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World Trust Fund (WTR)

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Friday 30 July, 2004

World Trust Fund

Audited Annual Report

The World Trust Fund

                         THE WORLD TRUST FUND

                Societe d'Investissement a Capital Fixe
                           R.C. No. B 37.154

                         Audited annual report
                        as at March 31st, 2004

                         THE WORLD TRUST FUND

                       Organisation of the Fund


WALTER A. EBERSTADT, OBE                              Lazard Freres & Co., LLC
                                                      30 Rockefeller Plaza
                                                      U.S.A.-NEW YORK, NY 10020


ERIC C. ELSTOB *                                      14 Fournier Street
(deceased on October 28th, 2003)                      Spitalfields
                                                      U.K.-London E1 6QE.

RAFIK FISCHER                                         KREDIETBANK S.A. Luxembourgeoise
                                                      43, boulevard Royal
                                                      L-2955 Luxembourg

J. MURRAY LOGAN *                                     L-R Global Partners L.P.
                                                      430 Park Avenue, 7th Floor
                                                      U.S.A.-New York, NY 10022

PHILIP R. McLOUGHLIN *                                Phoenix Funds
(retired)                                             56 Prospect Street
                                                      PO Box 150480
                                                      U.S.A.-Hartford, CT 061150480

JEREMY W. SILLEM                                      One Canada Square
                                                      U.K.-London E14 5AD

FRANCOIS A. VOSS                                      Lazard Freres & Cie
                                                      121 Boulevard Haussmann
                                                      F-75382 Paris, France

ALEXANDER E. ZAGOREOS                                 Lazard Asset Management, LLC
                                                      30 Rockefeller Plaza
                                                      U.S.A.-New York, NY 10020

Registered Office                                     11 rue Aldringen
                                                      L-1118 Luxembourg

Manager                                               Lazard Asset Management LLC
                                                      30 Rockefeller Plaza
                                                      U.S.A.-New York, NY 10020

Custodian, Listing and Paying Agent                   KREDIETBANK S.A. Luxembourgeoise
                                                      43 boulevard Royal
                                                      L-2955 Luxembourg

Domiciliary, Registrar, Transfer                      KREDIETRUST LUXEMBOURG S.A.
and Administrative Agent                              11 rue Aldringen
                                                      L-2960 Luxembourg

Independent Auditor                                   ERNST & YOUNG
                                                      Societe Anonyme
                                                      6 rue Jean Monnet
                                                      L - 2180 Luxembourg

* Member of the Audit Committee


General Information

1. Unaudited semi-annual reports and audited annual reports are made
available at the registered office of the Fund, 11, rue Aldringen,
L-1118 Luxembourg and will be mailed to each registered Shareholder.

2. The Annual General Meeting of Shareholders will be held in Luxembourg each
year at 3 p.m. on the third Tuesday in August or if any such day is not a
business day for banks in Luxembourg, on the next following business day.
Notices of General Meetings including their agenda, time and place and
containing details of attendance, quorum and majority requirements under
Luxembourg law will be sent to the registered address of Shareholders not less
than 21 days before the date of the Meeting.

3. Annual reports (including audited accounts) will be posted to Shareholders
not less than 21 days before the day fixed for the Annual General Meeting at
which they are to be considered.

4. The Fund aims to achieve capital growth through investment in a diversified
portfolio of closed-end funds listed or traded on international stock exchanges
and whose Shares are currently traded at a discount to net asset value, thereby
offering the potential for attractive financial returns.

5. Dividends will only be paid to the extent that they are covered by income
received from underlying investments. The Articles provide that dividends shall
not be paid out of surpluses arising upon the realisation of investments.

6. A dividend declared but not claimed by a Shareholder after twelve years from
the declaration thereof shall lapse and revert to the Fund.

7. The Net Asset Value is expressed in US Dollars and is published weekly in the
"Financial Times" under Luxembourg Regulated Funds.

8. The Shares of " The World Trust Fund " are listed on the London Stock
Exchange and the quotation is published in the « Financial Times » daily under
Investment Companies. The Shares are also listed on the Luxembourg Stock


Chairman's Statement 

In my statement for the year ended March 31st, 2002 I referred to the
three preceding years over which the MSCI World Index was down 15.5%
and the MSCI EAFE Index down 18.6% whereas the World Trust Fund
portfolio had declined by only 1.9%. In the following year I reported
we again "could not side step the effects of the bear market entirely
but were handsomely ahead of all the yardsticks by which we measure
ourselves. I concluded by writing "we believe we have (in the World
Trust Fund) a vehicle capable of making real money under halfway
propitious circumstances."

Indeed the year ended March 31st, 2004 seems to have provided such
circumstances. The MSCI World Index rose by 41.5%, the MSCI EAFE Index by 53.9%,
the S&P 500 Index by 35.1%, and the World Trust Fund asset value per share,
after all expenses, by 69.3%. How they did it is described in detail in our
managers' report. These results while obviously highly gratifying, are unlikely
to be repeated in a hurry!

The sizable out-performance of the yard sticks by which we measure ourselves
contractually, triggered a performance fee under the contract between the World
Trust Fund and Lazard Freres Asset Management, more fully described in note 3 in
the annual report.

On quite another subject, the current year will be my last as your chairman.
While our manager will all too readily attest to the fact that the board members
considered as Lazard affiliated have been highly independent, in order to
maintain our listing on the London Stock Exchange, which we consider to be a
valuable asset, latest by April 1st, this board must be reconstituted to be
deemed legally independent from Lazard. Work to meet the requirements has
commenced and our shareholders may expect to be kept fully informed.

