Half-year Report

LEI: 5299008VJFXCUD2EG312

THE MERCHANTS TRUST PLC

Half-Yearly Financial Report

For the six months ended 31 July 2025

Chairman's Statement

I am pleased to present the Merchants Trust half-year report for the six months to 31 July 2025. Strong income growth from our portfolio has once again enabled the Board to raise the dividend, extending an unbroken record of 43 consecutive annual increases.

The UK stock market delivered healthy returns in the first half of the year, with the Company's net asset value (NAV) total return rising by 5.4%* over the period. This lagged the 7.5% return of the FTSE All-Share Index, for reasons outlined in the Manager's Report. Shareholder returns were lower at 1.5%, reflecting a widening discount to NAV, against a backdrop of continued outflows from UK equity funds.

While relative performance and the discount widening are disappointing, the Board is monitoring both closely. We continue to promote the Company actively through media engagement and direct shareholder communication. Encouragingly, the portfolio recently temporarily exceeded £1 billion in value for the first time, placing Merchants among the larger and more liquid trusts in its sector, enhancing its appeal to wealth managers. Our Manager continues to find attractive opportunities in a polarised UK market, and both the Board and Manager remain optimistic about prospects for future income and capital growth.

* Debt at fair value

Background

Although Merchants is primarily invested in UK equities, global developments, particularly in the United States, have had a significant influence during the period. Financial markets have been shaped by policy decisions and geopolitical actions during President Trump's second term, underlining the continuing influence of the US economy and trade policy on global markets.

By contrast, the UK environment was more stable, though persistently high inflation prevented meaningful interest rate cuts. Economic growth, a key priority for the new government, remained modest though better than many large economies, with fiscal challenges weighing on the Chancellor and administration. Despite this, UK equities as a whole posted respectable gains. However, market leadership remained narrow, and investor sentiment was tempered by concerns over domestic growth and global uncertainty.

Performance and portfolio

Merchants delivered a NAV total return of 5.4% over the six-month period, compared with 7.5% for the FTSE All-Share Index. Absolute returns were positive, though relative performance lagged the benchmark and some peers. This was largely due to the narrowness of market leadership: as in the US, certain groups of companies drove the market higher.

Some of these leading stocks did not align with our Manager's long-term value approach. Instead, greater emphasis has been placed on attractively valued domestic cyclicals, which have underperformed in the recent low-growth environment. While this positioning has weighed on short-term results, we remain convinced that it provides the best foundation for long-term returns. The Board has reviewed the Manager's strategy in detail and continues to support this disciplined, value-focused approach.

Portfolio activity reflected evolving opportunities, with an unusually high number of new investments compared with a typical half-year. Selective purchases were made where valuations and income prospects were attractive, while holdings with more limited capital growth potential were reduced.

The share price return of 1.5% reflected a widening discount to NAV, in line with a broader trend across UK investment trusts as international investors reduced exposure to UK equities. The Board, together with advisers and the Manager, monitors this closely and retains the option of share buybacks if appropriate. Meanwhile, we remain active in shareholder engagement and marketing to improve awareness and demand.

Earnings and dividends

Total income from the portfolio was £28.8m, 2.5% higher than the £28.1m generated in the first half of last year. Earnings per share rose by 3.5% to 17.7p (2024: 17.1p). This strong income performance provides confidence both in the sustainability of the dividend and in rebuilding revenue reserves.

With the final dividend for the 2025 financial year now approved, Merchants has increased its dividend for 43 consecutive years - earning the Company "Dividend Hero" status from the AIC. The Board has declared a second interim dividend of 7.3p per share, payable on 20 November 2025 to shareholders on the register at 10 October 2025. This brings the total dividend for the first half of the current financial year to 14.6p, compared with 14.5p last year - a year-on-year increase of 0.7%.

Shareholder engagement

In May we held our AGM in a hybrid format, with shareholders able to attend both in person and online. I was delighted to see such strong participation. For those unable to join, a recording of my introduction and our Lead Portfolio Manager Simon Gergel's update is available on our website under "Videos, Podcasts & Reading."

