M&G Feeder of Property Portfolio Annual Long Report and audited Financial … · 2019. 11. 29. ·...

M&G Feeder of Property PortfolioAnnual Long Report and audited Financial Statements for the year ended 30 September 2020

M&G Feeder of Property Portfolio

Manager's Report Page 1

Directors’ statement Page 3

Manager's Responsibilities & Trustee’s Responsibilities Page 4

Independent Auditor’s Report Page 5

Manager’s Report, including the financial highlightsand financial statements and notes Page 7

Other regulatory disclosures 8

Glossary Page 29

Contents

Manager

M&G Securities Limited10 Fenchurch Avenue, London EC3M 5AGTelephone: 0800 390 390 (UK only)(Authorised and regulated by the Financial Conduct Authority)

Investment manager

M&G Investment Management Limited,10 Fenchurch Avenue, London EC3M 5AG, UKTelephone: +44 (0)20 7626 4588

(Authorised and regulated by the Financial Conduct Authority.M&G Securities Limited is a member of the InvestmentAssociation and of The Investing and Saving Alliance (formerlyTax Incentivised Savings Association))

Administration office

M&G Securities LimitedPO Box 9039, Chelmsford CM99 2XGTelephone: 0800 390 390 (UK only)

(For your security and to improve the quality of our service, wemay record and randomly monitor telephone calls)

The Trust Deed can be inspected at our offices or at the office ofthe Trustee.

Trustee

NatWest Trustee & Depositary Services Limited, House A, Floor 0,Gogarburn, 175 Glasgow Road, Edinburgh EH12 1HQ, UK(Authorised and regulated by the Financial Conduct Authorityand the Prudential Regulation Authority)

Registrar

SS&C Financial Services Europe Ltd*,SS&C House, St. Nicholas Lane, Basildon, Essex SS15 5FS, UK(Authorised and regulated by the Financial Conduct Authority)* DST Financial Services Europe Ltd changed its name to SS&C Financial ServicesEurope Ltd on 31 March 2020.

Investment accounting services

State Street Global Services,20 Churchill Place, London E14 5HJ(Authorised and regulated by the Financial Conduct Authority)

Directors of the Manager

M Ammon*, C Dobson (non executive director), N M Donnelly**,S A Fitzgerald, P R Jelfs, M McGrade (non executive director),L J Mumford* Resigned 17 October 2019.

** Resigned 30 June 2020.

Co-fund managers

Fiona Rowley* and Justin Upton

(Employees of M&G FA Limited, which is an associate of M&GSecurities Limited)* Fiona Rowley has stepped down on 30 November 2020 and from 1 December2020 Justin Upton is the sole fund manager.

Independent auditor

Ernst & Young LLPAtria One, 144 Morrison Street, Edinburgh EH3 8EX, UK


Manager's Report

ANNUAL LONG REPORT AND AUDITED FINANCIAL STATEMENTS • SEPTEMBER 2020 1

SuspensionOn 4 December 2019 a temporary suspension of dealing in theM&G Property Portfolio and the M&G Feeder of Property Portfoliobecame effective at midday.

At that time Brexit-related uncertainty and ongoing structuralshifts in the UK retail sector prompted unusually high outflowsfrom the underlying fund for retail investors. Given thosecircumstances and deteriorating market conditions thatsignificantly impacted the ability to sell commercial property, thefund's temporarily suspended dealing in the interests ofprotecting our customers. The decision to suspend was taken inagreement with the fund’s Depositary and we have informed theFinancial Conduct Authority. We are in regular dialogue with boththe fund’s Depositary and the Financial Conduct Authority.

We are unable to say how long the suspension will last, but regularupdates are provided on the M&G website and we will write toinvestors when we are able to reopen the funds. We continue tobalance the objective of raising cash levels with the need toprotect the interests of all our investors. Our ongoing, targetedsales programme is intended to preserve the portfolio’s integrityand long term prospects. The fund’s suspension is under constantreview and the decision to resume dealing will be taken by theAuthorised Corporate Director, with agreement from the fund’sDepositary. The suspension will be lifted as soon as practicable.

M&G continues to waive 30% of the annual charge in recognitionof the inconvenience caused to our clients and customers.

Assessment of valueFrom June 2020, we will be publishing an annual assessment ofthe value delivered to investors in this fund. The assessment willcover, amongst other things, an assessment of our charges, thequality of our services, and how we compare to our competitors.This is available at www.mandg.co.uk/valueassessment.

Important informationThe World Health Organisation declared the COVID-19 outbreaka pandemic on 11 March 2020.

Global financial markets have been reacting to the outbreak. Allmarkets have incurred increased volatility and uncertainty sincethe onset of the pandemic.

The Manager has also noted the operational risks that are posedto the Company and its service providers due to global and localmovement restrictions that have been enacted by variousgovernments.

The COVID-19 pandemic is an unprecedented event and theeventual impact on the global economy and markets will largelydepends on the scale and duration of the outbreak. The Managerwill continue to monitor this situation.


Manager's Report

ANNUAL LONG REPORT AND AUDITED FINANCIAL STATEMENTS • SEPTEMBER 20202

Directors’ statementThis report has been prepared in accordance with therequirements of the Collective Investment Schemes sourcebook,as issued and amended by the Financial Conduct Authority.

M&G Securities Limited15 December 2020


Manager's Report


Statement of the Manager’s ResponsibilitiesIn respect of the annual investment report and financialstatements of the Scheme

The Collective Investment Schemes sourcebook, as issued (andamended) by the Financial Conduct Authority (FCA), requires theManager to prepare the investment report and financialstatements for each accounting period which give a true and fairview of the financial position of the Scheme as at the end of theaccounting period, and the net revenue and the net losses for theperiod. In preparing the financial statements, the Manager isrequired to:

• comply with the Statement of Recommended Practice forAuthorised Funds issued by the Investment Association inMay 2014 and amended in June 2017, the Trust Deed,generally accepted accounting principles and applicableaccounting standards subject to any material departureswhich are required to be disclosed and explained in thefinancial statements;

• select suitable accounting policies and then apply themconsistently;

• make judgments and estimates that are reasonable andprudent;

• prepare the financial statements on the going concern basisunless it is inappropriate to presume that the Scheme willcontinue in operation.

The Manager is required to keep proper accounting records, tomanage the Scheme in accordance with the CollectiveInvestment Schemes sourcebook, as issued (and amended) bythe FCA, the Trust Deed and the Prospectus, and to takereasonable steps for the prevention and detection of fraud orother irregularities.

Statement of the Trustee’s Responsibilitiesand Report of the Trustee to the Unitholdersof M&G Feeder of Property Portfolio (‘theScheme’) for the year ended 30 September2020The Trustee must ensure that the Company is managed inaccordance with the Financial Conduct Authority’s CollectiveInvestment Schemes sourcebook, the Open-Ended InvestmentCompanies Regulations 2001 (SI2001/1228) (the OEICRegulations), as amended, the Financial Services and Markets Act2000, as amended, (together ‘the Regulations’), the Company’sInstrument of Incorporation and Prospectus (together ‘theScheme documents’) as detailed below.

The Trustee must in the context of its role act honestly, fairly,professionally, independently and in the interests of the Schemeand its investors.

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

The Trustee must ensure that:

• the Scheme’s cashflows are properly monitored and that cashof the Scheme is booked into the cash accounts in accordancewith the Regulations;

• the sale, issue, redemption and cancellation of units arecarried out in accordance with the Regulations;

• the value of units of the Scheme are calculated in accordancewith the Regulations;

• any consideration relating to transactions in the Scheme’sassets is remitted to the Scheme within the usual time limits;

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

• the instructions of the Alternative Investment Fund Manager(‘the AIFM’) are carried out (unless they conflict with theRegulations).

The Trustee also has a duty to take reasonable care to ensure thatthe Scheme is managed in accordance with the Regulations andthe Scheme documents in relation to the investment andborrowing powers applicable to the Scheme.

Having carried out such procedures as we consider necessary todischarge our responsibilities as Trustee of the Scheme, it is ouropinion, based on the information available to us and theexplanations provided, that in all material respects the Scheme,acting through the AIFM:

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

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

Edinburgh NatWest Trustee and15 December 2020 Depositary Services Limited


Manager's Responsibilities & Trustee’sResponsibilities


Independent Auditor’s Report to theunitholders of M&G Feeder of PropertyPortfolioOpinion

We have audited the financial statements of M&G Feeder ofProperty Portfolio (“the Trust”) for the year ended30 September 2020 which comprise the Statement of TotalReturn and Statement of Change in Net Assets Attributable toUnitholders together with the Balance Sheet, the accountingpolicies of the Trust, the related notes and the Distribution Tables.The financial reporting framework that has been applied in theirpreparation is applicable law and United Kingdom AccountingStandards (United Kingdom Generally Accepted AccountingPractice) including FRS 102 ‘The Financial Reporting Standardapplicable to the UK and Republic of Ireland’.

In our opinion, the financial statements:

• give a true and fair view of the financial position of the Trustas at 30 September 2020 and of the net revenue and the netcapital losses on the scheme property of the Trust for the yearthen ended; and

• have been properly prepared in accordance with UnitedKingdom Generally Accepted Accounting Practice includingFRS 102 ‘The Financial Reporting Standard applicable in theUK and Republic of Ireland’.

Basis for opinion

We conducted our audit in accordance with InternationalStandards on Auditing (UK) (ISAs (UK)) and applicable law. Ourresponsibilities under those standards are further described in theAuditor’s responsibilities for the audit of the financial statementssection of our report below. We are independent of the trust inaccordance with the ethical requirements that are relevant to ouraudit of the financial statements in the UK, including the FRC’sEthical Standard, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.

Emphasis of matter – the impact of the fund's suspension onthe basis of preparation

We draw attention to note 2(a) of the financial statements whichdescribes the fund’s suspension as a result of the cash position ofthe underlying fund falling below the target level and the actionsthat the Manager is taking to lift this suspension as soon aspractical. The cash position is being managed using the riskmanagement policies referred to in note 3 of the financialstatements. Our opinion is not modified in respect of this matter.

Conclusions relating to going concern

We have nothing to report in respect of the following matters inrelation to which the ISAs (UK) require us to report to you where:

• the manager’s use of the going concern basis of accounting inthe preparation of the financial statements is notappropriate; or

• the manager has not disclosed in the financial statementsany identified material uncertainties that may castsignificant doubt about the company’s ability to continue toadopt the going concern basis of accounting for a period of atleast twelve months from the date when the financialstatements are authorised for issue.

Other information

The other information comprises the information included in theannual report, other than the financial statements and ourauditor’s report thereon. The manager is responsible for the otherinformation.

Our opinion on the financial statements does not cover the otherinformation and, except to the extent otherwise explicitly statedin this report, we do not express any form of assurance conclusionthereon.

In connection with our audit of the financial statements, ourresponsibility is to read the other information and, in doing so,consider whether the other information is materially inconsistentwith the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If weidentify such material inconsistencies or apparent materialmisstatements, we are required to determine whether there is amaterial misstatement in the financial statements or a materialmisstatement of the other information. If, based on the work wehave performed, we conclude that there is a materialmisstatement of the other information, we are required to reportthat fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the rules of theCollective Investment Schemes sourcebook of the FinancialConduct Authority

In our opinion:

• the financial statements have been properly prepared inaccordance with the Statement of Recommended Practicerelating to Authorised Funds, the rules of the CollectiveInvestment Schemes sourcebook of the Financial ConductAuthority and the Instrument of Incorporation;

• the information given in the manager’s report for thefinancial year for which the financial statements are preparedis consistent with the financial statements; and


Independent Auditor’s Report


Independent Auditor’s Report to theunitholders of M&G Feeder of PropertyPortfolioOpinions on other matters prescribed by the rules of theCollective Investment Schemes sourcebook of the FinancialConduct Authority• there is nothing to indicate that proper accounting records

have not been kept or that the financial statements are not inagreement with those records.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matter inrelation to which the rules of the Collective Investment Schemessourcebook of the Financial Conduct Authority require us to reportto you if, in our opinion:

• we have not received all the information and explanationswhich, to the best of our knowledge and belief, are necessaryfor the purposes of our audit.

