FINSBURY GROWTH & INCOME TRUST PLC - Annual Financial Report

FINSBURY GROWTH & INCOME TRUST PLC - Annual Financial Report

PR Newswire

                      LONDON STOCK EXCHANGE ANNOUNCEMENT

                               12 December 2013

                      Finsbury Growth & Income Trust PLC

             Audited Results for the Year Ended 30 September 2013

        The Company's annual report will be posted to shareholders on
   Thursday, 19 December 2013. 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 30
September 2013 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


12 December 2013

Financial Summary and Key Data

                                                             As at               As at
                                                             30 September        30 September
                                                             2013                2012                % Change
Share price                                                  479.0p              376.0p              +27.4
Net asset value per share                                    476.1p              370.7p              +28.4
Premium of share price to net asset value per share          0.6%                1.4%                -
Gearing*                                                     3.6%                5.1%                -
Shareholders' funds                                          £395.8m             £254.2m             +55.7
Number of shares in issue                                    83,136,557          68,568,381          +21.2

                                                             Year ended          Year ended
                                                             30 September        30 September
                                                             2013                2012
Share price (total return)#                                  +30.5%              +23.6%
Net asset value per share total return#                      +31.6%              +21.1%
FTSE All-Share Index (total return)                          +18.9%              +17.3%
(Company benchmark)# +
Ongoing charges*                                             0.8%                0.9%
Dividends per share
First interim dividend                                       4.8p                4.6p
Second interim dividend                                      5.7p                5.2p
                                                             10.5p               9.8p                +7.1

# Source - Morningstar

+ Source - FTSE International Limited ("FTSE")©FTSE 2013*

* See glossary


Chairman's Statement

"...the Company's net asset value total return and share price total return
have again significantly outperformed the Company's benchmark during the year"

Performance

I am delighted to report that the Company's net asset value total
return for the year of 31.6% (2012: 21.1%) and the share price total return of
30.5% (2012: 23.6%) have again both significantly outperformed the Company's
benchmark, the FTSE All-Share Index, measured on a total return basis, which
rose by 18.9% over the same period (2012: 17.3%). The principal contributions
to net asset value performance came from our major holdings in Schroders,
London Stock Exchange and Heineken.

The Company's continued strong performance and the resulting demand
for its shares has caused them to trade at a premium to the cum income net
asset value per share consistently throughout the year. The share price ended
the year standing at a 0.6% premium to net asset value per share which
compares to a premium as at 30 September 2012 of 1.4%.

It is also particularly pleasing to note that our Investment
Manager's strategy has delivered excellent returns over the last ten years
with £1,000 invested ten years ago now being worth approximately £4,466. This
compares to approximately £2,400 from the Company's benchmark index, the FTSE
All-Share Index.

Share Capital

Consistent demand for the Company's shares led to the issue of a
total of 14,568,176 new shares during the year raising £63.8 million. This
demand necessitated the holding of a General Meeting in July 2013 where
shareholder authority was obtained to issue 8.1 million shares on a
non-pre-emptive basis at prices not less than the prevailing cum income net
asset value per share. It is proposed to renew this authority at the Company's
Annual General Meeting to be held in January 2014. The Company's most recent
prospectus dated 12 December 2012 is also being renewed in order that your
Company is able to continue to issue shares in accordance with the Prospectus
Directive.

The chart below shows the number of shares in issue (excluding
treasury shares) at each Company year-end from 2004, the year that the Board
introduced the Company's discount control mechanism.

From questions asked at previous Annual General Meetings it is
apparent that while shareholders appreciate the fact that we operate an active
discount control mechanism it is not entirely clear to many of them precisely
how it works. For those who would like to know more there is a detailed
explanation of how we operate our scheme on page 5.

Return and Dividend

The Income Statement shows a total return per share of 112.1 pence
per share (year ended 30 September 2012: 68.8 pence) consisting of a revenue
return per share of 12.7 pence (year ended 30 September 2012: 10.8 pence) and
a capital return per share of 99.4 pence (year ended 30 September 2012: 58.0
pence).

I am pleased to report that the Company's net revenue return during
the year was again higher than the previous year and your Board has declared
two interim dividends for the year totaling 10.5 pence per share (year ended
30 September 2012: 9.8 pence) an increase of 7.1%. This is in line with the
Board's long-term objective of a progressive dividend policy.

In light of the continued strong demand for the Company's shares
and in order to facilitate dividend payments on a timely and cost effective
basis, your Board continues to elect to distribute the Company's income to
shareholders by means of two interim dividends. We have considered the
possibility of moving to quarterly dividends, but the majority of our
investments still pay only two dividends a year so we do not believe it would
be cost effective. We will keep it under review.

Borrowings

Gearing continues to be an important part of your Company's
strategy. The Company's two year £25 million loan facility with Scotiabank
Europe expired on 4 October 2013 and was renewed for a further three years on
improved terms. The new facility is for £30 million with the ability to draw
down a further £20 million if required. As at the date of this report £20.8
million has been drawn down under this facility.

The Board

It was with great regret that the Board had to announce earlier
this year the sudden and totally unexpected death of their highly respected
colleague Giles Warman on 24 May 2013. His experience and wise counsel will be
greatly missed.

In accordance with our policy of all Directors standing for
re-election annually, you will find the appropriate resolutions in the notice
of the Annual General Meeting.

Regulatory

The Board intends to achieve compliance with the Alternative
Investment Fund Managers Directive (the `Directive') by 22 July 2014. The
Board, together with its advisers, is currently reviewing the options open to
the Company and will ensure that all documentation and arrangements to enable
the Company to comply with the Directive are in place well in advance of the
deadline.

The Company has complied with the new company reporting regulations
which have necessitated making a number of significant changes to this Annual
Report. Your Board hopes that the changes that have been made will make this
document both easier to read and provide a better understanding of the Company
and its strategy.

Outlook

There are signs that global markets are entering a recovery phase
although not without periods of volatility and, in the UK, despite the
continued existence of strong headwinds, there is evidence that the outlook
for the economy appears better than at any time since the onset of the
financial crisis.

Your Board continues to support fully our Investment Manager's
strategy of investing in high quality companies that own both durable and cash
generative brands. We believe firmly that this will continue to deliver strong
investment returns to shareholders over the longer term.

Annual General Meeting

The Annual General Meeting of the Company will be held at the
Barber-Surgeons' Hall, Monkwell Square, Wood Street, London EC2Y 5BL on
Wednesday, 29 January 2014 at 12 noon, and we hope as many shareholders as
possible will attend. This will be an opportunity to meet with the Board and
to receive a presentation from our Investment Manager.

Anthony Townsend
Chairman

12 December 2013

How our Discount Control Mechanism works

Shareholders in the Company will know that the principal difference
between investment trusts and the other most common collective investment
vehicles, unit trusts and open ended investment companies ("OEICs"), is that

- to participate in unit trusts and OEICs, investors apply to the
fund managers for new units or shares. These are normally issued and redeemed
at or near to net asset value per share ("NAV"), whereas

- to participate in an investment trust requires the purchase or
sale of the shares in that trust through the stock market.

The shares in an investment trust usually trade at a price closely
linked to its NAV, but they seldom if ever trade at exactly the NAV, or at
"par" as it is known. Historically the great majority of investment trusts
have traded at a discount to NAV, often well into double digits, although
there are a select few, usually specialist, trusts that trade at a premium.

There are some investors who find the ability to buy stock in
investment trusts at a discount attractive, although they are rarely so
enthusiastic if they have to sell at a discount. However, your Directors
believe that it is in the best interests of all our shareholders (whether
buying, holding or selling) that the Company's shares trade at a price as
close to NAV as possible.

The level of discount, or premium, at which investment trust shares
trade is very substantially affected by the law of supply and demand; put
simply a much sought-after share rarely trades at a significant discount and
may even trade at a premium, whereas out of favour shares often move to
material discounts.

In an effort to try to eliminate discount volatility, your
Directors introduced a discount control mechanism ("DCM") in 2004. Under our
DCM, we will normally buy in the Company's shares being offered on the stock
market whenever the discount reaches a level of 5% or more and then hold those
shares in "treasury". Shares held by a company in treasury are, for accounting
purposes, effectively eliminated but, legally and for Stock Exchange purposes,
they continue to exist, which means they can later be sold back to the market
if conditions permit.

In recent years the Company's successful performance has generated
substantial investor interest, which in the absence of the other side of our
DCM could have led to our shares moving to a significant premium to NAV. Your
Directors consider that limiting the premium is just as important as limiting
the discount; no-one likes to pay over the odds for an investment! The other
side of our DCM is therefore that whenever there are unsatisfied buying orders
for our shares in the market, we issue new shares at a small premium to NAV.
This ensures that there is no asset dilution to our existing shareholders, but
stops the market price going to a significant and possibly unsustainable
premium. We do therefore effectively become a market maker in our own shares
and you can see from the chart on page three how successful that has been.

These two sides of our DCM are widely to be found elsewhere in the
investment trust sector, but there is a third aspect to ours that is rare. I
explained above that shares held in treasury continue to exist legally and can
be re-sold, but in most cases shareholders will only permit that if they are
re-sold at NAV or higher. For many years we have sought and obtained the
authority of our shareholders to re-sell shares held in treasury at a discount
to NAV, provided that any sale is at a narrower discount to NAV than that
prevailing when the shares were bought in. The round trip of buying them in
and then selling them out again at a finer discount is always asset-accretive
to shareholders, but it is the increased liquidity that this arrangement
permits that is the real benefit.

We have not had to use this power for many years, but there was a
point some years ago where it was very useful to us in helping us place a
large holding of shares in the Company that was too large for the market to
digest in one go. We therefore bought part of that holding into treasury and
then sold the shares out to the market over the next few months in smaller
parcels at a finer discount. The whole operation was a great success and we
are therefore very keen to keep this power in our DCM armoury.

It is Resolutions 10, 11, 12 & 13 in the Notice of Annual General
Meeting that enable us to operate what we consider to have been a very
effective DCM in recent years and we strongly recommend that shareholders
therefore vote in favour of those resolutions in order to continue it.

Anthony Townsend
Chairman

12 December 2013

Strategic Report

We aim 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 Strategy

The Company's investment policy is to invest principally in the
securities of UK listed 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 will normally comprise approximately 30 investments.
Unless driven by market movements, securities in FTSE 100 companies, and
comparable companies listed on an overseas stock exchange will normally
represent between 50% and 100% of the portfolio; securities in FTSE 350
companies and comparable companies listed on overseas stock exchanges will
normally represent at least 70% of the portfolio.

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 listed
businesses that appear undervalued.

The Company does not and will not invest more than 15%, in
aggregate, of the value of its gross assets in other closed ended investment
companies (including investment trusts) listed on the London Stock Exchange.

Further, 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.

No investment will be made in any company or fund managed by the
Investment Manager without the prior approval of the Board.

The Company's gearing policy is that gearing will not exceed 25% of
the Company's net assets. In normal market conditions it is expected that the
level of gearing will be between 5% and 25% of the Company's net assets.

The Company has the ability to invest 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.

Business Model

The Company has no employees and all of its Directors are
non-executive. The Company delegates its day-to-day activities to third
parties. The Company has appointed Lindsell Train Limited as Investment
Manager and Frostrow Capital LLP as Manager, Company Secretary and
Administrator.

Lindsell Train was appointed Investment Manager to the Company in
December 2000. Lindsell Train has given Mr 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 Conduct Authority.

Frostrow Capital is responsible for providing company secretarial,
administrative, accounting and marketing services to the Company. Frostrow was
established in 2007 to provide specialist management, company secretarial,
administration and marketing services to investment companies. Frostrow is
authorised and regulated by the Financial Conduct Authority.

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 policy. It also has
responsibility for all strategic issues, dividend policy, share issuance and
buy back policy, gearing, share price and discount/premium monitoring and
corporate governance matters.

