Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

Fins Growth Inc Tst (FGT)

  Print      Mail a friend       Annual reports

Tuesday 21 December, 2010

Fins Growth Inc Tst

Annual Financial Report


                      LONDON STOCK EXCHANGE ANNOUNCEMENT                       

                      Finsbury Growth & Income Trust PLC                       

             Audited Results for the Year Ended 30 September 2010              

Further to the voluntary disclosure of the Company's annual results for the
year ended 30 September 2010 by way of a preliminary announcement dated 14
December 2010, in accordance with the Disclosure and Transparency Rules ("the
Rules") 4.1.3 and 6.3.5(2) this announcement contains the text of the
preliminary announcement dated 14 December 2010 together with the additional
text in compliance with the Rules.

The Company's annual report will be posted to shareholders on 23 December 2010.
Members of the public may obtain copies from Frostrow Capital LLP. 25
Southampton Buildings, London WC2A 1AL or from the Company's website at:

www.finsburygt.com

The Company's annual report and financial statements for the year ended
30September 2010 has been submitted to the UK Listing Authority, and will
shortly be available for inspection on the National Storage Mechanism (NSM):

www.hemscott.com/nsm.do

(Documents will usually be available for inspection within two business days of
this notice being given)

Mark Pope, Frostrow Capital LLP, Company Secretary - 0203 008 4913

21 December 2010

Investment Objective

The Company's investment objective is to achieve capital and income growth and
to provide shareholders with a total return in excess of that of the FTSE
All-Share Index.

Investment Policy

The Company invests principally in the securities of UK quoted companies,
whilst up to a maximum of 20% of the Company's portfolio, at the time of
acquisition, can be invested in quoted companies worldwide. Where possible, a
minimum position size of 1% of the Company's gross assets is held unless the
holding concerned is being built or disposed of.

The portfolio is managed by Lindsell Train Limited and will normally comprise
approximately 30 investments. Unless driven by market movements, FTSE 100
companies, including preference shares issued by such companies, will normally
represent between 50% and 100% of the portfolio; at least 70% of the portfolio
will normally be invested in companies within the FTSE 350.

Further details of the Company's investment policy are set out in the Report of
the Directors.

Capital Structure

At 30 September 2010 the Company had 52,947,423 shares of 25p each in issue
(2009: 51,271,673). As at this date no shares were held in treasury (2009:
1,525,750). During the year 150,000 new shares were issued, 3,983,011 shares
were reissued out of treasury and 2,457,261 shares were repurchased to be held
in treasury. Following the year-end and up to 14 December 2010, the latest
practicable date before the printing of this report, this position had not
changed and, as at 14 December 2010, the Company had 52,947,423 shares in
issue.

Gearing

As at 30 September 2010 the Company had a secured one year revolving committed
credit facility of £15 million with Scotiabank Europe PLC and, as at that date,
a total of £10.7 million was drawn down under this facility. This facility
expired on 6 October 2010 and was rolled for a further year with an increased
limit of £20 million. As at 14 December 2010 a total of £12.3 million was drawn
down from this facility.

Annual General Meeting

The Annual General Meeting of the Company will be held at The City of London
Club, 19 Old Broad Street London EC2N 1DS at 12 noon on Thursday, 27 January
2011.

Performance Summary

 

                                                     30 Sep    30 Sep          
                                                                               
                                                       2010      2009  % Change
                                                                               
Share price                                          297.8p    231.0p     +28.9
                                                                               
Net asset value per share (including income)         301.4p    249.0p     +21.0
                                                                               
Net asset value per share (excluding income)         297.0p    243.9p     +21.8
                                                                               
FTSE All-Share Index (total return) (company        3,829.4   3,404.4     +12.5
benchmark)                                                                     
                                                                               
Dividends per share (see note 8 on page 39)            8.8p      9.5p      -7.4
                                                                               
Gearing†                                               6.7%     10.6%          
                                                                               
Share price total return*                            +33.1%    +22.9%          
                                                                               
Net asset value per share total return*              +25.6%    +24.0%          
                                                                               
FTSE All-Share Index (total return)                  +12.5%    +10.8%          

Five Year Performance Summary

                                       30 Sep  30 Sep  30 Sep  30 Sep  30 Sep
                                                                             
                                         2006    2007    2008    2009    2010
                                                                             
Share price                            300.3p  307.5p  202.0p  231.0p  297.8p
                                                                             
Share price total return*              +19.6%   +5.3%  -33.1%  +22.9%  +33.1%
                                                                             
Net asset value per share (including   302.6p  315.4p  215.5p  249.0p  301.4p
income)                                                                      
                                                                             
Net asset value per share (excluding   298.4p  310.6p  215.5p  243.9p  297.0p
income)                                                                      
                                                                             
Net asset value per share (total       +21.2%   +6.9%  -31.4%  +24.0%  +25.6%
return)*                                                                     
                                                                             
FTSE All-Share index (total return)    +14.7%  +12.2%  -22.3%  +10.8%  +12.5%
                                                                             
Premium/(discount) of share price to     0.6%  (1.0)%  (6.3)%  (5.3)%    0.3%
net asset value per share (excluding                                         
income)                                                                      
                                                                             
Revenue return per share (see note 7    12.4p    9.4p   10.1p    9.1p    8.5p
on page 39)                                                                  
                                                                             
Ordinary dividends per share             8.4p    9.0p    9.5p    9.5p    8.8p
                                                                             
Special dividends per share              2.3p       -       -       -       -
                                                                             
Total expense ratio†                     1.0%    1.1%    1.0%    0.9%    1.0%

* Source: Morningstar.

† See glossary on page 52.

The Board

Anthony Townsend (Chairman)

Anthony Townsend, (62), rejoined the Board in February 2005 and became Chairman
in January 2008. He has spent over 40 years working in the City and was
Chairman of the Association of Investment Companies from 2001 to 2003. He is
Chairman of Baronsmead VCT 3 plc, British & American Investment Trust PLC, F&C
Global Smaller Companies PLC and Miton Worldwide Growth Investment Trust Plc.
He is also a Director of Worldwide Healthcare Trust PLC. Anthony is Chairman of
the Management Engagement Committee.

John Allard

John Allard, (64), has served on the Board since 2000. He was an Investment
Manager with M&G for over 20 years, specialising in equity income funds. John
has been a Director of various investment trust companies since 1981.

Neil Collins

Neil Collins, (63), joined the Board in 2008. He has spent most of his career
in financial journalism and was City Editor of The Daily Telegraph for nearly
20 years until he retired from the position in 2005. Prior to that he had been
City Editor of the London Evening Standard and The Sunday Times. A former
columnist for the London Evening Standard and commentator for Reuters, he is a
Director of Templeton Emerging Markets Investment Trust PLC.

David Hunt, FCA

David Hunt, (63), joined the Board in 2006. A Chartered Accountant, he was
formerly a Director of The Assurance and Business Services Division of Smith &
Williamson Limited for whom he now acts as a consultant. David has over 25
years' experience advising quoted companies. He is Chairman of the Audit
Committee.

Vanessa Renwick

Vanessa Renwick, (49), has served on the Board since 2000. Vanessa has over 20
years' experience in the investment funds industry, having worked for Laing &
Cruickshank and UBS Warburg. Vanessa has particular expertise in corporate
finance and marketing.

Giles Warman

Giles Warman, (62), has served on the Board since 1989. Giles is a Director of
European Assets Trust NV and was formerly employed by Numis Securities Limited.
Prior to this he was a partner at Sheppards & Chase and a Director of
Charterhouse Tilney. He has over 40 years' experience in the investment
industry.

All members of the Board are non-executive. None of the Directors have any
other connections with the Investment Manager and are not employed by any of
the companies in which the Company holds an investment.

Chairman's Statement

Performance

I am pleased that the strong performance reported at the interim stage
continued during the second half of the Company's financial year. The Company's
net asset value total return for the year was 25.6% and the share price total
return 33.1% compared to the total return from our benchmark index, the FTSE
All-Share index of 12.5%.

The Company's performance when compared to the benchmark index is particularly
pleasing. The principal contributions to net asset value performance came from
our major holdings in A.G. Barr, Pearson, Fidessa, Burberry Group and Diageo.

The discount of the Company's share price to the net asset value per share
began the year at 5.3% and moved to a premium of 0.3% at the year-end.

I am delighted to report that the Company was a joint winner of the UK Income
Category at the 2010 Investment Week, Investment Trust of the Year Awards.

Share Capital

During the year the Company has continued to be active in reissuing shares from
treasury at a discount of less than 5.0% and buying back shares for treasury
where they were offered at a discount greater than 5.0% to the net asset value
per share. A total of 2,457,261 shares were repurchased for treasury during the
year in accordance with the Company's stated policy and all 3,983,011 shares
held in treasury were reissued during the year at a price representing a
narrower discount to net asset value per share than that at which they had been
bought into treasury. In addition 150,000 new shares were issued at a 0.5%
premium to the estimated cum income net asset value per share at the time of
issue. Since the year-end no new shares have been

issued and none have been repurchased into treasury.

Return and Dividend

The Income Statement shows a total return per share of 62.5p consisting of a
revenue return per share of 8.5p and a capital return per share of 54.0p.

The Company's net revenue return during the year was less than in previous
years and your Board has declared two interim dividends for the year totalling
8.8p per share (year ended 30 September 2009: 9.5p). In paying this total
dividend of 8.8p per share the Company has used £170,000 of brought forward
revenue reserves. At this year's level of distribution the yield on the
Company's shares is approximately 3.0%, in line with that of the Company's
benchmark index. As mentioned at the interim stage, it is regrettable that the
dividend for the full year to 30 September 2010 is lower than the prior year by
some 7%. The principal reason behind the fall in the Company's income during
the year is the significant reduction in the level of income from our Lloyds
preference shares. I reiterate, however, that the lower level of dividend for
the financial year does not alter the Board's long term objective of a
progressive dividend policy.

Borrowings

Subsequent to the year end the Company renewed its secured fixed term committed
revolving credit facility with Scotiabank Europe PLC at an increased limit of £
20 million; the facility is subject to a variable interest rate. A total of £
12.3 million is currently drawn down from this facility.

Chairman's Statement

Continued

Developments in the Investment Trust Sector In June of this year a review of
the current rules for taxation of investment trusts was announced with the
intention of modernising the tax treatment which has remained unchanged for
over 40 years. Based on comments made by our trade association, the Association
of Investment Companies (AIC), your Board does not expect that the new rules
will have a material effect on the Company.

The text of the Alternative Investment Fund Managers (AIFM) Directive,
legislation which will regulate `alternative investment funds' including
investment trusts, was ratified recently by the European Parliament. This draws
to a close the first stage of the finalising the Directive. The AIC continues
to be fully engaged in the implementation of the Directive which is expected to
become part of UK law by early 2013.

Outlook

Although it is expected that the UK economy will avoid a double-dip recession,
the outlook remains uncertain with a recovery being dependent on exports and
the ability of the private sector to create domestic jobs.

Despite this uncertain outlook, your Board continues its full support of our
Investment Manager's strategy of investing in companies with exposure to
foreign, and in particular emerging, markets with sustainable dividend growth
rates and which are held for the long term. We firmly believe that this
strategy will continue to deliver strong investment returns to shareholders
over the longer term.

Further information concerning the portfolio, including dividend prospects, can
be found in our Investment Manager's Review beginning on page 5.

Anthony Townsend
Chairman

14 December 2010

Investment Manager's Review

December of this year, calendar 2010, marks the 10th anniversary of Lindsell
Train Limited's (LT) appointment as Investment Manager to your Company. It may
sound trite, but it is nonetheless true that we feel privileged to have been
associated for so many years with this long-established and well-respected
investment trust - and very much hope that we will remain so for another
decade, or longer. There is self-interest in that aspiration of course, but, in
an era when investment managers swap funds almost as often as football managers
swap clubs, we take great satisfaction from building a really long term
performance record and hope that shareholders recognise the benefits of it.

Nonetheless, we know we must earn and re-earn this privilege to manage your
capital. We are pleased, then, that the last two calendar years have proven
relatively successful for the Company's investment strategy. In passing, it is
here relevant to acknowledge how grateful we are to your Board for its support
of LT through the two years preceding these, particularly 2007, when our
relative performance was far from satisfactory. Board support over that period
encouraged us to stick to our principles and positions - justifiably so, we
believe.

Taking a longer perspective, over the just short of ten years up to the end of
Q3 calendar 2010 since its appointment, LT's performance for the Company
amounts to 6.2% pa (NAV total return, net dividends reinvested). This compares
to the FTSE All-Share's total return over the same period of 3.1% pa. The
Company's return is after allowance for all fees, of perhaps 1% pa - fees that
the benchmark does not pay, implying that our investment approach has delivered
an underlying performance some 4% pa above the market average. Such
outperformance adds up over time - multiply our annual return and that of the
All-Share by ten to get some sense of the gap that has opened up between the
two.

In seeking to convey to shareholders how we have been able to deliver this
outperformance - through a period, let us remind ourselves, that contained two
very disagreeable bear markets - we find that a single word suffices. This one
word,

which more or less accounts for what success we've enjoyed over the period is:
Baggers.

"Baggers" is a term devised by Peter Lynch, the legendary US investor who
managed the biggest mutual fund in the world, Fidelity Magellan, for 13 years
in the 1970s and 1980s. A bagger is a share that goes up a lot. Indeed, to
qualify as one a share needs to at least double on its book cost since
investment. Any share that doubles is always good news, but three-baggers or
four-baggers - treblers or quadruplers are even more welcome. So far as Peter
Lynch is concerned, the Holy Grail for investors is the mystical ten-bagger -
that share which rises 1,000% from its purchase price. For most of us mortals
ten-baggers are discouragingly rare, although, amazingly, Lynch enjoyed over
100 of them during his tenure at Magellan.

Baggers are relevant for LT and hence for your Company because of the nature of
our investment philosophy. As shareholders may recall, our approach calls for
us to make long term commitments to a limited number (limited due to their
scarcity) of exceptional companies - companies that own wonderful brands or
business franchises. Now, it is all very well owning such shares for the
proverbial long term, but this strategy is only vindicated if, over time, those
shares go up and go up a lot. In short, LT needs baggers to succeed.

Happily, over the last ten years we have unearthed a fair few of them. Indeed
in the portfolio today there are eight-baggers - listed below, with their
multiple of gain - A.G. Barr (5.0x), Burberry Group (3.0x), Dr Pepper Snapple
(effectively infinite, as a free share), Fuller Smith & Turner (3.0x), Fidessa
(3.0x), Lindsell Train Investment Trust (2.0x), Thomson Reuters (3.5x) and
Young & Co's Brewery (3.5x). In total these represent over 30% of the portfolio
by number of holdings and 31.5% by value. Their importance in driving long term
returns is manifest.

The wonderful thing about baggers, as Peter Lynch demonstrated, is that there
is no reason why they should cease to work for you, even after the first
doubling or trebling. Good companies often carry right on being good companies

Investment Manager's Review

Continued

- generating higher earnings over time, as a result of both business growth
and, not to be underestimated, their ability to protect investors against the
effects of inflation. We see no reason why, say, Burberry's rapidly expanding
business on mainland China or Fidessa's lock on the dealing platforms of most
leading global investment banks shouldn't go on becoming ever more valuable
over time.

What really intrigues us, though, is what will be the Company's next baggers -
its future winners. To become a bagger, a share must offer both undervaluation
and a long term growth opportunity. We find several holdings with precisely
these dual characteristics in your portfolio today. For instance, during 2010
we have been steadily building an investment in Daily Mail & General Trust
(DMGT) - owner of the Daily Mail, of course, as well as other fine media
properties. We analyse the shares to be cheap for two reasons. First, DMGT has
a sizeable domestic UK business - and the general consensus is that the UK
economy is palsied at best. Next, investors fret that the Internet will
disintermediate newspapers, sending them toward the same oblivion as the town
crier. We demur, on both counts. Pessimism about the UK is indeed intense
amongst British investors, but if the Coalition's stated policies of holding
long term interest rates at multi-year lows and cutting corporation tax are
delivered upon, then there seems every prospect that the economy will do rather
better than expected. Even if the UK just muddles through, many domestic UK
companies are already undervalued - including not just DMGT, but the regional
brewers in the portfolio, Fullers, Marston's and Youngs. Next, we watch DMGT's
success in developing its own Internet business, notably the heavy traffic that
visits Mail Online every day. It seems to us that far from being a threat, the
Internet is the engine that will drive DMGT's profits for years to come. Any
shift in investors' perceptions of DMGT, from vulnerable "cyclical", as
currently, to cash-generative "growth" company will offer serious bagging
potential. The same analysis is pertinent for other technology and media
positions in the portfolio and, to us, Pearson, Reed and Sage look pregnant.

The Chairman has mentioned earlier in this report the unwelcome decision his
Board took to reduce your dividend this year. The fault is all ours. Many years
ago we made, in hindsight, a poor allocation of your capital to what turned
into Lloyd's Bank preference shares. The two-year suspension of dividends on
these instruments - as dictated by the EU - put a hole in your income account
that we could not fill. If there is any consolation in this sorry tale it is
that the Lloyd's pref have performed well in capital terms in 2010, rising 40%,
as

investors' confidence in both the survival of the bank and its ability to pay
dividends recovers. After all, Lloyds too is an important beneficiary of
stability in the UK economy. Elsewhere we are encouraged by the dividend
performance of other portfolio constituents and expect this to drive both
dividend growth and further total return for your shares in the Company.

