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World Trust Fund (WTR)

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Friday 20 January, 2012

World Trust Fund

Transaction in Own Shares

Transaction in Own Shares

World Trust Fund

The World Trust Fund

Interim Management Statement

for the quarter ended 31st December 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 October 2011 to 31 December 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 October 2011 to 31 December 2011:

  • The Fund’s net asset value (NAV) rose by 2.4% to $2.99 in US$ terms (base currency), compared with a rise of 7.2% in the MSCI All Countries World Index.
  • The Fund’s share price rose in Sterling terms by 1.5% to 171 pence.
  • The discount to NAV (in Sterling) at the end of the period was 11.2%.
  • The Fund’s underlying holdings had an average weighted discount of 25.4%.

Global stock markets rose amid greater optimism for a resolution to the sovereign debt crisis in Europe. In addition, many investors were heartened as U.S. economic data strengthened during the last few weeks of 2011. Claims for new unemployment benefits fell, and both industrial production and consumer spending increased. Corporate earnings globally continued to be a bright spot in the uncertain market environment, as companies have been actively reducing costs and capital expenditures to bolster strong profitability and cash generation, even in a lacklustre economic environment. However, the markets’ performance throughout the quarter remained volatile as a number of events in the Eurozone drove turmoil. These included a proposed Greek referendum on the country’s bailout package, disagreement within the Eurozone about the role of the European Central Bank in solving the crisis, a German bund auction that elicited low demand, the escalation of Italian bond yields, and the formation of new governments in Greece and Italy. Broadly speaking, investors were also anxious about weakening economic activity in China.

Stock selection and strong absolute returns in EM Asia were the key drivers of return. Investments focused on China, South Korea, the Philippines, and Indonesia performed well. Several key holdings that underwent corporate governance initiatives also helped performance. Stock selection in Asia Pacific and Japan hurt returns, as did exposures in EM Europe. Although an underweight exposure (nearly half the benchmark weight) to the United States hurt returns as the USA performed strongly (S&P 500 +11.8% for the period), several U.S.-focused investments performed well. Overweight exposures to emerging markets detracted from returns. Performance was also hindered as the portfolio’s average discount widened by approximately 410 basis points.

Long Term Performance:

       
1-Year 3-Year 5-Year 10-Year
Share Price £ -13.9% +13.4% - 5.2% +5.9%
Share Price US$* -14.2% +15.7% - 9.5% +6.6%
Net Asset Value US$ -12.8% +14.8% - 9.1% +6.0%
Net Asset Value £* -12.3% +12.7% - 4.7% +5.1%
MSCI All Countries World US$ - 7.4% +12.0% - 1.9% +4.2%

*Converted using Foreign Exchange rate used by the administrator.

Top Five Holdings (%):

   

31/12/11

30/09/11

First Pacific 8.8% 8.0%
New Germany Fund 4.6% 4.9%
JPMorgan European Smaller Companies 4.3% 4.9%
China Everbright Ltd 4.2% 2.9%
Templeton Emerging Markets Investment Trust plc 4.1% 0.0%

Top 5 Regional Breakdown (%)

   

31/12/11

30/09/11

Asia ex Japan 28.3% 16.1%
Europe (ex UK) 20.7% 16.4%
North America 17.8% 18.4%
Japan 7.8% 8.7%
United Kingdom 6.2% 6.0%

The above change in regional exposure largely is a reflection of the reduction in the Company’s short positions over the period, which can be seen below.

 

31/12/11

 

30/09/11

Long Exposure 96.1% 89.6%
Short Exposure 0.0% -13.7%
Net Exposure 96.1% 75.9%

Top 10 Country Weightings (%)

 

31/12/11

United States 16.0%
China 8.5%
Japan 7.8%
Philippines 7.0%
United Kingdom 6.2%
Germany 4.7%
Switzerland 4.2%
Indonesia 3.5%
France 3.4%
Hong Kong 3.2%

Leverage:

As at 31 December 2011 the Fund had no leverage.

Material Transactions and Events:

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:

5 October 2011   200,000 shares at 164p per share
18 October 2011 115,000 shares at 172p per share
27 October 2011 80,000 shares at 174p per share
17 November 2011 84,000 shares at 172p per share
5 January 2012 1,525,000 shares at 172p per share
17 January 2012 389,000 shares at 179p per share
19 January 2012 200,000 shares at 179.5p per share

Following the above repurchases, the Fund has 54,038,063 Ordinary shares in issue which should be used as the denominator under the Luxembourg Transparency Law. Similarly 51,331,081 ordinary shares with voting rights in issue (FSA’s denominator), excluding 2,706,982 ordinary shares which are currently held in treasury.

Additionally there remain 10,807,612 Warrants in issue.

Listing Category: Premium – Equity Closed-ended Investment Fund