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<p><strong>Your capital is at risk. Past performance is not a guide to future returns. </strong></p>
<p> </p>
<p><strong>Malcolm MacColl:</strong> It’s been quite the start to the year for global equity investors. As I record this update, there is war in Iran and the Strait of Hormuz, a narrow chokepoint between the Persian Gulf and the Arabian Sea, has been effectively closed by Iran, bringing significant disruption to global energy markets.</p>
<p>This disruption is symptomatic of one of two major themes in markets over the first quarter.</p>
<p>First, worries about geopolitics, a fragmenting world and access to scarce resources, of which the unfolding energy crisis is only the most recent expression.</p>
<p>The second clear trend in markets was triggered by the release of Claude CodeWork, an agentic coding tool which triggered an abrupt reassessment of what might constitute a long-lasting advantage in software.</p>
<p>In contrast to the scarcity of certain physical resources, intelligence is becoming abundant, and the cost of creating code is collapsing. Against this backdrop, our returns in the first part of the year have lagged global indices, which have also, amidst the uncertainty, fallen from their recent highs.</p>
<p>A theme of physical bottlenecks is clearly visible in the attribution. Those companies benefiting from the three major limiting factors in the build-out of AI infrastructure, memory chips, leading-edge manufacturing capacity for the most advanced AI chips, and power and cooling systems, saw Samsung Electronics, TSMC and Comfort Systems all enjoy strong share price appreciation. Energy and power-related companies also did well.</p>
<p>In contrast, the angst towards businesses seen as having any part of their competitive advantage, even tangentially, rooted in software, saw companies such as AppLovin in digital advertising, ecommerce businesses DoorDash, Shopify, and Sea, Adyen in payments, and CoStar, which provides data for the real estate industry, all suffering share price declines of over 30 percent. We view these drawdowns as overreactions and have been selectively adding to positions.</p>
<p>Amongst this noise, our role is to distinguish clear signals within themes. Perhaps most importantly, we see a broadening of the growth opportunities available to us. Specifically, decades of underinvestment in physical assets, alongside trends towards electrification, the rebuilding of defence capabilities, and reshoring, all point towards an improving outlook for heavier industries.</p>
<p>We see mismatches in some metals and commodity markets, for instance. Copper will be in demand as AI infrastructure and electrification build-outs continue globally, and we have taken new holdings in the American miner Freeport McMoRan and the Peruvian bank Credicorp, both well-placed to benefit from this trend.</p>
<p>Similarly, fossil fuels will continue to be needed at scale for decades. And where restrictions permit, we have added to the US onshore driller EOG and the US gas company EQT, and have also increased clients’ holdings in the Brazilian major Petrobras. These actions were taken prior to the most recent disruptions in the Gulf.</p>
<p>Physical bottlenecks of a different sort exist with the AI revolution too, as the infrastructure build-out continues to become more capital-intensive. We’ve added to Samsung on the strength of its memory business, and also own positions in other specialist machine makers and data centre builders, where the scarcity of their expertise represents other profitable bottlenecks.</p>
<p>If the market remains conflicted about AI, with the narrative oscillating between exuberance and scepticism, this flipping of sentiment has been especially dramatic in software. Such a widespread draining of confidence offers a rich opportunity.</p>
<p>For instance, in contrast to the prevailing mood, the ecommerce platform Shopify and the payment technology platform Adyen should be strengthened by AI agents. Both provide critical support to merchants and a broadening network helps them if an army of empowered sellers relies on them to make transactions happen. Similarly, Samsara combines an operating dashboard with sensors that customers attach to vehicles and equipment. The combination of hardware and software gives Samsara durability.</p>
<p>We’ve added to all three. In contrast, we’ve sold where the pace of change is weakening holdings.</p>
<p>One example of Salesforce, where we expected the company to embed AI to its advantage into its customer relationship software. However, it looks now more likely to be overtaken by advances in other companies.</p>
<p>Overall, our recent actions have done two things for the portfolio.</p>
<p>First, they’ve broadened our sources of growth, moderating previous areas of underexposure. That feels right given the widening range of possible futures and the rising capital intensity of growth across several end markets.</p>
<p>Second, they’ve kept our growth ambitions high. And evening out of our sector and industry positions gives us the freedom to swing for the fences in the right stocks. We’ve adjusted our technology-focused holdings to give us the best chance of owning the most rewarding group of high-growth businesses.</p>
<p>And what I find most exciting right now is that we’ve not had to pay up to make this switch. In relative valuation terms, the portfolio remains around historic lows. The previous times we’ve approached those lows, this has preceded rewarding spells for shareholders, and I’m confident that we’re well-placed to deliver that once again.</p>
<p> </p>
<p> </p>
<h3 class="TABLEHEADER1212pt">Global Alpha</h3>
