Distribution Number 9 Legal & General Multi Manager Income Trust Interim Manager s Report for the period ended 15 July 2010 (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 1.51% compared to the IMA Cautious Managed sector median fall, on a total return basis, of 0.31%. This placed the Trust in the first quartile (19th 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 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 Equity markets were notably volatile over the six months under review, as investors worried about the contagion effects of the escalating European sovereign debt crisis and the potential for a double dip recession. The MSCI All Country World Index was broadly flat in Sterling terms although the strength of the US Dollar helped US equities to produce an improved return to the UK investor against this backdrop. The FTSE All-Share Index was 1.7% down on a total return basis, but the major laggard (unsurprisingly given its debt woes) was the FTSE Europe (excluding UK) Index which fell 5.1% in Sterling terms on a total return basis, in large part due to the downtrend in the Euro (Source: Bloomberg). Elsewhere, government bonds returned to form as the market sought out safehavens amidst the volatile backdrop. UK fixed interest gilts as represented by the FTSE Actuaries British Government All-Stocks Index, produced a total return of over 5%. Gold also benefited from this environment, by nearly 7% and breaking through the $1,200 an ounce barrier, whilst Oil fluctuated (sharply at times) and ended the period just under $5 below its $82 per barrel price in mid-january 2010. In the currency markets, Sterling was down versus most major currencies, especially the Yen (Source: Bloomberg). 2
Manager s Investment Report continued Trust Review Fund selection was the main driver of the Trust s performance over the period under review. Key outperformers included Invesco Perpetual Income and Lazard Emerging Markets Fund whilst M&G Recovery Fund and Investec American Fund lagged. In terms of asset allocation, positive contributions came from being overweight in Asia (excluding Japan) and Emerging Markets equities; underweight in Europe (excluding UK) and UK equities; exposure to bonds (especially Emerging Markets Debt, US Treasuries and investment grade corporates); and being underweight in the Euro. The underweight in US equities and overweight in Energy equities proved negative for relative returns. Activity over the period included moving to a more defensive position in mid-january 2010 by reducing our equity exposure. This reflected our desire to take some profits on investments that had performed very strongly since the recovery in equity markets and also our concern over an increase in downside risks to the global economy (for example, contagion from Greece s sovereign debt woes). A number of fund changes were then made in February 2010, with an introduction of GLG Alpha Select (representing our first investment, since launch, into Alternatives); switching from Jupiter Financial Opportunities Fund into Jupiter International Financials and disposing of M&G Strategic Corporate Bond Fund. Later in the period we utilised weaknesses in Energy stocks to add to our holding in Guinness Global Energy. Outlook Whilst we do believe the downside risks have increased in recent months, we remain comfortable with our current strategy (which included a number of more defensive changes earlier in the year as noted above). We continue to place much emphasis and weight in our portfolios with defensive managers who are quality focused and/or income orientated. This is indicative of our view that the economic recovery, albeit weak, will be sustained, thus providing sufficient support to corporate earnings. Corporate balance sheets are generally in a very healthy state and, following the recent market falls, equity valuations appear, in our opinion, to be relatively attractive rather than rich. That said, we remain vigilant on the downside risks in asset prices and ready to respond should these show signs of materialising. Our current key concerns in this respect include governments going too far in their zeal to tighten and embrace fiscal austerity, and derailing the still fragile economic recovery; markets having to riot before the European Central Bank is forced into more committed and affirmative action to 3