Responsibilities of the manager

As explained more fully in the manager's responsibilitiesstatement set out on page 4, the manager is responsible for thepreparation of the financial statements and for being satisfiedthat they give a true and fair view, and for such internal control asthe manager determines is necessary to enable the preparationof financial statements that are free from material misstatement,whether due to fraud or error.

In preparing the financial statements, the manager is responsiblefor assessing the trust’s ability to continue as a going concern,disclosing, as applicable, matters related to going concern andusing the going concern basis of accounting unless the managereither intends to liquidate the trust or to cease operations, or hasno realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financialstatements

Our objectives are to obtain reasonable assurance about whetherthe financial statements as a whole are free from materialmisstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Reasonable assuranceis a high level of assurance, but is not a guarantee that an auditconducted in accordance with ISAs (UK) will always detect amaterial misstatement when it exists. Misstatements can arisefrom fraud or error and are considered material if, individually or inthe aggregate, they could reasonably be expected to influencethe economic decisions of users taken on the basis of thesefinancial statements.

A further description of our responsibilities for the audit of thefinancial statements is located on the Financial Reporting Council’swebsite at: https://www.frc.org.uk/auditorsresponsibilities. Thisdescription forms part of our auditor’s report.

Use of our report

This report is made solely to the unitholders of the trust, as a body,pursuant to Paragraph 4.5.12 of the rules of the CollectiveInvestment Schemes sourcebook of the Financial ConductAuthority. Our audit work has been undertaken so that we mightstate to the Company’s unitholders those matters we are requiredto state to them in an auditor’s report and for no other purpose. Tothe fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the Company and theCompany’s unitholders as a body, for our audit work, for thisreport, or for the opinions we have formed.

Edinburgh Ernst & Young LLP15 December 2020 Statutory Auditor

(1) The maintenance and integrity of the M&G website is the responsibility of theManager; the work carried out by the auditors does not involve considerationof these matters and, accordingly, the auditors accept no responsibility for anychanges that may have occurred to the financial statements since they wereinitially presented on the website.

(2) Legislation in the United Kingdom governing the preparation anddissemination of financial statements may differ from legislation in otherjurisdictions.


Independent Auditor’s Report


Investment objectiveThe trust aims to maximise long term total return (thecombination of income and growth of capital) solely throughinvestment in the M&G Property Portfolio.

Investment policyThe trust will invest solely in the M&G Property Portfolio.

Investment approachThe M&G Feeder of Property Portfolio is directly invested in theM&G Property Portfolio. The underlying fund is diversified acrossdifferent property sectors (such as retail, offices and industrial).This is done by reviewing the structural and portfolio riskimplications of holding various assets within the underlying fundand when acquiring new assets for the portfolio. In researchingproperties and therefore the associated risk, the manager of theunderlying fund considers location, property type, rent review andlease expiry pattern, tenant, industry sector, tenure, leasecovenants and physical and environmental factors.

BenchmarkBenchmark: IA UK Direct Property sector.

The M&G Property Portfolio, in which the trust solely invests, isactively managed. The benchmark is a comparator against whichthe trust’s performance can be measured. The sector has beenchosen as the trust’s comparator benchmark as it is the M&GProperty Portfolio’s comparator benchmark. Both the M&GProperty Portfolio and the trust are constituents of the sector. Thecomparator benchmark does not constrain the portfolioconstruction of the M&G Property Portfolio or the trust.

For unhedged share classes, the benchmark is shown in the shareclass currency.

Risk profileAs the trust invests solely in the M&G Property Portfolio, its riskprofile therefore reflects that of the M&G Property Portfolio, theunderlying fund. The underlying fund invests in a diversifiedportfolio of commercial property mainly in the UK. It is thereforesubject to the price volatility of the UK commercial propertymarkets as well as the performance of individual properties.

In difficult market conditions, or if significant numbers ofinvestors withdraw their investments from the underlying fund atthe same time, the manager may be forced to dispose of propertyinvestments in the underlying fund, and the value of certainproperty investments may therefore be less predictable thanusual. Under these circumstances, it may be harder to sell assetsat the last valuation or quoted market price, or at a priceconsidered to be fair. Such conditions could result in unpredictable

changes in the value of the underlying fund’s holdings. In general,property investments are harder to buy and sell compared toinvestments in fixed income securities and company shares.

There is the possibility that a portion of the underlying fund will beheld in cash if the supply of new investment opportunities islimited which, if the situation persists, may restrict itsperformance.

In addition, there is a risk that an occupational tenant on aproperty held in the underlying fund’s portfolio could default on itsrental payments. Furthermore, the fund manager will placetransactions, hold positions and place cash on deposit with arange of eligible persons or institutions, also known ascounterparties. There is a risk that a counterparty may default onits obligations or become insolvent, which could have a negativeimpact on the value of the underlying fund.

Portfolio diversification is key in managing liquidity and defaultrisks as well as reducing market risk. The underlying fund’s risks aremeasured and managed as an integral part of the investmentprocess.

In addition to the risk outlined above, the price of shares in theunderlying fund may be subject to significant ‘swings’ in value. Asthe price of units in the trust is largely based on the price of sharesin the underlying fund, a swing in the price of shares in theunderlying fund will therefore result in a similar swing in the priceof units of the trust.

The underlying fund is valued daily on both an ‘offer’ basis (howmuch its assets would cost to buy) and a ‘bid’ basis (how much theunderlying fund would receive if assets were sold). The differencebetween the two, known as the ‘spread’, is currently around 7.25%.The published dealing prices are based on either the offer or bidvaluation, depending on whether investors are generally buyingshares in the underlying fund (the fund is in ‘net inflow’) or sellingshares (the underlying fund is in ‘net outflow’). Should flows movefrom net inflow to net outflow, the dealing prices may ‘swing’ froman offer basis to a bid basis and fall by the extent of the spread.On the other hand, the dealing prices may rise by the same extentshould flows move from net outflow to net inflow. During thesuspension period, the underlying fund will continue to price daily.Prices will be made available and supplied via the usualdistribution channels.

For large deals, the dealing price that investors receive may bedifferent from the published price. If investors are buying units inthe trust, they may receive a price that is higher than the quotedoffer price. If investors are selling units in the trust, they mayreceive a price that is lower than the quoted bid price.


Manager’s Report


Investment reviewAs at 1 October 2020, for the year ended 30 September 2020

On 4 December 2019, M&G Investments announced thetemporary suspension of dealing in the M&G Property Portfolioand its feeder fund.

In December 2019, unusually high and sustained outflows fromthe fund coincided with a period where continued Brexit-relatedpolitical uncertainty and ongoing structural shifts in the UK Retailsector made it difficult for us to sell commercial property. Giventhese circumstances, we reached a point where M&G believed itwould best protect the interests of the fund’s customers byapplying a temporary suspension in dealing.

The suspension allows the fund managers time to restore enoughliquidity by selling non-core assets that do not fit with the fund’sintended medium to long-term structure. Temporary suspensionremoves the immediate liquidity requirements of a daily dealtfund, so that assets can be sold in an orderly manner. Bytemporarily suspending dealing in the fund, we can avoid sellingcore assets at depressed prices, which removes the risk of skewingthe portfolio and undermining investor value.

The fund is still actively managed whilst in suspension, but inrecognition of customers’ temporary inability to access theirinvestment, M&G is waiving 30% of its annual charge, which willend when the fund resumes dealing. Suspension will be formallyreviewed on a monthly basis and we will inform investors if thelevel of discount changes. In all other aspects, the fund willcontinue to operate as normal throughout the suspension andcustomers will continue to receive income payments.

The decision to suspend was made by M&G Securities Limited, thefund’s Authorised Corporate Director (ACD), in agreement withthe Fund’s Depositary, and the Financial Conduct Authority wasinformed.

We are currently unable to say how long we expect the suspensionto last, but we will monitor the situation daily and suspension willbe formally reviewed every 28 days. Suspension will only continueas long as it is in the best interests of our customers. Please refer tothe M&G website for updates.

Performance against objective

Between 1 October 2019 (the start of the review period) and1 October 2020, the M&G Property Portfolio produced a negativetotal return (the combination of income and growth of capital)across all share classes.

Over five years, the fund produced a negative total return. Thefund therefore did not meet the current objective of providing acombination of capital growth and income over five years or moreby investing mainly in UK commercial property.

Market background

Over the 12-month review period, the UK commercial propertymarket recorded a negative total return of 3.6%, according toproperty consultant CBRE. From the start of the review period, upuntil the end of February 2020, All UK commercial propertyrecorded a small positive total return, as small monthly declines in

capital values were offset by income. However, in March capitalvalues fell sharply by 3.0%, which was driven almost entirely by arise in yields demanded by investors.

Capital values continued to fall for the rest of the review period,but in the latter stages the pace of the declines moderated. Somuch so, that for the final quarter of the review period, UKcommercial property recorded a small positive total return.

In the review period, capital values fell in every sector, but by farthe largest decline was seen in the Retail sector where capitalvalues fell by 18.8%. Capital values fell by only 0.7% in Industrialsand 3.1% in Offices over the 12 months.

The problems facing the traditional ‘bricks and mortar’ Retailsector – increasing costs and the rise of e-commerce – wereexacerbated by the COVID-19 lockdown in the spring of 2020. Asrestrictions were eased, difficult trading conditions havecontinued, which has led to an increase in failures in the sectorand some retailers’ capacity to pay rent has diminished.

The deteriorating prospects for the sector have meant investorsdemand a higher yield for holding Retail assets. The increase inyields and the fall in rents has magnified the decline in capitalvalues. While the challenges for retailers have intensified recentlybecause of COVID-19, the impact of the pandemic is far reaching.Areas once in high demand and performing well, such as thealternative sector (notably hotels and leisure), are also undernear-term pressure.

The service sector makes up approximately 80% of the UK grossdomestic product. Much of this economic activity traditionallytakes place in buildings, where people are in close contact.However, the restrictions on movement and social distancingrequirements have meant offices, shops, pubs, gyms etc arehaving to operate at lower levels of capacity. Offices have beenparticularly hard hit with employees encouraged to work fromhome wherever possible. Businesses are now reappraising theirneed for physical property, which has raised the expected return orrisk premium investors demand for holding property.

In the review period, the volume of property transactions wasbelow that seen against the five-year average, most notably inRetail where transaction volumes were markedly lower. Volumeswere held back initially by uncertainty over Brexit negotiations,but recovered after the general election in December 2019.Activity remained buoyant at the start of 2020, before grinding toa halt in March as the UK was ‘locked down’ in the wake ofCOVID-19.

Whilst activity has begun to recover in recent months,unsurprisingly, potential buyers, particularly in the Retail andLeisure sectors, are pausing to reflect on the impact of COVID-19and the uncertainty of future income streams. This has led toextended delays on completing transactions.

Given the acceleration of trends in the property sector, be theyinternet shopping or working from home, investors’ appetite foran asset and the risk premium they attach to it will be determined


Manager’s Report


Market background (continued)

by whether or not an asset is future-proof, the weighted averageunexpired lease term (an indicator of the average remaining lifeof the leases of a property) and how strong the covenant is on aproperty.

Over the 12-month period, the fund produced a negative totalreturn. The largest detractor to fund performance was the declinein the value of the underlying fund’s Retail assets, where theunderlying fund is slightly overweight. Assets with vacancy riskalso contributed to the decline in capital values, as the riskpremium associated with them has increased.

Stronger performance from other areas of the underlyingportfolio, including holdings in Industrials and Offices, havehelped to moderate the negative impact of Retail assets. This is akey virtue of a well-diversified portfolio across and within thesectors.

Another area that has contributed negatively to absoluteperformance has been the level of vacancies. Vacancies reducethe rental income, increase costs for the underlying fund and, inturn, the distributions investors receive. In addition, inenvironments where the reliability of income becomes moreuncertain, the market and the fund’s Standing IndependentValuer, Knight Frank (the Valuer) reflect this uncertainty, in anadditional risk premium. This adversely impacts valuations. Thatbeing said, the underlying fund’s vacancy rate has risen onlymodestly over the period and remains below that of thebenchmark.

