Distribution Number 13 Legal & General Multi Manager Income Trust Interim Manager s Report for the period ended 15 July 2011 (Unaudited)
Contents Page Number Manager s Investment Report 2 Authorised Status 5 Directors Statement 5 Portfolio Statement 6 Statement of Total Return 7 Statement of Change in Net Assets attributable to Unitholders 7 Balance Sheet 8 Notes to the Financial Statements 9 Trust Facts 10 Performance Record 11 General Information 12 1
Manager s Investment Report 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, near cash, cash and deposits. Manager s Investment Report During the period under review, the bid price of the Trust s accumulation units increased by 0.05% compared to the IMA Cautious Managed sector median return, on a total return basis, of 1.49%. This placed the Trust in the fourth quartile (80th percentile) of the sector rankings. (Source: Lipper, bid to bid, net income reinvested, in Sterling terms, no initial charge.) Over the period since launch (25 April 2008) to 15 July 2011 the bid price of the Trust s accumulation units increased by 27.60% compared to the IMA Cautious Managed sector median return, on a total return basis, of 12.69%. This placed the Trust in the first quartile (4th percentile) of the sector rankings. (Source: Lipper, bid to bid, 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 High volatility continued for the period under review. Concerns over the sovereign (government) debt crisis in the eurozone returned to the forefront, yet despite this the European Central Bank (ECB) became the first of the G4 central banks to raise interest rates since the financial crisis. Investors also had to contend with softer economic data and the tragic events in Japan in March 2011. There were wild swings in the commodities markets, with events in the Middle East and North Africa (MENA) region and the Arab Spring (the current prodemocracy uprisings in the Middle East and North Africa) impacting energy prices. West Texas Intermediate (WTI) Oil rose during the period by more than 6%. Against this backdrop and also benefiting from fears of a US default, inflation and a hard landing in China, gold embedded itself as a safehaven investment, increasing by 17% and encroaching, at the end of the review period, on the US $1,600 an ounce barrier. The FTSE Global Government Bond Index also did well, returning 3.1%, whilst both the MSCI AC World Index (in Sterling terms) and the FTSE All Share Index were broadly flat despite the volatile environment. 2
Manager s Investment Report continued Trust Review The Trust was negatively impacted by both asset allocation and, to a lesser extent, fund selection over the review period. Regarding the former, the overweight positions in emerging market equities and Asia Pacific (excluding Japan) equities detracted from performance, as did the underweight position in UK Government bonds. However, positions in energy equities and local currency emerging market debt proved positive. In terms of fund selection, key laggards included Investec American, Neptune Russia and Greater Russia, Investec Global Gold and GLG Alpha Select. Positive contributions came from First State Asian Equity Plus and Invesco Perpetual High Income. We started the review period by taking some profits from our positions in emerging markets (excluding Russia) and Asia Pacific (excluding Japan), reinvesting primarily into US equities. Following sharp declines in Japanese equities post the Sendai earthquake, we opened a new position in the CF Morant Wright Japan Fund. Over the review period, we also increased our exposure to our positions in gold and energy stocks, with the two investments continuing to serve as useful hedges against global uncertainties. In line with the weakening economic data towards the end of the period under review, we tweaked the Trust s equity exposure in favour of the more high quality, income focused holdings and added further to our holding in the CF Morant Wright Japan Fund, primarily on valuation grounds. Outlook Although we share some of the markets cautiousness in the near term, we continue to view the current slowdown as a mid cycle soft patch, believing that there are sufficient positive factors in place to allow for further headway to be made. Specifically, we feel there is upside potential for stocks, corporate bonds and select commodities; more so than in developed market government bonds and cash. That said, volatility looks set to remain high and we remain fully aware of the downside risks. One such risk is the eurozone and its sovereign debt crisis. With the periphery still struggling with soaring debt levels and European banks remaining in a fragile state, we feel the underlying forces are still very much deflationary in many parts of Europe and we struggled to see the merits of the ECB s decision to raise rates. Changing continents, we hold the view that China will engineer a soft landing and that markets fears of a hard landing are overblown. In the money markets, the ending of a second round of Quantitative Easing (QE2) in itself should not have a major impact, in part because the US Federal Reserve has implied that policy will continue to be accommodative. Elsewhere, although the current price of oil may have a higher geopolitical risk premium built in, we continue to remain bullish (hopeful of rising prices) and believe that the longerterm positive fundamental story remains intact. 3
