Legal & General Emerging Markets Government Bond (Local ...€¦ · the Legal & General Emerging...

Distribution Number 13

Legal & General Emerging Markets Government Bond (Local Currency) Index Fund

Annual Manager's Reportfor the year ended20 April 2019

Contents

Page Number

1

Manager's Investment Report* 2

Authorised Status* 4

Directors’ Statement 4

Statement of the Manager's Responsibilities 5

Statement of the Trustee’s Responsibilities 6

Report of the Trustee 7

Portfolio Statement* 8

Independent Auditor’s Report 18

Statement of Total Return 21

Statement of Change in Net Assets attributable to Unitholders 21

Balance Sheet 22

Notes to the Financial Statements 23

Distribution Tables 37

Fund Information* 41

Risk and Reward Profile (unaudited)* 50

General Information (unaudited)* 51

* These collectively comprise the Authorised Fund Manager’s Report.

2

Manager's Investment Report

Investment Objective and PolicyThe objective of the Fund is to provide a return in line with the JPMorgan GBI-EM Global Diversified Local Currency Index (after adjustment for management charges and taxation).

The Fund will invest primarily in the constituents of the JPMorgan GBI-EM Global Diversified Local Currency Index. Securities will be held with weightings generally proportionate to the weightings in the JPMorgan GBI-EM Global Diversified Local Currency Index. The bonds the Fund invests in will be composed primarily of securities issued by emerging market sovereign entities and which are denominated in the national currency of the issuer. Sub-investment grade bonds will be used.

The Fund may also invest in other transferable securities, permitted deposits, money market instruments, cash, near cash and units in collective investment schemes.

The Fund may hold derivatives for Efficient Portfolio Management purposes.

Manager's Investment ReportDuring the year under review, the bid price of the Fund’s I-Class accumulation units rose by 1.36%. JPMorgan Chase, the Index compiler, calculates the benchmark Index at the end of the business day using closing bid prices, whereas the Fund is valued using prevailing bid prices at 12 noon. Therefore, for tracking purposes the Fund has been revalued using closing prices. On this basis over the review year, the Fund rose by 1.76%, compared with a rise in the Index of 2.13% (Source: LGIM), producing a tracking difference of -0.37%.

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 ReviewDuring the year under review, global economic indicators highlighted continued expansion albeit amid a synchronised slowdown. The closely watched global manufacturing PMI (Purchasing Managers Index) composite Index, for example, fell back to its lowest level for three and a half years in February 2019. This was partly a result of the US-China trade dispute, but also reflected a slowdown in the Chinese economy. Worldwide, inflationary pressures have remained subdued by historical standards. Having risen to its highest level in four years in early October 2018, the Brent crude oil price declined sharply to just over $50 per barrel in December, its lowest level for 15 months, driven by increased levels of supply, notably US inventories, before rallying during the opening quarter of 2019.

Within Asia, the export-dependent economies of Taiwan and South Korea reported a sharp decline in manufacturing activity late in the review year. The Chinese economy grew at an annualised rate of 6.4% during the first quarter of 2019. This was the lowest growth rate since the global financial crisis, weighed down by the intensifying trade dispute with the US, weaker domestic demand, and escalating off-balance-sheet borrowings by local government.

Among other major emerging economies, in Brazil data releases have been disappointing with growth expectations for 2019 downgraded, although the Russian economy has now expanded for nine consecutive quarters, accelerating over the final months of 2018. Several emerging economies with relatively high debt levels

3

and current-account deficits also came under increased scrutiny, notably Turkey and Argentina.

Although market volatility rose on concerns that the Federal Reserve may be tightening monetary policy too aggressively, emerging bond markets have rallied since the turn of the calendar year as the Federal Reserve sounded a much more cautious tone on the need for further US interest-rate hikes.

Fund ReviewAll investment activity was prompted either by unitholder investment or redemption, or by changes in the profile of the benchmark. The Fund experienced net positive cash flow during the review year.

There were no significant changes in the Index or portfolio exposure over the review year, both in terms of currency or interest rate exposure. The largest portfolio country exposure changes included Chile increasing by approximately 0.9% and Peru by approximately 0.8%, in line with benchmark changes. The JPMorgan Index team consulted on the inclusion of China into the Index during the review year, but ultimately decided against announcing inclusion in 2018.

At the end of the review year, the Fund held 223 bonds issued by 19 countries. The Index consisted of 217 bonds issued by 19 countries.

OutlookLooking ahead, valuations are starting to appear stretched, and are increasingly pricing in a goldilocks environment of modest growth and supportive monetary policy. In the shorter term, a setback in either, such as accelerating inflation, or rising geopolitical tensions, would likely result in a market correction.

The Fund remains well placed to capture the performance of the Index.

Legal & General Investment Management Limited(Investment Adviser) 21 May 2019

Manager's Investment Report continued

Authorised Status

4

Authorised StatusThis Fund is an Authorised Unit Trust Scheme as defined in section 243 of the Financial Services and Markets Act 2000 and is a UCITS Retail Scheme within the meaning of the FCA Collective Investment Schemes sourcebook.

Directors’ StatementWe hereby certify that this Manager's Report has been prepared in accordance with the requirements of the FCA Collective Investment Schemes sourcebook.

A. J. C. Craven L. W. Toms(Director) (Director)

Legal & General (Unit Trust Managers) Limited20 June 2019

5

Statement of Responsibilities

Statement of the Manager's ResponsibilitiesThe Collective Investment Schemes sourcebook published by the FCA, ("the COLL Rules") require the Manager to prepare financial statements for each annual accounting period which give a true and fair view of the financial position of the Fund and of the net income and net gains or losses on the property of the Fund for the period.

In preparing the financial statements, the Manager is responsible for:

• selecting suitable accounting policies and then apply them consistently;

• making judgements and estimates that are reasonable and prudent;

• following UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland;

• complying with the disclosure requirements of the Statement of Recommended Practice for UK Authorised Funds issued by the Investment Management Association in May 2014;

• keeping proper accounting records which enable it to demonstrate that the financial statements as prepared comply with the above requirements;

• assessing the Fund's ability to continue as a going concern, disclosing, as applicable, matters related to going concern;

• using the going concern basis of accounting unless they either intend to liquidate the Fund or to cease operations, or have no realistic alternative but to do so;

• such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; and

• taking reasonable steps for the prevention and detection of fraud and irregularities.

The Manager is responsible for the management of the Fund in accordance with its Trust Deed, the Prospectus and the COLL Rules.

6

Statement of the Trustee's ResponsibilitiesThe Depositary in its capacity as Trustee of Legal & General Emerging Markets Government Bond (Local Currency) Index Fund must ensure that the Fund is managed in accordance with the Financial Conduct Authority’s Collective Investment Schemes Sourcebook, the Financial Services and Markets Act 2000, as amended, (together “the Regulations”), the Trust Deed and Prospectus (together “the Scheme documents”) as detailed below.

The Depositary must in the context of its role act honestly, fairly, professionally, independently and in the interests of the Fund and its investors.

The Depositary is responsible for the safekeeping of all custodial assets and maintaining a record of all other assets of the Fund in accordance with the Regulations.

The Depositary must ensure that:

• the Fund's cash flows are properly monitored and that cash of the Fund is booked in cash accounts in accordance with the Regulations;

• the sale, issue, repurchase, redemption and cancellation of units are carried out in accordance with the Regulations;

• the value of units of the Fund are calculated in accordance with the Regulations;

• any consideration relating to transactions in the Fund’s assets is remitted to the Fund within the usual time limits;

• the Fund’s income is applied in accordance with the Regulations; and

• the instructions of the Authorised Fund Manager (“the AFM”), which is the UCITS Management Company, are carried out (unless they conflict with the Regulations).

Statement of Responsibilities continued

7

Report of the Trustee

Report of the Trustee to the Unitholders of the Legal & General Emerging Markets Government Bond (Local Currency) Index Fund ("the Fund") for the year ended 20 April 2019The Depositary also has a duty to take reasonable care to ensure that the Fund is managed in accordance with the Regulations and the Scheme documents of the Fund in relation to the investment and borrowing powers applicable to the Fund.

