable Gains Act 1992, the requirements of theCOLL Sourcebook and the Guidance on Stocklending issued by theFCA as amended from time to time.

41.3 Underwriting and sub-underwriting contracts and placings mayalso, subject to certain conditions set out in the COLL Sourcebook,be entered into for the account of the Company.

42 Underwriting

42.1 Underwriting and sub-underwriting contracts and placings mayalso, subject to certain conditions set out in the Regulations, beentered into for the account of the Company or sub-fund.

43 Borrowing Powers

43.1 The ACD may, on the instructions of the Company and subject tothe Regulations, borrow money from an eligible institution or anapproved bank for the use of the Company on the terms that theborrowing is to be repayable out of the Scheme Property.

43.2 The ACD must ensure that borrowing does not, on any businessday, exceed 10% of the value of the Scheme Property.

43.3 These borrowing restrictions do not apply to ‘back to back’borrowing for currency hedging purposes.

44 Leverage

44.1 Alternative Investment Fund Managers (AIFMs) are required tocalculate leverage in accordance with the AIFMD, which definesleverage as any method by which an Alternative Investment Fund

Appendix 2 –


PAIF/29092017/ENG/r01

35

(AIF) increases its exposure through borrowing or the use ofderivatives.

44.2 Leverage when used in this prospectus means the followingsources of leverage can be used when managing the Fund:

44.2.1 cash borrowing, subject to the restrictions set out inparagraph 43.

44.2.2 financial derivative instruments and reinvestment of cashcollateral in the context of securities lending.

44.3 The ACD is required to calculate and monitor the level of leverageof the Fund, expressed as a ratio between the exposure of the Fundand its Net Asset Value (exposure/NAV), under both the grossmethod and the commitment method.

44.4 Under the gross method, the exposure of the Fund is calculated asfollows:

44.4.1 include the sum of all assets purchased, plus the absolutevalue of all liabilities;

44.4.2 exclude cash and cash equivalents which are highly liquidinvestments held in the base currency of the Fund, that arereadily convertible to a known amount of cash, are subjectto an insignificant risk of change in value and provide areturn no greater than the rate of a three month high qualitybond;

44.4.3 derivative instruments are converted into the equivalentposition in their underlying assets;

44.4.4 exclude cash borrowings that remain in cash or cashequivalents and where the amounts payable are known;

44.4.5 include exposures resulting from the reinvestment of cashborrowings, expressed as the higher of the market value ofthe investment realised or the total amount of cashborrowed; and

44.4.6 include positions within repurchase or reverse repurchaseagreements and securities lending or borrowing or othersimilar arrangements.

44.5 Under the commitment method, the exposure of the Fund iscalculated in the same way as under the gross method; however,where “hedging” offsets risk and “netting” eliminates risk, thesevalues are not included.

44.6 Further information regarding these different leverage calculationmethods can be obtained from the ACD upon request.

44.6 The maximum level of leverage for the Fund under both the grossand commitment methods is disclosed in the Risk ManagementProcess document, which is available on request from the ACD.

44.7 In addition, the total amount of leverage employed by the Fund willbe disclosed in the Fund’s annual report

Appendix 2 –


PAIF/29092017/ENG/r01

36

Where permitted by their objective and policy, the Company may deal in anysecurities, derivatives or money market instruments on any market that is:

a) a regulated market; or

b) a market in an EEA State which is regulated, operates regularly and isopen to the public; or

c) a market which the ACD, after consultation with the Depositary, decides isappropriate for investment of or dealing in the scheme property (seeAppendix 2, 12.4 for more detail).

In addition, up to 20% in value of a sub-fund may be invested in transferablesecurities and/or money market instruments which are not listed on thesemarkets.

For the purposes of “c” above, the markets listed below have been deemedappropriate.

