RIT Capital Partners : Annual Report December 2023

Corporate Objective

To deliver long-term capital growth, while preserving shareholders' capital; to invest without the constraints of a formal benchmark, but to deliver for shareholders increases in capital value in excess of the relevant indices over time.

Investment Policy

To invest in a widely diversified, international portfolio across a range of asset classes, both quoted and unquoted; to allocate part of the portfolio to exceptional managers in order to ensure access to the best external talent available.

Sir James Leigh-Pemberton

In the first half of 2023, most major indices traded in a relatively narrow range, punctuated by periods of weakness and recovery. As the year progressed, a belief that interest rates may have peaked led to a rebound in developed world equity markets, which was particularly marked in the fourth quarter. US equity markets finished the year strongly, buoyed by a small number of very large technology companies. These so-called 'magnificent seven' tech stocks accounted for the majority of the S&P 500's gains. Excluding these few companies, the overall market returns were more modest.

Our net asset value per share finished the year at 2,426 pence, representing a total return (including dividends) of 3.2%, lagging our investment hurdles of CPI+3%, which was up 7.0%, and the MSCI ACWI (50% sterling) which rose 18.4%. This brings our 10-year performance to 109%, a more than doubling of shareholders' capital over the period. Our investment portfolio is structured around three core pillars of quoted equities, private investments, and uncorrelated strategies. During 2023, the portfolio saw good performance from quoted equities, driven primarily by our successful single stock selection and exposure to Japan. Uncorrelated strategies also made a positive contribution, helped by the outperformance of our credit managers, as well as our investments in carbon credits. However, the value of our private investments softened, reflecting lower valuations of external funds carried over from the fourth quarter of 2022 and our carefully considered revaluation of our direct investments. Currency was also a headwind; the pound's appreciation of some 5% against the US dollar over the year impacting the translated value of our global investments.

Our portfolio is made up of high-conviction investments with differing characteristics and return drivers. While there will be times when not all asset classes meet our long-term expectations, we remain committed to our diversified approach. Our belief is that utilising a carefully constructed blend of different assets, overlaid with a top- down risk management function, remains the best way to manage our investments for the long-term benefit of shareholders. Our Manager's Report from J. Rothschild Capital Management (JRCM or the Manager) provides a detailed review of investment performance, attribution, positioning and risk management.

While the most important driver of our share price performance over the long term is our NAV, the Board is

This brings our 10-year performance to 109%, a more than doubling of shareholders' capital over the period.

also intensely focused on the rating of our shares, and in this regard 2023 was a difficult year. Discounts for investment trusts widened considerably, and our discount was no exception ending the year at -22%, resulting

in a total shareholder return (including dividends) of

-9.6%. This is a source of frustration to our shareholders, as well as to the Board and our Manager. Directors' shareholdings are disclosed in this Report and our colleagues in our Manager also have significant 'skin in the game', with interests in approximately £18 million RIT shares at the year end, reinforcing the close alignment with shareholders' interests. The Board and our Manager have been, and continue to be, acutely focused on closing the discount.

During 2023, we increased the level of our interactions with shareholders, and I am very grateful for their candid and thoughtful feedback in these discussions, which has been very helpful in guiding our plans to reduce the discount. I address below four core topics: private investments, capital allocation, costs and marketing.

Private investments are currently out of favour with investors, and discounts for trusts exposed to these assets have widened significantly in 2023. RIT has always had private investments as a core part of its approach, and despite mark-to-market volatility in the short term, over the long term the success of these investments has been a strong contributor to our returns. Our earlier successes have, in part, placed us in a challenging position; healthy capital growth is one of the main reasons why, over the past five years, our private investments had come to represent a higher proportion of the portfolio than in the past. We are committed to this asset class and continue to believe that our long-standing relationships are a source of competitive advantage and attractive returns to shareholders. This is reflected in

our portfolio, which in aggregate is sitting on sizeable profits, over and above the capital we invested. The returns generated by our private portfolio are set out in more detail in the Manager's Report. Most of our largest direct investments are profitable companies with growing revenues and earnings. Our close manager relationships

and brand strength, often enable us to access a preferred position in the capital structure of a company, with the majority of our direct investments having some element of downside protection.

Nevertheless, over the next two years we will look to reduce the proportion of the portfolio represented by private investments to a level of between around a quarter and a third of NAV. This will be achieved by organic exits and the continuation of a very high return bar for any new investments. Where we see realisations from this portfolio, we expect to deploy the capital to buy back our shares or to make new investments in the liquid portfolio, depending on the level of discount, the opportunity set and general portfolio management needs. What we will not do is accelerate exits or engage in sales at discounts to fair value to the detriment of long-term shareholder value.

