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Diverse Inc Trust (DIVI)

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Wednesday 14 August, 2013

Diverse Inc Trust

Annual Financial Report


 THE DIVERSE INCOME TRUST PLC
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 MAY 2013

The Directors present the Annual Financial Report of the Diverse Income Trust
plc ("Company" or "Diverse") for the year ended 31 May 2013. The full Annual
Report and Accounts can be accessed via the following website: 
www.mitongroup.com/dit or by contacting the Company Secretary on 01392 477500.

RESULTS FOR THE YEAR TO 31 MAY 2013

Increased dividend per share
The dividend per share was increased from an annualised 2.02p last year to
2.10p this year, representing an increase of 4%. In addition £394,000 was added
to distributable revenue reserves, and will be available to smooth dividend
growth over the coming years.

36% growth in capital
The NAV per share rose from 47.83p to 65.12p over the year. This has been
greatly assisted by the general rise in the market, with the FTSE All-Share
Index up 25% over the year to 31 May 2013.

£61m additional capital raised to reduce the ongoing charges and add market
liquidity for shareholders
Two C share issues, amounting to £30m in July 2012 and £31m in December 2012,
resulted in total assets reaching £136m at 31 May 2013.

Additional management resource
Miton has welcomed George Godber and Georgina Hamilton to its team of UK equity
managers. They bring additional insight regarding the tangible assets and
underlying cashflow particularly of mid and larger UK companies.

Diverse announced its intention to merge with Miton Income Opportunities Trust
plc
MIOT, formerly known as Henderson Fledgling Trust plc, appointed Miton to align
its £80m portfolio with that of Diverse so it could effect a merger with the
Company in due course. This has now been achieved and both companies are
proceeding with the merger documentation. Diverse shareholders will not bear
any of the costs of the transaction.

Diverse wins Best New Investment Trust Award
The Association of Investment Companies awarded Diverse the Best New Investment
Trust Award based upon the novelty of its investment strategy versus other UK
income trusts and its strong performance since issue.

SUMMARY OF RESULTS
                                         At 31 May 2013    At 31 May 2012     Change
                                                                               
Net asset value per ordinary share               65.12p            47.83p      36.1%

Ordinary share price (mid)                       66.00p            48.75p      35.4%
                                                                               
Premium to net asset value                        1.35%             1.92%              
                                                                               
Revenue return per ordinary share                 2.42p             2.32p               
                                                                               
Total return per ordinary share                  19.27p             0.43p               
                                                                               
Total dividends per ordinary share                2.10p             2.19p¹              
                                                                        
¹The dividend for the period to 31 May 2012 covered thirteen months, and the
annualised dividend was 2.02p. Therefore, the underlying growth of the dividend
in the year to 31 May 2013 was 4%. Current period revenues funded more than the
4% increase and so £394,000 was added to revenue reserves for smooth dividend
growth in the future.

CHAIRMAN'S STATEMENT

Markets
The UK equity market rose steadily through the year, largely supported by
liquidity injections to the financial system provided by central banks. Early
in the year, the European Central Bank added to the actions of the Bank of
England and US Federal Reserve, whilst the Bank of Japan joined towards the end
of the year. Over the year to 31 May 2013 the FTSE All-Share Total Return Index
rose 30.1%, and the average UK income trust appreciated by 38.3%.

Results
The Company aims to differentiate itself from other UK income trusts by
targeting a sustainable growth of its dividend. Over the year to 31 May 2013
our dividend has been increased by 4%, usefully ahead of inflation and
short-term interest rates. In addition, the Company has put £394,000 of current
period revenue into distributable reserves for the future.

Over the year the Company has delivered a total return of 40.7% per ordinary
share. This comprises a NAV rise of 17.29p, representing 36.1% capital
appreciation, and a dividend of 2.10p, representing a yield of 4.3% on the
share price at the start of the year. This performance has been fully reflected
in the share price rise, which has typically stood at a premium to NAV of 3.8%
over the year.

Overall Scale
During the year, the Board approved two C share offerings with the main purpose
of increasing the scale of the Company, such that the fixed costs could be
spread over a much larger asset base and improve the return for shareholders.
In addition, a larger trust has greater market liquidity, enhancing the ability
for shareholders to transact, which in turn the Board believes helps enhance
the rating of the Company's shares. As a result of the two C share offerings,
plus the market appreciation, the Company's assets grew from just under £48m to
close to £136m at the year end.

Potential Merger with Miton Income Opportunities Trust plc
On 15 February 2013, the Board announced that it had agreed proposals for a
future merger with Miton Income Opportunities Trust plc ("MIOT", formerly known
as Henderson Fledgling Trust plc). Over recent months the MIOT portfolio has
been reconfigured so that it is over 90% aligned with the strategy adopted by
our Company. As announced on 2 July 2013, the merger documents are currently
being produced, and are expected to be posted to shareholders in September. The
proposals will be subject to the approval of both sets of shareholders. The
combined portfolio would have assets of over £220m at current market levels,
offering further enhancement to the market liquidity of the Company's shares
and a further reduction in the ongoing charges, which should fall to around
1.3%. The transaction has been structured in such a way that the Company's
shareholders will not suffer economic dilution to their interests. The
Company's costs and expenses will be offset by the premium at which new shares
will be issued to MIOT shareholders, and it is expected that shareholders may
even benefit from a modest uplift in the NAV following the transaction.

Under the terms of the merger, which will be recommended by the boards of both
companies, MIOT shareholders will receive new shares in the Company valued at a
premium of 2.5% to the NAV as at the effective date of the merger. The
consideration for the issue of new shares will be the transfer to Diverse of
the entire investment portfolio of MIOT. There will be no cash exit offered to
MIOT shareholders as part of the scheme.

Articles of Association
The law relating to investment trusts has recently been amended to modernise
the investment trust regime. One of the changes is that that the distribution
of investment profits is no longer prohibited. Accordingly, with effect from 
6 April 2012, the definition of "investment company" under the Companies Act 2006
was amended such that the articles of association of investment companies are
no longer required to prohibit the payment of capital profits as dividends. At
the Annual General Meeting, the Board will be seeking shareholder approval to
amend the Company's Articles of Association so that capital profits can be
distributed as dividends if it were to be considered to be in shareholders'
interests. This will provide the Company with greater flexibility to fund
dividends both from revenue, as currently, as well as capital profits. However,
it remains the Directors' intention that dividends should generally be funded
from revenue.

Authority to Issue Shares
At the forthcoming Annual General Meeting, the Board will be seeking the
renewal of the Company's authority to issue up to 10% of the ordinary shares.
This authority is as previously approved at the 2012 Annual General Meeting.

On 7 December 2012 shareholders granted the Company the authority to issue up
to 300 million C shares, with such authority to expire at the 2013 Annual
General Meeting. Pursuant to this authority being granted, on 17 December 2012
the Company issued 62 million C shares. Accordingly, the Company is seeking
shareholder approval for the renewal of the balance of this authority 
(238 million C shares). This will give the Company the flexibility to meet
additional demand for shares which is not met through the secondary market,
will allow the Company to potentially grow its market capitalisation and will
enable the Board to seek to manage the premium to NAV at which the shares trade
from time to time. It will also enable the Company to issue further C Shares in
a timely manner without shareholders being required to incur the additional
costs of the Company convening further general meetings to approve such
issuance (the costs of convening a General Meeting are estimated to be
approximately £40,000 (excluding VAT)). The Board recognises the importance of
shareholder protections and, as indicated in the Prospectus issued in November
2012, confirms that any issue of C Shares for cash under the authority set out
in the resolution will be on a fully pre-emptive basis.

Annual General Meeting
The Company's second Annual General Meeting is being held at 3.00 pm on
Tuesday, 22 October 2013 at Furniture Makers' Hall, 12 Austin Friars, London
EX2N 2HE.

Prospects
At some point in the future, possibly even in the year ahead, the Bank of
England will wind down its Quantitative Easing programme, which may impact on
both market sentiment and the cash flows of companies in general. Therefore, we
believe that there will be an even greater importance to careful stock
investing in those companies with the most robust balance sheets. Such
companies are clearly better placed to sustain dividends, even at times of
economic stress. In addition, those able to increase turnover and cashflow in
the coming years should be able to fund respectable growth in dividends. Your
Company moderates stock specific risk through a portfolio with wide
diversification across 107 holdings. These policies have helped the Company's
shares to trade with a relatively modest level of volatility since its launch.

At the time of writing, equity markets globally are suffering a period of
fluctuating volatility. Nonetheless, we will continue to focus on growing the
dividend income of the Company's portfolio progressively over time, which we
believe will help the Company to continue to deliver a premium investment
return.

Michael Wrobel
Chairman
14 August 2013

MANAGER'S REPORT

Markets
Stock market returns in the 12 months to 31 May 2013 have been pretty good. At
the previous year end, investors were greatly concerned that Greece was likely
to leave the Euro currency in a chaotic manner. However, a statement by the EU
President to `do whatever it takes' and the announcement of the willingness of
the European Central Bank to buy the Government bonds of the weaker states
changed sentiment. Meanwhile, the policy of Quantitative Easing continued to be
applied by several central banks and this encouraged banks around the world to
purchase bonds generally. As a result, the bond yields of some of the more
vulnerable Euroland countries improved very significantly in the period. A
particularly fine example is Portugal, where 10 year Government bond yields
halved from 11.65% to 5.55% over the year to 31 May 2013. Extraordinary stuff.

Against a backdrop this positive, equity markets have also performed strongly.
On a total return basis, the FTSE All-Share Index rose 30.1%. The FTSE 250
Index once again delivered premium returns, with a rise of 39.9%. However, in
contrast to the credit boom trend, many smaller companies have delivered even
better returns. The FTSE SmallCap Index (ex IC) rose 46.1% in the year ended
31 May 2013. Not all smaller stock indices performed as well. The FTSE AIM
All-Share Index rose only 6.4% in the period as portfolio managers aggressively
sold down small exploration stocks because they are unlikely to ever pay
sustained dividends.

These index moves underline a fundamental change of attitude coming through in
the financial markets. As anticipated, investors are beginning to move away
from embracing extra volatility in the hope of holding stocks that will
outperform rising indices, and instead are seeking investments in businesses
with decent dividend yields that are well-placed to sustain a growth of that
dividend into the future.

This change in attitude is also being seen in the growing interest in smaller
companies that are able to pay good and growing dividends. Whereas previously
companies that were outside the largest 350 quoted stocks were largely ignored
by professional investors, now there is a greater willingness to consider them.
The chart in the full Annual Report shows the performance of all stocks,
grouped by market capitalisation, that had a yield of at least 4% at 
31 May 2012, and their performance in the year under review. The chart 
demonstrates the strong share price performance of stocks with high yields.

Since many of these high-yielding companies were already well owned, the change
in attitude did not drive their share prices up very much. Many of the best
performing income stocks in the period were further down the market
capitalisation range. However, it will also be noted that many of the smallest
high yield stocks missed out on the general trend. We believe that the attitude
change by investors is still at its early stages and as yet many have not been
willing to consider those paying good and growing dividends with market
capitalisations below £100m. At present, we are still able to invest in these
stocks at more attractive valuation metrics, and therefore we believe they
still offer some of the most attractive risk/reward ratios.

The criteria used for selecting portfolio stocks
There are five criteria that the managers use to determine the scope for the
business to deliver good and growing dividends.

The prospect of turnover growth
If a business is to sustain and grow its dividend, then the portfolio needs to
invest in companies that will generate more cash in the coming years. Without
decent turnover growth this is near-impossible to achieve over time.

Sustained or improving margins
A business needs to deliver significant value to its customer base if it is to
sustain decent margins. Unexpected cost increases cannot be charged on to
customers if they are anything less than delighted with their suppliers.
Turnover growth will not lead to improved cash generation if declining margins
offset it.