In the event that an eligible market changes its name or merges with anothereligible market, the successor market will be an eligible market unless theFCA’s COLL rules require further due diligence by the ACD and Depositaryin order for it to be approved. In these circumstances, the prospectus will beupdated with the name of the new market at the next available opportunity.

Europe (Non-EEA States)

Switzerland SIX Swiss Exchange

Turkey Borsa Istanbul

Croatia Zagreb Exchange

Americas

Brazil BM&F Bovespa

Canada TSX (forms part of the TMX Group)

Mexico Bolsa Mexicana de Valores (Mexican StockExchange)

United States New York Stock ExchangeNYSE Mkt LLCBoston Stock Exchange (BSE)Chicago Stock Exchange (CHX)The NASDAQ Stock MarketUS OTC market regulated by FINRANational Stock ExchangeNYSE ArcaNASDAQ OMX PHLXThe market in transferable securities issued by oron behalf of the Government of the United Statesof America conducted through those persons forthe time being recognised and supervised by theFederal Reserve Bank of New York and known asprimary dealers.

Africa

South Africa The JSE Securities Exchange

Far East

Australia Australian Securities Exchange (ASX)

China Shanghai Stock ExchangeShenzhen Stock Exchange

Hong Kong Hong Kong ExchangesGrowth Global Enterprise Market (GEM)

India Bombay Stock Exchange LtdThe National Stock Exchange of India

Indonesia Indonesia Stock Exchange (IDX)

Japan Tokyo Stock ExchangeNagoya Stock ExchangeSapporo Stock ExchangeJASDAQ

Korea Korea Exchange Incorporated (KRX)

Malaysia Bursa Malaysia Berhad

New Zealand New Zealand Stock Exchange

Philippines Philippine Stock Exchange (PSE)

Singapore Singapore Exchange (SGX)

Sri Lanka Colombo Stock Exchange

Taiwan Taiwan Stock ExchangeGre Tai (Taiwan OTC)

Thailand The Stock Exchange of Thailand (SET)

Middle East

Israel Tel Aviv Stock Exchange (TASE)

For the purposes of “c” above, the derivatives markets listed below havebeen deemed appropriate.

Europe (Non-EEA States)

Switzerland EUREX

Americas

Canada The Montreal Exchange

United States CME GroupChicago Board Options Exchange (CBOE)

Africa

South Africa The South African Futures Exchange (SAFEX)

Far East

Australia Australian Securities Exchange (ASX)

Hong Kong Hong Kong Exchanges

Japan Osaka Securities Exchange

Korea Korea Exchange Incorporated (KRX)

New Zealand New Zealand Futures Exchange

Singapore Singapore Exchange (SGX)

Appendix 3 –

Eligible markets

PAIF/29092017/ENG/r01

37

Appendix 4 –

Performance bar charts and graphs

PAIF/29092017/ENG/r01

M&G Property Portfolio Bar Chart (Sterling class A)

-20.6

8.4 6.4

3.7 0.6

5.8

13.7

8.3

-7.6

6.2

-25

-20

-15

-10

-5

0

5

10

15

20

Dec 07-Dec 08

Dec 08-Dec 09

Dec 09-Dec 10

Dec 10-Dec 11

Dec 11-Dec 12

Dec 12-Dec 13

Dec 13-Dec 14

Dec 14-Dec 15

Dec 15-Dec 16

Dec 16-Dec 17

Source: Morningstar Inc, last 10 years, % return, bid to bid, income reinvested, sterling Share Class A

M&G Property Portfolio to end December each year

The cumulative performance over the last 10 years is 22.2%

Past performance is not a guide to future performance.