During 2023, we undertook one of the largest buybacks in the investment trust industry, acquiring some 8.6 million shares at a cost of £163 million, our largest single allocation of capital in the year. This generated a strong return on investment, increasing the NAV per share return for shareholders; the buyback also reinforced the confidence that we have both in our NAV and our approach. If compelling returns from allocating our capital in this way continue to be available, we will retain the flexibility to act.

Over the year, we also paid dividends of 38 pence per share, an increase of almost 3% over 2022, and totalling £57 million. Our approach remains to maintain or increase the dividend, subject to the overriding capital preservation objective. In 2024, we intend to pay a dividend of 39 pence per share, an increase of 2.6% over 2023. The dividend will be paid as normal in equal instalments in April and October, funded from our significant reserves.

Our long-standing investment approach covers multiple asset classes, sectors and geographies, and provides shareholders with access to investments, including specialist funds, which are not typically accessible to individual shareholders. This approach is in line with our Investment Policy and has been deployed consistently year on year. It is a key driver of RIT's strong long-term performance. By design, it will not be the cheapest approach to managing investments, but whenever we allocate capital, we do so only if the anticipated risk- adjusted return, net of all costs (both internal costs and any fees paid to external managers) delivers value to shareholders.

We continue to look for ways to reduce costs, and enhance our communications, with a portion of the savings made over the year reinvested into improving our marketing and investor relations efforts. We will continue

to invest in more regular and informative direct contact with shareholders.

Our environmental, social, and governance (ESG) initiatives remain an area of particular focus, with our Manager, JRCM, submitting its first report during the year as a signatory of the UN Principles for Responsible Investment (UN PRI). We also include our first Sustainability Report within this Annual Report, where we have collated in one location, all of the activities we undertake in respect of our wider commitments to society and the environment.

Governance and employees

Following an extensive international search process, Maggie Fanari retired from the Board on 29 February, joining JRCM on 1 March as its CEO. Maggie has an outstanding track record of successfully leading teams investing across different asset classes and geographies at one of the largest and most respected investment companies in the world - Ontario Teachers' Pension Plan - where she was the Senior Managing Director and Global Group Head High Conviction Equities. We are delighted that Maggie has joined the exceptional team at JRCM, and we look forward to working closely with her in the execution of the important initiatives outlined above.

Maggie succeeds Francesco Goedhuis, who retired as JRCM's CEO in December as a result of an illness in his immediate family. Francesco joined JRCM in 2010 and was appointed CEO in 2014. During his 13 years with the Manager, Francesco has provided outstanding leadership, continuously strengthening both the team in JRCM and our exceptional network of investment partners. The Board was very pleased to announce recently that he will continue his association with RIT in his new role as Senior Adviser to JRCM.

After 11 years, Ron Tabbouche (latterly the co-CIO at JRCM) retired to join his family in Israel, with Nick Khuu appointed to the role of CIO. Nick is a very experienced investor across multiple asset classes, having worked at leading investment firms in New York andSan Francisco. He has been with JRCM for over four years operating in senior investment roles, and we are delighted with his appointment.

On behalf of the Board, I would like to express our gratitude to Francesco and Ron for their very significant contributions to the Manager and to your Company's performance over more than a decade.

At the end of September, after more than three years as a Director of RIT, Maxim Parr retired from the Board to take on the position of Chair of JRCM, providing valuable leadership and additional resources during a period of transition of its senior leadership team.

I would like to thank my colleagues on the Board, and our talented and dedicated employees for their hard work and commitment throughout the year. This diverse group shares a single aim - creating long-term value for RIT's shareholders. At a time when the outlook for global economies and markets and the geopolitical environment are particularly complicated, these colleagues, together with our investment partners and advisers, are the key to our future success. We have the flexibility to select the best investments across any asset class, sector or geography, coupled with the strength of our network which opens doors to opportunities that others cannot access. These remain important differentiators on which we will continue to build for the future.

Nathaniel Charles Jacob Rothschild 1936 - 2024 Finally, it is with great sadness that we mourn the recent death of our founder and former chairman, Lord Jacob Rothschild. Jacob was chairman of the Rothschild Investment Trust, subsequently renamed RIT Capital Partners plc, from 1971 to 2019. He devised, developed, and led the growth of the Company, including its listing on the London Stock Exchange in 1988. During his tenure, the net asset value increased from £5 million to over £3 billion by the time he retired from the Board in September 2019 and was granted the title of Honorary President. Our thoughts and condolences are with Hannah Rothschild, his daughter and current Director, and the rest of the Rothschild family at this time. He will be missed.

