The Schiehallion Fund

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<p><strong>Your capital is at risk. Past performance is not a guide to future returns.</strong></p> <p>&nbsp;</p> <p><strong>Robert Natzler</strong>: Shareholder conversations in the recent quarter have been dominated by discussion of our portfolio company, SpaceX, which has now completed one of the largest IPOs in history. In addition to this, our portfolio company, Bending Spoons, listed on the 1st of July. Our portfolio company, Anthropic, has also confidentially filed its IPO paperwork. Our aim with this quarterly update is to explore what comes next.</p> <p>The most obvious impact is that the public proportion of our portfolio has risen markedly. We would normally expect this to fluctuate between 10 and 30 percent of the portfolio's value. As of today, it is closer to 40 percent. Of course, Schiehallion is a private growth portfolio. We aim to invest in what we believe are the world's most exceptional private companies.</p> <p>Our mandate allows us to continue to hold great growth companies after the IPO, with the aim of ultimately using the public part of the portfolio as a source of funding for new private investments. It is worth bearing in mind that it is normal for our stakes in freshly listed holdings to be locked up for a number of months after the IPO.</p> <p>The growing public proportion in the portfolio, therefore, does not immediately equate with growth in liquidity. However, as liquidity becomes available, we will face a series of portfolio management and reinvestment decisions. We can't tell you today exactly what we'll sell or when we'll sell it. Those decisions will depend on valuations, market conditions and the opportunities available to us. But we want to reassure shareholders that our objective hasn't changed.</p> <p>We aim to continue to recycle capital from successful investments into the next generation of exceptional private businesses. And I say continue because this isn't new for us. Since 2019, we have realised and reinvested almost $400 million within the portfolio, taking liquidity both from listed holdings and from selling into the private secondary market. Recycling capital has thus already become an important driver of long-term compounding value within the portfolio.</p> <p>Another part of the ‘what happens next’ question is about sources of performance beyond SpaceX, Bending Spoon and Anthropic. We are really excited about the potential that we see inside the portfolio. In the aggregate, the average revenue growth of portfolio companies is around 50 percent, about two-and-a-half times more than the Nasdaq 100 index, which of course includes Nvidia.</p> <p>However, this also comes through in the individual operational performance of company holdings. Take ByteDance, for example. Most people know ByteDance as the owner of TikTok, but today it's so much more than that. Alongside being one of the world's largest social media platforms, ByteDance has built China's leading ecommerce platform and has developed significant AI capabilities, including China's most popular chat bot.&nbsp;Meanwhile, greater clarity around the future of TikTok in the USA has removed one potential obstacle to a future listing.</p> <p>Looking elsewhere, we've also been encouraged by the progress of the two defence companies we invested in over the last two years. Tekever continues to expand its autonomous aerial systems business across Europe, while in the US and Anduril has strengthened its position as a leading supplier of autonomous defence technology to the US Department of Defense. Both of these are exceptional businesses in their own right, and the structural increase in defence spending should give them an additional tailwind.</p> <p>The list continues. Stripe, the payments company, continues to accelerate its growth rate as its simple, API-led payment solution has proven to be a great fit for the next generation of AI coded businesses. Databricks, the AI database company, is enjoying the payoff from major investments in enabling AI software. Vinted, the second hand retail platform, is building on a recent expansion into the US.</p> <p>Wayve, the autonomous driving company, is due to start autonomous taxi pilots in partnership with Uber in London this year. Revolut, the global neobank, today serves more customers than HSBC and continues to lead the industry on product development. Across the bench, this portfolio is performing strongly and I could carry on, but instead, I'd like to look ahead to the next generation of great names, the ones we don't own for the portfolio yet.</p> <p>Every year, our team sees around 1,000 private investment opportunities. Our detailed diligence process boils this down to around ten investments each year. That is roughly 1 percent of the companies that we meet, which we feel meet the bar for our clients’ capital on an ongoing basis. Across the world, we are continuing to see founder-led businesses, many growing at 70 percent or more, with durable competitive advantages and a keen focus on using their growth to drive into profitability.</p> <p>Now, we aim to continue to keep the bar for fresh investments as high as it has been in the past, but the liquidity created by the recent and upcoming IPOs should allow us to, over a reasonable period of time, find and invest in another generation of exceptional private companies for the portfolio. And this is ultimately what Schiehallion was always designed to do.</p> <p>To back one generation of exceptional private companies, support them on their journey to the public markets and then to harvest, reinvest and go again. Thank you for your support.</p> <p>&nbsp;</p> <h3 class="TABLEHEADER1212pt">The Schiehallion Fund Limited</h3> <p><strong>Annual past performance to 30 June 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; width: 32.1507%;">&nbsp;</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; width: 13.5371%;"><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; width: 13.7975%;"><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; width: 13.5371%;"><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; width: 13.5371%;"><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; width: 13.407%;"><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: 32.1507%;">Share Price</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right; width: 13.5371%;">-33.0</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right; width: 13.7975%;">-52.4</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right; width: 13.5371%;">64.7</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right; width: 13.5371%;">18.4</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right; width: 13.407%;">68.1</td> </tr> <tr style="height: 18.6667px;"> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 32.1507%;">Net Asset Value</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right; width: 13.5371%;">-19.5</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right; width: 13.7975%;">-14.5</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right; width: 13.5371%;">7.2</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right; width: 13.5371%;">27.2</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right; width: 13.407%;">58.4</td> </tr> </tbody> </table> <p><span class="superscript">Source: Morningstar. Total return in US dollars.</span></p> <h3>Important information</h3> <p>This communication was produced and approved in July 2026 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.&nbsp;&nbsp;</p> <p>Unlisted investments such as private companies may be more difficult to buy or sell, so changes in their prices may be greater.</p> <p>This communication should not be considered as advice or a recommendation to buy, sell or hold a particular investment. This communication contains information on investments which does not constitute independent investment research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned.</p> <p>Baillie Gifford &amp; Co and Baillie Gifford &amp; Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). 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