We remain committed to clear and regular communication. Our podcast series A Value View and other articles, videos, and interviews are available on our website and through streaming platforms.

Board developments

As noted in our Annual Report, Timon Drakesmith retired from the Board at the May AGM. We thank him warmly for his significant contribution. In July, we welcomed Neil Galloway as a new Director. Neil brings over 30 years of experience in banking and finance, including senior leadership roles in listed companies. He is currently a Non-Executive Director and Chair of the Management Engagement Committee at AVI Global Trust PLC. We look forward to his contributions to the Board.

Outlook

UK GDP growth forecasts for 2025 have been revised slightly upwards but remain modest. Inflation is expected to average 3.4%, with energy and labour costs elevated. Further interest rate cuts are anticipated but not assured, while unemployment is forecast to rise gradually. Consumer spending remains cautious, though savings rates are higher and mortgage refinancing pressures appear to be easing.

Globally, geopolitical risks remain high. US trade policy continues to reshape global commerce, while conflicts in Ukraine, Gaza, and elsewhere add to volatility. Meanwhile, advances in AI and automation are reshaping industries and labour markets, with profound implications for productivity and employment.

In such an environment, macroeconomic predictions are fraught with uncertainty. We believe this favours active, bottom-up investors such as our Manager, who focus on the fundamentals of individual businesses rather than short-term macroeconomic noise. UK equities continue to offer compelling value, particularly for income-focused investors, and we believe Merchants is well-positioned to benefit from any broadening of market leadership and improving sentiment.

The Board remains confident in the Trust's strategy and the Manager's disciplined approach. We thank shareholders for their continued support and look forward to reporting further progress in our full-year results.

Principal Risks and Uncertainties

As identified in the Annual Report, the principal risks are now considered to be geopolitical risks, followed by investment risks, including those relating to strategy and performance.

The principal risks and uncertainties facing the company, together with the board's controls and mitigation, are those described in the Annual Report for the year ended 31 January 2025 published in April 2025 and are listed below:

· Investment strategy, for example, asset allocation or the level of gearing may lead to a failure to meet the company's objectives, such as income generation and dividend growth.

· Investment performance, for example poor stock selection for the portfolio leads to decline in the rating and attraction of the company.

Risks such as significant geopolitical risks and climate change risks, have become progressively more prevalent and are no longer classified as 'emerging risks'.

The board's approach to mitigating these risks and uncertainties is set out in the explanation with the Risk Map in the Annual Report. In the board's view these will remain the principal risks and uncertainties for the six months to 31 January 2026.

Going Concern

The directors have considered the company's investment objective and capital structure both in general terms and in the context of the current macro-economic background. Having noted that the portfolio is liquid as it consists mainly of securities which are readily realisable, and through continuous assessment of the company's financial covenants, the directors have concluded that the company has adequate resources to continue in operational existence for the foreseeable future. The directors have also considered the continuing risks and consequences of macroeconomic and unanticipated shocks on the operational aspects of the company and have concluded that the company has the ability to continue in operation and meet its objectives in the foreseeable future. For this reason, the directors continue to adopt the going concern basis in preparing the financial statements.

Responsibility Statements

The directors confirm to the best of their knowledge that:

The condensed set of financial statements contained within the half-yearly financial report has been prepared in accordance with FRS102 and FRS104, as set out in Note 2, the Accounting Standards Board's Statement 'Half-Yearly Financial Reports'; and

The interim management report includes a fair review of the information required by The Financial Conduct Authority's (FCA) Disclosure Guidance and Transparency Rule 4.2.7 R of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

The interim management report includes a fair review of the information concerning related parties transactions as required by the Disclosure Guidance and Transparency Rule 4.2.8 R.