I anticipate an advisory role for myself in the future, not only because I, my
family, and a number of friends have substantial shareholdings in the World
Trust Fund, but because of my long involvement with closed-end fund investing
may prove useful.

We were all saddened by the death of our fellow board member and friend, Eric
Elstob. Eric chaired the Audit Committee and brought a vast knowledge and
experience in global investing to our proceedings. He was a charming, witty man
whose presence will be greatly missed.

Luxembourg, June 11th, 2004                     Walter A. Eberstadt 


Manager's Review

For the 12 months, ending March 31st, 2004, the World Trust Fund rose 69.3% in
net asset value terms, while the benchmark, MSCI World, gained 41.5%. In terms
of price, the Fund rose 56.8%.


Performance (cumulative)

                                                                   1-Year             3-Year              5-Year

       World Trust Fund NAV                                         69.3%              53.4%              53.2%
       World Trust Fund Price                                       56.8               34.4               39.0
       MSCI World Index                                             41.5               -0.2              -10.8
       MSCI EAFE Index                                              53.9               -4.2               -5.8
       S&P 500 Index                                                35.1                1.9               -5.9

The Fund's outperformance came primarily from closed-end fund investments in
emerging markets, particularly China, as well as investments in natural
resources (such as gold and other metals), Japan and in European Small Caps.
Discount-narrowing through corporate action, as well as occasional portfolio
hedging achieved by shorting the technology sector and the U.S. market, were
also helpful.

Despite this good performance, the World Trust Fund still traded at a discount
of 16.8%, as of March 31st, 2004. With an internal discount of 15%, every dollar
invested in the Fund buys approximately $1.41 worth of assets.

We wrote in last year's Managers' Comments that the global investment
environment was challenging, underpinned by the unfolding of U.S. corporate
scandals, the lingering impact of the TMT bubble collapse, the Iraqi war, the
North Korean nuclear threat, and the uncertainty in Asia caused by SARS. Our
strategy, as always, has been to seek underlying cheap valuations and deep,
tangible discounts, and to hedge those sectors that we believed were overvalued.

March 2003, marked the bottom of the current bear market. For the next 12
months, the MSCI World Index staged a substantial rally not seen over the last
three decades, as global markets rose more than 40%. By adhering to our
philosophy, the World Trust Fund outperformed this rally by an additional 25
percentage points.

Country Allocation

The China growth story was a major economic driver last year, as it kicked off a
global chain of demand, especially for commodities. Recovery in Japan was
healthy, and corporate Japan generated positive returns on equity. Here in the
United States, ample liquidity from the record low interest rates led to the
largest profits-rebound in a decade. The graph (below) shows the geographic
asset allocation, by region, compared to our benchmark.

Geographic Allocation (on a see-through basis)


Source: Fundamental Data 

The Fund is overweight emerging markets in Asia and Europe. We have
been increasing exposure to developed Europe, and to the U.K, where we
have opportunities because of widening discounts. Our emerging markets
investments are cheaply priced, relative to the developed world, as
shown in the chart below:

                           P/E (2005E)        Earnings Growth (2005E)            P/B

USA                           17.9x                 12%                          3.0x
World ex-USA                  14.6                   24                          2.0
Emerging Markets              10.7                   31.8                        1.9
Latin America                  8.1                   39.4                        1.8
Asia                          11.8                   36.5                        2.0
                                           Source: Morgan Stanley, Free indices, USD

Emerging Markets

For the third consecutive year, the emerging markets index outperformed the
global markets index. The MSCI Emerging Free Index almost doubled the return of
the MSCI World Index for the past year. Low valuations, coupled with faster
growth and higher returns on equity, were the key drivers. The steadily
improving macroeconomic picture, in Asia, drew investors' interest. These
improvements were the results of economic reforms, growing positive current
accounts, appreciating currencies, and better corporate governance.

China was the star performer, with the H-share Index (comprised of Chinese
companies listed in Hong Kong) soaring over 130%. Both Thailand and India were
up 100% in dollar terms. However, emerging markets continued to be a neglected
asset class, and still trades at a discount of over 35% to global markets, as
the chart below shows.

Emerging Markets Forward P/E Discount (%)


Source: Merrill Lynch,

Even though closed-end fund discounts, in general, have narrowed, our holdings
in emerging markets funds continue to trade at an average discount of about 14%.
Emerging markets have come a long way since the crises of the Mexican peso,
Russian debt default, and the Asian meltdown when average discounts were very
wide. The World Trust Fund was able to participate in, and benefit from, this
discount-narrowing. At the same time, underlying values appreciated.


China generated the highest returns for the Fund. We trimmed our China
investments toward the latter part of the year, and sold holdings such as China
Fund, Templeton Dragon, China Life, and PICC. We have been exploring
opportunities in closed-end funds in the domestic A share market, many of which
are selling at double-digit discounts.

A Tale of Two Markets


The chart above highlights this opportunity. While Hong Kong-listed China stocks
were up sharply, Chinese A shares remained at multi-year lows. This is where we
see opportunity.

China is experiencing one of the greatest changes in the 21st century. Millions
of people are moving to cities to seek opportunities, which, in turn, are
creating an unprecedented demand for housing, roads, schools, services, and
transportation. We believe such demand should, most likely, last for decades.
The year 2003 saw China rapidly becoming the world's outsourcing and production
center. While bullish in the long-run, we have been investing opportunistically
because of the high volatility in this market, and concerns about China's
ability to manage its growth.


