October 23, 2009
Proposed share split, change of share trading currency, benchmark and performance fee arrangements
In the most recent report and accounts published by The World Trust Fund (the “Fund”), the Board referred to the possible change of currency in which the Fund’s shares are traded and a sub-division of the share capital, both of which would be expected to assist in the marketability of the Fund’s shares. The Board is pleased to announce today proposals to implement these changes, together with certain other proposed changes to the Fund’s benchmark and performance fee arrangements with the Fund’s investment manager, Lazard Asset Management LLC (“Lazard”). In summary, the proposals are to:
(i) change the currency in which the Fund’s shares are traded from US dollars to Sterling;
(ii) undertake a sub-division of the Fund’s share capital on the basis of 10 new ordinary shares for each existing ordinary share;
(iii) change the benchmark of the Fund to the MSCI All Countries World Index; and
(iv) increase the NAV on which the performance fee calculation is based ("Reference NAV") to reflect the underperformance of the Fund over the previous 12 months.
The proposed sub-division and change of benchmark are conditional upon the approval of shareholders and it is anticipated that a circular containing details of those proposals (“Circular”) and a notice of extraordinary general meeting (“EGM”) will be sent to shareholders following approval of the Circular by the Commission de Surveillance du Secteur Financier (“CSSF”). This approval is required as a consequence of the Fund being incorporated in Luxembourg.
Change of share trading currency and proposed sub-division
In response to comments from a number of shareholders and potential investors in the Fund about the liquidity of the Fund’s shares, the Board, having consulted with the Fund’s brokers, Arbuthnot Securities, believes that having a larger number of shares in issue with a lower share price than at present and changing the currency in which the shares are traded from US dollars to Sterling, should assist in improving the marketability and liquidity of the Fund’s shares and support the attraction and retention of a diverse shareholder base.
Change of share trading currency – the London Stock Exchange has confirmed that the currency in which the Fund’s shares are traded will change from US dollars to Sterling with effect from 8.00 am on Friday 30 October 2009.
Proposed sub-division – the Board intends to send a Circular to shareholders, following approval by the CSSF, to approve a resolution to sub-divide the ordinary shares of $2 each in the capital of the Fund so that shareholders will receive 10 new ordinary shares of $0.20 for each existing ordinary share of $2. The value of each shareholding will not be affected by the proposed sub-division. The new ordinary shares will, in all respects, rank pari passu with and, except for the difference in nominal value, be subject to the same rights and restrictions as the existing ordinary shares and, in particular, the holders of new ordinary shares will have the same voting rights, the same rights to participate in dividends or income of the Fund and the same rights on a liquidation of the Fund as holders of existing shares. There will be no increase in total share capital as a result of the sub-division, no new shares are being marketed or being made available to non-shareholders in whole or in part and no additional funds are being raised. An expected timetable of principal events in relation to the proposed sub-division will be set out in the Circular.
Proposed change of Benchmark
The Board announced in the Fund’s latest annual accounts that it had been discussing with Lazard a proposed change to the Fund’s benchmark from the MSCI World Index (“Benchmark”), which has no emerging market component, to the MSCI All Countries World Index which includes an emerging markets element (although at a smaller percentage than those investments in the Fund’s current portfolio). In light of the expectation that the Fund will be maintaining a material commitment to emerging markets, the Board has now decided that a change in benchmark would be desirable. The Board also believes that the proposed benchmark will improve transparency and align the Fund’s benchmark with that of its peers in the sector. The proposed change to the benchmark will be conditional upon the approval of both the CSSF and shareholders. Details of the resolution to be put to shareholders and of the EGM will be set out in the Circular, which will be despatched following approval by the CSSF.
Change to the performance fee arrangements
In the period from 31 March 2008 to 31 March 2009, the Fund’s NAV fell by 61.3%, underperforming the MSCI World Index, which fell by 44.0%. The Board has discussed this under performance with the Fund’s investment manager and Lazard has proposed an adjustment to the Reference NAV. The proposal involves increasing the Reference NAV from $17.66 to $25.57 for the period 31 March 2009 to 31 March 2011 to reflect the previous year’s under performance relative to the Benchmark. This will result in the investment manager only being entitled to the payment of a performance fee if there is out-performance relative to the Benchmark using the higher Reference NAV. Except for the raising of the Reference NAV, the performance fee will continue to be calculated in the same manner as described in the Fund's legal documentation. The Board believes that this adjustment will benefit shareholders while at the same time continuing to provide an incentive for the Fund’s investment manager to out-perform the Benchmark.
For more information contact:
Arbuthnot Securities Limited
Alastair Moreton / Hannah Pearce
020 7012 2000
Short Name: World Trust Fund
Category Code: CAR
Sequence Number: 201015
Time of Receipt (offset from UTC): 20091023T081339+0100
Source: AnnuityIQ; Business Wire