Colin Clark

Chairman26 September 2025

Performance - half-year review

1 NAV total return reflects both the change in Net Asset Value per ordinary share and the net ordinary dividends paid.

A Glossary of Alternative Performance Measures (APMs) can be found at the end of this document.

Portfolio Managers' report

Simon GergelLead Portfolio Manager

Richard KnightPortfolio Manager

Andrew KochPortfolio Manager

Economic and market background

We said at the start of the year that the outlook was particularly uncertain, especially in the USA, because of President Trump's approach to trade and tariff negotiations. On 2 April, the self-proclaimed "Liberation Day", President Trump unveiled a swingeing range of tariffs on other countries' goods, ranging from 10% to over 40%. This led to heightened anxiety amongst governments and companies and extreme volatility in financial markets during April. Frantic negotiations took place in the subsequent days, and China responded with reciprocal tariffs in an escalating trade war, which led to potential tariffs with China of well over 100%. President Trump also threatened to try to remove the chairman of the Federal Reserve Bank, as he was frustrated by interest rate policy. However, under considerable pressure from the US Treasury market, he soon backed away from this threat, deferred many of the tariffs for up to 90 days and excluded specific goods, pending trade discussions.

Over subsequent weeks, financial markets regained their poise and volatility declined, as tariffs tensions abated somewhat. Eventually, the US announced far more modest tariffs on most countries, including 10% on most UK goods and 15% for the EU. Although, as these were still well above previous prevailing rates, they will likely raise US inflation and reduce growth.

Over the six-month period, most equity markets shook off the policy concerns and rose, producing healthy total returns of around 7.5% in the UK for the FTSE All-Share and just under 6% for the US S&P Index. However, the US dollar weakened notably, even with a partial recovery in July, in response to this trade uncertainty and a massive US stimulus package. This drop in the currency wiped out the gains in the S&P Index for investors based in the UK.

Whilst overall stock market gains were solid, individual sector and stock moves were more extreme in both directions. In general, the movements of individual share prices and stocks seemed to depend more on investors crowding into "winning" stocks, and rewarding positive earnings momentum, i.e. whether earning expectations were being upgraded or downgraded, rather than changes to intrinsic values. The UK stock market continued to see large outflows from investment funds, which likely exaggerated the market trends, as there was less active money to exploit opportunities among falling stocks. We also saw a large number of share buy-back announcements from companies, which were generally welcomed by investors looking for liquidity.

The strongest major sector in the UK stock market was aerospace & defence, which rose by nearly 60%. This was driven by prospects of increasing defence spending, but also by the strong operational recovery at Rolls Royce which raised earnings guidance materially. Life insurance, tobacco and banks were also strong sectors. The weakest large sector was finance & credit services, where London Stock Exchange Group fell heavily. Several cyclical sectors were also weak, including general industrials, media and housebuilding, although the defensive beverages sector also declined.

Investment performance

The total return on Merchants' investment portfolio was 5.2%, below the strong 7.5% market return. Our investment philosophy is based on identifying undervalued companies in the expectation that, over time, undervalued companies will outperform the broader stock market. Whilst there is considerable evidence that a value driven approach should outperform in the long term, it can also have periods of underperformance. Paradoxically though, these periods often increase the opportunities that a value-driven style can exploit. When stock markets are driven by momentum trading, such as in recent months, shares that are lowly priced compared to their intrinsic value can lag behind those that are seeing strong current trading.

The companies that made the biggest positive and negative contributions to relative performance. The dispersion of individual stock returns in the first half of the year was very high, as certain companies in favour with investors outperformed markedly, and many of those out of favour fell heavily.

Not owning the aerospace & defence stocks Rolls Royce and BAE Systems accounted for virtually all of the underperformance. Rolls' 78% rally alone added 1.5% to the index return. Whilst the recovery in profitability and cash generation at Rolls has been notable, the shares have also re-rated considerably, as investors have favoured stocks with strong momentum. Rolls only recommenced paying dividends this year after a five-year pause, so it is not a natural holding for Merchants' high yield strategy. BAE Systems shares rose 49% on the back of strong performance and optimism about rising defence budgets. Merchants had owned BAE previously, but we sold it in 2023, on valuation grounds.

