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World Trust Fund (WTR)

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Wednesday 10 August, 2011

World Trust Fund

Interim Management Statement

Interim Management Statement

World Trust Fund

The World Trust Fund
Interim Management Statement
for the quarter ended 30th June 2011

The World Trust Fund (the “Fund”) is publishing this Interim Management Statement in accordance with the Luxembourg law of 11 January 2008 on Transparency requirements (the “Transparency law”).

This Interim Management Statement has been produced solely to provide additional information to shareholders as a body to meet the relevant requirements of the Transparency law. It should not be relied upon by any other party or for any other purpose.

This Interim Management Statement relates to the period from 1 April 2011 to 30 June 2011 and contains information that covers this period and the period up to the date of publication of this Interim Management Statement.

The Fund aims to achieve long-term capital appreciation by investing in companies, in the main closed-end investment companies, whose shares trade at a discount to their underlying net asset value and are listed on international exchanges. For hedging purposes the Fund may also sell short stock indices, stocks, and shares of exchange-traded funds or closed-end funds, not exceeding 100% of the Fund’s net assets.

Highlights:
Over the 3 month period from 1 April 2011 to 30 June 2011:

  • The Fund’s net asset value (NAV) fell by 0.6% to $3.50 in US$ terms (base currency), compared with a rise of 0.3% in the MSCI All Countries World Index. (Since the period end the NAV fell a further 1.1% in US$ terms to $3.46 as at the end of July 2011, compared to a fall of 1.6% in the MSCI All Countries World Index.)
  • The Fund’s share price fell in Sterling terms by 1.5% (traded currency) to 193.75p
  • The discount to NAV (in Sterling) at the end of the period was 11.1%.
  • The Fund’s underlying holdings had an average weighted discount of 20.4%.

Global markets rose slightly during the period. Macro factors dominated the markets. Sovereign debt concerns arose again as Greece faced internal protests over the austerity measures required to receive the next tranche of foreign assistance. Meanwhile, the unrest in the Middle East and North Africa continued with Syria also cracking down violently on protests. The Fund had nearly zero exposure to northern Africa, the Middle East and Greece, thus helping insulate returns from the political and economic upheaval in these areas.

In the United States, a string of negative data on housing, employment, and manufacturing, as well as the expected ending of the Fed’s quantitative easing, led investors to question growth expectations. European markets performed well despite contagion concerns from the sovereign crisis. Germany contributed to the strong performance, as the nation continues to benefit from exports and low unemployment. The Fund’s focused investments in the United States and developed Europe were some of the biggest contributors to returns over the period.

In Asia, markets declined slightly on the back of concerns over slowing growth prospects following weaker manufacturing numbers from China and continuing inflation fears in the region. The Fund’s China focused investments were some of the largest detractors from performance over the period. Japan edged higher in the quarter in anticipation of a recovery beyond the current slowdown following the earthquake and, as a result, the Fund’s investments focused on Japan also performed well. The weighted average discount of the Fund’s underlying holdings widened thus negatively impacting performance.

Long Term Performance:

    1-Year     3-Year     5-Year     10-Year
 
Share Price £* +15.5% - 1.9% - 1.9% +5.2%
Share Price US$** +24.1% - 8.7% - 4.7% +6.5%
Net Asset Value US$ +26.4% - 7.7% - 3.6% +6.6%
MSCI AC World Net US$ +30.1% + 0.9% +3.2% +4.8%
 

*Re-stated to equivalent Sterling traded price using foreign exchange rates used by the Fund’s custodian State Street.
**Re-stated to equivalent US Dollar traded price using foreign exchange rates used by the Fund’s custodian State Street

Top Five Holdings (%):

   

30/06/11

   

31/03/11

First Pacific 6.7% 6.6%
JPMorgan European Smaller Companies 5.9% 5.8%
New Germany Fund 5.7% 5.4%
Eurazeo 5.2% 5.3%
Swiss Helvetia Fund 4.6% 4.2%
 

Top 5 Regional Breakdown (%)

   

30/06/11

   

31/03/11

Asia ex Japan 26.2% 26.9%
Europe (ex UK) 26.1% 24.6%
North America 19.9% 23.3%
United Kingdom 6.2% 5.8%
Japan 8.4% 8.2%
 
 
Long Exposure 96.8% 103.0%
Short Exposure 0.0% 0.0%
Net Exposure 96.8% 103.0%
 

Top 10 Country Weightings (%)

    30/06/11
United States 18.1%
China 9.3%
Japan 8.4%
Germany 7.0%
United Kingdom 6.2%
Philippines 5.7%
Switzerland 5.4%
France 5.4%
Taiwan 2.8%
Indonesia 2.6%
 

Leverage:

As at 30 June 2011 the Fund had no leverage.

Material Transactions and Events:

On 10 August 2011 the Fund published a prospectus in connection with a proposed bonus issue of warrants to shareholders on a 1 for 5 basis. An EGM has been convened on 31 August 2011 at which shareholders will be requested to approve the proposals.

Purchase of own shares

During the period under review and up to the date of release of this Interim Management Statement, the Fund has purchased the following ordinary shares to be held in treasury:

6 May 2011       66,305 shares at 196p per share
1 June 2011 61,450 shares at 193.5p per share
15 June 2011 100,000 shares at 189.5p per share
30 June 2011 120,500 shares at 190.673p per share
 

Following the above repurchases, the Fund has 60,217,350 shares in issue which should be used as the denominator under the Luxembourg Transparency Law. Similarly 54,038,063 ordinary shares with voting rights in issue (FSA’s denominator), excluding 6,179,287 ordinary shares which are currently held in treasury. At the EGM to approve the bonus issue proposals referred to above, Shareholders will be asked to cancel all ordinary shares that are currently held in treasury.



Listing Category: Premium – Equity Closed-ended Investment Fund