Annual General Meeting & Investor Forum 2026

DEAN BUCKLEY: OK, it's 3 o'clock, and it's kick-off time. Good afternoon, everybody. Welcome to the 138th annual general meeting of Alliance Witan, and the very first that we have held in London. I'm delighted that so many of you have been able to join us here today.

And I also express a really warm welcome to all of you joining us remotely. I'm Dean Buckley. I'm the chair of your board. I'd like to introduce my colleagues. On the far left here, we've got Craig Baker from WTW. He is the lead manager of the portfolio with overall responsibility for the performance that we deliver.

And then I've got my fellow board members, Shauna Bevan and Rachel Beagles. Next to me on my left is Sarah Bates, our senior independent director and chair of the nomination committee. To my right is Tamsin Hooton, who is our company secretary from Juniper Partners. Next to her is Jo Dixon, who is the chair of our audit and risk committee.

And last but not least, next to Jo is Milyae Park. Milyae chairs our marketing committee. We're also joined in the room by Chris Merrick from BDO and our company auditor. I haven't spotted him yet. Oh, he's up there. Hello. Good to see you, Chris. In a moment, I'll ask shareholders, who have not already done so, to vote by poll on the formal business of the meeting. Following that, I'll make a few remarks about the company's developments over the past 12 months.

And that will be followed by a presentation from Craig, who'll talk in much more detail about our portfolio, its performance, and the outlook for the future. We'll then move on to the question and answer session.

And all being well, we expect to finish at around 4:10. After the conclusion of the formal business of the AGM, we plan to have a short coffee break up on the mezzanine level, and at 4:40 we'll be holding our investor forum, where shareholders will be able to hear from two new stock-pickers that were appointed in September 2025 Artisan Partners and Brown Advisory. I hope that those of you here in person will join the board later on, when we'll have a light refreshments after the investment forum. We're looking forward to talking with as many of you as we can individually. That reception will be held on the 15th floor, and later on the team will show you where to go.

So turning back to the matters at hand, I note that there is a quorum of shareholders present, and I now declare the 138th annual general meeting open. The formal business of the meeting, including the resolutions to be put before shareholders, is set out in the notice of the meeting included on page 128 of the annual report, a copy of which you should already have and which I will take as read. Ladies and gentlemen, please raise your hand if you've got any questions on the resolutions to be put to the meeting today.

Thank you.

AUDIENCE: Any questions now-- if the votes might be raised. That affects which way someone was going to vote in the actual vote.

DEAN BUCKLEY: That's fine.

AUDIENCE: Whether you have it now or vote--

DEAN BUCKLEY: No, the vote will not close. I'm coming on to this actually, I think. The vote won't close until the end of the question and answer session.

And I will explicitly say at a point towards the end of the Q&A that the poll is about to close.

So you will have time to vote, bearing in mind the Q&A session.

AUDIENCE: Thank you.

DEAN BUCKLEY: Thank you for the question.

AUDIENCE: Do you have any questions. What do you do in this space?

DEAN BUCKLEY: I'm coming on to that. Maybe I should have said all of this before I asked whether there are any questions.

But just in case I forget, you hand it in to the Computershare people at the back of the forum. They'll be waiting to receive the cards.

So for the ease of conducting the formal business of the meeting, I do not propose to read through each of the resolutions.

And in order to accurately reflect the views of shareholders present and those who have voted by proxy in advance of the meeting, I will exercise my right as chair, in accordance with the company's articles of association, to call a poll on the resolutions. Please note that shareholders who have already voted by proxy, and who do not wish to change the way in which they voted, need not complete the poll card as your proxy vote will stand. If you've not already voted and you wish to do so, please complete the poll card that was given to you when you arrived. You will then have until the end of the meeting to complete the card. If any shareholder does not have a poll card and requires one, please raise your hand and somebody from Computershare will come along and give you a card. There's one up there that's noted. There's another one over there. Oh, and there's one here.

So there are quite a few that require cards.

So if my colleagues from Computershare can deal with that, that would be great.

Now, as I mentioned, the poll will remain open until the end of the meeting.

And at that point, we ask that you pass your completed cards to the Computershare people that will be waiting up at the top there.

So thank you very much, ladies and gentlemen.

Now, for your information, proxy votes received in advance of the meeting in relation to the resolutions can be seen on the screen. On the basis of these proxy votes, of which all are at least 97% in favor, it is very likely that all of the resolutions will pass.

However, the final results of the poll will be announced to the market tomorrow and we will also publish them on the company's website tomorrow.

Now, before handing over to Craig, there are a few comments that I would like to make. 2025 was a volatile but ultimately, I think, rewarding year for investors in global equities. It was marked by heightened geopolitical tensions, regional rotations away from the US equity market, and intensification of the debate around the valuation of AI-related stocks. Your company's share price total return for the year was 5.4%, which trailed the 13.9% return from our benchmark, the MSCI All Country World Index. This is disappointing and represents a second successive year in which we have not matched the very strong index returns. That's negatively impacted the longer- term relative returns, which are now well behind the index. Nevertheless, most active managers of global equities have struggled to beat a concentrated index.

And the last year aside, our performance versus the peers over the long term has been very competitive. We also have a strong track record of delivering attractive, absolute returns over the long term and a rising dividend while maintaining a disciplined approach to diversification and risk management.

Now, Craig is going to go into more detail about investment performance shortly. I mentioned the dividend and on the subject of the dividend, last year, we declared a total dividend of 28.32 pence, which was a 6.1% increase on the previous year. Yesterday, we declared a first interim dividend of 7.33 pence, which is an increase of 3.53% on the first interim dividend of 2025. The board remains very proud of the company's track record of increasing dividends, which has now extended to 59 years.

Turning to charges, the board works very hard to ensure that our shareholders get good value for money from all of our service providers. Our ongoing charges ratio in 2025 was 47 basis points, or 59 basis points after adding back the management fee waived by WTW in respect of their contribution to the costs of the company's combination with Witan. Your board is committed to ensuring that the company's costs remain competitive. We announced on the 25th of March that we secured a substantial reduction in the investment management fee payable to WTW with effect from 1st of April '26 with a further reduction taking effect on 1st of January '27. This new fee reflects the competitive environment in which we operate. Our target is to deliver an OCR of 50 basis points or lower in 2027, which is super competitive for a global equity multi-manager proposition. We also like the company's shares to trade as close as possible to NAV and for that relationship with NAV to be stable over time. In 2025, when the discounts of many investment trusts were volatile, the company's discount remains stable, averaging 4.8% versus 4.7% in the prior year. This compared favorably against the average discount for the AIC global sector peer group, which was 7%. The performance of our shares is ultimately a function of investment performance, but it can also be helped by share buybacks, which we continue to use where necessary and will continue to do so. It can also be helped by excellent promotion and communication.

And here our marketing team at WTW have worked hard to continue to raise the profile of the company, and indeed, our marketing efforts are widely acknowledged to be amongst the very best in the investment company sector.

Now, with those comments, I'll ask Craig to present some further details regarding investment performance.

CRAIG BAKER: Great. Thanks, Dean.

And good afternoon, everyone. It's always a pleasure to get to meet so many shareholders at one event.

And of course, an honor for WTW to host for the first time the AGM of Alliance Witan.

Now, I think probably to start my piece, it's worth reaffirming the trust's overarching objective as set out on the screen here, to be a core investment that delivers a real return over the long term through a combination of capital growth and a rising dividend. That's what you, our shareholders, have been promised, expect, and ultimately deserve, and we never lose sight of that. Over the long run, we've very much achieved that.

So since WTW started managing the money in April 2017 to the end of 2025, an investor has achieved a return of approximately 125%, which equates to 10% per annum or a real return of 6% per annum, so 6% per annum in excess of inflation.

And in every single year the dividend of the trust has increased.

And we're also proud to have outperformed the peer group of other global equity funds over three years, five years, and that since inception number back to 2017.

However, I know that some of you will be as disappointed as I am by the more recent relative performance versus the index benchmark, where we have underperformed.

Ultimately, as an active equity fund, we expect over the long term to be able to significantly outperform the passive alternative.

And as a significant shareholder in the trust myself, I literally share the same experience and frustration when that doesn't turn out to be the case.

So what am I going to touch on in this session?

Well, I'll start off with going straight at that underperformance in 2025. Explain why that happened in the context of a very narrow, momentum-driven market.

And I'll also discuss how that's affected our longer term numbers. I'll then highlight that despite those short term challenges, the fundamentals of the businesses that we actually own in the portfolio have actually remained incredibly strong, positioning us particularly well for future growth. I'll talk about how we've remained disciplined and focused on the long term, and hence resisted any knee-jerk reactions to short-term market noise.

And then I'll briefly update you on some of the changes to the manager lineup during 2025, with two new stock-pickers in particular being added to the roster in the third quarter of 2025. For those of you that are able to stay on for the investor forum, afterwards, Stu Gray, my colleague, will go through that in even more detail, and you'll get an opportunity to meet those two managers that joined during the year and ask them the difficult questions about stocks. I'll then look to just reassure you that the investment philosophy and process that we have in place not only remain sound, but are unchanged through the last few years.

And finally, I'll note this management fee reduction that Dean has already alluded to that increases shareholder alignment.

So let's start by reviewing the performance in 2025 and some of the other recent years, focusing on why, despite producing really strong absolute returns, we haven't been able to keep pace with that unusually strong performance of the index over that period.

So what we've got here is a chart that shows the NAV total return relative to the MSCI All Country World Index for each calendar year going back to 2017. Obviously, the green bars reflect outperformance. The red bars reflect underperformance versus that index. You can see 2023 was a particularly positive year, where we beat the index by around 6%.

But 2024 and 2025, much more disappointing, underperforming by roughly 6% and 9%, respectively.

Now, despite actually lagging the index in 2024 and 2025, it is worth noting that we actually achieved strong positive returns in each of those years.

And indeed, it was a return of 20% in absolute terms over that two-year period.

Now, 20% is a pretty good return in any two-year period that you look back in history and indeed is consistent with the 10% per annum that we've been achieving over the full nine-year period.

However, over that two-year period, the index did even well, driven by a concentrated exposure to a number of AI winners in particular, and I'll go through that in some detail.

But as I'll allude to later, in such a strongly performing but narrow market, you would have had to have had an extremely concentrated portfolio, either by stock or by theme, in order to outperform over that period of time, which goes against our diversified, style-neutral approach.

So this slide puts those results into a multi-year perspective. It shows our annualized total returns over the three years, five years, and that since inception point to April 2017.

And it does that after all fees and shows it relative to for comparators that the board look at and that we regularly report on in the annual report and at these kind of forums, that's two index returns and two peer group returns.

Now, as discussed already, the total return has been behind the All Country World Index in each period because of 2024 and 2025.

But interestingly, we're ahead of all three of the other comparators over every single one of the periods shown here.

So over the last five years, for example, we've beaten both the equal weighted version of that index, which is a better proxy for how the average company performed over the period and takes out that issue of concentration that we've seen with a smaller number of stocks driving markets. We've outperformed that by about 4% per annum over that five years.

And similarly, we've outperformed the average investment trust in the global sector by 4% per annum over those five years.

And then even the wider universe, including all closed-ended and all open-ended funds in global equities, we've outperformed that by 1% per annum.

Now, before I dive in and explain how on earth you can beat all peer groups and the equal weighted version of the index, and still lag quite significantly in recent times the market cap weighted index. I thought it was worth just updating you on Q1 2026, because most of my talk will be about the events of 2025 and the longer periods to the end of December 2025 as well. The market environment in Q1 was also relatively unusual. While in the first two months of the quarter, you actually saw that some of the so-called Magnificent Seven stocks, the big tech firms in the US that have driven markets for a number of years. While some of those sold off a little in January and February-- not all of them-- the AI theme was nonetheless still dominant in those first two months.

In particular, the share prices of a number of companies across multiple sectors were indiscriminately hit as the market decided that they were a threat from AI. Their business models were at threat, and so some of them saw quite significant falls, despite producing very strong returns in their business as a whole.

Now, while some of those companies are undeniably going to be under threat, many are probably not, certainly not to the extent that the market has decided they are.

And indeed, some of them are actually going to be significant beneficiaries of using AI within their own business.

And that's actually a topic I'll return to later, because it's something that makes us incredibly excited about the portfolio as we look at it today.

Now, of course, after January and February, in March, the market became dominated by the unfortunate events in the Middle East, driving a spike in oil prices.

And we saw investor attention switch dramatically away from just focusing on who are the AI winners versus losers, and instead obsessing more about who's going to be impacted by the rise in the oil price.

However, ultimately, it was still a very narrow market, just moved to one other theme rather than the original theme that had been driving markets. Again, our portfolio performed pretty much in line with the peer group, but unfortunately did lag the benchmark again in the first quarter of 2026.

So let's examine how unusual this recent performance of the market has been, and hence the context behind which we've been performing.

So this chart is one of the most striking pieces of evidence about recent market conditions. What we've got here is the percentage of stocks that make up the S&P 500, so the 500 largest stocks in the US, that outperformed the index in each individual calendar year going back to 1990.

So 36 individual calendar years here, what proportion of stocks were outperforming the benchmark.

Now, this is the US because it's easier to show the analysis for that market.

But the US makes up 60% of the world market cap anyway.

So this is pretty reflective of what's been going on.

Now, in theory, half of stocks in a normal course of events would outperform in a year, and half the stocks would underperform in a year. It's never exactly that, but that is the typical scenario you see.

