UK Alpha Trust - Value Rally

It has been a happy new year for equity investors, with the FTSE All-Share up 4.91% so far during 2012.* Investors have returned to a more positive mindset – for the time being, at least – and some of the cyclical stocks that were shunned last year have rebounded.

The Legal & General UK Alpha Trust has been able to benefit from this rally due to our focus on deep value and strong growth companies; the fund is up 5.98% year to date.* Some of the stocks we hold, for example Cap-XX, Hutchison China MediTech and Rambler Metals & Mining, have been strong performers in recent weeks. There are plenty of other stocks we hold, however, where we believe there is significant upside that the market has not yet recognised. Two examples are Central Asia Metals and eServGlobal.

Central Asia Metals has operations in Kazakhstan and Mongolia where it is exploring for copper, gold and molybdenum. Having had a tough time in the second half of 2011, the share price recently rose sharply on news that the company now has full ownership of the Kounrad Copper Project in Kazakhstan, where construction of the plant is largely complete and under budget. We remain holders of the stock.

eServGlobal is a long-term holding in the fund that we have continued to hold despite its share price being slow to recover from last August’s crash. The company specialises in mobile money solutions, which provides financial services to users without access to traditional banking infrastructure. We believe there is significant potential in this sector and our conviction is such that we are prepared to weather the current macro headwinds.

We take a long-term investment approach, so while the current rally has been encouraging it is of course only a small part of the story. Our focus remains on trying to position the portfolio in our highest conviction stock ideas.

Legal & General Investment Management February 2012

* Source: Lipper, % Growth Cumulative, GBP, Total Return, from 31/12/11 to 02/02/12.