Having carried out such procedures as we considered necessary to discharge our responsibilities as Depositary of the Fund, it is our opinion, based on the information available to us and the explanations provided, that, in all material respects the Fund, acting through the AFM:

(i) has carried out the issue, sale, redemption and cancellation, and calculation of the price of the Fund’s units and the application of the Fund’s income in accordance with the Regulations and the Scheme documents of the Fund; and

(ii) has observed the investment and borrowing powers and restrictions applicable to the Fund in accordance with the Regulations and the Scheme documents of the Fund.

Northern Trust Global Services SE UK BranchUK Trustee and Depositary Services20 June 2019

Portfolio Statement

8

Portfolio Statement as at 20 April 2019All investments are in investment grade securities unless otherwise stated. The percentages in brackets show the equivalent holdings at 20 April 2018.

Holding/ Nominal

Value Investment

Market Value

£

% of Net

Assets

TestNORTH AMERICA — 9.92% (9.71%) Test TestDominican Republic — 0.07% (0.00%)

DOP55,000,000 Dominican Republic International Bond 8.9% 15/02/20231 831,004 0.07

Mexico — 9.85% (9.71%) MXN160,000,000 Mexico Government International

Bond 8% 11/06/2020 6,520,076 0.54MXN427,300,000 Mexico Government International

Bond 6.5% 10/06/2021 16,916,993 1.40MXN139,900,000 Mexico Government International













Bond 8% 07/11/2047 3,554,295 0.29

119,430,336 9.85

CONTINENTAL EUROPE — 27.47% (27.39%) Czech Republic — 4.27% (3.94%)

CZK122,540,000 Czech Republic Government International Bond 3.75% 12/09/2020 4,244,806 0.35



Portfolio Statement continued

9

Holding/ Nominal

Value Investment

Market Value

£

% of Net

Assets

TestCzech Republic — (cont.) Test TestCZK98,420,000 Czech Republic Government

International Bond 0.45% 25/10/2023 3,136,042 0.26



CZK117,720,000 Czech Republic Government International Bond 1% 26/06/2026 3,751,696 0.31





51,833,125 4.27

Hungary — 4.45% (4.61%) HUF282,170,000 Hungary Government International

Bond 2% 30/10/2019 769,911 0.06HUF835,590,000 Hungary Government International

Bond 3.5% 24/06/2020 2,344,794 0.19HUF738,140,000 Hungary Government International

Bond 1% 23/09/2020 2,018,025 0.17HUF745,860,000 Hungary Government International

Bond 7.5% 12/11/2020 2,244,581 0.19HUF1,191,630,000 Hungary Government International



Bond 7% 24/06/2022 4,335,004 0.36HUF2,735,450,000 Hungary Government International






Bond 3% 27/10/2027 6,376,139 0.53HUF892,520,000 Hungary Government International

Bond 6.75% 22/10/2028 3,149,050 0.26

53,946,012 4.45

Poland — 8.88% (9.01%) PLN22,551,000 Poland Government International

Bond 1.5% 25/04/2020 4,557,245 0.38


10

Holding/ Nominal

Value Investment

Market Value

£

% of Net

Assets

TestPoland — (cont.) Test TestPLN36,394,000 Poland Government International

Bond 0% 25/07/2020 7,215,733 0.59PLN8,732,000 Poland Government International

Bond 5.25% 25/10/2020 1,860,955 0.15PLN31,938,000 Poland Government International












Bond 2.75% 25/04/2028 8,397,602 0.69

107,664,382 8.88

Romania — 2.49% (2.77%) RON13,530,000 Romania Government International

Bond 3.25% 22/03/2021 2,441,722 0.20RON17,430,000 Romania Government International


Bond 4% 27/10/2021 3,160,055 0.26RON13,800,000 Romania Government International







Bond 5.8% 26/07/2027 3,885,759 0.32

30,184,509 2.49

Russian Federation — 7.38% (7.06%) RUB305,145,000 Russian Federation 6.4% 27/05/2020 3,626,350 0.30RUB379,200,000 Russian Federation 7.6% 14/04/2021 4,558,184 0.38


11

Holding/ Nominal

Value Investment

Market Value

£

% of Net

Assets

TestRussian Federation — (cont.) Test TestRUB356,525,000 Russian Federation 7.5% 18/08/2021 4,272,594 0.35RUB776,733,000 Russian Federation 7% 15/12/2021 9,184,884 0.76RUB165,856,000 Russian Federation 7.6% 20/07/2022 1,983,611 0.16RUB744,810,000 Russian Federation 7.4% 07/12/2022 8,855,544 0.73RUB166,925,000 Russian Federation 7% 25/01/2023 1,957,885 0.16RUB407,182,000 Russian Federation 7% 16/08/2023 4,760,772 0.39RUB490,779,000 Russian Federation 6.5% 28/02/2024 5,587,923 0.46RUB539,371,000 Russian Federation 7.1% 16/10/2024 6,277,743 0.52RUB512,065,000 Russian Federation 7.75%

16/09/2026 6,077,515 0.50RUB610,566,000 Russian Federation 8.15%

03/02/2027 7,428,099 0.61RUB648,403,000 Russian Federation 7.05%

19/01/2028 7,339,750 0.61RUB168,855,000 Russian Federation 6.9% 23/05/2029 1,865,883 0.15RUB446,755,000 Russian Federation 8.5% 17/09/2031 5,513,297 0.46RUB553,845,000 Russian Federation 7.7% 23/03/2033 6,360,421 0.52RUB352,183,000 Russian Federation 7.25%

10/05/2034 3,837,146 0.32

89,487,601 7.38

SOUTH AMERICA — 24.24% (23.09%) Argentina — 0.49% (0.83%)

ARS146,084,000 Argentina Government International Bond 18.2% 03/10/20211 2,205,075 0.18

ARS125,435,000 Argentina Government International Bond 16% 17/10/20231 1,783,374 0.15

ARS132,627,902 Argentina Government International Bond 15.5% 17/10/20261 1,910,128 0.16

5,898,577 0.49

Brazil — 9.80% (9.90%) BRL2,200,000 Brazil Government International

Bond 0% 01/04/20201 4,041,441 0.33BRL12,855,000 Brazil Government International








Bond 10% 01/01/20271 11,840,596 0.98


12

Holding/ Nominal

Value Investment

Market Value

£

% of Net

Assets

TestBrazil — (cont.) Test TestBRL2,350,000 Brazil Government International

Bond 10% 01/01/20291 5,003,288 0.41

118,849,828 9.80

Chile — 3.32% (2.46%) CLP1,345,000,000 Chile Government International

Bond 5.5% 05/08/2020 1,605,657 0.13CLP1,765,000,000 Chile Government International



Bond 4% 01/03/2023 4,178,220 0.34CLP6,075,000,000 Chile Government International



Bond 5% 01/03/2035 9,815,174 0.81CLP5,570,000,000 Chile Government International

Bond 6% 01/01/2043 8,196,245 0.68

40,232,610 3.32

Colombia — 7.05% (7.05%) COP14,850,000,000 Colombia Government

International Bond 11% 24/07/2020 3,887,541 0.32COP87,500,700,000 Colombia Government




COP56,490,700,000 Colombia Government International Bond 7.5% 26/08/2026 14,752,288 1.21

COP57,630,000,000 Colombia Government International Bond 6% 28/04/2028 13,675,776 1.13

COP21,025,000,000 Colombia Government International Bond 7.75% 18/09/2030 5,541,231 0.46

COP30,600,000,000 Colombia Government International Bond 7% 30/06/2032 7,571,742 0.62

85,541,601 7.05

Peru — 3.40% (2.65%) PEN23,850,000 Peruvian Government International

Bond 5.7% 12/08/2024 5,924,717 0.49PEN21,775,000 Peruvian Government International




Bond 6.95% 12/08/2031 7,212,663 0.60


13

Holding/ Nominal

Value Investment

Market Value

£

% of Net

Assets

TestPeru — (cont.) Test TestPEN22,400,000 Peruvian Government International


Bond 6.9% 12/08/2037 5,779,362 0.48

41,187,597 3.40

Uruguay — 0.18% (0.20%) UYU29,911,000 Uruguay Government International

Bond 9.875% 20/06/2022 665,467 0.05UYU78,968,000 Uruguay Government International