And indeed, over the long term, it's mainly bounced around that 50% level.

But look at the far right-hand side of this chart. The last few years have been genuinely extraordinary outliers. In 2023, only 26% of stocks beat the index. In 2024, 28%, and 2025 30% . Those are three of the lowest breadth years on record.

Historically, they've only actually been six times in the last 36 years that less than 40% of stocks outperformed.

And four of those were 2020, 2023, 2024, and 2025. Perhaps unsurprisingly, we underperformed in three of those four years, and the peer group underperformed in all four of them.

Now, that's got huge implications for any active manager. If nearly three out of four companies are underperforming, even a well-run, diversified portfolio will likely own many stocks that are lagging.

Now, I mentioned this not to excuse our performance, but to provide context. The playing field has been unusually tilted in the favor of a small number of momentum-driven, index-heavy stocks recently.

But such extremes don't persist indefinitely.

And that brings me to a famous quote that captures our philosophy on why we think these conditions will eventually turn in our favor.

So a combination of Ben Graham's comments in 1934 and Warren Buffett's comments in 1973 famously got distilled into the quote that we've got here on the screen. "In the short run, the market is a voting machine, but in the long run, it's a weighing machine." So what that's really saying is that in the short term, market prices often reflect popularity or sentiment. Think of them like votes.

But over the long term, stock prices tend to reflect the true fundamental value of the businesses.

So the weight of a company's earnings and cash flows, for example. Right now, we're living through a period where the market is in voting machine mode, chasing popular themes like artificial intelligence or surging oil prices, and effectively crowding into a few hot stocks, almost regardless of fundamentals in some cases.

But we know from experience that eventually, the market will start acting as a weighing machine again. Reality will reassert itself and the true worth of a business their earnings, cash flows, dividends, growth prospects will be what determines stock prices in the long term, it always has been in the past. Our strategy is built on that principle. We're willing to endure periods where the votes don't go our way, because confidence that the weight of our company's strong fundamentals will ultimately be reflected in their stock prices.

So let's actually look at 2025 to bring that to life. Here's where we break down the average returns of various categories of stocks.

And again, we've used the US as an example.

And the results are quite eye- opening. On the far left, you see that a basket of NASDAQ-listed companies with no revenues, essentially early-stage speculative tech firms. Scores soared by over 50% on average in 2025.

So let's just say that again. Companies that literally had zero sales jumped more than 50% on average.

Now, clearly some of those are well worth soaring. They are going to be the winners, but on average have any company with no sales to go up 50% is quite an extraordinary situation. The next group is the Magnificent Seven, the so-called big US tech firms that have performed unbelievably well for many years. They were next up with a return of 22% on average. Then you get the unprofitable companies, and then eventually you get to ones with revenues and profits outside of the Mag Seven.

And this chart illustrates the key challenge we and the peer group faced in 2025. Our strategy avoids chasing speculative fads and concentrates on companies with real earnings and strong fundamentals.

And in 2025, that meant we didn't own many of the story stocks that skyrocketed simply because they were tied to themes like AI, regardless of their profits or valuations. We also maintained a broadly diversified portfolio rather than concentrating solely in the handful of the largest tech giants. We still had decent exposure to that, just not as much as the index.

And whilst that diversification is healthy for risk management and long-term returns, it caused us to trail a market that was extraordinarily top heavy and speculative. The good news is that this environment is not normal. Eventually, reality catches up. Companies can't live on hype forever. They need earnings and cash flow. When the market broadens out and fundamentals matter again, we believe our approach will shine.

Now, I'll break down the drivers of our 2025 performance in a bit more detail, having given that context. What this slide tries to do is it takes the 11 managers that we've got in the portfolio and says, which of them did particularly well, which of them did kind of about in line with the benchmark slightly above, slightly below, and which ones had a really tough time in 2025.

And you can see those three groupings.

So on the left-hand side, we had two of our stock pickers managed to outperform despite that challenging environment.

So firstly Dalton, our Japanese specialist who focus a bit down the cap spectrum in Japan, they not only benefited from a strong Japanese market environment, but they also outperformed the topic 6 flagship Japanese index through strong stock selection, and in particular through engagement with the companies that they're invested in.

And then one of our new additions to the portfolio that are going to be around later in the investor forum, Artisan, who are a value manager, quickly added some value despite only joining in the third quarter of 2025, picking a number of winners, including some in the AI space given that there are value manager, I thought worth calling out.

Now, four of the stock pickers in the middle had performance that ended up reasonably close to the benchmark. Three of those were value managers, but they're all quite different in how they define value.

So you had Lyrical, a more higher beta value-oriented manager focused on the US. You had Metropolis, who are a value manager based in the UK, but they actually focus quite a lot on the quality of the company's business models as well.

And they had EdgePoint, a Canadian-based value manager, focus a bit more on the change that's going on with the businesses that they own.

And then the fourth in that category was Brown, the other manager that joined in the third quarter of 2025. They're much more of a quality, biased manager, a style that was out of favor in that period but they were only in the portfolio for a quarter.

But we had five stock pickers that significantly underperformed given the backdrop that I've talked through. The first, well, following many years of incredibly strong performance, our best performer for quite some time. GQG were by far the weakest performer during 2025. They rotated out of a lot of the growth names that they were invested in and went into more defensive, lower volatility stocks, which of course lagged during the year's big risk on rallies in the second half. Subsequently, they actually the best performer in the first quarter of 2026.

But that was a period that they struggled in relative terms during 2025. You then had Veritas and Vulcan, who both favor high-quality businesses with stable earnings and a lower market beta, inevitably, all managers with that kind of style had a tough time during 2025 given the backdrop that I've explained.

But it's important to say that even a couple of growth managers struggled in 2025. That's Jennison and Sands.

So Jennison is a manager that we like in the growth space, partly because we think they've got incredibly strong sell disciplines. They do focus on the momentum in the businesses of these growth companies that they're invested in.

And following the DeepSeek moment in early 2025, they saw some real risks to that AI thing. They brought in their sell discipline, cut back some of their positions. That risk turned out not to be as big as they had feared and the market had generally feared.

And so they did make their way back into a number of those names.

But just being out for a little bit hurt their performance on a relative basis, not in absolute terms during 2025.

And Sands, on the other hand, had a number of their software companies that they were owning get hit indiscriminately, as we said a little bit on this fear of AI hurting their business models. Sands remain very, very confident that that's been overblown.

So in 2025, over 90% of our underperformance of the index came from stock-specific factors.

So it wasn't us having a strong overweight or underweight to a particular sector or country. It really was stock selection.

Now, that's cold comfort, but it does at least confirm that we're staying disciplined to our process, which is to ensure that stock selection drives everything. What I've done here is I've put up five groupings of things that led to underperformance on specific stocks.

So the first area top left there are stocks that were simply mistakes, so things that were sold following poor relative performance.

So these represent genuine realized relative losses.

And I've given a couple of examples there of Robin Hood and Icon that were traded during the period and sold.

And the managers just simply got those wrong.

But that represents by far the minority of the underperformance during 2025. In most cases, any relative losses versus the benchmark that we've had have been unrealized losses. What do I mean by that?

Well, I mean that they were either short-term underperformance from stocks that we still own and continue to believe look very attractive in the market, has been ignoring the strength of their fundamentals, or it was from being underweight some companies or not owning some companies that did phenomenally well during 2025, but we believe are likely to do slightly less well from here. Just to illustrate that point, I often get asked why we're underweight NVIDIA, a stock that continues to outperform considerably.

Now, we've held NVIDIA in the portfolio for a number of years. Most of the period, in fact, we've been running the portfolio.

And over recent years, we've averaged about a 1.5% position.

So about 1.5% of the whole of Alliance Witan invested in that one stock-- NVIDIA.

Now, a few years ago, that reflected an overweight position. Nowadays, that means that we're significantly underweight, because their extreme outperformance had led NVIDIA to become 5% of the index. 5% of that index of a few thousand companies is in one stock-- NVIDIA.

So think about, if we were overweight NVIDIA, we would have 6% or 7% of the entire assets of Alliance Witan in that one stock, a stock that's doubled over the last 12 months, that's gone up 1,300% over the last five years and has gone up 24,000% over the last 10 years. No matter how positive you feel about the prospects for that, would you really want 6%, 7% of your entire assets in something that had performed like that. We like the stock, we own the stock, but we're not taking those positions relative to the index.

In contrast, this slide shows a few examples of individual companies in our portfolio where the underlying business performance has been much stronger than the stock performance and so we think look very attractive from here.

Now, you can see multiple of our stock pickers independently chose some of those companies, which is a sign of high conviction. The key point is that in 2025, many of the businesses we own have been executing well. They've been growing their revenues, growing their profits, or growing their competitive moats, even though their share prices haven't yet fully reflected that strength and in some cases, have actually sold off.

So let's take a couple of examples.

So Visa, which is held by three of our stock pickers, has seen 17% earnings growth in the last 12 months, expanding margins, robust EPS growth and free cash flow generation and the managements even buying back stock, yet its share price has languished due to short-term fears about the economy and concerns that some of these payment processing firms are at risk of being disrupted.

Now, each of the stock pickers are fully aware of all of those risks, but are quite clearly of the view that they have been wildly overblown in the case of Visa. In another example, Shopify, a company owned by a couple of our growth-oriented managers that's had excellent sales and profit numbers.

But its share price was held back by market worries that AI might again look overly pessimistic. In Japan, we've got Bandai Namco. I've got here, this is Pac-Man and Tamagotchi Fame that's making operational improvements, returning cash to shareholders, and yet the share price has actually fallen in those cases. Makes it look more attractive. I could go on with the other names on here. I could give you another 10, 20 names from the portfolio. The silver lining is that these all represent latent value in our portfolio. When the market eventually refocuses on fundamentals, these types of companies should see their stock prices play catch up. That gives us confidence that our portfolio has a strong foundation. We're not relying on hope or speculation. We see concrete evidence that our companies are getting stronger as a matter of time before share prices reflect that. Indeed, this slide shows the latent value by breaking down both our returns and the returns on the index between two components.

So firstly, the fundamental return that reflects what's happening inside the businesses we or the index own.

And then valuation multiple changes.

So how the market's pricing of those companies has changed.

Now, we've done this analysis for different periods-- one year, three years, five years, and since our appointment. Here we've shown it based on book value.

But we could do it on earnings. We could do it on flow. We do, it tells you a similar story.

So if you focus on the purple bars, which is the fundamental piece, you can see that our portfolio's fundamental performance has been incredibly strong in every case, much stronger than that of the overall market.

But our valuation multiples have compressed relative to the market because the market has been focused on those small number of things that dominate the index. This gets back to that voting machine versus weighing machine, and that we're in one stage of that, but we will flip to the other. If we take 2025 as an example, the growth in book value of our holdings was 7.5% versus 1 and 1/2 for the index.

So our companies, on average, grew their fundamentals five times as much than that of the index.

So what does this mean?

Well, it indicates a significant unrecognized value in our portfolio. History shows that that divergence can't last that long. Eventually either the market rates these stocks or the fundamentals accrue and drive returns through sheer maths. Going forward, if the market starts to reward fundamentals again, we could see a powerful catch-up effect, which is one of the reasons to be optimistic.

So let's just finish with the outlook from here.

And despite these recent headwinds, we see many reasons to be very optimistic about the future. In fact, our portfolio today looks more attractive relative to the market than it has in a very long time. Consider a few metrics on this slide. On the left-hand side, we've got valuation. Our portfolio is more cheaply valued than the benchmark, around 15% cheaper based on classic price to book or price-to-earnings measures. That's a sizable discount, meaning you're paying less for each pound of our portfolio's profits or assets compared to that of an index fund. Then the second group are businesses despite that are higher quality on average.

So they have a 35% higher return on equity and a 15% higher return on invested capital. Our companies are generating more profit per pound of shareholder equity, a sign of strong business quality.

And they also have higher dividend yields, nearly 50% higher than that of the index, reflecting that our holdings return more cash to shareholders.

And we achieve all of that with lower leverage in the companies we own, 30% less debt than that of the index as a whole.

And lower leverage means our businesses are generally less risky and better able to navigate economic downturns.

In summary, we own companies that are cheaper, higher quality, faster growing, and yielding more income than the market average. That's a pretty compelling opportunity for the future.

So let me conclude with a final thought. We believe Alliance Witan is exceptionally well placed for the future.

First, we consider some of the world's best stock pickers managing your portfolio. They're top-tier investment managers with strong long term track records, carefully selected and monitored by our team.

Second, our strategy gives you the best of both worlds, high conviction stock picking, but with built-in diversification and risk management. This means we can stay invested for the long term and navigate all weathers. We remain disciplined and focused on fundamentals, avoiding reactionary moves based on short-term noise.

And finally, we're able to deliver all of this at a very competitive fee.

And as Dean mentioned, the management fee will fall even further in 2027. We're confident that staying the course with our strategy, the same strategy that's delivered strong results in the long run, will continue to reward all of us in absolute terms, and soon start to do so in relative terms as markets normalize. I'd like to reiterate that this confidence isn't based on hope or hype, it's based on facts, the fundamental progress of our holdings, the historical cyclicality of market leadership, and the value currently embedded in our portfolio.

Thank you for your attention this afternoon and longer term support as shareholders. At that point, I shall hand back to Dean for questions.