Manager s Investment Report continued support the Euro area; labour and housing markets taking a notable turn for the worse triggering a significant retrenchment in consumers. Also the danger that any of these happen at a time when most fiscal policies, used to reflate a global economy that is still struggling to regain its feet, have been spent. With western interest rates near zero, we believe further efforts on the fiscal stimulus front could be tough given the markets current concern on fiscal deficits. Legal & General (Unit Trust Managers) Limited (Investment Adviser) 5 August 2010 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 non-ucits 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 2 September 2010 5
Portfolio Statement Portfolio Statement as at 15 July 2010 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 2010. Holding/ Market % of Nominal Value Net Value Investment Assets Funds investing in Overseas shares - 40.36% (45.23%) 1,850,771 CF Morant Wright Japan B 3,509,616 1.87 1,108,956 First State Asian Equity Plus 21,059,318 11.24 1,787,926 First State Latin American Fund 3,119,931 1.66 72,379 GLG Alpha Select UCITS III E 7,327,625 3.91 762,352 Guinness Global Energy 4,041,011 2.16 2,370,966 Investec American Fund A Acc 3,696,810 1.97 23,082,289 Jupiter International Financials 10,659,401 5.69 2,242,059 Lazard Emerging Markets Fund 5,051,894 2.70 898,568 Neptune Russia and Greater Russia Fund B Acc 2,836,779 1.51 107,185 Veritas Global Equity Income A 14,342,253 7.65 75,644,638 40.36 Funds investing in UK shares - 17.19% (17.55%) 7,432,492 Artemis Income Fund 11,385,232 6.08 4,094,863 Invesco Perpetual High Income 11,825,145 6.31 840,539 Invesco Perpetual High Income Acc 3,679,396 1.95 5,210,679 M&G Recovery Fund A Acc 5,335,735 2.85 32,225,508 17.19 Funds investing in Overseas fixed interest securities - 19.20% (13.64%) 24,533,028 Invesco Perpetual Global Bond Fund 18,463,835 9.85 12,577,123 Investec Emerging Markets Debt Fund 17,514,356 9.35 35,978,191 19.20 Funds investing in UK fixed interest securities - 22.48% (22.87%) 14,395,685 Invesco Perpetual Corporate Bond 11,541,163 6.16 25,969,818 M&G Optimal Income 30,582,073 16.32 42,123,236 22.48 Portfolio of investments 185,971,573 99.23 Net other assets 1,438,976 0.77 Total net assets 187,410,549 100.00 6
Financial Statements Statement of Total Return for the period ended 15 July 2010 15/07/10 15/07/09 Income Net capital gains 1,209,624 3,782,750 Revenue 2,944,176 2,885,585 Expenses (1,560,308) (675,796) Finance costs: Interest (2,628) (379) Net revenue before taxation 1,381,240 2,209,410 Taxation (22,618) (383,735) Net revenue after taxation for the period 1,358,622 1,825,675 Total returns before distributions 2,568,246 5,608,425 Finance costs: Distributions (2,377,256) (2,286,063) Change in net assets attributable to Unitholders from investment activities 190,990 3,322,362 Statement of Change in Net Assets attributable to Unitholders for the period ended 15 July 2010 15/07/10 15/07/09 Opening net assets attributable to Unitholders 169,183,331 120,433,645 Amounts received on creation of units 21,409,094 6,478,701 Less: Amounts paid on cancellation of units (3,903,917) (3,854,304) 17,505,177 2,624,397 Stamp Duty Reserve Tax (36,115) (14,517) Retained distribution on accumulation units 567,166 83,879 Change in net assets attributable to Unitholders from investment activities 190,990 3,322,362 Closing net assets attributable to Unitholders 187,410,549 126,449,766 The difference between the opening net assets and the comparative closing net assets in the movement in the second half of the year. 7
Financial Statements continued Balance Sheet as at 15 July 2010 ASSETS 15/07/10 15/01/10 Investment assets 185,971,573 167,983,183 Debtors 3,133,851 2,915,773 Cash and bank balances 365,218 864,365 Total other assets 3,499,069 3,780,138 Total assets 189,470,642 171,763,321 LIABILITIES Investment liabilities - - Creditors (723,071) (845,877) Bank overdrafts (420,432) (597,363) Distribution payable on distribution units (916,590) (1,136,750) Total other liabilities (2,060,093) (2,579,990) Total liabilities (2,060,093) (2,579,990) Net assets attributable to Unitholders 187,410,549 169,183,331 8
Notes to the Financial Statements as at 15 July 2010 1. Accounting policies The accounting policies applied are consistent with the most recent annual Financial Statements. (a) Basis of accounting 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 November 2008 ( the IMA SORP 2008 ). 9