The underlying fund has historically always targeted a 7.5% to12.5% cash position. The rationale for a low cash weighting is toprovide investors with ‘property-like’ returns (specifically anattractive distribution) by being ‘fully invested’. It should be notedthat over the long term c.70% of the total return from UKcommercial property has come from income.

The underlying fund’s average cash holding for the period hasbeen towards the lower end of this range which, compared toholding higher levels of cash, offers less protection in a marketwhere capital values are falling. When the fund resumes dealing,we will be targeting a higher cash level, which should betterenable us to manage investor flows, albeit at the expense of alower distribution.

The underlying fund is usually valued at least once a month by theValuer. Knight Frank collects data from across the UK and appliesevidence from the wider market of transaction prices andachievable rents to value the underlying fund’s property assets.We also highlight to the Valuer our evidence of latest pricing andrental values. By using the most recent information, propertyvaluations fully reflect current market conditions.

On 8 November 2019, Knight Frank carried out an intra-monthvaluation, which resulted in a 3.6% decrease in the fund’s netasset value. This adjustment stemmed primarily from investmentsin the Retail sector, whose values fell on aggregate by 7.7%,reducing the value of Retail sector assets in the underlying fund by£75.6 million.

The reason for the intra-month valuation was the growingnumber of available data points and transactional evidencepointing to a marked deterioration in the Retail sector since thesummer of 2019. By making this adjustment, the Valuer acted onthe most recent market information, ensuring the underlying fundwas fully marked to the current market at that time, and thatinvestors were transacting at the most up-to-date price.

Between 17 March 2020 and 8 September 2020, the Valuerapplied material uncertainty clauses (MUCs) to the underlyingfund’s property assets. With buyers unable to inspect propertiesdue to COVID-19 and subsequently not enough transactions onwhich to base accurate valuations, all valuers were faced with thesame set of unprecedented circumstances. Consequently, lesscertainty – and a higher degree of caution – was attached tovaluations of all UK physical properties than usual.

Initially the MUCs covered all direct property assets, but graduallythese were lifted, with MUCs on Industrial assets being the first tobe removed in June 2020. On 9 September 2020, the MUCs hadbeen removed on all property assets.

Since income accounts for around 70% of the total return frominvestment in property over the long term, we actively managethe assets to safeguard and increase the underlying portfolio’sincome streams. Much of the asset management work now isfocused on rent collection and tenant liaison.

M&G Real Estate’s asset managers are in regular dialogue withoccupiers to maintain the important focus on receipt of rentalincome. We take our responsibilities as a major commercialproperty owner very seriously and are supporting tenants to findsolutions that help protect businesses in distress, whilst alsoprotecting the interests of the many savers and pensioners whosemoney is invested in our buildings. We are doing all we can topreserve value during this period of market stress and are workingwith occupiers to balance business continuity with our objective todeliver returns at this very difficult time for all.

Portfolio structure

The underlying portfolio invests directly in UK commercialproperty, predominantly in what we consider as either prime orgood secondary property – the higher-quality end of thespectrum. In terms of strategy, we aim to balance the elements ofincome and growth within the underlying portfolio while,importantly, managing the underlying fund’s assets actively tooptimise performance.

We maintained the underlying fund’s exposure towards what weconsider to be higher-quality properties during the review period,at a time when we have seen a performance divergence in thetraditional sectors, with quality outperforming. The value of, andcrucially, the income from prime assets, tends to be more resilientin times of market stress, in our opinion.

The underlying fund is a well-diversified portfolio designed togenerate rental income across the UK by region and sector, withprospective returns guiding asset allocation decisions. Across allsectors, the strength of rental growth in the next 12 to 18 monthsmay have a material bearing on property valuations going


Manager’s Report


Portfolio structure (continued)

forward; however, the somewhat muted development cycle inrecent years (except for Central London offices) and low historicalvacancies should offer a degree of support at current levels.

The underlying fund’s investment strategy is reviewed quarterly,with clear objectives with respect to capital allocation. Thedecision to buy or sell an asset is based on the individualproperty’s lifecycle and the optimal fund structure.

Early in the reporting period, the fund was in outflow and so assetsidentified for sale across the underlying portfolio were evaluatedfor divestment. In order to meet redemptions, the decision tocarry out ‘BAU’ (business as usual) sales across the underlyingportfolio remained, with a focus on reducing the exposure toRetail to be more in line with the broader market (as measured bythe MSCI IPD Quarterly Universe).

In terms of current positioning, at the reporting period end, theintention remains to raise liquidity predominantly by sellingRetail. However, there is a balance to be struck regarding timelyresumption of dealing while also acknowledging that some Retailassets have highly depressed valuations.

Within retailing, the way people shop varies, as do the physicalstores and online sites. The impact that the internet is having onthe sector is undeniable, but it is not a zero-sum game where onlydigital players win. E-tailing is multifaceted and enhanced by anomnichannel presence. Online purchases often require a physicalstore presence, be that for ‘click and collect’ or returns. But thatdoes not mean you need to be online to be successful, as Primarkhave shown time and time again.

The pandemic has, however, exposed retailers’ business models.Retailers across the spectrum are assessing their footprint and thefuture landscape for the most profitable solution. There is agrowing recognition that a well-structured online offering is key,but it is reliant on a number of well-chosen tangible stores. For aretailer, a warehouse on a well-located retail park nearby largeconurbations provides easy delivery access of goods, has spacefor their full collection (and meets near-term social distancingrequirements), while addressing customer needs of easy accessand parking, click and collect and returns – the comparison withthe high street is stark.

Furthermore, as a property investor, retail parks can have anadvantage over the high street. Investors typically own the wholeretail park and so have control over rents and occupiers. On theother hand, the high street has highly fragmented ownership thatcan quickly undermine shopping experience and achievable rents.We therefore retain our material underweight position in the highstreet and overweight exposure to dominant regional sites. Wefavour out-of-town retail parks and will continue to have amaterial exposure to what is now a high yielding part of themarket. Overall, the underlying fund is overweight the Retailsector.

The underlying fund’s weighting in Offices is above that of thebroader market, despite a significant underweight in CentralLondon, because it is offset by overweight positions in South EastOffices and Rest of UK Offices. Our overweight positions in the

sector have been driven by our valuation discipline. As we look toraise capital and consolidate our Office portfolio, the exposure toSouth East Offices is likely to be reduced.

We are selectively marketing assets in Offices, which we considerto be no longer core holdings. This can be due to of a variety ofreasons, including a reduction in the quality of the rental incomestream, vacancy risk or stock specific characteristics such as assetsize, location and whether the property requires further capitalinvestment. These considerations are particularly pertinent at thecurrent time, given the uncertain backdrop for office requirementsin the future.

In the Industrial sector, the underlying fund is in line with thebroader market. The underlying fund is underweight London andthe South East and overweight the Rest of the UK. The underlyingfund has been underweight London and the South East for sometime as pricing has remained firm, making it challenging for us tofind value in the sector.

Within the sector, demand is strong from retailers for smallerwarehouses close to towns, as online shoppers demand tighterdelivery windows, while larger sheds are still required for regionaland national distribution. Given the positive structuralfundamentals that underpin this sector, we have invested aportion of the assets under management in industry-specificindustrial real estate investment trusts (REITs), to gain exposure tothis positive dynamic in the market.

The REIT strategy on the underlying portfolio is designed to beselective and tactical in nature, and the volatility in the stockmarket has provided attractive entry points. As well as IndustrialREITs we have also invested in a Central London Offices REIT anda student accommodation-focused REIT, where the underlyingfund has limited exposure and a significant underweight position.

The vacancy rate (excluding developments) of the underlyingfund was 7.3% at the end of September, below that of the MSCIIPD Quarterly Universe, which was 7.6% at the end of June 2020,the latest date for which data is available. Over the review period,the vacancy rate has risen modestly, which is indicative of how weare looking to support tenants during the pandemic and thecommercial value the sites hold for the occupiers.

At the end of September, the underlying fund’s cash position was10.1%. At the start of the review period, the underlying fund’scash balance was 7.5%; at the time of the fund’s temporarysuspension, it had fallen to 4.8%.

Looking ahead, as we rebuild liquidity, we will target a higher cashlevel than the previous 7.5% - 12.5% range. As part of this process,we want to ensure the cash position stabilises at this increasedlevel, having met client redemptions once the fund reopens fordealing.

Investment activities

During the period, the fund was first in outflow, but then wastemporarily suspended. Initial progress raising capital to enablethe fund to resume dealing quickly was encouraging. By end-March, £113.8 million of assets (79% in Retail) had been sold anda further £296.8 million were under offer. However, progress was


Manager’s Report


Investment activities (continued)

halted by the pandemic, which imposed restrictions onmovement and investors’ ability to conduct due diligence.Furthermore, the impact of COVID-19 on the economy createduncertainty regarding property values.

Throughout the second and third quarters of 2020, we have hadbetween £134.3 million and £296.8 million of assets under offer,but deals have progressed slowly. Investors’ diminished appetiteto complete an investment is illustrated by the drop in investmentactivity across the UK for these quarters – down nearly 60%compared to a 10-year average of the equivalent period.Investors have been further discouraged by the materialuncertainty clauses attached to some assets, which indicates alack of confidence regarding values.

All the direct property transactions during the review period weredisposals; there were no purchases apart from a small investmentin industry-specific REITs in the Industrial, Central London Officesand student accommodation sectors. At the end of September,REITs represented 1.2% of the fund’s net asset value.

The list of sales continues to be guided by future underlyingportfolio structure, with the aim of ensuring that going forwardthe underlying fund is well diversified to deliver an attractiveincome distribution with capital growth, while being aligned withthose sectors forecast to outperform.

Assets are identified for sale based on our long-term strategicasset allocation objectives combined with an individualinvestment case for each property and its future return potential.Given the current environment, we are focused on selling areas ofthe market that we feel are likely to contribute negatively toperformance, due to either their sector dynamics or the property-specific risk – shortening lease lengths and vacancy rates, forexample.

Activity during the review period included the sale of sixTravelodge hotels in various parts of the UK. The aggregateconsideration was £22.8 million.

In Retail, we sold two retail parks – Ravenside Retail Park inEdmonton for £51.4 million and Wycombe Retail Park, HighWycombe for £38.7 million. We also sold Newcastle ShoppingPark for £34.75 million and a shop at 25-26 Commercial Street,Leeds for £2.3 million.

There was one sale in Offices during the review period, 20,Kingston Road, Staines for £19.0 million.

In Industrials, we sold Western Approach Distribution Park, anindustrial unit in Bristol for £36.6 million and a unit at West TullosIndustrial Estate, Aberdeen for £4.7 million.

Later in the review period, we sold an industrial unit at HartleburyTrading Estate, Worcestershire for £11.6 million, a unit at10 Blenheim Park, Nottingham for £7.3 million and units inAberdeen for £3.3 million. Finally, in September, we sold twoindustrial warehouses at Kingsbury Link, Tamworth for£26.85 million in aggregate.

Our immediate priority is the sale of further properties with theobjective of resuming dealing as soon as possible. As at 6 October2020 (the latest date for which data is available), a further£234.5 million of asset sales are currently being progressed, ofwhich 59% are in the Retail sector. This continues our strategy ofreducing the underlying fund’s overall weighting to Retail whilstfocusing on dominant consumer-led sites that arecomplementary to the changing structural themes emergingboth in the sector and as a result of Covid-19.

Asset management

Active asset management continued to enhance theperformance of the underlying portfolio during the review period,by maintaining values through securing and strengthening rentalincome. Throughout the second half of the review period, much ofthe asset management work was focused on rent collection andtenant liaison.

Retail

We renewed a lease with Lush, a cosmetics retailer, at Unit 3,Coney Street, York. The lease was due to expire at the end of2019. The new FRI lease* expires at the end of 2024. We alsocompleted a letting to 3D Kitchens on a 4,000 sq ft unit at OrbitalRetail Park, Cannock. The 10-year lease has a tenant break afterfive years. At Wycombe Retail Park, High Wycombe (which hasnow been sold) we renewed a 10-year FRI lease with Currys.

