Legal & General Multi Manager Income Trust Annual Manager s Short Report for the year ended 15 January Distribution Number 35

Transcription

1 Legal & General Multi Manager Income Trust Annual Manager s Short Report for the year ended 15 January 2017 Distribution Number 35

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3 Investment Objective and Policy The investment objective is to achieve a high income with some potential for capital growth. The Trust aims to invest in a wide range of Collective Investment Schemes including unregulated Collective Investment Schemes and will pursue an active asset allocation policy across all countries, currencies and sector representations. The Trust may also invest directly in transferable securities, money market instruments, derivatives and forward transactions, near cash, cash and deposits. Risk Profile Credit Risk This Trust is invested in Collective Investment Schemes which may directly invest in financial securities such as bonds. With these investments, there is a risk of suffering loss due to a party not meeting its financial obligations. Market Risk Market risk arises mainly from uncertainty about future prices. It represents the potential loss the Trust may suffer through holding market positions in the face of market movements. The Manager adheres to the investment guidelines and in this way, monitors and controls the exposure to risk from any type of security, sector or issuer. Currency Risk This Trust is invested in Collective Investment Schemes that invest in overseas financial securities. The performance of the Trust may therefore be affected by changes in exchange rates, through its holdings in these funds. Interest Rate Risk This Trust is invested in interest distributing funds. The performance of the Trust may therefore be affected by changes in interest rates, through its holdings in these funds. 1

4 Trust Facts Period End Dates for Distributions: Distribution Dates: 15 Jan, 15 Apr, 15 Jul, 15 Oct 15 Mar, 15 Jun, 15 Sep, 15 Dec Ongoing Charges Figures: 15 Jan Jan 16 R-Class 1.75% 1.82% I-Class 1.36% 1.43% F-Class 1.75% 1.82% No performance fees were charged to the Trust during the current or preceding year. The Ongoing Charges Figure (OCF) is the ratio of the Trust s total discloseable costs (excluding overdraft interest) and all costs suffered through holdings in underlying Collective Investment Schemes, to the average net assets of the Trust. The OCF is intended to provide a reliable figure which gives the most accurate measure of what it costs to invest in a trust and is calculated based on the last period s figures. Risk and Reward Profile Lower risk Higher risk Potentially lower rewards Potentially higher rewards This risk and reward profile is based on historical data which may not be a reliable indication of the Trust s risk and reward category in the future. The category is based on the rate at which the value of the Trust has moved up and down in the past. This Trust is in category four because it invests, through other funds, in a variety of investments. A mixture of higher risk investments and lower risk investments has a balancing effect. Company shares and sub-investment grade bonds generally provide higher rewards and higher risks whereas investment grade bonds generally provide lower rewards and lower risks. This trust has a lower proportion of investments in company shares than other mixed investment funds. The Trust s category is not guaranteed to remain the same and may change over time. Even a trust in the lowest category is not a risk free investment. 2

5 Distribution Information R-Class The distribution payable on 15 March 2017 is p per unit for distribution units and p per unit for accumulation units. I-Class The distribution payable on 15 March 2017 is p per unit for distribution units and p per unit for accumulation units. F-Class The distribution payable on 15 March 2017 is p per unit for distribution units and p per unit for accumulation units. 3

6 Portfolio Information The top 10 holdings and their associated weighting at the current and preceding year ends were: Top 10 Holdings at Top 10 Holdings at 15 January January 2016 Percentage of Percentage of Holding Net Asset Value Holding Net Asset Value JPM Global Corporate Bond Fund GBP (hedged) 'C' Inc 14.58% Artemis Income Fund 'I' Inc 9.31% Legal & General All Stocks Gilt Index Trust 'I' Inc 7.68% Legal & General US Index Trust 'I' Inc 7.26% Legal & General Emerging Markets Government Bond (US$) Index Fund 'L' Inc 7.09% Nordea Global High Yield Bond Fund HBI GBP Acc 6.54% Invesco Perpetual Income Fund Inc 5.26% Blackrock European Dynamic Fund Acc 3.86% Neuberger Berman Global Bond Absolute Return Fund 'I5' Acc 3.66% MI Dynamic Bond Fund 'I' Inc 3.60% Artemis Income Fund 'I' Inc 12.55% Blackrock European Dynamic Fund Acc 8.12% JP Morgan Global Corporate Bond Fund 'C' Inc 7.50% Legal & General All Stocks Gilt Index Trust 'I' Inc 7.28% Legal & General US Index Trust 'I' Inc 6.91% Invesco Perpetual High Income Fund Inc 6.35% Henderson UK Property 'I' Inc 5.98% Nordea Global High Yield Bond Fund HBI Acc 5.64% First State Asian Equity Plus Fund 'I' Inc 5.13% JO Hambro Japan Fund 'A' Inc 4.92% 4