Bond 8.5% 15/03/2028 1,537,145 0.13

2,202,612 0.18

AFRICA — 8.55% (8.65%) South Africa — 8.55% (8.65%)

ZAR66,674,000 South Africa Government International Bond 6.75% 31/03/2021 3,628,297 0.30



ZAR202,480,993 South Africa Government International Bond 8% 31/01/2030 10,277,571 0.85










103,627,304 8.55

ASIA — 24.30% (22.91%) Indonesia — 9.79% (9.05%)

IDR17,000,000,000 Indonesia Government International Bond 8.25% 15/09/2020 956,271 0.08


14

Holding/ Nominal

Value Investment

Market Value

£

% of Net

Assets

TestIndonesia — (cont.) Test TestIDR25,000,000,000 Indonesia Government


IDR138,215,000,000 Indonesia Government International Bond 8.25% 15/07/2021 7,770,975 0.64

IDR126,700,000,000 Indonesia Government International Bond 7% 15/05/2022 6,935,401 0.57



















15

Holding/ Nominal

Value Investment

Market Value

£

% of Net

Assets

TestIndonesia — (cont.) Test TestIDR105,000,000,000 Indonesia Government


118,772,244 9.79

Malaysia — 5.85% (5.66%) MYR19,850,000 Malaysia Government International

Bond 3.492% 31/03/2020 3,686,691 0.30MYR11,800,000 Malaysia Government International






Bond 3.795% 30/09/2022 762,007 0.06MYR9,700,000 Malaysia Government International
















Bond 4.762% 07/04/2037 4,110,306 0.34

70,889,502 5.85


16

Holding/ Nominal

Value Investment

Market Value

£

% of Net

Assets

TestPhilippines — 0.32% (0.29%) Test TestPHP39,000,000 Philippine Government

International Bond 4.95% 15/01/2021 576,223 0.05

PHP137,000,000 Philippine Government International Bond 3.9% 26/11/2022 1,958,387 0.16

PHP87,000,000 Philippine Government International Bond 6.25% 14/01/2036 1,404,274 0.11

3,938,884 0.32

Thailand — 8.34% (7.91%) THB142,417,000 Thailand Government International

Bond 2.55% 26/06/2020 3,469,781 0.29THB356,304,000 Thailand Government International



Bond 2% 17/12/2022 8,722,445 0.72THB214,205,000 Thailand Government International










Bond 2.875% 17/06/2046 6,599,772 0.54

101,110,946 8.34

MIDDLE EAST — 3.73% (6.50%) Turkey — 3.73% (6.50%)

TRY27,740,000 Turkey Government International Bond 9.4% 08/07/20201 3,177,874 0.26




TRY31,455,000 Turkey Government International Bond 11% 02/03/20221 3,224,849 0.27



17

Holding/ Nominal

Value Investment

Market Value

£

% of Net

Assets

TestTurkey — (cont.) Test TestTRY23,254,000 Turkey Government International

Bond 8.5% 14/09/20221 2,160,632 0.18TRY28,947,000 Turkey Government International






Bond 9% 24/07/20241 1,922,243 0.16TRY32,131,000 Turkey Government International





Bond 12.4% 08/03/20281 2,809,672 0.23

45,206,296 3.73

Portfolio of investments 1,190,834,970 98.21

Net other assets 21,679,917 1.79

Total net assets £1,212,514,887 100.00%

1 These are sub-investment grade fixed interest securities and represent 14.09% of the net assets of the Fund.

Total purchases for the year: £610,380,640.

Total sales for the year: £229,955,809.

Independent Auditor’s Report

18

Independent auditor's report to the Unitholders of Legal & General Emerging Markets Government Bond (Local Currency) Index Fund ('the Fund')OpinionWe have audited the financial statements of the Fund for the year ended 20 April 2019 which comprise the Statement of Total Return, the Statement of Changes in Net Assets Attributable to Unitholders, the Balance Sheet, the Related Notes and Distribution Tables for the Fund and the accounting policies set out on pages 23 to 24.

In our opinion, the financial statements:

• give a true and fair view, in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, of the financial position of the Fund as at 20 April 2019 and of the net revenue and the net capital losses on the property of the Fund for the year then ended; and

• have been properly prepared in accordance with the Trust Deed, the Statement of Recommended Practice relating to UK Authorised Funds, and the COLL Rules.

Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Fund in accordance with, UK ethical requirements including the FRC Ethical Standard.

We have received all the information and explanations which we consider necessary for the purposes of our audit and we believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

The impact of uncertainties due to the UK exiting the European Union on our audit Uncertainties related to the effects of Brexit are relevant to understanding our audit of the financial statements. All audits assess and challenge the reasonableness of estimates made by the Manager and related disclosures and the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and the Fund’s future prospects and performance.

Brexit is one of the most significant economic events for the UK, and at the date of this report its effects are subject to unprecedented levels of uncertainty of outcomes, with the full range of possible effects unknown. We applied a standardised firm-wide approach in response to that uncertainty when assessing the Fund’s future prospects and performance. However, no audit should be expected to predict the unknowable factors or all possible future implications for a fund and this is particularly the case in relation to Brexit.

Going concernThe Manager has prepared the financial statements on the going concern basis as they do not intend to liquidate the Fund to cease their operations, and as they have concluded that the Fund’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).

Independent Auditor’s Report continued

19

We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least a year from the date of approval of the financial statements. In our evaluation of the Manager’s conclusions, we considered the inherent risks to the Fund’s business model, including the impact of Brexit, and analysed how those risks might affect the Fund’s financial resources or ability to continue operations over the going concern period. We have nothing to report in these respects.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a guarantee that the Fund will continue in operation.

Other informationThe Manager (Legal & General (Unit Trust Managers) Limited) is responsible for the other information presented in the Annual Manager's Report together with the financial statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work:

• we have not identified material misstatements in the other information; and

• in our opinion the information given in Manager's Report for the financial year is consistent with the financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where under the COLL Rules we are required to report to you if, in our opinion:

• proper accounting records for the Fund have not been kept; or

• the financial statements are not in agreement with the accounting records.

Manager's responsibilitiesAs explained more fully in their statement set out on page 5, the Manager is responsible for: the preparation of financial statements that give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Fund or to cease operations, or have no realistic alternative but to do so.

Independent Auditor’s Report continued

20

Auditor's responsibilitiesOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.

The purpose of our audit work and to whom we owe our responsibilitiesThis report is made solely to the Fund’s unitholders, as a body, in accordance with Rule 4.5.12 of the Collective Investment Schemes sourcebook (‘the COLL Rules’) issued by the Financial Conduct Authority under section 247 of the Financial Services and Markets Act 2000. Our audit work has been undertaken so that we might state to the Fund’s unitholders those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Fund and the Fund’s unitholders as a body, for our audit work, for this report, or for the opinions we have formed.