We have to acknowledge, however, that our holding in WPP has been very disappointing. The marketing services company reported weak results and lowered guidance several times in recent months. We had believed that a major repositioning of the business under CEO Mark Reed, simplifying the corporate structure and investing in digital and AI capabilities, would lead to improved performance. However, the business has continued to underperform peers, notably Publicis. We took the difficult decision to sell the position in July, despite a depressed valuation, on concerns that there would have to be further restructuring of the business under a new chief executive. We decided to focus on investments where we have higher conviction.

The remaining negative contributors had lower individual impacts and broadly fit into three categories. First, there are companies that have disappointed investors for idiosyncratic reasons. These included distribution company DCC, which received less than expected for the sale of its healthcare business, fund manager Man Group, which earned lower performance fees from one of its major strategies, and Conduit, which reported poor reinsurance results, despite a solid industry backdrop. In these cases, we continue to have confidence in the medium-term outlook and believe the shares are significantly undervalued.

Second, several companies have found trading conditions tougher than anticipated, but we believe conditions will improve in due course. Some of these are in the housing related sectors (although only Barratt Redrow is among the top ten contributors). We would also include Tate & Lyle and B&M in this category. Finally, there are shares that are not in the portfolio but have lifted the index return, most notably HSBC.

Looking at the top positive contributors to relative performance, the largest were also companies that were not owned in the portfolio. London Stock Exchange Group fell back on disappointing subscriber growth, whilst spirits company Diageo has seen concerns about US tariffs and weaker sales in certain regions. AstraZeneca also underperformed, largely due to concerns about potential changes to US pharmaceutical industry regulation and pricing. The underweight position in Unilever also helped relative performance.

Of the stocks owned in the portfolio, Lloyds and OSB (OneSavingsBank) rallied, as rising bank profitability, cash generation and cash returns continued to find support with investors. Assura, the real estate company that owns healthcare assets, like GP surgeries, received competing takeover bids from a private equity consortium and their sector peer Primary Health Properties. There was another property company among the top ten positive stocks, Sirius Real Estate, which benefited from strong trading performance and optimism about German industrial and defence spending, which should benefit their German industrial properties.

British American Tobacco saw a strong re-rating from a low level, as investors warmed to the opportunities for their "reduced harm", next generation nicotine products, in particular. Elsewhere, the gambling company Entain, saw its shares rally by over 45%. Entain was helped especially by very strong growth and upgraded expectations for its BetMGM joint venture in America, which is benefitting as online gaming and sports betting is progressively legalised in many US states.

Portfolio changes

The wide dispersion of share price moves provided many new investment opportunities. We added eight new companies to the portfolio, a much higher level of change than in recent years, as we were able to identify strong businesses, trading well below our assessment of their fair value. Conversely, several portfolio companies' share prices appreciated towards fair value, and we sold these to fund the other stocks, where we had higher conviction. In total we sold nine companies, leaving a portfolio of fifty two companies at the end of July.

The new investments span a range of industries and have different drivers, but they were typically shares trading well below historic average valuations, often with recovery potential in their business, and generally paying an attractive dividend yield.

Sirius Real Estate, mentioned above, is a well-managed industrial property company, operating in Germany and the UK. It provides an interesting example of the inefficiency of the stock market. Merchants sold out of Sirius five years ago, at a higher price than we were now able to reinvest at. From 2020 to 2024, the company's book value per share had risen over 50% and the dividend by nearly 70%. The shares were trading at an unusual discount to book value, despite the benefits of the large, expected increase in German defence spending.

Another business set to benefit from higher defence spending is Serco, the government outsourcing company operating in justice, immigration and defence. Following recent acquisitions, defence spending now represents approximately half of group profits, and the order book is growing rapidly. Unlike other defence related companies, the valuation was very modest, as the overall group has been going through a short-term hiatus in growth, due to a few specific contracts ending or scaling down.