DEAN BUCKLEY: Thank you, Craig. I'm now going to invite questions-- yes, a well, well-deserved round of applause.

[APPLAUSE]

NARRATOR: Never gets that from the board. Anyway, I'll now invite questions from the floor and also from those attending remotely. We'll answer as many questions as we can during the meeting, and we'll post answers to the themes that have arisen from the questions on our website following the meeting. Where we get several questions on the same theme, we'll group them together and provide one answer to cover the main points raised. If you're attending remotely and would like to ask a question, please click on the Q&A tab and then type your question and we'll see it here on the iPad. For those in attendance at the meeting, please raise your hand, and a member of the events team will provide you with a microphone. It'll be helpful if you keep your questions brief so that we can get through as many as possible. Before asking your question, please give your name and, if appropriate, the company that you represent.

So I'm now going to take the first question. I see a hand up there, a face that I recognize. Good to see you again.

MARIO STINSON: Thank you.

Thank you. My name is Mario Stinson, and I'm a private shareholder and have been for a long time. I would like to say to Craig, a lot of what you've said I completely and utterly disagree with. The first thing you said, we've outperformed our peers.

Well, a lot of us were at the F&C AGM this morning.

And F&C have outperformed Alliance in 1, 2, 3, 4, and 5 years.

And they're 20% ahead of you in four or five years.

Now, I can understand the logic and reasoning for that, but there's no point, in my view, in standing up there and saying, we've outperformed our peers because we haven't. It's as simple as that. The other thing is, you believe in facts, not hope.

Well, quite frankly, I think it's you're believing in hope and future hope, which is not what I want. I don't want your analysis of why we didn't do well and why we didn't do this and why we didn't do that. I want performance.

And I'm coming to the conclusion that the way that the board and we as a company use WTW is not the best way to run a trust of this magnitude. If you look at your competitors, F&C bankers, et cetera, they all run in a more traditional way.

And they're all performing significantly better than the way that this trust is performing.

Now, you say we're not invested-- another thing you said we're not invested in hype and we're not invested in the index, and NVIDIA's 5% of the index, et cetera, et cetera.

Well, quite frankly, neither is a trust such as Murray International, for example. They're not invested in any of the seven major things yet their performance was significantly better than Alliance over 1, 2, 3, 4, five-year period. There is something wrong-- and I was speaking to one of your directors before this meeting. There is something fundamentally wrong with the way that the trust is managed.

DEAN BUCKLEY: Thank you for your question. Craig, do you want to deal with the performance aspects of that.

And then I might say something about the board's responsibility over and above that.

CRAIG BAKER: Yeah, just to be clear, I said that we'd beaten the peer group, which we have, which is the average of the peer group. Clearly there are always the ability to pick out funds that were at the top of the peer group that have done better than us. That's absolutely true. In the same way, we can pick out ones that have done a lot worse than us, but we've certainly beaten the average in the peer group over three years, five years and since inception.

And you can choose whichever peer group you want, whether it be the investment trusts, global equity sector or whether it be the wider global equity sector, including all open-ended and closed-ended funds.

But you're absolutely right that there are examples of ones that have performed better. There are essentially a couple of ways that you can have performed better than us over recent periods. One would be to run less risk relative to the benchmark, because clearly the benchmark has been virtually the best performing thing out there. A lot of the ones you're referring to still underperformed the index, but they outperformed us and they took a lot less risk than we did.

And we could talk through some of those. We do monitor the risk that each of those are taking.

So that's one way you could do it. The other is to run a much more concentrated and be more biased towards a small number of themes, neither of which is how we construct the portfolio. I take your point on you don't want to just talk about the future. You want to see the results.

So do we. We absolutely want to see that. I would note that 10% per annum returns are good outcomes. It is literally this situation that the market cap index has been so extreme that it's been incredibly difficult, including the people you're talking about to have outperformed it. They haven't either.

And that has been a phenomenon that's been unusual in recent years. We've significantly outperformed the index if you equal weighted those companies, because as I said before, three out of four stocks have been underperforming. That is ultimately what's been the issue out there.

But absolutely, we need to deliver on the returns. We feel incredibly confident that we will. You can only talk to why are you confident about that future performance based on what does the portfolio look like today. Why do you believe that the fundamentals of the businesses that you own, because ultimately that's what you own. You own a share in these businesses, not their share prices over the long term.

And fundamentals drive everything. If you look over 100 years, everything is just driven by the fundamentals of businesses.

But there can be periods like the last five years where that is not what has driven returns, but the worst thing you can do is give up on that and move into the things that have gone up the most over that period.

So I think those are probably the main things that I would refer to.

DEAN BUCKLEY: Yeah. I mean, I just want to say that the board spends more time focused on investment performance than anything else.

And we do that both at the board meetings and also outside of the meetings. We have a pretty much continuous dialogue with WTW to ensure that we understand the outcomes of our strategy and ensure that WTW and our stock pickers are doing exactly what they say they do.

And we spent a lot of time recently analyzing the reasons for the underperformance over the last couple of years and trying to understand whether we've got some of style gap in the portfolio, or if it really is just the fact that our stock pickers have found these markets very, very challenging because they're so concentrated.

And we've reached the conclusion that we do not have any style gaps.

And it is indeed the concentrated markets that have provided the challenge for the stock pickers. If we turn the clock back 21 months, two years over the period since inception of WTW and the multi-manager strategy, we had outperformed the index and we had significantly outperformed pretty much every other competitor, including F&C. It's the last two years that we've found very challenging, and the reason we found those years very challenging is because of the concentration of the markets that Craig has talked about. The board is encouraging WTW to stick to what they do to continue the process, keep doing what they've been doing.

And like WTW, we've got a great deal of confidence in the portfolio that we own. We own good companies with strong growth at cheap valuations, particularly cheap relative to the market.

So we've got a lot of confidence that this portfolio is going to perform well moving forward.

Thank you. There are a couple of questions down here. The first one is here.

JEREMY DOBBIN: Jeremy Dobbin. I'm a shareholder via HL platform. I originally purchased shares in 2009, so I think I clarified a long term holder. My comment just what's I like the risk reward ratio that you offer. It gives me-- I can sleep at night. I like dividends. Dividends, I used to reinvest them, but now I draw them down as part of my portfolio helps with my pension. Question. According to the AIC, your reserves are about 0.17, about 17.

So they're quite low compared to your competitors. I'd just like to comment on that.

And the other comment is that a number of loanable funds and other investment trusts are going down the route of the enhanced dividend route, where they pay an enhanced dividend relating to NAV. I haven't got a view either way. I like the idea. I'm not looking to maximize my dividend like 6% or 7% because I like to see capital growth as well.

So I'm very happy with the level that you're paying. I just want it maintained. I wouldn't want to see-- and thank you very much. 59 years, great. I hope that continues for the rest of my lifetime.

Thank you very much.

DEAN BUCKLEY: Well, thank you for your comments. I mean, I've got to be honest, dividend is the area where when I talk to shareholders, I get the most diverse range of opinions. I have some shareholders who tell me they don't want any dividend because they're investing for capital growth and dividends are taxed at a higher marginal rate than capital gains. I have other shareholders who tell me they want the dividend possible, because they rely on the income from this investment to fund their retirement.

So as a board and as chair of the board, I've got to balance all of those views and come up with a strategy that I think balances them appropriately and delivers the best outcome for the company, which is how we've arrived at where we've got to.

And basically, this is a total return portfolio. Over the long term, I don't think it's unreasonable to expect global equities to deliver 8% to 10% per annum total return. Our view is that it's not unreasonable to pay out around about a quarter of that in income and 3/4 in capital gains.

And working out that arithmetic, it gets you towards the yield that we've got on our shares, which is just in the low twos. The other advantage of positioning in the low twos is that it's more than you will get on a passive fund. It's more than you will get on an open-ended global fund.

And it's very competitive against our peers in the AIC global sector.

So for those that are wanting that combination of capital growth and income, I think it's an attractively positioned proposition. You asked the technical question around the revenue reserve.

And you are right, our revenue reserves are 17% of this year's income.

But we can and we will supplement the dividend from capital reserves. If you think about the portfolio, the portfolio generates about $100 million in income and we pay out about $110 million in dividend. Obviously, we've got some costs to take off the income, but the positioning is sustainable. Our capital reserves are enormous and our dividend is sustainable.

And we can grow the dividend from these levels.

But our expectation is that we'll keep it at around about that low 2% level. The enhanced dividend, we're not going to go down that route because of the nature of the shareholder base that we've got. I'm actually on the board of a company that has done it.

And one of the reasons that company did it is that it wanted to be more attractive to retail shareholders and had quite a big wealth management institutional shareholder base.

So it wanted to improve its relative attraction to retail investors. We've got a very, very strong retail following.

And actually I think the balance in this company between retail investors and institutional investors is quite a good balance that we quite like to keep. The board does spend a lot of time thinking about dividend.

And I have no doubt later on, I'll get a lot of different views on dividend, but I think we've got it pitched in broadly the right space.

But thank you. There's a question here.

HENRY CHUA: Henry Chua shareholders. Since Alliance Trust savings set up a private equity plan, I'd just like to make a comment. I was going to ask a question related to dividends, but my fellow shareholders asked the question.

But I have to challenge your thinking, Dean, because if I look at the report page 2 and 3, the dividends have not been covered, at least for the last two years, if not longer.

And that explains the very low reserve. The objective of this trust, as first laid out by the manager, is basically total shareholder return. All the global trusts I know of and I do invest in not just this trust, global trusts, are basically dividend heroes, no different from this one. They might be 59 years or 57 years or 53 years that give and take, one or two years. Unless you can grow your dividend cover, The dividend policy is not sustainable, really.

So I think you do need to look at this issue more than just oh, we've got some investors looking for dividends, because at the end of the day, this is a total shareholder return trust.

DEAN BUCKLEY: And again, as I've mentioned, we have the flexibility to pay dividends out of the capital reserve.

And as it's a total return trust, which you acknowledge, the board have made a judgment around the shape of how we want to deliver that total return to investors.

And our judgment is that delivering it-- in the long run, returns are 8% to 10%, which I think is a perfectly reasonable assumption. Our judgment is that delivering that return 80% capital, 20% dividend is a perfectly reasonable position to take, even if it means slightly supplementing the dividend through the payment of capital reserves.

So that's the position we take. I appreciate that you have a slightly different view, but I can assure you that there will be a very broad church of views in this room.

And I think that we're trying to serve that broad shape of views.

And I think the policy that we've got is the best way to do it.

HENRY CHUA: I have a second question.

DEAN BUCKLEY: Sorry, I'm going to stop you there because I know there's--

HENRY CHUA: I have a second question related to the stock pickers.

DEAN BUCKLEY: I'm going to stop you there because you've asked the question, and I will talk to you later upstairs, and we'll deal with the other question then.

But I want to make sure everybody has an opportunity to ask questions. There's a question here.

ROBERT TOMKINSON: My name is Robert Tomkinson. I've been a shareholder of Alliance Trust for 40 years. I never thought I'd ask this question, because I campaigned many years as chairman of a number of public companies to have women on the board.

But when you were going to get a second man on the board?

DEAN BUCKLEY: Sorry, I missed the question.

SPEAKER: When is there going to be a second man on the board?

DEAN BUCKLEY: Yes, go ahead.

SPEAKER: It's actually quite entertaining. We do worry about this.

And then I say to myself, I've been on lots of boards, and my colleague Jo made this point earlier where we were the only women.

And for quite a while nobody worried very much about that at all.

But we do, and it is a good point and we are considering it.

And as the board develops and as we manage our succession.

And we are in the process of doing that, I think you may perhaps see a marginal rebalancing of the balance. We have all sorts of other interesting, diverse characteristics between us, which I think is also very important.

DEAN BUCKLEY: We've got too many Northerners on the board for a Southern male, honestly. Anyway, sorry. There's a question here. The lady in the middle here.

And then there's a gentleman there by the post.

JANE PERRY: Jane Perry, private shareholder. Speaking as a minority woman. You talk a lot about stock picking, exceptional companies, long termism.

But your average turnover means that you're holding stocks for barely a year.

And to take an example, which has been mentioned already, that's a faster turnover than foreign and colonial. How do you justify that against your company objectives?

DEAN BUCKLEY: A very fair question.

And our turnover was slightly higher last year.

But I'll ask Craig to deal with that.

CRAIG BAKER: Yeah, so 2025, the portfolio turnover in aggregate was about 85% which is higher than it has typically been. It's been more in the 50s kind of average. Let's break down the 85%.

So 20% of that was because we changed two stock pickers. 5% is the standard rebalancing that we do between the managers, which obviously sometimes increasing some of them reducing others.

So that leaves you with 60% turnover in the underlying portfolios that the managers are running. 30% of that was genuine name turnover.

So then changing the stock for a different stock, and 30% was just rebalancing within the stocks they've had.

Now, 60% is quite high. Just to be clear, there's 11 managers. About nine of them had 35% or less turnover.

And a couple of them had in excess of 100% turnover last year. What you tend to find is that the turnover is much higher in really extreme markets, positively or negative, because you're going into a stock with a long-term view.

But the market could suddenly change that price so dramatically that even your long-term views changed in six months, 12 months.

So we don't see turnover as a bad thing necessarily. It could be a good thing. I mean, ultimately, if you're going into stocks because you think on a five-year basis they look incredibly cheap and then the market agrees with you within three months. That's wonderful news. You've made an incredible return, and it's time to move on to another stock because it's no longer priced appropriately.