Trust Facts Distribution information R-Class The distribution payable on 15 September 2010 is 0.3556p net per unit for distribution units and 0.3794p net per unit for accumulation units. Total Expense Ratio R-Class 15 Jul 10 15 Jan 10 Trust expenses 1.87% 1.80% Performance fees 0.35% 0.57% Total 2.22% 2.37% 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. Portfolio Turnover Rate 6 months to Year to 15 Jul 10 15 Jan 10 Total purchases for the period 64,763,352 67,414,760 Total sales for the period 47,823,224 44,750,672 Portfolio Turnover Rate 47.68% 57.03% The Portfolio Turnover Rate (PTR) gives an indication of how much the Trust s investments have changed during the period. As the Trust pays for any charges involved with buying and selling investments, the higher the percentage, the more costs it has paid. 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 (1) R-Class Distribution Units 118,588,075 45.28p 261,884,756 Accumulation Units 1,845,570 46.02p 4,010,056 15 January 10 R-Class Distribution Units 142,597,699 54.98p 259,375,136 Accumulation Units 26,585,632 57.84p 45,966,350 15 July 10 R-Class Distribution Units 142,019,917 55.10p 257,744,409 Accumulation Units 45,390,632 58.79p 77,195,955 Unit Price Range and Net Revenue R-Class Units Highest Offer Lowest Bid Net Year Price Price Revenue Distribution Units 2008 (1) 54.28p 40.53p 0.7066p 2009 57.60p 42.08p 1.6240p 2010 (2) 60.51p 53.46p 0.7938p Accumulation Units 2008 (1) 54.28p 41.18p 0.7093p 2009 60.52p 43.25p 1.6727p 2010 (2) 64.20p 56.69p 0.8404p (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 2010 and net revenue per unit to 15 September 2010. Past performance is not a guide to future performance. The price of units and 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: Period end dates for distributions: Distribution dates: 15 January Minimum initial lump sum investment: 500 Minimum monthly contribution: 50 Valuation point: 15 January, 15 April, 15 July, 15 October 15 March, 15 June, 15 September, 15 December 12 noon Management charge: Annual 1%* Performance fee charges: Initial charge: 5% Please refer to Simplified Prospectus. * With effect from 1 October 2009 when the Registrar s charge became 0.15%, the annual management charge was temporarily reduced by 0.15%. This reduction still applies at the balance sheet date, but may be withdrawn at some future date. Pricing and Dealing The prices are published on the internet at http://www.legalandgeneral.com/investment/fundprice_multi_manager.jsp 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 interim or annual 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 or braille. If you would like to discuss your particular requirements, please contact us on 0370 050 0955. Call charges will vary. We may record and monitor calls. Significant Changes Calculation of Unit Prices From 7 June 2010, the way we price units in this Trust changed. Each day, two unit prices are calculated: The Creation Price - based on the price of buying all the Trust s assets plus any costs involved, and; The Cancellation Price - based on the price of selling all the Trust s assets less any costs involved. The difference between these two prices is known as `the spread. Prior to 7 June 2010, we based our daily dealing price on either the creation or cancellation price, depending on the volume of overall transactions in the Trust for that valuation point. Generally, we would use the creation price if we were selling more units to clients than we were buying back and the cancellation price if we were buying back more units from clients than we were selling. This price would then become the `published bid price - we would then add any applicable initial charge to arrive at the `published offer price. From 7 June 2010, we will base the price of selling units to clients on the creation price and will refer to this as the `offer price (creation price plus any initial charge). The price at which we will buy back clients units will be based on the cancellation price and will be referred to as the `bid price. This means that there will be a difference between the selling (offer) and buying (bid) prices for units, being the spread plus any initial charge. Both the bid and offer prices are published on our website www.legalandgeneral.com/utprices. 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. Ellis M. J. Gregory S. R. Pistell S. D. Thomas Secretary A. Fairhurst Registrar Legal & General (Portfolio Management Services) Limited Customer Services P.O. Box 1004 Cardiff CF24 0YS 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 Hay s Galleria 1 Hay s Lane London SE1 2RD Investment Adviser 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 14
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