Final Results

Invesco Asia Trust plc Annual Financial Report Announcement for the Financial Year Ended 30 April 2008 FINANCIAL INFORMATION AND PERFORMANCE STATISTICS The benchmark index of the Company is the MSCI All Countries Asia Pacific ex Japan Index (adjusted for sterling) Performance Statistics At At 30 April 30 April % 2008 2007 Change Net assets (£'000) 118,862 116,146 +2.3 Actual gearing 102 107 Asset gearing 101 106 Net asset value (`NAV') per ordinary share:   - per Balance Sheet 126.7p 109.6p +15.6   - after charging proposed final dividend 125.2p 108.3p +15.6 (capital NAV) Net asset value (total return)(i) +16.3 Mid-market price per ordinary share 112.8p 97.8p +15.3 Discount per ordinary share on capital NAV 9.9% 9.7% Benchmark Index(i)   - capital return 247.9 214.3 +15.7   - total return 455.6 382.5 +19.1 (i) Source: Thomson Financial Datastream. Revenue Gross income (£'000) 3,247 2,816 +15.3 Net revenue available for ordinary shares 1,762 1,434 +22.9 (£'000) Dividend per share 1.5p 1.3p +15.4 Total expense ratio 1.3% 1.2% Return per Ordinary Share Revenue return 1.8p 1.3p Capital return 16.2p 8.3p Total return 18.0p 9.6p Chairman's Statement Performance and Prospects The Company's performance for the 12 months to 30 April 2008 reflects a more volatile period for Asia, and for equities. With Asia having outperformed for much of 2007, a rise in risk-aversion levels towards the end of the period caused a retreat in a number of Asian stockmarkets. Dominating the headlines has been the credit crisis, which resulted from the collapse of the US subprime-mortgage market. Despite Asian banks having limited exposure to these subprime loans, Asia suffered in line with global equities, with markets which had outperformed strongly being the worst affected. This has led to a more muted performance for the Company for the year as a whole, but, encouragingly, still strongly in positive territory. Over the period, the net asset value per ordinary share increased from 108.3p to 125.2p, a rise of 15.6% on a capital basis, compared to the benchmark index, the MSCI All Countries Asia Pacific ex Japan Index adjusted for sterling, which rose by 15.7%. However, on a total return basis the NAV rose 16.3% compared to a 19.1% increase in the benchmark index. The Company's share price rose from 97.8p to 112.8p, while the discount to net asset value at which the shares trade was relatively unchanged at 9.9% (up from 9.7%). Dividend The Board is pleased to recommend a final dividend of 1.5p per ordinary share (2007: 1.3p). The dividend, which is subject to the approval of shareholders at the Annual General Meeting, will be payable on 11 August 2008 to shareholders on the Register on 11 July 2008. Share Buy Backs During the year the Company repurchased 12,125,000 shares for cancellation. This represented 11.4% of the Company's capital at the start of the year. The shares were purchased at an average discount of 10.1% to net asset value, so enhancing NAV per share by 1.23%. Gearing The Company has a £15 million uncommitted revolving loan facility, of which £ 2.5 million was drawn down at the year end, gearing the portfolio by 2% (2007: 7%). The Board and the Manager review gearing regularly and closely. Duncan Neil (known as Peter) Robertson It was with great regret and sadness that the Board announced in March that Peter Robertson passed away on 21 March 2008. Peter had served as a member of the Board since 1995. He had wide experience of investment management in Asian markets and his wise counsel and guidance were valued highly by both his fellow Directors and the Company's investment managers. He will be much missed by colleagues and friends alike. Special Business at the Annual General Meeting As in previous years, the Board seeks shareholders' approval to renew the authorities to issue new ordinary shares, if necessary, while disapplying pre-emption rights, and to buy back the Company's ordinary shares in the market within the limits set out in Special Resolutions 8 and 9. This year, we are proposing that shares so acquired by the Company can also be held in treasury with a view to their resale if appropriate, or later cancellation. Shares that are purchased but not cancelled, are known as Treasury Shares. The holding of Treasury Shares is restricted to 10% of each class of a Company's share capital. Shares held in treasury will only be reissued on terms that are in the best interest of shareholders. With Special Resolution 10, subdivided into sections 10.1 and 10.2, your Board seeks shareholders' authority to adopt revised Articles of Association for the Company in two stages. The changes follow the introduction of certain provisions of the Companies Act 2006 as well as the Transparency Directive on 20 January 2007. The Companies Act changes came into force during 2007 and early 2008 and the remainder will come into force in October 2008. Ordinary