View transcript
<div>
<p><strong>Your capital is at risk. Past performance is not a guide to future returns. The following update is based on a representative portfolio. As such, stock examples may not be held in every client portfolio, and performance may differ.</strong></p>
<p>This transcript was generated by AI. </p>
<p><strong>Nektarios Chatzilefteris: </strong>Looking back on the last three months, our first thought would be, what an extraordinary quarter. But then, we can’t help but wonder whether we should view it as just another episode of this saga we are becoming accustomed to. I’m not sure, but as we try to unpick the latest developments in President Trump’s foreign policy agenda, I feel the need to heavily caveat my comments with an ‘at-the-time-of-recording’ tag, as every day and comment shifts markets decisively, with the latest day of the quarter the clearest example. You will certainly be aware that oil prices have risen sharply and remain volatile as markets react to news on the Middle East conflict. But what of bond markets? In most risk-off scenarios, bonds would normally benefit from a flight to quality.</p>
<p>However, inflation concerns overwhelmingly won this time, causing yields to rise sharply. The Bank of England and other major central banks had been expected to continue cutting interest rates throughout the year. But with energy prices surging, markets were very quick to price in rate hikes, and short-dated yields rose by close to a percentage point in March. This was later followed by a partial retracement, as fears of a growth slowdown reasserted themselves amid the fading of hopes for a quick resolution to the conflict. Most recently, stronger indications from the US president of an imminent resolution of the conflict sparked a massive rally across both equity and fixed income markets. It has been a complete rollercoaster.</p>
<p>The reaction in the corporate bond market has been more measured. Credit risk premia have risen, naturally, but demand has remained strong and investors keep keen to buy the dip. So for now at least, the impact has been relatively muted. We had deliberately positioned the fund relatively neutrally for the year ahead. Our base case was for a reasonably stable economic backdrop. But we recognised that valuations left little room for positive surprises.</p>
<p>And, as has come to pass, a negative surprise at some point was a possibility. So it is reassuring that the fund has performed as expected throughout this period of volatility. The fund slightly underperformed the Strategies Index, breaking a record of 11 quarters, almost three years, of fund outperformance. <br>Considering our positioning, relatively defensive but still outyielding the index, throughout an overweight to credit risk and the overall volatility, we are comfortable with how the fund behaved and the underlying holdings. Looking ahead, while we have debated the likely course of events in the Middle East, we accept our insights here are limited. Therefore, we have focused on considering the impact on our portfolio of a range of potential scenarios.</p>
<p>The most obvious is a prolonged period of higher energy prices and supply chain disruptions. For example, fertiliser costs have already risen, impacting food costs. Prices for helium used in semiconductor manufacturing have doubled, and higher funding costs due to the repricing of interest-rate expectations will have a disproportionate impact on certain sectors or highly leveraged balance sheets. Given the market’s propensity to rally on good news, there is every chance that a positive resolution to the conflict will lead to a quick recovery in corporate bond markets. But developing conviction in either direction at this point is challenging. And so far, we have not made any drastic changes to the portfolio.</p>
<p>This means the portfolio is positioned to, one, continue to out-yield the index, two, express a significant overweight to BBB-rated investment-grade bonds, three, continue to favour an overweight in shorter and medium-maturity bonds across the yield curve, retaining our underweight long-dated credit risk, and four, retain dry powder and optionality in the current market volatility. Earlier in the quarter, we participated in a number of new issues, which gave us the opportunity to reinvest maturing bonds at attractive prices. Examples include Alphabet’s large sterling issue, Verizon’s inaugural sterling issue, Heathrow and others. We also marginally topped up our old exposure to various core positions, such as Mitchells & Butlers, the pub owner, whilst looking to a diversified approach in other areas where we saw value. For example, by splitting new exposure across a group of high-quality bank bonds instead of one. Whether these are indeed extraordinary times or just the new normal, sticking to your investment approach is the way to navigate them.</p>
<p>The strategy primarily seeks to add value through bond selection, and we do think further opportunities will arise. We are confident that patience, whilst keeping your eyes open for opportunities, is a virtue in this environment.</p>
<p> </p>
</div>
<div>
<h3 class="TABLEHEADER1212pt">Baillie Gifford Investment Grade Bond Fund</h3>
<p class="TABLEHEADER1212pt"><strong>Annual past performance to 31 March each year (net %)</strong></p>
<table border="1" style="border-collapse: collapse; width: 100%; border-width: 0px; height: 56.0001px;">
<tbody>
<tr style="height: 18.6667px;">
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6667px; width: 33.4992%;"> </td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6667px; width: 13.267%;"><strong>2022</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6667px; width: 13.267%;"><strong>2023</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6667px; width: 13.267%;"><strong>2024</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6667px; width: 13.267%;"><strong>2025</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6667px; width: 13.267%;"><strong>2026</strong></td>