A forward-looking management team
Businesses often need to make commercial decisions on incomplete information. A
thoughtful and forward-looking team has a better chance of making better
decisions.

Robust balance sheet
There are disproportionate advantages to having the independence of a strong
balance sheet in a period of elevated economic and political risks. Conversely,
corporates with imprudent borrowings can risk the total loss of shareholders'
capital.

Low expectation valuation
Many of the most exciting stocks enjoy higher stock market valuations but
almost none can consistently beat the high expectations baked in to their share
prices. Those with low expectations tend to less vulnerable to disappointment,
but conversely can enjoy excellent share price rises if they surprise on the
upside.

Companies that best meet these criteria on a prospective basis are believed to
be best positioned to deliver attractive returns to shareholders, as well as
offering moderated risk.

These criteria, used in reverse, can also be useful in determining the timing
of portfolio stocks that should be considered for divestment. So a business in
danger of suffering a period of turnover declines, for example, would naturally
be expected to generate less cash flow in future years and thereby struggle to
sustain their current dividend over time, let alone grow it.

Performance
The Company holds a widely diversified list of 107 holdings. The largest 40
stocks in the portfolio are listed below. It will be noted that most holdings
are around 1% of the portfolio. On occasions, when the risk/reward ratio
appears particularly attractive, some holdings are purchased to take them up to
around 1.5% of the portfolio. With differential share price moves, some of
these holdings can move up to slightly larger percentages. However, the overall
volatility of the portfolio has been well below other trusts in the UK Growth
and Income sector. In part this is related to the wide diversification within
the portfolio, and in part to the naturally lower volatility of higher income
stocks, especially those with strong balance sheets.

Over the year under review, the Company delivered a total return of 40.7%.
Generally the Company was largely fully invested throughout the period,
although the borrowing facility was not greatly used.

There were two C share issues in the period and the new capital was typically
invested in similar stocks to that of the original fund. Once at least 90% of
the new capital had been invested, then the C share portfolio was merged with
that of the parent. This process ensured that shareholders' returns were not
diluted by the additional capital raised during the year.

The Company launched on the Stock Exchange on 28 April 2011. Since that time,
on a price basis, the FTSE All-Share Index has delivered a rise of 10.1%. The
FTSE SmallCap Index (ex IC) rose by 23.9%, although the FTSE AIM All-Share fell 
by 20.8%. The price return on the Company in the period was 29.4%.

Portfolio
The portfolio is invested in a wide range of individual stocks that together
offer the prospect of good and growing dividend income. Although there are some
in FTSE 100 Index which we find attractive, they are fairly limited in number.
For that reason the portfolio has only 6.3% of its capital invested in these
stocks. There are a greater number in the FTSE 250 or MidCap Index and
therefore the Company holds around 23.0% in this area of the market. Overall,
around one-third of the portfolio is invested in the largest 350 stocks, which
implies that around two-thirds is invested in the remaining universe of some
2,500 quoted stocks.

Gervais Williams and Martin Turner
Miton Capital Partners Limited
14 August 2013

PORTFOLIO INFORMATION AS AT 31 MAY 2013

Rank  Company                     Sector & main      Valuation   % of net  Yield¹
                                  activity               £'000     assets       %

1     Greencore                   Food Producers         2,979        2.2     2.9
                                                                               
2     St Ives                     Support Services       2,939        2.2     3.7
                                                                               
3     UK Mail                     Industrial             2,756        2.0     3.7
                                  Transportation                                 
                                                                               
4     Fairpoint²                  General Financial      2,692        2.0     5.0
                                                                               
5     CML Microsystems            Technology             2,574        1.9     0.9
                                  Hardware &                                   
                                  Equipment                                    
                                                                               
6     Beazley                     Non Life Insurance     2,353        1.7     3.5
                                                                               
7     Charles Taylor Consulting   General Financial      2,352        1.7     5.4
                                                                               
8     Abbey Protection²           Non Life Insurance     2,284        1.7     4.2
                                                                               
9     Randall & Quilter           Non Life Insurance     2,218        1.6     6.6
      Investment Holdings²                                                    
                                                                               
10    Bioventix²                  Pharmaceuticals &      2,197        1.6     4.3
                                  Biotechnology                                
                                                                               
      Top 10 investments                                25,344       18.6        
                                                                               
11    4imprint                    Media                  2,167        1.6     3.1
                                                                               
12    SQS Software²               Software &             2,042        1.5     2.1
                                  Computer                                     
                                                                               
13    Novae Group                 Non Life Insurance     1,909        1.4     4.1
                                                                               
14    Dairy Crest                 Food Producers         1,875        1.4     4.3
                                                                               
15    Staffline²                  Support Services       1,871        1.4     1.9
                                                                               
16    BT                          Fixed Line             1,870        1.4     3.1
                                  Telecommunications                           
                                                                               
17    Interserve                  Support Services       1,861        1.4     4.2
                                                                               
18    Zotefoams                   Chemicals              1,848        1.4     2.6
                                                                               
19    888 Holdings                Travel & Leisure       1,841        1.3     4.5
                                                                               
20    KCOM                        Fixed Line             1,820        1.3     4.9
                                  Telecommunications                           
                                                                               
      Top 20 investments                                44,448       32.7        
                                                                               
21    Brown(N)                    General Retailers      1,748        1.3     3.0
                                                                               
22    Secure Trust Bank²          Banks                  1,739        1.3     2.9
                                                                               
23    Hansard Global              Life Insurance         1,704        1.3     8.6
                                                                               
24    Wilmington                  Media                  1,689        1.2     4.3
                                                                               
25    Personal²                   Non Life Insurance     1,679        1.2     4.6
                                                                               
26    Huntsworth                  Media                  1,676        1.2     5.8
                                                                               
27    Hilton Food                 Food Producers         1,667        1.2     3.4
                                                                               
28    Cineworld                   Travel & Leisure       1,664        1.2     3.6
                                                                               
29    Vodafone                    Mobile                 1,645        1.2     5.3
                                  Telecommunications                           
                                                                               
30    Consort Medical             Health Care            1,624        1.2     2.4
                                  Equipment &                                  
                                  Services                                     
                                                                               
      Top 30 investments                                61,283       45.0        
                                                                               
31    Cranswick                   Food Producers         1,621        1.2     2.7
                                                                               
32    Segro                       Real Estate            1,607        1.2     5.5
                                                                               
33    Amlin                       Non Life Insurance     1,597        1.2     5.8
                                                                               
34    TalkTalk Telecom            Fixed Line             1,588        1.2     4.6
                                  Telecommunications                           
                                                                               
35    Berendsen                   Support Services       1,555        1.1     3.3
                                                                               
36    Catlin                      Non Life Insurance     1,549        1.1     5.9
                                                                               
37    Nationwide Accident²        Support Services       1,511        1.1     7.6
                                                                               
38    Cable & Wireless Comms      Fixed Line             1,500        1.1     6.0
                                  Telecommunications                           
                                                                               
39    Provident Financial         General Financial      1,494        1.1     5.0
                                                                               
40    Silverdell²                 Support Services       1,468        1.1     1.2
                                                                                 
Top 40 investments                                      76,773       56.4        
                                                                               
Balance held in 67 equity investments                   50,926       37.5        

Total equity investments                               127,699       93.9  
      
Fixed interest and convertible investments               1,198        0.9 
       
Total investments                                      128,897       94.8        
                                                                               
Cash and net assets                                      7,012        5.2        
                                                                               
Net assets                                             135,909      100.0        

¹Source: Interactive Data. Based on historic yields. Manager's estimate where
no historical data.

²AIM/ISDX listed.

A copy of the full portfolio of investments as at 31 May 2013 is available on
the Company's website, www.mitongroup.com/dit.

Portfolio exposure by sector
                                                 %
                                                  
Insurance & Insurance Services                16.3
                                                  
Consumer Services                             15.7
                                                  
General Financial                             11.6
                                                  
Support Services                              10.5
                                                  
Consumer Goods                                10.0
                                                  
Industrials                                    7.2
                                                  
Technology                                     6.8
                                                  
Telecommunications                             6.2
                                                  
Cash and Fixed Interest/Convertibles           6.0
                                                  
Basic Materials                                3.9
                                                  
Health Care                                    3.7
                                                  
Oil & Gas                                      1.2
                                                  
Utilities                                      0.9
                                                  
                                             100.0

Portfolio by asset allocation
                                                 %
                                                  
FTSE 100                                       6.3
                                                  
FTSE 250                                      23.0
                                                  
FTSE SmallCap                                 24.2
                                                  
FTSE Fledgling                                 2.4
                                                  
AIM/ISDX                                      34.4
                                                  
Other                                          3.7
                                                  
Cash and Fixed Interest/Convertibles           6.0
                                                  
                                             100.0

Portfolio by spread of investment income
                                                 %
                                                  
FTSE 100                                       9.7
                                                  
FTSE 250                                      29.0
                                                  
FTSE SmallCap                                 23.5
                                                  
FTSE Fledgling                                 3.4
                                                  
AIM/ISDX                                      27.5
                                                  
Fixed Interest and Other                       6.9
                                                  
                                             100.0

Estimated annual income by sector¹
                                                 %
                                                  
Insurance & Insurance Services                22.8
                                                  
Consumer Services                             15.7
                                                  
General Financial                             14.8
                                                  
Support Services                              11.1
                                                  
Telecommunications                             8.1
                                                  
Consumer Goods                                 7.2
                                                  
Industrials                                    7.0
                                                  
Basic Materials                                4.1
                                                  
Health Care                                    3.1
                                                  
Technology                                     3.0
                                                  
Fixed Interest/Convertibles                    1.5
                                                  
Utilities                                      1.1
                                                  
Oil & Gas                                      0.5
                                                  
                                             100.0

¹Projected income based on portfolio as at 31 May 2013.
Source: Miton Capital Partners Limited

BOARD OF DIRECTORS (all non-executive)

Michael Wrobel (Chairman)
Paul Craig
Lucinda Riches (Chairman of the Management Engagement Committee)
Jane Tufnell (Senior Independent Director and Chairman of the Audit Committee)

CAPITAL STRUCTURE

The Company's share capital consists of redeemable ordinary shares of 0.1p each
with one vote per share ("ordinary shares") and non-voting management shares of
£1 each ("management shares").

As at 31 May 2013 and the date of this report, there are 208,693,307 ordinary
shares in issue, none of which are held in treasury, and 50,000 management
shares.

The Company has a redemption facility through which shareholders are entitled
to request the redemption of all or part of their holding of ordinary shares on
an annual basis on 31 May in each year. The Board may, at its absolute
discretion, elect not to operate the annual redemption facility in whole or in
part, although it has indicated that it is minded to approve all requests.

Further details of the capital structure can be found in note 8 to the
financial statements.

INVESTMENT OBJECTIVE

The Company's investment objective is to provide shareholders with an
attractive level of dividends coupled with capital growth over the long term.

INVESTMENT POLICY

The Company invests primarily in quoted or traded UK companies with a wide
range of market capitalisations, but a long-term bias toward small and mid-cap
equities. The Company may also invest in large cap companies, including FTSE
100 constituents, where it is believed that this may increase shareholder
value.

The Manager adopts a stock specific approach in managing the Company's
portfolio and therefore sector weightings are of secondary consideration. As a
result of this approach, the Company's portfolio does not track any benchmark
index.

The Company may utilise derivative instruments including index-linked notes,
contracts for differences, covered options and other equity-related derivative
instruments for efficient portfolio management, gearing and investment
purposes. Any use of derivatives for investment purposes will be made on the
basis of the same principles of risk spreading and diversification that apply
to the Company's direct investments, as described below. The Company will not
enter into uncovered short positions.

Risk Diversification
Portfolio risk is mitigated by investing in a diversified spread of
investments. Investments in any one company, shall not, at the time of
acquisition, exceed 15% of the value of the Company's investment portfolio.
Typically it is expected that the Company will hold a portfolio of between 80
and 120 securities, predominantly most of which will represent no more than
1.5% of the value of the Company's investment portfolio as at the time of
acquisition.

