Annual Report and 31 May 2024 Financial Statements ## Baillie Gifford ## US Growth ## Trust plc Investor disclosure document The UK Alternative Investment Fund Managers Regulations requires certain information to be made available to investors prior to their making an investment in the Company. The Company’s Investor Disclosure Document is available for viewing at bgusgrowthtrust.com. Notes None of the views expressed in this document If you are in any doubt as to the action you should should be construed as advice to buy or sell a take you should consult your stockbroker, bank particular investment. manager, solicitor, accountant or other Independent Financial Adviser authorised under the Financial Investment trusts are UK public listed companies Services and Markets Act 2000 if you are in the and as such comply with the requirements of the United Kingdom or, if not, from another appropriately Financial Conduct Authority. They are not authorised authorised financial adviser. or regulated by the Financial Conduct Authority. If you have sold or otherwise transferred all of your Baillie Gifford US Growth Trust plc (the ‘Company’) ordinary shares in Baillie Gifford US Growth Trust currently conducts its affairs, and intends to continue plc, please forward this document, together with any to conduct its affairs, so that the Company’s ordinary accompanying documents, but not your personalised shares can qualify to be considered as a mainstream Form of Proxy, as soon as possible to the purchaser investment product and can be recommended or transferee, or to the stockbroker, bank or other by Independent Financial Advisers to ordinary agent through whom the sale or transfer was or retail investors in accordance with the rules of is being effected for delivery to the purchaser or the Financial Conduct Authority in relation to transferee. non-mainstream investment products. This document is important and requires your immediate attention. Baillie Gifford US Growth Trust plc Financial highlights 02 ## Contents Purpose and investment principles 04 Strategic report Chair's statement 07 Managers' review 09 Baillie Gifford's stewardship principles 14 Baillie Gifford proxy voting 15 Baillie Gifford environmental, social and governance engagement 16 One year summary 20 Five year summary 22 Summary of results since inception 24 Review of investments 26 Portfolio executive summary 30 Baillie Gifford – valuing private companies 34 List of investments 41 Business review 45 Governance report Directors and management 58 Directors’ report 61 Corporate governance report 66 Audit Committee report 73 Directors’ remuneration report 76 Statement of Directors’ responsibilities 80 Financial report Independent Auditor’s report 83 Income statement 90 Balance sheet 91 Statement of changes in equity 92 Cash flow statement 93 Notes to the Financial Statements 94 Shareholder information Notice of Annual General Meeting 113 Further shareholder information 118 Third party data provider disclaimer 120 Sustainable Finance Disclosure Regulation 121 Communicating with shareholders 122 Glossary of terms and alternative performance measures 124 Company information 129 01 Introduction ## Baillie Gifford US Growth: ## The American Dream made real Financial highlights Year to 31 May 2024 Total returns * # † Share price NAV Comparative index ## 32.9% 16.2% 24.8% Share price, NAV and comparative index total return* Discount* (figures rebased to 100 at 31 May 2023) (figures plotted at month end dates) 140 130 (15 %) 120 110 %) 100 | | 90 | | | | %) | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | MAMFJDNOSAJJM | | | MAMFJDNOSAJJM | | | | 2023 | | | | 2023 | | | | | # | † | | | | | | 150 (10%) | | | | | | | | * Alternative performance measure – see Glossary of terms and alternative performance measures on pages 124 to 127. † The comparative index is the S&P 500 Index total return (in sterling terms). # Net asset value per share (‘NAV’) with borrowings at fair value. At 31 May 2024 the NAV with borrowings at fair value was the same as the NAV with (20 borrowings at book value. For a definition of terms see Glossary of terms and alternative performance measures on pages 124 to 127. Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 120. Past performance is not a guide to future performance. | (25 | | 02 | Annual Report and Financial Statements 2024 | | | --- | --- | --- | --- | --- | | | | | | 2024 2024 | | | Discount NAV | | Share price Comparative index | | Baillie Gifford US Growth Trust plc 03 Introduction ## Purpose and ## investment principles Our purpose ## Baillie Gifford US Growth Baillie Gifford US Growth aims to find, own and ## aims to deliver above support the most exceptional public and private growth companies in America. ## average long-term returns We believe that our investment approach of ## for shareholders by long termism, embracing asymmetry, and global ## keeping fees and costs perspective gives us an advantage in uncovering exceptional growth companies. Our opportunity set ## low and harnessing the is wide given the Company’s structure means we can invest in exceptional growth companies regardless of ## long-term growth potential their listed status. ## of companies. Exceptional growth companies address huge market opportunities at an early stage, possess a sustainable competitive edge and enjoy powerful and effective cultures that enable them to realise their long-term potential. We believe such companies contribute to productive innovation in society and, over the full course of time, these companies will develop deep competitive moats and generate abnormal profits and unusually high shareholder returns. We endeavour to generate returns for our shareholders by helping in the creation and improvement of such useful enterprises. If we are successful in identifying these companies, we believe that we can multiply our shareholders’ wealth over the long term. 04 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Our investment principles far more in a company if we are right than lose if we are wrong, tells us that the costliest of Managing shareholders’ money is a huge privilege mistakes is excessive risk aversion. and not one we take lightly. It is a relationship, not a transaction. Relationships can only be built on ș We do not believe that the index is the right a foundation of trust and understanding. With this in starting point for portfolio construction. The index mind, we seek to lay out the fundamental principles allocates capital based on size. We believe that by which we will manage your money and the capital should be allocated based on marginal framework for how we make decisions so that you, return and the ability to grow at those rates our shareholders, can decide whether it aligns with of return. Big companies are not immune to your investment philosophy. disruption. We do not manage the portfolio to an active share target, but we expect the active ș We believe the fundamental measure of our share of the Company to be high. success will be the value we create for our shareholders over the long term. It is only ș We are largely indifferent to a company’s private over periods of five years or more that the or public status. We will conduct diligent analysis characteristics we look for in businesses and allocate capital to where the highest returns become apparent. Our turnover has been low, are likely to be. consistent with our time horizon. We ask that ș We believe our duty is to maximise the long-term our shareholders measure our performance over wealth of our shareholders, and that placing similar periods. emphasis on short-term performance serves our ș Short-term volatility is an inevitable feature of shareholders poorly. the market, and we will not manage the portfolio ș We will endeavour to operate in the most to reduce volatility at the expense of long-term efficient, honest and economical way possible. gain. Many managers are risk-averse and fear That means keeping our ongoing costs loss more than they value gain. Therefore, they including management fees low. We recognise accept smaller, more predictable risks rather that even modest amounts, when allowed to than the larger and less predictable ones. compound over long periods of time, add up to We believe that this is harmful to long-term staggering sums, and we do not wish to dilute the returns, and we will not shy away from making compounding of returns with the compounding investments that are perceived to be risky if we of costs. believe that the potential payoffs are worthwhile. This means that our performance may be lumpy With this foundation, we aim to build Baillie Gifford over the short term. US Growth Trust into a world-class savings vehicle. We are grateful that you have joined us on this ș We believe, and academic work has shown, journey, and we look forward to a long and hopefully that long-term equity returns are dominated by prosperous relationship with you. a small handful of exceptional growth companies that deliver outsized returns. Most stocks do not matter for long-term equity returns, and investors will be poorly served by owning them. In our search for exceptional growth companies, we will make mistakes. But the asymmetry inherent in equity markets, where we can make 05 ## Strategic ## report The Strategic report, which includes pages 7 to 56 and incorporates the Chair’s statement has been prepared in accordance with the Companies Act 2006. Baillie Gifford US Growth Trust plc ## Chair’s ## statement I am pleased to report an improvement in performance during the financial year to 31 May 2024. The Company’s share price and net asset value, calculated by deducting borrowings at fair value, total returns were 32.9% and 16.2% respectively. This compares with a total return of | | 24.8% for the S&P 500 Index | | * (in sterling terms). | | --- | --- | --- | --- | | Tom Burnet | Over the period from 23 March 2018 (launch date | | | | Chair | and first trade date), the Company’s share price and | | | | Appointed | net asset value, calculated by deducting borrowings | | | | Director and Chair | at fair value, returned 91.4% and 121.2% respectively | | | | 5 March 2018 | compared to a total return of 152.0% for the | | | | | S&P 500 Index | * (in sterling terms). | | Further information about the Company’s portfolio performance is covered by our portfolio managers, Gary Robinson and Kirsty Gibson, in their Managers’ review. Share issuance and buy-backs The Company’s shares moved from a discount of 22.4% at the start of the financial year to a discount of 11.2% at 31 May 2024 as sentiment towards the Company’s growth investing style and the investment trust sector more generally improved. During the financial year the Company deployed its buy-back powers and 7,925,000 shares were bought back, representing 2.6% of the Company’s issued share capital at the start of the year. The Board recognises the importance of the Company’s liquidity policy and regularly discusses this topic at Board meetings. As at 31 May 2024, the Company had authority, which was granted at the 2023 Annual General Meeting, to issue a further 30,515,370 shares and to buy-back a further 45,742,539 shares. These authorities expire in September 2024. The Company will be seeking to renew both the issuance and buyback authorities at the forthcoming Annual General Meeting. * Source: LSEG and relevant underlying index providers. See disclaimer on page 120. For a definition of terms see Glossary of terms and alternative performance measures on pages 124 to 127. Past performance is not a guide to future performance. 07 Strategic report ## Gearing The Company has two loan facilities in place. The US$25 million five-year revolving credit facility with ING Bank N.V., London Branch, which matured on 31 July 2023, was refinanced with a US$25 million three-year revolving credit facility from ING Bank N.V., London Branch on 26 July 2023. The US$25 million three-year fixed rate facility with ING Bank N.V., London Branch matured on 23 October 2023 and was refinanced with a US$25 million three-year revolving credit facility from The Royal Bank of Scotland International Limited on 18 October 2023. The facilities are available to be used to fund purchases of securities as and when suitable opportunities arise. As at 31 May 2024, the facilities had been drawn down in full (31 May 2023 – US$50 million). Net gearing fell from 6% to 5% over the course of the year. ## Earnings and dividend The Company's priority is to generate capital growth over the long term. The Company therefore has no dividend target and will not seek to provide shareholders with a particular level of dividend. The net revenue return per share for the year to 31 May 2024 was a negative 2.07p (period to 31 May 2023, a negative 1.55p). As the revenue reserve is again running at a deficit, the Board is recommending that no final dividend be paid. Should the level of underlying income increase in future years, the Board will seek to distribute the minimum permissible to maintain investment trust status by way of a final dividend. ## Private company investments As at the Company's year end, the portfolio weighting in private company investments stood at 34.1% of total assets, invested in 24 companies (2023 – 34.5% invested in 25 companies). There was one new purchase in the year, Human Interest, and Oddity listed during the period (the Convoy holdings were written off during the period subsequent to the company ceasing operations). There is commentary on the new and existing holdings in the Managers' review and the review of investments on pages 9 to 12 and 26 to 29. Your portfolio managers remain alert to further special and high potential opportunities not widely accessible through public markets. ## Environmental, Social and Governance (ESG) matters The Company's Managers believe that sustainability is inextricably linked to being a long-term investor, and their thoughts on this topic are set out in more detail on page 14. The Managers' pursuit of long-term growth opportunities typically involves investment in entrepreneurial, disruptive and technology-driven businesses. These companies are often capital-light with a low carbon footprint. ## Annual General Meeting The Annual General Meeting of the Company has been scheduled to be held at the offices of Herbert Smith Freehills in London (Exchange House, Primrose Street, London, EC2A 2EG) at 9.00am on Friday, 27 September 2024. All shareholders are invited to attend, and the Board looks forward to welcoming you. The meeting will be followed by a presentation from the Managers. I encourage shareholders to submit their votes by proxy before the applicable deadline ahead of the meeting and to submit any questions for the Board or Managers in advance by email to trustenquiries@bailliegifford.com or by calling 0800 917 2112 (Baillie Gifford may record your call). ## Outlook In our last report I allowed myself to imagine that peaking interest rates might see valuations begin to recover during 2024. Clearly the Board is delighted that we have seen an improvement in our share price and a narrowing of our discount over the intervening period. Perhaps more importantly though, we continue to believe that the seismic changes in technology that underpin many of the companies we are invested in will continue and accelerate. We are at an inflexion point where many verticals, from transportation to drug discovery to communications and many others, are all ripe for disruption and we firmly believe that the portfolio of businesses we own includes many that will deliver outsize returns to long-term investors. Tom Burnet Chairman 21 August 2024 08 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc ## Managers’ ## review In recent years, we have observed a marked shift in emphasis among the companies in your portfolio. There has been a pivot from prioritising growth alone to embracing a more balanced approach that incorporates both growth and profitability. In our previous interim report, we characterised 2022 as the ‘year of reorientation’ and 2023 as the Gary Robinson ‘year of execution’. We are now witnessing the Portfolio manager tangible benefits of this strategic shift, as evidenced by the improved financial metrics across your portfolio companies. As of the end of March, 67% of the portfolio was generating positive cash flow or positive earnings per share (‘EPS’), a notable increase from 48% in March 2023. Crucially, growth has remained robust during this period of improving profitability. The median revenue growth rate exceeded 18% over the year to March 2024, significantly outpacing the S&P 500 Index. This dual achievement – maintaining Kirsty Gibson strong growth while enhancing profitability – is a Portfolio manager testament to the quality and adaptability of our chosen companies. It is our view that many of your holdings are emerging from the challenging post-Covid period in a stronger position than when they entered it. These businesses have not only addressed cost bases that had become inflated during the pandemic but have also evolved their strategies, organisational structures and processes. Companies that were buffeted by pandemic-induced demand fluctuations have become leaner and more agile, positioning themselves for higher profitability. 09 Strategic report We see parallels between the current situation and The launch of ChatGPT at the end of 2022 brought the period following the Global Financial Crisis. AI into the spotlight, and we believe this attention Then, as now, many businesses faced unexpectedly is warranted. Indeed, recent advancements in AI weak demand, with cyclical companies in the represent some of the most important technological consumer discretionary and industrial sectors developments in a century. The internet and particularly affected. However, we observed that mobile drove near universal access to computing the most adaptable of these businesses emerged power. AI is rendering computers intelligent. It from that period stronger. For instance, the is outperforming humans in certain tasks and is multi-industrial business United Technologies improving at a remarkable rate. It has the potential to Group, which we held in our American Fund, make large swathes of the economy more efficient. achieved higher margins in 2011 than in 2008, Our decision to reinvest in Meta (previously despite sales not having fully recovered. The market Facebook) last year was partly driven by our view underestimated this recovery, leading to strong that the company is uniquely placed to leverage AI. share performance. AI requires substantial financial resources and data, A similar pattern is now unfolding with internet- both of which Meta possesses in abundance. The focused companies. Consider Shopify, the company also boasts a strong engineering culture ecommerce tools platform. Its free cash flow margin and appears well-positioned to attract top talent. turned negative post-Covid as lockdown-driven We see numerous parallels between Shopify’s demand waned. However, following a period of strategic shift and Meta’s ‘year of efficiency’. Both reorientation, margins have recovered to prior peak companies, compelled by necessity, streamlined levels and could potentially surpass them this year. their teams to address the complexities bred from What drove Shopify to pursue such a rapid growth and to position themselves for the new turnaround? While there was some pressure to cut AI paradigm. Mark Zuckerberg optimised Meta costs given the shift in stock market sentiment, by trimming managerial layers, thus accelerating the company was motivated by a more pressing decision-making. Like Shopify, he made the company concern. Chief executive Tobi Lütke recognised that leaner by cancelling lower priority projects – the artificial intelligence (‘AI’) would be key to Shopify’s aforementioned ‘side quests’. Zuckerberg shares future, and he wanted to ensure the company was Lütke’s view that side quests can slow a company well-positioned to capitalise on this opportunity. down. For instance, side quests require IT and HR This required Shopify to become leaner to move support and, as these functions grow, they can faster. Lütke insightfully noted that companies often become less responsive to the main mission. become sluggish not due to their size, but because A leaner organisation, perhaps counterintuitively, of an accumulation of ‘side quests’ – projects often executes faster. adjacent to the main mission that don’t directly serve AI is already beginning to impact Meta’s business. it. While these may be manageable during stable It was Meta’s use of AI that enabled it to successfully economic times, they can hinder agility when the navigate Apple’s ad-targeting rule changes a few market landscape shifts. years ago. Meta is also using AI to refine its content In response, Shopify streamlined its operations, recommendation algorithm and has already seen divesting its logistics business to focus on AI. The improvements in user engagement as a result. company also eliminated unnecessary meetings and Investments in AI are not inexpensive. Both Meta cut bureaucracy, resulting in a one-third increase in and Amazon have revised their capital expenditure engineer productivity. Customer service efficiency budgets upward due to their AI spending plans. has also improved, with AI already assisting in over However, this expenditure remains manageable in half of customer service inquiries in the January the context of their prodigious cash flows. Indeed, – March quarter. Shopify is optimistic that AI will Amazon’s margins are on an upward trend and, like help contain costs while maintaining robust top-line Shopify’s, are poised to exceed their prior peak growth. The newly streamlined Shopify is emerging levels in the coming years. better positioned to exploit the product and cost opportunities afforded by generative AI. 10 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc NVIDIA, another holding in your portfolio, has been cohorts from which Insulet and Inspire derive most a key beneficiary of this AI spending boom. Its of their revenues are unlikely to be significantly revenues grew by a remarkable 125% last year and impacted by GLP-1s. We had been following both the shares responded accordingly. We reduced our businesses for some time and used this weakness position earlier this year to reflect the change in as an opportunity to initiate positions. risk-reward profile. Other notable new holdings in the period include: As mentioned, we believe Shopify and Meta have Guardant Health, a provider of molecular diagnostic emerged from their periods of reorientation stronger tests for cancer; YETI, a consumer branded goods and better positioned for the future. Block has company renowned for its durable coolers and undergone a similar transformation over the past drinks containers; Sprout Social, a social media year, which was one of the key motivations for our management platform; and Samsara, a provider of recent investment. Block, which owns merchant telematics and safety technology for the trucking software provider Square and financial app Cash industry. App, has always been an exceptional product We also made several complete sales during this company. However, it historically lacked financial period. We parted ways with communications discipline, and this lack of focus had begun to impact software provider Twilio, which had