Legal & General (N) Tracker Trust Interim Manager s Short Report for the period ended 31 March 2012 Distribution Number 25
Investment Objective and Policy L&G (N) Tracker Trust aims to track the capital performance of the UK equity market, as represented by the FTSE All-Share Index, by investment in a representative sample of stocks selected from all economic sectors. Securities in the FTSE All-Share Index will be held with weightings generally proportionate to their company s market capitalisation. From time to time non-index constituents may be held as a result of a corporate action and these holdings will be sold or transferred as soon as reasonably practical. Risk Profile Market risk Currency risk Market risk arises mainly from uncertainty about future prices. 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. This Trust holds investments 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. 1
Trust Facts Period End Dates for Distributions: Distribution Dates: 31 Mar, 30 Sep 31 May, 30 Nov Total Expense Ratios: 31 Mar 12 30 Sep 11 Accumulation Units 1.15% 1.15% CTF Accumulation Units 1.50% 1.50% The Total Expense Ratio is the ratio of the Trust s operating costs (excluding overdraft interest and transaction fees) to the average net assets of the Trust. Ongoing Charges Figure 31 Mar 12 Accumulation Units 1.15% CTF Accumulation Units 1.50% The Ongoing Charges Figure (OCF) is the ratio of the Trust s total discloseable costs (excluding overdraft interest) 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 fund and is calculated based on the last period s figures. The OCF will be included in all Managers Reports for periods ending 28 February 2012 onwards in accordance with the FSA Collective Investment Schemes sourcebook and the additional guidance provided for the Statement of Recommended Practice for Authorised Funds issued by the IMA in July 2011. As a result the OCF will replace the TER in all subsequent reports, however, as prior period figures have not been calculated the TER will be retained as a comparative figure. 2
Synthetic Risk and Reward Indicator Lower risk Higher risk Typically lower rewards Typically higher rewards 1 2 3 4 5 6 7 This risk and reward indicator 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 six 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. 3
Trust Performance Net Asset Net Asset Number Of Accounting Value Of Value Per Units Date Trust Unit In Issue 30 Sep 09 Accumulation 708,748,099 114.16p 620,822,571 CTF Accumulation 124,064,410 111.68p 111,092,182 30 Sep 10 Accumulation 789,016,196 126.16p 625,384,687 CTF Accumulation 172,079,422 122.97p 139,933,402 30 Sep 11 Accumulation 733,653,096 118.92p 616,945,777 CTF Accumulation 184,872,308 115.50p 160,056,907 31 Mar 12 Accumulation 829,758,071 136.53p 607,763,463 CTF Accumulation 224,988,715 132.38p 169,953,190 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. Distribution Information Accumulation Units The distribution payable on 31 May 2012 is 1.5686p net per unit for accumulation units. CTF Accumulation Units The distribution payable on 31 May 2012 is 1.3009p net per unit for accumulation units. 4
Portfolio Information The top 10 holdings and their associated weighting for the current period and preceding year are: Top 10 Holdings at Top 10 Holdings at 31 March 2012 30 September 2011 Percentage of Percentage of Holding Net Asset Value Holding Net Asset Value HSBC Holdings 5.42% HSBC Holdings 5.47% BP 4.76% Vodafone Group 5.28% Vodafone Group 4.73% BP 4.63% Royal Dutch Shell (A) 4.40% Royal Dutch Shell (A) 4.50% GlaxoSmithKline 3.91% GlaxoSmithKline 4.22% British American Tobacco 3.43% Royal Dutch Shell (B) 3.25% Rio Tinto 2.74% BG Group 2.69% BHP Billiton 2.24% British American Tobacco 3.41% Royal Dutch Shell (B) 3.34% Rio Tinto 2.67% BG Group 2.58% AstraZeneca 2.43% Trust Holdings as at 31 March 2012 25% 20% 20% 17% 15% 10% 5% 13% 11% 9% 9% 7% 6% 4% 2% 2% 0% Trust Holdings as at 30 September 2011 25% 20% 20% 17% 15% 13% 10% 10% 9% 8% 8% 7% 5% 4% 2% 2% 0% 5
Unit Price Range and Net Revenue Accumulation Units Highest Lowest Net Year Price Price Revenue 2007 139.60p 122.10p 2.8537p 2008 134.10p 78.30p 3.4700p 2009 119.80p 74.46p 3.0132p 2010 136.70p 109.60p 2.4828p 2011 140.80p 114.90p 2.8376p 2012 (1) 140.90p 130.20p 1.5686p CTF Accumulation Units Highest Lowest Net Year Price Price Revenue 2007 138.10p 126.70p 2.1822p 2008 132.30p 76.96p 2.8119p 2009 117.10p 73.04p 2.5019p 2010 133.10p 106.90p 2.0045p 2011 136.90p 111.60p 2.3091p 2012 (1) 136.60p 126.30p 1.3009p (1) The above tables show highest and lowest mid prices to 31 March 2012 and net revenue per unit to 31 May 2012. 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