Resolution 11 is proposed pursuant to changes in the UK Listing Rules. Listed investment companies are now subject to additional requirements in respect of their published investment policies. To comply with the new standards, the Directors are proposing a restated investment policy to be formally adopted, subject to shareholders' approval at the AGM. The restated policy is set out in the Report of the Directors. This will not give rise to changes in the way the Company's assets are managed. Outlook With contagion from the credit markets having reduced liquidity and confidence globally, equities have struggled since the turn of the year. At the same time, inflationary pressures have increased sharply, with inflation rates significantly surpassing both central bank targets and economists' expectations. The combination of these two events has caused investors to reduce exposure to the markets across the board, with the relative safety of government bonds benefiting from the flight to quality. However, recently we have seen investors developing a more sanguine view, with a number of Asian stockmarkets making strong gains. This may offer hope for a more stable environment, although there are worries that global economic headwinds may negatively impact markets in the second half of the year. Asian economic and corporate fundamentals remain positive, and there are many reasons for optimism. Economic data has remained relatively resilient, with exports holding up well as growth in the rest of the world has helped to offset weakness in the US. Consensus estimates of corporate earnings growth for the region have been revised downwards recently, with the market now trading on a prospective earnings multiple of 13.5 times (on those consensus forecasts). As this is in the upper-end of historic ranges further gains may be limited. This suggests that risk and reward are now more balanced in Asia, with individual stock selection becoming increasingly important in adding value to Company performance. I look forward to seeing shareholders at the Annual General Meeting of the Company on 6 August 2008, when there will be opportunities for them to meet members of the Board and the Investment Manager. David Hinde Chairman 19 June 2008 Manager's Report Market & Economic Review Asian equities ended higher than at the start of the 12 months under review, despite a sharp increase in volatility. Hopes that the worst of the credit crisis may be over encouraged investors to be more positive on equities towards the end of the period. Overall, Asian markets outperformed versus developed and other emerging markets. The MSCI All Countries Asia Pacific ex Japan Index (Total Return) ended 19.1% higher, while the MSCI World Index actually recorded a fall of 1.0% in sterling terms. The period was remarkable for the sharp increase in risk and volatility. Having peaked in October 2007, Asia followed world stockmarkets lower on increased concerns that the US economy might be about to enter a recession. Sharp falls in share prices across the globe in January caused a number of Asian markets to suffer quite substantial declines, with markets which had outperformed in 2007 being the worst affected. However, since their lows in February, Asian stockmarkets have staged a rebound as sentiment towards equities has improved. Hong Kong and Chinese bourses recently enjoyed a strong turnaround in fortunes after a string of government announcements highlighted Beijing's eagerness to prop up stockmarkets. Chinese domestic stockmarkets had fallen to their lowest levels in nearly nine months in March, on a mixture of concerns over weaker profits, the effects of a US economic slowdown on the rest of the world and an oversupply of new companies coming to the market. However, Hong Kong and Chinese markets bounced back strongly, as Chinese policymakers announced new measures to stabilise the local `A' share market. The government placed restrictions on the sale of shares by imposing controls on investors in listed companies in an effort to avert fears of a flood of new paper hitting the market. The government also reversed its decision from last year by lowering the stamp duty on stock transactions back to 0.1% from 0.3%, a move initiated in May 2007 to arrest the rapid ascent of local stockmarkets. This provided an immediate lift to the markets, with the Shanghai Composite index recording its biggest one-day gain in more than six years after the announcement. This helped the index to end the period 7.0% higher. Hong Kong's Hang Seng index performed even better, closing 28.4% higher (all figures are £ sterling returns) over the 12-month period. India also enjoyed strong gains towards the end of the period, regaining some of the ground it had lost since the turn of the year. Software companies in particular benefited from a fall in the Indian rupee rate against the US dollar. Taiwan