At Riverside Retail Park, Northampton, we completed a leaserenewal with Costa Coffee and Poundland. Both tenants took newfive-year leases.* An FRI lease imposes full repairing and insuring obligations on the tenant,

relieving the landlord from all liability for the cost of insurance and repairs.

Offices

We completed a new letting to Samsonite on 5,000 sq ft on thefirst floor at 5, The Square (Stockley Park). The lease is for 10 years,with a tenant option to break in year five and a 12-month rent-free period. A further 12-month rent-free period applies if thebreak in year five is not exercised. The passing rent is in excess ofthe Estimated Rental Value (the rental value of the property if theproperty was let at market rates).

Industrial

We completed a 20-year lease with Restore (a documentmanagement company) at Beach Ream 8B, Rainham. The leasehas no breaks and rent reviews are every five years. The leaserenewal follows the tenant completing an extension at thepremises.

At Unit 2, Leatherhead Trade Park we completed a rent review.The new rent represents an uplift of 25% from the previous rent.We also agreed a new five-year lease at a distribution unit inNormanton to the existing tenant Sigma Solutions. The rentachieved represent an increase of 12% on the previous level.

Also, a new letting completed at Kingsbury Link, Tamworth to RTIInternational Metals on a 5-year lease.


Manager’s Report


Leisure

We completed a lease on a vacant unit at the Peel Centre,Blackburn, to restaurant group Jimmy’s Killer Prawns. As a result,The Peel Centre is now fully let, and this assisted with themarketing of the property as prospective buyers were able to viewa fully occupied site.

At Medway Valley Leisure Park, Rochester, we took a surrender ofthe lease on a unit from the franchisee and re-let it to thefranchiser, Creams, a café and ice cream outlet. The new 10-yearFRI lease started in September. Before completing the surrender,we collected all the arrears from the franchisee.

Outlook

The reopening of the UK economy was matched with a pick-up inactivity during the third quarter, with rolling 3-month GDP ratereturning to growth in August. However, the resurgence of thevirus has resulted in new restrictions and in the face of thisuncertainty, the path for recovery continues to be dependent onthe country’s ability to contain COVID-19.

The threat of a “no-deal” Brexit with the EU at the end of thetransition poses an additional risk. That said, with on-goinglockdown measures likely to remain less stringent than thoseemployed earlier in the year, the economy is expected to continueto regain initial losses, albeit at a modest pace. Protecting theeconomy and health remains a complex balancing act.

The surge in online retailing is intensifying the contrastingfortunes of the Industrial and Retail sectors. The acceleration ine-commerce adoption is proving more permanent and we expectit to underpin industrial occupational demand over the longerterm, in our view attracting investors searching for rental growthand more certain incomes.

Meanwhile, Retail continues to underperform, particularlyshopping centres and high-street shops, with supermarkets andretail warehouses showing greater resilience during thispandemic. While investor demand for the overall retail propertysector will struggle to pick up in the near term, we think investorswill remain focused on core, well-located retail space with secureand long-term income streams, underpinned by high qualitytenants.

The office occupational market remains subdued, with limitedleasing activity reflecting delayed occupier decision-making. Thisis partly indicating the normal reaction of companies to economicweakness, but also the pandemic’s impact on working from home.Indeed, there is a lot of debate around the future of the offices,but the sector entered the crisis from a position of strength withlow vacancy rates, below those reported during the previousdownturns. Rent collection has held up well since the onset of theCOVID-19 pandemic.

In terms of property investment, the lifting of materialuncertainty clauses in September will clear some doubtsurrounding valuations. Provided restrictions do not impede oninvestors’ ability to carry out on-the-ground due diligence, deal

frequency should rise from low levels seen in the past twoquarters. In our view, this will be supportive of our goal to raisecapital and resume dealing in the fund.

Fiona Rowley & Justin UptonCo-fund managers

Employees of M&G FA Limited which is an associate of M&G Securities Limited.Fiona Rowley has stepped down on 30 November 2020 and from 1 December2020 Justin Upton is the sole fund manager.

Please note that the views expressed in this Report should not be taken as arecommendation or advice on how the fund or any holding mentioned in the Reportis likely to perform. If you wish to obtain financial advice as to whether an investmentis suitable for your needs, you should consult a Financial Adviser.


Manager’s Report


Portfolio statement

as at 30 SeptemberHolding

2020£'000

2020%

2019%

COLLECTIVE INVESTMENT SCHEMES 1,349,169 97.87 99.081,412,899,012 M&G Property Portfolio Sterling Class 'F' (Income) 1,349,169 97.87

Portfolio of investments (notes 2c & 2d on page 22) 1,349,169 97.87 99.08Net other assets / (liabilities) 29,370 2.13 0.92

Net assets attributable to unitholders 1,378,539 100.00 100.00


Manager’s Report


Trust performancePlease note past performance is not a guide to futureperformance and the value of investments, and the income fromthem, will fluctuate. This will cause the trust price to fall as well asrise and you may not get back the original amount you invested.

The following chart and tables reflect the key financialinformation of a representative unit class, Sterling Class ‘A’(Accumulation) units. As different unit classes have differentattributes, for example charging structures and minimuminvestments, please be aware that their performance may bedifferent. For more information on the different unit classes in thistrust please refer to the Prospectus for M&G Feeder of PropertyPortfolio, which is available free of charge either from our websiteat www.mandg.co.uk/prospectuses or by calling M&G CustomerRelations.

Trust level performanceTrust net asset value

as at 30 September2020£'000

2019£'000

2018£'000

Trust net asset value (NAV) 1,378,539 1,711,419 2,257,001

Performance since launchTo give an indication of how the trust has performed since launch,the chart below shows total return of Sterling Class ‘A’(Accumulation) units.

100

105

135

130

125

120

115

110

145

140

952013 2014 2015 2016 20202017 2018 2019

January 2013 = 100, plotted monthly Chart date 1 October 2020

Sterling Class ‘A’ (Accumulation) units*

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

IA UK Direct Property sector average*

To give an indication of the performance of the trust, thefollowing table shows the compound rate of return, per annum,over the period. Calculated on a bid to bid basis with incomereinvested.

Long-term performance by unit classOneyear

01.10.19% [a]

Threeyears

02.10.17% pa

Fiveyears

01.10.15% pa

Sincelaunch

% paSterling [b]

Class ‘A’ -11.7 -3.3 -2.4 +1.5 [c]

Class ‘D’ -11.3 -2.7 -1.8 +2.2 [c]

Class ‘I’ -11.4 -2.8 -1.9 +2.1 [c]

Class ‘R’ -11.6 -3.0 -2.1 +1.9 [c]

Class ‘X’ -11.7 -3.1 -2.3 +1.6 [c]

[a] Absolute basis.

[b] Bid to bid with income reinvested.

[c] 18 January 2013, the launch date of the trust.


Financial highlights


Operating charges and portfolio transactioncostsWe explain below the payments made to meet the ongoing costsof investing and managing the trust, comprising operatingcharges and portfolio transaction costs.

Operating chargesOperating charges include payments made to M&G and toproviders independent of M&G:

• Annual charge: Charge paid to M&G covering the annualcost of M&G managing and administering the trust and thecosts of third parties providing services to the trust. From1 August 2019, this charge rolls all costs that make up theoperating charges into one annual charge.For every £1 billion of a trust’s net asset value, a discount of0.02% will be applied to that trust’s annual charge (up to amaximum of 0.12%).

• Extraordinary legal and tax expenses: Costs that specificallyrelate to legal or tax claims that are both exceptional andunforeseeable. Such expenses are uncommon, and would not beexpected in most years. Although they result in a short-term cost tothe trust, generally they can deliver longer term benefits forinvestors.

• Investment management: Charge paid to M&G forinvestment management of the trust. From 1 August2019 this charge forms part of the annual charge.

• Ongoing charges from underlying funds: Ongoing chargeson holdings in underlying funds that are not rebated. From1 August 2019 charges from underlying funds (excludingInvestment Trust Companies and Real Estate InvestmentTrusts) will be rebated.

The operating charges paid by each unit class of the trust areshown in the following performance tables. These charges do notinclude portfolio transaction costs or any entry and exit charges(also known as initial and redemption charges). The chargingstructures of unit classes may differ, and therefore the operatingcharges may differ.

Operating charges are in line with the ongoing charges shown inthe Key Investor Information Document, other than where therehave been extraordinary legal or tax expenses, or an estimate hasbeen used for the ongoing charge because a material change hasmade the operating charges unreliable as an estimate of futurecharges.

Portfolio transaction costsPortfolio transaction costs are incurred by trusts when buying andselling investments.

The trust does not incur direct portfolio transaction costs. Thetrust will incur indirect costs through its underlying investment inthe M&G Property Portfolio as described below.

The dealing prices of the M&G Property Portfolio, in which theM&G Feeder of Property Portfolio is invested, may ‘swing’ to theextent of the ‘spread’ reflecting the costs of buying and sellingproperties, currently around 7.25%. Each day we value the assetsof the M&G Property Portfolio on both an ‘offer’ basis (how muchthey would cost to buy) and a ‘bid’ basis (how much theunderlying fund would receive if they were sold). The differencebetween the two, known as the ‘spread’, is currently around 7.25%.This reflects the costs of buying and selling properties, inparticular Stamp Duty Land Tax paid on purchases which canaccount for up to 5% of the property value. The dealing prices wepublish are on either the offer basis or bid basis, depending onwhether people are generally buying underlying fund shares (theunderlying fund is in ‘net inflow’) or selling shares (the underlyingfund is in ‘net outflow’). Should underlying fund flows move fromnet inflow to net outflow, the dealing prices may ‘swing’ from anoffer basis to a bid basis and fall by the extent of the spread. Onthe other hand, should flows move from net outflow to net inflow,the dealing prices may rise by the same extent. For large deals(regarded as deals in excess of £50,000) the dealing price may bedifferent from the published price. Unit purchases may receive aprice that is higher than the quoted offer price. Unit sales mayreceive a price that is lower than the quoted bid price.

Portfolio transaction costs

as at 30 September 2020 2019 2018 Average [a]

Indirect portfolio transaction costs % % % %Average portfolio dealing spread 6.30 6.42 5.80 6.17

[a] Average of first three columns.




Specific unit class performanceThe following tables show the performance of each unit class. All‘Performance and charges’ percentages represent an annual rateexcept for the ‘Return after operating charges’ which is calculatedas a percentage of the opening net asset value per unit (NAV).‘Dilution adjustments’ are only in respect of direct portfoliotransaction costs.

Historic yields for the current year are calculated as at9 October 2020.

