HERITAGE MANAGED PORTFOLIO FUND 31-Dec-17

Key facts

The Fund's investment objective is to generate long term capital growth, with a lower risk than equity alternatives.

Price at 31-Dec-17 £297.46 Minimum investment £20,000 Fund currency GBP Investment advisor Heritage Capital Management Ltd. Fund size £184.2m Fund domicile Guernsey Management fee 1% pa + perf. fee ( 5% of profits ) Fund status Non-distributor ( "roll-up" ) Subscriptions/redemptions Monthly Pricing information www.heritage-capital.co.uk ISIN code GB00B128Z472 Performance and risk

Performance Dec-17 2017 ytd 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Annualised

Managed Portfolio Fund 1.39% 11.50% 7.48% 6.80% 7.74% 13.85% 13.27% 0.06% 10.78% 10.32% -15.60% 2.74% 16.79% 14.28% 10.92% 16.10% -0.41% -7.19% 6.66%

World Index ( £ ) 2.15% 13.78% 29.59% 3.49% 10.99% 19.85% 7.93% -4.50% 16.49% 17.86% -18.86% 8.24% 6.01% 22.69% 7.30% 20.82% -27.08% -15.52% 6.68% (total return - including dividends) Monthly price performance since inception ( 1/12/2000 ) Performance of HMPF vs World Index (£ total return) 300 290 35.00% 280 270 30.00% 260 250 25.00% 240 230 20.00% 220 15.00% 210 200 10.00% 190 180 5.00% 170 160 0.00% 150 140 -5.00% 130 -10.00% 120 110 -15.00% 100 90 -20.00% 80 70 -25.00% 60 -30.00% 50 2017 2016201520142013201220112010200920082007200620052004200320022001Ave

ytd N ov -00 N ov -01 N ov -02 N ov -03 N ov -04 N ov -05 N ov -06 N ov -07 N ov -08 N ov -09 N ov -10 N ov -11 N ov -12 N ov -13 N ov -14 N ov -15 N ov -16 N ov -17

Managed Portfolio MSCI World Index (£)

Risk Overall the Fund's conservative approach and well diversified, multi-asset portfolio results in a relatively low risk profile compared to an index of blue chip shares such as the FTSE 100.

Best return over : Worst return over : Annual volatility 1 year 3 years 5 years 10 years 1 year 3 years 5 years10 years

Heritage Managed Portfolio Fund 24.8% 55.6% 85.2% 122.3% -19.5% -11.3% 16.7% 63.6% 3.0%

FTSE 100 index 44.7% 60.0% 73.8% 76.8% -34.9% -33.8% -14.7% -10.0% 6.1% Volatility for £ World Equity index

Asset allocation

The equity content consists predominantly of profitable companies on attractive valuations as well as some international & specialist funds including private equity.

Equity shares The preference shares and convertibles consist of zero dividend preference shares 11% and bonds that have an option to convert into ordinary shares.

Preference shares The property exposure is through funds and REITs that invest directly in & convertibles 10% commercial property as well as property company shares. Corporate bonds The corporate bond holdings consist of investment grade as well as some higher 49% yield bonds and include both fixed and floating rate bonds. Property Cash is held to manage risk and to provide liquidity.

23% Cash

7%

Commentary

The Managed Portfolio Fund seeks to generate long-term capital growth at a lower risk than that associated with pure equity market investment through active management of a well diversified multi-asset portfolio.

The Fund has had a good year in 2017 with a gain of 2.57% in the final quarter taking the full year return to 11.50%.

Equity markets have enjoyed a strong year and there were excellent gains of over 25% for a number of our shares including Intermediate Capital, Greggs, , , Air Partner, Beazley, Clarke, and Unilever and double digit gains from some of our specialist funds such as Dunedin Enterprise, Worldwide Healthcare and Utilico Emerging Markets.

Our property investments also performed well with particularly strong gains of over 25% from TR Property and Hansteen and we also realised good profits on a direct investment in 12 properties in Wokingham acquired at a discount from a major housebuilder.

Our portfolio of fixed interest securities has also had another decent year and continues to provide a running yield of over 6%.

Looking ahead, we believe that our portfolio of investments remains well positioned to generate attractive returns for long-term investors, whilst our relatively defensive positioning and diversification should continue to provide some protection against any major market setbacks.

Investors should be aware that past results are not a guide to future performance and that the value of investments can fall as well as rise. The information set out above does not constitute an offer to subscribe for shares, which may only be purchased under the terms of the Explanatory Memorandum.