Annual Financial Report

TIDMADD

Annual Financial Report Announcement
Advance Developing Markets Trust plc

Year ended 31 May 2009

CHAIRMAN'S STATEMENT

On behalf of the Board I am pleased to present to you the Annual
Report for the financial year to the 31st of May, 2009.Your Manager
has reported in extensive detail the extraordinary events of the past
eighteen months which included the seizure of the world credit
markets, the near collapse of the global banking system and the
destruction of corporate and individual wealth on a scale
unparalleled since the 1930s.

Globalisation of information and capital markets, consistently low
interest rates and an apparently inexhaustible supply of credit
manufactured through increasingly complex structures conspired to
feed greed and arrogance in both developed and emerging economies and
financial markets. Your Manager has catalogued the results vividly.

So, where do we go from here?
The Bank Credit Analyst (BCA) sums up the dilemma neatly. Following
the sharp rally in share prices since early March "global stock
markets might have entered a period of stalemate, reflecting the
intense and frustrating stand off between the authorities'
reflationary efforts on one side and the intense debt-deflation
pressures on the other". There may be some weakness in equities in
the final quarter of 2009 but an improving economic outlook in the
next eighteen months, especially in emerging economies, will foster
further share price increases. Extreme monetary policies and enormous
fiscal stimuli have worked to stabilise the global economy and
engineering a measure of recovery in developed economies. But it is
the emerging countries, dominated by China, which will provide more
powerful and sustainable economic growth. China moved aggressively to
stimulate its economy last November. The fruits of this policy have
just become evident in the economic data released on July 16th. The
economy grew at 7.9% (yoy) in the three months to the end of June;
with investment, industrial production and retail sales all
contributing to the recovery. The domestic property and stock markets
have appreciated significantly. Emerging economies, such as Brazil,
South Africa, Chile and some MENA countries have enjoyed substantial
demand for iron ore, copper, oil and energy and agricultural
commodities. Export growth is improving in emerging Asia reflecting
the demand generated by China's infrastructure and capital investment
programmes, as well as the rebuilding of global inventories. Thus,
global economic trends are becoming less synchronised. The unresolved
question is: will the improving economic growth in leading emerging
countries be sufficiently robust to counter-act the anaemic growth
predicted for the G7 countries? Will they bail out the global economy
in 2010? There is not sufficient evidence to support the suggestion
at present. Meanwhile investors can look to emerging economies,
together with the global natural resources/energy/agricultural
commodities industry sectors, to deliver superior sustained stock
market and currency investment opportunities.

Longer-term prospects
It is difficult to estimate what will be the long-term effects of the
extreme monetary and fiscal policies adopted in the USA, UK and
Europe to stave off a looming "great depression". Is it a viable way
forward to print money in a profligate manner, borrow and spend our
way out of the problems created by excessive greed and debt? Without
more evidence to support a sustainable economic and financial
recovery it is too early to define sensibly "exit strategies" for
central banks and governments. This has been a balance sheet
recession, triggered by the bursting of the credit bubble.This
suggests that the recovery will be slower, unemployment will climb
higher and interest rates will remain lower for longer. This raises
another important question; will current aggressive policies lead to
higher inflation? Current measures of the output gap indicate that
this is not the case. There is significant remaining production
capacity in Asia, unemployment is still rising in developed countries
and consumers are still saving to rebuild overstretched household
balance sheets. Bond markets also exercise a measure of discipline,
as do currency markets. Securitisation markets remain dormant and
banks are generally reluctant to lend. The threat of inflation is
stronger in economies such as China, Brazil, Saudi Arabia and South
Africa. Part of the tsunami of credit created by diktat in China,
through the state controlled banks, has undoubtedly been diverted to
financial and property assets. It will take exceptional skill and
judgement to dampen these fires without provoking serious defaults.

Conclusion
Emerging economies and stock markets have performed exceptionally
well in the past six months. A measure of consolidation would be
welcome. China, India, Brazil and Indonesia are well placed to
deliver significant growth which will underpin the Company's
portfolio over the next eighteen months, barring any major
geo-political event. The extensive experience and knowledge of your
Management team will enable them to select and monitor the highest
quality managers and discounted closed end funds in selected
geographical regions and specific industry sectors which will benefit
from growth in emerging economies.

