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<p><strong>Your capital is at risk. Past performance is not a guide to future returns.</strong></p>
<p><strong>This transcript has been generated by AI.</strong></p>
<p> </p>
<p><strong>Donna Neil (DN)</strong>: Good morning, everyone. My name is Donna Neil, and I am part of the US Financial Intermediaries team based here in Edinburgh. I'll be your host for the next 20 minutes or so, and I'm delighted to be joined today by Andrew Brown, who is one of our International Alpha Investment Specialists. Before we get started, just a reminder that your information discussed in this webinar is based on the strategy and may differ ever so slightly from the vehicle you're invested in. Our plan today is to give you an update on the international equities market backdrop, alongside portfolio performance, positioning, and a bit of an outlook. As always, we do prefer this to be as interactive as possible, so please use the Q&A button at the bottom of your screen, and I'll do my best to get through these. I'll just touch on our latest AUM figures. As of the end of December, the firm had just over $270 billion in assets under management. And of that, around $17 billion is invested in the International Alpha strategy. As a reminder, International Alpha is one of our flagship international equity strategies, formed in 2002, and employs a bottom-up, long-term growth approach to investing. We believe in having high active share, and what makes this strategy different to our other international strategies is that we seek to invest across four different types of growth companies.</p>
<p>In terms of where you can access the strategy, it's available through our mutual fund and also our retail SMA, which recently hit its three-year track record. Okay, so Andy, let's jump straight in. Can you talk us through how international equities generally have performed during 2025?</p>
<p><strong>Andrew Brown (AB)</strong>: Yeah, Donna, it was an outstanding year for international equities 2025, helped by strong sentiment towards the asset class and a weakening dollar. In fact, it was the best year in over a decade for the asset class, and the returns were almost double what was delivered by the US market. It was a strong year for markets, but it was a very small number of themes that drove returns. And there was a very strong style element. So, for example, there was a value tilt in developed markets that was very pronounced with sectors like financials and aerospace and defence doing extremely well. So, this made it quite challenging for many active managers. Within emerging markets, the picture was a little bit different, but there was a very strong skew towards technology stocks within that market. So, very, very concentrated, but great returns for the asset class.</p>
<p><strong>DN:</strong> Great. Okay, so looking specifically at the International Alpha strategy, the first half of 2025 is strong for the portfolio with one and three-year relative returns ahead of the benchmark and the portfolio fundamentals looking strong. However, a very different picture emerged during the second half of the year. Talk us through the International Alpha portfolio performance.</p>
<p><strong>AB:</strong> Yeah, that's right. So the second half of the year was really challenging. So there was significant, these style headwinds that I've just touched on, this very strong value tilt was very pronounced in the second half of the year. And even though the strategy continued to deliver positive returns, it ended the year well behind the index. That was despite the fact that over the full year, it delivered a return that was well in excess of what we would typically see. And so really what we've seen is a market that's been dominated by sentiment and not fundamentals. In fact, the portfolio fundamentals continued to improve during the year. And if we compare where they are versus five years ago, even, the portfolio looks in a very, very good place. But there was this very strong style element, which meant that we lagged the market in that second half. And a second factor, which was quite important, was the impact of what we would describe as AI excitement or AI hype on returns. Now, we saw this particularly in emerging markets, where a long tail of companies that were seen as beneficiaries of AI-related capex and investment performed very well. Many of these we would regard as second-rate companies. Now, make no mistake, we're very excited about AI, and we have exposure to some businesses that we think are going to be front and centre of the development of this very important technology. But the way markets have behaved around this theme has been quite unhelpful for us, voting very quickly on which companies are likely to be winners and losers, whereas we think the picture will actually be a lot more complicated than that.</p>
<p><strong>DN: </strong>Great, thanks for the context. So just touching on AI again, how is the portfolio positioned to capitalise on this developing technology?</p>
