Interim Management Statement

RNS Number : 6260H

Henderson Diversified Income Ltd

24 February 2010

 



HENDERSON DIVERSIFIED INCOME LIMITED

24 FEBRUARY 2010

HENDERSON DIVERSIFIED INCOME LIMITED

Interim Management Statement

Review of the period from 1 November 2009 to 31 January 2010

MATERIAL EVENTS OR TRANSACTIONS DURING THE PERIOD

Dividends: a fourth interim dividend of 1.25p per ordinary share in respect of the year ended 31 October 2009, was paid on 31 December 2009 to holders registered on 11 December 2009.

A first interim dividend of 1.15p per ordinary share in respect of the year ended 31 October 2010, was declared on 24 February 2010 and will be paid on 31 March 2010 to holders registered on 12 March 2010.

Share Price:  Over the period the share price rose from 69.5p to 74.3p whilst the share price discount to net asset value rose from -6.7% to -6.9%.

Review: Over the three months to 31 January 2010, three month LIBOR remained stable with a marginal rise from 0.59% to 0.62%. The income target of 1.25% over LIBOR continues to be exceeded and any further increases in LIBOR will increase distributable income in future quarters. Over the period, we continued our policy of recycling cash out of bonds that have performed well, and where capital appreciation is limited by their high government bond sensitivity, into bonds where there is a greater potential for capital appreciation due to declining credit risk and a large yield cushion against government bond yields. Given the modest rally in the gilt market at the end of the period, we sold a few more future contracts and in doing so effectively shortened the duration (interest rate risk) of the portfolio, offsetting the longer dated investment grade holdings that display sensitivity to the gilt market. The loan portfolio made good progress where we have been switching loans at attractive discounts, to those offering better potential for further capital appreciation and good running yields.

There are no other material events or transactions to report.

PERFORMANCE AND FINANCIAL HIGHLIGHTS

Performance to 31 January 2010

	1 month	3 months	Since launch
Net Asset Value Total Return per ordinary share	3.54	9.26	-0.95
Share Price Total Return per ordinary share	6.83	8.89	-9.81

The Fund was Launched in July 2007

Source:   Datastream

Financial Position

	at 31 January 2010	at 31 October 2009
Net assets	£75m	£72m
Net asset value (cum income)	79.8p	74.5p
Ordinary share price	74.3p	69.5p
Premium/Discount	-6.9%	-6.7%
Gearing	13%	16%
Target Yield	3 month LIBOR + 1.25%*	3 month LIBOR + 1.25%
Total Expense Ratio	1.43%	1.43%

*3 month £ LIBOR was 0.62% on 31 January 2010

Dividends Paid/Declared in Financial Year to date

	Amount	Pay Date	Record Date
Fourth Interim	1.15p	31 December 2009	11 December 2009
First Interim	1.2p	31 March 2010	12 March 2010

THE PORTFOLIO

Top 10 Investments	Country	% of portfolio	% of portfolio
		at 31 Jan 2010	at 31 Oct 2009
ISS 11% 15/06/2014, 8.875% 15/05/2016 and FRN 15/05/2018 Second Lien		2.7%	-
Kabel BW (secured loan B & C)	Germany	2.3%	2.43%
XSYS Flint (secured loan B)		2.3%	2.18%
Nycomed (secured loan C & D)		2.3%	-
Bauch & Lomb (secured loan term B)	Euro	2.2%	2.36%
Infonxx (secured loan term B)	Euro	2.2%	2.15%
BNP Paribas FRN 7.436%	Euro	2.1%	2.13%
Prosiben (secured loan B)		2.0%	-
AZ Electronics (secured loan B & C)	Euro	2.0%	2.05%
Aviva 5.7% and 6.125%		2.0%	2.14%

Sector Breakdown	% at 31 January 2010	% at 31 October 2009
Secured Loans	52.5	50.2
Investment Grade Bonds	27.7	30.0
High Yield Corporate Bonds	19.8	17.6
Credit Default Swaps**	0.0	0.0
Unit Trust	0.0	0.1
Cash	0.0	2.1

**The total gross exposure to short and long risk positions in credit default swaps at 31 January 2010 was £4.2 million (31 October 2009: £9.4 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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