Interim Management Statement

 
TIDMKGR 
 
KGR ABSOLUTE RETURN PCC LIMITED 
( Registered in Guernsey - Number 43789 ) 
 
Registered Office: 
MARTELLO COURT, ADMIRAL PARK, ST PETER PORT, GUERNSEY, GY1 3HB 
 
__________________________ 
 
TELEPHONE: [phone] 
FACSIMILE: [phone] 
 
e-mail: [e-mail] 
 
For immediate release 8 May 2009 
 
KGR ABSOLUTE RETURN PCC LIMITED - KGR ASIA DYNAMIC 1 (GBP) 
 
(a closed-ended protected cell company incorporated in Guernsey with 
registration number 43789) 
 
Interim Management Statement - 3 months to 31 March 2009 (unaudited) 
 
This statement has been prepared to provide additional information to 
shareholders as a body to meet the relevant requirements of the UK Listing 
Authority's Disclosure and Transparency Rules. It should not be relied upon by 
any party for any purpose other than as stated above. 
 
The Company is now subject to the Companies (Guernsey) Law 2008 which was 
introduced on 1 July 2008. In addition, the new Guernsey Closed Ended Fund 
rules took effect on 15 December 2008 and the Company is now classified as an 
Authorised Fund and has to comply with the requirements of the Authorised 
Collective Investment Schemes Rules 2008 (the "Authorised Rules"). 
 
Investment Objective, Investment Adviser and Change of Name of the Company 
 
The Company's objective is to seek long term capital appreciation through 
investment in a diversified multi-manager, multi strategy portfolio of hedge 
funds investing in Asia. 
 
During 2008 the Company's Investment Adviser was acquired by LGT Capital 
Partners, a leading alternative asset manager based in Switzerland, focused on 
institutional investors. As a consequence, the Investment Adviser has changed 
its name from KGR Capital (Hong Kong) Limited to LGT Capital Partners 
(Asia-Pacific) Limited. In light of the change of ownership of the Investment 
Adviser, the Board will propose a special resolution at the Annual General 
Meeting on 16 June 2009 to change the name of the Company to Castle Asia 
Alternative PCC Limited. The name of the only existing cell, within the 
Company's protected cell structure, will be changed to Sterling Class. The 
Board believes that the new name will make it easier for the Company to benefit 
from marketing and investor relations initiatives undertaken by LGT Capital 
Partners on behalf of two other listed companies for which it is responsible: 
Castle Alternative Invest and Castle Private Equity. 
 
The Company's policy of hedging its US$ exposure using forward foreign exchange 
contracts was reinstated on 29 December 2008. 
 
Performance Summary 
 
Over the three month period, the company's net asset value produced a negative 
return of 0.20%, net of all fees. The closing net asset value as at 31 March 
2009 was GBP56.23 million or 100.06 pence per share. At the close of business on 
31 March 2009 (the last business day of the quarter), the mid market price of 
KGR AR's shares on the London Stock Exchange was 81.00 pence, representing a 
discount of 19.05%. 
 
The performance of KGR AR's NAV per share for the three months to 31 March 2009 
was as follows: 
 
       Month           Performance 
 
January 2009              -0.04% 
 
February 2009             -0.85% 
 
March 2009                +0.69% 
 
Market Update 
 
Asian equity markets started 1Q2009 on a strong note in continuation of the 
recovery towards the end of 2008. The rally proved to be short-lived and the 
market sold off sharply from late January to early March, as economic releases 
remained weak and concerns over the financial system remained centre stage. 
Towards late March, however, confidence seemed to have returned which helped 
fuel a sharp rebound in the equity markets as capital started to be allocated 
again. The market continued to surge in the month of April, with MSCI Asia 
Pacific Index and MSCI Asia ex-Japan Index moving up 12.4% and 16.5% in the 
month respectively. Overall, the major Asian equity indices ended the quarter 
with mixed results. On-shore China was by far the best performing market, while 
Japan and Vietnam were the two worst performing markets over this three-month 
period. 
 
Credit markets, on the other hand, eased up despite ongoing concerns over 
corporate credit risks worldwide. Spreads on both Asian high grades and high 
yields narrowed significantly in January, and in the case of high yields, 
continued to narrow in February and March. Overall, these credit spreads ended 
the quarter narrower than their respective levels at the end of 2008. 
 
With almost every asset class showing some signs of stabilizing, similar 
behavior could be observed in the commodity markets. While the broader Standard 
&Poor Goldman Sachs Commodity Index was down 10.6%, oil and gold were positive 
performers for the quarter. Oil, in particular, led the way and was up in all 
three months for a cumulative return of 26.1% over this period. 
 
Strategy Contribution 
 
      Strategy            1Q2009 
 
Arbitrage                 +0.28% 
 
Equity Market             +0.08% 
Neutral 
 
Event Driven              +0.09% 
 
Fixed Income              -0.08% 
 
L/S China                 +0.06% 
 
L/S Japan                 -0.27% 
 
L/S Pan Asia              -0.45% 
 
Macro                     -0.10% 
 
Multi-Strategy            +0.20% 
 
Performance Review 
 
The change in the NAV over 1Q2009 was, to a large extent, consistent with the 
performance of the underlying strategies over the period. Arbitrage managers 
collectively were the biggest positive contributors to performance. On the 
other hand, long/short pan Asia managers were the biggest detractors to 
performance. 
 
The table below shows the composition of KGR AR's investment portfolio by 
strategy as at 31 March 2009 (excluding cash): 
 
      Strategy       As at 31 Mar 09 
 
Arbitrage                 16.55% 
 
Equity Market             10.29% 
Neutral 
 
Event Driven              9.41% 
 
Fixed Income              5.45% 
 
L/S China                 4.16% 
 
L/S Japan                 9.65% 
 
L/S Pan Asia              29.54% 
 
Macro                     2.96% 
 
Multi-Strategy            11.99% 
 
Top 10 Holdings (shown as % of NAV) 
 
                   Strategy                    As at 31 Mar 09 
 
Artradis Barracuda Fund                             8.47% 
 
EB Asia Absolute Return Fund limited                5.15% 
 
Rockhampton Fund                                    4.83% 
 
Alphadyne Investment Strategies Fund, Ltd.          4.82% 
 
Akamatsu Fund                                       4.68% 
 
SR Global Fund Inc.                                 4.63% 
 
Dragonback Asia Pacific Equity Multi-Strategy       4.51% 
Fund 
 
East of Suez Fund                                   4.50% 
 
Horizon Portfolio I Limited                         4.26% 
 
Clairvoyance Asia Fund Ltd.                         4.26% 
 
As at 31 March 2009 the proportion of net assets invested in funds with 
redemption restrictions in force was less than 10%. Cash as at 31 March 2009 
accounted for approximately 9.34% of net asset value. 
 
Material Events 
 
During the quarter the Company purchased 3,450,000 shares at an average price 
of 82.70 pence per share and an average discount to net asset value of 14.25%. 
These will be held in Treasury and if not subsequently reissued, cancelled 
after one year. 
 
Board 
 
Dennis Phillips has indicated his intention to retire from the Board at the 
forthcoming Annual General Meeting. The Board is in the process of identifying 
a replacement and we expect to make an announcement shortly. 
 
This interim management statement is available on the KGR Capital/LGT Capital 
Partners website: www.kgrcapital.com. 
 
For further information contact: 
 
Edward Cartwright or Pia Skogstrom, 
LGT Capital Partners (U.K.) Limited 
Tel: [phone] 
 
Fortis Fund Services (Guernsey) Limited 
Company Secretary 
Tel: [phone] 
 
8 May 2009 
 
 
 
END