Nick Train, Lindsell Train Limited

Investment Manager

14 December 2010

Contribution to Net Asset Value

For the year ended 30 September 2010

 

                                                   Contribution                 
                                                                                
                                                   for the year                 
                                                             to                 
                                                                                
                                                   30 September   Contribution  
                                                                                
                                                           2010      per share  
                                                                                
Investment                                                £'000       (pence)*  
                                                                                
Equities                                                                        
                                                                                
A.G. Barr                                                 7,768           15.1  
                                                                                
Pearson                                                   2,990            5.8  
                                                                                
Fidessa                                                   2,800            5.4  
                                                                                
Burberry Group                                            2,790            5.4  
                                                                                
Diageo                                                    2,611            5.1  
                                                                                
Euromoney Institutional Investor                          2,311            4.5  
                                                                                
Schroders                                                 1,974            3.8  
                                                                                
Sage Group                                                1,696            3.3  
                                                                                
Kraft Foods                                               1,602            3.1  
                                                                                
Hargreaves Lansdown                                       1,329            2.6  
                                                                                
Reed Elsevier                                             1,220            2.4  
                                                                                
Unilever                                                  1,124            2.2  
                                                                                
Dr Pepper Snapple                                         1,032            2.0  
                                                                                
Thomson Reuters                                             703            1.4  
                                                                                
Lindsell Train Investment Trust                             537            1.0  
                                                                                
Daily Mail & General Trust                                  462            0.9  
                                                                                
Fuller Smith & Turner                                       441            0.8  
                                                                                
Young & Co's Brewery                                        344            0.7  
                                                                                
Rathbone Brothers                                           157            0.3  
                                                                                
Marston's                                                    69            0.1  
                                                                                
Celtic                                                       30            0.1  
                                                                                
London Stock Exchange                                      (449 )         (0.9 )
                                                                                
Lloyds Banking Group                                       (485 )         (0.9 )
                                                                                
                                                         33,056           64.2  
                                                                                
Preference Shares                                                               
                                                                                
Lloyds Banking Group 9.25% (non-cum preference)             870            1.7  
                                                                                
Celtic 6% (cum preference)                                   (3 )            -  
                                                                                
Lloyds Banking Group 9.75% (non-cum preference)             (97 )         (0.2 )
                                                                                
                                                            770            1.5  
                                                                                
Unquoted                                                                        
                                                                                
Frostrow Capital LLP                                        170            0.3  
                                                                                
                                                            170            0.3  
                                                                                
Interest income from HMRC (VAT reclaim on                    13              -  
management fees)                                                                
                                                                                
Contribution for the year                                34,009           66.0  
                                                                                
Expenses and finance charges                             (1,801 )         (3.5 )
                                                                                
Total contribution for the year                          32,208           62.5  

*   based on 51,546,561 shares, being the weighted average number of shares in 
    issue during the year ended 30 September 2010.                             

Investments

as at 30 September 2010

 

                                                               Fair            
                                                                               
                                                              value        % of
                                                                               
Investment                                Sector              £'000 investments
                                                                               
A.G. Barr                                 Beverages          18,659        11.1
                                                                               
Diageo                                    Beverages          17,536        10.4
                                                                               
Unilever                                  Food Producers     16,109         9.6
                                                                               
Pearson                                   Media              11,995         7.1
                                                                               
Fidessa                                   Software &         10,239         6.1
                                          Computer Services                    
                                                                               
Sage Group                                Software &          9,525         5.6
                                          Computer Services                    
                                                                               
Reed Elsevier                             Media               7,914         4.7
                                                                               
Schroders                                 General             7,898         4.7
                                          Financials                           
                                                                               
Rathbone Brothers                         General             7,525         4.5
                                          Financials                           
                                                                               
Kraft Foods^                              Food Producers      7,129         4.2
                                                                               
Top 10 investments                                          114,529        68.0
                                                                               
Marston's                                 Travel & Leisure    5,782         3.4
                                                                               
Euromoney Institutional Investor          Media               5,573         3.3
                                                                               
Daily Mail & General Trust                Media               5,321         3.2
                                                                               
Burberry Group                            Personal Goods      5,294         3.1
                                                                               
Dr Pepper Snapple ^                       Beverages           4,883         2.9
                                                                               
Thomson Reuters ~                         Media               4,712         2.8
                                                                               
Lloyds Banking Group 9.25% (non cum       Preference Shares   4,673         2.8
preference)*                              (Banks)                              
                                                                               
Fuller Smith & Turner                     Travel & Leisure    3,955         2.3
                                                                               
London Stock Exchange                     General             3,832         2.3
                                          Financials                           
                                                                               
Hargreaves Lansdown                       General             3,610         2.1
                                          Financials                           
                                                                               
Top 20 investments                                          162,164        96.2
                                                                               
Young & Co's Brewery                      Travel & Leisure    3,278         2.0
                                                                               
Lindsell Train Investment Trust           General             2,040         1.2
                                          Financials                           
                                                                               
Celtic                                    Travel & Leisure      642         0.4
                                                                               
Frostrow Capital LLP+                     General               340         0.2
                                          Financials                           
                                                                               
Celtic 6% (cum preference)*               Travel & Leisure       50           -
                                                                               
Total investments                                           168,514       100.0

All of the above investments are equities listed in the UK, unless otherwise
stated.

^   Listed in the United States                                                
                                                                               
~   Listed in Canada                                                           
                                                                               
*   Non-equity - Preference Shares                                             
                                                                               
+   Unquoted partnership interest                                              

Analysis of the Portfolio

as at 30 September 2010

 

                                                                 £'000        %
                                                                               
Listed on a recognised stock exchange                          163,451     97.0
                                                                               
Total listed equities                                          163,451     97.0
                                                                               
Frostrow Capital LLP                                               340      0.2
                                                                               
Total unquoted investments                                         340      0.2
                                                                               
Lloyds Banking Group 9.25% (non cum preference)                  4,673      2.8
                                                                               
Celtic 6.0% (cum preference)                                        50        -
                                                                               
Total preference shares                                          4,723      2.8
                                                                               
Total investments                                              168,514    100.0

Sector Analysis of the Portfolio

as at 30 September 2010

Comparison of sector weightings with the FTSE All-Share Index

 

                                                                   Finsbury   
                                                                     Growth   
                                                                              
                                        Finsbury         FTSE      & Income   
                                          Growth                              
                                                                              
                                        & Income    All-Share      (Under)/   
                                                        Index   over weight   
                                                                              
Sector                                         %            %             %   
                                                                              
Oil & Gas                                      -         16.2         (16.2 ) 
                                                                              
Oil & Gas Producers                            -         15.6         (15.6 ) 
                                                                              
Oil Equipment, Services &                      -          0.6          (0.6 ) 
Distribution                                                                  
                                                                              
Alternative Energy                             -            -             -   
                                                                              
Basic Materials                                -         12.2         (12.2 ) 
                                                                              
Chemicals                                      -          0.4          (0.4 ) 
                                                                              
Forestry & Paper                               -          0.1          (0.1 ) 
                                                                              
Industrial Metals                              -          0.1          (0.1 ) 
                                                                              
Mining                                         -         11.6         (11.6 ) 
                                                                              
Industrials                                    -          7.3          (7.3 ) 
                                                                              
Construction & Materials                       -          0.3          (0.3 ) 
                                                                              
Aerospace & Defence                            -          1.9          (1.9 ) 
                                                                              
General Industrials                            -          0.6          (0.6 ) 
                                                                              
Electronic & Electrical Equipment              -          0.3          (0.3 ) 
                                                                              
Industrial Engineering                         -          0.7          (0.7 ) 
                                                                              
Industrial Transportation                      -          0.2          (0.2 ) 
                                                                              
Support Services                               -          3.3          (3.3 ) 
                                                                              
Consumer Goods                              41.3         11.6          29.7   
                                                                              
Automobile & Parts                             -          0.2          (0.2 ) 
                                                                              
Beverages                                   24.4          3.2          21.2   
                                                                              
Food Producers                              13.8          1.9          11.9   
                                                                              
Household Goods & Home Contruction             -          1.9          (1.9 ) 
                                                                              
Personal Goods                               3.1          0.5           2.6   
                                                                              
Tobacco                                        -          3.9          (3.9 ) 
                                                                              
Healthcare                                     -          7.6          (7.6 ) 
                                                                              
Healthcare Equipment & Services                -          0.3          (0.3 ) 
                                                                              
Pharmaceuticals & Biotechnology                -          7.3          (7.3 ) 
                                                                              
Consumer Services                           29.2          9.9          19.3   
                                                                              
Food & Drug Retailers                          -          3.0          (3.0 ) 
                                                                              
General Retailers                              -          1.6          (1.6 ) 
                                                                              
Media                                       21.1          2.7          18.4   
                                                                              
Travel & Leisure                             8.1          2.6           5.5   
                                                                              
Telecommunications                             -          6.0          (6.0 ) 
                                                                              
Fixed Line Telecommunications                  -          0.9          (0.9 ) 
                                                                              
Mobile Communications                          -          5.1          (5.1 ) 
                                                                              
Utilities                                      -          3.7          (3.7 ) 
                                                                              
Electricity                                    -          1.0          (1.0 ) 
                                                                              
Gas, Water & Multiutilities                    -          2.7          (2.7 ) 
                                                                              
Financials                                  15.0         23.7          (8.7 ) 
                                                                              
Banks                                          -         13.3         (13.3 ) 
                                                                              
Nonlife Insurance                              -          1.0          (1.0 ) 
                                                                              
Life Insurance                                 -          3.0          (3.0 ) 
                                                                              
Real Estate Investment & Services              -          0.3          (0.3 ) 
                                                                              
Real Estate Investment Trusts                  -          1.3          (1.3 ) 
                                                                              
General Financials                          15.0          1.9          13.1   
                                                                              
Equity Investment Instruments                  -          2.9          (2.9 ) 
                                                                              
Technology                                  11.7          1.8           9.9   
                                                                              
Software & Computer Services                11.7          1.3          10.4   
                                                                              
Technology Hardware & Equipment                -          0.5          (0.5 ) 
                                                                              
Total excluding Preference Shares           97.2        100.0             -   
                                                                              
Preference shares                            2.8            -           2.8   
                                                                              
Total including Preference Shares          100.0        100.0             -   

Report of the Directors incorporating the Business Review

The Directors present their report and the financial statements for the year
ended 30 September 2010.

Introduction

The Report of the Directors includes the Business Review and Corporate
Governance Statement. The Business Review contains a review of the Company's
business, the principal risks and uncertainties it faces and an analysis of its
performance during the financial period and the position at the period end and
the future business plans of the Company. To aid understanding of these areas
the Board has included an analysis using appropriate Key Performance
Indicators. The Business Review should be read in conjunction with the
Chairman's Statement on pages 3 and 4, the Investment Manager's Review on pages
5 and 6 and the analyses on pages 7 to 10.

Business and Status of the Company

The Company is registered as a public limited company and is an investment
company within the terms of Section 833 of the Companies Act 2006. Its shares
are listed on the Official List of the UK Listing Authority and traded on the
main market of the London Stock Exchange. The Company has received approval
from HM Revenue & Customs as an authorised investment trust under Section 842
of the Income and Corporation Taxes Act 1988 ("ICTA 1988") for the year ended
30 September 2009 and all previous periods. This approval is subject to there
being no subsequent enquiry under corporation tax self-assessment. In the
opinion of the Directors, the Company continues to direct its affairs so as to
enable it to qualify for such approval and the Company will continue to seek
approval each year. With effect from the year ended 30 September 2010, approval
will be sought under Sections 1158 and 1159 of the Corporation Tax Act 2010
("CTA 2010"), formerly Section 842 ICTA 1988.

The Company's shares are eligible for inclusion in the stocks and shares
component of an Individual Savings Account.

Investment Objective

The Company's investment objective is to achieve capital and income growth and
to provide shareholders with a total return in excess of that of the FTSE
All-Share Index.

Investment Policy

The Company invests principally in the securities of UK quoted companies,
although up to a maximum of 20% of the Company's portfolio, at the time of
acquisition, can be invested in quoted companies worldwide. Where possible,

a minimum position size of 1% of the Company's gross assets is held unless the
holding concerned is being built or disposed of.

The portfolio is managed by Lindsell Train Limited ("Lindsell Train" or the
"Investment Manager") and will normally comprise approximately 30 investments.
Unless driven by market movements, FTSE 100 companies, including preference
shares issued by such companies, will normally represent between 50% and 100%
of the portfolio; at least 70% of the portfolio will normally be invested in
companies within the FTSE 350.

The Company does not and will not invest more than 10%, in aggregate, of the
value of its gross assets in other closed ended investment companies (including
investment trusts) listed on the London Stock Exchange, except where the
investment companies themselves have stated investment policies to invest no
more than 15% of their gross assets in other closed ended investment companies
(including investment trusts) listed on the London Stock Exchange. The Company
does not and will not invest more than 15%, in aggregate, of the value of the
gross assets of the Company in other closed ended investment companies
(including investment trusts) listed on the London Stock Exchange.

No investment will be made in any company or fund where Lindsell Train acts as
the investment manager without the prior approval of the Board.

The Board has set a maximum level of gearing of 25% of the Company's net
assets.

The Company has the ability to invest a proportion (up to 25% of its gross
assets) in preference shares, bonds and other debt instruments, although no
more than 10% of any one issue may be held. In addition, a maximum of 10% of
the Company's gross assets can be held in cash, where the Investment Manager
believes market or economic conditions make equity investment unattractive or
while seeking appropriate investment opportunities or to maintain liquidity.

Whilst performance is measured against the FTSE All-Share Index, the Company's
portfolio is constructed and managed without reference to a stock market index,
investments being selected only after extensive research by the Investment
Manager. The Investment Manager uses a bottom-up stock picking approach and
looks to invest in a universe of excellent UK listed businesses that appear
undervalued.

Report of the Directors

Continued

Results and Dividends

The results attributable to shareholders for the year are shown on page 31. The
dividends for the year to 30 September were:

                                                                  2010     2009
                                                                               
                                                                 £'000    £'000
                                                                               
First Interim paid of 4.4p per share (2009: 4.4p)                2,224    2,211
                                                                               
Second Interim payable of 4.4p per share (2009: 5.1p)            2,330    2,615
                                                                               
Total                                                            4,554    4,826

Performance and Performance Measurement

While the Board monitors the net asset value as the primary financial
measurement it is aware that share price performance and income return are the
most important factors to the Company's shareholders. Net asset value and share
price performance are of course closely linked and it is the responsibility of
the Investment Manager to seek the best investments and to manage the portfolio
in the most beneficial way to achieve the highest returns for shareholders. The
Company's net asset value per share total return for the year was 25.6%. The
Company's benchmark, the FTSE All-Share Index (measured on a total return
basis) rose by 12.5% during the same period. The Company's share price total
return for the year was 33.1%. For the year under review, the Contribution to
Net Asset Value table is detailed on page 7.

While the Board recognises that income return is also important to
shareholders, reduced net revenue has meant that, even using some of the
Company's distributable reserves, the Board has been unable to maintain the
Company's progressive dividend policy. The Company's dividends total 8.8p per
share for the year ended 30 September 2010, as compared to a total figure of
9.5p per share for the previous year.

The Board reviews overall performance on a continuous basis. The Company's net
asset value per share is announced daily via a regulatory news service and is
available online (see page 54 of this annual report for details).

Key Performance Indicators ("KPIs")

The Board assesses the Company's performance in meeting its investment
objective against the following key performance indicators:

•  Net asset value per share total return    
   (see page 1)                              
                                             
•  Share price total return (see pages 1 and 
   28)                                       
                                             
•  Revenue return per share (see pages 1, 31 
   and 39)                                   
                                             

•  Share price premium/(discount) to net     
   asset value per share analysis (see page  
   1)                                        
                                             
•  Benchmark and peer group performance (see 
   pages 1, 12 and 28)                       

As indicated, Lindsell Train has been appointed by the Board to manage the
Company's portfolio and Frostrow Capital LLP ("Frostrow" or the "Manager") has
been appointed as the Company's Manager, Administrator and Company Secretary.
Each provider is responsible to the Board which is ultimately responsible to
the shareholders for performing against inter alia the above KPIs within the
terms of their respective agreements by utilising the capabilities of the
experienced professionals within each firm.

Principal Risks and their Mitigation

The Company's assets consist principally of listed equities; its main area of
risk is therefore stock market related. The specific key risks faced by the
Company, together with the mitigation approach adopted, are as follows (further
information on the Company's risk management strategy can be seen in note 16
beginning on page 42).

Objective and Strategy - The Company and its Investment Objective become
unattractive to investors

The Board regularly reviews the investment mandate and the long-term investment
strategy in relation to market and economic conditions, and the operation of
the Company's peers, thereby monitoring whether the Company should continue in
its present form. Each month the Board receives a Monthly Review, which
monitors the Company's investment performance (both on an absolute basis and
against the benchmark and peer group) and its compliance with the investment
guidelines. The Company's Manager and Investment Manager regularly present
additional reports and presentations to the Board and their continuity is
regularly considered by the Board.

Report of the Directors

Continued

Level of discount/premium - Share price performance lags NAV performance

The Board undertakes a regular review of the level of discount/premium and
consideration is given to ways in which share price performance may be
enhanced, including the effectiveness of marketing. The Board operates an
active discount control mechanism with the aim of limiting the discount of the
share price to the net asset value per share to a maximum of 5%. In the event
of shares being re-purchased by the Company, such shares may be held in
treasury for reissue into the market when demand arises. Shareholders should
note that it remains possible for the share price discount to net asset value
per share to be greater than 5% on any one day and this is due to the fact that
the share price continues to be influenced by overall supply and demand for the
Company's shares in the secondary market. The average month-end discount of
share price to the ex-income net asset value per share during the year was 2%.

Market Price Risk

Market price risk arises mainly from uncertainty about future prices of
financial instruments held. It represents the potential gain or loss the
Company might suffer through holding market positions in the face of price
movements.

The Board meets on at least a quarterly basis during the year and at each
meeting they consider the asset allocation and concentration of the portfolio
in order to review the risk associated with particular instruments, as well as
receiving a report from the Investment Manager on the portfolio and its
performance. The Investment Manager has responsibility for selecting
investments in accordance with the Company's investment objective and seeks to
ensure that individual stocks meet an acceptable risk-reward profile.

Liquidity Risk

The Company's assets comprise mainly realisable securities, which can be sold
to meet funding requirements where necessary.

Interest Rate Risk

The Company borrows in sterling at floating rates of interest and hence is
exposed to the risk that its cashflow will change due to movements in
prevailing interest rates. The Board imposes borrowing limits to ensure gearing
levels are appropriate to market conditions and reviews these on a regular
basis.

The Company also invests in fixed rate preference shares which are exposed to
movements in their fair value arising

from changes in interest rates. These risks are managed alongside market price
risk as described above.

Credit Risk

The Company's principal financial assets are bank balances, debtors and
investments which represent the Company's maximum exposure to credit risk in
relation to financial assets. The credit risk on bank balances is considered
low because the counter-parties are banks with high credit ratings assigned by
international credit agencies. The credit risk in relation to the companies
that comprise the portfolio is monitored closely by the Investment Manager.