Manager s Investment Report continued Finally, we remain positive on the outlook for gold, increasingly viewing it as a currency rather than a commodity and one whose fundamentals appear a lot sounder than those of the US Dollar, the Euro and Sterling. Legal & General (Unit Trust Managers) Limited (Investment Adviser) 5 August 2011 4
Authorised Status Authorised Status This Trust is an Authorised Unit Trust Scheme as defined in section 243 of the Financial Services and Markets Act 2000 and is a nonucits Retail Scheme within the meaning of the FSA Collective Investment Schemes sourcebook. Directors Statement We hereby certify that this Manager s Report has been prepared in accordance with the requirements of the FSA Collective Investment Schemes sourcebook. M. B. Boardman S. D. Thomas (Director) (Director) Legal & General (Unit Trust Managers) Limited 31 August 2011 5
Portfolio Statement Portfolio Statement as at 15 July 2011 All investments are in distribution units or ordinary shares unless otherwise stated. The percentages in brackets show the equivalent sector holdings as at 15 January 2011. Holding/ Market % of Nominal Value Net Value Investment Assets Funds investing in Overseas shares 42.09% (43.19%) 3,805,263 CF Morant Wright Japan 'B' Inc 7,568,287 3.63 822,697 First State Asian Equity Plus 'I' Inc 17,827,764 8.55 1,059,985 First State Latin America 'B' Acc 2,166,609 1.04 1,400,211 Guinness Global Energy 'A' Inc 9,392,643 4.51 2,090,503 Ignis Hexam Global Emerging Markets 'I' Acc 3,545,494 1.70 2,749,110 Investec American 'A' Acc 4,764,768 2.29 6,659,186 Investec Global Gold 'A' Acc 14,385,839 6.90 8,411,305 Jupiter International Financials Acc 3,577,540 1.72 1,019,878 Neptune Russia and Greater Russia Fund 'B' Acc 4,099,909 1.97 139,817 Veritas Global Equity Income 'A' Inc 20,404,851 9.78 87,733,704 42.09 Funds investing in UK shares 21.39% (22.75%) 7,276,116 Artemis Income Fund Inc 12,008,162 5.76 107,640 GLG Alpha Select UCITS III 'E' Inc 10,290,355 4.94 392,962 Invesco Perpetual High Income Acc 1,973,808 0.95 5,107,851 Invesco Perpetual High Income Inc 16,271,571 7.81 3,297,862 M&G Recovery Fund 'A' Inc 4,021,083 1.93 44,564,979 21.39 Funds investing in Overseas fixed interest securities 15.95% (13.43%) 15,166,307 Invesco Perpetual Global Bond Fund Inc 11,283,732 5.41 15,605,808 Investec Emerging Markets Debt 'A' Inc 21,962,267 10.54 33,245,999 15.95 Funds investing in UK fixed interest securities 19.65% (20.11%) 12,476,183 Invesco Perpetual Corporate Bond Inc 10,178,217 4.87 25,076,496 M&G Optimal Income 'A' Inc 30,813,998 14.78 40,992,215 19.65 Portfolio of investments 206,536,897 99.08 Net other assets 1,925,489 0.92 Total net assets 208,462,386 100.00% Where any of the above securities are unlisted, they are valued at the Manager s best assessment of their fair value. The total value of Purchases during the period was 47,466,215. The total value of Sales during the period was 42,516,016. 6
Financial Statements Statement of Total Return for the period ended 15 July 2011 15/07/11 15/07/10 Income Net capital (losses)/gains (1,888,910) 1,209,624 Revenue 3,295,610 2,944,176 Expenses (833,798) (1,560,308) Finance costs: Interest (1,909) (2,628) Net revenue before taxation 2,459,903 1,381,240 Taxation (260,792) (22,618) Net revenue after taxation for the period 2,199,111 1,358,622 Total return before distributions 310,201 2,568,246 Finance costs: Distributions (2,626,561) (2,377,256) Change in net assets attributable to Unitholders from investment activities (2,316,360) 190,990 Statement of Change in Net Assets attributable to Unitholders for the period ended 15 July 2011 15/07/11 15/07/10 Opening net assets attributable to Unitholders 204,702,377 169,183,331 Amounts received on creation of units 10,267,857 21,409,094 Less: Amounts paid on cancellation of units (4,928,939) (3,903,917) 5,338,918 17,505,117 Stamp Duty Reserve Tax (42,028) (36,115) Retained distribution on accumulation units 779,479 567,166 Change in net assets attributable to Unitholders from investment activities (2,316,360) 190,990 Closing net assets attributable to Unitholders 208,462,386 187,410,549 The difference between the opening net assets and the comparative closing net assets is the movement in the second half of the year. 7
Financial Statements continued Balance Sheet as at 15 July 2011 15/07/11 15/01/11 ASSETS Investment assets 206,536,897 203,644,592 Debtors 4,331,905 7,424,872 Cash and bank balances 305,719 571,409 Total other assets 4,637,624 7,996,281 Total assets 211,174,521 211,640,873 LIABILITIES Investment liabilities Creditors (1,799,123) (4,930,699) Bank overdrafts (1,016,616) Distribution payable on distribution units (913,012) (991,181) Total other liabilities (2,712,135) (6,938,496) Total liabilities (2,712,135) (6,938,496) Net assets attributable to Unitholders 208,462,386 204,702,377 8
Notes to the financial statements 1. Accounting Policies (a) Changes to accounting policies The financial statements have been prepared under the historical cost convention, as modified by the revaluation of investments and in accordance with the Statement of Recommended Practice for Authorised Funds issued by the IMA in October 2010 ( the IMA SORP 2010 ). The financial statements have been prepared on the basis of the accounting policies set out in the most recent annual financial statements (15 January 2011). As at 15 July 2010, the financial statements were prepared in accordance with the Statement of Recommended Practice for Authorised Funds issued by the IMA in November 2008. There has been no impact on the financial statements disclosure for the period. 9