Performance

Five Year Performance Summary          30 Sep  30 Sep  30 Sep  30 Sep  30 Sep
                                       2009    2010    2011    2012    2013
Share price                            231.0p  297.8p  308.1p  376.0p  479.0p
Share price total return*              +22.9%  +33.1%  +6.5%   +23.6%  +30.5%
Net asset value per share              249.0p  301.4p  310.3p  370.7p  476.1p
Net asset value per share (total
return)*                               +24.0%  +25.6%  +5.8%   +21.1%  +31.6%
FTSE All-Share Index (total return)**  +10.8%  +12.5%  (4.4)%  +17.3%  +18.9%
Revenue Return per share (see note 7)  9.1p    8.5p    9.7p    10.8p   12.7p
* Source: Morningstar

**† Source: FTSE International Limited ("FTSE")©FTSE 2013

† See glossary on page 62

Contribution to Total Return

For the year ended 30 September 2013

                                                       Total                Contribution
                                                       Return               per share
Investment                                             £'000                (pence)*
Equities
Schroders                                              9,948                13.1
London Stock Exchange                                  7,648                10.1
Heineken                                               7,128                9.4
Daily Mail & General Trust (A Shares)                  6,836                9.0
Hargreaves Lansdown                                    6,194                8.1
Reed Elsevier                                          5,746                7.6
Fidessa                                                5,064                6.7
Diageo                                                 4,815                6.3
Burberry Group                                         4,405                5.8
Greene King                                            3,880                5.1
A.G Barr                                               3,838                5.1
Euromoney Institutional Investor                       3,711                4.9
Rathbone Brothers                                      2,696                3.5
Unilever                                               2,667                3.5
Marston's                                              2,607                3.4
Kraft Foods Group#                                     2,268                3.0
Pearson                                                2,156                2.8
Thomson Reuters                                        1,731                2.3
Young & Co's Brewery                                   1,712                2.3
Fuller Smith & Turner                                  1,391                1.8
Sage Group                                             966                  1.3
The Lindsell Train Investment Trust                    743                  1.0
Celtic                                                 462                  0.6
Dr Pepper Snapple                                      23                   0.0
Mondelez International#                                (529               ) (0.7         )
                                                       88,106               116.0
Preference Shares (franked income)
Celtic 6% (cumulative convertible preference)          15                   0.0
                                                       15                   0.0
Unquoted
Frostrow Capital LLP                                   318                  0.4
Total contribution after the deduction of withholding
taxation                                               88,439               116.4
Other operating expenses & finance charges             (3,232             ) (4.3         )
Total contribution for the year                        85,207               112.1

* Based on 75,974,098 shares, being the weighted average number of
shares in issue during the year ended 30 September 2013.

# On 2 October 2012, Kraft Foods Inc.changed its name to Mondelez
International and also completed the spin-off of its North American business
by issuing one new share in Kraft Foods Group for every three shares held in
Mondelez International.

Investment Manager's Review

"Locking into that observed propensity for wonderful businesses to
compound wealth for their owners is at the heart of our approach"

Dr Samuel Johnson is a great hero of mine and this report is
inspired by one of his many memorable flashes of wisdom. He wrote:

"Men more frequently require to be reminded than taught."

After 32 years as a professional investor and coming up to 13 of
those managing the investment affairs of your Company, I find myself
acknowledging the truth of Johnson's statement. Everyone who faces the
intellectual and emotional challenges of the capital markets needs to keep
learning - and for me of late it's been grappling with the implications of
cloud computing. But despite this I know that I benefit just as much from a
periodic revisiting of the longstanding principles that Lindsell Train uses to
run clients' equity capital. Reminding ourselves of those principles keeps us
on the straight and narrow.

So below I review the ideas that shape your Company's portfolio.
I'll introduce each one with a quote or comment that has proven influential to
the development of our thinking.

1. "If you want different investment performance you must invest
differently." Sir John Templeton

This is an unpalatable, but incontrovertible truth. If you want
different performance - for which I suppose read "better performance" - then
you have to do something that others don't. We hope shareholders are happy
with the "different" performance we have been able to deliver for them since
2001. But they mustn't ever lose sight of the risks that we've had to take to
achieve that return - we certainly don't. The portfolio has at times performed
very differently from its FTSE All-Share benchmark and will do so again, for
good or for ill, in the future.

Perhaps the most obvious difference about our approach is the
unusually long time horizon we work with, as measured by levels of portfolio
turnover. Last year turnover for the Company's portfolio was under 3%, which
means that the average annual turnover since our appointment is less than 6%.
We expect that the typical UK Equity OEIC will experience annual turnover of
closer to 100%. We think it's helpful - though not strictly scientific - to
say if a given portfolio turnover is 100% in a year that implies the
investment manager is taking on average a one year time horizon for each
holding. By contrast, at less than 6% pa, - as it is for Finsbury - the
implication is that each position will be held for 17 years or longer. And
consistent with that, note that many of our holdings are 13 years old and
counting. The one certain benefit of our relative inactivity - although there
are uncertain disadvantages too - is that total running costs for Finsbury
will tend to be lower, potentially much lower, than for other funds with
higher frequency of costly transactions.

2. "Stocks are simple. All you do is buy shares in a great business
for less than the business is intrinsically worth, with managers of the
highest integrity and ability. Then you own those shares forever." Warren
Buffett.

The explanation for our low turnover (and our choice of the type of
company we invest in) is found in the above advice from Buffett. Now, I always
feel a bit guilty tabling this quote as an account of what we do. How can such
a simple suggestion - even from the world's greatest investor - be the basis
of a credible and competitive investment philosophy? But it is what it is and
by and large it has worked - for Buffett obviously. In passing, let me assure
you that it's not so easy to identify, then stick with investments in even
great companies. The pressure to "do something", particularly when a great
company is going through an inevitable dull patch, is intense. The dull share
performance of Unilever in 2013 is an example. We fortify ourselves during
such episodes by remembering the comment below of another outstanding investor
- Peter Lynch - who, just like Buffett, is famous for running his winners.

3. "Other investors invent arbitrary rules for when to sell."

Lynch ran his winners, arguing that if a share has done well - at
least for reasons that are explicable and not wholly speculative - then there
is every reason to expect it to continue to do well (although always
remembering that nothing goes up in a straight line). He (and we) dispute the
conventional wisdom that says: "It's never wrong to take a profit". It can be
very wrong. If by doing so you permanently reduce your interest in a great
long-term investment. Share prices of the best companies double, then double
again and again over time. Locking into that observed propensity for wonderful
businesses to compound wealth for their owners is at the heart of our
approach. Running your winners. For instance, Diageo shares have doubled on
their book cost for Finsbury shareholders and much more than doubled against
the first price where we began to accumulate, back in 2003. We have no doubt
that Diageo shares will double again for you over time - as its cash flows
grow and as the pricing power of Diageo's brands protects you against monetary
inflation.

We continue to find inspiration in our stock selection from this
recommendation made by my former, much admired boss - Vivien Bazalgette.
Vivien once told me :

4. "If a company's products taste good buy the shares."

We are drawn to companies whose products or services are regarded
as irreplaceable by their customers. So, for instance, scientists and lawyers
around the world have little option but to subscribe to Reed Elsevier's
services - they can't do their work without them; the same is true for
investment bank customers of Fidessa's software. But, as Vivien recognised,
consumer loyalty to a tasty product is just as reliable and highly profitable.
Finsbury shareholders can take comfort knowing that their investment is being
supported by peoples' insatiable love of, for instance - Guinness, Johnnie
Walker, IRN-BRU, Rubicon, Fullers' London Pride, Old Speckled Hen, Dr Pepper,
Cadbury Dairy Milk, Oreos, Toblerone, Magnum ice cream, Hellman's, Knorr and
my own "that without which I cannot do": Marmite. These products will be
enjoyed 30 years from now and, in an uncertain world, that is enough to mean
the companies that own these brands are likely to be terrific investments over
time.

We run a concentrated portfolio for Finsbury, with rarely more than
25 holdings. In part the inspiration and example for this policy comes from
the man who gave me my break into the investment industry. This was Richard
Thornton, the "T" of GT Management, who hired me in 1981. Sadly Richard died
in 2013, mourned and respected by colleagues as a rainmaker of the first rank,
as well as a formidable stock market operator. I've never forgotten Richard's
account - to a group of then feckless graduate trainees - of his secret to
investment success:

5. "First, identify your great idea. Next, invest into it as much
as you can possibly afford. Third, double the size of your holding, so you can
no longer sleep at night. Finally - TELL EVERYONE ELSE ABOUT IT!"

Richard knew that great investment opportunities are rare and must
be backed with conviction, when you happen across one. He also knew how easy
it is to suffer "diworseification", from a lazy proliferation of "it seemed
like a good idea at the time" holdings cluttered across a portfolio. So we
stick to his advice and all the rest from our elders and betters.

Turning to the outlook for equity markets - we remain bullish for
both global and UK equities. It seems to us that the background conditions are
as encouraging for equity investing as at any time since, say, 1801, when the
London Stock Exchange was founded. For sure, three current macro factors are
unequivocally positive. First, technology change is creating new industries,
new companies and new opportunities for existing companies - at a faster pace
than ever. Next, the world's population not only continues to grow; in
addition more and more people on the planet are being lifted out of poverty.
Finally, the risks to the real value of the competing asset classes to equity
- namely government bonds and cash - look as scary as ever. To us that adds up
to a compelling case to commit long term capital to stocks.

We know it would be comforting for cautious shareholders to be
offered more certainty as to the likely shape and timing of those promised
equity returns. The fact is Anglo-Saxon equities have delivered 6-7% pa total
returns over and above inflation over decades, if not centuries. But they have
never done so with a metronomic, regular 6-7% pa pace. No, the truth of the
likely shape of equity returns is best expressed in this wonderful observation
from light versifier, Ogden Nash:

6. "Shake and shake the ketchup bottle, First none will come and
then a lot'll"

It is indeed hard, we might say impossible, to time the equity
markets. And yet it is imperative investors maintain adequate exposure to
equity. This is the reason that your portfolio remains fully invested, indeed
moderately geared.

Nick Train
Director
Lindsell Train Limited
Investment Manager

12 December 2013

Investments

as at 30 September 2013

                            Fair                                           Fair
                            Value                          Appreciation/   Value
                            2012       Purchases  Sales    (depreciation)  2013       % of
Investments                 £'000      £'000      £'000    £'000           £'000      Investments
Diageo                      30,346     2,544      -        3,954           36,844     9.0
Unilever                    24,918     9,979      -        1,566           36,463     8.9
Pearson                     20,019     11,933     -        1,136           33,088     8.1
Heineken *                  21,118     2,596      -        6,595           30,309     7.4
Schroders                   12,811     2,574      -        9,528           24,913     6.1
A.G. Barr                   19,408     -          -        3,403           22,811     5.6
Reed Elsevier               11,035     5,782      -        5,203           22,020     5.4
London Stock Exchange       9,340      4,933      -        7,268           21,541     5.3
Daily Mail` & General
Trust                       9,947      4,722      -        6,417           21,086     5.1
Fidessa                     11,386     5,443      -        4,254           21,083     5.1
Rathbone Brothers           12,008     3,935      -        2,180           18,123     4.4
Hargreaves Lansdown         9,554      1,292      -        5,698           16,544     4.0
Sage Group                  12,699     3,768      -        (224)           16,243     4.0
Greene King                 8,701      2,498      -        3,417           14,616     3.6
Burberry Group              5,501      2,507      -        4,199           12,207     3.0
Euromoney Institutional
Investor                    6,993      101        -        3,512           10,606     2.6
Mondelez International # ^  9,321      1,106†     -        (652)           9,775      2.4
Thomson Reuters ~           4,705      2,600      -        1,465           8,770      2.1
Dr Pepper Snapple ^         5,972      2,439      -        (179)           8,232      2.0
Young & Co's Brewery        5,109      75         -        1,565           6,749      1.6
Fuller Smith & Turner       5,040      -          -        1,295           6,335      1.5
Kraft Foods Group # ^       -          4,016†     -        2,154           6,170      1.5
The Lindsell Train
Investment Trust            2,770      -          -        680             3,450      0.8
Celtic                      559        284        -        462             1,305      0.3
Frostrow Capital LLP +      470        -          -        180             650        0.2
Celtic 6% (cumulative
convertible preference) **  54         -          -        10              64         -
Marston's                   7,131      -          (9,368)  2,237           -          -
                            266,915    75,127     (9,368)  77,323          409,997    100.0

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

# On 2 October 2012, Kraft Foods Inc. changed its name to Mondelez
International and also completed the spin-off of its North American business
by issuing one new share in Kraft Foods Group for every three shares held in
Mondelez International.

† Net of relevant book cost adjustments arising from the Kraft
Foods/Mondelez corporate action.

* Listed in the Netherlands.

^ Listed in the United States.

~ Listed in Canada.

+ Unquoted partnership interest.

** Non-equity - Preference Shares.

Monitoring Performance

The Board continually reviews overall performance. The Company's
net asset value per share is announced daily via a regulatory news service and
is available online.