Portfolio Performance - Investment performance may not be meeting the
investment objective or shareholder requirements

The Board regularly reviews investment performance against the benchmark and
against the peer group. The Board also receives reports that show an analysis
of performance compared with other relevant indices. The Investment Manager
provides an explanation of stock selection decisions and an overall rationale
for the make-up of the portfolio. The Investment Manager discusses current and
potential investment holdings with the Board on a regular basis in addition to
new initiatives, which may enhance shareholder returns.

Operational and Regulatory Risk

Failure to qualify as an Investment Trust under the terms of Sections 1158 and
1159 of the CTA 2010 may lead to the Company being subject to corporation tax
on its capital profits. A breach of the Listing Rules of the Financial Services
Authority ("FSA") may result in censure by the FSA and/or the Company's
suspension from listing. Other control failures, either by the Manager, the
Investment Manager or any other of the Company's service providers, may result
in operational and/or reputational problems, erroneous disclosures or loss of
assets through fraud, as well as breaches of regulations. An independent
custodian has been appointed by the Company to safeguard the assets of the
Company.

The Manager and the Investment Manager review the level of compliance with
Sections 1158 and 1159 of the CTA 2010 and other financial regulatory
requirements on a daily basis. All transactions, income and expenditure
forecasts are reported to the Board. The Board regularly considers all risks,
the measures in place to control them and the possibility of any other risks
that could arise. These risks are formalised in the Company's risk assessment
register. The Board ensures that satisfactory assurances are received from its
various service

Report of the Directors

Continued

providers. In addition, each of the third party providers provides a copy of
its report on internal controls (SAS 70, AAF or equivalent) to the Board each
year. The Manager's and the Investment Manager's Compliance Officers produce
regular reports for review by the Company's Audit Committee and are available
to attend meetings in person if required.

Investment Management Key Person Risk

There is a risk that the individual responsible for managing the Company's
portfolio may leave his employment or may be prevented from undertaking his
duties.

The Investment Manager has in place an insurance policy covering key personnel.
There is a qualified individual within the Investment Manager who works with
the designated portfolio manager who could take over if necessary.

Fixed Asset Investments

The fair value of the Company's investments, at 30 September 2010 was £
168,514,000 (2009: £138,799,000) showing a profit since acquisition of £
56,209,000 (2009: profit £22,160,000). Taking these investments at this
valuation, the net assets attributable to each share at 30 September 2010
amounted to 301.4p (2009: 249.0p).

Issue and Repurchase of Shares

At the Annual General Meeting held on 27 January 2010, authority to allot up to
5,033,887 shares on a non pre-emptive basis was granted.

The Board continues to believe the use of a discount management policy, to buy
back shares if offered at a discount greater than 5% to the net asset value per
share, and the use of the treasury share facility, whereby shares repurchased
by the Company are held in treasury for reissue into the market (at a discount
less than 5% to the net asset value per share) when demand is present, are in
the best interests of the Company and shareholders. During the year a total of
2,457,261 shares were repurchased by the Company and held in treasury and
3,983,011 shares were reissued out of treasury at a price representing a
narrower discount to net asset value per share than that at which they had been
bought into treasury. As at 14 December 2010 no shares were held in treasury.

The reissue of shares at a discount to the Company's prevailing net asset value
per share will have a dilutive effect on the net asset value per share.

In addition, 150,000 new shares were issued by the Company during the year at a
0.5% premium to the estimated cum income net asset value per share at the time
of issue.

Current and Future Developments

A review of the Company's year, its performance since the year-end and the
outlook for the Company can be found in the Chairman's Statement on pages 3 and
4 and in the Investment Manager's Review on pages 5 and 6. The Board
concentrates its attention on the Company's investment performance and the
Investment Manager's investment approach and on factors that may have an effect
on this approach. Marketing reports are given to the Board at each Board
meeting, which include how the Company is being promoted and details of
communications with existing and potential shareholders. The Board is regularly
updated on wider investment trust industry issues and discussions are held
concerning the Company's development and strategy.

Management

The Company has no employees and most of its day-to-day activities are
delegated to third parties. The Company has appointed Lindsell Train as
Investment Manager and Frostrow as Manager, Administrator and Company
Secretary.

Lindsell Train was appointed Investment Manager to the Company in December
2000. Lindsell Train has given Nick Train responsibility for managing the
Company's portfolio. Mr Train was previously head of Global Equities at M&G PLC
and head of Pan-European Equities at GT Management PLC. Mr Train has managed
money in the UK equity market since 1983, including the top decile performer GT
Income Fund (1985-1998). Lindsell Train is authorised and regulated by the
Financial Services Authority.

The Board looks to the Investment Manager to deliver investment performance.

The Investment Manager continues to manage the portfolio in accordance with the
investment objective and policy. The Investment Manager is an independent
investment management company and is able to access, through in-depth research
and analysis, the most profitable investments for the Company.

Frostrow is a firm established in 2007 to provide specialist management,
administration, company secretarial and marketing services to investment
companies. Frostrow is authorised and regulated by the Financial Services
Authority.

Frostrow is responsible for providing company secretarial, administrative,
accounting and marketing services. Details of the appointment of each party are
given below.

Report of the Directors

Continued

Investment Management Agreement: Under the terms of the Investment Management
Agreement, Lindsell Train provides discretionary investment management services
to the Company for a periodic fee equal to 0.45% per annum of the Company's
market capitalisation. The Investment Management Agreement may be terminated by
either party giving notice of not less than 12 months. The Investment Manager
under the terms of the Agreement provides inter alia the following services:

•  seeking out and evaluating investment     
   opportunities;                            
                                             
•  recommending the manner by which monies   
   should be invested, disinvested, retained 
   or realised;                              
                                             
•  advising on how rights conferred by the   
   investments should be exercised;          
                                             
•  analysing the performance of investments  
   made; and                                 
                                             
•  advising the Company in relation to       
   trends, market movements and other matters
   which may affect the investment policy of 
   the Company.                              

Management, Administrative and Secretarial Services Agreement: Management,
Administrative, Secretarial and other services are provided to the Company by
Frostrow.

Under the terms of the Management, Administrative and Secretarial Services
Agreement Frostrow receives a periodic fee at a rate of 0.15% per annum of the
Company's market capitalisation plus a fixed fee of £70,000 per annum
calculated monthly and payable monthly in arrears.

The notice period on the Management, Administration and Company Secretarial
Agreement with Frostrow is 12 months and may be terminated by either party.

Frostrow, under the terms of the Management, Administrative & Secretarial
Services Agreement provides inter alia the following services:

•  marketing and shareholder services;       
                                             
•  administrative services to such extent and
   from such dates as the Board may          
   determine;                                
                                             
•  advice and guidance in respect of         
   corporate governance requirements;        
                                             
•  performance measurement reports;          
                                             
•  maintenance of adequate accounting records
   and management information;               
                                             

•  preparation and despatch of the audited   
   annual financial statements, the unaudited
   interim report and the interim management 
   statements; and                           
                                             
•  attending to general tax affairs where    
   necessary.                                

Performance Fee: Dependent on the level of performance achieved, Lindsell Train
and Frostrow are also entitled to the payment of a performance fee. The
calculation basis of the performance fee is by reference to the annual increase
in the Company's adjusted market capitalisation per share, but only after
attainment of an absolute return hurdle, which is the sum of the increase in
the Retail Price Index ("RPI") in the year, plus a fixed return of 6%. During
the year the RPI rose by 4.64%, therefore the performance fee hurdle, as at 30
September 2010, was 455.04p per share, being 10.64% above the hurdle at 30
September 2009. The Company's adjusted market capitalisation per share as at 30
September 2010 was 293.18p. Lindsell Train receives 85% and Frostrow receives
15% of the performance fee. The total fixed, periodic and performance fees
payable in any one year to Lindsell Train and Frostrow are capped at 1.25% of
the Company's market capitalisation. Any outperformance, that would have
resulted in a higher fee being paid had there been no cap, is carried forward
into the calculation of future years' fees. Similarly, in the case of
underperformance, any underperformance has to be made up in future years before
a performance fee becomes payable in those years. In the year under review, no
performance fee was accrued or paid.

Holding in The Lindsell Train Investment Trust plc and Partnership Interest in
Frostrow Capital LLP

In 2001 the Company acquired a holding, equivalent to 5% of its issued share
capital, in The Lindsell Train Investment Trust plc, which is managed by
Lindsell Train, the Company's Investment Manager. The Lindsell Train Investment
Trust plc owns 25% of Lindsell Train and so the Company has an indirect
interest of 1.25% in Lindsell Train.

The Company also acquired a 10% interest in Frostrow at a cost of £150,000 in
2007, of which £75,000 was repaid to the Company by Frostrow in 2008. The
valuation of the Company's investment in The Lindsell Train Investment Trust
plc and Frostrow at the year end can be found on page 8.

Report of the Directors

Continued

Investment Manager, Manager Evaluation and Re-Appointment

The review of the performance of Lindsell Train as Investment Manager and
Frostrow as Manager is a continuous process carried out by the Board with a
formal evaluation being undertaken each year. As part of this process the Board
monitors the services provided by the Investment Manager and the Manager and
receives regular reports and views from them. The Board also receives
comprehensive performance measurement reports to enable it to determine whether
or not the performance objective set by the Board has been met.

The Board believes the continuing appointment of the Investment Manager and the
Manager, under the terms described on the previous page, is in the interests of
shareholders as a whole. In coming to this decision it also took into
consideration the following additional reasons:

 

-  the quality and depth of experience       
   allocated by the Investment Manager to the
   management of the portfolio and the level 
   of past performance of the portfolio in   
   absolute terms and also by reference to   
   the benchmark index; and                  
                                             
-  the quality and depth of experience of the
   management, administrative, company       
   secretarial and marketing team that the   
   Manager allocates to the management of the
   Company.                                  

Going Concern

The Directors, having made relevant enquiries, are satisfied that it is
appropriate to prepare financial statements on the going concern basis as the
net assets of the Company consist of liquid securities, all of which, with the
exception of the partnership interest in Frostrow Capital LLP, are traded on
recognised stock exchanges.

Creditors' Payment Policy

Terms of payment are negotiated with service providers when agreeing settlement
details for transactions. While the Company does not follow a formal code, it
is the Company's continuing policy to pay amounts due to creditors as and when
they become due. As at 30 September 2010, the Company did not have any trade
creditors (2009: nil).

Social, Economic and Environmental Matters

The Company's primary objective is to achieve capital and income growth by
investing in the shares of UK companies. The Board recognises that this should
be done in an environmentally responsible and ethical way. As the majority of
the Company's investments are in blue-chip companies, the Board is of the
opinion that investee companies are likely to have high standards of corporate
governance and considerable regard both for the welfare of their employees and
on environmental matters in relation to areas where their operations are
located. The Company encourages a positive approach to corporate governance and
engagement with companies.

Charitable and Political Donations

The Company has not in the past and does not intend in the future to make any
charitable or political donations.

Directors

The Directors of the Company, all of whom served throughout the year are shown
below. Further information on the Directors can be found on page 2.

Anthony Townsend
John Allard
Neil Collins
David Hunt
Vanessa Renwick
Giles Warman

Directors' Interests

The beneficial interests of the Directors and their families in the Company
were as set out below:

 

                                                             Number of shares  
                                                                   held        
                                                                               
                                                                   30        30
                                                            September September
                                                                               
                                                                 2010      2009
                                                                               
Anthony Townsend                                               95,940    95,940
                                                                               
John Allard                                                    17,094    15,758
                                                                               
Neil Collins                                                    7,986     3,746
                                                                               
David Hunt                                                     15,000    15,000
                                                                               
Vanessa Renwick                                                12,580    12,580
                                                                               
Giles Warman                                                   73,000    73,000

There have been no changes to the Directors' interests in the Company's shares
between the end of the year and the date of this report.

None of the Directors were granted or exercised rights over shares during the
year. None of the Directors has any contract (including service contracts) with
the Company.

Report of the Directors

Continued

Directors' Fees

A report on Directors' Remuneration is set out on pages 27 and 28.

Directors' and Officers' Liability Insurance Cover

Directors' and Officers' liability insurance cover was maintained by the Board
during the year ended 30 September 2010. It is intended that this policy will
continue for the year ended 30 September 2011 and subsequent years.

Directors' Indemnities

As at the date of this report, indemnities are in force between the Company and
each of its Directors under which the Company has agreed to indemnify each
Director, to the extent permitted by law, in respect of certain liabilities
incurred as a result of carrying out his role as a Director of the Company. The
Directors are also indemnified against the costs of defending any criminal or
civil proceedings or any claim by the Company or a regulator as they are
incurred provided that where the defence is unsuccessful the Director must
repay those defence costs to the Company. The indemnities are qualifying third
party indemnity provisions for the purposes of the Companies Act 2006.

A copy of each deed of indemnity is available for inspection at the Company's
registered office during normal business hours and will be available for
inspection at the Annual General Meeting.

Securities Carrying Voting Rights

The following information is disclosed in accordance with the Large and
Medium-size Companies and Groups (Accounts and Reports) Regulations 2008 and
DTR 7.2.6 of the FSA Disclosure and Transparency Rules.

 

•  The Company's capital structure and voting
   rights are summarised on the inside front 
   cover.                                    
                                             
•  Details of the substantial shareholders in
   the Company are listed on below.          
                                             
•  The giving of powers to issue or buy back 
   the Company's shares requires the relevant
   resolution to be passed by shareholders.  
   Proposals for the renewal of the Board's  
   current powers to issue and buy back      
   shares are detailed on pages 18 and 19.   
                                             
•  There are no restrictions concerning the  
   transfer of securities in the Company; no 
   special rights with regard to control     
   attached to securities; no restrictions on
   voting rights; no agreements between      
   holders of securities regarding their     
   transfer known to the Company; and no     
   agreements which the Company is party to  
   that might affect its control following a 
   successful takeover bid.                  

Substantial Share Interests

As at 30 November 2010 the Company was aware of the following substantial
interests in the voting rights of the Company:

 

                                                               Number of   % of
                                                                               
Fund manager                        Registered holder             shares shares
                                                                               
Brewin Dolphin                      Various Brewin Nominee     6,832,753  12.90
                                    Managed Accounts                           
                                                                               
Alliance Trust Savings              Alliance Trust Savings     6,207,219  11.72
                                    Nominees                                   
                                                                               
Rathbone                            Various Rathbone Nominee   4,171,748   7.88
                                    Managed Accounts                           
                                                                               
Rensburg Sheppards Investment       Ferlim Nominees, Rensburg  3,055,601   5.77
Management                          Client Nominees                            
                                                                               
Henderson Global Investors          Various Nominee Accounts   2,853,537   5.39
                                                                               
Charles Stanley                     Rock Nominees              2,227,359   4.21
                                                                               
JP Morgan Asset Management          Chase Nominees, Bank of    2,206,290   4.17
                                    New York Nominees                          
                                                                               
Legal & General Investment          Various Nominee Accounts   1,979,245   3.74
Management                                                                     
                                                                               
UBS Wealth Management               Various Nominee Accounts   1,807,890   3.41

Report of the Directors

Continued

Auditor

Grant Thornton UK LLP have indicated their willingness to continue to act as
Auditor to the Company and a resolution for their re-appointment will be
proposed at the forthcoming Annual General Meeting.

Audit Information

So far as the Directors are aware, there is no relevant information of which
the Auditors are unaware. The Directors have taken all steps they ought to have
taken to make themselves aware of any relevant audit information and to
establish that the Auditors are aware of such information.

Corporate Governance

A formal statement on Corporate Governance is set out on pages 22 to 26 and
forms part of the Report of the Directors.

Beneficial Owners of Shares - Information Rights

The beneficial owners of shares who have been nominated by the registered
holder of those shares to receive information rights under Section 146 of the
Companies Act 2006 are required to direct all communications to the registered
holder of their shares rather than to the Company's registrar, Capita
Registrars, or to the Company directly.

Notice Period for General Meetings

At last year's Annual General Meeting, a special resolution was passed allowing
general meetings of the Company to be called on a minimum notice period
provided for in the Companies Act 2006. For meetings other than annual general
meetings this is a period of 14 clear days.

The Board believes that it should continue to have the flexibility to convene
general meetings of the Company (other than annual general meetings) on 14
clear days' notice.

The Board is therefore proposing Resolution 11 as a special resolution to
approve 14 clear days as the minimum period of notice for all General Meetings
of the Company other than Annual General Meetings. The notice period for Annual
General Meetings will remain 21 clear days.

The authority, if given, will lapse at the next Annual General Meeting of the
Company after the passing of this resolution.

Annual General Meeting

The formal notice of Annual General Meeting is set out on pages 47 to 51 of
this Annual Report. Resolutions relating to the following items of special
business will be proposed at the forthcoming Annual General Meeting:

Share Repurchases

At the Annual General Meeting held on 27 January 2010, shareholders approved
the renewal of the authority permitting the Company to repurchase its own
shares.

The Directors wish to renew the authority given by shareholders at the previous
Annual General Meeting. The principal aim of a share buy-back facility is to
enhance shareholder value by acquiring shares at a discount to net asset value,
as and when the Directors consider this to be appropriate. The purchase of
shares, when they are trading at a discount to net asset value per share,
should result in an increase in the net asset value per share for the remaining
shareholders. This authority, if conferred, will only be exercised if to do so
would result in an increase in the net asset value per share for the remaining
shareholders and if it is in the best interests of shareholders generally. Any
purchase of shares will be made within guidelines established from time to time
by the Board. It is proposed to seek shareholder authority to renew this
facility for another year at the Annual General Meeting.

Under the current Listing Rules, the maximum price that may be paid on the
exercise of this authority must not exceed the higher of (i) 105% of the
average of the middle market quotations for the shares over the five business
days immediately preceding the date of purchase and (ii) the higher of the last
independent trade and the highest current independent bid on the trading venue
where the purchase is carried out. The minimum price which may be paid is 25p
per share. Shares which are purchased under this authority will either be
cancelled or held as treasury shares.

Special Resolution No. 10 in the Notice of Annual General Meeting will renew
the authority to purchase in the market a maximum of 14.99% of shares in issue
on 14 December 2010, being the nearest practicable date prior to the signing of
this Report, (amounting to 7,936,819 shares). Such authority will expire on the
date of the next Annual General Meeting or after a period of 15 months from the
date of passing of the resolution, whichever is earlier. This means in effect
that the authority will have to be renewed at the next Annual General Meeting
or earlier if the authority has been exhausted.