benefited strongly from Ma Ying-jeou's presidential election victory. His Kuomintang Party, which favours closer ties with China, won a landslide victory in the presidential elections with 58% of the votes. Other Asian markets also enjoyed strong gains for the year: Thailand's main stockmarket index was up by 34.2%, while Indonesia (+14.6%) and South Korea (+10.9%) also ended the period with solid gains. By contrast, both the Philippines and Malaysian stockmarkets suffered. The Philippines struggled as inflationary pressures weighed heavily on investors' minds, while Malaysian shares were hindered after the country's ruling coalition suffered a big election setback, leaving investors uncertain about government's policies, including important plans for infrastructure spending and fuel-subsidy cuts. Despite the recent volatility, Asian macroeconomic fundamentals continued to demonstrate a reasonably solid footing. For China and India, the two largest economies in the region, data remained relatively strong, although snowstorms in China had a temporary negative impact on growth. Despite this, China's economic growth remained solidly in double-digit territory, growing 10.6% year-on-year (y-o-y) in the first quarter of 2008, while India maintained its robust growth at 8.4% in the fourth quarter. Elsewhere, initial first quarter data for 2008 has provided a surprisingly positive picture, with Hong Kong, Thailand and Indonesia all reporting better-than-expected economic growth figures. Hong Kong's economy actually accelerated further in the first quarter, as exports to China and Europe spurred its economy to expand by 7.1% y-o-y, after gaining 6.9% in the previous quarter. However, there are indications that growth may slow across the region in the second half of the year as the global economic slowdown takes more of a hold. Indeed, the World Bank has cut its forecast for Chinese economic growth to 9.6% from 11.6% last year, while India's government has also stated that growth in its economy looks set to moderate. Palaniappan Chidambaram, the Indian finance minister, forecast growth to slow to 8.7% in the year ending 31 March 2008, down from 9.6% in fiscal year 2007. Encouragingly, however, these figures remain on the high side, with Asian growth remaining far superior to that in developed markets. Inflationary pressures continued to be a concern for the region, with upward inflation surprises being a recurrent theme this year. Chinese inflation hit an 11-year high recently, while India's inflation rate has also continued upwards. Wholesale inflation in India hit 7.3% by mid-April, while China's remained above 8% as commodity and oil prices surged. Elsewhere, consumer prices across the region also continued to tick higher. Soaring food prices were largely to blame for pushing up consumer inflation, with rice and pork prices in particular driving prices higher. This has seen central banks become far more vigilant, with rising inflation forcing Australia's central bank into two separate 25 basis-point rate hikes this year. Both China's and India's central banks have also responded by asking lenders to set aside more cash reserves. The concern is that inflation is not set to dissipate quickly as wage growth in a number of Asian countries continues to grow at double-digit rates. Recently, retail sales in China expanded by 22% in April, boosted by rising incomes and higher prices. With China, India and Indonesia home to 40% of the world population, it may take some time for inflation to moderate from these relatively high levels. Company Performance Over the period, the Company provided strong absolute total returns, gaining 16.3% over the year ended 30 April 2008. By comparison, the MSCI All Countries Asia Pacific ex Japan Price Index (Total Return) ended the period 19.1% higher. At a country level, the decision to increase our exposure to Taiwan proved positive as the presidential election benefited a number of Taiwanese stocks. The share prices of China Life Insurance, Far East Textile and Polaris Securities rose well over 50% during the period. Stock selection within Hong Kong and Indonesia also proved positive. On a sector basis, stock selection within financials and industrials was strong. In particular, stock selection in diversified financials and insurance aided performance. The share price of Jardine Matheson, a conglomerate with a number of businesses in the Asia-Pacific region, rose strongly as the company delivered 2007 profits ahead of analyst expectations. By contrast, poor returns from some of our consumer stocks negatively impacted on relative performance. In particular, our holding in ABC Learning Centres in Australia, the world's largest owner of childcare centres, suffered as worries over its ability to repay debt emerged. The shares of Synear Food Holdings, the Chinese-based food company, also fell sharply after the firm announced