This semi-annual report says Schiehallion Fund's net asset value rose 9.9% and its share price 11.1% in six months. The manager is cautious: returns come from a few winners, so he concentrates only on "true champions." Top holdings include Bending Spoons (the biggest gainer, an app consolidator), SpaceX (a key holding, performing well), and ByteDance (contributing positively). There were also laggards like Indian media firm Dailyhunt, which was written down and hurt returns.
Schiehallion Fund Limited focuses on investing in late-stage private companies with transformative growth potential that are expected to go public, taking minority stakes to achieve long-term capital appreciation. The report covers the half-year results for the period ended July 31, 2025: ordinary s
Half-year NAV return of 9.9%, share price return of 11.1%; the discount narrowed from 19.2% to 18.3%.
| Metric | 31 Jul 2025 (period-end/half-year) | 31 Jan 2025 (period-start/beginning) | Change |
|---|---|---|---|
| NAV per share | 146.95¢ | 133.69¢ | +9.9% |
| Share price | 120.00¢ | 108.00¢ | +11.1% |
| Discount | (18.3%) | (19.2%) | Narrowed 0.9pp |
| Shareholders' funds | US$1,497.53m | US$1,369.96m | +9.3% (on original figures) |
| Market cap | US$1,222.89m | US$1,106.72m | +10.5% (on original figures) |
| Shares outstanding | 1,019,078,907 | 1,024,738,907 | -0.6% (on original figures) |
| Income-class earnings per share (half-year) | (0.57¢) | prior-year period (0.04¢) | Loss widened |
During the period, NAV ranged 147.31¢/125.08¢; the share price ranged 122.00¢/83.00¢; the discount ranged (35.10%)~(10.49%). In the prior-year period, NAV ranged 120.57¢/114.61¢; the share price ranged 103.00¢/57.00¢; the discount ranged (51.23%)~(11.66%). The report does not disclose a benchmark index; the author separately notes that since the buyback program was launched in November 2023, the discount has narrowed from 46.8% to 18.3%.
The author attributes the half-year's "increasingly asymmetric returns" to three major holdings, but does not disclose attribution figures.
| Holding | Portfolio weight | Contribution/Detraction | One-line attribution |
|---|---|---|---|
| Bending Spoons | 12.5% | Positive driver (not quantified in the original text) | The author says it demonstrates exceptional operational execution within its respective domain |
| SpaceX | 9.9% | Positive driver (not quantified in the original text) | Same as above |
| ByteDance | 7.8% | Positive driver (not quantified in the original text) | Same as above |
The three holdings together account for roughly 30.2% of portfolio weight, spanning three geographic regions: Europe, North America, and China. The report does not provide contribution or detraction data for other holdings.
The author uses the sporting-champion narrative to justify the soundness of the holdings; readers should note that this contains an element of self-justification from the holder's perspective.
Stance: Cautious — the author uses the Pareto 80/20 principle to argue that "a small number of top companies contribute most of the returns," hence maintaining an extremely high investment bar.
No data is disclosed on net exposure, leverage, or long/short ratios; this stance is more about "quality over quantity" at the stock-selection level than a directional view on the macro market.
Three unnamed holdings were added during the half-year; the only identifiable use of capital is buybacks, with funding partly sourced from the sale of listed investments.
Significant changes to corporate governance and listing structure: a proposed change of tax-resident status, a transfer of trading segment, and continued deployment of capital into buybacks.
Building on the earlier analysis, this section continues to interpret in depth the key information in this interim report, focusing on changes in the market environment, the dynamics of specific holdings, and the strategic intent behind the portfolio structure.
The report notes that private market fundraising warmed up in H1 2025 and that the IPO market showed signs of thawing. This carries two deeper implications:
1. Greater certainty of exit routes: For growth funds, IPO is one of the core exit channels. In the past two years, valuation inversions froze the IPO market. Now that Chime and HeartFlow have successfully listed on Nasdaq, the market has begun to accept a new equilibrium between "growth premium" and "profitability." HeartFlow in particular, as a medical imaging company, provides a price anchor for late-stage private holdings through its listing.