At each Board meeting, the Board considers a number of performance
measures to assess the Company's success in achieving its investment
objective. The key performance indicators (KPI's) are as follows:

- Share price and net asset value per share total return
performance

- Revenue return per share

- Share price premium/(discount) to net asset value per share
- Benchmark and peer group performance

Both Lindsell Train and Frostrow Capital are responsible for
performing against inter alia the above KPIs within the terms of their
respective agreements.

Principal Risks and Uncertainties

The principal risks identified by the Board and the actions taken
to mitigate them are set out below. A detailed risk matrix is reviewed and
updated by the Company's Audit Committee, on behalf of the Board, twice
yearly. The principal risks and uncertainties faced by the Company relate to
the nature of its objectives and strategy as an investment company and the
markets in which it invests.

Principal Risks and Uncertainties               Mitigation
Investment Activity and Strategy                The Board regularly reviews the Company's investment mandate and its
                                                long-term investment strategy in relation to market and economic
An unsuccessful investment strategy,            conditions, and the operation of the Company's peers, thereby monitoring
including asset allocation or level of          whether the Company should continue in its present form. The Investment
gearing, may lead to underperformance           Manager provides an explanation of stock selection decisions and an
against the Company's benchmark index and       overall rationale for the make-up of the portfolio. The Investment
peer companies, and may result in the           Manager discusses current and potential investment holdings with the
Company's shares trading on a discount wider    Board on a regular basis in addition to new initiatives, which may
than the maximum level set by the Board.        enhance shareholder returns. The Board sets appropriate investment
                                                restrictions and guidelines which are monitored and reported on by the
                                                Company's Manager. Each month the Board receives a monthly review report
                                                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. Additional reports and presentations are
                                                regularly presented to investors by the Company's Manager, Investment
                                                Manager and also by Winterflood Securities, the Company's Corporate
                                                Stockbroker.

                                                The Board also 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,
                                                share issuance and share buy-backs, where appropriate. The Board has
                                                implemented a discount control mechanism intended to establish a target
                                                level of no more than a 5% discount of share price to the ex income net
                                                asset value per share. New shares are issued on at least a 0.7% premium
                                                to the higher of the prevailing cum or ex income net asset value per
                                                share at the time of issuance.

                                                A proportion of the Company's assets are invested in securities
                                                denominated in foreign currencies. As the Company's shares are
                                                denominated and traded in sterling, the return to shareholders will be
                                                affected by changes in the value of sterling relative to those foreign
                                                currencies. The Company does not at present hedge against currency
                                                exposure. The Board keeps this position under constant review.
Shareholder Relations and Corporate             The Board receives regular reports on shareholder activity and is kept
Governance                                      informed of shareholder sentiment. Regular contact is maintained with
                                                major shareholders. Details of the Company's compliance with corporate
Shareholder unrest could arise if there is      governance best practice, including information on relations with
poor adherence to best practice in corporate    shareholders, are set out in the Corporate Governance Statement.
governance and which could result in
reputational damage to the Company.
Operational                                     The Board reviews both the internal control and the disaster recovery
                                                procedures put in place by its principal service providers on a regular
Disruption to, or failure of, accounting,       basis.
dealing or payments systems or the
custodian's records could prevent accurate
reporting and monitoring of the Company's
financial position.

Financial                                       The Company's Investment Manager is responsible for undertaking reviews
                                                of the creditworthiness of the counterparties that it uses. The Board
The financial risks associated with the         regularly reviews the Investment Manager's approved list of
Company include market risk (including          counterparties.
counter-party risk), interest rate risk,
liquidity risk and credit risk.                 The Company's assets mainly comprise readily realisable liquid
                                                securities, which can be sold to meet funding requirements if necessary.

                                                Further information on financial instruments and risk, as required by
                                                FRS 29, can be found in note 16 to the financial statements.
Accounting, Legal and Regulatory                The Board relies on the services of its Manager and also external
                                                advisers to ensure compliance with applicable law and regulations
Failure to comply with appropriate law and      including the Companies Act, the Corporation Tax Act and the UKLA
regulations could expose the Company to         Listing Rules. The Board is aware of changes to the regulatory
serious financial loss and reputational         environment in the year ahead. In particular the Company continues to
damage.                                         prepare itself for implementation of the Alternative Investment Fund
                                                Managers Directive (AIFMD) and the Foreign Account Tax Compliance Act
                                                (FATCA).

Director, Social, Economic and Environmental Matters and Looking to
the Future

Directors

The Directors of the Company, who served during the year, are shown
below. Further information on the Directors can be found on page 16.

Anthony Townsend (Chairman)
John Allard
Neil Collins
David Hunt
Vanessa Renwick
Giles Warman (passed away on 24 May 2013)

Board Diversity

The Company is supportive of the recommendations of Lord Davies'
Report that the performance of corporate boards can be improved by encouraging
the appointment of the best people from a range of differing perspectives and
backgrounds. The Company recognises the benefits of diversity on the Board,
including gender, and takes this into account in its Board appointments. The
Company is committed to ensuring that any director search process actively
seeks persons with the right qualifications so that appointments can be made,
on the basis of merit, against objective criteria from a diverse selection of
candidates. To this end the Board will continue to dedicate time to consider
diversity during any director search process.

Social, Economic and Environmental Matters

The Directors, through the Company's Investment Manager, encourage
companies in which investments are made to adhere to best practice with regard
to Corporate Governance. In light of the nature of the Company's business
there are no relevant human rights issues and the Company does not have a
human rights policy.

Looking to the Future

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 and
in the Investment Manager's Review.

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 will be promoted
and details of planned 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 future
development and strategy.

Approval

The Strategic Report was approved by the Board of Directors on 12
December 2013 and signed on behalf of:

Anthony Townsend
Chairman

Directors' Review

Board of Directors

All members of the Board are non-executive. None of the Directors
has any other connection with the Investment Manager or is employed by any of
the companies in which the Company holds an investment.

Anthony Townsend (Chairman)

Anthony Townsend, (65), rejoined the Board on 1 February 2005 and
became Chairman on 30 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. Anthony is also Chairman of Baronsmead VCT 3 plc, British & American
Investment Trust PLC, F&C Global Smaller Companies PLC and Miton Worldwide
Growth Investment Trust PLC.

John Allard

John Allard, (67), has served on the Board since 11 October 2000. A
Director of M&G Investment Management for 16 years, 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, (66), has served on the Board since 30 January 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, Neil currently writes a column for the Financial
Times on Saturdays. Neil is also a Director of Templeton Emerging Markets
Investment Trust PLC.

David Hunt, FCA

David Hunt, (66), has been a Director since 6 July 2006. A
Chartered Accountant, he was formerly a Director in the Assurance and Business
Services division of Smith & Williamson Limited. Prior to that he was a
partner at both Binder Hamlyn and Andersen. David has over 30 years'
experience advising quoted companies. He is the Senior Independent Director.
David is also a member of the Audit and Risk Committee of the Church of
England Pensions Board.

Vanessa Renwick

Vanessa Renwick, (52), has served on the Board since 11 October
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.

All Directors are members of the Audit and Management Engagement Committees.

                                 In memoriam

                                 Giles Warman

                        26 January 1948 to 24 May 2013

It was with great regret that the Directors of Finsbury Growth &
Income Trust PLC had to announce earlier this year the sudden and totally
unexpected death of their colleague Giles Warman on 24 May 2013.

Giles first joined the Board in 1988 when the Company was called
Scottish Cities Investment Trust and capitalised at less than £30m. He was
almost immediately embroiled in the Company's takeover battle with Anglo
Scandinavian Investment Trust, which ended with the successful enlargement of
the Company and was the cornerstone for its future growth. He went on to play
a very significant part in helping it grow to its current market
capitalisation of over £400m.

Giles was hugely enthusiastic about the Company and was
instrumental in selecting Nick Train of Lindsell Train as the Company's
Investment Manager in 2000. His commitment to the Company was total and we
think in over 20 years he only ever missed one board meeting when he was
unwell. His knowledge of stock market practice and process was extremely
useful to the Company; he knew the companies in our portfolio well and he took
particular interest in the Company's discount control mechanism of which he
was proud. Importantly, Giles was always willing to challenge the status quo,
often to the considerable benefit of the Company.

His fellow Directors, Nick Train, our Investment Manager and the
senior management of Frostrow Capital all feel that they have not just lost a
much admired and respected colleague, but they have lost a very special man
who was a good friend to them all. He was a delightful colleague to work with
and we shall all miss him greatly.

December 2013

Giles was involved in helping young people to find their first job
in life, and his friends and family have set up the Giles Warman Foundation in
his memory. Further information can be found at
https://www.mydonate.bt.com/fundraisers/thegileswarmanfoundation

A tribute by Nick Train entitled "The World's Greatest Stockbroker"
can be found on the Company's website at www.finsburygt.com.

The Composition of the Board -

A Personal View from the Chairman

The impetus for this piece was a meeting that our Senior
Independent Director, David Hunt, and I had earlier this year with the fund
manager and head of corporate governance of one of our principal institutional
shareholders. I had quite fairly been taken to task by this shareholder for
not adequately explaining our apparent non-compliance when the board
recommended last year the re-election as directors of John Allard, Vanessa
Renwick and Giles Warman, each of whom had already served for more than nine
years. That impetus received a tragic stimulus from the sudden and wholly
unexpected death of Giles Warman on 24 May; I had already discussed with the
board the idea of writing this piece and I knew that Giles was keen that it
should be seen in print. Shareholders will find our tribute to Giles on page
17.

During the course of my 40 years plus career in the City I have had
the good fortune to work closely with a considerable number of plc chairmen.
Some of them were truly inspirational, some considerably less so, but each of
them brought in their own way some highly individual skills and techniques to
the directing of a company's business from the chair; I have attempted to
learn from all of them. One of the great lessons I have learnt is that the
co-operative working, or what some like to call the "chemistry", of a board is
a precious but delicate matter. Get it right and great things can be achieved
- get it wrong and at its worst the board can be completely dysfunctional; I
know, I have seen it!

When my colleagues did me the honour of asking me to take the chair
of Finsbury Growth & Income Trust in 2008 I had already served with them for
several years. I felt I knew them well but as a new and independent chairman I
was keen to adopt a fresh approach. They all had very relevant skills and
experience, but I did not think we were using them to maximum advantage.
Accordingly I had separate sessions with each of them during which I explained
that I wanted more direct participation from each of them. My mantra was and
is "silence is not an option"! Whenever we have an important decision to be
made I insist that each of them gives me their carefully considered opinion
and I have to give them all great credit for rising to that challenge. They
and our newer colleagues take this responsibility very seriously and I take
comfort from knowing that when we make a decision it incorporates all the
collective skills and experience grouped round the table. That doesn't mean we
always get it right or even that we have unanimity but we do have total
"buy-in" to whatever we eventually decide.

I take our annual board evaluation process very seriously and I do
it myself. Third party consultants and detailed score sheets have their
supporters but I find one on one in depth discussions with each of my
colleagues, using a fairly simple but standardised template, are far more
productive. My Directors concentrate on the areas about which they have strong
views and I come away from the process, which I record in our minutes in some
detail every year, feeling that I have a very accurate assessment of how well
our board is functioning and what and where we might do better. The three
long-serving Directors, now sadly two, who we put forward for re-election last
year, play a key role in this and I draw heavily on the relevant experience
and knowledge they bring to the table. I know from calibrated, first hand,
experience how valuable each one of our Directors is to our deliberations;
they participate in them fully and demonstrate amply the independent judgment
they bring to the process. The different walks of life from which they come
mean they often see issues from varying perspectives so I like to think that
we analyse boardroom matters from all angles that we can.

The words the various corporate governance edicts concentrate on is
"avoiding staleness" in a board of Directors; I contend that "refreshment" is
not necessarily the best, and in my view certainly not the only, way of
avoiding it. The AIC Code of Corporate Governance to which we adhere
specifically recognises the value that long knowledge of an investment
company's business can provide. As I explained to our institutional
shareholders, I do find it difficult to see what totally new members of the
board, with no prior knowledge or experience of the Company, could do that
would be superior to what we already have available to us.

A totally non-executive board such as ours, which is very common in
the investment trust sector, has a quite different dynamic to the typical
board of a commercial organisation that combines both executive and
non-executive directors. The balance needs careful stewardship which I regard
as my paramount responsibility and about which I care greatly. The lion's
share of the credit for our very successful results over recent years does of
course belong to our very talented Portfolio Manager Nick Train, but I think
the board's stewardship has also played a meaningful part, quite possibly to a
rather greater extent than most shareholders realise. It is our good fortune
that we have an Investment Manager who regards the Finsbury board as an asset
and not something to be worked round!

