The Baillie Gifford Investment Trust ISA and Share Plan. Application Pack BAILLIE GIFFORD

Transcription

1 BAILLIE GIFFORD The Baillie Gifford Investment Trust ISA and Share Plan Application Pack WE LOOK FOR QUALITY COMPANIES OFFERING LONG-TERM GROWTH AND AN ONGOING COMPETITIVE ADVANTAGE.

2 Contents 1 Taking the long-term view to get the best from our investment trusts 3 Your long-term investment partner 4 Flexible and cost-effective investments 6 Seven trusts to choose from 9 The benefits of the Share Plan 10 ISA options 13 Key Features 30 Terms & Conditions Need more information? We work hard to provide you with all the information we think you might need about our Share Plan and ISA. If you have any questions after reading through this pack, please contact our Client Relations Team on or trustenquiries@bailliegifford.com Photos Getty Images, Corbis Images.

3 ISA and Share Plan Taking the long-term view to get the best from our investment trusts In this pack we look at the benefits of accessing the stock market through the range of investment trusts managed by Baillie Gifford & Co Limited, and how you can invest in them through a Baillie Gifford Investment Trust Share Plan and ISA. The Share Plan is a versatile, convenient and affordable way to invest for your financial future. The ISA could be a tax-efficient way for you to invest in the investment trusts we manage. Please read on to find out which product might be for you. We hope that this information helps you to decide on a long-term investment strategy. Please note: The investment trusts managed by Baillie Gifford & Co Limited are listed UK companies. As a result, the value of the shares in them, and any income from them, can fall as well as rise and investors may not get back the amount invested. Investments with exposure to overseas securities can be affected by changing stock market conditions and currency exchange rates. These products are aimed at investors who are financially aware or who have taken financial advice, who are prepared to take the risks associated with stock market investment and who are looking for a long-term investment. WE ARE COMMITTED LONG-TERM OWNERS OF COMPANY SHARES AND HAPPY TO BE OCCASIONAL PESTS TO THEIR MANAGEMENT. 1

4 ISA and Share Plan INVESTMENT IS NOT QUANTUM PHYSICS. 2

5 ISA and Share Plan Your long-term investment partner Choose to invest with Baillie Gifford and you ll be making a decision that should stand you in good stead over the years to come. We have been seeking superior investment returns for our clients for over a century now. Our whole investment philosophy is focused on long-term growth and we ensure our reach is steadfastly global. Baillie Gifford is one of the leading privately owned investment management firms in the UK. Structured as a partnership, investment management is our sole business. The company is wholly owned by its partners, all of whom work full time for the firm. We believe that their personal involvement in the business is crucial to maintaining the motivation and high standards essential to a modern financial organisation and in maintaining a firm customer focus. The result is a successful, stable business that continues to grow organically with a strong commitment to continuing as an independent, private business based in Edinburgh. Choosing Baillie Gifford as your long-term investment partner may well be one of the most sensible decisions you ever make. Please note: 1. We have provided you with this pack so you can decide whether these investments are right for you. Baillie Gifford does not provide individual investment advice, and we are not required to assess how suitable these may be for you and your individual circumstances. Therefore, you will not benefit from the protection of the rules on assessing suitability. 2. The ISA and Share Plans are designed for UK investors and are not intended for persons who are treated as tax resident outside of the UK and this application pack is not intended for distribution other than in the UK. 3. If you are in any doubt about how suitable any of these investments are for you, please contact an authorised intermediary for advice. Professional advice website allows you to search for authorised intermediaries in your area. 3

6 ISA and Share Plan Flexible and cost-effective investments Investment trusts can be an easy and cost-effective way to benefit from the potential growth of stock markets all over the world. This means they could form the core of many people s investment portfolio. Gain access to a wide range of shares Investment trusts are companies whose sole purpose is to invest in other companies with the aim of making money for their shareholders. In some ways they are like pooled investments (such as open ended investment companies and unit trusts), which aim to provide a spread of risk through a wide range of investments. With investment trusts managed by Baillie Gifford & Co Limited, you benefit from expert management, which means that you don t have to decide when to buy or sell individual shares. Investment trusts can also be more cost-effective than other forms of pooled investment, as their running costs tend to be lower. Because they have a fixed pool of capital to invest, they can take a long-term view. WE ARE NOT SPECULATORS BUT LONG-TERM FUNDAMENTAL INVESTORS SEEKING TO TURN TIME AND VOLATILITY TO OUR ADVANTAGE. 4

7 ISA and Share Plan OUR WHOLE INVESTMENT PHILOSOPHY IS FOCUSED ON LONG-TERM GROWTH FROM COMPANIES WHEREVER THEY MIGHT BE BASED AROUND THE WORLD. 5