Sterling Class ‘A’ Income unit performanceThe unit class was launched on 18 January 2013.for the year to 30 September 2020 2019 2018

Change in NAV per unit UK p UK p UK p

Opening NAV 75.13 80.41 78.23Return before operating charges and after

direct portfolio transaction costs (7.96) (0.74) 6.17Operating charges (0.69) (1.61) (1.69)

Return after operating charges (8.65) (2.35) 4.48

Distributions (2.75) (2.93) (2.30)

Closing NAV 63.73 75.13 80.41

Direct portfolio transaction costs UK p UK p UK p

Costs before dilution adjustments 0.00 0.00 0.00Dilution adjustments [a] 0.00 0.00 0.00

Total direct portfolio transaction costs 0.00 0.00 0.00

Performance and charges % % %

Direct portfolio transaction costs [b] 0.00 0.00 0.00Operating charges excluding property expenses 1.00 1.63 1.70Property expenses 0.74 0.48 0.37

Operating charges [c] 1.74 2.11 2.07Return after operating charges -11.51 -2.92 +5.73Historic yield 4.54 3.85 3.37Effect on yield of charges offset against capital 0.99 1.47 1.50

Other information

Closing NAV (£'000) 104,053 126,948 220,938Closing NAV percentage of total fund NAV (%) 7.55 7.42 9.79Number of units 163,283,380 168,964,380 274,761,380Highest unit price (UK p) 80.61 85.89 86.11Lowest unit price (UK p) 68.38 81.06 82.90

Sterling Class ‘A’ Accumulation unit performanceThe unit class was launched on 18 January 2013.for the year to 30 September 2020 2019 2018





Distributions (2.84) (2.35) (2.15)

Retained distributions 2.84 2.35 2.15

Closing NAV 90.18 102.15 105.48







Other information


Sterling Class ‘D’ Income unit performanceThe unit class was launched on 18 January 2013.for the year to 30 September 2020 2019 2018


Opening NAV 2,223.18 2,359.55 2,285.35Return before operating charges and after



Distributions (79.11) (81.80) (73.55)

Closing NAV 1,896.32 2,223.18 2,359.55







Other information

Closing NAV (£'000) 16,789 19,932 32,429Closing NAV percentage of total fund NAV (%) 1.22 1.16 1.44Number of units 885,349 896,549 1,374,385Highest unit price (UK p) 2,386.33 2,522.12 2,525.80Lowest unit price (UK p) 2,034.33 2,396.74 2,421.67




Specific unit class performance

Sterling Class ‘D’ Accumulation unit performanceThe unit class was launched on 18 January 2013.for the year to 30 September 2020 2019 2018





Distributions (89.45) (84.29) (78.75)


Closing NAV 2,472.23 2,787.87 2,858.46







Other information

Closing NAV (£'000) 494 558 612Closing NAV percentage of total fund NAV (%) 0.04 0.03 0.03Number of units 20,000 20,000 21,400Highest unit price (UK p) 2,992.19 3,058.69 3,033.89Lowest unit price (UK p) 2,629.68 2,977.23 2,844.92

Sterling Class ‘I’ Income unit performanceThe unit class was launched on 18 January 2013.for the year to 30 September 2020 2019 2018





Distributions (2.87) (2.99) (2.61)

Closing NAV 68.02 79.89 84.96







Other information


Sterling Class ‘I’ Accumulation unit performanceThe unit class was launched on 18 January 2013.for the year to 30 September 2020 2019 2018





Distributions (42.56) (40.09) (37.57)


Closing NAV 1,228.98 1,387.93 1,424.97







Other information

Closing NAV (£'000) 657,355 808,347 1,115,072Closing NAV percentage of total fund NAV (%) 47.68 47.23 49.40Number of units 53,487,933 58,241,233 78,252,119Highest unit price (UK p) 1,489.42 1,524.04 1,512.42Lowest unit price (UK p) 1,307.25 1,482.47 1,419.95





Sterling Class ‘R’ Income unit performanceThe unit class was launched on 18 January 2013.for the year to 30 September 2020 2019 2018





Distributions (2.75) (2.89) (2.43)

Closing NAV 64.60 76.02 81.03







Other information

Closing NAV (£'000) 123 145 220Closing NAV percentage of total fund NAV (%) 0.01 0.01 0.01Number of units 190,886 190,886 270,886Highest unit price (UK p) 81.57 86.56 86.75Lowest unit price (UK p) 69.31 82.00 83.33

Sterling Class ‘R’ Accumulation unit performanceThe unit class was launched on 18 January 2013.for the year to 30 September 2020 2019 2018





Distributions (3.99) (3.68) (3.44)


Closing NAV 121.01 136.88 140.81







Other information

Closing NAV (£'000) 406 527 842Closing NAV percentage of total fund NAV (%) 0.03 0.03 0.04Number of units 335,100 385,100 598,100Highest unit price (UK p) 146.86 150.47 149.45Lowest unit price (UK p) 128.72 146.22 140.60





Sterling Class ‘X’ Income unit performanceThe unit class was launched on 18 January 2013.for the year to 30 September 2020 2019 2018





Distributions (2.89) (3.37) (2.42)

Closing NAV 67.11 79.12 84.68







Other information

Closing NAV (£'000) 483 708 1,630Closing NAV percentage of total fund NAV (%) 0.03 0.04 0.07Number of units 720,130 895,130 1,925,130Highest unit price (UK p) 84.88 90.45 90.68Lowest unit price (UK p) 72.01 85.37 87.29

[a] In respect of direct portfolio transaction costs.

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

[c] During the trust’s suspension the annual charge will be reduced by 30%.




Financial statementsStatement of total return

2020 2019for the year to 30 September Note £'000 £'000 £'000 £'000IncomeNet capital gains / (losses) 4 (231,868) (106,594)Revenue 6 69,237 85,817

Expenses 7 (10,080) (18,152)

Net revenue / (expense) before taxation 59,157 67,665Taxation 8 (11,219) (12,117)

Net revenue / (expense) after taxation 47,938 55,548

Total return before distributions (183,930) (51,046)Distributions 9 (52,309) (63,110)

Change in net assets attributable to unitholders from investment activities (236,239) (114,156)

Statement of change in net assets attributable to unitholders2020 2019

for the year to 30 September £'000 £'000 £'000 £'000

Opening net assets attributable to unitholders 1,711,419 2,257,001Amounts received on issue of units 42 117,096Amounts paid on cancellation of units (124,999) (586,236)

(124,957) (469,140)Dilution adjustments 1,389 6,121Change in net assets attributable to unitholders from investment activities (see above) (236,239) (114,156)Retained distributions on Accumulation units 26,927 31,593

Closing net assets attributable to unitholders 1,378,539 1,711,419


Financial statements and notes


2020 2019as at 30 September Note £'000 £'000

Assets

Fixed assetsInvestments 1,349,169 [a] 1,695,721 [a]

Current assetsDebtors 10 31,304 30,032Cash and bank balances 11 25,939 28

Total assets 1,406,412 1,725,781Liabilities

CreditorsDistribution payable (5,105) (7,201)Other creditors 12 (22,768) (7,161)

Total liabilities (27,873) (14,362)

Net assets attributable to unitholders 1,378,539 1,711,419

[a] There were no cash equivalents held at the year end (2019: same).



Financial statements (continued)Balance sheet


Notes to the financial statements

1 Statement of compliance

The financial statements have been prepared in compliance withUK Financial Reporting Standard 102 (FRS 102) and inaccordance with the Statement of Recommended Practice(SORP) for Authorised Funds issued by the Investment Associationin May 2014 and amended in June 2017.

2 Summary of significant accounting policies

a) Basis of preparation

The financial statements of the M&G Feeder of Property Portfolioare prepared on a going concern basis, under the historical costconvention as modified by the revaluation of certain financialassets and liabilities measured at fair value through profit or loss.The ACD has made an assessment of the fund's ability tocontinue as a going concern which is made as at the date of issueof these financial statements and considers liquidity, declines inglobal capital markets, investor intentions including known andestimated redemptions, expense projections, key serviceprovider's operational resilience, and the impact of COVID-19. Inarriving at this conclusion the ACD has specifically considered thefollowing:

The underlying fund needs to ensure that it has sufficient cash tobe able to meet redemptions. Prior to suspension on 4 Decemberthe underlying fund’s cash position fell below the target level. Thesuspension allows the underlying fund managers to continue tobalance the objective of raising cash levels with the need toprotect the interests of all our investors. The ongoing, targetedsales programme is intended to preserve the portfolio’s integrityand long term prospects. The underlying fund’s suspension isunder constant review and the decision to resume dealing will betaken by the Authorised Corporate Director, with agreement fromthe fund’s Depositary.

As at 30 September 2020 the underlying fund had sufficientliquid assets to meet its current obligations, with current liabilitiesof £67.6 million and current assets of £288.5 million. Ongoingoperating expenses represent only 18.3% of annual contractedincome. Had full Annual charge been billed to the underlying fundthe ratio would rise to 19.7%.

The ACD and Investment Manager are closely monitoring theimpact of Covid-19 on the underlying fund's rental collection andthe credit worthiness and operational earnings of all tenants.Where there are concerns around recovery these are consideredfor bad debt provisioning.

As a result the ACD has concluded that the use of going concernbasis is appropriate in preparing these Financial statements.

b) Basis of valuation of investments

The investment is valued at its fair value as at 12 noon on30 September 2020, being the last business day of the financialyear. The fair value of M&G Property Portfolio is cancellation price.

c) Investment gains and losses

Gains and losses on the realisation of investments and increasesand decreases in the valuation of investments held at the balancesheet date are treated as capital.

d) Distribution and interest income

Income from the investment is recognised on an accruals basis, byreference to the amount of distributable income in the underlyinginvestment and treated as revenue. Income received in respect ofpurchases of the investment during the financial year will includean element of equalisation which represents the average amountof distributable income included in the price paid for the units.The equalisation is treated as a return of capital for taxationpurposes and not included in the distributable income. Bankinterest is recognised on an accruals basis.

e) Expenses

For accounting purposes, all expenses are charged againstrevenue for the period on an accruals basis.

f) Apportionment of income and expenses to multiple unitclasses

With the exception of the annual charge and annualmanagement charge, which are directly attributable to individualunit classes, all income and expenses are apportioned to thetrust’s unit classes pro-rata to the value of the net assets of therelevant unit class on the day that the income or expenses arerecognised.

g) Taxation

Deferred tax is provided for in respect of timing differences thathave originated but not reversed by the balance sheet date, withthe exception of those regarded as permanent differences. Anyliability to deferred tax is provided at the average rate of taxexpected to apply. A deferred tax asset is recognised to the extentthat it is expected to be utilised, based on the likelihood of taxableprofits arising in the next twelve month period from which thefuture reversal of timing differences can be deducted. Deferredtax assets and liabilities are not discounted to reflect the timevalue of money.

h) Distribution policy

The policy of the trust is to distribute all available income,excluding any items treated as capital in accordance with theabove polices and after deduction of expenses properlychargeable against revenue.

In determining the amount available for distribution to Incomeunits, the annual charge and the annual management charge areoffset against capital, increasing the amount available fordistribution whilst restraining capital performance to anequivalent extent.

Income attributable to Accumulation unitholders is retained atthe end of each distribution period and represents a reinvestmentof income. All remaining income is distributed in accordance withthe Collective Investment Schemes sourcebook.




Notes to the financial statements2 Summary of significant accounting policies (continued)

h) Distribution policy (continued)Distributions which have remained unclaimed by unitholders formore than six years are credited to the capital property of thetrust.

These accounting policies have been consistently applied sincethe beginning of the financial year.

3 Risk management policies

The trust has been established as a feeder fund which will investsolely in Sterling Class ‘F’ Income shares of the M&G PropertyPortfolio (the ‘underlying fund’) (an Open-Ended InvestmentCompany) established under English law. The underlying fund’sinvestment objective is to carry on Property Investment Businessand to manage cash raised from investors for investment in theProperty Investment Business. In so doing, the fund aims tomaximise long-term total return (the combination of income andgrowth of capital) through investment mainly in commercialproperty.

The trust has the same risks and risk management policies as theunderlying fund, which are as follows:

The Manager is responsible for establishing, implementing andmaintaining an adequate and documented risk managementpolicy for identifying, measuring and managing all risks to whichfunds are or might be exposed.

The Fund’s investment activities expose it to various types of riskincluding market price risk, credit risk and liquidity risk. Thesefinancial statements are designed to enable users to evaluate thenature and extent of those risks and how they are managed.

Market price riskMarket price risk is the risk of loss resulting from fluctuations in themarket value of the fund’s investments including, but not limitedto, adverse real estate valuation movements which may beattributable to changes to global or local economic conditions;local market conditions such as the price volatility of the UKcommercial property markets or performance of individualproperties; the financial conditions of tenants; changes in interestrates or exchange rates; real estate tax rates and otheroperational expenses; environmental laws and regulations;planning laws and other governmental legislation; energy pricesand the relative attractiveness of real estate types or locations. Inaddition, real estate is subject to long-term cyclical trends thatgive rise to significant volatility in values.

The fund’s exposure to market price risk is comprised mainly ofmovements in the value of the fund’s investments in properties.Property investments are inherently difficult to value and difficultto transform into cash due to the individual nature of eachproperty. As a result, valuations are subject to uncertainty. Thevalue of investments is determined by the Independent Valuerand is therefore subjective. The Independent Valuer has acquired

significant experience in the real estate sectors targeted by thefund. No assurance can be given that any given real estate assetcould be sold at a price equal to the fair value ascribed to it. Thereis no assurance that the actual sale price will reflect the estimatesresulting from the valuation process even where such sales occurshortly after the valuation date.

