Interim Management Statement

City Merchants High Yield Trust Limited

                         Interim Management Statement         
                 for the Three Months ended 30 September 2012

City Merchants High Yield Trust Limited (the `Company') is a Jersey
incorporated investment company listed on the London Stock Exchange. The
Company was incorporated on 19 December 2011 and commenced trading on 2 April
2012 following the scheme of reconstruction and voluntary winding up of City
Merchants High Yield Trust plc on 30 March 2012, as detailed in the prospectus
dated 23 February 2012.

Objective of the Company

The Company's investment objective is to seek to obtain both high income and
capital growth from investment, predominantly in high-yielding fixed-interest
securities.

The Company seeks to provide a high level of dividend income relative to
prevailing interest rates through investment in fixed-interest securities,
various equity-like securities within fixed-income markets and equity-linked
securities such as convertible bonds and in direct equities that have a high
income yield. It also seeks to enhance total returns through capital
appreciation generated by investments which have equity-related
characteristics.

Material Events

No material events, specifically in relation to the Company, occurred during
the period.

Dividends

The Company paid a first interim dividend of 2.6 pence per ordinary share on 24
August 2012 and a second interim dividend of 2.5 pence per ordinary share has
been declared, which will be paid on 30 November 2012, to shareholders on the
register on 26 October 2012.

As envisaged in the prospectus dated 23 February 2012, the Board continues to
target, on the basis of current market conditions, total dividends, for the
period from Admission to 31 December 2012, of 7.6 pence per share which,
together with the Special Dividend of 2.4 pence per share paid by City
Merchants High Yield Trust plc on 28 March 2012, will represent total dividends
of 10 pence per share in respect of the 12 months to 31 December 2012.

Market Background

High yield bonds performed strongly in absolute terms and relative to
government bonds in the third quarter and investor appetite for credit risk
strengthened.

According to data from Merrill Lynch, European high yield bonds had a total
return for the quarter of 6.1% (in sterling terms), the aggregate yield for
this market falling 165 basis points (bps) to 8.04%. This compares to a return
of 6.5% for sterling investment grade corporate bonds and 1.2% for Gilts. In
sector terms, investment grade financials were strong, returning 8.6% compared
to 5.0% for non-financials. Within financials, subordinated bank debt,
sensitive to developments in the eurozone debt crisis, outperformed. Sterling
Tier 1 subordinated bank debt returned 11.2%, its aggregate yield falling
184bps to 8.18%. The yield spreads for both subordinated bank capital and high
yield bonds remain significant.

Investor risk appetite was encouraged by increased efforts from policy makers
to address the problems in the eurozone and to stimulate economic growth.
European Central Bank President Draghi marked a significant shift in the bank's
policy when he said in July that it would do "whatever it takes" to support the
integrity of the single currency project. In September a plan was announced for
Outright Monetary Transactions, unlimited purchases (with some conditions
attached) in troubled sovereign markets to eliminate risk premia that the bank
perceives as being associated with market expectations of a sovereign's
departure from the euro. In the US, the Federal Reserve (Fed) unveiled a third
programme of quantitative easing, aimed at supporting economic recovery through
ongoing purchases of mortgage-backed securities. The Fed also indicated that it
now expects to maintain its current low interest rate policy until mid-2015.

From low levels in the summer months, high yield bond issuance rose sharply in
September to €10.2bn (across all currencies, data from Barclays), with
companies keen to take advantage of strong market conditions. Default rates
remain low. According to Moody's, the rolling 12 month European high yield rate
of default was 2.6% in August, down from 2.7% in July but up from 1.1% in
August 2011.

Portfolio Strategy & Outlook

We continue to favour better quality high-yield issuers as well as higher
yielding investment-grade companies. Yields have come down considerably, the
aggregate yield on European high yield having fallen in the quarter by 165bps
to 8.04%, according to Merrill Lynch. However, they remain at relatively high
levels and we believe we can still find opportunities, most notably in banks
and other financials. We think that the combination of structural reform,
conservative interpretations of Basel III guidelines and rising capital levels
will be a powerful support for subordinated bank debt for years to come. In our
opinion, aggregate yields on this type of debt offer real value despite their
increased volatility. Elsewhere, we believe we can still find select
opportunities across the high yield market. We expect that income will drive
total returns to a greater extent in coming quarters.

Despite the market rally we have seen in recent months, we have continued to
add new positions and add to existing positions where they have appeared to
offer value. Over this three month period we have, for example, added positions
in Techem 6.125% (utility) and in Telenet 6.25% and Telenet 6.75% (telecom) and
topped up our holding in Campofrio 8.25% (food). We sold out our positions in
Stena 6.125% (transport) and William Hill 7.125% (leisure).

Paul Read Paul Causer
Fund Managers
October 2012

.

