Half Yearly Report

RNS Number : 8092N

Mid Wynd Inter Inv Trust PLC

24 February 2009

 



MID WYND INTERNATIONAL INVESTMENT TRUST PLC

Results for the six months to 31 December 2008

In the six month to 31 December 2008, the Company's net asset value per share (after deducting borrowings at fair value) declined 22.9% while the FTSE World Index in sterling terms declined 10.1%. The share price declined by 26.0%.

	The speed and severity of events during the initial period when robust global growth changed to steep recession and a financial system in near collapse took the Managers by surprise. Performance was affected by the portfolio's exposure to emerging markets, industrial companies and oil related business.
	Sales or reductions have been made in companies particularly sensitive to capital expenditure, those reliant upon high oil prices today for their long term prospects and those with impending potential liquidity problems. The main purchases have been index-linked, convertible and corporate bonds.
	The revenue return increased 26.9% to 6.70p per share (31 December 2007: 5.28p) largely due to the increased exposure to bonds.
	An interim dividend of 6.50p (31 December 2007: 5.50p) will be paid on 7 April 2009 to shareholders on the register at the close of business on 13 March 2009.

The objective of Mid Wynd International Investment Trust PLC is to achieve capital and income growth by investing on a worldwide basis. 

Mid Wynd seeks to meet its objective of achieving capital and income growth through investment principally in a portfolio of international quoted equities. The proportion of the portfolio invested in UK companies will not normally exceed 25%. Further details of the Company's investment policy are given in the Directors' Report in the Annual Report and Accounts. 

The Company has total assets of £40.9m (before deduction of the bank loan of £2.3m) as at 31 December 2008.

Mid Wynd is managed by Baillie Gifford & Co, the Edinburgh based fund management group with around £38.3 billion under management and advice as at 23 February 2009.

Past performance is not a guide to future performance. The value of an investment and any income from it is not guaranteed and may go down as well as up and investors may not get back the amount invested. This is because the share price is determined by the changing conditions in the relevant stockmarkets in which the Company invests and by the supply and demand for the Company's shares. You can find up to date performance information about Mid Wynd at www.midwynd.co.uk

24 February 2009

- ends -

For further information please contact:

Michael MacPhee, Manager

Mid Wynd International Investment Trust PLC    0131 275 2000

Roland Cross, Director,

Broadgate Marketing                                          020 7726 6111

The following is the unaudited Half-Yearly Financial Report for the six months to 31 December 2008

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

Half-Yearly Financial Report 31 December 2008

Responsibility Statement

We confirm that to the best of our knowledge:

• the condensed set of financial statements has been prepared in accordance with the Accounting Standards Board's statement 'Half-Yearly Financial Reports';

• the Interim Management Report includes a fair review of the information required by Disclosure and Transparency Rules 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

• the Interim Management Report includes a fair review of the information required by Disclosure and Transparency Rules 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

PMS Barron 

Chairman

23 February 2009

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

Interim Management Report

Background

The world has shifted from robust growth and anxiety about inflation to a financial system in near collapse. Confidence and trust lie broken. We are in a sudden and deep recession. What should have been good news lies at the heart of the crisis. The competition globalisation brings and a near quadrupling of the global labour force involved in market economies over the past 25 years are excellent developments. The prolonged disinflation they have allowed was also excellent news. One can have too much of a good thing, however. An inadequate financial regulatory system and complacent central bankers combined with the unchanging forces of human nature led to uncontrolled credit expansion and what may be turning into debt deflation. 

Fixing the global banking system will take time. It collapsed through over leverage and abuse. The second round effect of debt default has really just begun and looks likely to be prolonged; so it can hardly be surprising that banks are unwilling, even where able, to make fresh loans. The response we have seen and seem sure to continue to see entails massive state intervention, plus monetary and fiscal stimulus on a scale and in ways never before attempted. This comes after a decade of ill-advised monetary stimulus and thereby mostly from a base of high debts and low savings, particularly in the US and UK. Government debt and deficits are also high and rising rapidly. Yet it should be clear that we cannot borrow our way out of debt, though we may try to inflate our way out of it. Excessive public sector debt will burden us for generations as a consequence of the policy response to this self-inflicted calamity and demographics will work against paying it down.