38

M&G Dynamic Allocation Fund

M&G Feeder of Property Portfolio

M&G Global Dividend Fund

M&G Global Macro Bond Fund

M&G Investment Funds (1)











M&G Optimal Income Fund

M&G Strategic Corporate Bond Fund

Appendix 5 –

Other collective investment schemes of the ACD

PAIF/29092017/ENG/r01

39

Albania: Raiffeisen Bank sh.a., TiranaArgentina: Citibank N.A., Buenos AiresAustralia: Hong Kong and Shanghai Banking Corporation

Limited, SydneyAustria: 1) UniCredit Bank Austria AG, Vienna

2) Deutsche Bank AG, ViennaBahamas: n/aBahrain: HSBC Bank Middle East, Al SeefBangladesh: Standard Chartered Bank, DhakaBelgium: Deutsche Bank AG, Amsterdam branch

(operating through the Amsterdam branch withsupport from its Brussels branch)

Benin: Standard Chartered Bank Côte d’Ivoire, AbidjanBermuda: HSBC Bank Bermuda Limited, HamiltonBosnia-Herzegovina:The Federation of Bosnia and Herzegovina: UniCredit Bank d.d., SarajevoBotswana: Standard Chartered Bank of Botswana Limited,

GaboroneBrazil: Citibank N.A. São Paulo Branch, São PauloBulgaria: 1) Citibank Europe plc, Sofia

2) UniCredit Bulbank AD, SofiaBurkina Faso: Standard Chartered Bank Côte d’Ivoire, AbidjanCanada: 1) State Street Trust Company Canada, Toronto

(Depositary transactions) 2) RBC Investor Services, Toronto (Physicaltransaction)

Cayman Islands: n/aChannel Islands: n/aChile: Itaú CorpBanca S.A., Santiago de ChileChina 1) China Construction Bank (A shares), Beijing

A-Share Market: 2) HSBC Bank (China) CompanyLimited, Shanghai

China HSBC Bank (China) Company Limited, Shanghai B-Share Market:

China-Shanghai 1) Standard Chartered Bank (Hong Kong)Hong Kong Limited, Hong KongStock Connect: 2) The Hong Kong and ShanghaiBanking Corporation Limited, Hong Kong3) Citibank N.A., Hong Kong

Clearstream: State Street is a direct participant in ClearstreamBanking Luxembourg. State Street does not use asubcustodian bank.

Colombia: Cititrust Colombia S.A. Sociedad Fiduciaria,Bogota

Costa Rica: Banco BCT S.A., San JoseCroatia: 1) Privredna Banka Zagreb d.d, Zagreb

2) Zagrebacka banka d.d., ZagrebCuracao: n/aCyprus: BNP Paribas Securities Services, S.C.A., Athens

(operating remotely to service the Cyprus market)Czech Republic: 1) Ceskoslovenská Obchodní Banka A.S., Prague

2) UniCredit Bank Czech Republic and Slovakia,a.s., Praha

Denmark: 1) Skandinaviska Enskilda Banken AB (SEB),Copenhagen 2) Nordea Bank Danmark A/S, Copenhagen

Ecuador: n/aEgypt: HSBC Bank Egypt S.A.E, CairoEstonia: AS SEB Pank, TallinnEthiopia: n/aEuroclear: Since State Street is a direct participant in

Euroclear Bank, State Street does not use asubcustodian bank.

Finland: 1) Skandinaviska Enskilda Banken AB (publ)(SEB), Helsinki 2) Nordea Bank Finland Plc, Helsinki

France: Deutsche Bank AG, Amsterdam branch (operatingthrough the Amsterdam branch with support fromits Paris branch)

Georgia: JSC Bank of Georgia, TbilisiGermany: 1) State Street Bank International GmbH, Munich

2) Deutsche Bank AG, EschbornGhana: Standard Chartered Bank Ghana Limited, AccraGreece: BNP Paribas Securities Services, S.C.A., AthensGuernsey: n/aGuinea Bissau: Standard Chartered Bank Côte d’Ivoire, AbidjanHong Kong: Standard Chartered Bank (Hong Kong) Limited,

