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Press ReleasesNILE PAN AFRICA FUND (NAFAX) ANNUAL FUND NEWSLETTERNile Capital Management is pleased to announce its first year performance update for the Nile Pan Africa Fund (Symbol: NAFAX), an actively managed mutual fund that focuses exclusively on the continent of Africa. Fund Overview From its inception on April 28th, 2010 through April 30th, 2011, the Nile Pan Africa Fund gained +22.07% annualized. During the same time period, the MSCI Frontier Markets Index gained +9.94%, the Dow Jones Africa 50 Titans Index increased +11.07%, and the S&P 500 Total Return Index advanced +16.67% annualized. In its first year, the Fund also showed low monthly correlation to the S&P 500 (0.72) as well as the MSCI Frontier Markets Index (0.48) potentially making it a strong addition to a globally diversified portfolio. The Fund's annualized standard deviation (based on monthly returns) was 16.77% - lower than the S&P 500 (18.09%) and MSCI Frontier Markets (17.21%), indicating a favorable risk profile for the Fund. The Fund's performance in its first year reinforces the case for investment in Africa through an actively managed Fund. We continue to believe that there are substantial opportunities for long term investors throughout the continent of Africa, and that active management and on-the-ground knowledge set Nile apart as an investment manager. Aside from being challenged by concern over political unrest in North Africa and the Middle East in the first quarter (Egypt is the Fund's only exposure in North Africa), the Fund's performance was strong in its first year, which we believe is a result of our emphasis on selectivity, focus and active management. Egypt is the second largest country in Africa by market capitalization but only represented about 7% of the fund investment holdings at the end of the first quarter of 2011, largely because we seek opportunities across the continent. Overall, the fund investment themes remain threefold: natural resources, infrastructure, and consumer growth. Portfolio Commentary In its first year, the top performers in the Nile Pan Africa Fund came from the mining and consumer goods sectors. Most notably, First Quantum, a copper and gold mining company, was up 73% in the past 12 months as strong prices in both copper and gold (up more than 20% and 30% respectively) as well as successes in the company's operations helped price appreciation. The company is expected to continue to make progress on development of its various mining projects and we expect copper pricing to remain favorable. Therefore, we are still comfortable with the company's value and prospects for growth. Another strong performer was African Minerals, which was up 36% in the past 12 months. African Minerals has a massive iron ore project in Sierra Leone and has benefitted from both Chinese interest in the company as well as a recently completed round of financing that will allow it to complete its current stage of development. We continue to see a favorable pricing environment for the company and recent upgrades to its resources makes valuation rather compelling. Nigeria Flourmills also rose 49% in the last 6 months on strong demand from the Nigerian consumer market and the overall post-financial crisis recovery in the Nigerian economy (the IMF estimates Nigerian real GDP growth for 2010 to be a robust 8.4%). We see demographics and overall economic strength in Nigeria to continue to provide a favorable environment for the company. On the other hand, the Nile Pan Africa Fund experienced weakness in a number of its Egyptian holdings, which suffered due to the political and social unrest in the country. However, it is notable to point out that Egypt's market has rebounded from its lows, and one of our holdings (Juhanya Foods) has already risen above its price before the Egyptian market shutdown. While we continue to monitor the situation in Egypt, we remain positive on the country's long term dynamics, and expect the market to recover over time. Outlook We continue to view the potential for long term growth in Africa to be extremely strong. This view, which is underpinned by our favorable outlook for natural resources, infrastructure, and consumer growth, is supported by strong expectations for the continent as a whole, as well as in a number of individual economies. Nile Capital Management's approach is to invest opportunistically in a focused portfolio of investment opportunities in the best markets and companies across Africa. On the other hand, prospects for growth in advanced economies are tenuous at best and highly dependent on deficit spending. The results are high budget deficits (debt burdens as a percent of GDP) and loose monetary policies to stimulate economic growth. If not properly managed, this may lead to higher inflation while not boosting economic growth. At the same time, several economies in Africa, for example Nigeria (which currently represents our largest overweight), have low national debt as a percent of GDP. The graph below shows the Nigerian debt situation relative to other advanced economies. National Debt vs Budget Deficit Nigeria is one example of a country where perceived risks belie the underlying opportunity for investment. We at Nile Capital Management continue to believe that by actively seeking good companies across the continent, the performance of an Africa-focused investment will benefit a portfolio of developed market stocks by enhancing and diversifying returns. On a business development note, Nile Capital Management was pleased to announce the launch of its investment blog - www.moneywatchafrica.com in late 2010. We hope to make this site a resource for investors who seek to understand the opportunity for growth in Africa, and how Nile seeks investments in Africa's markets. We hope you take time to read our commentary, and subscribe for regular updates from the site. Going forward, we are looking forward to what we believe will be a strong 2011. As always, we are happy to answer any questions you may have about investing in Africa, and encourage you to contact us at info@nilecapital.com or (646) 367-2820. Thank you, Larry Seruma To view our recent holdings information click here. To view updated performance information click here. The Nile Pan Africa Fund is available through a variety of platforms, including but not limited to: Ameriprise, Charles Schwab, E*Trade, Fidelity, Morgan Keegan, Pershing, Scottrade, Sterne Agee, and Vanguard. Nile Pan Africa Fund (NAFAX) Performance, April 2011 As of April 30, 2011. Inception Date is April 28, 2010.
