The trust delivered a NAV total return of 16.7%, compared with 27.7% for the MSCI All Countries World Index, while its share price total return was 15.1%. 

Chair James Macpherson said portfolio managers Helge Skibeli, Sam Witherow and James Cook had “underestimated the scale and market impact of the AI investment boom”, adding that stock selection within the technology sector had weighed on relative returns.

Macpherson said the trust’s bias towards businesses with durable growth potential had left it underweight momentum at a time when market sentiment, rather than company fundamentals, was the main driver of performance. 

Despite the challenging year, Macpherson backed the investment strategy, noting that the trust had outperformed its benchmark in eight of the past 10 financial years to 30 June 2026, delivering average annualised returns of 14.1% over the period. 

The portfolio managers explained their cautious approach to stocks seen as AI winners had weighed on performance, as they waited for clearer evidence that large-scale investments would generate sufficient returns.

They argued an “extreme mismatch” between supply and demand had created bottlenecks in the AI supply chain, benefiting lower-quality suppliers such as generic memory chip manufacturers. The trust had instead favoured higher-quality chipmakers Taiwan Semiconductor Manufacturing and ASML, which “materially lagged their lower quality peers”.

Its modest overweight positions in Amazon and Microsoft also detracted from returns, as investors grew concerned about rising capital expenditure without clear evidence of corresponding revenue growth. However, the managers said their analysis of the potential returns from AI investment had strengthened their conviction to maintain the positions.

Outside technology, holdings in consumer businesses including Lowe’s, McDonald’s and Yum China also underperformed as valuations fell despite relatively resilient fundamentals. The managers acknowledged that, in such market conditions, “resilience was simply not enough”, but said they remained confident these companies’ quality would eventually be rewarded.

Healthcare and industrial holdings provided some offset. Johnson & Johnson contributed positively to relative returns, alongside Japanese automation company Keyence and US construction equipment distributor United Rentals. The managers said these performances reflected a “broadening of industrial strength globally”.

The trust recorded a five-year cumulative NAV total return of 76.9%, compared with 75.3% for its benchmark. Its five-year cumulative share price total return was 69.8%.

Over 10 years, its cumulative NAV total return reached 273.0%, against 235.4% for the benchmark, while its share price total return was 330.3%. The board said the trust remained one of the top performers in its peer group over both periods. 

During the year, the trust repurchased 34.5 million shares into treasury at a total cost of £198.3m. The buybacks were made at a weighted average discount to NAV of 3.25% and added 0.98p to NAV per share. 

Shareholders received four interim dividends of 5.75p per ordinary share, totalling 23p for the financial year. For the financial year beginning 1 July 2026, the board intends to pay dividends totalling 24.8p per share, equivalent to four quarterly payments of 6.2p. The three remaining payments are expected in December 2026, April 2027 and June 2027. 

The increase would mark the 11th consecutive year of dividend growth. Since adopting its enhanced dividend policy in 2016, dividends paid and declared to shareholders have risen by 675%, equivalent to almost 20.5% annually. 

The board also highlighted its substantial distributable reserves, which stood at £2.36bn, or 433.1p per share, as at 30 June 2026. These reserves give the trust scope to partially fund dividend payments without relying solely on income generated by its portfolio. 

In their report, the portfolio managers said earnings expectations had been driven by the expanding scale of global investment in AI.

They estimated that almost 40% of year-on-year growth in earnings forecasts came from the semiconductor and technology hardware sectors, forecasting that AI capital expenditure would exceed $1.3 trillion in 2026: an increase of more than 70% year on year.

They compared the scale of investment with the 19th-century railway expansion and the 1990s fibre-optic cable buildout. The managers said the boom was driving exceptional earnings growth for semiconductor and industrial companies, while also contributing to unusually strong market momentum and a concentration of returns among a relatively small number of stocks.