Where it is necessary for the fund to sell properties in order tomeet redemptions, the amounts realised from the sales may bematerially less than the current valuation.

The fund is subject to interest rate risk in respect of cash deposits,Treasury Bills and overdrafts held.

Liquidity riskLiquidity risk is the risk that funds cannot be raised or investmentssold at limited cost or in an adequate time frame to meetfinancial commitments such as unit redemptions.

The fund’s liquidity can be affected by unexpected or high levelsof unit redemptions. In difficult market conditions, or if significantnumbers of investors withdraw their investments from the fund atthe same time, the manager may be forced to dispose of propertyinvestments, and the value of certain property investments maytherefore be less predictable than usual. Under thesecircumstances, it may be harder to sell assets at the last valuationor quoted market price, or at a price considered to be fair. Suchconditions could result in unpredictable changes in the value ofthe fund’s holdings. In general, property investments are harder tobuy and sell compared to investments in fixed income securitiesand company shares.

There is the possibility that a portion of the portfolio will be held incash if the supply of new investment opportunities is limitedwhich, if the situation persists, may restrict the performance ofthe fund.

The Independent Risk Team is responsible for second lineoversight of liquidity risk. To this end, the Risk Team assesses andmonitors liquidity risk. The liquidity reports as provided by the firstline can be reviewed ad-hoc by the Risk Team wheneverconsidered relevant, and liquidity can be interrogated and fundmanagers can be challenged on the liquidity in the funds.

The portfolios are reviewed regularly at Liquidity ManagementSub-Committee (LMSC) meetings. The relevant risk team isresponsible for escalating funds with potential liquiditymismatches to the Sub-Committee, and the LMSC is responsiblefor highlighting, challenging, escalating, or requiring furtheraction, as it deems necessary.

Credit riskThe fund is exposed to credit risk in the event of default by anoccupational tenant. The fund would suffer a rental shortfall andincur additional costs, including legal expenses, in maintaining,insuring and re-letting the property.




Notes to the financial statements3 Risk management policies (continued)

Risk managementThe fund’s risks are measured and managed as an integral part ofthe investment process. It invests in illiquid assets, but trades dailyand hence portfolio diversification contributes towards managingliquidity and default risks as well as reducing market price risk.During the year, the fund has not hedged against movements inthe value of its investments. However, the Prospectus permits thefund to use derivative instruments for hedging such risks and theManager may from time to time employ such instruments.

In managing credit risk, income from any one tenant or tenantswithin the same group must not exceed 25% of the aggregaterevenue in relation to the property investments in any accountingperiod, unless the tenant is the UK Government or guaranteed bythe UK Government. Rent is collected from tenants in advance,usually quarterly. Cash is placed on deposit with reputablefinancial institutions and is subject to limits as disclosed in theProspectus.

To manage liquidity risk the fund currently targets between 7.5%and 12.5% unencumbered cash under normal market conditions.Under certain market conditions where liquidity risk may bedeemed to be elevated, the level of cash targeted by the fundmay be higher. Actual cash levels may differ from targeted cashlevels for a number of reasons, particularly arising from time lagsrelated to arranging to exchange and complete property sales. Ifliquidity becomes more of a focus, for example if actual cash lookslikely to move below targeted cash for an extended period, thefund manager will enter an enhanced monitoring and oversightphase, explicitly focusing on ensuring that all customers in thefund are being treated fairly in terms of ongoing portfoliocomposition, appropriate asset sales or purchases.

In exceptional circumstances where assets cannot be fairlyvalued, or may otherwise need to be sold at a large discount toraise cash to settle redemptions, the fund may be temporarilysuspended if that is deemed to be in the best interest of allinvestors.

Additionally, the Manager may borrow for the account of the fundbut only for the purpose of meeting redemption requests wherethere is a timing difference in connection with the purchase andsale of property investments. Use of the revolving credit facility isdetailed in note 14.

4 Net capital gains / (losses)

2020 2019for the year to 30 September £'000 £'000Non-derivative securities [a] (231,868) (106,593)Transaction charges 0 (1)

Net capital gains / (losses) [a] (231,868) (106,594)

[a] Includes realised gains of £2,217,000 and unrealised losses of £234,086,000.(2019: realised gains of £38,000,000 and unrealised gains of £144,593,000).Certain realised gains and losses in the current year were unrealised in the prioryear.

5 Portfolio transactions and associated costs

The following tables show portfolio transactions and theirassociated transaction costs. For more information about thenature of the costs please see the section on ‘Operating chargesand portfolio transaction costs’ on page 15.

for the year to 30 September2020£'000

2019£'000

a) PurchasesCollective investment schemes 9,825 67,862

Total purchases after transaction costs 9,825 67,862

b) SalesCollective investment schemes 124,018 503,890

Total sales after transaction costs 124,018 503,890

c) Direct portfolio transaction costsFor underlying transaction costs refer to the M&G Property Portfolio financial statements.

d) Indirect portfolio transaction costs % %Portfolio dealing spread [a] 6.30 6.42

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

6 Revenue2020 2019

for the year to 30 September £'000 £'000Bank interest 1 2Distributions from collective investment schemes: non-taxable 3,464 8,666Distributions from collective investment schemes: taxable 1,729 1,610Distributions from collective investment schemes: propertyincome dividends 64,023 75,516HM Revenue & Customs interest 20 23

Total revenue 69,237 85,817

7 Expenses2020 2019

for the year to 30 September £'000 £'000

Payable to the Manager or associateAnnual charge 10,080 2,608Annual management charge [a] 0 15,544

Total expenses 10,080 18,152

[a] The segregated charges shown above for annual management for those paid bythe trust up to and including 31 July 2019. As of 1 August 2019 these chargeshave been replaced by the single annual charge.

Audit fees for the financial year ending 2020 were £6,000 (including VAT).




Notes to the financial statements8 Taxation

2020 2019for the year to 30 September £'000 £'000

a) Analysis of charge in the yearCorporation tax 12,198 12,287Deferred tax (note 8c) (979) (170)

Total taxation 11,219 12,117

b) Factors affecting taxation charge for the yearNet revenue / (expense) before taxation 59,157 67,665

Corporation tax at 20% 11,831 13,533Effects of:

Distributions from collective investment schemes: non-taxable (612) (1,416)

Total tax charge (note 8a) 11,219 12,117

c) Provision for deferred taxationProvision at the start of the year 3,659 3,829Deferred tax in profit and loss account (note 8a) (979) (170)

Provision at the end of the year 2,680 3,659

The trust has not recognised a deferred tax asset in the current financial year(2019: same).

9 Distributions

2020 2019for the year to 30 September Inc [a] Acc [b] Inc [a] Acc [b]

Dividend distributions £'000 £'000 £'000 £'000First interim 7,309 7,632 7,285 7,902Second interim 7,189 8,046 7,493 8,385Third interim 5,320 5,728 7,745 8,268Final 5,105 5,521 7,201 7,038

Total net distributions 51,850 61,317Income deducted on cancellation of units 459 2,174Income received on issue of units 0 (381)

Distributions 52,309 63,110

Net revenue / (expense) per statement oftotal return 47,938 55,548Expenses offset against capital 4,371 7,561Undistributed income brought forward 1 1Undistributed income carried forward (1) 0

Distributions 52,309 63,110

[a] Distributions payable on Income units.

[b] Retained distributions on Accumulation units.

10 Debtors2020 2019

as at 30 September £'000 £'000Distributions receivable 11,453 17,380Sales awaiting settlement 0 5,504Tax recoverable 19,851 7,148

Total debtors 31,304 30,032

11 Cash and bank balances2020 2019

as at 30 September £'000 £'000Cash held as bank balances 25,939 28

Total cash and bank balances 25,939 28

12 Other creditors2020 2019

as at 30 September £'000 £'000Manager's annual management charge payable 56 57Amounts payable on cancellation of units 0 5,504Annual charge payable 7,831 1,599Corporation tax payable 12,198 0Deferred taxation 2,682 0Expenses payable 1 1

Total other creditors 22,768 7,161

13 Investment property

The below sensitivities illustrate the impact of changes in keyunobservable inputs (in isolation) on the fair value of theunderlying fund’s property investments, analysed by sector inaccordance with the portfolio statement.

as at 30 September 2020

Increase inyield 25bps

£’000

Decrease inyield 25bps

£’000Retail (22,104) 23,709Office (24,566) 26,589Industrial (25,803) 28,725Leisure (4,102) 4,417Other (1,334) 1,451

Total (77,909) 84,891

as at 30 September 2019

Increase inyield 25bps

£’000

Decrease inyield 25bps

£’000Retail (42,310) 47,359Office (33,010) 35,770Industrial (30,997) 34,232Leisure (7,391) 8,086Other (1,631) 1,763

Total (115,339) 127,210

Future minimum rentals receivable under non-cancellableoperating leases within investment property are as follows:

2020£’000

2019£’000

Not later than one year 96,539 114,491Later than one year and not later than five years 307,080 357,832Later than five years 506,089 601,585

909,708 1,073,908

14 Contingent assets, liabilities and outstandingcommitments

There were no contingent assets, liabilities or outstandingcommitments at the balance sheet date (2019: same).




Notes to the financial statements15 Units in issue

The following table shows each class of unit in issue during theyear. Each unit class has the same rights on winding up howeverthey may have different charging structures as set out in note 16below.

Opening Movements ClosingUnit class 01.10.19 Issued Cancelled 30.09.20SterlingClass ‘A’ Income 168,964,380 0 (5,681,000) 163,283,380Class ‘A’ Accumulation 153,886,094 0 (8,230,000) 145,656,094Class ‘D’ Income 896,549 2,000 (13,200) 885,349Class ‘D’ Accumulation 20,000 0 0 20,000Class ‘I’ Income 747,334,030 0 (60,053,000) 687,281,030Class ‘I’ Accumulation 58,241,233 0 (4,753,300) 53,487,933Class ‘R’ Income 190,886 0 0 190,886Class ‘R’ Accumulation 385,100 0 (50,000) 335,100Class ‘X’ Income 895,130 0 (175,000) 720,130

16 Charging structure

The table below sets out the charging structure for each class ofunit in existence as at the balance sheet date. The chargingstructure is the same for both Income and Accumulation units ofeach class.

Unit class

Entrycharge

%

Exitcharge

%

Annualcharge [a]

%

SterlingClass ‘A’ n/a n/a 1.35Class ‘D’ n/a n/a 0.60Class ‘I’ n/a n/a 0.85Class ‘R’ n/a n/a 0.85Class ‘X’ n/a n/a 1.35

[a] The amounts shown are the maximum annual charge. M&G will apply adiscount of 0.02% for every £1 billion of a fund’s net asset value. This is assessedquarterly and implemented on a forward basis no later than 13 business daysafter quarter end. M&G is waiving 30% of the annual charge while the fund is insuspension in recognition of the inconvenience caused to clients and customers.

17 Related parties

M&G Securities Limited, as Manager, is a related party and acts asprincipal on all the transactions of units in the trust except with inspecie transactions, where M&G Securities Limited acts as anagent. The aggregate monies received through issues, and paidon cancellations, are disclosed in the ‘Statement of change in netassets attributable to unitholders’ and note 9. Amounts due to /from M&G Securities Limited in respect of unit transactions at theyear end are disclosed in notes 10 and 12 where applicable.

Amounts paid to M&G Securities Limited in respect of the annualcharge and Manager’s annual management charge are disclosedin note 7. Amounts due at the year end from the annual chargeare disclosed in note 12.

During the year, there were transactions in shares in relatedparties of M&G Securities Limited with a total value of£133,843,000 (2019: £571,752,000).

At the balance sheet date, the trust held shares in related partiesof M&G Securities Limited with a value of £1,349,169,000 (2019:£1,695,721,000).

At the balance sheet date, unitholders from within M&G plc, ofwhich M&G Securities Limited is a wholly owned subsidiary, haveholdings totalling 32.01% (2019: 30.11%) of the trust’s units.