2. Indirect validation of other liquidity in the portfolio: Many unlisted companies in the Schiehallion portfolio (such as ByteDance and SpaceX) lack public-market reference points for valuation. A more active IPO market helps narrow the valuation gap between the primary and secondary markets, reducing the risk of portfolio NAV drawdowns.
| Metric | Status | Interpretation |
|---|---|---|
| Private fundraising | Steady rebound | Capital is being redeployed, but with greater emphasis on quality |
| IPO count | Two (Chime, HeartFlow) | Exit channel for tech assets reopening |
| Macro uncertainty | Still present (trade policy, etc.) | Not preventing deal activity, but valuations are more sensitive |
Worth noting: both IPOs took place in the US and were in the technology/healthcare tracks, further confirming the US market's pricing power over innovative assets. Schiehallion holds a heavy US allocation (55.1% of NAV) — this is both an opportunity and a risk: if US equities correct, the portfolio's valuation would come under pressure.
The half-year list of contributors and detractors clearly shows the portfolio's "winner-takes-all" character, but also exposes concentration risk.
| Type | Company | Time horizon | Root cause |
|---|---|---|---|
| Contributor | Bending Spoons | Long-term | M&A integration + technology enablement |
| Contributor | Tekever | Short-term (9 months) | Defense cycle upturn + product takeoff |
| Detractor | Dailyhunt | Long-term | Business model deterioration, revenue decline |
| Detractor | Warby Parker | Short-term | Quarterly results missed expectations |
The report discloses two complete exits (Airbnb, Masterclass) and one trim (Wise). Three key principles lie behind these actions:
1. "Expected return decay" takes precedence over "fundamental deterioration": Airbnb was sold not because the business was viewed unfavorably, but because at its current market cap, the upside was limited and capital efficiency had declined. This is consistent with Schiehallion's underlying logic of "finding companies that can grow multiple times" — when a company's market cap reaches a certain stage, it is better to rotate into earlier-stage, more explosive targets than to hold an asset that cannot outperform the portfolio average. Airbnb was held for five and a half years, returning 135%, roughly 16% annualized — respectable, but already approaching maturity.
2. Timely stop-loss to avoid expanding opportunity cost: Masterclass's business did not develop as expected (online education was affected by the fading pandemic dividend); selling acknowledges failure and frees capital for new opportunities.
3. Position management under concentrated conviction: Wise was reduced from 6.1% to 4.4% but retained as a core holding. This reflects both long-term confidence in the company and a dynamic adjustment of the valuation held — possibly based on a more conservative fair value assessment.
This "dynamic rebalancing" strategy allows the portfolio to sustain its high-growth character. It shows that Schiehallion values potential ten-baggers over mean-reversion investments.
The three companies added this year — Revolut, Anduril, and Rippling — have no business overlap, but share common characteristics:
| Company | Industry | Core advantage | Investment logic |
|---|---|---|---|
| Revolut | Fintech | Ultra-fast internationalization, expanding product matrix | Evolving from a challenger bank toward a super-app, covering 40% of markets outside the US |
| Anduril | Defense technology | Software-defined hardware, Pentagon contracts | Disrupting traditional defense contractors; moat from a proprietary AI platform |
| Rippling | Enterprise SaaS | Employee data as the foundation connecting HR/IT/Finance | Modular products lower customer switching costs; wide expansion radius |
All three meet the standard of "redefining traditional industries with technology" and each has high customer stickiness and scalable business models. Anduril deserves particular attention — it is a star unicorn in the US defense technology space. Schiehallion's pre-emptive primary-market positioning ahead of the Nasdaq IPO wave demonstrates its ability to capture "non-consensus opportunities."
The key metrics reported are very compelling:
This indicates that the companies in the portfolio not only enjoy high growth but also possess independent cash-generation capability or ample capital reserves to withstand a potential market downturn. This "high-quality growth" reduces the risk of forced dilution from shifts in the funding cycle.
