F&C Investment Trust Delivers 12.4% NAV Return and Plans 56th Consecutive Dividend Rise

F&C Investment Trust (LSE: FCIT) delivered strong absolute returns during the first half of 2026, although its net asset value performance finished fractionally behind its global benchmark.

The investment trust generated a net asset value, or NAV, total return of 12.4% over the six months to 30 June. That compared with a 12.6% return from the FTSE All-World Index.

Shareholders did slightly better at the market-price level. The share price total return was 12.8%, helped by a modest narrowing of the discount at which the shares trade relative to the portfolio's underlying value.

Meanwhile, the board plans to increase the total dividend for 2026. If delivered, this would represent F&C's 56th consecutive annual dividend rise.

F&C Investment Trust's key half-year figures

Measure	First half of 2026	Comparison
NAV total return	12.4%	FTSE All-World: 12.6%
Share price total return	12.8%	Ahead of benchmark
NAV per share, debt at market value	375.18p	335.84p at 31 December 2025
Share price	350.6p	313.0p at 31 December 2025
Discount	6.6%	6.8% at year-end
Net revenue return per share	2.84p	2.62p a year earlier
First interim dividend	0.99p	Payable on 3 August 2026
Gearing, debt at fair value	4.5%	4.7% at year-end
Share buybacks	0.7% of shares in issue	£41.1 million charged to reserves

The per-share comparison figures have been restated for May's four-for-one share split. This changed the number and nominal value of the shares but did not alter the underlying value of shareholders' investments.

Investors can also view the F&C Investment Trust share page or read the original company announcement.

Strong returns, but a narrow benchmark miss

A 12.4% NAV return is a strong result in absolute terms, but the 0.2 percentage point benchmark shortfall deserves some attention.

F&C said all of its listed strategies produced positive returns, while private equity holdings gained 9.1%. Its global strategies performed particularly well, returning 13.5% against the benchmark's 12.6%.

The Global Focus strategy was the standout, rising 20.5%. It benefited from holdings in semiconductor and AI infrastructure companies, including SK Hynix, Kioxia Holdings, Applied Materials, TSMC and ASML.

However, several other mandates lacked sufficient exposure to a small number of semiconductor and memory-chip companies whose share prices rose exceptionally quickly. As those companies became larger parts of their respective indices, not owning them created a meaningful drag on relative performance.

This is an important distinction. The trust did not miss the AI infrastructure theme entirely. It owned several major winners, but not enough of every company driving the unusually concentrated benchmark advance.

Regional performance was mixed

F&C has been gradually reducing its exposure to US assets, particularly US large-cap growth shares, while increasing its emerging markets allocation.

The trust's North American equities returned 10.8%, slightly behind their 11.2% benchmark. Its European strategy gained 9.1%, marginally ahead of the relevant index's 9.0% return.

Japan was weaker on a relative basis, returning 11.6% against 16.9% for the benchmark. Emerging markets produced a healthy 18.7% gain, but that also trailed the index's exceptional 25.5% return. F&C attributed almost all of the emerging markets shortfall to not owning SK Hynix, which rose 283.6% during the period.

The results underline both sides of portfolio diversification. It reduces dependence on one region, manager or investment style, but it can also lag when a narrow group of shares dominates market returns.

Dividend income continues to grow

F&C's net revenue return rose 8.4% to 2.84p per share, up from 2.62p in the first half of 2025. Total income increased to £69.7 million from £64.7 million, while special dividends rose to £1.3 million from £1.1 million.

Currency movements reduced the revenue return by £1.0 million.

The board declared a first interim dividend of 0.99p per share, payable on 3 August. It also reiterated its plan to deliver another increase in the total annual dividend.

The previous year's 4.15p dividend was fully covered by earnings of 4.49p per share and represented a 6.4% annual increase. F&C also had a £136.6 million revenue reserve at the end of June, up from £125.5 million at the end of 2025.

Revenue reserves consist of income retained from previous years. Investment trusts can use these reserves to support dividend payments when portfolio income is temporarily weaker, although future dividends are never guaranteed.

Buybacks and discount management

F&C's discount narrowed from 6.8% to 6.6% during the half-year. A discount means the shares trade below the value of the underlying portfolio.

This small narrowing contributed 0.4 percentage points to the share price total return, helping it reach 12.8% and finish slightly ahead of the benchmark.

The company repurchased 0.7% of its shares during the period. The cost of shares bought back and held in treasury was £41.1 million.

Buybacks can support the share price and may add modestly to NAV per share when conducted at a discount. In this case, buybacks contributed 0.1 percentage points to the NAV total return.

The discount nevertheless remained meaningful at 6.6%. There is no guarantee it will continue narrowing, particularly if investor demand for investment trusts weakens.

Gearing provided a modest boost

F&C ended the period with gearing of 4.5% when debt was measured at fair value, down slightly from 4.7% at the beginning of the year. Including derivatives exposure, gearing stood at 5.7%.

Gearing means using borrowing to increase market exposure. It can improve returns when investments rise, but it can also magnify losses during falling markets.

Gearing and other effects contributed 0.7 percentage points to the NAV return. F&C also repaid a €42 million loan and entered into a £100 million unsecured revolving credit facility, of which £75 million had been drawn at the period end.

Private equity valuation remains a risk to watch

Private equity accounted for 11.2% of F&C's portfolio strategy allocation and returned 9.1% during the half-year.

Unquoted Level 3 investments were valued at £788.1 million and represented 10.7% of total investments. These assets do not have readily observable market prices, so their valuations involve greater judgement than listed shares.

The company estimated that a 10% fall in the unlisted portfolio would reduce net assets by approximately £79 million, equivalent to 1.1% of net assets. That is not an outsized exposure for the overall trust, but it remains relevant when assessing valuation uncertainty.

What matters for F&C shareholders now

The main positive is that F&C delivered double-digit NAV and share price returns while maintaining its diversified approach. Revenue grew, the discount narrowed and the board remains on course to extend an unusually long record of annual dividend increases.

The principal negative is that performance still fell just short of the benchmark. The portfolio owned several AI infrastructure winners, but underweight positions in a handful of exceptionally strong semiconductor and memory stocks proved costly.

Management believes equity market opportunities are broadening beyond previous leaders. That could suit F&C's mix of regions, managers and investment styles. However, the trust also warned that AI-related capital spending could moderate, while geopolitical uncertainty and high valuations may create further volatility.

For shareholders, the next test is whether diversification can capture a broader market advance without surrendering too much ground if returns remain concentrated among a small number of technology companies.