Hend.glbl.tst Share Price (HGL)

In terms of our outlook, very little has changed that would lead us to alter the view we expressed in the annual report - namely that equities are inexpensive, the US will continue to enjoy relative economic strength and the Eurozone debt crisis will be an ongoing issue. The political transition in China should be largely complete by July and this should lay the ground for an increase in government economic policy initiatives. Although the monetary indicators are pointing to a contraction in many European economies we do not think it will be long before there is further action by the ECB. Importantly, inflationary pressures have subsided and this paves the way for a more proactive policy stance in both China and Europe.

Portfolio Commentary: In the quarter to 30 April 2012 the Company's net asset value per ordinary share ("NAV") total return was +1.2% compared to a total return of +2.6% for the composite benchmark. The equity rally, which started at the end of last year, continued until the middle of March before it began to falter. In the second half of the quarter many companies reported results for the first three months of this year. For the most part these results demonstrated a continuation of recent trends. Consistent with the economic data, companies are reporting strong business conditions in the USA and, although conditions are weaker in Europe and in China, profitability remains robust. It would appear that US economic strength is not enough in itself to sustain global equity markets. In the last couple of months there has been a resurgence in the Eurozone debt crisis. The positive effects of the European Central Bank's Long Term Repurchasing Operations seem to have worn off and events in southern Europe are dominating the headlines. We made a few changes to the portfolio during the period. At the start of the quarter liquidity stood at 5.4% of gross assets and ended at 3.9% of gross assets, representing a balance of £5.5m as at 30 April 2012. We took some profits in BorgWarner, GKN and Macy's and we added to our positions in HSBC, Teck Resources, Telstra and BP. Also we initiated positions in Citigroup and Apple, noting the latter's decision to commence paying a dividend, and we reduced our holdings in Baxter, Wharf, Vale and Oracle. Our sector positioning remains broadly neutral.

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