The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Investment return and principal value will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Past performance is no guarantee of future results. As stated in the current prospectus, the Fund's total annual operating expense ratio (gross) is 4.17% for Class A shares. The Fund's investment adviser has contractually agreed to reduce its fees and/or absorb expenses of the fund, at least until July 31, 2011, to ensure that the Total Annual Fund Operating Expenses After Fee Waiver (exclusive of any acquired fund fees and expenses, borrowing costs, taxes and extraordinary expenses) will not exceed 2.50% for Class A subject to possible recoupment from the Fund in future years. Please review the Fund's prospectus for more detail on the expense waiver. Results shown reflect the waiver, without which the results could have been lower. A Fund's performance, especially for very short periods of time, should not be the sole factor in making your investment decisions. For performance information current to the most recent month-end, please call toll-free 1-877-68-AFRICA. Investors should carefully consider the investment objectives, risks, charges and expenses of the Nile Pan Africa Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained by calling 1-877-68-AFRICA. The prospectus should be read carefully before investing. The Nile Pan Africa Fund is distributed by Northern Lights Distributors, LLC member FINRA. Nile Capital Management, LLC is not affiliated with Northern Lights Distributors, LLC. Mutual Funds involve risk, including possible loss of principal. Because the Fund will invest the majority of its assets in African companies, it is highly dependent on the state of the African economy and the financial prospects of specific African companies. Certain African markets are in only the earliest stages of development and may experience political and economic instability, capital market restrictions, unstable governments, weaker economies and less developed legal systems with fewer security holder rights. Adverse changes in currency exchange rates may erode or reverse any potential gains from the Fund's investments. ETF's are subject to specific risks, depending on the nature of the underlying strategy of the fund. These risks could include liquidity risk, sector risk, as well as risks associated with fixed income securities, real estate investments, and commodities, to name a few. Non-diversification risk, as the Funds are more vulnerable to events affecting a single issuer. Investments in underlying funds that own small and mid-capitalization companies may be more vulnerable than larger, more established organizations. Dow Jones Africa Titans 50 Index: Measures the stock performance of 50 leading companies that are headquartered or generate the majority of their revenues in Africa. Stocks are selected to the index by float-adjusted market capitalization, subject to screens for size and liquidity. 0893-NLD-5/3/2011 |
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© 2010 Nile Capital Management, LLCInvestors should carefully consider the investment objectives, risks, charges and expenses of the Nile Pan Africa Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained by calling 1-877-68-AFRICA. The prospectus should be read carefully before investing. The Nile Pan Africa Fund is distributed by Northern Lights Distributors, LLC. Mutual Funds involve risk, including possible loss of principal. Because the Fund will invest the majority of its assets in African companies, it is highly dependent on the state of the African economy and the financial prospects of specific African companies. Certain African markets are in only the earliest stages of development and may experience political and economic instability, capital market restrictions, unstable governments, weaker economies and less developed legal systems with fewer security holder rights. Adverse changes in currency exchange rates may erode or reverse any potential gains from the Fund’s investments. ETF’s are subject to specific risks, depending on the nature of the underlying strategy of the fund. These risks could include liquidity risk, sector risk, as well as risks associated with fixed income securities, real estate investments, and commodities, to name a few. Non-diversification risk, as the Funds are more vulnerable to events affecting a single issuer. Investments in underlying funds that own small and mid-capitalization companies may be more vulnerable than larger, more established organizations. The Fund’s exposure to companies primarily engaged in the natural resource markets may subject the Fund to greater volatility than investments in a wider variety of industries. There is a risk that issuers and counterparties will not make payments on securities and other investments held by the Fund, resulting in losses to the Fund. In general, the price of a fixed income security falls when interest rates rise. The Fund may invest, directly or indirectly, in "junk bonds.” Such securities are speculative investments that carry greater risks than higher quality debt securities. 0605-NLD-4/28/2010 |
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