The largest absolute contributors* to performance in the fourth quarter were companies reporting positive third-quarter news: Alphabet rose almost 30% (in USD terms), supported by continued strength across its core Search and YouTube franchises, improving Google Cloud profitability, and the successful rollout of its latest Tensor Processing Unit (TPU) which reinforced confidence in its AI capabilities; Thermo Fisher and Haleon both exceeded analysts’ expectations on organic revenue growth and benefitted from a broad Health Care sector rally as regulatory and pricing risk perceptions eased following the Trump-Pfizer agreement; S&P Global raised full-year revenue guidance following sustained strength across its core business areas; and Coca-Cola reported strong organic growth for the quarter and further progress toward the near-completion of its well-received refranchising programme. Performance (%) Fund Index* Excess return Month 0.04 1.04 -1.01 Last three months -3.51 3.29 -6.80 Year to date -0.75 22.34 -23.08 Since inception** 5.99 10.58 -4.59 * Index: MSCI ACWI TR USD (R Class)  ** Since inception: 3 September 2013 On the downside, the fourth quarter saw a continuation of the indiscriminate punishing of a diverse range of data-rich and software-enabled business models that has been underway since August, driven by heightened concerns around advanced AI (generative AI [GenAI] and agentic AI) disruption. This resulted in a de-rating across several differentiated, high-quality holdings including RELX, SAP and ADP. As discussed in prior commentaries, these businesses are already integrating AI into their proprietary datasets and deeply embedded workflows and as such, we believe they are far more likely to benefit from the technology than be displaced by it. For example, RELX’s third-quarter results highlighted growing uptake of AI-enabled platforms, such as Lexis+ AI, which is supporting revenue growth across its analytics franchise, while SAP’s recent results showed strong cloud and ERP adoption which management emphasised is expanding the addressable base for AI-led upsell and embedded AI functionality. AJ Gallagher and Microsoft also detracted in the quarter as both stocks pulled back following strong runs earlier in the year. Stock selection appears as a relative detractor in the fourth quarter partly due to AI disruption concerns which weighed on several of the Fund’s overweight subgroups, most notably within Information Technology, Financials, and Industrials. Within Information Technology, the Fund’s preferred Software group declined 8% (in USD terms), while investor preference for AI infrastructure exposure saw the Hardware and Semis subsectors both rise 6%. In Financials, balance-sheet-light areas held by the Fund – Payments (-2%), Insurance Brokers (-9%), and Exchanges and Data Providers (-1%) – lagged a +10% gain in Banks, which the Fund does not own. A similar pattern was evident in Industrials, where the Fund is skewed to capital-light Professional Services - an industry which returned -9% versus a flat overall sector. Outside these areas, Zoetis’ share price fall meant the fund lagged the very strong Health Care sector, while AutoZone was a drag within Consumer Discretionary, partially offset by strong performance in Communication Services due to Alphabet.