Manager s Investment Report During the period under review, from noon 30 September 2011 to noon 30 March 2012, being the last working day of the accounting period, the bid price of the Trust s accumulation units rose by 14.79%. As the benchmark Index is not published at midday, in order to provide an appropriate comparison, the Trust has been valued at closing prices, the same basis as used for the Index. Over the review period from close 30 September 2011 to close 30 March 2012, being the last working day of the accounting period, the capital only price of the Trust s accumulation units rose by 13.16%. The FTSE All-Share Index (capital only) rose by 13.13% (Source: Bloomberg). 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. The FTSE All-Share Index is calculated by FTSE International Limited ( FTSE ). FTSE does not sponsor, endorse or promote this product. All copyright in the Index values and constituent list belongs to FTSE. Legal & General has obtained full license from FTSE to use such copyright in the creation of this product. FTSE, FT-SE and Footsie are trade marks of the London Stock Exchange Plc and The Financial Times Limited and are used by FTSE International Limited ( FTSE ) under licence. All-Share is a trade mark of FTSE. Market/Economic Review The FTSE All-Share Index comprises the FTSE 250 Index (+17.51%), the best performing element of the FTSE All-Share Index over the review period, the FTSE 100 Index (+12.48%) and the FTSE SmallCap Index (+11.95%) (Source: Bloomberg). The UK budget in March 2012 left sentiment broadly neutral. Although in line with overall expectations, and the government remaining committed to deficit reduction, the UK still remains vulnerable to wider shocks in the global economy. Retail sales fell 0.8% in February 2012, and January 2012 figures were revised lower (0.9% to 0.3%), reflecting the squeeze on real income people are experiencing amongst growing levels of unemployment. Reduced energy bills for many UK homes helped bring the consumer prices index (CPI) down slightly in February 2012, to the lowest level in more than a year, but at 3.4% it was still considerably higher than Bank of England s target of 2%. In coming months, high petrol prices and the threat of drought hitting farming and leading to increased food prices are likely to put a halt to any downward trends in inflation. Despite this unappealing backdrop, UK equities continued to mimic global markets, and the FTSE 100 broke through its highest close barrier (5,948) of 2012 in March. Towards the end of the month, however, economic growth concerns drove down performance. In particular, resource stocks were hit by slowdown and reduced demand concerns. 7
Manager s Investment Report continued Over the review period, major sectors such as Chemicals (+38.1%), Oil Equipment, Services & Distribution (+37.0%), and Electronic & Electrical Equipment (+30.3%) showed the largest positive returns. The sectors that underperformed the most were Alternative Energy (-64.5%), Leisure Goods (-15.1%) and Food & Drug Retailers (-5.9%). Trust Review At the quarterly Index review in December 2011, six companies were added to the FTSE All-Share Index, including the construction and material company CRH after its change of primary listing from Dublin. The Russian companies Evraz (steelmaker) and Polymetal International (precious metals miner) were included after both became eligible following their change of listing to London. Mouchel Parkman and Hampson Industries were both deleted from the Index. At the quarterly Index review in March 2012, five companies were added to the FTSE All-Share Index including miners Petra Diamonds and Avocet Mining, oil and gas producer Ruspetro, food producer Greencore Group and Bilfinger Berger Global Infrastructure. Game Group, MWB Group Holdings and Namakwa Diamonds were deleted from the Index. At each of the Index review effective dates the Trust s portfolio was rebalanced accordingly. Takeovers included Autonomy Corporation by US company Hewlett-Packard