The world economy grew too fast for too long by borrowing growth from the future. It has a bad case of leverage and needs bed rest, not adrenaline administered by failed politicians. It is simply time for Western consumers to build up real savings from income as their apparent savings from asset price appreciation vanish. The current scale of wealth destruction is unprecedented in modern times and comfortably dwarfs even the unimaginably large amounts of money being printed and thrown at the problem. We should expect only to cushion the blow, not duck it. The way out of this tragedy must be catharsis. Predictions of rapid recovery six months away are likely to prove hollow.  

Some things are urgent and lacking. Regulation must improve. Modernised multi-lateral rules on transparency, capital, leverage, accounting and liquidity are needed. America's 1933 Glass Steagall Act separated old fashioned banking from investment banking and the public's savings from the sport of speculation. Its repeal in 1999 was a mistake. Credit is a drug that requires controls. Its suppliers need to be fully visible and fully regulated. Historians will take a very dim view of the past decade. The good news is that no one can now doubt things are bad and that hard work lies ahead. Thomas Edison told us that 'opportunity comes dressed in overalls and looks like hard work'. Long term opportunities are certainly arising. Prices are finally absorbing and reflecting reality rather than extrapolating boom and hope. 

Structurally, the East appears in better shape than the developed economies of the West. Savings rates are high and banking systems less stretched. This is especially true of China. However, time is needed to evolve away from reliance upon exports to the West and build domestic consumer led growth. In the short term, there is dislocation and consumption is depressed. Chinese policy is squarely aimed at reversing this trend. We must hope that the urge to devalue and reinvigorate dwindling trade surpluses can be resisted.

  Interim Management Report (Ctd)

Portfolio and Outlook

The six months to 31 December 2008 has been a dreadful period for investors and Mid Wynd has been severely affected. Our net asset value per share fell by 22.9% to 766.8p. This compares with falls of 22.6% in the FTSE All-Share Index and 10.1% in the FTSE World Index (in sterling terms) over the same period. 

Avoiding capital losses as this vicious spiral has unfolded has proved entirely beyond us. Mid Wynd struggled, particularly in the initial stages. Your manager was caught out by the speed and severity of events and failed to anticipate the sudden collapse that has left us in the worst recession since the Second World War. While avoiding much of the pain from owning bank stocks themselves, we have nonetheless suffered from the unanticipated consequences of the banking failure on our companies and their customers. Anticipating harder times for Western consumers was also correct but insufficient. 

Heavy exposure to emerging markets, industrial companies and oil related businesses has been our undoing. Your manager expects that supply shortage will be the primary long term driver of the oil price and related corporate investment intentions. A short term demand problem has meanwhile brought the price of oil down by 70% or so. Globalisation and infrastructure building remain critical to a better and less polluted world. In the last six months, however, trade has ground to a halt and investment has collapsed. China and perhaps Brazil, of the larger developing nations, both have clear potential to grow into thriving consumer societies. At present, falling commodity prices and a collapse in demand for manufactured exports are proving severe headwinds.

All forms of risk asset have endured their worst period in some decades - the Company's bond holdings have suffered as well as its equities. Owning assets, any assets, alongside distressed and de-leveraging sellers has been a chastening experience in price terms regardless of the underlying commercial performance of the assets in question. We have ourselves fallen victim to excessive leverage in the case of the CQS Rig Finance fund, which has been squeezed as the price of its bonds has fallen while the value of its debt has not.

Money, outside the gold standard, is backed not by tangible assets but by confidence. Confidence is in exceedingly short supply, the more so perhaps given abandonment of fiscal prudence across a range of major economies. We are in the hands of a monetary experiment that has no precedent. One answer is that of Bob Zoellick, Chairman of the World Bank, who advocates a new gold standard, with currencies backed by a basket of commodities and tangible assets including gold. There is a very wide range of fairly extreme possible outcomes from here. What is particularly unusual is the degree to which probability attaches to the extremes relative to the middle. 

At one end is accelerating inflation. If monetary authorities carry out their promises to print money and buy assets with it and are able to keep doing so for long enough and in sufficient size, this is nearly bound to happen. Index-linked bonds, especially those of Japan and America, would appear to offer cheap insurance with little downside in this event. We have been buyers of these bonds as equity markets bounced towards the end of the year. At the other end of the spectrum policy may simply fail in its goals, leading to a prolonged slump. In the case of Japan, which has endured just this for the past two decades, conventional bond yields were driven down to very low levels. This outcome would lead to further marked appreciation in government bonds and holding these would serve as a cushion against the inevitable falls in corporate profits. 