For 2025 overall, the largest contributors to absolute performance* were the cloud hyperscalers Alphabet after its very strong fourth quarter and Microsoft where the absolute impact was boosted by the large position size. Hyperscaler Oracle’s success with its OCI business also contributed positively ahead of our sale in the third quarter, an exit driven by the sharp shift in its business model, reduced free cash flow and stretched valuation. The stock is down over 40% since peak. In Consumer Staples, L’Oréal had a particularly strong year, significantly outperforming peers as organic growth reaccelerated, backed by improving trends in Asia and resilient demand in Europe. Investor confidence was further boosted by evidence that ongoing digital investments are enhancing execution. Visa also had a decent year as resilient consumer spending and growth in high-margin cross-border volumes supported steady revenue and earnings momentum. Accenture was the largest absolute detractor* in 2025. Share price weakness over the year reflects a continuation of sub-trend industry growth, the demand hit from U.S. government cost-cutting initiatives, along with concerns about Advanced AI’s potential deflationary pressure on industry profit pools, which led to our exit in the fourth quarter. In Health Care, UnitedHealth cut and then abandoned its 2025 earnings guidance, while Becton Dickinson disappointed on its full year 2025 growth. We exited both positions in the second quarter. Shares in animal health player Zoetis struggled due to near-term pressures related to it osteoarthritis treatment and investor fear surrounding increased competition, although we continue to view the company as an industry leader with a defensive revenue profile and an attractive pipeline. Finally, Constellation Brands detracted before our exit in the first quarter, reflecting uncertainty over its Mexico-based brewing operations in an increasingly complex tariff environment and the impact of the U.S. administration’s immigration policies on its customer base. Relative performance for 2025 reflects both the persistence of narrow market leadership among cyclical and AI-infrastructure-exposed segments and the broad-based de-rating of a diverse range of quality business models, impacting names even where underlying fundamentals remained intact. In Information Technology, Software (+9% in USD terms), where the fund is significantly overweight, delivered a decent positive return for the year but this materially lagged the exceptional gains in Hardware and Semis (both c. +40%); areas which the Fund has typically avoided due to high operating leverage, capital intensity and cyclical end-demand. A similar dynamic was evident in Financials and Industrials, where the more resilient Payments, Insurance Brokers and Professional Services segments were negative, while lower quality, highly cyclical areas including Banks and Aerospace & Defense delivered unusually elevated returns in excess of +50%. Index concentration further impacted relative performance as a small number of stocks accounted for a disproportionate share of benchmark performance, most notably Nvidia, Broadcom, JP Morgan, and Meta, which the Fund has not owned due to its quality and valuation discipline. Outside of these dynamics, Health Care weakness was due to idiosyncratic stock-specific issues, although we remain supportive of the long-term case for high quality names in specific sub-sectors such as Life Science, Animal and Consumer Health, while Communication Services saw relative outperformance. Sector allocation for the year was modestly supportive.

We are concerned about the growing uncertainty around the net impact of GenAI on industry profit pools. While Accenture is well positioned to support enterprise AI adoption, the pace, scale and economics of that adoption remain unclear, with a risk that AI-driven efficiency gains prove net deflationary for consulting revenues. Given the widening range of potential outcomes and reduced relative conviction versus alternative opportunities in the fund, we chose to redeploy capital into higher-conviction names. We also sold out of the small position in FactSet, following a reassessment of its quality profile amid emerging structural risks to data aggregation businesses. We see greater clarity and defensibility in other financial services names that should offer better insulation from advanced AI-related risks and more reliable long-term earnings visibility. During the quarter, we added to several positions where we saw attractive valuation opportunities following short-term dislocations. This included Uber and AutoZone, along with Intercontinental Exchange and Experian where there was upside to our price targets. Reductions were also largely valuation driven. We trimmed ADP to manage relative valuation risk and maintain flexibility amid macro and technology transition uncertainty, along with Roper Technologies as the shares reflected a high degree of optimism at a time when near term growth visibility has moderated. Booking Holdings and Haleon were also clipped after the share prices rerated on good results. Looking back over the year as a whole, 2025 saw higher fund turnover than is typical for the strategy, reflecting an environment characterised by sharp valuation dispersion, AI-driven narrative shifts, and a number of stock-specific developments. Periods of market dislocation created opportunities to selectively initiate new positions where we believed long-term compounding potential was not reflected in valuations; in addition to Ferrari, these included Synopsys, MSCI and Uber. Similarly, we remained agile with existing holdings, adding to several positions where conviction remained high and valuations became particularly attractive, notably Microsoft and Alphabet in the first quarter after the shares derated on DeepSeek concerns, Booking Holdings, SAP, S&P Global, ADP and RELX which wobbled on AI disruption concerns, and AJ Gallagher, AutoZone, Haleon and Zoetis where the risk-reward profile remained attractive. On the other side, we exited a number of holdings where the medium-term outlook had become less compelling, in doing so upgrading the overall quality and resilience of the Fund and recalibrating the number of positions back towards a more typical level from the top end of its range earlier this year. We also sold Oracle, which returned 40% since our purchase in the first quarter. As in prior years, valuation discipline remained central to position sizing and capital allocation decisions: we trimmed SAP, Booking Holdings, Abbott Laboratories, and AutoZone following strong results in the first quarter, and reduced Microsoft, Alphabet, L’Oréal, and Visa as earnings momentum drove share price strength over the year. We also scaled back Aon and ADP on relative valuation grounds, along with Thermo Fisher after a strong second-half rally on good results.