18 Events after the balance sheet date

In the underlying fund, between 30 September 2020 and8 November 2020 the cash position has risen from 10% to 14%.The cash position is being managed using the risk managementpolicies referred to in note 3.

19 Fair value analysis

Financial instruments have been measured at their fair value andhave been classified below using a hierarchy that reflects thesignificance of the inputs used in measuring their fair value:

Level 1: Unadjusted quoted price in an active market for anidentical instrument

This includes instruments such as publicly traded equities, highlyliquid bonds (e.g. Government bonds) and exchange tradedderivatives (e.g. futures) for which quoted prices are readily andregularly available.

Level 2: Valuation technique using observable market data

This includes instruments such as over-the-counter (OTC)derivatives, debt securities, convertible bonds, mortgage-backedsecurities, asset-backed securities and open-ended funds whichhave been valued using models with observable market datainputs.

Level 3: Valuation technique using unobservable inputs

This refers to instruments which have been valued using modelswith unobservable data inputs. This includes single broker-pricedinstruments, suspended/unquoted securities, private equity,unlisted closed-ended funds and open-ended funds withrestrictions on redemption rights.

as at 30 SeptemberAssets

2020 [a]Liabilities

2020Assets

2019 [a]Liabilities

2019Basis of valuation £'000 £'000 £'000 £'000Level 1 0 0 0 0Level 2 0 0 1,695,721 0Level 3 1,349,169 0 0 0

1,349,169 0 1,695,721 0

[a] Relates to the holding in M&G Property Portfolio Sterling Class ‘F’ (Income) units.




Notes to the financial statements19 Fair value analysis (continued)

In accordance with FRS 102 (22.4a) the units in issue for eachclass meet the definition of a puttable instrument as theunitholders have the right to sell the units back to the issuer. Theunits in the trust may be issued and redeemed on any businessday at the quoted price. These units are not traded on anexchange. Due to temporary suspension, the holdings in M&GProperty Portfolio Sterling Class ‘F’ (Income) shares are valued asLevel 3.

Land and buildings and property under construction do not fallwithin the FRS 102 definition of financial instruments held at fairvalue. The balance sheet totals for these items in the current andprior year are therefore not included in the above table (thesewould fall under level 3 if included).

20 Risk management policies

The general risk management policies for the trust are set out innote 3 to the financial statements on pages 23 and 24.

21 Dividend distribution tables

This trust pays quarterly ordinary distributions and the followingtable sets out the distribution periods.

Quarterly distribution periodsStart End Xd Payment

First interim 01.10.19 31.12.19 02.01.20 29.02.20Second interim 01.01.20 31.03.20 01.04.20 31.05.20Third interim 01.04.20 30.06.20 01.07.20 31.08.20Final 01.07.20 30.09.20 01.10.20 30.11.20

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

Group 1 units are those purchased prior to a distribution periodand therefore their net revenue rate is the same as the distributionrate.

Group 2 units are those purchased during a distribution periodand therefore their distribution rate is made up of net revenueand equalisation. Equalisation is the average amount of revenueincluded in the purchase price of all Group 2 units and is refundedto the holders of these units as a return of capital. Being capital itis not liable to Income Tax. Instead, it must be deducted from thecost of units for Capital Gains Tax purposes. The tables belowshow the split of the Group 2 rates into the net revenue andequalisation components.

Sterling Class ‘A’ Income unitsOrdinary distributions Group 2 Group 1 & 2for the year Income Equalisation Distributionto 30 September 2020 2020 2020 2019

UK p UK p UK p UK pFirst interim 0.4466 0.3606 0.8072 0.6822Second interim 0.7897 0.0000 0.7897 0.7368Third interim 0.5863 0.0000 0.5863 0.7630Final 0.5624 0.0000 0.5624 0.7466

Sterling Class ‘A’ Accumulation unitsOrdinary distributions Group 2 Group 1 & 2for the year Income Equalisation Distributionto 30 September 2020 2020 2020 2019


Sterling Class ‘I’ Income unitsOrdinary distributions Group 2 Group 1 & 2for the year Income Equalisation Distributionto 30 September 2020 2020 2020 2019


Sterling Class ‘I’ Accumulation unitsOrdinary distributions Group 2 Group 1 & 2for the year Income Equalisation Distributionto 30 September 2020 2020 2020 2019


Sterling Class ‘R’ Income unitsOrdinary distributions Group 2 Group 1 & 2for the year Income Equalisation Distributionto 30 September 2020 2020 2020 2019


Sterling Class ‘R’ Accumulation unitsOrdinary distributions Group 2 Group 1 & 2for the year Income Equalisation Distributionto 30 September 2020 2020 2020 2019





Authorised status

The trust is an authorised unit trust, being a Non-UCITS retailscheme as defined in FCA rules.

Alternative Investment Fund ManagersDirective (AIFMD)

In accordance with the AIFMD we are required to report toinvestors on the ‘leverage’ of the fund and any ‘specialarrangements’ that exist in relation to the trust’s assets.

Leverage

Under AIFMD, leverage is defined as any method by which thetrust increases its exposure through borrowing or the use ofderivatives. This exposure must be calculated in two ways, the‘gross method’ and the ‘commitment method’. The trust must notexceed maximum exposures under both methods.

‘Gross method’ is calculated as the sum of all positions of the trust(both positive and negative), that is, all eligible assets, liabilitiesand derivatives, including derivatives held for risk reductionpurposes.

‘Commitment method’ exposure is also calculated as the sum ofall positions of the trust (both positive and negative), but afternetting off derivative and security positions as specified byAIFMD rules.

Therefore as at 30 September 2020 the total amount of leverageis as follows:

Gross method:

M&G Feeder of Property Portfolio 100%

Commitment method:

M&G Feeder of Property Portfolio 100%

The M&G Feeder of Property Portfolio did not use leverage toincrease its exposure and this position.

Special arrangements

A ‘Special Arrangement’ is an arrangement in relation to fundassets that results in an investor or group of investors receivingdifferent redemption rights to those generally available toinvestors in a given unit class.

The fund had no assets subject to special arrangements for theperiod ending 30 September 2020.

Remuneration

In line with the requirements of the Alternative Investment FundManagers Directive (“AIFMD”), M&G Securities Limited (the“AIFM”) is subject to a remuneration policy which is consistentwith the principles outlined in the European Securities andMarkets Authority guidelines on sound remuneration policiesunder the AIFMD.

The remuneration policy is designed to ensure that any relevantconflicts of interest can be managed appropriately at all timesand that the remuneration of employees is in line with the riskpolicies and objectives of the alternative investment fundsmanaged by the AIFM. Further details of the remuneration policycan be found here: https://www.mandgplc.com/our-business/mandg-investments/mandg-investments-business-policies. Theremuneration policy and its implementation is reviewed on anannual basis, or more frequently where required, and is approvedby the M&G plc Board Remuneration Committee.

M&G Securities Limited in its capacity as the AlternativeInvestment Fund Manager (the ‘AIFM’) of M&G Feeder ofProperty Portfolio has delegated portfolio management servicesto M&G Investment Management Limited (the ‘Delegate’). TheESMA Guidelines require the AIFM to ensure that, to the extentportfolio management activities are delegated by the AIFM, theDelegate is itself subject to remuneration provisions of equivalenteffect to those contained in the AIFMD. M&G InvestmentManagement Limited is subject to the Markets in FinancialInstruments Directive (‘MiFID’) which is considered by theFinancial Conduct Authority to be equally effective.

The AIFM is required under the AIFMD to make quantitativedisclosures of remuneration. These disclosures are made in linewith M&G’s interpretation of currently available guidance onquantitative remuneration disclosures. As market or regulatoryguidance evolves, M&G may consider it appropriate to makechanges to the way in which quantitative disclosures arecalculated. Members of staff and senior management typicallyprovide both AIFMD and non-AIFMD related services and have anumber of areas of responsibility. Therefore, only the portion ofremuneration for those individuals’ services which may beattributable to the AIFM is included in the remuneration figuresdisclosed. Accordingly the figures are not representative of anyindividual’s actual remuneration.

M&G Securities Limited does not directly employ any staffmembers. However, for the financial year ended 31 December2019, aggregate remuneration of £2,263,768 (£496,699 inrespect of fixed remuneration and £1,767,069 in respect ofvariable remuneration) was paid to individuals whose actionsmay have a material impact on the risk profile of the AIFM, ofwhich £55,360 related to senior management.

Other regulatory disclosures


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

Accumulation units: A type of unit where distributions are automaticallyreinvested and reflected in the value of the units.

Asset: Anything having commercial or exchange value that is owned by abusiness, institution or individual.

Asset allocation: Apportioning a portfolio’s assets according to risktolerance and investment goals.

Asset class: Category of assets, such as cash, company shares, fixedincome securities and their sub-categories, as well as tangible assets suchas real estate.

Bond: A loan in the form of a security, usually issued by a government orcompany, which normally pays a fixed rate of interest over a given timeperiod, at the end of which the initial amount borrowed is repaid.

Bond issue: A set of fixed income securities offered for sale to the publicby a company or government. If the bonds are sold for the first time, it iscalled a ‘new issue’.

Bottom-up selection: Selecting stocks based on the attractiveness of acompany.

Bunds: Fixed income securities issued by the German government.

Capital: Refers to the financial assets, or resources, that a company has tofund its business operations.

Capital growth: Occurs when the current value of an investment isgreater than the initial amount invested.

Capital return: The term for the gain or loss derived from an investmentover a particular period. Capital return includes capital gain or loss onlyand excludes income (in the form of interest or dividend payments).

Cash equivalents: Deposits or investments with similar characteristics tocash.

Charity Authorised Investment Fund (CAIF) : An investment entitythat is both a registered charity and an authorised investment fund. TheCAIF must comply with charity law as well as financial services laws andregulations, and is usually treated as a registered charity for tax purposes.

Comparative sector: A group of funds with similar investment objectivesand/or types of investment, as classified by bodies such as the InvestmentAssociation (IA) or Morningstar™. Sector definitions are mostly based onthe main assets a fund should invest in, and may also have a geographicfocus. Sectors can be the basis for comparing the different characteristicsof similar funds, such as their performance or charging structure.

Consumer Prices Index (CPI): An index used to measure inflation, whichis the rate of change in prices for a basket of goods and services. Thecontents of the basket are meant to be representative of products andservices we typically spend our money on.

Convertible bonds: Fixed income securities that can be exchanged forpredetermined amounts of company shares at certain times during theirlife.

Corporate bonds: Fixed income securities issued by a company. They arealso known as bonds and can offer higher interest payments than bondsissued by governments as they are often considered more risky.

Coupon: The interest paid by the government or company that has raiseda loan by selling bonds.

Credit: The borrowing capacity of an individual, company or government.More narrowly, the term is often used as a synonym for fixed incomesecurities issued by companies.

Credit default swaps (CDS): Are a type of derivative, namely financialinstruments whose value, and price, are dependent on one or moreunderlying assets. CDS are insurance-like contracts that allow investors totransfer the risk of a fixed income security defaulting to another investor.

Credit rating: An independent assessment of a borrower’s ability to repayits debts. A high rating indicates that the credit rating agency considersthe issuer to be at low risk of default; likewise, a low rating indicates highrisk of default. Standard & Poor’s, Fitch and Moody’s are the three mostprominent credit rating agencies. Default means that a company orgovernment is unable to meet interest payments or repay the initialinvestment amount at the end of a security’s life.

Credit rating agency: A company that analyses the financial strength ofissuers of fixed income securities and attaches a rating to their debt.Examples include Standard & Poor’s and Moody’s.

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

Credit selection: The process of evaluating a fixed income security, alsocalled a bond, in order to ascertain the ability of the borrower to meet itsdebt obligations. This research seeks to identify the appropriate level ofdefault risk associated with investing in that particular bond.

Credit spread: The difference between the yield of a corporate bond, afixed income security issued by a company, and a government bond of thesame life span. Yield refers to the income received from an investment andis expressed as a percentage of the investment’s current market value.

Default: When a borrower does not maintain interest payments or repaythe amount borrowed when due.

