Portfolio commentary

Henderson TR Pacific Inv. Trust PLC
23 November 2005


HENDERSON TR PACIFIC INVESTMENT TRUST PLC

HENDERSON GLOBAL INVESTORS

23 NOVEMBER 2005


                   HENDERSON TR PACIFIC INVESTMENT TRUST PLC

                    Q&As with Andrew Beal, Portfolio Manager


Henderson TR Pacific Investment Trust plc

How many years' experience of investing in the Far East do you have and how good
is your track record?

I have been specialising in Asian equities for most of my career which
originally started with Schroder Investment Management. I lived in Asia in the
mid-1990s and managed the Schroder Korea and the Schroder Seoul Funds as well as
being a senior member of the Global Emerging Markets team.  More recently I was
Lead Portfolio Manager, Emerging Markets and Pacific Rim for Nicholas Applegate
Capital Management in San Diego where I was responsible for the PIMCO NACM
Pacific Rim Fund, which won Best Fund over 3 years, Pacific Region in the 2005
Lipper Fund Awards.

What is your investment philosophy and process?

I believe that equity markets tend to systematically mis-price stocks when a
fundamental shift occurs in a company's fortunes. Analysts and investors'
expectations tend to be fairly anchored and, when something changes, they can be
slow to react. If you can identify companies that are going through positive or
negative transitions, and it is clear from the valuations that the market is not
discounting these changes, then potentially there is an opportunity to make
money. As a bottom up stock picker my strategy is to take positions in good
quality companies where I can see a fundamental change that is going to lead to
a sustainable acceleration in earnings, provided that valuations are modest,
regardless of what Asian country they might be in.

What changes have you made to the portfolio?

After I took over the management of the Trust in September 2005, I reviewed the
entire portfolio. I looked at each stock in turn and asked the question: does
this company have the scope to grow its earnings in excess of market
expectations over a sustained period? If my research and conviction suggested
that it did not, I sold the position. Recent sales have included China ShineWay,
China Techfaith Wireless and Global Biochem. In Singapore, we sold Chartered
Semiconductor and Venture Manufacturing. Other sales included Chunghwa Telecom,
Taishin Financial and MegaFinancial in Taiwan.

When I took the Trust over it contained 59 stocks, now it contains 52 stocks.
Turnover has been in the region of 40%.


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                   HENDERSON TR PACIFIC INVESTMENT TRUST PLC

                    Q&As with Andrew Beal, Portfolio Manager

What sort of stocks have you been buying?

As outlined above, we are looking for companies undergoing a change that the
market has not properly evaluated. In Hong Kong, we purchased Esprit Holdings,
which owns the rights to the Esprit clothing brand worldwide. In the 1990s, the
company had sizeable operations in the Asia Pacific region as well as the US but
the Asian crisis led it to completely overhaul its strategy. More recently,
Esprit has focused its efforts on Continental Europe.  Esprit has a low cost
production base in China and a successful and fast growing mid-market fashion
brand in Europe. The company now has a strong market presence in Germany and is
expanding into France, Benelux and Scandinavia. In addition, the company plans
to re-launch its brand in Asia, and selectively expand in the US market, which
could prove the catalyst to further growth over the long term. Esprit has
delivered compound annual earnings growth in excess of 40% per annum over the
last three years. Growth in excess of 20% per annum is expected going forward.
At the same time, it is trading on an undemanding multiple of 18 times 2006
earnings.

Also in Hong Kong, we added Johnson Electric to the portfolio. The company
supplies a range of motors to the auto industry. The investment story is quite
simple; the company is making impressive market share gains versus its developed
market competitors. Like Esprit, Johnson Electric has a cheap and efficient
production facility in China. At the same time, the company has bought out
rivals in the US and closed down their production capacity but kept their
distribution networks. This has enabled Johnson Electric to funnel its own
production through an established distribution network. Johnson Electric
recently made an acquisition of a Swiss rival Saia-Burgess. In my view, the
market has misunderstood the acquisition and has penalised Johnson Electric
because the deal will not instantly boost earnings. However, we think this
acquisition is a good long-term strategic move which will allow the company to
move into new product lines and expand across Europe. We expect Johnson Electric
to be able to deliver earnings growth over the next three years of between 15%
to 20% per annum. At the time of writing, the stock is trading at 15 times March
2007 earnings.

In Korea, we have increased the position in Kookmin Bank and moved from an
underweight to an overweight position. Kookmin is the leading retail banking
franchise in Korea. The company has had a difficult few years. Korea saw its
credit card market collapse about two years ago and Kookmin Bank had a very
large credit card operation. Over the past six months, the situation has
stabilised. At the same time, the domestic economy is picking up. Not only are
provisions falling off rapidly but there is a chance that Kookmin could see
write backs on some of these losses. Furthermore, we expect lending to pick up
over next couple of years as the Korean economy recovers. We also expect net
interest margins to trend higher partly as a result of moderate interest rate
increases. We think the bank's sustainable return on equity is 20% and it trades
on 1.5 times 2006 book value.