The Company will not invest more than 10% of its gross assets, at the time of
acquisition, in other listed closed-ended investment funds, whether managed by
the Manager or not, except that this restriction shall not apply to investments
in listed closed-ended investment funds which themselves have stated investment
policies to invest no more than 15% of their gross assets in other listed
closed-ended investment funds. In addition to this restriction, the Directors
have further determined that no more than 15% of the Company's gross assets
will, at the time of acquisition, be invested in other listed closed-ended
investment funds (including investment trusts) notwithstanding whether or not
such funds have stated policies to invest no more than 15% of their gross
assets in other listed closed-ended investment funds.

Unquoted Investments
The Company may invest in unquoted companies from time to time subject to prior
Board approval. Investments in unquoted companies in aggregate will not exceed
5% of the value of the Company's investment portfolio as at the time of
investment.

Borrowing and Gearing Policy
The Board considers that long-term capital growth can be enhanced by the use of
gearing which may be through bank borrowings and the use of derivative
instruments such as contracts for differences. The Company may borrow (through
bank facilities and derivative instruments) up to 15% of net asset value
("NAV") (calculated at the time of borrowing).

The Board oversees the level of gearing in the Company, and reviews the
position with the Manager on a regular basis.

In the event of a breach of the investment policy set out above and the
investment and gearing restrictions set out therein, the Manager shall inform
the Board upon becoming aware of the same and if the Board considers the breach
to be material, notification will be made to the London Stock Exchange.

No material change will be made to the investment policy without the approval
of shareholders by ordinary resolution.

BUSINESS REVIEW

Principal Activity and Status
The principal activity of the Company is to carry on business as an investment
trust. The Company intends at all times to conduct its affairs so as to enable
it to qualify as an investment trust for the purposes of Sections 1158/1159 of
the Corporation Tax Act 2010 ("S1158/1159"). The Directors do not envisage any
change in this activity in the foreseeable future.

The Company has applied for, and been granted, approval from HM Revenue &
Customs ("HMRC") as an investment trust under S1158/1159 for the period ended
31 May 2012. The Company will be treated as an investment trust company for
each subsequent accounting period, subject to there being no serious breaches
of the conditions for approval.

The principal conditions that must be met for approval by HMRC as an investment
trust for any given accounting period are that the Company's business should
consist of "investing in shares, land or other assets with the aim of spreading
investment risk and giving members of the company the benefit of the results"
and the Company must distribute a minimum of 85% of all its income as dividend
payments. The Company must also not be a close company. The Directors are of
the opinion that the Company has conducted its affairs for the year ended
31 May 2013 so as to be able to continue to qualify as an investment trust.

The Company's status as an investment trust allows it to obtain an exemption
from paying taxes on the profits made from the sale of its investments and all
other net capital gains. Investment trusts offer a number of advantages for
investors, including access to investment opportunities that might not be open
to private investors and to professional stock selection skills at lower cost.

The Company is an investment company in accordance with the provisions of
Sections 832 and 833 of the Companies Act 2006.

The Company has a wholly owned subsidiary, DIT Income Services Limited. The
purpose of the subsidiary is to invest in shorter-term holdings, where the
gains after corporation tax can be passed up to the parent company by way of
dividends, thus improving the position of the Company's revenue account.

Investment Policy
The Company's investment policy is set out above and contains information on
the policies which the Company follows relating to asset allocation, risk
diversification and gearing, and includes maximum exposures, where relevant.

The Company invests primarily in quoted or traded UK companies with a wide
range of market capitalisations but a long-term bias toward small and mid cap
equities with a view to achieving the Company's investment objective.

The Manager adopts a stock specific approach in managing the Company's
portfolio and therefore sector weightings will be of secondary consideration.
As a result of this approach, the Company's portfolio will not track any
benchmark index.

Details of the largest investments are shown above.

Performance
The Chairman's Statement and the Manager's Report above give details of the
Company's activities, performance and position during the year.

The Board reviews the Company's performance by reference to a number of Key
Performance Indicators ("KPIs") and considers that the most relevant KPIs are
those that communicate the financial performance and strength of the Company as
a whole. The Board and the Manager monitor the following KPIs:

● NAV performance, relative to comparable investment trusts and open-ended
funds and to various UK stockmarket indices

The Company's total return increased by 40.7% over the year. This compares
favourably with its peer group, where the average was a 38.2% increase. By
comparison, the total return on the FTSE All-Share Index was 30.1%, on the FTSE
SmallCap Index (ex IC) was 46.1%, and on the AIM All-Share Index was 6.4%.

● NAV volatility

The Company has an objective to deliver attractive returns whilst having an eye
to constraining volatility relative to other similar investment trusts. For the
year to 31 May 2013, the Company's NAV had a volatility of 8.7%, the third
lowest in its peer group.

● Movements in the Company's share price

The Company's share price increased by 40.9% over the year on a total return
basis. This compares favourably with its peer group, where the average increase
was 38.2%. By comparison, the total return on the FTSE All-Share Index was
30.1%, on the FTSE SmallCap Index (ex IC) was 46.1%, and on the AIM All-Share
Index was 6.4%.

● The discount of the share price in relation to the NAV

The Company has an objective to keep the discount to NAV at a minimum. Over the
year to 31 May 2013 the Company has maintained an average premium to NAV of
3.8%. This compares favourably with its peer group, where the average discount
was 0.5% over the year. The premium on the NAV at 31 May 2013 was 1.4%.

● The Company's dividend growth rate

The Company has an objective to deliver an attractive dividend income and
growth in the dividend. In the year, the Company paid dividends totalling 2.1p,
representing a yield of 3.6% (based on an average share price of 57.8p). The
Company grew this dividend by 4.0% compared to the annualised total of the
previous year. This compares to its peer group, where the average growth rate
was 3.8%.

● Ongoing charges

The ongoing charges for the year to 31 May 2013 amounted to 1.45% (2012: 1.90%)
of total assets.

Net Asset Value
The NAV at 31 May 2013 was 65.1p per share.

Dividends
Dividends totalling 2.1p per ordinary share have been paid or declared in
respect of the period ended 31 May 2013 as follows:

First interim dividend:   0.30p paid on 30 November 2012      
                                                              
Second interim dividend:  0.50p paid on 28 February 2013      
                                                              
Third interim dividend:   0.46p paid on 31 May 2013           
                                                              
Fourth interim dividend:  0.84p payable on 31 August 2013     

Shareholders will have the option to vote on the dividend payment policy of the
Company at the forthcoming Annual General Meeting.

Share Issues
Under a special resolution passed on 6 April 2011, the Directors were granted
the authority to allot up to 100,000,000 C shares. They were also granted the
authority to allot ordinary shares up to an aggregate nominal amount of 
£10,000, and this authority was renewed at the Annual General Meeting held on 
17 October 2012.

On 19 July 2012, 60,000,000 C shares of 1p each were issued under a Placing and
Offer for Subscription at an issue price of 50p each, raising an aggregate of 
£30 million of gross proceeds for the Company. These C shares were converted
into ordinary shares at the rate of 0.9418 ordinary shares for every C share on
1 October 2012, resulting in the issue of 56,507,978 new ordinary shares.

At a General Meeting held on 7 December 2012, the Directors were granted the
authority to allot C shares on a fully pre-emptive basis up to an aggregate
nominal amount of £3,000,000, representing 300,000,000 C shares.

62,000,000 C shares of 1p each were issued on 17 December 2012 at an issue
price of 50p each under an Open Offer, Placing and Offer for Subscription for C
shares, raising an aggregate of £31 million of gross proceeds for the Company.
These C shares were converted into ordinary shares at the rate of 0.8417
ordinary shares for every C share on 26 March 2013, resulting in the issue of
52,185,329 new ordinary shares.

Following the above transactions, there are 208,693,307 ordinary shares in
issue as at the year end and at the date of this Report.

The remaining authorities to issue shares are due to expire at the Company's
Annual General Meeting to be held on 22 October 2013. Proposals for their
renewal are set out in the full Annual Report and Accounts.

There are no restrictions concerning the transfer of securities in the Company
or on voting rights; no special rights with regard to control attached to
securities; 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.

Purchase of Own Shares
At the Annual General Meeting of the Company held on 17 October 2012, the
Directors were granted the authority to buy back up to 14,990,000 ordinary
shares. No ordinary shares have been bought back under this authority. The
authority will expire at the next Annual General Meeting when a resolution for
its renewal will be proposed.

Treasury Shares
Shares bought back by the Company may be held in treasury, from where they
could be re-issued at a premium to NAV quickly and cost effectively. This
provides the Company with additional flexibility in the management of its
capital base. No shares were purchased for, or held in, treasury during the
year.

Share Redemptions
Valid redemption requests were received under the Company's redemption facility
for the 31 May 2013 Redemption Point in relation to 34,893 ordinary shares. As
permitted under the Company's Articles of Association, these shares were
matched with buyers and were sold at a calculated Redemption Price of 
65.16 pence.

Principal Risks
The Company is exposed to a variety of risks. The principal financial risks and
the Company's policies for managing these risks and the policy and practice
with regard to financial instruments are summarised in note 17 to the financial
statements. The Board has also identified the following additional risks and
uncertainties:

Investment and strategy
There can be no guarantee that the investment objective of the Company will be
achieved. The Company is an investment trust which invests mainly in UK
equities. However, the Company has a very wide investment policy and may also
invest in cash and bonds, unquoted investments, derivative instruments and
other investments and securities, as appropriate.

The Company does not follow any benchmark. Accordingly, the portfolio of
investments held by the Company will not mirror the stocks and weightings that
constitute any particular index or indices, which may lead to the Company's
shares failing to follow either the direction or extent of any moves in the
financial markets generally (which may or may not be to the advantage of
shareholders).

The Manager has in place a dedicated investment management process which is
designed to ensure the investment objectives are achieved. The Board reviews
regular investment and financial reports from the Manager.

Smaller companies
The Company will invest primarily in quoted UK companies with a wide range of
market capitalisations but a long-term bias toward small and mid cap equities.
Smaller companies can be expected, in comparison to larger companies, to be
less mature businesses, have more restricted depth of management and a higher
risk profile. In addition, the relatively small market capitalisation of such
companies can make the market in their shares illiquid. Prices of smaller
capitalisation stocks are often more volatile than prices of larger
capitalisation stocks and the risk of insolvency of many smaller companies
(with the attendant losses to investors) is higher.

The Company looks to mitigate this risk by holding a spread of investments,
achieved through limiting the size of new holdings at the time of investment,
to a maximum of 1.5% of the portfolio. All potential investee companies are
researched by the Manager prior to investment.

Sectoral diversification
The Company is not constrained from weighting to any sector. This may lead to
the Company having significant exposure to portfolio companies from certain
business sectors from time to time. Greater concentration of investments in any
one sector may result in greater volatility in the value of the Company's
investments and consequently its NAV.

The Company seeks to achieve returns by investing across the full spectrum of
companies meeting its criteria, covering all sectors.

Unquoted companies
The Company may invest in unquoted companies from time to time. Such
investments, by their nature, involve a higher degree of valuation and
performance uncertainties and liquidity risks than investments in listed and
quoted securities and they may be more difficult to realise.

This risk is mitigated by the requirement for the Board to prior approve any
investment into unquoted companies and by limiting the size of aggregate
unquoted investments to less than 5% of the portfolio as at the time of
investment.

Use of derivative instruments
The Company may utilise derivative instruments including index-linked notes,
contracts for differences, covered options and other equity-related derivative
instruments for efficient portfolio management, gearing and investment
purposes. The Company will not enter into derivative contracts for speculative
purposes.