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

Derivatives: Financial instruments whose value, and price, are dependenton one or more underlying assets. Derivatives can be used to gainexposure to, or to help protect against, expected changes in the value ofthe underlying investments. Derivatives may be traded on a regulatedexchange or traded over the counter.

Developed economy/market: Well-established economies with a highdegree of industrialisation, standard of living and security.

Dilution adjustments: The dilution adjustment is used to protectongoing investors against the transaction charges incurred in investing ordivesting in respect of creations and cancellations. The dilutionadjustment is made up of the direct and indirect transaction charges. Inthe financial statements the direct transaction charges as a percentage ofaverage NAV will be disclosed. This percentage will take account of thosedirect transaction charges that have been recovered through the dilutionadjustment leaving a percentage that just represents the costs incurred inportfolio management.

Distribution: Distributions represent a share in the income of the fundand are paid out to Income shareholders or reinvested for Accumulationshareholders at set times of the year (monthly, quarterly, half-yearly orannually). They may either be in the form of interest distributions ordividend distributions.

Distribution yield: Expresses the amount that is expected to bedistributed by the fund over the next 12 months as a percentage of theshare price as at a certain date. It is based on the expected gross incomeless the ongoing charges.

Diversification: The practice of investing in a variety of assets. This is arisk management technique where, in a well-diversified portfolio, any lossfrom an individual holding should be offset by gains in other holdings,thereby lessening the impact on the overall portfolio.

Glossary


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

Duration: A measure of the sensitivity of a fixed income security, alsocalled a bond, or bond fund to changes in interest rates. The longer a bondor bond fund’s duration, the more sensitive it is to interest ratemovements.

Duration risk: The longer a fixed income security, also called a bond, orbond fund’s duration, the more sensitive and therefore at risk it is tochanges in interest rates.

Emerging economy or market: Economies in the process of rapidgrowth and increasing industrialisation. Investments in emerging marketsare generally considered to be riskier than those in developed markets.

Equities: Shares of ownership in a company.

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

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

Exposure: The proportion of a fund invested in a particular share/fixedincome security, sector/region, usually expressed as a percentage of theoverall portfolio.

Fixed income security: A loan in the form of a security, usually issued by agovernment or company, which normally pays a fixed rate of interest overa given time period, at the end of which the initial amount borrowed isrepaid. Also referred to as a bond.

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

Foreign exchange: The exchange of one currency for another, or theconversion of one currency into another currency. Foreign exchange alsorefers to the global market where currencies are traded virtually aroundthe clock. The term foreign exchange is usually abbreviated as ‘forex’ andoccasionally as ‘FX’.

Foreign exchange (FX) strategy: Currencies can be an asset class in itsown right, along with company shares, fixed income securities, propertyand cash. Foreign exchange strategy can therefore be a source ofinvestment returns.

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

Fundamentals (company): A basic principle, rule, law, or the like, thatserves as the groundwork of a system. A company’s fundamentals pertainspecifically to that company, and are factors such as its business model,earnings, balance sheet and debt.

Fundamentals (economic): A basic principle, rule, law, or the like, thatserves as the groundwork of a system. Economic fundamentals are factorssuch as inflation, employment, economic growth.

Futures: A futures contract is a contract between two parties to buy or sella particular commodity or financial instrument at a predetermined priceat a future date. Futures are traded on a regulated exchange.

Gilts: Fixed income securities issued by the UK government.

Government bonds: Fixed income securities issued by governments, thatnormally pay a fixed rate of interest over a given time period, at the end ofwhich the initial investment is repaid.

Hedging: A method of reducing unnecessary or unintended risk.

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

High yield bonds: Fixed income securities issued by companies with a lowcredit rating from a recognised credit rating agency. They are consideredto be at higher risk of default than better quality, ie higher-rated fixedincome securities but have the potential for higher rewards. Defaultmeans that a company or government is unable to meet interestpayments or repay the initial investment amount at the end of a security’slife.

Historic yield: The historic yield reflects distributions declared over thepast 12 months as a percentage of the share price, as at the date shown.

Income yield: Refers to the income received from an investment and isusually expressed annually as a percentage based on the investment’scost, its current market value or face value.

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

Income shares: A type of share where distributions are paid out as cashon the payment date.

Income units: A type of unit where distributions are paid out as cash onthe payment date.

Index tracking: A fund management strategy that aims to match thereturns from a particular index.

Index-linked bonds: Fixed income securities where both the value of theloan and the interest payments are adjusted in line with inflation over thelife of the security. Also referred to as inflation-linked bonds.

Inflation: The rate of increase in the cost of living. Inflation is usuallyquoted as an annual percentage, comparing the average price this monthwith the same month a year earlier.

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

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

Interest rate risk: The risk that a fixed income investment will lose value ifinterest rates rise.

Interest rate swap: An agreement between two parties to swap a fixedinterest payment with a variable interest payment over a specified periodof time.

Investment Association (IA): The UK trade body that represents fundmanagers. It works with investment managers, liaising with governmenton matters of taxation and regulation, and also aims to help investorsunderstand the industry and the investment options available to them.

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

Investment grade bonds: Fixed income securities issued by a companywith a medium or high credit rating from a recognised credit ratingagency. They are considered to be at lower risk from default than thoseissued by companies with lower credit ratings. Default means that acompany or government is unable to meet interest payments or repay theinitial investment amount at the end of a security’s life.

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

Leverage: When referring to a company, leverage is the level of acompany’s debt in relation to its assets. A company with significantlymore debt than capital is considered to be leveraged. It can also refer to afund that borrows money or uses derivatives to magnify an investmentposition.

Liquidity: A company is considered highly liquid if it has plenty of cash atits disposal. A company’s shares are considered highly liquid if they can beeasily bought or sold since large amounts are regularly traded.

Glossary


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

Macroeconomic: Refers to the performance and behaviour of aneconomy at the regional or national level. Macroeconomic factors such aseconomic output, unemployment, inflation and investment are keyindicators of economic performance. Sometimes abbreviated to ‘macro’.

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

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

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

Monetary policy: A central bank’s regulation of money in circulation andinterest rates.

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

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

Near cash: Deposits or investments with similar characteristics to cash.

Net asset value (NAV): A fund’s net asset value is calculated by takingthe current value of the fund’s assets and subtracting its liabilities.

Ongoing Charge Figure: The Ongoing charge Figure represents theoperating costs investors can reasonably expect to pay under normalcircumstances.

Open-ended investment company (OEIC): A type of managed fund,whose value is directly linked to the value of the fund’s underlyinginvestments.

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

Over-the-counter (OTC): Whereby financial assets are traded directlybetween two parties. This is in contrast to exchange trading, which iscarried out through exchanges set up specifically for the purpose oftrading. OTC is also known as off-exchange trading.

Overweight: If a fund is ‘overweight’ a stock, it holds a larger proportion ofthat stock than the comparable index or sector.

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

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

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

Preference shares: Preference shares are a loan to a company that maybe traded in the same way as ordinary shares, but generally have a higheryield and pay dividends on fixed dates. Preference shares have varyingcharacteristics as to the treatment of the principal and the dividendpayment, which includes ranking them above ordinary shares when itcomes to dividend payments.

Principal: The face value of a fixed income security, which is the amountdue back to the investor by the borrower when the security reaches theend of its life.

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

Property Expense Ratio (PER): Property expenses are the operatingexpenses that relate to the management of the property assets in theportfolio. These include: insurance and rates, rent review and leaserenewal costs and maintenance and repairs, but not improvements. Theydepend on the level of activity taking place within the fund. The PropertyExpense Ratio is the ratio of property expenses to the fund’s net assetvalue.

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

Retail Prices Index (RPI): A UK inflation index that measures the rate ofchange in prices for a basket of goods and services in the UK, includingmortgage payments and council tax.

Risk: The chance that an investment’s return will be different to what isexpected. Risk includes the possibility of losing some or all of the originalinvestment.

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

Risk premium: The difference between the return from a risk-free asset,such as a high-quality government bond or cash, and the return from aninvestment in any other asset. The risk premium can be considered the‘price’ or ‘pay-off’ for taking on increased risk. A higher risk premiumimplies higher risk.

Risk-free asset: An asset that notionally carries no risk of nonpayment bythe borrower such as a high-quality fixed income security issued by agovernment or cash.

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

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

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

Share class: Each M&G fund has different share classes, such as A, R andI. Each has a different level of charges and minimum investment. Detailson charges and minimum investments can be found in the Key InvestorInformation Documents.

Share class hedging: Activities undertaken in respect of hedged sharesto mitigate the impact on performance of exchange rate movementsbetween the fund’s currency exposure and the investor’s chosen currency.

Short position: A way for a fund manager to express his or her view thatthe market might fall in value.

Short selling: This often refers to the practice whereby an investor sells anasset they do not own. The investor borrows the asset from someone whodoes own it and pays a fee. The investor must eventually return theborrowed asset by buying it in the open market. If the asset has fallen inprice, the investor buys it for less than they sold it for, thus making a profit.The contrary may also occur.

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

Short-dated government bonds: Fixed income securities issued bygovernments and repaid over relatively short periods.

Sovereign debt: Debt of a government. Also referred to as governmentbonds.

Sub-investment grade bonds: Fixed income securities issued by acompany with a low rating from a recognised credit rating agency. Theyare considered to be at higher risk from default than those issued bycompanies with higher credit ratings. Default means that a company orgovernment is unable to meet interest payments or repay the initialinvestment amount at the end of a security’s life.

Glossary


Top-down investing: An investment approach that analyses economicfactors, ie surveys the ‘big picture’, before selecting which companies toinvest in. The top-down investor will look at which industries are likely togenerate the best returns in certain economic conditions and limit thesearch to that area.

Total return: The term for the gain or loss derived from an investmentover a particular period. Total return includes income (in the form ofinterest or dividend payments) and capital gains.

Treasuries: Fixed income securities issued by the US government.

Triple A or AAA rated: The highest possible rating a fixed incomesecurity, also called a bond, can be assigned by credit rating agencies.Bonds that are rated AAA are perceived to have the lowest risk of default.Default means that a company or government is unable to meet interestpayments or repay the initial investment amount at the end of a security’slife.

UCITS: Stands for Undertakings for Collective Investment in TransferableSecurities. This is the European regulatory framework for an investmentvehicle that can be marketed across the European Union and is designedto enhance the single market in financial assets while maintaining highlevels of investor protection.

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

Underlying value: The fundamental value of a company, reflecting bothtangible and intangible assets, rather than the current market value.

Underlying yield: Refers to the income received by a managed fund, andis usually expressed annually as a percentage based on the fund’s currentvalue.

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

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

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

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

Volatile: When the value of a particular share, market or sector swings upand down fairly frequently and/or significantly, it is considered volatile.

Volatility: The degree to which a given security, fund, or index rapidlychanges. It is calculated as the degree of deviation from the norm for thattype of investment over a given time period. The higher the volatility, theriskier the security tends to be.

Warrant: A security issued by a company that gives the holder the right tobuy shares in that company at a specified price and within a certaintimeframe.

Yield: This refers to either the interest received from a fixed incomesecurity or to the dividends received from a share. It is usually expressed asa percentage based on the investment’s costs, its current market value orits face value. Dividends represent a share in the profits of the companyand are paid out to a company’s shareholders at set times of the year.

Yield (equity): Refers to the dividends received by a holder of companyshares and is usually expressed annually as a percentage based on theinvestment’s cost, its current market value or face value. Dividendsrepresent a share in the profits of the company and are paid out to acompany’s shareholders at set times of the year.

Yield (bonds): This refers to the interest received from a fixed incomesecurity and is usually expressed annually as a percentage based on theinvestment’s cost, its current market value or its face value.

Yield (income): Refers to the income received from an investment and isusually expressed annually as a percentage based on the investment’scost, its current market value or face value.

Glossary

M&G Securities Limited is authorised and regulated by the Financial ConductAuthority and provides investment products. The Company’s registered office is10 Fenchurch Avenue, London EC3M 5AG Registered in England: No. 90776


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M&G Feeder of Property Portfolio Annual Long Report and audited Financial … · 2019. 11. 29. ·...

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