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<p><strong>Your capital is at risk. Past performance is not a guide to future returns.</strong></p>
<p><br>Markets entered 2026 with confidence that inflation was easing and growth remained resilient. But that view was challenged during the first quarter of the year, first by concerns around artificial intelligence and then by geopolitical developments in the Middle East. Bond markets have been unsettled, with yields reflecting elevated inflation expectations alongside heightened uncertainty around energy, central bank policy and trade. Equities continue to be supported by structural growth themes over the long term, particularly in AI and digital infrastructure, but investors have become much more selective in the short term, placing greater emphasis on valuation, cash generation and the timing of returns. The only firm conclusion to be sensibly drawn at this stage is that uncertainty remains elevated in the short term.</p>
<p>The conflict in Iran has already lasted longer than expected, and its implications for energy prices, inflation, interest rates and global growth remain unclear. For the avoidance of doubt, we hold no Middle East-listed equities and, for that matter, have no direct bond exposure either. We do have small bond positions in countries such as Egypt, but these are limited and carefully managed within the broader portfolios. Over the quarter, the funds delivered a negative return, both in absolute terms and relative to each respective peer group. This was not the result of a single factor, but rather a period in which equities and bonds were challenged simultaneously.</p>
<p>Within equities, weakness was most evident in digital platforms and ecommerce, where Prosus, which invests in a portfolio of digital businesses, food delivery platform DoorDash and ecommerce platform Shopify were notable detractors, reflecting elevated starting expectations and a reduced willingness from the market to look through near-term uncertainty. Payments business Adyen and Meta Platforms, better known as Facebook, also declined as investors reassessed the durability and the timing of growth. We remain positive about the opportunity for each of these companies, even those that have been caught up in concerns about AI. As ever, our stance is nuanced. It’s focused on where a company’s competitive advantage sits in this evolving ecosystem and how durable it is from today’s starting point.</p>
<p>In contrast, semiconductor exposure provided strong returns. Samsung Electronics, ASML and TSMC were among the top contributors here, driven by continued demand for advanced chips, with ASM International also a positive. Bonds helped to limit the drawdown, but were still negatively impacted by the market’s view of the conflict as an inflationary shock. Credit spreads have widened, ie prices have fallen, although they’re not yet glaringly cheap. And our preference for emerging market government bonds over developed market government bonds detracted from returns.</p>
<p>We’ve reduced that emerging market bond exposure. However, given the high level of uncertainty, we’ve not made significant changes. Aggregate exposures therefore remain broadly in line with our benchmark allocation for fixed income of 50 percent global government bonds and 50 percent global credit. Elsewhere, what we think is really exciting is that we continue to find diverse new opportunities for growth. Recent equity purchases range from Irish bank AIB and CaixaBank in Spain to US public safety technology business Axon and diversified energy business Total, where the case is not about a play on the oil price, but the growth to come from a broad energy company with uncommon capital discipline.</p>
<p>To fund these purchases, we’ve sold holdings in Japanese media and entertainment group CyberAgent, German mortgage and fintech platform Hypoport and the UK-listed Trainline, where, among other factors, increased uncertainty around the impact of AI has reduced our confidence in the growth outlook. Within both funds, we retain a modest equity overweight versus our strategic allocation, alongside diversified exposure to bonds and cash. Although we have recently reduced that overweight a little in response to the current backdrop. Overall, however, our focus remains on identifying high-quality growth companies with resilient earnings and long-term structural drivers. And we believe the portfolios remain well positioned in that context.</p>
<p>We believe that rigorous bottom-up research and a willingness to pursue growth wherever it is found, across sectors, themes and geographies, will be key to delivering returns over time. And it is on that basis that we have confidence in the future growth of the funds. Thank you for your continued support, and please don’t hesitate to get in touch if you have any questions.</p>
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<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 Baillie Gifford and its staff may have dealt in the investments concerned.</p>
<p>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>Further details of the risks associated with investing in the Fund can be found in the Key Investor Information Document, copies of which are available at www.bailliegifford.com or the Prospectus which is available by calling the ACD.</p>