Fundamentals continued to improve in Japan, and we have been amply
rewarded by our investments there. Return on equity, as shown in the
chart below, is expected to be the highest in two decades. We are
witnessing some real signs of change -- new jobs are being created,
land prices are increasing for the first time since the 1990s. Our
investments are primarily in the small cap sector, and we continue to
believe that this is the area which will experience the greatest
benefit and growth. Our patience in the Japanese market has begun to
pay off.

Japan's Return on Equity


Top Ten Holdings

The World Trust Fund is a concentrated portfolio. The top 10 holdings represent
about 50% of the Fund's portfolio. The weighted average discount of the entire
Fund is about 16.5%.

Fund Name                                Portfolio %
Merrill Lynch World Mining                       7.4
MS Emerging Markets                              6.3
Fleming Russia                                   6.1
F&C Small Companies                              5.5
John Hancock Bank                                4.9
Swiss Helvetia                                   4.5
Eurazeo                                          4.1
Templeton Emerging                               3.8
Advanced Developing                              3.6
Finsbury Worldwide Pharm                         3.4

Portfolio Hedging

As discussed in previous reports over the last three years, the Placing
Memorandum of the Fund was amended in 1998 to permit the hedging of risk of
underlying holdings. As a global discount investor, the manager intends to
capture the discount while hedging some of the risk of the underlying holdings.
This is especially appropriate in light of the unprecedented market volatility
in the past few years. Exchange-traded funds, such as QQQ (NASDAQ 100 Index),
Diamonds (Dow Jones Industrial Index), Spiders (S&P 500 Index), and iShares,
index funds were shorted as part of the hedging strategy. The manager is also
authorized to short-sell stocks, baskets of stocks, closed-end funds, and
investment trusts in order to hedge risks.

Our first short sale occurred in January 2000, when we shorted QQQ to hedge part
of the technology exposure. Over the last four years, we actively placed shorts
on technology, pharmaceuticals, the U.S. market, Japan, and Europe.

Over the past year, the following securities were shorted:

--  QQQ (Nasdaq 100 Index Trust)

--  Spiders (S&P 500 Index Trust)

--  Nasdaq Biotech Index Trust

--  Dow Jones Utilities Index Trust

--  Semiconductor Holders Trust

These positions afford some hedging of our Fund exposure to technology,
biotechnology, and the U.S. market. Over the past few years, such hedging added
significant value to the Fund.

Fund Restructuring

The momentum for fund restructuring continues, and the Fund is benefiting from
this. Over the past year, many of our holdings conducted tender offers, and some
were open-ended to eliminate discounts.

John Hancock Bank & Thrift. The Fund instituted a quarterly dividend payout of
2.5% of net assets.

France Growth Fund. The board recommended that the fund be dissolved.

Eurazeo & Rue Imperiale were to be merged. 2.8125 shares of Eurazeo will be
offered for every Rue Imperiale share, and an additional bonus share of Eurazeo
will be offered.

Korea Fund. About 16% of our shares were tendered back to the company at a
discount of 2%.

Taiwan Greater China Fund. Management has changed to internal management. A
tender offer was proposed by the Board, in addition to the annual open-ending

The Outlook

As usual, there is very little clarity in the outlook for global equities. The
United States is in a presidential election cycle, while conducting a war in
Iraq. The Middle East is as volatile as ever with uncertainty about oil supplies
and rising demand. Interest rates in the United States are generally believed to
be at the bottom of a rising cycle. Equity valuations are not compelling, and
average discounts on closed-end funds are fair, but not at bargain levels.

However, there are always sectors, markets, and individual funds that represent
both relative and absolute value, and investment opportunities. We continue to
strive to beat our benchmark - the MSCI World Index - but also, and most
importantly, not to lose money.

Luxembourg, June 11th, 2004                     Lazard Asset Management


Auditor's Report

To the Shareholders of The World Trust Fund:

We have audited the financial statements, which consist of the statement of net
assets and investments of The World Trust Fund (a Luxembourg investment company
with fixed capital) (the "SICAF") as at March 31st, 2004 and the related
statement of operations for the year then ended, the statement of changes in net
assets, the statement of changes in shares outstanding and the notes to the
financial statements for the year then ended. These financial statements are the
responsibility of the Board of Directors of the SICAF. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing.
Those Standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Board of Directors of the SICAF in preparing the financial statements, as well
as evaluating the overall financial statements presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the attached financial statements described above give, in
conformity with the legal and regulatory requirements in Luxembourg, a true and
fair view of the financial position of The World Trust Fund as at March 31st,
2004 and the results of its operations and changes in its net assets for the
year then ended.

Supplementary information included in the annual report has been reviewed in the
context of our mandate but has not been subject to specific audit procedures
carried out in accordance with the standards described above. Consequently, we
express no opinion on such information. We have no observation to make
concerning such information in the context of the financial statements taken as
a whole.

