Manchester & London Investment Trust Plc - Half-year Financial Report

* Total return including dividends reinvested, as sourced from Bloomberg.      

Dates for the interim dividend

CHAIRMAN’S STATEMENT

Introduction & Performance

The first half of 2026 has been defined by a rapid acceleration in the capabilities of Ai, most notably with the emergence of capable Ai Agents such as Claude Code.   This technological leap has precipitated a material divergence in technology performance, causing significant disruption to software stocks as the market reassesses the durability of legacy seat-based SaaS business models in an agentic world.   This disruption has broadened beyond software to impact sectors such as publishing, financials and even healthcare, leaving fewer hiding places for those that have yet to embrace the Ai era.

The Company’s NAV per share Total Return for the half year was -1.4 per cent.   Performance was primarily held back by the underperformance of Microsoft, an exposure the Manager has since materially cut.   The Manager’s Report sets out the performance of the portfolio in more detail, including stock-specific contributions.

The annualised NAV per share Total Return (dividends reinvested) in GBP for the Management Team since inception (September 2015) remains approximately 17 per cent per annum.    

Board and Composition

There have been no changes to the Board during the period.   Biographical details of all the directors can be found in the latest AGM notice and the latest Annual Report.

Capital Returns, Buy Backs, Discounts & Dividends

At the period end, the Shares traded at a 26.0 per cent discount to their NAV per Share, compared to an average discount of 18.8 per cent in 2025.

On 24 September 2025 the Company announced it would be pausing on-market share buybacks because the aggregate proportion of the Company’s voting power held by the public (as that term is used in section 446 of the Corporation Tax Act 2010) is now close to the minimum 35 per cent threshold.     The Board does not expect a near-term resumption of buybacks.

Some shareholders have expressed their view to the Manager that the pause of share buybacks   means that total capital returns via dividends and buybacks to shareholders will hence reduce.     As a result, on 23 October 2025 the company announced an Enhanced Dividend Policy, stating an intention to pay at least 40p per share per annum ordinary dividend for the next five years.

Consequently, we have declared an increased ordinary interim dividend of 20 pence per Ordinary Share.     This marks an increase from the prior year (31 January 2025: 7.0p ordinary and 7.0p special) and underscores our commitment to shareholder returns.

Auditor

Deloitte LLP were re-appointed as the Company’s auditor at the AGM held in 2025.

Outlook            

The emergence of autonomous Ai agents in 2026 marks a watershed moment, comparable in significance to the launch of ChatGPT.   In our view, this development reinforces the critical necessity of the infrastructure required to support these models, underpinning our conviction that the Ai buildout has many years yet to run.   It is becoming clear that Ai Agents are a serious substitute to Humans in the undertaking of various functions within an Enterprise.   However, we anticipate this will precipitate further disruption to legacy business models, potentially impacting even those incumbents currently viewed as 'safe'.

Within the Ai sector itself, market leadership is increasingly fluid; the fortunes of individual companies can pivot sharply on perceptions of success, with single model releases capable of driving significant share price movements.   Furthermore, the rapid pace of technological change within Ai infrastructure is driving pronounced volatility where a stock can go from market darling to being perceived technologically obsolete in a matter of weeks.     Consequently, 2026 represents perhaps the most complex environment for stock selection in the Manager’s decade-long tenure, a landscape offering exceptional opportunity, but accompanied by elevated disruption risk.

The numerous risks we face include geopolitical friction between the US and China, sticky inflation, and the evolving regulatory landscape.   However, our conviction in the "Machine Age" remains undiminished.   We believe that focusing our investment exposure on the hardware and infrastructure enabling this transition offers the best path to long-term capital appreciation.

Please do not forget to consider the fund for this year’s ISA allowance.

Daniel Wright

Chairman

18 March 2026

MANAGER'S REPORT

Market Review

The Nasdaq 100 Technology Sector Index (NDXT) delivered a total return of 6.5 per cent in Sterling terms, a headline figure that masked a highly bifurcated market where constituents were roughly evenly split between gainers and losers.   Index performance was narrowly concentrated, the Memory and Semi Cap companies with high Memory exposure accounted for approximately 55 per cent of the index's return.   A further 50 per cent of the index’s performance was driven by Alphabet Inc , buoyed by the perceived success of its Gemini models.   Conversely, Microsoft   was the significant detractor for the index.