Jatin Patelfor and on behalf of KPMG LLP, Statutory AuditorChartered Accountants15 Canada Square,London E14 5GL20 June 2019

Financial Statements

21

Statement of Total Returnfor the year ended 20 April 2019

20/04/19 20/04/18Notes £ £ £ £

Income

Net capital losses 3 (28,163,665) (31,702,696)

Revenue 4 61,042,100 32,419,913

Expenses 5 (2,285,275) (1,445,192)

Interest payable and similar charges 7 (32,651) (308,577)

Net revenue before taxation 58,724,174 30,666,144

Taxation 6 — —

Net revenue after taxation for the year 58,724,174 30,666,144

Total return before distributions 30,560,509 (1,036,552)

Distributions 7 (61,009,449) (32,111,336)

Change in net assets attributable to Unitholders from investment activities £(30,448,940) £(33,147,888)

Statement of Change in Net Assets attributable to Unitholders for the year ended 20 April 2019

20/04/19 20/04/18£ £ £ £

Opening net assets attributable to Unitholders 853,134,790 438,783,959

Amounts received on issue of units 519,951,542 448,848,603

Amounts paid on cancellation of units (135,339,635) (18,393,747)

Amounts paid on in-specie transactions (27,899,444) —

356,712,463 430,454,856

Change in net assets attributable to Unitholders from investment activities (30,448,940) (33,147,888)

Retained distributions on accumulation units 33,116,574 17,043,863

Closing net assets attributable to Unitholders £1,212,514,887 £853,134,790

Financial Statements continued

22

Balance Sheet as at 20 April 2019

20/04/19 20/04/18Notes £ £

ASSETS

Fixed assets:

Investments 1,190,834,970 838,239,796

Current assets:

Debtors 8 24,577,074 19,251,187

Cash and bank balances 9 22,365,896 10,154,868

Total assets 1,237,777,940 867,645,851

LIABILITIES

Creditors:

Bank overdrafts 9 (15,809,413) (4,854,496)

Distributions payable (8,155,949) (4,229,583)

Other creditors 10 (1,297,691) (5,426,982)

Total liabilities (25,263,053) (14,511,061)

Net assets attributable to Unitholders £1,212,514,887 £853,134,790

Notes to the Financial Statements

23

1. Statement of ComplianceThe Financial Statements have been prepared in compliance with UK Financial Reporting Standard 102 (FRS 102) and in accordance with the Statement of Recommended Practice for UK Authorised Funds issued by the Investment Management Association in May 2014 (2014 SORP).

2.SummaryofSignificantAccountingPolicies (a) Basis of Preparation

The Financial Statements have been prepared on a going concern basis, under the historical cost convention as modified by the revaluation of certain financial assets and liabilities measured at fair value through profit or loss.

The principal accounting policies which have been applied consistently are set out below.

(b) Functional and Presentation Currency The functional and presentation currency of the Fund is Sterling.

(c) Recognition of RevenueBond revenue is accounted for on an effective yield basis, calculated with reference to the purchase price. If the Manager believes that future commitments will not be met due to the bond issuer showing signs of financial distress, revenue accruals will be discounted. Any resultant revenue from these issues will then be treated on a receipts basis.

All other revenue is recognised on an accruals basis.

(d) Treatment of ExpensesAll expenses (other than those relating to the purchase and sale of investments) are charged against revenue on an accruals basis.

(e) Distribution PolicyThe policy is to distribute all available revenue, after deduction of those expenses which are chargeable in calculating the distribution. In order to conduct a controlled dividend flow, interim distributions will be at the Manager’s discretion, up to a maximum of the distributable revenue for the period. All remaining revenue is distributed in accordance with the COLL.

Fund Management Fees are deducted from capital for the purpose of calculating the distribution. This increases the amount of the distribution paid, but reduces the capital growth potential of the Fund. Marginal tax relief is not accounted for in determining the distribution.

Distributions which have remained unclaimed by Unitholders for over six years are credited to the capital property of the Fund.

Notes to the Financial Statements continued

24

(f) Basis of Valuation of InvestmentsAll investments are valued at their fair value as at 12 noon on 19 April 2019, being the last working day of the accounting year. The fair value for non-derivative securities is bid market price, excluding any accrued interest. The fair value for derivative instruments is the cost of closing out the contract on the last working day of the accounting year.

Where values cannot be readily determined, the securities are valued at the Manager’s best assessment of their fair and reasonable value.

(g) TaxationProvision is made for taxation at current rates on the excess of investment revenue over expenses.

Deferred tax is provided for on all timing differences that have originated but not reversed by the balance sheet date, other than those differences that are regarded as permanent. Any liability to deferred tax is provided for at the average rate of tax expected to apply.

(h) Foreign ExchangeTransactions in foreign currencies are translated at the rate of exchange ruling on the date of the transaction. Where applicable, assets and liabilities denominated in foreign currencies are translated into Sterling at the rates of exchange ruling at 12 noon on 19 April 2019, being the last working day of the accounting year.

Comparative End Page

3. Net capital losses

20/04/19 20/04/18

£ £

The net capital losses during the year comprise: (28,163,665) (31,702,696)

Non-derivative securities (28,874,551) (30,895,393)

Forward currency contracts 1,490,459 139,737

Currency losses (779,573) (947,040)

Net capital losses (28,163,665) (31,702,696)

4. Revenue

20/04/19 20/04/18

£ £

Bond interest 60,980,368 32,111,085

Bank interest 61,732 308,828

61,042,100 32,419,913Space – –

2.SummaryofSignificantAccountingPoliciescontinued


25

5. Expenses

20/04/19 20/04/18

£ £

Payable to the Manager, associates of the Manager and agents of either of them:

Fund management fees 2,285,275 1,445,192

Total expenses 2,285,275 1,445,192

Audit fees of £11,330 plus VAT of £2,266 have been borne by the Manager out of its fund management fee. In the prior year, the total audit fee was £11,000 plus VAT of £2,200.


26

6. Taxation (a) Analysis of taxation charge in year

20/04/19 20/04/18

£ £

Corporation tax — —

Current tax [note 6(b)] — —

Deferred tax [note 6(c)] — —

Total taxation — —

(b) Factors affecting taxation charge for the yearThe current tax charge excludes capital gains and losses for the reason that Authorised Unit Trusts are not subject to Corporation Tax on these items. Current tax differs from taxation assessed on net revenue before taxation as follows:

Net revenue before taxation 58,724,174 30,666,144

Net revenue before taxation multiplied by the applicable rate of Corporation tax of 20% (2018: 20%) 11,744,835 6,133,229

Effects of:

Interest distributions deductible for tax purposes (11,744,835) (6,133,229)

Current tax — —

(c) Provision for deferred taxThere is no deferred tax provision in the current or preceding year.


27

7. DistributionsThe distributions take account of revenue received on the creation of units and revenue deducted on the cancellation of units and comprise:

20/04/19 20/04/18

£ £

First interim distribution 13,148,860 8,943,346

Second interim distribution 13,085,750 8,689,622

Third interim distribution 18,480,238 9,415,193

Final distribution 17,724,721 8,077,793

62,439,569 35,125,954

Add: Revenue deducted on cancellation of units 1,306,015 117,179

Add: Revenue deducted on in-specie transactions 42,644 —

Less: Revenue received on creation of units (2,778,779) (3,131,797)

Distributions for the year 61,009,449 32,111,336

Interest payable and similar charges

Bank overdraft interest 32,651 308,577

61,042,100 32,419,913

The differences between the net revenue after taxation and the distributions for the year are as follows:

20/04/19 20/04/18

£ £

Net revenue after taxation for the year 58,724,174 30,666,144

Add: Expenses charged to capital 2,285,275 1,445,192

Distributions for the year 61,009,449 32,111,336

8. Debtors

20/04/19 20/04/18

£ £

Accrued revenue 22,237,950 14,836,360

Amounts receivable for creation of units 2,335,900 4,383,179

Receivable for foreign exchange contracts 3,224 31,648

24,577,074 19,251,187


28

9. Net uninvested cash

20/04/19 20/04/18

£ £

Cash and bank balances 22,365,896 10,154,868

Bank overdrafts (15,809,413) (4,854,496)

Net uninvested cash 6,556,483 5,300,372

10. Other creditors

20/04/19 20/04/18

£ £

Accrued expenses 142,637 99,246

Amounts payable for cancellation of units 150,000 2,000

Purchases awaiting settlement 1,005,054 5,325,736

1,297,691 5,426,982

11. Contingent liabilities and outstanding commitmentsThere were no contingent liabilities or outstanding commitments at the balance sheet date (20 April 2018: same).


29

12. Financial Instruments and Associated RisksThe investments of a Fund in financial securities and derivatives are subject to normal market fluctuations and other risks inherent in investing in such instruments. Legal & General (Unit Trust Managers) Limited (UTM) is the Authorised Fund Manager and has responsibility for ensuring appropriate risk management processes are implemented for each Unit Trust.

The UTM Board has delegated the risk oversight function to the Fund Manager Oversight Committee (FMOC), a committee of the Legal & General Investment Management (Holdings) Limited (LGIMH) Board that meets monthly. The primary objective of the FMOC is to ensure proper oversight of the investment management activities and associated services performed by LGIM, its delegates and other Fund Managers, under the Investment Management Agreement (IMA), on behalf of UTM in its capacity as Authorised Fund Manager. The committee consists of senior members of LGIMH and members of the UTM Board. Other senior staff members are also in attendance, as required by the agenda.