In the consumer area we added Reckitt and B&M European Value Retail. Reckitt owns many leading household brands like Dettol, Finish, Durex and Nurofen. The shares were depressed, primarily due to litigation in the USA over infant formula milk, which seemed to be overly discounted in the valuation, even on pessimistic assumptions. B&M is a value retailer that has an excellent long-term growth record, but has more recently seen earnings come back from an exceptional period during the Covid-19 pandemic. This led to a sharp drop in the valuation of the business. We believed this was unduly pessimistic, as the company remains differentiated, is highly cash generative, and has plans to reinvigorate growth.

RS Group is a high service distributor of hundreds of thousands of industrial and electronic components to over a million customers. A period of weak industrial activity provided an opportunity to invest at an unusually attractive price, whilst a relatively new management team is also transforming the business to enhance profitability and growth. Begbies Traynor is a small domestic insolvency and property services company. It has an excellent record of organic and acquisition led growth. The insolvency business is counter-cyclical, as it should benefit from stress in the economy. This provides a useful diversification benefit for the portfolio.

The final new investments were both global businesses but listed on the French stock exchange. Michelin, the tyre manufacturer, is a leader in the industry and is benefiting from structural trends, such as the growth in higher specification, premium tyres and speciality off-road vehicles. General concerns about the automotive industry have depressed the shares, but tyres are predominantly a replacement product, less susceptible to new car sales. Sodexo is a leader in food services and facilities management, serving more than 100m people in over 40 countries. The business is economically defensive and should deliver steady growth. At time of purchase, the shares were paying a 5% dividend yield, well covered by cash generation, and the valuation was at a substantial discount to its historic averages, as well as to its peers.

We sold two retailers from the portfolio. Next is an exceptional retailer, which has built an impressive online operation serving its own and third-party brands. Our investment played out, as the stock market rewarded the online growth opportunity and resilience of the physical shops and the shares moved close to our assessment of fair value. Tesco was a similar case, as the market started to recognise Tesco's industry-leading performance and commanding position in food retail. In these and other cases, we aim to differentiate between great companies and great investment opportunities. Next and Tesco remain great, or at least good companies, but at the valuations they reached, we found more compelling investment opportunities elsewhere.

Several other companies were sold as they performed very well and approached our assessment of fair valuation; Haleon, Keller and Imperial Brands. We also sold the automotive engineering business Dowlais, which attracted a takeover bid from its rival American Axle.

Other sales included Drax, which was another strong performer. However, the sale also reflected a change in our investment view, as we believe the prospects for the UK government to subsidise their proposed Bio-Energy Carbon Capture and Storage (BECCS) project have diminished. WPP was also a change of view, as explained above. Finally, we sold Bank of Ireland. The shares had performed well, and whilst the valuation remained modest, we believed the outlook for domestic banks was better, given differences in interest rate policy between the UK and the EU.

Income

Dividend income grew modestly during the period, with total income up around 2.5% to £28.8m (£28.1m), and revenue earnings per share up 3.5% to 17.7p (17.1p). We have seen a few dividend cuts in the period, generally when companies have experienced challenging trading conditions, but many companies continued to steadily increase their dividends. A number of companies have also taken advantage of depressed share prices to allocate surplus capital to share buybacks, rather than to higher dividend growth. Where shares are clearly undervalued, this can make good sense from a capital allocation perspective, and we are generally supportive. However, we expect boards to be disciplined on price and only buy back shares when the company is undervalued. We will continue to monitor this trend.

Portfolio income also benefits from our general policy, of reducing positions in investments as share prices rise towards fair value (when yields have typically gone down) and adding to investments which fall further below fair value (when yields have typically gone up).

In aggregate, the payout ratio of the UK stock market - the proportion of company earnings needed to cover dividend payments - is low compared to recent history. This is partly due to a higher preference for buy-backs, and it should mean that dividend payments will be more resilient if there is any mild deterioration in trading conditions.

