RNS Number:7969S
Accelerated Return Fund Limited
03 December 2003
THE ACCELERATED RETURN FUND LIMITED
PRELIMINARY ANNOUNCEMENT OF INTERIM RESULTS
The Directors announce the unaudited statement of results for the interim period
from 1 April to 30 September 2003 as follows:-
About the Company
The Accelerated Return Fund Limited is a Guernsey incorporated, closed-ended
investment company. With the exception of two Management Shares issued for
administrative reasons, the Company's issued share capital comprises 27,700,000
Participating Shares ("Shares") whose performance is designed to depend upon the
performance of the FTSE 100 Index.
Pursuant to the initial placing and offer for subscription 21,200,000 Shares
were issued at a price of 100p per share on 8 April 2003, a further 2,100,000
Shares were issued at a price of 105.25p on 5 June 2003 and a further 2,300,000
Shares were issued at a price of 108p on 22 July 2003. After the period end a
further 2,100,000 Shares were issued at a price of 112p on 15 October 2003. All
27,700,000 Shares now in issue rank pari passu, have been admitted to the
Official List and are capable of being dealt in on the London Stock Exchange.
The Company has an unlimited life but the Shares will be redeemed on or around
10 October 2008.
Your Board in conjunction with the Company's Manager has, since the initial
placing and offer for subscription of Shares, been successful in raising further
capital for the Company by the subsequent issue of 6,500,000 new Shares. Looking
to the future your Board remains open to further approaches from shareholders,
prospective shareholders or the Company's Manager which may result in the issue
of further shares. As was the case with the 6,500,000 Shares issued between June
and October of this year, any further issues of Shares would only be made where
the proceeds of the issue can be invested in accordance with the Company's
investment objective and policy and on terms which are non-dilutive for existing
shareholders.
Investment Objective and Policy
The investment objective of the Company is to provide shareholders with six
times the capital return of the FTSE 100 Index, up to a maximum of 66%, over 5 1/2
years (the "Final Capital Entitlement"). The Final Capital Entitlement per Share
is designed to be determined by the performance of the FTSE 100 Index over the
calculation period from 7 April 2003 to 7 October 2008.
In accordance with the Company's investment policy, the net proceeds derived by
the Company from the issue of Shares have been invested in a portfolio of debt
securities and over-the-counter derivative instruments at prices based on the
closing level of the FTSE 100 Index on 7 April 2003 of 3935.80. Therefore, if
the FTSE 100 Index rises 11% from its starting level of 3935.80 on 7 April 2003,
which equates to a level of 4368.80 in October 2008, the Shares are designed to
return growth of 66%.
There is full capital protection if the FTSE 100 Index has fallen at the end of
the period (October 2008) unless the FTSE 100 Index has closed more than 50%
down during the term to 1967.9. In this case, if the FTSE 100 Index is still
below 3935.80 at the end of the period, the net asset value of the Company will
fall by an equivalent percentage. If the level of the FTSE 100 Index has
returned above its starting level of 3935.80 in October 2008, then the Company
will still provide six times the return of the FTSE 100 Index to a maximum of
66%.
Manager's Report for the period 1 April to 30 September 2003
Investment Performance
At launch, and at each subsequent placing of Shares, the net proceeds derived
from the issue of Shares of the Fund were invested in a portfolio of debt
securities and options at a price based on the FTSE 100 Index on 7 April 2003 at
an effective index level of 3935.8. On 30 September 2003, the FTSE 100 Index
closed at 4091.3, a rise of 4.0% since launch. Over the same period, the total
market value of the Fund rose by 13.5%.
As the Fund's investment portfolio is based upon the FTSE 100 Index, it is
possible to show the potential capital entitlements available to shareholders
based on the level of the FTSE 100 Index on the Fund's winding-up date of 7
October 2008. These figures are for illustrative purposes only and do not
represent forecasts or take into account any unforeseen circumstances.
As at 7 October 2008:
Final FTSE 100 Index Net Asset Value if Net Asset Value if
Level FTSE 100 Index never FTSE 100 Index has
closes below 1967.9** closed below 1967.9**
2000 100 50
2500 100 63
3000 100 76
3500 100 88
4000 109 109
4091.3* 123 123
4500 166 166
* FTSE 100 Index level at the end of the reporting period
** On any day from 7 April 2003 to 7 October 2008
Market Review
The FTSE 100 Index began the period under review rebounding strongly from the
seven-year lows seen for many global equity indices in March 2003. This was
predominantly attributable to the seemingly swift resolution to the conflict in
Iraq. The FTSE 100 Index recorded its biggest monthly percentage gain of 8.7% in
more than 5 years in April and was up 13.2% in the six months to 30 September,
with 92 of the constituent stocks making gains.