8 ISA and Share Plan The global investment trusts These global investment trusts, all managed by Baillie Gifford & Co Limited, could meet the needs of most types of investor over the long term. Trust Scottish Mortgage Investment Trust PLC Size of Trust (net) at 29/02/16 3,223m Aims of Trust Is an actively managed, low cost investment trust, investing in a high conviction global portfolio of companies with the aim of maximising total returns over the long term. The managers look for strong businesses with above-average returns and aim to achieve a greater return than the FTSE All World Index (in sterling terms) over a five year rolling period. The Monks Investment Trust PLC The Scottish American Investment Company P.L.C. (SAINTS) Edinburgh Worldwide Investment Trust plc (EWIT) 954m Aims for long-term capital growth which takes priority over income. This is pursued through applying a patient approach to investment, principally from a differentiated, actively managed global equity portfolio containing a diversified range of growth stocks. 328m Aims to be a core investment for private investors seeking income. Its objective is to grow the dividend at a faster rate than inflation by increasing capital and growing income. The focus of the portfolio is on global equities but investments are also made in bonds, property and other asset types. 220m Aims for capital growth from a global portfolio of initially immature entrepreneurial companies, typically with a market capitalisation of less than $5bn at time of initial investment, which are believed to offer long-term growth potential. Please note: Generally, we take and encourage what we see as a sensible long-term investment approach. The trusts portfolios do not track indices. Instead, they express conviction in individual companies, irrespective of their index weights. Consequently, there will be some periods of both out performance and under performance relative to indices. We suggest that investors share our long-term perspective (at least five years) when assessing the suitability and performance of these trusts. Our monthly Investment Trust Bulletin contains more information, including performance data and holdings information for all of the trusts we manage. Copies can be obtained by contacting us, or downloaded from our website at The website also contains up-to-date analysis, performance and prices as well as the latest Annual Reports & Accounts for each trust. 6

9 ISA and Share Plan The specialist investment trusts We also manage more specialist trusts. Trust Size of Trust (net) at 29/02/16 Aims of Trust The Baillie Gifford Japan Trust PLC Baillie Gifford Shin Nippon PLC Pacific Horizon Investment Trust PLC 332m Aims to pursue long-term capital growth principally through investment in medium to smaller sized Japanese companies, which are believed to have above average prospects for growth. 168m Aims to achieve long-term capital growth principally through investment in small Japanese companies which are believed to have above average prospects for capital growth. 109m Aims to achieve capital growth through investment in the Asia Pacific region (excluding Japan) and in the Indian Sub-continent. These may be suitable for investors who are prepared to accept the increased risk that may come with investing in them, such as investing in smaller companies or in more volatile markets. Please note: The value of investments and any income from them may go down as well as up and investors may not get back the amount originally invested. All of the trusts described in this application pack invest in overseas securities and may be affected both positively and negatively by currency fluctuations. Further details, including the associated risks of all seven of these trusts are included in the Key Features from page 13 of this application pack. MARKETS, QUITE SIMPLY, ARE NOT EFFICIENT SO WE BELIEVE A GENUINELY ACTIVE APPROACH LIKE OURS IS ESSENTIAL. 7

10 ISA and Share Plan WE ARE LONG-TERM INVESTORS IN MARKETS OBSESSED WITH SHORT-TERMISM. 8

11 ISA and Share Plan The benefits of the Share Plan The Baillie Gifford Investment Trust Share Plan is aimed at those clients looking to gain access to the stock market by investing in a range of investment trusts managed by Baillie Gifford & Co Limited. You can choose to invest with up to three other people in the same Share Plan. Furthermore, there is no overall maximum investment limit which you can invest in the Share Plan. You can choose to invest in any combination of the seven investment trusts managed by Baillie Gifford & Co Limited (details on pages 6 and 7) subject to the minimum amounts below. You can invest A lump sum investment from 250 per investment trust From 30 a month, for each investment trust you choose By using a combination of lump sum and monthly savings. Flexibility You can switch between trusts in the range managed by Baillie Gifford & Co Limited whenever you wish You can stop and restart monthly subscriptions whenever you wish, without penalty You can withdraw all or part of your investment. Withdrawals of part of your investment are subject to the minimum remaining balance of 250 as detailed in condition 9 of the Terms & Conditions You can use our Online Management Service (OMS) to manage your Share Plan. If there are two or more of you holding the Share Plan jointly, your access to OMS will be restricted and you will not be able to place dealing instructions online (please see condition 24 of the Terms & Conditions for further details). More information on this service can be found online at or by calling our Client Relations Team on Costs There is no initial charge or annual management charge for the Share Plan There are no charges for switches between trusts within your Share Plan There is a charge of 22 for each withdrawal from the Share Plan Other charges include the dealing price spread* and Government stamp duty of 0.5% on purchases (including all switches) and certain transfers The investment trusts also incur costs in managing and administering their portfolios (including dealing costs). These are shown in the Key Features More information about the impact of these charges on your investment is given in the Key Features. *The dealing price spread is the difference, on any day, between the buying and selling price of an investment trust s shares, as set by the market makers who hold and trade the shares. 9