I would also like to bring to shareholders' attention the proposal to
re-domicile Advance Developing Markets Trust through a voluntary
winding up of the Company and a rollover of shareholders'
interests into a newly established Guernsey fund. This move has been
prompted by the Company's increasing investment into open ended funds
during the past seven years since the first such investment was made
in 2002. Certain types of open ended funds are subject to potentially
punitive tax treatment while the Company remains domiciled in the UK.
It is the Board's belief that the continued flexibility afforded to
the Manager to invest in such vehicles carries significant benefits
for the Company, namely the ability to allocate to "best of breed"
managers and countries that are not represented sufficiently within
the closed end fund universe. The change of domicile will sustain
these benefits while leaving the investment policy and management of
the Company 's investments unchanged. An extensive consultation with
major shareholders has indicated that there is broad support for the
proposals and, subject to shareholder approval, the Board expects
that they will be implemented in November. A circular dealing with
this proposal will be sent to shareholders shortly which will set out
a full explanation of the relevant issues. Once published a copy of
the circular will also be made available on the Manager's website
www.pro-asset.com and will be available on request from the Company
Secretary.

PE O'CONNOR
Chairman
August 2009

MANAGER'S REPORT

Performance review
The financial year to the end of May 2009 was the most testing the
Company has had to endure in its 11 year history. The start of the
period very nearly marked an all time high for the various emerging
market indices. From this point the benchmark emerging markets index
declined by a massive 52.1% in sterling terms (62.2% in USD terms)
before recovering 64.8% (70.3% in USD terms) from its October lows to
finish the period 21.1% lower overall. These wild swings in market
direction reflected the, at times, all encompassing hysteria,
pessimism and panic that gripped investors and markets worldwide
during parts of the year.

Advance Developing Markets Trust saw its NAV decline by 27.4%* over
the period, while the share price declined by 31.4%. Those
shareholders on the register on 21 October 2008 received bonus
subscription shares on a 1 for 5 basis thus boosting their price
return for a package of one share plus one fifth of a subscription
share to -27.4%. These numbers represent underperformance of the
benchmark index. Historically, our strategy of running broadly
diversified portfolios, with some exposure to "uncorrelated" assets,
has led to underperformance in short, sharp rallies and this was
certainly the case in the second half of the financial year. This is
the first year since 2000 that we have had to report underperformance
in our Annual Report and so, as both Managers and Shareholders, we
are deeply disappointed. The performance of the Company's NAV, the
benchmark, the FTSE All Share Index and the S&P 500 are shown on
Chart 1.

Chart 1. Advance Developing Markets Trust's NAV performance compared
to global indices. Data in GBP. Source: Bloomberg (page 2 - Annual
Report)

The major source of underperformance was the yawning gap that opened
from November to March between traditional emerging market assets and
those "uncorrelated" investments that Advance Developing Markets
Trust holds in funds of property, private equity and frontier market
equities (predominantly Africa, the Middle East, Bangladesh, Pakistan
and Vietnam). As emerging markets rallied, your investments in these
areas (which accounted for around 14% of NAV at the beginning of the
period) displayed only a muted recovery. Investments in property and
private equity funds moved to significant discounts to their headline
net asset values, in many instances as a reflection of their
shareholder registers rather than the quality of their assets. This
provided a number of opportunities for us but, as existing investors,
generally more difficulties.

*undiluted excluding current year revenue

Within our investments in mainstream markets, many of the underlying
investment managers struggled to cope with irrational, volatile
markets and, in the case of several of our open ended investments,
substantial and unfortunately timed redemptions. Long term holdings
such as JP Morgan Russia Securities plc, Blackrock Latin American IT
and Eastern European Trust plc all detracted meaningfully from
performance. Henderson TR Pacific IT and Coronation Top 20 Fund were
two of only a handful of investments that outperformed their
respective benchmarks.