been its pace of innovation. This appears to be changing. underperforming for some time. The catalyst for this Founder Jack Dorsey is now managing the business sale was the departure of its founder, Jeff Lawson. to stringent targets that balance both growth and We also divested our position in videoconferencing profitability. Employee numbers have been capped, software company Zoom, which was struggling to and he has restructured the company to refocus on grow amidst fierce competition from Microsoft’s its core mission. As a result, Block is now more agile Teams. Other complete sales included Snap, and seems poised to become significantly more Chegg, Illumina, MarketAxess, Novocure, Redfin profitable. and Warby Parker. One feature common to Shopify, Meta and Block, While this may seem like a substantial list of and indeed many of your other holdings, is the changes, it’s important to note that your portfolio presence of a founder-leader. It has long been turnover remains low at 14%, consistent with our our contention that founder-led businesses five to ten-year holding period. This underscores are more adaptable than average. This is partly our commitment to long-term investing and our because founders wield what Ben Horowitz calls conviction in the companies we hold. ‘moral authority’ – the credibility necessary to make substantial strategic changes. The rapid On the unlisted front, we made one additional transformations we have witnessed at Shopify, investment during the year: Human Interest, Meta and Block in response to changing market which helps small and medium-sized businesses conditions are rare in non-founder-led businesses. offer retirement plans to their employees. The IPO market is beginning to show signs of life, Portfolio changes although volumes remain well below pre-pandemic While AI has dominated recent headlines, it is levels. As mentioned in our interim report, one of not the only disruptive force to have emerged in your holdings, online cosmetics company Oddity, recent years. In the healthcare sector, a new class went public during the year. We anticipate that of medicines called GLP-1s has created a stir due more of the private businesses in your portfolio will to their ability to induce weight loss. While we do transition to public markets in the coming years. not have direct exposure to manufacturers of these At the end of the reporting period, the Company held drugs, the excitement surrounding GLP-1s indirectly 24 private companies, which in aggregate comprised led to the purchase of two new healthcare holdings: 34.1% of total assets. The allocation to private Insulet, which produces pumps for treating diabetes, companies is concentrated, with the top five private and Inspire Medical Systems, which manufactures companies comprising over half of the allocation, surgical implants for sleep apnoea. Both stocks and the top ten comprising over three-quarters. experienced sell-offs due to fears that GLP-1s would We have provided a summary of the operational shrink their addressable markets. While diabetes progress of the top ten private companies on pages and sleep apnoea are linked to obesity, making this 38 to 40. concern understandable, we believe that the patient 11 Strategic report Outlook The US remains a fertile hunting ground for growth investors. Its companies are leading in new technological paradigms like AI, just as they led previous innovation waves such as the internet and mobile. Our aim is to identify the most exceptional amongst these companies and hold them for the long term, thereby capturing the unique upside that such companies offer. In our experience, one of the key features that unites such firms is adaptability. To endure and thrive over the long term, businesses must be able to respond effectively to changing market circumstances and technological paradigms. The transformations we have witnessed at holdings including Shopify, Meta, Block and, indeed, NVIDIA over the past few years are extremely encouraging in this context. They have demonstrated their adaptability and are now better positioned for the future. The next cohort of generationally important companies will share this ability to adapt, innovate and position themselves for a rapidly evolving future. It is our conviction that many such companies are present in your portfolio, across both your public and private holdings. Markets have been volatile lately, reflecting uncertainty about the future. We believe our investee companies have the qualities necessary to navigate through this uncertainty. The best companies create opportunities for themselves, even in challenging environments. We believe this feature is structurally underappreciated by markets and exploitable by patient investors. As we look ahead, we remain excited about the prospects for your portfolio and confident in our ability to continue identifying and investing in the companies that will shape the future of the global economy. US Equity Growth Team Baillie Gifford & Co 21 August 2024 12 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc 13 Strategic report ## Baillie Gifford’s ## stewardship principles Baillie Gifford’s overarching ethos is that we are ‘Actual’ investors. That means we seek to invest for the long term. Our role as an engaged owner is core to our mission to be effective stewards for our clients. As an active manager, we invest in companies at different stages of their evolution across many industries and geographies, and focus on their unique circumstances and opportunities. Our approach favours a small number of simple principles rather than overly prescriptive policies. This helps shape our interactions with holdings and ensures our investment teams have the freedom and retain the responsibility to act in clients’ best interests. Long-term value creation Governance fit for purpose We believe that companies that are run for the Corporate governance is a combination of structures long term are more likely to be better investments and behaviours; a careful balance between systems, over our clients’ time horizons. We encourage our processes and people. Good governance is the holdings to be ambitious, focusing on long-term essential foundation for long-term company value creation and capital deployment for growth. success. We firmly believe that there is no single We know events will not always run according to governance model that delivers the best long-term plan. In these instances we expect management outcomes. We therefore strive to push back against to act deliberately and to provide appropriate one-dimensional global governance principles in transparency. We think helping management to favour of a deep understanding of each company resist short-term demands from shareholders often we invest in. We look, very simply, for structures, protects returns. We regard it as our responsibility to people and processes which we think can maximise encourage holdings away from destructive financial the likelihood of long-term success. We expect to engineering towards activities that create genuine trust the boards and management teams of the value over the long run. Our value will often be in companies we select, but demand accountability supporting management when others don’t. if that trust is broken. Alignment in vision and practice Sustainable business practices Alignment is at the heart of our stewardship A company’s ability to grow and generate value for approach. We seek the fair and equitable treatment our clients relies on a network of interdependencies of all shareholders alongside the interests of between the company and the economy, society and management. While assessing alignment with environment in which it operates. We expect holdings management often comes down to intangible factors to consider how their actions impact and rely on these and an understanding built over time, we look for relationships. We believe long-term success depends clear evidence of alignment in everything from on maintaining a social licence to operate and look capital allocation decisions in moments of stress for holdings to work within the spirit and not just the to the details of executive remuneration plans and letter of the laws and regulations that govern them. committed share ownership. We expect companies Material factors should be addressed at the board to deepen alignment with us, rather than weaken it, level as appropriate. where the opportunity presents itself. 14 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc ## Baillie Gifford ## proxy voting We believe that ‘active ownership’ of our clients’ Company meeting record holdings is as important as selecting the right investments in the first instance. These guidelines are aligned with our stewardship principles and describe our approach to proxy voting and company engagement, the key levers of active ownership, often described as ‘stewardship’. While these guidelines are intended to provide an insight into how we approach voting on our clients’ behalf, it is important to note that we assess every company individually. In voting, we will always evaluate proposals on a case-by-case basis, based on what we believe to be in the best long-term interests of our clients, rather than rigidly applying a policy. Number of meetings voted 100 A broad cross section of our investment staff are with management involved in our ongoing work on stewardship. In the Number of meetings with at least 14 same way that our investment approach is based one vote against, withhold or abstain around empowered and independent teams, our Meetings not voted – voting and engagement is led by the individual investment teams. In keeping with our decentralised and autonomous culture, our investment teams will, Voting distribution on occasion, elect to vote differently on the same general meeting resolutions. Where this happens, we report accordingly in the proxy voting disclosure on our website. We also have clear processes in place to identify, prevent and manage potential proxy voting-related conflicts of interest to ensure that in all cases the firm acts in the clients’ best interest. Baillie Gifford’s firm-wide conflict of interest disclosure is available on our website at bailliegifford.com Prior to taking any voting action, we usually address specific ESG concerns by engaging directly with the company, using voting as an escalation mechanism if we have not seen sufficient progress. Voting activity and the reasons for any resolutions voted Votes for 92.4% against in the period is disclosed on the Company Votes against 6.6% website and can be viewed at bgusgrowthtrust.com Votes abstained 1.0% 15 Strategic report ## Baillie Gifford environmental, ## social and governance ## engagement By engaging with companies, we seek to build constructive relationships with them, to better inform our investment activities and, where necessary, effect change within our holdings, ultimately with the goal of achieving better returns for our shareholders. The examples on the following pages demonstrate our stewardship approach through constructive, ongoing engagement. Engagements in the year to 31 May 2024 Environmental Social Governance 10X Genomics Affirm Alnylam Pharmaceuticals Amazon Aurora Innovation Cloudflare CoStar Group Coursera Guardant Health HashiCorp Moderna Netflix NVIDIA Penumbra Pinterest Rivian Automotive Roblox Roku Solugen Shopify Snowflake Sprout Social Sweetgreen Tesla The Trade Desk Watsco Wayfair Workday 16 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Guardant Health Objectives In March 2024, we met with the co-Founders and co-CEOs of Guardant Health, Helmy Eltoukhy and AmirAli Talasaz. We wanted to deepen our relationship with the founders and further explore their long-term strategy to grow Guardant’s liquid biopsy business. Discussions Outcomes The discussion was wide ranging. Areas of focus Overall, we gained a greater understanding of included: how Guardant could grow the therapy Guardant’s market opportunity, the approach of the selection part of the business to expand across the co-founders, as well as some further insight into patient journey, rather than the single point it is used the culture they foster at the company. The meeting at today; the company’s international expansion served to deepen our relationship in what we plans; and the potential scale and opportunity of its hope to be a multi-year investment and was thesis screening business, which could be revolutionary supportive. but is at an early stage. In particular, we explored the FDA approval pathway for it to become reality. 17 Strategic report Solugen Objectives We spent several days visiting Solugen’s headquarters in Houston, Texas in September 2023. As mentioned last year, we have an observer board seat at Solugen, which helps us gain significant insight into the company’s progress. The purpose of this visit was to see how this progress is translating into action on the ground. We were taken on a tour of various manufacturing facilities by the chief technical officer and co-founder, Sean Hunt. Discussions Outcomes Sean Hunt showed us much of the original This visit served to enhance our understanding manufacturing equipment and the control room of Solugen’s processes and potential competitive for Solugen’s innovative bioforge in Houston. advantages as well as confirm its progress in The bioforge is a biomanufacturing platform to developing the next generation of sustainable produce organic acids (used in concrete, cleaning, chemical production. The Houston bioforge is the agricultural and energy industries) via a novel proof of concept that helped Solugen to recently technology that leverages enzymes and metal win a contract with the US Department of Energy catalysts. The highly efficient production process to begin construction of a second, larger bioforge has significantly lower carbon emissions and higher in Marshall, Minnesota. yield than existing methods of chemical production. Solugen’s bioforge in Houston has been operating since 2021. We also visited the bioforge itself and were taken through the groundbreaking process the company has developed. 18 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc CoStar Group Objectives CoStar provides information, analytics and online marketplaces to the commercial real estate industry in North America and the UK. The objective of our meeting in August 2023 was to explore aspects of sustainability most material to CoStar, namely, human capital, social issues and data privacy. Discussions Outcomes CoStar balanced people’s needs and the imperative Through ongoing discussions with company for growth during our discussion about human leadership, it has become clear that CoStar sees capital and social issues. They believe the answer to human capital, social and data privacy issues these concerns can be found in people leadership. as among the most material to the long-term The board spends a lot of time on strategy sustainability of their businesses. We agree. alongside acquisitions and integrations, while the This was another positive conversation. CoStar head of HR presents to CoStar’s board at least has been proactive in reaching out to us on many twice yearly. CoStar also conducted a materiality topics, and we invited them to continue to do so. assessment several years ago, identifying attrition We will follow CoStar’s progress through future and engagement as concerns. They believe they engagements. have addressed some of this as attrition rates have fallen and engagement scores have subsequently risen. Data privacy has always been on top of CoStar’s priority list due to its large dataset, which is a source of competitive advantage. The engagement highlighted CoStar’s continued focus on strengthening its data and cyber security as it integrates AI further into its business. 19 Strategic report ## One year ## summary 31 May 2024 31 May 2023 % change | Shareholders’ funds | # | | £643.9m £568.6m 13.2 | | | --- | --- | --- | --- | --- | | Gearing* | | | | 5% 6% | | Net asset value per ordinary share | | ‡ | 216.65p 186.48p 16.2 | | Share price 192.40p 144.80p 32.9 Comparative index (in sterling terms) † 24.8 Ongoing charges* 0.70% 0.69% Discount* 11.2% 22.4% Active share (relative to S&P 500 Index)* 86% 92% Number of shares in issue 297,228,700 305,153,700 Market capitalisation £571.9m £441.9m Year to 31 May 2024 2023 Total returns (%)* Net asset value 16.2% (2.7%) Share price 32.9% (13.8%) Comparative index (in sterling terms) † 24.8% 4.7% * Alternative performance measure – see Glossary of terms and alternative performance measures on pages 124 to 127. † S&P 500 Index total return (in sterling terms). See disclaimer on page 120. # For a definition of terms see Glossary of terms and alternative performance measures on pages 124 to 127. ‡ Net asset value per share (‘NAV’) with borrowings at fair value. At 31 May 2024 the NAV with borrowings at fair value was the same as the NAV with borrowings at book value. For a definition of terms see Glossary of terms and alternative performance measures on pages 124 to 127. Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 120. Past performance is not a guide to future performance. 20 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc | Year to 31 May | 2024 | 2024 | 2023 | 2023 | | --- | --- | --- | --- | --- | | Year's high and low | High | Low | High | Low | | Net asset value per ordinary share‡ | 228.97p | 176.10p | 223.16p | 169.35p | | Share price | 204.00p | 135.6p | 197.00p | 132.80p | | Discount* | 9.6% | 24.5% | 9.7% | 23.7% | | | 2024 | 2023 | | --- | --- | --- | | Net return per ordinary share | | | | Revenue | (2.07p) | (1.55p) | | Capital | 31.73p | (3.56p) | | **Total** | **29.66p** | **(5.11p)** | * Alternative performance measure – see Glossary of terms and alternative performance measures on pages 124 to 127. ‡ Net asset value per share ('NAV') with borrowings at fair value. At 31 May 2024 the NAV with borrowings at fair value was the same as the NAV with borrowings at book value. For a definition of terms see Glossary of terms and alternative performance measures on pages 124 to 127. Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 120. Past performance is not a guide to future performance. 21 Strategic report # Five year summary The following charts indicate how an investment in Baillie Gifford US Growth has performed relative to its comparative index and its underlying net asset value over the five year period to 31 May 2024. **Total return* performance** (figures rebased to 100 at 31 May 2019) ![img-0.jpeg](img-0.jpeg) **Premium/(discount)* to net asset value** (figures plotted on a monthly basis) ![img-1.jpeg](img-1.jpeg) * Alternative performance measure – see Glossary of terms and alternative performance measures on pages 124 to 127. † S&P 500 Index total return (in sterling terms). See disclaimer on page 120. Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 120. Past performance is not a guide to future performance. 22 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Annual net asset value and share price total return * Relative annual net asset value and share price total return * (after deducting borrowings at fair value) (relative to the comparative index † total return) 25% 50% 0% 0% | | 2020 | 2021 2022 2023 | | 2024 | | 2020 | 2021 2022 2023 | | 2024 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Years to 31 May | | | | | Years to 31 May | | | NAV per share return ● Share price return | | | | | NAV per share return ● Share price return | | | | | Active share * Portfolio turnover * (compared to the comparative index † ) (plotted on a quarterly basis) 80% 60% 40% 10% 20% | 0% | | | | 0% | | | | --- | --- | --- | --- | --- | --- | --- | | | 2019 | 2020 | 2021 2022 2023 | | 2019 2020 2021 2022 2023 | | | | | | Years to 31 May | | | Years to 31 May | | Active share | | | | Turnover | | | 100% 30% 100% 50% 20% * Alternative performance measure – see Glossary of terms and alternative performance measures on pages 124 to 127. (25%) † S&P 500 Index total return (in sterling terms). See disclaimer on page 120. Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 120. (50%) Past performance is not a guide to future performance. | (50%) (75%) | | | | --- | --- | --- | | | 2024 2024 | 23 | | ● ● ● ● | | | Strategic report ## Summary of results ## * ## since inception Capital Shareholders’ funds/net | | | | | | | | | asset value | | | Net asset | | | | Premium/ | | Premium/ | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Total | | | Shareholders’ | | | (book) | | value (fair) | | Share | | (discount) | | (discount) | | | | | | | assets | Borrowings | | | funds | per share | | | per share | † | price | | (book) | † | | (fair) | † | | At 31 May | | | £’000 | | £’000 | | £’000 | | | p | | p | | p | | % | | | % | | 23 March | | 169,466 – 169,466 97.96 97.96 100.50 2.6 2.6 | | | | | | | | | | | | | | | | | | | 2018 | # | | | | | | | | | | | | | | | | | | | 2019 301,830 11,901 289,929 126.17 126.17 129.00 2.2 2.2 2020 490,762 14,560 476,202 181.92 181.92 189.00 3.9 3.9 2021 935,222 26,339 908,883 296.21 296.12 308.00 4.0 4.0 2022 623,860 39,674 584,186 191.44 191.63 168.00 (12.2) (12.3) 2023 608,941 40,342 568,599 186.33 186.48 144.80 (22.3) (22.4) 2024 683,204 39,271 643,933 216.65 216.65 192.40 (11.2) (11.2) Revenue Gearing ratios Revenue earnings | | | | | Net return | | per ordinary | | | Ongoing | | | | | Gross | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Period/year | | Income | | after tax | | | share | | charges | † | Gearing | † | gearing | | † | | to 31 May | | £’000 | | | £’000 | | | p ‡ | | % | | % | | | % | | 2019 | ¶ | | 699 (2,054) (1.09) 0.77 2 4 | | | | | | | | | | | | | 2020 595 (2,555) (1.05) 0.75 (1) 3 2021 648 (5,066) (1.78) 0.68 1 3 2022 568 (5,781) (1.88) 0.62 6 7 2023 850 (4,718) (1.55) 0.69 6 7 2024 603 (6,282) (2.07) 0.70 5 6 * For a definition of terms used see Glossary of terms and alternative performance measures on pages 124 to 127. † Alternative performance measure. See Glossary of terms and alternative performance measures on pages 124 to 127. # Close of business on 23 March 2018, launch date and first trade date. ‡ The calculation of revenue earnings per share is based on the revenue from ordinary activities after taxation and the weighted average number of ordinary shares in issue (see note 7 to the Financial Statements on page 98). ¶ For the period 7 February 2018, date of incorporation of the Company, to 31 May 2019. Past performance is not a guide to future performance. 24 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Cumulative performance (taking 23 March 2018 as 100) At 31 May Net asset value (fair) total return † Share price total return † Comparative index total return § 23 March 2018 # 100 100 100 2019 129 128 122 2020 186 188 141 2021 302 306 172 2022 196 167 193 2023 190 144 202 2024 221 191 252 † Alternative performance measure. See Glossary of terms and alternative performance measures on pages 124 to 127. # Close of business on 23 March 2018, launch date and first trade date. § S&P 500 Index total return (in sterling terms). Source: LSEG and relevant underlying index providers. See disclaimer on page 120. Absolute performance | | | 1 year | | 3 years | | 5 years | | Since inception | | # | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | % | | % | | % | | | % | | Share price | | 32.9 | | (37.5) | | | 49.1 | | 91.4 | | | NAV | ‡ | | 16.2 (26.8) 71.7 121.2 | | | | | | | | Comparative index* 24.8 46.5 106.2 152.0 All figures are stated on a total return basis † for the period to 31 May 2024. * Comparative index: S&P 500 Index (total return and in sterling terms). † Alternative performance measure – see Glossary of terms and alternative performance measures on pages 124 to 127. # Close of business on 23 March 2018, launch date and first trade date. ‡ Net asset value per share (‘NAV’) with borrowings at fair value. At 31 May 2024 the NAV with borrowings at fair value was the same as the NAV with borrowings at book value. For a definition of terms see Glossary of terms and alternative performance measures on pages 124 to 127. Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 120. Past performance is not a guide to future performance. 25 Strategic report ## Review of ## investments Top ten holdings A review of the Company’s ten largest investments and additions to the private company investments as at 31 May 2024. © Copyright (c) 2022 Nor Gal/Shutterstock© SpaceX | Space Exploration | NVIDIA | | --- | --- | | Technologies | NVIDIA designs and manufactures | | An aerospace and space | graphics processing units for the | | transportation company that | gaming and professional markets. | | manufactures advanced rockets, | They are highly specialised | | like the Falcon 9, and satellites, | semiconductor chips that can be | | like Starlink, which provides | used for a range of applications, | | global broadband services. We are | from gaming to artificial intelligence | | excited by its pursuit of reduced | (‘AI’). After years of investment | | launch costs, thus opening | into both hardware and software, | | avenues for growth, such as | NVIDIA is well positioned to benefit | | tourism and transportation. A clear | from the rise of generative AI, as | | segment leader, it looks positioned | its chips form the infrastructure | | to capture an attractive share of | layer to power large language | | the growing space industry, while | models. NVIDIA is using its scale to | | Starlink may become the first | further reinvest in its opportunity; | | globally relevant utility. | designing new hardware to make | data centres more powerful and energy efficient, while building software to help companies adopt AI more quickly. | Valuation at | £51,864,000 | | Valuation at | £44,715,000 | | --- | --- | --- | --- | --- | | 31 May 2024 | | | 31 May 2024 | | | % of total assets* 7.6% | | | % of total assets* 6.5% | | | Valuation at | £39,220,000 | | Valuation at | £24,334,000 | | 31 May 2023 | | | 31 May 2023 | | | % of total assets* 6.5% | | | % of total assets* 4.0% | | | Net purchases/(sales) | | Nil | Net purchases/(sales) | (£1,399,000) | | in the year | | | in the year | | Denotes private company investment. * Total assets less current liabilities, before deduction of borrowings. See Glossary of terms and alternative performance measures on pages 124 to 127. 26 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc © Stripe | Amazon | | The Trade Desk | | Stripe | | | | --- | --- | --- | --- | --- | --- | --- | | In retail, Amazon competes on | | The advertising industry is | | Stripe is a payments technology | | | | price, selection and convenience | | undergoing a wholesale shift. In the | | company. Founded in 2010 by Irish | | | | and is improving all three as | | past advertising was bought and | | brothers Patrick and John Collison, | | | | it gets bigger. Amazon’s AWS | | sold in bundles. In the digital world, | | the company is in the process of | | | | (Amazon Web Services) division | | advertising can be transacted on | | developing a platform for sending | | | | is in a clear position of leadership | | a one-to-one basis, targeting only | | money seamlessly and compliantly | | | | in what could turn out to be one | | the audiences that are relevant. | | between any two internet- | | | | of the largest and most important | | The Trade Desk provides the | | connected nodes in the world. | | | | market shifts of our time. Both | | technology that enables this | | The company processes massive | | | | opportunities are outputs of what | | targeted buying of advertising | | volumes of payments from a broad | | | | is perhaps most distinctive of all | | through real-time auctions. | | customer base, ranging from US | | | | about Amazon – its culture. The | | This is known as programmatic | | start-ups to global giants. Stripe’s | | | | company is run with a uniquely | | advertising. Programmatic | | long-term ambition is to make | | | | long-term perspective. It is | | advertising is growing rapidly, | | entrepreneurship easier and thus | | | | willing to be bold and scale its | | supported by higher efficacy and | | significantly increase the amount | | | | experiments (and failures) as it | | a tangible demonstration of return | | of business conducted online. | | | | grows. These cultural distinctions | | on investment. We believe that | | | | | | allow Amazon to possess the rare | | The Trade Desk will emerge as the | | | | | | and attractive combination of scale | | leading buying platform for the | | | | | | and immaturity. | | independent internet. | | | | | | Valuation at | £35,710,000 | Valuation at | £34,288,000 | Valuation at | £32,007,000 | | | 31 May 2024 | | 31 May 2024 | | 31 May 2024 | | | | % of total assets* 5.2% | | % of total assets* 5.0% | | % of total assets* 4.6% | | | | Valuation at | £22,361,000 | Valuation at | £32,448,000 | Valuation at | £25,681,000 | | | 31 May 2023 | | 31 May 2023 | | 31 May 2023 | | | | % of total assets* 3.7% | | % of total assets* 5.3% | | % of total assets* 4.2% | | | | Net purchases/(sales) | £3,626,000 | Net purchases/(sales) | (£1,040,000) | Net purchases/(sales) | | Nil | | in the year | | in the year | | in the year | | | Denotes private company investment. * Total assets less current liabilities, before deduction of borrowings. See Glossary of terms and alternative performance measures on pages 124 to 127. 27 Strategic report © DIEGO AZUBEL/EPA-EFE/Shutterstock© Shutterstock / Melnikov Dmitriy | Meta Platforms | Moderna | Netflix | | --- | --- | --- | | Meta Platforms is the owner | Moderna is a leader in the field | Netflix has the potential to | | of Facebook, WhatsApp and | of mRNA therapeutics. mRNA is | become the first truly global | | Instagram. We think that AI could | a foundational technology that | content and distribution media | | be a significant growth driver. In | theoretically has the potential | brand. Its base of more than | | the nearer term, it should facilitate | to induce the production of just | 230 million subscribers allows | | revenue growth as AI systems | about any protein – human or | it to invest in building a strong | | allow adverts to be targeted | non-human – inside our cells. This | customer proposition through its | | more effectively despite Apple’s | versatility opens up a wide range | library of exclusive and desirable | | privacy restrictions. Facebook | of therapeutic opportunities for | content. This in turn attracts more | | may be unique in having the | mRNA. mRNA is in a sense digital, | subscribers, creating a powerful | | engineering resources to take | and is therefore programmable. | flywheel that distances itself | | advantage of this opportunity. The | In moving from one drug to the | from other likely competitors. | | company addressed its cost base | next, the delivery mechanism | The shift from linear TV to on- | | last year, leaving it well-placed | and building blocks remain the | demand streaming is still in the | | to take on this challenge. In the | same. The only thing that changes | early stages, and Netflix is a prime | | longer term, AI should facilitate | is the code. Because of this, | beneficiary. | | the monetisation of WhatsApp, a | Moderna’s mRNA platform ought | | | platform that enjoys widespread | to be more scalable than past | | | usage but has struggled to find a | drug development approaches. | | | revenue model. | Moderna may have more in | | common with a software company than a biotech business. | Valuation at | £25,369,000 | | Valuation at | £23,506,000 | | Valuation at | £23,441,000 | | --- | --- | --- | --- | --- | --- | --- | --- | | 31 May 2024 | | | 31 May 2024 | | | 31 May 2024 | | | % of total assets* 3.7% | | | % of total assets* 3.4% | | | % of total assets* 3.4% | | | Valuation at | | – | Valuation at | £21,025,000 | | Valuation at | £17,247,000 | | 31 May 2023 | | | 31 May 2023 | | | 31 May 2023 | | | % of total assets* – | | | % of total assets* 3.5% | | | % of total assets* 2.8% | | | Net purchases/(sales) | £18,391,000 | | Net purchases/(sales) | | £973,000 | Net purchases/(sales) | (£1,588,000) | | in the year | | | in the year | | | in the year | | * Total assets less current liabilities, before deduction of borrowings. See Glossary of terms and alternative performance measures on pages 124 to 127. 28 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Private company new buy © NetPhotos/Alamy Stock Photo Shopify Brex Human Interest Shopify provides software tools Brex is building an all-in-one Human Interest is a digital which allow merchants to easily set platform for businesses to manage retirement account manager giving their finances. It started by offering up and manage their businesses SME employers the ability to offer a corporate card for venture- across an increasingly complex employees 401(k) pension and backed business. It has expanded and fragmented retail landscape. IRA (individual retirement into larger businesses and is now Shopify’s software helps to account) plans. This is a massively offering a broader suite of products make merchants more efficient underserved part of the market including business accounts, by automating large swathes of – 50% of American households expense management and bill their operations (e.g. marketing, have no retirement accounts. The pay software. Existing options are | inventory management, payments, | expensive and do not work well | possibilities of real-time payroll | | --- | --- | --- | | order processing, shipping) thus | with one another. Brex is aiming to | SaaS (software as a service) | | allowing them to focus on product | build a fully integrated suite which | integrations enable automated | | market fit. The company maintains | will act as the financial operating | and therefore very low cost 401(k) | | a rapid pace of innovation and is | system for growing businesses. Its | administration. Human Interest | business model and approach have run by an impressive founder who has become the clear leader in the demonstrated strong alignment has built a distinctive merchant space. It has: a large end market; with its customers, a rarity in focused culture. a rapidly growing product that has this sector. This customer focus, a plausible regulatory tailwind; a coupled with the strength of the business model that shows clear founding team and breadth of their signs of operating leverage; and ambition, leave Brex well placed to a decent argument for business exploit this opportunity. model innovation against the incumbents. | Valuation at | £21,747,000 | Valuation at | £20,666,000 | | Valuation at | £4,713,000 | | | --- | --- | --- | --- | --- | --- | --- | --- | | 31 May 2024 | | 31 May 2024 | | | 31 May 2024 | | | | % of total assets* 3.1% | | % of total assets* 3.1% | | | % of total assets* 0.7% | | | | Valuation at | £33,135,000 | Valuation at | £15,624,000 | | Valuation at | | – | | 31 May 2023 | | 31 May 2023 | | | 31 May 2023 | | | | % of total assets* 5.4% | | % of total assets* 2.6% | | | % of total assets* – | | | | Net purchases/(sales) | (£5,042,000) | Net purchases/(sales) | | Nil | Net purchases/(sales) | £4,658,000 | | | in the year | | in the year | | | in the year | | | Denotes private company investment. * Total assets less current liabilities, before deduction of borrowings. See Glossary of terms and alternative performance measures on pages 124 to 127. 29 Strategic report ## Portfolio executive ## summary Key contributors to and detractors from performance – year to 31 May 2024 | | Contribution to | | Absolute | | | Contribution to | Absolute | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | absolute performance | | performance | | | absolute performance | performance | | | Contributors | % * | | % | † | Detractors | % * | % | † | | NVIDIA 6.4 182.7 | | | | | Convoy (1.3) (100.0) | | | | | Space | | 2.0 32.2 | | | Novocure (1.0) (80.0) | | | | Exploration Denali (0.4) (40.2) Technologies Therapeutics Amazon 1.9 42.4 | | Indigo | (0.4) (94.5) | | --- | --- | --- | | Netflix 1.6 58.0 | Agriculture | | | DoorDash 1.4 64.1 | Solugen | (0.4) (19.2) | * Contribution to absolute performance (in sterling terms) has been calculated to illustrate how an individual stock has contributed to the overall return. It is influenced by both share price performance and the weighting of the stock in the portfolio, taking account of any purchases or sales over the period. † Absolute performance (in sterling terms) has been calculated on a total return basis over the period 1 June 2023 to 31 May 2024. For the definition of total return see Glossary of terms and alternative performance measures on pages 124 to 127. Table ordered by contribution to performance. Denotes private company investment. Source: Revolution. Distribution of total assets * by sector 2024 Industry 2024 2023 % % 6 1 Information technology 29.9 31.3 1 2 Consumer discretionary 19.0 18.8 5 3 Communication services 15.6 11.7 4 Industrials 12.5 16.2 5 Healthcare 12.1 13.7 4 6 Financials 6.2 3.9 7 Real estate 1.6 0.3 2 8 Materials 1.4 2.3 3 9 Consumer staples 1.0 1.3 10 Net liquid assets 0.7 0.5 Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 120. * For a definition of terms see Glossary of terms and alternative performance measures on pages 124 to 127. 30 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc New buys Additions Block Amazon Pinterest Guardant Health Aurora Innovation Roblox Human Interest BillionToOne Sana Biotechnology Inspire Medical Systems Cloudflare Sweetgreen Insulet Coursera Meta Platforms Databricks Samsara Doximity Sprout Social Honor Technology YETI Holdings Moderna ReductionsComplete sales | Convoy | * | 10X Genomics | HashiCorp | Snowflake | | --- | --- | --- | --- | --- | | Chegg | | Affirm | Lemonade | Tesla | | Illumina | | Alnylam Pharmaceuticals | Netflix | The Trade Desk | | MarketAxess | | Chewy | NVIDIA | Watsco | | Novocure | | CoStar Group | Oddity | Wayfair | | Redfin | | Datadog | Penumbra | Workday | | Snap | | Denali Therapeutics | Recursion Pharmaceuticals | | | Twilio | | DoorDash | Rivian Automotive | | | Warby Parker | | Duolingo | Roku | | | Zoom Video Communications | | Ginkgo Bioworks | Shopify | | Assets highlighted in bold indicate an investment decision. * The Convoy holdings were written off during the period subsequent to the company ceasing operations. Denotes private company investment. Denotes listed investment previously held in the portfolio as a private company investment. 31 Strategic report Growth drivers 2024 The illustration below groups companies by the long-term growth drivers identified during investment research. This is a subjective process, but we believe it is more consistent with our view that the real risk in the portfolio lies in the growth opportunities identified for individual companies not playing out, rather than how index providers choose to classify companies. Inspire 10x Genomics Lyra Health Doximity Insulet Rivian Data meets Devices Honor PsiQuantum Nuro Healthcare 3.5% Zipline 3.4% Workday Tanium Evolution of Perumbra Capsule Guardant Innovation | | | | | | Transportation | | | | BillionToOne | | Recursion | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | Healthcare | | Pharmaceuticals | | | | | | | Samsara | | 6.3% | | | | | | | | | | | | | | Convoy | 11.8% | | | | | | | New | Datadog | | | | | | | | | | Databricks | Enterprise | | | | | | TeslaAurora | | | | | | | | 17.2% | Cloudflare | | | | | | | | | Therapies | Watsco | | | | Snyk | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | HashiCorp | | | | | | | | | | (Development Stage) | | | | | | Capital | | | | | Snowflake | | | | | | | | | | | | Alnylam | | | | | | | | | Sprout Social | | | | | | | 0.7% | | | | | Allocators | | | | | | | | | | | | | | | | Pharmaceuticals | | | 2.9% | | | | | | | | | Niantic | | | | | Denali | | | | | | | | Amazon.com | | | NVIDIA | | | | | Industrialisation | | | | | | | | | | | | | | | | | | | | | | Therapeutics | | Therapies | | | YETI | | | | | | | | Roku | | | | | | | | | | | | CoStar | | | | | | | | | | | of Biology | | | | | | | | | Away (JRSK) | | | | | | | | Netflix | | | | | (Commercial Stage) | | | Roblox Battle for 1.4% Sana 4.2% Thumbtack Biotechnology The Trade Desk Our Attention Solugen Moderna Shopify 16.4% Discord Indigo Sweetgreen Pinterest Agriculture Meta Ginkgo Future of Epic Games BioWorks Wayfair Brex Commerce Block 22.7% Lemonade Faire Wholesale Workrise Digitisation of Finance | | Oddity | | Coursera | | | | --- | --- | --- | --- | --- | --- | | Chewy Airbnb | | SpaceX | | 10.8% | | | | | | Change in | | Stripe | Human Interest | DoorDash | Commercialisation | | Education | | | --- | --- | --- | --- | --- | | | | of Space | 2.0% | Blockstream | | | | 7.6% | Duolingo | | This thematic risk analysis is reflective of the Managers’ views. Companies may appear in more than one circle if they are exposed to the same thematic risk. Figures represent percentage of total investments excluding cash. Source: Baillie Gifford. 32 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc 33 Strategic report # Baillie Gifford – valuing private companies We hold our private company investments at 'fair value' i.e. the price that would be paid in an open-market transaction. Valuations are adjusted both during regular valuation cycles and on an ad hoc basis in response to 'trigger events'. Our valuation process ensures that private companies are valued in both a fair and timely manner. The valuation process is overseen by a valuations group at Baillie Gifford, which takes advice from an independent third party (S&P Global). The valuations group is independent from the investment team with all voting members being from different operational areas of the firm, and the portfolio managers only receive final notifications once they have been applied. We revalue the private holdings on a three-month rolling cycle, with one third of the holdings reassessed each month. During stable market conditions, and assuming all else is equal, each investment would be valued four times in a twelve-month period. For investment trusts, the prices are also reviewed twice per year by the respective investment trust boards and are subject to the scrutiny of external auditors in the annual audit process. Beyond the regular cycle, the valuations team also monitors the portfolio for certain 'trigger events'. These may include: changes in fundamentals; a takeover approach; an intention to carry out an Initial Public Offering ('IPO'); company news which is identified by the valuation team or by the portfolio managers; or meaningful changes to the valuation of comparable public companies. Any ad hoc change to the fair valuation of any holding is implemented swiftly and reflected in the next published net asset value. The valuations group also monitors relevant market indices on a weekly basis and updates valuations in a manner consistent with our external valuer's (S&P Global) most recent valuation report where appropriate. Periods of market volatility during the year have meant that valuations continue to be reviewed much more frequently, in some instances resulting in a further valuation movement. The data below quantifies the revaluations carried out during the year to 31 May 2024, but does not reflect the ongoing monitoring of the private investment portfolio that has not resulted in a change in valuation. ## Baillie Gifford US Growth Trust* | Instruments held | 56 | | --- | --- | | Number of revaluations | 288 | | Percentage of portfolio valued up to 4 times | 30.4% | | Percentage of portfolio valued 5+ times | 69.6% | * Data reflecting period 1 June 2023 to 31 May 2024 to align with the Company's reporting period end. Whilst pockets of heightened volatility remain, the general improvement in market sentiment is reflected in the private company valuations at 31 May 2024. The average movement in company valuations and share prices across the portfolio are shown below. | | Average movement in company valuation | Average movement in share price | | --- | --- | --- | | Baillie Gifford US Growth Trust* | 15.7% | 22.2% | * Data reflecting period 1 June 2023 to 31 May 2024 to align with the Company's reporting period end. 34 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc ## Private companies summary ### Historical snapshot Since our first investment in private companies in 2018, Baillie Gifford US Growth has deployed £242.5m of capital in this area. ![img-2.jpeg](img-2.jpeg) ### Transaction value Showing all transactions prior to 31 May 2024 (£'000). (Graph plotted in calendar years) ![img-3.jpeg](img-3.jpeg) ### Portfolio activity – year to 31 May 2024 £8.2m of new capital was deployed in private companies during the year. #### New buys Human Interest #### Follow on funding rounds BillionToOne Databricks Honor Technology Oddity listed during the period. Subsequent to Convoy ceasing operations the holdings in it were written off during the year (see note 9 of the Financial Statements on page 100). ### Concentration At 31 May 2024 we held 24 private companies which equated to 34.1% of total assets. - Five companies account for 57.3% of the private company exposure. - Ten companies account for 78.1% of the private company exposure. ![img-4.jpeg](img-4.jpeg) All figures stated as percentage of total assets, as at 31 May 2024. 35 Strategic report | | | Private exposure 31 May 2024 | | 31 May 2023 | | | --- | --- | --- | --- | --- | --- | | | | | % | | % | | 1 | 1 Space Exploration Technologies 7. 6 6.5 | | | | | 2 Stripe 4.6 4.2 3 Brex 3.1 2.6 6 4 Zipline 2.1 2.3 5 Faire Wholesale 1.9 2.2 2 6 Other 14.8 16.7 3 5 4 Performance of listed holdings at 31 May 2024 held previously as private company investments from date of initial investment of each holding to 31 May 2024 (absolute performance in sterling terms %) Affirm Airbnb Aurora Ginkgo Bioworks Oddity Snowflake 400(100) 0 200100 300 ● Absolute performance from initial investment to initial public offering % ● Absolute performance from initial public offering to 31 May 2024 % ● Total absolute performance from initial investment to 31 May 2024 % Source: Revolution/Baillie Gifford. Note: Absolute performance returns cannot be added together as they are geometric. 36 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc ## Private company investments and listed investments previously held as private company investments as a percentage of total assets* (plotted quarterly from March 2018) ![img-5.jpeg](img-5.jpeg) Source: Baillie Gifford. ### Size Our private company exposure tends to be weighted to the upper end of the maturity curve, focused on late stage private companies which are scaling up and becoming profitable. | Cap | Total equity value (USD) | % of total assets* | Number of holdings | | --- | --- | --- | --- | | Micro | <300m | 0.5 | 3 | | Small | 300m–2bn | 5.2 | 7 | | Medium | 2bn–10bn | 10.3 | 9 | | Large | >10bn | 18.1 | 5 | | | | **34.1** | **24** | *Total assets less current liabilities, before deduction of borrowings. See Glossary of terms and alternative performance measures on pages 124 to 127. ### Valuation movements – year to 31 May 2024 ![img-6.jpeg](img-6.jpeg) Source: Baillie Gifford. Baillie Gifford US Growth private company valuation changes, year to 31 May 2024. 