12 ISA and Share Plan Put your feet up with individual savings accounts (ISAs) The Baillie Gifford Investment Trust ISA is aimed at those clients looking to gain access to the stock market in a taxefficient way, by investing in a range of investment trusts managed by Baillie Gifford & Co Limited. The Baillie Gifford ISA Transfer is available to clients looking to transfer existing ISAs held with another manager and invest them in a range of investment trusts managed by Baillie Gifford & Co Limited. Please note: The benefit of a cash ISA is that your capital is generally secure and readily available. If you invest in equities your capital is at risk. The value of any tax reliefs will depend on your individual circumstances and tax rates and reliefs, as well as the tax treatment of ISAs, could change at any time. ISA Limits 2016/2017 In the current 2016/2017 tax year, you can invest up to the limit of 15,240 into an ISA split between a stocks and shares ISA and a cash ISA as you decide. The full amount may be invested in a stocks and shares ISA if desired, or into a cash ISA if you prefer but please note that Baillie Gifford does not offer a cash ISA. The annual subscription limits can change from tax year to tax year. You should check the annual subscription limits as published by HM Revenue & Customs. More information is available on HM Revenue & Customs website ( or call our Client Relations Team on Please note, however, that we are unable to give you individual investment advice. WE LIVE IN A PERIOD OF EXPONENTIAL CHANGE, PROVIDING OPPORTUNITIES FOR STOCK PICKERS LIKE US. 10

13 ISA and Share Plan The benefits of ISAs and ISA transfers You can invest A lump sum investment from 2,000 (with a minimum of 1,000 per investment trust) From 100 a month, for each investment trust you choose Top ups from 250 for each investment trust chosen by you. You can also Transfer your current ISAs to Baillie Gifford, if their minimum value is at least 2,000 each*. Flexibility You can use our Online Management Service (OMS) to manage your ISA. More information on this service can be found online at or by calling our Client Relations Team on You can switch between trusts in the range managed by Baillie Gifford & Co Limited whenever you wish You can withdraw all or part of your investment, subject to a minimum withdrawal of 500. Investments may be subject to a minimum remaining balance of 2,000 as detailed in condition 9 of the Terms & Conditions. Please note that the Baillie Gifford Investment Trust ISA is not a Flexible ISA. Costs There is a management charge of (+VAT) per year for managing all of the ISAs you hold with us** There is a charge of 22 for each withdrawal There are no charges for switches between investment trusts within your ISA Other charges include the dealing price spread*** and Government stamp duty of 0.5% on purchases (including all switches) and certain transfers There is a charge of for each transfer to another ISA manager and a further charge of per trust for re-registering the shares in the name of another nominee The investment trusts also incur costs in managing and administering their portfolios (including dealing costs). These are shown in the Key Features More information about the impact of these charges on your investment is given in the Key Features. *Your existing ISA manager may charge for transferring an ISA to Baillie Gifford. **The annual management charge is collected half yearly on 4 April and 4 October in arrears. If you close your ISA, the charge will be pro-rated based on the number of days since the last charge. ***The dealing price spread is the difference, on any day, between the buying and selling price of an investment trust s shares, as set by the market makers who hold and trade the shares. 11

14 ISA and Share Plan More information You can receive the latest investment trust information from Baillie Gifford by . Our online communications include: Monthly bulletins every month we ll send you our online investment trust bulletin that contains links to the latest trust factsheets Video interviews with online video interviews you can get the latest information direct from the investment managers. Trust Magazine Trust magazine is the free, award-winning magazine from Baillie Gifford for articles, news and views on investment trusts. Get your copy by calling our Client Relations Team on or us at Take control We won t constantly fill your inbox with irrelevant s and you can choose what information to receive. You can also stop and start s as and when you wish. It s easy to sign up The whole process only takes a couple of minutes. Simply go to and sign up today. WE THINK THE SHEER PACE OF TECHNOLOGICAL CHANGE IS MISPERCEIVED BY THE MARKETS. 12

15 ISA and Share Plan Key Features Key Features of the Baillie Gifford Investment Trust ISA and Share Plan The Financial Conduct Authority is a financial services regulator. It requires us, Baillie Gifford Savings Management Limited, to give you this important information to help you decide whether our Share Plan or ISA is right for you. You should read this document carefully before making any decision to invest so that you understand what you are buying, and then keep it safe for future reference. Baillie Gifford is not required to assess how suitable these investments may be for you and your individual circumstances and therefore you will not benefit from the protection of the rules on assessing suitability. If you are in any doubt about how suitable any of these investments are for you, please contact an authorised intermediary for advice. Baillie Gifford does not provide individual investment advice. Introduction This Key Features document contains important information about the Baillie Gifford Investment Trust Share Plan (the Share Plan ) and the Baillie Gifford Investment Trust ISA (the ISA ), which you need to know about before deciding whether to invest. These Key Features should be read alongside the Terms & Conditions of the plans. We have used coloured headings in this document to help you find the areas that are relevant to you: Headings in blue relate to All Plans Headings in burgundy relate to Share Plans Headings in green relate to ISAs Where we have used the symbol beside text, more information may be found in our online factsheets at or by calling our Client Relations Team on