Most of the upside for the Index again came from heavyweight financials such as
HSBC, Barclays and Lloyds, and pharmaceutical large-caps GSK and Astrazeneca. In
percentage terms, the best performing stock was Reuters, which rose over 109%
throughout the period, as poor sentiment surrounding its business prospects gave
way to takeover speculation. ICI, another stock that had been hit hard at the
start of the year, rebounded over 80% and was the best performing stock in the
3rd quarter of 2003. Previous strong performers in the tobacco and utilities
sectors lagged as investors moved away from defensive stocks.
The summer months were typically quiet and volatility fell to very low levels as
many dealers and investors enjoyed the uncharacteristically good weather. The
market remained range-bound between 4000 and 4200, with many participants
observing that a breakout in either direction would prove decisive in the medium
term, and indeed spurred on by advances in the US, the breakout was to the
upside.
Having closed at a new high for the year of 4314.70 on 18th September, the Index
fell back towards the end of the month following weakness for most global equity
markets brought about by concerns regarding the efficacy of fiscal and monetary
policy in the US and the subsequent volatility in the currency markets,
specifically the weakness of the dollar. This came about from comments made by
central bankers at a meeting of G8 countries that implied an end to the "strong
dollar policy".
Market Outlook
Despite recent rises and higher short term price to earnings ratios compared to
longer term trends, many commentators see value in UK stocks, although rising
gilt yields have made this argument somewhat less compelling. Going forward,
much will depend on the performance of the US market, and this provides probably
the greatest threat, as valuations there, specifically price to earnings ratios
are discounting very optimistic earnings growth and a recovery in capital
expenditure.
The rally has also displayed a level of complacency toward global geopolitical
events that could be easily be shattered by any escalation in terrorist
activity. With the situation in Iraq far from being satisfactorily concluded,
the ongoing tension with North Korea, as well as missile testing in Pakistan,
there are a number of potential sources for negative price shocks.
INCOME STATEMENT
for the period from 1 April 2003 to 30 September 2003
GBP
Net movement in unrealised appreciation on investments 1,963,700
-----------
Operating expenses (2,038,374)
-----------
Loss before financing costs and taxation (74,674)
-----------
Loss on ordinary activities before taxation (74,674)
-----------
Taxation on ordinary activities -
-----------
Net loss for the period (74,674)
===========
In arriving at the results for the financial period, all amounts above relate to
continuing operations.
There are no recognised gains or losses for the period other than those
disclosed above.
BALANCE SHEET
as at 30 September 2003
MANAGE-
MENT
FUND FUND TOTAL
GBP GBP GBP
FIXED ASSETS
Financial assets 25,409,440 - 25,409,440
----------- ---------- -----------
CURRENT ASSETS
Debtors 10,226 2 10,228
Cash at bank 912,787 - 912,787
----------- ---------- -----------
923,013 2 923,015
CURRENT LIABILITIES
Creditors due within one 107,584 - 107,584
year ----------- ---------- -----------
NET CURRENT ASSETS 815,429 2 815,431
----------- ---------- -----------
Creditors due after one 815,429 - 815,429
year
NET ASSETS 25,409,440 2 25,409,442
=========== ========== ===========
SHAREHOLDERS' FUNDS
Share capital 2,560 2 2,562
Share premium 25,481,554 - 25,481,554
----------- ---------- -----------
25,484,114 2 25,484,116
Retained earnings (74,674) - (74,674)
----------- ---------- -----------
TOTAL SHAREHOLDERS' FUNDS
25,409,440 2 25,409,442
=========== ========== ===========
SHARES IN ISSUE 25,600,000 2 25,600,002
NAV PER SHARE Pence Pence
99.25 100.00
STATEMENT OF CASH FLOWS
for the period from 1 April 2003 to 30 September 2003
GBP
Operating activities
Loss on ordinary activities after taxation (74,674)
Less: unrealised appreciation on investments (1,963,700)
Add: increase in accrued expenses 923,013
Less: increase in accrued income (10,226)
-----------
Net cash outflow from operating activities (1,125,587)
-----------
Investing activities
Purchase of financial assets held for trading (23,445,740)
-----------
Net cash outflow from investing activities (23,445,740)
-----------
Financing activities
Proceeds of issue of Participating Shares 25,894,250
Issue costs of Participating Shares (410,136)
-----------
Net cash inflow from financing activities 25,484,114
-----------
Increase in cash and cash equivalents 912,787
===========
Cash at end of period 912,787
===========
For further information contact:
John R Le Prevost, for Company Secretary. Tel: Guernsey 01481 722260
for The Accelerated Return Fund Limited
Anson Fund Managers Limited - Company Secretary
3 December 2003
END OF ANNOUNCEMENT
This information is provided by RNS
The company news service from the London Stock Exchange
END
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