In addition, looking at the geographic distribution of assets:
| Country | Weight change (Jan → Jul) | Primary reason |
|---|---|---|
| US | 56.8% → 55.1% | Trimmed some US holdings, but offset by new Anduril/Rippling positions |
| Italy | 8.1% → 12.5% | Bending Spoons valuation surge |
| Portugal | 1.5% → 2.9% | Tekever valuation doubled |
| China | 8.4% → 9.9% | Douyin/ByteDance valuation rose |
| UK | 8.7% → 9.0% | New Revolut investment |
| India | 3.9% → 2.3% | Dailyhunt impairment drag |
This distribution displays a "US-centric, Europe-supporting" character. The weight contributions from Italy and Portugal stem from the performance of individual holdings, not from actively increased geographic exposure. The portfolio's coverage of Asia (excluding China) is relatively thin; whether it will increase investment in Southeast Asia or Japan remains to be seen.
The incremental information in this section centers on:
Taken together, these factors indicate that Schiehallion has not altered its strategy because of macro uncertainty; rather, it has used market volatility to proactively restructure the portfolio, concentrating its bets on potential champions over the coming years.
Cumulative investment since inception in 2019 totals US$1.24 billion, but more informative than the total is the tempo of deployment. The chart shows deal activity peaked in 2021–2022, coinciding with the high-valuation territory of global private markets; from 2023 onward, transaction frequency fell markedly while average deal size increased, displaying a clear countercyclical character — not adding capital at the most feverish moments, but entering quality targets at reasonable prices when the market cools.
The diversification of exit routes is equally noteworthy: 10 companies were acquired, several achieved listings, and some were sold. The fund does not cling to IPO as the sole exit path. Particularly notable is that in the January–July 2025 window, the fund exited Masterclass via a "sale" rather than waiting for a listing, demonstrating management's discipline in decisively disposing of holdings at an inflection point or falling short of growth expectations.
The portfolio's size distribution reveals the essence of the investment strategy — not the scattergun approach of traditional VC, but the selection of a small number of late-stage companies that have already crossed the "product-market validation" stage and are moving from expansion toward the profit inflection point. The capital intensity metric provides a more direct view of this tendency:
| Company size | Share of capital invested | Share of company count | Capital/company ratio (relative intensity) |
|---|---|---|---|
| Micro <US$300m | 0.7% | 14.0% | 0.05x |
| Small US$300m–US$2bn | 16.4% | 27.9% | 0.59x |
| Mid US$2bn–US$10bn | 42.5% | 34.9% | 1.22x |
| Large >US$10bn | 40.4% | 23.3% | 1.73x |
82.9% of capital is concentrated in companies valued above US$2bn, and the capital/company ratio increases with size — a strategic logic of "the larger, the more confident the bet": large late-stage companies typically have more mature corporate governance, clearer unit economics, and stronger resilience, corresponding to lower due-diligence uncertainty and more predictable exit paths.
The top 10 private companies account for 47.5% of net assets, and the top 5 for 36.3%, with Bending Spoons (12.5%), SpaceX (9.9%), and ByteDance (7.8%) forming the overweight first tier. The three operate in mobile apps, aerospace, and social media respectively, with relatively low underlying correlation, creating industry-level risk hedging at the portfolio level.
The ordering of the fourth and fifth positions is especially intriguing: Wayve Technologies (3.1%) has overtaken Stripe (3.0%) in valuation terms. This is not random fluctuation but a direct reflection of the 2025 re-rating of the AI autonomous-driving space — the capital market's pricing logic for companies like Wayve that possess end-to-end AI models has changed, and the fund's NAV has benefited accordingly. This weight change also reflects that Schiehallion's private portfolio is not statically held; rather, it captures the value migration of underlying companies in real time through fair value movements.
Fair value movements over the half-year were +US$154.9 million, accounting for 13.3% of the period-end private portfolio's fair value and far exceeding new investment over the same period (US$60.985 million). This was the primary driver of the portfolio's appreciation in the period, fully demonstrating that "holding itself creates value."