Asset allocation was neutral for performance, the benefit of holding
a decent level of cash for most of the year, outweighing the negative
effect of being underweight in China (-6.8%) and India (-4.3%) and
overweight in Russia (-48.9%). Being significantly overweight in
Brazil going into the second half of the year, when the market rose
by 54.4%, was a major positive.

Discount changes in our core closed end fund positions were
marginally accretive to performance, as the Company's benefitted from
the tender offer conducted by Templeton Emerging Markets Investment
Trust ("TEMIT") in June 2008 and demand for emerging market closed
end funds pushed discounts to narrower levels in 2009. The latter was
particularly pronounced in US listed funds, including Taiwan Fund Inc
and China Fund Inc, both of which saw their discounts move from the
high teens during the crisis to close to parity at the end of the
period.

Market Environment
Global investors are renowned for their propensity to overreact to
both good and bad news and for the brevity of their memories. Rarely
have these traits been more amply illustrated than in the period
under review. The first half of the year was characterised by a total
loss of confidence in financial markets everywhere. Global equity
markets fell in a synchronised fashion, with cash, gold and
government debt proving the only true safe havens. Forced selling was
widespread, pushing asset prices to multi year lows. By October 2008
the market reflected a sense of total despair, with genuine concerns
that the global economy was slipping into a depression, the likes of
which had not been seen since the 1930s.

As has historically been the case, the point at which pessimism
peaked marked the low in markets. From 27th October a rally took hold
on signs that fundamentals were deteriorating at a slowing rate and
that a depression might be averted. Valuations were ludicrously low
and cash levels were ludicrously high. Talk of "green shoots"
prompted a wave of cash to flow back into markets in anticipation
that the worst was over. Emerging markets enjoyed substantial inflows
as people rushed back into "risk assets". The "BRIC" markets (Brazil,
Russia, India and China) were particular beneficiaries. By the mid
point in the year, emerging markets had seen inflows in the region of
$30bn, following outflows of $40bn last year.

The performance of the major emerging markets and frontier regions is
shown in the three adjacent charts, depicting the crash, the recovery
and the period overall.

Chart 2. "The Crisis" - Global emerging and frontier market
performance, % gain/loss in GBP, 31/05/08 to 27/10/08. Source:
Bloomberg . (page 3 - Annual Report)

Chart 3. "The Recovery" - Global emerging and frontier market
performance, % gain/loss in GBP, 27/10/08 to 31/05/09. Source:
Bloomberg (page 3 - Annual Report)

Chart 4. "Annus Horribilis" - Global emerging and frontier market
performance, % gain/loss in GBP, 31/05/08 to 31/05/09. Source:
Bloomberg (page 3 - Annual Report)

Asia (-12.9%) was by far and away the best performing region for the
year as a whole, with relatively strong performance in India (-4.3%)
and China (-6.8%) standing out. The return from India was back end
loaded with the results of the parliamentary election in May
propelling the market up by 25.1% in that one month alone. While
China tracked all other markets down in the crisis phase, it
outperformed significantly in the second half of the year as
investors took comfort from resilient GDP growth and the Government's
4tr Renminbi ($500bn) stimulus package.

In Eastern Europe, the damage done in the first half of the year
proved insurmountable despite significant rallies in the Russian
market and those of its smaller neighbours. A doubling of the oil
price from its December lows provided some respite, but a further
doubling would be required from current levels to match the peak oil
price that coincided with the top of the Russian market. In South
Africa, performance came from a low level in the previous period and
was strong despite political uncertainty and a severe retrenchment of
the domestic consumer.

The Latin American region continues to be dominated by Brazil, which
turned in mediocre performance for the period as a whole. On the way
down, the market and currency were affected by panic relating to a
number of costly derivative contracts sold to listed companies by
investment banks. The management of the economy was prudent
throughout the crisis. This was reflected in strong performance, off
a base of incredibly low valuations, from October onwards.