We will in due course hope to find another Director who can add to
our skill base, hard though it will be to find someone who can contribute all
that Giles Warman did, so "refreshment" will inevitably take place. I
certainly do not want to give shareholders the impression that I am implacably
opposed to it; I just want to be sure that we come out of the process stronger
than we went into it and that is easier to say than to do. I hope shareholders
will not consider it vain of me to claim it, but we do have a very strong and
competent board and I want to be sure that when it becomes time for me to hand
over the reins, I can do so with confidence that I leave with a board even
stronger than it was when I first took the chair. It will not therefore
surprise shareholders that we are again strongly recommending the re-election
of our long serving Directors Vanessa Renwick and John Allard to the board
this year; I consider them to be very valuable Directors and I firmly believe
it is in shareholders' best interests that we hang on to them! Following our
decision that all Directors should stand for re-election every year, I should
point out that we do of course recommend the re-election of our newer
Directors with equal enthusiasm; I would not wish them to think I value them
any less highly.

Anthony Townsend

12 December 2013

Report of the Directors

The Directors present their report and the financial statements for the year
ended 30 September 2013.

Business and Status of the Company

The Company is registered as a public limited company in Scotland
(Registered Number SCO13958) 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 Sections 1158 and 1159 of the Corporation
Tax Act 2010 ("CTA 2010"), for the year ended 30 September 2012. 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 continue to qualify for such
approval. In accordance with recent changes to CTA 2010, the Company has
obtained ongoing approval from HM Revenue & Customs for all accounting periods
from 1 October 2012.

The Company's shares are eligible for inclusion in the following: Investment
Dealing Accounts, ISAs, Junior ISAs and SIPPs.

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 listed
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 will normally comprise approximately 30 investments.
Unless driven by market movements, securities in FTSE 100 companies, and
comparable companies listed on an overseas stock exchange will normally
represent between 50% and 100% of the portfolio; securities in FTSE 350
companies and comparable companies listed on overseas stock exchanges will
normally represent at least 70% of the portfolio.

Further details concerning the Company's investment policy can be
found in the Strategic Report on page 6.

Fixed Asset Investments

The fair value of the Company's investments at 30 September 2013
was £409,997,000 (2012: £266,915,000) showing a gain since acquisition of
£173,510,000 (2012: gain £100,286,000). Taking these investments at this
valuation, the net assets attributable to each share at 30 September 2013
amounted to 476.1p (2012: 370.7p).

Share Capital

At the Annual General Meeting held on Wednesday, 30 January 2013,
authority to allot up to 7,393,622 shares on a non pre-emptive basis at prices
not less than the higher of the prevailing cum or ex income net asset value
per share at the time of issuance was granted.

All of the shares available under this allotment authority have
been issued and the Company held a General Meeting on Friday, 30 July 2013
where shareholder authority was obtained to issue a further 8,098,655 shares
on the same basis. A prospectus has also been published in order to obtain
admission to the Official List maintained by the UK Listing Authority of any
shares issued pursuant to the authority obtained.

During the year, 14,568,176 new shares were issued by the Company
at a minimum premium of 0.7% to the higher of the prevailing cum or ex income
net asset value per share at the time of issue. Since the year-end and to the
date of this report, a further 3,090,000 new shares have been issued under the
same issuance criteria. No shares were repurchased by the Company during the
year.

Capital Structure

As at 30 September 2013 there were 83,136,557 shares of 25p each in
issue (2012: 68,568,381), each share having one vote;

The giving of powers to issue or buy back the Company's shares
requires the relevant resolution to be passed by shareholders;

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.

Company Management

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;

- advising the Company in relation to trends, market movements and
other matters which may affect the investment policy of the Company; and

- marketing.

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

Under the terms of the Management, Secretarial Services and
Administrative 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, Company Secretarial and
Administration Agreement with Frostrow is 12 months and may be terminated by
either party.

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

- marketing and shareholder services;

- company secretarial and administrative services;

- 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 half year report and the interim management
statements; and

- attending to general tax affairs where necessary.

Performance Fee: In the year under review, no performance fee was
accrued or paid (30 September 2012: Nil).

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%. The performance fee is calculated annually and is based on 15% of the
outperformance per share over the absolute return hurdle. Lindsell Train
receives 85% and Frostrow receives 15% of the performance fee. During the year
the RPI rose by 3.15%, therefore the performance fee hurdle, as at 30
September 2013, was 602.18p per share, being 9.15% above the hurdle at 30
September 2012. The Company's adjusted market capitalisation per share as at
30 September 2013 was 488.81p. 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.

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 the
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.

Investment Manager, Manager Evaluation and Re-Appointment

The review of the performance of Lindsell Train as Investment
Manager and Frostrow Capital 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 best 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, the clarity and rigour of the
investment process, 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, company
secretarial, administrative and marketing team that the Manager allocates to
the management of the Company.

Political Donations

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

Directors

Directors' and Officers' Liability Insurance Cover

Directors' and Officers' liability insurance cover was maintained
by the Board during the year ended 30 September 2013. It is intended that this
policy will continue for the year ended 30 September 2014 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/her 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
offices of Frostrow Capital LLP during normal business hours and will be
available for inspection at the Annual General Meeting.

Directors' (and Other Senior Individuals) Interests

The beneficial interests in the Company of the Directors and also
of Nick Train, the individual with responsibility for managing the Company's
portfolio at Lindsell Train and Alastair Smith, Managing Partner at Frostrow
Capital, and their families, were as set out below:

                                                                                      Number of shares held
                                                                              30 September         30 September
                                                                              2013                 2012
Anthony Townsend                                                              179,468              127,968
John Allard                                                                   26,348               19,604
Neil Collins                                                                  23,786               21,986
David Hunt                                                                    23,500               23,500
Vanessa Renwick                                                               29,080               18,514
                                                                              282,182              211,572
Alastair Smith                                                                49,507               43,621
Nick Train                                                                    206,873              153,486
                                                                              256,380              197,107
Total                                                                         538,562              408,679

Mr Allard purchased a further 548 of the Company's shares between
30 September 2013 and the date of this report.

Mr Train purchased a further 8,450 of the Company's shares between
30 September 2013 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.

Substantial Share Interests

The Company was aware of the following substantial interests in the
voting rights of the Company:

                                                                        30 September 2013         30 November 2013
                                                                      Number of       % of     Number of       % of
Fund manager                    Registered holder                     shares          shares   shares          shares
Brewin Dolphin                  Various Nominee Accounts              10,277,155      12.36    10,467,696      12.27
Alliance Trust Savings          Alliance Trust Savings Nominees       8,768,170       10.55    9,198,106       10.79
Rathbones                       Various Nominee Accounts              5,254,365       6.32     5,288,275       6.20
Investec Wealth & Investment    Various Nominee Accounts              4,864,423       5.85     4,862,209       5.70
Hargreaves Lansdown             Various Nominee Accounts              4,758,957       5.72     5,285,082       6.20
Charles Stanley                 Rock Nominees                         3,474,349       4.18     3,545,740       4.16
Brewin Dolphin
(non-discretionary clients)     Various Nominee Accounts              3,457,038       4.16     3,451,978       4.00
Scottish Widows                 Various Nominee Accounts              2,851,644       3.43     2,840,681       3.33
JP Morgan Asset Management      Chase Nominees                        2,530,545       3.04     2,526,345       2.96

As at 30 September 2013 the Company had 83,136,557 shares in issue. As at 30
November 2013 the Company had 85,276,557 shares in issue.

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.

The Bribery Act 2010

The Board has adopted a zero tolerance approach to instances of
bribery and corruption. Accordingly it expressly prohibits any Director or
associated persons when acting on behalf of the Company, from accepting,
soliciting, paying, offering or promising to pay or authorise any payment,
public or private, in the United Kingdom or abroad to secure any improper
benefit for themselves or for the Company.

The Board applies the same standards to its service providers in their
activities for the Company.

A copy of the Company's anti-bribery and corruption policy can be
found on its website at www.finsburygt.com.

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.

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from its
operations, nor does it have responsibility for any other emissions producing
sources under Large and Medium sized Companies and Groups (Accounts and
Reports) Regulations 2008 (as amended), (including those within our underlying
investment portfolio).

By order of the Board

Frostrow Capital LLP
Company Secretary
12 December 2013

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 judgments 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 Conduct Authority.

The financial statements are published on the Company's website
(website address: www.finsburygt.com) and via the website of the Manager
(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 Auditor does not involve consideration of
the maintenance and integrity of these websites and, accordingly, the Auditor
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.

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.

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 Auditor is aware of such information.

Responsibility Statement under the Disclosure and Transparency
Rules

The Directors, whose details can be found on page 16, confirm to
the best of their knowledge that:

- the financial statements, within this 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 2013;

- the Chairman's Statement, Strategic Report and the Report of the
Directors include a fair review of the information required by 4.1.8R to
4.1.11R of the FCA's Disclosure and Transparency Rules; and

- the annual report and financial statements taken as a whole are
fair, balanced and understandable and provide the information necessary to
assess the Company's performance, business model and strategy.

On behalf of the Board

Anthony Townsend
Chairman

12 December 2013

Corporate Governance

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 the UK
Corporate Governance Code published in October 2012 (the "UK Governance 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 UK Governance Code), will
provide better information to shareholders. A copy of the UK Governance Code
can be found at www.frc.org.uk.

The Board considers that it has managed its affairs throughout the
year ended 30 September 2013 in compliance with the recommendations of the AIC
Code and the relevant provisions of the UK Governance Code, except as set out
below:

- the role of the chief executive;

- executive directors' remuneration;

- the need for an internal audit function;

- the Chairman of the Company continuing in the Chair at Board
meetings when Directors' remuneration matters are considered; and

- the need for a separate nomination committee.

The Board considers the first three provisions are not relevant to
the position of the Company, being an externally managed investment trust. In
particular, all of the Company's day-to-day management and administrative
functions are outsourced to third parties. As a result, the Company has no
executive Directors, employees or internal operations.

Board Independence, Composition and Tenure

The Board is responsible to shareholders for the overall management
of the Company's affairs and currently consists of five non-executive
Directors. The Chairman is responsible for the leadership of the Board and
ensuring its effectiveness on all aspects of its role. The Directors'
biographical details, set out on page 16, demonstrate a breadth of investment,
commercial and professional experience. David Hunt is the Senior Independent
Director, who can act as a sounding board for the Chairman and as an
intermediary for the other Directors when necessary.

The Company's Articles of Association provide that a Director
appointed during the year is required to retire and seek election by
shareholders at the next Annual General Meeting and that all Directors are
required to submit themselves for re-election at least once every three years.
While the Company is not a FTSE 350 company the Board has implemented the
provisions of the UK Governance Code whereby all Directors of the Company
stand for re-election on an annual basis.

All of the Directors are considered independent of the Investment
Manager and have no relationship or conflicts which are likely to affect their
independent judgment. The Board subscribes to the view expressed within the
AIC Code that long-serving Directors should not be prevented from forming part
of an independent majority and it does not consider that a Director's tenure
necessarily reduces his or her ability to act independently. The Board has
considered the position of all of the Directors as part of the evaluation
process, and believes that it would be in the Company's best interests to
propose them for re-election at the forthcoming Annual General Meeting for the
following reasons:

Mr Townsend, who has been Chairman of the Company since January
2008 and a Director since rejoining the Board in February 2005, brings a
wealth of experience to the Board through his long City career. He has been in
the investment trust industry for over 25 years and was Chairman of the
Association of Investment Companies from 2001-2003.

Mr Allard, who has been a Director since December 2000, has
extensive experience of the investment management industry and was previously
a fund manager with M & G for over 20 years, specialising in equity income
stocks. He has detailed knowledge of the markets in which the Company invests
and takes a keen interest in all aspects of the Company's portfolio.

Mr Collins joined the Board in January 2008. A financial
journalist, he was City Editor of the Daily Telegraph for 19 years and
currently writes a weekly column for the Financial Times. He has followed most
of the companies in the Company's portfolio for many years and is a passionate
advocate of shareholders' interests.

Mr Hunt, who has been a Director since 2006, is Senior Independent
Director and Chairman of the Audit Committee. He is a Chartered Accountant
with over thirty years' experience at partner level of advising quoted
companies with Binder Hamlyn, Andersen and Smith & Williamson; his
contribution to the Company's Audit Committee is particularly respected by his
colleagues.

Mrs Renwick, who joined the Board in 2000, has over 20 years'
experience at Laing & Cruickshank and UBS Warburg in corporate finance and
marketing. She has specialist knowledge of investment product distribution
throughout UK markets which is of great benefit to the Company.