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                   HENDERSON TR PACIFIC INVESTMENT TRUST PLC

                    Q&As with Andrew Beal, Portfolio Manager

Hyundai Motor was another addition to the portfolio. The company has been
undervalued by the market due to the perception that it makes low quality cars.
In fact, just about every industry survey shows the company has made huge
strides over the last five years and is closing the gap with leading Japanese
brands in terms of quality and customer satisfaction. In the US, Hyundai's cars
trade at a sizeable discount to their Japanese competitors. Over the next 12
months, Hyundai's entire US range is going to be revamped and the company plans
to use this as an opportunity to reposition the brand and to raise prices. The
market is currently discounting an improvement in volumes but is sceptical about
the company's plans to hike prices. The stock trades on a forward price multiple
of eight times and, if we are right about their success in export markets,
Hyundai could enjoy compound annual earnings growth over the next three years in
excess of 15%.



IOI Corporation, Malaysia's leading palm oil producer, was another new holding.
IOI is benefiting from a number of long-term trends. Firstly, consumption of
palm oil in China is increasing. Secondly, consumption in the west is increasing
as consumers search for a healthier alternative to saturated fats. Finally, the
Malaysian government is sponsoring research to see if palm oil could be an
alternative energy source. Given that demand for the product is growing rapidly
and that supply is constrained because it takes ten years to bring a plantation
to maturity, palm oil prices are likely to stay high. The stock trades on 16
time June 2006 earnings.



Finally, we added a small position in Tata Motors, the Trust's first addition in
India. Tata Motors is India's leading maker of passenger cars and commercial
vehicles. The Indian auto sector is growing rapidly as more and more roads get
built. India has really lagged China in terms of developing its basic
infrastructure and we think that it will start to play catch up over the next
few years.  With better quality roads being built there is an increased
incentive for wealthier Indians to buy cars and for Indian businesses to use
vehicles to transport goods. Although competition is increasing, Tata is
pre-eminent in its market. We think that over the long term it should be able to
grow earnings in excess of 20% per annum and that it is cheaply valued given
that it trades on a P/E of just 11 times March 2007 earnings.



What changes have been made to the geographical allocation of the Trust?

Following the additions and deletions outlined above, the shape of the Trust has
changed markedly. When I took the Trust over, it had a sizeable overweight in
China and we are now underweight. Conversely, in Korea we have moved from an
underweight to an overweight position. In Hong Kong, we have moved to an
overweight stance. In Thailand, we now overweight and we have reduced our
exposure to Taiwan.



What are your key investment themes?

We have increased the portfolio's exposure to the consumer discretionary sector,
via the addition of Hyundai Motor Company, LG Electronics and Esprit. Seeking
exposure to emerging Asian brands is a theme for the Trust. Business Week and
Interbrand produce a top 100 global brand survey and we find this survey
instructive as it highlights the extent to which Asian brands are emerging and
in some cases becoming global leaders. According to this survey, Samsung's brand
value is higher than Dell's. Hyundai Motor's brand value is greater than Nissan
and only slightly lower than Audi's. LG Electronics' brand exceeds that of
Starbucks.





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                   HENDERSON TR PACIFIC INVESTMENT TRUST PLC

                    Q&As with Andrew Beal, Portfolio Manager



What parameters will be used to measure performance?

From the 1 January 2006 the Trust will be adopting the MSCI All Country Asia
ex-Japan index, which will include India.



How long before shareholders should expect to see consistent out performance?

Now that the portfolio has been restructured, I am confident that the Trust will
enjoy a significant improvement in short-term performance in 2006.



What is the market outlook?

After a strong run up over summer, Asian equity markets have struggled in
October largely due to worries about the outlook for US interest rates,
inflation and the health of the US consumer. To a certain extent, these have
been external headwinds, contrasting with the latest economic releases in Asia
which have been good and suggest an improving outlook.



Once Asian equity markets have digested their concerns about the outlook for
inflation and US interest rates, we think they will resume their upward move as
investors focus on the strength of the Japanese and Chinese economies, an
environment of moderate growth across western markets and steadily improving
corporate earnings. Interest rates across Asia will need to rise next year but
we think any rises will be moderate as inflation remains well contained.







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For further information, please contact:

Andrew Beal
Portfolio Manager
Henderson TR Pacific Investment Trust plc
Telephone: [phone]

James de Sausmarez
Head of Investment Trusts
Henderson Global Investors
Telephone: [phone]


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