The stark contrast between the performance of global emerging and the
frontier markets of the Middle East and Africa in the recovery phase
is clearly shown in chart 3. It warrants a full explanation given the
impact on the portfolio. Going into the crisis, frontier markets
were, we felt, well placed to weather the storm (as they did during
the Russian crisis, the dotcom bust and most other emerging market
"wobbles"); their economies continued to grow and remained largely
isolated from the glut of debt that had built up in the rest of the
world; their financial institutions were stable as a result and the
companies therein were growing earnings as much through rampant
domestic demand as international trade. These observations are
largely unchanged after the crisis although growth, both in GDP and
corporate earnings, has slowed somewhat.

What drove the declines in frontier markets was the same panic
selling that forced all markets down. Unfortunately, in such illiquid
markets, the timeframe required for all sellers to be satisfied was
somewhat longer. This accounts for the fact that frontier markets
outperformed emerging markets on the way down but then did not bottom
until March 2009, some five months after emerging markets. This lag,
we think, will play out over the coming months, with frontier markets
catching up the relative ground they lost between November and March.
Performance in May, June and especially in July, when markets briefly
consolidated, supports this belief.

Chart 5. Emerging markets vs. frontier markets in GBP, rebased to
100, 31/05/08 - 31/05/09. Source: Bloomberg (page 4 - Annual Report)

Portfolio
The portfolio breakdown by investment type was as follows at the end
of the period.

May 2009 May 2008
Closed ended investment funds 58.9% 66.1%
Open ended investment funds 31.0% 29.8%
Exchange traded funds 8.7% 3.5%
Cash 1.4% 0.6%

The increase in market access products was in response to volatility
in both discounts and markets and the Manager's desire to preserve
liquidity in the portfolio while maintaining market exposure. The
reduction in closed end funds was mostly the result of corporate
activity, firstly with TEMIT leaving the portfolio, having been a 10%
weighting, and then the tender offer of Blackrock Latin American IT
towards the end of the period, which we used to reduce our position
in that fund. The underperformance of the closed end funds we owned
in the property and private equity space also contributed to the
decline. Our open ended investments were largely unchanged during the
period, except where a corresponding closed end fund offered an
attractive discount opportunity.

The Company's asset allocation is shown on page 6. The regional
weighting to Asia increased by around 8% almost entirely as a result
of aggressive buying of the Chinese market after the crisis. This
decision was made on the back of attractive valuations relative to
that market's history and an attractive discount opportunity in the
form of China Fund Inc, which we bought aggressively in October and
November when the discount was as wide as 20%. It finished the period
at just 1.5%, at which level we have been selling the position down
and rotating into a Chinese Exchange Traded Fund.

Similarly, in Eastern Europe the decline in the regional weighting
was almost entirely the result of our reduction in the Company's
exposure to the Russian market, as risks to the long term outlook
there increased and our closed end fund exposure through JP Morgan
Russia Securities plc traded at parity despite this.

In Latin America the major change was in Brazil, where we added
aggressively to our position in the iShare Brazil in the second half
of the year on the back of a positive country visit which bolstered
our confidence in the top down story. We also began a position in
Tarpon All Equities Fund, an open ended product managed by a highly
experienced boutique outfit based in Sao Paulo. The lack of
availability of suitable products in the Brazilian market continues
to baffle us.

Market Outlook
The magnitude and ferocity of both the collapse and recovery of
emerging markets, and "risk assets" in general, caught virtually all
investors by surprise. Despite our unerring belief in the long term
prospects for the emerging and frontier market asset classes, we can
be included in this category.

At present, markets worldwide seem to have paused for breath. We view
this as a constructive period of consolidation, during which
investors and companies will finally have a chance to take stock of
the upheaval of the last 12-18 months, while waiting for some
visibility to emerge as to what path the global economy will take
from here.

In the short-term, we hope that this consolidation holds, but suspect
that emerging markets may retrace some of their recent gains.
However, we do not believe the depths of last year will be revisited.
The global depression scenario that pushed markets to their lows last
year has been discarded; forced sellers have generally found relief
and record levels of cash, earning negligible interest, all support
this argument. At the same time we don't believe the excesses that
caused the crisis in the first place have all been eliminated.