<p><strong>AB:</strong> Well, there's two main areas that we have exposure. One area is what we would describe as the critical enablers of AI. So these are companies like TSMC, the global leading chip manufacturer, that really sit at sort of at the heart of everything that's happening with AI, simply we can't see the AI development coming through without that business. Businesses like ASML, the leading manufacturer of lithography machines, which again is absolutely crucial for the chip shrinkage and the continued development of large language models and the like. And then we've got businesses that we would regard as the exploiters. So these are companies that are being very proactive, that are investing very heavily in AI, that are already seeing applications coming through with clear profitability drivers. So companies like the music streaming business, Spotify, the internet plumbing business, Shopify, those are great examples where we're already seeing AI really drive returns for their business.</p>
<p><strong>DN:</strong> Great. Okay, so let's go back to performance again. Let's focus initially on the detractors of performance over the last quarter or six months. Maybe you can talk us through that a little bit more.</p>
<p><strong>AB:</strong> Sure. I mean, I think the On the performance side, over the quarter, the picture was slightly different to the full year period. Over the quarter, if there was a theme that we can unpack, which is not always easy over such a short time period, it's that companies that were investing for future growth were hit with negative sentiment. So a couple of examples here would be the Latin American leading e-commerce and fintech business Mercado Libre, which is investing quite strongly in its logistics business to fend off competitive threats. Now, this is a playbook we've seen adopted many times before. We've owned this company on behalf of our clients for over 15 years. And we've often seen the share price weak on the back of investment, and then we've seen it rebound very strongly when the fruits of that investment come through. Another example is the Southeast Asian internet platform C-Limited, which has been following a similar path and has been quite weak. A second factor in performance over the quarter is the Chinese names were a bit weak. Now, this is in the context of an extremely strong 12-month period. So China performed very well over 2025, but in the final quarter, it ran out of steam a little bit. So a couple of Chinese names, so Tencent and Tencent Music Entertainment, were featuring among the largest detractors.</p>
<p><strong>DN:</strong> Great, thanks, Andy. I think Mikado Libre continues to be a core example of our long-term thinking support through many different cycles that our holdings can experience. We did actually have a question that was sent in on McCardy Libre beforehand. I think you've kind of touched on it a bit already, but anything else you want to add as to why we continue to hold them?</p>
<p><strong>AB:</strong> Well, I read a killer stat on MercadoLibre, actually, in one of the publications that the company produced very recently. And that was that it has just produced 27 consecutive quarters of 30% plus top line growth. And apparently, that's actually a public company record across the entire international landscape. So I think that almost speaks more than anything else I can say about why we like the company.</p>
<p><strong>DN: </strong>I think you're right. Okay, so let's turn to the positive side of the portfolio more. Can you chat us through the top contributors to performance this quarter?</p>
<p><strong>AB:</strong> So over the quarter, there aren't really any sort of overriding themes among the top contributors. So Samsung Electronics did very well. Now, that's not surprising. It's exposed to AI. I could have mentioned it as one of the critical enablers to AI as well, because it's a leader in memory. Now, Samsung had had some difficulties with its high bandwidth memory chips. Now, there have been some issues with qualifying its products. Now, those have been resolved. And that's really important because they're by far the most profitable products that Samsung sells. And so NVIDIA has now accepted the qualification of their products. So that's obviously been very positive in terms of sentiment. We've also seen a dramatic upcycle in memory chip prices, which is very helpful for Samsung. A completely different kind of business, Europe's leading low-cost airline Ryanair, featured among the top performers as well. Now, this was on the back of just some stronger ticket pricing and some growth in ancillary services that Ryanair sells on the aircraft. So just revenues and profits were stronger. Ryanair is a business we've owned for a long time. It does very well through tough times. It tends to take market share consistently. we have periods when profit's a bit depressed and we have periods when it's a bit better and more recently we saw the profits being stronger. And finally, my final name to mention again, a completely different company is DSV, which is actually the world's largest freight forwarding company. and here what drove positive sentiment was that they've made a very large transformational acquisition and the progress with getting synergies from that deal has exceeded the market's expectations. We're not surprised here because they've got a playbook of doing this in the past and we're pleased to see them do it again.</p>
<p><strong>DN:</strong> Excellent, thank you. Just a reminder to all, please do submit your questions if there's anything you'd like us to answer. Okay, so continuing on with those positives, the portfolio did actually see quite a bit of activity in the final quarter. So perhaps you can talk us through some of these changes that were made and why we've made them.</p>