worse-than-expected fourth-quarter earnings. Outlook for Asian Economies and Markets Asian markets have underperformed so far in 2008, reflecting the high valuation levels some markets had reached in 2007. Recently, however, Asia has enjoyed somewhat of a revival as investors have become a little more willing to accept risk. There are of course concerns on how an economic slowdown in the global economy will impact on Asia's export-driven economies. In addition, Asia's vulnerability as a consumer, rather than as a producer of commodities, may also provide a negative backdrop. However, year-to-date falls have seen valuations in a number of stockmarkets come down to more attractive levels, as investors have come to realise that previous earnings growth forecasts were too high for 2008. This should help support Asian markets, and if indeed we encounter a softer landing for the global economy, this may provide an additional tailwind for Asian equities to outperform. Macroeconomic conditions, despite remaining relatively resilient so far, may weaken in the second half of 2008 as the full effects of a global slowdown become apparent. Exports have held up well, as growth in Europe and within Asia has helped to offset weakness in exports to the US. In China, however, after a long period in which the main focus was the risk of overheating, there has recently been greater acknowledgement of the risks to growth. These risks stem mainly from global conditions, but there is also a concern that with inflation well above the government's 5% target, and with many inflationary pressures in the pipeline, there appears to be little chance of significant monetary policy easing in the short term. Central banks across the region are now facing an increasing dilemma. The expected US recession is posing downside risks to growth, but commodity-price inflation, partly reflecting the weaker US dollar, has continued to push inflation rates higher in most areas. Surging rice prices are another factor that has been fanning regional inflation. Rice prices have recently hit an all-time high, raising fears of fresh outbreaks of social unrest across Asia, where the grain is the staple food for more than 2.5 billion people. The latest increase in rice prices has been sparked by global rice stocks falling to their lowest levels in decades, along with a number of major rice-producing nations implementing restrictions on rice exports to ensure that domestic needs are met. Increasingly, governments are introducing measures to curb inflation. South Korea has frozen domestic utility prices, while China's policymakers have also introduced new price freezes. In our view, accelerating food prices are an issue where policymakers need to remain vigilant, but we do expect some pressures to subside in the second half of the year, leaving central banks with a clearer picture and a little more room for manoeuvre. In terms of corporate earnings, consensus estimates of earnings growth for the region have recently been revised lower by around 3%. Earnings growth forecasts for the region as a whole now stand at 12% for 2008. This, however, may be still too high and we may see further downgrades as we move further into 2008. With the region on a prospective multiple of 13.5 times earnings, according to consensus earnings forecasts, overall valuations are close to the top end of recent historic ranges. Although we continue to see areas where valuations are at attractive levels, stock selection will likely be the key to outperformance in 2008. Looking forward, we continue to be relatively sanguine about prospects for the region on a medium to long-term view and we certainly expect Asia to outperform if investors become more comfortable that a slowdown in global growth will not extend into a prolonged recession. Importantly, growth in China and India remains strong. The global macroeconomic picture is uncertain at the moment, but Asian growth still remains superior to that of the developed world. Corporate earnings and balance sheets are currently strong and interest rates in many economies remain low. Valuations remain at a slight premium to those in the developed world, but if Asia can continue to deliver stronger growth, this should not be perceived as a major concern. Although markets may be susceptible to any global macroeconomic scare or rising geo-political concerns, the overall message is that Asia continues to be an attractive investment destination on a medium- to long-term view. Asia certainly has its best chance since the early 1990s of remaining resilient in the face of a global slowdown. Strategy In terms of strategy, our aim is to find growth, but in areas where we feel that valuations are not excessive. We continue to favour domestic-growth plays, but remain vigilant on the valuation levels of some Chinese stocks, particularly as the Chinese government will be forced to maintain