Interim Management Statement

6 August 2014

BACIT Limited ("BACIT")

Portfolio Update

During the second quarter of 2014 BACIT's net asset value ("NAV") increased
by0.30%. The FTSE All-Share (Total Return in £) rose by 2.24% during that time,
and the HFRI Fund of Funds Strategic Index fell by 0.66%(in £) and rose by 1.84%
(in US$). Since launch BACIT's total return has been 17.12%, the FTSE All-Share
has risen by 23.35% and the HFRI Fund of Funds Strategic Index has risen by
8.87% (in £), and 15.40% (in US$).

BACIT started the quarter with 90.1% of NAV invested and 96.8% committed, and
ended it with 92.6% invested across 31 underlying funds and 22 managers. As we
noted in our May letter, we also made our first investment into one of the
ICR's early stage drug prospects during the first quarter of the year, taking
the number of holdings to 32.

During the second quarter, we increased our holdings in Maga Smaller Companies
Fundand WyeTree European Recovery Fund, and thus the portfolio's exposure to
Europe. We also met additional capital calls from the Fund's second private
equity investment Permira V, which has now drawn down 27% of our capital
commitment, following the announcement of six acquisitions since late October
2013.

At 30 June 2014 the list of investments was as follows:

                                              % OF NAV

Polar Capital Japan Alpha Fund                  7.1%
Majedie Asset UK Equity                         5.8%
BlackRock UK Special Situations Fund            5.2%
Maga Smaller Companies Fund                     4.9%
Polygon European Equity Opportunity Fund        4.8%
Tower Fund                                      4.8%
SW Mitchell European Fund USD                   4.7%
Salt Rock Master Fund Ltd                       4.4%
Sinfonietta Fund                                4.3%
WyeTree European Recovery Fund EUR              3.7%
The SFP Value Realization Fund                  3.4%
Portland Hill Overseas Fund                     3.3%
CG Portfolio Fund plc Dollar Fund               3.2%
Chenavari Multi Strategy Credit Fund            3.1%
Polygon Mining Fund                             2.9%
Russian Prosperity Fund                         2.8%
HC Master Fund Limited                          2.6%
Cumulus Energy                                  2.4%
Infracapital Partners II                        2.4%
Chenavari EU Regulatory Capital Strategy        2.2%
AIMS Diversified Fund                           2.1%
Polygon Convertible Opportunity Fund            1.8%
WyeTree RRETRO                                  1.8%
Prosperity Russia Domestic Fund                 1.7%
PCM Europe                                      1.5%
Alphagen Relative Value Agricultural Fund       1.4%
Chenavari EU Real Estate Strategy               1.1%
Permira V                                       1.0%
BlackRock Natural Resources Growth & Income
Fund                                            0.9%
Optimal Australia Fund                          0.7%
SW Mitchell Emerging European Fund              0.4%
CRT Pioneer GP Limited                          0.2%

BACIT continues to leave all investments made into US$ denominated funds
unhedged, but to hedge out all exposure to the Euro share classes. Sterling
appreciated by 2.36% against the dollar during the second quarter, prolonging
the headwind to NAV progress that has been a feature of the last 16 months. As
regular readers will know, this has detracted substantially from performance
of the underlying managers, ten of which are up over 35% since BACIT's
inception, and two are up over 100%.
  

                               % of NAV

      UK £                       35.4%
      US $ (unhedged)            52.3%
      € (hedged back into £)     12.3%




This sterling strength has reversed since the quarter end, as the
marketsrecognisethat while theUK has shown solid growth for five quarters it is
quite late cycle in shape, with house price inflation, car sales at 10 year
highs, and a deteriorating trade deficit. The effects of PPI claims are now
waning, and with rates currently too low, households will soon be
re-mortgaging at higher rates.The Scottish Referendum is now being discounted
by markets which appear to be sanguine about a `no' vote, but the general
election is just 9 months away.

                              % of Invested
                                 Capital

     Europe ex-UK                 34.4%
     Asia-Pacific                 16.7%
     Europe & US                  16.3%
     UK                           11.8%
     Emerging                     10.5%
     US                            9.3%
     Global                        1.0%

These effects, combined with profit-taking driven by over-valuation, the
relative attractions of defensive large cap sectors which are less
domestically exposed and so less vulnerable to the UK interest rate cycle, and
a wave of new issues (85 in H1 vs. 94 in the whole of 2013), made for a weak
quarter for UK smaller companies.

With some similar issues in Europe, the second quarter prove challenging for
long only and hedged equity managers in the UK and Europe, as they moved to
more defensive positioning in terms of names in their portfolios and, for the
hedge managers, flatter books. Nonetheless, the UK and EU remain 10% and 20%
respectively below their long-term mean valuations, and managers remain
confident that there is plenty of opportunity.