Dividends
The Company's investment objective includes the aim of providing shareholders
with a dividend income. There is no guarantee that any dividends will be paid
in respect of any financial year or period. The ability to pay dividends is
dependent on a number of factors including the level of dividends earned from
the portfolio and the net revenue profits available for that purpose.

The redemption of shares pursuant to the redemption facility may also reduce
distributable reserves to the extent that the Company is unable to pay
dividends.

The Company maintains accounting records and produces forecasts that are
designed to reduce the likelihood that the Company will not have sufficient
distributable resources to meet its dividend objective.

Share price volatility and liquidity/marketability risk
The market price of the Company's shares, like shares in all investment
companies, may fluctuate independently of the NAV and thus may not reflect the
underlying NAV of the shares. The shares could trade at a discount or premium
to NAV at different times, depending on factors such as supply and demand for
the shares, market conditions and general investor sentiment.

Gearing
The Company's investment strategy may involve the use of gearing to enhance
investment returns, which exposes the Company to risks associated with
borrowings. Gearing may be generated through the use of options, futures,
options on futures, swaps and other synthetic or derivative financial
instruments. Such financial instruments inherently contain much greater
leverage than a non-margined purchase of the underlying security or instrument.

While the use of borrowings should enhance the total return on the shares where
the return on the Company's underlying assets is rising and exceeds the cost of
borrowing, it will have the opposite effect where the return on the Company's
underlying assets is rising at a lower rate than the cost of borrowing or
falling, further reducing the total return on the shares. As a result, the use
of borrowings by the Company may increase the volatility of the NAV per share.

The Company has an overdraft facility in place, as detailed in note 15, but
this was unused at 31 May 2013 and throughout much of the period.

The Company is limited to a maximum gearing of 15% of the net assets. There was
no gearing at 31 May 2013.

Key man risk
The Company depends on the diligence, skill, judgement and business contacts of
the Manager's investment professionals and its future success could depend on
the continued service of these individuals, in particular Gervais Williams.

C shares
The Directors have been authorised to issue C shares and will be seeking
renewal of this authority at the Annual General Meeting. If the Directors
decide to issue C shares, the proportions of the voting rights held by ordinary
shareholders will be diluted on the issue of such C shares as each C share
carries the right to one vote. The voting rights may be diluted further on
conversion of the C shares depending on the applicable conversion ratio.

Redemption facility
The operation of the annual redemption facility may lead to a more concentrated
and less liquid portfolio which may adversely affect the Company's performance
and value. Further, redemptions may also adversely affect the secondary market
liquidity of the ordinary shares.

The Board would seek to mitigate the risk of substantial redemptions being
requested by maintaining a regular flow of communication with shareholders and
the achievement of the investment objectives of the Company. Under the Articles
of Association, the Board may, at its absolute discretion, elect not to operate
the redemption facility on any given Redemption Point, although the Board does
not generally expect to exercise this discretion, save in the interests of
shareholders as a whole.

Taxation
The affairs of the Company are conducted so as to satisfy the conditions of
approval as an investment trust under S1158/1159.

Any change in the Company's tax status or in taxation legislation or practice
generally could affect the value of the investments held by the Company, affect
the Company's ability to provide returns to shareholders, lead the Company to
lose its exemption from tax on chargeable gains or alter the post-tax returns
to shareholders.

The Board seeks to use the services of appropriately qualified professional
organisations to ensure adherence by the Company to the taxation requirements
of an investment trust to mitigate this risk.

Compliance with laws or regulations
The Company is subject to compliance with the Companies Act 2006 and the
continuing obligations imposed by the UK Listing Authority on investment
companies whose shares are listed on the Official List. A breach of any of
these could lead to suspension of the listing of the Company's shares on the
London Stock Exchange and/or financial penalties, with the resulting
reputational implications.

The Board utilises appropriately qualified service providers to carry out the
day-to-day activities of the Company. The Manager also has an independent
compliance department that carries out regular monitoring of the activities of
the Manager and provides regular reports to the Board.

The Alternative Investment Fund Managers' Directive ("AIFMD") was implemented
by EU member states, including the UK, on 22 July 2013. Firms already operating
in accordance with AIFMD at the date of implementation will have until 22 July
2014 to register with the Financial Conduct Authority if they wish to become an
Alternative Investment Fund Manager in their own right. It seems likely that
there will be an increase, potentially a material increase, in the Company's
governance, administration and custodian expenses as a result of this
implementation. The Board is in the process of discussing the requirements and
the implications with its advisers to ensure compliance by 22 July 2014.

Engagement of third party advisers
The Company has no employees and the Directors have all been appointed on a
non-executive basis. Whilst the Company has taken all reasonable steps to
establish and maintain adequate procedures, systems and controls to enable it
to comply with its obligations, the Company is reliant upon the performance of
third party service providers for its executive function.

The Board makes appropriate enquiries before engaging third parties which are
all expected to operate in accordance with written contracts and service level
agreements, if appropriate.

Social, Environmental, Community and Employee Issues
The Company does not have any employees and the Board consists entirely of
non-executive Directors. As an investment trust, the Company has no direct
impact on the community or the environment, and as such has no policies in this
area. In carrying out its investment activities and in relationships with
suppliers, the Company aims to conduct itself responsibly, ethically and
fairly.

Current and Future Developments
On 15 February 2013 the Company announced that it had agreed heads of terms
with the board of Henderson Fledgling Trust plc (subsequently renamed Miton
Income Opportunities Trust plc ("MIOT")) in respect of a future merger of the
two companies (the "Scheme"). Under the Scheme, which is to be recommended by
the boards of both companies, MIOT shareholders will receive Diverse shares
valued at a premium of 2.5% to the NAV as at the effective date of the Scheme.
The consideration for the issue of new Diverse shares will be the transfer to
Diverse of the entire investment portfolio of MIOT, following the setting aside
of such amounts as required to meet its outstanding and contingent liabilities,
by way of a scheme of reconstruction. There will be no cash exit offered as
part of the Scheme.

The Scheme has a number of benefits for Diverse's shareholders, the key ones of
which are:

● scaling up the assets of the Company will improve the liquidity of its shares
on the secondary market to the benefit of all shareholders;

● the acquisition of an investment portfolio which will be complementary to the
Company's existing portfolio;

● introducing new investors into the Company and broadening its investor base;
and

● reducing the Company's fixed operating costs as a percentage of shareholder
funds.

The Company will pay for its own costs of implementing the Scheme. The Scheme
has been structured in a way to ensure that there will be no dilution to the
Company's NAV as a result of the Scheme.

As announced on 2 July 2013, it is anticipated that a prospectus setting out
full details of the merger will be sent to shareholders in September 2013.

Please refer to the Chairman's Statement and the Manager's Report above for
further information on the likely future development of the Company.

Going Concern
The Directors consider that it is appropriate to adopt the going concern basis
in preparing the financial statements. After making enquiries, and bearing in
mind the nature of the Company's business and assets, the Directors consider
that the Company has adequate resources to continue in operational existence
for the foreseeable future. In arriving at this conclusion the Directors have
considered the liquidity of the portfolio and the Company's ability to meet
obligations as they fall due for a period of at least 12 months from the date
that these financial statements were approved.

Cash flow projections have been reviewed and show that the Company has
sufficient funds to meet both its contracted expenditure and its discretionary
cash outflows in the form of the dividend policy.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the Group
financial statements in accordance with applicable United Kingdom law and those
International Financial Reporting Standards ("IFRS") as adopted by the European
Union.

Under company law the Directors must not approve the financial statements
unless they are satisfied that they present fairly the financial position,
financial performance and cash flows of the Group for that year.

In preparing the Group financial statements, the Directors are required to:

● select suitable accounting policies in accordance with IAS 8: `Accounting
Policies, Changes in Accounting Estimates and Errors' and then apply them
consistently;

● present information, including accounting policies, in a manner that provides
relevant, reliable, comparable and understandable information;

● provide additional disclosures when compliance with specific requirements in
IFRS is insufficient to enable users to understand the impact of particular
transactions, other events and conditions on the Group's financial position and
financial performance;

● state that the Group has complied with IFRS, subject to any material
departures disclosed and explained in the financial statements; and

● make judgements and estimates that are reasonable and prudent.

The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that the Group financial statements comply with the Companies
Act 2006 and Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Group and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for
preparing a Directors' Report (including Business Review), Directors'
Remuneration Report and Corporate Governance Statement that comply with that
law and those regulations, and 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, 
www.mitongroup.com/dit, which is maintained on behalf of the Company by the
Manager, Miton Capital Partners Limited. Under the Management Agreement, the
Manager has agreed to maintain, host, manage and operate the Company's website
and to ensure that it is accurate and up to date and operated in accordance
with applicable law. The work carried out by the Auditor does not involve
consideration of the maintenance and integrity of this website and accordingly,
the Auditor accepts no responsibility for any changes that have occurred to the
financial statements since they were initially presented on the website.
Visitors to the website need to be aware that legislation in the United Kingdom
covering the preparation and dissemination of the financial statements may
differ from legislation in their jurisdiction.

We confirm that to the best of our knowledge:

● the Group financial statements, prepared in accordance with IFRS as adopted
by the European Union, give a true and fair view of the assets, liabilities,
financial position and profit of the Group; and

● this Annual Report includes a fair review of the development and performance
of the business and the position of the Group together with a description of
the principal risks and uncertainties that it faces.

On behalf of the Board
Michael Wrobel
Chairman
14 August 2013

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's
statutory accounts for the year ended 31 May 2013 and the period ended 31 May
2012 but is derived from those accounts. Statutory accounts for 2012 have been
delivered to the Registrar of Companies, and those for 2013 will be delivered
in due course. The Auditor has reported on those accounts; their report was 
(i)unqualified, (ii) did not include a reference to any matters to which the
Auditor drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under Section 498 (2) or (3) of the Companies
Act 2006. The text of the Auditor's report can be found in the Company's full
Annual Report and Accounts at: www.mitongroup.com/dit

CONSOLIDATED INCOME STATEMENT
                                                        
                                  Year ended       Period from incorporation to            
                                  31 May 2013              31 May 2012        
                          Revenue  Capital    Total  Revenue  Capital    Total 
                  Note      £'000    £'000    £'000    £'000    £'000    £'000 
                                                                               
Gains/(losses) on
investments held                                                               
at fair value                                                                  
through profit or                                                              
loss                11          -   28,196   28,196        -   (1,494)  (1,494)
                                                    
                                                                               
Income               2      4,765        -    4,765    2,954        -    2,954 
                                                                               
Investment           3       (256)    (767)  (1,023)    (132)    (397)    (529)
management fee                                                                 
                                                                               
Other expenses       4       (532)       -     (532)    (494)       -     (494)
                                                                               
Return/(loss) on
ordinary                                                                       
activities before                                                              
finance costs and                                                              
taxation                    3,977   27,429   31,406    2,328   (1,891)     437 
                                                                               
Finance costs -
overdraft                                                                      
interest paid                  (3)      (9)     (12)       -        -        - 
                                                                               
Return/(loss) on             
ordinary                                                                       
activities before                                                              
taxation                    3,974   27,420   31,394    2,328   (1,891)     437                                       
                                                                               
Taxation             5        (25)      -       (25)      (9)       -       (9)
                                                                               
Return/(loss) on     6       
ordinary                                                                       
activities after                                                               
taxation                    3,949   27,420   31,369    2,319   (1,891)     437                                    
                                                                               
                            pence    pence    pence    pence    pence    pence 
                                                                               
Return/(loss) per    6       2.42    16.85    19.27     2.32    (1.89)    0.43 
ordinary share                                                                 
                                                                               
Return per C         6       0.63     4.32     4.95        -        -        - 
share                                                                          

The total column of this statement is the Income Statement of the Group
prepared in accordance with IFRS, as adopted by the European Union. The
supplementary revenue and capital columns are presented in accordance with the
Statement of Recommended Practice issued by the Association of Investment
Companies ("AIC SORP").