a tight monetary policy to combat inflation concerns. Instead, we continue to favour Hong Kong, where a combination of falling US interest rates and continuing strong growth in China makes it an attractive proposition. Essentially, we favour quality companies which have been de-rated along with the market, despite maintaining a positive outlook and robust earnings growth. The Company is strongly focused on the consumer sector as demographics, highsavings rates and increasing wages are all powerful factors that will help maintain the strength of consumer spending. By contrast, we are underweight in some cyclical areas, where global economic headwinds are likely to reduce earnings expectations. More generally, the stockmarkets of India and China have fallen to a greater degree than other countries in Asia, although they may still look expensive if earnings continue to disappoint. However, they are expected to lead in any recovery. We are therefore looking to invest in China and India as their markets de-rate and become more attractive. Indeed, we recently bought Ping An Insurance after the share price had fallen by more than 50% from its peak. Stuart Parks Investment Manager 19 June 2008 INVESTMENTS IN ORDER OF VALUATION Classification of Investments at 30 April 2008 2008 2007 At % of At % of Valuation Portfolio Valuation Portfolio Australia £'000 £'000 Materials 6,638 5.6 5,572 4.5 Consumer Discretionary 393 0.3 1,747 1.4 Industrials 1,669 1.4 2,231 1.8 Financials 2,460 2.1 2,208 1.8 Utilities 1,163 1.0 911 0.7 12,323 10.4 12,669 10.2 China Energy 771 0.6 2,304 1.9 Consumer Staples 667 0.6 186 0.2 Materials - - 951 0.8 Consumer Discretionary 691 0.6 191 0.2 Industrials 694 0.6 - - Financials 701 0.6 4,304 3.4 Information Technology 2,384 2.0 - - Utilities - - 1,622 1.3 5,908 5.0 9,558 7.8 Hong Kong Energy 1,618 1.3 - - Consumer Staples 1,021 0.9 - - Consumer Discretionary 2,099 1.8 4,542 3.7 Industrials 4,873 4.0 3,176 2.6 Financials 16,021 13.3 13,844 11.2 Telecommunication Services 6,306 5.2 3,055 2.5 Utilities 3 - - - Open Ended Funds - - 1,293 1.1 31,941 26.5 25,910 21.1 India Consumer Staples 2,482 2.0 1,536 1.3 Materials 2,480 2.1 2,593 2.1 Consumer Discretionary 1,112 0.9 2,021 1.6 Industrials 1,996 1.7 660 0.5 Financials 965 0.8 - - Information Technology 1,981 1.6 1,621 1.3 Telecommunication Services 1,237 1.0 - - 12,253 10.1 8,431 6.8 Indonesia Consumer Staples 641 0.5 - - Materials 1,097 0.9 - - Industrials 333 0.3 - - Financials - - 1,408 1.1 2,071 1.7 1,408 1.1 Malaysia Consumer Discretionary 604 0.5 2,195 1.8 Industrials 74 0.1 2,857 2.3 Financials 1,699 1.4 430 0.4 Utilities 428 0.4 2,651 2.2 2,805 2.4 8,133 6.7 2008 2007 At % of At % of Valuation Portfolio Valuation Portfolio £'000 £'000 Philippines Consumer Staples 417 0.3 - - Financials 2,413 2.0 3,539 2.9 Utilities - - 398 0.3 2,830 2.3 3,937 3.2 Singapore Energy 2,598 2.2 876 0.7 Consumer Staples 660 0.6 3,127 2.5 Industrials 2,923 2.4 4,549 3.7 Healthcare 1,367 1.1 1,368 1.1 Financials 2,505 2.1 4,636 3.7 Information Technology 1,106 0.9 1,179 1.0 11,159 9.3 15,735 12.7 South Korea Consumer Staples - - 938 0.8 Materials 1,138 0.9 1,217 1.0 Consumer Discretionary - - 368 0.3 Industrials 4,099 3.4 2,568 2.1 Financials 6,283 5.2 8,990 7.2 Information Technology 5,218 4.3 6,513 5.3 16,738 13.8 20,594 16.7 Taiwan Materials 186 0.2 1,626 1.3 Consumer Discretionary 1,637 1.4 - - Industrials 1,236 1.0 1,207 1.0 Financials 7,130 6.0 3,278 2.7 Information Technology 7,840 6.5 6,952 5.7 18,029 15.1 13,063 10.7 Thailand Consumer Discretionary - - 221 0.2 Financials 816 0.7 1,206 1.0 816 0.7 1,427 1.2 Other Materials 748 0.6 1,219 1.0 Financials 1,335 1.1 - - Consumer Staples 1,199 1.0 973 0.8 3,282 2.7 2,192 1.8 Total Market Valuation 120,155 100.0 123,057 100.0 INVESTMENTS IN ORDER OF VALUATION at 30 April 2008 Ordinary shares unless stated otherwise At Market Value % of Company Principal Activity Country £'000 Portfolio China Mobile* Telecommunication Hong Kong 6,306 5.2 Services Jardine Matheson Diversified Financials Hong Kong 5,979 5.0 Samsung Electronics Technology Hardware South Korea 5,218 4.3 Equipment BHP Billiton Materials Australia 4,767 4.0 Taiwan Semiconductor Semiconductors Taiwan 4,572 3.8 Manufacturing Kookmin Bank Banking South Korea 3,670 3.1 United Phosphorus Chemicals India 2,480 2.1 Qbe Insurance Insurance Australia 2,460 2.1 Wharf Diversified Financials Hong Kong 2,423 2.0 Sina Software & Services China 2,384 2.0 Top Ten Holdings 40,259 33.6 China Life Insurance Taiwan 2,340 1.9 ITC Food, Beverages & India 2,200 1.8 Tobacco Cheung Kong Real Estate Hong Kong 2,192 1.8 DBS Banking Singapore 2,164 1.8 Keppel Capital Goods Singapore 2,072 1.7 Noble Capital Goods Hong Kong 2,066 1.7 China Insurance* Insurance Hong Kong 2,004 1.7 Cathay Financial Insurance Taiwan 2,003 1.7 Infosys Technologies Software & Services India 1,981 1.6 Newcrest Mining Materials