SKANDIA GLOBAL FUNDS PLC - Fidelity Investments

Skandia Global Funds plc
Annual Report and Audited Financial Statements for the year ended 31 December 2011
SKANDIA TOTAL RETURN USD BOND FUND
INVESTMENT ADVISER’S REPORT FOR THE YEAR ENDED 31 December 2011
Skandia Total Return USD Bond Fund – Pacific Investment Management Company LLC
Investment Adviser’s Commentary (continued)
The following strategies were positive for quarterly returns:
� Tactical positioning in agency mortgage-backed securities, which underperformed Treasuries of the same duration.
� Exposure to non-US developed interest rates, particularly core Europe, where rates fell on fears of a global economic slowdown.
The Skandia Total Return USD Bond fund portfolio achieved a positive return over the fourth quarter and outperformed the
benchmark. The fund‟s allocation to emerging markets benefitted from the sharp recovery in the sector. Within US credit, the
emphasis on financials hurt relative returns, as industrials and utilities continued to outperform, being more isolated from the direct
effects of the European crisis. In currency positioning, the Fund‟s progressive shift into the Dollar (financed by trading the Euro) paid
off, as the greenback appreciated over the European currency on fears of the crisis escalating.
The contribution of duration positioning was neutral, as the negative effect from the Fund‟s front-end US rate overweight was offset
by a tactical allocation to long-term UK gilts, which rallied on the back of strong quantitative easing (QE) support from the Bank of
England.
Source: Pacific Investment Management Company LLC as at 31 December 2011.
* Performance figures refer to Class A1 shares and are sourced from Morningstar. Calculation basis: bid to bid, net of fees, gross
income reinvested in fund base currency (US Dollars).
References to benchmarks are for illustrative purposes only and are not intended to imply a performance objective. There is no
guarantee that the Skandia Total Return USD Bond Fund will outperform this benchmark.
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