37 Strategic report Top 10 private companies progress – year to 31 May 2024 Operational highlights Financial highlights ș World record number of launches in a single year ș In November 2023, Elon Musk confirmed via X with 96 launches made in 2023. that Starlink had achieved cash flow breakeven. The company has ample liquidity to fund the ș Starlink now has 3 million customers in 99 business over the medium term. countries. ș Starship flight test 4 took place in June 2024 and both the booster and the upper stage ship completed a successful splashdown. ș In 2023, Stripe passed the milestone of $1 ș Tender offer in March 2024 valued the company trillion in total payment volume (‘TPV’), up 25% at $65 billion. versus the prior year. ș At $1 trillion TPV, the output of businesses that run on Stripe equates to roughly 1% of global gross domestic product (‘GDP’). | ș Fintech company Brex has enhanced its | | ș The changes announced in January 2024 | | | --- | --- | --- | --- | | | offerings with features like Auto Transfers for | | are designed to “make Brex more agile and | | | business accounts, new card management tools, | | accelerate our path to profitability, building on | | | budget notification options and enhancements | | the growth we had in 2023. We grew our revenue | | | for Brex travel. | | 35%+ in 2023 while gross profit increased by | 75%. This reduction in force puts us on a clear ș The company also launched Brex Assistant, path towards profitability.” an AI-powered expense management tool, | and announced a new iteration of the Brex | ș “Brex’s financial plan is to be well above cash | | | --- | --- | --- | | business account with features like AI-powered | | flow positive with the current cash we have, | | accounting in 2024. | | which calls for around 4 years of runway.” | ș In January 2024, Brex announced it was laying off about 20% of its staff in an effort to innovate and streamline its services amidst a more challenging economic environment. ș Zipline’s drones have now logged 70 million ș In April 2023, Zipline announced a funding round miles, making more than 1 million deliveries. raising $330 million at a $4.2 billion post money valuation – this was a 55% increase from its ș In early 2023, Zipline unveiled the next 2021 round which valued the company at generation platform, dubbed Platform 2 $2.7 billion. or P2 Zip. ș In September 2023, Zipline obtained authorisation from the Federal Aviation Administration (‘FAA’) to operate ‘beyond the visual line of sight’ flights. 38 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Top 10 private companies progress – year to 31 May 2024 (continued) Operational highlights Financial highlights | ș Faire Market, the company’s summer virtual | | ș The e-commerce platform Shopify invested | | | --- | --- | --- | --- | | | trade show, was the largest so far. Nearly | | in Faire in September 2023. Faire is now the | | | 53,000 retailers bought stock during the show, | | recommended wholesale marketplace for Shopify | | | with around 290,000 orders placed. There are | | merchants, bringing a huge customer network to | | | over 100,000 brands on Faire’s platform. | | the brands selling via Faire. | | ș Faire is building more tools for its brands and | | ș Faire trimmed its workforce by 20% in November | | | | retailers. It is rolling out analytics tools for its top | | 2023 to operate with a leaner management | | | brands and has improved its ‘Collections’ tool to | | structure. | help brands curate their products. | ș In June 2023, Databricks acquired generative | | ș In September 2023, Databricks announced the | | | --- | --- | --- | --- | | | AI company MosaicML for $1.3 billion. | | closing of its Series I funding round which raised | | | The company will help make generative AI | | over $500 million and valued the company at | | | accessible for all organisations enabling it to | | $43 billion. | build, own and secure AI models with its own ș Financials continue to be impressive – at the end proprietary data. of July 2023, the company confirmed that it had ș In March 2024, Databricks and NVIDIA crossed $1.5 billion revenue run rate with over announced an expanded collaboration 50% year on year growth. to optimise data and AI workloads on the Databricks platform (NVIDIA also participated in the September 2023 funding round). | ș As at May 2024 Discord had 200 million | | ș October 2023 saw the company launch an app- | | | --- | --- | --- | --- | | | monthly active users (from 152 million in | | store allowing subscribers to purchase digital | | | January 2023), rolling out several speed and | | items for their avatar and accounts. Discord | | | feature improvements. | | plans to open this new revenue stream to non- | Nitro subscribers. ș Over 90% of users play games on the platform, spending a total of 1.5 billion hours gaming ș It will also begin inviting eligible developers in the each month. UK and Europe to share in company revenue by building apps on top of the platform and letting users subscribe to them (this is already available in the US). 39 Strategic report Top 10 private companies progress – year to 31 May 2024 (continued) Operational highlights Financial highlights ș Over 500,000 people have now received ș Annual recurring revenue has grown to BillionToOne tests. Its Northstar cancer $125 million, from zero four years ago. screening tests have been available for patient use since early 2023. ș Announced a collaboration with Johnson & Johnson that will see its UNITY tests used as part of a Johnson & Johnson clinical trial. This important validation opens up the opportunity to support more clinical trials. | ș As of May 2024, Lyra, the leading provider of | | ș As of May 2024, Lyra has raised a total of | | | --- | --- | --- | --- | | | innovative Workforce Mental Health solutions | | $907 million, with the last funding round being | | | for employers, had more than 300 companies | | a $235 million round in January 2022. | partnered to offer Lyra’s mental health benefits to their employees, giving 15 million people access to this care. ș In May 2024, a four-year independent study from AON showed that employers offering Lyra’s workforce mental health solutions saw an average annual health care cost reduction of 26%, sustained consistently over four years. | ș In April 2024, Solugen broke ground on its | | ș In August 2023 Chakrabati noted its | | | --- | --- | --- | --- | | | new biomanufacturing facility in Minnesota – | | 10,000 gallon Bioforge Houston “can | | | ‘Bioforge Marshall’. | | produce the chemicals at enormous | volumes, and do so profitably.” ș Solugen’s first commercial production plan | ‘Bioforge Houston’ opened in 2021 and it | ș Solugen secured a $214 million loan from | | | --- | --- | --- | | has demonstrated an over 80% reduction | | the Department of Energy to support the | | in greenhouse gas emissions compared to | | construction of Bioforge Marshall. | conventional petroleum-based methods. Bioforge Marshall will be six times the size of Bioforge Houston and aims to produce bio-based chemical products for use in wastewater treatment, construction, agriculture and energy sectors. ș In August 2023 CEO Gaurab Chakrabarti noted Solugen’s Houston facilities were producing over 10,000 tons of chemicals per year, removing more carbon from the environment than they put in. 40 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc ## List of investments as at 31 May 2024 | | | 2024 | | % of | 2023 | | --- | --- | --- | --- | --- | --- | | | | Value | | total | Value | | Name | Business | £’000 | assets* | | £’000 | | Space Exploration Technologies | Rocket and spacecraft company 26,502 3.9 20,041 | | | | | Series J Preferred Space Exploration Technologies Rocket and spacecraft company 15,214 2.2 11,505 Series N Preferred Space Exploration Technologies Rocket and spacecraft company 6,040 0.9 4,568 Series K Preferred Space Exploration Technologies Rocket and spacecraft company 3,139 0.5 2,374 Class A Common Space Exploration Technologies Rocket and spacecraft company 969 0.1 732 Class C Common 51,864 7. 6 39,220 NVIDIA Graphics chips 44,715 6.5 24,334 Amazon Online retailer and cloud computing provider 35,710 5.2 22,361 The Trade Desk Advertising technology company 34,288 5.0 32,448 | Stripe Series G Preferred | Online payment platform 13,984 2.0 11,110 | | --- | --- | | Stripe Series I Preferred | Online payment platform 13,625 2.0 10,860 | | Stripe Class B Common | Online payment platform 2,871 0.4 2,281 | | Stripe Series H Preferred | Online payment platform 1,527 0.2 1,430 | 32,007 4.6 25,681 Meta Platforms Social networking websites 25,369 3.7 – Moderna Therapeutic messenger RNA 23,506 3.4 21,025 Netflix Subscription service for TV shows and movies 23,441 3.4 17,247 Shopify Cloud-based commerce platform provider 21,747 3.1 33,135 Brex Class B Common Corporate credit cards for start-ups 10,648 1.6 8,050 Brex Series D Preferred Corporate credit cards for start-ups 10,018 1.5 7,574 20,666 3.1 15,624 DoorDash Online local delivery 17,845 2.6 11,482 Tesla Electric cars, autonomous driving and solar energy 17,239 2.4 24,967 | Zipline International Series C Preferred | Drone-based medical delivery 8,910 1.3 8,771 | | --- | --- | | Zipline International Series E Preferred | Drone-based medical delivery 5,049 0.7 4,970 | | Zipline International Series F Preferred | Drone-based medical delivery 820 0.1 807 | 14,779 2.1 14,548 * Total assets less current liabilities, before deduction of borrowings. See Glossary of terms and alternative performance measures on pages 124 to 127. Denotes private company investment. Denotes listed investment previously held in the portfolio as a private company investment. Past performance is not a guide to future performance. 41 Strategic report | | | 2024 | | % of | 2023 | | --- | --- | --- | --- | --- | --- | | | | Value | | total | Value | | Name | Business | £’000 | assets* | | £’000 | Cloudflare Cloud-based provider of network services 13,357 1.9 12,589 | Faire Wholesale Series F Preferred | Online wholesale marketplace 4,972 0.7 5,114 | | --- | --- | | Faire Wholesale | Online wholesale marketplace 4,429 0.6 4,546 | | Faire Wholesale Series G Preferred | Online wholesale marketplace 3,684 0.6 3,789 | 13,085 1.9 13,449 Workday Enterprise information technology 12,450 1.8 13,548 Pinterest Image sharing and social media company 12,273 1.8 5,698 Databricks Series H Preferred Data and AI platform 11,647 1.7 7,974 Databricks Series I Preferred Data and AI platform 435 0.1 – 12,082 1.8 7,974 CoStar Group Commercial property information provider 10,776 1.6 15,817 Duolingo Mobile learning platform 10,743 1.6 11,944 Watsco Air conditioning, heating and refrigeration 10,611 1.5 11,076 equipment distributor Discord Series I Preferred Communication software 9,448 1.4 11,006 Sweetgreen Salad fast food chain 9,370 1.4 1,212 BillionToOne Series C Preferred Molecular diagnostics technology platform 3,984 0.6 3,438 BillionToOne Series D Preferred Molecular diagnostics technology platform 2,749 0.4 – BillionToOne Series C-1 Preferred Molecular diagnostics technology platform 2,533 0.4 – 9,266 1.4 3,438 Lyra Health Series E Preferred Digital mental health platform for enterprises 7,136 1.1 6,688 Lyra Health Series F Preferred Digital mental health platform for enterprises 1,664 0.2 1,591 8,800 1.3 8,279 Datadog IT monitoring and analytics platform 8,768 1.3 8,193 Solugen Series C-1 Preferred Combines enzymes and metal catalysts 5,821 0.9 7,257 to make chemicals Solugen Series D Preferred Combines enzymes and metal catalysts 2,827 0.4 3,487 to make chemicals 8,648 1.3 10,744 Snyk Series F Preferred Developer security software 5,055 0.8 4,061 Snyk Ordinary Shares Developer security software 3,016 0.4 2,424 8,071 1.2 6,485 Affirm Class B Consumer finance 4,543 0.7 2,373 Affirm Consumer finance 3,477 0.5 2,116 8,020 1.2 4,489 Oddity Online cosmetics and skincare company 7,072 1.0 5,648 Roblox User generated content game company 6,900 1.0 8,115 Epic Games Video game platform and software developer 6,741 1.0 6,060 Wayfair Online furniture and homeware retailer 6,552 0.9 4,831 Block Financial services merchant and mobile 6,127 0.9 – payment company Inspire Medical Systems Medical technology company 6,054 0.9 – * Total assets less current liabilities, before deduction of borrowings. See Glossary of terms and alternative performance measures on pages 124 to 127. Denotes private company investment. Denotes listed investment previously held in the portfolio as a private company investment. Past performance is not a guide to future performance. 42 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc | | | 2024 | | % of | 2023 | | --- | --- | --- | --- | --- | --- | | | | Value | | total | Value | | Name | Business | £’000 | assets* | | £’000 | | Snowflake | Developer of a SaaS-based cloud data warehousing | 5,771 0.8 7,598 | | | | platform Insulet Medical device company 5,736 0.8 – Samsara Connected operations cloud software company 5,430 0.8 – Alnylam Pharmaceuticals Therapeutic gene silencing 5,248 0.8 11,066 Human Interest Series E Preferred Retirement benefits platform 4,713 0.7 – Human Interest Warrants for Retirement benefits platform – – – Series E/E-1 4,713 0.7 – Guardant Health Biotechnology company 4,645 0.7 – Tanium Class B Common Online security management 4,548 0.7 3,814 Roku Online media player 4,451 0.7 4,895 Nuro Series C Preferred Self-driving vehicles for local delivery 2,509 0.4 2,040 Nuro Series D Preferred Self-driving vehicles for local delivery 1,939 0.3 1,645 4,448 0.7 3,685 HashiCorp Open source infrastructure software 4,360 0.6 4,709 Workrise Technologies Jobs marketplace for the energy sector 1,975 0.3 2,741 Series E Preferred Workrise Technologies Jobs marketplace for the energy sector 1,895 0.3 2,662 Series D Preferred Workrise Technologies Jobs marketplace for the energy sector 421 <0.1 592 Series D-1 Preferred 4,291 0.6 5,995 Chewy Online pet supplies retailer 4,084 0.6 6,168 Thumbtack Class A Common Online directory service for local businesses 2,437 0.4 810 Thumbtack Series I Preferred Online directory service for local businesses 1,293 0.2 1,113 Thumbtack Series A Preferred Online directory service for local businesses 174 <0.1 58 Thumbtack Series C Preferred Online directory service for local businesses 51 <0.1 17 Thumbtack Series B Preferred Online directory service for local businesses 12 <0.1 4 3,967 0.6 2,002 PsiQuantum Silicon photonic quantum computing 3,872 0.6 3,535 Series D Preferred YETI Holdings Consumer products for the outdoor and recreation 3,726 0.6 – markets | Airbnb Class B Common | Online market place for travel accommodation 3,501 0.6 2,725 | | --- | --- | | Away (JRSK) Series D Preferred | Travel and lifestyle brand 1,072 0.2 1,698 | | Away (JRSK) Convertible | Travel and lifestyle brand 1,039 0.2 1,075 | Promissory Note Away (JRSK) Convertible Travel and lifestyle brand 1,039 0.2 1,075 Promissory Note 2021 Away (JRSK) Series Seed Preferred Travel and lifestyle brand 234 <0.1 1,165 3,384 0.6 5,013 Denali Therapeutics Clinical stage neurodegeneration company 3,321 0.5 5,803 Penumbra Medical tools to treat vascular diseases 3,178 0.5 5,696 * Total assets less current liabilities, before deduction of borrowings. See Glossary of terms and alternative performance measures on pages 124 to 127. Denotes private company investment. Denotes listed investment previously held in the portfolio as a private company investment. Past performance is not a guide to future performance. 43 Strategic report | | | 2024 | | % of | 2023 | | --- | --- | --- | --- | --- | --- | | | | Value | | total | Value | | Name | Business | £’000 | assets* | | £’000 | | Doximity Social network and digital workflow tools for | | 3,136 0.5 2,680 | | | | medical professionals | Niantic Series C Preferred | Augmented reality games 3,026 0.4 2,608 | | --- | --- | | Aurora Innovation | Self-driving technology 1,668 0.2 368 | | Aurora Innovation Class B Common | Self-driving technology 1,317 0.2 785 | 2,985 0.4 1,153 Coursera Online educational services provider 2,842 0.4 4,176 Sprout Social Social media management firm 2,777 0.4 – Lemonade Insurance company 2,068 0.3 2,335 Recursion Pharmaceuticals Drug discovery platform 1,891 0.3 2,111 | Honor Technology Series D Preferred | Home care provider 1,158 0.2 609 | | --- | --- | | Honor Technology Series E Preferred | Home care provider 502 0.1 264 | | Honor Technology Subordinated | Home care provider 198 <0.1 – | Convertible Promissory Note 1,858 0.3 873 10X Genomics Single cell sequencing company 1,714 0.3 4,361 Capsule Series 1-D Preferred Digital pharmacy 824 0.1 1,305 Capsule Series E Preferred Digital pharmacy 509 0.1 807 1,333 0.2 2,112 Sana Biotechnology Gene editing technology 1,239 0.2 929 Rivian Automotive Electric vehicle manufacturer 1,078 0.2 1,560 Ginkgo Bioworks Bioengineering company developing micro organisms 930 0.1 2,946 that produce various proteins | Blockstream Series B-1 Preferred | Bitcoin and digital asset infrastructure 163 <0.1 1,140 | | --- | --- | | Indigo Agriculture Class A Common | Agricultural technology company 130 <0.1 2,375 | | Abiomed CVR | Manufacturer of heart pumps – – – | Total investments 678,234 99.3 Net liquid assets† 4,970 0.7 Total assets* 683,204 100.0 Private | | Listed | | company | Net liquid | Total | | --- | --- | --- | --- | --- | --- | | | equities | | investments | # assets † | assets * | | | | % | % | % | % | | 31 May 2024 | 65.2 34.1 0.7 100.0 | | | | | | 31 May 2023 | 65.0 34.5 0.5 100.0 | | | | | * Total assets less current liabilities, before deduction of borrowings. See Glossary of terms and alternative performance measures on pages 124 to 127. † See Glossary of terms and alternative performance measures on pages 124 to 127. # Includes holdings in ordinary shares, preference shares and convertible promissory notes. Denotes private company investment. Denotes listed investment previously held in the portfolio as a private company investment. Past performance is not a guide to future performance. 44 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc ## Business ## review Business model Objective and policy The Company’s investment objective is to produce Business and status long-term capital growth. Baillie Gifford US Growth Trust plc is a public The Company invests predominantly in equities of company limited by shares and is incorporated in companies which are incorporated or domiciled, or England and Wales. The Company is an investment which conduct a significant portion of their business, company within the meaning of section 833 of the in the United States and which the Company Companies Act 2006 and carries on business as an believes have the potential to grow substantially investment trust. Investment trusts are UK public faster than the average company over the long listed companies and their shares are traded on the term. Such investment is typically direct, but may London Stock Exchange. They invest be indirect, including through investment in funds. in a portfolio of assets in order to spread risk. The Company has a fixed share capital although, The maximum direct investment in any one company subject to shareholder approval, it may purchase or fund is limited to 10% of the Company’s total its own shares or issue shares. The price of the assets measured at the time of investment. Company’s shares is determined, like other The portfolio consists of direct holdings in listed listed shares, by supply and demand. securities and unlisted securities in up to a combined The Company has been approved as an investment maximum of 90 companies or funds, typically with trust by HM Revenue & Customs subject to the 30 or more listed security holdings. The maximum Company continuing to meet the eligibility amount which may be invested directly in unlisted conditions. The Directors are of the opinion securities shall not exceed 50% of the total assets that the Company has continued to conduct of the Company, measured at the time of investment. its affairs so as to enable it to comply with the The Company will at all times be invested in several ongoing requirements of section 1158 of the sectors. While there are no specific limits placed Corporation Tax Act 2010 and the Investment Trust on exposure to any one sector, the Company will (Approved Company) (Tax) Regulations 2011. at all times invest and manage the portfolio in a The Company is an Alternative Investment manner consistent with spreading investment risk. Fund for the purposes of the UK Alternative With prior approval of the Board, the Company Investment Fund Managers Regulations. may use derivatives for the purposes of efficient portfolio management (in order to reduce, Purpose transfer or eliminate investment risk in the Baillie Gifford US Growth aims to deliver above Company’s portfolio). Derivative instruments average long-term returns for shareholders by in which the Company may invest may include keeping fees and costs low and harnessing the foreign exchange forwards, exchange-listed long-term growth potential of companies. and over-the-counter options, futures, options on futures, swaps and similar instruments. The Board, however, currently does not expect to enter into derivative or hedging transactions to mitigate against currency or interest rate risk. 45 Strategic report The Board intends to employ gearing in the Liquidity policy normal course of events. The Company may in The Board recognises the need to address any aggregate borrow amounts equalling up to 30% sustained and significant imbalance of buyers and of the net asset value of the listed securities sellers which might otherwise lead to shares trading held by the Company, calculated at the time at a material discount or premium to net asset value of drawdown, although the Board expects that per share. While it has not adopted any formal borrowings will typically represent an amount in discount or premium targets which would dictate the range of 10% to 20% of the net asset value the point at which the Company would seek to of the listed securities held by the Company. purchase shares or issue further shares, the Board is committed to utilising its share purchase and share While it is intended that the Company will be fully issuance authorities where appropriate in such a way invested in normal market conditions, the Company as to mitigate the effects of any such imbalance. In may hold cash on deposit or invest on a temporary considering whether buy-back or issuance might be basis in a range of cash equivalent instruments. appropriate in any particular set of circumstances, the The Board does not expect that the Company will Board will take into account, inter alia: the prevailing hold cash or cash equivalent instruments, but there market conditions; whether the discount is substantial is no restriction on the amount of cash or cash relative to the Company’s peers; the degree of net equivalent instruments that the Company may hold. asset value accretion that will result from the buy- Culture and values