Outlook

It is easy being based in the UK to be concerned about anaemic growth rates, a large government deficit and high national debt. There has been a lot of commentary about the difficulties that Rachel Reeves, Chancellor of the Exchequer, faces in trying to fund spending increases while staying within her fiscal rules, and not raising income tax, VAT or national insurance. However, the UK is not alone in this challenge. Economic growth of 1.2% in the second quarter of 2025, compared to a year earlier, was actually one of the higher growth rates among the leading G7 economies. Also, the UK budget deficit and government debt levels are lower than many other G7 countries, with the notable exception of Germany.

So, although the outlook for the UK economy is lacklustre, it is not especially weak on a global basis. Furthermore, the Bank of England has been cutting interest rates for over a year, and the benefits of lower funding costs will gradually feed through to consumer mortgage rates and corporate borrowing costs. It is also important to remember that the UK stock market is not the UK economy. A large majority of sales and profits of UK-listed businesses comes from overseas, so that the global outlook is at least as important.

Where the portfolio does have a large domestic exposure, there are also reasons for optimism. The banks sector is seeing improving profitability and cash generation, after being fundamentally restructured in the 15 years since the global financial crisis. There is a positive outlook for the real estate markets that the portfolio is exposed to, whilst property yields seem to be peaking (i.e. valuations troughing). Elsewhere, one of the biggest domestic exposures is to the housing market, either directly via housebuilders, or via building products and materials manufacturers or distributors. It is a government priority to increase the level of house building in the UK. There are early signs that planning reforms should ease some of the constrains on housebuilders, and falling mortgage costs should stimulate demand. These factors should support a recovery in building activity over the next few years.

Taking a step back, though, our role is not to forecast economic growth, or even the short-term outlook for various industries. Out role is to identify and build a portfolio of mis-priced assets that can deliver superior capital returns and a high and rising income stream, for investors, over the medium term. To do that successfully, we need the following things to come together.

First, we need an inefficient stock market, where it is possible to identify strong businesses trading below their intrinsic value. At present, the UK market is not only cheap compared to its history and other markets, but it is also highly polarised. Outflows of money from actively managed funds and the momentum driven market we described earlier, have created a fertile opportunity set for investors with a longer-term mindset to exploit.

Second, we need a clear investment philosophy, a disciplined investment process and an experienced team of investment professionals, backed by a well-resourced investment platform. As investors, we need to constantly challenge ourselves both on our stock selection process and on individual investment decisions. We will make mistakes along the way, and markets will move in cycles, but we have shown historically that we can make the strongest returns after periods when our approach has been out of favour.

In summary, we are confident that there are considerable inefficiencies in the UK stock market. These inefficiencies can be exploited by owning a diversified collection of strong businesses, trading well below their fair value and paying a high dividend stream. We believe that Merchants' portfolio can deliver strong capital returns and income to meet the company's objectives.

Portfolio breakdown

at 31 July 2025

1 International stock

Income Statement

for the six months ended 31 July 2025

Statement of Changes in Equity

Balance Sheet

The net asset value as at 31 July 2025 is based on 148,424,887 ordinary shares.

The net asset value as at 31 July 2024 is based on 148,324,887 ordinary shares.

The net asset value as at 31 January 2025 is based on 148,424,887 ordinary shares.

Cash Flow Statement

1 Cash inflow from dividends was £27,841,000 (2024: £26,930,000) and cash inflow from interest was £180,000 (2024: £147,000).

Notes to the Financial Statements

for the six months ended 31 July 2025

1. Financial statements

The half-yearly financial report has been neither audited nor reviewed by the company's auditors. The financial information for the year ended 31 January 2025 has been extracted from the statutory financial statements which have been delivered to the Registrar of Companies. The auditors' report on those financial statements was unqualified and did not contain a statement under section 498 of the Companies Act 2006. The total return column of the Income Statement is the profit and loss account of the company. All revenue and capital items derive from continuing operations. No operations were acquired or discontinued in the period. Allianz Global Investors UK Ltd acts as Investment Manager to the company. Details of the services and fee arrangements are given in the latest annual report of the company, which is available on the company's website at www.merchantstrust.co.uk.

