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<p><strong>Your capital is at risk. Past performance is not a guide to future returns. </strong></p>
<p><strong>Kathleen Hunter:</strong> When markets lose confidence, they become increasingly short-term and more sensitive to events. Volatility rises, stocks are bucketed together, and simple labels start to take hold. AI winners, AI losers, safe havens, domestic cyclicals. This type of environment can create significant mispricing, which long-term fundamental growth investors can capitalise on. And dramatic share price moves underpinned by short-term news flow can become vulnerable to reversal when this narrative changes.</p>
<p>The clearest example this year has been oil. Prices spiked as investors worried about disruption linked to the conflict in Iran, before giving back most of these gains by the end of this quarter. That created a turbulent period for the oil majors, which went from dominant drivers of the index returns in the first quarter to notable underperformers in the second. And there are echoes of this behaviour in software and technology stocks. Earlier this year, concerns about artificial intelligence led investors to group companies together and mark them down sharply. Many are still caught up in this AI loser narrative, but in some cases, that pressure has actually started to ease as the market has looked again at the individual businesses.</p>
<p>The label came first, but to some extent, the fundamentals have started to come back into focus. This quarter, the UK Alpha Strategy delivered positive, absolute and relative performance. We don’t want to overstate one quarter, though. A few months don’t settle a long-term investment case. But the quarter did show what can happen when the market starts to differentiate broad narratives from fundamental characteristics of the individual companies. Softcat, the biggest contributor to outperformance, is a good example.</p>
<p>It’s an IT infrastructure and services provider, and its shares sold off earlier in the year as investors worried that AI would disrupt parts of its market. We thought that interpretation was too blunt. In our view, AI is not making IT easier for companies. If anything, it’s making it much more complicated. Businesses need to work out what technology to use, how it fits with their existing systems, how to manage the risks around it, and how to make sure it actually delivers value. This plays right into Softcat’s strengths.</p>
<p>It has long-standing customer relationships, strong vendor partnerships, and a track record of helping companies make sensible technology decisions. And in its latest trading update, it demonstrated that it’s actually already benefiting from AI-related demand. In terms of detractors this quarter, Genus was one of the laggards as its shares were weighed down by macroeconomic uncertainty and the timing of a recovery in the Chinese pork market. We recognise these uncertainties, but we think they risk obscuring the progress that the business has made, including delivering record profits and achieving important milestones in its gene-editing programme. We also continue to work through a strong pipeline of new ideas this quarter and purchased two new holdings, Cranswick and Helios Towers. With Helios Towers, this is a company that owns and operates telecom towers across Africa and the Middle East.</p>
<p>We expect demand for mobile data in these markets to grow significantly and for Helios to benefit as their customers rely more heavily on its infrastructure and add more equipment to its existing towers. So to summarise, performance this quarter was encouraging, but it’s only a start. There is still a long way to go before the portfolio’s long-term growth potential is properly reflected in its share prices. AI, geopolitics, interest rates and near-term economic data all matter, but they do not affect every company in the same way. Our job is to look through the labels and ask how change affects the long-term economics of each business. Is the market reacting to the facts or simply reacting to the narrative?</p>
<p>For long-term fundamental growth investors, that is not just a challenge, it’s an opportunity. The recovery in performance this quarter is welcome, but we believe the bigger opportunity is still to come.</p>
<p style="margin-bottom: 6.0pt;" class="MsoNormal"> </p>
<h3>UK Alpha</h3>
<p><strong>Annual past performance to 30 June each year (%)</strong></p>
<table border="1" style="border-collapse: collapse; width: 100%; border-width: 0px; height: 93.9395px;">
<tbody>
<tr style="height: 18.7879px;">
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.7879px; width: 27.8552%;"> </td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;"><strong>2022</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;"><strong>2023</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;"><strong>2024</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;"><strong>2025</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;"><strong>2026</strong></td>
</tr>
<tr style="height: 37.5758px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 37.5758px; width: 27.8552%;">UK Alpha Composite (gross) </td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 37.5758px; text-align: right; width: 14.4483%;">-39.9</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 37.5758px; text-align: right; width: 14.4483%;">23.7</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 37.5758px; text-align: right; width: 14.4483%;">2.3</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 37.5758px; text-align: right; width: 14.4483%;">17.9</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 37.5758px; text-align: right; width: 14.4483%;">2.8</td>
</tr>
<tr style="height: 18.7879px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 27.8552%;">UK Alpha Composite (net)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;">-40.3</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;">23.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;">1.8</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;">17.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;">2.2</td>
</tr>
<tr style="height: 18.7879px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 27.8552%;">FTSE All Share index*</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;">-10.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;">12.9</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;">12.3</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; text-align: right; width: 14.4483%;">20.5</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 18.7879px; text-align: right; width: 14.4483%;">18.1</td>
</tr>
</tbody>
</table>
<p> </p>
<p><strong>Annualised returns to 30 June 2026 (%)</strong></p>
<table border="1" style="border-collapse: collapse; width: 100%; border-width: 0px; height: 93.3523px;">
<tbody>
<tr style="height: 36.9886px;">
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 36.9886px; width: 61.3387%;"> </td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 36.9886px; width: 13.1043%; text-align: right;"><strong>1 year</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 36.9886px; width: 12.713%; text-align: right;"><strong>5 years</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 36.9886px; width: 12.844%; text-align: right;"><strong>10 years</strong></td>
</tr>
<tr style="height: 18.7879px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 61.3387%;">UK Alpha Composite (gross)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 13.1043%; text-align: right;">2.8</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 12.713%; text-align: right;">-1.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 12.844%; text-align: right;">6.0</td>
</tr>
<tr style="height: 18.7879px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 61.3387%;">UK Alpha Composite (net)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 13.1043%; text-align: right;">2.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 12.713%; text-align: right;">-2.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 12.844%; text-align: right;">5.4</td>
</tr>
<tr style="height: 18.7879px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 61.3387%;">FTSE All Share index</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 13.1043%; text-align: right;">18.1</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 12.713%; text-align: right;">10.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 12.844%; text-align: right;">8.6</td>
</tr>
</tbody>
</table>
<p><span class="source-text">Source: Revolution, FTSE. US dollars. Net returns have been calculated by reducing the gross return by the highest annual management fee for the composite. 1 year figures are not annualised.</span><br><br></p>
<p><strong>Past performance is not a guide to future returns.</strong></p>
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<p> </p>
<h3>Risk factors </h3>
<p>This communication was produced and approved in July 2026 and has not been updated subsequently. It represents views held at the time and may not reflect current thinking.</p>
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