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<p data-start="16" data-end="100"><strong>Your capital is at risk. Past performance is not a guide to future returns.</strong></p>
<p data-start="4974" data-end="5133"><strong>Ben James: </strong></p>
<p>The sound of bagpipes in Boston from Scotland’s Tartan Army will live long in the memory. Unfortunately, Scotland’s campaign is just that: a memory. And memory defined the quarter in US equities.</p>
<p>High-bandwidth memory became the market’s hottest bottleneck. AI compute demand overwhelmed fixed supply, prices surged and sent companies like Micron and Sandisk up to 200% and beyond. We do not hold these names. So, while US Growth delivered strong low-double-digit absolute returns, it lagged the S&P 500 and Russell Growth indices in the period.</p>
<p>This is the challenge for long-term growth investors. AI obviously matters. The issue is where durable value will accrue. Scarcity can create spectacular profits, but also temporary profits. When capacity expands, will memory-chip economics prove structural, or fade like Boston bar takings once the Scotland fans left?</p>
<p>That sits behind what we are calling tech’s great divergence.</p>
<p>The market is currently rewarding one expression of growth above almost all others: AI infrastructure. Semiconductors, memory, equipment and related stocks have surged over the last year, while software and digital platforms have often been treated as AI casualties.</p>
<p>Every one of the index’s 12 top-returning stocks over the past year has been semiconductor-related. This is a correlated bet in the market.</p>
<p>But accepting AI’s importance is not the same as buying every listed expression of the theme. Paradigm shifts create exceptional companies. They also create overcapacity, false winners and painful valuation cycles. Selectivity matters.</p>
<p>While we have been underweight in some of these companies, we have not ignored infrastructure. In April, we bought Broadcom. Broadcom has been built with discipline, technical depth and ruthless capital allocation. Its customised chips are increasingly important to AI systems because they deliver high performance and power efficiency for specific tasks. We think Broadcom can compound value through this Supercycle.</p>
<p>Among the detractors this quarter were Shopify and Netflix. In several cases, share price weakness was severely opposite than the positive growth in fundamentals. Shopify captures this tension. We see it as an exceptional company and likely AI beneficiary, it is delivering outstanding operational growth, yet the market has pushed it and many other software businesses into the “AI casualty” basket.</p>
<p>That may prove far too blunt.</p>
<p>However, Snowflake is a useful counterexample. The market worried AI would weaken its core data warehousing business. This quarter suggested the opposite. Product revenue grew 34% year on year and guidance rose. Its AI-related products appear to be helping customers deploy workloads faster and consume more of the platform. Snowflake may be using AI to improve its own efficiency and move up the enterprise stack.</p>
<p>For most clients, we also initiated a small position in SpaceX at IPO, after holding the company privately in our UK closed-ended fund since 2018. SpaceX has outlier potential: a vertically integrated system that has transformed access to orbit, a dominant launch position, and markets spanning connectivity, defence, mobile and, eventually, orbital compute. We funded this mostly by reducing Tesla, to manage exposure to Elon Musk companies, and kept the position at starter size, taking some profits after the stock surged in the days following IPO.</p>
<p>Both Snowflake and SpaceX contributed positively this quarter.</p>
<p>In this current market, the most important thing for us is to maintain our fortitude, and focus on what drives long-term returns – fundamentals and forecasts.</p>
<p>The portfolio’s long-term fundamentals remain strong. Around 90% of holdings are profitable and free cash flow positive. Forecast growth is more than 80% ahead of the market. Yet the valuation premium is at its lowest point in ten years. That looks like an attractive long-term opportunity.</p>
<p>In our opinion, the bagpipe music will probably stop on the memory-chip surge. It may be soon; it may take years. Our job is not to chase each new bottleneck. It is to identify and hold exceptional growth companies.</p>
<p>Exceptional growth companies are what drive long-term market returns. They address large market opportunities, strengthening competitive advantages and cultures that maximise long-term value. These rare companies ultimately grow faster, for longer at higher rates of return than the average.</p>
<p>That is where we believe the enduring returns will be made, long after this quarter’s market memory has faded.</p>
<p>Thank you.</p>
<p> </p>
<h3 class="TABLEHEADER1212pt">US Equity Growth</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: 74px;">
<tbody>
<tr style="height: 18.5px;">
<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: 18.5px;"> </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: 18.5px;"><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: 18.5px;"><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: 18.5px;"><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: 18.5px;"><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: 18.5px;"><strong>2026</strong></td>
</tr>
<tr style="height: 18.5px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">US Growth Composite (gross)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">-61.5</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">31.9</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">19.8</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">35.5</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">-6.9</td>
</tr>
<tr style="height: 18.5px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">US Growth Composite (net)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">-61.7</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">31.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">19.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">34.9</td>
<td style="border: 1px solid rgb(204, 204, 204); padding-top: 10px; padding-right: 10px; padding-bottom: 10px; height: 18.5px;">-7.4</td>
</tr>
<tr style="height: 18.5px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">S&P 500 Index</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">-10.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">19.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">24.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">15.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">22.3</td>
</tr>
</tbody>
</table>
<p> </p>
<p><strong>Annualised returns to 30 June 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%;"><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%;"><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%;"><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%;">US Growth Composite (gross)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 13.1043%;">-6.9</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.713%;">-5.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.844%;">15.4</td>
</tr>
<tr style="height: 18.6667px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 61.3387%;">US Growth Composite (net)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 13.1043%;">-7.4</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.713%;">-5.7</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.844%;">14.8</td>
</tr>
<tr style="height: 18.6667px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 61.3387%;">S&P 500 Index</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 13.1043%;">22.3</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.713%;">13.4</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.844%;">15.5</td>
</tr>
</tbody>
</table>
<p><span class="source-text"><strong><br></strong></span>Source: Revolution, S&P. 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. <br> <br><strong>Past performance is not a guide to future returns.</strong><br> <br>Legal notice: The S&P 500 Index is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”). Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.<span class="source-text"><strong><br><br></strong></span></p>
<p><strong>Risk factors </strong><br>This communication was produced and approved in July 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>
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<p> </p>