Each Fund has Investment Guidelines, an Investment Objective and Investment Restrictions, against which the fund manager will operate. These are set out in Schedule 1 of the IMA between LGIM and UTM. The Schedule is maintained by each fund manager, reviewed by the LGIM Operational Risk and Compliance Teams and approved senior members of LGIMH on behalf of the UTM board. The Schedule provides the detail needed to determine the risk profile for each fund. Fund managers are not permitted to invest into any new instruments without first gaining approval from UTM.

The Investment Objective and Policy of this Fund is detailed on page 2.

(a) Market Risk arising from other price riskMarket Risk arises mainly from uncertainty about future prices. It represents the potential loss the Fund may suffer through holding market positions in the face of market movements.

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting similar instruments traded in the market.

The assets held by the Fund can be seen in the Portfolio Statement starting on page 8. Movements in the prices of these investments result in movements in the performance of the Fund. The Manager adheres to the investment guidelines established in the Trust Deed, the Prospectus, the COLL and the Fund’s IOG, and in this way, monitors and controls the exposure to risk from any type of security, sector or issuer.

At 20 April 2019, if the price of the investments held by the Fund increased or decreased by 5%, with all other variables remaining constant, then the net assets attributable to unitholders would increase or decrease by approximately £59,541,749 (20 April 2018: £41,911,990).


30

(b) Interest Rate RiskInterest Rate Risk is the risk of movements in the value of financial instruments as a result of fluctuations in interest rates.

The Fund is exposed to interest rate risk through its holdings in debt securities. The market value of debt securities and any floating rate payments from debt securities held (and interest rate swaps) may fluctuate as a result of changes in interest rates. This risk is managed by the active monitoring and adjustment of the investments held by the Fund, in line with the stated investment objective and policy of the Fund.

At 20 April 2019, if interest rates on the Fund increased or decreased by 1 basis point, with all other variables remaining constant, then the net assets attributable to unitholders would increase or decrease by approximately £634,145 (20 April 2018: £435,952). This represents the Manager's best estimate of a reasonable possible shift in interest rates, having regard to historical volatility of those rates.

The interest rate profile of the Fund's net assets and liabilities at the balance sheet date was:

20/04/19Total £'000

Floating rate

£'000

Fixed rate

£'000

No interest

£'000Portfolio 1,190,835 — 1,190,835 —Other assets 46,943 22,366† — 24,577 Other liabilities (25,263) (15,809)† — (9,454)Total 1,212,515 6,557 1,190,835 15,123

20/04/18Total £'000

Floating rate

£'000

Fixed rate

£'000

No interest

£'000Portfolio 838,240 — 838,240 —Other assets 29,406 10,155† — 19,251Other liabilities (14,511) (4,854)† — (9,657)Total 853,135 5,301 838,240 9,594

† The Fund’s floating rate other assets and liabilities are represented by its bank balances and overdraft facilities. Cash is deposited, and overdraft facilities utilised, on normal commercial terms and earn or bear interest based on LIBOR.

12. Financial Instruments and Associated Risks continued


31

Fixed Rate Financial Assets

Weighted average Interest rate

%

Weighted average Period for which Rateisfixed

YearsCurrency 20/04/19 20/04/18 20/04/19 20/04/18

Argentina Peso 12.78 17.70 4.71 5.81Brazilian Real 7.45 7.66 3.49 3.75Chilean Peso 3.85 4.17 11.85 12.11Colombian Peso 5.95 5.80 6.75 6.89Czech Koruna 1.77 1.16 6.32 5.87Dominican Peso 9.06 — 3.83 —Hungarian Forint 1.67 1.23 4.77 4.75Indonesian Rupiah 7.59 6.76 8.95 9.92Malaysian Ringgit 3.82 3.91 6.18 6.23Mexican Peso 8.08 7.42 8.64 9.25Peruvian Sol 5.26 4.97 10.81 11.01Philippine Peso 5.05 5.03 3.61 12.56Polish Zloty 2.10 2.17 4.58 4.61Romanian Leu 4.22 3.64 4.21 4.11Russian Ruble 7.86 6.96 6.44 6.73South African Rand 9.08 8.45 15.91 16.16Thai Baht 2.35 2.09 8.48 6.89Turkish Lira 20.09 12.96 4.44 4.88Uruguay Peso 10.58 9.19 7.18 7.16US Dollar 4.54 4.56 7.42 7.53

The bonds shown in the Portfolio Statement with open maturity dates are assumed to mature on 31 December 2049 for the purpose of calculating the weighted average period for which the rate is fixed.

12. Financial Instruments and Associated Risks continued (b) Interest Rate Risk continued


32

(c) Foreign Currency RiskForeign Currency Risk is the risk of movements in the value of financial instruments as a result of fluctuations in exchange rates. This risk may be managed by the use of forward currency contracts or currency futures as necessary.

Forward currency contracts were utilised during the current and the preceding year.

At 20 April 2019, if the value of Sterling increased or decreased by 1% against all currencies, with all other variables remaining constant, then the net assets attributable to unitholders would increase or decrease by approximately £11,985,772 (20 April 2018: £8,582,501).

The direct foreign currency profile of the Fund's net assets at the balance sheet date was:

Net foreign currency assets

20/04/19 Currency

Monetary exposures

£'000

Non-monetary exposures

£'000Total £'000

Argentine Peso 407 5,899 6,306Brazilian Real 1 118,850 118,851Chilean Peso — 38,627 38,627Colombian Peso 18 85,542 85,560Czech Koruna 499 51,833 52,332Dominican Peso — 831 831Hungarian Forint 2 53,946 53,948Indonesian Rupiah 6 118,772 118,778Malaysian Ringgit — 70,890 70,890Mexican Peso 51 119,430 119,481Peruvian Sol 85 41,188 41,273Philippine Peso — 2,991 2,991Polish Zloty 786 107,664 108,450Romanian Leu 8 30,185 30,193Russian Ruble 464 89,488 89,952South African Rand 16 103,627 103,643Thai Baht — 101,111 101,111Turkish Lira 27 45,206 45,233Uruguay Peso — 2,203 2,203US Dollar 5,374 2,553 7,927



33

Net foreign currency assets

20/04/18 Currency

Monetary exposures

£'000

Non-monetary exposures

£'000Total £'000

Argentine Peso 561 7,063 7,624Brazilian Real 1 84,497 84,498Chilean Peso — 20,787 20,787Colombian Peso 3,245 60,138 63,383Czech Koruna 666 33,570 34,236Hungarian Forint 977 39,319 40,296Indonesian Rupiah 1,600 77,191 78,791Malaysian Ringgit 383 48,296 48,679Mexican Peso 1,964 82,893 84,857Peruvian Sol 300 22,618 22,918Philippine Peso 25 1,583 1,608Polish Zloty 1,488 76,859 78,347Romanian Leu 635 23,644 24,279Russian Ruble 1,074 60,262 61,336South African Rand 1,207 73,804 75,011Thai Baht 704 67,526 68,230Turkish Lira 855 55,443 56,298Uruguay Peso 34 1,681 1,715US Dollar 4,292 1,065 5,357

( d) Credit RiskCredit Risk is the risk of suffering financial loss as a result of a counterparty to a financial transaction being unable to fulfil their financial obligations as they fall due.

Bonds or other debt securities involve credit risk to the issuer which may be evidenced by the issuer’s credit rating. Securities which are subordinated and/or have a lower credit rating are generally considered to have a higher credit risk and a greater possibility of default than more highly rated securities.

The Fund's investments in bonds expose it to the default risk of the bond issuer with regards interest payments and principal repayments. Bond holdings with low credit ratings (sub-investment grade) or those that are not rated by a reputable credit rating agency (unrated) are disclosed in the Portfolio Statement on pages 8 to 17.

This risk is managed by appraising the credit profile of financial instruments and issuers in line with the Fund's investment objective and policy.

(e) Liquidity RiskLiquidity Risk relates to the capacity to meet liabilities as they fall due. The primary source of this risk to the Fund is the liability to Unitholders for any cancellation of units.

