Interim Management Statement

RNS Number : 9898B

Henderson Diversified Income Ltd

28 February 2011

 



HENDERSON DIVERSIFIED INCOME LIMITED

28 FEBRUARY 2011

HENDERSON DIVERSIFIED INCOME LIMITED

Interim Management Statement

Review of the period from 1 November 2010 to 31 January 2011

MATERIAL EVENTS OR TRANSACTIONS DURING THE PERIOD

Dividends: a fourth interim dividend of 1.15p per ordinary share in respect of the year ended 31 October 2010, was paid on 31 December 2010 to holders registered on 10 December 2010.

A first interim dividend of 1.15p per ordinary share in respect of the year ended 31 October 2011, was declared on 28 February 2011 and will be paid on 31 March 2011 to holders registered on 11 March 2011.

Share Price:  Over the period the share price declined from 79.3p to 77.0p whilst the share price discount to net asset value widened from -4.5% to -7.6%.

Review: 

Over the three months to 31 January 2011, three month sterling LIBOR increased marginally from 0.74% to 0.78%. The income target of 1.25% over LIBOR continues to be exceeded and as and when interest rates are finally raised in the UK the distributable income will increase, albeit with a lag. Over the period bond markets remained volatile as European peripheral sovereign risks remained at the forefront of investors' minds. However, in early 2011 the corporate bond market regained its poise and climbed higher as investors took comfort from a continued strong economic recovery and signs that European politicians were finally attempting to formulate a comprehensive solution to their fiscal crisis. The loan market was less volatile over the period supported by continued refinancings into the bond market and investor demand for the asset class. The Company remains positioned for a reflationary economic outlook with a substantial proportion of its assets in floating rate securities. A low and declining default rate is supportive for the credit holdings whilst anything with a high interest rate sensitivity continues to be shunned as rising rates will likely lead a loss of capital in these asset classes. In addition, the Company has continued to hold the small allocation to high yielding ordinary shares that was made in the summer of 2010.

There are no other material events or transactions to report.

PERFORMANCE AND FINANCIAL HIGHLIGHTS

Performance to 31 January 2011

	1 month	3 months	Since launch
Net Asset Value Total Return per ordinary share	1.47	1.66	10.50
Share Price Total Return per ordinary share	1.98	-1.40	3.34

The Fund was launched in July 2007

Source:   Datastream

Financial Position

	at 31 January 2011	at 31 October 2010
Net assets	£77m	£76m
Net asset value (cum income)	83.3p	83.0p
Ordinary share price	77.0p	79.3p
Premium/Discount	-7.6%	-4.5%
Gearing	11%	9%
Target Yield	3 month LIBOR + 1.25%*	3 month LIBOR + 1.25%*
Total Expense Ratio (Source: Henderson fact sheet)	1.71%	1.71%

*3 month £ LIBOR was 0.78% on 31 January 2011 and 0.74% on 31 October 2010

Dividends Paid/Declared in Financial Year to date

	Amount	Pay Date	Record Date
Fourth Interim	1.15p	31 December 2010	10 December 2010
First Interim	1.15p	31 March 2011	11 March 2011

THE PORTFOLIO

Top 10 Investments	Country	% of portfolio	% of portfolio
		at 31 Jan 2011	at 31 Oct 2010
ISS (11% 15/06/2014, 8.875% 15/05/2016 and FRN 15/05/2018 Second Lien)	Denmark	2.8%	2.2%
Alliance Boots (secured loan 05/07/2015 term B2)	UK	2.4%	1.2%
House of Fraser (secured loan term B & C)	UK	2.4%	1.2%
Gala (secured loan term B & C)	UK	2.4%	2.4%
Lloyds Banking Group (Lloyds 11.04% & 7.869%, HBOS-Cap funding 6.461% & Sterling finance 7.881%, Bank of Scotland 7.281%, 7.286% and Capital funding 8.117%)	UK	2.3%	2.6%
RBS WorldPay (secured loan term B1 and FRN 15/10/2017 Term B1)	UK	2.2%	0.9%
Kabel BW (secured loan term B & C)	Germany	2.2%	2.2%
Bausch & Lomb (secured loan term B)	United States	2.1%	2.2%
Xerium (secured loan)	USA	2.1%	1.6%
ProSieben (secured loan B2 &B3)	Germany	2.1%	2.1%

Sector Breakdown	% at 31 January 2011	% at 31 October 2010
Secured Loans	56.0	54.3
High Yield Corporate Bonds	21.1	21.4
Investment Grade Bonds	18.7	20.1
Equities	4.2	4.2
Credit Default Swaps**	0.0	0.0

**The total gross exposure to short and long risk positions in credit default swaps at 31 January 2011 was £3.7 million (31 October 2010: £5.0 million).

The objective of Henderson Diversified Income Limited is to provide Shareholders with a high level of income and capital growth over the long term.

The Company aims to deliver these objectives for Shareholders by investing selectively across the full spectrum of fixed income asset classes including, but not limited to, secured loans, asset-backed securities, investment grade corporate bonds, high yield corporate bonds, unrated bonds, gilts, preference and selective high yield equity shares, hybrid securities, convertible bonds and floating rate notes.

Further information on the Company, including an up to date NAV and share price information, can be found at http://www.hendersondiversifiedincome.com

For further information, please contact:

Jeremy Hamon Company Secretary Telephone: [phone]	James de Sausmarez Director Head of Investment Trusts Henderson Global Investors Telephone: [phone]
Sarah Gibbons-Cook Investor Relations and PR Manager Henderson Global Investors Telephone: [phone]

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