16 ISA and Share Plan Key Features Aims The aims of The Baillie Gifford Investment Trust Share Plan To allow you, a retail client, to buy shares in the investment trusts managed by Baillie Gifford & Co Limited, without using a stockbroker. The aims of The Baillie Gifford Investment Trust ISA To provide you, a retail client, with an investment vehicle with special tax advantages and to allow you to buy shares in the investment trusts managed by Baillie Gifford & Co Limited, without using a stockbroker. Your Commitment The Share Plan and ISA are designed to be long-term investments. After an initial investment has been made, there is no commitment to make any further subscriptions to the Investment Trust Share Plan or ISA and regular monthly subscriptions can be stopped at any time without charge. There are annual subscription limits set by law for investments into ISAs. Minimum investments Monthly investment Lump sum Transfers Additional lump sum per trust Share Plan From 30 for each trust chosen by you. (No maximum). From 250 for each trust chosen by you. (No maximum). From 250 for each trust chosen by you. (No maximum). From 250 for each trust chosen by you. (No maximum). ISA From 100 for each trust chosen by you. From 2,000 (minimum 1,000 for each trust chosen by you). From 2,000 (minimum 1,000 for each trust chosen by you). (No maximum). From 250 for each trust chosen by you. Maximum investments There is no overall maximum investment limit for the Share Plan. The law imposes annual subscription limits and ongoing eligibility requirements in relation to the ISA. Please see condition 6 of the Terms & Conditions for more detail. 14

17 ISA and Share Plan Key Features Risk Factors Any investment in an investment trust involves risk. You should be aware of the following risk factors that apply to the investment trusts we manage: Investment Trust Risk Scottish Mortgage Monks SAINTS Edinburgh Worldwide Japan Trust Shin Nippon Pacific Horizon Value can go down X X X X X X X Overseas investments X X X X X X X Emerging Markets X X X X Borrowing (Gearing) X X X X X X X Buy back shares X X X X X X X Liquidity X X X X X X X Derivatives X X X X X X X Property X Smaller/immature companies X X X Single country trusts X X Corporate Bonds X X Unlisted investments X X Charges to capital X X X Charges to income X X X X Income is less important X X X Unlikely to achieve any income X X Annual continuation vote X Five-yearly continuation vote X These risks are described in full overleaf. 15

18 ISA and Share Plan Key Features Risk Factors (cont.) Value can go down The investment trusts managed by Baillie Gifford & Co Limited are listed UK companies. The value of their shares and any income from them, can fall as well as rise and investors may not get back the amount invested. Overseas investments The trust invests in overseas securities. Changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up. Emerging Markets The trust invests in emerging markets where difficulties in dealing, settlement and custody could arise, resulting in a negative impact on the value of your investment. Borrowing (Gearing) All the trusts can borrow money to make further investments (sometimes known as gearing or leverage ). The risk is that when this money is repaid by the trust, the value of the investments may not be enough to cover the borrowing and interest costs, and the trust will make a loss. If the trust s investments fall in value, any invested borrowings will increase the amount of this loss. Buy back shares All the trusts can buy back their own shares. The risks from borrowing, referred to above, are increased when a trust buys back its shares. Pacific Horizon has discretion to tender up to five per cent of its shares twice a year. Derivatives The trust can make use of derivatives to obtain, increase or reduce exposure to assets and may result in the trust being leveraged. Derivatives are most often used to compensate for possible unfavourable currency and market movements. This may result in greater movements (down or up) in the net asset value of the trust. It is not our intention that the use of derivatives will significantly alter the overall risk profile of the trust. A further risk exists in respect of the counterparty with whom the derivative transaction is made. Due care and diligence is exercised in the selection of counterparties, however, the possibility of the counterparty failing to pay sums due to the fund still remains. Property The trust has some direct property investments, which may be difficult to sell. Valuations of property are only estimates based on the valuer s opinion. These estimates may not be achieved when the property is sold. Smaller/immature companies Investment in smaller/immature companies is generally considered higher risk as changes in their share prices may be greater and the shares may be harder to sell. Smaller/ immature companies may do less well in periods of unfavourable economic conditions. Single country trusts The trust s exposure to a single market and currency may increase risk. Liquidity Market values for securities which have become difficult to trade may not be readily available, and there can be no assurance that any value assigned to such securities will accurately reflect the price the trust might receive upon their sale. 16