Comparing the current period with the previous fiscal year yields richer signals:
| Item | Jan–Jul 2025 (US$'000) | Full-year 2024 (US$'000) | Change |
|---|---|---|---|
| Opening fair value | 999,607 | 869,709 | +129,898 |
| New purchases | 60,985 | 121,914 | –60,929 |
| Sale proceeds | (1,297) | (32,383) | +31,086 |
| Loss on sales | (8,703) | (39,224) | +30,521 |
| Category reclassifications | (40,000) | (18,468) | –21,532 |
| Fair value movements | +154,870 | +98,059 | +56,811 |
| Closing fair value | 1,165,462 | 999,607 | +165,855 |
Three key signals:
1. A marked slowdown in the investment pace — purchases fell from US$121.9m to US$61.0m, a 50% decline. New investments were concentrated solely in three positions — Anduril, Rippling, and Revolut — plus follow-ons in Merlin Labs and Tekever. This suggests the fund manager believes the market has not yet fully cleared and chooses to "wait patiently" rather than "buy at high levels."
2. A sharp contraction in sales activity — in the previous fiscal year, sale proceeds of US$32.38m were accompanied by realized losses of US$39.22m, indicating the fund disposed of several holdings below cost — a signal of proactive portfolio optimization. In H1 2025, however, almost no sales were made (only US$1.297m), implying the judgment that the expected returns on existing holdings are higher than any sale price.
3. Fair value movements far exceeded purchase payments — appreciation was 2.5 times the amount of purchases. Annualized, the fair value growth rate is roughly 26% — a solid and compelling figure for a late-stage portfolio characterized by "scaling + moving toward profitability."
What is truly worth probing in the valuation mechanism is the independence of its governance structure — the valuation team is separate from the investment team, voting members come from different operating divisions, and external valuation advice is provided by S&P Global. This architecture is uncommon among closed-end funds, yet it is precisely where private-asset holders face the greatest conflicts of interest.
67.1% of holdings were revalued more than three times within six months, far exceeding the regulatory requirement of a three-month rolling cycle (i.e., roughly four times a year). The core driver of high-frequency revaluation is "trigger events" — including IPO intentions, M&A approaches, and sharp fluctuations in the valuations of comparable listed companies. The valuation team tracks relevant market indices weekly and compares them in real time against S&P Global reports, ensuring that valuation changes are reflected promptly in the next NAV. This high-frequency calibration mechanism effectively answers the traditional criticism that "private asset valuations lag the public market" and provides investors with more timely value anchors.
In the holdings list, Blockstream, McMakler, and Northvolt have had their valuations written down to zero — the strongest proof of the fund's honesty. Take Northvolt: this Swedish battery maker was once a flagship enterprise of Europe's green transition and declared bankruptcy in November 2024. Schiehallion did not offset it at "book value"; instead, it wrote the expected recoverable value to zero and squarely bore the loss.
This case also reveals the essence of late-stage private investing: even companies closest to an IPO still carry tail risk of going to zero. That the portfolio was not seriously wounded by such a failure is precisely due to the two-tier structure of "top-heavy concentration + broad coverage" — position limits on any single name ensure that a few write-offs to zero cannot erode overall returns.
| Asset class | 31 July 2025 | 31 January 2025 | Change |
|---|---|---|---|
| Listed investments | 20.0% | 21.3% | –1.3pp |
| Private company investments | 77.8% | 72.9% | +4.9pp |
| Net current assets | 2.2% | 5.8% | –3.6pp |
The share of private investments rose to 77.8% and the net current asset ratio fell to 2.2% — the liquidity buffer is nearing its limit. If the portfolio needs to meet follow-on investment obligations or capitalize on valuation pullbacks, internal firepower amounts to only US$32.82 million. But the closed-end structure grants the fund institutional tolerance of "zero redemptions," allowing it to pursue long-term convictions while nearly fully invested. A 2.2% net current asset ratio would be unimaginable in a traditional mutual fund; in Schiehallion's context, it is an aggressive declaration that capital has been fully deployed into its highest-conviction holdings.
Based on the financial statements and notes in the sequel, the following provides incremental analysis from three dimensions: financial structure, fee changes, and capital allocation.
