Legal & General Asian Income Trust Annual Manager s Short Report for the year ended 10 September Distribution Number 34

Transcription

1 Legal & General Asian Income Trust Annual Manager s Short Report for the year ended 10 September 2017 Distribution Number 34

2

3 Investment Objective and Policy The investment objective is to generate income with some potential for capital growth through exposure mainly to Asian securities. The Trust will invest mainly in securities across all economic sectors which are registered and quoted in the countries included within the FTSE All World Asia Pacific (excluding Japan) Index, the Indian sub-continent and securities quoted on other stock exchanges where the underlying assets of those securities reflect investments in the economies of the countries listed above. Risk Profile 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 overseas financial securities. The performance of the Trust may therefore be affected by changes in exchange rates. This risk may be managed by the use of forward currency contracts, which aim to manage the effect of changing exchange rates. Trust Facts Period End Dates for Distributions: 10 Mar, 10 Jun, 10 Sep, 10 Dec Distribution Dates: 10 Feb, 10 May, 10 Aug, 10 Nov Ongoing Charges Figures: 10 Sep Sep 16 R-Class 1.82% 1.77% E-Class 1.82% 1.77% F-Class 1.32% 1.27% I-Class 0.93% 0.88% C-Class 0.75% 0.70% The Ongoing Charges Figure (OCF) is the ratio of the Trust s total discloseable costs (excluding overdraft interest) to the average net 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. 1

4 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 five because it invests in company shares which generally provide higher rewards and higher risks than other investments such as bonds, cash or commercial property. 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. Distribution Information R-Class The distribution payable on 10 November 2017 is p per unit for distribution units and p per unit for accumulation units. E-Class The distribution payable on 10 November 2017 is p per unit for distribution units and p per unit for accumulation units. F-Class The distribution payable on 10 November 2017 is p per unit for distribution units and p per unit for accumulation units. I-Class The distribution payable on 10 November 2017 is p per unit for distribution units and p per unit for accumulation units. C-Class The distribution payable on 10 November 2017 is p per unit for distribution units and p per unit for accumulation units. 2

5 12% 10% 10% 8% 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 10 September September 2016 Percentage of Percentage of Holding Net Asset Value Holding Net Asset Value Transurban 3.68% Taiwan Semiconductor Manufacturing 3.41% China Construction Bank 'H' 3.24% Qantas Airways 3.05% DBS Group 2.33% Downer EDI 2.15% United Overseas Bank 2.15% Fletcher Building 2.13% Rio Tinto 2.13% Westpac Banking 2.09% China Construction Bank 'H' 3.44% Transurban 3.40% Taiwan Semiconductor Manufacturing 3.13% Australia & New Zealand Banking Group 2.70% Coal India (P-Note) 2.37% National Australia Bank 2.33% Meridian Energy 2.33% DUET Group 2.32% QBE Insurance Group 2.25% Downer EDI 2.19% Trust Holdings as at 10 September % 30% 31% 20% 10% 6% 5% 4% 4% 2% 2% 1% 1% 1% 1% 1% 1% 0% Trust Holdings as at 10 September % 30% 30% 20% 14% 10% 10% 9% 9% 5% 5% 4% 3% 2% 2% 2% 1% 1% 1% 1% 1% 0% 3

6 Comparative Tables R-Class Distribution Units Change in Net Asset Value per Unit Accounting year ending 10/09/17 10/09/16 10/09/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* (78.75) Operating charges (calculated on average price) (9.32) (7.03) (7.56) Return after operating charges* (86.31) Distributions on income units (22.34) (18.80) (19.26) Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 18.15% 33.36% (18.40)% Other Information Closing net asset value ( ) 2,231,392 1,742,699 1,911,084 Closing number of units 422, , ,812 Operating charges 1.82% 1.77% 1.71% Direct transaction costs 0.03% 0.04% 0.09% Prices Highest unit price p p p Lowest unit price p p p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net The price of units and any income from them may go down as well as up. 4

7 Comparative Tables continued R-Class Accumulation Units Change in Net Asset Value per Unit Accounting year ending 10/09/17 10/09/16 10/09/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* (107.50) Operating charges (calculated on average price) (13.80) (9.98) (10.22) Return after operating charges* (117.72) Distributions (33.23) (26.80) (26.14) Retained distributions on accumulation units Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 18.29% 34.10% (18.78)% Other Information Closing net asset value ( ) 15,844,788 13,764,338 14,238,904 Closing number of units 1,962,336 2,016,410 2,797,283 Operating charges 1.82% 1.77% 1.71% Direct transaction costs 0.03% 0.04% 0.09% Prices Highest unit price p p p Lowest unit price p p p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net The price of units and any income from them may go down as well as up. 5