19 ISA and Share Plan Key Features Corporate Bonds Corporate bonds are generally perceived to carry a greater possibility of capital loss than investment in, for example, higher rated UK government bonds. Bonds issued by companies and governments may be adversely affected by changes in interest rates and expectations of inflation. Unlisted investments The trust s risk could be increased by its investment in unlisted investments. These assets may be more difficult to buy or sell, so changes in their prices may be greater. Charges to capital The following trusts charge a percentage of their investment management fee and borrowing costs (and property management for SAINTS) to capital; SAINTS 65%, Scottish Mortgage and EWIT 75%, which reduces the capital value. Also, where income is low, the remaining expenses may be greater than the total income received, meaning the trust may not pay a dividend and the capital value would be further reduced. Charges to income Charges are deducted from income. Where income is low, the expenses may be greater than the total income received, meaning the trust may not pay a dividend and the capital value would be reduced. Income is less important The aim of the trust is to achieve capital growth. You should not expect a significant, or steady, annual income from the trust. Unlikely to achieve any income The aim of the trust is to achieve capital growth and it is unlikely that the trust will provide a steady, or indeed any, income. Annual continuation vote Shareholders in the trust have the right to vote at the Annual General Meeting on whether to continue the trust or wind it up. If the shareholders decide to wind the trust up, the assets will be sold and you will receive a cash sum in relation to your shareholding. Five-yearly continuation vote Shareholders in the trust have the right to vote every five years, on whether to continue the trust or wind it up. If the shareholders decide to wind the trust up, the assets will be sold and you will receive a cash sum in relation to your shareholding. The next vote will be held at the Annual General Meeting in November In addition You should note that tax rates and reliefs may change at any time and their value depends on your circumstances. The following risk factors only apply to investment in the ISA The favourable tax treatment of ISAs may change. You should be aware that in the case of a transfer, if you change your mind and exercise any cooling-off rights (if applicable) your previous ISA manager is under no obligation to accept your proceeds back. In this case, all tax benefits will be lost. If your previous ISA manager accepts your money back, there may be costs involved. You should also note that during an ISA transfer the transfer proceeds will be uninvested for a period of time (between the sale of the existing holdings and the reinvestment of the proceeds following the end of any cooling-off period) and therefore they are exposed to the risk of missing any rise in the market during that time. Please also remember that charges, including an annual management charge, apply to ISA investments. The overall impact of these charges on small subscriptions will be much higher in percentage terms than on larger subscriptions. 17

20 ISA and Share Plan Key Features Your Questions Answered The Share Plan What is the Share Plan? The Share Plan allows you to buy shares in the investment trusts managed by Baillie Gifford & Co Limited, without using a stockbroker. Features: No initial or annual plan charges* Invest a lump sum from 250 or monthly from just 30 No overall maximum investment Stop and start saving at any time. You may not invest in the Share Plan if you are a citizen of, national of, or resident in, a country other than the UK: where such investment would require the Share Plan or us to comply with local laws, and/or where it is prohibited by that country s exchange controls or other regulations. It is your responsibility to satisfy yourself that you are permitted to invest in the Share Plan. Can I invest in the Share Plan? You may be interested in the Baillie Gifford Investment Trust Share Plan if you: want to invest either monthly or with lump sums are financially aware, prepared and able to take your own investment decisions or are prepared to seek financial advice are prepared to take the risks associated with stock market investment (see pages 15 17) appreciate the value of professional fund management are looking for an investment vehicle which is cost effective, flexible, and offers a choice of investment trusts are looking for a long-term investment are aged 18 or over. You can apply individually or jointly with up to three other people. Subscriptions may be made into a Share Plan held by another person as a gift to that person (which we refer to as a donor ). We will need the full name and address of the donor in order to meet our requirements under the antimoney laundering regulations. Please see condition 6 of the Terms & Conditions for more information. *Further details of charges are given on pages 23 to 25 of this application pack. 18

21 ISA and Share Plan Key Features Your Questions Answered The ISA What is the ISA? An ISA is an investment vehicle with special tax advantages. The Baillie Gifford Investment Trust ISA allows you to buy shares in the investment trusts managed by Baillie Gifford & Co Limited, without using a stockbroker. It is available as a stocks and shares account only. Baillie Gifford does not offer cash ISAs. If you do not subscribe the full ISA allowance for a tax year, you will not have used your full tax benefits for that year and subscriptions cannot be backdated. Features: Tax-efficient investment No set-up charge* Annual management charge of just VAT (see condition 14 of the Terms & Conditions) Lump sum investment from 2,000 up to the annual ISA maximum Invest monthly from 100. ISA Transfers Transfer existing ISAs from other plan managers Consolidate your plans Minimum transfer value 2,000. The value of any tax reliefs will depend on your individual circumstances and tax rates and reliefs, as well as the tax treatment of ISAs could change at any time. Can I invest in the ISA? You may be interested in the Baillie Gifford Investment Trust ISA if you: want to transfer an existing ISA or open a new ISA want to benefit from any tax reliefs available want to invest either monthly or with lump sums are financially aware, prepared to take your own investment decisions or are prepared to seek financial advice are prepared to take the risks associated with stock market investment (see pages 15 17) appreciate the value of professional fund management are looking for an investment vehicle which is cost effective, flexible, and offers a choice of investment trusts are looking for a long-term investment. You can only invest in our ISA if you: are aged 18 or over are resident in the UK for tax purposes have not subscribed to another stocks and shares ISA in the current tax year are investing only in your own name. It is your responsibility to satisfy yourself that you are permitted to invest in the ISA. If your spouse or civil partner dies you may be able to claim an additional ISA allowance. Please contact us for more information on our Additional Permitted Subscriptions facility. *Further details of charges are given on pages 23 to 25 of this application pack. 19