Now, of course, there's costs of turning over the portfolio, but it is worth noting that costs have come down enormously in what is ultimately a relatively large cap global equity portfolio.

And so even when we change a manager, the cost of that is actually pretty low. You're talking one or two basis points tends to be at the total portfolio level if we change a manager to put this in perspective.

So yes, it was a bit higher than normal, was that a concern to us? No.

DEAN BUCKLEY: Thank you, Craig. There's a question here.

And then the gentleman there with the blue shirt on.

ROGER HIGGINSON: Thank you. Roger Higginson, private shareholder. Question, if I may, for Craig. I hope I understood your presentation correctly, but you did at one stage, put up on the screen some company names where you said the company basically was a very good company. It was profitable and every aspect of it was good from an investor's perspective.

But you consider that the market hadn't recognized that in the share price. One of the companies on the screen was Visa.

So I was slightly surprised in your manager's report and the annual report of the trust on page 12, that where there were two columns, one of which were the top 10 purchasers and the other top 10 sales, that Visa came up as the largest sale of some $17 million.

Well, if Visa is performing so well and its share price hasn't been recognized by the market, why is it being sold?

Thank you.

CRAIG BAKER: It was owned by one of the managers we replaced.

ROGER HIGGINSON: Oh, OK.

DEAN BUCKLEY: So I mean, I think I'm right in saying that at the beginning of the year, three managers owned Visa. At the end of the year, two managers owned Visa.

So it's still a very big position for us, albeit not quite as big as it was. A very good spot, though. Gentleman with a blue shirt.

PHIL CLARK: Thank you. My name is Phil Clark. I was a shareholder in Witan for quite a long time, certainly more than a decade.

But I was a shareholder in Alliance for two or three years. This is the first time I've attended this meeting. Can I have just one request and one question, please. The request is that Witan, in their accounts, used to have a fabulous table which showed for each stock picker their performance in the year, the benchmark that they were aiming for.

And it also showed their cumulative performance and their cumulative benchmark.

And that painted a picture beautifully. In your report, you've got an awful lot of words, which have very few numbers in them.

And call me old-fashioned, but it's as a shareholder, you always feel warm when you've got a table of hard numbers, rather than a graph or a page of woolly words. Do you think you could actually put in a table to that effect to actually just make it the conversation crisper and easier, because this is a-- investment trusts are very crisp and easy business. It's all about the performance and the numbers at the end of the day.

And we can see in total--

DEAN BUCKLEY: I'll deal with that briefly.

And then I'll allow you to ask your question to be brief. The reason we don't include the manager-- Craig talks about manager performance. He's quite happy to do it.

But the reason we don't include it is that we purposely don't give our managers a benchmark against which they manage the money. We asked them to give us their 20 best stock ideas.

And those 20 best stock ideas could have a very strong value bias. They might have a very strong growth bias.

Ultimately, though, it's the blend of all of that risk managed by WTW that creates the portfolio that the board is focused on, and we want our shareholders to focus on.

And we've always felt that putting in the individual performance of the individual stock pickers would be a distraction to that conversation. Having said that, I acknowledge that we've got a number of stakeholders who have been asking for that information.

So the board are going to revisit that subject. We'll see where we get to. I'm not promising, but it will be revisited.

Now very briefly, the question.

PHIL CLARK: All right. Very briefly. I do own a number of other trusts in the same place as this, and they're all frustratingly below the benchmark, which is very frustrating.

And you can see the reason for it is that the market has performed in a very lumpy manner.

So, for example, you pointed out those shares in NASDAQ that had no revenue, unless you had those were stuffed.

And this year, unless you've got oils, you're stuffed.

And so this year, you're stuffed. I'm wondering, why shouldn't either I buy ETFs or why shouldn't you actually put build ETFs into your portfolio to actually capture the things that you don't know are going to do well.

So who knew in 2025 that Lloyds Bank would deliver 85%? Nobody knew.

So get some ETFs in the edge to give you a-- well, that's a suggestion anyway.

But why shouldn't I buy them?

DEAN BUCKLEY: Well, there's a large shareholder in Lloyds Bank. I was delighted that the shares delivered 80% but it didn't really compensate for the previous 15 years that I'd owned the shares. In terms of passives, I mean, obviously, owning passives, whether they're in an ETF or open-ended form, I mean, clearly that has been an optimal strategy over the last few years.

But as Craig said earlier, buying passives is buying a very, very concentrated portfolios where the biggest weights are in the stocks that have historically done well.

And I'm always-- Craig didn't use the chart in this presentation, but he produces a great slide, which shows the winners, the biggest companies in the world at the end of each decade.

And it's remarkable that if you take the biggest companies in the world at the end of the decade, very few of them are around at the end of the next decade.

And I think that's the risk with passive investing. You're allocating the biggest chunks of capital to the companies that have done well. It's a strategy that's worked well in the last few years, but I don't think there is any guarantee that it will work well in the future.

And I think markets will broaden out.

And when they broaden out, active investors will do well.

So a question from the gentleman in the far corner up there with a black jacket.

And then there's another one in the middle.

And then I'm being nudged by my company secretary that we're running-- anyway, sorry. Question on that.

AUDIENCE: Just to add on to the point that was made earlier about the diversity question.

And by the way, boards were heavily dominated by women is no more diverse than a board heavily dominated by men. They are both inappropriate in a big company, in an investment trust.

But the one thing you're missing when you look at the talents of people because, to be honest, most of the ticks apply to everybody, is you don't have anybody with experience of starting their own businesses. You need enterprise. You need people who understand being on a business, creating a business, rather than joining a large business that's already successful. You need somebody that actually understands a bit more of that. That would provide some real diversity in it, whether it's a man or a woman.

But do think about other aspects of diversity, not just the ones you've selected at the moment.

DEAN BUCKLEY: Thank you. Comment well made and very well received. That's something that we will bear in mind.

But you're right. I think as a group-- have any of us started our own businesses? Oh, well, there we go. There we go. There we go.

SPEAKER: Self storage?

DEAN BUCKLEY: I think you were directing your criticism at me, because I have not started my own business. I've worked in corporate world my entire career in very large companies.

But you're right. One of the things we do think very, very carefully about is the diversity of this board on multiple levels.

And we like to think that we're quite a diverse board and that we're very effective and that we work well together.

Thank you. Question here in the middle.

And we are nearing the end.

So if you are going to fill out your cards and wanting to vote, please do that soon because I'm going to close the voting after we've dealt with this question. Sir?

SUNIL GUPTA: Sunil Gupta, shareholder in both the merged entities since '99. This is a question about the buyback policy of the board. One reason for the merger of the two entities was to improve the marketability through being in the FTSE 100. Alliance witnessed towards the bottom of the FTSE 100.

So my observation is that sustained buybacks, if they're not compensated by significant capital appreciation, is going to gradually push you below that 90 percentile threshold.

So that's part A.

And part B is just the wider policy as to whether 5% is the right number. Why is it 5, not 8 or 7 or 4?

Thank you.

DEAN BUCKLEY: OK, good question. I mean, I don't think I've ever been on an investment company board that's liked doing buybacks. We don't want to do them. We'd rather not do them.

But we make a judgment that it's in the best interest of our shareholders to do so. I mean, the first thing to say is that I think the overwhelming majority of shareholders do like the fact that our discount is predictable, it's stable, and it's at a relatively low level against NAV. Every time we buy shares at a discount, it is accretive to NAV.

So it's enhancing the individual value of the shares that you own, because we bought those shares at a discount. Our policy it's publicly unstated, but you will see through the actions of the board that we will defend our discount or defend the share price when the discount is moving out beyond 5%. We think that is an equilibrium point that we want to defend. Companies that don't defend that level and allow their shares to trade freely do from time to time, move out to significantly wide discounts. That can attract investors that then go on to behave in a way that is not necessarily in the best interests of all shareholders.

And I won't allow that to happen here. The board will continue with its policy. Why is it 5 and not 6 or 4? 5 is a level, again, which provides this balance. We spent about $200 million defending our discount through buybacks last year. That's about 4% of our NAV. Apart from F&C, it's the lowest level of buybacks in the sector.

And one of the reasons why we're able to defend our discount with relatively low buybacks is that the market has got confidence in this board defending that 5% as demonstrated over the last decade or so.

So again, buybacks are a bit like dividends. When I go upstairs, I will guarantee I'll get a broad range of views on buybacks.

And the board has got to come to a balanced judgment of what it thinks is in the best interests of all shareholders.

And I think we've got it right.

And certainly whilst armchair will continue with the policy.

Thank you. I think now we've come to of a natural end and I'm way over time.

So we're going to call an end to the questions there. Obviously the board are going to be upstairs having coffee with you very, very shortly so that if there are any more questions, will be very, very happy to take them. The cards, I can see the card. I'm just trying to find-- I've lost where I am in my script.

So I now need to turn back to the formal business of the meeting.

So the poll is now closed. Please pass the completed cards to the Computershare representative at the back of the room when you're going out towards where the coffee is being served.

Now, it's going to take us some time to count the votes once the meeting is closed.

And as I mentioned earlier, based on the proxy votes that we've already had, we expect that all of the resolutions will be passed.

But the final voting figures will announce tomorrow morning to the market, and shortly after that, we'll publish the results on our website. Ladies and gentlemen, thank you. That concludes the business of the meeting. Once again, I'd like to thank all of you who've taken the trouble to attend here in person and also those that are attending online.

MARK ATKINSON: Welcome back, everyone, at least those of you who are here at the AGM a bit earlier. Welcome, too, to those joining online for the first time for this investor forum. I'm Mark Atkinson, from the investor relations team. If you're at the AGM, you'll have heard Craig talk in some detail about investment performance. There will be a recording on our website, if you didn't catch him.

Now we're going to focus on the positioning of the portfolio, starting with a presentation by Stuart Gray, who sits on the Alliance Witan Investment Committee with Craig here at WTW. Stu's presentation will be followed by the two stock pickers who joined the lineup last autumn. I'll leave Stu to introduce them both in a minute. After we've heard from Stu and the stock pickers, we'll take questions with Craig and Dean Buckley, the company chair, joining us back on the platform. We'll have roving mics for those of you in the room.

And if you're online, please put your questions in the Q&A speech bubble at the top right of your screen. Over to you, Stu.

STUART GRAY: Fantastic.

Thank you, Mark, and good afternoon, everybody.

So I'm going to start with a very quick recap of the investment strategy for the company, and then, hopefully, quickly move into the portfolio and what actions we've been taking over the last year or so.

So, as you recall, we are a multimanager strategy. I think multimanager itself is nothing new. I think everyone uses multimanager in some way.

So the question is, how is Alliance Witan different?

And the way that WTW has tried to deliver this portfolio in a differentiated way is really driven by the pillars you have on the screen here.

So, high-conviction investing. We've talked earlier today about having customized, concentrated portfolios, where we're asking our stock pickers to focus on just their very best investment ideas. We think this is going to maximize the skill sets that they have, maximize the expected return that we can deliver from their portfolios, and maximize our long-term returns to shareholders.

But we recognize, of course, that these concentrated portfolios can be very volatile in the short term, and hence we seek to maximize diversity.

So we use diversification to try and smooth away the volatile return streams of any individual manager, and the combined portfolio has a much smoother path to what should be long-term high expected returns.

Of course, we have to deliver this at a sensible cost.

And the chairman spoke earlier about how the costs of the company are very competitive and are coming down.

So, from 1st of January next year, the target OCI for the company was around 50 basis points.

And that is very competitive for a multimanager strategy and also highly competitive versus individual managers in the peer group. Exclusive access. This is just a point to make that we go everywhere in the world to try and find the best investors anywhere that we can. We are not restricted to the UK market or your chosen UK platform. We can find the best managers around the world and bring them to the shareholder base through Alliance Witan.

And we talked a lot earlier today as well about the steady dividend growth over time. 59 years, as a dividend hero, is something the board is very committed to continuing going forward.

So these are the fundamental underpinnings of the strategy.

But talk about what this really ends up in, in terms of portfolio and the companies, starting off just by looking at our biggest active positions.

Now, when you talk to an individual manager, they will always talk about their top 10 or top 20 holdings.

So whilst they might be running a portfolio of, say, 50 companies, they'll say, don't worry, I'm a very high- conviction investor because I've got a lot of capital in my top 10 or 20.

Well, our stock pickers have got all their capital in their top 10 or 20 ideas.

So Alliance Witan really is about all the companies in the portfolio, not just about the top 10. Nevertheless, we're showing our active positions here.

And clearly, selectivity is the name of the game. We are very selective about which companies we want to own. That selectivity is incredibly important.

And you can see that we don't own some very large companies in the benchmark. I think index concentration is something that everyone is very well-versed in nowadays. Apple is a very large part of the market, and we do not own it. Also, for example, we don't own Tesla.

So we are not afraid to not own companies where we see better value elsewhere. Also, importantly, there are companies that are not necessarily household names amongst our highest active positions.

So for example, Everest Group, TD SYNNEX-- these are probably names that people are not overly familiar with and don't often find as the biggest active bets in people's portfolios, but it just speaks to how our managers are just going anywhere they can to find the best investment opportunities, and we will make those sizable positions in the portfolio.

