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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 class="MsoNormal"><strong>Claire Swan (CS): </strong>Good morning, everyone. Welcome to our first quarter update of our Baillie Gifford International Alpha Strategy.</p>
<p class="MsoNormal">I'm Claire Swan and I'm a relationship manager for our financial intermediary clients. I'm joined today by Andrew Brown, who is a specialist on the International Alpha Strategy, and also Tia Chen, an analyst on the Strategy.</p>
<p class="MsoNormal">Now, it's certainly been an eventful quarter, not just from a geopolitical standpoint, but also in markets. While we have not made portfolio changes as a result of the current situation, we recognise there is a new market regime taking shape, and higher interest rates and weaker globalisation change where long-term growth might come from.</p>
<p class="MsoNormal">Now, the plan for the next 20 to 30 minutes is, as usual, to talk through the recent drivers of performance and the impact on your portfolio, how the current environment is influencing our investment decisions and our overall outlook.</p>
<p class="MsoNormal">One thing to bear in mind is that the information discussed today is based on the Strategy as a whole and may differ very slightly if you're invested in the mutual fund, the CIT or SMA.</p>
<p class="MsoNormal">Now, I'm sure you'll have lots of questions for us today. We are live, so please feel free to submit them via the chat function and I will try my best to get to them all.</p>
<p class="MsoNormal">So, Andy, perhaps a good place to start is in the first quarter of 2026.</p>
<p class="MsoNormal"><strong>Andrew Brown (AB): </strong>Thank you, Claire, and hello, everyone.</p>
<p class="MsoNormal">Yes, the performance picture in the first quarter of 2026 was very challenging for quality growth managers like Baillie Gifford. In many ways, it's been a continuation of what we saw in the second half of last year. There are really a few things that have driven outcomes.</p>
<p class="MsoNormal">First of all, there have been style headwinds for quality growth. And by that, what I mean is there's been a big valuation reset of quality growth companies, even if they've performed well operationally, which in the case of most of the Strategy’s holdings, that was the case. And many stocks in the index, which we would regard as lower quality, have continued to enjoy a valuation uplift. So those style headwinds have been challenging.</p>
<p class="MsoNormal">Secondly, we've seen a very narrow range of industries being rewarded by markets. So, defence companies, banks, areas within commodities, this is again a continuation from last year. And despite the fact that the International Alpha Strategy has very broad exposure to a number of different areas, this narrowness of market returns has been very difficult.</p>
<p class="MsoNormal">The third challenging area has been the impact of sentiment around artificial intelligence. We saw in the second half of last year that the market was very quick to vote on which companies were going to be very heavily disrupted by artificial intelligence, even without any evidence that that was the case. Now, that continued into the first couple of months of the first quarter of this year. So that's also presented headwinds.</p>
<p class="MsoNormal">Now, as always, there are stocks that performed very well. We've had some bright spots in the portfolio and in the Strategy. So, we have exposure to semiconductor names that we would regard as critical enablers towards AI, names like Samsung Electronics, the leading specialist in memory, a key requirement for the development of AI; TSMC, the Taiwanese chip producer, which is very much at the vanguard of chip shrinkage. Both of these companies did incredibly well during the quarter.</p>
<p class="MsoNormal">In fact, Samsung saw its profits increase eightfold. It actually generated more money in the quarter than the entire year in 2025. So that's very exciting. But despite these bright spots, and there's one or two other areas too – some of the newer holdings in the portfolio, which Tia will talk about in due course – made a very good contribution to the strategy. But overall, the Strategy was quite far behind the benchmark over the quarter.</p>
<p class="MsoNormal">What I would say is, that it's worth taking a step back and thinking about the longer-term outcomes for this Strategy. Recent performance has not been what our clients would expect, but the strategy does have a very good record of delivering strong returns and outperforming the index over the vast majority of its history, and that history goes back to 2002 for the Strategy. So I think we can take a lot of confidence from that.</p>
<p class="MsoNormal"><strong>CS:</strong> Yeah, so it's fair to say that we are facing a bit of a complicated picture. Are we seeing a structural shift in the forces that drive economic activity and investment returns, do you think?</p>
<p class="MsoNormal"><strong>AB:</strong> Yes, the investment environment has changed. And although we remain very committed to our longstanding philosophy, our long-term quality growth focused investment style, we have to acknowledge that the sources of growth have changed. And in short, what we're seeing is a shift away from capital-light businesses, so particularly in the software area where our clients have benefited over many years through the strong performance that those holdings have generated, towards more real assets, towards businesses that operate in areas like materials and energy, and also the companies that fund that capex-driven investment that we're beginning to see.</p>
<p class="MsoNormal"><strong>CS:</strong> Okay, so Tia, do you want to talk us through then some of the changes that we've been making to the portfolio?</p>