Against this backdrop, the Company’s NAV per share Total Return for the half year was -1.4 per cent.   Microsoft   was the primary reason for this underperformance, creating a drag of approximately -4.6 per cent.   Since the period end, we have decisively reduced the Fund's exposure to Microsoft to just 0.5 per cent of Net Assets.   Whilst Microsoft has a sensible roadmap to becoming a key Hyperscaler/Enterprise Platform for Ai, the   execution by the management team has been too slow and technologically underwhelming compared to competitors like Anthropic.

Currency movements provided a further material headwind.   The 3.7 per cent appreciation of Sterling against the US Dollar during the period reduced returns, given the portfolio's significant US Dollar exposure.   We estimate that Foreign Exchange movements negatively impacted portfolio performance by approximately 3.5 per cent.

The total return of the portfolio by sector holdings in local currency (excluding costs and foreign exchange) is shown below.

Technology

Material positive performers (>1 per cent contribution to return) included Nvidia Corp, ASML Holding NV and Advanced Micro Devices Inc.

Material negative contributors included Microsoft Corp and Synopsys Inc, both Software stocks.   As noted above, Microsoft has now been reduced to 0.5 per cent of Net Assets, whilst Synopsys has been fully disposed.    

Following the exit of Synopsys and the strategic reduction of our Microsoft position, the Fund now retains minimal exposure to legacy 'Software 1.0'.     It is our view that most incumbent software business models face a radical transformation in the agentic era, a transition likely to result in structurally lower operating margins.

We remain focused on the 'picks and shovels' of Ai, increasing our exposure to critical hardware components such as optical interconnects.   However, the velocity of technological change within the Data Center is accelerating; consequently, we must dynamically adapt our positioning to capture shifting architectural trends.   Shareholders should therefore anticipate higher portfolio turnover than in prior periods.

In recent newsletters, we have detailed the rationale underpinning our $500 price target for Nvidia, a valuation derived from our modelling of specific Ai workload demands and the silicon best positioned to service them.   While we will continuously recalibrate this target as new data emerges, we currently see no superior risk-adjusted vehicle to capture the value of the Ai transition.

The portfolio's weighting to this sector (including options on a MTM basis) at the period end was 95.8 per cent of the net assets, down marginally from 96.0 percent at the end of the previous financial year.

Consumer

There were no material positive or negative performers in this sector.

The portfolio's weighting to this sector (including options on a MTM basis) at the period end was 4.8 per cent of the net assets, up from 3.3 per cent at the end of the previous financial year.

Financials

There were no material positive or negative performers in this sector.

The portfolio's weighting to this sector (including options on a MTM basis) at the period end was 3.5 per cent of the net assets, up from 3.2 per cent at the end of the previous financial year.

Healthcare

There were no material positive or negative performers in this sector.

The portfolio's weighting to this sector (including options on a MTM basis) at the period end was 1.9 per cent of the net assets, up from 1.6 per cent at the end of the previous financial year.

Other (including funds, ETFs and beta hedges)

There were no material positive or negative performers in this sector.

The portfolio's weighting to this sector (including options on a MTM basis) at the period end was 8.3 per cent of the net assets, up from 3.2 per cent at the end of the previous financial year.

Market Outlook

While inflation has moderated from its peaks, it remains sticky, suggesting that the path to lower interest rates may be more gradual than previously hoped.   However, even a stabilisation in yields provides a constructive backdrop for future equity returns.   Geopolitical risks between the US and China persist, and we expect ongoing uncertainty around global tariff rates as supply chains continue to decouple.

We continue to believe our portfolio of long-duration assets is likely to be more sensitive to interest rate movements than to the effects of a mild recession.   Furthermore, should cash rates fall below a certain threshold, we anticipate a significant rotation from money market funds into growth equities, driven by the superior earnings potential of the Ai economy.

Market Risks

The primary challenges to equities remain inflation, recession, regulation, energy prices, and war.     While inflation has moderated from its peaks, it remains sticky, and history warns of potential reversals.   We remain hopeful that over time, productivity gains from the "Machine Age" and the deployment of Ai Agents can assist in structurally reducing inflation via increased productivity.