Hong KongHungary: 1) Citibank Europe plc, Hungarian Branch,

Budapest 2) UniCredit Bank Hungary Zrt., Budapest

Iceland: Landsbankinn hf, ReykjavikIndia: 1) The Hong Kong and Shanghai Banking

Corporation Limited, Mumbai 2) Deutsche Bank AG, Mumbai

Indonesia: Deutsche Bank A.G., JakartaIreland: State Street Bank and Trust Company, EdinburghIsle of Man: n/aIsrael: Bank Hapoalim B.M., Tel AvivItaly: 1) Deutsche Bank S.p.A., Milan

2) Intesa Sanpaolo (ISP), MilanIvory Coast: Standard Chartered Bank Côte d’Ivoire, AbidjanJamaica: Scotia Investments Jamaica Limited, KingstonJapan: 1) Mizuho Bank, Ltd, Tokyo

2) The Hong Kong and Shanghai BankingCorporation, Japan branch (HSBC), Tokyo

Jersey: n/aJordan: Standard Chartered Bank, Shmeissani Branch,

AmmanKazakhstan: JSC Citibank Kazakhstan, AlmatyKenya: Standard Chartered Bank Kenya Limited, NairobiKuwait: HSBC Bank Middle East Limited, KuwaitLatvia: AS SEB Bankas, RigaLebanon: HSBC Bank Middle East Limited, BeirutLiechtenstein: n/aLithuania: SEB Bankas, VilniusLuxembourg: Since State Street is a direct participant in

Clearstream Banking Luxembourg, State Streetdoes not use a subcustodian bank. Luxembourgdomiciled assets may be held in either theEuroclear or Clearstream ICSDs.

Macedonia (Republic of Macedonia): n/aMalawi: Standard Bank Limited, BlantyreMalaysia: 1) Standard Chartered Bank Malaysia Berhad

Menara Standard Chartered, Kuala Lumpur 2) Deutsche Bank (Malaysia) Berhad InvestorServices, Kuala Lumpur

Mali: Standard Chartered Bank Côte d’Ivoire, AbidjanMalta: n/aMarshall Islands: n/aMauritius: Hong Kong and Shanghai Banking Corp. Limited,

EbeneMexico: Banco Nacional de México S.A. (Banamex) Global

Securities Services, Mexico CityMorocco: Citibank Maghreb, CasablancaMozambique: n/aNamibia: Standard Bank Namibia Limited, WindhoekNetherlands: Deutsche Bank AG, Amsterdam branchNew Zealand: The Hong Kong and Shanghai Banking Corp.

Limited, Auckland

Appendix 6 –

List of Sub-Custodians

PAIF/29092017/ENG/r01

40

Niger: Standard Chartered Bank Côte d’Ivoire, AbidjanNigeria: Stanbic IBTC Bank Plc., LagosNorway: 1) Skandinaviska Enskilda Banken, Oslo

(operating through its Oslo branch) 2) Nordea Bank Norge ASA, Oslo

Oman: HSBC Bank Oman S.A.O.G, SeebPakistan: Deutsche Bank AG, KarachiPalestine: HSBC Bank Middle East Limited, RamallahPanama: Citibank, N.A., Panama CityPeru: Citibank del Perú S.A., LimaPhilippines: Deutsche Bank AG, Investor Services, Makati CityPoland: 1) Bank Handlowy w Warszawie S.A., Warsaw

2) Bank Polska Kasa Opieki S.A., WarsawPortugal: Deutsche Bank AG, Amsterdam branch (operating

through the Amsterdam branch with support fromits Lisbon branch)

Puerto Rico: Citibank, N.A. Puerto Rico, San JuanQatar: HSBC Bank Middle East Limited, DohaRepublic of Srpska: UniCredit Bank d.d, SarajevoRomania: Citibank Europe plc, Dublin – Romania Branch,

BucharestRussia: AO Citibank, MoscowRwanda: n/aSaudi Arabia: HSBC Saudi Arabia, RiyadhSenegal: Standard Chartered Bank Côte d’Ivoire, AbidjanSerbia: Unicredit Bank Serbia JSC BelgradeSingapore: 1) Citibank N.A., Singapore