Now that the dust seems to be settling it is apparent to us that the
emerging market story is even stronger than it was before the crisis.
The hypothesis that emerging markets can grow independently of
developed markets has been tested, and proven. In 2009 the developing
world will grow its GDP by 0.7%, while the developed world will see a
shrinkage of 3.6% (Source: Morgan Stanley). The latter is
increasingly dependent on the former, when in recent history the
reverse has always been true. Emerging market companies have emerged
from the crisis with their reputations generally enhanced, while the
actions of a number of western corporates have destroyed confidence
overall. The long term outlook is very positive, not just for the
BRICs, but for the many smaller emerging and frontier markets also.

When we look at our universe of investments, we see many
opportunities. Most of those anomalies that emerged during the
market's volatility still prevail, with more appearing recently as
markets have rallied.

At a top down level different markets are trading on diverse
multiples which provides opportunities for astute asset allocation by
your Manager and the underlying regional investment managers. At a
bottom up level, the same applies, with our active country
specialists able to build portfolios that offer both deep value and
high growth. Consistent with our investment philosophy and portfolio,
those best placed to take advantage will be locally based investors
with specific market knowledge, experience and appropriately aligned
incentives in place.

In the world of closed end funds, discounts are currently widening
again, apparently in anticipation of a pull back in markets.
Historically such discount movements have been a canny indicator of
future market trends. There are several active situations in the
portfolio that can be revived now that the turmoil is over.

We hope to capture many of these opportunities and believe they will
be reflected in the Company's performance over time. To ensure we
maintain an informational edge, the team will continue to travel
extensively as we did in the last 12 months. While the recent past is
something we hope to put behind us we are excited about the future
and our passion for the asset class remains as strong as ever.

We thank you for your continued support in what has been a very
difficult period for the Company.

Progressive Developing Markets Limited
September 2009

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ANNUAL
REPORT AND THE FINANCIAL STATEMENTS

The directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and
regulations.

Company law requires the directors to prepare financial statements
for each financial year. Under that law they have elected to prepare
the financial statements in accordance with UK Accounting Standards
and applicable law (UK Generally Accepted Accounting Practice).

Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the company and of the profit or loss
of the company for that period. In preparing these financial
statements, the directors are required to:

* select suitable accounting policies and then apply them
consistently;

* make judgments and estimates that are reasonable and prudent;

* state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and

* prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.

The directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the company's transactions
and disclose with reasonable accuracy at any time the financial
position of the company and enable them to ensure that the financial
statements comply with the Companies Act 2006. They have general
responsibility for taking such steps as are reasonably open to them
to safeguard the assets of the company and to prevent and detect
fraud and other irregularities.

Under applicable law and regulations, the directors are also
responsible for preparing a Directors' Report, Directors'
Remuneration Report and Corporate Governance Statement that complies
with that law and those regulations.

The directors are responsible for the maintenance and integrity of
the corporate and financial information included on the company's
website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.

The Directors confirm that to the best of our knowledge:

* The financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company; and

* The Directors' Report includes a fair review of the development
and performance of the business and the position of the issuer
together with a description of the principal risks and
uncertainties that it faces.

PRINCIPAL RISKS AND UNCERTAINTIES

The board considers that the principal risks faced by the
shareholders of the Company fall into two categories:

External Risks
Shareholders face the risk of poor performance from emerging market
stock markets and currencies in which the Company is indirectly
invested. It is not possible for the Manager to diversify away from
this risk completely or to predict the timing of such performance.
Historically emerging markets can show a greater degree of
uncertainty than developed markets.

Internal Risks
Poor allocation of the Company's assets to both markets and investee
funds by the Manager, poor governance, compliance or administration,
including the loss of investment trust status could potentially
result in shareholders not making acceptable returns on their
investment in the Company.