This risk is minimised by holding a large proportion of readily realisable assets, cash balances and via access to overdraft facilities.

12. Financial Instruments and Associated Risks continued (c) Foreign Currency Risk continued


34

(f) Derivative Risk - Sensitivity AnalysisDerivative Risk arises from uncertainty about future market movements. This risk is managed by the policies shown within Market risk.

At the balance sheet date, no derivatives were held that could impact the Fund in a significant way (20 April 2018: same).

(g) Fair ValueThe fair value of a financial instrument is the amount for which it could be exchanged between knowledgeable, willing parties in an arm’s length transaction. There is no material difference between the value of the financial assets and liabilities, as shown in the financial statements, and their fair value.

The Statement of Recommended Practice for Financial Statements of UK Authorised Funds issued by the Investment Management Association in May 2014 requires the classification of the Fund’s financial instruments held at the year end into a 3 tiered fair value hierarchy. The 3 tiers of the hierarchy and the classification of the Fund’s financial instruments as at the balance sheet date were:

20/04/19 Basis of Valuation

Assets £

Liabilities £

Level 1 - Quoted Prices — —Level 2 - Observable Market Data 1,190,834,970 —Level 3 - Unobservable Data — —

Total 1,190,834,970 —

20/04/18 Basis of Valuation

Assets £

Liabilities £

Level 1 - Quoted Prices 60,262,180 —Level 2 - Observable Market Data 777,977,616 —Level 3 - Unobservable Data — —

Total 838,239,796 —

Level 1The unadjusted quoted price in an active market for assets or liabilities that the entity can access at the measurement date.

Level 2Valuation techniques using observable inputs other than quoted prices within Level 1.

Level 3Valuation techniques using unobservable inputs.



35

13. Portfolio transaction costsAs the Fund mainly invests in assets that are not subject to commissions or taxes, there are no transaction costs (20 April 2018: same).

Total purchases for the year: £610,380,640(20 April 2018: £500,388,556)

Total sales for the year: £229,955,809, including in-specie £27,527,079(20 April 2018: £55,030,123)

The average portfolio dealing spread, including the effect of foreign exchange, as at the balance sheet date was 0.35% (20 April 2018: 0.31%).

14. Unit classesA list of unit classes in issue and the fund management fee on each unit class can be found on page 51. The net asset value per unit of each unit class and the number of units in each class are given in the comparative tables on pages 42 to 49. The distributions per unit class are given in the distribution tables on pages 37 to 40. All classes have the same rights on winding up.

R-Class Distribution AccumulationOpening Units — —

Units issued 183,220 966,436

Units cancelled (12,476) (31,337)

Units converted — —

Closing Units 170,744 935,099

I-Class Distribution AccumulationOpening Units 100,590,362 315,071,810

Units issued 44,149,887 169,889,440

Units cancelled (13,714,160) (150,096,861)


Closing Units 131,026,089 334,864,389

C-Class Distribution AccumulationOpening Units 2,000 117,349,867

Units issued 9,685,323 292,301,674

Units cancelled (23,152) (17,037,450)


Closing Units 9,664,171 392,614,091

L-Class Distribution AccumulationOpening Units 663,282,910 196,361,920

Units issued 193,132,746 141,177,508

Units cancelled (7,437,947) (66,379,631)


Closing Units 848,977,709 271,159,797


36

15. Ultimate controlling party and related party transactionsThe Manager is regarded as a related party to the Fund because it provides key management personnel services to the Fund. The ultimate controlling party of the Manager is Legal & General Group Plc. Subsidiaries of Legal & General Group Plc are also considered related parties to the Fund.

Legal & General (Unit Trust Managers) Limited acts as the principal on all the transactions of the units in the Fund. The aggregated monies received through creations or paid on cancellations are disclosed in the statement of change in net assets attributable to unitholders.

Equalisation amounts relating to creations and cancellations of units are shown within note 7. Fees received by the Authorised Fund Manager from the Fund plus any rebates paid by the Authorised Fund Manager to the Fund are shown within notes 3, 4 and 5 as applicable. Any outstanding fees, amounts outstanding on creations or cancellations of units in the Fund, or rebates receivable by the Fund from the Manager are shown within notes 8 and 10 as applicable.

At the year end, the Manager and its associates held 25.57% (28.05% as at 20 April 2018) of the Fund's units in issue.

16. Post balance sheet market movementsAs at the close of business on the balance sheet date the Net Asset Value per I-Class accumulation unit was 65.74p. The Net Asset Value per I-Class accumulation unit for the Fund as at 12 noon on 19 June 2019 was 69.24p. This represents an increase of 5.32% from the year end value.

Distribution Tables

37

Distribution Tables for the year ended 20 April 2019Group 1: units purchased prior to a distribution period.

Group 2: units purchased during a distribution period.

Equalisation is the average amount of revenue included in the purchase price of all Group 2 units and is refunded to the holders of these units as a return of capital. As capital it is not liable to Income Tax but must be deducted from the cost of units for Capital Gains Tax purposes.

Period1st Interim Interest distribution in pence per unit 21/04/18 to 20/07/18 R-Class Distribution DistributionDistribution Units Revenue Equalisation 20/09/18 20/09/17Group 1 0.3902 — 0.3902 N/AGroup 2 0.2081 0.1821 0.3902 N/AR-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/09/18 20/09/17Group 1 0.3899 — 0.3899 N/AGroup 2 0.2536 0.1363 0.3899 N/AI-Class Distribution DistributionDistribution Units Revenue Equalisation 20/09/18 20/09/17Group 1 0.7394 — 0.7394 0.9716Group 2 0.2300 0.5094 0.7394 0.9716I-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/09/18 20/09/17Group 1 0.8267 — 0.8267 1.0347Group 2 0.4369 0.3898 0.8267 1.0347C-Class Distribution DistributionDistribution Units Revenue Equalisation 20/09/18 20/09/17Group 1 0.7420 — 0.7420 0.9730Group 2 — 0.7420 0.7420 0.9730C-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/09/18 20/09/17Group 1 0.8285 — 0.8285 1.0357Group 2 0.4657 0.3628 0.8285 1.0357L-Class Distribution DistributionDistribution Units Revenue Equalisation 20/09/18 20/09/17Group 1 0.7430 — 0.7430 0.9756Group 2 0.4811 0.2619 0.7430 0.9756L-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/09/18 20/09/17Group 1 0.8306 — 0.8306 1.0363Group 2 0.6212 0.2094 0.8306 1.0363

–

–

Distribution Tables continued

38

Period2nd Interim Interest distribution in pence per unit 21/07/18 to 20/10/18 R-Class Distribution DistributionDistribution Units Revenue Equalisation 20/12/18 20/12/17Group 1 0.6067 — 0.6067 N/AGroup 2 0.1590 0.4477 0.6067 N/AR-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/12/18 20/12/17Group 1 0.6112 — 0.6112 N/AGroup 2 0.2545 0.3567 0.6112 N/AI-Class Distribution DistributionDistribution Units Revenue Equalisation 20/12/18 20/12/17Group 1 0.6875 — 0.6875 0.7454Group 2 0.2746 0.4129 0.6875 0.7454I-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/12/18 20/12/17Group 1 0.7789 — 0.7789 0.8060Group 2 0.4675 0.3114 0.7789 0.8060C-Class Distribution DistributionDistribution Units Revenue Equalisation 20/12/18 20/12/17Group 1 0.6895 — 0.6895 0.7465Group 2 — 0.6895 0.6895 0.7465C-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/12/18 20/12/17Group 1 0.7809 — 0.7809 0.8072Group 2 0.3605 0.4204 0.7809 0.8072L-Class Distribution DistributionDistribution Units Revenue Equalisation 20/12/18 20/12/17Group 1 0.6913 — 0.6913 0.7477Group 2 0.4411 0.2502 0.6913 0.7477L-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/12/18 20/12/17Group 1 0.7832 — 0.7832 0.8087Group 2 0.3877 0.3955 0.7832 0.8087