Sir James Leigh-Pemberton

Chairman

Purpose and strategic aims

Since your Company's inception, our purpose has been consistent, namely to protect and enhance shareholders' wealth over time by providing diversifiied portfolio management. This is set out in our Corporate Objective:

"to deliver long-term capital growth, while preserving shareholders' capital; to invest without the constraints of a formal benchmark, but to deliver for shareholders increases in capital value in excess of the relevant indices over time."

The origins of the business can be traced back to the earlier Rothschild Investment Trust, chaired by Lord Jacob Rothschild from 1971, when it had a value of £5 million. In its current form, your Company was listed on the London Stock Exchange in 1988, and has followed a constant and unique approach to this day. Our multi- asset, flexible investment strategy differentiates us from other conventional investment trusts. Our access and expertise enable us to build a flexible, diversified portfolio that delivers through different economic cycles. We invest for the long term in the most compelling opportunities across asset classes, geographies and capital structures, applying careful risk management, all designed to support our most important objective: long-term capital growth.

There may be periods when we will try to place a degree of protection of shareholders' funds ahead of growth, but we believe that active management of our portfolio exposures is more likely to lead to long-term outperformance. We do not target absolute returns and therefore, ensuring we have sufficient capital deployed to generate long-term growth will naturally result in us being exposed to market risk.

Over time, we believe that a combination of healthy participation in up markets, and reasonable protection in down markets, should help us to compound ahead of markets through the cycles. Indeed, since your Company's listing in 1988, we have participated in 74% of the monthly market increases but only 41% of the market declines. This has resulted in our NAV per share total return compounding at 10.5% per annum, a meaningful outperformance of global equity markets at 7.3%. Over the same period the total return to shareholders was 10.6% per annum.

Above all, our approach is long term … Our access and expertise enable us to

build a flexible, diversified portfolio that delivers through different economic cycles.

Investment approach

Our Investment Policy guides our Manager and subsidiary, J. Rothschild Capital Management Limited (JRCM) as it manages your portfolio:

"to invest in a widely diversifiied, international portfolio across a range of asset classes, both quoted and unquoted; to allocate part of the portfolio to exceptional managers in order to ensure access to the best external talent available."

We typically invest your portfolio across multiple asset classes, geographies, industries and currencies diversified across three investment pillars: quoted equities, private investments and uncorrelated strategies. This has been the basis of our approach over many years and the long-term success of your Company has been the result of combining thematic investing with active management of a distinctive blend of investments, all overlaid with currency positioning and macro exposure management. Using our unique access and expertise, we create a distinctive blend of high-conviction investments of differing profiles and varying underlying return drivers. This targets long-term performance with a balance of risk and reward that is superior to the wider equity markets.

Our respected name is a hallmark of quality, affording us unrivalled access to world-leading investment opportunities, allowing us to maximise our ability to deploy capital effectively. We have a highly skilled investment team with significant depth and breadth of experience across different asset classes and we are also able to draw on our network to broaden our intellectual bandwidth by leveraging specialist insight from our Manager's network of exceptional manager partners. The strength of these relationships enables us to invest in sectors and geographies which may be inaccessible to many investors.

This aspect of our model is key to our ability to identify and deliver value from differing sectors, markets and assets. And while access to such specialist managers involves paying fees, the level of these fees is an important and integral part of the investment decision. Our focus is solely on the net returns, and therefore if the returns, net of all fees, meet our target, we are comfortable paying them. Our reported net asset value is, of course, net of all management and performance fees.

Above all, our approach is long term. The permanent capital structure of an investment trust, compared to an open-ended fund, means we do not suffer from liquidity- driven pressures to fund investors' redemptions. We can therefore hold our investments in both public and private markets over an extended period and choose to realise them at the optimal time.

Another key facet of our investment approach is risk management. The Board establishes and oversees the risk appetite through regular monitoring of asset allocation and security limits. These are intended to allow JRCM to efficiently and effectively manage the portfolio in line with the Corporate Objective.

The Manager has developed a sophisticated risk management approach, on which it reports regularly to the Board. This incorporates quantitative and qualitative measures, as well as the careful use of hedging. The risk management tools assist in the construction of a portfolio designed to provide diversifiied sources of return and to monitor closely the performance of individual assets and the portfolio composition. Further information on risk management is set out on pages 24 to 30.

In summary, our fllexible and distinctive model, with the freedom to utilise multiple asset classes and different investment structures, allows our Manager to deploy capital and manage risks as effectively as possible.

Further information in relation to the investment approach as well as portfolio attribution and returns is set out in the Manager's Report on pages 11 to 20.