So again, it's much broader than just the top active positions that we see here. Something that is a bit of a feature is, certainly, in this market environment, the portfolio is very much focused on being selective about AI winners, so not trying to own the whole space, where the whole space is receiving a lot of hype, but being very selective about what we think are the real winning business models that will be there for the long-term in the future, even though the future is highly uncertain in this area of the market.

And on the other side, where we're seeing a lot of disruption from AI, our managers are focusing on companies that are perceived as being disrupted and are being heavily discounted right now, but actually focusing on those companies where we think the concern is overdone, if you like, and not really warranted, and where we're seeing great value in a lot of businesses, now, that are perceived to be at threat of disruption. Maybe London Stock Exchange is an example, which maybe Mick might talk about later.

So, very quickly, focusing on what WTW does. Our job, of course, is to manage the portfolio, build the portfolio, and manage the portfolio through time.

So we select the stock pickers for the portfolio, and we allocate the appropriate amount of capital to them.

So you can see all the stock pickers here. The simplest way of describing how a stock picker gets into the portfolio is, one, they have to be among the best in the world at what it is that they do.

Second, they have to be different to all the other managers in the portfolio. Those are the two fundamental drivers of how we put this portfolio together.

So all of our managers-- we spend hundreds of hours over years, if not decades, researching these managers. We are highly convicted in the abilities of these managers.

And more importantly, we do believe that they are doing very different things, which gives us the diversity that we talked about earlier.

And that diverse idea generation and decision-making is really what gives the portfolio robustness through time. I've color-coded a few of these on the chart.

So you can see that two new managers have been added to the portfolio last year. I'll talk about them a little bit more in a second.

And then I've added, in red and green, where we've added or reduced capital since the start of 2025.

So how we think about allocating capital is to make sure that the total portfolio has the characteristics that we expect.

And those expectations would be that, from a top-down perspective, the company-- sorry, the company's portfolio is meant to look broadly like the market. We are not trying to risk your capital based on decisions about a big factor exposure, so a bet on whether value is going to outperform growth this year, or whether US will outperform non-US, or large caps outperforming small caps, for example. These big top-down bets are very difficult to get right.

And more importantly, they are very difficult to get right repeatedly over long periods of time.

So we do not take a lot of risk based on top-down views, but the portfolio is very different from the bottom up.

So that bottom-up stock selection really drives the risk in the portfolio and drives your expected return.

So the capital is allocated to the managers to get the right balance from that top-down perspective, and you can see where we change the allocation through time. It is driven by that perspective of the total portfolio.

So, as an example, last year-- well, actually, let's take a step back-- a very, very high-level summary since COVID. Technology stocks took off after COVID as the world went digital and went online.

And if you recall, around 2022-ish, interest rates went up significantly. Tech stocks sold off significantly. At that point, a lot of our managers were buying a number of these large tech companies. They had great, dominant business models. We could see future growth coming from AI. We could see that these companies have slashed costs and their prices have come down.

So a number of our managers had bought more technology companies, and that paid off very well over '23, '24, et cetera. Last year, Vulcan-- sorry, Metropolis and Veritas, on this slide that we trimmed-- they had actually taken some profits from their technology stocks. They'd made a lot of money. They were now seeing increasing competition and higher valuations, and they were selling some of their technology investments. GQG, as Craig touched on earlier, rotated quite aggressively out of technology, albeit a bit early.

But they rotated out of technology into other areas of the market they perceived as offering better long-term potential-- into healthcare, into some utilities, into oil more recently as well. The sum of all of these moves meant that the total portfolio had less exposure, or had we done nothing about it, the portfolio would have had less exposure to tech, a little bit less exposure to some of these growth drivers.

And hence you can see that our reaction is to allocate a little bit less capital to Veritas, Metropolis, GQG. We added some capital to Sands, Jennison, who gives us growth exposure. We added some capital to Vulcan, who gives us US large-cap exposure.

And it helps us balance the total fund and keep those top-down positions relatively stable and ensure that the total portfolio is still being driven by the bottom up. I'm not going to spend long on this slide. Craig touched on this in an answer to Q&A earlier. I think I would just maybe add, whilst turnover last year was 85%, people do ask us a lot about, you say you're long-term investors, which we are, but does this turnover contradict that? I would note, on top of what Craig answered earlier on, the level of manager turnover that WTW has made since inception is tracking, I believe, around 9% per annum.

So it implies a longer than 10-year holding period with our stock pickers.

So we are very long-term in our partnership with our stock pickers, and they are generally very long-term in how they view their businesses.

And as Craig alluded to earlier, market behavior today is such that we are seeing very extreme price movements.

And even if you have a long-term view about businesses, when you see extreme price changes, it drives turnover in the portfolio. That is actually a good thing. We think competition for capital in very concentrated portfolios is very healthy. It ensures that the stock pickers are always getting the best investment opportunities into their portfolios.

And from our perspective, we're always having to make sure we've got the best managers picking your stocks.

So, on that point, I will touch briefly on our two new managers. I'm going to focus on why we actually made the change, from a portfolio perspective. I'm going to let Dan and Mick talk much more about who they are and what they do, and they will give you much more detail on that. From a portfolio perspective, Dan is a manager we've known for a very long time now. Dan started his value investing franchise at Artisan, I think, over 20 years ago now, Dan? Is that right?

DAN O'KEEFE: [INAUDIBLE]

STUART GRAY: Indeed.

So, without trying to embarrass Dan too much, the reason we have very high conviction in Dan is not the highly differentiated idea about what value investing is. It's really about, over that 20-year period, through multiple environments, the quality of analysis, the clarity of his approach in what he's trying to do, the temperament around which he makes investment decisions lead us to believe that this is a very, very high-quality implementation of a value investing strategy. At the same time, Dan has a focus in this account on US, not exclusively, but there is a bias towards US stocks.

And that's also quite helpful to the portfolio, from a top-down perspective, as the portfolio is underweight US.

So having this gives us a little bit more ability to manage that exposure overall, relative to the market.

By the way, I would add that, whilst people say the US market is an expensive market today, which is true on average, I would note that there is a high degree of dispersion within the US market today, and there are actually a great number of companies at very attractive valuations.

And Dan will talk much more about that. We replaced ARGA, in the portfolio, with Artisan. ARGA is a manager that, as some of you have noted, was only in the portfolio for a relatively short time. That's unusual for us.

And the reason was that, in our ongoing due diligence, they had an incident, actually, on the operational side of the business, rather than the investment side. We research everything that these managers are doing.

And we had relatively lower conviction in some of their execution of their processes.

So, in this "competition for capital" mindset, it was enough to make the trade that we just thought, at this point in time, Artisan is a better manager, and we have this opportunity to bring Artisan to the portfolio.

And that's improving what we think is the stock-picking for your portfolio in the future.

Similarly, in the case of Brown, again, to vastly oversimplify, we replaced SGA with Brown. Both are managers that I would say, simplistically, focus on high-quality companies, high-quality growth businesses.

So what was it that led us to change from one to the other? SGA is a manager that's been in the portfolio since inception, since our inception, 2017, and they were going through a bit of change in terms of their portfolio management.

So some of the founders were handing over to the second generation. That, in itself, wasn't a deal breaker, if you like. The second generation had been at the firm for average 15 years. They were very experienced, talented investors.

But in that transition, we started to get a little bit less comfortable with some of the decision-making characteristics that were exhibited in the portfolio. Contrast that with a discussion with Mick at Brown Advisory.

Now, one thing which we think Mick does very, very well is spend a lot of time re-examining and self-testing what they do, in terms of their processes and their decision-making. They've had stable decision-making, and there's focus on constantly improving through time. The decision-making is a lot crisper, and we think that's an advantage, going forward. Secondly, and more importantly, Mick will talk a lot about how they focus on the customer of the company, and why that customer keeps coming back to the business to buy their goods and services again and again through time. That brings pricing power.

And in our view, if we move into a world which is more inflationary in general, the quality area of the market, I think, could be quite challenged by inflation and some of these other changes going on in the world.

And actually having the focus that Brown has, I think, will protect the portfolio from some of these changing trends, going forward.

So that's from a portfolio perspective as to why we just have conviction-- that change in conviction's enough to switch from one manager to another in the portfolio.

But with that, I think I'll hand over to both Dan and Mick to talk more about what it is that they actually do, and how they pick stocks for you in the portfolio.

So I will hand over first to Dan.

Thank you very much.

DAN O'KEEFE: Thank you. Good afternoon.

So I was thinking about what to say.

And of course, I could drone through the presentation, which I'm loath to do.

But I was thinking about, if I was in your position, what would I want to know?

And I think I would want to know some pretty simple things about me. I would want to know, who's Artisan Partners? I would want to know, who's Dan O'Keefe, and how does he think? What are his motivations? What are his incentives?

And then I would want to how I'm going to invest your money, or actually, our money, which should tell you something about who I am.

But I'll get into that in just a minute. I think who Artisan Partners is is very important.

So Artisan is a pretty interesting business model, was founded in the mid-1990s.

And the idea of Artisan Partners, conceived by the founder, Andy Ziegler, was to go out into the universe of large institutional money managers and find talented individuals who are lost inside large bureaucratic organizations, who don't have autonomy, and who aren't making a lot of money, and offer to lift them out of that organization and put them in business at Artisan and give them investment, autonomy, and control over their business so that they're effectively running their business, from an investment standpoint, and then share the economics-- in other words, an entrepreneurial model.

And that model has been replicated since 1994 over 10 different investment teams. I was brought into Artisan in 2002 to start a new business, and I've done so.

And I've been a money manager since-- 1997 was when I started my investing career.

And I was lifted out of a firm called Harris Associates, again, to join Artisan and to start a new business.

And I've been at Artisan since 2002, managing money in the same way as when I started, and pretty much in the same way as I was at Harris Associates.

And so I think this entrepreneurial model and the autonomy is very powerful. I don't think the 10 teams at Artisan are necessarily the brightest people in the world. I'm not one of the smartest people in the world.

But all of the 10 investment teams that Artisan have been really quite successful.

And you have to ask yourself, why has that happened? Why is it replicable across a lot of different people?

And I think it's the model. I think something very powerful happens when you give someone autonomy and you give them an entrepreneurial environment.

And they have full control over what they're doing, with, of course, fully resourced back office, fully resourced training, fully resourced client service, fully resourced regulatory and IT, where the investor can really just focus on their vision of investing.

And so I think that's why the model has been so successful across 10 different investment teams, harnessing those powerful characteristics and drivers.

Now, who am I, and what are my motivations?

So, whenever I sit across the table from a CEO, I always want to know a little bit about them, and I want to know what their motivations are and what their incentives are. My incentives are the same as yours.

So most of my family's net worth is invested in the strategies that I manage for Artisan and for you.

So I make most of my money through the investment return that I generate from managing the assets that we are collectively invested in.

So I am just as much invested as you, probably more than most of you, actually, but my incentives are the same.

And I think that's powerful. I think you need alignment between a client and a money manager, and I think that's one of the most important characteristics.

And I always invest based on the idea of making money. That's what I'm here. I'm here to make money, and I'm here to not lose money. Those are my objectives. People talk about alpha. They talk about beta. They talk about factors. They talk about the index. I don't care about any of that. I just want to make money, and I want to not lose money.

So I hope that's what your motivations are.

And if that's the same motivation, then we're aligned.

And I think we are aligned.

So then the third question that I thought you might have for me is, how do I invest, specifically?

So I'm a value investor. There aren't many of us left in the world, which someone pointed out to me, but I'm still kicking.

And I think maybe I'm still around and I've done OK because I have a slightly different view of what value investing is. The caricature of a value investor is someone who buys low-PE stocks. Not every value investor does that, but let's create the caricature.

And low-PE stocks can be very dangerous because usually what it means is they're crummy businesses, and they're highly levered businesses.

And the thesis is, well, you buy a business at 10 times earnings. It should revert to the mean, and you get a 12- or 13-times multiple.

And you make a return, and then you sell it.

And you go, you look for the next low-multiple stock, and you just churn the flywheel of multiple arbitrage.

And I learned early in my career, from the mistakes that I made and from the mistakes that I watched other people in the industry make, that generally, the progress of the business is going to drive your return.

So if you buy a crummy company, a low multiple, often, the low multiple isn't enough to save you if the business is facing all kinds of challenges, if the leverage goes against you, if it gets disrupted by, well, the internet back in the '90s, when newspaper companies were dying, and then retailers to a certain degree in the 2000s, and then who knows what AI is going to do to multiple industries?

So you need to have confidence in the business, long term, and so a cheap valuation just isn't enough. It's not enough for me.

So the way that I handle this risk of value investing is I value businesses, and I buy them at a discount to what I think they're worth. I don't go into the market and say, I'm only going to buy 10 PE stocks or 12 PE stocks. I value businesses, and if I find a great business that I think is worth 20 times earnings, well, logically, a 15- times-earnings multiple at my purchase price is a pretty good deal, especially if the value per share of the business grows, which is generally what I look for, is value per share growing.

So, instead of having just a pure multiple-based perspective, I look at discount to intrinsic worth.

And I also look very closely at the durability of the business, the quality of the business.

And, to my earlier comments about what motivates me, I look at the incentives of the management team and the incentives of the board because I want to get involved with people who are interested in making money for the shareholders, not building their empire, or some other motivation.

So that's my view of value investing. Buy cheap, relative to intrinsic value. Focus on good, durable businesses. Focus on financial strength, and focus on aligning yourself with management teams who want to make money.

And that has, I think, done pretty well for me and my shareholders over the last 20 or so years. I don't want to look at that right yet, right now.