back or issuance; the cash resources readily available to the Company; the immediate pipeline of investment In the context of a company with no employees, opportunities open to the Company; the level of the culture and values are expressed by the Company’s Company’s existing borrowings; and the working Directors and the service providers with whom capital requirements of the Company. The Board will shareholders and other stakeholders interact, and continue to monitor the discount and the application through the relationships between the Board and of the liquidity policy and will amend the approach to those service providers, including the Managers. discount management in response to the prevailing As noted in more detail in the section 172 statement market conditions and other factors noted above. on pages 53 to 56, the Board seeks to engage with its Managers and other service providers in a The Board will keep shareholders appraised, on collaborative and collegiate manner, and to maintain a regular and ongoing basis, of the approach the highest standards of business conduct. which it has adopted in implementing this liquidity policy, principally through commentary Dividend policy in its Annual and Interim reports. The Company’s priority is to produce capital growth Share buy-backs – at the Annual General Meeting over the long term. The Company therefore has held on 18 September 2023 the Company was no dividend target and will not seek to provide granted a general authority to make purchases shareholders with a particular level of distribution. of up to 45,742,539 shares, being approximately However, the Company intends to comply with 14.99% of the issued ordinary share capital as the requirements for maintaining investment trust at 4 August 2023. This authority expires at the status for the purposes of section 1158 of the UK forthcoming Annual General Meeting. In exercising Corporation Tax Act 2010 regarding distributable the Company’s power to buy back shares, the income. The Company will therefore distribute as a Board has complete discretion as to the timing, final dividend amounts such that it does not retain, price and volume of shares so purchased. If the in respect of an accounting period, an amount Company does purchase its own shares it may hold greater than 15% of its income (as calculated for them in treasury rather than purchase them for UK tax purposes) for that period. As the revenue cancellation. Shares may only be sold from treasury account is again running at a deficit, the Board is at a price which, after costs, is not less than the recommending that no final dividend be paid. net asset value per share at the relevant time. All share repurchases are conducted in accordance with the Companies Act 2006 and the UK Listing Rules applicable to closed-ended investment funds from time to time and are announced to the market via a Regulatory Information System on the same or the following business day. 46 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc 7,925,000 were bought back during the year under Borrowings review. At 31 May 2024 10,131,300 shares were Borrowings are typically invested in securities when held in treasury. Between 1 June 2024 and 16 it is considered that investment grounds merit the August 2024 1,950,000 shares were bought back. Company taking a geared position to securities. The Directors are seeking shareholders’ approval Gearing levels, and the extent of equity gearing, are at the Annual General Meeting to renew the discussed by the Board and Managers at every Board authority to purchase up to 14.99% of the ordinary meeting. The Managers are tasked with ensuring shares in issue as at 16 August 2024 (being the that gearing is managed efficiently and within the latest practicable date prior to the publication of parameters set by the Board and any loan covenants. this document) or, if less, up to 14.99% of the Facility Facility ordinary shares in issue (excluding treasury shares) amount type Lender Maturing Drawings on the date on which the authority is granted, $25 Revolving ING Bank N.V. 31 July 2026 Fully such authority to expire at the date of the Annual million credit drawn General Meeting in 2025. Such purchases will only be made at a discount to the prevailing net asset | | $25 | Revolving | The Royal | 18 October | Fully | | --- | --- | --- | --- | --- | --- | | value. Any such shares which are bought back | million | credit | Bank of | 2026 | drawn | | may be held in treasury and may subsequently | | | Scotland | | | International then either be sold for cash or cancelled. Limited Share issuance – the Directors will again be seeking authorities at the forthcoming Annual General Performance Meeting for issuance and disapplication of pre- At each Board meeting, the Directors consider a emption rights to sell any shares held in treasury number of performance measures to assess the and allot new shares at a premium to the net asset Company’s success in achieving its objectives. value per share with debt valued at fair value. These authorities will expire at the conclusion of Key performance indicators the 2025 Annual General Meeting or on the expiry The key performance indicators (‘KPIs’) used of 15 months from the passing of the resolutions, to measure the progress and performance whichever is earlier. Should shareholder approval of the Company over time are established be granted it will allow the Directors to issue new industry measures and are as follows: ordinary shares at a premium to net asset value or C shares convertible into ordinary shares, in ș the movement in the net asset value per ordinary order to satisfy investor demand over the year share; should the Company be in a position to do so. ș the movement in the share price; No new ordinary shares will be issued at a price ș performance compared to the comparative which (after costs and expenses) is less than the index; net asset value per existing ordinary share at the time of the issue of the new shares, unless the new ș the premium/discount of the share price to the shares are first offered pro-rata to shareholders net asset value per share; and on a pre-emptive basis. C shares will be issued at ș the ongoing charges ratio. a price of £1 per C share. As mentioned above, An explanation of these measures can be found in the Company has the authority to raise further the Glossary of terms and alternative performance funds through the issue of C shares rather than measures on pages 124 to 127. ordinary shares. C shares are designed to overcome the potential disadvantages that may arise out The KPIs for the year to 31 May 2024 and since of a fixed price issue of further shares for cash. inception, 28 March 2018, are shown on pages These disadvantages relate primarily to the effect 20 to 25. that an injection of substantial uninvested cash In addition to the above, the Board considers peer may have on the net asset value per ordinary group comparative performance. share performance of an otherwise fully invested portfolio (commonly referred to as ‘cash drag’). During the year to 31 May 2024 the Company issued no shares. Between 1 June 2024 and 16 August 2024 no shares were issued. 47 Strategic report Value assessment Baillie Gifford & Co Limited undertakes regular value assessments of its products. Following the assessment in 2024, it was concluded that the Company was expected to provide fair value for a reasonably foreseeable period. Principal and emerging risks As explained on pages 70 and 71 there is an ongoing process for identifying, evaluating and managing the risks faced by the Company on a regular basis. The Directors have carried out a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, regulatory compliance, solvency or liquidity. There have been no material changes to the principal risks during the year. A description of these risks and how they are being managed or mitigated is set out below. The Board considers the heightened macroeconomic and geopolitical concerns to be factors which exacerbate existing risks, rather than discrete risks, within the context of an investment trust. Their impact is considered within the relevant risks. | Financial | What is the risk? | How is it managed? | Current assessment of risk | | --- | --- | --- | --- | | risk | The Company’s assets consist | The Board has, in particular, | This risk is considered to | | | mainly of listed securities and | considered the impact of | be high but unchanged | | | its principal financial risks are | heightened market volatility | as a result of heightened | | | therefore market related and | during recent months due to | macroeconomic and | | | include market risk (comprising | macroeconomic factors such as | geopolitical concerns | | | currency risk, interest rate | higher inflation, interest | which continue to create | | | risk and other price risk), | rates and geopolitical concerns. | a challenging environment | | | liquidity risk and credit risk. | To mitigate this risk the Board | for businesses, but with | | | An explanation of those risks | considers at each meeting various | some signs that interest rate | | | and how they are managed | portfolio metrics including | pressures, for example, may | | | is contained in note 17 to the | individual stock performance and | be starting to recede. | | | Financial Statements on pages | weightings, the top and bottom | | | | 104 to 111. | contributors to performance, | | purchases and sales of investments and relative sector weightings against the comparative index. The portfolio managers provide their rationale for stock selection decisions. A comprehensive strategy meeting is held annually to facilitate challenge of the Company’s strategy. The value of the Company’s investment portfolio would be affected by any impact, positively or negatively, on sterling but such impact would be partially offset by the effect of exchange rate movements on the Company’s dollar denominated borrowings. Decreasing RiskIncreasing Risk No Change 48 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Private What is the risk? How is it managed? Current assessment of risk company The Company’s liquidity risk To mitigate this risk, the Board There has been no significant could be increased by its considers the private company change to the number of investment investment in private company securities in the context of the private company investments risk | securities. These assets may | overall investment strategy and | during the period. At 31 | | --- | --- | --- | | be more difficult to buy or | provides guidance to the Managers | May 2024, private company | | sell, so changes in their prices | on the maximum exposure to | investments comprised | | may be greater than for listed | private company securities. The | 34.1% of total assets. | | investments. | investment policy limits the amount | | which may be invested in private company securities to 50% of the total assets of the Company in aggregate, measured at the time of investment. Investment What is the risk? How is it managed? Current assessment of risk strategy risk Pursuit of an investment To mitigate this risk, the Board This risk is considered to strategy to fulfil the Company’s regularly reviews and monitors be stable as there are signs objective which the market the Company’s objective and that the market’s appetite for perceives to be unattractive or investment policy and strategy, growth stocks, typically held inappropriate, or the ineffective the investment portfolio and by the Company, is recovering implementation of an attractive its performance, the level of following the recent period of or appropriate strategy, may discount/premium to net asset heightened macroeconomic lead to reduced returns for value at which the shares trade and geopolitical concerns. shareholders and, as a result, and movements in the share a decreased demand for the register and raises any matters Company’s shares. This may of concern with the Managers. lead to the Company’s shares trading at a wide discount to their net asset value. Environmental What is the risk? How is it managed? Current assessment of risk social and Perceived problems on This is mitigated by the Managers’ The Managers continue environmental, social and strong ESG stewardship and to embed analysis of ESG governance governance (‘ESG’) matters engagement policies which are factors within the investment risk | in an investee company | available to view on the Managers’ | process. Although climate | | --- | --- | --- | | could lead to that company’s | website, bailliegifford.com, and | activists have recently | | shares being less attractive to | which have been reviewed and | targeted the Managers’ | | investors, adversely affecting | endorsed by the Company, and | sponsorship of cultural | | its share price, in addition | which have been fully integrated | events, media coverage | | to potential valuation issues | into the investment process as | has been balanced and | | arising from any direct impact | well as the extensive up-front | has largely recognised | | of the failure to address | and ongoing due diligence which | that the objective is not | | the ESG weakness on the | the Managers undertake on each | to seek perfection but to | | operations or management | investee company. Due diligence | focus on materiality and | | of the investee company | includes assessment of the risks | the direction of travel, with | | (for example a failure to | inherent in climate change as well | the understanding that | | identify a pathway to Net | as ongoing positive engagement | engagement can encourage | | Zero or poor employment | on ESG-related issues (see pages | responsibility and meaningful | | practices). Repeated failure | 17 to 19). | change. | by the Managers to identify ESG weaknesses in investee companies could lead to the Company’s own shares being less attractive to investors, adversely affecting its own share price. Decreasing RiskIncreasing Risk No Change 49 Strategic report | Discount | What is the risk? | How is it managed? | Current assessment of risk | | --- | --- | --- | --- | | risk | The discount/premium at | To manage this risk, the | The Company’s discount | | | which the Company’s shares | Board monitors the level of | narrowed during the year. | | | trade relative to its net asset | discount/premium at which the | Over the year to 31 May 2024 | | | value can change. The risk | shares trade and the Company | the Company bought back | | | of a wide discount is that | has authority to buy back its | 7,925,000 shares to be | | | it may undermine investor | existing shares, when deemed | held in treasury. The Board | | | confidence in the Company and | by the Board to be in the best | continues to monitor closely | | | shareholders selling their shares | interests of the Company and | the discount and the impact | | | will get less than the net asset | its shareholders. The liquidity | of the current liquidity policy | | | value of those shares. | policy is set out on page 46. | being applied. | Regulatory What is the risk? How is it managed? Current assessment of risk risk Failure to comply with To mitigate this risk, All control procedures are applicable legal and regulatory Baillie Gifford’s Business Risk, working effectively. There requirements such as the Internal Audit and Compliance have been no material tax rules for investment trust departments provide regular regulatory changes that companies, the UK Listing reports to the Audit Committee impacted the Company Rules and the Companies Act on Baillie Gifford’s monitoring during the year. could lead to suspension of the programmes. Major regulatory Company’s Stock Exchange change could impose listing, financial penalties, a disproportionate compliance qualified audit report or the burdens on the Company. In such Company being subject to tax circumstances representation is on capital gains. made to ensure that the special circumstances of investment trusts are recognised. Shareholder documents and announcements, including the Company’s published Interim and Annual Report and Financial Statements, are subject to stringent review processes and procedures are in place to ensure adherence to the Transparency Directive and the Market Abuse Directive with reference to inside information. Custody and What is the risk? How is it managed? Current assessment of risk Depositary Safe custody of the Company’s To mitigate this risk, the Audit All control procedures are assets may be compromised Committee receives six-monthly working effectively. risk through control failures by the reports from the Depositary Depositary, including breaches confirming safe custody of the of cyber security. Company’s assets held by the Custodian. Cash and portfolio holdings are independently reconciled to the Custodian’s records by the Managers who also agree uncertificated private portfolio holdings to confirmations from investee companies. The Custodian’s assured internal controls reports are reviewed by Baillie Gifford’s Business Risk department and a summary of the key points is reported to the Audit Committee and any concerns investigated. Decreasing RiskIncreasing Risk No Change 50 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Operational What is the risk? How is it managed? Current assessment of risk risk Failure of Baillie Gifford’s To mitigate this risk, Baillie Gifford All control procedures systems or those of other has a comprehensive business are working effectively. third party service providers continuity plan which facilitates The other key third party could lead to an inability to continued operation of the service providers have not provide accurate reporting business in the event of a service experienced significant and monitoring or a disruption. The Audit Committee operational difficulties misappropriation of assets. reviews Baillie Gifford’s Report affecting their respective on Internal Controls and reports services to the Company. by other key third party providers are reviewed by Baillie Gifford on behalf of the Board and a summary of the key points is reported to the Audit Committee and any concerns investigated. Cyber What is the risk? How is it managed? Current assessment of risk security risk A cyber attack on Baillie Gifford’s To mitigate this risk, the Audit This risk is seen as increasing network or that of a third party Committee reviews reports on due to recent indications service provider could impact Internal Controls published that the continuation of the confidentiality, integrity or by Baillie Gifford and other geopolitical tensions could availability of data and systems. third party service providers. lead to cyber attacks. Baillie Gifford’s Business Risk Emerging technologies, department reports to the Audit including AI, could potentially Committee on the effectiveness increase information security of information security controls risks. in place at Baillie Gifford and its business continuity framework. Cyber security due diligence is performed by Baillie Gifford on third party service providers which includes a review of crisis management and business continuity frameworks. Decreasing RiskIncreasing Risk No Change 51 Strategic report | Leverage risk | What is the risk? | How is it managed? | Current assessment of risk | | --- | --- | --- | --- | | | The Company may borrow | To mitigate this risk, all borrowings | No significant change in | | | money for investment purposes. | require the prior approval of | risk level. The Company | | | If the investments fall in value, | the Board and leverage levels | refinanced its existing loan | | | any borrowings will magnify | are discussed by the Board and | facilities with revolving credit | | | the impact of this loss. If | Managers at every meeting. | facilities during the period. | | | borrowing facilities are not | Covenant levels are monitored | | | | renewed, the Company may | regularly. The majority of the | | | | have to sell investments | Company’s investments are in | | | | to repay borrowings. The | quoted securities that are readily | | | | Company can also make use of | realisable. Further information | | | | derivative contracts. The use | on leverage can be found on | | | | of such contracts may have a | page 119 and the Glossary of | | | | gearing effect so as to enhance, | terms and alternative performance | | | | or worsen, returns relative to | measures on pages 124 to 127. | | the amount invested in this way. Political and What is the risk? How is it managed? Current assessment of risk associated The Board is of the view that Political developments are closely This risk is increasing as political change in areas in monitored and considered by the governments and consumers economic risk which the Company invests or Board. The Board has particular around the world continue may invest may have financial regard to macroeconomic and to assess the impact of consequences for the Company. geopolitical tensions, and heightened geopolitical monitors portfolio diversification. tensions and conflicts as well as challenging macroeconomic conditions. Emerging risk As explained on pages 70 and 71 the Board has regular discussions on principal risks and uncertainties, including any risks which are not an immediate threat but could arise in the longer term. The Board considers that the key emerging risks arise from the interconnectedness of global economies and the related exposure of the investment portfolio to external and emerging threats such as the societal and financial implications of escalating geopolitical tensions, cyber security risks including developing AI and quantum computing capabilities and new infectious diseases or similar public health threats. This is mitigated by the Managers’ close links to the investee companies and their ability to ask questions on contingency plans. The Managers believe the impact of such events may be to slow growth rather than to invalidate the investment rationale over the long term. Decreasing RiskIncreasing Risk No Change 52 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Viability statement Based on the Company’s processes for monitoring operating costs, share price discount/premium, Having regard to provision 31 of the UK Corporate the Managers’ compliance with the investment Governance Code, the Directors have assessed objective, asset allocation, the portfolio risk the prospects of the Company over a five year profile, leverage, counterparty exposure, liquidity period. The Directors continue to consider risk and financial controls, the Directors have this period to be appropriate, as it is reflective concluded that there is a reasonable expectation of the longer-term investment strategy of the that the Company will be able to continue in Company, and to be a period during which, in the operation and meet its liabilities as they fall absence of any adverse change to the regulatory due over the next five years as a minimum. environment and to the favourable tax treatment afforded to UK investment trusts, they do not Promoting the success of the Company expect there to be any significant change to the | current principal risks facing the Company nor to | (section 172 statement) | | --- | --- | | the adequacy of the mitigating controls in place. | Under section 172 of the Companies Act 2006, | | Furthermore, the Directors do not reasonably | the directors of a company must act in the way | | envisage any change in strategy or objectives | they consider, in good faith, would be most likely | | or any events that would prevent the Company | to promote the success of the company for the | | from continuing to operate over that period. | benefit of its members as a whole, and in doing | so have regard (amongst other matters and to the In considering the viability of the Company, the extent applicable) to: a) the likely consequences Directors have conducted a robust assessment of any decision in the long term, b) the interests of each of the Company’s principal and emerging of the company’s employees, c) the need to risks and uncertainties as detailed on pages 70 foster the company’s business relationships with and 71 and in particular the impact of market risk suppliers, customers and others, d) the impact of where a significant fall in American equity markets the company’s operations on the community and would adversely impact the value of the Company’s the environment, e) the desirability of the company investment portfolio. The Directors have also maintaining a reputation for high standards of considered the Company’s leverage and liquidity business conduct and f) the need to act fairly in the context of the unsecured floating rate loan as between members of the company. facilities which expire in July and October 2026, the income and expenditure projections and the fact that In this context and having regard to Baillie Gifford the Company’s investments comprise mainly readily US Growth being an externally-managed investment realisable quoted equity securities which can be sold company with no employees, the Board considers to meet funding requirements if necessary. Specific that the Company’s key stakeholders are its leverage and liquidity stress testing was conducted existing and potential new shareholders, its during the year, including consideration of the externally-appointed Managers (Baillie Gifford) risk of further market deterioration. The leverage and other professional service providers (corporate stress testing identified the impact on leverage in broker, registrar, Auditor, Custodian and Depositary), scenarios where gross assets fall by 25% and 50%, lenders, portfolio companies, AIC/industry reflecting a range of market conditions that may peers, investment platforms, wider society adversely impact the portfolio. The liquidity stress and the environment. testing identified the reduction in the value of assets The Board considers that the interests of the that can be liquidated within one month that would Company’s key stakeholders are aligned, in terms result in the value of those assets falling below the of wishing to see the Company deliver sustainable value of the borrowings. The stress testing did not long-term growth, in line with the Company’s indicate any matters of concern. In addition, as stated objective and strategy, and meet the highest substantially all of the essential services required by standards of legal, regulatory, and commercial the Company are outsourced to third party service conduct, with the differences between stakeholders providers, this allows key service providers to be being merely a matter of emphasis on those elements. replaced at relatively short notice where necessary. The Board’s methods for assessing the Company’s progress in the context of its stakeholders’ interests are set out on the following pages. 