</tr>
<tr style="height: 18.6667px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 33.4992%;">Investment Grade Bond Fund </td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 18.6667px; width: 13.267%;"> -5.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 18.6667px; width: 13.267%;"> -11.5</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 18.6667px; width: 13.267%;"> 6.9</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 18.6667px; width: 13.267%;"> 4.7</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 18.6667px; width: 13.267%;"> 4.0</td>
</tr>
<tr style="height: 18.6667px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 33.4992%;">Index*</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 18.6667px; width: 13.267%;"> -5.1</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 18.6667px; width: 13.267%;"> -10.3</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 18.6667px; width: 13.267%;"> 6.1</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 18.6667px; width: 13.267%;"> 2.5</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 18.6667px; width: 13.267%;"> 4.3</td>
</tr>
<tr>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; width: 33.4992%;">Sector Average** </td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; width: 13.267%;"> -4.3</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; width: 13.267%;"> -9.1</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; width: 13.267%;"> 7.4</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; width: 13.267%;"> 3.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; width: 13.267%;"> 4.4</td>
</tr>
</tbody>
</table>
</div>
<div></div>
<div>
<p style="margin-top: 0cm; line-height: 12.0pt;" class="BGSOURCEbodySOURCE"><span class="source-text">Source: FE, Revolution, ICE Data Indices. Total return net of charges, in sterling. Share class returns calculated using 10am prices, while the Index is calculated close-to-close. Class B Inc.</span><span class="source-text" style="font-size: 12.0pt; mso-fareast-font-family: Calibri; color: windowtext; mso-ligatures: none; mso-fareast-language: EN-GB;"></span></p>
<p class="MsoNormal"><span class="source-text" style="mso-ansi-language: EN-GB;">*ICE BofA sterling Non-Gilt Index</span></p>
<p class="MsoNormal"><span class="source-text">**IA £ Corporate Bond Sector</span></p>
<p class="MsoNormal">The manager believes this is an appropriate target given the investment policy of the Fund and the approach taken by the manager when investing. In addition, the manager believes an appropriate performance comparison for this Fund is the Investment Association Sterling Corporate Bond Sector. </p>
<p class="MsoNormal"><strong>Past performance is not a guide to future returns.</strong></p>
<p class="MsoNormal"><span class="source-text">Legal notice: ICE DATA INDICES, LLC (“ICE DATA”), is used with permission. ICE® is a registered trademark of ICE DATA or its affiliates and BOFA® is a registered trademark of Bank of America Corporation licensed by Bank of America Corporation and its affiliates (“BOFA”) and may not be used without BOFA’S prior written approval. ICE DATA, its affiliates and their respective third party suppliers disclaim any and all warranties and representations, express and/or implied, including any warranties of merchantability or fitness for a particular purpose or use, including the indices, index data and any data included in, related to, or derived therefrom. Neither ICE DATA, its affiliates not their respective third party suppliers shall be subject to any damages or liability with respect to the adequacy, accuracy, timeliness or completeness of the indices or the index data or any component thereof, and the indices and index data and all components thereof are provided as an “as is” basis and your use is at your own risk. ICE DATA, its affiliates and their respective third party suppliers do not sponsor, endorse or recommend Baillie Gifford & Co, or any of its products and services.</span></p>
</div>
<div></div>
<div>
<h3>Important information and risk factors </h3>
<p>This recording was produced and approved in April 2026 and has not been updated subsequently. It represents views held at the time and may not reflect current thinking. </p>
<p>The views expressed should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions. </p>
<p>This communication contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research, and </p>
<p>Baillie Gifford and its staff may have dealt in the investments concerned. <br>Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). Baillie Gifford & Co Limited is an Authorised Corporate Director of OEICs. </p>
<p>Investment markets can go down as well as up and market conditions can change rapidly. The value of an investment in the Fund, and any income from it, can fall as well as rise and investors may not get back the amount invested. </p>
<p>The Fund’s share price can be volatile due to movements in the prices of the underlying holdings and the basis on which the Fund is priced. </p>
<p>Bonds issued by companies and governments may be adversely affected by changes in interest rates, expectations of inflation and a decline in the creditworthiness of the bond issuer. The issuers of bonds in which the Fund invests may not be able to pay the bond income as promised or could fail to repay the capital amount. </p>
<p>Further details of the risks associated with investing in the Fund can be found in the Key Investor Information Document or the Prospectus, copies of which are available at bailliegifford.com.</p>
</div>