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 Frostrow Capital LLP 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. The
Chairman also regularly reviews the training and development needs of each
Director. (Please see the Chairman's view on the composition of the Board on
pages 18 and 19).

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

The Board's Responsibilities

The Board meets regularly and five scheduled Board meetings were
held during the year to deal with the stewardship of the Company and other
matters. There is a formal schedule of matters specifically reserved for
decision by the Board; it 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. 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.

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

Since the year-end 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.

Conflicts of Interest

Directors have a duty to 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 each Board meeting, 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.

Committees of the Board

During the year the Board delegated certain responsibilities and
functions to committees. Due to the Company's size and to avoid the need to
establish separate committees, the Nominations and Remuneration function is
carried out by the full Board under the Chairmanship of the Chairman of the
Company. The Board considers it appropriate for the Chairman of the Company to
preside over Directors' remuneration matters due to his independence and also
his knowledge and experience of the investment trust industry. The Audit and
Management Engagement Committees continue in operation and copies of their
full Terms of Reference can be obtained from the Company Secretary, will be
available at the Annual General Meeting and can be found on the Company's
website at www.finsburygt.com and via 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 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.

Audit Committee

The Company's Audit Committee met on three occasions during the
year. It 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 Audit Committee also monitors
the performance, objectivity and independence of the external Auditor and
agrees both the terms of engagement letter and the fees payable for the audit
on behalf of the Board. In addition, the Committee also 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 Committee meets with the external
Auditor, without representatives of the Manager and the Investment Manager
being present, at least once a year. Further information on the work of the
Audit Committee during the year can be found in the Audit Committee Report.

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 October 2013, at which time
it was agreed that no amendments to the agreements were required. The
agreements are reviewed on a periodic basis as necessary.

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

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

                                                                     Management
Type and number of meetings held in the year              Audit      Engagement
to                                            Board       Committee  Committee
30 September 2013                             (5)         (3)        (1)
Anthony Townsend                              5           3          1
John Allard                                   5           3          1
Neil Collins                                  5           3          1
David Hunt                                    5           3          1
Vanessa Renwick                               5           3          1
Giles Warman (passed away on 24 May 2013)     3           2          -

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 30 January 2013.

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 risk management and internal financial control
during the year.

Relations with Shareholders

The Board, the Investment Manager and the Manager consider
maintaining good communications with shareholders and engaging with larger
shareholders through meetings and presentations a key priority. Shareholders
are being informed by the publication of annual and half year reports which
include financial statements. These reports are supplemented by interim
management statements, the daily release of the net asset value per share to
the London Stock Exchange and the publication of monthly factsheets. All this
information including interviews with the Investment Manager is available on
the Company's website at www.finsburygt.com.

The Board is also keen that the Annual General Meeting (AGM) be a
participative event for all shareholders. The Investment Manager makes a
presentation and shareholders are encouraged to attend. The Chairmen of the
Board and of the Committees attend the AGM and are available to respond to
queries and concerns from shareholders. Twenty working days notice of the AGM
has been given to shareholders and separate resolutions are proposed in
relation to each substantive issue. Shareholders may submit questions for the
AGM in advance of the meeting or make general enquiries of the Company via the
company secretary at the registered office of the Company. The Directors make
themselves available after the AGM to meet shareholders.

Where the vote is decided on a show of hands, the proxy votes
received are relayed to the meeting and subsequently published on the
Company's website. Proxy forms have a `vote withheld' option. The Notice of
Meeting sets out the business of the AGM together with the full text of any
special resolutions.

The Company has made arrangements for investors through the
Alliance Savings Scheme to receive all Company communications and have the
ability to direct the casting of their votes. The Company has also made
arrangements with its registrar for shareholders, who own their shares direct
rather than through a nominee or share scheme, to view their account over the
Internet at www.capitashareportal.com. Other services are also available via
this service.

The Board monitors the share register of the Company; it also
reviews correspondence from shareholders at each meeting and maintains regular
contact with major shareholders. Shareholders who wish to raise matters with a
Director may do so by writing to them at the registered office of the Company.

Proxy Voting and Stewardship

The Board has instructed the Investment Manager to take into
account the published corporate governance policy and the environmental
practices and policies of the companies in which they invest on behalf of the
Company. The Company has delegated responsibility for voting to the Investment
Manager.

The Board has considered the Investment Manager's Stewardship Code
and Proxy Voting Policy and the Investment Manager reports to the Board, on
the application of the Stewardship Code and Voting Policy. The Investment
Manager's Stewardship Code and Voting Policy can be found on the Investment
Manager's website in the corporate information section.

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.

By order of the Board

Frostrow Capital LLP
Company Secretary

12 December 2013

Audit Committee Report

for the year ended 30 September 2013

Responsibilities

As Chairman of the Audit Committee I can confirm that the
Committee's main responsibilities during the year were:

1. To review the Company's half-year and final financial statements
together with announcements and other filings relating to the financial
performance of the Company and issues of the Company's shares. In particular,
the Committee considered whether the financial statements are fair, balanced
and understandable, allowing shareholders to more easily assess the Company's
strategy, investment policy, business model and financial performance.

2. To review the risk management and internal control processes of
the Company and its key service providers. As part of this review the
Committee again reviewed the appropriateness of the Company's anti-bribery and
corruption policy.

3. To recommend the appointment of external auditors, and agreeing
the scope of their work and their remuneration, reviewing their independence
and the effectiveness of the audit process.

4. To consider any non-audit work to be carried out by the
auditors. Other than their review of the half-year report and tax compliance
services, the external auditor carried out no other non-audit work during the
year.

5. To consider the need for an internal audit function. Since the
Company delegates its day-to-day operations to third parties and has no
employees, the Committee has determined there is no requirement for such a
function.

The Committee's terms of reference are available for review on the
Company's website at www.finsburygt.com

Meetings and business

The Committee, which consists of all the Directors of the Company,
met twice during the year and also on 1 October 2013, this meeting having been
rescheduled from its original date of 25 September 2013.

The following matters were dealt with at these meetings:

December 2012:

- Review of the preliminary results

- Approval of the annual report and financial statements

- Review of risk management and compliance

May 2013:

- Review of the Committee's terms of reference

- Approval of the half-year report

- Review of risk management and compliance

- Review of the Manager's internal control framework

October 2013:

- Review of the auditor's plan for the 2013 audit

- Consider the implications of the 2012 UK Corporate Governance
Code and the required changes to the Company's annual report and financial
statements

Financial Statements

The financial statements, and the annual report as a whole, are the
responsibility of the Board. The Board looks to the Audit Committee to advise
them in relation to the financial statements both as regards their form and
content, issues which might arise and on any specific areas requiring
judgment.

With the introduction of the Strategic Report this year, we have
deliberately sought to make the narrative of the annual report clearer and
more concise. We hope we have achieved this objective and would welcome any
feedback. The Strategic Report should be regarded as a standalone section of
the annual report and so some duplication is inevitable!

The Committee considered certain significant issues in relation to
the financial statements. These issues, and how they were addressed, were:

Accounting Policies

The current accounting policies, as set out on pages 42 and 43,
have been applied consistently throughout the last two years. In light of no
unusual transactions during the year or other possible reasons, the Committee
has found no reason to change the policies.

The Committee recognises that the introduction of FRS 102 `The
Financial Reporting Standard applicable in the UK and Republic of Ireland' in
2015 may have implications for the Company's accounting policies and as a
result will shortly carry out a review.

Going Concern

The Committee is satisfied that it is appropriate for the Board to
prepare the financial statements on the going concern basis.

Recognition of Revenue from Investments

The Committee wished to receive assurance that all dividends
receivable, including special dividends, had been accounted for correctly.
They received the necessary confirmation.

Valuation of the Company's Partnership Interest in Frostrow Capital
LLP

The Committee reviewed the consistently applied valuation
methodology of the Company's partnership interest in Frostrow Capital LLP. The
proposed valuation, based upon a discounted multiple of revenue, was accepted.

External auditor

Meetings:

This year the nature and scope of the audit together with Grant
Thornton's audit plan were considered by the Committee on 1 October 2013
without the auditors being present.

As Chairman of the Committee, I met the audit partner, Julian
Bartlett, and his audit manager on 19 November 2013 to discuss the outcome of
the audit and the draft 2013 annual report and accounts. The Committee then
met Grant Thornton on 4 December 2013 to review the outcome of the audit and
to discuss the limited issues that arose.

Given the changes to narrative reporting which are incorporated in
the annual report for the first time, we have also discussed the presentation
of the annual report with the auditor and sought their perspective.

Independence and Effectiveness:

In order to fulfil the Committee's responsibility regarding the
independence of the auditor, we reviewed:

- the senior audit personnel in the audit plan for the year,

- the auditor's arrangements concerning any conflicts of interest,

- the extent of any non-audit services, and

- the statement by the auditor that they remain independent within
the meaning of the regulations and their professional standards.

In order to consider the effectiveness of the audit process, we
reviewed:

- the auditor's fulfilment of the agreed audit plan,

- the report arising from the audit itself,

- feedback from the Manager, and

- a report from the FRC's Audit Quality Review Team.

The Committee is satisfied with the auditor's independence and the
effectiveness of the audit process, together with the degree of diligence and
professional scepticism brought to bear.

Appointment:

The Committee has noted that Grant Thornton (taken together with
Robson Rhodes which merged into Grant Thornton in 2007) has been in place for
many years during which time no audit tender has taken place. The audit
partner has changed periodically in accordance with professional and
regulatory standards and to protect independence and objectivity. The current
audit partner Mr Julian Bartlett will shortly have completed his five-year
term (a period specified by auditing standards).

Whilst the Committee has recommended to the Board that Grant
Thornton be reappointed at the forthcoming Annual General Meeting, after
careful deliberation it has also concluded that, in the interests of good
governance, it is appropriate for a tender process to be carried out in
respect of the audit appointment in 2014.

David Hunt, FCA
Chairman of the Audit Committee

12 December 2013

Directors' Remuneration Report

for the year ended 30 September 2013

Statement from the Chairman

I am pleased to present the Directors' Remuneration Report to
shareholders. This report has been prepared in accordance with the
requirements of Section 421 of the Companies Act 2006 and the Enterprise and
Regulatory Reform Act 2013. An Ordinary Resolution for the approval of this
report will be put to shareholders at the Company's forthcoming Annual General
Meeting. The law requires the Company's auditors to audit certain of the
disclosures provided in this report. Where disclosures have been audited, they
are indicated as such.

Due to the Company's size and to avoid the need to establish a
separate Remuneration Committee, the Company's remuneration function is
carried out by the full Board under my Chairmanship. The Board considers the
framework for the remuneration of the Directors on an annual basis. It reviews
the ongoing appropriateness of the Company's remuneration policy and the
individual remuneration of Directors by reference to the activities of the
Company and comparison with other companies of a similar structure and size.
This is in-line with the AIC Code.

At the most recent review, held on 1 October 2013, it was agreed to
increase the fees paid to the Directors by 5% with effect from 1 October 2013
(the last increase having taken effect from with 1 October 2011) as follows:
Chairman £31,500, Chairman of the Audit Committee £24,150 and £21,000 for each
other Director. As at 30 September 2013, the Directors' fees were paid at the
following annual rates: Mr Anthony Townsend (Chairman) £30,000, Mr John Allard
£20,000, Mr Neil Collins £20,000, Mr David Hunt £23,000, Mrs Vanessa Renwick
£20,000. Mr Giles Warman passed away on 24 May 2013 and received £13,000 until
that date.

The bar chart below shows the comparative cost of Directors' fees
compared with the level of dividend distribution for 2012 and 2013.

As noted in the Strategic Report, all of the Directors are
non-executive and therefore there is no Chief Executive Officer. The Company
does not have any employees. There is therefore no CEO or employee information
to disclose.

At the Annual General Meeting held in January 2013 the results in
respect of the resolution to approve the Directors' remuneration were as
follows:

Percentage of votes cast                                          Number of votes
For                         Percentage of votes cast Against      withheld
97.83                       2.17                                  358,548

At that time a resolution to approve the Company's remuneration
policy was not required. However, an additional resolution to approve the
Company's remuneration policy will be considered by shareholders at the
forthcoming Annual General Meeting.

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.

Audited Information

Directors' Fees

The Directors, as at the date of this report, and who (save for Mr
Warman) all served throughout the year, received the fees listed in the table
overleaf. These exclude any employers' national insurance contributions, if
applicable. No other forms of remuneration were received by the Directors and
so fees represent the total remuneration of each Director.

