Aberdeen Global Annual Report and Accounts For the year ended 30 September 2016 R.C.S:B27471 Contents Incorporation 01 Indian Equity 155 Chairman’s Statement 02 Japanese Equity 159 Investment Manager’s Review 03 Japanese Smaller Companies 169 Net Asset Value History 04 Latin American Equity 176 Summary of Historic Information 15 Multi Asset Growth 180 Performance History 17 Multi Asset Income 191 Aberdeen Global - Combined Statements 22 Multi-Manager World Equity 212 Asia Pacific Equity 23 Multi-Strategy 215 Asian Credit Bond 31 North American Equity 217 Asian Local Currency Short Duration Bond 37 North American Smaller Companies 221 Asian Property Share 43 Responsible World Equity 225 Asian Smaller Companies 47 Russian Equity 230 Australasian Equity 54 Select Emerging Markets Bond 234 Brazil Bond 58 Select Emerging Markets Investment Grade Bond 247 Brazil Equity 61 Select Euro High Yield Bond 254 China A Share Equity 65 Select Global Credit Bond 267 Chinese Equity 69 Select Global Investment Grade Credit Bond 280 Eastern European Equity 74 Select High Yield Bond 290 Emerging Markets Corporate Bond 78 Swiss Equity 292 Emerging Markets Equity 88 Technology Equity 296 Emerging Markets Infrastructure Equity 95 UK Equity 300 Emerging Markets Local Currency Bond 102 World Credit Bond 304 Emerging Markets Local Currency Corporate Bond 109 World Equity 314 Emerging Markets Smaller Companies 114 World Equity Dividend 320 Ethical World Equity 120 World Government Bond 322 European Equity 122 World Resources Equity 329 European Equity Dividend 126 World Smaller Companies 334 European Equity (Ex UK) 130 Notes to the Financial Statements 339 Flexible Equity 134 Report of the Réviseur d’Entreprises agréé 359 Frontier Markets Bond 136 Risk Management and Remuneration 360 Frontier Markets Equity 142 Management and Administration 366 German Equity 147 General Information 370 Indian Bond 151 Further Information 371 Incorporation Aberdeen Global (“the Company”) was incorporated as a société anonyme, qualifying as a société d’investissement à capital variable on 25 February 1988 for an unlimited period and commenced operations on 26 April 1988. It is registered under number B27471 at the Register of Commerce at the District Court of Luxembourg. As at 30 September 2016, the Company has issued shares in the following Funds: Asia Pacific Equity Indian Equity Asian Credit Bond Japanese Equity Asian Local Currency Short Duration Bond Japanese Smaller Companies Asian Property Share Latin American Equity Asian Smaller Companies Multi Asset Growth Australasian Equity Multi Asset Income Brazil Bond Multi-Manager World Equity Brazil Equity North American Equity China A Share Equity North American Smaller Companies Chinese Equity Responsible World Equity Eastern European Equity Russian Equity Emerging Markets Corporate Bond Select Emerging Markets Bond Emerging Markets Equity Select Emerging Markets Investment Grade Bond Emerging Markets Infrastructure Equity Select Euro High Yield Bond Emerging Markets Local Currency Bond Select Global Credit Bond Emerging Markets Local Currency Corporate Bond Select Global Investment Grade Credit Bond Emerging Markets Smaller Companies Swiss Equity European Equity Technology Equity European Equity Dividend UK Equity European Equity (Ex UK) World Credit Bond Frontier Markets Bond World Equity Frontier Markets Equity World Government Bond German Equity World Resources Equity Indian Bond World Smaller Companies The full name of each Fund is constituted by the name of the Company, Aberdeen Global, followed by a hyphen and then the specific name of the Fund. Throughout the Financial Statements, the Funds are referred to by their short names as indicated above. No subscriptions can be received on the basis of this document. Subscriptions are only valid if made on the basis of the current prospectus or on the Key Investor Information Document, accompanied by a copy of the latest annual report or of the subsequent semi-annual report if it has been published. Please see the Notes to the Financial Statements for changes during the year. aberdeen-asset.com 01 Chairman’s Statement During the fiscal year ending 30 September 2016, the Company’s Select Euro High Yield Bond Fund almost reached EUR 1 billion in AUM. assets under management (“AUM”) decreased slightly from US$30.8 This increase was due to a combination of investor subscriptions and billion to US$28.9 billion. The Board notes that, while plenty of mergers of other Aberdeen managed UCITS into this Fund in July and uncertainty in the global economic outlook remains following the September 2016. While other Fixed Income Funds had a good year in impact of Brexit in the UK, and the results of the US presidential terms of performance, this has not yet been reflected