Half Yearly Report

Investment objective

The Company's objective is to provide capital growth through investment in companies listed on the Official List and tradedon the Alternative Investment Market ("AIM") with a market capitalisation at the time of investmentof up to

£50 million, which are believed to be at a "point of change".The Company will also invest in unquotedinvestments where it is believed that there is a likelihood of the shares becoming listed or traded on AIM or the investee company being sold. Its investmentobjective is to increase net asset value per share at a higher rate than other quoted smaller company trusts and the MSCI Small Cap UK index.

Investment policy

The Company investsprincipally in securities of publicly quoted UK companies, though it may invest in unquoted securities. The concentrated UK portfoliocomprises between 20 to 35 securities. The performance of the Company's investments is compared to the MSCI Small Cap UK index.

The Company will also invest in unquoted investments where it is believed that there is a likelihoodof the shares becoming listed or traded on AIM or the investee company being sold.

It is the Company's policy not to invest in any listed investmentcompanies or listed investment trusts.

It is intendedfrom time to time, when deemed appropriate, that the Companywill borrow for investment purposes. The Company, however, does not currentlyhave any borrowing facilities.

Investment strategy

Investments are selectedfor the portfolio only after extensive research which the Investment Manager believes to be key. The whole process through which equity must pass in order to be included in the portfolio is very rigorous. Only a security where the Investment Manager believes that the price will be significantly higher in the future will pass the selection process. The Company's Investment Manager believes the key to successful stock selection is to identify the long-term value of a company's shares and to have the patienceto hold the shares until that value is appreciated by other investors. Identifying long-term value involves detailed analysis of a company's earning prospects over a five year time horizon.

The Company's InvestmentManager is Chelverton Asset Management Limited, an independent investment manager focusing exclusively on achieving returns for investors based on UK investment analysis of the highest quality. The founders and employee owners of Chelverton include experienced investment professionals with strong investment performance records who believe rigorous fundamental research allied to patience is the basis of long-terminvestment success.

Interim management report

The Company's net asset value per share has increased in the last six months from 35.74p to 42.04p, an increase of 17.6%. In the same period the Company's benchmark index, the MSCI Small Cap UK index increased by 18.3 %.

In the last few months the Euro sovereign debt problems have re-emerged with the position of Cyprus causing great concern through Europe and even affecting Russia, and this contagion is focusing attention again on Portugal, Greece, Italy and France. Only when the European debt position is demonstrably resolved, in the distant future, will companies and stock markets begin to perform as history has shown they can.

The continued "rebalancing" of the British Economy away from Oil and Gas production and Financial services to modest growth in almost every other sector, and from public spending to private sector growth is taking its toll. The net effect of this slow, but necessary, change, manifests itself in the overall economy as very weak, or at times, no GDP growth. This process, politics allowing, needs to continue for many more years to achieve the right balance between the private sector - wealth creating, and the public sector - service provider.

In the past six months a gradual rebalancing of the portfolio has taken place with the large holding in IDOX being steadily sold as the share price continued to rise strongly. The cash proceeds were partially used to fund the tender offer for 10% of the share capital, and to invest in Main Dental Partners, a buy and build dental group and Airways International, a start-up company providing services to the Repair, Maintenance and Overhaul of jet planes. Longer term shareholders will recall the significant profits that were made in the past in Oasis Healthcare, a buy and build dental group.

Significant increases in value were recognised by the Board, prior to the tender offer, in Parmenion Capital Partners, One Horizon Group and Closed Loop Recycling. Significant growth has taken place in these three companies since the valuation date and we would expect further valuation uplifts by the year end.

Transflex, a vehicle hire company, which was a start-up when we invested a year ago is performing extremely well and the fund has invested an additional £100,000 for development capital, taking the investment to £200,000 being 10% of the company. It is likely that further funding will be required to finance the continued growth.

On the other side of the ledger we are disappointed to report that Metalrax went into Administration in early April and this was our first total casualty for several years. In addition the shares in Belgravium have declined sharply over the past six months as the trading performance has disappointed.

Elsewhere in the fund the shares in Sanderson have risen strongly recognising improved prospects and Datong having announced they had received a takeover approach went up some 50%.

The tender offer proceeded smoothly and an additional 1,188,423 shares were cancelled. In the absence of any unexpected events it will be the Board's intention to repeat the process again this year.

Looking through to the second half of the year the global macro outlook is improving, led by the US, and most forecasters believe that the UK will produce more encouraging growth over the second half of the year.

Chelverton Asset ManagementLimited

29 April 2013

Principal risks and uncertainties

The Board considers that the principal risks and uncertainties facing the Company for the remaining six months of the financial year remain the same as those disclosedin the interim management report on page 2 and also on pages 11 and 12 of the Report of the Directors in the Annual Report for the year ended 31 August 2012. These risks include market risk, discount volatility, regulatoryrisks, financial risk and liquidityrisks.

Responsibility statement

The Directors confirm that to the best of their knowledge:

• the condensedset of financial statements for the six months to 28 February2013, prepared in accordance with the Statement on Half Yearly Financial Reports issued by the UK Accounting Standards Board, gives a true and fair view of the assets, liabilities, financial position and net return of the Company; and

• the interim management report together with the notes to the Half Yearly Report include a fair review of the

information required by;

(a) DTR 4.2.7Rof the Disclosure and Transparency Rules,being an indication of important eventsthat have occurred during the first six months of the financial year and their impact on the condensedset of financial statements; and a description of the principalrisks and uncertainties for the remainingsix months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being relatedparty transactions that have taken place in thefirst six monthsof the current financial year and that have materially affected the financial positionor performance of the Company during that period;and any changes in the related party transactions describedin

the last Annual Report that could do so.