Issue of Shares

Ordinary Resolution No. 7 in the Notice of Annual General Meeting will renew
the authority to allot the unissued share capital up to an aggregate nominal
amount of £1,323,686 (equivalent to 5,294,742 shares, or 10% of the Company's
existing issued share capital on 14 December 2010, being the nearest
practicable date prior to the signing of this Report).

Report of the Directors

Continued

Such authority will expire on the date of the next Annual General Meeting or
after a period of 15 months from the date of the passing of the resolution,
whichever is earlier. This means that the authority will have to be renewed at
the next Annual General Meeting.

When shares are to be allotted for cash, Section 551 of the Companies Act 2006
(the "Act") provides that existing shareholders have pre-emption rights and
that the new shares must be offered first to such shareholders in proportion to
their existing holding of shares. However, shareholders can, by special
resolution, authorise the Directors to allot shares otherwise than by a pro
rata issue to existing shareholders. Special Resolution No. 8 will, if passed,
give the Directors power to allot for cash equity securities up to 10% of the
Company's existing share capital on 14 December 2010 (reduced by any treasury
shares sold by the Company pursuant to Resolution No. 9, as described below),
as if Section 551 of the Act does not apply. This is the same nominal amount of
share capital which the Directors are seeking the authority to allot pursuant
to Resolution No. 7. This authority will also expire on the date of the next
Annual General Meeting or after a period of 15 months, whichever is earlier.
This authority will not be used in connection with a rights issue by the
Company.

Under Section 724 of the Companies Act 2006 (`s724') the Company is permitted
to buy back and hold shares in treasury and then sell them at a later date for
cash, rather than cancelling them. It is a requirement of s724 that such sale
be on a pre-emptive, pro rata, basis to existing shareholders unless
shareholders agree by special resolution to disapply such pre-emption rights.
Accordingly, in addition to giving the Directors power to allot unissued share
capital on a non preemptive basis pursuant to Resolution No. 8, Resolution No.
9, if passed, will give the Directors authority to sell shares held in treasury
on a non pre-emptive basis. The benefit of the ability to hold treasury shares
is that such shares may be resold. This should give the Company greater
flexibility in managing its share capital, and improve liquidity in its shares.
It is the intention of the Board that any re-sale of treasury shares would only
take place at a narrower discount to the net asset value per share than that at
which they had been bought into treasury, and in any event at a discount no
greater than 5% to the prevailing net asset value per share, and this is
reflected in the text of Resolution No. 9. It is also the intention of the
Board that sales from treasury would only take place when the Board believes
that to do so would assist in the provision of liquidity to the market. The
number of treasury shares which may be sold pursuant to this authority is
limited to 10% of the Company's existing share capital on 14 December 2010

(reduced by any equity securities allotted for cash on a non-pro rata basis
pursuant to Resolution No. 8, as described above). This authority will also
expire on the date of the next Annual General Meeting or after a period of 15
months, whichever is earlier.

The Directors intend to use the authority given by Resolutions Nos. 7, 8 and 9
to allot shares and disapply pre-emption rights only in circumstances where
this will be clearly beneficial to shareholders as a whole. The issue proceeds
would be available for investment in line with the Company's investment policy.
No issue of shares will be made which would effectively alter the control of
the Company without the prior approval of shareholders in general meeting.

General Meetings

Special Resolution No. 11 seeks shareholder approval for the Company to hold
General Meetings (other than the Annual General Meeting) at 14 clear days'
notice.

Recommendation

The Board considers that the resolutions relating to the above items of special
business, are in the best interests of shareholders as a whole. Accordingly,
the Board unanimously recommends to the shareholders that they vote in favour
of the above resolutions to be proposed at the forthcoming Annual General
Meeting as the Directors intend to do in respect of their own beneficial
holdings totalling 221,600 shares.

Report of the Directors

Continued

Shareholder Analysis

as at 30 September

 

                                             2010      2010       2009      2009
                                                                                
                                        Number of      % of  Number of      % of
                                                     issued               issued
                                                                                
                                           shares     share     shares     share
                                                    capital              capital
                                                                                
Nominee Companies excluding Alliance   40,525,008      76.5 38,181,830      74.5
Trust savings and ISA clients                                                   
                                                                                
Alliance Trust Savings and ISA Clients  6,100,652      11.5  6,011,268      11.7
                                                                                
Private Individuals                     2,886,624       5.5  3,125,495       6.1
                                                                                
Other Institutions, Investment Funds,   2,313,406       4.4  2,725,518       5.3
Pension Funds and Companies                                                     
                                                                                
Banks and Bank Nominees                 1,121,733       2.1  1,227,562       2.4
                                                                                
Total shares in issue (excluding       52,947,423     100.0 51,271,673     100.0
treasury shares)                                                                

By order of the Board

Frostrow Capital LLP

Company Secretary

14 December 2010

Statement of Directors' Responsibilities

Company law in the United Kingdom requires the Directors to prepare financial
statements for each financial year. The Directors are responsible for preparing
the financial statements in accordance with applicable law and regulations. In
preparing these financial statements, the Directors have:

•  selected suitable accounting policies and 
   applied them consistently;                
                                             
•  made judgements and estimates that are    
   reasonable and prudent;                   
                                             
•  followed applicable UK accounting         
   standards; and                            
                                             
•  prepared the financial statements on a    
   going concern basis.                      

The Directors are responsible for keeping adequate accounting records which
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 are also responsible for safeguarding the assets of
the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.

The Directors are responsible for ensuring that the Report of the Directors and
other information included in the Annual Report is prepared in accordance with
company law in the United Kingdom. They are also responsible for ensuring that
the Annual Report includes information required by the Listing Rules of the
Financial Services Authority.

The financial statements are published on the Company's website (website
address: www.finsburygt.com) and on the Manager's website (website address: 
www.frostrow.com). The maintenance and integrity of these websites, so far as
it relates to the Company, is the responsibility of the Manager. The work
carried out by the Auditors does not involve consideration of the maintenance
and integrity of these websites and, accordingly, the Auditors accept no
responsibility for any changes that have occurred to the financial statements
since they were initially presented on these websites. Visitors to the websites
need to be aware that legislation in the United Kingdom governing the
preparation and dissemination of the financial statements may differ from
legislation in their jurisdiction.

The Directors, whose details can be found on page 2, confirm that to the best
of their knowledge the financial statements, within the Annual Report, have
been prepared in accordance with applicable accounting standards, give a true
and fair view of the assets, liabilities, financial position and the return for
the year ended 30 September 2010, and that the Chairman's Statement, Investment
Manager's Review and the Report of the Directors include a fair review of the
information required by 4.1.8R to 4.1.11R of the FSA's Disclosure and
Transparency Rules.

On behalf of the Board

Anthony Townsend

Chairman

14 December 2010

Corporate Governance

This Corporate Governance Statement forms part of the Report of the Directors.

Compliance

The Board has considered the principles and recommendations of the AIC Code of
Corporate Governance ("AIC Code") by reference to the AIC Corporate Governance
Guide for Investment Companies ("AIC Guide"), both of which can be found on the
AIC website www.theaic.co.uk. The AIC Code, as explained by the AIC Guide,
addresses all the principles set out in Section 1 of the 2008 Combined Code on
Corporate Governance (the "Combined Code") as well as setting out additional
principles and recommendations on issues that are of specific relevance to the
Company. The Board considers that reporting against the principles and
recommendations of the AIC code, and by reference to the AIC Guide (which
incorporates the Combined Code on Corporate Governance (the "Combined Code")),
will provide better information to shareholders. A copy of the Combined Code
can be found at www.frc.org.uk.

The Board considers that it has managed its affairs throughout the year ended
30 September 2010 in compliance with the recommendations of the AIC Code and
the relevant provisions of Section 1 of the Combined Code, except as set out
below. The Combined Code includes provisions relating to:

•  the role of the chief executive;          
                                             
•  executive directors' remuneration; and    
                                             
•  the need for an internal audit function.  

For the reasons set out in the AIC Guide, and in the preamble to the AIC Code,
the Board considers these provisions are not relevant to the position of the
Company, being an externally managed investment trust. The Company has
therefore not reported further in respect of these provisions.

Board Independence, Composition and Tenure

The Board, chaired by Anthony Townsend, currently consists of six non-executive
Directors. The Directors' biographical details, set out on page 2, demonstrate
a breadth of investment, commercial and professional experience. John Allard,
Vanessa Renwick (who both joined the Board in 2000) and Giles Warman (who
became a Director in 1989) have all served in excess of nine years on the Board
since their first election. Nonetheless, the Board considers them to be
independent in character and judgement and does not consider that the criterion
of length of service should

necessarily preclude them from being so considered. This position accords with
the recommendation of the AIC Code that a director may be viewed as being
independent notwithstanding service that could be considerably more than nine
years. Directors who have served more than nine years on the Board and those
who are not deemed to be independent are required to seek re-election annually.

Anthony Townsend, who rejoined the Board in 2005, David Hunt, appointed a
Director in 2006 and Neil Collins who became a Director in 2008, are all also
considered by the Board to be independent.

John Allard, Vanessa Renwick and Giles Warman, all having served on the Board
for more than nine years from the date of their first election, will retire at
the Annual General Meeting and, being eligible, offer themselves for
re-election.

The Board has considered the position of Mrs Renwick and Messrs Allard and
Warman, and believes that it would be in the Company's best interests to
propose them for re-election at the forthcoming Annual General Meeting.

None of the Directors has a service contract with the Company. New Directors
are appointed with the expectation that they will serve for a minimum period of
three years and the terms of their appointment are detailed in a letter sent to
them when they join the Board. These letters are available for inspection at
the offices of the Company's Manager and will be available at the Annual
General Meeting. When a new Director is appointed to the Board, he/she is
provided with all relevant information regarding the Company and his/her duties
and responsibilities as a Director. In addition, a new Director will also spend
time with representatives of the Manager and Investment Manager in order to
learn more about their processes and procedures. Directors' appointments are
reviewed formally every three years by the Board. Any Director may resign in
writing to the Board at any time.

The Company's Articles of Association provide that one-third of the Directors
must retire by rotation and may offer themselves of re-election at each Annual
General Meeting. The terms of the Directors' appointments also provide that a
Director shall retire and be subject to election at the first Annual General
Meeting after appointment and re-election at least every three years
thereafter.

The Board also receives regular briefings from, amongst others, the Auditors
and the Company Secretary regarding any proposed developments or changes in
laws or regulations that could affect the Company and/or the Directors.

Corporate Governance

Continued

The Board's Responsibilities

The Board is responsible for efficient and effective leadership of the Company
and has reviewed the schedule of matters reserved for its decision. The Board
meets at least on a quarterly basis and at other times as necessary. The Board
is responsible for all aspects of the Company's affairs, including the setting
of parameters for and the monitoring of the investment strategy and the review
of investment performance and investment policy which is set out on page 11 of
this annual report. It also has responsibility for all corporate strategy
issues, dividend policy, share buy-back policy, gearing, share price and
discount/premium monitoring and corporate governance matters. To enable them to
discharge their responsibilities, prior to each meeting the Directors are
provided, in a timely manner, with a comprehensive set of papers giving
detailed information on the Company's transactions, financial position,
performance and income forecast. Representatives of the Manager and Investment
Manager attend each Board meeting, enabling the Directors to seek clarification
on specific issues or to probe further on matters of concern; a full written
report is also received from the Investment Manager at each quarterly meeting.
In light of these reports, the Board gives direction to the Investment Manager
with regard to the Company's investment objectives and guidelines. Within these
established guidelines, the Investment Manager takes decisions as to the
purchase and sale of individual investments.

There is an agreed procedure for Directors, in the furtherance of their duties,
to take independent professional advice if necessary at the Company's expense.
The Directors have access to the advice and services of the Company Secretary,
through its appointed representative, who is responsible to the Board for
ensuring that Board procedures are followed.

Performance Evaluation

During the year the performance of the Board, committees and individual
Directors (including each Director's independence) was evaluated through a
formal assessment process led by the Chairman. This involved the circulation of
a Board effectiveness checklist, tailored to suit the nature of the Company,
followed by discussions between the Chairman and each of the Directors. The
performance of the Chairman was evaluated by the other Directors under the
leadership of David Hunt.

Committees of the Board

During the year the Board delegated certain responsibilities and functions to
committees. In line with the AIC Code, the Board has disbanded the Nominations
and Remuneration

Committees in favour of the full Board adopting the responsibilities of such
committees under the Chairmanship of the Chairman of the Company, Anthony
Townsend. The Audit and Management Engagement Committees continue in operation
and copies of the full Terms of Reference, which clearly define the
responsibilities of each Committee, can be obtained from the Company Secretary,
will be available at the Annual General Meeting and can be found on the
Company's website on www.finsburygt.com and on the website of the Manager at 
www.frostrow.com. The Audit Committee is chaired by David Hunt. All Directors
of the Company, including the Chairman of the Company, are members of this
Committee to enable them to be kept fully informed of any issues that may
arise. The Directors believe that Mr Hunt, a Chartered Accountant, has relevant
financial knowledge and experience to enable him to chair this Committee
effectively. The Management Engagement Committee is chaired by the Chairman of
the Company, Anthony Townsend. Again, all Directors of the Company are members
of this Committee to enable them to be kept fully informed of any issues that
may arise.

The table overleaf details the number of Board and Committee meetings attended
by each Director. During the year there were five Board meetings, one Board
Committee meeting, two Audit Committee meetings and one meeting of the
Management Engagement Committee.

Audit Committee

The Company's Audit Committee meets at least twice per year. The Audit
Committee is responsible for the review of the Annual Report and the Interim
Report, the nature and scope of the external audit and the findings thereof and
the terms of appointment of the Auditors, including their remuneration and the
provision of any non-audit services by them.

The Audit Committee reviews the need for non-audit services and authorises such
on a case by case basis having given consideration to the cost effectiveness of
the services and the independence and objectivity of the auditors.

The Audit Committee meets representatives of the Manager and the Investment
Manager and their Compliance Officers who report as to the proper conduct of
business in accordance with the regulatory environment in which both the
Company, the Manager and the Investment Manager operate. The Company's external
Auditor also attends the Audit Committee at the Audit Committee's request and
reports on its work procedures, the quality and effectiveness of the Company's
accounting records and its findings in relation to

Corporate Governance

Continued

the Company's statutory audit. The Committee meets with the external Auditor,
without representatives of the Manager and the Investment Manager being
present, at least once a year.

Management Engagement Committee

The Management Engagement Committee meets at least once per year. The
Management Engagement Committee is responsible for the regular review of the
terms of the management and investment management agreements with, and the
performance of, the Manager and Investment Manager and also the Company's other
service providers. The Committee last met in September 2010, at which time it
was agreed that no amendments to the agreements were required. The agreements
shall continue to be reviewed on a periodic basis as necessary.

Conflict of Interest

On 1 October 2008 it became a statutory requirement that a Director must avoid
a situation in which he or she has, or can have, a direct or indirect interest
that conflicts, or possibly may conflict, with the Company's interests (a
"situational conflict").

It is the responsibility of each individual Director to avoid an unauthorised
conflict situation arising. He or she must request authorisation from the Board
as soon as he or she becomes aware of the possibility of a situational conflict
arising.

The Board is responsible for considering Directors' requests for authorisation
of situational conflicts and for deciding whether they should be authorised.
The factors to be considered will include whether the situational conflict
could prevent the Director from performing his or her duties, whether it has,
or could have, any impact on the Company

and whether it could be regarded as likely to affect the judgment and/or
actions of the Director in question. When the Board is deciding whether to
authorise a conflict or potential conflict, only Directors who have no interest
in the matter being considered are able to take the relevant decision, and in
taking the decision the Directors must act in a way they consider, in good
faith, will be most likely to promote the Company's success. The Directors are
able to impose limits or conditions when giving authorisation if they think
this is appropriate in the circumstances.

A register of conflicts is maintained by the Company Secretary and is reviewed
at quarterly Board meetings, to ensure that any authorised conflicts remain
appropriate. Directors are required to confirm at these meetings whether there
has been any change to their position.

The Directors must also comply with the statutory rules requiring company
directors to declare any interest in an actual or proposed transaction or
arrangement with the Company.

The table below details the number of Board and Committee meetings attended by
each Director. During the year there were five Board meetings, one Board
Committee meeting, two Audit Committee meetings and one meeting of the
Management Engagement Committee.

 

                                                                     Management
                                                                               
Type and number of                                   Board     Audit Engagement
                                                                               
meetings held in the year                  Board Committee Committee  Committee
                                                                               
to 30 September 2010                         (5)       (1)       (2)        (1)
                                                                               
Anthony Townsend                               5         -         2          1
                                                                               
John Allard                                    5         -         2          1
                                                                               
Neil Collins                                   5         -         2          1
                                                                               
David Hunt                                     5         1         2          1
                                                                               
Vanessa Renwick                                5         1         2          1
                                                                               
Giles Warman                                   5         -         2          1

Other ad hoc meetings of the Board and Committees are held in connection with
specific events as and when necessary. All of the Directors attended the Annual
General Meeting held on 27 January 2010.

Corporate Governance

Continued

Internal Controls

Risk assessment and the review of internal controls are undertaken by the Board
in the context of the Company's overall investment objective. The review covers
the key business, operational, compliance and financial risks facing the
Company. In arriving at its judgement of what risks the Company faces, the
Board has considered the Company's operations in the light of the following
factors:

•  the nature and extent of risks which it   
   regards as acceptable for the Company to  
   bear within its overall business          
   objective;                                
                                             
•  the threat of such risks becoming a       
   reality; and                              
                                             
•  the Company's ability to reduce the       
   incidence and impact of risk on its       
   performance.                              

Against this background, the Board has split the review of risk and associated
controls into five sections reflecting the nature of the risks being addressed.
These sections are as follows:

•  corporate strategy;                       
                                             
•  investment activity;                      
                                             
•  published information, compliance with    
   laws and regulations;                     
                                             
•  service providers; and                    
                                             
•  investment and business activities        

The Company has outsourced all its activities to agents. The Company has
obtained from its various service providers assurances and information relating
to their internal systems and controls to enable the Board to make an
appropriate risk and control assessment, including the following:

•  details of the control environment in     
   operation;                                
                                             
•  identification and evaluation of risks and
   control objectives;                       
                                             
•  review of communication methods and       
   procedures; and                           
                                             
•  assessment of the control procedures.     