                                                        ERNST & YOUNG 
                                                        Societe Anonyme 
                                                        Independent Auditors

Luxembourg, June 11th, 2004                             Bernard LHOEST

                         THE WORLD TRUST FUND

                        Statement of Net Assets
                               (in USD)

                                    March 31st, 2004           March 31st, 2003
Securities' portfolio at market value  193,707,266                    92,133,056
Cash at banks                                    4                       391,737
Other liquid assets                        237,381                    37,584,106
Receivable on treasury transactions        303,270                             -
Income receivable on portfolio             284,206                       119,099
Interest receivable on bank accounts             -                           839
Other receivables                        6,074,111                             -
                                       ------------                --------------
Total assets                                          200,606,238                   130,228,837
Bank liabilities                        22,608,856                     7,917,646
Payable on purchases of securities         604,690                             -
Payable on Short Term Arrangements               -                    21,384,485
Payable on treasury transactions           301,312                             -
Interest payable on bank accounts           40,940                        13,815
Expenses payable                         6,732,027                       294,240
                                       ------------                --------------
Total liabilities                                      30,287,825                    29,610,186
                                                    --------------                --------------
NET ASSETS at the End of the Year                     170,318,413                   100,618,651
                                                    ==============                ==============
Number of Shares outstanding                            6,235,335                     6,235,335
Net Asset Value per Share                                   27.32                         16.14

                  Shareholders' Equity Represented by
                               (in USD)

                                           March 31st, 2004           March 31st, 2003
Capital: 9,331,738 Shares at USD 2.00        18,663,476                   18,663,476
Share Premium                                70,220,782                   70,220,782
Legal Reserve                                 1,866,348                    1,777,749
Profit brought forward                      105,465,761                   93,843,825
                                           -------------                -------------
Total Capital and Reserves                                196,216,367                   184,505,832
Cost of 3,096,403 Shares held in Treasury                 -47,045,639                   -47,045,639
Repurchase of 1,334,756 Warrants                           -8,631,613                    -8,631,613
Net realised loss/profit for the Year                     -17,596,207                    11,710,535
Unrealised appreciation/depreciation
on securities                                              47,375,505                   -40,744,356
Unrealised appreciation/depreciation
on Short Term Arrangements                                          -                       823,892
                                                        --------------               ---------------
Total Shareholders' Equity                                170,318,413                   100,618,651
                                                        ==============               ===============

The accompanying notes are an integral part of these financial statements

                         THE WORLD TRUST FUND

                        Statement of Operations
                               (in USD)
INCOME                                                       March 31st, 2004      March 31st, 2003
Dividends, net                                                      3,145,954             2,418,544
Interest on bank accounts                                              76,655               167,478
Other income                                                           39,885                30,155
                                                          --------------------  --------------------
Total income                                                        3,262,494             2,616,177
                                                          ====================  ====================
Management fees                                                     1,056,940               783,800
Performance fees                                                    6,281,731                     -
Custodian fees                                                         40,230                32,138
Banking charges and other fees                                         38,579                33,828
Central administration costs                                           48,237                50,105
Audit and supervisory fees                                             23,922                15,755
Other administration costs                                            158,660               152,265
Subscription duty                                                      73,545                51,843
Interest paid                                                         407,799               201,560
Other expenses                                                         26,288                55,719
                                                          --------------------  --------------------
Total expenses                                                      8,155,931             1,377,013
                                                          --------------------  --------------------
NET INVESTMENT INCOME                                              -4,893,437             1,239,164
                                                          ====================  ====================
- on portfolio                                                    -12,689,793            10,493,497
- on foreign exchange                                                 -12,977               -22,126
                                                          --------------------  --------------------
REALISED LOSS / GAIN                                              -17,596,207            11,710,535
                                                          ====================  ====================
- on portfolio                                                     87,295,969           -20,476,543
                                                          --------------------  --------------------
RESULT OF OPERATIONS                                               69,699,762            -8,766,008
Repurchase of Shares                                                        -            -1,058,363
                                                          ====================  ====================
TOTAL VARIATION OF NET ASSETS                                      69,699,762            -9,824,371
TOTAL NET ASSETS AT THE BEGINNING OF THE YEAR                     100,618,651           110,443,022
                                                          --------------------  --------------------
TOTAL NET ASSETS AT THE END OF THE YEAR                           170,318,413           100,618,651
                                                          ====================  ====================

The accompanying notes are an integral part of these financial statements

                         THE WORLD TRUST FUND

                  Statement of Changes in Net Assets
                               (in USD)

                                                   March 31st, 2004              March 31st, 2003
Net Assets at the Beginning of the Year                 100,618,651                   110,443,022
Net investment income                     -4,893,437                     1,239,164
Net realised loss/gain on sale of
 securities                              -12,689,793                    10,493,497
Net realised loss on foreign exchange        -12,977                       -22,126
                                        -------------                 -------------
Net realised loss/gain for the Year                     -17,596,207                    11,710,535
Change in unrealised appreciation/
 depreciation on securities                              87,295,969                   -20,476,543
Repurchase of Shares                                              -                    -1,058,363
                                                     ---------------               ---------------
Net Assets at the End of the Year                       170,318,413                   100,618,651
                                                     ===============               ===============

                Statistical Information about the Fund
                               (in USD)

                                        March 31st, 2004    March 31st, 2003    March 31st, 2002

Total Net Assets                            170,318,413         100,618,651         110,443,022
Net Asset Value per Share                         27.32               16.14               17.49

              Statement of Changes in Shares Outstanding
                  For the Year ended March 31st, 2004

  Number of Shares Outstanding at the Beginning of the Year                          6,235,335

  Number of Shares repurchased                                                               -

  Number of Shares Outstanding at the End of the Year                                6,235,335

The accompanying notes are an integral part of these financial statements

                         THE WORLD TRUST FUND

             Statement of investments and other net assets
                           March 31st, 2004
                               (in USD)

Currency   Number /     Description                                    Cost       Market value    % of
         nominal value                                                                            total
----------------------- ---------------------------------------------------------------------------------

EUR            106,165  Eurazeo                                       2,231,230      7,436,269      4.37