Directors' Emoluments for the Year (audited)

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

                         Date of Appointment to the
                         Board                       Fees 2013      Fees 2012
Anthony Townsend
(Chairman)               1 February 2005             £30,000        £30,000
John Allard              11 October 2000             £20,000        £20,000
Neil Collins             30 January 2008             £20,000        £20,000
David Hunt*              6 July 2006                 £23,000        £23,000
Vanessa Renwick          11 October 2000             £20,000        £20,000
Giles Warman**           29 December 1988            £13,000        £20,000
                                                     £126,000       £133,000

* Chairman of the Audit Committee and Senior Independent Director

** Passed away on 24 May 2013

Directors' Interest in Ordinary Shares

The Directors interests in the share capital of the Company are
shown in the table below:

                                                        Number of shares held
                                               30 September 2013    30 September 2012
Anthony Townsend                                   179,468              127,968
John Allard                                        26,348               19,604
Neil Collins                                       23,786               21,986
David Hunt                                         23,500               23,500
Vanessa Renwick                                    29,080               18,514
Giles Warman                                       n/a                  78,540
Total                                              282,182              290,112

Mr Allard purchased a further 548 of the Company's shares between 30 September
2013 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.

Approval

This Directors' Remuneration Report was approved by the Board on 12 December
2013 and signed on its behalf by

Anthony Townsend
Chairman

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. This policy is reviewed annually and it is intended that it will
continue for the year ending 30 September 2014 and for subsequent financial
years.

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 £200,000 per annum, and they are not eligible for bonuses,
pension benefits, share options, long-term incentive schemes or other
benefits. The current and projected Directors' fees for 2013 and 2014 are
shown in the following table.

Directors' Fees Current and Projected

                                         Fees 2014                     Fees 2013
Anthony Townsend                         £31,500                       £30,000
John Allard                              £21,000                       £20,000
Neil Collins                             £21,000                       £20,000
David Hunt*                              £24,150                       £23,000
Vanessa Renwick                          £21,000                       £20,000

* Chairman of the Audit Committee and Senior Independent Director

Directors' Remuneration Year Ended 30 September 2013

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 to re-election
annually thereafter. The terms also provide that a Director may be removed
without notice and that compensation will not be due on leaving office.

No communications have been received from shareholders regarding
Directors' remuneration.

It is the Board's intention that the remuneration policy will be
considered by shareholders at the Annual General Meeting at least once every
three years.

An Ordinary Resolution for the approval of this policy will be
considered by shareholders at the forthcoming Annual General Meeting.

Approval

This Remuneration Policy Report was approved by the Board on 12
December 2013 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 (`the Company') for the year ended 30 September 2013 which
comprise the Income Statement, the Reconciliation of Movements in
Shareholders' Funds, the Balance Sheet, the Cash Flow 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 auditor

As explained more fully in the Statement of Directors'
Responsibilities 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 and express an opinion on 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 Financial Reporting Council's website at
www.frc.org.uk/apb/scope/private.cfm.

Auditor commentary

An overview of the scope of our audit

Our audit approach was based on a thorough understanding of the
Company's business and is risk-based. The day-to-day management of the
Company's investment portfolio, the custody of its investments and the
maintenance of the Company's accounting records is outsourced to third-party
service providers. Accordingly, our audit work is focused on obtaining an
understanding of, and evaluating, internal controls at the Company and
relevant third party service providers. This included a review of reports on
the description, design and operating effectiveness of internal controls at
relevant third party service providers. We undertook substantive testing on
significant transactions, balances and disclosures, the extent of which was
based on various factors such as our overall assessment of the control
environment, the design effectiveness of controls over individual systems and
the management of specific risks.

Our application of materiality

We apply the concept of materiality in planning and performing our
audit, in evaluating the effect of any identified misstatements and in forming
our opinion. For the purpose of determining whether the financial statements
are free from material misstatement we define materiality as the magnitude of
a misstatement or an omission from the financial statements or related
disclosures that would make it probable that the judgment of a reasonable
person, relying on the information would have been changed or influenced by
the misstatement or omission. We also determine a level of performance
materiality which we use to determine the extent of testing needed to reduce
to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for the financial
statements as a whole.

We established materiality for the financial statements as a whole
to be £2.0 million which is 0.5% of the Company's net assets. Due to the
significance of the Company's net assets compared to the amounts in the
revenue column of the Income Statement, we calculated a separate materiality
for the revenue column of the Income Statement of £0.5 million.

We have determined the threshold at which we communicate
misstatements to the Audit Committee to be £0.1 million. In addition, we
communicate misstatements below that threshold that, in our view, warrant
reporting on qualitative grounds.

Our assessment of risk

Without modifying our opinion, we highlight the following matters
that are, in our judgment, likely to be most important to users' understanding
of our audit. Our audit procedures relating to these matters were designed in
the context of our audit of the financial statements as a whole, and not to
express an opinion on individual transactions, balances or disclosures.

Investments

The Company's business is investing in financial assets with a view
to profit from the total return in the form of revenue and capital gains.
Accordingly, the investment portfolio is a significant, material item in the
financial statements. The recognition and measurement of the investment
portfolio is therefore a risk that requires particular audit attention.

Our audit work included, but was not restricted to, understanding
management's process to recognise and measure investments including ownership
of those investments, obtaining a confirmation of investments held at the year
end directly from the independent custodian, testing the reconciliation of the
custodian records to the records maintained by the Company's administrator,
testing a selection of investment additions and disposals shown in the
Company's records to supporting documentation and agreeing the valuation of
quoted investments to an independent source of market prices.

The Company's accounting policy on the valuation of quoted
investments is included in note 1, and its disclosures about investments held
at the year end are included in note 9.

Investment income

Investment income is the Company's major source of revenue and a
significant, material item in the Income Statement. Accordingly, the
recognition of investment income is a risk that requires particular audit
attention.

Our audit work included, but was not restricted to, assessing
whether the Company's accounting policy for revenue recognition is in
accordance with the United Kingdom Generally Accepted Accounting Practice,
obtaining an understanding of management's process to recognise revenue in
accordance with the stated accounting policy, testing whether a sample of
income transactions has been recognised in accordance with the policy, and for
a sample of investments held in the period confirming that income that should
have been received has been received and recorded, and assessing whether any
of the dividends should have been treated as capital receipts.

The Company's accounting policy on the recognition of income is
shown in note 1 and the components of that revenue are included in note 2.

Management over-ride of internal controls

Under ISAs (UK & Ireland), for all of our audits we are required to
consider the risk of management override of financial controls. Due to the
unpredictable nature of this risk we are required to assess it as a
significant risk requiring special audit consideration.

Our audit work included, but was not restricted to, specific
procedures responding to this risk that are required by ISA 240 (UK & Ireland)
`The Auditor's Responsibilities Relating to Fraud in an Audit of Financial
Statements'. This included tests of journal entries, the evaluation of
judgments and assumptions in any management estimates and tests of any
significant transactions outside the normal course of business. These tests
were also performed in the context of the functions provided by, and the
controls designed and implemented at, the relevant third party service
providers.

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 2013 and of its net 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.

Other reporting responsibilities

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;

- the information given in the Strategic Report and Report of the
Directors for the financial year for which the financial statements are
prepared is consistent with the financial statements; and

- the information given in the Corporate Governance Statement with
respect to internal controls and risk management systems in relation to
financial reporting processes 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 ISAs (UK and Ireland), we are required to report to you if,
in our opinion, information in the annual report is:

- materially inconsistent with the information in the audited
financial statements; or

- apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Company acquired in the course of
performing our audit; or

- otherwise misleading.

In particular, we are required to consider whether we have
identified any inconsistencies between our knowledge acquired during the audit
and the directors' statement that they consider the annual report is fair,
balanced and understandable, and whether the annual report appropriately
discloses those matters that were communicated to the audit committee which we
consider should have been disclosed.

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.

Under the Listing Rules we are required to review:

- the Directors' statement 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 UK Corporate Governance
Code specified for our review; and

- certain elements of the report to shareholders by the Board on
Directors' remuneration.

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

12 December 2013

Income Statement

for the year ended 30 September 2013

                                                                                                              2012
                                                    Revenue    Capital    2013          Revenue    Capital    Total
                                         Notes      £'000      £'000      Total £'000   £'000      £'000      £'000
Gains on investments designated at
fair value through profit or loss        9          -          77,323     77,323        -          37,685     37,685
Exchange difference                                 -          (36      ) (36         ) -          (39      ) (39      )
Income                                   2          11,300     -          11,300        8,083      -          8,083
Investment management and
management fees                          3          (735     ) (1,493   ) (2,228      ) (479     ) (974     ) (1,453   )
Other expenses                           4          (603     ) -          (603        ) (543     ) (5       ) (548     )
Return on ordinary activities before
finance charges and taxation                        9,962      75,794     85,756        7,061      36,667     43,728
Finance charges                          5          (121     ) (244     ) (365        ) (131     ) (267     ) (398     )
Return on ordinary activities before
taxation                                            9,841      75,550     85,391        6,930      36,400     43,330
Taxation on ordinary activities          6          (184     ) -          (184        ) (138     ) -          (138     )
Return on ordinary activities after
taxation                                            9,657      75,550     85,207        6,792      36,400     43,192
Return per share                         7          12.7p      99.4p      112.1p        10.8p      58.0p      68.8p

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 form part of these financial statements.

Reconciliation of Movements in Shareholders' Funds

for the year ended 30 September 2013

                                                  Share      Capital
                                       Share      premium    redemption   Special    Capital    Revenue
                                       capital    account    reserve      reserve    reserve    reserve
                                       £'000      £'000      £'000        £'000      £'000      £'000      Total £'000
At 30 September 2012                   17,142     86,458     3,453        12,424     128,685    6,047      254,209
Net return from ordinary activities    -          -          -            -          75,550     9,657      85,207
Second interim dividend (5.2p per
share) for the year ended 30
September 2012                         -          -          -            -          -          (3,579   ) (3,579      )
First interim dividend (4.8p per
share) for the year ended 30
September 2013                         -          -          -            -          -          (3,647   ) (3,647      )
Issue of shares                        3,642      60,121     -            -          -          -          63,763
Cost of share issuance                 -          (114     ) -            -          -          -          (114        )
Year ended 30 September 2013           20,784     146,465    3,453        12,424     204,235    8,478      395,839
At 30 September 2011                   14,309     50,253     3,453        12,424     92,285     4,894      177,618
Net return from ordinary activities    -          -          -            -          36,400     6,792      43,192
Second interim dividend (4.8p per
share) for the year ended 30
September 2011                         -          -          -            -          -          (2,740   ) (2,740      )
First interim dividend (4.6p per
share) for the year ended 30
September 2012                         -          -          -            -          -          (2,899   ) (2,899      )
Issue of shares                        2,833      36,321     -            -          -          -          39,154
Cost of share issuance                 -          (116     ) -            -          -          -          (116        )
Year ended 30 September 2012           17,142     86,458     3,453        12,424     128,685    6,047      254,209

The notes form part of these financial statements.

Balance Sheet

as at 30 September 2013

                                                                                       2013            2012
                                                                       Notes           £'000           £'000
Fixed assets
Investments designated at fair value through profit or loss            9               409,997         266,915
Current assets
Debtors                                                                10              1,348           2,343
Cash at bank                                                                           5,943           2,224
                                                                                       7,291           4,567
Current liabilities
Creditors                                                                              (1,249        ) (2,023        )
Bank loan                                                                              (20,200       ) (15,250       )
                                                                       11              (21,449       ) (17,273       )
Net current liabilities                                                                (14,158       ) (12,706       )
Total net assets                                                                       395,839         254,209
Capital and reserves
Share capital                                                          12              20,784          17,142
Share premium account                                                                  146,465         86,458
Capital redemption reserve                                                             3,453           3,453
Special reserve                                                                        12,424          12,424
Capital reserve                                                        13              204,235         128,685
Revenue reserve                                                                        8,478           6,047
Equity shareholders' funds                                                             395,839         254,209
Net asset value per share                                              14              476.1p          370.7p

The financial statements were approved by the Board of Directors on 12
December 2013, and were signed on its behalf by:

Anthony Townsend
Chairman

The notes form part of these financial statements.