The key procedures which have been established to provide internal financial
controls are as follows:

•  investment management is provided by      
   Lindsell Train. The Board is responsible  
   for setting the overall investment policy 
   and monitors the actions of the Investment
   Manager at regular Board meeting;         
                                             
•  administration, company secretarial and   
   marketing duties for the Company are      
   performed by Frostrow;                    

•  custody of assets is undertaken by The    
   Bank of New York Mellon;                  
                                             
•  the duties of Investment Manager, Manager 
   and the Custodian are segregated. The     
   procedures of the individual parties are  
   designed to complement one another;       
                                             
•  the Board clearly defines the duties and  
   responsibilities of their agents and      
   advisers. The appointment of agents and   
   advisers to the Company is conducted by   
   the Board after consideration of the      
   quality of the parties involved; the Board
   monitors their ongoing performance and    
   contractual arrangements;                 
                                             
•  mandates for authorisation of investment  
   transactions and expense payments are set 
   by the Board; and                         
                                             
•  the Board reviews financial information   
   produced by the Investment Manager and the
   Manager in detail on a regular basis.     

All of the Company's management functions are performed by third parties whose
internal controls are reviewed by the Board or on its behalf by Frostrow.

In accordance with guidance issued to directors of listed companies, the
Directors confirm that they have carried out a review of the effectiveness of
the system of internal financial control during the year, through the
procedures set out above.

Relations with Shareholders

The Board reviews the shareholder register at each Board meeting. The Company
has regular contact with its institutional shareholders particularly through
the Manager. The Board supports the principle that the Annual General Meeting
be used to communicate with private investors. The full Board attends the
Annual General Meeting under the Chairmanship of the Chairman of the Board.
Details of proxy votes received in respect of each resolution are made
available to shareholders at the meeting and are also published on the
Company's website at www.finsburygt.com. Representatives from the Investment
Manager attend the Annual General Meeting and give a presentation on investment
matters to those present. The Company has adopted a nominee share code which is
set out on page 26.

The Board receives marketing and public relations reports from the Manager to
whom the marketing function has been delegated. The Board reviews and considers
the marketing plans of the Manager on a regular basis.

The Annual and Interim Reports, the Interim Management Statements and a monthly
fact sheet are available to all

Corporate Governance

Continued

shareholders. The Board considers the format of the Annual and Interim Reports
so as to ensure they are useful to all shareholders and others taking an
interest in the Company. In accordance with best practice, the Annual Report,
including the Notice of the Annual General Meeting, is sent to shareholders at
least 20 working days before the meeting. Separate resolutions are proposed for
substantive issues.

Exercise of Voting Powers

The Board has delegated authority to the Investment Manager to vote the shares
held by the Company through its nominee, The Bank of New York (Nominees)
Limited. The Board has instructed that the Investment Manager submits votes for
such shares wherever possible. This accords with current best practice whilst
maintaining a primary focus on financial returns. The Investment Manager may
refer to the Board on any matters of a contentious nature.

Accountability and Audit

The Directors' statement of responsibilities in respect of the financial
statements is set out on page 21. The report of the Company's auditor is set
out on pages 29 and 30. The Board has delegated contractually to external
agencies, including the Manager and the Investment Manager, the management of
the portfolio, custodial services (which includes the safeguarding of the
Company's assets), the day to day marketing, accounting administration, company
secretarial requirements and registration services. Each of these contracts

was entered into after full and proper consideration by the Board of the
quality and cost of the services offered, including the control systems in
operation in so far as they relate to the affairs of the Company. The Board
receives and considers regular reports from the Manager and ad hoc reports and
information are supplied to the Board as required.

Nominee Share Code

Where shares are held in a nominee company name, where the beneficial owner of
the shares is unable to vote in person, the Company nevertheless undertakes:

-  to provide the nominee company with       
   multiple copies of shareholder            
   communications, so long as an indication  
   of quantities has been provided in        
   advance;                                  
                                             
-  to allow investors holding shares through 
   a nominee company to attend general       
   meetings, provided the correct authority  
   from the nominee company is available; and
                                             
-  that investors in the Alliance Trust      
   Savings Scheme or ISA are automatically   
   sent shareholder communications, including
   details of general meetings, together with
   a form of direction to facilitate voting  
   and to seek authority to attend.          

Nominee companies are encouraged to provide the necessary authority to
underlying shareholders to attend the Company's general meetings.

Directors' Remuneration Report

for the year ended 30 September 2010

The Board has prepared this report, in accordance with the requirements of
Schedule 8 to The Large and Medium Sized Companies and Groups (Accounts and
Reports) Regulations 2008. An ordinary resolution for the approval of this
report will be put to the members at the forthcoming Annual General Meeting.

The law requires your Company's auditors to audit certain of the disclosures
provided. Where disclosures have been audited, they are indicated as such. The
auditors' opinion is included in their report on pages 29 and 30.

Policy on Directors' Fees

The Company follows the recommendations of the AIC Code that Directors'
remuneration should reflect their duties, responsibilities and the value of
their time spent. The Board's policy is that the remuneration of the Directors
should reflect the experience of the Board as a whole, and is determined with
reference to comparable organisations and appointments. There are no
performance conditions attaching to the remuneration of the Directors as the
Board does not believe that this is appropriate for non-executive Directors. It
is intended that this policy will continue for the year ending 30 September
2011 and for subsequent financial years.

At a Board Meeting held on 23 September 2010 it was agreed that the fees paid
to the Directors should remain unchanged for the forthcoming year.

The fees for the Directors are determined within the limits set out in the
Company's Articles of Association, the maximum aggregate amount currently being
£150,000, and they are not eligible for bonuses, pension benefits, share
options, long-term incentive schemes or other benefits.

Directors' Service Contracts

It is the Board's policy that none of the Directors has a service contract. The
terms of their appointment provide that Directors shall retire and be subject
to election at the first annual general meeting after their appointment, and at
least every three years after that. The terms also provide that a Director may
be removed without notice and that compensation will not be due on leaving
office.

Your Company's Performance

The law requires a line graph be included in the Directors' Remuneration Report
showing total shareholder return for each of the financial years in the
relevant period. The graph set out below compares, on a cumulative basis, the
total return (assuming all dividends are reinvested) to shareholders compared
to the total shareholder return on a notional investment made up of shares of
the same kind and number as those by reference to which the FTSE All-Share
Index (total return) (the Company's stated benchmark) is calculated.

The Board, while fulfilling the function of a Remuneration Committee, reviews
the level of remuneration on an annual basis by reference to the activities of
the Company and comparison with other companies of a similar structure and
size.

Directors' Remuneration Report

Continued

Directors' Emoluments for the Year (audited)

The Directors who served in the year received the following emoluments in the
form of fees:

 

                                                                  Fees     Fees
                                                                               
                                                                  2010     2009
                                                                               
Anthony Townsend (Chairman)                                    £27,500  £27,500
                                                                               
John Allard                                                    £18,000  £16,000
                                                                               
Neil Collins                                                   £18,000  £16,000
                                                                               
David Hunt*                                                    £21,000  £19,000
                                                                               
Vanessa Renwick                                                £18,000  £16,000
                                                                               
Giles Warman                                                   £18,000  £16,000

*   Chairman of the Audit Committee.                                           

Approval

The Directors' Remuneration Report was approved by the Board of Directors on 14
December 2010 and signed on its behalf by

Anthony Townsend

Chairman

Independent Auditor's Report to the Members of Finsbury Growth & Income Trust
PLC

We have audited the financial statements of Finsbury Growth & Income Trust PLC
for the year ended 30 September 2010 which comprise the Income Statement, the
Reconciliation of Movements in Shareholders' Funds, the Balance Sheet, the
Cashflow Statement and the related notes. The financial reporting framework
that has been applied in their preparation is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Statement of Directors' Responsibilities set out
on page 21, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's (APB's)
Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on
the APB's website at www.frc.org.uk/apb/scope/UKP.

Opinion on financial statements

In our opinion the financial statements:

 

•  give a true and fair view of the state of
   the Company's affairs as at 30 September 
   2010 and of its return for the year then 
   ended;                                   

•  have been properly prepared in accordance
   with United Kingdom Generally Accepted   
   Accounting Practice; and                 
                                            
•  have been prepared in accordance with the
   requirements of the Companies Act 2006.  

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

•  the part of the Directors' Remuneration  
   Report to be audited has been properly   
   prepared in accordance with the Companies
   Act 2006; and                            
                                            
•  the information given in the Report of   
   the Directors for the financial year for 
   which the financial statements are       
   prepared is consistent with the financial
   statements.                              

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our
opinion:

•  adequate accounting records have not been
   kept, or returns adequate for our audit  
   have not been received from branches not 
   visited by us; or                        
                                            
•  the financial statements and the part of 
   the Directors' Remuneration Report to be 
   audited are not in agreement with the    
   accounting records and returns; or       
                                            
•  certain disclosures of directors'        
   remuneration specified by law are not    
   made; or                                 
                                            
•  we have not received all the information 
   and explanations we require for our      
   audit.                                   

Independent Auditor's Report to the Members of Finsbury Growth & Income Trust
PLC

Continued

Under the Listing Rules, we are required to review:

 

•  the Directors' statement, set out on page
   16, in relation to going concern; and    
                                            
•  the part of the Corporate Governance     
   Statement relating to the Company's      
   compliance with the nine provisions of   
   the June 2008 Combined Code specified for
   our review.                              

Julian Bartlett

Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London

14 December 2010

Income Statement

for the year ended 30 September 2010

                                            2010                         2009  
                                                                               
                      Revenue   Capital    Total   Revenue   Capital    Total  
                                                                               
               Notes    £'000     £'000    £'000     £'000     £'000    £'000  
                                                                               
Gains on           9        -    28,733   28,733         -    17,942   17,942  
investments                                                                    
designated at                                                                  
fair value                                                                     
through profit                                                                 
or loss                                                                        
                                                                               
Exchange                    -        (3 )     (3 )       -         2        2  
difference                                                                     
                                                                               
Income             2    5,363         -    5,363     5,401         -    5,401  
                                                                               
Investment         3     (305 )    (619 )   (924 )    (226 )    (460 )   (686 )
management and                                                                 
management                                                                     
fees                                                                           
                                                                               
Recovery of                11        23       34        50       101      151  
VAT on                                                                         
investment                                                                     
management                                                                     
fees                                                                           
previously                                                                     
paid                                                                           
                                                                               
Other expenses     4     (492 )     (89 )   (581 )    (410 )       -     (410 )
                                                                               
Return on               4,577    28,045   32,622     4,815    17,585   22,400  
ordinary                                                                       
activities                                                                     
before finance                                                                 
charges and                                                                    
taxation                                                                       
                                                                               
Finance            5     (109 )    (221 )   (330 )    (176 )    (359 )   (535 )
charges                                                                        
                                                                               
Return on               4,468    27,824   32,292     4,639    17,226   21,865  
ordinary                                                                       
activities                                                                     
before                                                                         
taxation                                                                       
                                                                               
Taxation on        6      (84 )       -      (84 )       -         -        -  
ordinary                                                                       
activities                                                                     
                                                                               
Return on               4,384    27,824   32,208     4,639    17,226   21,865  
ordinary                                                                       
activities                                                                     
after taxation                                                                 
                                                                               
Return per         7     8.5p     54.0p    62.5p      9.1p     34.0p    43.1p  
share                                                                          

The "Total" column of this statement represents the Company's Income Statement.

The "Revenue" and "Capital" columns are supplementary to this and are prepared
under guidance published by the Association of Investment Companies (AIC).

All items in the above statement derive from continuing operations.

The Company had no recognised gains or losses other than those declared in the
Income Statement.

The notes on pages 35 to 46 form part of these financial statements.

Reconciliation of Movements in Shareholders' Funds

for the year ended 30 September 2010

                      Share     Capital                                        
                                                                               
             Share  premium  redemption  Special  Capital   Revenue            
                                                                               
           capital  account     reserve  reserve  reserve   reserve     Total  
                                                                               
             £'000    £'000       £'000    £'000    £'000     £'000     £'000  
                                                                               
At 30       13,199   35,914       3,453   12,424   57,890     4,779   127,659  
September                                                                      
2009                                                                           
                                                                               
Net return       -        -           -        -   27,824     4,384    32,208  
from                                                                           
ordinary                                                                       
activities                                                                     
                                                                               
Second           -        -           -        -        -    (2,615 )  (2,615 )
interim                                                                        
dividend                                                                       
(5.1p per                                                                      
share) for                                                                     
the year                                                                       
ended 30                                                                       
September                                                                      
2009                                                                           
                                                                               
First            -        -           -        -        -    (2,224 )  (2,224 )
interim                                                                        
dividend                                                                       
(4.4p per                                                                      
share) for                                                                     
the year                                                                       
ended 30                                                                       
September                                                                      
2010                                                                           
                                                                               
Issue of        38      381           -        -        -         -       419  
shares                                                                         
                                                                               
Repurchase       -        -           -        -   (5,934 )       -    (5,934 )
of shares                                                                      
into                                                                           
treasury                                                                       
                                                                               
Sale of          -      918           -        -    9,159         -    10,077  
shares                                                                         
from                                                                           
treasury                                                                       
                                                                               
Year ended  13,237   37,213       3,453   12,424   88,939     4,324   159,590  
30                                                                             
September                                                                      
2010                                                                           
                                                                               
At 30       13,199   35,914       3,453   12,424   39,845     4,949   109,784  
September                                                                      
2008                                                                           
                                                                               
Net return       -        -           -        -   17,226     4,639    21,865  
on                                                                             
ordinary                                                                       
activities                                                                     
                                                                               
Second           -        -           -        -        -    (2,598 )  (2,598 )
interim                                                                        
dividend                                                                       
(5.1p per                                                                      
share) for                                                                     
the year                                                                       
ended 30                                                                       
September                                                                      
2008                                                                           
                                                                               
First            -        -           -        -        -    (2,211 )  (2,211 )
interim                                                                        
dividend                                                                       
(4.4p per                                                                      
share) for                                                                     
the year                                                                       
ended 30                                                                       
September                                                                      
2009                                                                           
                                                                               
Repurchase       -        -           -        -   (1,856 )       -    (1,856 )
of shares                                                                      
into                                                                           
treasury                                                                       
                                                                               
Sale of          -        -           -        -    2,675         -     2,675  
shares                                                                         
from                                                                           
treasury                                                                       
                                                                               
Year ended  13,199   35,914       3,453   12,424   57,890     4,779   127,659  
30                                                                             
September                                                                      
2009                                                                           

The notes on pages 35 to 46 form part of these financial statements.

Balance Sheet

as at 30 September 2010

                                                            2010        2009   
                                                                               
                                                Notes      £'000       £'000   
                                                                               
Fixed assets                                                                   
                                                                               
Investments designated at fair value through        9    168,514     138,799   
profit or loss                                                                 
                                                                               
Current assets                                                                 
                                                                               
Debtors                                            10        613       1,022   
                                                                               
Cash at bank                                               1,387       1,531   
                                                                               
                                                           2,000       2,553   
                                                                               
Current liabilities                                                            
                                                                               
Creditors                                          11       (224 )      (193 ) 
                                                                               
Bank loans                                         11    (10,700 )   (13,500 ) 
                                                                               
                                                         (10,924 )   (13,693 ) 
                                                                               
Net current liabilities                                   (8,924 )   (11,140 ) 
                                                                               
Total net assets                                         159,590     127,659   
                                                                               
Capital and reserves                                                           
                                                                               
Share capital                                      12     13,237      13,199   
                                                                               
Share premium account                                     37,213      35,914   
                                                                               
Capital redemption reserve                                 3,453       3,453   
                                                                               
Special reserve                                           12,424      12,424   
                                                                               
Capital reserve                                    13     88,939      57,890   
                                                                               
Revenue reserve                                            4,324       4,779   
                                                                               
Equity shareholders' funds                               159,590     127,659   
                                                                               
Net asset value per share                          14     301.4p      249.0p   

The financial statements on pages 31 to 46 were approved by the Board of
Directors on 14 December 2010, and were signed on its behalf by:

Anthony Townsend

Chairman

The notes on pages 35 to 46 form part of these financial statements.

Finsbury Growth & Income Trust PLC   •   Company Registration Number 13958
(Registered in Scotland).

Cash Flow Statement

for the year ended 30 September 2010

 

                                                            2010        2009   
                                                                               
                                                Notes      £'000       £'000   
                                                                               
Net cash inflow from operating activities          17      4,244       4,573   
                                                                               
Net cash outflow from servicing of finance                  (326 )      (487 ) 
                                                                               
Financial investment                                                           
                                                                               
Purchase of investments                                  (19,152 )    (7,017 ) 
                                                                               
Sale of investments                                       18,170       7,746   
                                                                               
Net cash (outflow)/inflow from financial                    (982 )       729   
investment                                                                     
                                                                               
Equity dividends paid                                     (4,839 )    (4,809 ) 
                                                                               
Net cash (outflow)/inflow before financing                (1,903 )         6   
                                                                               
Financing                                                                      
                                                                               
Shares issued net of issue expenses                          419           -   
                                                                               
Repurchase of shares into treasury                        (5,934 )    (1,856 ) 
                                                                               
Sale of shares from treasury                              10,077       2,675   
                                                                               
(Repayment)/drawdown of loans                             (2,800 )       500   
                                                                               
Net cash inflow from financing                             1,762       1,319   
                                                                               
(Decrease)/increase in cash                        18       (141 )     1,325   
                                                                               
Reconciliation of net cash flow to movement                                    
in net debt                                                                    
                                                                               
Decrease/(increase) in cash resulting from                  (141 )     1,325   
cashflows                                                                      
                                                                               
Decrease/(increase) in debt                                2,800        (500 ) 
                                                                               
Exchange movements                                            (3 )         2   
                                                                               
Movement in net debt                                       2,656         827   
                                                                               
Net debt at 1 October 2009                               (11,969 )   (12,796 ) 
                                                                               
Net debt at 30 September 2010                      18     (9,313 )   (11,969 ) 

The notes on pages 35 to 46 form part of these financial statements.