Trust Facts Distribution Information RClass The distribution payable on 15 September 2011 is 0.3640p net per unit for distribution units and 0.3993p net per unit for accumulation units. Total Expense Ratio RClass 15 Jul 11 15 Jan 11 Trust expenses 2.03% 1.96% Performance fees 0.00% 0.92% Total 2.03% 2.88% The Total Expense Ratio (TER) is the ratio of the Trust s operating costs (excluding overdraft interest and transaction charges) and all costs suffered through holdings in underlying Collective Investment Schemes, to the average net assets of the Trust. The TER represents an annualised figure. 10
Performance Record Net Asset Values Net Asset Net Asset Number Of Accounting Value Of Value Per Units Date Trust Unit In Issue 15 January 09 RClass Distribution Units 118,588,075 45.28p 261,884,756 Accumulation Units 1,845,570 46.02p 4,010,056 15 January 10 RClass Distribution Units 142,597,699 54.98p 259,375,136 Accumulation Units 26,585,632 57.84p 45,966,350 15 January 11 RClass Distribution Units 149,328,330 58.59p 254,862,026 Accumulation Units 55,374,047 63.44p 87,282,673 15 July 11 RClass Distribution Units 145,228,026 57.91p 250,793,074 Accumulation Units 63,234,360 63.52p 99,546,803 Unit Price Range and Net Revenue RClass Units Highest Lowest Net Year Offer Bid Revenue Distribution Units 2008 (1) 54.28p 40.53p 0.7066p 2009 57.60p 42.08p 1.6240p 2010 62.17p 53.46p 1.6317p 2011 (2) 62.51p 56.50p 0.7529p Accumulation Units 2008 (1) 54.28p 41.18p 0.7093p 2009 60.52p 43.25p 1.6727p 2010 67.33p 56.69p 1.7353p 2011 (2) 68.15p 61.58p 0.8204p (1) The Trust s units were launched on 25 April 2008. (2) The above table shows highest offer and lowest bid prices to 15 July 2011 and net revenue per unit to 15 September 2011. 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
General Information Constitution Launch date: 25 April 2008 Year end: 15 January Period end dates for distributions: 15 January, 15 April, 15 July, 15 October Distribution dates: 15 March, 15 June, 15 September, 15 December Minimum initial lump sum investment: 500 Minimum monthly contribution 50 Valuation point: 12 noon Management charge: Annual 1%* Performance fee charge: Please refer to Simplified Prospectus Initial charge: 5% * The annual management charge was reduced to 0.85% on 1 October 2009. This was done on a temporary basis and the Manager reserves the right to increase this back to 1% at some point in the future. Pricing and Dealing The prices are published on the internet at www.legalandgeneral.com/investments/fundinformation/dailyfundprices/fundprices/multimanager.html immediately after they become available. Dealing in units takes place on a forward pricing basis, from 8:30am to 6:00pm, Monday to Friday. Buying and Selling Units Units may be bought on any business day from the Manager or through a financial adviser by telephoning, completing an application form or on the internet at www.legalandgeneral.com. Units may normally be sold back to the Manager on any business day at the bid price calculated at the following valuation point. ISA Status This Trust may be held within this Tax advantaged savings arrangement. The favourable Tax treatment of ISAs may not be maintained. For full written information, please contact your usual financial adviser or ring 0370 050 0955. Call charges will vary. We may record and monitor calls. Stamp Duty Reserve Tax Stamp Duty Reserve Tax suffered on the surrender of units where applicable, has been charged against the capital assets of the Trust. 12
General Information continued Prospectus and Manager s Reports The Manager will send to all persons on the Unitholder Register annual and interim short form reports. Copies of the Prospectus and the most recent annual or interim reports are available free of charge by telephoning 0370 050 0955 or by writing to the Manager. Do you have difficulty in reading information in print because of a disability? If so, we can help. We are able to produce information for our clients in large print and braille. If you would like to discuss your particular requirements, please contact us on 0370 050 0955. Call charges will vary. We may monitor and record calls. 13
General Information continued 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 Directors of the Manager M. B. Boardman S. C. Ellis M. J. Gregory S. R. Pistell S. D. Thomas Secretary A. Fairhurst Registrar Legal & General (Portfolio Management Services) Limited P.O. Box 6080 WolverhamptonWV1 9RB Authorised and regulated by the Financial Services Authority Dealing: 0370 050 0956 Enquiries: 0370 050 0955 Registration: 0370 050 0955 Call charges will vary. We may record and monitor calls. Trustee The Royal Bank of Scotland Plc, Trustee and Depositary Services, Gogarburn P.O. Box 1000, Edinburgh EH12 1HQ Authorised and regulated by the Financial Services Authority Independent Auditors PricewaterhouseCoopers LLP 7 More London Riverside London SE1 2RT Investment Adviser Legal & General (Unit Trust Managers) Limited One Coleman Street, London EC2R 5AA Authorised and regulated by the Financial Services Authority 14
2
3
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