<p class="MsoNormal"><strong>Tia Chen (TC):</strong> Thank you so much, Claire.</p>
<p class="MsoNormal">The landscape is indeed changing, and that's why you've seen more turnover than usual this quarter. Well, a helpful mental model of framing the change is around three structural shifts that we're seeing, each of which has translated into the changes we made for your portfolio this quarter.</p>
<p class="MsoNormal">The first change we've seen, or been seeing, is the interest rate regime. We think that the interest rates are staying higher for longer. When the range of possible futures widens, the risk premiums will rise and the capital will become scarcer. So, the businesses that provide the capital will earn structurally higher returns.</p>
<p class="MsoNormal">This has driven our decision to reduce our underweight in banks this quarter. But we've been very selective. We're focusing on the franchises that are operating in higher growth countries and those that are with diversified income bases and where the valuations haven't been re-rating as much.</p>
<p class="MsoNormal">For example, we bought Credit Corp for your portfolio. It is a Peruvian bank that is benefiting from a structurally underbanked population in Peru, and it also owns Yape, which is Peru's largest digital banking platform.</p>
<p class="MsoNormal">The second thing that we are seeing is real asset and commodity land growth. We think that globalization is reversing and every country now needs to pursue energy independence and build domestic manufacturing capacity. That is enormously capital-intensive, and will drive demand for the physical inputs needed for that buildout, such as copper and energy.</p>
<p class="MsoNormal">Well, after a decade of underinvestment in copper and energy, we have a structural deficit that is projected to last, you know, for the better part of the coming decade. Hence, we've been building dedicated copper exposure through buying these in mining for your portfolio.</p>
<p class="MsoNormal">On the energy side, recent conflicts in the Middle East have reinforced the strategic value of owning secure, efficient oil. And we've bought Petrobras, which really stands out as one of the few oil majors that has been growing in production volume, and it also owns the world-class deep water expertise.</p>
<p class="MsoNormal">The third thing I want to highlight is AI and electrification lab growth. We've been working really hard to broaden the exposure across the AI value chain, beyond the semiconductor names that have really served you well. For example, we added CATL to our portfolio this quarter. It is a Chinese global leader in battery manufacturing, and its energy storage business has really seen its demand tripling on the back of datacentre power needs.</p>
<p class="MsoNormal">Moreover, we also bought SoftBank for your portfolio, which gives you exposure to great companies along the AI value chain, through its stakes in OpenAI, Arm, and ABB at a discount to the value of its underlying assets. We've mainly funded these additions to a portfolio by taking profits on the AI winners that have already had [an] exceptional run, and by exiting from software and platform holdings where we believe AI has weakened the original thesis.</p>
<p class="MsoNormal">The net result is a portfolio that is anchored in a broader set of growth drivers and better diversified and positioned really well for the new world.</p>
<p class="MsoNormal"><strong>CS:</strong> Thank you, Tia. So, while that all seems really sensible, Andy, what would you say to clients who might be thinking this is all a little ‘too little, too late’?</p>
<p class="MsoNormal"><strong>AB:</strong> A lot of the things that Tia has talked about, the developments that Tia has framed, the three different lenses, we've been thinking about this for quite some time. I would say for about 18 months or so. And at the same time, for the past couple of years, we've been thinking as an investment team about how to broaden the portfolio's exposure.</p>
<p class="MsoNormal">So, we've been doing this from the bottom up through our idea generation. We've been looking in different places. And banks are one of those places that we hadn't been looking in as much in the distant past, but in the last couple of years, we've researched a large range of banks. Commodities is another area, materials area, we've looked at several different copper businesses.</p>
<p class="MsoNormal">We've held investment sprints, as we call them, which is when we do a sort of shorter review of a large number of companies – helped with AI actually – and then we do a much deeper dive in the more traditional Baillie Gifford forensic research that lasts several weeks.</p>
<p class="MsoNormal">So, this aim of looking at these different drivers of return, and also broadening the idea generation, the funnel of ideas, if you like, is something that we've been working on for a couple of years.</p>
<p class="MsoNormal">Of course, the transactions that have made it into the portfolio more recently have happened a bit quicker because of developments that happened in the Middle East, for example. So on the energy side, we acted quite swiftly. But we had those ideas ready to act upon, and that was extremely helpful.</p>
<p class="MsoNormal"><strong>CS: </strong>That's helpful to know our process.</p>
<p class="MsoNormal">We have plenty of time, so if you do have any questions, please do submit them just now on the Q&A function.</p>
<p class="MsoNormal">So I know that recent performance has been challenging, but what is the outlook then for the Strategy from here? What can we say to give our clients confidence that performance will improve?</p>