  Interim Management Report (Ctd)

Of course, it is usually a mistake to neglect the middle way, which would be that of low growth, 

negligible inflation, further falls and then gradual recovery in asset prices, employment, consumption and indebtedness. Some assets just look very cheap now. It is for this reason that convertible bonds and corporate bonds of companies we know well have found their way into the portfolio - Iron Mountain, Linde, Seadrill, Q Cells. These purchases have been funded from reductions or sales in companies particularly sensitive to capital expenditure or where long term prospects will be materially affected by presently lower energy prices. Examples include Apache, EnCana, Vallourec, Amec, Ultra, Aker Solutions, Opti Canada and Diamond Offshore. As the background has deteriorated companies with impending potential liquidity problems have also been sold. Harsco and Ivanhoe Mines fall into this category.

We may be approaching a point of maximum despair. Markets left hope, audacious or otherwise, behind some time ago. The Company's asset allocation has changed significantly over the past six months to reflect a very changed world. Fixed income represented over one fifth of our holdings and equities under three quarters at the end of the year, and this trend has continued subsequently. It is not sensible to make firm predictions about the outlook. Current circumstances are extreme and flexibility is critical. Cash flow generative, resilient businesses are at the heart of our strategy. More than ever, this would seem to be prudent.

Despite very disappointing results in this half year, by far our worst for a decade, Mid Wynd shares have produced a net asset value capital return of 36% over the ten years to the end of 2008, or roughly 3.1% per annum. Equities, as represented by the FTSE World Index, have returned -0.1% per annum (in sterling terms, capital only), going from expensive to fairly good value over this period. The Company's revenue picture is quite encouraging. The recent shift in asset allocation and the yields we have been able to capture should underpin healthy improvement in revenues, which rose 27% to 6.70p, and offer the chance to achieve better real returns and certainly better total returns over the coming decade. The Board has increased the interim dividend by 18% to 6.50p.

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

INCOME STATEMENT

(unaudited)

	For the six months ended 31 December 2008			For the six months ended 31 December 2007			For the year ended 30 June 2008
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Realised (losses)/gains on investments	-	(3,420)	(3,420)	-	1,885	1,885	-	2,115	2,115
Unrealised (losses)/gains on investments	-	(7,548)	(7,548)	-	867	867	-	(2,662)	(2,662)
Currency (losses)/gains	-	(187)	(187)	-	(233)	(233)	-	89	89
Income from investments and interest receivable	549	-	549	467	-	467	1,550	-	1,550
Other income	4	-	4	4	-	4	11	-	11
Investment management fee	(50)	(50)	(100)	(67)	(67)	(134)	(129)	(129)	(258)
Recoverable VAT	-	-	-	-	-	-	111	55	166
Other administrative expenses	(82)	-	(82)	(82)	-	(82)	(153)	-	(153)
Net return before finance costs and taxation	421	(11,205)	(10,784)	322	2,452	2,774	1,390	(532)	858
Finance costs of borrowings	(9)	(9)	(18)	(13)	(13)	(26)	(22)	(52)	(74)
Net return on ordinary activities before taxation	412	(11,214)	(10,802)	309	2,439	2,748	1,368	(584)	784
Tax on ordinary activities	(75)	13	(62)	(43)	16	(27)	(348)	39	(309)
Net return on ordinary activities after taxation	337	(11,201)	(10,864)	266	2,455	2,721	1,020	(545)	475
Net return per ordinary share (note 4)	6.70p	(222.78p)	(216.08p)	5.28p	48.83p	54.11p	20.29p	(10.85p)	9.44p
Note: Dividends paid and proposed per ordinary share (note 5)	6.50p			5.50p			16.30p

   The total column of this statement is the profit and loss account of the Company.

   All revenue and capital items in the above statement derive from continuing operations.    

  A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above statement.