Performance - Total Return

                                  3 Months      1 Year     3 Years     5 Years
                                                                              
Share Price                           7.8%       11.3%       29.0%       30.6%
                                                                              
Net Asset Value                       8.8%       16.5%       35.9%       39.9%
                                                                              
FTSE All-Share Index                  4.7%       17.3%       26.1%        8.7%
                                                                              
FTSE Government Securities -          1.1%        8.3%       25.2%       48.7%
                                                                              
All Stocks Index                                                              

Source: Thomson Reuters Datastream

The performance for the 1 year, 3 year and 5 year periods reflect the combined
performance of City Merchants High Yield Trust plc up to 30 March 2012 and that
of the Company from 2 April 2012.


Share Price and Discount

                                        As at    For the Three Months Ended    
                                                                               
                                 30 September         30 September 2012        
                                                                               
                                         2012                                  
                                                                               
                                                    High        Low     Average
                                                                               
Ordinary Shares mid-market             158.50     159.00     147.50      151.62
                                                                               
price (pence)                                                                  
                                                                               
Discount                                 2.2%                                  

Source: Thomson Reuters Datastream

.

Assets and Gearing

                            30 September 2012
                                             
Total Gross Assets (£m)                 117.9
                                             
of which cash (£m)                        6.0
                                             
Borrowings (£m)                             -
                                             
Cum Income Net Asset                   162.02
Value (pence)                                
                                             
Gross Gearing                              0%
                                             
Net Cash                                 5.1%

`Gross Gearing' reflects the amount of gross borrowings in use by the Company
and takes no account of any cash balances. It is based on gross borrowings as a
percentage of shareholders' funds. 'Net Cash' represents the excess of cash
held over borrowings.

.

Bond Rating

                               30 September 2012
                                                
AA-                                         0.0%
                                                
A+                                          0.0%
                                                
A                                           1.0%
                                                
A-                                          0.8%
                                                
BBB+                                        1.2%
                                                
BBB                                        10.3%
                                                
BBB-                                        2.5%
                                                
BB+                                         9.7%
                                                
BB                                          8.6%
                                                
BB-                                         5.6%
                                                
B+                                          3.4%
                                                
B                                           0.3%
                                                
B-                                          0.0%
                                                
CCC+                                        0.3%
                                                
CCC                                         0.0%
                                                
CCC-                                        0.0%
                                                
CC                                          0.0%
                                                
C                                           0.0%
                                                
D                                           0.0%
                                                
NR(including equity)                       56.3%
                                                
                                          100.0%

.

Top Ten Holdings

Ranking  Top Ten Holdings                                        % of
                                                                     
Now                                                         Portfolio
                                                                     
1        LBG Capital         7.975% Sept 2024 & 16.125%          5.8%
                             Dec 2024 & 6.439% May 2020 &            
                             6.385% May 2020 & 9% Dec 2019           
                                                                     
2        Premier Farnell     89.2p Cum Cnv Pref                  3.4%
                                                                     
3        Societe Generale    8.875% FRN Perpetual                3.3%
                                                                     
4        Aviva               6.125% Perpetual                    2.6%
                                                                     
5        Vedanta Resources   8.25% Jun 2021 & 4% Cnv Mar         2.5%
                             2017                                    
                                                                     
6        General Motors      Wts Jul 2016 & Jul 2019             2.4%
                                                                     
7        Intesa Sanpaolo     8.375% FRN Perpetual                2.2%
                                                                     
8        Citigroup           Common Stock & FRN 2067 & US        2.2%
                             Pref                                    
                                                                     
9        Cemex               9.25% May 2020 & 4.875% Mar         2.2%
                             2015                                    
                                                                     
10       Balfour Beatty      10.75p Gross Cum Cnv Red Pref       2.1%

.

Changes to Share Capital

                             Ordinary Shares of no par value
                                                            
                                       Issued       Treasury
                                                            
As at 30 Jun 2012                  72,786,327              0
                                                            
Ordinary shares bought back                 0              0
                                                            
Ordinary shares issued                      0              0
                                                            
As at 30 September 2012            72,786,327              0

The Company has authority to buy back shares and to issue new shares
(disapplying pre-emption rights), in each case within specified limits. The
Company expects to renew these authorities each year.

.

Price and Performance

The Company's Ordinary shares are listed on the London Stock Exchange and the
price is published in the Financial Times under `Investment Companies' and in
the Daily Telegraph under `Investment Trusts'.

The Company's net asset value is calculated daily and can be viewed on the
London Stock Exchange website at www.londonstockexchange.com.

Further information can be obtained from Invesco Perpetual as follows:

Free Investor Helpline: 0800 085 8677 (available Monday to Friday from 8.30am
to 6.00pm)

Internet address: www.invescoperpetual.co.uk/investmenttrusts

The information provided in this statement should not be considered as a
financial promotion or recommendation.

Issued for and on behalf of City Merchants High Yield Trust Limited

Contact:

Hilary Jones

R&H Fund Services (Jersey) Limited

Telephone: [phone]

18 October 2012