In H1 2025, total comprehensive income was US$133.6M, a sharp reversal from -US$39.5M in the same period of 2024. However, this was driven entirely by unrealized/realized investment gains (US$138.9M), while revenue instead declined significantly:
| Item | 2025 H1 | 2024 H1 | YoY Change |
|---|---|---|---|
| Investment gains/(losses) | +138,912 | -39,662 | Turned from loss to gain |
| Interest and investment income | 1,191 | 4,670 | -74.5% |
| Of which: U.S. Treasury bill interest | 825 | 3,958 | -79.2% |
| Deposit interest | 165 | 263 | -37.3% |
This structure that emphasizes capital gains over income is not uncommon among growth-oriented investment trusts, but it was particularly extreme in 2025: revenue covered only 17% of operating expenses (US$6.99M), creating a US$5.8M revenue loss and directly causing the revenue reserve to further deteriorate to -US$22.8M (January 2025: -US$17.0M).
A notable signal is the shift in income sources: in H1 2024, the fund held a large position in U.S. Treasury Bills (both holdings and purchases/sales exceeded US$70M), contributing nearly US$4M in interest; in H1 2025, T-Bills were completely cleared out (balance fell from US$77.3M to $0), and interest income shrank to US$825K. This is essentially a swap of "defensive interest income" for "offensive equity investment"—direct evidence of the fund's rising risk appetite.
Investment management fees increased 29.6% year-over-year (US$4.47M → US$5.79M), in line with growth in net asset size. Calculated based on the tiered fee schedule disclosed in Note 03:
| Asset Range (Excluding Cash and Equivalents) | Applicable Rate |
|---|---|
| ≤ US$650M | 0.9% |
| US$650M – US$1.3B | 0.8% |
| > US$1.3B | 0.7% |
Based on net assets at period-end of US$1,497.5M less cash of US$36.8M, the underlying assets are approximately US$1.46B, of which the portion exceeding US$1.3B has begun to apply the 0.7% minimum marginal rate, reflecting the economies of scale in fee rates brought about by fund expansion.
Other administrative expenses nearly doubled year-over-year (US$577K → US$1.2M), with the largest variance in the following line item:
| Item | 2025 H1 | 2024 H1 | Change |
|---|---|---|---|
| General administrative expenses | 613 | 62 | +889% |
| Audit fees | 214 | 151 | +41.7% |
| Directors' fees, custody fees, etc. | 314 | 322 | -2.5% |
General administrative expenses surged from US$62K to US$613K, an increase of nearly tenfold. The interim report does not separately explain the reason for this jump in the notes; it may involve one-off expenditures or new compliance requirements. However, combined with the full-year figure (US$944K for FY2025), H1 2025 already accounts for 65% of the full year, suggesting this line item may decline in the second half, but further explanation should still be sought in the management discussion in the interim report.
| Asset Item | 2025-07-31 | 2025-01-31 | Change |
|---|---|---|---|
| Equity investments (fair value) | 1,464,713 | 1,290,450 | +13.5% |
| US Treasury Bills | 0 | 77,334 | -100% |
| Cash and equivalents | 36,798 | 6,118 | +501% |
| Total assets | 1,501,501 | 1,373,941 | +9.3% |
On the surface, cash increased sharply, but if T-Bills are treated as cash-like assets, total broad liquidity fell from US$83.5M to US$36.8M, a decline of more than half (-56%). At the same time, equity investments rose by US$174M, of which net new purchases (US$60.99M bought - US$25.63M sold) contributed only US$35M, with the remaining US$139M mainly attributable to valuation gains.
Structural Assessment: The fund liquidated all of its T-Bills, using half to increase equity positions and converting the other half into bank deposits. However, given that T-Bills were the only "readily liquidatable reserve," cash now represents just 2.5% of total assets, and the liquidity buffer has narrowed markedly. Although the board states in its going-concern declaration that it "maintains sufficient cash balances," this reserve level leaves limited room to absorb future investment commitments or market shocks.
| Buyback Item | 2025 H1 | 2024 H1 |
|---|---|---|
| Buyback amount (US$'000) | 6,030 | 1,439 |
| Repurchased share capital (share capital change) | No change | -1,925 |
| Capital redemption reserve change | No change | +1,925 |
It is worth noting that the H1 2025 buybacks did not cancel the repurchased shares (share capital remained unchanged at US$1,209.2M), but instead deducted them from the capital reserve in the form of treasury shares; the same period in 2024 used the cancellation method (share capital decreased and the capital redemption reserve increased accordingly). This difference implies that the 2025 buybacks are financially more flexible — the shares can be reissued in the future or cancelled as circumstances warrant. In terms of amount, buyback spending expanded 4.2x year over year; combined with the fund having activated its treasury share mechanism after January 2025, this indicates that management is willing to bear the opportunity cost (reducing funds available for investment) to support shareholder value when the share price trades at a significant discount to NAV.
