Chairman's Statement

I am pleased to present the first annual report and accounts of Herald Investment Trust. The trust was launched on 16 February 1994, so these accounts represent ten and a half months’ operations to 31 December 1994.

At the time of floatation certain individual company valuations were somewhat extended and this led to a decision to scale down the size and number of applications; as a result the size of the Trust was restricted to £65 million.

The market fell shortly after flotation following declines in the US bond market, and this led to a cautious approach to investing, which helped limit the decline in net assets to 5.2% after allowing for launch expenses. This compares favourably with arguably the most relevant index, the Hoare Govett Smaller Companies Index, which suffered a decline of 16.8%. Other indices to note are the FTSE-Smallcap and the FTSE-ASI which saw falls of 15.9% and 11.4% respectively. Against this background prospective multiples are looking much more attractive.

A dividend of 0.5p is proposed, and it is intended that the company should adopt a progressive dividend policy. Investors should note that the decision has been taken to expense all costs through the revenue account in the belief that investors are principally seeking capital appreciation and not income over the long term.

There continue to be prospects for strong profits growth among the companies in which Herald is invested, which should deliver benefits to shareholders over time.

The information on this page is taken from the Report & Accounts 1994