2. Accounting policies

The Company presents its results and positions under 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (FRS 102), which forms part of the Generally Accepted Accounting Practice ('UK GAAP') issued by the Financial Reporting Council.

The condensed set of financial statements has been prepared on a going concern basis in accordance with FRS 102 and FRS 104, 'Interim Financial Reporting', the Companies Act 2006 and the Statement of Recommended Practice - 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (SORP) issued by the Association of Investment Companies in July 2022. The context of the current macro-economic background has been thoroughly considered and the directors have concluded that there are no material uncertainties related to going concern. They have also been prepared on the assumption that approval as an investment trust will continue to be granted.

The accounting policies applied in preparation of the condensed set of financial statements with regard to measurement and classification have not changed from those set out in the Company's annual financial report for the year ended 31 January 2025.

3. Dividends on ordinary shares

Dividends paid on ordinary shares in respect of earnings for each period are as follows:

In accordance with FRS 102 section 32 'Events After the End of the Reporting Period', dividends payable at the period end have not been recognised as a liability. Details of these dividends are set out below.

The dividends above are based on the number of shares in issue at the period end. However, the dividend payable will be based upon the number of shares in issue on the record date and will reflect any purchase or cancellation of shares by the company settled subsequent to the period end.

4. Earnings per ordinary share

The earnings per ordinary share is based on a weighted number of ordinary shares 148,424,887 (31 July 2024: 148,324,887) in issue.

5. Fair value hierarchy

Investments and derivative financial instruments are designated as held at fair value through profit or loss in accordance with FRS 102 sections 11 and 12. FRS 102 sets out three fair value levels.

Level 1: The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable (i.e., developed using market data) for the asset or liability, either directly or indirectly.

Level 3: Inputs are unobservable (i.e., for which market data is unavailable) for the asset or liability.

With the exception of those financial liabilities measured at amortised cost, all other financial assets and financial liabilities are either carried at their fair value or the balance sheet amount is a reasonable approximation of their fair value.

As at 31 July 2025, the financial assets at fair value through profit and loss of £972,501,000 (31 July 2024: £976,724,000; 31 January 2025: £954,275,000) are categorised as follows:

For exchange listed equity investments the quoted price is either the bid price or the last traded price depending on the convention of the relevant exchange. For written options the value of the option is marked to market based on traded prices. Financial instruments valued using valuation techniques level 3 have, in the absence of relevant trading prices or market data, been valued based on the directors' best estimate.

6. Status of the Company

The company applied for and was accepted as an approved investment trust for accounting periods commencing on or after 1 February 2013, subject to it continuing to meet eligibility conditions at section 1158 Corporation Taxes Act 2010 and the ongoing requirements for approved companies in Chapter 3 Part 2 Investment Trust (Approved Company) (Tax) Regulations 2011 (Statutory Instrument 2011/2999).

7. Transactions with the Investment Manager and related parties

As disclosed in the annual report, the existence of an independent board of directors demonstrates that the company is free to pursue its own financial and operating policies and therefore, under FRS 8: Related Party Disclosures, the investment manager is not considered to be a related party. The company's related parties are its directors

There are no other identifiable related parties as at 31 July 2025, 31 July 2024 and 31 January 2025.

8. Comparative information

The half yearly financial report to 31 July 2025 and the comparative information to 31 July 2024 have neither been audited nor reviewed by the Company's auditors and do not constitute statutory accounts as defined in section 434 of the Companies Act 2006 for the respective periods. The financial information for the year ended 31 January 2025 has been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

Enquiries:

For further information, please contact:

Allianz Global Investors UK Limited

Stephanie Carbonneil

Head of Investment Trusts

Tel: 020 3246 7256