22 ISA and Share Plan Key Features Your Questions Answered Investing How do I invest? There are two ways to open a Share Plan or ISA: 1. You can complete and return the relevant application form(s) together with a personal cheque for your initial investment. The Share Plan can also be used to invest periodic and/or regular gifts from a donor by completing the relevant donor section of the application form. 2. You can apply through our Online Management Service (OMS). To access OMS, please log on to When subscribing by Direct Debit initial payment must be made by cheque unless you apply online through OMS, in which case you may make your initial payment by debit card. Your Direct Debit will start on receipt of your initial investment and mandate (or whichever is later) but will start shortly thereafter (i.e. due to timing it is possible that the cheque and Direct Debit may invest within the same month). We will not accept instructions which specify a maximum or minimum price or the timing of the purchase. We may delay processing your instructions if we cannot satisfactorily complete our anti-money laundering procedures. Please note: if you do not submit appropriate verification documents for all person(s) named on the application form, including any donor for Share Plans, we will return the full application form to you unprocessed. Please refer to condition 5 of the Terms & Conditions for more information. We will only accept instructions from the registered holder(s) of the Share Plan. This means if a donor makes payments into the Share Plan we will not accept instructions from them and will only apply the payments received in accordance with the instructions put in place from time to time by the registered holder(s). What other investment options are available to me? You may make top up investments at any time, subject to the minimum amount of 250 per investment trust. Switches between the investment trusts that you hold in your plan(s) are also available. When are the shares bought? Shares are bought on dealing days these are normally Tuesdays and Fridays. You should note that dealing cut-offs apply for more information see condition 5(g) of the Terms & Conditions. Initial investment: Share Plan Shares will be bought on the first available dealing day. ISA After the end of any cooling-off period, if applicable, and once your ISA has been opened, the shares will be bought on the first available dealing day. For more information about the cooling-off period see Can I change my mind? on page 21. Share Plan/ISA monthly investments: your subscription will normally be collected from your bank or building society account on, or soon after, the 1st or 15th of each month as specified by you on the Direct Debit Mandate. Only one collection date can be chosen. If you don t specify your preferred collection date in the Direct Debit Mandate, we will collect your payment on the 1st of each month. The shares will be bought on the next dealing day after the funds have cleared. It will take up to three business days for funds collected by direct debit to clear. How long will my Direct Debit for my Share Plan or ISA continue? Once started, your monthly Direct Debit Mandate will continue until you notify us and/or your bank or building society otherwise. Once stopped, your subscriptions will remain invested in your previously selected investment trust(s). Where you opt to make monthly investments in the ISA in one tax year, the application form, Direct Debit Mandate and any subsequent instructions you provide will remain valid into the new tax year. This means a new ISA will be automatically opened for you in the new tax year, and we will continue to request investments by Direct Debit into subsequent tax years, unless you tell us in writing that you do not want this to happen. 20

23 ISA and Share Plan Key Features Can I change my mind? Share Plan The Share Plan has no cooling-off period or cancellation rights. Your Share Plan may only be closed in accordance with the Terms & Conditions (see condition 11). ISA When you invest directly in the Baillie Gifford Investment Trust ISA without taking advice from an authorised intermediary, you cannot cancel your application. If you invest after taking advice from an authorised intermediary, you have seven days to cancel your application, which is known as the cooling-off period. How does the ISA cooling-off period work? If you have invested after taking advice from an authorised intermediary, the ISA s cooling-off period of seven days will apply from the day after the day we receive your application form and initial subscription. If you have taken advice from an authorised intermediary, any transfers in from another ISA manager will have a seven day cooling-off period that applies from the day after the day we receive your completed application form. We will not open your ISA during the cooling-off period and your money will remain uninvested during this period. Please refer to condition 4 of the Terms & Conditions for more information. You may withdraw your application to open your ISA at any time during the cooling-off period. To do so, you must inform us by completing the cancellation form and sending it to us. However, we must receive your cancellation form before the end of the cooling-off period. Once your ISA has been opened you may only close it in accordance with the Terms & Conditions (see condition 11). Will interest be paid on any cash held within my Share Plan or ISA? Interest is accrued daily on all cleared, uninvested cash balances held in your plan. This interest is not paid out to you or credited to your plan. What are my options regarding dividends? Dividends will either be reinvested automatically; or You can choose to have them paid to your bank or building society account. This does not have to be the same account from which your Direct Debit payments are collected. If you want payment to go to another account you must instruct us in writing. Please refer to condition 8 of the Terms & Conditions for more information. The relevant dividend payment dates for the individual investment trusts can be obtained by contacting our Client Relations Team on

24 ISA and Share Plan Key Features Your Questions Answered Tax How does tax affect investments in the Share Plan and ISA? Baillie Gifford is unable to give specific tax advice and the following comments are only meant as a guide. These comments apply to UK residents only and not to any other type of taxpayer. You are recommended to seek professional advice. You should be aware that investment trusts are subject to corporation tax on their income and may therefore have a corporation tax liability. Investment trusts are not, however, subject to corporation tax on their capital gains. Income Tax Share Plan If dividends are received in your plan then, depending on your circumstances, you may have a further liability to tax. This is irrespective of whether the dividends are paid to you or reinvested. You should consult a professional adviser for advice on your tax position. ISA You will not be taxed on income arising on investments held within an ISA. Capital Gains Tax Share Plan If you sell or transfer your Share Plan you may be liable for Capital Gains Tax (CGT). Every person has a CGT allowance for each tax year and you should seek professional advice. ISA You will not be taxed on capital gains on investments whilst they are held within an ISA. Any losses on ISA investments will not be allowable losses for the purposes of Capital Gains Tax against capital gains arising outside your ISA. Inheritance Tax This is a complex area and specialist advice should be sought. Share Plan There are various exemptions available to exclude or otherwise reduce the potential impact of Inheritance Tax. Specialist advice should be sought. ISA Tax benefits for ISA investments cease on death. An investment in an ISA will remain in the holders estate for Inheritance Tax purposes. If your spouse or civil partner dies you may be able to claim an additional ISA allowance. Please contact us for more information. General note applicable to all taxes You should consult a professional adviser for advice on your tax position. You can also get additional information from your local tax office and the HM Revenue & Customs website You should also bear in mind that the benefit to you of any of the tax treatments outlined above will depend on your individual circumstances and that tax rates and reliefs, as well as the tax treatments outlined above, can change. The information given here is based on our understanding of current UK law and HM Revenue & Customs practice as at the date of this document. 22