Business model, culture and values

RIT Capital Partners plc is a listed investment company, approved by HM Revenue and Customs (HMRC) as an investment trust. It is a UK Alternative Investment Fund (AIF) in accordance with UK legislation effective from 1 January 2021 which replicated the European Union's Alternative Investment Fund Managers Directive (AIFMD).

Investment management, as well as administration and company secretarial, is delegated under a formal agreement to our Manager, JRCM, a subsidiary of the Company. JRCM is separately regulated by the Financial Conduct Authority (FCA) as the UK Alternative Investment Fund Manager (AIFM) under the same UK rules. JRCM has a separate Board of Directors and is governed by its Executive Committee.

Board of

Directors

In addition, the Manager is also responsible for our subsidiary, Spencer House Limited (SHL). This company provides premises management for Spencer House and our other investment properties in St. James's. It also operates a profitable events business.

I am responsible for the leadership of the Board, which is ultimately tasked with ensuring that we both meet our Corporate Objective and maintain high standards of corporate governance.

The main focus of the Board is to ensure that the investment approach is suitable for achieving our Corporate Objective, and to monitor the performance of the Manager. In order to do this, we receive regular and detailed reports covering investment performance, risk, fiinance and operational matters.

The employees of our Manager and SHL are critical to our ability to meet all of our objectives. A key part of the monitoring of the Group is ensuring that the Manager is appropriately incentivised to deliver sustained, risk-adjusted returns and is able to attract, retain and develop a top-quality team. This team is expected to operate in accordance with our core values, and within a culture of high performance.

Our core values of respect, dignity and integrity are evidenced by the Group's fiive business principles of collaboration, enterprise, efficiency, effective communication and professional ethics, which are regularly communicated and reinforced through the Group's recruitment and appraisal processes. JRCM monitors the health of its culture by assessing regularly how well these principles are being applied, and the Board receives regular reports on this topic.

The Group has a clear and proactive approach to regular employee engagement. The Sustainability Report on pages 31 to 35 provides more detail of these interactions.

We are fiirm believers in the benefiits that cognitive diversity as well as diversity more generally, brings to decision-making, and seek to ensure this is refllected in our recruitment processes, both at Board level and within our subsidiaries. At the year end the Board comprised eight Directors, of which four were men and four women.

Within our subsidiaries, the employee base comprised 43 men and 19 women.

Corporate governance

The Directors are responsible for compliance with applicable rules, regulations and guidance in relation to governance, in particular taking into account the matters set out in Section 172(1) of the Companies Act 2006, which guides our approach to strategy and decision making (see pages 33, 34 and 62). The Board recognises that its actions have lasting impacts and consequences for the future of the Company, its shareholders and other stakeholders, and approaches its responsibilities accordingly.

The Board has a responsibility for ensuring that there are strong and healthy ties with all of our stakeholders, making sure that we consider their interests and acknowledge that the Group's interaction with them is fundamental to the long-term success of the business.

The Directors receive regular feedback and reports from the Manager on its investor relations activity, as well as from brokers and analysts, and undertake their own shareholder interactions, to ensure that shareholders' views are well understood by the Board.

When it comes to our Corporate Objective, shareholders understandably focus on our investment performance. This informs the Board's desire to seek healthy, risk- adjusted returns over the long term and through the cycles, with careful attention to capital preservation, and mindful of the Company's reputation as a responsible fiiduciary of shareholder capital. In assessing the right strategy to achieve these aims, the Board considers the ongoing suitability of the Investment Policy and the approach taken by the Manager to execute on the policy.

Other areas considered by the Board where shareholder views were taken into account included discount management, the dividend, buybacks, capital allocation, and ESG integration. Our current Board composition complies with the recommendations of both the Parker Review and the FTSE Woman Leaders Review (previously the Hampton-Alexander Review), and also meets the requirements of the FCA's listing rules in relation to diversity. ESG and sustainability will continue to help inform our approach to this area. Please refer to our Sustainability Report on pages 31 to 35 for more information.

The Group has relationships with a number of suppliers and service providers which play an important role

in enabling us to operate our business efficiently. The Groups' overarching policy with respect to these relationships is that they should be managed so that they are both sustainable and mutually benefiicial over the medium term, and deliver value for money for our shareholders (see page 34).

ESG and sustainability

We recognise that our purpose to protect and enhance our shareholders' wealth must combine with a commitment to reflecting ESG factors in our investment approach. The application of an ESG lens offers us a comprehensive understanding of both financial and non- financial risks, which ultimately contributes to improved decision-making. As a result, we have a more complete view of any given opportunity, supporting the delivery of risk-adjusted returns and aligning with shareholder expectations. ESG factors are integrated across our investment management and internal operations, and we aim to be good corporate citizens, applying robust governance and minimising our environmental impact.