Interim Management Statement

RNS Number : 6397Z

Advance Developing Markets Fund Ltd

11 March 2013

 



Advance Developing Markets Fund Limited ("the Company")

Interim Management Statement

This interim management statement covers the period from 1 November 2012 to 28 February 2013 and up to the date of publication of this statement. It is the first interim management statement issued by the Company in its financial year to 31 October 2013, as required by the UK Listing Authority's Disclosure and Transparency Rule 4.3.

Investment objective and policy

The Company's investment objective is to achieve consistent returns for Shareholders in excess of the MSCI Emerging Markets Net Total Return Index in Sterling terms.

Advance Emerging Capital Limited (the "Investment Manager") invests in a portfolio of funds and products which give diversified exposure to emerging market economies and those of the Pacific Rim. The Company's geographic asset allocation is derived from the Investment Manager's analysis of the prospects for regions and countries and of the underlying opportunities for investment. Individual investments are selected for their potential to outperform as a result of one or more of the following criteria: the performance of the region, market or asset class in which they invest; the skill of the underlying fund manager; and, in the case of closed end funds, through the narrowing of discounts at which their shares trade to net asset value. The Investment Manager may employ hedging mechanisms where it believes that this would protect the performance of the Company's investment portfolio in a cost effective manner.

Highlights

During the period from 1 November 2012 to 28 February 2013:

*  Net Asset Value ("NAV") per ordinary share ("Share") rose by 15.3%

*  Share price rose by 16.6%

*  MSCI Emerging Markets Net Total Return Index in Sterling terms rose by 13.1%

*  NAV per Share was 537.9p as at 28 February 2013

*  Share price was 490.0p as at 28 February 2013

*  Net assets were £405.9 million as at 28 February 2013

Gearing

Gearing is not used as a tool to enhance performance but short term borrowing is permitted to assist in the management of liquidity.

Material transactions and events

At the Company's Annual General Meeting, to be held on 15 March 2013, shareholders will be given the opportunity to vote on the continuation of the Company in accordance with the Company's articles of incorporation which provides for a continuation vote every 5 years.

In light of the forthcoming vote, the Board undertook a broad shareholder consultation exercise in the fourth quarter of 2012, which covered shareholders owning over 75% of the Company's ordinary shares and appointed an external investment consultant to review the Company's investment management arrangements and performance. While a wide range of views were expressed by shareholders, it was clear that the majority of those consulted were in favour of continuation of the Company and its focus on a portfolio of funds and products which give diversified exposure to emerging market economies. As a result the Board has recommended that shareholders vote in favour of the continuation resolution at the Annual General Meeting.

In conjunction with the continuation vote the Company announced proposals on 20 December 2012 for a tender offer for up to 15 per cent of the Company's shares in issue and two further conditional tender offers. The formal details of these proposals are contained in a circular published on 8 February 2013. The Board believes that the proposals strike a fair balance between those shareholders who wish to realise part of their investment in the Company at close to net asset value and those who wish to maintain their investment in the Company. The results of the initial 15 per cent tender offer are expected to be announced on 19 March 2013.

The Board of Directors is not aware of any other significant events or transactions that have occurred between 1 November 2012 and the date of this interim management statement that would have a material impact on the financial position or performance of the Company.

Investment Manager's Comment

During the period the portfolio's relative underweight in Asia was reduced with the most notable addition being to China. The increase in the Asian weighting was at the expense of Russia and Brazil.

With global markets recovering their poise and emerging market equities continuing to offer both growth and value, we remain confident that the prospects for the asset class are highly attractive.

Top 10 Holdings as at 28 February 2013                               % of NAV

Henderson Asian Growth Trust                                                  5.6%

BlackRock Latin American Investment Trust                              5.3%

Atlantis China Fund                                                                   5.1%

Korea Fund Inc                                                                         4.7%

JP Morgan Russian Securities                                                    4.0%

Neuberger Berman - China Equity Fund                                     4.0%

Tarpon All Equities Fund                                                            3.9%

Aberdeen Latin America Equity                                                 3.9%

iShares FTSE BRIC 50                                                              3.7%

Coronation Top 20 Fund                                                              3.6%

Total for top 10 holdings                                                             43.8%  

11 March 2013

Enquiries:

Advance Emerging Capital Limited (Investment Manager to Advance Developing Markets Fund Limited)

Roger Allen

Tel: [phone]           Email: [e-mail]

 

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