ADVANCE INVEST with 31.2% return in 2006

Advance Invest Mutual Fund, managed by Karoll Capital Management, saw off another successful year with an annual return of 31.17% (NAV/share change from BGN 1.8300 to 2.4005 in year 2006). The fund's focus is long term investment in stocks with high growth potential listed in the new EU entrants – Bulgaria & Romania. In 2006 Advance Invest once again bet on the domestic Bulgarian market to the highest extent, where 60% of the assets were invested as of year-end. In the last quarter the portion of Romanian stocks doubled to 12%, while Bulgarian bonds were reduced from 20 to just under 6%. This portfolio restructuring is aimed at funneling more funds toward Romania at the very beginning of 2007. 
 
In the first half of the year the prices of Advance Invest remained relatively flat against the background of rising markets due to the more balanced approach and the sizeable presence of bonds and REITS in the fund's portfolio. The strongest period for the fund as well as for the market was the last quarter of 2006. Among the most successful investments in Bulgaria could be pointed out Chimimport, DZI, Euroins, BACB, Alcomet, and SAF Magelan, and in Romania – Turbomechanica, Transelectrica, Impact, etc. Thus the positive return was evenly distributed among dozens of portfolio holdings through the process of diversification, which reduced the unsystematic risk typical of each individual position and lessened the volatility of the fund's return through the year.

Some of the noteworthy events for the fund in 2006 were the participation in the establishment of the first domestic private equity company – Advance Equity Holding, the more confident entrance in the Romanian market, the attracting of hundreds of individual as well as large institutional investors (insurance and pension companies) as fund shareholders. In 2006-end the NAV of Advance Invest is approximately BGN 33.6 mln, which ranks the fund as #1 by asset size among local funds.

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