All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the year.

The notes form part of these financial statements.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

                                  Share                                        
                         Share  premium  Special  Capital    Revenue           
                       capital  account  reserve  reserve    reserve     Total 
Group                    £'000    £'000    £'000    £'000      £'000     £'000 
                                                                               
As at 1 June 2012          100        -   48,558   (1,891)     1,059    47,826 
                                                                               
Total comprehensive                                                            
income:                                                                        
                                                                               
Net return for the           -        -        -   27,420      3,949    31,369 
year                                                                           
                                                                               
Transactions with                                                              
shareholders recorded                                                          
directly to equity:                                                            
                                                                               
Issue of ordinary          109   60,891        -        -          -    61,000 
shares                                                                         
                                                                               
Expenses of share            -   (1,554)       -        -          -    (1,554)
issue                                                                          
                                                                               
Equity dividends paid        -        -        -        -     (2,732)   (2,732)
                                                                               
As at 31 May 2013          209   59,337   48,558   25,529      2,276   135,909 

                                  Share                                        
                         Share  premium  Special   Capital  Revenue            
                       capital  account  reserve   reserve  reserve      Total 
Group                    £'000    £'000    £'000     £'000    £'000      £'000 
                                                                               
As at 30 March 2011          -        -        -         -         -         -
(incorporation)                                                                
                                                                               
Total comprehensive                                                            
income:                                                                        
                                                                               
Net return for the           -        -        -    (1,891)   2,319        428 
period                                                                         
                                                                               
Transactions with                                                              
shareholders recorded                                                          
directly to equity:                                                            
                                                                               
Issue of ordinary          100   49,900        -         -        -     50,000 
shares                                                                         
                                                                               
Expenses of share            -   (1,322)       -         -        -     (1,322)
issue                                                                          
                                                                               
Equity dividends paid        -        -        -         -   (1,260)    (1,260)
                                                                               
Transfer upon                -  (48,578)  48,578         -        -          - 
cancellation of share                                                          
premium account                                                                
                                                                               
Share premium                -        -      (20)        -        -        (20)
cancellation expenses                                                          
                                                                               
As at 31 May 2012          100        -   48,558    (1,891)   1,059     47,826 

The notes form part of these financial statements.

PARENT COMPANY STATEMENTS OF CHANGES IN EQUITY

                                Share
Company               Share   Premium    Special   Capital    Revenue    Total 
                    capital   account    reserve   reserve    reserve    £'000 
                      £'000     £'000      £'000     £'000      £'000          
                                  
                                                                               
As at 1 June 2012       100         -     48,558    (1,891)     1,002   47,769 
                                                                               
Total comprehensive                                                            
income:                                                                        
                                                                               
Net return for the        -         -          -    27,420      4,006   31,426 
year                                                                           
                                                                               
Transactions with                                                              
shareholders                                                                   
recorded directly                                                              
to equity:                                                                     
                                                                              
Issue of ordinary       109    60,891          -         -          -   61,000 
shares                                                                         
                                                                               
Expenses of share         -    (1,554)         -         -          -   (1,554)
issue                                                                          
                                                                               
Equity dividends          -         -           -        -     (2,732)  (2,732)
paid                                                                           
                                                                               
As at 31 May 2013       209    59,337      48,558   25,529      2,276  135,909 

       
Company               Share   Premium     Special   Capital   Revenue    Total 
                    capital   account     reserve   reserve   reserve    £'000 
                      £'000     £'000       £'000     £'000     £'000          
                                                                              
As at 30 March 2011       -         -           -         -         -        - 
(incorporation)                                                               
                                                                              
Total comprehensive                                                           
income:                                                                       
                                                                              
Net return for the        -         -           -    (1,891)    2,262      371 
period                                                                        
                                                                              
Transactions with                                                             
shareholders                                                                  
recorded directly                                                             
to equity:                                                                    
                                                                              
Issue of ordinary       100    49,900           -         -         -   50,000 
shares                                                                       
                                                                              
Expenses of share         -    (1,322)          -         -         -   (1,322)
issue                                                                         
                                                                              
Equity dividends          -         -           -         -    (1,260)  (1,260)
paid                                                                         
                                                                              
Transfer upon             -   (48,578)     48,578         -         -        - 
cancellation of                                                               
share premium                                                                 
account                                                                       
                                                                              
Share premium             -         -         (20)        -         -      (20)
cancellation                                                                  
expenses                                                                      
                                                                              
As at 31 May 2012       100         -      48,558    (1,891)    1,002   47,769 

The notes form part of these financial statements.


CONSOLIDATED AND PARENT COMPANY BALANCE SHEETS

                       Note         Group        Group       Company       Company 
                              31 May 2013  31 May 2012   31 May 2013   31 May 2012 
                                    £'000        £'000         £'000         £'000 
Non-current assets:                                                         
                                                                            
Investments held at      11       128,897       46,488       128,897        46,488 
fair value through                                                          
profit or loss                                                              
                                                                            
Current assets:                                                             
                                                                            
Investments held for                    -          151             -             - 
trading                                                                     
                                                                            
Trade and other          14         6,609        1,220         6,609         1,544 
receivables                                                                 
                                                                            
Cash and cash                         893          767           893           537 
equivalents                                                                 
                                                                            
                                    7,502        2,138         7,502         2,081 
                                                                            
Current liabilities:                                                        
                                                                            
Trade and other          15          (490)        (800)         (490)         (800)
payables                                                                     
                                                                            
Net current assets                  7,012        1,338         7,012         1,281 
                                                                            
Total net assets                  135,909       47,826       135,909        47,769 
                                                                            
Capital and reserves:                                                       
                                                                            
Share capital             8           209          100           209           100 
                                                                            
Share premium account     9        59,337            -        59,337             - 
                                                                            
Special reserve           9        48,558       48,558        48,558        48,558 
                                                                              
Capital reserve           9        25,529       (1,891)       25,529        (1,891)
                                                                            
Revenue reserve           9         2,276        1,059         2,276         1,002 
                                                                            
Shareholders' funds               135,909       47,826       135,909        47,769 
                                                                            
                                    pence        pence                          
                                                                            
Net asset value per      10         65.12        47.83                          
ordinary share                                                              

These financial statements were approved by the Board of The Diverse Income
Trust plc on 14 August 2013 and were signed on its behalf by:

Michael Wrobel
Chairman
Company no.: 7584303

The notes form part of these financial statements.


CONSOLIDATED AND PARENT COMPANY CASH FLOW STATEMENTS

                                      Group     Group   Company   Company 
                                     31 May    31 May    31 May    31 May
                                       2013      2012      2013      2012 
                                      £'000     £'000     £'000     £'000 
Operating activities:                                                     
                                                                          
Net return before taxation           31,394       437    31,451       380 
                                                                          
(Gains)/losses on investments held  (28,196)    1,494   (28,196)    1,494 
at fair value                                                             
                                                                          
Purchases of investments            (78,718)  (82,122)  (78,718)  (82,122)
                                                                          
Sales of investments                 19,130    34,022    19,130    34,022 
                                                                          
Increase in accrued income               (7)        -        (7)        - 
                                                                          
Increase in other receivables          (508)     (408)     (508)     (408)
                                                                          
Increase in other payables              191       106       191       106 
                                                                          
Movement in investments by              151      (151)        -         - 
subsidiary                                                                
                                                                          
Net cash outflow from operating     (56,563)  (46,622)  (56,657)  (46,528)
activities before taxation                                                
                                                                          
Taxation:                                                                 
                                                                          
Withholding tax paid                    (25)       (9)      (25)       (9)
                                                                          
Financing:                                                                
                                                                          
Shares issued                        61,000    50,000    61,000    50,000 
                                                                          
Expenses of share issues             (1,554)   (1,322)   (1,554)   (1,322)
                                                                          
Equity dividends paid                (2,732)   (1,260)   (2,732)   (1,260)
                                                                          
Expenses incurred on share premium        -       (20)        -       (20)
account cancellation                                                      
                                                                          
Movement in loan to subsidiary            -         -       324      (324)
                                                                          
Net cash inflow from financing and   56,689    47,389    57,013    47,065 
taxation                                                                  
                                                                          
Increase in cash and cash               126       767       356       537 
equivalents                                                               
                                                                          
Reconciliation of net cash flow to                                        
movements in net funds:                                                   
                                                                          
Cash and cash equivalents at the        767         -       537         - 
start of the year                                                         
                                                                          
Net cash inflow from cash and cash      126       767       356       537 
equivalents                                                               
                                                                          
Cash and cash equivalents at the        893       767       893       537 
end of the year                                                           

The notes form part of these financial statements.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 General Information and Significant Accounting Policies

The Diverse Income Trust plc is a company incorporated and registered in
England and Wales. The principal activity of the Company is that of an
investment trust company within the meaning of Sections 1158/1159 of the
Corporation Tax Act 2010.

The Group's annual financial statements for the year ended 31 May 2013 have
been prepared in conformity with IFRS as adopted by the European Union, which
comprise standards and interpretations approved by the International Accounting
Standards Board ("IASB"), and as applied in accordance with the provisions of
the Companies Act 2006. The annual financial statements have also been prepared
in accordance with the AIC SORP issued in January 2009 for the financial
statements of investment trust companies and venture capital trusts, except to
any extent where it is not consistent with the requirements of IFRS.

Basis of Preparation
The accounting policies adopted in preparing the current year's financial
statements are consistent with those of the previous year. In order to better
reflect the activities of an investment trust company and in accordance with
guidance issued by the AIC, supplementary information which analyses the Income
Statement between items of a revenue and capital nature has been prepared
alongside the Income Statement.

The financial statements have been prepared on a going concern basis and that
approval as an investment trust company has been granted and will continue to
be met.

The Directors have made an assessment of the Group's ability to continue as a
going concern and are satisfied that the Group has the resources to continue in
business for the foreseeable future. Furthermore, the Directors are not aware
of any material uncertainties that may cast significant doubt upon the Group's
ability to continue as a going concern. Therefore, the consolidated financial
statements have been prepared on the going concern basis.

The financial statements are presented in sterling, which is the Group's
functional currency as the UK is the primary environment in which it operates,
rounded to the nearest £'000, except where otherwise indicated.

Basis of Consolidation
The Group financial statements consolidate the financial statements of the
Company and its wholly-owned subsidiary, DIT Income Services Limited, drawn up
to 31 May 2013.

The subsidiary is consolidated from the date of its acquisition, being the date
on which the Company obtained control, and will continue to be consolidated
until the date that such control ceases. Control comprises the power to govern
the financial and operating policies of the investee so as to obtain benefit
from its activities and is achieved through direct or indirect ownership of
voting rights. The financial statements of the subsidiary are prepared for the
same reporting year as the parent Company, using consistent accounting
policies. All inter-company balances and transactions, including unrealised
profits arising from them, are eliminated.

As permitted by Section 408 of the Companies Act 2006, the Company has not
presented its own Income Statement. The amount of the Company's return for the
financial year dealt with in the financial statements of the Group is a profit
after tax of £31,426,000 (2012: £371,000).

Segmental Reporting
The Directors are of the opinion that the Group is engaged in a single segment
of business, being investment business. The Group primarily invests in
companies listed in the UK.

Accounting Developments
The IASB has issued the following relevant standards and interpretations which
are not effective for the year ended 31 May 2013 and have not been applied in
preparing these financial statements.

International Accounting Standards (IAS/IFRSs)                   Effective date
                                                                               
IFRS 9 Financial Instruments: Classification &                   1 January 2015
Measurement                                                                    
                                                                               
IFRS 10 Consolidated Financial Statements                        1 January 2013
                                                                               
IFRS 11 Joint Arrangements                                       1 January 2013
                                                                               
IFRS 12 Disclosure of Interests in Other Entities                1 January 2013
                                                                               
IFRS 13 Fair Value Measurement                                   1 January 2013

New standards adopted during the period have had no material impact on the
Group's financial statements and the Directors do not anticipate that the
initial adoption of the above standards will have a material impact in the
period of initial application.