Australia 1,871 1.6 Top Twenty Holdings 61,152 50.9 Mediatek Semiconductors Taiwan 1,818 1.5 Downer Capital Goods Australia 1,669 1.4 Far East Textile Consumer Durables & Taiwan 1,637 1.4 Apparel Cnooc* Energy Hong Kong 1,618 1.3 Banco De Oro Universal Banking Philippines 1,560 1.3 Bank Daelim Industrial Capital Goods South Korea 1,559 1.3 Dah Sing Banking Banking Hong Kong 1,530 1.3 Sinopac Financial Diversified Financials Taiwan 1,521 1.3 Daegu Bank Banking South Korea 1,475 1.2 Macquarie Korea Transportation South Korea 1,456 1.2 Top Thirty Holdings 76,995 64.1 Hon Hai Precision Technology Hardware Taiwan 1,450 1.2 Equipment Parkway Healthcare Singapore 1,367 1.1 China Real Estate Real Estate United 1,335 1.1 Opportunities Kingdom Polaris Securities Diversified Financials Taiwan 1,266 1.1 Bharti Airtel Telecommunication India 1,237 1.0 Services M.P. Evans Food, Beverages & United 1,199 1.0 Tobacco Kingdom Apa Utilities Australia 1,163 1.0 Korea Investment Diversified Financials South Korea 1,138 0.9 Posco Materials South Korea 1,138 0.9 Voltas Consumer Durables & India 1,112 0.9 Apparel Top Forty Holdings 89,400 74.3 Datacraft Asia Technology Hardware Singapore 1,106 0.9 Equipment Tambang Batubara Materials Indonesia 1,097 0.9 At Market Value % of Company Principal Activity Country £'000 Portfolio Samsung Heavy Capital Goods South Korea 1,084 0.9 Bharat Heavy Capital Goods India 1,030 0.9 HKR International Real Estate Hong Kong 1,013 0.8 Jain Irrigation Capital Goods India 966 0.8 ICICI Bank Banking India 965 0.8 Singapore Petrol Energy Singapore 948 0.8 Beijing Enterprise* Capital Goods Hong Kong 891 0.7 Bumiputra-Commerce Banking Malaysia 891 0.7 Top Fifty Holdings 99,391 82.5 Citic Pacific Capital Goods Hong Kong 884 0.7 Wing Lung Bank Banking Hong Kong 880 0.7 Filinvest Land Real Estate Philippines 853 0.7 Cosco Pacific Transportation Singapore 851 0.7 Ezra Energy Singapore 850 0.7 Cathay Pacific Air Transportation Hong Kong 835 0.7 CPN Retail Growth Real Estate Thailand 816 0.7 China Resources Retailing Hong Kong 803 0.7 Enterprise* Straits Asia Energy Singapore 800 0.7 Petrochina Energy China 771 0.6 Top Sixty Holdings 107,734 89.4 West China Cement Materials United 748 0.6 Kingdom Wah Lee Industrial Capital Goods Taiwan 709 0.6 Ping An Insurance+ Insurance China 701 0.6 China National Capital Goods China 694 0.6 Materials+ Hong Kong & Shanghai Hotels, Restaurants & Hong Kong 694 0.6 Hotels Leisure Great Wall Motor+ Automobiles & Components China 691 0.6 Synear Food Food, Beverages & China 667 0.6 Tobacco Bandar Raya Development Real Estate Malaysia 664 0.6 Petra Foods Food, Beverages & Singapore 660 0.6 Tobacco Unilever Indonesia Household & Personal Indonesia 641 0.5 Products Top Seventy Holdings 114,603 95.3 Genting Hotels, Restaurants & Malaysia 604 0.5 Leisure Dickson Concept Retailing Hong Kong 602 0.5 China Mengniu Food, Beverages & Hong Kong 529 0.4 Tobacco Taiwan Sogo Shingkong Commercial Services & Taiwan 527 0.4 Security Supplies Tenaga Nasional Utilities Malaysia 428 0.4 Alliance Global Food, Beverages & Philippines 417 0.3 Tobacco ABC Learning Centres Consumer Services Australia 393 0.3 Parkway Life Real Real Estate Singapore 341 0.3 United Tractors Capital Goods Indonesia 333 0.3 China Green Food, Beverages & Hong Kong 308 0.3 Tobacco Top Eighty Holdings 119,085 99.0 Hong Kong Aircraft Transportation Hong Kong 197 0.2 Taiwan Fertilizer Materials Taiwan 186 0.2 Hengan International Household & Personal Hong Kong 184 0.2 Products Bandar Raya Development Real Estate Malaysia 144 0.1 Warrants Dhampur Sugar Food, Beverages & India 141 0.1 Tobacco Dhampur Sugar Mills Food, Beverages & India 96 0.1 Tobacco At Market Value % of Company Principal Activity Country £'000 Portfolio Krisassets Capital Goods Malaysia 74 0.1 Dabur India Household & Personal India 45 0.0 Products China Resource Power Utilities Hong Kong 3 0.0 Total 120,155 100.0 * Red Chip Holdings + H-Shares Related Party Transactions David Hinde, the Chairman of the Company, is a non-executive director of Dah Sing Banking Group, and the Fund holds shares in that company equivalent to 1.3% of the value of the portfolio. The Board has delegated authority for investment selection to the Manager and the Manager has selected this investment independently in accordance with the investment strategy set out in the Annual Financial Report. The Board as a whole reviews the investment portfolio on a regular basis and is satisfied that the investment was selected in an objective manner and that no conflict of interest has arisen as a result of the selection of this stock. Principal Risks and Uncertainties The Company's investments are traded on the Far Eastern, Indian and Australasian stockmarkets. The principal risk for investors in the Company is of a significant fall and/or a prolonged period of decline in the markets. This could be triggered by unfavourable developments