The deferred tax liability fell from US$317K to 0, while a US$316K tax credit was recorded in the income statement. This means that the previously accrued provision for capital gains tax on Indian investments has been fully released — possibly due to changes in the actual holding structure or a narrowing of the profit headroom — providing a one-off boost to net profit.
| Cash Flow Item | 2025 H1 | 2024 H1 |
|---|---|---|
| Net cash flows from operating activities | -6,166 | -4,861 |
| Net cash flows from investing activities | +42,808 | +14,260 |
| Of which: Net purchases of investments | -35,351 | -22,010 |
| Net change in T-Bills | +78,159 | +36,270 |
| Net cash flows from financing activities | -6,138 | -1,439 |
| Net increase in cash | +30,504 | +7,960 |
Although the income statement shows a profit of US$133.6M, operating cash flow remains negative (-US$6.2M), and the gap widened by 27% year over year. This once again confirms: the fund's core returns come entirely from unrealized valuation changes, not cash-based income. At the operating activity level, the fund remains in a "blood transfusion" state — it needs to rely on cash released from maturing T-Bills to sustain subscriptions, buybacks, and fee payments.
If future equity investments lack dividend income or exit distributions, and interest rates decline further, this pattern of "book profits, cash bleeding" could constrain the fund's buyback capacity and fee payment flexibility.
The incremental information conveyed by this set of interim financial statements is threefold:
1. Clear strategic pivot: The fund has shifted from a defensive "T-Bills + equity investments" portfolio to an offensive posture of "nearly fully invested in equities," with the broad liquidity buffer halved.
2. Single-source earnings: Returns rely almost entirely on capital gains (US$138.9M), with only US$1.2M on the income side, while a jump in administrative expenses jointly pressures the profit structure.
3. Greater capital-management flexibility: Share buybacks via treasury shares and the release of Indian tax provisions retain more tools for future market-value management.
Even more notable is that, against a 9.3% NAV increase, the fund intensified its buybacks, implying that the discount of market value to NAV has not effectively narrowed alongside asset appreciation. This factor, together with marginal changes in the earnings structure and liquidity level, constitutes a risk point requiring continued tracking in the second half.
The marketing plan mechanism disclosed in the follow-up report warrants closer examination. The company participates in a marketing program administered by the investment manager (Baillie Gifford), with costs shared equally between the company and the investment manager, and the investment manager provides the personnel and resources to execute it. This structural design has two implications:
To date, the company has not separately disclosed marketing expenses, but through the "matching" mechanism with the investment manager, the economic risk of marketing costs is effectively shared by both parties, which better protects minority shareholders than the common "shareholders bear all costs" model.
The table below compares the EPS components across three reporting periods (in cents):
| Item | 2025 six months | 2024 six months | FY2025 |
|---|---|---|---|
| Revenue return | (0.57) | (0.04) | (0.39) |
| Capital return | 13.65 | (3.81) | 15.49 |
| Total | 13.08 | (3.85) | 15.10 |
Revenue return remains negative and has widened markedly: from -0.04¢ in the same period of 2024 to -0.57¢, a more than thirteenfold widening. This indicates that the company's current operating expenses (management fees, administrative costs, financing costs, etc.) have exceeded dividend and interest income. As an investment trust, such a shortfall is typically covered by capital reserves and does not affect day-to-day operations; however, over the long term, if the dividend-generating capacity of unlisted investments cannot cover expenses, it will continue to erode capital. Notably, the FY2025 full-year Revenue return was -0.39¢, while the six-month figure already reached -0.57¢, implying that the second-half loss may have narrowed (-0.39 - (-0.57) = +0.18¢), possibly related to expense-structure optimization or higher interest income from held assets.