–

–


39

Period3rd Interim Interest distribution in pence per unit 21/10/18 to 20/01/19 R-Class Distribution DistributionDistribution Units Revenue Equalisation 20/03/19 20/03/18Group 1 0.7553 — 0.7553 N/AGroup 2 0.1581 0.5972 0.7553 N/AR-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/03/19 20/03/18Group 1 0.7704 — 0.7704 N/AGroup 2 0.4374 0.3330 0.7704 N/AI-Class Distribution DistributionDistribution Units Revenue Equalisation 20/03/19 20/03/18Group 1 0.8571 — 0.8571 0.6998Group 2 0.5530 0.3041 0.8571 0.6998I-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/03/19 20/03/18Group 1 0.9829 — 0.9829 0.7661Group 2 0.7339 0.2490 0.9829 0.7661C-Class Distribution DistributionDistribution Units Revenue Equalisation 20/03/19 20/03/18Group 1 0.8615 — 0.8615 0.7010Group 2 — 0.8615 0.8615 0.7010C-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/03/19 20/03/18Group 1 0.9846 — 0.9846 0.7687Group 2 0.5800 0.4046 0.9846 0.7687L-Class Distribution DistributionDistribution Units Revenue Equalisation 20/03/19 20/03/18Group 1 0.8623 — 0.8623 0.7026Group 2 0.6520 0.2103 0.8623 0.7026L-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/03/19 20/03/18Group 1 0.9894 — 0.9894 0.7689Group 2 — 0.9894 0.9894 0.7689

–

–


40

PeriodFinal Interest distribution in pence per unit 21/01/19 to 20/04/19 R-Class Distribution DistributionDistribution Units Revenue Equalisation 20/06/19 20/06/18Group 1 0.7213 — 0.7213 N/AGroup 2 0.2824 0.4389 0.7213 N/AR-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/06/19 20/06/18Group 1 0.7477 — 0.7477 N/AGroup 2 0.4794 0.2683 0.7477 N/AI-Class Distribution DistributionDistribution Units Revenue Equalisation 20/06/19 20/06/18Group 1 0.8190 — 0.8190 0.5515Group 2 0.4510 0.3680 0.8190 0.5515I-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/06/19 20/06/18Group 1 0.9545 — 0.9545 0.6109Group 2 0.4276 0.5269 0.9545 0.6109C-Class Distribution DistributionDistribution Units Revenue Equalisation 20/06/19 20/06/18Group 1 0.8219 — 0.8219 0.5485Group 2 0.4767 0.3452 0.8219 0.5485C-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/06/19 20/06/18Group 1 0.9575 — 0.9575 0.6121Group 2 0.6260 0.3315 0.9575 0.6121L-Class Distribution DistributionDistribution Units Revenue Equalisation 20/06/19 20/06/18Group 1 0.8247 — 0.8247 0.5540Group 2 0.4915 0.3332 0.8247 0.5540L-Class Distribution DistributionAccumulation Units Revenue Equalisation 20/06/19 20/06/18Group 1 0.9609 — 0.9609 0.6136Group 2 — 0.9609 0.9609 0.6136

–

–

In the above tables, a distribution pay rate of N/A denotes that the Class was not in existence as at the applicable XD date, and therefore no distribution payment was made.

41

Fund Information

The Comparative Tables on pages 42 to 49 give the performance of each active share class in the Fund.

The ‘Return after charges’ disclosed in the Comparative Tables is calculated as the return after operating charges per unit divided by the opening net asset value per unit. It differs from the Fund's performance disclosed in the Manager's report, which is calculated based on the latest published price.

42

Comparative Tables

R-Class Distribution Units Change in Net Asset Value per Unit

Accounting Year ending 01/06/18 to 20/04/191

(pence per unit)

Opening net asset value per unit 50.00

Return before operating charges* 1.71 Operating charges (calculated on average price) (0.32)

Return after operating charges* 1.39

Distributions on income units^ (2.47)

Closing net asset value per unit 48.92

* after direct transaction costs of: —

Performance

Return after charges 2.78%

Other Information

Closing net asset value (£) 83,525 Closing number of units 170,744 Operating charges† 0.73% Direct transaction costs 0.00%

Prices

Highest unit price 50.99p Lowest unit price 46.44p

1 R-Class Distribution units launched on 1 June 2018.^ Distributions on income units are shown gross of taxation.† Operating charges, otherwise known as the OCF is the ratio of the Fund's total disclosable

costs (excluding overdraft interest) to the average net assets of the Fund. 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 price of units and any income from them may go down as well as up.


Fund Information continued

43

Start

R-Class Accumulation Units Change in Net Asset Value per Unit


(pence per unit)

Opening net asset value per unit 50.00

Return before operating charges* 1.79 Operating charges (calculated on average price) (0.32)

Return after operating charges* 1.47

Distributions^ (2.52) Retained distributions on accumulation units^ 2.52

Closing net asset value per unit 51.47

* after direct transaction costs of: —

Performance

Return after charges 2.94%

Other Information

Closing net asset value (£) 481,266 Closing number of units 935,099 Operating charges† 0.73% Direct transaction costs 0.00%

Prices

Highest unit price 52.56p Lowest unit price 46.80p

1 R-Class Accumulation units launched on 1 June 2018.^ Retained distributions on accumulation units are shown gross of taxation.† Operating charges, otherwise known as the OCF is the ratio of the Fund's total disclosable






Comparative Tables continued

44

I-Class Distribution Units Change in Net Asset Value per Unit


(pence per unit)

21/04/17 to 20/04/18

(pence per unit)

29/01/16 to 20/04/171

(pence per unit)

Opening net asset value per unit 57.98 60.55 50.00

Return before operating charges* 0.91 0.61 15.31 Operating charges (calculated on average price) (0.19) (0.21) (0.26)

Return after operating charges* 0.72 0.40 15.05

Distributions on income units^ (3.10) (2.97) (4.50)

Closing net asset value per unit 55.60 57.98 60.55

* after direct transaction costs of: — — —

Performance

Return after charges 1.24% 0.66% 30.10%

Other Information

Closing net asset value (£) 72,853,697 58,325,525 9,272,708 Closing number of units 131,026,089 100,590,362 15,314,188 Operating charges† 0.35% 0.35% 0.35% Direct transaction costs 0.00% 0.00% 0.00%

Prices

Highest unit price 58.74p 63.21p 65.48p Lowest unit price 52.65p 57.62p 49.08p

1 The Fund launched on 29 January 2016.^ Distributions on income units are shown gross of taxation.† Operating charges, otherwise known as the OCF is the ratio of the Fund's total disclosable







45

.

I-Class Accumulation Units Change in Net Asset Value per Unit


(pence per unit)

21/04/17 to 20/04/18

(pence per unit)

29/01/16 to 20/04/171

(pence per unit)




Distributions^ (3.54) (3.22) (4.61) Retained distributions on accumulation units^ 3.54 3.22 3.88



Performance


Other Information


Prices


1 The Fund launched on 29 January 2016.^ Distributions are shown gross of taxation. The amounts shown for 'Retained distributions on

accumulation units' are net of 20% income tax, except for distributions made from April 2017 onwards, which are paid on a gross basis.

† Operating charges, otherwise known as the OCF is the ratio of the Fund's total disclosable costs (excluding overdraft interest) to the average net assets of the Fund. 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.






46

.

C-Class Distribution Units Change in Net Asset Value per Unit


(pence per unit)

21/04/17 to 20/04/18

(pence per unit)

29/01/16 to 20/04/171

(pence per unit)







Performance


Other Information

Closing net asset value (£) 5,388,587 1,162 1,212 Closing number of units 9,664,171 2,000 2,000 Operating charges† 0.25% 0.25% 0.25% Direct transaction costs 0.00% 0.00% 0.00%

Prices









47

.

C-Class Accumulation Units Change in Net Asset Value per Unit


(pence per unit)

21/04/17 to 20/04/18

(pence per unit)

29/01/16 to 20/04/171

(pence per unit)







Performance


Other Information


Prices










48

.

L-Class Distribution Units Change in Net Asset Value per Unit


(pence per unit)

21/04/17 to 20/04/18

(pence per unit)

29/01/16 to 20/04/171

(pence per unit)







Performance


Other Information


Prices









49

.