7 Trust Holdings as at 15 January % 40% 41% 35% 30% 20% 16% 10% 8% 0% Funds investing in Funds investing in Funds investing in Funds investing in overseas fixed overseas shares UK shares UK fixed interest interest securities Trust Holdings as at 15 January % 40% 30% 35% 31% 25% 20% 10% 7% 2% 0% Funds investing Funds investing Funds investing Funds investing Net other assets in overseas in overseas in UK shares in UK fixed fixed interest shares interest securities securities 5

8 Comparative Tables R-Class Distribution Units Change in Net Asset Value per Unit Accounting year ending 15/01/17 15/01/16 15/01/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* 8.85 (0.08) 3.27 Operating charges (calculated on average price) (0.99) (1.08) (1.15) Return after operating charges* 7.86 (1.16) 2.12 Distributions (1.55) (1.48) (1.49) Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 14.08% (1.98)% 3.66% Other Information Closing net asset value ( ) 3,231,395 78,148, ,370,443 Closing number of units 5,198, ,945, ,995,807 Operating charges 1.75% 1.82% 1.97% Direct transaction costs nil nil nil Prices Highest unit price 66.03p 65.56p 63.54p Lowest unit price 53.80p 56.18p 56.08p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net assets of the Trust. Included within the OCF are synthetic costs which includes the OCF of the underlying funds weighted on the basis of their investment proportion. Past performance is not a guide to future performance. The price of units and any income from them may go down as well as up. Exchange rate changes may cause the value of any overseas investments to rise or fall. 6

9 Comparative Tables continued R-Class Accumulation Units Change in Net Asset Value per Unit Accounting year ending 15/01/17 15/01/16 15/01/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* (0.12) 3.90 Operating charges (calculated on average price) (1.29) (1.31) (1.37) Return after operating charges* 9.74 (1.43) 2.53 Distributions (1.95) (1.80) (1.77) Retained distributions on accumulation units Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 14.08% (2.03)% 3.72% Other Information Closing net asset value ( ) 44,607,263 49,633,485 66,604,921 Closing number of units 56,527,663 71,758,798 94,338,114 Operating charges 1.75% 1.82% 1.97% Direct transaction costs nil nil nil Prices Highest unit price 83.10p 79.15p 75.44p Lowest unit price 66.63p 68.47p 66.10p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net assets of the Trust. Included within the OCF are synthetic costs which includes the OCF of the underlying funds weighted on the basis of their investment proportion. Past performance is not a guide to future performance. The price of units and any income from them may go down as well as up. Exchange rate changes may cause the value of any overseas investments to rise or fall. 7

10 Comparative Tables continued I-Class Distribution Units Change in Net Asset Value per Unit Accounting year ending 15/01/17 15/01/16 15/01/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* 8.95 (0.10) 3.27 Operating charges (calculated on average price) (0.82) (0.85) (0.93) Return after operating charges* 8.13 (0.95) 2.34 Distributions (1.58) (1.55) (1.57) Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 14.43% (1.61)% 4.03% Other Information Closing net asset value ( ) 103,297,827 26,250,724 1,151,429 Closing number of units 164,214,303 46,586,219 1,956,449 Operating charges 1.36% 1.43% 1.58% Direct transaction costs nil nil nil Prices Highest unit price 63.68p 62.89p 60.86p Lowest unit price 54.31p 56.63p 56.31p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net assets of the Trust. Included within the OCF are synthetic costs which includes the OCF of the underlying funds weighted on the basis of their investment proportion. Past performance is not a guide to future performance. The price of units and any income from them may go down as well as up. Exchange rate changes may cause the value of any overseas investments to rise or fall. 8