with strong election, some investment strategies within the range experienced demand from investors, who it is believed are remaining cautious, good performance and growing interest from investors. especially in relation to Funds invested in emerging markets. Following a few years of decline in AUM, the Aberdeen Global - At the end of the September 2016, there were 48 active Funds in the Emerging Markets Equity Fund was last year the main contributor of umbrella. The Board has continued to diversify the offering by AUM growth with an increase of US$765 million. This Fund remains the launching the Multi Asset Growth Fund on 13 June; and together with biggest portfolio with more than US$6.3 billion in AUM as at the end of the existing Multi Asset Income Fund, these products should help the the year. Company diversify its assets and client base with a new type of investment strategy. Other equity strategies also grew in investment size, such as our China A Share Equity Fund, which has attracted investment as a vehicle through which to obtain exposure to China, and consequently has a substantial increase in AUM to US$294 million. The strong relative out-performance of North American Smaller Companies Fund also CG Little December 2016 generated significant inflows which resulted in an increase of US$189 million in AUM. Finally, our Latin American Equity Fund more than doubled in size to US$480 million. 02 Aberdeen Global Investment Manager’s Review Investment review Outlook Global financial assets strengthened over the year under review, Since the review year ended, equity and bond markets have retreated which was marked by key milestones. In December, the US Federal somewhat. Caution has intensified ahead of the US presidential Reserve (Fed) raised interest rates for the first time in nearly a decade. election in November and the Fed meeting in December. In addition, Although this removed a source of US policy uncertainty for investors, expectations of tough Brexit negotiations that will start next March sentiment remained precarious and equity markets plunged when the have fuelled concerns over the political and economic ramifications. volatile yuan and stuttering Chinese economy triggered massive Within emerging markets, China remains a key worry. The mainland’s outflows in mainland stocks a month later. Japan tried to boost growth transition into a more consumption-led economy is far from complete by introducing sub-zero interest rates, while other European central and further policy hiccups or a sharper-than-expected growth banks took rates deeper into negative territory. However, these slowdown in the interim could undermine investor confidence yet decisions stoked concerns over the impact of negative rates on again and cause market volatility to spike. Nevertheless, the banking-sector profits and knocked the wind out of financial stocks, rebalancing should result in better-quality growth over the long haul. causing a further global equity sell-off. Meanwhile, the weakening Against this backdrop, one of the few certainties is that most central Chinese economy, the possibility of higher US interest rates and banks should remain accommodative. disunity between Opec members over output cuts caused crude oil Aberdeen International to tumble to multi-year lows, exacerbating market volatility. Fund Managers Limited October 2016 Sentiment stabilised in the second half of the review year amid perceptions that the sell-off was overdone. In Asia, the reform momentum accelerated, bolstering investor confidence. But the calm was short-lived. In June, the UK unexpectedly chose to leave the European Union. Leading up to the referendum, equity markets were on edge and fell sharply when the shock vote was announced. Gaining from the turmoil were traditional safe havens such as the yen, the year’s best-performing G10 currency, whereas sterling fell to a 30-year low. Government bonds in developed markets also rallied on the ensuing risk aversion, which caused benchmark yields to fall to new lows, with some sinking below zero. Towards the review year-end, equity markets rebounded on the assurance of continued loose monetary policy by major central banks. The Fed remained on hold, despite hints that a second rate hike was on the cards. The Bank of England cut interest rates for the first time in seven years. A smooth leadership transition with Theresa May taking over as new UK prime minister also boosted confidence that the potential fallout of Brexit would be relatively contained. In other assets, oil rebounded as Opec finally agreed a tentative output cut, while gold gained over the year from a sense of heightened global uncertainty. Despite the volatility, global equities outperformed their fixed income counterparts in aggregate