Capital return is the absolute dominant driver of performance: The 2025 six-month period generated a capital return of 13.65¢ per share, driven mainly by valuation uplifts in unlisted companies. In the same period of 2024, it was -3.81¢, reflecting valuation pressure on unlisted investments during the market downturn. Such high volatility is consistent with the company's strategy of focusing on long-term growth-oriented private companies—its returns naturally exhibit a "J-curve" profile (conservative valuations in the early stages, with value released later via listings or acquisitions).
No dilutive factors: The company explicitly states there are no dilutive potential shares, and the weighted average share count is broadly stable (approximately 1,021–1,028 million shares), making the EPS calculation highly accurate.
No dividends were paid or proposed during the reporting period (zero in both years). This policy is unsurprising for a closed-end fund whose core objective is capital appreciation. The company invests primarily in unlisted, high-growth enterprises, which have strong reinvestment needs and rarely generate stable cash dividends. The zero-dividend policy means that total return is fully reflected in changes in net asset value per share, and investors exit through secondary-market trading or eventual liquidation.
The table below compares the proportion of assets by level (in thousands of US dollars / share of total):
| Item | Jul 31, 2025 | Share | Jan 31, 2025 | Share |
|---|---|---|---|---|
| Level 1 (listed equities) | 299,176 | 20.4% | 290,436 | 22.5% |
| Level 2 (observable inputs) | 0 | 0% | 0 | 0% |
| Level 3 (unobservable inputs) | 1,165,537 | 79.6% | 1,000,014 | 77.5% |
| Total | 1,464,713 | 100% | 1,290,450 | 100% |
Level 3 assets account for nearly three-quarters of the total and are still rising, constituting the core source of valuation uncertainty. Within Level 3, the main components are preferred shares (US$713.8 million) and ordinary shares (US$443.8 million), including complex instruments such as dividend preferences and conversion terms. These valuations rely on management judgment (e.g., discount rates, comparable company multiples, liquidity discounts) and are highly subjective. For external shareholders, although the valuation process is subject to audit and board review, the risk of "window effects" cannot be entirely eliminated.
Key valuation event: During the reporting period, Chime Financial in the portfolio successfully completed its IPO, with a fair value (IPO issue price) of US$18,325,000, and the investment was transferred from Level 3 to Level 1. This transfer is significant:
Changes in share capital are as follows:
| Item | Jul 31, 2025 | Jan 31, 2025 | Change |
|---|---|---|---|
| Ordinary shares issued (excl. treasury) | 1,019,078,907 | 1,024,738,907 | -5,660,000 |
| Treasury shares | 6,125,000 | 465,000 | +5,660,000 |
| Total share capital (incl. treasury) | 1,025,203,907 | 1,025,203,907 | 0 |
Key change: In the first half of 2025, the company repurchased 5,660,000 shares, but unlike in the same period of 2024 (1,925,000 shares), they were not cancelled but instead held as treasury shares. Treasury shares can be reissued at a premium in the future (for example, to support new share issuance programs), and this treatment provides financial flexibility, but it also reduces the "hard guarantee" of NAV-per-share enhancement—if the purpose of the buyback is to narrow the discount, holding shares as treasury rather than cancelling them has only a temporary effect on NAV per share, and any future reissuance would create dilution.
On the positive side, however, from after July 31, 2025 to October 1, a further 3,570,000 shares were repurchased, bringing the cumulative buyback to 9,230,000 shares, demonstrating management's continued efforts to correct the discount of the share price to NAV. Moreover, the authorized buyback ceiling is 153,037,243 shares (14.99% of issued shares), leaving ample room for market intervention over the next two years.
As a Guernsey-registered Foreign Financial Institution (FFI), the company must satisfy both AEOI (Automatic Exchange of Information) and FATCA reporting obligations. Although these compliance requirements do not directly affect investment performance, they increase operating costs and may constrain how overseas individual investors hold shares (e.g., requiring tax-residency declarations). For shareholders, this is a legal prerequisite for investing in a closed-end fund, and it also validates the soundness of the company's governance structure.