Q2 also saw a tsunami of new issuance (market estimates of €150bn) across
Europe which dampened performance. The convergence of rates in Europe
continued during the quarter, helping all of the credit managers in the
portfolio to solid or even strong contributions. With greatly improved cost
structures across the continent, even a small increase in demand would have a
significant effect: equities are still on relatively low valuations and
company visits suggest that the EU recovery is solid, even if credit demand is
chronically weak. The key reason that we have continued to increase the
portfolio's exposure to the region is the expansionary package of QE policies
for 2015, which should provide the area with a liquidity insurance policy if
QE withdrawals hurt elsewhere.

Japan and Russia recovered ground lost during the previous quarter, with
BACIT's managers all outperforming their benchmarks - one ofour Japan managers
is up 170% since BACIT's launch. Japan remains a core part of the portfolio,
though five straight months of declines in industrial production perhaps
explain in part why Prime Minister Abe continues on his frenetic world tour,
visiting 47 countries in the last 18m asking them to "Buy Abenomics". The
inflation critics have been silenced for now with 13 months of inflation, now
running at well over 3%, and more importantly the structural reforms the
country needs are starting to take shape.

In addition to the expected corporate tax cuts (from 35% to 25%), visa and
immigration changes, and possibly another round of easing, the Cabinet made
major announcements on Corporate Governance and a Stewardship Code which are
likely to have profound long term effects on Japanese equities and their
valuations. For example, directors will need to explain publically why
companies have cross-shareholdings, and many companies are expected to unwind
them increasing liquidity. Finally, the dividend payout ratio is rising
rapidly now, swinging the pendulum further towards shareholders.

The second quarter saw markets reopen for Russian debt capital raisings, and
the markets and the currency recovered the ground they lost in Q1on the back
of the Ukraine crisis. However since the quarter end, anticipation of and the
implementation of sanctions against Russia in retaliation for the horrific
events surrounding flight MH17 in mid-July have caused both markets and
currency to retrace some of that progress. Though financial centre reforms
continue - as of 1 July Russian equities are now clearable, and there was a
secondary public offering of the Russian Exchange - and Russia signed a
game-changing energy deal with China (worth $400bn over 30 years, and under
which Russia will export 20% of its gas and 25% of its oil from ~6%), these
have unsurprisingly garnered little attention.

                              % of NAV

    Equities                   56.6%
    Credit                     11.9%
    Macro                       8.8%
    Commodity                   8.6%
    Fixed Income                3.2%
    Infrastructure              2.4%
    Private Equity              1.2%
    Cash                        7.4%


The portfolio also benefited from positive contributions from the managers in
the macro, commodity andresources, fixed income, infrastructure and private
equity spaces during the quarter. Finally, our South African manager also made
a strong contribution, and we continue to look to add to BACIT'semerging
market(EM) holdings over time, subject to finding the right managers, and to
the consequences of the withdrawal of liquidity by the Fed. Though one would
not know it to look at the calm in EM today, normalisation of QE is likely to
have ramifications for other areas of the world.

We have therefore continued to pull the net exposure of the portfolio back
through allocations to managers with a lower beta than the equity markets, and
many of the managers themselves have cut their books, or rotated them into
more defensive positioning. This is with the aim that the portfolio should
weather any coming rise in volatility and correlations and resultant falls in
asset prices better than the markets.

In this vein, we are incredibly pleased to announce that on 1 August we have
added a new fund manager to the portfolio, Zebedee Growth Fund ("ZGF"), taking
the portfolio to 95% invested. ZGF is a long-short European equity manager who
has a propensity to vary his gross and net exposures according to opportunity,
and a history of preserving capital in difficult markets.

BACIT's success is entirely dependent on the philanthropy of the talented
managers with whom we invest, and we warmly welcome those who are now engaging
with BACIT.

We are extremely grateful to our existing managers for delivering another
quarter of absolute returns, and look forward to updating you in the autumn.

BACIT Management Team, 6 August 2014

About BACIT

BACIT Limited ("BACIT") is a closed-ended investment company, registered and
incorporated in Guernsey (registration number 55514). BACIT was admitted to
trading on the London Stock Exchange's main market for listed securities on 26
October 2012. Shares in BACIT trade under the ticker BACT.L.

BACIT's investment objective is to deliver superior returns from investments
in leading long-only and alternative investment funds across multiple asset
classes. BACIT only invests where the relevant investment manager provides
investment capacity on a ``gross return'' basis, meaning that BACIT and its
subsidiaries (the "Group") do not bear the impact of management or performance
fees on its investments.

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