High Income Bond Fund Distributor - USD

The Fund aims to maximise the total level of return for investors by investing, mainly in a diversified portfolio of bonds and other similar debt securities. In pursuing this objective, the Investment Manager shall invest primarily in a diversified portfolio of corporate & government bonds maturing in the medium term, with an average credit quality of BB- by S&P, although individual bond holdings may have higher or lower ratings. The Fund can also invest up to 10% of its assets in Non-Rated bond issues.

The Fund is actively managed, not managed by reference to any index.

The Investment Manager of the CC High Income Bond Funds – EUR and USD has the duty to ensure that the underlying investments of the funds are well diversified. According to the prospectus, the investment manager has to abide by a number of investment restrictions to safeguard the value of the assets

• The fund may not invest more than 10% of its assets in securities listed by the same body
• The fund may not keep more than 10% of its assets on deposit with any one credit institution. This limit may be increased to 30% in respect of deposits with an Approved Institution
• The fund may not invest more than 20% of its assets in any other fund

September 2026

Introduction
Fixed income markets delivered negative returns in September, extending the challenging Q3 backdrop of resilient economic activity and persistent inflation, which continued to drive a reassessment of the interest-rate outlook.

Inflationary pressures remained elevated as geopolitical tensions in the Middle East and Eastern Europe kept energy prices elevated. Oil rose above USD 100 per barrel, while European gas prices remained above EUR 70 per megawatt-hour for most of September, putting renewed upward pressure on headline inflation, while core inflation remained relatively contained. In response, the Federal Reserve and European Central Bank each raised policy rates by 25 basis points (“bps”) during the month and maintained a tightening bias, with markets pricing in a further 25bps increase from both central banks by year-end.

Against this backdrop, government bond yields rose sharply. The benchmark 10-year Treasury yield rose 76bps over Q3, with 47bps of the increase occurring in September alone, bringing the yield to 5.22% at quarter-end. European sovereign markets faced similar pressure. The 10-year German Bund yield rose 26bps in September from the previous month-end, reaching a high of 3.64%. French sovereign bonds continued to underperform amid heightened scrutiny of the country’s 2027 budget discussions. The 10-year France-Germany spread widened to nearly 130bps, approaching levels last seen during the euro-area sovereign-debt crisis.

Corporate credit markets also ended the month in negative territory, primarily reflecting the rise in underlying government bond yields. Investment-grade corporate credit was more adversely affected by its higher duration, underperforming lower-rated credit. High-yield credit proved comparatively resilient, despite negative returns, with European and US high-yield markets returning -1.79% and -2.52%, respectively. Higher carry and shorter duration helped cushion the impact of rising underlying yields and supported the segment’s relative performance.

Market environment and performance
The U.S. economy continued to demonstrate resilience, with second-quarter Gross Domestic Product (“GDP”) growth revised up to 2.2% in Q2 from the Bureau of Economic Analysis’ second estimate of 1.5%. The stronger estimate reflected upward revisions to investment, government spending, and consumer spending; underscoring the continued strength of domestic demand. The upward revision to investment, reflected stronger private inventory and fixed investment, with non-residential structures (particularly commercial and healthcare construction, led by data centres) providing the largest contribution.

Forward-looking indicators remained encouraging. The S&P Global U.S. Composite Purchasing Managers’ Index (“PMI”) 58.4 in September 2026 from 56 in August, matching the flash estimate and marking the strongest expansion in private-sector business activity in more than five years. Growth accelerated across both manufacturing and services, pointing to broad-based strength in the US economy. Growth accelerated across both manufacturing and services, pointing to broad-based strength in the US economy. New orders rose sharply, supporting stronger output and the fastest employment growth since June 2022. However, cost pressures also intensified, with input prices rising at their fastest pace since October 2022 and prompting businesses to increase selling prices more rapidly, adding to inflationary concerns.

Headline inflation steadied at 3.4% in August, unchanged from the previous month and in line with forecasts. Gasoline and fuel prices rose markedly, while inflation eased for shelter and for food. Core inflation, which excludes volatile food and energy costs, eased to 2.4% from 2.5% in the previous month. Leading indicators showed further signs of improvement.

In the euro area, Q2 growth was revised up to 0.6% from 0.4%, marking the strongest quarterly expansion since Q2 2022, largely driven by a sharp upward revision to Ireland’s GDP. Germany’s growth was also revised higher to 0.3%, while France’s was revised down to 0.0%. Spain led the bloc’s larger economies with 0.7% growth, while Italy expanded 0.2%. Business surveys reinforced the improving outlook, with the S&P Global Eurozone Composite PMI rising to 53.1 in September 2026 from 52 in August, matching the flash estimate and reaching its highest level in nearly three and a half years. The latest reading pointed to a solid acceleration in private-sector activity, with both manufacturing and services recording stronger growth as the third quarter ended.

Eurozone inflation edged higher to 3.8% in September from 3.2% in the previous month, exceeding market expectations. The rate reached its highest level since September 2023 and remained well above the European Central Bank’s (“ECB”) 2.0% target, driven largely by a surge in energy prices amid continued hostilities in the Middle East.

Fund performance
The CC High Income Bond Fund posted a -2.38% return in September, primarily reflecting the widening in credit market yields. Despite the challenging environment, the portfolio manager maintained an active approach, gradually enhancing the fund’s income profile by selectively capturing opportunities while closely managing duration.

During the month, the manager continued to selectively add to existing positions and rotate into issuers offering attractive relative value, while maintaining a disciplined focus on credit quality. Over the month, the fund increased its exposure to leading global multi-orbit satellite telecommunications and content connectivity operator SES SA and Boels, while rotating from Brightstar Lottery, ZF, Teva Pharmaceutical, and Dufry’s lower-coupon issues into higher-coupon bonds. This, allowing us to increasing the portfolio’s income yield, as we benefited from the higher carry offered by the new issues.

Market and investment outlook
Geopolitical tensions in the Middle East remained elevated throughout September, with the conflict involving the US, Israel, and Iran continuing to weigh on regional stability. Efforts to revive a ceasefire and advance diplomatic negotiations made limited progress. The continued uncertainty contributed to volatility in energy markets, particularly oil and European natural gas, posing a key upside risk to inflation.

Against this backdrop, a cautious yet proactive investment approach remains warranted. The recent market widening has created selective opportunities that we believe are attractive. In addition, the recent surge in bond issuance, particularly within the European High Yield market, provides opportunities to selectively increase exposure and rotate into issuers where we have strong conviction in the underlying credit quality. At the time of writing, we maintain our view that fixed income returns are likely to be increasingly driven by income rather than capital appreciation, underscoring the importance of securing attractive coupons from issuers with strong credit fundamentals.