Company Registration Number 13958 (Registered in Scotland)

Cash Flow Statement

for the year ended 30 September 2013

                                                                                            2013          2012
                                                                              Notes         £'000         £'000
Net cash inflow from operating activities                                     17            8,262         5,956
Net cash outflow from servicing of finance                                                  (359        ) (310        )
Financial investment
Purchase of investments                                                                     (76,004     ) (42,666     )
Sale of investments                                                                         9,368         2,865
Net cash outflow from financial investment                                                  (66,636     ) (39,801     )
Equity dividends paid                                                                       (7,226      ) (5,639      )
Net cash outflow before financing                                                           (65,959     ) (39,794     )
Financing
Shares issued                                                                               64,878        38,007
Drawdown of loans                                                                           4,950         1,700
Cost of share issuance                                                                      (114        ) (116        )
Net cash inflow from financing                                                              69,714        39,591
Increase/(decrease) in cash                                                   18            3,755         (203        )
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash resulting from cashflows                                        3,755         (203        )
Increase in debt                                                                            (4,950      ) (1,700      )
Exchange movements                                                                          (36         ) (39         )
Movement in net debt                                                                        (1,231      ) (1,942      )
Net debt at 1 October 2012                                                                  (13,026     ) (11,084     )
Net debt at 30 September 2013                                                 18            (14,257     ) (13,026     )

The notes 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 and dated January 2009.

The financial statements have been prepared on a going concern
basis. The Directors believe this is appropriate as the Company's net assets
consist almost entirely of liquid securities which are quoted on recognised
stock exchanges.

(b) Investments

As the Company'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 Company 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 such as discounted multiple of revenue, 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 in note 9, as recommended by the SORP.

(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.

(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 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) Nature and purpose of reserves

Special reserve

The Special reserve arose following Court approval in July 2002 to
transfer £13.16 million from the Share Premium account. This reserve is
distributable and has historically been used to fund any share buy-backs by
the Company.

Capital redemption reserve

This reserve arose when Ordinary Shares were redeemed by the
Company and subsequently cancelled, at which point the an amount equal to the
par value of the Ordinary Share capital was transferred from the Ordinary
Share capital to the capital redemption reserve.

Capital reserve

This reserve reflects any

- gains or losses on the disposal of investments;

- exchange differences of a capital nature;

- the increases and decreases in the fair value of investments which have been
recognised in the capital column of the Income Statement; and

- expenses which are capital in nature as disclosed in note I(e).

Revenue reserve

This reserve reflects all income and expenditure which are recognised in the
revenue column of the income statement.

(h) Cash at bank

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

2. Income

                                                                                          2013           2012
                                                                                          £'000          £'000
Income from investments
Franked investment income
- dividends                                                                               9,739          6,901
Unfranked investment income
- limited liability partnership profit-share                                              138            149
- overseas dividends                                                                      1,423          1,033
Total income                                                                              11,300         8,083

3. Investment Management and Management Fees

                                            Revenue     Capital     Total       Revenue     Capital     Total
                                            2013        2013        2013        2012        2012        2012
                                            £'000       £'000       £'000       £'000       £'000       £'000
Investment management fee                   505         1,026       1,531       322         656         978
Management fee                              192         389         581         131         265         396
VAT on management fees                      38          78          116         26          53          79
Total fees                                  735         1,493       2,228       479         974         1,453

4. Other Expenses

                                                       Revenue    Capital    Total      Revenue    Capital    Total
                                                       2013       2013       2013       2012       2012       2012
                                                       £'000      £'000      £'000      £'000      £'000      £'000
Directors' fees                                        126        -          126        133        -          133
Fees payable to the Company's auditor -statutory
annual audit                                           24         -          24         23         -          23
Fees payable to the Company's auditor -audit related
assurance services                                     4          -          4          4          -          4
Fees payable to the Company's auditor -taxation
compliance services                                    3          -          3          3          -          3
Printing                                               57         -          57         40         -          40
Bank and custody fees                                  47         -          47         31         -          31
Marketing costs                                        41         -          41         65         -          65
Other expenses                                         301        -          301        244        5          249
Total expenses                                         603        -          603        543        5          548

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.

5. Finance Charges

                                                   Revenue    Capital    Total      Revenue    Capital    Total
                                                   2013       2013       2013       2012       2012       2012
                                                   £'000      £'000      £'000      £'000      £'000      £'000
On bank loans wholly repayable within five years   114        231        345        113        229        342
Arrangement fees                                   -          -          -          8          17         25
Loan facility expenses                             7          13         20         10         21         31
                                                   121        244        365        131        267        398
6. Taxation on Ordinary Activities

                                                       Revenue    Capital    Total      Revenue    Capital    Total
                                                       2013       2013       2013       2012       2012       2012
                                                       £'000      £'000      £'000      £'000      £'000      £'000

(a) Analysis of charge for the year Irrecoverable
overseas tax                                           184        -          184        138        -          138
                                                       Revenue    Capital    Total      Revenue    Capital    Total
                                                       2013       2013       2013       2012       2012       2012
                                                       £'000      £'000      £'000      £'000      £'000      £'000

(b) Factors affecting tax charge for year Return on
ordinary activities before taxation                    9,841      75,550     85,391     6,930      36,400     43,330
Return on ordinary activities multiplied by
corporation tax of 23.5%^ (2012: 25%)                  2,313      17,754     20,067     1,732      9,100      10,832
Effects of:
Overseas tax                                           229        -          229        159        -          159
Overseas tax recoverable                               (45      ) -          (45      ) (21      ) -          (21      )
Franked investment income not subject to corporation
tax                                                    (2,288   ) -          (2,288   ) (1,725   ) -          (1,725   )
Overseas dividends not taxable                         (334     ) -          (334     ) (258     ) -          (258     )
Excess expenses unutilised                             309        -          309        251        -          251
Amounts charged to capital                             -          409        409        -          311        311
Expenses not deductible for tax purposes               -          8          8          -          10         10
Capital return not subject to tax*                     -          (18,171  ) (18,171  ) -          (9,421   ) (9,421   )
Current tax charge for the year (note 6(a))            184        -          184        138        -          138

^ Under the Finance Act 2013, the rate of corporation tax was
lowered to 23% from 24%. An average rate of 23.5% was applicable for the year
ended 30 September 2013.

* 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.

At 30 September 2013, the Company has not recognised a deferred tax
asset of £8,976,000 (2012: £8,869,000) arising principally as a result of
excess management and loan expenses. 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.

7. Return per Share

                                                   Revenue    Capital    Total      Revenue    Capital    Total
                                                   2013       2013       2013       2012       2012       2012
Return per Share                                   12.7p      99.4p      112.1p     10.8p      58.0p      68.8p

The total return per share is based on the total return
attributable to equity shareholders of £85,207,000 (2012: £43,192,000), and on
75,974,098 (2012: 62,788,996) 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 £9,657,000 (2011: £6,792,000).

Capital return per share is based on the net capital profit for the
year of £75,550,000 (2011: £36,400,000).

8. Dividends

                                          Ex-Div           Register          Payment         2013          2012
                                          Date             Date              Date            £'000         £'000
2013:
First interim dividend of 4.8p per
share (2012: 4.6p)                        3 April 2013     5 April 2013      2 May 2013      3,647         2,899
Second interim dividend of 5.7p per                                          8 November
share (2012: 5.2p)                        9 October 2013   11 October 2013   2013            4,748         3,579

The second interim dividend of 5.7p per share (2012: 5.2p) 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 dividends payable in respect of the financial year which
forms the basis of Section 1158 of the Corporation Tax Act 2010 are set out
below:

                                                                     2013
                                                                     £'000
Revenue available for distribution by way of dividend for the year   9,657
2013: First interim dividend of 4.8p per share paid on 2 May 2013    (3,647             )
2013: Second interim dividend of 5.7p per share paid on 8 November
2013                                                                 (4,748             )
Net addition to revenue reserves                                     1,262

9. Investments

Analysis of portfolio movements

                                                                                        2013            2012
                                                                                        £'000           £'000
Opening book cost                                                                       166,629         127,437
Opening investment holding gains                                                        100,286         60,810
Valuation at 30 September 2012                                                          266,915         188,247
Movements in the year:
Purchases at cost                                                                       75,127          43,848
Sales
- proceeds                                                                              (9,368        ) (2,865        )
- Gain/(loss) on sales                                                                  4,099           (1,791        )
Net movement in investment holding gains                                                73,224          39,476
Valuation at 30 September 2013                                                          409,997         266,915
Closing book cost                                                                       236,487         166,629
Investment holding gains at 30 September 2012                                           173,510         100,286
Valuation at 30 September 2013                                                          409,997         266,915

Investment holding gains

                                                                                        2013            2012
                                                                                        £'000           £'000
Gains/(losses) based on historical cost                                                 4,099           (1,791        )
Amounts recognised as investment holding (gains)/losses in previous year                (1,862        ) 2,583
Gain based on carrying values at previous year's balance sheet date                     2,237           792
Net movement in investment holding gains in the year                                    75,086          36,893
Gains on investments during the year                                                    77,323          37,685

Transaction costs on the acquisition and sale of investments
totaled £448,000 and £19,000 respectively (2012: £211,000 and £nil) and are
included within the gains/(losses) on investments within the Income Statement.

10. Debtors

                                                                                        2013            2012
                                                                                        £'000           £'000
Prepayments and accrued income                                                          864             744
Amount due from broker in respect of shares issued by the Company                       484             1,599
                                                                                        1,348           2,343
11. Creditors

Amounts falling due within one year

                                                                                                        2012
                                                                                        2013
                                                                                        £'000           £'000
Bank loan with Scotiabank Europe PLC*                                                   20,200          15,250
Amounts due to brokers                                                                  811             1,688
Other creditors and accruals                                                            438             335
                                                                                        21,449          17,273
* Further details on the loan facility can be found in note 16.

12. Share Capital

                                                                                        2013            2012
                                                                                        £'000           £'000
Allotted, issued and fully paid:
83,136,557 (2012: 68,568,381) shares of 25p each                                        20,784          17,142

During the year 14,568,176 new shares were issued for consideration
of £63,763,000 being an average price of 437.7p per share. At the year-end
there was a debtor of £484,000 (2012: £1,598,000) in relation to shares issued
but not settled until after the year-end. At the year-end the Company held no
shares in treasury (2012: Nil).

13. Capital Reserve

                                                                                             Capital
                                                                                             Reserve
                                                                                             Investment
                                                                              Capital        Holding
                                                                              Reserves       Gains
                                                                              Realised       Unrealised    Total
                                                                              £'000          £'000         £'000
At 1 October 2012                                                             28,399         100,286       128,685
Transfer on disposal of investments                                           1,862          (1,862      ) -
Net gains on investments                                                      2,237          75,086        77,323
Expenses charged to capital                                                   (1,737       ) -             (1,737      )
Foreign currency exchange difference                                          (36          ) -             (36         )
At 30 September 2013                                                          30,725         173,510       204,235

Under the terms of the Company's Articles of Association, sums
within "Capital Reserves" are available for distribution.

14. Net Asset Value per Share

The net asset value per share is based on net assets of
£395,839,000 (2012: £254,209,000) and on 83,136,557 (2012: 68,568,381)
(excluding treasury shares) shares in issue at the year end. As at 30
September 2013 the Company held no shares in treasury (2012: Nil).

15. Related Parties

Details of the relationship between the Company and Lindsell Train
Limited are disclosed in the Report of the Directors. During the year ended 30
September 2013, Lindsell Train Limited received £1,531,000 (2012: £978,000) in
respect of Investment Management fees, of which £150,000 (2012: £95,000) 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 (2012: £1,000,000) and a fair value
of £3,450,000 (2012: £2,770,000) as at 30 September 2013. The Lindsell Train
Investment Trust plc is managed by the Company's Investment Manager.

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. 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 mainly of equity
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 Strategic
Report.

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.

At 30 September 2013, the fair value of the Company's assets
exposed to market price risk was £409,997,000 (2012: £266,915,000) (see page
11). If the fair value of the Company's investments at the balance sheet date
increased or decreased by 20%, while all other variables remained constant,
the capital return and net assets attributable to shareholders for the year
ended 30 September 2013 would have increased or decreased by £81,999,000 or
98.6p per share (2012: £53,383,000 or 77.9p 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

The Company's main exposure to interest rate risk during the year
ended 30 September 2013 was through its £25,000,000 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 £20,200,000 (2012: £15,250,000) at an interest
rate of 1.87% (LIBOR plus 1.35%).

If the above level of borrowing was maintained for a year a 1%
increase/decrease in LIBOR would decrease/increase the revenue return by
£67,000, would decrease/increase the capital return by £135,000, and would
decrease/increase the net assets by £202,000 (2012: decrease/increase the
revenue return by £50,000, decrease/increase the capital return by £102,000
and decrease/increase the net assets by £152,000).