Critical Accounting Judgements and Key Sources of Estimation Uncertainty
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and the reported amounts in the Balance Sheet, the
Income Statement and the disclosure of contingent assets and liabilities at the
date of the financial statements. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to
be reasonable under the circumstances, the results of which form the basis of
making judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future period if the revision affects both current and
future periods. There were no accounting estimates in the current period.

Valuation of Investments
The Group's business is investing in financial assets with a view to profiting
from their total return in the form of income and capital growth. This
portfolio of financial assets is managed and its performance evaluated on a
fair value basis, in accordance with a documented investment strategy, and
information about the portfolio is provided internally on that basis to the
Group's Board of Directors. Accordingly, upon initial recognition the Group
designates the investments 'at fair value through profit or loss'. They are
included initially at fair value, which is taken to be their cost (excluding
expenses incidental to the acquisition which are written off in the Income
Statement, and allocated to 'capital' at the time of acquisition). Subsequent
to initial recognition, investments are valued at fair value through profit or
loss. For listed investments, this is deemed to be bid market prices or closing
prices for SETS stocks sourced from the London Stock Exchange. SETS is the
London Stock Exchange electronic trading service covering most of the market
including all FTSE 100 constituents and the most liquid constituents of the
FTSE 250 Index along with some other securities.

Gains and losses arising from changes in fair value are included in net profit
or loss for the period as a capital item in the Income Statement and are
ultimately recognised in the capital reserve.

The investment in the subsidiary company, DIT Income Services Limited, is held
at cost (£1) which is considered to be its fair value (2012: £1). Investments
held as current assets by the subsidiary undertaking are classified as 'held
for trading', and are at fair value.

Cash and Cash Equivalents
Cash comprises cash in hand, overdrafts and demand deposits. Cash equivalents
are short-term, highly liquid investments that are readily convertible to known
amounts of cash and which are subject to insignificant risk of changes in
value.

Income
Dividends received from UK registered companies are accounted for net of
imputed tax credits. Dividends from overseas companies are shown gross of
overseas withholding tax.

Dividends receivable on quoted equity shares are taken to revenue on an
ex-dividend basis. Dividends receivable on equity shares where no ex-dividend
date is quoted are brought into account when the Company's right to receive
payment is established. Fixed returns on non-equity shares are recognised on a
time apportioned basis.

Special dividends are taken to revenue or capital account depending on their
nature. In deciding whether a dividend should be regarded as a capital or
revenue receipt, the Board reviews all relevant information as to the reasons
for the sources of the dividend on a case by case basis.

All other income is accounted for on an accruals basis and is recognised in the
Income Statement.

Expenses and Finance Costs
All expenses are accounted for on an accruals basis. On the basis of the
Board's expected long-term split of total returns in the form of capital and
revenue returns of 75% and 25% respectively, the Company charges 75% of its
investment management fee and finance costs to capital. All other
administrative expenses are charged through the revenue column in the Income
Statement.

Expenses incurred directly in relation to placings and offers for subscription
of shares are deducted from equity and charged to the share premium account.

Taxation
Deferred tax is provided on an undiscounted basis in accordance with IFRS 19 on
all timing differences that have originated but not reversed by the Balance
Sheet date, based on tax rates that are expected to apply in the period when
the liability is settled or the asset is realised. Deferred tax assets are only
recognised if it is considered more likely than not that there will be suitable
profits from which the future reversal of timing differences can be deducted.
In line with the recommendations of the SORP, the allocation method used to
calculate the tax relief on expenses charged to capital is the "marginal"
basis. Under this basis, if taxable income is capable of being offset entirely
by expenses charged through the revenue account, then no tax relief is
transferred to the capital account.

No taxation liability arises on gains from sales of fixed asset investments by
the Company by virtue of its investment trust status. However, the net revenue
(excluding UK dividend income) accruing to the Company is liable to corporation
tax at the prevailing rates.

Dividends Payable to Shareholders
Dividends to shareholders are recognised as a liability in the period in which
they are paid or approved in general meetings and are taken to the Statement of
Changes in Equity. Dividends declared and approved by the Company after the
Balance Sheet date have not been recognised as a liability of the Company at
the Balance Sheet date.

Capital Reserve
Gains or losses on disposal of investments and changes in the fair value of
investments held at the year end are recognised in the Income Statement and
subsequently transferred to the capital reserve.

Also, certain other expenses are charged to this reserve in accordance with the
expenses policy above.

Special Reserve
The special reserve was created by a cancellation of the share premium account
by order of the High Court in February 2012. It can be used for the repurchase
of the Company's ordinary shares and for other corporate purposes. Its main
purpose is to allow the Company to meet annual redemption requests for ordinary
shares. The costs of repurchasing ordinary shares and meeting annual redemption
requests, including related stamp duty and transaction costs, are also charged
to the special reserve.

Share Capital
The Company classifies financial instruments issued as financial liabilities or
equity instruments in accordance with the substance of the contractual terms of
the instruments. The share capital of the Company comprises of redeemable
ordinary shares ("ordinary shares"), C shares, when in issue, and management
shares.

The Company is a closed-ended investment company with an unlimited life. The
ordinary shares are not puttable instruments because redemption is conditional
upon certain market conditions and/or Board approval. As such they are not
required to be classified as debt under IAS 32 - Financial Instruments:
Disclosure and Presentation.

As defined in the Articles of Association, redemption of ordinary shares is at
the sole discretion of the Directors, therefore the ordinary shares have been
classified as equity.

The issuance, acquisition and resale of ordinary shares are accounted for as
equity transactions and no gain or loss is recognised in the Income Statement.


2 Income
                                                Year ended            Period to
                                               31 May 2013          31 May 2012
                                                     £'000                £'000
Income from investments:                                                       
                                                                               
UK dividends                                         3,486                2,475
                                                                               
UK REIT dividend income                                 57                    -
                                                                               
Unfranked dividend income                            1,035                  414
                                                                               
UK fixed interest                                       40                    -
                                                                               
                                                     4,618                2,889
                                                                               
Other income:                                                                  
                                                                               
Bank deposit interest                                    2                    4
                                                                               
Net dealing profit of subsidiary                       143                   57
                                                                               
Underwriting income                                      2                    4
                                                                               
Total income                                         4,765                2,954


3 Investment Management Fee

                                    Year ended                   Period to          
                                   31 May 2013                  31 May 2012         
                            Revenue   Capital  Total    Revenue   Capital   Total    
                              £'000   £'000    £'000      £'000    £'000    £'000
                                                                                
Investment management fee       256     767    1,023        132      397      529

Under the terms of an agreement dated 7 April 2011, the Company has appointed
Miton Capital Partners Limited as the Manager. The basic investment management
fee is calculated at the rate of one-twelfth of 1.0% of the adjusted market
capitalisation of the Company on the last business day of each calendar month.
The basic management fee accrues daily and is payable in arrears in respect of
each calendar month. For the purpose of calculating the basic fee, the
'adjusted market capitalisation' of the Company is defined as the average daily
mid-market price for an ordinary share, multiplied by the number of ordinary
shares in issue, excluding those held by the Company in treasury, on the last
business day of the relevant month. In addition, the Manager is entitled to
receive a management fee on any Redemption Pool, as detailed in the Report of
the Directors in the full Annual Report.

At 31 May 2013 an amount of £226,000 (2012: £41,000) was outstanding and due to
Miton Capital Partners Limited in respect of management fees.


4 Other Expenses
                                                     Year ended       Period to
                                                    31 May 2013     31 May 2012
                                                          £'000           £'000
                                                                               
Secretarial services                                        120             108
                                                                               
Auditor's remuneration for*:                                                   
                                                                               
Audit of the Group's financial statements                    28              26
                                                                               
Other assurance related services**                            -              28
                                                                               
Directors' fees (see the Directors'                         105             121
Remuneration Report in the full Annual Report)                                 
                                                                               
Other expenses                                              279             211
                                                                               
                                                            532             494

* Amounts paid to the Company's Auditor in connection with the review of 
C share conversion ratios of £22,000 inclusive of VAT are included in share issue
costs (2012: £27,000 for launch work).

** Relates to amounts paid to the Company's Auditor in connection with the
audit of the Company's initial accounts which were required to support
dividends paid during the prior period.

All expenses are stated gross of irrecoverable VAT, where applicable.


5 Taxation
                                 Year ended                   Period to          
                                31 May 2013                  31 May 2012            
                         Revenue Capital    Total   Revenue   Capital     Total
                           £'000   £'000    £'000     £'000     £'000     £'000
                                                                               
Overseas taxation             25       -       25         9         -         9
suffered                                                                       

The current taxation charge for the year is lower than the standard rate of
corporation tax in the UK of 23%. The differences are explained below.

                                   Year ended                 Period to        
                                  31 May 2013                31 May 2012         
                           Revenue  Capital    Total   Revenue  Capital  Total 
                             £'000    £'000    £'000     £'000    £'000  £'000 
                                                                               
Return/(loss) on ordinary    3,974   27,420   31,394     2,328   (1,891)   437 
activities before taxation                                                     
                                                                               
Theoretical tax at UK          947    6,534    7,481       598     (486)   112 
corporation tax rate of                                                        
23.83% (2012: 25.69%)                                                          
                                                                               
Effects of:                                                                    
                                                                               
- UK dividends that are       (830)       -     (830)     (636)       -   (636)
not taxable                                                                    
                                                                               
- Overseas dividends that     (247)       -     (247)     (106)       -   (106)
are not taxable                                                                
                                                                               
- Other non-taxable income      (2)       -       (2)        -        -      - 
                                                                               
- Realised dealing gains       (32)       -      (32)      (17)       -    (17)
                                                                               
- Unrealised dealing            (2)       -       (2)        2        -      2 
losses                                                                         
                                                                               
- Non-taxable investment         -   (6,719)  (6,719)        -      384    384 
(gains)/losses                                                                 
                                                                               
- Overseas taxation             25        -       25         9        -      9 
suffered                                                                       
                                                                               
- Expenses not deductible       10        -       10         5        5     10 
for tax                                                                        
                                                                               
- Unrelieved expenses          156      185      341       154       97    251 
                                                                               
Actual current tax charge       25        -       25         9        -      9 

Factors That May Affect Future Tax Charges
The Company has excess management expenses of £2,200,000 (2012: £911,000) that
are available to offset future taxable revenue. At 31 May 2013, the Group has
not recognised a deferred tax asset of £506,000 (2012: £219,000) in respect of
these accumulated expenses as they will only be recoverable to the extent that
there is sufficient future taxable revenue. It is unlikely that the Company
will generate sufficient taxable income in the future to utilise these expenses
to reduce future tax charges and therefore no deferred tax charge has been
recognised.

In addition, deferred tax is not provided on capital gains and losses arising
on the revaluation or disposal of investments because the Company meets (and
intends to continue for the foreseeable future to meet) the conditions for
approval as an investment trust company under HMRC rules.


6 Return/(Loss) per Share

Ordinary Shares
The return per ordinary share is based on the net profit after taxation of 
£28,343,000 (2012: £428,000) and on 147,044,788 (2012: 100,000,000) ordinary
shares, being the weighted average number of ordinary shares in issue during
the year.

The return per ordinary share detailed above can be further analysed between
revenue and capital as follows:

                                     Year ended                            Period to           
                                    31 May 2013                           31 May 2012          
                        Revenue       Capital        Total      Revenue   Capital         Total
Basic and diluted                                                              
Net profit (£'000)        3,563        24,780       28,343        2,319    (1,891)          428
                                                                               
Weighted average
number of                                                                      
ordinary shares                                                                 
in issue                                       147,044,788                          100,000,000
                                                                               
Return per                 2.42         16.85        19.27         2.32     (1.89)         0.43
ordinary share                                                                 
(pence)                                                                        

C Shares

The return per C share is based on the net profit after taxation of £3,026,000
(2012: £nil) and on 61,136,364 (2012: nil) C shares, being the weighted average
number of C shares in issue during the periods in issue.