<p><strong>Annual past performance to 31 March each year (%)</strong></p>
<table border="1" style="border-collapse: collapse; width: 100%; border-width: 0px; height: 74.6668px;">
<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;"> </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; text-align: right;"><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; text-align: right;"><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; text-align: right;"><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; text-align: right;"><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; text-align: right;"><strong>2026</strong></td>
</tr>
<tr style="height: 18.6667px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px;">Global Alpha Composite (gross)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">-10.8</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">-9.9</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">20.9</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">-0.8</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">13.2</td>
</tr>
<tr style="height: 18.6667px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px;">Global Alpha Composite (net)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">-11.4</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">-10.5</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">20.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">-1.4</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">12.5</td>
</tr>
<tr style="height: 18.6667px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px;">MSCI ACWI Index</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">7.7</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">-7.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">23.8</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">7.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">20.5</td>
</tr>
</tbody>
</table>
<p> </p>
<p><strong>Annualised returns to 31 March 2026 (%)</strong></p>
<table border="1" style="border-collapse: collapse; width: 100%; border-width: 0px; height: 93.0001px;">
<tbody>
<tr style="height: 37px;">
<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: 37px; width: 61.3387%;"> </td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 37px; width: 13.1043%; text-align: right;"><strong>1 year</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 37px; width: 12.713%; text-align: right;"><strong>5 years</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 37px; width: 12.844%; text-align: right;"><strong>10 years</strong></td>
</tr>
<tr style="height: 18.6667px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 61.3387%;">Global Alpha Composite (gross)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 13.1043%; text-align: right;">13.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.713%; text-align: right;">1.8</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.844%; text-align: right;">10.6</td>
</tr>
<tr style="height: 18.6667px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 61.3387%;">Global Alpha Composite (net)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 13.1043%; text-align: right;">12.5</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.713%; text-align: right;">1.1</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.844%; text-align: right;">9.9</td>
</tr>
<tr style="height: 18.6667px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 61.3387%;">MSCI ACWI Index</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 13.1043%; text-align: right;">20.5</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.713%; text-align: right;">10.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.844%; text-align: right;">11.9</td>
</tr>
</tbody>
</table>
<p><strong><span class="source-text">Source:</span></strong><span class="source-text"> Revolution, MSCI. US dollars. Net returns have been calculated by reducing the gross return by the highest annual management fee for the composite. 1 year figures are not annualised.</span><br><br></p>
<p><strong>Past performance is not a guide to future returns.</strong></p>
<p><span class="source-text">Legal notice: MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.</span></p>
<p> </p>
<h3>Risk factors </h3>
<p>This communication 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, but is classified as advertising under Art 68 of the Financial Services Act (‘FinSA’) and Baillie Gifford and its staff may have dealt in the investments concerned.</p>
<p>All information is sourced from Baillie Gifford & Co and is current unless otherwise stated. </p>
<p>The images used in this communication are for illustrative purposes only.</p>
<p> </p>
<p><strong>Important information<br></strong>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>Baillie Gifford Overseas Limited provides investment management and advisory services to non-UK Professional/Institutional clients only. Baillie Gifford Overseas Limited is wholly owned by Baillie Gifford & Co. Baillie Gifford & Co and Baillie Gifford Overseas Limited are authorised and regulated by the FCA in the UK. </p>
<p>Persons resident or domiciled outside the UK should consult with their professional advisers as to whether they require any governmental or other consents in order to enable them to invest, and with their tax advisers for advice relevant to their own particular circumstances.</p>
<p><strong>Financial intermediaries</strong><br>This communication is suitable for use of financial intermediaries. Financial intermediaries are solely responsible for any further distribution and Baillie Gifford takes no responsibility for the reliance on this document by any other person who did not receive this document directly from Baillie Gifford.</p>