INCOME STATEMENT
For the year ended 31 May 2009

Year ended 31 May 2009 Year ended 31 May 2008
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000

Gains on
investments

(Losses) /
Gains on
disposal of - (36,654) (36,654) - 12,064 12,064
investments by
reference to
revalued book
costs
Transfer from
capital - 61,923 61,923 - 30,654 30,654
reserve -
investments
held
Total gains on
disposal of - 25,269 25,269 - 42,718 42,718
investments
Revaluation of - (68,716) (68,716) - 53,016 53,016
investments
Transfer to
realised
capital - (61,923) (61,923) - (30,654) (30,654)
reserve-
disposal of
investments
Total - (130,639) (130,639) - 22,362 22,362
(losses)/gains
on
investments
held
Income 2,858 - 2,858 2,224 - 2,224
Investment (391) 19 (372) (1,212) (2,551) (3,763)
management fee
Other expenses (499) - (499) (852) - (852)
Return /
(Loss) on
ordinary 1,968 (105,351) (103,383) 160 62,529 62,689
activities
before finance
costs
and taxation
Interest
payable and (4) (9) (13) (9) (19) (28)
similar
charges
Return /(Loss) 1,964 (105,360) (103,396) 151 62,510 62,661
before
taxation
Taxation (1,059) 2,820 1,761 21 (1,418) (1,397)
Return /(Loss) 905 (102,540) (101,635) 172 61,092 61,264
on ordinary
activities
after taxation

Return /(Loss)
per ordinary
share
1.34p (151.50p) (150.16p) 0.22p 77.35p 77.57p
- undiluted
1.34p* (151.50p)* (150.16p)* 0.22p* 77.35p* 77.57p*
- diluted

The total column of this statement is the profit and loss account of
the Company.
All revenue and capital items in the above statement derive from
continuing operations.
No operations were acquired or discontinued during the period.
A Statement of Total Recognised Gains and Losses is not required as
all gains and losses of the Company have been reflected in the above
statement.
*There was no diluting effect to the return per ordinary share for
the year ended 31 May 2009 arising from the subscription shares in
issue. There was no diluting impact for the year ended 31 May 2008 as
there were no subscription shares in issue at this date.

BALANCE SHEET
At 31 May 2009

2009 2008
GBP'000 GBP'000

FIXED ASSETS
Investments at fair value through profit or loss 235,755 399,691

CURRENT ASSETS
Sales for future settlement - 1,817
Accrued income 119 87
Debtors 48 16
Cash at bank and in hand 4,587 26
4,754 1,946

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE
YEAR

Accrued liabilities 330 2,247
Performance Fee - 127
Bank overdraft - 123
330 2,497

NET CURRENT ASSETS 4,424 (551)

TOTAL NET ASSETS 240,179 399,140

CAPITAL AND RESERVES

Share capital 781 790
Share premium account 53,959 54,089
Share purchase reserve - 22,567
Capital redemption reserve 149 10
Capital reserve - disposal of investments 145,036 151,696
Capital reserve - investments held 38,758 169,397
Revenue reserve 1,496 591
EQUITY SHAREHOLDERS' FUNDS 240,179 399,140

Net assets per ordinary share -undiluted 368.93p 505.40p
Net assets per ordinary share - diluted 355.95p 505.40p

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

For the year ended 31 May 2009

Capital Capital
Share Share Capital Reserve - Reserve -
Share Premium Purchase Redemption disposal of investments Revenue
Capital Account Reserve Reserve investments held Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000

Opening 790 54,089 22,567 10 151,696 169,397 591 399,140
shareholders'
funds

Purchase of (139) - (22,567) 139 (34,759) - - (57,326)
own shares
Issue of 130 (130) - - - - - -
subscription
shares
Profit for - - - - 28,099 (130,639) 905 (101,635)
the year

Closing 781 53,959 - 149 145,036 38,758 1,496 240,179
shareholders'
funds

For the year ended 31 May 2008

Opening 790 54,089 22,567 10 112,966 147,035 1,446 338,903
shareholders'
funds

Profit for - - - - 38,730 22,362 172 61,264
the year
Dividend paid - - - - - - (1,027) (1,027)
(Oct 2007)