8 Comparative Tables continued E-Class Distribution Units Change in Net Asset Value per Unit Accounting year ending 10/09/17 10/09/16 10/09/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* (78.75) Operating charges (calculated on average price) (9.32) (7.03) (7.56) Return after operating charges* (86.31) Distributions on income units (22.34) (18.80) (19.26) Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 18.15% 33.36% (18.40)% Other Information Closing net asset value ( ) 161,680, ,388, ,527,699 Closing number of units 30,615,626 32,708,393 33,436,840 Operating charges 1.82% 1.77% 1.71% Direct transaction costs 0.03% 0.04% 0.09% Prices Highest unit price p p p Lowest unit price p p p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net The price of units and any income from them may go down as well as up. 6

9 Comparative Tables continued E-Class Accumulation Units Change in Net Asset Value per Unit Accounting year ending 10/09/17 10/09/16 10/09/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* (107.50) Operating charges (calculated on average price) (13.80) (9.98) (10.22) Return after operating charges* (117.72) Distributions (33.23) (26.80) (26.14) Retained distributions on accumulation units Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 18.29% 34.10% (18.78)% Other Information Closing net asset value ( ) 3,141,252 2,803,572 2,628,560 Closing number of units 389, , ,390 Operating charges 1.82% 1.77% 1.71% Direct transaction costs 0.03% 0.04% 0.09% Prices Highest unit price p p p Lowest unit price p p p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net The price of units and any income from them may go down as well as up. 7

10 Comparative Tables continued F-Class Distribution Units Change in Net Asset Value per Unit Accounting year ending 10/09/17 10/09/16 10/09/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* (79.59) Operating charges (calculated on average price) (6.92) (5.15) (5.44) Return after operating charges* (85.03) Distributions on income units (22.94) (19.21) (19.60) Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 18.76% 34.16% (17.92)% Other Information Closing net asset value ( ) 6,936 7,019 1,723 Closing number of units 1,277 1, Operating charges 1.32% 1.27% 1.21% Direct transaction costs 0.03% 0.04% 0.09% Prices Highest unit price p p p Lowest unit price p p p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net The price of units and any income from them may go down as well as up. 8

11 Comparative Tables continued F-Class Accumulation Units Change in Net Asset Value per Unit Accounting year ending 10/09/17 10/09/16 10/09/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* (109.36) Operating charges (calculated on average price) (10.29) (7.31) (7.35) Return after operating charges* (116.71) Distributions (34.11) (27.42) (26.55) Retained distributions on accumulation units Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 18.87% 34.77% (18.37)% Other Information Closing net asset value ( ) 43,528 32,731 13,616 Closing number of units 5,240 4,684 2,626 Operating charges 1.32% 1.27% 1.21% Direct transaction costs 0.03% 0.04% 0.09% Prices Highest unit price p p p Lowest unit price p p p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net The price of units and any income from them may go down as well as up. 9

12 Comparative Tables continued I-Class Distribution Units Change in Net Asset Value per Unit Accounting year ending 10/09/17 10/09/16 10/09/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* (81.18) Operating charges (calculated on average price) (4.99) (3.63) (3.73) Return after operating charges* (84.91) Distributions on income units (23.41) (19.45) (19.78) Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 19.19% 34.51% (17.68)% Other Information Closing net asset value ( ) 75,351,716 55,872,215 36,618,560 Closing number of units 13,563,163 11,502,128 9,749,979 Operating charges 0.93% 0.88% 0.82% Direct transaction costs 0.03% 0.04% 0.09% Prices Highest unit price p p p Lowest unit price p p p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net The price of units and any income from them may go down as well as up. 10

13 Comparative Tables continued I-Class Accumulation Units Change in Net Asset Value per Unit Accounting year ending 10/09/17 10/09/16 10/09/15 (pence (pence (pence per unit) per unit) per unit) Opening net asset value per unit Return before operating charges* (110.72) Operating charges (calculated on average price) (7.38) (5.15) (5.04) Return after operating charges* (115.76) Distributions (34.81) (27.76) (26.86) Retained distributions on accumulation units Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 19.33% 35.28% (18.05)% Other Information Closing net asset value ( ) 94,417,331 80,004,198 29,402,506 Closing number of units 11,125,811 11,249,811 5,593,200 Operating charges 0.93% 0.88% 0.82% Direct transaction costs 0.03% 0.04% 0.09% Prices Highest unit price p p p Lowest unit price p p p Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net The price of units and any income from them may go down as well as up. 11

14 Comparative Tables continued C-Class Distribution Units Change in Net Asset Value per Unit Accounting year ending 10/09/17 10/09/16 10/09/15 (pence (pence (pence per unit) per unit) per unit) 1 Opening net asset value per unit Return before operating charges* (0.19) Operating charges (calculated on average price) (0.53) (0.38) (0.01) Return after operating charges* (0.20) Distributions on income units (3.12) (2.59) (0.10) Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 19.40% 34.77% (0.40)% Other Information Closing net asset value ( ) 18,805,538 15,732, Closing number of units 25,495,204 24,433,533 2,000 Operating charges 0.75% 0.70% 0.65% Direct transaction costs 0.03% 0.04% 0.09% Prices Highest unit price 76.62p 67.70p 50.82p Lowest unit price 62.62p 47.66p 48.59p 1 C-Class units launched on 1 September Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net The price of units and any income from them may go down as well as up. 12

