Heritage Investment Fund Limited Performance for the year ended 31st December 2017

US Dollar Absolute Return Managed Portfolio Inflation TR Global Fund Fund (US) Equity Index (£) Risk profile Low Medium Minimum investment horizon 3 years + 5 years + Target net annual return 5% 6-7% Price at 31 December 2017 US$159.44 £297.45 Return for the quarter (net) 3.79% 2.56% 0.53% 5.10% Year 2017 return (net) 10.83% 11.50% 2.14% 13.78% Year 2016 return (net) 2.08% 7.48% 1.16% 29.59% Year 2015 return (net) -0.47% 6.80% 0.08% 3.49% Year 2014 return (net) 5.42% 7.74% 1.65% 10.99% Year 2013 return (net) 3.98% 13.85% 1.49% 19.85% Year 2012 return (net) 1.95% 13.27% 2.10% 7.93% Compound annual return since 2001 2.72% 6.66% 2.12% 6.68% Annual volatility 3.05% 3.02% 0.09% 6.09% Size of Fund (millions) US$12.1 £184.2

US Dollar Absolute Return Fund Managed Portfolio Fund Equity shares US Equity Index 15% 11% Pref shares & US Corporate 10% convertibles

10% Bond Index Corporate bonds

49% 51% Physical Gold Property 23%

Cash Cash 24% 7%

The US Dollar Absolute Return Fund aims to protect investors’ The Managed Portfolio Fund seeks to generate long-term capital capital and generate annual returns in excess of inflation by investing growth at a lower risk than that associated with equity market in liquid, well-diversified exchange traded funds (ETF) which track investment through active management of a well diversified multi- US equity, corporate bond and gold indices, whose returns are asset portfolio. uncorrelated in order to reduce losses and volatility. Downside risk is

managed using derivatives to limit losses. 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%. The Fund has 51% invested in an equity index ETF for growth, which tracks the S&P 500 largest US companies and yields 1.45% Equity markets have enjoyed a strong year and there were excellent per annum, which gained 9.14% for the year after hedging. gains of over 25% for a number of our shares including Intermediate Capital, Greggs, , , Air Partner, The Fund also has 24% invested in a US investment-grade corporate Beazley, Clarke, and Unilever and double digit gains from bond ETF, yielding 3.25% per annum, both for income and as a some of our specialist funds such as Dunedin Enterprise, hedge against equity market weakness, which gained 1.69% for the Worldwide Healthcare and Utilico Emerging Markets. year after hedging. Our property investments also performed well with particularly The Fund has a further 10% invested in a physical gold ETF, as a strong gains of over 25% from TR Property and Hansteen and we hedge against inflation and US Dollar weakness, which gained 1.01% also realised good profits on a direct investment in 12 properties in for the year. Wokingham acquired at a discount from a major housebuilder.

The Fund produced a positive return of 3.79% for the quarter and is Our portfolio of fixed interest securities has also had another decent up 10.83% for the year. It is well positioned to generate future year and continues to provide a running yield of over 6%. returns significantly in excess of inflation over the medium term. 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.

This report is not an invitation to subscribe for shares in the Heritage Investment Funds and is for the information of investors only. Investors should be aware that past investment performance is not a guide to future performance, and that the value of investments may fall as well as rise. An investor may get back less than the original amount invested.