GBP            243,500  JPM Fleming Em Mks Inv Tr Plc                   523,097        661,784      0.39
GBP             27,000  Old Mutual South Africa Tr Plc                   32,100         41,028      0.02
                                                                   -------------  -------------  --------
                                                                        555,197        702,812      0.41
SEK            124,900  Investor AB B                                   871,314      1,249,911      0.73

USD            720,900  MS Emerging Markets Fd Inc                    7,320,440     11,296,503      6.63

                                                                   -------------  -------------  --------
Total shares                                                         10,978,181     20,685,495     12.14
Undertakings for collective investment
EUR            745,040  Greek Progress Fd SA Reg Sh                   2,386,696      3,039,601      1.78

GBP             87,160  3I European Tec Trust Plc                       344,988        269,695      0.16
GBP            456,020  3i Bioscience Invest Trust Plc                3,544,834      2,093,531      1.23
GBP          2,625,000  Advance UK Trust Plc                          4,454,287      6,073,728      3.57
GBP          1,103,675  Advance Value Real Co Ltd                             0              0      0.00
GBP          2,180,523  Advanced Dev Markets Trust Plc                4,125,577      6,566,894      3.86
GBP            250,000  Anglo & Overseas Trust Plc                      670,570        807,994      0.47
GBP            925,000  Baillie Gifford Shin Nip Plc                  1,529,088      2,734,784      1.61
GBP            100,708  Baring Emerging Europe Plc                      187,545        570,525      0.34
GBP            385,000  Brunner Investment Trust Plc                  1,557,661      1,877,071      1.10
GBP          3,300,000  Close Finsbury Eurotech Tr Plc                4,965,015      2,196,734      1.29
GBP             95,300  Deutsche Latin Am Co Trust Plc                   89,289        124,690      0.07
GBP          3,064,000  Edinburgh Dragon Trust Plc                    3,080,928      4,515,328      2.65
GBP            100,000  Edinburgh Worlwide Inv Tr Plc                   215,900        265,353      0.16
GBP             62,600  Electra Investment Trust Plc                    710,143        849,521      0.50
GBP             92,200  F&C Colo Em Mks Inv Trust Plc                    95,667        126,984      0.07
GBP          2,500,000  F&C Smaller Co Plc                            7,110,758      9,847,427      5.78
GBP          1,210,000  Finsbury Technology Trust Plc                 2,668,789      4,632,836      2.72
GBP            725,000  Finsbury Worldwide Pharmaceut Plc             2,253,324      6,204,108      3.64
GBP          1,150,000  Fleming Japan Sm Co Inv Tr Plc                8,095,677      5,321,742      3.12
GBP            500,000  Henderson Elec & Ge Inv Tr Plc                1,896,971      2,304,619      1.35
GBP            625,000  Henderson EuroTrust Plc                       2,184,924      2,920,944      1.72
GBP            500,000  Intl Biotechnology Trust Plc                    897,900        941,129      0.55
GBP             78,200  JPM Fl Ch Inv Trust Plc                          61,386         95,137      0.06
GBP             50,000  JPM Fle US Disco Inv Trust Plc                  367,678        555,037      0.33
GBP          2,958,491  JPM Fleming Russian Sec Plc                   3,599,178     10,947,142      6.43
GBP          1,000,000  JPMorgan Fleming Jap Inv Trust Plc            3,211,282      4,072,106      2.39
GBP          3,605,451  ML World Mining TST Plc                       6,089,921     13,357,605      7.84
GBP          1,899,000  Pacific Assets Trust Plc                      1,690,655      2,188,236      1.29
GBP          1,200,000  Polar Capital Tec Trust Plc                   2,527,484      3,564,355      2.09
GBP            600,000  Scottish Mrtge Inv Trust Plc                  2,379,063      3,360,520      1.97
GBP          1,000,000  TR Property Inv Trust Plc                     1,044,392      1,744,532      1.02
GBP          2,522,300  Templeton Em Mks Inv Tr Plc                   4,820,726      6,774,045      3.98
GBP          3,500,000  Throgmorton Trust Plc                         5,813,881      6,105,864      3.59
GBP            500,000  Utilico Investment Trust Plc                  1,091,837      1,028,356      0.60
                                                                   -------------  -------------  --------
                                                                     83,377,318    115,038,572     67.55