The weighted average interest rate, during the year, on borrowings
under the above mentioned revolving credit facility provided by Scotiabank
Europe PLC was 1.89% (2012: 2.34%).

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

                                                                                    2013
                                                                                    Within          2012
                                                                                    one year        Within
                                                                                    £'000           one year £'000
Exposure to floating rates:
Cash at bank                                                                        5,943           2,224
Creditors: amount falling due within one year
- borrowings under the loan facility                                                20,200          15,250
Exposure to fixed rates:
Investments designated at fair value through profit or loss#                        64              54

# Comprises holdings Celtic 6% cumulative convertible preference (2012: Celtic
6% cumulative preference).

Currency risk

The financial statements are presented in sterling, which is the
functional currency and presentational currency of the Company. At 30
September 2013, the Company's investments, with the exception of five, were
priced in sterling. The five exceptions, Thomson Reuters, listed in Canada,
Heineken, listed in the Netherlands, and Dr Pepper Snapple, Kraft Foods Group
and Mondelez International, all listed in the United States, represent 15.4%
of the portfolio.

The Investment Manager and Manager monitor the Company's exposure
to foreign currencies on a continuous basis and regularly report to the Board.
The Company does not hedge against foreign currency movements, but the
Investment Manager takes account of the risk when making investment decisions.

Income denominated in foreign currencies is converted into sterling
on receipt. The Company does not use financial instruments to mitigate the
currency exposure in the period between its receipt and the time that the
income is included in the financial statements.

At 30 September 2013 the Company held £24,177,000 (2012:
£15,293,000) of investments denominated in U.S. dollars and £8,770,000 (2012:
£4,705,000) in Canadian dollars and £30,309,000 (2012: £21,118,000) Euros.

The following table details the sensitivity of the Company's
capital or revenue return after taxation for the year to a 5% increase and
decrease in sterling against foreign currency (2012: 5% increase and
decrease).

If sterling had weakened against the foreign currencies, as stated
above, this would have had the following effect:

                                                     2013       2013        2013       2012       2012        2012
                                                     US$        Canadian$   Euro       US         Canadian$   Euro
                                                     £'000      £'000       £'000      £'000      £'000       £'000
Increase in revenue return                           2          -           -          5          -           1
Increase in capital return                           537        121         703        805        237         1,099
Total return after tax/increase in shareholders'
funds                                                539        121         703        810        237         1,100

If sterling had strengthened against the foreign currency as stated
overleaf, this would have had the following effect:

                                                        2013      2013        2013      2012      2012        2012
                                                        US$       Canadian$   Euro      US        Canadian$   Euro
                                                        £'000     £'000       £'000     £'000     £'000       £'000
Decrease in revenue return                              (2      ) -           -         (4      ) -           (1      )
Decrease in capital return                              (514    ) (117      ) (671    ) (728    ) (214      ) (995    )
Total return after tax/decrease in shareholders' funds  (516    ) (117      ) (671    ) (732    ) (214      ) (996    )

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 Aa3 (Moodys) and A+ (S&P).

Scotiabank Europe PLC, the provider of the Company's loan facility,
has 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.

As at 30 September 2013, the exposure to credit risk was £7,355,000
(2012: £4,621,000), comprising:

                                                                                            2013          2012
                                                                                            £'000         £'000
Fixed assets:
Non-equity investments (preference shares)                                                  64            54
Current assets:
Other receivables (amounts due from brokers, dividends and interest receivable)             1,348         2,343
Cash at bank                                                                                5,943         2,224
Total exposure to credit risk                                                               7,355         4,621

Liquidity Risk

Liquidity Risk 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.

Financial assets at fair value through profit or loss     Level 1        Level 2        Level 3        Total
at 30 September 2013                                      £'000          £'000          £'000          £'000
Equity investments                                        409,283        -              650            409,933
Preference share investments                              64             -              -              64
                                                          409,347        -              650            409,997
Financial assets at fair value through profit or loss     Level 1        Level 2        Level 3        Total
at 30 September 2012                                      £'000          £'000          £'000          £'000
Equity investments                                        266,391        -              470            266,861
Preference share investments                              54             -              -              54
                                                          266,445        -              470            266,915

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

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

                                                                                       2013             2012
                                                                                       £'000            £'000
Opening fair value                                                                     470              470
Total gains or losses included in gains on investments in the Income Statement - on
assets held at the end of the year                                                     180              -
Closing fair value                                                                     650              470

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. Details of the
Company's net debt, representing 3.6% (2012: 5.1%) of net assets, can be found
on the Balance Sheet and in note 11.

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 limits in normal market conditions,
between 5% and 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.

There were no breaches by the Company, during the year, of the
financial covenants put in place by Scotiabank Europe PLC in respect of the
committed revolving credit facility provided to the Company.

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

17. Reconciliation of Net Return Before Finance Charges and

Taxation to Net Cash Inflow from Operating Activities

                                                                                    2013              2012
                                                                                    £'000             £'000
Total return before finance charges and taxation                                    85,756            43,728
Less: capital return before finance charges and taxation                            (75,794        )  (36,667        )
Net revenue before finance charges and taxation                                     9,962             7,061
Increase in accrued income and prepayments                                          (129           )  (30            )
Increase in creditors                                                               96                63
Taxation - irrecoverable overseas tax paid                                          (174           )  (159           )
Investment management and management fees charged to capital                        (1,493         )  (974           )
Other expenses charged to capital                                                   -                 (5             )
Net cash inflow from operating activities                                           8,262             5,956

18. Analysis of Changes in Net Debt

                                                     At                                           At
                                                     1 October                     Exchange       30 September
                                                     2012           Cashflow       Movement       2013
                                                     £'000          £'000          £'000          £'000
Cash at bank                                         2,224          3,755          (36         )  5,943
Debt falling due within 1 year                       (15,250     )  (4,950      )  -              (20,200           )
Net debt                                             (13,026     )  (1,195      )  (36         )  (14,257           )

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 Partnership                         Shares held       £'000          interest
A.G. Barr                                                        4,340,802         22,811         3.7
Frostrow Capital LLP (unquoted)                                  -                 650            10.0
The Lindsell Train Investment Trust*                             10,000            3,450          5.0
Young & Co's Brewery                                             1,014,865         6,749          3.5

* 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 Barber-Surgeons' Hall, Monkwell
Square, Wood Street, London EC2Y 5BL on Wednesday, 29 January 2014 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 2013.

2. To re-elect Anthony Townsend as a Director of the Company.

3. To re-elect John Allard as a Director of the Company.

4. To re-elect Neil Collins as a Director of the Company.

5. To re-elect David Hunt as a Director of the Company.

6. To re-elect Vanessa Renwick as a Director of the Company.

7. To receive and approve the Directors' Remuneration Report for
the year ended 30 September 2013.

8. To receive and approve the Remuneration Policy.

9. To reappoint Grant Thornton UK LLP as auditor 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 11, 12, 13 and 14 are proposed as special resolutions:

Authority to Allot Shares

10. 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 £2,155,663 being 10% of
the issued share capital at 12 December 2013 and representing 8,622,655 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 2015 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

11. THAT in substitution of all existing powers (but in addition to
any power conferred on them by resolution 12 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 10 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

(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 £2,155,663, being 10% of the issued share
capital of the Company as at 12 December 2013 and representing 8,622,655
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 12 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 higher of the
Company's cum or ex income 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.

Treasury Shares

12. THAT in substitution of all existing powers (but in addition to
any power conferred on them by resolution 11 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 £2,155,663, being 10% of the issued share
capital of the Company as at 12 December 2013 and representing 8,622,655
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 11 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.

Authority to Repurchase Shares

13. 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") (either for retention as treasury shares for future
reissue, resale, transfer or cancellation) provided that:

(i) the maximum aggregate number of Shares authorised to be
purchased is 12,925,360 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 2015 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

14. 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 9WJ
12 December 2013

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 Asset Services, PXS, 34 Beckenham Road,
Beckenham, Kent BR3 4TU no later than 12 noon on Monday, 27 January 2014.

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 Monday, 27 January
2014 (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 12 December 2013 (being the last business day prior to the
publication of this notice) the Company's issued share capital consists of
86,226,557 ordinary shares, carrying one vote each. Therefore, the total
voting rights in the Company as at 12 December 2013 are 86,226,557.

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.

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 Asset Services 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 Asset
Services, 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.

Explanatory Notes to the Resolutions

Resolution 1 - To receive the Annual Report and Accounts

The Annual Report and Accounts for the year ended 30 September 2013
will be presented to the AGM. These accounts accompanied this Notice of
Meeting and shareholders will be given an opportunity at the meeting to ask
questions.

Resolutions 2 to 6 - Re-election of Directors

Resolutions 2 to 6 deal with the re-election of each Director.

Resolutions 7 to 8 - Remuneration Policy and Remuneration Report

It is now mandatory for all listed companies to put both their
Report on Directors' Remuneration and their Remuneration Policy to a
shareholder vote. Resolution 9 - Re-appointment of auditors

Resolution 9 relates to the re-appointment of Grant Thornton UK LLP
as the Company's independent auditor to hold office until the next AGM of the
Company and also authorises the Directors to set their remuneration.

Resolutions 10 to 12

Ordinary Resolution No. 10 in the Notice of Annual General Meeting
will renew the authority to allot the unissued share capital up to an
aggregate nominal amount of £2,155,663 (equivalent to 8,622,655 shares, or 10%
of the Company's existing issued share capital on 12 December 2013, being the
nearest practicable date prior to the signing of this Report). 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. 11 will, if passed, give the Directors power to allot for cash
equity securities up to 10% of the Company's existing share capital on 12
December 2013 (reduced by any treasury shares sold by the Company pursuant to
Resolution No. 12, 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. 10. 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 pre-emptive basis pursuant to Resolution No.
11, Special Resolution No. 12, 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. Any re-sale of treasury shares would only
take place at a narrower discount to the ex-income 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 ex-income net asset value per
share, and this is reflected in the text of Resolution No. 12. 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 12
December 2013 (reduced by any equity securities allotted for cash on a non-pro
rata basis pursuant to Resolution No. 12, 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.
10, 11 and 12 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.

Resolution 13

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. 13 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 12 December 2013, being the nearest practicable date prior
to the signing of this Report, (amounting to 12,925,360 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.

Resolution 14

Special Resolution No. 14 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 totaling 282,730 shares.

Glossary of Terms

AIFM

The Alternative Investment Fund Manager Directive (the "Directive")
is a European Union Directive that entered into force on 22 July 2013. The
Directive regulates EU fund managers that manage alternative investment funds
(this includes investment trusts). There is a one-year transition period
within which alternative funds must comply with the provisions of the
Directive.

Discount or Premium

A description of the difference between the share price and 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 the result is a premium. If
the share price is lower than the net asset value per share, the shares are
trading at a discount.

FTSE Disclaimer

"FTSE©" is a trade mark of the London Stock Exchange Group
companies and is used by FTSE International Limited under licence. All rights
in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors.
Neither FTSE nor its licensors accept any liability for any errors or
omissions in the FTSE indices and/or FTSE ratings or underlying data. No
further distributions of FTSE Data is permitted without FTSE's express written
consent.

Gearing

Gearing is calculated by dividing total assets (as defined below)
less cash or cash equivalents by shareholders' funds expressed as a
percentage.

Net Asset Value (NAV)

The value of the Company's assets, principally investments made in
other companies and cash being held, less any liabilities. The NAV is also
described as `shareholders' funds' per share. 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 an investment over a specified
period assuming dividends paid to shareholders were reinvested at net asset
value per share at the time the shares were quoted ex-dividend. This is a way
of measuring investment management performance of investment trusts which is
not affected by movements in discounts or premiums.

Ongoing Charges

Ongoing charges are calculated by taking the Company's annualised
expenses, excluding performance fees and exceptional items, and dividing by
the average net asset value of the Company over the year.

The publishing of ongoing charges information rather than a total
expense ratio (TER) is advocated by the Association of Investment Companies
who believe that using a single methodology to calculate ongoing charges will
help reduce inconsistencies and allow investors and advisers to compare
investment companies more easily with open-ended funds.

Share Price Total Return

The change in capital value of a company's shares over a given
period, plus dividends received, expressed as a percentage of the opening
value.

Total Assets

Total Assets less current liabilities (before deducting prior
charges). Prior charges includes all loans for 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. Such shares are not capable of being voted and carry no
rights to dividends.

12 December 2013

ANNOUNCEMENT ENDS