<p class="MsoNormal"><strong>AB:</strong> Well, as an investment team, we actually feel extremely optimistic at the moment. Of course, we would like to have generated better outcomes for our clients, and we have a lot of sympathy for the challenges that they're under with our investment style not having delivered in recent periods. But when we look at the portfolio characteristics, you know, really it makes us extremely positive. And we haven't seen such a positive picture for really a number of years.</p>
<p class="MsoNormal">Just to put some examples around that, or some data points around that, if we look at the growth that the portfolio is expected to generate – so if we look at, for example, forecast earnings growth for the next three years – the portfolio, the International Alpha Strategy, is expected to deliver much better earnings growth than the market. If we look at measures like quality, and we could look at that through balance sheet strength or through returns on invested capital, we see a strategy that has a much bigger bias versus the index, a much stronger tilt than we've seen historically.</p>
<p class="MsoNormal">But despite that fact, the valuation premium of the portfolio – and remember quality growth portfolios will always trade at a premium because they're higher quality – that premium is at its lowest for 15 years. So, that means really we're giving our clients exposure to higher growth, better quality, and they're paying a lot less for it. And actually, such as the extremity of this valuation de-rating that the portfolio has suffered from, [that] the portfolio now trades at a 10 percent discount, more than a 10 percent discount, to the growth index.</p>
<p class="MsoNormal">So, this is a very unusual situation. We haven't seen this picture since 2005, and if we look at the sorts of returns that were generated for the subsequent five years after we saw a similar picture, they were very, very strong. So I think that should make us and make our clients encouraged for the future.</p>
<p class="MsoNormal"><strong>CS:</strong> Yeah, well, I hope that leaves everyone feeling optimistic about the future.</p>
<p class="MsoNormal">We don't have any questions, so perhaps this is a good place to leave it, and we thank you all for joining.</p>
<p class="MsoNormal"> </p>
<h3 class="TABLEHEADER1212pt">International 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: 92.9923px;">
<tbody>
<tr style="height: 18.6641px;">
<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: 18.6641px;"> </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: 18.6641px; 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: 18.6641px; 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: 18.6641px; 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: 18.6641px; 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: 18.6641px; text-align: right;"><strong>2026</strong></td>
</tr>
<tr style="height: 37px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 37px;">International Alpha Composite (gross)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 37px; text-align: right;">-15.8</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 37px; text-align: right;">-5.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 37px; text-align: right;">9.7</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 37px; text-align: right;">5.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 37px; text-align: right;">7.9</td>
</tr>
<tr style="height: 18.6641px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px;">International Alpha Composite (net)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px; text-align: right;">-16.3</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px; text-align: right;">-5.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px; text-align: right;">9.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px; text-align: right;">5.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px; text-align: right;">7.2</td>
</tr>
<tr style="height: 18.6641px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px;">MSCI ACWI ex US Index</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px; text-align: right;">-1.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px; text-align: right;">-4.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px; text-align: right;">13.8</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px; text-align: right;">6.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px; text-align: right;">25.6</td>
</tr>
</tbody>
</table>
<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%;">International Alpha Composite (gross)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 13.1043%; text-align: right;">7.9</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.713%; text-align: right;">0.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.844%; text-align: right;">7.5</td>
</tr>
<tr style="height: 18.6667px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 61.3387%;">International Alpha Composite (net)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 13.1043%; text-align: right;">7.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.713%; text-align: right;">-0.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.844%; text-align: right;">6.9</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 ex US Index</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 13.1043%; text-align: right;">25.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.713%; text-align: right;">7.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; width: 12.844%; text-align: right;">8.9</td>
</tr>
</tbody>
</table>
<p><span class="source-text"><strong>Source:</strong> 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></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>
<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>
<h3>Important information</h3>
<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>
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