USD              5,000  Asia Pacific Fd Inc                              50,950         69,500      0.04
USD              7,300  Brazil Fd Inc                                   111,763        172,791      0.10
USD             13,070  Egypt (The) Trust SICAF Reg Sh                  107,469        109,265      0.06
USD            126,971  Emerging Mks Telecomm Fd Inc                  1,276,191      1,072,905      0.63
USD            104,000  Europe Fd Inc                                 1,818,743      1,041,040      0.61
USD            100,000  First Financial Fund Inc                      1,354,924      1,830,000      1.07
USD              1,000  First Nis Regional Fd SICAF Reg                   3,750          5,911      0.00
USD            447,204  France Growth Fd Inc                          3,983,134      3,398,750      2.00
USD              2,100  Genesis Malaysia Maju Fd Ltd                     49,172         80,850      0.05
USD                800  Greater China Fd Inc                              8,552         12,800      0.01
USD            195,906  Italy Fd Inc                                          0              0      0.00
USD            880,000  John Hancock Bank&Thrift Opp.                 7,138,331      8,896,800      5.22
USD            281,869  Korea (The) Fd Inc                            4,101,156      6,003,810      3.53
USD             22,000  Korea Equity Fd Inc                              85,800        119,460      0.07
USD             24,000  Korea-Europe Fd Ltd                             149,520        225,600      0.13
USD            285,007  Latin America Discovery Fd                    2,914,424      3,890,346      2.28
USD            284,255  MS Asia Pacific Fd Inc                        2,764,476      3,425,273      2.01
USD          84,851.24  Martin Currie Abs Ret Fds Ltd China             999,998      1,356,118      0.80
USD              4,000  Morgan Stanl Eastern Eu Fd Inc                   87,400        136,000      0.08
USD             78,400  New Germany Fd Inc                              569,184        577,808      0.34
USD                600  Saffron Fd Inc                                    5,048          5,604      0.00
USD              5,000  Scudder New Asia Fund Inc                        46,500         74,200      0.04
USD            623,000  Swiss Helvetia Fd Inc                         8,116,743      8,192,450      4.81
USD            436,400  Taiwan Fd Inc                                 4,957,446      5,935,040      3.48
USD          1,113,700  Taiwan Greater China Fund                     5,154,013      5,290,075      3.11
USD              5,000  Thai Fd Inc                                      26,350         46,800      0.03
USD              1,400  Turkish Investment Fd Inc                         6,720         17,360      0.01
USD             10,000  Value Catalyst Fd Ltd                         1,000,000      1,355,000      0.80
                                                                   -------------  -------------  --------
                                                                     46,887,757     53,341,556     31.31
                                                                   -------------  -------------  --------
Total undertakings for collective investment                        132,651,771    171,419,729    100.64
Warrants and rights
GBP          3,383,929  Templeton Em Mks Inv Tr Plc Wts 94/30.09.04   1,557,584        932,112      0.55
                                                                   -------------  -------------  --------
Total warrants and rights                                             1,557,584        932,112      0.55


USD            267,077  Vietnam Enterprise Invest Ltd                   272,418        376,579      0.22
                                                                   -------------  -------------  --------
Total shares                                                            272,418        376,579      0.22
Undertakings for collective investment
USD              1,500  Baltic Fd I LP                                  871,807        144,382      0.09
                                                                   -------------  -------------  --------
Total undertakings for collective investment                            871,807        144,382      0.09

Warrants and rights
GBP            721,090  ML World Mining TST Plc Call Wts Mercury
                        World Mng 29.04.05                                    0        148,969      0.09
                                                                   -------------  -------------  --------
Total warrants and rights                                                     0        148,969      0.09
                                                                   -------------  -------------  --------
TOTAL INVESTMENTS IN SECURITIES                                     146,331,761    193,707,266    113.73
CASH AT BANKS                                                                                4      0.00
OTHER NET ASSETS/(LIABILITIES)                                                     -23,388,857    -13.73
                                                                                  -------------  --------
TOTAL                                                                              170,318,413    100.00
                                                                                  =============  ========

The accompanying notes are an integral part of these financial statements

                         THE WORLD TRUST FUND

               Currency Classification of the Portfolio
                           March 31st, 2004
                     (in percentage of net assets)

Pound Sterling                                               68.60 %
US Dollar                                                    38.25 %
Euro                                                          6.15 %
Swedish Krona                                                 0.73 %
  TOTAL                                                     113.73 %

                     Registered Domicile of Assets
                           March 31st, 2004
                     (in percentage of net assets)

United Kingdom                                               68.73 %
United States of America                                     36.19 %
France                                                        4.37 %
Greece                                                        1.78 %
Cayman Islands                                                1.02 %
Bermuda                                                       0.80 %
Sweden                                                        0.73 %
Luxembourg (Grand Duchy of)                                   0.06 %
Guernsey                                                      0.05 %
    TOTAL                                                   113.73 %

The accompanying notes are an integral part of these financial statements

                         THE WORLD TRUST FUND

                   Notes to the Financial Statements
                           March 31st, 2004


The World Trust Fund (the "Fund") is an investment company with limited
liability organised as a " societe anonyme " under the laws of the Grand Duchy
of Luxembourg and qualified as a " societe d'investissement a capital fixe "
under the law of March 30th, 1988 regarding undertakings for collective
investments and Article 72-3 of the law of August 10th, 1915 regarding
commercial companies. The Fund is governed by section II of the law of March
30th, 1988 (the Luxembourg law of December 20th, 2002 as from February 13rd,
2004) on Collective Investment Undertakings.

The Fund has been incorporated in Luxembourg on June 20th, 1991 for an unlimited
duration. The Fund's articles of incorporation (the "Articles") have been
published in the " Memorial, Recueil des Societes et Associations " and they
have been filed with the Registrar of the Luxembourg District Court, where
copies thereof may be obtained. In addition, a legal notice concerning the issue
of the Shares is on file with the Registrar of the Luxembourg District Court.

The Fund's investment objective is to achieve long term capital appreciation
through investments in closed-end funds whose Shares are listed or traded on
international exchanges and at a discount to net asset value.


a)  Presentation of Accounts

    The financial statements are presented in accordance with the
    Luxembourg regulations relating to investments funds. The Fund
    keeps its books and records in USD.

b)  Valuation

    1)  The Net Asset Value per Share is calculated in accordance with
        Article 22 of the Articles on each Valuation Date (as defined
        in the Articles).

        The Net Asset Value per Share will be determined by dividing
        the Net Assets of the Fund being the value of its assets less
        liabilities, by the number of Shares then in issue.