L-Class Accumulation Units Change in Net Asset Value per Unit


(pence per unit)

21/04/17 to 20/04/18

(pence per unit)

29/01/16 to 20/04/171

(pence per unit)







Performance


Other Information


Prices







Exchange rate changes may cause the value of any overseas investments to rise or fall.Comparative Tables End



50

RiskandRewardProfile(unaudited)

*

1 2 3 4 5 6 7

Lower risk Higher risk

Potentially lower rewards Potentially higher rewards

• The Risk and Reward Indicator table demonstrates where the Fund ranks in terms of its potential risk and reward. The higher the rank the greater the potential reward but the greater the risk of losing money. It is not guaranteed to remain the same and may change over time. It is based on historical data and may not be a reliable indication of the future risk profile of the Fund. The shaded area in the table above shows the Fund’s ranking on the Risk and Reward Indicator.

• The Fund is in category five because it invests in company or government bonds which are sensitive to changes in interest rates, inflation and credit. This can be driven by political and economic changes and other significant events and may cause the value to go up and down. Bonds that are closer to their maturity date tend to be more stable in value. Bonds are generally considered to be higher risk investments than cash, but lower risk than company shares.

• Even a fund in the lowest category is not a risk free investment.

General Information (unaudited)

51

*

ConstitutionLaunch date: 29 January 2016

Period end dates for distributions: 20 January, 20 April, 20 Julyand 20 October

Distribution dates: 20 March, 20 June, 20 September and 20 December

Minimum initial lump sum investment: R-Class £100

I-Class £1,000,000C-Class* £100,000,000L-Class** £100,000

Valuation point: 12 noon

Fund management fees: R-Class 0.73%I-Class 0.35%C-Class* 0.25%L-Class** 0.14%

Initial charge: Nil for all existing unit classes

* Class C units are available to certain eligible investors who meet the criteria for investment in such units as outlined in the share class policy of the Manager, which is available to investors in the C Class upon request. Where investors in the C Class no longer continue to meet the criteria for investment in such units, further investment in such units may not be permitted.

** Class L units are only available to other Legal & General funds and/or companies which have entered into an agreement with the Manager or an affiliate of the Manager.

Pricing and DealingThe prices are published on the internet at www.legalandgeneral.com/investments/fund-information/daily-fund-prices 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 UnitsUnits may be bought on any business day from the Manager or through a financial adviser by 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 Fund 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.

General Information (unaudited) continued

52

Prospectus and Manager’s ReportsThe 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 on0370 050 0955.

Call charges will vary. We may record and monitor calls.

Information on Tracking ErrorThe ‘Tracking Error’ of a Fund is the measure of the volatility of the differences between the return of the Fund and the return of the benchmark Index. It provides an indication of how closely the Fund is tracking the performance of the benchmark Index after considering things such as Fund charges and taxation.

Using monthly returns, over the review year, the annualised Tracking Error of the Fund is 0.20%, whilst over the last three years to the end of April 2019, the annualised Tracking Error of the Fund is 0.23%. These Tracking Errors are within the anticipated Tracking Error levels set out in the Fund's Prospectus of +/-0.50% per annum.

EU Savings Directive The Fund has been reviewed against the requirements of the Directive 2003/48/EC on Taxation of savings in the form of interest payments (ESD), following the HM Revenue & Customs debt investment reporting guidance notes.

Under the Directive, information is collected about the payment of distributions to residents in certain other countries and is reported to HM Revenue & Customs to be exchanged with Tax authorities in those countries.

The Fund falls within the 25% debt investment reporting threshold. This means that details of all distributions and redemption proceeds paid to non UK investors will be reported by Legal & General (Unit Trust Managers) Limited to HM Revenue & Customs to be exchanged with the relevant Tax authorities.

Dual Pricing ArrangementThe Manager’s fixed dual pricing arrangement has a set spread to account for the costs of transacting in a particular Fund. 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 Fund in the form of a payment from the Manager. This provides an enhanced return to the Fund, though the size of any return will be dependent on the size of subscriptions and redemptions.


53

Remuneration DisclosureIn accordance with the Undertakings for collective investment in transferable securities (UCITs) Directive, often referred to as the UCITs V Directive, the Legal & General Emerging Markets Government Bond (Local Currency) Index Fund, as a UCITs Scheme, is required to disclose the aggregate remuneration paid by the UCITs Manager and by the UCITs Scheme to Identified Staff, together with the number of beneficiaries, and, where relevant, performance fees paid by the UCITs Scheme. The aggregate amount of remuneration must be broken down by category of employees or other staff members and be split into fixed and variable remuneration.

The following provides information on the remuneration of persons whose professional activities have a material impact on the management company and the funds managed by it as at 31 December 2018:

Controlled Functions

HeadcountFixed Remuneration

(£'000)Variable Remuneration

(£'000)

Remuneration related to this Fund

(Pro-rated) (£'000)

36 7,644 13,053 477

Market Risk Takers

HeadcountFixed Remuneration

(£'000)Variable Remuneration

(£'000)

Remuneration related to this Fund

(Pro-rated) (£'000)

24 2,667 3,393 19

Controlled FunctionsDuring 2018, Legal & General Unit Trust Managers Limited (UTM) engaged the services of seven employees of Legal & General Investment Management (Holdings) Limited (LGIMH), plus a further one employee of Legal & General Resources (LGR) to act as Director. In addition there was one non-executive Director. UTM also engaged the services of a further 24 LGIMH employees and a further three L&G Resources (LGR) employees to act in a variety of Controlled Functions, including Chief Compliance Officer, Money Laundering Reporting Officer, Client Asset Oversight, Systems and Controls Functions, Significant Management Functions and Customer Functions. These employees were also engaged by other companies in the L&G Group. The aggregate remuneration received by these individuals, for all their services across the L&G Group, is disclosed in the table above. We have prorated the remuneration figures by the Net Asset Value of the UCITS Funds as a percentage of the total assets under management of UTM.


54

Material Risk TakersDuring 2018, UTM engaged the services of Legal & General Investment Management’s Index Fund Management team, which consists of 24 investment professionals located in our London Office. The team includes a variety of Fund Managers, Analysts and Support Staff, with the Fund Managers empowered to take discretionary investment management decisions on behalf of the Fund. The team is also engaged in managing other Legal & General UTM Funds/Schemes and is also engaged by other companies in the L&G Group. The aggregate remuneration received by the members of the team, for all their services across the L&G Group, is disclosed in the table above. We have prorated the remuneration figures by the Net Asset Value of the UCITS Funds as a percentage of the total assets under management of the Legal & General Investment Management’s Index Fund Management team.

SignificantChangeNew Unit Class: R-ClassWith effect from 1 June 2018, R-Class units have been launched with accumulation and distribution units available.


55

Authorised Fund ManagerLegal & General (Unit Trust Managers) LimitedRegistered in England and Wales No. 01009418Registered office:One Coleman Street,London EC2R 5AATelephone: 0370 050 3350Authorised and regulated by the Financial Conduct Authority

Directors of the ManagerR. M. Bartley (resigned 31 December 2018)A. J. C. CravenS. Hynes H. MorrisseyH. SolomonS. D. Thomas (resigned 17 October 2018) L. W. TomsA. R. Toutounchi*M. J. Zinkula

*Non-executive Director

SecretaryJ. McCarthy

RegistrarLegal & General (Unit Trust Managers) LimitedP.O. Box 6080,Wolverhampton WV1 9RBAuthorised and regulated by the Financial Conduct Authority

Dealing: 0370 050 0956Enquiries: 0370 050 0955Registration: 0370 050 0955Call charges will vary. We may record and monitor calls.

Trustee Northern Trust Global Services SE UK BranchTrustee and Depositary Services50 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 AuditorsKPMG LLP 15 Canada Square,London E14 5GL

Investment AdviserLegal & General Investment Management LimitedOne Coleman Street,London EC2R 5AAAuthorised and regulated by the Financial Conduct Authority

Authorised and regulated by the Financial Conduct AuthorityLegal & General(Unit Trust Managers) LimitedRegistered in England and Wales No. 01009418Registered office:One Coleman Street,London EC2R 5AAwww.legalandgeneral.com

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