53 Strategic report Stakeholder Why we engage How we engage and what we do Shareholders Shareholders are, collectively, the Company’s The Board places great importance on communication owners: providing them with a return for their with shareholders. The Annual General Meeting provides investment in accordance with the Company’s an opportunity for the Board and Managers to present to investment policy and objective is the reason shareholders on the Company’s performance, future plans for its existence. and prospects. It also allows shareholders the opportunity to meet with the Board and Managers and raise questions and concerns. The Chair is available to meet with shareholders as appropriate. The Managers meet regularly with shareholders and their representatives, reporting their views back to the Board. Directors also attend certain shareholder presentations, in order to gauge shareholder sentiment first hand. Shareholders may also communicate with members of the Board at any time by writing to them at the Company’s registered office or to the Company’s broker. These communication opportunities help inform the Board when considering how best to promote the success of the Company for the benefit of all shareholders over the long term. Baillie Gifford – The Company’s Board has delegated the The Board seeks to engage with its Managers, in a Managers and management of the Company’s portfolio, collaborative and collegiate manner, encouraging open and Secretaries and the administration of the Company’s constructive discussion and debate, while also ensuring that operations including fulfilment of regulatory appropriate and regular challenge is brought and evaluation and taxation reporting requirements, to conducted. This approach aims to enhance service levels Baillie Gifford. Baillie Gifford is therefore and strengthen relationships with the Managers, with a view responsible for the substantial activities of to ensuring the interests of the Company’s shareholders the Company and has the most immediate are best served, by keeping cost levels proportionate and influence on its conduct towards the other competitive, and by maintaining the highest standards of stakeholders, subject to the oversight and business conduct. strategic direction provided by the Board. Portfolio companies As all of the Company’s operations are The Board is cognisant of the need to consider the impact | conducted by third party service providers, | of the Company’s investment strategy and policy on wider | | --- | --- | | it is the companies held in its investment | society and the environment. The Board considers that its | | portfolio which have the primary real-world | oversight of environmental, social and governance (‘ESG’) | | impact in terms of social and environmental | matters is an important part of its responsibility to all | | change, both positively and negatively, as | stakeholders. The Board’s review of the Managers includes | | well as generating, through their commercial | an assessment of their ESG approach and its application in | | success, the investment growth sought by | making investment decisions. The Board regularly reviews | | the Company’s shareholders. The investee | Governance Engagement reports, which document the | | companies have an interest in understanding | Managers’ interactions with investee companies on ESG | | their shareholders’ investment rationale in | matters (see pages 14 to 19). | order to assure themselves that long-term business strategies will be supported. Broker The Company’s broker provides an interface The Company’s broker regularly attends Board meetings, between the Company’s Board and its and provides reports to those meetings, in order to keep the institutional shareholders. Board apprised of shareholder and wider market sentiment regarding the Company. They also arrange forums for shareholders to meet the Chair, or other Directors, outwith the normal general meeting cycle. Registrar The Company’s registrar provides an The Company Secretaries liaise with the registrar to interface with those shareholders who ensure the frequency and accuracy of communications hold the Company’s shares directly. to shareholders is appropriate, and monitor shareholder correspondence to ensure that the level of service provided by the registrar is acceptable. The Managers’ risk function reviews the registrars’ internal controls report and reports on the outcome of this review to the Board. 54 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Stakeholder Why we engage How we engage and what we do Auditor The Company’s Auditor has a responsibility The Company’s Auditor meets with the Audit Committee to provide an opinion on the Financial Chair and the Board, in the absence of the Managers where Statements as set out in the Auditor’s report deemed necessary, and the Managers undertake to provide to the members on pages 83 to 89. all information requested by the Auditor in connection with the Company’s annual audit promptly and to ensure that it is complete and accurate in all respects. | Depositary | The Depositary is responsible for the | The Depositary provides the Audit Committee with a report | | --- | --- | --- | | and Custodian | safekeeping of the Company’s financial | on its monitoring activities. The Board and Managers seek to | | | instruments, as set out in more detail on | engage with the Depositary and Custodian in a collaborative | | | page 62. | and collegiate manner, encouraging open and constructive | discussion and debate, while also ensuring that appropriate and regular challenge is brought and evaluation conducted. This approach aims to enhance service levels and strengthen relationships with the Depositary and Custodian, with a view to ensuring the interests of the Company’s shareholders are best served by keeping cost levels proportionate and competitive, and by maintaining the highest standards of business conduct. Lenders Lenders such as banks providing fixed The Company’s legal advisers review all legal agreements or revolving credit facilities provide the in connection with the Company’s debt arrangements Company’s gearing as described on page 47 and advise the Board on the appropriateness of the terms and have an interest in the Company’s ongoing and covenants therein. The Managers and Secretaries financial health and viability. ensure that the frequency and accuracy of reporting on, for example, covenant certification is appropriate and that correspondence from the lenders receives a prompt response. AIC/industry peers The Association of Investment Companies The Company is a member of the AIC, and the Directors (‘AIC’) and the Company’s investment and/or the Managers and Secretaries (as appropriate) trust industry peers have an interest in the participate in technical reviews, requests for feedback on Company’s conduct and performance, proposed legislation or regulatory developments, corporate as adverse market sentiment towards governance discussions and/or training. one investment trust can affect attitudes towards the wider industry. Investment platforms Investment platforms provide an interface The Managers liaise with the various investment platforms on with shareholders who invest in the strategies for improving communications with the Company’s Company indirectly. shareholders who hold their shares via these platforms. An annual timetable of key dates is published on the Company’s website, for the ease of reference of such shareholders. Wider society and No entity, corporate or otherwise, can exist The Board’s and Managers’ interactions with the various the environment without having an influence on the society stakeholders as noted above form the principal forms of in which it operates or utilising the planet’s direct engagement with wider society and in respect of the resources. Through its third-party relationships, environment (commercial, financial and in terms of planetary as noted above, the Company seeks to be health and resources). a positive influence and, in circumstances where that is not possible, to mitigate its negative impacts insofar as is possible. 55 Strategic report The Board recognises the importance of keeping Board representation the interests of the Company and its stakeholders, At 31 May 2024 the Board comprises five Directors, in aggregate, firmly front of mind in its key decision three male and two female. The Company has no making. The Company Secretaries are available at all employees. The Board’s policy and disclosures on times to the Board to ensure that suitable consideration diversity are set out on page 69. is given to the range of factors to which the Directors should have regard. In addition to ensuring that the Environmental, social and governance policy Company’s stated investment objective was being Details of the Company’s policy on socially responsible pursued, key decisions and actions during the year investment can be found under ‘Corporate governance which required the Directors to have regard to and stewardship’ on page 72 and the Managers’ applicable section 172 factors included: approach to stewardship and examples of portfolio ș the buying back of 7,925,000 of the Company’s company engagement are set out on pages 14 to 19. own shares into treasury at a discount to net asset The Company considers that it does not fall within value, for subsequent reissue, in order to ensure the scope of the Modern Slavery Act 2015 and it the Company’s shareholders found liquidity for is not, therefore, obliged to make a slavery and their shares when natural market demand was human trafficking statement. In any event, the insufficient, and on terms that enhance net asset Company considers its supply chains to be of low value for remaining shareholders; and risk as its suppliers are typically professional ș refinancing the expiring revolving credit facilities advisers. A statement by the Managers under the from ING Bank N.V. with a three-year US$25 Act has been published on the Managers’ website million unsecured revolving credit facility from at bailliegifford.com. ING Bank N.V. and a three-year US$25 million unsecured revolving credit facility from The Future developments of the Company Royal Bank of Scotland International Limited, The outlook for the Company for the next year is set for the purpose of investing in exciting growth out in the Chair’s statement on pages 7 and 8 and in opportunities, which the Board believes will the Managers’ review on pages 9 to 12. enhance long-term returns for shareholders. The Strategic report which includes pages 7 to 56 Employees, human rights and community was approved by the Board on 21 August 2024. issues The Board recognises the requirement to provide Tom Burnet information about employees, human rights and Chair community issues. The Company has no employees. All its Directors are non-executive and all its functions are outsourced. There are, therefore, no disclosures to be made in respect of employees, human rights and community issues. 56 Annual Report and Financial Statements 2024 ## Governance ## report This Governance report, which includes pages 58 to 81 outlines the Board’s approach to the governance of your Company. We believe that good governance builds better outcomes and we are committed to high standards of corporate governance and transparency. Governance report # Directors and management ![img-7.jpeg](img-7.jpeg) **Tom Burnet** Chair Appointed 2018 Tom Burnet was appointed a Director and Chair on 5 March 2018 and is also Chair of the Nomination Committee. He is chair of Kainos Group plc, a London listed IT services business, and a non-executive director of CT Private Equity Trust PLC. Tom is also chair of two privately owned technology businesses. Previously, Tom was managing director of Serco's Defence Services division. He started his career as an Army Officer serving in the Black Watch (R.H.R.), having graduated with an MBA from the University of Edinburgh. ![img-8.jpeg](img-8.jpeg) **Sue Inglis** Director Appointed 2018 Sue Inglis was appointed a Director on 5 March 2018 and is the Senior Independent Director. She has a wealth of experience from more than 30 years advising listed investment companies and financial institutions. Before embarking on a non-executive career, her executive roles included managing director – Corporate Finance in the Investment Companies teams at Cantor Fitzgerald Europe (2012–2018) and Canaccord Genuity (2009–2012). Sue is a qualified lawyer, and was a partner and head of the funds and financial services group at Shepherd & Wedderburn, a leading Scottish law firm. In 1999 she was a founding partner of Intelli Corporate Finance, an advisory boutique firm focusing on the asset management and investment company sectors, which was acquired by Canaccord Genuity in 2009. Sue is currently a non-executive director of CT Global Managed Portfolio Trust PLC and Seraphim Space Investment Trust PLC. ![img-9.jpeg](img-9.jpeg) **Graham Paterson** Director Appointed 2018 Graham Paterson was appointed a Director on 5 March 2018 and is Chair of the Audit Committee. He is an investment and financial services professional with over 20 years' experience in the private equity industry. A chartered accountant, Graham was one of the founding partners of SL Capital Partners LLP (formerly Standard Life Investments (Private Equity) Ltd), where he was a partner and board member until 2010. During his 13 years at SL Capital, he was one of the managers of Standard Life Private Equity Trust plc and was a member of the advisory boards to a number of leading private equity fund managers. In 2013, Graham co-founded TopQ Software Ltd, a technology company which develops software for the private equity industry. TopQ Software was acquired by eVestment Inc (now part of NASDAQ Inc) in 2015, where Graham was a director of the private markets data and analytics business until early 2018. Graham is currently Senior Independent Director of The Income & Growth VCT plc and a non-executive director of Invesco Perpetual UK Smaller Companies Investment Trust plc and Diaceutics PLC. 58 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Chris van der Kuyl was appointed a Director on 1 June 2021. He is one of Scotland’s leading entrepreneurs working across the technology, media, gaming and entertainment sectors. Chris is most notably co-founder and chair of multiple award-winning games developer 4J Studios, best known for developing Minecraft for Microsoft, Sony and Nintendo games consoles. He and fellow co-founder, Paddy Burns, launched Chroma Ventures, the investment arm of 4J Studios, in 2021. Chris is also chair Chris van der Kuyl of Puny Astronaut, Broker Insights, Stormcloud Games and Ace Aquatec Director and sits on the boards of Blippar, Ant Workshop, Parsley Box Plc and Appointed 2021 Chroma Developments. Alongside his commercial roles, he was the founding chair of Entrepreneurial Scotland and is currently a member of multiple advisory and local charity boards. Rachael Palmer was appointed a Director on 1 June 2021. She is an experienced strategy, marketing and business development professional with extensive experience working within the technology sector. Most recently, Rachael led Google’s VC and Startup Partnerships for the Europe, Middle East and Africa region. Before Google, Rachael consulted to numerous start-ups and led marketing and business development efforts for EY’s world famous Entrepreneur of the Year Rachael Palmer Program. Rachael has also held positions at American Express and Director Microsoft where she held various product, marketing and business Appointed 2021 development roles. Rachael received her MBA from The Wharton School and her BSE in Computer Science & Engineering from the University of Pennsylvania. All the Directors above and on the prior page served on the Board throughout the year. All Directors are non-executive and, in the opinion of the Board, are independent of the Managers. All Directors are members of the Nomination and Audit Committees. 59 Governance report ## Portfolio managers ![img-10.jpeg](img-10.jpeg) Gary is a partner and US Equity Growth investment manager. Gary joined Baillie Gifford in 2003 and spent time working in the Japanese, UK and European Equity teams before moving to the US Equity Team in 2008. Gary is a generalist investor but retains a special interest in the healthcare sector, dating back to his undergraduate degree. He graduated MBiochem in Biochemistry from Oxford University in 2003. **Gary Robinson** Portfolio manager Appointed 2018 ![img-11.jpeg](img-11.jpeg) Kirsty is a portfolio manager in the US Equity Growth team. Kirsty joined Baillie Gifford in 2012 and began her career on the US Equity team, moving on to spend several years in the small and large cap global equities departments, before returning to the US Equity team. She graduated MA (Hons) in Economics in 2011 and MSc in Carbon Management in 2012, both from the University of Edinburgh. **Kirsty Gibson** Portfolio manager Appointed 2021 ### Managers and secretaries The Company has appointed Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, as its Alternative Investment Fund Manager and Company Secretaries. Baillie Gifford & Co Limited has delegated portfolio management services to Baillie Gifford & Co. Dealing activity and transaction reporting have been further sub-delegated to Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited. Baillie Gifford & Co is an investment management firm formed in 1927 out of the legal firm Baillie & Gifford, WS, which had been involved in investment management since 1908. Baillie Gifford is one of the largest investment trust managers in the UK and currently manages thirteen closed-ended investment companies. Baillie Gifford also manages open-ended investment companies, together with investment portfolios on behalf of pension funds, charities and other institutional clients, both in the UK and overseas. Funds under the management or advice of Baillie Gifford totalled around £217.8 billion. Based in Edinburgh, it is one of the leading privately owned investment management firms in the UK, with 58 partners and a staff of around 1,700. Baillie Gifford & Co Limited and Baillie Gifford & Co are both authorised and regulated by the Financial Conduct Authority. 60 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc ## Directors’ ## report The Directors present their Corporate governance report together with the Financial The Corporate governance report is set out on pages Statements of the Company for 66 to 72 and forms part of this report. the year to 31 May 2024. Managers and Company Secretaries Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed as the Company’s Alternative Investment Fund Manager (‘AIFM’) and Company Secretaries. Baillie Gifford & Co Limited has delegated portfolio management services to Baillie Gifford & Co. Dealing activity and transaction reporting have been further sub-delegated to Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited. The Investment Management Agreement between the AIFM and the Company sets out the matters over which the Managers have authority in accordance with the policies and directions of, and subject to restrictions imposed by, the Board. The Investment Management Agreement is terminable on not less than six months’ notice. Compensation fees would only be payable in respect of the notice period if termination by the Company were to occur within a shorter notice period. The annual management fee is 0.70% on the first £100 million of net assets, 0.55% on the next £900 million of net assets and 0.50% on the remaining net assets. Management fees are calculated and payable quarterly. The Board is of the view that calculating the fee with reference to performance would be unlikely to exert a positive influence on performance. The Board as a whole fulfils the functions of the Management Engagement Committee. The Board considers the Company’s investment management and secretarial arrangements on a continuing basis and a formal review is conducted at least annually. 