Foreign & Colonial Investment Trust bounces back in 2009

Foreign & Colonial Investment Trust ("FCIT") has published its annual results for the year ended 31 December 2009, showing a net asset value total return of 21.3%.

The trust - which became the world's first retail investment fund when it was founded in 1868 - also raised its dividend for the 39th consecutive year, by 3.1% to 6.65p per share.

The net asset value total return was slightly behind that of FCIT's benchmark (40% FTSE All Share and 60% FTSE All World ex UK), which produced a total return of 23.4%. However, the benchmark has no allocation to private equity, which - as predicted in the 2008 annual results statement - proved a drag on Foreign & Colonial's performance during 2009.

In contrast, stock selection contributed positively to performance, particularly in North America and Europe. At the start of 2009, fund manager Jeremy Tigue and the board of FCIT decided to take direct control over the trust's outsourced US large-cap managers, removing a third-party manager selection firm that had been in place since 2005. Tigue's long-term bullish view on emerging markets also paid off, with the 15% allocation to emerging markets and Developed Asia proving the biggest positive contributor to performance overall.

The inflation-beating dividend increase came against a backdrop of dividend cuts by many of FCIT's holdings, and was partly funded by dipping into the trust's considerable revenue reserve. However, the amount taken from the reserve is less than was paid into it in 2007 and 2008 as the result of VAT refunds. The Board has signalled its intention to at least maintain the dividend in 2010.

Since the year-end Tigue has brought the trust's Japan portfolio back in-house to F&C. It was outsourced to Goldman Sachs Asset Management in 2005, but F&C's internal team is now performing well under the leadership of Jamie Jenkins.

Commenting on the outlook for the year ahead, Foreign & Colonial Investment Trust chairman Mark Loveday said: "We will continue to strive for good and consistent relative outperformance over the long-term, and look to add value for shareholders through a virtuous circle of net asset value and share price total return, discount control management, dividend growth, a low and competitive total expense ratio and effective marketing."

During 2009, inflows into FCIT through savings schemes run by F&C were 80% higher than in 2008. These were particularly strong in the first half of the year, where extreme risk aversion against a backdrop of market uncertainty saw investors flock to the relative safety of broadly diversified global vehicles like FCIT. Some 41% of the trust's shares are now owned through F&C's savings schemes, which include tax-efficient Individual Savings Accounts and Child Trust Funds.

Foreign & Colonial Investment Trust will hold its AGM on 6 May. At the meeting Mark Loveday will retire and hand the chairmanship to Simon Fraser, who joined the FCIT Board in September 2009. Fraser was chief investment officer at Fidelity International from 1999 to 2005 and became a non-executive director of Barclays plc in 2009.