Notes to the Financial Statements

1.  Accounting Policies                                                        

The principal accounting policies, all of which have been applied consistently
throughout the year in the preparation of these financial statements, are set
out below:

(a) Basis of preparation                                                       

The financial statements have been prepared under the historical cost
convention, except for the measurement at fair value of investments, and in
accordance with UK Generally Accepted Accounting Practice (GAAP) and the
Statement of Recommended Practice (SORP) for "Financial Statements of
Investment Trust Companies and Venture Capital Trusts" issued by the
Association of Investment Companies dated January 2009.

(b) Investments                                                                

As the entity's business is investing in financial assets with a view to
profiting from their total return in the form of dividends, interest or
increases in fair value, investments are designated at fair value through
profit or loss and are initially recognised at fair value. The entity manages
and evaluates the performance of these investments on a fair value basis in
accordance with its investment strategy, and information about the investments
is provided internally on this basis to the Board. Fair value for quoted
investments is deemed to be bid market prices, or last traded price, depending
on the convention of the exchange on which they are quoted.

Unquoted investments are valued by the Directors using primary valuation
techniques, in accordance with IPEVCA guidelines.

Changes in the fair value of investments held at fair value through profit or
loss, and gains and losses on disposal are recognised in the Income Statement
as "gains or losses on investments designated at fair value through profit or
loss".

All purchases and sales of investments are accounted for on the trade date
basis.

The Company's policy is to expense transaction costs on acquisition through the
capital column of the Income Statement. The total of such expenses, showing the
total amounts included in disposals and acquisitions are disclosed below, as
recommended by the SORP.

Transaction costs on the acquisition and sale of investments totalled £141,000
and £22,000 respectively (2009: £36,000 and £13,000) and are included within
the gains/(losses) on investments within the Income Statement.

(c) Dividend Payments                                                          

Dividends paid by the Company on its shares are recognised in the financial
statements in the period in which they are paid and are shown in the
Reconciliation of Movements in Shareholders' Funds.

(d) Investment Income                                                          

Dividends receivable on equity shares are recognised on the ex-dividend date.

Fixed returns on non-equity shares are recognised on a time apportionment
basis.

Special dividends: In deciding whether a dividend should be regarded as a
capital or revenue receipt, the Company reviews all relevant information as to
the reasons for and sources of the dividend on a case by case basis.

LLP profit share is recognised in the financial statements when the entitlement
to the income is established.

Notes to the Financial Statements

Continued

1.   Accounting Policies Continued                                             
                                                                               
(e)  Expenditure and Finance Charges                                           

All the expense and finance costs are accounted for on an accruals basis.
Expenses are charged through the revenue column of the Income Statement except
as follows:

(1) expenses which are incidental to the acquisition or disposal of an
investment are treated as part of the cost or proceeds of that investment (as
explained in 1(b) above);

(2) expenses are taken to the capital reserve via the capital column of the
Income Statement, where a connection with the maintenance or enhancement of the
value of the investments can be demonstrated. In line with the Board's expected
long term split of returns, in the form of capital gains and income from the
Company's portfolio, 67% of the investment management fee, management fee and
finance costs are taken to the capital reserve;

(3) performance fees are charged 100% to capital.

(f)  Taxation                                                                  

The payment of taxation is deferred or accelerated because of timing
differences between the treatment of certain items for accounting and taxation
purposes. Full provision for deferred taxation is made under the liability
method, without discounting, on all timing differences that have arisen, but
not reversed by the balance sheet date, unless such provision is not permitted
by Financial Reporting Standard 19.

Any tax relief obtained in respect of management and investment management
fees, finance costs and other capital expenses charged or allocated to the
capital column of the Income Statement is reflected in the Capital Reserve -
realised and a corresponding amount is charged against the revenue column of
the Income Statement. The tax relief is the amount by which corporation tax
payable is reduced as a result of these capital expenses.

 

(g)  Capital Reserve                                                           

The following are charged to the capital column of the Income Statement and
transferred to this reserve:

-    Gains and losses on the disposal of investments;                          
                                                                               
-    Exchange differences of a capital nature;                                 
                                                                               
-    Expenses, together with the related taxation effect, in accordance with   
     the above policies; and                                                   
                                                                               
-    Increase and decrease in the valuation of investments held at the year    
     end.                                                                      

(h)  Cash at bank                                                              

Cash at bank comprises cash in hand and on demand deposits.

2.   Income                                                                    

 

                                                               2010        2009
                                                                               
                                                              £'000       £'000
                                                                               
Income from investments                                                        
                                                                               
Franked investment income                                                      
                                                                               
-   dividends                                                 4,807       5,326
                                                                               
Unfranked investment income                                                    
                                                                               
-   limited liability partnership profit-share                   80          70
                                                                               
-   overseas dividends                                          463           -
                                                                               
-   money market dividend                                         -           5
                                                                               
                                                              5,350       5,401
                                                                               
Other income                                                                   
                                                                               
Interest from HMRC (re: VAT reclaim on management                13           -
fees)                                                                          
                                                                               
Total income                                                  5,363       5,401

Notes to the Financial Statements

Continued

3.   Investment Management and Management Fees                                 

 

                             Revenue  Capital    Total  Revenue  Capital  Total
                                                                               
                                2010     2010     2010     2009     2009   2009
                                                                               
                               £'000    £'000    £'000    £'000    £'000  £'000
                                                                               
Investment management fee        200      406      606      144      293    437
                                                                               
Management fee                    90      182      272       71      145    216
                                                                               
VAT on management fees            15       31       46       11       22     33
                                                                               
Total fees                       305      619      924      226      460    686

4.   Other Expenses                                                            

                             Revenue  Capital    Total  Revenue  Capital  Total
                                                                               
                                2010     2010     2010     2009     2009   2009
                                                                               
                               £'000    £'000    £'000    £'000    £'000  £'000
                                                                               
Directors' fees                  121        -      121      111        -    111
                                                                               
Fees payable to the               20        -       20       20        -     20
Company's auditor                                                              
-statutory annual audit                                                        
                                                                               
Fees payable to the                3        -        3        3        -      3
Company's auditor -all                                                         
other services                                                                 
                                                                               
Printing                          33        -       33       33        -     33
                                                                               
ISA & savings scheme costs        15        -       15       14        -     14
                                                                               
Bank and custody fees             20        -       20       19        -     19
                                                                               
Marketing costs                   63        -       63       43        -     43
                                                                               
Legal and professional fees       59       89      148       10        -     10
*                                                                              
                                                                               
Other expenses                   158        -      158      157        -    157
                                                                               
Total expenses                   492       89      581      410        -    410

All of the above expenses include VAT where applicable, with the exception of
the fees paid to the Company's auditor, which are shown net of VAT.

*    During the year the Company incurred legal costs amounting to £133,000 in 
     relation to the set up of the new loan facility with Scotiabank Europe    
     PLC, of which 67% has been charged to the Capital column of the Income    
     Statement and 33% has been charged to the Revenue column of the Income    
     Statement. (See note 16 on page 43 for further details).                  

Details of the amounts paid to Directors are included in the Directors'
Remuneration Report on pages 27 and 28.

 

5.   Finance Charges                                                           

                             Revenue  Capital    Total  Revenue  Capital  Total
                                                                               
                                2010     2010     2010     2009     2009   2009
                                                                               
                               £'000    £'000    £'000    £'000    £'000  £'000
                                                                               
On bank loans wholly              89      181      270      171      349    520
repayable within five years                                                    
                                                                               
Arrangement fee Scotiabank        20       40       60        5       10     15
Europe PLC (2009: ING Bank                                                     
N.V.)                                                                          
                                                                               
                                 109      221      330      176      359    535

Notes to the Financial Statements

Continued

6. Taxation on Ordinary Activities                                             

                              Revenue  Capital    Total  Revenue  Capital Total
                                                                               
                                 2010     2010     2010     2009     2009  2009
                                                                               
                                £'000    £'000    £'000    £'000    £'000 £'000
                                                                               
(a) Analysis of charge for                                                     
    the year                                                                   
                                                                               
    Irrecoverable overseas         84        -       84        -        -     -
    tax                                                                        

                      Revenue   Capital    Total   Revenue   Capital    Total  
                                                                               
                         2010      2010     2010      2009      2009     2009  
                                                                               
                        £'000     £'000    £'000     £'000     £'000    £'000  
                                                                               
(b) Factors affecting                                                          
    tax charge for                                                             
    year                                                                       
                                                                               
    Return on           4,468    27,824   32,292     4,639    17,226   21,865  
    ordinary                                                                   
    activities before                                                          
    taxation                                                                   
                                                                               
    Return on           1,251     7,791    9,042     1,299     4,823    6,122  
    ordinary                                                                   
    activities                                                                 
    multiplied by                                                              
    Corporation tax                                                            
    of 28% (2009:                                                              
    28%)                                                                       
                                                                               
    Effects of:                                                                
                                                                               
    Irrecoverable          84         -       84         -         -        -  
    overseas tax                                                               
                                                                               
    Franked            (1,346 )       -   (1,346 )  (1,491 )       -   (1,491 )
    investment income                                                          
    not subject to                                                             
    corporation tax                                                            
                                                                               
    Overseas             (130 )       -     (130 )       -         -        -  
    dividends not                                                              
    taxable                                                                    
                                                                               
    Excess expenses       221         -      221       189         -      189  
    unutilised                                                                 
                                                                               
    Amounts charged         -       254      254         -       201      201  
    to capital                                                                 
                                                                               
    Expenses not            4         -        4         3         -        3  
    deductible for                                                             
    tax purposes                                                               
                                                                               
    Capital return          -    (8,045 ) (8,045 )       -    (5,024 ) (5,024 )
    not subject to                                                             
    tax*                                                                       
                                                                               
    Current tax            84         -       84         -         -        -  
    charge for the                                                             
    year (note 6(a))                                                           

*  Gains on investments are not subject to corporation tax within an investment
   trust company.                                                              

(c) Provision for deferred taxation                                            

No provision for deferred taxation has been made in the current or prior year.

The Company has not recognised a deferred tax asset of £9,428,000 (2009: £
8,953,000) arising as a result of excess management expenses and it is not
anticipated that this asset will be utilised in the foreseeable future.

Deferred tax is not provided on unrealised capital gains or losses arising on
investments because the Company meets and intends to continue meeting the
conditions for approval as an investment trust.

Notes to the Financial Statements

Continued

7.   Return per Share                                                          

                             Revenue  Capital    Total   Revenue  Capital Total
                                                                               
                                2010     2010     2010      2009     2009  2009
                                                                               
Return per Share                8.5p    54.0p    62.5p      9.1p    34.0p 43.1p

The total return per share is based on the total return attributable to equity
shareholders of £32,208,000 (2009: £21,865,000), and on 51,546,561 (2009:
50,737,975) shares, being the weighted average number of shares in issue during
the year.

Revenue return per share is based on the net revenue on ordinary activities
after taxation of £4,384,000 (2009: £4,639,000).

Capital return per share is based on the net capital profit for the year of £
27,824,000 (2009: £17,226,000).

8.   Dividends                                                                 

                              Ex-Div     Register      Payment     2010    2009
                                                                               
                                Date         Date         Date    £'000   £'000
                                                                               
2010:                                                                          
                                                                               
First interim           3 March 2010 5 March 2010 1 April 2010    2,224   2,211
dividend of 4.4p per                                                           
share (2009: 4.4p)                                                             
                                                                               
Second interim          29 September    1 October   1 November    2,330   2,615
dividend of 4.4p per            2010         2010         2010                 
share (2009: 5.1p)                                                             

The second interim dividend of 4.4p per share (2009: 5.1p) has not been
included as a liability in these financial statements as it is only recognised
in the financial year in which it is paid.

The total dividend payable in respect of the financial year which forms the
basis of Sections 1158 and 1159 of the Corporation Tax Act 2010 are set out
below:

                                                                        2010   
                                                                               
                                                                       £'000   
                                                                               
Revenue available for distribution by way of dividend                  4,384   
for the year                                                                   
                                                                               
2010: First interim dividend of 4.4p per share paid on 1              (2,224 ) 
April 2010                                                                     
                                                                               
2010: Second interim dividend of 4.4p per share paid on               (2,330 ) 
1 November 2010                                                                
                                                                               
Utilisation of brought forward revenue reserves                         (170 ) 

Notes to the Financial Statements

Continued

9.   Investments                                                               

Analysis of portfolio movements

                                                        2010            2009   
                                                                               
                                                       £'000           £'000   
                                                                               
Opening book cost                                    116,639         123,218   
                                                                               
Opening investment holding gains/(losses)             22,160          (1,632 ) 
                                                                               
Valuation at 30 September 2009                       138,799         121,586   
                                                                               
Movements in the year:                                                         
                                                                               
Purchases at cost                                     19,152           7,017   
                                                                               
Sales                                                                          
                                                                               
- proceeds                                           (18,170 )        (7,746 ) 
                                                                               
Loss on sales                                         (5,316 )        (5,850 ) 
                                                                               
Net movement in investment holdings gains             34,049          23,792   
                                                                               
Valuation at 30 September 2010                       168,514         138,799   
                                                                               
Closing book cost                                    112,305         116,639   
                                                                               
Investment holding gains at 30 September 2010         56,209          22,160   
                                                                               
Valuation at 30 September 2010                       168,514         138,799   

Investment holding gains

                                                        2010            2009   
                                                                               
                                                       £'000           £'000   
                                                                               
Losses based on historical cost                       (5,316 )        (5,850 ) 
                                                                               
Amounts recognised as investment holding losses        6,031           3,270   
in previous year                                                               
                                                                               
Gain/(loss) based on carrying values at previous         715          (2,580 ) 
year's balance sheet date                                                      
                                                                               
Net movement in investment holding gains in the       28,018          20,522   
year                                                                           
                                                                               
Gains on investments during the year                  28,733          17,942   

10.  Debtors                                                                   

                                                              2010         2009
                                                                               
                                                             £'000        £'000
                                                                               
Prepayments and accrued income                                 613          902
                                                                               
VAT recoverable on investment management fees                    -          120
previously paid                                                                
                                                                               
                                                               613        1,022

11.  Creditors                                                                 

Amounts falling due within one year

                                                              2010         2009
                                                                               
                                                             £'000        £'000
                                                                               
Bank loan with Scotiabank Europe PLC* (2009: ING Bank       10,700       13,500
N.V.)                                                                          
                                                                               
Other creditors and accruals                                   224          193
                                                                               
                                                            10,924       13,693

*    Further details on the loan facility can be found in note 16.             

Notes to the Financial Statements

Continued

12.  Share Capital                                                             

                                                                    2010   2009
                                                                               
                                                                   £'000  £'000
                                                                               
Authorised:                                                                    
                                                                               
Shares of 25p                                                     25,000 25,000
                                                                               
Allotted, issued and fully paid:                                               
                                                                               
52,947,423 (2009: 52,797,423) shares of 25p each                  13,237 13,199

During the year 150,000 new shares were issued, 3,983,011 shares were re-issued
out of treasury and 2,457,261 shares were repurchased to be held in treasury.
At the year-end the Company held no shares in treasury (2009: 1,525,750).

13.  Capital Reserve                                                           

                                                           Capital             
                                                                               
                                                           Reserve             
                                                                               
                                             Capital    Investment             
                                                                               
                                            Reserves       Holding     Total   
                                                             Gains             
                                                                               
                                               £'000         £'000     £'000   
                                                                               
At 1 October 2009                             35,730        22,160    57,890   
                                                                               
Transfer on disposal of investments           (6,031 )       6,031         -   
                                                                               
Net gains on investments                         715        28,018    28,733   
                                                                               
Expenses charged to capital                     (906 )           -      (906 ) 
                                                                               
Foreign currency exchange difference              (3 )           -        (3 ) 
                                                                               
Repurchase of shares into treasury            (5,934 )           -    (5,934 ) 
                                                                               
Sale of shares from treasury                   9,159             -     9,159   
                                                                               
At 30 September 2010                          32,730        56,209    88,939   

Under the terms of the Company's Articles of Association, sums within "Capital
Reserves" are available for distribution only by way of redemption or purchase
of any of the Company's own shares. In addition, in order to maintain
investment trust status, the Company may only distribute by way of dividend
accumulated revenue profits.

14.  Net Asset Value per Share                                                 

The net asset value per share is based on net assets of £159,590,000 (2009: £
127,659,000) and on 52,947,423 (2009: 51,271,673) (excluding treasury shares)
shares in issue at the year end. As at 30 September 2010 the Company held no
shares in treasury (2009: 1,525,750).

15.  Related Parties                                                           

Details of the relationship between the Company and Lindsell Train Limited are
disclosed in the Report of the Directors on pages 15 and 16. During the year
ended 30 September 2010, Lindsell Train Limited received £606,000 (2009: £
437,000) in respect of Investment Management fees, of which £57,000 (2009: £
43,000) was outstanding at the year end.

The Company has an investment in The Lindsell Train Investment Trust plc with a
book cost of £1,000,000 (2009: £1,000,000) and a fair value of £2,040,000
(2009: £1,540,000) as at 30 September 2010. The Lindsell Train Investment Trust
plc is managed by the Company's Investment Manager.

Notes to the Financial Statements

Continued

16.  Risk Management                                                           

As an investment trust, the Company invests in equities and other investments
for the long term so as to secure its investment objective as stated on page
11. In pursuit of its investment objective, the Company is exposed to a variety
of risks that could result in either a reduction in the Company's net assets or
a reduction in the revenue profits available for distribution.

The Company's financial instruments comprise equity and fixed rate investments,
cash balances, borrowings and debtors and creditors that arise directly from
its operations.

The principal risks inherent in managing the Company's financial instruments
are market risk, liquidity risk and credit risk. These risks and the Directors'
approach to the management of them are set out in the Report of Directors on
pages 12 to 14.

Market Risk

Market risk comprises three types of risk: market price risk, interest rate
risk and currency risk.

Market price risk

As an investment company, performance is dependent on the performance of the
underlying companies and securities in which it invests. The market price of
investee companies' shares is subject to their performance, supply and demand
for the shares and investor sentiment regarding the company or the industry
sector in which it operates. Consequently market price risk is one of the most
significant risks to which the Company is exposed. Further information
regarding market price risk can be found in the Report of the Directors on page
13.