61 Governance report The Board considers, amongst others, the following Directors topics in its review: The names and biographical details of the Board ș the quality of the personnel assigned to handle members who served on the Board as at the year the Company’s affairs; end and up to the date the Financial Statements were signed can be found on pages 58 and 59. ș the investment process and the results achieved to date; Each Director shall retire from office at each Annual General Meeting and offer themselves ș the administrative services provided by the for re-election. Secretaries; and Following formal performance evaluation, the ș the marketing effort undertaken by the Managers. Board concluded that the performance of the Following the most recent review, it is the opinion Directors continues to be effective and each remains of the Directors that the continuing appointment of committed to the Company. Their contribution to the Baillie Gifford & Co Limited as AIFM and Company Board is greatly valued and the Board recommends Secretaries and the delegation of the investment their re-election to shareholders. management services to Baillie Gifford & Co, and the further sub-delegation of dealing activity and Directors’ indemnity and insurance transaction reporting to Baillie Gifford Overseas The Company has entered into qualifying third party Limited and Baillie Gifford Asia (Hong Kong) deeds of indemnity in favour of each of its Directors. Limited, on the terms agreed, is in the interests The deeds, which were in force during the year of the Company and the shareholders as a whole to 31 May 2024 and up to the date of approval of due to the strength of the investment management this report, cover any liabilities that may arise to a team, the Managers’ commitment to the investment third party, other than the Company, for negligence, trust sector, the quality of the secretarial and default or breach of trust or duty. The Directors administrative functions and the marketing efforts are not indemnified in respect of liabilities to the undertaken by the Managers. Company, any regulatory or criminal fines, any costs incurred in connection with criminal proceedings in Depositary which the Director is convicted or civil proceedings brought by the Company in which judgement is In accordance with the Alternative Investment given against him or her. In addition, the indemnity Fund Managers Directive, the AIFM must appoint a does not apply to any liability to the extent that it is Depositary to the Company. The Bank of New York recovered from another person. Mellon (International) Limited has been appointed as the Company’s Depository. The Company maintains Directors’ and Officers’ liability insurance. The Depositary’s responsibilities include cash monitoring, safe keeping of the Company’s financial Conflicts of interest instruments, verifying ownership and maintaining a record of other assets and monitoring the Each Director submits a list of potential conflicts of Company’s compliance with investment limits and interest to the Nomination Committee on an annual leverage requirements. The custody function is basis. The Committee considers these carefully, also undertaken by The Bank of New York Mellon taking into account the circumstances surrounding (International) Limited (the ‘Custodian’). them, and makes a recommendation to the Board on whether or not the potential conflicts should be authorised. Board authorisation is for a period of one year. Having considered the lists of potential conflicts there were no situations which gave rise to a direct or indirect interest of a Director which conflicted with the interests of the Company. 62 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc ## Share capital ### Capital structure The Company's capital structure (excluding treasury shares) as at 31 May 2024 consisted of 297,228,700 ordinary shares of 1p each (see note 12 to the Financial Statements on page 102). At 31 May 2024, 10,131,300 shares were held in treasury. There are no restrictions concerning the holding or transfer of the Company's ordinary shares and there are no special rights attached to any of the shares. ### Dividends The ordinary shares carry a right to receive dividends. Interim dividends are determined by the Directors, whereas any proposed final dividend is subject to shareholder approval. The Company's objective is to produce capital growth and the policy is only to distribute, by way of a final dividend, the minimum permissible to maintain investment trust status. No dividends were declared during, or in respect of, the period. ### Capital entitlement On a winding up, after meeting the liabilities of the Company, the surplus assets will be paid to ordinary shareholders in proportion to their shareholdings. ### Voting Each ordinary shareholder present in person or by proxy is entitled to one vote on a show of hands and, on a poll, to one vote for every share held. Information on the deadlines for proxy appointments for the forthcoming AGM can be found on pages 116 and 117. ### Major interests disclosed in the Company's shares | Name | Ordinary 1p shares held at 31 May 2024 | % of issue at 31 May 2024 | | --- | --- | --- | | Saba Capital Management, L.P. (indirect) | 39,339,754 | 13.2 | | Brewin Dolphin Limited (indirect) | 27,039,346 | 9.1 | | Quilter plc (indirect) | 14,967,518 | 5.0 | Subsequent to the year end on 12 June 2024 the Company received notification that Quilter plc held 14,812,038 shares, being 4.98% of the shares in issue. On 19 June 2024 the Company received notification Saba Capital Management, L.P. held 41,894,682 shares, being 14.1% of the shares in issue. The Company received further notification on 13 August 2024 that Saba Capital Management, L.P. held 44,308,785, being 15.0% of the shares in issue. There have been no further notifications of major interests in the Company's shares intimated up to 16 August 2024. ### Analysis of shareholders at 31 May | | 2024 Number of shares held | 2024 % | 2023 Number of shares held | 2023 % | | --- | --- | --- | --- | --- | | Institutions | 36,077,259 | 12.1 | 45,557,960 | 14.9 | | Intermediaries | 218,868,169 | 73.6 | 240,643,562 | 78.9 | | Individuals | 432,785 | 0.2 | 1,552,388 | 0.5 | | Marketmakers | 41,850,487 | 14.1 | 17,399,790 | 5.7 | | | **297,228,700** | **100.0** | **305,153,700** | **100.0** | ## Annual General Meeting ### Issuance of shares At the last Annual General Meeting, the Directors were granted shareholders' approval for a general authority to allot shares and also an authority to issue shares or sell shares held in treasury on a non pre-emptive basis (without first offering such shares to existing shareholders pro rata to their existing holdings). No shares were issued during the year (2023 – no shares were issued). Both authorities expire at the forthcoming Annual General Meeting and the Directors are seeking shareholders' approval to renew them for a further year, as detailed below. Resolution 10 in the Notice of Annual General Meeting seeks a general authority in substitution to the Company's existing authorities for the Directors to issue ordinary shares or C shares up to an aggregate nominal amount of £984,262.33. This amount represents one-third of the Company's total ordinary share capital in issue (excluding treasury shares) at 16 August 2024 and meets institutional guidelines. This authority would be in substitution for the existing authority and will continue until the conclusion of the Annual General Meeting to be held in 2025 or on the expiry of 15 months from the passing of the resolution, if earlier. 63 Governance report Resolution 11, which is proposed as a special resolution, seeks authority for the Directors to allot equity securities or sell treasury shares on a non pre-emptive basis for cash up to an aggregate nominal amount of £295,278.70 (representing 10% of the issued ordinary share capital of the Company excluding treasury shares as at 16 August 2024). This authority would be in substitution for the existing authority and will continue until the conclusion of the Annual General Meeting to be held in 2025 or on the expiry of 15 months from the passing of the resolution, if earlier. The Directors consider that the authorities proposed to be granted by Resolutions 10 and 11 continue to be advantageous when the Company's shares trade at a premium to net asset value and the level of natural liquidity in the market is unable to meet demand. Such authorities will only be used to issue ordinary shares or sell ordinary shares from treasury at a premium to net asset value and only when the Directors believe that it would be in the best interests of the Company to do so. The Directors believe that the ability to buyback shares at a discount and re-sell them or issue new ordinary shares at a premium are useful tools in smoothing supply and demand. 12,081,300 shares were held in treasury as at 16 August 2024. #### **Market purchases of shares by the Company** At the last Annual General Meeting the Company was granted authority to purchase up to 45,742,539 ordinary shares (equivalent to approximately 14.99% of the ordinary shares in issue (excluding treasury shares) as at 14 August 2023). This authority expires at the forthcoming Annual General Meeting. 7,925,000 shares were bought back during the year under review and 10,131,300 shares are held in treasury at 31 May 2024. Between 1 June 2024 and 16 August 2024 a further 1,950,000 shares were bought back. Share buy-backs may be made principally: i. to enhance net asset value for continuing shareholders by purchasing shares at a discount to the prevailing net asset value; and ii. to address any imbalance between the supply of and the demand for the Company's shares that results in a discount of the quoted market price to the published net asset value per share. The Company may hold bought back shares in treasury and then: i. sell such shares (or any of them) for cash (or its equivalent under the Companies Act 2006); or ii. cancel the shares (or any of them). Shares will only be re-sold from treasury at a premium to net asset value per ordinary share. Treasury shares do not receive distributions and the Company is not entitled to exercise voting rights attaching to them. The Directors are seeking shareholders' approval at the Annual General Meeting to renew the authority to purchase up to 44,262,277 ordinary shares in issue (excluding treasury shares) as at 16 August 2024, being the latest practicable date prior to the publication of this document (or, if less, the number representing approximately 14.99% of the Company's ordinary shares in issue (excluding treasury shares) at the date of passing of the resolution, such authority to expire at the Annual General Meeting of the Company to be held in 2025. In accordance with the UK Listing Rules, the maximum price (excluding expenses) that may be paid on the exercise of the authority must not exceed the higher of: i. 5% above the average closing price on the London Stock Exchange of an ordinary share over the five business days immediately preceding the date of purchase; and ii. an amount equal to the higher of the price of the last independent trade of an ordinary share and the highest current independent bid for an ordinary share on the trading venue where the purchase is carried out. The minimum price (exclusive of expenses) that may be paid will be the nominal value of an ordinary share. Purchases of shares will be made within guidelines established, from time to time, by the Board. Your attention is drawn to Resolution 12 in the Notice of Annual General Meeting. #### **Recommendation** The Directors consider each resolution being proposed at the Annual General Meeting to be in the best interests of the Company and its shareholders as a whole and they unanimously recommend that all shareholders vote in favour of them, as they intend to do where possible in respect of their own beneficial shareholdings. 64 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Financial instruments Greenhouse Gas Emissions and Streamlined The Company’s financial instruments comprise Energy and Carbon Report (‘SECR’) its investment portfolio, cash balances, bank All of the Company’s activities are outsourced borrowings and debtors and creditors that arise to third parties. The Company therefore has no directly from its operations such as sales and greenhouse gas emissions to report from its purchases awaiting settlement and accrued income. operations, nor does it have responsibility for any The financial risk management objectives and other emissions producing sources under the policies arising from its financial instruments and Companies Act 2006 (Strategic report and Directors’ the exposure of the Company to risk are disclosed reports) Regulations 2013. For the reasons set in note 17 to the Financial Statements on pages 104 out above, the Company considers itself to be a to 111. low energy user and, therefore, is not required to disclose energy and carbon information under the Articles of Association SECR regulations. The Company’s Articles of Association may only be amended by special resolution at a general meeting Bribery Act of shareholders. The Company has a zero tolerance policy towards bribery and is committed to carrying out business Disclosure of information to Auditor fairly, honestly and openly. The Managers also adopt The Directors confirm that so far as each of a zero tolerance approach and have policies and the Directors is aware there is no relevant audit procedures in place to prevent bribery. information of which the Company’s Auditor is unaware and the Directors have taken all the steps Criminal Finances Act 2017 that they ought to have taken as Directors in order The Company has a commitment to zero tolerance to make themselves aware of any relevant audit towards the criminal facilitation of tax evasion. information and to establish that the Company’s Auditor is aware of that information. On behalf of the Board Independent Auditor Tom Burnet Chair The Auditor, Ernst & Young LLP, is willing to 21 August 2024 continue in office and, in accordance with section 489 and section 491(1) of the Companies Act 2006, resolutions concerning Ernst & Young LLP’s reappointment and remuneration will be submitted to the Annual General Meeting. Post balance sheet events The Directors confirm that there have been no post Balance Sheet events which require adjustment of in, the Financial Statements or notes thereto up to 21 August 2024. 65 Governance report ## Corporate ## governance report The Board is committed to Compliance achieving and demonstrating The Board confirms that the Company has complied throughout the high standards of corporate year under review with the relevant provisions of the Code (with the governance. The Association of exception of the membership of the Audit Committee noted below) and Investment Companies (‘AIC’) the recommendations of the AIC Code. The Code includes provisions Code of Corporate Governance relating to the role of the chief executive, executive directors’ (‘AIC Code’) provides a framework remuneration and the need for an internal audit function. Given that of best practice for investment the Company is an externally managed investment trust, the Board companies and can be found considers these provisions are not relevant to the Company. The at theaic.co.uk. The Financial need for an internal audit function specific to the Company has been Reporting Council (‘FRC’) has addressed on page 73. Although the AIC Code permits the Chair of confirmed that AIC members who the Board to be a member of the Audit Committee, the Code does not. report against the AIC Code, as is The Board believes it is appropriate for Mr TJW Burnet to be a member the case with the Company, will of the Audit Committee due to the small size of the Board and his be meeting their obligations in knowledge, experience and professional expertise being a significant relation to the 2018 UK Corporate benefit to the Committee. Mr TJW Burnet was and continues to be Governance Code (the UK ‘Code’), considered independent. which can be found at frc.org.uk. The Board The Board has overall responsibility for the Company’s affairs. It has a number of matters formally reserved for its approval including strategy, investment policy, currency hedging, gearing, treasury matters, dividend and corporate governance policy. A separate strategy session is held annually. The Board also reviews the Financial Statements, investment transactions, revenue budgets and performance of the Company. Full and timely information is provided to the Board to enable the Board to function effectively and to allow Directors to discharge their responsibilities. At 31 May 2024 the Board comprised five Directors all of whom are non-executive. The Chair, Mr TJW Burnet, is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda. The executive responsibilities for investment management have been delegated to the Company’s Alternative Investment Fund Manager (‘AIFM’), Baillie Gifford & Co Limited, and, in the context of a Board comprising entirely non-executive Directors, there is no chief executive officer. The Senior Independent Director is Ms SP Inglis. The Directors believe that the Board has a balance of skills and experience which enable it to provide effective strategic leadership and proper governance of the Company. Information about the Directors, including their relevant experience, can be found on pages 58 and 59. 66 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Board of Directors Comprises independent non-executive directors* Chair: Tom Burnet Senior Independent Director: Sue Inglis Audit Nomination Committee Committee Chair: Graham Paterson Chair: Tom Burnet Purpose: The primary purpose of the Purpose: The main purpose of the Company’s Audit Committee is to provide Nomination Committee is to oversee Board oversight of the financial reporting process, recruitment and succession planning as the audit process, the Company’s system well as Board appraisals including of internal controls and compliance with identifying training needs. laws and regulations. Third-party service providers appointed by the Board Alternative Investment Fund Managers and Company Secretaries: Baillie Gifford & Co Limited (wholly owned subsidiary of Baillie Gifford & Co) Dealing activity and transaction reporting: Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited Portfolio management: Baillie Gifford & Co The Bank of Computershare Panmure Liberum Ernst & Young New York Mellon Investor Services Limited LLP (International) Limited PLC Company broker Auditor Depositary and Custodian Registrar * The independent non-executive directors are made up of Tom Burnet, Sue Inglis, Chris van der Kuyl, Rachael Palmer and Graham Paterson. Further details on their experience and contribution to the Board can be found on pages 58 and 59. 67 Governance report There is an agreed procedure for Directors to seek Following formal performance evaluation the independent professional advice if necessary at the Board considers that each Director continues to Company’s expense. No such advice was sought in be independent in character and judgement and the year to 31 May 2024 or 31 May 2023. their skills and experience are a significant benefit to the Board. Appointments to the Board Meetings The terms and conditions of Directors’ appointments are set out in formal letters of appointment which are There is an annual cycle of Board meetings which available for inspection on request. is designed to address, in a systematic way, overall strategy, review of investment policy, investment Under the provisions of the Company’s Articles performance, marketing, revenue budgets, dividend of Association, a Director appointed during the policy and communication with shareholders. The period is required to retire and seek election by Board considers that it meets sufficiently regularly shareholders at the next Annual General Meeting. to discharge its duties effectively. The following In accordance with the Code, all Directors will retire table shows the attendance record for the Board and from office at each Annual General Meeting and, Committee meetings held during the year, excluding if appropriate, offer themselves for re-election. ancillary and sub-committee meetings. The Annual The reasons why the Board supports the Directors General Meeting was attended by all the Directors re-election are set out on page 62. with the exception of Mr van der Kuyl. Directors are not entitled to any termination Directors’ attendance at meetings payments in relation to their appointment. Audit Nomination Board Committee Committee Chair and Directors’ tenure The Nomination Committee has considered the Number of meetings 4 4 1 question of tenure for Directors and has concluded TJW Burnet 4 4 1 that there should not be a set maximum time SP Inglis 4 4 1 limit for a Director or Chair to serve on the Board. GD Paterson 4 4 1 The Nomination Committee keeps under review CRD van der Kuyl 3 4 1 the balance of skills, knowledge, experience, performance and length of service of the Directors RL Palmer 4 4 1 ensuring the Board has the right combination of skills and preservation of knowledge and experience Nomination Committee balanced with the appointment of new Directors The Nomination Committee consists of the whole bringing in fresh ideas and perspective. Board due to its relatively modest size. The Chair of the Board is Chair of the Committee. The Independence of Directors Committee meets on an annual basis and at such All of the Directors are considered by the Board to other times as may be required. The Committee has be independent of the Managers and free of any written terms of reference which include reviewing business or other relationship which could interfere the composition of the Board, identifying and with the exercise of their independent judgement. nominating new candidates for appointment to the Board, Board appraisal, Board independence, The Directors recognise the importance of succession planning and training. The Committee succession planning for company boards and also considers whether Directors should be reviews the Board composition annually. The recommended for re-election by shareholders. The Board is of the view that length of service will not Committee is responsible for considering Directors’ necessarily compromise the independence or potential conflicts of interest and for making contribution of Directors of an investment trust recommendations to the Board on whether or not company, where continuity and experience can be the potential conflicts should be authorised. a benefit to the Board. The Committee’s terms of reference are available on request from the Company and on the Company website: bgusgrowthtrust.com. 68 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Board diversity As an externally managed investment company with no chief executive officer (CEO) or chief financial Diversity policy officer (CFO), the Board considers the Chairs of Appointments to the Board are made on merit with the Audit Committee and Nomination Committee due regard for the benefits of diversity including to be senior roles in addition to the roles of Senior gender, social and ethnic backgrounds and cognitive Independent Director and Board Chair identified as and personal strengths. The priority in appointing such by the