So here's the breakdown of the top 10 companies in the portfolio.

And I think this is a pretty darn good expression of what I just said. Every single one of these companies is a durable or long-duration business. Everyone was bought in an attractive price.

And every one of them has the ability to, or is, creating value per share, growing value per share at an attractive rate, and, I believe, will do so for a long period of time.

So Shell-- I bought that in 2021 in the main strategy of my business, which is the global value strategy.

And this is an oil and gas company that was left for dead in Europe because there was this idea, which I think is losing its momentum, to put it politely, that we're going to not need oil and gas in the future.

And so European oil companies were trading at single-digit PEs.

And Shell is actually a pretty darn good oil company. It's got a great CEO. It barely has any debt. All of the cash flow comes back to shareholders in the form of buybacks and dividends.

And when I purchased it, I was getting a probably 15% owner's yield on that business and a 15% value-per-share growth because of the capital allocation. If you're retiring shares at six times earnings, you're growing value per share at a double-digit rate and paying a 4%, 5% dividend yield.

So long-duration asset, great balance sheet, great capital allocation, double-digit value-per-share growth. BNY Mellon, custody bank based in the US, not a capital-intensive business-- I bought that at a single- digit PE. Management team, for the past seven or eight years, has been buying back 10% to 15% of the company a year. The value per share has grown meaningfully. They're now generating-- I think $8.50 a share is a reasonable proxy for EPS over the next couple of years, whereas, a few years ago, it was $4 or $5. Charles Schwab, we bought in the selloff of 2023 and the bank sell-off of 2023. This is a phenomenal franchise hoovering up assets in the wealth management space, which we paid about eight or nine times earnings for it. Citigroup-- we paid about half book value for that. Jane Fraser is doing a phenomenal job. She's turned that business around. They're now generating a 13% ROE, versus the 7% or 8% ROE that it was generating when we bought it.

So I could go through each and every one of these. I'm not going to do that.

But the hallmarks, again, are an attractive valuation, the ability to grow value per share, and financially strong, and management teams and boards of directors who are incented to and motivated to create value per share for the owners. You can see we've had some good stocks since I started managing your money, and we've had some bad stocks. This is an interesting business. You get up every day, and you go to work, and you know you're going to make mistakes.

And if you're really good at this business, for every five decisions you make, two of your decisions are going to be bad.

So you have to make sure that the two mistakes that you make are less bad than the three good decisions you make are good. That's basically what investing is all about.

But it takes some humility to go to work every day knowing you're going to make mistakes, but you got to try to minimize them.

So what I would say about the mistakes-- and I always like to start with the mistakes-- is, are they really mistakes, or are they temporary mark to markets?

And so the way to answer that question is to ask yourself, well, has there been a permanent diminution in the value of the business? Has the value per share of the company stepped down?

And often, a declining share price is truly indicative of value per share declining, and it's a mistake.

But in each of these cases, I don't believe value per share has declined.

So Universal Music Group, since we've owned it, has grown its revenue at nearly a 10% clip and grown its profits at a 10%-or-more clip. They're generating phenomenal results. They're raising prices. The service providers who provide the music that Universal develops are raising their prices to end consumers, which is being passed on to Universal Music.

And I think that's going to continue over the next several years. I think music as a service is underpriced, and they will continue to take price, and they will continue to grow subscribers.

So the business is doing great. The share price is down because people think AI is going to eliminate recorded music. I don't think that's true. We can go into that in greater detail if anyone has a question, but I just don't believe it to be true. In fact, I think artificial intelligence is going to be a benefit for Universal Music. Meta platforms is down. I don't really know why it's down. Sometimes, we make up reasons for a stock being down. The market doesn't like the sector. The market's worried about AI. There's some risk, maybe some legal risks. They had a bad lawsuit settlement, which I think is de minimis, in terms of the impact on the company, and will be reversed on appeal.

But again, the value of Meta continues to grow. The business is performing phenomenally well. I've owned this since 2015 or '16. I bought it at maybe 13 times earnings. My original cost is probably three or four times earnings as a result of the growth. Progressive is a growing-advantage direct reseller of auto insurance. It's taking market share. It's doing better than the market. We're going through a soft period of insurance pricing right now, which is clearly, in my mind, cyclical. I've owned Progressive since 2012. I think that business is going to continue to grow and continue to take market share.

So that's a flavor for some of our detractors. Again, the share prices are down, but in my view, the value of the company is not down. Our best performer has been Samsung. This is benefiting from artificial intelligence. You need a lot of memory to run an AI server, and Samsung is a leading manufacturer of memory. Shell has done phenomenally well most recently, especially because of the war, but it's been doing well since before that. The compounding effect of retiring shares at single-digit PEs and paying dividends, over the last several years, has been a tailwind for that valuation. Lam Research, which we actually just sold a few days ago-- we tripled our money on that over a few years. They make the capital equipment that's used to manufacture semiconductors.

So we bought it at probably 12 times earnings, and we sold it at 50 times earnings.

And at 50 times earnings, I thought, OK, now we're taking a lot of risk.

But it's a great business, and I hope I don't regret selling that five years down the road. Alphabet I've owned since 2008. This has been a great stock this year. People are starting to believe that artificial intelligence is going to be a benefit to the business model, which I believe.

And then Citigroup generated the highest ROE in their most recent results that they've generated in probably 10 years.

So that gives you a little bit of a flavor for the types of businesses I like, some of the decisions I've made, both good and bad.

And you can see, here, the top holdings, which we've already gone through. I don't think I'm going to go through these. I mean, we've talked about some stocks. I don't think these are any more interesting than any of the other ones we've talked about, so I'm going to leave it at that. OK, thank you.

[APPLAUSE]

MICK DILLON: So good afternoon, everybody, and thanks for joining us. You've got two foreign accents on the stage today, I'm afraid to say.

So what I'd like to do is actually not dissimilar to what Dan did, which is just explain who we are, what we're trying to do, and how it is that we can effectively help everybody save for their retirements and compound wealth over time.

So I'll start with Brown Advisory. Brown's a firm based in Baltimore, in Maryland, in the UK, just north-- beg your pardon-- in the US, just north of Washington. I'm based here, with my co-PM, Bertie. Brown's been an independent firm for about just over 25 years, when the current management led a buyout from an investment bank called Alex. Brown & Sons.

And what's interesting is that the eighth generation of the Alex Brown family is the chairman of the board today.

And I say that because everybody says they think long-term. It's actually really hard to do.

But if you've got somebody who's been doing it for eight generations, it's really helpful for just abstracting yourself from some of the short-term pressures. One of the other things that's important is that we're a private partnership. Everybody who works at Brown has shares, some form of equity in Brown. It's a very important part of our culture both because it aligns us with our clients-- the firm has to do well-- but also because it makes people think, not dissimilar to what Dan was talking about with his firm, of, we want people who are entrepreneurial. We want people who are thinking about their clients and how we can make their lives better.

And so, by being owners in the firm, we think it brings an alignment. Within Global Leaders, Bertie and I, who are the two co-PMs-- again, very, very similar to Dan, we only have two investments. We're invested in Brown Advisory. We're partners and shareholders at Brown.

And everything else-- I'm talking about my kids' ISAs, my wife's pension, the whole lot. Everything is in the strategies we manage. I'm a very strong believer in alignment. Everybody who works on the strategy is invested in the strategy as well, so all of the analysts are invested as well.

And I think that alignment's very important. People often talk about eating your own cooking.

And I believe that, when you do that, then you get to the point where that's the only thing that you're trying to do on a daily basis.

And of course, as Stu had said earlier, we're concentrated. I've touched on we're long-term. Everything we're thinking about is, what does this industry, what does this business, what does this company look like in five years' time?

But there was something else that Stu touched on that I think is really, really important.

And that is, we actually start all of our analysis-- every single company we ever look at, we sit there and say, what do you do for your customer that nobody else can do? What's the unique product or service that you bring to your customers? What's the problem that you solve for your customers? How do you create value for them in some unique way?

And the reason we do that is our observation is that the best companies that we've ever seen-- and I don't care whether this is in Asia or in Europe. I don't care whether it's in healthcare or in technology. The best companies always do something special for their customer.

And what happens is what Stu touched on, which is, suddenly, then, you've got happy customers who come back.

But much more importantly, they tell all their friends, and they tell them what a great deal they're doing. One of the things that we do is we have analysts. We call them investigative analysts.

And as an example, the lead of that team is a former Wall Street Journal investigative journalist.

And they go out, and they do customer surveys for us. We're trying to get into the mind of the customer to understand why it is, in five years' time, they'll still be happy and coming back.

And one of the most interesting things that we often hear is, it's not cheap, but it's good value.

And that's what we're looking at. This is not a price discussion. We're looking for customers who know they're paying up for something special.

And that's very important part of the thinking because that means that, so long as you continue to solve that problem or create the value, that in the long run, that the shareholders will do well, too.

And a really simple way to think about this is just, in any business, the most important person in any business is the customer. Why? Because, if you haven't got a customer, for a start, you haven't got a business.

But more seriously, that's your revenue, and everything else in business flows from the revenue line.

And so, as shareholders-- anybody who's looked at a profit-and-loss statement-- knows, the customer is the top, and at the bottom is the dividend, or the earnings per share. That's the shareholder.

And so you've got to start with the top and look after them if you want to do well as a shareholder over time.

So we invest using three principles. One is what Stu was talking about, which is deep customer analysis. The second one is linking that to the shareholders. We look at return on capital and how that compounds over time.

And lastly is valuation, and that is free cash flow back to the shareholders. How much cash is this going to cost us to invest, and what can we expect to get out?

So, with that quick introduction, I'll jump into some of the portfolio, and then I'll come back.

So I've already touched on what we're looking for, in terms of customer outcomes. What I will say is, it leads you to very different places. As an example, if you look up here, under consumer discretionary, we have a Latin American e-commerce platform and fintech company called Mercado Libre. If you look down under information technology, TSMC is Taiwan Semiconductor Manufacturing Company. They make the semiconductors for all of these AI chips. If you come over, Stu, again, touched on London Stock Exchange Group, which I'll talk about in a minute. You can end up in really interesting places and very different parts of the market, frankly, looking nothing like the benchmark.

But that's the point. The point is, if you're going to find good returns, you've got to do something different.

And so for us, that's one of the ways that we look at investing. If you look down at the bottom, you can see, by geography, we're very distributed around the world-- a big bias to the US, as it happens, but actually, a pretty big bias to Europe as well. We've, over the last couple of years, found Europe was really getting left behind in global benchmarks and have found a number of interesting investments there. One of the investments that I'll touch on in a minute is a company-- and I picked two UK companies today so that people would have familiarity with the examples we're going to use. It's a company called Experian, which is just based over in Victoria, actually.

And they help people get credit.

And I'll come back to what they do in a minute, but again, very, very different in terms of what they're doing.

And London Stock Exchange I'll touch on, too. I'll go back just to talk about some of the things that have worked and some of the things that haven't worked, if I can drive the slides.

So, similar to Dan, you learn from your mistakes. You don't learn from something that goes right, because you expected it to go right. You learn when you thought something was going to go right, and it doesn't.

And by the way, that's a very important part of how we invest. One of the things we do that is very different to many managers is we actually have a coach, and the coach analyzes every single investment decision that we make. This is about the process discipline that Stu touched on before.

And why do we do that? Because the portfolio manager's job is buying, selling, sizing. It's allocating capital under uncertainty with risk, but it's allocating capital.

And so if you're going to be really honest with yourself, and you think, how do I get better over time, the answer is you have somebody who's independent who observes and judges you and then helps you think about ways that you can get better. One of the ways we've done this is, if you look at some of the bottom performers, one of our rules is, if something materially underperforms-- I won't get into all the technical details-- we have to either buy more, or we have to get out.

And so the two examples I picked that I want to talk about today are Experian and London Stock Exchange because they materially underperformed, and we bought more.

And the question is why? Why would you do that?

So I'll come back to that in a minute. The other thing, just quickly, to say here, which I personally think is super interesting, is, of all the top performers, they're all in incredibly different industries. GE Aerospace makes almost 2/3 of the engines on narrow-body aircraft, globally. Deutsche Borse, who I'm sure people know run the Frankfurt Stock Exchange-- actually, 50% of the economics at Deutsche Borse come from running Eurex, the European futures exchange, which is a vertically integrated exchange, which means you have to do all of your trading, custody, settlement, clearing on the exchange. Why does that matter? Because people only use futures to hedge when they're worried. In good times, people aren't worried, right? It's in the bad times.

And it's in the bad times you need to know that, if I'm worried about that risk, I can lay off that risk somewhere else.

And that's what Deutsche Borse does. Dan's already touched on Alphabet. In the last, I'm going to say, three years-- I'd be interested your view on this, Dan-- I think Alphabet's gone from winner to loser to winner to loser, back to winner again.

And that's probably just in the last three years. Alphabet, by the way-- and I'll touch on this later-- Alphabet's the only vertically integrated firm across the whole AI tech stack. It's got a very unique position within AI. Taiwan Semi and Roche I've touched on.

So let's jump into what are some of the-- I touched on one of the themes that we think makes us different, which is this customer outcome. The other one is you've got this great customer outcome, but how protected is that relationship with the customer? The biggest thing I worry about is somebody coming in and stealing the customer. We talk about that as supply-side risk. It's somebody coming in with a better search engine and stealing that customer from Google. It's somebody coming in with a new futures exchange and taking liquidity off of Deutsche Borse.