    2)  In calculating the Net Asset Value, income and expenditures
        are treated as accruing from day to day and the Articles
        provide, inter alia, that :

        (i) securities which are quoted or dealt in on any stock
            exchange or other regulated market will be valued at the
            settlement or closing price on the last full business day
            on which such exchange or market was open for trading
            preceding the applicable Valuation Date;

        (ii) if securities are quoted, listed, traded or dealt in on
            more than one stock exchange or regulated market the
            Directors may select for the purposes of valuation the
            stock exchange or regulated market which they consider
            provides the fairest criterion of value for the relevant

        (iii) if securities are not quoted or dealt in on any stock
            exchange or regulated market or if, with respect to
            securities quoted or dealt in on any stock exchange or
            dealt in on any regulated market, the price as determined
            pursuant to paragraph (i) above is in the opinion of the
            Directors, not representative of the fair market value of
            the relevant securities, the value of such securities will
            be determined by reference to their reasonably foreseeable
            sales price determined prudently and in good faith by and
            under the direction of the Directors.

    3)  Average Cost : purchases of securities are recorded at cost.
        Realised gains or losses on securities sold are computed on an
        average cost basis.

    4)  The value of cash in hand or on deposit, bills and notes
        payable on presentation, accounts due, prepaid expenses and
        dividends and interest declared and fallen due but not yet
        received consists of the nominal value of such assets, except,
        however, in the event that it seems improbable that such value
        can be realised, in which event the value is determined by
        deducting a sum which the Board of Directors of the Fund
        considers appropriate to reflect the realisable value of such

    5)  Foreign currencies: monetary assets and liabilities
        denominated in foreign currencies in the Statement of Net
        Assets are translated into USD at the rates of exchange ruling
        at the date of the report. Transactions in foreign currencies
        are recorded in USD based on the exchange rates applicable at
        the date of the transaction.

The following significant exchange rates have been applied for the conversion as
of the date of the report :

        1   EUR          Euro                                  1.2288500
        1   GBP          Pound Sterling                        1.8363500
        1   HKD          Hong Kong Dollar                      0.1283582
        1   SEK          Swedish Krona                         0.1325469
        1   TWD          New Taiwan Dollar                     0.0303490

c) Income Recognition

Interest and dividend income is recorded on an accrual basis, net of any
withholding taxes in the relevant country.


A management fee of 0.75% per annum will be calculated each quarter on the basis
of the average weekly Net Asset Value during the relevant quarter and will be
paid quarterly in arrears to Lazard Asset Management LLC, the Manager.

The Manager is also entitled to a performance related fee payable yearly from
the second anniversary (i.e. from June 21st, 1993) of the Fund onwards which is
calculated as follows :

(i) 5% of the amount by which the undiluted Net Asset Value has
    exceeded by 5% or more but less than 10% per annum the compound
    growth rate of the Morgan Stanley Capital International World
    Index with net reinvested dividends, in USD (the « Index ») during
    the two preceding years; and

(ii) 10% of the amount by which the undiluted Net Asset Value has
    exceeded by 10% or more but less than 15% per annum the compound
    growth rate of the Index during the two preceding years; and

(iii) 15% of the amount by which the undiluted Net Asset Value has
    exceeded by 15% or more but less than 20% per annum the compound
    growth rate of the Index during the two preceding years; and

(iv) 20% of the amount by which the undiluted Net Asset Value has
    exceeded by 20% or more per annum the compound growth rate of the
    Index during the two preceding years; subject to the growth in the
    Index during the two year period being positive. In the event that
    the Index is not available at each Valuation Date, the Fund shall
    use its best efforts to estimate this index by reference to the
    MSCI World Index without reinvested dividends. Certain adjustments
    may be necessary in the event that actual performance at each
    anniversary date differs from those amounts previously accrued.

The Board of Directors of the Fund has resolved as of March 30th, 2004 :

--  to change the due date of calculation of the performance fee from July 1st
    (the date of the commencement of the Investment Management Agreement) to
    March 31st, end of the fiscal year, after the financial report is audited,
    subject to prior approval by the CSSF,

--  to update the Investment Management Agreement by an addendum (the
    "Addendum"), subject to prior approval by the CSSF. It is furthermore
    resolved that, subject to prior approval of the CSSF, such Addendum be

As of the date of the report, the performance fees amounted to USD 4,600,362. As
of March 31st, 2004 an additional amount of USD 1,681,369 has been provisioned
in connection with the above changes until a decision is taken upon these
suggested changes.

Out of its fees, the Manager will pay its own expenses and those of any
investment advisers retained by it.


As a Luxembourg investment company, under present laws the Fund is not subject
to income taxes in Luxembourg. Irrecoverable taxes may be withheld at the source
on dividends and interest received on investment securities.

According to the law of December 20th, 2002, the Fund is subject to Luxembourg
subscription duty (" taxe d'abonnement ") at the rate of 0.05% per annum of its
Net Assets, such tax being payable quarterly on the basis of the Total Net
Assets of the Fund at the end of the relevant quarter. However the value of
investments in other investment companies already subject to Luxembourg
subscription duty is not subject to this tax anymore.


The Fund may repurchase Shares up to 10% of the issued capital of the Fund and
Warrants when the Shares are trading at a discount to the Net Asset Value per
Share. The repurchase of Shares is granted by Shareholders on an annual basis;
however, Shareholders and Warrantholders do not have the right to require the
Fund to repurchase their Shares or Warrants. Shares repurchased may then be
resold at a future date when a premium to the Net Asset Value per Share may be
obtained or may be cancelled by way of a reduction of issued capital. Such
transactions will take place on a stock exchange, over-the-counter market or
other regulated market on which the Shares and Warrants are traded. Whilst it is
intended that this policy should have the effect of reducing the discount to Net
Asset Value at which the Shares trade, it is not intended to maintain the Share
price of the Fund at Net Asset Value.