25 ISA and Share Plan Key Features Your Questions Answered Charges With the exception of the ongoing charges figures, the figures on pages 23 to 25 are based on each individual trust s reporting dates, which are as follows: Trust Reporting Date Scottish Mortgage 30 September 2015 Interim Monks 31 October 2015 Interim SAINTS 31 December 2015 Annual Edinburgh Worldwide 31 October 2015 Annual Japan 31 August 2015 Annual Shin Nippon 31 July 2015 Interim Pacific Horizon 31 July 2015 Annual What are the charges? We do not currently charge an initial charge or dealing charge for investment in the Share Plan or ISA. Charges will be applied in the Share Plan and ISA for withdrawals. In addition, for the ISA, the following additional charges will apply: Annual management charge ( VAT, payable in two instalments of VAT) Transfers out ( 32.50) Re-registration charge ( 32.50). When you open an ISA we will charge you the full VAT for periods of less than six months at the next charge date. If you close your ISA we will charge a proportion of the annual management charge based on the number of days since the last charge date. Further details, including when these charges apply and how they are applied are given in the Terms & Conditions (see condition 14). There are also charges incurred by the investment trusts relating to the management and administration of their portfolios. These are explained in more detail opposite. How are charges deducted from my ISA? The annual management charge will be collected from any available cash balances in your ISA. Where this is insufficient, shares will be sold to raise enough cash. Alternatively, the facility to pay the annual management charge by Direct Debit is available. If you would like to do this, please contact the Client Relations Team on What are the costs of managing the investment trusts portfolios? In addition to any other charges set out in this section, there are charges and expenses borne directly by the investment trusts relating to the management and administration on their portfolios. The ongoing charges figure is the operating costs of managing an investment trust expressed as a percentage of its average net assets. The current ongoing charges figure for each of the trusts is shown below. These are updated annually and shown in each trusts Annual Report and Accounts. Trust Ongoing Charges Annual Report dated Scottish Mortgage 0.48% 31 March 2015 Monks 0.58% 30 April 2015 SAINTS 0.93% 31 December 2015 Edinburgh Worldwide 0.93% 31 October 2015 Japan 0.90% 31 August 2015 Shin Nippon 1.14% 31 January 2015 Pacific Horizon 1.02% 31 July

26 ISA and Share Plan Key Features Your Questions Answered Charges (cont.) What is the effect of charges and expenses? The following tables are for illustrative purposes only and are to help you compare the charges of our Share Plan and ISA with charges made by other investment products. What you might get back is not guaranteed. Scottish Mortgage has been used in these examples as it is the largest investment trust available for investment in the Share Plan and ISA. The calculations in the following tables have been derived as follows: It has been assumed that no commission has been paid to an authorised intermediary A withdrawal charge is charged on most sales and this has been deducted For the ISA, an annual management charge including VAT has been deducted A dealing price spread* has been deducted from the initial investment, together with government stamp duty A deduction has been made for annual charges incurred in managing the investment portfolio. These include the investment management fees, auditor s fees, directors fees, dealing costs and other administration charges associated with the running of the investment trusts such as bank and custodial charges and irrecoverable VAT. The tables are based upon information extracted from the latest published Annual/Interim Reports at the time of preparation of these Key Features; no allowance has been made for dividend growth and any income has been assumed to be reinvested. Scottish Mortgage Share Plan The effect of charges and expenses on a lump sum investment of 1,000 and monthly savings of 50, assuming investment growth of 4.5% a year and a spread of 0.66% (including government stamp duty of 0.5%), is set out below. The 4.5% growth rate has been used as an example of how the Trust might perform. A lump sum investment of 1,000 At end of year Investment to date Effect of deductions to date What you might get back assuming 4.5% growth p.a. 1 1, , , , , , , ,440 Monthly Savings of 50 At end of year Investment to date Effect of deductions to date What you might get back assuming 4.5% growth p.a , , , , , ,270 The last rows in the above tables show that over 10 years, the effect of the total charges and expenses could amount to 109 on a lump sum investment of 1,000 and 275 on monthly savings of 50. Putting it another way, this would have the same effect as bringing investment growth from 4.5% a year down to 3.7% a year on a lump sum investment of 1,000 and to 3.8% a year on monthly savings of 50. *The dealing price spread is the difference on any day between the buying and selling price of an investment trust s shares, as set by the market makers. Market makers hold shares and trade in them. 24