within the region or events outside it. Additionally, performance is geared by bank borrowings which may accentuate any decline in performance. Other significant risks include consistent underperformance by the Manager, or the market rating of the Company failing to reflect good performance. While the Board obviously cannot influence market movements, it is vigilant in monitoring and taking steps to mitigate the effects of falls in markets should they occur. As has been indicated, the performance of the Manager is carefully monitored by the Board, and the continuation of the Manager's mandate is revisited every six months. The Board has established guidelines to ensure that the investment policy that it has approved is pursued by the Manager. The Board and the Manager maintain an active dialogue with the aim of ensuring that the market rating of the Company's shares reflects the underlying net asset value; and there are in place both buy-back and issuance facilities to assist in the management of this process. The Company is subject to various laws and regulations by virtue of its status as an investment trust and its listing on the London Stock Exchange. A breach of s.842 ICTA could lead to the Company being subject to capital gains tax on the profits arising from the sale of its investments. A serious breach of other regulatory rules might lead to suspension from the Stock Exchange or to a qualified Audit Report. Other control failures, either by the Manager or any other of the Company's service providers, might result in operational or reputational problems, erroneous disclosures or loss of assets through fraud, as well as breaches of regulations. The Manager reviews the level of compliance with s.842 ICTA and other financial regulatory requirements on a daily basis. All transactions, income and expenditure are reported to the Board. The Board regularly considers all risks, the measures in place to control them and the possibility of any other risks that could arise. The Board ensures that satisfactory assurances are received from service providers. The Manager's Compliance Officer produces regular reports for review by the Company's Audit Committee. Risks and Risk Management Policies are also detailed in the financial statements in the Annual Financial Report. Directors' Responsibility Statement in respect of the preparation of the Annual Financial Report The Directors are responsible for preparing the Annual Financial Report in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgments and estimates that are reasonable and prudent; • state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors, to the best of their knowledge, state that: • the financial statements, prepared in accordance with United Kingdom Generally Accepted Accounting Practice, give a true and fair view of the assets, liabilities, financial position and loss of the Company; and • the Report of the Directors includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that it faces. The Directors are responsible for keeping proper accounting records that 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 1985. 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. David Hinde Chairman Signed on behalf of the Board of Directors 19 June 2008 Income Statement for the year ended 30 April 2008 2007 Revenue Capital Total Revenue Capital Total Return Return Return Return Return Return £'000 £'000 £'000 £'000 £'000 £'000 Gains on - 17,239 17,239 - 9,623 9,623 investments Gains/(losses) on foreign   currency - 50 50 - (160) (160) revaluation Income 3,247 - 3,247 2,816 - 2,816 Investment management   fee (250) (750) (1,000) (208) (624) (832) Other expenses (441) (30) (471) (419) (46) (465) Return before finance   costs and 2,556 16,509 19,065 2,189 8,793 10,982 taxation Finance costs (120) (361) (481) (95) (285) (380) Return on ordinary   activities 2,436 16,148 18,584 2,094 8,508 10,602 before tax Tax on ordinary (674) 182 (492) (660) 267 (393) activities Net return on ordinary   activities after tax for   the financial 1,762 16,330 18,092 1,434 8,775 10,209 year Return per ordinary share: Basic 1.8p 16.2p 18.0p 1.3p 8.3p 9.6p The total column of this statement represents the Company's profit and loss account prepared in accordance with the accounting polices detailed in note 1 to the financial statements. