Morningstar Rating™

as at 30 September 2013

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Manager's Comment for August 2014

The recent gyrations in European markets gave us the opportunity to invest in French holding company, Eurazeo. Its share price fell by 20% between June and mid-August and this pushed its discount up from mid-teen levels to close to 30%. There are two additional factors that make this particularly interesting. Firstly, the widening of the discount prompted comment from management about the absolute level of the discount, together with a statement regarding their intention to boost the level of share buybacks to 10% of the shares outstanding should the discount remain at these wide levels. And secondly, management confirmed the intention to sell two of their largest private equity holdings – Elis and Europcar – which together make up approximately one-third of total NAV. In early September, Elis confirmed its intention to proceed with an IPO. Both companies have performed strongly in operational terms over the past year and the prospect of successful disposals should provide support for further narrowing of the discount, as well as potential increases in NAV.

At Vivendi, the ongoing rationalisation continues with the company accepting a takeover bid for its Brazilian broadband business GVT. We used the strength in the share price to take partial profits on our holding. We had added to the position at the end of June on price weakness, and the recent strength allowed us to sell at a very narrow discount to our estimate of NAV.

Net cash levels increased very slightly to 5.6% and the weighted average discount increased marginally to 28.3%.

We continue to identify attractive opportunities on wide discounts at attractive valuation levels and with genuine catalysts for discount narrowing.

Retail Investors advised by IFAs

The Company currently conducts its affairs so that its shares can be recommended by Independent Financial Advisers (“IFAs”) in the UK to ordinary retail investors in accordance with the Financial Conduct Authority (“FCA”) rules in relation to non-mainstream investment products and intends to continue to do so. The shares are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are shares in an authorised investment trust.

British Empire Securities and General Trust plc

British Empire Securities and General Trust p.l.c. (British Empire) is a closed-end investment trust with shares listed on the London Stock Exchange in the FTSE 250 Index. The investment objective is to achieve capital growth through a focused portfolio of investments, particularly in companies whose share prices stand at a discount to estimated underlying net asset value. British Empire shares can be purchased and held in a Stocks & Shares ISA or a Share Saving scheme through the investment managers, Asset Value Investors.

Asset Value Investors is an employee owned management company founded in 1985 to manage the assets of British Empire, which was a £6 million trust at that time. Today, British Empire has assets of over £856* million and is managed by John Pennink and Joe Bauernfreund.

British Empire Securities Share Price Updated 19/09/14
Price Ord 523.00
NAV 580.42
Prem/-Disc -9.89
Dividend Yield 2.01


Year End 30 Sept
Accounts Published 30 Nov
General Meeting Dec
Dividend Paid Jan, June
Launch Date July 1889

Price Performance December 2003 to December 2013 †

How a typical investment of £11,280 performed over the last five years ‡

Initial Investment

British Empire Securities and General Trust has had an average annual NAV total return of 12.4%* since 1985.

* Figures at 31 December 2013

† ‡ Gross annual returns to 31 December. Past performance should not be seen as an indication of future performance. The price of investments and the income may fall as well as rise and investors may not get back the full amount invested. British Empire uses gearing techniques (leverage) which will exaggerate market movements both down and up which could mean sudden and large falls in market value. Please refer to the Key Features Document for further details of the risks affecting your investment. Performance figures are cumulative and based on Price total return and do not include Plan charges. For more information, please call 0845 850 0181.

Tax treatment depends on the individual circumstances and may be subject to change in the future.