At the end of the follow-up report, the distinction between "Total net assets" and "Shareholders' funds" is set out, differing in the accounting treatment of borrowings—the former deducts borrowings (at fair value or par value), while the latter deducts them at par value. When comparing discount rates across different investment trusts, investors should pay particular attention to differences in these bases. Since the company currently does not disclose borrowing details, this distinction may affect the calculation of the NAV discount, but the report provides clear definitions, reducing the risk of misinterpretation.
(The subsequent sections will continue to analyze other content.)
The follow-up report simultaneously provides NAV, share price, and discount rate. If one recalculates from the raw data in the table, the internal consistency of the data for the two periods is found to differ markedly:
| Item | Jan 31, 2025 | Jul 31, 2025 |
|---|---|---|
| Disclosed NAV per share (¢) | 133.69 | 146.95 |
| Disclosed share price (¢) | 108.00 | 120.00 |
| Disclosed discount rate | (14.9%) | (18.3%) |
| Discount rate calculated from disclosed data | (19.2%) | (18.3%) |
| NAV implied by the disclosed discount rate (¢) | 126.9 | 146.95 |
| Share price implied by the disclosed discount rate (¢) | 113.8 | 120.00 |
The July 31 data are perfectly consistent; however, for January 31, based on the disclosed NAV of 133.69¢ and share price of 108.00¢, the discount rate should be (19.2%), not (14.9%). Conversely, to obtain a discount of (14.9%), the share price would need to be 113.8¢ or the NAV 126.9¢. Since the company explicitly pays no dividends and there is no ex-rights adjustment, this means that at least one of the January 31 disclosures contains a typographical error or an inconsistent basis. For investors relying on the discount rate to time their entry, this detail could directly affect their trading decisions, and it is hoped that the relevant disclosing party will clarify it as soon as possible in the form of an erratum.
The above inconsistency does not merely affect a single figure; it changes the conclusion on the discount trend:
| Period Change | Disclosed Basis | Calculated Basis |
|---|---|---|
| Jan–Jul 2025 | Discount widened 340bps | Discount narrowed 90bps |
| Share price change | +11.1% | +11.1% |
| NAV change | +9.9% | +9.9% |
Since the share price gain (11.1%) exceeded the NAV gain (9.9%), the discount should mathematically have narrowed, not widened. In other words, based on the actual direction of share-price and NAV changes, the conclusion of a "widening discount" does not hold. However, if the (14.9%) from the financial statements was used in the previous announcement, external investors may have been misled by the earlier disclosure basis. As of the date of this report, the discount rate calculated from verifiable data is 18.3%, having narrowed moderately from the 19.2% calculated on the same basis in January, indicating that the market's recognition of the company's NAV has actually recovered slightly.
The follow-up report explicitly states that the company "does not pay a dividend," so total return is exactly aligned with the percentage changes in NAV and share price. This means:
Compared with common practices among other UK investment trusts, many comparable funds support their share prices through buybacks. No similar policy appears in The Schiehallion Fund Limited's disclosures, which may be an important reason its discount rate has remained persistently in double digits.
The appearance of CVR in the glossary section indicates that a company in the underlying portfolio has undergone a merger or restructuring, and the fund has thereby obtained rights to future contingent consideration. Points worth noting:
This makes the fund's discount problem stem not only from the liquidity deficiency of private equity assets, but also from the valuation uncertainty of contingent assets, creating a dual structure of "liquidity discount + contingent-value discount."
The company information shows that The Schiehallion Fund Limited is registered in Guernsey and adopts an Alternative Investment Fund structure, with the Administrator, Secretary and Designated Manager all undertaken by Alter Domus. Although this centralized structure saves operating costs, it also means that, compared with funds with an independent secretariat, the checks and balances may rely more on the supervision of the Investment Manager and the Depositary.
Particularly noteworthy is that the investor-relations channels point entirely to Baillie Gifford's contact points (enquiries@bailliegifford.com and schiehallionfund.com), rather than to the fund's own independent IR team. Baillie Gifford simultaneously serves as Investment Manager and AIFM, and the client-relations team is also staffed by its employees. From a governance perspective, concentrating information disclosure and investor-communication functions within the same institution may, to some extent, reduce the timeliness with which outside investors obtain symmetric information—a detail that is not insignificant when the discount rate remains persistently elevated.