Until the date of the report, the Fund has repurchased the following Shares on
the London Stock Exchange:

 Prior to March 31st, 2003   total repurchase   3,096,403 Shares  USD 47,045,639
                                                                  USD 47,045,639

These Shares are held in Treasury.


The balance of the Warrants has been converted into Shares in accordance with
the prospectus.


The Fund was incorporated with an authorised Share capital of USD 30,000,000
represented by 15,000,000 Shares of a par value of USD 2 each.

The initial subscribed capital amounted to USD 45,000 and was represented by
4,500 Units (each Unit consists of five Shares and one Warrant).

All Units have been fully paid in cash of USD 45,000 together with total issue
premiums of USD 180,000.

On September 27th, 1991 the Board of Directors decided to increase the capital
to USD 17,777,490 by the issue of 8,888,745 additional Shares and 1,773,249
additional Warrants attached thereto, against payment in cash of a total of USD
17,732,490 and a total Share premium of USD 66,496,837.50. This increase was
approved by notarial deed dated October 18th, 1991.

The Warrantholders could exercise their subscription rights in any of the years
1996 to 2001 inclusive. Each Warrant gave the right to subscribe to one Share at
a price of USD 10.

By a resolution of the meeting of the Board of Directors dated June 6th, 2002
the Board decided to increase the capital by creation of 442,993 new Shares of
USD 2 each, with a Share premium of USD 3,543,944. All the 442,993 Shares had
been entirely subscribed and fully paid in cash, so that the amount of USD
4,429,930 is available to the corporation.

The Fund is required by Luxembourg law to transfer five percent of its yearly
net profits to a non distributable legal reserve until such reserve amounts to
ten percent of the Fund's nominal Share capital, this reserve is not available
for dividend distribution.


The formation expenses have been amortised over a period of 5 years.


The Custodian receives, under the terms of the Custodian Agreement, fees for its
services at rates to be agreed from time to time between the Fund and the
Custodian in accordance with Luxembourg practice.


Each of the Directors shall be paid a fee for his services at such a rate (if
any) as the Board of Directors shall determine provided that the aggregate of
such fees shall not exceed USD 60,000 per annum or such higher amount as may
from time to time be determined by the Shareholders in General Meeting. The
Directors may also be paid all reasonable travelling, hotel and other expenses
properly incurred by them in the course of their duties relating to the Fund.


As of the date of the report, the Fund was not engaged in any outstanding
foreign exchange contracts and in any outstanding currency option.


As of the date of the report, the global valuation of the securities lent
amounted to USD 7,504,875.


As of the date of the report, the beneficial and non-beneficial interests of the
Directors in the Share capital are the following :

                                   Beneficial                   Non-Beneficial
                           --------------------------     --------------------------
                                     Shares                         Shares
                           --------------------------     --------------------------
Walter A. Eberstadt                           31,000                         72,000
Rafik E. H. Fischer                                -                              -
J. Murray Logan                                1,000                              -
Philip R. McLoughlin                               -                              -
Jeremy W. Sillem                              12,300                          2,540
François A. Voss                               2,500                              -
Alexander E. Zagoreos                         57,755                          1,425


Alexander E. Zagoreos is a Managing Director of Lazard Freres & Co., LLC which,
through its division Lazard Asset Management LLC, serves as an investment
manager for the Fund. Walter A. Eberstadt is a limited Managing Director of
Lazard Freres & Co, LLC, and François A. Voss is a Managing Director of Lazard
and Managing Director of Lazard Freres, Paris which may be considered affiliated
with Lazard Freres & Co., LLC through certain common partners.


As of the date of the report, the Directors of the Fund were aware of the
following interests in the Shares of the Fund :

                                                       Shares        of Issued Capital

Clients of Lazard Freres & Co., LLC and
Lazard Asset Management
                                                        1,972,134            31.62835%

All issued Shares of the Fund are on deposit with a registered clearing house
and, accordingly, with the exception of those Shareholdings of which the
Directors have been notified, the Directors are not in a position to state the
exact size of any Shareholdings in the Fund.


As of the date of the report, the Fund had no Short Term Arrangements.


The changes of the investment portfolio are available at the registered office
of the Fund without any fee.


The Board of Directors of the Fund has resolved on the October 23rd, 1998 to
amend the Placing Memorandum mainly:

--  to allow the hedging of risks connected to the evolution of stock markets to
    the fullest extent permitted by the Luxembourg regulations, and

--  to emphasise the Manager's intent to make active use of the Fund's voting
    rights to participate in matters pertaining to the orientation and policies
    of closed-end funds in which it invests.

The addendum is dated June 1999 and is part of the Placing Memorandum dated July
2nd, 1991 and may not be distributed without such Placing Memorandum.

The Board of Directors of the Fund has resolved to amend and complete this
addendum mainly:

--  to allow, for hedging purposes, the selling of short indices, shares of
    exchange-traded funds or Closed-end Funds, baskets of stocks and stocks,
    short sales not exceeding 100% of the Fund's net assets.

The addendum is dated April 2002, replaces the one dated June 1999 and is part
of the Placing Memorandum dated July 2nd, 1991 and may not be distributed
without such Placing Memorandum.

As from March 22nd, 2004 the CSSF approved the amended Placing Memorandum
(February 2004) which is only valid if accompanied by the Addendum dated April
2002 in order that the Fund is subject to the law December 20th, 2002 regarding
undertakings for collective investments with effect from February 13th, 2004.

a d v e r t i s e m e n t