<p><strong>AB: </strong>We've made a concerted effort over the past year, and in fact, couple of years, to look widely, look in different places, to broaden the exposure across the portfolio. This has the benefit of providing more resilience, of giving clients more shots at goal rather than being dependent upon any single or small number of themes. We're very excited about AI, for example, but we want clients to be exposed to other growth drivers, other opportunities. So in this context, during the most recent quarter, we've taken some very different holdings. Now, those include a copper miner, a high-quality copper miner called Lundin Mining, which operates at the low end of the cost curve. It's family owned and run, and it's benefiting from that investment in data centers and just that sort of growth in AI and the energy transition, which all require copper. We've invested in a salmon company called Salmar, which is very, very different. And so it turns out that people are eating more and more salmon as a healthy form of protein. And so the salmon market does grow structurally, but it does have peaks and troughs. We've recently had a trough, so Salmar is a bit out of favour, but it is the leader. It's got the most attractive business relative to its peers. It's lower cost. It has lower levels of sea lice because it operates in colder locations, giving it a competitive edge. And then finally, we took a holding in a chip designer called Mediatek. And MediaTek is a business that operates in an oligopoly with Qualcomm in terms of chips for smartphones. But the excitement actually is related to AI. So we think that market will recover on the smartphone side, but we think they're actually positioned to benefit from application-specific integrative circuits used in artificial intelligence. And they've got a tie-up with Google, related to Google's Gemini product, which we think could be really quite exciting. So those are three examples of some very different businesses that we've taken holdings in, and it sort of represents the fact that we are, you know, looking in lots of different places to uncover growth.</p>
<p><strong>DN:</strong> Excellent. And what about, has anyone come out of the portfolio over the last quarter?</p>
<p><strong>AB: </strong>Yes, yes, that's right. Obviously, we have to raise money for the new buys. We've taken a bit of money off the table from some stocks that have performed well on valuation grounds, but we've also sold out of some names. So we've sold out of a company called Amadeus. Now, this is a travel software company. It competes with a company called Sabre. It has a very strong position in ticketing, if you like, in the airline industry, but also reservation and bookings for hotels. We think this is an area that really does face AI disruption. We think with some of the progress that Google is making with things like Google Flights, that it could be on the wrong side of technology development. And so we hadn't really been so impressed with the recent profit growth either, so we decided to sell that one. And we sold a business called Dassault Systèmes, which is a French company that makes prototyping and, I guess, product design software. And again, we think there's maybe some element of an AI threat here. But we also are disappointed with one part of its business in particular. So it made an acquisition in the medical area, the life sciences area, buying a business called MediData. And that business is underperforming. It's been a drag on profits for quite some time now. And we're not convinced that it's going to turn itself around. So we've sold out of both of these names.</p>
<p><strong>DN:</strong> Excellent. Well, there's certainly been a lot going on. It's also made me start to think about my dinner and maybe whether I'll have salmon. So thinking about how the portfolio is positioned now, what makes you and the team excited for the year ahead?</p>
<p><strong>AB:</strong> Well, the key thing is the portfolio fundamentals, which I know I keep coming back to. But the portfolio growth and quality characteristics have improved over the past year, over the past five years. The bias between the portfolio and the index has increased. So the portfolio has stronger growth relative to the index than we've seen in the past. The valuation of the portfolio has come down. So we're getting more growth, higher quality, and we're paying less for it. And if we look at another stat, if we look at the holdings within the portfolio, three quarters of the names are forecasting double-digit earnings growth for each of the next three years. So it feels like we have a portfolio that's in a very strong place. It hasn't delivered the relative returns that we would expect or we would like in recent periods. But over the long run, our evidence does suggest that share prices follow fundamentals. We truly believe that. And that's what's defined our investment record over 20 plus years in this strategy. And based on that, the portfolio looks like it's in a very good place.</p>
<p><strong>DN: </strong>Great, thank you for your optimistic outlook. I'd also like to take a minute to draw your attention to a great short article that Jenny Davis, one of the portfolio managers on the International Alpha Strategy has recently written. It's actually linked just in the section on the right hand side to your screen just now. It's called International Alpha, Why We Do What We Do. In the article, Jenny talks through a lot about what you've been touching on there, Andy, around volatility as part of our journey. It may test our conviction, but it also proves the value of staying true to our philosophy and process. Do you have anything final you would like to end on after my shameless plug of one of our brilliant articles?</p>