This Half Yearly Reportwas approved by the Board of Directorson 29April2013 and the above responsibility statementwas signed on its behalf by George Stevens, Chairman.

Going concern

The Directors believe,bearing in mind the nature of the Company's business and assets, that the Companyhas adequate resources to continue in operational existencefor the foreseeable future. For this reason they continueto adopt the going concern basis in preparingthe accounts.

Portfolio review

as at 28 February2013

The Company's portfolio as at 28 February 2013 is set out below.

Portfolio review (continued)

as at 28 February 2013

* In administration

Portfolio of investments

Percentage of portfolio by sector

Sector Percentage

Software & Computer Services 22.29

Support Services 36.41

Technology Hardware & Equipment 5.50

Industrial engineering 8.78

Pharmaceuticals & Biotechnology 6.49

Electronic & electrical equipment 6.10

Health Care Equipment & Services 6.77

Mobile Telecommunications 6.23

Travel & Leisure 1.43

Percentage of portfolio by index

AIM 63.78

Unquoted 29.99

Delisted 6.23

Income statement (unaudited)

forthe six months to 28 February 2013

Six months to Year to Six months to

28 February 2013 31 August2012 29 February 2012

*  75% of the managementfee and finance costs have been charged to capital reserve.

#  The returnper Ordinary shareis based on 10,570,998 (31 August 2012: 12,389,652; 29 February 2012: 12,951,672) shares, being the weighted average number of shares in issue during the period.

The total column of this statementis the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuingoperations.

A separate statement of total recognised gains and losseshas not been prepared as all such gains and losses are included in the income statement.

Reconciliation of movements in shareholders'funds (unaudited)

for the six months to 28 February 2013

Balancesheet (unaudited)

as at 28 February 2013

Statement of cash flows (unaudited)

for the six months to 28 February 2013

Notes to the half yearly report

The unaudited interim financial information does not constitutestatutory accounts as defined in Section 434 of the Companies Act 2006. The statutory accounts for the year to 31 August 2012, which contained an unqualified auditors' report, have been lodged with the Registrar of Companies and did not contain a statement required under Section 498

(2) or (3) of the Companies Act 2006. The financial information for the period ended 28 February 2013 and 29 February 2012 has not been audited or reviewed by the Company'sAuditor pursuant to the AuditingPractices Board guidance on such reviews.

This information has been preparedon the basis of accounting policies set out in the statutory accountsof the Company for the year to 31 August 2012.

Thebasic net asset value per Ordinary share is based on net assets of £4,412,000 (31 August 2012: £4,212,000; 29 February2012: £3,985,000) and on 10,495,860 Ordinary shares (31 August 2012: 11,784,283; 28 February 2012: 11,884,283) being the number of Ordinary shares in issue at the period end.

Thetax charge for the six months to 28 February 2013 is nil (year to 31 August 2012: nil; six months to 29 February 2012: nil).

TheCompany has an effectivetax rate of 0% for the year ending 31 August 2012. The estimated effective tax rate is 0% as investment gains are exempt from tax owing to the Company'sstatus as an Investment Trust and there is expected to be an excess of management expenses over taxable income.

4 Called up share capital

Pursuant to the Tender Offer, 1,188,423 Ordinaryshares were repurchased for cancellation on 6 February 2013. Followingthe Tender Offer and buybackoffer there are 10,495,860 Ordinary shares in issue (31 August 2012:11,784,283: 29 February 2012: 11,884,283).

Chelverton Asset Management Limited acts as the Investment Manager. Mr Horner, a Director of the Company, is alsoa director of Chelverton AssetManagement Limited. He is also a directorof CEPS PLC, in whichthe Company has an investment. At 28 February2013 there was £3,000 (31 August 2012: £3,000; 29 February2012:

£3,000) payable to the InvestmentManager.

It is the intentionof the Directors to conduct the affairs of the Company so that they satisfy the conditions for approval as aninvestment trust company as set out in Sections 1158/1159 of the Corporation Tax Act 2010.

Directorsand advisers

George Stevens (Chairman) Kevin Allen

David Horner

Chelverton Asset ManagementLimited 12b George Street

Bath BA1 2EH Tel: 01225 483 030

Secretary and Registered Office John Girdlestone

Chartered Accountant

Waterside Court

Falmouth Road

Penryn

Cornwall

TR10 8AW

Tel: 01326 378 288

Share Registrars Limited Suite E

First Floor

9 Lion and Lamb Yard Farnham

Surrey GU9 7LL Tel: 01252 821 390

www.shareregistrars.uk.com

Auditors Hazlewoods LLP Windsor House Bayshill Road

Cheltenham GL50 3AT

Custodian and Banker Jarvis Investment Managers

78 Mount Ephraim

Royal Tunbridge Wells

TN4 8BS

Tel: 01892 510 515

Information about the Company can be obtained at the Investment Manager's website at www.chelvertonam.com.

An investment company as defined under Section 833 of the Companies Act 2006.

REGISTERED IN ENGLAND No. 298951