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

BALANCE SHEET

 (unaudited)

	31 December 2008		31 December 2007		30 June  2008
	£'000		£'000		£'000
FIXED ASSETS
Investments	38,996		49,849		46,896
CURRENT ASSETS
Debtors	178		160		511
Cash and short term deposits	2,034		5,372		4,299
	2,212		5,532		4,810
CREDITORS
Amounts falling due within one year	(318)		(166)		(291)
NET CURRENT ASSETS	1,894		5,366		4,519
TOTAL ASSETS LESS CURRENT LIABILITIES	40,890		55,215		51,415
CREDITORS
Amounts falling due after more than one year
Bank loans (note 6)	(2,302)		(2,698)		(1,422)
	(2,302)		(2,698)		(1,422)
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation	(6)		(5)		(4)
	38,582		52,512		49,989
CAPITAL AND RESERVES
Called-up share capital	1,257		1,257		1,257
Share premium	20		20		20
Capital reserve - realised	36,502		38,755		39,276
Capital reserve - unrealised	(440)		11,508		7,987
Revenue reserve	1,243		972		1,449
EQUITY SHAREHOLDERS' FUNDS	38,582		52,512		49,989
NET ASSET VALUE PER ORDINARY SHARE (after deducting borrowings at fair value) (note 7)	766.8p		1044.5p		994.4p
NET ASSET VALUE PER ORDINARY SHARE (after deducting borrowings at par)	767.4p		1044.4p		994.3p
Ordinary shares in issue (note 8)	5,027,766		5,027,766		5,027,766

 MID WYND INTERNATIONAL INVESTMENT TRUST PLC

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (unaudited)

For the six months ended 31 December 2008

	Share capital £'000	Share premium £'000	Capital reserve - realised £'000	Capital reserve - unrealised £'000	Revenue reserve £'000	Total shareholders' funds £'000
Shareholders' funds at 1 July 2008	1,257	20	39,276	7,987	1,449	49,989
Net return on ordinary activities after taxation	-	-	(2,774)	(8,427)	337	(10,864)
Dividends paid during the period#	-	-	-	-	(543)	(543)
Shareholders' funds at 31 December 2008	1,257	20	36,501	(440)	1,243	38,582

For the six months ended 31 December 2007

	Share capital £'000	Share premium £'000	Capital reserve - realised £'000	Capital reserve - unrealised £'000	Revenue reserve £'000	Total shareholders' funds £'000
Shareholders' funds at 1 July 2007	1,257	20	36,890	10,918	1,083	50,168
Net return on ordinary activities after taxation	-	-	1,865	590	266	2,721
Dividends paid during the period#	-	-	-	-	(377)	(377)
Shareholders' funds at 31 December 2007	1,257	20	38,755	11,508	972	52,512

For the year ended 30 June 2008

	Share capital £'000	Share premium £'000	Capital reserve - realised £'000	Capital reserve - unrealised £'000	Revenue reserve £'000	Total shareholders' funds £'000
Shareholders' funds at 1 July 2007	1,257	20	36,890	10,918	1,083	50,168
Net return on ordinary activities after taxation	-	-	2,386	(2,931)	1,020	475
Dividends paid during the year#	-	-	-	-	(654)	(654)
Shareholders' funds at 30 June 2008	1,257	20	39,276	7,987	1,449	49,989