At 30 September 2010, the fair value of the Company's assets exposed to market
price risk was £168,514,000 (2009: £138,799,000) (see page 8). If the fair
value of the Company's investments at the balance sheet date increased or
decreased by 10%, while all other variables remained constant, the capital
return and net assets attributable to shareholders for the year ended 30
September 2010 would have increased or decreased by £16,851,000 or 31.8p per
share (2009: £13,880,000 or 27.1p per share).

No derivatives or hedging instruments are utilised to manage market price risk.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates.

Interest rate movement may affect:

•    the interest payable on the Company's variable rate borrowings            

•    the level of income receivable from variable interest securities and cash 
     at bank and on deposit                                                    

•    the fair value of investments of fixed rate securities                    

Notes to the Financial Statements

Continued

16.  Risk Management Continued                                                 

The Company's main exposure to interest rate risk during the year ended 30
September 2010 was through its £15,000,000 secured multicurrency committed
revolving credit facility with Scotiabank Europe PLC. Borrowings varied
throughout the year as part of the Board's endorsed policy. Borrowings at the
year-end amounted to £10,700,000 (2009: £13,500,000 - loan provided by ING Bank
N.V.) at an interest rate of 2.24% (LIBOR plus 1.5%).

If the above level of borrowing was maintained for a year a 1% increase/
decrease in LIBOR would decrease/increase the revenue return by £35,000, would
decrease/increase the capital return by £72,000, and would decrease/increase
the net assets by £107,000 (2009: decrease/increase the revenue return by £
45,000, decrease/increase the capital return by £90,000 and decrease/increase
the net assets by £135,500).

The weighted average interest rate, during the year, on borrowings under the
above mentioned revolving credit facility provided by Scotiabank Europe PLC was
2.13% (2009: 5.03%).

At the year-end, the Company's financial assets and liabilities exposed to
interest rate risk were as follows:

 

                                                                  2010     2009
                                                                               
                                                                Within   Within
                                                                               
                                                              one year one year
                                                                               
                                                                 £'000    £'000
                                                                               
Exposure to floating rates:                                                    
                                                                               
Cash at bank                                                     1,387    1,531
                                                                               
Creditors: amount falling due within one year                                  
                                                                               
- borrowings under the loan facility                            10,700   13,500
                                                                               
Exposure to fixed rates:                                                       
                                                                               
Investments designated at fair value through profit or loss#     4,723    6,123

#   Comprises holdings in Lloyds Banking Group 9.25% non cum preference and    
    Celtic 6% cum preference as set out on page 8.                             

Currency risk

The financial statements are presented in sterling, which is the functional
currency and presentational currency of the Company. At 30 September 2010, all
of the Company's investments, with the exception of three, were priced in
sterling. The three exceptions, Thomson Reuters, listed in Canada and Dr Pepper
Snapple and Kraft Foods, both listed in the United States, represent 9.9% of
the portfolio (see page 8).

Credit Risk

Credit risk is the Company's exposure to financial loss from the failure of a
counterparty to deliver securities or cash for acquisition or disposals of
investments which could result in the Company suffering a financial loss.
Credit risk is managed as follows:

-    Investment transactions are carried out only with brokers whose           
     creditworthiness is reviewed by the Investment Manager.                   
                                                                               
-    Transactions are ordinarily undertaken on a delivery versus payment basis 
     whereby the Company's custodian bank ensures that the counterparty to any 
     transactions entered into by the Company has delivered its obligation     
     before any transfer of cash or securities away from the Company is        
     completed.                                                                
                                                                               
-    Any failing trades in the market are closely monitored by both the        
     Investment Manager and the Manager.                                       
                                                                               
-    Cash is only held at banks that have been identified by the Board as      
     reputable and of high credit quality. Bank of New York Mellon has a credit
     rating of Aaa (Moodys) and AA (S&P).                                      

During the year, Scotiabank Europe PLC, the provider of the Company's loan
facility, established a first fixed and floating charge over the assets of the
Company as security against any funds drawn down by the Company under the loan
facility.

Notes to the Financial Statements

Continued

16.  Risk Management Continued                                                 

As at 30 September 2010, the exposure to credit risk was £6,723,000 (2009: £
8,676,000), comprising:

                                                                2010       2009
                                                                               
                                                               £'000      £'000
                                                                               
Fixed assets:                                                                  
                                                                               
Non-equity investments (preference shares)                     4,723      6,123
                                                                               
Current assets:                                                                
                                                                               
Other receivables (amounts due from brokers, dividends           613      1,022
and interest receivable)                                                       
                                                                               
Cash at bank                                                   1,387      1,531
                                                                               
Total exposure to credit risk                                  6,723      8,676

The exposure to credit risk calculation is based on the Company's credit risk
exposure as at 30 September 2010.

Liquidity Risk

This is the risk that the Company will encounter difficulty in meeting
obligations associated with financial liabilities.

Liquidity risk is not significant as the majority of the Company's assets are
investments in quoted equities and other quoted securities that are readily
realisable, and are significantly in excess of its financial liabilities.

Fair value of financial assets and financial liabilities

Financial assets and financial liabilities are either carried in the balance
sheet at their fair value or at a reasonable approximation of fair value.

Valuation of financial instruments

The Company measures fair values using the following fair value hierarchy that
reflects the significance of the inputs used in making the measurements.
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset as follows:

•    Level 1 - valued using quoted prices unadjusted in active markets for     
     identical assets or liabilities.                                          
                                                                               
•    Level 2 - valued by reference to valuation techniques using observable    
     inputs for the asset or liability other than quoted prices included within
     Level 1.                                                                  
                                                                               
•    Level 3 - valued by reference to valuation techniques using inputs that   
     are not based on observable market data for the asset or liability.       

The table below sets out fair value measurements of financial instruments as at
the end of the reporting period by the level in the fair value hierarchy into
which the fair value measurement is categorised.

                                              Level 1  Level 2  Level 3   Total
                                                                               
                                                £'000    £'000    £'000   £'000
                                                                               
Equity investments                            163,451        -      340 163,791
                                                                               
Preference share investments                    4,723        -        -   4,723
                                                                               
                                              168,174        -      340 168,514

Notes to the Financial Statements

Continued

The valuation techniques used by the company are explained in the accounting
policies note on page 35.

There have been no transfers during the year between Levels 1 and 2. A
reconciliation of fair value measurements in Level 3 is set out below.

Level 3 Reconciliation of financial assets at fair value                       
through profit or loss                                                         
                                                                               
At 30 September 2010                                                      £'000
                                                                               
Opening fair value                                                          250
                                                                               
Total gains or losses included in gains on investments in                      
the Income Statement                                                           
                                                                               
- on assets held at the end of the year                                      90
                                                                               
Closing fair value                                                          340

Capital management objectives, policies and procedures

The structure of the Company's Capital is described in note 12 to the financial
statements and details of the Company's reserves are shown in the
Reconciliation of Movements in Shareholders' Funds on page 32. Details of the
Company's debt, representing 6.7% of net assets, can be found on the Balance
Sheet on page 33 and in note 16 on page 43.

The Company's capital management objectives are:

•    to ensure that it is able to continue as a going concern; and             
                                                                               
•    to achieve capital and income growth and to provide shareholders with a   
     total return in excess of that of the FTSE All-share Index through an     
     appropriate balance of equity capital and debt.                           

The Board, with the assistance of the Investment Manager and Manager, regularly
monitors and reviews the broad structure of the Company's capital. These
reviews include:

•    the level of gearing, set at a maximum of 25% of net assets, which takes  
     account of the Company's position and the views of the Board and the      
     Investment Manager on the market; and                                     
                                                                               
•    the extent to which revenue reserves should be retained or utilised.      

The Company's objectives, policies and procedures for managing capital are
unchanged from last year.

The Company is subject to externally imposed capital requirements;

•    In order to be able to pay dividends out of profits available for         
     distribution, the Company has to be able to meet one of the two capital   
     restriction tests imposed on investment companies by company law.         

These requirements are unchanged since last year and the Company has complied
with them at all times.

Notes to the Financial Statements

Continued

17.  Reconciliation of Net Return Before Finance Charges and Taxation to Net   
     Cash Inflow from Operating Activities                                     

 

                                                             2010       2009  
                                                                              
                                                            £'000      £'000  
                                                                              
Total return before finance charges and taxation           32,622     22,400  
                                                                              
Less: capital return before finance charges and taxation  (28,045 )  (17,585 )
                                                                              
Net revenue before finance charges and taxation             4,577      4,815  
                                                                              
Decrease in accrued income and prepayments                    260        271  
                                                                              
Decrease/(increase) in debtors                                135       (134 )
                                                                              
Increase/(decrease) in creditors                               26        (20 )
                                                                              
Taxation - irrecoverable overseas tax paid                    (69 )        -  
                                                                              
Investment management and management fees charged to         (596 )     (359 )
capital                                                                       
                                                                              
Other expenses charged to capital                             (89 )        -  
                                                                              
Net cash inflow from operating activities                   4,244      4,573  

 

18. Analysis of Changes in Net Debt                                            

 

                                      At                                   At   
                                                                                
                               1 October                Exchange           30   
                                                                    September   
                                                                                
                                    2009    Cashflow    Movement         2010   
                                                                                
                                   £'000       £'000       £'000        £'000   
                                                                                
Cash at bank                       1,531        (141 )        (3 )      1,387   
                                                                                
Debt falling due within 1 year   (13,500 )     2,800           -      (10,700 ) 
                                                                                
Net debt                         (11,969 )     2,659          (3 )     (9,313 ) 

 

19. Substantial Interests                                                      

The Company holds interests in 3% or more of any class of capital in the
following entities:

 

                                                                    % of issued
                                                                               
                                                                  share capital
                                                                               
                                                                     or Limited
                                                                               
                                                                      Liability
                                                                               
                                                       Fair value   Partnership
                                                                               
Company or Limited Liability             Shares held        £'000      interest
Partnership                                                                    
                                                                               
A.G. Barr                                  1,521,934       18,659           3.9
                                                                               
Frostrow Capital LLP (unquoted)                    -          340          10.0
                                                                               
Lindsell Train Investment Trust*              10,000        2,040           5.0
                                                                               
Marston's                                  6,244,565        5,782           3.7

*   Also managed by Lindsell Train Limited who receive an Investment Management
    fee of 0.65% per annum of the company's adjusted market capitalisation.    

Notice of the Annual General Meeting

Notice is hereby given that the Annual General Meeting of Finsbury Growth &
Income Trust PLC will be held at The City of London Club, 19 Old Broad Street,
London EC2N 1DS on Thursday, 27 January 2011 at 12 noon, for the following
purposes:

Ordinary Business

1.   To receive and consider the audited accounts and the Report of the        
     Directors for the year ended 30 September 2010.                           
                                                                               
2.   To re-elect John Allard as a Director of the Company.                     
                                                                               
3.   To re-elect Vanessa Renwick as a Director of the Company.                 
                                                                               
4.   To re-elect Giles Warman as a Director of the Company.                    
                                                                               
5.   To approve the Directors' Remuneration Report.                            
                                                                               
6.   To reappoint Grant Thornton UK LLP as auditors of the Company and to      
     authorise the Directors to determine their remuneration.                  

Special Business

To consider, and if thought fit, pass the following resolutions of which
resolutions 8, 9, 10 and 11 are proposed as special resolutions:

Authority to Allot Shares

7.   THAT in substitution of all existing authorities the Directors be and are 
     hereby generally and unconditionally authorised in accordance with Section
     551 of the Companies Act 2006 (the `Act') to exercise all powers of the   
     Company to allot relevant securities (within the meaning of Section 551 of
     the Act) up to a maximum aggregate nominal amount of £1,323,686 being 10% 
     of the issued share capital at 14 December 2010 and representing 5,294,742
     shares of 25p each in the Company (or, if changed, the number representing
     10% of the issued share capital of the Company at the date at which this  
     resolution is passed) provided that this authority share expire at the    
     conclusion of the Annual General Meeting of the Company to be held in 2012
     or 15 months from the date of passing this resolution, whichever is the   
     earlier, unless previously revoked, varied or renewed, by the Company in  
     general meeting and provided that the Company shall be entitled to make,  
     prior to the expiry of such authority, an offer or agreement which would  
     or might require relevant securities to be allotted after such expiry and 
     the Directors may allot relevant securities pursuant to such offer or     
     agreement as if the authority conferred hereby had not expired.           

Disapplication of Pre-emption Rights

8.   THAT in substitution of all existing powers (but in addition to any power 
     conferred on them by resolution 9 set out in the notice convening the     
     Annual General Meeting at which this resolution is proposed ("Notice of   
     Annual General Meeting")) the Directors be and are hereby generally       
     empowered pursuant to Section 570 of the Companies Act 2006 (the "Act") to
     allot equity securities (within the meaning of Section 560 of the Act) for
     cash pursuant to the authority conferred on them by resolution 7 set out  
     in the Notice of Annual General Meeting or otherwise as if Section 561(1) 
     of the Act did not apply to any such allotment:                           

     (a)  pursuant to an offer of equity securities open for acceptance for a  
          period fixed by the Directors where the equity securities            
          respectively attributable to the interests of holders of shares of   
          25p each in the Company ("Shares") are proportionate (as nearly as   
          may be) to the respective numbers of Shares held by them but subject 
          to such exclusions or other arrangements in connection with the issue
          as the Directors may consider necessary, appropriate or expedient to 
          deal with equity securities representing fractional entitlements or  
          to deal with legal or practical problems arising in any overseas     
          territory, the requirements of any regulatory body or stock exchange,
          or any other matter whatsoever; and                                  

Notice of the Annual General Meeting

Continued

     (b)   provided that (otherwise than pursuant to sub-paragraph (a) above)  
           this power shall be limited to the allotment of equity securities up
           to an aggregate nominal value of £1,323,686, being 10% of the issued
           share capital of the Company as at 14 December 2010 and representing
           5,294,742 Shares or, if changed, the number representing 10% of the 
           issued share capital of the Company at the date of the meeting at   
           which this resolution is passed, and provided further that (i) the  
           number of equity securities to which this power applies shall be    
           reduced from time to time by the number of treasury shares which are
           sold pursuant to any power conferred on the Directors by resolution 
           9 set out in the Notice of Annual General Meeting and (ii) no       
           allotment of equity securities shall be made under this power which 
           would result in Shares being issued at a price which is less than   
           the net asset value per Share as at the latest practicable date     
           before such allotment of equity securities as determined by the     
           Directors in their reasonable discretion,                           
                                                                               
     and such power shall expire at the conclusion of the next Annual General  
     Meeting of the Company after the passing of this resolution or 15 months  
     from the date of passing this resolution, whichever is earlier, unless    
     previously revoked, varied or renewed by the Company in general meeting   
     and provided that the Company shall be entitled to make, prior to the     
     expiry of such authority, an offer or agreement which would or might      
     otherwise require equity securities to be allotted after such expiry and  
     the Directors may allot equity securities pursuant to such offer or       
     agreement as if the power conferred hereby had not expired.               
                                                                               
9.   THAT in substitution of all existing powers (but in addition to any power 
     conferred on them by resolution 8 set out in the Notice of Annual General 
     Meeting) the Directors be and are hereby generally empowered pursuant to  
     Section 570 of the Companies Act 2006 (the "Act") to sell relevant shares 
     (within the meaning of Section 560 of the Act) if, immediately before the 
     sale, such shares are held by the Company as treasury shares (as defined  
     in Section 724 of the Act ("treasury shares")), for cash as if Section 561
     (1) of the Act did not apply to any such sale provided that:              
                                                                               
     (a)   where any treasury shares are sold pursuant to this power at a      
           discount to the then prevailing net asset value of ordinary shares  
           of 25p each in the Company ("Shares"), such discount must be (i)    
           lower than the discount to the net asset value per Share at which   
           the Company acquired the Shares which it then holds in treasury and 
           (ii) not greater than 5% to the prevailing net asset value per Share
           at the latest practicable time before such sale (and for this       
           purpose the Directors shall be entitled to determine in their       
           reasonable discretion the discount to their net asset value at which
           such Shares were acquired by the Company and the net asset value per
           Share at the latest practicable time before such Shares are sold    
           pursuant to this power); and                                        
                                                                               
     (b)   this power shall be limited to the sale of relevant shares having an
           aggregate nominal value of £1,323,686, being 10% of the issued share
           capital of the Company as at 14 December 2010 and representing      
           5,294,742 Shares or, if changed, the number representing 10% of the 
           issued share capital of the Company at the date of the meeting at   
           which this resolution is passed, and provided further that the      
           number of relevant shares to which power applies shall be reduced   
           from time to time by the number of Shares which are allotted for    
           cash as if Section 561(1) of the Act did not apply pursuant to the  
           power conferred on the Directors by resolution 8 set out in the     
           Notice of Annual General Meeting,                                   
                                                                               
     and such power shall expire at the conclusion of the next Annual General  
     Meeting of the Company after the passing of this resolution or 15 months  
     from the date of passing this resolution, whichever is earlier, unless    
     previously revoked, varied or renewed by the Company in general meeting   
     and provided that the Company shall be entitled to make, prior to the     
     expiry of such authority, an offer or agreement which would or might      
     otherwise require treasury shares to be sold after such expiry and the    
     Directors may sell treasury shares pursuant to such offer or agreement as 
     if the power conferred hereby had not expired.                            

Notice of the Annual General Meeting

Continued

Authority to Repurchase Shares

10.  THAT the Company be and is hereby generally and unconditionally authorised
     in accordance with Section 701 of the Companies Act 2006 (the "Act") to   
     make one or more market purchases (within the meaning of Section 693(4) of
     the Act) of ordinary shares of 25 pence each in the capital of the Company
     ("Shares") provided that:                                                 
                                                                               
     (i)   the maximum aggregate number of Shares authorised to be purchased is
           7,936,819 or, if changed, the number representing 14.99% of the     
           issued share capital of the Company at the date of the meeting at   
           which this resolution is proposed;                                  
                                                                               
     (ii)  the minimum price (exclusive of expenses) which may be paid for a   
           Share is 25 pence;                                                  
                                                                               
     (iii) the maximum price (exclusive of expenses) which may be paid for a   
           Share is an amount equal to the greater of (i) 105% of the average  
           of the middle market quotations for a Share as derived from the     
           Daily Official List of the London Stock Exchange for the five       
           business days immediately preceding the day on which that Share is  
           purchased and (ii) the higher of the last independent trade in      
           shares and the highest then current independent bid for shares on   
           the London Stock Exchange as stipulated in Article 5(1) of          
           Regulation No. 2233/2003 of the European Commission (Commission     
           Regulation of 22 December 2003 implementing the Market Abuse        
           Directive as regards exemption for buyback programmes and           
           stabilisation of financial instruments);                            
                                                                               
     (iv)  this authority shall expire at the conclusion of the Annual General 
           Meeting of the Company to be held in 2012 or, if earlier, on the    
           expiry of 15 months from the date of the passing of this resolution 
           unless such authority is renewed prior to such time; and            
                                                                               
     (v)   the Company may make a contract to purchase Shares under this       
           authority before the expiry of the authority which will or may be   
           executed wholly or partly after the expiration of such authority,   
           and may make a purchase of Shares in pursuance of any such contract.

