2022 INTERIM REPORT

CHAIRMAN'S STATEMENT

MARKETS AND PERFORMANCE

Thankfully it appears that, through the increasingly global rollout of effective Covid-19 vaccines and easing of restrictions in Europe and America, we are now closer to what we previously described as ‘normal’. Sadly, this improvement has been tempered by the effects of the conflict between Russia and Ukraine which, as well as creating untold levels of human suffering, is impacting economies around the world. Due to these and other macro factors, such as some of the highest rates of inflation seen in a generation, in the first six months of this year equity markets have been very volatile. In particular, we have seen a reversal of fortune for some of the largest technology companies. For the last few years, these have skewed the performance of the global market index to which, historically, our portfolio has been relatively underweight.

As market returns have become less concentrated, our diversified portfolio has fared better than those biased towards larger growth stocks. Against a background in which most markets fell, we delivered a Net Asset Value (NAV) Total Return for the six months to 30 June 2022 of -10.5%, which was marginally ahead of the -11.0% return of the Company’s benchmark index. Encouragingly, in terms of a peer comparison, this performance was 8.1% ahead of the Association of Investment Companies’ (AIC) global sector average return.

The average discount increased to 6.3% for the period, slightly above the 5.9% average for the year to 31 December 2021.

AN ATTRACTIVE AND SUSTAINABLE DIVIDEND

We have announced a second interim dividend for 2022 of 6.0p (2021: 3.702p). The total of the first two interim dividends paid for 2022 is 12.0p, representing an increase of 62% on the same payments for 2021.

This continues the increase in the level of our dividend announced in 2021. The dividend yield as at 30 June 2022 was 2.4%. This level of dividend is well supported by the Company’s investment strategy and significant distributable reserves which stood at over £3.3 billion at 30 June 2022. We are one of a handful of investment trusts that has been able to increase its total ordinary dividend for 55 consecutive years. This is a record of which the Board continues to be proud and expects to extend.

INVESTING RESPONSIBLY

In its report, our Investment Manager, WTW, provides information on how we encourage positive change regarding responsible business practices in the companies in which the Company invests.

We have maintained the limited number of investment exclusions that we had in place at the end of 2021, adding a restriction preventing investment in Russia and Belarus. The few Russian holdings that were held in the portfolio at the start of the year were all sold by 1 March 2022, before the market for those stocks closed.

SHAREHOLDER ENGAGEMENT

I chaired my third Annual General Meeting (AGM) of the Company in April this year, but this was the first where I was able to meet our shareholders in person. I was pleased that so many managed to come along to the meeting and that those who were not able to attend personally were able to watch the meeting remotely and ask questions. We will continue to hold meetings that shareholders can attend in person and we will also provide the opportunity for shareholders, if they so choose, to participate in the meeting remotely.

We held an investor forum immediately after the AGM and a second virtual forum in July. We plan to hold a further investor event in October to allow you to hear directly from our Investment Manager and several of our Stock Pickers.

BOARD CHANGES AND SUCCESSION PLANNING

Chris Samuel, who joined the Board in 2015 stepped down from the Board at the conclusion of the AGM. I would like to reiterate my thanks to Chris for the significant contribution he made and wish him well.

In keeping with ongoing succession planning, we have started the search for at least one new Director to enhance the Board’s existing skills and help us to achieve a more ethnically diverse Board by 2024.

POSITIONING AND OUTLOOK

While the outlook remains challenging, with pressures from inflation and global political risks, we expect the resilient companies identified by our Stock Pickers to prosper. Our portfolio is characterised by companies that are fundamentally sound with attractive valuations and stronger and more stable prospects of growth than the index. We, and WTW, believe that our diversified, high conviction approach will deliver steady returns over the longer term with less volatility than many single manager strategies.

Gregor Stewart, Chairman

27 July 2022