So one of the frameworks we use is, how special is that relationship?

And a really simple way to think about this, particularly with the switching costs on the right, is, if you create a ton of value for your customer, by default, you're creating a switching cost because, for a start, they don't want to leave.

And then, even if they do want to leave, actually, it's difficult to leave because now I'm going to have to give something up that I really value for something uncertain.

And that uncertainty alone creates another switching cost there. If you think about a customer journey, you've got to, first of all, become the customer.

But then, to leave, if you're getting great value, first of all, there's no drive, so why are you going to switch anyway? Even if you decide to switch, then you've got another barrier.

And then, lastly, there's a third barrier, which is, well, now I've got to go and find something else.

And those things create switching costs, which come back to the very first thing that I said, which is, I want businesses with special relationships with the customer because then I can know what they look like in five years' time.

So I won't get into all of the details here, but this moat framework and this thinking about the customer relationships is really, really important to what we do. I want to touch on one of the examples.

So we did a drawdown review on Experian.

And just so everybody knows what Experian does, Experian is a credit bureau. There's only three big credit bureaus, globally. There's Experian, who's actually the biggest. There's Equifax and TransUnion.

And credit bureaus have a really interesting place in the economy because when a bank goes to loan money, a typical bank in Europe has about a net interest margin of 2%, and they have loan losses of 1%.

And so, in other words, their real return, their return on assets, is about 1%. You don't want to make mistakes. You don't want to lend it to the wrong person and have loan losses of 2%, because there goes your whole business.

And so what Experian does is it goes out and it gets data, all sorts of different data, and it helps people come up with a credit report. There's credit reports on all of us. I actually get my credit report off Experian.

And why is that important? Because, when you go to the bank, and you need a loan for a mortgage, or you need a credit card, or you need an auto loan, all of that data comes back to checking your credit report with Experian. The job to be done, for a credit bureau, is really simple. It is, help me pick customers who are going to pay back my loan. They need to have both the ability-- so they've got to have the cash flow-- to be able to pay me back, and they've got to have the willingness to pay me back.

And it turns out the big issue is not, have I got the money? It's, will I use the money to pay back the bank, or will I go and spend it on a new car or whatever else it is?

And so the real issue is about behavioral economics, and do I show a propensity to pay back my debts? That data is proprietary data.

And the bulk of that data, 30% of the data around behavioral economics, is only at Experian.

And that data makes the big difference to that 1% loan loss rates.

So when we look at a company like that, where they have something special for the customer, it's based on a proprietary data and knowledge, and the job to be done doesn't change over time, the delivery mechanism will change, but the job to be done-- help me pick customers who will pay back my loan-- doesn't change over time.

And so Experian is an example where we had a drawdown review, and we bought more.

Now, Experian hasn't rebounded yet.

And similar to what Dan was saying about a couple of his examples, if we think about that business and how it looks like in five years' time, it's not a business that we see materially changing, and we think that there's terrific value there. I want to come back and just talk very briefly-- although we should just check the clock-- about London Stock Exchange. London Stock Exchange is an incredibly interesting business for all of the wrong reasons, which is that it's completely misnamed. I know it's called the London Stock Exchange Group. The stock exchange is 3% of revenues. Yes, 3% of revenues. 2/3, 67% of revenues at London Stock Exchange, come from providing real-time proprietary data to the financial markets. This can be to compliance people. This can be regulatory functions for pricing because they do reference prices. This can be for quantitative hedge funds to trade in the markets with nanosecond delivery of data on a physical infrastructure right around the planet. London Stock Exchange-- just under 75% of the cash flow comes from real-time data, 90% of which is proprietary to London Stock Exchange.

And the job to be done for clients is, give me information that I can't get anywhere else.

And so when we look at LSEG, as it's called, first of all, we think it's misnamed.

But much more importantly, that job to be done is only becoming more and more important in an AI world, where what's the thing that brings differentiation? Proprietary data.

So it's a very interesting company. We invested. It fell by-- I'm not kidding-- about 50%. We bought more. We bought more again. It hasn't quite recovered yet.

But if I think about what this looks like in five years' time, we feel reasonably comfortable today that this is going to be in a very, very strong position in an AI world over the next five years. I know that I'm running up on time, so I'm going to quickly just say one last thing on AI, just because I know that it'll be on people's minds. We have different investments across the AI stack. The way to think about AI is there's end-user applications. There's the actual AI technologies. This is what you hear about in large language models and Anthropic and OpenAI. There's the actual delivery, the hardware delivery from cloud service providers, like Microsoft Azure or Amazon AWS, that actually runs all those models on them.

And then there's the technical compute and infrastructure. This is all the semiconductors, the memory that Dan had talked about, Alphabet, who have their own semiconductors there. One thing to say about Alphabet is Alphabet is the only company that is invested in all four parts of this stack in material ways. They have 15 apps with a billion users each.

So in other words, AI-enabled apps is what Alphabet does. They obviously have a leading model in Gemini. They have their own cloud platform, with Google Cloud, and they have their own semiconductors.

So, when we think about AI, we're looking for companies that we think can create immense value over a very long period of time. I'm going to stop there just because I'm super conscious of time, and I want to make sure that people get a lot of time to ask questions.

But the last thing I want to say is, thank you.

Thank you for coming today. I hope this has been interesting for everybody, and I hope we're about to get a whole bunch of questions.

So thank you.

[APPLAUSE]

MARK ATKINSON: We're going to move to questions. I don't know if this mic is turned on. I'll sit down if it is. Great. Dean and Craig will join us on the stage.

So we've had a number of questions come in in advance, but anxious to take as many as we can here, from people in the room, if the mics could find you.

But in the meantime, let's start with a question we've had online.

And it's an obvious one, I suppose, but what effect has the current situation in the Middle East had on the Alliance Witan strategy?

And I guess this question should go to probably both Stu, the WTW portfolio level, and maybe Dan.

And want to comment on that? You already mentioned it's impacted one of your holdings.

So, Stu.

STUART GRAY: So the short answer is, impact on strategy-- effectively none, in the sense that the strategy is designed to be diversified. It's designed in the knowledge that we don't know everything, and we cannot predict a lot of events, like Iran.

So I think the strategy is designed to withstand these things, and it's designed to let the stock pickers go where they see value in businesses, and it's the businesses that we do understand. When it comes to geopolitical risk, we have to understand a range of outcomes, but predicting precise oil prices or exactly what's going to happen, or when is this going to get resolved-- those are things that we can't predict.

So the strategy doesn't need to change, but the portfolio does.

And perhaps at that point, I might pass on to some of the others.

DAN O'KEEFE: Well, I mean, the market's at an all-time high, so apparently it's not a big deal.

[LAUGHTER]

NARRATOR: I mean, 20% of the world's energy supply has been choked off, so I mean, that has to have an impact. Explicitly, the impact that we've seen is Shell has gone up a lot because the oil price has gone up a lot. We've also seen some companies-- not necessarily anything that you own through me, but some companies will have seen their energy costs rise, which is going to squeeze their margins, like a cement producer, which is a fairly energy-intensive business. Or a chemical manufacturer will see its costs go up, so that will squeeze their margins.

And so some of those stocks have come down.

But the market seems to largely be looking through it.

And I don't know that that's totally irrational. I mean, in the United States, we're not seeing, for example, consumption of fuel at the fuel pump be affected at all. There's been no elasticity there. We don't see any real change in consumer behavior in the United States, which, of course, is the largest market in the world.

So the consumer's just taking this in stride. I don't think they're happy about it. I think if you ask people, the consumer, they'll say bad things, but their behavior doesn't suggest that those bad things are actually changing anything.

So it is quite interesting. I mean, energy is just not a huge percent of the economy anymore. Europe will certainly be much more affected by choking off 20% of the world's oil supply than will the United States because Europe has made some very bad decisions about how it structures its energy system, and they're entirely dependent upon imports.

And they have a much more expensive energy complex, whereas the United States is entirely energy-independent and is now actually exporting energy to the rest of the world. Asia is in a similar position to Japan. They're dependent upon LNG. Japan needs LNG to be shipped into its country and needs oil. China needs oil to be imported.

So Europe and Asia are going to be much more affected by a lack of energy supply than the United States. Those are some of my thoughts.

MARK ATKINSON: Mick?

MICK DILLON: I'll get much more specific to the investments that we've got, which is the number one thing is likely inflation.

And then, for us, the way we think about that is all of the companies we look at-- we want them to have some of pricing power.

And why? The answer is to protect yourself from inflation.

But you don't want to use it unless you have to, because you don't want to annoy your customer and give them an incentive to leave.

So we actually think about it in three different ways. The first one is, can I just pass it through? My costs have gone up. Can I pass it through? That's cash-flow-neutral. It's very helpful. It's cash-flow-neutral. That doesn't create any value. What's much more interesting is companies that have got pricing power where they could, if they so choose, put prices up, and they say zero drop-off in volumes. In other words, it creates real value for the shareholders at the end. You've got to be very discerning when you use that. The last one-- and this comes up a lot in more innovative industries, like healthcare and technology-- is, is there some sort of innovation that you can bring that then you can charge more for the customer?

So for us and the companies that we invest in, actually, this comes back to an inflation issue, predominantly.

MARK ATKINSON: Can we take a question from the room over here?

AUDIENCE: Yes, good afternoon. Henry [? Lang. ?] I read, recently, there were some comments and, I think, a Bank of England official warning that both the FTSE 100 and the markets in America were overpriced and so on, and warning of possible substantial falls. I'd be interested to hear whether you agree with that view. I think FTSE's fallen back slightly, but in America, I think they're still pretty high up.

So what do you think of this view? Is there going to be a big fall?

And if that were to occur, what sort of action would you be looking to do? Would you be looking to build up some of those holdings in stocks that you identified as performing well, in terms of company performance, but the share price hasn't performed well?

MARK ATKINSON: So I think, in summary, it's, is there a crash coming, and what would you do about it?

[LAUGHTER]

NARRATOR: Maybe, Stu, do you want to have a go for that one first?

STUART GRAY: Yeah. I mean, undoubtedly, as Dan just mentioned, equity markets are at all-time highs, or very close to. The level of risk-seeking behavior in the market is extraordinarily high. Craig talked a lot about this earlier today. Uncertainty in the world in general is extreme. As in with AI disruption, we don't what's going to happen with the future. Geopolitical risk is very high, oil-price spikes. We've got a lot of uncertainty, and markets don't normally like uncertainty. If you're uncertain about the future, prices normally are lower to reflect that uncertainty.

But they're not, so markets are very high.

So risk-seeking behavior in the market is very high, which is unusual.

But back to some earlier comments. We try to select the right businesses. We're not trying to predict that the whole market is either overvalued or undervalued. We're trying to identify, specifically, the companies which offer great investment prospects for the next five years or more. We are not really trying to take bets on the market as a whole, and I think it's very difficult to do that, to honest.

So I won't sit here and tell you that I expect the market to crash next year or to go up next year, because I don't know. What we do know is that there's a range of possible outcomes.

And when we talk to Dan and Mick about their businesses, we talk about, how are these companies going to be affected by these different scenarios?

MARK ATKINSON: Mick?

MICK DILLON: Isn't it a delicious irony that business value is the net present value of future cash flow, and yet none of us is able to predict the future worth a damn?

[LAUGHTER]

NARRATOR: So my ability to predict the direction of the stock market is terrible.

But one can assess risk and reward across a range of outcomes, which really is what investing is about. It's not about predicting the future, because no one can predict the future.

But it's assessing amongst the characteristics of businesses, ranges of outcomes, and the price that you pay for those businesses, and whether that represents an attractive risk-reward. Markets are elevated, particularly in the United States. Are they dangerously elevated? I mean, AI is driving a lot of that valuation risk, and there's a lot of optimism around AI. Could there be a sell-off because AI optimism in the near term proves to be unwarranted? Definitely. Is there a lot of stupid behavior going on? For sure. There always is.

And it's the responsibility of the responsible investor to make the best out of whatever situation the markets throw at you.

And so usually sell-offs are, to me, a really exciting time. In a sell-off, my favorite saying is, these are the good times. You just don't know it yet.

But you will it in three years, if you committed capital.

And so, when there is a big sell-off, there's opportunities.

And so I don't know if there's one coming, but if there is one-- I kind of hope there is-- we'll do our best to create value out of that sell-off.

And historically, we've been able to do that, deploy capital at very attractive rates when markets go down. I mean, I realize I'm being tongue-in-cheek. It's no fun when it's happening, but it really is the way that the market stabilizes, corrects itself, and allows for future returns to be generated. Markets can't continually go up. They have to go down. I mean, I think, since I've been in this business, I've been through eight or nine bear markets.

So we're all still alive.

MARK ATKINSON: Mick, anything to add on that?

MICK DILLON: Yeah. In fact, I was going to go exactly where Dan went, which is the best investments are when you're most uncomfortable.

And when the market goes down, that can be totally exhilarating.

And what do I mean by that?

And don't forget, I've got all my money invested in the fund as well, right? What do I mean by that? I mean that, suddenly, you've got opportunities, more than one or two. You've got 10.

And that doesn't happen. That's not normal, and it doesn't happen every day.

But every now and again, you get a Liberation Day and a tariff sell-off like that.

And that one only lasted for about a week.