<p><strong>AB:</strong> No, I don't think so. I think just to recap that, you know, this portfolio is offering higher growth, better quality and the valuation has come down. So, you know, it feels like a great time to, you know, to be looking at this portfolio, I would say.</p>
<p><strong>DN: </strong>Fantastic. OK, big thank you to you all for joining us today. This is the first in the webinar series with international concentrated growth tomorrow and long term global growth on Friday with the remainder following next week. I do encourage you all to reach out to your relationship manager should you have any follow-up questions or would simply like to hear more from us. And do read Jenny's article that I mentioned. We've linked it to the right of the screen just now for you. We also have a wealth of insights available on our website and also our LinkedIn pages. So please do follow us and sign up to our monthly mail-ins to ensure you receive the latest pieces. Once again, thank you very much for joining and we look forward to seeing you at our other webinars later this month. Thank you. </p>
<p> </p>
<h3 class="TABLEHEADER1212pt">International Alpha</h3>
<p><strong>Annual past performance to 31 December each year (%)</strong></p>
<table border="1" style="border-collapse: collapse; width: 100%; border-width: 0px; height: 77.0372px;">
<tbody>
<tr style="height: 19.2593px;">
<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: 19.2593px;"> </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: 19.2593px;"><strong>2021</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: 19.2593px;"><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: 19.2593px;"><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: 19.2593px;"><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: 19.2593px;"><strong>2025</strong></td>
</tr>
<tr style="height: 19.2593px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">International Alpha Composite (gross)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">0.1</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">-28.4</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">19.8</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">5.9</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">20.2</td>
</tr>
<tr style="height: 19.2593px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">International Alpha Composite (net)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">-0.5</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">-28.9</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">19.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">5.3</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">19.5</td>
</tr>
<tr style="height: 19.2593px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">MSCI ACWI ex US Index</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">8.3</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">-15.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">16.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">6.1</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px;">33.1</td>
</tr>
</tbody>
</table>
<p> </p>
<p><strong>Annualised returns to 31 December 2025 (%)</strong></p>
<table border="1" style="border-collapse: collapse; width: 100%; border-width: 0px; height: 92.5px;">
<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: 61.3276%;"> </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: 13.0762%;"><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: 12.684%;"><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: 12.8147%;"><strong>10 years</strong></td>
</tr>
<tr style="height: 18.5px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px; width: 61.3276%;">International Alpha Composite (gross)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 13.0762%;">20.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 12.684%;">1.8</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 12.8147%;">8.4</td>
</tr>
<tr style="height: 18.5px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px; width: 61.3276%;">International Alpha Composite (net)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 13.0762%;">19.5</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 12.684%;">1.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 12.8147%;">7.7</td>
</tr>
<tr style="height: 18.5px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 19.2593px; width: 61.3276%;">MSCI ACWI ex US Index</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 13.0762%;">33.1</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 12.684%;">8.5</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 12.8147%;">8.9</td>
</tr>
</tbody>
</table>
<p><span class="source-text"><strong><br></strong><span style="font-size: 7.0pt; line-height: 115%; font-family: 'Helvetica Now Text',sans-serif; mso-fareast-font-family: 'Times New Roman'; mso-bidi-font-family: Arial; mso-ansi-language: EN-GB; mso-fareast-language: EN-GB; mso-bidi-language: AR-SA;"><strong>Source</strong>: Revolution, MSCI. US dollars. 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></span></p>
<p><strong>Past performance is not a guide to future returns.</strong></p>
<p>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.</p>
<p> </p>
<h3>Risk Factors </h3>
<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 was produced and approved in January 2026 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.</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>