11 Comparative Tables continued I-Class Accumulation Units Change in Net Asset Value per Unit Accounting year ending 15/01/17 15/01/16 15/01/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* (0.17) 3.91 Operating charges (calculated on average price) (1.02) (1.04) (1.11) Return after operating charges* (1.21) 2.80 Distributions (1.99) (1.90) (1.87) Retained distributions on accumulation units Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 14.51% (1.70)% 4.08% Other Information Closing net asset value ( ) 10,467,039 9,321,680 3,540,575 Closing number of units 13,026,930 13,284,707 4,960,333 Operating charges 1.36% 1.43% 1.58% Direct transaction costs nil nil nil Prices Highest unit price 80.56p 76.27p 72.61p Lowest unit price 67.62p 69.37p 66.61p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net assets of the Trust. Included within the OCF are synthetic costs which includes the OCF of the underlying funds weighted on the basis of their investment proportion. Past performance is not a guide to future performance. The price of units and any income from them may go down as well as up. Exchange rate changes may cause the value of any overseas investments to rise or fall. 9

12 Comparative Tables continued F-Class Distribution Units Change in Net Asset Value per Unit Accounting year ending 15/01/17 15/01/16 15/01/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* 8.87 (0.05) 3.26 Operating charges (calculated on average price) (1.04) (1.08) (1.15) Return after operating charges* 7.83 (1.13) 2.11 Distributions (1.56) (1.48) (1.49) Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 14.03% (1.93)% 3.65% Other Information Closing net asset value ( ) 42,190 37, Closing number of units 67,957 67,957 1,628 Operating charges 1.75% 1.82% 1.97% Direct transaction costs nil nil nil Prices Highest unit price 62.86p 62.40p 60.45p Lowest unit price 53.77p 56.13p 56.04p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net assets of the Trust. Included within the OCF are synthetic costs which includes the OCF of the underlying funds weighted on the basis of their investment proportion. Past performance is not a guide to future performance. The price of units and any income from them may go down as well as up. Exchange rate changes may cause the value of any overseas investments to rise or fall. 10

13 Comparative Tables continued F-Class Accumulation Units Change in Net Asset Value per Unit Accounting year ending 15/01/17 15/01/16 15/01/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* (0.13) 3.91 Operating charges (calculated on average price) (1.30) (1.31) (1.37) Return after operating charges* 9.78 (1.44) 2.54 Distributions (1.95) (1.81) (1.77) Retained distributions on accumulation units Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 14.11% (2.04)% 3.72% Other Information Closing net asset value ( ) 39,137 34,283 34,978 Closing number of units 49,490 49,468 49,445 Operating charges 1.75% 1.82% 1.97% Direct transaction costs nil nil nil Prices Highest unit price 79.31p 75.53p 71.99p Lowest unit price 66.76p 68.60p 66.23p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net assets of the Trust. Included within the OCF are synthetic costs which includes the OCF of the underlying funds weighted on the basis of their investment proportion. Past performance is not a guide to future performance. The price of units and any income from them may go down as well as up. Exchange rate changes may cause the value of any overseas investments to rise or fall. 11

14 Manager s Investment Report During the year under review, the bid price of the Trust s R-Class accumulation units increased by 13.99% compared to the IA Mixed Investment 20-60% Shares sector average return, on a Total Return basis, of 14.46% (Source: Lipper, using selling prices, net income reinvested, in Sterling terms, no initial charge). Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up. Exchange rate changes may cause the value of any overseas investments to rise or fall. Market/Economic Review Following a volatile start to the year under review amidst concerns over Chinese growth and its potential contagion on the global economy, fears soon eased following stronger economic data in the US, a significant expansion in the ECB s stimulus programme and a rebound in commodities. It proved to be a year of surprises, however, the fragile recovery was soon rocked by the Yes result in the UK s referendum to leave the European Union (EU), leading to Sterling falling sharply against its major trading currencies, although initial market weakness proved short-lived and financial assets soon regained their poise. Political developments again took centre stage towards the end of the review year, with the election of Donald Trump as president of the United States. Trump s plan to cut taxes, boost infrastructure spend and reduce regulation led investors to anticipate rising domestic growth and inflation, and western stock markets and bond yields moved higher in response. Against this backdrop, the MSCI World Index (in Sterling terms) outperformed cash and government bonds by rising just over 41%. Within commodities, WTI Oil rose over the review year by 78% on the back of healthy demand growth, various supply disruptions and an agreement by Organisation of Petroleum Exporting Countries (OPEC) and non-opec states to cut production, before ending the review year at $52.4 per barrel, whilst Gold as a perceived safe haven rose by 10% to end the review year at $1197.3/oz. Trust Review The Trust lagged its peer-group over the review year, being positively impacted by asset allocation but negatively impacted by fund selection. Beginning with the former, the Trust benefitted from its overweight position in fixed income, as well as the underweight position in cash. In terms of fund selection, Invesco Perpetual High Income, JOHCM Japan and Henderson UK Property were the key laggards to relative performance, although these losses were offset somewhat by the holdings in Artemis Income and Lazard Global Listed Infrastructure. Activity during the position in included new purchases in Old Mutual UK Mid Cap and Lazard Global Listed Infrastructure. We sold out of Edinburgh Partners European Opportunities, following 12