2) United Overseas Bank Limited (UOB),Singapore

Slovak Republic: UniCredit Bank Czech Republic and Slovakia, a.s.,Bratislava

Slovakia: n/aSlovenia: UniCredit Banka Slovenija d.d., LjubljanaSouth Africa: 1) Standard Bank of South Africa Limited,

Johannesburg 2) FirstRand Bank Limited, Johannesburg

South Korea: 1) Deutsche Bank AG, Seoul 2) Hong Kong and Shanghai Banking Corp.Limited, Seoul

Spain: Deutsche Bank SAE Investor Services, MadridSri Lanka: The Hong Kong and Shanghai Banking

Corporation Limited, ColomboSwaziland: Standard Bank Swaziland Limited, MbabaneSweden: 1) Nordea Bank AB (publ), Stockholm

2) Skandinaviska Enskilda Banken, StockholmSwitzerland: 1) UBS Switzerland AG, Zurich

2) Credit Suisse AG, ZurichTaiwan: 1) Deutsche Bank AG, Taipei

2) Standard Chartered Bank (Taiwan) Limited,Taipei

Tanzania: Standard Chartered Bank Tanzania Limited, Dares Salaam

Thailand: Standard Chartered Bank (Thai) Public CompanyLimited, Bangkok

Togo: Standard Chartered Bank Côte d’Ivoire, AbidjanTransnational: n/aTrinidad & Tobago: n/aTunisia: Banque Internationale Arabe de Tunisie (BIAT),

TunisTurkey: 1) Citibank A.S., Istanbul

2) Deutsche Bank A.S., IstanbulUganda: Standard Chartered Bank Uganda Limited,

KampalaUkraine: PJSC Citibank, Kyiv

United Arab Emirates HSBC Bank Middle East Limited Global Banking Abu Dhabi Securities and Markets, DubaiExchange-ADX:

United Arab Emirates HSBC Bank Middle East Limited Global Banking -DFM: and Markets, Dubai

United Arab Emirates HSBC Bank Middle East Limited Global Banking-NASDAQ: and Markets, Dubai

United Kingdom: State Street Bank and Trust Company, EdinburghUnited States: 1) State Street Bank and Trust Company, Boston

2) DTCC Newport Office Center, Jersey CityUruguay: Banco Itau Uruguay S.A., MontevideoVenezuela: Citibank N.A., CaracasVietnam: Hong Kong & Shanghai Banking Corp. Ltd. Centre

Point, Ho Chi Minh CityWAEMU (West African Economic and Monetary Union): n/aZambia: Standard Chartered Bank Zambia Plc, LusakaZimbabwe: Stanbic Bank Zimbabwe Limited, Harare

Appendix 6 –

List of Sub-Custodians

PAIF/29092017/ENG/r01

41

The Company and Head Office:

M&G Property PortfolioLaurence Pountney HillLondon EC4R 0HH

Authorised Corporate Director:

M&G Securities LimitedLaurence Pountney HillLondon EC4R 0HH

Investment Manager:

M&G Investment Management LimitedLaurence Pountney HillLondon EC4R 0HH

Custodian:

State Street Bank and Trust Company1 Canada SquareLondon E14 5AF

Depositary:

National Westminster Bank PlcTrustee & Depositary ServicesThe Younger Building,3 Redheughs Avenue,EdinburghEH12 9RH

Registrar:

DST Financial Services Europe LimitedPO Box 9039ChelmsfordCM99 2XG

Auditor:

Ernst & Young LLPAtria One144 Morrison StreetEdinburgh EH3 8EXUnited Kingdom

Directory


PAIF/29092017/ENG/r01

5770

1 M&G Securities Limited is authorised and regulated by the Financial Conduct Authority and provides investment products. The company’s registered office is LaurencePountney Hill, London EC4R 0HH. Registered in England number 90776.