27 ISA and Share Plan Key Features The equivalent reductions in yield over 10 years for the other investment trusts available in the Share Plan are shown in the table below: Investment Trust Based on a lump sum investment of 1,000 Reduction (from 4.5%) in investment growth to: Based on monthly savings of 50 Reduction (from 4.5%) in investment growth to: Monks 3.6% 3.7% SAINTS 3.0% 3.0% Edinburgh Worldwide 3.3% 3.2% Japan 3.3% 3.2% Shin Nippon 3.1% 3.1% Pacific Horizon 3.0% 2.9% Scottish Mortgage ISA The effect of charges and expenses on a lump sum investment of 3,000 and monthly savings of 250, assuming investment growth of 5.0% a year and a spread of 0.66% (including government stamp duty of 0.5%), is set out below. The 5.0% growth rate has been used as an example of how the Trust might perform. A lump sum investment of 3,000 At end of year Investment to date Effect of deductions to date What you might get back assuming 5.0% growth p.a. 1 3, , , , , ,460 Monthly Savings of 250 At end of year Investment to date Effect of deductions to date What you might get back assuming 5.0% growth p.a. 1 3, , , , , , ,000 1,850 36,800 The last rows in the above tables show that over 10 years, the effect of the total charges and expenses could amount to 821 on a lump sum investment of 3,000 and 1,850 on monthly savings of 250. Putting it another way, this would have the same effect as bringing investment growth from 5.0% a year down to 3.1% a year on a lump sum investment of 3,000 and to 4.1% a year on monthly savings of 250. The equivalent reductions in yield over 10 years for the other investment trusts available in the ISA are shown in the table below: Investment Trust Based on a lump sum investment of 3,000 Reduction (from 5.0%) in investment growth to: Based on monthly savings of 250 Reduction (from 5.0%) in investment growth to: Monks 3.0% 3.9% SAINTS 2.4% 3.3% Edinburgh Worldwide 2.6% 3.5% Japan 2.6% 3.5% Shin Nippon 2.4% 3.3% Pacific Horizon 2.3% 3.2% 10 3, ,060 25

28 ISA and Share Plan Key Features Your Questions Answered Withdrawals Can I make withdrawals from my Share Plan and ISA? Yes. You can sell some, or all, of your shares by giving notice in writing by post or by fax (provided that in the case of faxes the original signed instruction follows in the post), or online through OMS. Please note that dealing on OMS is restricted to accounts with one holder. There is usually a charge for withdrawals, and minimum limits may apply. Can I close my Share Plan or ISA? Yes. You can close your Share Plan or ISA at any time. Please see condition 11 of the Terms & Conditions. Can I transfer my ISA to another ISA manager? Yes. You may transfer your Baillie Gifford ISA to another ISA manager. There is usually a charge for transfers, and minimum limits may apply. Please see condition 10 for more information. 26

29 ISA and Share Plan Key Features Other Important Information What statements will I be sent? We will send communications to you by post, to the last address notified by you. You will be deemed to have received these forty-eight hours after posting. We will send communications only to the first-named holder on your plan. Please note that donors will not receive any communications from us and we will not share any information about the plan with them. We will acknowledge receipt of any application to make: a lump sum investment any subsequent top-up investment initial monthly investments; or a transfer. We will then send you a contract note, no later than the business day following the dealing day on which your shares were bought. We will not send contract notes for regular monthly contributions or reinvestment of dividend income. We will send half-yearly statements within 25 business days of 5 April and 5 October each year. These will contain: a valuation statement and a transaction statement (which will be made up of cash, stock and income statements). If any income has been generated in your plan, we will send you a consolidated tax voucher and dividend statement annually in April. You should check contract notes and half-yearly statements carefully and let us know immediately if there are any discrepancies or you have any queries. Uninstructed changes to account information, or failure to receive expected contract notes, half year statements, sales proceeds or dividend payments within the normal deadlines should be reported to us immediately. Will I be sent any other documents? We will also send you the annual and interim reports of the investment trust(s) in which your Share Plan and/or ISA are invested. No share certificates will be issued. You will receive notice of annual and other shareholder meetings. You may apply to attend, speak and vote at those shareholder meetings for the investment trust(s) in which you have invested by indicating your wish to do so on the form of direction which will be sent to you before each meeting. You will also have the right to instruct the nominee how to vote on your behalf on any resolution by completing the form of direction. What information will joint-holders receive? All communications will only be sent to the first-named holder. Where can I find details of the investment trusts share prices and other information? Figures are published daily on our website at and in the Financial Times. Alternatively, you can obtain the previous day s mid-market closing prices by calling Client classification We are required to classify all of our clients and notify them of their classification. By applying to invest in the Share Plan or the ISA, you will be classified as a retail client. This provides the highest level of protection. What are my rights in the event of a bonus or rights issue or similar event? It will not be possible to give advance notification or accept new cash subscriptions specifically for rights issues. The half-yearly statement will contain details of any shares allotted to your Share Plan or ISA under any scrip or bonus issues. Further details of your rights are given in condition 18(e) of the Terms & Conditions. 27