General Meetings

11.  THAT as permitted by the EU Shareholders' Rights Directive (2007/36/EC)   
     any General Meeting of the Company (other than the Annual General Meeting 
     of the Company) shall be called by notice of at least 14 clear days in    
     accordance with the provisions of the Articles of Association of the      
     Company provided that the authority shall expire on the conclusion of the 
     next Annual General Meeting of the Company, or, if earlier, on the expiry 
     15 months from the date of the passing of the resolution.                 

 

By order of the Board                                         Registered office
                                                                               
                                                                50 Lothian Road
                                                                               
Frostrow Capital LLP                                            Festival Square
                                                                               
Company Secretary                                                     Edinburgh
                                                                               
                                                                        EH3 9BY
                                                                               
14 December 2010                                                               

Notice of the Annual General Meeting

Continued

Notes

 

1.   Members are entitled to appoint a proxy to exercise all or any of their   
     rights to attend and to speak and vote on their behalf at the meeting. A  
     shareholder may appoint more than one proxy in relation to the meeting    
     provided that each proxy is appointed to exercise the rights attached to a
     different share or shares held by that shareholder. A proxy need not be a 
     shareholder of the Company. A proxy form which may be used to make such   
     appointment and give proxy instructions accompanies this notice.          
                                                                               
2.   A vote withheld is not a vote in law, which means that the vote will not  
     be counted in the calculation of votes for or against the resolutions. If 
     no voting indication is given, a proxy may vote or abstain from voting at 
     his/her discretion. A proxy may vote (or abstain from voting) as he or she
     thinks fit in relation to any other matter which is put before the        
     meeting.                                                                  
                                                                               
3.   To be valid any proxy form or other instrument appointing a proxy must be 
     completed and signed and received by post or (during normal business hours
     only) by hand at Capita Registrars, PXS, 34 Beckenham Road, Beckenham,    
     Kent BR3 4TU no later than 12 noon on 25 January 2011.                    
                                                                               
4.   In the case of a member which is a company, the instrument appointing a   
     proxy must be executed under its seal or signed on its behalf by a duly   
     authorised officer or attorney or other person authorised to sign. Any    
     power of attorney or other authority under which the instrument is signed 
     (or a certified copy of it) must be included with the instrument.         
                                                                               
5.   The return of a completed proxy form, other such instrument or any CREST  
     Proxy Instruction (as described below) will not prevent a shareholder     
     attending the meeting and voting in person if he/she wishes to do so.     
                                                                               
6.   Any person to whom this notice is sent who is a person nominated under    
     Section 146 of the Companies Act 2006 to enjoy information rights (a      
     "Nominated Person") may, under an agreement between him/her and the       
     shareholder by whom he/she was nominated, have a right to be appointed (or
     have someone else appointed) as a proxy for the meeting. If a Nominated   
     Person has no such proxy appointment right or does not wish to exercise   
     it, he/she may, under any such agreement, have a right to give            
     instructions to the shareholder as to the exercise of voting rights.      
                                                                               
7.   The statement of the rights of shareholders in relation to the appointment
     of proxies in paragraph 1 above does not apply to Nominated Persons. The  
     rights described in that paragraph can only be exercised by shareholders  
     of the Company.                                                           
                                                                               
8.   Pursuant to regulation 41 of the Uncertificated Securities Regulations    
     2001, only shareholders registered on the register of members of the      
     Company (the "Register of Members") at 5.30 p.m. on 25 January 2011 (or,  
     in the event of any adjournment, on the date which is two days before the 
     time of the adjourned meeting) will be entitled to attend and vote or be  
     represented at the meeting in respect of shares registered in their name  
     at that time. Changes to the Register of Members after that time will be  
     disregarded in determining the rights of any person to attend and vote at 
     the meeting.                                                              
                                                                               
9.   As at 14 December 2010 (being the last business day prior to the          
     publication of this notice) the Company's issued share capital consists of
     52,947,423 ordinary shares, carrying one vote each. Therefore, the total  
     voting rights in the Company as at 14 December 2010 are 52,947,423.       
                                                                               
10.  CREST members who wish to appoint a proxy or proxies through the CREST    
     electronic proxy appointment service may do so by using the procedures    
     described in the CREST Manual. CREST Personal Members or other CREST      
     sponsored members, and those CREST members who have appointed a service   
     provider(s), should refer to their CREST sponsor or voting service        
     provider(s), who will be able to take the appropriate action on their     
     behalf.                                                                   
                                                                               
11.  In order for a proxy appointment or instruction made using the CREST      
     service to be valid, the appropriate CREST message (a "CREST Proxy        
     Instruction") must be properly authenticated in accordance with the       
     specifications of Euroclear UK and Ireland Limited ("CRESTCo"), and must  
     contain the information required for such instruction, as described in the
     CREST Manual. The message, regardless of whether it constitutes the       
     appointment of a proxy or is an amendment to the instruction given to a   
     previously appointed proxy must, in order to be valid, be transmitted so  
     as to be received by the issuer's agent (ID RA10) no later than 48 hours  
     before the time appointed for holding the meeting. For this purpose, the  
     time of receipt will be taken to be the time (as determined by the        
     timestamp applied to the message by the CREST Application Host) from which
     the issuer's agent is able to retrieve the message by enquiry to CREST in 
     the manner prescribed by CREST. After this time any change of instructions
     to proxies appointed through CREST should be communicated to the appointee
     through other means.                                                      
                                                                               
12.  CREST members and, where applicable, their CREST sponsors or voting       
     service providers, should note that CRESTCo does not make available       
     special procedures in CREST for any particular message. Normal system     
     timings and limitations will, therefore, apply in relation to the input of
     CREST Proxy Instructions. It is the responsibility of the CREST member    
     concerned to take (or, if the CREST member is a CREST personal member or  
     sponsored member, or has appointed a voting service provider, to procure  
     that his CREST sponsor or voting service provider(s) take(s)) such action 
     as shall be necessary to ensure that a message is transmitted by means of 
     the CREST system by any particular time. In this connection, CREST members
     and, where applicable, their CREST sponsors or voting system providers are
     referred, in particular, to those sections of the CREST Manual concerning 
     practical limitations of the CREST system and timings.                    
                                                                               
13.  The Company may treat as invalid a CREST Proxy Instruction in the         
     circumstances set out in Regulation 35(5)(a) of the Uncertificated        
     Securities Regulations 2001.                                              
                                                                               
14.  In the case of joint holders, where more than one of the joint holders    
     purports to appoint a proxy, only the appointment submitted by the most   
     senior holder will be accepted. Seniority is determined by the order in   
     which the names of the joint holders appear in the Register of Members in 
     respect of the joint holding (the first named being the most senior).     
                                                                               
15.  Members who wish to change their proxy instructions should submit a new   
     proxy appointment using the methods set out above. Note that the cut-off  
     time for receipt of proxy appointments (see above) also applies in        
     relation to amended instructions; any amended proxy appointment received  
     after the relevant cut-off time will be disregarded.                      

Notice of the Annual General Meeting

Continued

Notes (continued)

16.  Members who have appointed a proxy using the hard-copy proxy form and who 
     wish to change the instructions using another hard-copy form, should      
     contact Capita Registrars on 0871 664 0300 (calls cost 10p per minute plus
     network extras).                                                          
                                                                               
17.  If a member submits more than one valid proxy appointment, the appointment
     received last before the latest time for the receipt of proxies will take 
     precedence.                                                               
                                                                               
18.  In order to revoke a proxy instruction, members will need to inform the   
     Company. Members should send a signed hard copy notice clearly stating    
     their intention to revoke a proxy appointment to Capita Registrars, PXS,  
     34 Beckenham Road, Beckenham, Kent BR3 4TU.                               
                                                                               
19.  In the case of a member which is a company, the revocation notice must be 
     executed under its common seal or signed on its behalf by an officer of   
     the company or an attorney for the company. Any power of attorney or any  
     other authority under which the revocation notice is signed (or a duly    
     certified copy of such power of attorney) must be included with the       
     revocation notice. If a member attempts to revoke its proxy appointment   
     but the revocation is received after the time for receipt of proxy        
     appointments (see above) then, subject to paragraph 4, the proxy          
     appointment will remain valid.                                            

Location of the Annual General Meeting

to be held at The City of London Club, 19 Old Broad Street, London EC2N 1DS on
Thursday, 27 January 2011 at 12 noon.

Glossary of Terms

Discount or Premium

A description of the situation when the share price is lower or higher than the
net asset value per share. The size of the discount or premium is calculated by
subtracting the share price from the net asset value per share and is usually
expressed as a percentage (%) of the net asset value per share. If the share
price is higher than the net asset value per share this situation is called a
premium. If the share price is lower than the net asset value, shares are
trading at a discount.

Gearing

The term used to describe the process of borrowing money for investment
purposes in the expectation that the returns on the investments purchased using
the borrowings exceed the finance costs associated with those borrowings.

There are several methods of calculating gearing and the following has been
selected:

It is calculated by dividing the drawdown loans of the Company by the
Shareholders' funds.

Net Asset Value (NAV)

The value of the Company's assets, principally investments made in other
companies and cash being held, minus any liabilities for which the Company is
responsible, e.g. money owed to other people. The NAV is also described as
`shareholders' funds'. The NAV is often expressed in pence per share after
being divided by the number of shares which have been issued. The NAV per share
is unlikely to be the same as the share price which is the price at which the
Company's shares can be bought or sold by an investor. The share price is
determined by the relationship between the demand and supply of the shares.

Net Asset Value Total Return

The theoretical total return on shareholders' funds per share, including an
assumed amount of an original investment at the beginning of the period
specified, reflecting the change in net asset value assuming that dividends
paid to shareholders were reinvested at net asset value per share at the time
the shares were quoted ex-dividend. A way of measuring investment management
performance of investment trusts which is not affected by movements in
discounts or premiums.

Total Assets

Total assets give an indication of the total value of all the Company's
investments before deducting any borrowings used for gearing/investment
purposes.

Treasury Shares

Shares previously issued by a company that have been bought back from
shareholders to be held by the company for potential sale or cancellation at a
later date.

Total Expense Ratio

The total operating expenses incurred by a company, including any charged to
capital, excluding performance fees, finance charges, recovery of VAT on
management fees and other exceptional items, as a percentage of average total
shareholders' funds.

How to Invest

Alliance Trust Savings Limited

The Company's shares are available through savings plans (including investment
Dealing Accounts, ISAs and SIPPs) operated by Alliance Trust Savings Limited,
which facilitates both regular monthly investments and lump sum investments in
the Company's shares. Shareholders who would like information on the savings
plans should call Alliance Trust Savings Limited on 01382 573737 or log on to 
www.alliancetrust.co.uk/alliancetrustsavings/ or email
contact@alliancetrust.co.uk. Calls to this number may be recorded for
monitoring purposes.

An Individual Savings Account (`ISA') is a tax efficient method of investment
for an individual which gives the opportunity to invest in the Company up to £
10,200 in the tax year 2010/2011 and in subsequent tax years when they
subscribe to a Stocks and Shares ISA.

The preceding two paragraphs have been issued and approved by Alliance Trust
Savings Limited. Alliance Trust Savings Limited of PO Box 164, 8 West
Marketgait, Dundee DD1 9YP is registered in Scotland with number SC98767.
Alliance Trust Savings Limited provides investment products and services and is
authorised and regulated by the Finance Services Authority. It does not provide
investment advice.

Capita Registrars - Share Dealing Service

A quick and easy share dealing service is available to existing shareholders
through the Company's Registrar, Capita Registrars, to either buy or sell
shares. An online and telephone dealing facility provides an easy to access and
simple to use service.

Type of trade                                 Online                  Telephone
                                                                               
Share certificates       1% of the value of the deal   1.5% of the value of the
                                                                           deal
                                                                               
                        (Minimum £20.00, max £75.00)     (Minimum £25.00, max £
                                                                        102.50)

There is no need to pre-register and there are no complicated forms to fill in.
The online and telephone dealing service allows you to trade `real time' at a
known price which will be given to you at the time you give your instruction.

To deal online or by telephone all you need is your surname, shareholder
reference number, full postcode and your date of birth. Your shareholder
reference number can be found on your latest statement or certificate where it
will appear as either a `folio number' or `investor code'. Please have the
appropriate documents to hand when you log on or call, as this information will
be needed before you can buy or sell shares.

For further information on this service please contact:

www.capitadeal.com (online dealing) or 0871 664 0445† (telephone dealing)

†    Calls cost 10p per minute plus network extras and may be recorded for     
     training purposes. Lines are open from 8.30 a.m. to 4.30 p.m. Monday to   
     Friday.                                                                   

The Share Dealing Service is provided by Capita IRG Trustees Limited which has
issued and approved the preceding paragraphs. Capita IRG Trustees Limited, The
Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU is registered in England
and Wales with number 2729260. Capita IRG Trustees Limited is authorised and
regulated by the Financial Services Authority.

Risk Warnings

-    Past performance is no guarantee of future performance.                   
                                                                               
-    The value of your investment and any income from it may go down as well as
     up and you may not get back the amount invested. This is because the share
     price is determined by the changing conditions in the relevant            
     stockmarkets in which the Company invests and by the supply and demand for
     the Company's shares.                                                     
                                                                               
-    As the shares in an investment trust are traded on a stockmarket, the     
     share price will fluctuate in accordance with supply and demand and may   
     not reflect the underlying net asset value of the shares; where the share 
     price is less than the underlying value of the assets, the difference is  
     known as the `discount'. For these reasons, investors may not get back the
     original amount invested.                                                 
                                                                               
-    Although the Company's financial statements are denominated in sterling,  
     it may invest in stocks and shares that are denominated in currencies     
     other than sterling and to the extent they do so, they may be affected by 
     movements in exchange rates. As a result, the value of your investment may
     rise or fall with movements in exchange rates.                            
                                                                               
-    Investors should note that tax rates and reliefs may change at any time in
     the future.                                                               
                                                                               
-    The value of ISA tax advantages will depend on personal circumstances. The
     favourable tax treatment of ISAs may not be maintained.                   

Company Information

Directors

Anthony Townsend (Chairman)

John Allard

Neil Collins

David Hunt, FCA

Vanessa Renwick

Giles Warman

Registered Office

50 Lothian Road, Festival Square,

Edinburgh EH3 9BY

Company Registration Number

13958 (Registered in Scotland)

The Company is an investment company as defined under Section 833 of the
Companies Act 2006.

The Company was incorporated in Scotland on 15 January 1926. The Company was
incorporated as Scottish Cities Investments Trust PLC.

Website

www.finsburygt.com

Investment Manager

Lindsell Train Limited

Cayzer House,

30 Buckingham Gate

London SW1E 6NN

Website: www.lindselltrain.com

Authorised and regulated by the Financial Services Authority.

Manager, Administrator and Company Secretary

Frostrow Capital LLP

25 Southampton Buildings,

London WC2A 1AL

Telephone: 020 3008 4910

E-Mail: info@frostrow.com

Website: www.frostrow.com

Authorised and regulated by the Financial Services Authority.

If you have an enquiry about the Company or if you would like to receive a copy
of the Company's fact sheet by e-mail, please contact Frostrow Capital using
the above e-mail address.

Custodian and Banker

Bank of New York Mellon

The Bank of New York Mellon Centre

160 Queen Victoria Street

London EC4V 4LA

Auditors

Grant Thornton UK LLP

30 Finsbury Square,

London EC2P 2YU

Registrars

Capita Registrars

Northern House, Woodsome Park,

Fenay Bridge, Huddersfield,

West Yorkshire HD8 0LA

Telephone (in UK): 0871 664 0300†

Telephone (from overseas): +44 (0) 20 8639 3399

Facsimile: +44 (0) 1484 600911

E-mail: ssd@capitaregistrars.com

Website: www.capitaregistrars.com

Please contact the Registrars if you have a query about a certificated holding
in the Company's shares.

†  calls cost 10p per minute plus network   
   extras and may be recorded for training  
   purposes. Lines are open from 8.30 a.m.  
   to 5.30 p.m. Monday to Friday.           

Stockbrokers

Winterflood Investment Trusts

The Atrium Building, Cannon Bridge,

25 Dowgate Hill
London EC4R 2GA

Share Price Listings

The price of your shares can be found in various publications including the
Financial Times, and in The Daily Telegraph, The Times and The Scotsman.

The Company's net asset value per share is announced daily and is available,
together with the share price, on the TrustNet website at www.trustnet.com

Identification Codes                        
                                            
Shares:   SEDOL:     0781606                
                                            
          ISIN:      GB0007816068           
                                            
          BLOOMBERG: FGTLN                  
                                            
          EPIC:      FGT                    

Disability Act

Copies of this annual report and other documents issued by the Company are
available from the Company Secretary. If needed, copies can be made available
in a variety of formats, including braille, audio tape or larger type as
appropriate. You can contact the Registrar to the Company, Capita Registrars,
which has installed telephones to allow speech and hearing impaired people who
have their own telephone to contact them directly, without the need for an
intermediate operator, for this service please call 0800 731 1888. Specially
trained operators are available during normal business hours to answer queries
via this service. Alternatively, if you prefer to go through a `typetalk'
operator (provided by The Royal National Institute for Deaf People) you should
dial 18001 from your textphone followed by the number you wish to dial.

Contact: Mark Pope at Frostrow Capital LLP,

0203 008 4913

Frostrow Capital LLP, Company Secretary

- 21 December 2010

ANNOUNCEMENT ENDS