Closing 790 54,089 22,567 10 151,696 169,397 591 399,140
shareholders'
funds

CASH FLOW STATEMENT

For the year ended 31 May 2009

2009 2008
GBP'000 GBP'000

OPERATING ACTIVITIES
Cash inflow from investment income and bank 2,827 2,238
interest
Cash outflow from management expenses (3,344) (6,007)
Cash inflow from VAT on management fees 2,247 -
Cash inflow from disposal of investments 137,949 123,674
Cash outflow from purchase of investments (77,883) (116,295)
Cash inflow from foreign exchange movements 301 200
Interest paid (13) (28)
Foreign tax paid (74) (97)

NET CASH INFLOW FROM OPERATING 62,010 3,685
ACTIVITIES

EQUITY DIVIDENDS PAID - (1,027)

FINANCING
Purchase of own ordinary shares (57,326) -

INCREASE IN CASH 4,684 2,658

2009 2008
GBP'000 GBP'000
Opening balance (97) (2,755)
Cash inflow 4,684 2,658
Balance at 31 May 4,587 (97)

NOTES

1. The accounts have been prepared in accordance with applicable UK
accounting standards.

The accounts are prepared under the historical cost convention as
modified by the revaluation of investments and in accordance with
applicable accounting standards and the Statement of Recommended
Practice "Financial statements of investment trust companies"
("SORP"), issued in December 2005 by the Association of Investment
Companies, except where the SORP has been superseded by Accounting
Standards.

2. Return/(loss) per ordinary share
Undiluted loss of 150.16p per ordinary share (2008: undiluted return
of 77.57p per ordinary share) is based on the net loss on ordinary
activities after taxation of GBP101,635,000 (2008: net return of
GBP61,264,000) attributable to the weighted average of 67,686,419
(2008: 78,975,034) ordinary shares of 1p in issue during the year.

There is no dilution impact in the year ended 31 May 2009 arising
from the subscription shares in issue. There were no subscription
shares in issue during the year ended 31 May 2008.

3. Net asset value per ordinary share
The figure for undiluted net assets per ordinary share is based on
GBP240,179,000 (2008: GBP399,140,000) divided by 65,100,837 (2008:
78,975,034) ordinary shares in issue.

The figure for diluted net assets per ordinary share is based on
GBP278,068,000 (2008: GBP399,140,000) divided by 78,121,005 (2008:
78,975,034) ordinary shares in issue. The diluted figure is based on
all the subscription shares being converted into ordinary shares at a
price of 291p per ordinary share. There was no dilution at 31 May
2008 as there were no subscription shares in issue at that time.

4. Dividend
The Company's revenue profit after tax for the year amounted to
GBP905,000 (2008: GBP172,000). The directors propose to pay a final
dividend in respect of the year ended 31 May 2009 of 1.0p per
ordinary share (2008: Nil) absorbing GBP651,000 (2008: GBPnil) based on
the number of ordinary shares in issue at the date of this report.
If approved at the Annual General Meeting, the final dividend will be
paid on 6 November 2009 to ordinary shareholders on the register on 9
October 2009.

5. Related party transactions
Fees payable to the investment manager and to the
administrator/company secretary are detailed in the Notes to the
accounts. The relevant amounts outstanding as accruals comprised a
monthly management fee of GBP221,516 (2008: GBP308,990) and an
administration fee of GBP10,412 (2008: GBP10,639). No performance fee
was payable at 31 May 2009 (2008:GBP126,778).

6. Financial information
The financial information for 2009 is derived from the statutory
accounts for 2009, which will be delivered to the registrar of
companies following the company's Annual General Meeting. The
statutory accounts for 2008 have been delivered to the registrar of
companies. The auditors have reported on the 2008 and 2009 accounts;
their reports were unqualified.

The Annual Report for the year ended 31 May 2009 was approved on 25
September 2009. It will be posted to shareholders and will be made
available on the Manager's website at www.pro-asset.com

This announcement contains regulated information under the Disclosure
Rules and Transparency Rules of the FSA.

7. The Annual General Meeting will be held on 29 October 2009 at
12.00 noon at the offices of Lawrence Graham LLP, 4 More London
Riverside, London SE1 2AU.

25 September 2009

Secretary and registered office:
Cavendish Administration Limited
145-157 St John Street
London
EC1V 4RU

Tel: 020 7490 4355

END

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This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.

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