#   See note 5.

 MID WYND INTERNATIONAL INVESTMENT TRUST PLC

CONDENSED CASH FLOW STATEMENT (unaudited)
	Six months to 31 December 2008		Six months to 31 December 2007			Year to 30 June 2008
		£'000		£'000	£'000
Net cash inflow from operating activities		570		246	860
Net cash outflow from servicing of finance		(17)		(25)	(76)
Total tax paid		-		-	(43)
Net cash (outflow)/inflow from financial investment		(2,393)		5,341	5,240
Equity dividends paid (note 5)		(543)		(377)	(654)
Net cash (outflow)/inflow before use of liquid resources and financing		(2,383)		5,185	5,327
Liquid Resources
Decrease/(increase) in short term deposits		1,771		(2,617)	(1,380)
Net cash inflow/(outflow) from use of liquid resources		1,771		(2,617)	(1,380)
Financing
Net cash outflow from bank loans		-		-	(1,443)
Net cash outflow from financing		-		-	(1,443)
(Decrease)/increase in cash		(612)		2,568	2,504
Reconciliation of net cash flow to movement in net (debt)/funds
(Decrease)/increase in cash in the period		(612)		2,568	2,504
(Decrease)/increase in short term deposits		(1,771)		2,617	1,380
Decrease in bank loans		-		-	1,443
Exchange movement on short term deposits and bank loans		(762)		(231)	(170)
Movement in net (debt)/funds in the period		(3,145)		4,954	5,157
Net funds/(debt) at start of the period		2,877		(2,280)	(2,280)
Net (debt)/funds at end of the period		(268)		2,674	2,877
Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities
Net return before finance costs and taxation		(10,784)		2,774	858
Net losses/(gains) on investments		10,968		(2,752)	547
Currency losses/(gains)		187		233	(89)
Amortisation of fixed income book cost		(59)		(23)	(49)
Changes in debtors and creditors		294		41	(310)
Overseas tax		(15)		(19)	(89)
Income tax		(21)		(8)	(8)
Net cash inflow from operating activities		570		246	860

  MID WYND INTERNATIONAL INVESTMENT TRUST PLC

THIRTY LARGEST EQUITY HOLDINGS (unaudited) at 31 December 2008
Name	Region	Business	Value  £'000		% of total assets*
Baillie Gifford Developed Asia Pacific Fund	Asia Pacific/Japan	Investment fund	2,471		6.0
Baillie Gifford Japanese Smaller Companies Fund	Japan	Investment fund	1,839		4.5
Seadrill**	Continental Europe	Oil and gas services	1,018		2.5
Kone	Continental Europe	Elevators	976		2.4
Nestlé	Continental Europe	Food products	915		2.2
Essilor	Continental Europe	Ophthalmology	844		2.1
Schlumberger	North America	Oil services	752		1.8
Vodafone	United Kingdom	Mobile telecommunications operator	698		1.7
Pepsico	North America	Soft drink and food	633		1.5
GlaxoSmithKline	United Kingdom	Pharmaceuticals	588		1.4
Imperial Tobacco	United Kingdom	Tobacco	567		1.4
GBL	Continental Europe	Investment company	556		1.4
Total	Continental Europe	Integrated oil	527		1.3
Medco Health Solutions	North America	Prescription management	525		1.3
L'Oréal	Continental Europe	Personal care	493		1.2
TSMC	Emerging Markets	Semiconductor manufacturer	488		1.2
Walgreen	North America	Pharmacy chain	474		1.2
Novozymes	Continental Europe	Enzyme producer	468		1.1
Petrobras	Emerging Markets	Integrated oil	449		1.1
Schindler	Continental Europe	Elevators	441		1.1
Goldman Sachs Group	North America	Investment banking	440		1.1
Celesio	Continental Europe	Drug wholesaler and retailer	418		1.0
Swisscom	Continental Europe	Telecommunications	410		1.0
Capita	United Kingdom	Outsourcing	405		1.0
Exxon Mobil	North America	Integrated oil	399		1.0
Cameron International	North America	Oilfield equipment manufacturer	394		1.0
Geberit	Continental Europe	Building materials	391		1.0
Royal Dutch Shell	United Kingdom	Integrated oil	376		0.9
Naspers	Emerging Markets	Media company	375		0.9
Imperial Energy	Emerging Markets	Oil and gas exploration and production	374		0.9
			19,704		48.2

*Total assets before deduction of bank loan

**Includes holding in convertible loan stock

DISTRIBUTION OF TOTAL ASSETS at 31 December 2008 (unaudited)

	31 December 2008 %		31 December 2007 %		30 June 2008   %
Equities: United Kingdom	10.9		14.2		13..9
Continental Europe	30.4		28.6		29.3
North America	14.8		17.9		17.7
Japan	7.8		5.3		3.4
Asia Pacific	2.7		6.5		6.0
Emerging Markets	11.0		11.7		13.1
Total equities	77.6		84.2		83.4
Fixed interest	17.8		6.1		7.8
Net liquid assets	4.6		9.7		8.8
Total assets (before deduction of bank loans)	100.0		100.0		100.0

MID WYND INTERNATIONAL INVESTMENT TRUST PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (unaudited)