There is the possibility that countries that undertake material Ai investment, such as the USA, will be rewarded with a decade or so of both productivity gains and relatively strong economic growth.   Should that scenario be combined with contained geopolitical risks, then we could see a period of sustained stock market returns.

Geopolitical risks, such as the conflict in Ukraine, the Middle East, and US-Sino relations, also pose very material concerns.   The world continues to splinter into distinct spheres of influence, and while the US generational shift in trade policy may be beneficial in the long run, it introduces heightened uncertainty today.  

Global debt levels and persistent fiscal deficits remain a source of concern, and we continue to watch sovereign bond yields with vigilance.   China, Iran, North Korea, and Russia all have a history of being volatile actors that can cause numerous horrific events that could cause material downside for the markets.   The companies in our portfolio have a material exposure to China and Taiwan, hence we have been active at various times in recent years at laying on hedges against this risk.

Ai Outlook

Contrary to the mainstream narrative, we see no evidence of an Ai bubble at this stage. We view current Capital Expenditure levels as not only sustainable but entirely commensurate with the magnitude of the opportunity.   Our dashboard of key metrics, including token usage, ROI, hyperscaler backlogs, and enterprise adoption, points unequivocally to healthy unit economics for the sector.

The capability frontier has advanced rapidly in recent months, and we expect this momentum in reasoning and autonomy to persist throughout the year.   We previously noted that the duration of tasks Ai could perform autonomously was doubling every seven months; this rate of improvement has now accelerated to just four months.

We view the dramatic success of Coding Agents as merely the beachhead for wider Ai adoption. As SemiAnalysis recently observed:

"Coding was once the most valuable work of all... Coding is now a beachhead in terms of the disruption that agentic information processing has, and the larger 15 trillion-dollar information work economy is now at risk. There are 1b+ information workers, or roughly 1/3rd of the global 3.6 billion workforce."

We expect continued efficiency gains from hardware advances and model optimisations to further drive down the cost per unit of intelligence, thereby improving ROI for enterprise adopters.

Following further guidance upgrades during Q1, we remain on track for another year of 60 per cent growth in hyperscaler Ai capex. Total combined 2025 and 2026 cloud capex is now projected at $1.2 trillion which is an increase of $500 billion from estimates just a year ago.

Consequently, we anticipate a continued reallocation of corporate budgets from Labour towards Ai, driving further displacement of workers. Longer term, we expect significant advances in robotics, particularly industrial robotics driven by the onshoring of manufacturing and assembly activities back to the USA.   We would observe that those most at risk from disruption of Ai appear to be those that believe the least in its future possibilities.     It is worth considering that point when you are next faced with abject denial of Ai’s substitution risk to Human Enterprise functionality.

Concentration Risk

Since the last year end, we have materially reduced our portfolio concentration.   Nevertheless, at the time of writing, our top five holdings still represent approximately 71% of Net Assets (by Delta Adjusted Exposure), with our single largest holding accounting for circa 43%.

While we are happy to diversify further once opportunities allow (eg after Anthropic and SpaceX Ipos) we refuse to diversify arbitrarily by rotating capital from quality into 'also-rans'.

In our Annual Report released in September 2025, we cautioned: 'We would not be surprised if, in a few years’ time, it will be seen that the most dangerous portfolio to hold from today was a widely diversified selection of legacy Software 1.0 stocks.'   Regrettably for many, this prediction has played out and even affected the Enterprise Software names like Microsoft that we felt would be more sheltered from these fears.

For our Retail Shareholders, the logical conclusion of this concentration risk is that the Fund should form part of a broader, diversified portfolio.     We urge you not to over-concentrate your own holdings in this Fund if you cannot afford to bear potential losses.

“Diversification is protection against ignorance. It makes little sense if you know what you are doing,”   Warren Buffett

Conclusion

The risks are varied, numerous and material but the Era of Ai has many years left to run.   Ai offers investors a first-class ticket to what could be one of the most exciting investment and economic periods of the century.  

Please:

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Long the Future.