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations and the Company has no other gains or losses, therefore no Statement of Total Recognised Gains and Losses is presented. No operations were acquired or discontinued in the year. Reconciliation of Movements in Shareholders' Funds for the year ended 30 April Capital Share Redemp- Capital Capital Share Premium tion Special Reserve Reserve - Revenue - Capital account Reserve Reserve realised Unrealised Reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 FOR THE YEAR ENDED 30 APRIL 2007 At 30 April 10,596 74,588 650 25,796 (28,357) 21,727 2,209 107,209 2006 Net return for - - - - 7,101 1,674 1,434 10,209 the year Final dividend - - - - - - (1,272) (1,272) At 30 April 10,596 74,588 650 25,796 (21,256) 23,401 2,371 116,146 2007 FOR THE YEAR ENDED 30 APRIL 2008 Net return for - - - - 21,963 (5,633) 1,762 18,092 the year Final dividend - - - - - - (1,378) (1,378) Shares bought-back   and cancelled (1,213) - 1,213 (13,998) - - - (13,998) At 30 April 9,383 74,588 1,863 11,798 707 17,768 2,755 118,862 2008 Balance Sheet at 30 April 2008 2007 £'000 £'000 Fixed assets   Investments held at fair value 120,155 123,057 Current assets   Debtors 555 527   Cash at bank 1,123 1,360 1,678 1,887 Creditors: amounts falling due within one year (2,858) (8,749) Net current liabilities (1,180) (6,862) Total assets less current liabilities 118,975 116,195 Provisions (113) (49) Total net assets 118,862 116,146 Capital and reserves Share capital 9,383 10,596 Share premium account 74,588 74,588 Other reserves:   Capital redemption reserve 1,863 650   Special reserve 11,798 25,796   Capital reserve - realised 707 (21,256)   Capital reserve - unrealised 17,768 23,401 Revenue reserve 2,755 2,371 Total Shareholders' funds 118,862 116,146 Net asset value per ordinary share Basic 126.7p 109.6p These financial statements were approved and authorised for issue by the Board of Directors on 19 June 2008. David Hinde Chairman Signed on behalf of the Board of Directors Cash Flow Statement for the year ended 30 April 2008 2007 £'000 £'000 Cash inflow from operating activities 979 1,021 Servicing of finance (483) (382) Taxation (206) (179) Capital expenditure and financial investment 20,299 (34) Dividends paid (1,378) (1,272) Net cash inflow/(outflow) before management of liquid   resources and financing 19,211 (778) Management of liquid resources 412 (468) Financing (19,498) 1,200 Increase/(decrease) in cash in the year 125 (46) Reconciliation of cash flow to movement in net debt Increase/(decrease) in cash in the year 125 (46) Cash outflow/(inflow) from movement in debt 5,500 (1,200) Cash (inflow)/outflow from (decrease)/increase (412) 468 in liquid resources Change in net debt resulting from cash flows 5,213 (778) Translation differences 50 (160) Movement in net debt in the year 5,263 (938) Net debt at beginning of year (6,640) (5,702) Net debt at end of year (1,377) (6,640) Notes 1. Basis of Preparation Accounts Basis The financial statements have been prepared under the historical cost convention, except for the measurement at fair value of investments, and in accordance with applicable United Kingdom Accounting Standards and with the Statement of Recommended Practice (`SORP') `Financial Statements of Investment Trust Companies' issued by the Association of Investment Companies in 2005. 2. Income 2008 2007 £'000 £'000 Income from investments UK dividends 19 18 Overseas dividends 2,817 2,636 Scrip dividends 385 151 3,221 2,805 Other income Deposit interest 26 11 Total income 3,247 2,816 3. Investment management fee 2008 2007 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Investment 250 750 1,000 208 624 832 management fee 4. Return per Ordinary Share The revenue, capital and total return per ordinary share is based on each applicable return on ordinary activities after tax and on 100,690,977 (2007: 105,962,425) ordinary shares, being the weighted average number of shares in issue throughout the year. 5. Net asset value The net asset value per ordinary share and the net assets attributable at the year end were as follows: Net asset value Net assets per share attributable 2008 2007 2008 2007 Pence Pence £'000 £'000 Ordinary shares - Basic 126.7 109.6 118,862 116,146 The basic net asset value per ordinary share is based on the net assets at the year-end and on 93,837,425 (2007: 105,962,425) ordinary shares, being the number of ordinary shares in issue at the year-end. The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 30 April 2008 have been agreed with the auditors and are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2007 and 2008 statutory accounts received unqualified reports from the Company's auditors and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.237(2) or (3) of the Companies Act 1985. The financial information for 2007 is derived from the statutory accounts for 2007 which have been delivered to the Registrar of Companies. The 2008 accounts will be filed with the Registrar of Companies in due course. The Annual General Meeting of the Company will be held at 12.00 noon on 6 August 2008 at 30 Finsbury Square, London EC2A 1AG. The audited Annual Financial Report will be posted to shareholders shortly. Copies may be obtained during normal business hours from the Company's Registered Office, 30 Finsbury Square, London EC2A 1AG. By order of the Board Invesco Asset Management Limited 19 June 2008

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