for 6.3 billion cash and Northumbrian Water Group for 4.7 billion by the consortium UK Water (2011) Ltd. Other takeovers included oil and gas company Hansen Transmissions International by ZF International BV, manufacturer Charter International by US company Colefax Corp and Collins Stewart Hawkpoint acquired by Canaccord Financial Inc. Other acquisitions also included Robert Wiseman Dairies, Alterian and Arena Leisure Plc. Capital raisings were completed in the following companies for growth reasons: Smith (David S) Holdings ( 465 million) to fund acquisitions of packaging manufacturer SCA Packaging Holding BV and clothing manufacturer Jaeger Group, MedicX Fund ( 37 million) to fund further growth and Talvivaara Mining ( 69 million) to fund research and development. Vodafone Group paid a 2 billion special dividend after receiving income from its 45% holding in US company Verizon Wireless. Stagecoach and Aegis Group also had capital repayments. Cairn Energy returned over 2.2 billion to shareholders following its sale of Cairn India to Vedanta Resources, and GlaxoSmithKline repaid 250 million following the disposal of non-core activities. Other capital repayments included European Investment Trust, Micro Focus International, easyjet and Millennium & Copthorne Hotels. 8
Manager s Investment Report continued At the end of the review period, the Trust had holdings in all of the 614 companies in the Index. The three largest stocks in the Index at the end of the review period were Royal Dutch Shell (7.65%), HSBC (5.42%) and BP (4.76%). Outlook European equities strengthened on completion of the Greek debt swap, and due to the European Central Bank (ECB) keeping interest rates at 1%. Fears of missing further gains has forced many investors into equity markets, even though there are concerns over the fragile state of the peripheral weaker eurozone nations and the uncertainty surrounding the impact of a slowdown globally, including China. As the Bank of England is considering further doses of quantitative easing if the UK economy struggles to recover from one of the longest and deepest recessions of the post-war era, unemployment in the UK is expected to potentially peak at 8.8% of the workforce this year, with declines not being seen until 2013. However, quantitative easing is expected to help improve the flow of credit to small businesses and households, helping gross domestic product (GDP) growth to gradually pick up, ensuring that the Trust is in a good position to capture any upturn in markets. Legal & General Investment Management Limited (Investment Adviser) 17 April 2012 9
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 0370 050 0955, or by writing to the Manager. Call charges will vary. We may record and monitor calls. You don t have to wait until your next annual statement or manager s report to get a progress update on the performance of your selected investment Fund. If you click on www.legalandgeneral.com/investments/ fund-information/daily-fund-prices/fund-prices/lg-unit-trustprices.html or www.nationwide.co.uk/investments you ll be able to find the current daily price for your choice of investment Fund. Significant Changes Change in Fund Accountant The Fund Accountant of the Trust has changed. The Bank of New York Mellon (International) Limited ceased to be the Fund Accountant on 10 October 2011 and Northern Trust Global Services Limited has taken on responsibility thereafter. This change has had no impact upon individual client investments and no action is required from investors. Manager Legal & General (Unit Trust Managers) Limited Registered in England No. 01009418 Registered office: One Coleman Street, London EC2R 5AA Telephone: 0370 050 3350 Authorised and regulated by the Financial Services Authority Call charges will vary. We may record and monitor calls. Trustee National Westminster Bank Plc Trustee and Depositary Services 135 Bishopsgate London EC2M 3UR Authorised and regulated by the Financial Services Authority Independent Auditors PricewaterhouseCoopers LLP 7 More London Riverside London SE1 2RT 10
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Authorised and regulated by the Financial Services Authority Legal & General (Unit Trust Managers) Limited Registered in England No. 01009418 Registered office: One Coleman Street, London EC2R 5AA www.legalandgeneral.com 99883 14