M&L Capital Management Limited @MLCapMan

18 March 2026

Equity Exposures AND PORTFOLIO SECTOR ANALYSIS

Equity exposures (longs)

As at 31 January 2026

*     Sector weightings have been determined using the primary sector classification assigned to each holding by a leading Ai model, based on an analysis of the company’s core business activities and industry focus.

** Including equity swap exposures.

***Includes Short Equity exposures and Options valued at marked to market.

Exposure is related to Delta Adjusted Exposure (Glossary).

INTERIM MANAGEMENT REPORT

The important events that have occurred during the period under review and the key factors influencing the financial statements are set out in the Chairman’s Statement on pages 4 and 5 and the Manager’s Report on pages 6 to 9.

The principal risks facing the Company are substantially unchanged since the date of the latest Annual Report and Financial Statements and continue to be as set out in the Strategic Report and note 16 of that report.   Risks faced by the Company include, but are not limited to, investment performance risk; key man risk and reputational risk; fund valuation risk; risk associated with engagement of third-party service providers; regulatory risk; fiduciary risk; fraud risk; portfolio concentration; and discount risk.   Details of the Company’s management of these risks are set out in the Annual Report and Financial Statements.

M&M Investment Company plc is the controlling shareholder of the Company.   This company was controlled throughout the six months ended 31 January 2026, and continues to be controlled by Mark Sheppard, who forms part of the investment management team at M&L Capital Management Limited.   Details of related party disclosures are set out in note 7 of this Report.

DIRECTORS’ REPORT

Going Concern

As detailed in the notes to the financial statements and in the Annual Report for the year ended 31 July 2025, the Board continually monitors the financial position of the Company and has considered for the six months ended 31 January 2026 an assessment of the Company’s ability to meet its liabilities as they fall due.   The review also included consideration of the level of readily realisable investments and current cash and debt ratios of the Company and the ability to repay any outstanding prime broking facilities.   In light of the results of these tests on the Company’s cash balances and liquidity position, the Directors consider that the Company has adequate financial resources to enable it to continue in operational existence.   Having carried out the assessment, the Directors are satisfied that it is appropriate to continue to adopt the going concern basis in preparing the financial results of the Company.   The Directors have not identified any material uncertainties or events that might cast significant doubt upon the Company’s ability to continue as a going concern.   The assets of the Company comprise mainly of securities that are readily realisable and accordingly, the Company has adequate financial resources to meet its liabilities as and when they fall due and to continue in operational existence for the foreseeable future.

Related Party Transactions

In accordance with DTR 4.2.8R there have been no new related party transaction agreements during the six-month period to 31 January 2026 and therefore nothing to report on any material effect by such transactions on the financial position or performance of the Company during that period.   There have therefore been no changes in any related party transaction agreements described in the last Annual Report that could have a material effect on the financial position or performance of the Company in the first six months of the current financial year or to the date of this report.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Directors confirm that to the best of their knowledge:

• the condensed set of financial statements has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting; and gives a true and fair view of the assets, liabilities, financial position and return of the Company; and

• this Half-Yearly Report includes a fair review of the information required by:

a)       DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

b)       DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so.

This Half-Yearly Report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by:

Daniel Wright

Chairman

18 March 2026         

Condensed Statement of Comprehensive Income

For the six months ended 31 January 2026

The total column of this statement represents the Condensed Statement of Comprehensive Income, prepared in accordance with international accounting standards in conformity with the requirements of UK IFRS and the Companies Act 2006.   The supplementary revenue and capital columns are both prepared under the Statement of Recommended Practice published by the Association of Investment Companies (“AIC SORP”).

All items in the above statement are derived from continuing operations.   No operations were acquired or discontinued during the period.

There is no other comprehensive income, and therefore the return for the period after tax is also the total comprehensive income.

The notes on pages 17 to 21 form part of these financial statements.

Condensed Statement of Changes in Equity

For the six months ended 31 January 2026

* These reserves are distributable, excluding any unrealised capital reserve.   The balance of the unrealised capital reserve at 31 January 2026 was £199,468,000 (31 January 2025: £170,096,000; 31 July 2025: £242,928,000).

The notes on pages 17 to 21 form part of these financial statements.

Condensed Statement of Financial Position

As at 31 January 2026

The notes on pages 17 to 21 form part of these financial statements.

Condensed Statement of Cash Flows

For the six months ended 31 January 2026