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Foreign & Colonial Investment Trust NAV per share down 3.4 per cent


Foreign & Colonial Investment Trust’s net asset value per share fell by 3.4 per cent in the first half of 2010 to 294.4 pence.

Foreign & Colonial Investment Trust’s net asset value per share fell by 3.4 per cent in the first half of 2010 to 294.4 pence.

The net asset value total return over the period was -2.2 per cent, compared with a total return from the benchmark (40 per cent FTSE All-Share and 60 per cent FTSE All World ex UK) of -3.6 per cent.

An interim dividend has been maintained at 3.0p.

Outperformance of the benchmark was driven by positive performance from the private equity portfolio.

Asset allocation was the largest positive contributor to performance. A widening in the discount acted as a slight drag, leading to a share price total return of -3.6 per cent.

An active discount control mechanism continued to be employed, with 17,264,048 shares bought back during the period.

The portfolio is underweight relative to the benchmark in the US, UK, Europe and Japan and overweight developed Asia and emerging markets.

Although revenue has been hit by the suspension of dividend payments by BP, the board still intends at least to match in 2010 the level of dividend paid by FCIT in 2009. This is likely to necessitate a small transfer from the revenue reserve built up by the company over the past decade.

During the period FCIT took out new short-term loans in yen and sterling, raising the effective level of gearing from 7.6 per cent to 12.4 per cent. This borrowing was used to buy into weaker markets in May and June.
Foreign & Colonial Investment Trust chairman Simon Fraser says: “We expected and got more volatile and difficult market conditions in the first half of 2010. Our listed portfolio suffered from this, but higher private equity valuations meant we outperformed our benchmark.
“On balance we think the opportunities are greater than the threats and our increased gearing reflects this view. Our highly diversified portfolio gives us great flexibility to cope with whatever markets might do in the rest of 2010.”

Foreign & Colonial Investment Trust was the world’s first collective investment fund when it was launched in 1868. With over GBP2bn of assets under management, it is still one of the UK’s largest and is a constituent of the FTSE 250 Index. Managed by Jeremy Tigue at F&C Investments in London, FCIT aims to provide long-term capital and income growth from a globally spread portfolio of listed and private equity.

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