But even then, we found one new company. In fact, that was when we bought Experian, was about three days after the Liberation Day tariffs.

And so I would invert your question a little bit to say, when are we going to get the next big opportunity? Because that is when it makes a big difference.

MARK ATKINSON: OK, great. Can we have a question here?

AUDIENCE: You talk about companies, and you're looking at companies. You're looking at PEs. You're trying to find value in the future. America in particular has huge global debt, which is going to get bigger because of what's happening in the Middle East.

And that surely, ultimately, has got to affect the dollar, the value of the dollar.

And does that affect the businesses that you've invested in that are fundamentally, you believe, good businesses?

But where I'm saying is that the debt seems just to be getting bigger and bigger and bigger, and the can just seems to be being kicked down the road on a continual basis. Just interested to your views.

DAN O'KEEFE: This is an interesting topic. I mean, the United States is borrowing 6% of GDP a year.

And that that's just as, now, a matter of course. You would never see a 6%-of-GDP deficit in the United States outside of a war or a massive crisis, recession.

But we're now spending that as a matter of course, and no one is even talking about addressing the issue.

And the debt is piling up, as you say, and it's a problem. Do I know when it's going to come to a head? No. Will it end badly? Definitely. How will it end badly? I don't know, but it's very bad.

And I find it interesting that people think that interest rates are going to come down. We have this conversation.

Well, when are interest rates going to come down? I don't see how interest rates can come down in the United States, meaningfully, when you're borrowing 6% of GDP. I mean, that's an enormous inflationary tailwind.

So again, predicting the future is very difficult. You could go back to Japan, which is now at over 200% debt-to-GDP and has been accumulating forever, and the population is declining. The economy isn't really growing.

So you have fewer people to service the debt, or the debt load on the back of every Japanese individual is growing every year, significantly.

Well, that's not good when GDP isn't really growing. Your liabilities are growing, but your asset isn't.

And Japan is being impoverished as a result of these policy decisions about deficit spending. The GDP per capita of Japan is now less than the minimum-wage income of a fast-food worker in the state of California.

So I mean, that's a level of impoverishment that is extraordinary that's happened in Japan over the last 20 years, and yet the Japanese stock market has been doing pretty well.

So these discussions are interesting, and we need to be cognizant of the risks, but predicting what's going to happen with the debt, and then predicting the second and third derivative as a result of the debt is just way beyond my ability.

And so we have to look at the world as it is. We have to find businesses that are durable, with honest people and good balance sheets.

And the better ones will do better in whatever environment we experience.

And remember, equity prices are nominal, so inflation can be a tailwind. Equities are the only way you're going to keep up with inflation.

So, is the debt going to go down as a result of debasement through inflation? Inflation-- what will that do to equity prices? There's all types of different scenarios.

But we just can't predict the future.

MARK ATKINSON: Question over here, with the gentleman with the jacket.

AUDIENCE: As the gentleman just said, every American owns owes over $100,000 each-- something like that, I believe.

And you say interest rates are unlikely to come down in that scenario. What do you think might happen at the elections? Will the president be deadlocked?

DAN O'KEEFE: So you're asking what's going to happen in the next election?

AUDIENCE: Yeah. I mean, it's going to be a deadlock. [LAUGHTER, OVERLAPPING SPEECH] He'll be hobbled.

MARK ATKINSON: I'm not sure Dan's going to have a prediction on that one.

DAN O'KEEFE: Boy, I don't know. Let me see what Polymarket says.

[LAUGHTER]

NARRATOR: I don't know. The next election in the US is November, which, in political terms, is a lifetime.

And then, the next presidential election is two years after that, which is a generation, in political terms.

So I have no idea.

MARK ATKINSON: Let's have a question here at the front.

AUDIENCE: Thank you. Can I ask a question about stock picking? How important, when you're picking a stock, is the chief executive of that company?

And more importantly, what happens when he decides to quit, either because he wants to enjoy the fortune he's made, or because somebody pushes him out?

MARK ATKINSON: Let's ask Mick that one. I mean, I'm sure you meet CEOs all the time.

MICK DILLON: Yeah.

So, for a start, they're both incredibly important and not.

But I'll start with why they are, because they set the culture. Culture is always set from the top.

And so if you're thinking about, how is this business run, why is this going to be a good company in five years' time, all of those things in that direction does ultimately get set by the CEO. Are they the sole person responsible for that? Never.

But it is an important question to sit there and think about. There's another one.

And Dan touched on this when he was speaking before, which is, how do they get paid, and what are their motivations?

And so one of the things that we often look at is, how much skin have they got in the game-- part 1. Part 2-- what do they do with those share options that vest every year?

And part 3 is, what's their incentive for the short run, versus the long run, in this business?

So it is important to look at it. It is something that we do spend a lot of time on as well. Anything else you had?

DAN O'KEEFE: No, I think that was quite fulsome.

MARK ATKINSON: OK, so we'll go here next.

But before we go there, if we get a mic--

AUDIENCE: When he decides to leave, do you sell the stock?

DAN O'KEEFE: No. I mean, not necessarily. I mean, when Steve Jobs left Apple, it was actually a good time to buy Apple stock. When Sergey Brin stepped down as CEO and what's-his-name took over, the business marched on. A really good, durable business with a good culture and a deep executive bench can more than survive a CEO transition.

So it depends on facts and circumstances. It really does.

MICK DILLON: You do step back and look at it, though. Yeah, definitely.

MARK ATKINSON: Before we go here, let me just ask one question online, just to make sure everyone gets a fair share. This is probably more for Dean, I think, than anyone. It's asking about fees. To what extent does Alliance, by which I think the question must mean the board, have input into the fees that the underlying stock pickers are paid? Or is that purely a decision for WTW?

DEAN BUCKLEY: Well, it's a decision for WTW, but clearly, they're working in within the broader remit of the fees that the board pay WTW.

And we're working in a fiercely competitive market. Several of you mentioned passive funds earlier today. You can get global exposure through a passive fund for something less than 20 basis points, and they are winning market share.

So active managers need to outperform the index, and they need to do it at lower cost.

And that has been behind what has driven the board's view that we need a lower cost proposition. Within that, though, we need to ensure that we can afford the very best managers.

And that's where WTW come in, because the scale of WTW enables Alliance Witan to leverage that scale to get better fees from the stock pickers.

So the stock-picker fees that we get, we wouldn't be able to access as a standalone company. It just wouldn't be possible.

But through WTW, we can do that.

So what we deliver is a global equity multimanager proposition, as I said earlier, at sub-50 basis points, which is super competitive. You will not find it anywhere else.

MARK ATKINSON: This gentleman here. Then we're going to go to the gentleman in the check shirt by the pillars.

AUDIENCE: This is a question for Dan. Have I got it correct that your Lam Research-- you sold all of the holdings? Is that correct?

So you sold at a massive profit that brings in, and you hang on to the ones that are not performing so well? Why would you do that?

And for a start, what have you invested in with the money you've sold out of them? What have you done with that money? Because I'm really happy about that because I'm a large holder in Alliance Trust.

So explain to me why you've done that, if you can for me.

DAN O'KEEFE: Yeah, so I sold it because the valuation just became extreme.

So it's now at over 50 times earnings, which is a valuation that's hard to justify, economically.

AUDIENCE: But why sell all of it, though? Why not sell, I mean, 75%, 50%? Why the total holding, though? I find that very strange. Why would you do that?

DAN O'KEEFE: Well, if something is overvalued and presents a risk, I don't know that I want to own any of it.

AUDIENCE: So what have you replaced it with? Can I ask you, then, Dan?

DAN O'KEEFE: What have I done with the money?

AUDIENCE: Yes.

DAN O'KEEFE: I've probably spread it across Marsh Mac, Elevant, Schwab, American Express.

So I reinvested it across the rest of the portfolio.

AUDIENCE: And has the money grown since [? you rehandled the other ?] companies?

DAN O'KEEFE: I just did this a week or two ago.

[LAUGHTER]

NARRATOR: Time will tell. Time will tell if it's a good decision.

MARK ATKINSON: Let's get some other people to ask questions. I think you've had three, so let's go to the gentleman in the check shirt.

AUDIENCE: Dan, we'll meet next time. Tell me what you think. [OVERLAPPING SPEECH]

DAN O'KEEFE: --mistakes then, for sure.

AUDIENCE: Hello. I'm talking about stock-picking here. A lot of the concentration seems to be in information technology, finance, and all that. There was only one stock I recognized. That was GE. You don't seem to have much, in terms of engineering. I'm a retired engineer, so I just wondered how much you do invest in other industries, and particularly considering America's just sent some guys around the moon, and they must be much more advanced in advanced technology, engineering, and all the rest of it. Where do your stock bankers come from?

DAN O'KEEFE: I think he's asking you.

MICK DILLON: Yeah. I was invested in GE, so I'll start with this.

First of all, the short answer on that is, yeah, some of these engineering companies are incredibly impressive. I would also say that engineering has moved over time, back to the Lam Research that Dan's invested in.

Ultimately, that's an engineering company. It's electrical engineering, not mechanical engineering, but it's an engineering company. Back to GE. We've actually reinvested that money in a French company called Safran.

And Safran is GE's joint venture partner in making the engines that I described before. The difference was the valuation, which Dan was also just talking about. The valuation was substantially different for a 50/50 joint venture partner.

And so we reallocated our capital. The reason you reallocate capital-- there's two or three reasons.

And I touched on them before, this "buying, selling, sizing." But really, what you're trying to get at is, what's the probability that I'm going to get this outcome that I'm hoping for? If I get it, how big is it? What's my payoff? Do I get five-year double-digit IRRs? Do I get 10% a year for five years, or do I get 20% a year for five years?

So how big is the payoff?

And then, also, if I get it wrong-- because, like what Dan was saying, we make mistakes. Everybody makes mistakes. How badly does it go wrong?

And that capital allocation of thinking about not just the individual investments, but also how you're doing that capital allocation, I think, is a really important bit.

But in terms of engineering, we've looked at companies selling paint. We've looked at lock companies. We've looked at all sorts of things.

So yeah, no, I personally don't think that we're limited in any way that way.

DEAN BUCKLEY: I don't own engineering stocks, because I heard you retired.

[LAUGHTER]

NARRATOR: If you want to get back in the game, I'll look at them again.

MARK ATKINSON: Thanks for that. There's a gentleman there, just reaching for the mic. We should say, we've overrun, so we've got time for probably this and one more question.

AUDIENCE: [INAUDIBLE]. I invested with Interactive Investor. You hire and fire stock pickers.

So when you fire, do you have a contract with them that they get compensation when you fire them?

And do they liquidate the portfolio they hold for you?

MARK ATKINSON: Craig?

CRAIG BAKER: No.

[LAUGHTER]

NARRATOR: So we can change the stock pickers at any point in time at no cost. I mean, there's obviously the cost of transition from that manager to another manager, but that's a very low cost.

MARK ATKINSON: I'm being told there's someone behind the pillar who I can't see who's had their hand up for some time, so perhaps we could go there.

AUDIENCE: Yeah, thank you.

So my question is about overall investment strategy because I recognize the value that, from stock-picking perspective, you've got a range of different managers.

But obviously, each of those is going to have their own investment style, their own philosophy, their own convictions. What I'm struggling with is how you put that together at a top level to ensure consistency, and you don't end up with a kind of scenario which somebody mentioned at the AGM, where you've got one share that's being sold by one manager and bought by two others.

And that, to me, does not sound very consistent or sensible.

MARK ATKINSON: Craig, Stu?

CRAIG BAKER: Well, the first thing I'll say is the last thing we want is consistency.

So we do actually want the managers to be thinking about the world very differently. If they're not, you might as well just have one of them, rather than two.

So we ultimately want managers that go and find their very best ideas, and not-- they think about the long term. They think about risk in terms of permanent loss of capital, rather than risk in terms of risk relative to a benchmark or peer group. We want them to come at the decision as to whether a company looks attractive very differently. If two or three managers end up in the same stock, coming at it completely differently, we end up with a bigger position. I want a bigger position because they're all coming at it from a different angle and saying, this still looks attractive in the lens that I look at those companies. We sometimes get asked the opposite question, which is, are you not worried if all your managers ended up in the same stock? It's never happened, and it's incredibly unlikely. I think there's a few thousand stocks they can invest in. They're picking their favorite 20, and every single one of them having the same stock in their top 20-- it's never happened. I doubt it will ever happen.

But we've certainly had it where 5 of the 11 managers have had the same stock. That's quite rare. I think we've got about 20 stocks where more than one manager owns them. We've got about five stocks where more than two managers own them, and we've got one stock where four managers owns them at the moment, I think.

So that doesn't happen too often. Could there be a scenario, in the same year, where a couple of managers buy a stock, and one manager sells it? Yes. We're not worried about that. I know that you could look at that and say, well, could you cross the stock, and you're paying out in costs? It happens so infrequently, and the cost of that is so low in a large-cap portfolio, that it really wouldn't be worth saving you any money at all. That matters a lot when you're running an index fund and that's the only thing you're trying to outperform on, and it happens quite regularly.

But it isn't that big a deal in our portfolio, so we actually don't want them to be like that.

But we spend a huge amount of time understanding the style, the approach, looking at their portfolios. Challenge them-- why they own them, why they don't own them-- so that we can specifically ensure that they are different to each other.

MARK ATKINSON: OK, well, we are 10 minutes over time, so perhaps we can take any further questions upstairs, over a drink.