In our view, the actions taken during 2025 have strengthened the overall quality, Outlook Quality ‘on sale’ After a very strong 2025, with the MSCI World Index up 21%, a third boom year after a +19% return in 2024 and +24% in 2023, global equity markets enter 2026 at a pivotal juncture. The close of 2025 was marked by a dynamic tension between those optimistic that artificial intelligence (AI) will drive a visible transformation in corporate profitability in the near term, justifying the massive capital expenditures, and the growing voice of those questioning whether these high expectations can be realised in the near term. Against this backdrop of uncertainty, not just around the path of AI adoption, but also growth, inflation, trade policy, government debt and geopolitics to name just a few, the MSCI World Index continues to trade at around 20x forward earnings, with the S&P 500 at 22x, valuations that imply far more certainty than seems to be warranted. And these steep valuations rest on the assumption of robust 14% earnings growth for the MSCI World over each of the next two years, driven by further margin expansion from already elevated levels. A regime of seeming market certainty in a distinctly uncertain world has naturally not been favourable for Quality as a style, which has underperformed the broader market to an extent not seen since the dot-com era 2. In terms of our outlook, historically, such periods of Quality underperformance have been followed by a meaningful relative resurgence in Quality stocks, and our fund, which contributes to our view that Quality offers one of the greatest opportunities in markets today. In fact, we’d argue many of the companies we own across a range of sub-industries are double-discounted, being punished not just for being ‘quality’ but also viewed as being at risk from Advanced AI disruption. This has hit Software companies within Information Technology, a variety of Professional Services within Industrials, and Information Services within Financials. Our view is that the market has taken an indiscriminate view, not differentiating enough between industries and business models. We believe companies such as MSCI, S&P Global, RELX and Experian are not only likely to be robust against the Advanced AI threat but should actually be long-term beneficiaries. As such, we disagree with the market about these companies’ prospects. This is not to say that we are complacent; we continue to reassess our holdings’ moats and focus on names where we are most confident about their resilience against Advanced AI risks. While their de-rating has adversely affected performance in 2025, it does improve their prospects going forward. Our quality fund also has exposure to those providing Advanced AI, mainly through select hyperscalers – companies that have decent growth prospects even without Advanced AI – alongside reasonable valuations, which should limit the downside from any deflation of Advanced AI expectations. Where we have limited direct exposure to semiconductors, we prefer businesses that serve as key bottlenecks in the supply chain with broad use cases that are not wholly reliant on generative AI prospects. 

We are particularly wary of players where planned capital expenditures are highly dependent on debt financing rather than their own cash flow generation. These Advanced AI exposures are deliberately balanced by holding traditional defensives such as high-quality consumer and health companies. Overall, the fund is built around companies with the capacity for sustained earnings growth, supported by pricing power and recurring revenues. These are businesses that have demonstrated resilience through cycles, with lower earnings and price volatility than the broader market, showing a pre-tax return on operating capital employed (ROOCE) of over 70% for the fund versus 24% for the index, and gross margins at close to 60% versus 33%. In the past, the market has charged an insurance premium for this resilience, with Quality significantly pricier than the overall index. This is far from the case today. The fund is projected to grow faster than the market, with projected topline growth of over 8% per year over the next two years, well ahead of the index at 5.9%. Despite the attractive combination of this higher topline growth and its traditional resilience, the fund actually trades at a significant free cash flow discount to the market, a level of discount not seen in the past decade – a rare opportunity. Looking forward, we expect fundamentals to reassert themselves, as they always do in the end. Against the uncertain backdrop, a fund of some of the highest quality companies in the world, trading at an unusually discounted price versus the market, suggests a generational opportunity to take advantage of Quality on sale. Our conclusion? That this is a great fund, full of great companies, that are continuing to deliver resilient earnings growth, with strong fundamentals, but are trading at the wrong price, particularly relative to the stretched market.