Est.inv.tst Regulatory News (ET.)

Chairman's Statement

During the second half of the financial year the share price rose by 7.2% while the net asset value increased by 9.5%. For the full financial year the share price declined 3.2% while the net asset value rose 0.1%. In addition dividends totalling 4.1p were paid to shareholders during the period, lifting the total return of the share price to (0.9%) and the net asset value to 2.1%. These compare to the 3.7% increase in the FTSE APCIMS Stock Market Balanced Index and a 1.0% gain in the MSCI World Index in sterling terms.

The end of the last financial year marks the Company's 10th anniversary. The Company was listed in the aftermath of the dot.com bust, just after the 9/11 terrorist attack and ahead of the second Gulf War, at a time when most Western economies were in recession. A decade later many Western economies are again in, or close to, recession. This is a direct consequence of the 2008 Global Financial Crisis which was caused by the 2002-2007 Greenspan credit bubble, itself arguably a reaction to the dot.com bust. The Company was also launched during the early days of the Euro. From 2002 to 2008 the Euro appreciated constantly but since has steadily but surely started to relinquish these gains as this politically inspired project falls foul of economic realities.

At launch the Company pursued a multi asset strategy, favouring bonds, absolute return vehicles and a substantial exposure to Asian equities to achieve its goal of both protecting and growing the capital of shareholders. In more recent times shareholders' funds have increasingly been invested in Asian equities. The Company has also maintained some exposure to Gold Bullion and held a healthy degree of liquidity. There was considerable volatility in the share price and the net asset value during the global financial crisis but the swift recovery of both, and subsequent further appreciation, has vindicated your investment manager's longer term portfolio positioning.

As discussed in the Investment Manager's report the outlook for the Chinese economy is not just highly unpredictable but extremely important for all global investors at this juncture. Your investment manager holds a particularly strong view on the likely development of the Chinese economy and the probable impact on commodity prices. Your Board believes that the assets of the Company are very well positioned to benefit

from this anticipated development.

Your Board continues to be alert to the many developments in regulation and corporate governance. These include the Alternative Investment Fund Managers Directive (AIFMD)(EU), the Foreign Account Tax Compliance Act (FATCA)(USA), the Retail Distribution Review (RDR), new HMRC Investment Trust regulations, changes in UK GAAP and review of UK Corporate Governance and Stewardship Codes. Inevitably, these will increase the cost of compliance and perhaps have the wider unintended consequence of repressing capital flows, which the world can ill afford as deleveraging continues in Western economies.

New Tax Regulations came into force on 1 January 2012 which introduced new rules regarding the approval of companies as investment trusts by HM Revenue & Customs. The new rules permit the distribution of capital profits to shareholders by way of dividend, allowing greater flexibility on how dividends are managed in the future. Under previous tax and company law such distributions were prohibited and this prohibition was required to be included in an investment company's Articles of Association. Your Board believes it is prudent to be in a position to take advantage of the new regulations as and when such distributions are considered to be in the best interest of the Company's shareholders and to this end Resolution 10 in the Notice of Meeting is being proposed as a Special Resolution seeking shareholders' approval to amend the Articles of Association of the Company to remove the current restriction on the distribution of capital profits.

The Board has proposed a final dividend of 2.6p per Ordinary Share taking the total dividend for the financial

year to 4.3p, an increase of 7.5% over the previous year. This is the 9th consecutive year of dividend growth. The Board will continue to pursue a progressive dividend policy.

Sir David Cooksey GBE

Chairman

31 May 2012

Investment Manager's Report

The Chairman's statement notes the essentially flat performance of the share price and net asset value of the Company during the past financial year. During the past twelve months the ordinary shares have moved from a discount of 11.5% to a discount of 14.4%. For comparative purposes, the MSCI AC World Index declined 0.3%, the MSCI Asia ex Japan Index fell 6.6% while the MSCI Japan Index gained 0.7%.

The past decade has been relatively fallow for equity investors. The MSCI AC World Index has compounded at 4.1% in Sterling terms while the MSCI United Kingdom (+4.4%pa) and Japan (+2.7%pa) indices have fared little differently. The FTSE APCIMS Stock Market Balanced Index has achieved a slightly higher compound return of 5.0% because of the implicit weighting in bonds. In sharp contrast the MSCI Asia ex Japan Index has returned 12% compound over the past decade compared with the Company's total shareholder return of 7.9% over the same period.

This has vindicated your Company's long term commitment to equities in this region and enabled the Company to post competitive long term returns. Including reinvested dividends the Company's share price and net asset value have grown at a compound rate of 7.9% and 9.5% since listing in March 2002 and, according to the Association of Investment Companies, this ranks the Company 3rd out of 22 in terms of net asset value appreciation and 9th out of 24 in terms of share price returns over the ten years to 31 March 2012. The difference in the rankings is principally explained by the movement from parity to a discount over the period.

China has become an increasingly important player in the global economy over the past decade, even more so since the financial crisis of 2008 from which the Western economies have yet to fully recover. The reflationary fiscal and monetary policies enacted by the Chinese authorities in the wake of the financial crisis resulted, however, in a classic credit and investment boom which has been predominantly focused in the infrastructure and property sectors. To put the scale of this boom in perspective, China now accounts for roughly 60% of the cement produced and consumed globally with per capita cement consumption running at approximately three times the global average. In recent years, only Spain, in 2007, has achieved such cement "intensity".

We remain positive on the outlook for consumption in China. A more balanced economic growth model, which favours consumption over investment, is at the heart of the current 12th five-year plan. Demographics, on-going urbanisation and rising disposable income also support expectations of rising consumption in China and indeed across much of the rest of Asia. Your Company's investments in China play to this expected trend. The Company owns no Chinese banks, property or infrastructure companies. Elsewhere in Asia this consumer focus is reflected in the Indian investments while the Company has significant exposure to the ASEAN infrastructure sector via investments in utility, transportation and cement companies.

Crucially the vast majority of companies owned by the Company purchase a large amount of raw materials, or commodities, and will therefore be big beneficiaries of any broad retreat in commodity prices. The faltering demand from China for commodities, coupled with the rapid growth in their supply, does not bode well for prices. Your investment manager is, therefore, refreshingly upbeat about the prospects for the portfolio and hopes to make further substantial progress in the second decade of the Company.

BDT Invest and Bedlam Asset Management

The Company owns an effective 15% stake in the Investment Manager and also a 4% stake in Bedlam Asset Management. These unlisted investments are revalued every quarter. The latest calculation (an average of book value, 2% of funds under management and 2x annual management charges) valued both firms at a modest premium to book value. The two investments account for 1.3% of the Company's assets. BDT Invest's funds under management stood at approximately £85m at 31 March 2012. BDT Invest currently manages four products across Japan and Asia. BDT Invest remains a small company and future prospects are dependent upon a number of factors including the ever-changing regulatory landscape referred to in the Chairman's Statement, the necessity to deliver solid investment performance, the capability to market effectively, the ability to attract and retain high quality individuals and capable financial management.

Financial Results

The portfolio generated gross income of £1,482,000 during the year, a 2.9% increase from the £1,440,000 generated in the preceding period. Excluding fees payable to the investment manager, expenses amounted to £326,000, a 3.6% decrease from the £338,000 recorded in the previous year. The Company charges 80% of the annual management fee and 100% of any performance fee to capital. The total fees payable to the investment manager decreased from £363,000 to £350,000. In consequence the Company recorded a revenue return on ordinary activities after tax of £1,024,000.

BDT Invest LLP

Investment Manager

31 May 2012