The return per C share detailed above can be further analysed between revenue
and capital as follows:

                              Year ended                    Period to          
                              31 May 2013                  31 May 2012         
                                                                               
                      Revenue  Capital       Total   Revenue   Capital    Total
                                                                               
Basic and diluted                                                              
                                                                               
Net profit (£'000)        386    2,640       3,026       n/a       n/a      n/a
                                                                               
Weighted average                        61,136,364                          n/a
number of C shares                                                             
in issue                                                                       
                                                                               
Return per C share       0.63     4.32        4.95       n/a       n/a      n/a
(pence)                                                                        


7 Dividends per Ordinary Share

Amounts recognised as distributions to equity holders in the year.

                                       Year ended                Period to       
                                       31 May 2013              31 May 2012        
                                  £'000           pence    £'000          pence
                                              per share               per share
In respect of the previous                                                     
period:                                                                        
                                                                               
Fourth interim dividend             930            0.93        -              -
                                                                               
In respect of the year under                                                   
review:                                                                        
                                                                               
First interim dividend              300            0.30      300           0.30
                                                                               
Second interim dividend             782            0.50      500           0.50
                                                                               
Third interim dividend              720            0.46      460           0.46
                                                                               
Dividends distributed during the  2,732            2.19    1,260           1.26
year                                                                           

The Directors have declared a fourth interim dividend in respect of the year
ended 31 May 2013 of 0.84p per ordinary share payable on 31 August 2013 to all
shareholders on the register at close of business 28 June 2013. The total
dividends payable in respect of the financial year for the purposes of the
income retention test for Section 1158 of the Corporation Tax Act 2010 are set
out below.

                                                    Year ended 31    Period to
                                                         May 2013  31 May 2012          
                                                            £'000        £'000     
                                 
Revenue available for distribution by way of                3,949        2,319 
dividends for the year                                                         
                                                                               
First interim dividend of 0.30p per ordinary share           (300)        (300)
                                                                               
Second interim dividend of 0.50p per ordinary share          (782)        (500)
                                                                               
Third interim dividend of 0.46p per ordinary share           (720)        (460)
                                                                               
Declared fourth interim dividend of 0.84p (2012:           (1,753)        (930)
0.93p) per ordinary share                                                      
                                                                               
Estimated revenue reserve retained for the year               394          129 


8 Called Up Share Capital
                                     31 May 2013                31 May 2012
                                   number  £'000              number  £'000
Ordinary shares 0.1p                                                       
each:                                                                      
Opening balance               100,000,000    100                   -      -
                                                                           
Issue of ordinary             108,693,307    109         100,000,000    100
shares                                                                     
                              208,693,307    209         100,000,000    100

On 27 June 2012, the Company published a prospectus in relation to proposals to
raise up to £50 million (before expenses) by way of a placing and offer for
subscription of C shares. Applications were received under the placing for
53,905,400 C shares and under the offer for subscription for 6,094,600 
C shares, raising an aggregate of £30 million of gross proceeds for the Company
and resulting in the issue of 60,000,000 C shares.

On 1 October 2012, the C shares were converted into ordinary shares in the
ratio of 0.9418 ordinary shares for every C share, based on the calculated
prevailing NAV for each share class as at 28 September 2012, resulting in the
issue of 56,507,978 new ordinary shares.

On 20 November 2012, the Company published a prospectus setting out details of
a target issue of in excess of 40 million C shares at 50 pence per C share by
way of an open offer, placing and offer for subscription.

Applications were received under the open offer for 5,675,768 C shares, under
the placing for 52,940,182 C shares and under the offer for subscription for
3,384,050 C shares, raising an aggregate of £31 million of gross proceeds for
the Company and resulting in the issue of 62,000,000 C shares.

On 26 March 2013, the C shares were converted into ordinary shares in the ratio
of 0.8417 ordinary shares for every C share, based on the calculated prevailing
NAV for each share class at 25 March 2013, resulting in the issue of 52,185,329
new ordinary shares. Following the conversion and at 31 May 2013 there were
208,693,307 ordinary shares in issue.

Redemption of Ordinary Shares
The Company, which is a closed-ended investment company with an unlimited life,
has a redemption facility through which shareholders are entitled to request
the redemption of all or part of their holding of ordinary shares on an annual
basis on 31 May in each year. As set out in the Articles of Association, the
Board may, at its absolute discretion, elect not to operate the annual
redemption facility in whole or in part. Accordingly, the ordinary shares have
been classified as equity.

At 31 May 2013, the Company had received redemption requests for 34,893
ordinary shares. All of those shares were matched with buyers at the same
calculated redemption price and were settled on 14 June 2013. Following this,
the issued share capital and voting rights remained unchanged at 208,693,307
ordinary shares.

Management Shares
The 50,000 management shares with a nominal value of £1 each were allotted to
Miton Group plc on 30 March 2011, the parent company of the Manager, on the
basis of an undertaking to pay one-quarter of their nominal value on or before
30 March 2016 and the balance on demand. The management shares are non-voting
and non-redeemable and, upon a winding-up or on a return of capital of the
Company, shall only receive the fixed amount of capital paid up on such shares
and shall confer no right to any surplus capital or assets of the Company.

As at 31 May 2013, no amounts had been paid up (2012: £nil).


9 Reserves

2013                         Share               Capital     Capital    
                           premium    Special    reserve     reserve   Revenue
                           account    reserve   realised  unrealised   reserve
                             £'000      £'000      £'000       £'000     £'000

Opening balance                  -     48,558     (1,173)       (718)    1,059 
                                                                               
Premium on issue of         60,891          -          -           -         - 
ordinary shares                                                                
                                                                               
Expenses of share issue     (1,554)         -          -           -         - 
                                                                               
Net gains on realisation         -          -      1,654           -         - 
of investments                                                                 
                                                                               
Unrealised net increase          -          -          -      26,542         - 
in value of investments                                                        
                                                                               
Management fees/finance          -          -       (776)          -         - 
costs charged to capital                                                       
                                                                               
Equity dividends paid            -          -          -           -    (2,732)
                                                                               
Revenue return on                -          -          -           -     3,949 
ordinary activities                                                            
after tax                                                                      
                                                                               
Closing balance             59,337     48,558       (295)     25,824     2,276 


2012                         Share               Capital     Capital    
                           premium    Special    reserve     reserve   Revenue 
                           account    reserve   realised  unrealised   reserve 
                             £'000      £'000      £'000       £'000     £'000           
                                                                               
Opening balance                  -          -          -           -         - 
                                                                               
Premium on issue of         49,900          -          -           -         - 
ordinary shares                                                                
                                                                               
Cancellation of share      (48,578)    48,578          -           -         - 
premium account                                                                
                                                                               
Expenses of share premium        -        (20)         -           -         - 
account cancellation                                                           
                                                                               
Expenses of share issue     (1,322)         -          -           -         - 
                                                                               
Net losses on realisation        -          -       (776)          -         - 
of investments                                                                 
                                                                               
Unrealised net decrease in       -          -          -        (718)        - 
value of investments                                                           
                                                                               
Management fees/finance          -          -       (397)          -         - 
costs charged to capital                                                       
                                                                               
Equity dividends paid            -          -          -           -    (1,260)
                                                                               
Revenue return on ordinary       -          -          -           -     2,319 
activities after tax                                                           
                                                                               
Closing balance                  -     48,558     (1,773)       (718)    1,059 

At a General Meeting of the Company held on 6 April 2011 a resolution was
passed approving the cancellation of the Company's share premium account.

The Court subsequently confirmed this cancellation on 22 February 2012 and an
amount of £48,578,000 was transferred from the Company's share premium account
to its special reserve. This amount can be treated as a distributable reserve
for all purposes permitted by the Companies Act 2006 (as amended), and will
enhance substantially the ability of the Company to meet annual redemption
requests and to buy-back its own shares either into treasury or for
cancellation.


10 Net Asset Value per Ordinary Share

The net asset value per ordinary share and the net asset values attributable at
the year end were as follows:

                  Net asset value    Net assets  Net asset value     Net assets
                        per share  attributable        per share   attributable
                      31 May 2013   31 May 2013      31 May 2012    31 May 2012
                            pence         £'000            pence          £'000
                                                                               
Ordinary shares             65.12       135,909            47.83         47,826
- Basic and                                                                    
diluted                                                                        

Net asset value per ordinary share is based on net assets at the year end and
208,693,307 ordinary shares (2012: 100,000,000), being the number of ordinary
shares in issue at the year end.


11 Investments

Group and Company                                 31 May 2013      31 May 2012
                                                        £'000            £'000
Investment portfolio summary:                                                  
                                                                               
Opening book cost                                      47,206                -
                                                                              
Opening investment holding losses                        (718)               -
                                                                               
Total investments designated at fair                   46,488                -
value                                                                          


Group and Company                                 31 May 2013      31 May 2012 
                                                        £'000            £'000 
Analysis of investment portfolio                                               
movements                                                                      
                                                                               
Opening valuation                                      46,488                - 
                                                                               
Movements in the period:                                                       
                                                                               
Purchases at cost                                      78,217           82,816 
                                                                               
Sales - proceeds                                      (24,004)         (34,834)
                                                                               
      - gains/(losses) on sales                         1,654             (776)
                                                                               
Increase/(decrease) in investment holding              26,542             (718)
gains                                                                          
                                                                               
Closing valuation                                     128,897           46,488 
                                                                               
Closing book cost                                     103,073           47,206 
                                                                               
Closing investment holding gains/(losses)              25,824             (718)
                                                                               
                                                      128,897           46,488 

A list of the largest portfolio holdings by their fair value is shown in the
portfolio information above.

                                                   31 May 2013      31 May 2012
                                                         £'000            £'000
                                                                               
Listed:                                                 82,115           31,161
                                                                               
United Kingdom                                                                 
                                                                               
Unlisted:                                               46,782           15,327
                                                                               
United Kingdom (quoted on AIM/ISDX)                                            
                                                       128,897           46,488

The investments are all equities or bonds which are either listed on the
Official List or quoted on AIM/ISDX in the UK and are included in the Balance
Sheet at fair value.

The investments are registered in the names of the nominees of HSBC Bank plc,
as custodian to the Company. There were no contingent liabilities in respect of
the investments held at the end of the year.

                                               Year ended             Period to
                                              31 May 2013           31 May 2012
                                                    £'000                 £'000
                                                                               
Transaction costs                                     
                                                                               
Costs on acquisitions                                 460                   570       
                                                                               
Costs on disposals                                     52                    74
                                                                               
                                                      512                   644


                                               Year ended             Period to 
                                              31 May 2013           31 May 2012 
                                                    £'000                 £'000 
                                                                               
Analysis of capital gains/(losses)                                             
                                                                               
Gains/(losses) on sales of investments              1,654                 (776)
                                                                               
Movement in investment holding gains/              26,542                 (718)
(losses)                                                                       
                                                   28,196               (1,494)

Fair Value Hierarchy

IFRS 7 requires classification of financial instruments measured at fair value
at one of three levels according to the relative reliability of the inputs used
to estimate the fair values.

Classification     Input                                                       
                                                                               
Level 1            Valued using quoted prices in active markets for identical  
                   assets or liabilities (actively traded on recognised stock  
                   exchanges)                                                  
                                                                               
Level 2            Valued by reference to valuation techniques using observable
                   inputs 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                

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.

The valuation techniques used by the Company are explained in the accounting
policies in note 1 under the heading 'Valuation of Investments'. At 
31 May 2013, all the Company's financial assets at fair value through profit or loss
are included in Level 1 with the exception of the investment in the subsidiary
which is classified as a Level 3 investment (2012: same).