1. 2. 3.	The condensed set of financial statements have been prepared on the basis of the same accounting policies as set out in the Company's Annual Financial Statements at 30 June 2008 and in accordance with the ASB's Statement 'Half-Yearly Financial Reports' and have not been audited or reviewed by the Auditors pursuant to the Auditing Practices Board Guidance on 'Review of Interim Financial Information.'  The financial information contained within this half-yearly financial report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the year ended 30 June 2008 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The Auditors' Report on those accounts was not qualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. The management agreement is terminable on not less than 12 months' notice, or on shorter notice in certain circumstances. The fee in respect of each quarter is 0.125% of the net assets of the Company attributable to its shareholders on the last day of that quarter.
		Six months to 31 December 2008	Six months to 31 December 2007	Year to 30 June  2008
		£'000	£'000	£'000
4.	Net return per ordinary share
	Revenue return on ordinary activities after taxation	337	266	1,020
	Capital return on ordinary activities after taxation	(11,201)	2,455	(545)
	Total return	(10,864)	2,721	475
	Net return per ordinary share is based on the above totals of revenue and capital and on 5,027,766 ordinary shares, being the weighted average number of ordinary shares in issue during each period.
		Six months to 31 December 2008	Six months to 31 December 2007	Year to 30 June  2008
		£'000	£'000	£'000
5.	Dividends
	Amounts recognised as distributions in the period:
	Previous year's final dividend of 8.50p (2007 - 7.50p), paid 16 October 2008	427	377	377
	Previous year's special dividend of 2.30p (2007 - n/a), paid 16 October 2008	116	-	-
	Interim dividend for the year ending 30 June 2008 of 5.50p paid 7 April 2008	-	-	277
		543	377	654
	Dividends paid and proposed in the period:
	Interim dividend for the year ending 30 June 2009 of 6.50p (2008 - 5.50p)	327	277	277
	Final dividend for the year ended 30 June 2008	-	-	427
	Special dividend for the year ended 30 June 2008	-	-	116
		327	277	820
	The interim dividend was declared after the period end date and has therefore not been included as a liability in the balance sheet. It is payable on 7 April 2009 to shareholders on the register at the close of business on  13 March 2009. The ex-dividend date is 11 March 2009.
	MID WYND INTERNATIONAL INVESTMENT TRUST PLC NOTES TO THE CONDENSED FINANCIAL STATEMENTS (unaudited)
6.	The bank loan falling due in more than one year comprises a ¥300 million loan drawn down under a US$5 million facility expiring on 27 February 2012 (31 December 2007 - ¥600 million; 30 June 2008 - ¥300 million).
7.	The fair value of the bank loan at 31 December 2008 was £2,331,000 (31 December 2007 - £2,695,000; 30 June 2008 - £1,416,000).
8.	At 31 December 2008 the Company had authority to buy back 753,662 of its own shares. No shares were bought back during the period under review.
9.	Transaction costs incurred on the purchase and sale of the investments are added to the purchase cost or deducted from the sale proceeds, as appropriate. During the period, transaction costs on purchases amounted to £12,000 (31 December 2007 - £13,000; 30 June 2008 - £35,000) and transaction costs on sales amounted to £5,000 (31 December 2007 - £12,000; 30 June 2008 - £21,000).
10.	None of the views expressed in this document should be construed as advice to buy or sell a particular investment.
11.	Principal Risks and Uncertainties The principal risks facing the Company relate to the Company's investment activities. These risks are market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. Other risks facing the Company include the following: gearing risk (the use of borrowing can magnify the impact of falling markets), the risk that the discount can widen and regulatory risk (that the loss of investment trust status or a breach of the UKLA Listing Rules could have adverse financial consequences and cause reputational damage). An explanation of these risks and how they are managed is contained in note 22 of the Company's Annual Report and Accounts for the year to 30 June 2008. Since then, the Company has increased its exposure to corporate bonds, some of which are currently extremely illiquid and as a consequence may not be readily realisable at fair value. In addition, investment income includes amortisation of the discount to par at which such bonds were acquired. The Annual Report can be obtained free of charge from Baillie Gifford & Co and is available on the Mid Wynd page of the Managers' website: www.midwynd.co.uk.
12.	The half-yearly financial report is available on www.midwynd.co.uk and will be posted to shareholders on or around 27 February 2009.

 

END

 

 

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