15 Manager s Investment Report continued some internal changes within the fund, and reinvested the proceeds into Man GLG Continental European Growth. We also sold out of Goldman Sachs India, due to a change in the team view following disappointing political developments in the country, as well as M&G Optimal Income. In addition, we significantly reduced exposure to Henderson Property post the referendum vote. Finally, we invested in a new position in Guinness Global Energy, a fund we have held in the past. Outlook As had been largely expected, the US Federal Reserve raised interest rates for the second time in a decade in December The surprise, however, was the Federal Reserve s more hawkish trajectory, which led to the US Dollar soaring, as well as an increase in bond yields. We now believe that the market is fairly priced, albeit with risks in both directions, significant fiscal stimulus could move markets higher, but excessive Dollar strength and negative knock-on effects (both domestically and abroad) from the tightening in financial conditions could cause further delays in rate hikes. Elsewhere, China has been out of the market limelight in recent months, as investors have focused on other global and political events. We believe this will change, and are expecting a cyclical slowdown in China, which, although unlikely to be the start of a hard landing, should cause China risk premia to widen considerably over the coming months. Finally, we have recently introduced a new theme in our portfolios - `New Political Paradigm' - based on the slow recovery of an economy after a financial crisis resulting in a potential push towards fringe politics. Whilst the impact of this theme will be broadly negative, in view of protectionism adversely impacting global trade, the way we translate the theme into the Multi Manager funds is likely to vary over time. Legal & General Investment Management Limited (Investment Adviser) 8 February

16 Manager s Report and Accounts Copies of the most recent Interim and Annual Long Form Manager s Reports are available free of charge by telephoning , by writing to the Manager or are available on the internet at Call charges will vary. We may record and monitor calls. Dual Pricing Arrangement The Manager s fixed dual pricing arrangement has a set spread to account for the costs of transacting in a particular Trust. Where the Manager operates a box through which unit subscriptions and unit redemptions are netted into a single trade instruction to the Trustee, the netting reduces the actual transaction costs and this generates a revenue to the Manager. With effect from 1 January 2016, the revenue generated from this activity is calculated on a monthly basis and returned to the Trust in the form of a payment from the manager. This provides an enhanced return to the Trust, through the size of any return will be dependent on the size of subscriptions and redemptions. Minimum Investment Amounts The minimum initial lump sum investment amounts for each class are as follows: R-Class 500 I-Class 1,000,000 F-Class 500 In addition, monthly contributions can be made into the R-Class with a minimum amount of 10, and F-Class with a minimum amount of 50 per month. F-Class units are only available to: i) investors who have received advice from authorised intermediaries and platforms in relation to their investment in units in the Trust and ii) authorised intermediaries or distributers who the Manager reasonably considers will adequately bear the costs of marketing to and acquiring investors at no or limited cost to the Manager, and to whom the Manager has confirmed that such distributer or investor meets the criteria for investment in such units. Other Information The information in this report is designed to enable unitholders to understand how the Trust has performed during the year under review and how it is invested at the year end. Further information on the activities and performance of the Trust can be obtained by telephoning or by writing to the Manager. Call charges will vary. We may record and monitor calls. 14

17 Authorised Fund Manager Legal & General (Unit Trust Managers) Limited Registered in England and Wales No Registered office: One Coleman Street, London EC2R 5AA Telephone: Authorised and regulated by the Financial Conduct Authority Call charges will vary. We may record and monitor calls. Trustee Northern Trust Global Services Limited 50 Bank Street, Canary Wharf, London E14 5NT Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority Independent Auditors PricewaterhouseCoopers LLP 7 More London Riverside London SE1 2RT 15

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20 Authorised and regulated by the Financial Conduct Authority Legal & General (Unit Trust Managers) Limited Registered in England and Wales No Registered office: One Coleman Street, London EC2R 5AA MMI