12 Substantial Share Interests

The Company has notified interests in 3% or more of the voting rights of seven
investee companies (none of which are closed-end investment funds). However,
the Board does not consider any of the Company's other equity investments to be
individually material in the context of the financial statements.


13 Investment in Subsidiary

The Company owns the whole of the issued ordinary share capital (£1) of DIT
Income Services Limited, an investment dealing company registered in England
and Wales. The subsidiary is held at cost of £1, which is considered to be its
fair value, and has received loans from the Company amounting to £nil at 
31 May 2013 (2012: £324,000).


14 Trade and Other Receivables

                                    Group                     Company              
                           31 May 2013  31 May 2012   31 May 2013   31 May 2012
                                 £'000        £'000         £'000         £'000
                                                                               
Amounts due from brokers         5,686          812         5,686           812
                                                                                
Dividends receivable               893          393           893           393
                                                                               
Accrued income                       7            -             7             -
                                                                               
Taxation recoverable                 4            -             4             -
                                                                               
Prepayments and other               19           15            19            15
debtors                                                                        
                                                                               
Amounts due from                     -            -             -           324
subsidiary                                                                     
                                 6,609        1,220         6,609         1,544


15 Trade and Other Payables
                                     Group                     Company              
                            31 May 2013   1 May 2012  31 May 2013   31 May 2012
                                  £'000        £'000        £'000         £'000
                                                                               
Amounts due to brokers              193          694          193           694
                                                                               
Other creditors                     297          106          297           106
                                                                               
                                    490          800          490           800

The Company has an uncommitted multi-currency overdraft facility agreement with
HSBC Bank plc, under which the bank makes available an aggregate amount equal
to the lesser of:

i. £7,500,000; and
   
ii. 15% of custody assets from time to time.
   
The purpose of the facility is for short-term liquidity and it has no fixed
term but is subject to review from time to time, at least on an annual basis.
Interest is payable monthly in arrears on the amount of the facility
outstanding at the rate of 1.75% above the applicable base rate set by the
bank. In addition, a fee of £15,000 per annum is payable on each anniversary
date.

The facility is secured by a floating charge over the Company's assets. The
overdraft facility was undrawn as at 31 May 2013.


16 Capital Commitments and Contingent Liabilities

As at 31 May 2013 there were no outstanding commitments or contingent
liabilities.


17 Analysis of Financial Assets and Liabilities

Investment Objective and Policy
The Group's investment objective and policy are detailed above.

The Group's investing activities in pursuit of its investment objective involve
certain inherent risks.

The Group's financial instruments comprise:

• shares and debt securities held in accordance with the Group's investment
objective and policies;

• cash, liquid resources and short-term debtors and creditors that arise from
its operations; and

• current asset investments held by its subsidiary.

The risks identified arising from the Group's financial instruments are market
risk (which comprises market price risk, interest rate risk and foreign
currency exposure), liquidity risk and credit and counterparty risk. The Group
may enter into derivative contracts to manage risk, but has not done so to
date. The Board reviews and agrees policies for managing each of these risks,
which are summarised below. These policies have remained unchanged since the
beginning of the accounting year.

Market Risk
Market risk arises mainly from uncertainty about future prices of financial
instruments used in the Group's business. It represents the potential loss the
Group might suffer through holding market positions by way of price movements,
interest rate movements and exchange rate movements. The Manager assesses the
exposure to market risk when making each investment decision and these risks
are monitored by the Manager on a regular basis and the Board at quarterly
meetings with the Manager.

Market price risk
Market price risk (i.e. changes in market prices other than those arising from
currency risk or interest rate risk) may affect the value of investments.

The Board manages the risks inherent in the investment portfolio by ensuring
full and timely reporting of relevant information from the Manager. Investment
performance is reviewed at each Board meeting.

The Group's exposure to other changes in market prices as at 31 May 2013 on its
equity investments held at fair value through profit or loss was 
£127,699,000 (2012: £46,488,000).

A 10% increase in the market value of its listed equity investments at 
31 May 2013 would have increased net assets attributable to shareholders by 
£12,770,000 (2012: £4,649,000). An equal change in the opposite direction would
have decreased the net assets available to shareholders by an equal and
opposite amount.

Interest rate risk
Interest rate movements may affect the level of income receivable on cash
deposits and payable on its overdraft facility. The Group's financial assets
and liabilities, excluding short-term debtors and creditors, may include
investment in fixed interest securities, such as UK corporate debt stock, whose
fair value may be affected by movements in interest rates. The majority of the
Group's financial assets and liabilities, however, are non-interest bearing. As
a result, the Group's financial assets and liabilities are not subject to
significant amounts of risk due to fluctuations in the prevailing levels of
market interest rates. There was limited exposure to interest bearing
liabilities during the year ended 31 May 2013.

The possible effects on the fair value and cash flows that could arise as a
result of changes in interest rates are taken into account when making
investment decisions. The Board imposes borrowing limits to ensure gearing
levels are appropriate to market conditions.

As disclosed in note 15, during the year the Company had an uncommitted
multi-currency overdraft facility with HSBC Bank plc. The facility was not in
use as at the Balance Sheet date (2012: same).

The interest rate profile of the Group (excluding short-term debtors and
creditors) was as follows:

                                   Weighted                
                                    average    Weighted                           
                                 period for     average                                
                                 which rate    interest    Floating                    
                                   is fixed        rate        rate  Fixed rate              
As at 31 May 2013                     years           %       £'000       £'000
                                                                               
Assets                                                                         
                                                                               
Fixed interest securities -            5.48        6.17           -       1,198
sterling                                                                       
                                                                               
Cash at bank - sterling                   -           -         893           -
                                                                               
                                                                893       1,198


                                   Weighted    Weighted      
                                    average    Weighted                            
                                 period for     average                                
                                 which rate    interest    Floating                    
                                   is fixed        rate        rate  Fixed rate             
As at 31 May 2012                     years           %       £'000       £'000
                                                                               
Assets                                                                         
                                                                               
Cash at bank - sterling                   -           -         767           -
                                                                               
                                                                767           -

The weighted average interest rate is based on the current yield of each asset,
weighted by its market value.

The floating rate assets consist of cash deposits on call earning interest at
prevailing market rates.

If interest rates had been 500 basis points higher or lower and all other
variables were held constant, the Group's profit for the year ended 31 May 2013
would decrease/increase by £45,000 (2012: decrease/increase by £38,000). This
is attributable to the Group's exposure to interest rates on its floating rate
cash balances and fixed interest securities as at the year ended 31 May 2013,
and is not considered by the Directors to be representative for the year as a
whole.

Foreign currency risk
Although the Company's performance is measured in sterling, a proportion of the
Group's assets may be either denominated in other currencies or are in
investments with currency exposure. Any income denominated in foreign currency
is converted into sterling upon receipt. At the Balance Sheet date, all the
Group's assets were denominated in sterling and accordingly the only currency
exposure the Group has is through the trading activities of its investee
companies.

Liquidity Risk
Liquidity risk is not considered to be significant as the Group's assets
primarily comprise mainly cash and readily realisable securities, which can
under normal conditions be sold to meet funding commitments if necessary. They
may however be difficult to realise in adverse market conditions. The Group can
achieve short-term flexibility by the use of its overdraft facility.

The maturity profile of the Group's financial liabilities of £490,000 
(2012: £800,000) are all due in one year or less.

Credit and Counterparty Risk
Credit risk is the risk of financial loss to the Group if the contractual party
to a financial instrument fails to meet its contractual obligations.

The maximum exposure to credit risk as at 31 May 2013 was £2,091,000 
(2012: £767,000). The calculation is based on the Group's credit risk
exposure as at 31 May 2013 and this may not be representative for the whole year.

The Group's listed investments are held on its behalf by HSBC Bank plc acting
as the Group's custodian. Bankruptcy or insolvency of the custodian may cause
the Group's rights with respect to securities held by the custodian to be
delayed. The Board monitors the Group's risk by reviewing the custodian's
internal controls report.

Where the Manager makes an investment in a bond, corporate or otherwise, the
credit rating of the issuer is taken into account so as to minimise the risk to
the Group of default.

Investment transactions are carried out with a number of brokers whose
creditworthiness is reviewed by the Manager. Transactions are ordinarily
undertaken on a delivery versus payment basis whereby the Group's custodian
bank ensures that the counterparty to any transaction entered into by the Group
has delivered on its obligations before any transfer of cash or securities away
from the Group is completed.

Cash is only held at banks that have been identified by the Board as reputable
and of high credit quality.

None of the Group's assets are past due or impaired (2012: same).

Fair Values of Financial Assets and Financial Liabilities
All financial assets and liabilities of the Group are either carried in the
Balance Sheet at fair value through profit or loss, or the Balance Sheet amount
is a reasonable approximation of fair value.

Capital Management Policies

The Company's capital management objectives are:

• to ensure that it will be able to continue as a going concern; and

• to maximise the income and capital return over the long-term to its equity
shareholders through an appropriate balance of equity capital and 'debt'.

As stated in the investment policy, the Company has authority to borrow up to
15% of net asset value through a mixture of bank facilities and derivative
instruments. There were no borrowings as at 31 May 2013 (2012: £nil). Also, as
a public company the minimum share capital is £50,000.

The Company's capital at 31 May                         
comprises                                                
                                                        2013               2012
                                                       £'000              £'000
                                                                               
Shareholders' funds:                                                           
                                                                               
Equity share capital                                     209                100
                                                                               
Retained earnings and other reserves                 135,700             47,669
                                                                               
Total shareholders' funds                            135,909             47,769

The Board with the assistance of the Manager monitors and reviews the broad
structure of the Company's capital on an ongoing basis. This review includes:

• the planned level of gearing, which takes into account the Manager's view of
the market;

• the need to buy back shares for cancellation or treasury, which takes account
of the difference between the net asset value per share and the share price
(i.e. the level of share price discount or premium);

• the need for new issues of equity shares; and

• the extent to which revenue in excess of that which is required to be
distributed should be retained.

The Company's objectives, policies and processes for managing capital have
remained unchanged since its launch.


18 Transactions with the Manager and Related Parties

The amounts paid to the Manager together with details of the investment
management contract are disclosed in note 3. The existence of an independent
Board of Directors demonstrates that the Company is free to pursue its own
financial and operating policies and therefore, under the AIC SORP, the Manager
is not considered to be a related party.

The Company's related parties are its Directors. Fees paid to the Company's
Board are disclosed in the Directors' Remuneration Report in the full Annual
Report.

There are no other identifiable related parties at the year end


19 Post Balance Sheet Events

Since the year end and as set out in the Chairman's Statement above, in
relation to the proposed merger with Miton Income Opportunities Trust plc
("MIOT") (formerly Henderson Fledgling Trust plc), the Board has been informed
that MIOT's portfolio has now been realigned so as to be consistent with the
Company's investment policy.

The boards of both companies have agreed to proceed with a recommended merger
of the two companies, to be effected through a scheme of reconstruction and the
winding-up of MIOT on the terms set out in the announcement of 15 February 2013.

A circular containing full details of the proposed merger is expected to be
posted to shareholders in September 2013 for approval at general meetings of
both companies to be held shortly thereafter.

ANNUAL GENERAL MEETING
The Company's Annual General Meeting will be held on Tuesday, 22 October 2013
at 3.00pm at Furniture Makers' Hall, 12 Austin Friars, London EC2N 2HE.

NATIONAL STORAGE MECHANISM
A copy of the Annual Report and Financial Statements will be submitted shortly
to the National Storage Mechanism ("NSM") and will be available for inspection
at the NSM, which is situated at: www.morningstar.co.uk/uk/nsm

ENDS

Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on this announcement (or any other website) is
incorporated into, or forms part of, this announcement.

a d v e r t i s e m e n t