15 Comparative Tables continued C-Class Accumulation Units Change in Net Asset Value per Unit Accounting year ending 10/09/17 10/09/16 10/09/15 (pence (pence (pence per unit) per unit) per unit) 1 Opening net asset value per unit Return before operating charges* (0.19) Operating charges (calculated on average price) (0.57) (0.39) (0.01) Return after operating charges* (0.20) Distributions (3.32) (2.64) (0.10) Retained distributions on accumulation units Closing net asset value per unit * after direct transaction costs of: Performance Return after charges 19.56% 35.54% (0.40)% Other Information Closing net asset value ( ) 1,231, , Closing number of units 1,525,611 1,477,506 2,000 Operating charges 0.75% 0.70% 0.65% Direct transaction costs 0.03% 0.04% 0.09% Prices Highest unit price 82.32p 69.77p 50.82p Lowest unit price 65.66p 48.09p 48.59p 1 C-Class units launched on 1 September Operating charges, otherwise known as the OCF is the ratio of the Trust s total disclosable costs (excluding overdraft interest) to the average net The price of units and any income from them may go down as well as up. 13

16 Manager s Investment Report During the year under review, the bid price of the Trust s R-Class accumulation units rose by 18.27%. This compares to a rise in the FTSE All-World Asia Pacific (excluding Japan) Index of 20.66% on a total return, Sterling adjusted basis (Source: Bloomberg). The value of investments and any income from them may go down as well as up. Market/Economic Review Global economic activity has improved markedly over the past twelve months. The recovery has been particularly strong in the manufacturing sector, accompanied by an upturn in global trade volumes, although recent data suggests this has now peaked with inventories starting to rise from a low level. Higher commodity prices over the second half of 2016 have been reflected in rising consumer price inflation in the major developed economies. While the global recovery has been broad-based, it has been led by the US where growth accelerated during the latter half of 2016 driven by consumer demand. In Asia, the Chinese authorities have adopted a range of policy initiatives to facilitate the economy s transition from export and investment-driven growth towards consumption and services, with growth exceeding expectations in the second quarter of Equity markets recorded double-digit percentage gains as investors became more positive on the prospects for global economic growth. Meanwhile, Asian equity markets outperformed the FTSE World Index as investors became less concerned about the risk of protectionist US trade policies, while returns have also been enhanced by the broad-based rally in local currencies since the beginning of Trust Review The Trust delivered a positive return over the 12-month period, initially driven by strong gains in Australia and Hong Kong. However, our technology holdings in Taiwan detracted from performance. Regional allocation aided returns in the first half of the review year, thanks predominantly to our overweight position in Australia and underweight position in India. In the second half of the review year, our overweight position in Australia and underweight position in Korea detracted from returns. However, stock selection was broadly positive, led by strength in the Australia leisure and consumer sectors, Macau gaming companies and technology hardware focused names. While there has been no significant shift in allocation at the country level, we were active on stock selection, taking advantage of several attractive market opportunities. As a result, we slightly reduced our underweight positioning in India and Korea by opening new 14

17 Manager s Investment Report continued positions in Bharti Infratel (India), Coway and Hyundai Motor (both South Korea). Our long-standing overweight allocations towards Australia and Singapore are maintained, although we trimmed our position in the former. Outlook The growth outlook for Asia has improved since the beginning of the year, helped by stable domestic trade demand, relatively cheap credit and an improving external backdrop. China s domestic economy appears in resilient shape, with activity levels strong, reflecting solid economic data and fewer concerns surrounding capital outflows. From a bottom-up perspective, we believe that market volatility continues to create interesting stock-specific opportunities. Legal & General Investment Management Limited (Investment Adviser) 3 October

18 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. 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, though 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 E-Class 100,000 F-Class 500 I-Class 1,000,000 C-Class 50,000,000 In addition, monthly contributions can be made into the R-Class 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. C-Class Units are only available to distributors who actively market and distribute such Units (or whom the manager believes intends to do so) and to whom the Manager has confirmed by letter that they meet the criteria for investment in such Units. 16

19 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 Significant Changes Removal of the Initial Charge for R-Class With effect from 6 June 2017, the initial charge for R-Class units has been removed. Prior to this change the initial charge was 5%. The removal of the initial charge will provide better value for investors, as there is no longer a cost of setting up the investment. Removal of Initial Commission With effect from 6 June 2017, initial commission will no longer be paid on the Trust. The initial commission was intended to reflect the costs incurred by the product provider and the intermediary for setting up and selling the business, however, Legal & General no longer consider it appropriate to continue to pay commission on such transactions. 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 17

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 FAE