FCA. new Directors is to identify the candidate with the best range of skills and experience to complement Board composition existing Directors, with a view to ensuring that the In order to fulfil its obligations, the Board recognises Board remains well placed to help the Company the importance of having a range of skilled and achieve its investment and governance objectives. experienced Directors, balancing the benefits of length of service and knowledge of the Company The following disclosures are provided in respect with the desirability of ensuring regular refreshment of the UK Listing Rules targets that: i) 40% of a of the Board. board should be women; ii) at least one senior role should be held by a woman; and iii) at least one The Board reviewed the composition of the Board board member should be from a non-white ethnic during the year in consideration of succession background, as defined by the Office of National planning and developing a diverse pipeline. Statistics (ONS) criteria. In line with the AIC Corporate Governance Code The breakdown of gender diversity and ethnic principle that ‘a successful company is led by background on the Board is shown below. an effective Board, whose role is to promote the long-term sustainable success of the company, generating value for shareholders and contributing % of the Senior Gender Number Board roles to wider society’ the Board will be undertaking a recruitment process in the coming years to allow Men 3 60% 1 * time for an appropriate transition period. The Women 2 40% 1 intention of the Board is that Director retirements 5 100% will be staggered, ensuring the experience and * The Board Chair, being a senior position in accordance with the UK diversity of the Board is maintained and effective Listing Rules. The Board also considers the Nomination Committee succession planning occurs. and Audit Committee Chairs to be senior positions. The Nomination Committee Chair is also the Board Chair. The Audit Committee Chair is a man. Performance evaluation An appraisal of the Chair, each Director and a % of the Senior performance evaluation and review of the Board Ethnic background Number Board roles as a whole and its Committees was carried out during White British or 4 80% 2 * the year. After completing an evaluation questionnaire Other White (including the results were discussed and reviewed by the minority white groups) Board. The appraisal of the Chair was led by Ms SP Black/African/ 1 20% – Inglis, the Senior Independent Director. Caribbean/Black British The appraisals and evaluations considered, 5 100% amongst other criteria, the balance of skills of the * The Board Chair and SID, being senior positions in accordance with the Board, training and development requirements, the UK Listing Rules. The Board also considers the Nomination Committee and Audit Committee Chairs to be senior positions. The Nomination contribution of individual Directors and the overall Committee Chair is also the Board Chair. The Audit Committee Chair’s effectiveness of the Board and its Committees. ethnic background is White. Following this process it was concluded that the performance of each Director, the Chair, the Board As at 31 May 2024, the Board complied with and its Committees continues to be effective and the UK Listing Rule target with respect to ethnic the Chair and each of the other Directors remains background and the 40% target for women. The committed to the Company. Board also meets the UK Listing Rules target for a woman holding a senior role on the Board (Ms SP Inglis is the Senior Independent Director). 69 Governance report A review of the Chair’s and the other Directors’ The practical measures in relation to the design, commitments was carried out and the Nomination implementation and maintenance of control policies Committee is satisfied that they are capable of and procedures to safeguard the Company’s devoting sufficient time to the Company. There assets and to manage its affairs properly, including were no significant changes to the Chair’s other the maintenance of effective operational and commitments during the year. compliance controls, have been delegated to the Managers and Secretaries. The Company became a constituent of the FTSE 350 Index in January 2024. The Board intends that The Board oversees the functions delegated to the an independent external agency will be engaged Managers and Secretaries and the controls managed to carry out the evaluation following the third by the AIFM in accordance with the UK Alternative anniversary of the Company’s addition to the Investment Fund Managers Regulations (as detailed FTSE 350 Index. below). Baillie Gifford & Co’s Internal Audit and Compliance Departments and the AIFM’s permanent Induction and training risk function provide the Audit Committee with regular reports on their monitoring programmes. New Directors are provided with an induction The reporting procedures for these departments programme which is tailored to the particular are defined and formalised within a service level circumstances of the appointee. Regular briefings agreement. Baillie Gifford & Co conducts an annual were provided during the year on industry and review of its system of internal controls which is regulatory matters. Directors receive other relevant documented within an internal controls report which training as necessary. complies with ISAE 3402 – Assurance Reports on Internal Controls of Service Organisations made Remuneration available to Third Parties. This report is independently As all the Directors are non-executive, there is reviewed by Baillie Gifford & Co’s auditor and a copy no requirement for a separate Remuneration is submitted to the Audit Committee. Committee. Directors’ fees are considered by the A report identifying the material risks faced by the Board as a whole within the limits approved Company and the key controls employed to manage by shareholders. The Company’s policy on these risks is reviewed by the Audit Committee. remuneration is set out in the Directors’ Remuneration report on page 77. These procedures ensure that consideration is given regularly to the nature and extent of risks Audit Committee facing the Company and that they are being actively monitored. Where changes in risk have The report of the Audit Committee is set out on been identified during the year they also provide pages 73 to 75. a mechanism to assess whether further action is required to manage these risks. Internal controls and risk management The Board confirms that these procedures have The Directors acknowledge their responsibility been in place throughout the Company’s financial for the Company’s risk management and year and continue to be in place up to the date of internal controls systems and for reviewing their approval of this report. effectiveness. The systems are designed to manage rather than eliminate the risk of failure to achieve To comply with the UK Alternative Investment Fund business objectives and can only provide reasonable Managers Regulations, The Bank of New York but not absolute assurance against material Mellon (International) Limited acts as the Company’s misstatement or loss. Depositary and Baillie Gifford & Co Limited as its AIFM. The Board confirms that there is a continuing process for identifying, evaluating and managing The Depositary’s responsibilities include cash the significant risks faced by the Company in monitoring, safe keeping of the Company’s financial accordance with the FRC ‘Guidance on Risk instruments, verifying ownership and maintaining a Management, Internal Control and Related Financial record of other assets and monitoring the Company’s and Business Reporting’. No significant weaknesses compliance with investment limits and leverage were identified in the year under review and up to requirements. The Depositary is liable for the loss of the date of this report. financial instruments held in custody. The Depositary will ensure that any delegate segregates the assets 70 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc of the Company. The Company’s Depositary also The Company’s assets, the majority of which are acts as the Company’s Custodian. The Custodian investments in quoted securities which are readily prepares reports on its key controls and safeguards realisable, exceed its liabilities significantly. All which are independently reviewed by its appointed borrowings require the prior approval of the Board. auditor. The reports are reviewed by Baillie Gifford’s Gearing levels and compliance with borrowing Business Risk Department and a summary of the key covenants are reviewed by the Board on a regular points is reported to the Audit Committee and any basis. As at 31 May 2024, the Company had a net concerns are investigated. current liability of £34.3 million primarily as a result of the two US$25 million revolving credit facilities. The Depositary provides the Audit Committee with a The Company has continued to comply with the report on its monitoring activities. investment trust status requirements of section 1158 The AIFM has established a permanent risk of the Corporation Tax Act 2010 and the Investment management function to ensure that effective risk Trust (Approved Company) (Tax) Regulations 2011. management policies and procedures are in place Accordingly, the Financial Statements have been and to monitor compliance with risk limits. The AIFM prepared on the going concern basis as it is the has a risk management policy which covers the risks Directors’ opinion, having assessed the principal associated with the management of the portfolio, and emerging risks and other matters set out in and the adequacy and effectiveness of this policy the viability statement on page 53, which assesses is reviewed and approved at least annually. This the prospects of the Company over a period of five review includes the risk management processes and years, that the Company will continue in operational systems and limits for each risk area. existence for a period of at least twelve months from The risk limits, which are set by the AIFM and the date of approval of the Financial Statements. approved by the Board, take into account the objectives, strategy and risk profile of the portfolio. Relations with shareholders These limits, including leverage (see page 119) are The Board places great importance on monitored and the sensitivity of the portfolio to key communication with shareholders. The Company’s risks is undertaken periodically as appropriate to Managers meet regularly with shareholders and ascertain the impact of changes in key variables their representatives and report shareholders’ views in the portfolio. Exceptions from limits monitoring to the Board. The Chair is available to meet with and stress testing undertaken by Baillie Gifford’s shareholders as appropriate. Shareholders wishing Business Risk Department are escalated to the AIFM to communicate with any member of the Board may and reported to the Board along with any remedial do so by writing to them at the Company’s registered measures being taken. No exceptions occurred office or through the Company’s broker, Panmure during the year. Liberum Limited (see contact details on page 129). The Company’s Annual General Meeting provides Going concern a forum for communication with all shareholders. In accordance with the Financial Reporting Council’s The level of proxies lodged for each resolution guidance on going concern and liquidity risk, the will be announced at the Meeting and is published Directors have undertaken a rigorous review of the on the Company website bgusgrowthtrust.com Company’s ability to continue as a going concern. subsequent to the meeting. The Company’s principal risks are market related The notice period for the Annual General Meeting and include market risk, liquidity risk and credit is at least twenty working days. risk. An explanation of these risks and how they are managed is set out on pages 48 to 52 and contained Shareholders and potential investors may obtain in note 17 to the Financial Statements on pages 104 up-to-date information on the Company at to 111. bgusgrowthtrust.com. The Board has considered in particular, the impact of heightened market volatility due to macroeconomic and geopolitical concerns, but does not believe the Company’s going concern status is affected. 71 Governance report Corporate governance and stewardship comparisons company-to-company and year-on- year. Based on the most recent analysis, as at 31 The Company has given discretionary voting powers May 2024 the carbon intensity of Baillie Gifford to Baillie Gifford & Co. The Managers vote against US Growth Trust’s portfolio was 89.4% lower than resolutions they consider may damage shareholders’ the Company’s benchmark (S&P 500 Index). This rights or economic interests and report their actions analysis estimate is based on the 64% of the value to the Board. of the Company’s portfolio which reports on carbon The Company believes that it is in the shareholders’ emissions and other carbon-related characteristics interests to consider environmental, social and and Scope 1&2 Weighted Average Carbon Intensity governance (‘ESG’) factors, including climate (WACI) by Revenue. Carbon intensity measures the change, when selecting and retaining investments carbon efficiency of the portfolio per unit of output and has asked the Managers to take these issues and assesses the portfolio’s exposure to carbon- into account as long as the investment objectives intensive companies. are not compromised. The Managers do not exclude Baillie Gifford’s Task Force on Climate-Related companies from their investment universe purely Financial Disclosures (‘TCFD’) Climate report on the grounds of ESG factors but adopt a positive is available on the Managers’ website at engagement approach whereby matters bailliegifford.com. A TCFD climate report for are discussed with management with the aim of Baillie Gifford US Growth is available on the improving the relevant policies and management Company website at bgusgrowthtrust.com. systems and enabling the Managers to consider how ESG factors could impact long term investment The Managers, Baillie Gifford & Co, are signatories returns. The Managers’ statement of compliance to the Principles for Responsible Investment, the with the UK Stewardship Code can be found on Net Zero Asset Managers initiative and the Carbon the Managers’ website at bailliegifford.com. The Disclosure Project and are also members of the Managers’ policy has been reviewed and endorsed Asian Corporate Governance Association and the by the Board. Baillie Gifford & Co has considered the International Corporate Governance Network. Sustainable Finance Disclosure Regulation (‘SFDR’) and further details can be found on page 121. On behalf of the Board Tom Burnet Climate change Chair The Board recognises that climate change poses 21 August 2024 a serious threat to our environment, our society and economies and companies around the globe. Addressing the underlying causes is likely to result in companies that are high emitters of carbon facing greater societal and regulatory scrutiny and higher costs to account for the true environmental impact of their activities. The Managers pursuit of long-term growth opportunities typically involves investment in entrepreneurial, disruptive and technology-driven businesses. These companies are often capital-light with a low carbon footprint. The Managers’ utilise data sourced from a third party provider to map the carbon footprint of the equity portfolio, using the information to prioritise engagement and understand what higher emitting companies are doing to manage climate risk better. Best practice in this area is evolving rapidly, and it is therefore challenging to establish reliable 72 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc ## Audit ## Committee report | The Audit Committee consists of all the independent | ș the Company’s accounting policies and | | | --- | --- | --- | | Directors. The 2019 AIC Code of Corporate | | practices and the implementation of the | | Governance permits the Chair of the Board to be a | | Managers’ valuation policy for investments | | member of the Audit Committee. The Board believes | | in unlisted (private) companies; | that Mr TJW Burnet’s knowledge, experience and ș the regulatory changes impacting the Company; professional expertise is a significant benefit to the Committee. The members of the Committee ș the fairness, balance and understandability of consider that they have the requisite financial the Annual Report and Financial Statements and skills and experience to fulfil the responsibilities whether it provided the information necessary of the Committee. Mr GD Paterson, Chair of the for shareholders to assess the Company’s Committee, is a Chartered Accountant. performance, business model and strategy; The Committee’s authority and duties are clearly ș the effectiveness of the Company’s defined within its written terms of reference internal control environment; which are available on request from the Company ș the appointment, remuneration and terms of Secretaries and at bgusgrowthtrust.com. The terms engagement of the external Auditor; of reference are reviewed annually. ș the policy on the engagement of the external The Committee’s effectiveness is reviewed on an Auditor to supply non-audit services; annual basis as part of the Board’s performance ș the independence and objectivity of the evaluation process. external Auditor and the effectiveness of At least once a year, where deemed necessary, the audit process; the Committee meets with the external Auditor ș the need for the Company to have without any representative of the Managers being its own internal audit function; present. ș internal controls reports received from the Main activities of the Committee Managers and other service providers; and The Committee met twice during the year, and the ș the arrangements in place within Baillie Gifford external Auditor, Ernst & Young LLP, attended both & Co whereby its staff may, in confidence, meetings. Baillie Gifford & Co’s Internal Audit and raise concerns about possible improprieties in Compliance Departments and the AIFM’s permanent matters of financial reporting or other matters. risk function provided reports on their monitoring programmes for these meetings. In addition, the Internal audit external Auditor met with the Audit Committee Chair The Committee continues to believe that the on an ad hoc basis to discuss matters pertinent to compliance and internal controls systems and the the Committee as they arose. internal audit function in place within the Managers The matters considered, monitored and reviewed provide sufficient assurance that a sound system by the Committee during the course of the year of internal control, which safeguards shareholders’ included the following: investment and the Company’s assets, is maintained. An internal audit function, specific to the Company, ș the results announcements and the is therefore considered unnecessary. Annual and Interim Reports; 73 Governance report Financial reporting from the Managers on the cash position and cash flow projections of the Company, the liquidity of The Committee considers that the most significant its investment portfolio, compliance with debt area of risk likely to impact the Financial Statements covenants, availability of borrowing facilities and is the existence, ownership and valuation of the Company’s ability to meet its obligations as they investments as they represent 99.3% of total assets. fall due. The Committee also reviewed the viability statement on page 53 and statement on going Unlisted (private company) investments concern on page 71. Following this assessment, The Committee reviewed the Managers’ valuation the Committee recommended to the Board the approach for investments in unquoted companies appropriateness of the going concern basis in (as described on pages 34, 95 and 96) and approved preparing the Financial Statements and confirmed the valuations of the unlisted investments following the accuracy of the viability statement and a detailed review of the valuation of each investment statement on going concern. and relevant challenge where appropriate. The Managers and Auditor confirmed to the The Auditor agreed the holdings in certificated form Committee that they were not aware of any material to confirmations from the Company’s Custodian and misstatements in the context of the Financial holdings of uncertificated unlisted investments to Statements as a whole and that the Financial confirmations from the relevant investee companies. Statements are in accordance with applicable law and accounting standards. Listed investments The majority of the investments are in quoted Internal controls and risk management securities and market prices are readily available from independent external pricing sources. The The Committee reviewed the effectiveness of the Committee reviewed Baillie Gifford’s report on Company’s risk management and internal controls Internal Controls which details the controls in place systems as described on pages 70 and 71. No regarding the recording and pricing of investments. significant weaknesses were identified in the year under review. The Managers agreed the prices of all the listed investments at 31 May 2024 to external External Auditor price sources and the holdings were agreed to To fulfil its responsibility regarding the independence confirmations from the Company’s Custodian or of the external Auditor, the Committee reviewed: Transfer Agent. ș the Auditor’s audit strategy for the year to FRC Audit Quality Review 31 May 2024 which included a report from The Financial Reporting Council (‘FRC’) reviewed the Auditor describing their arrangements to the audit of the Company’s Financial Statements manage Auditor independence and received for the year to 31 May 2023. The audit for the year confirmation of their independence; and to 31 May 2023 was performed by KPMG LLP. ș the extent of non-audit services provided by | The FRC assessed the audit as good. A good quality | the external Auditor. There were no non-audit | | --- | --- | | assessment indicates that no key or other findings | fees paid to the external Auditor in the year | | were identified. | to 31 May 2024 or the year to 31 May 2023. | To assess the effectiveness of the external Auditor, Other matters the Committee reviewed and considered: The Committee reviewed the Managers’ report on Internal Controls which details the controls in place ș the Auditor’s fulfilment of the agreed audit plan; regarding completeness and accurate recording of ș the Audit Quality Inspection report on investment income. The accounting treatment of any Ernst & Young LLP issued by the FRC’s special dividends received or receivable during the Audit Quality Review team (‘AQRT’); and year is reviewed by the Managers as they arise. ș detailed discussion with audit personnel to The Committee considered the factors that might challenge audit processes and deliverables. affect the Company’s viability over a period of five years and its ability to continue as a going concern for at least twelve months from the date of signing of the Financial Statements, together with reports 74 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Non-audit service requests are considered on a case In recognition of underlying audit rotation by case basis. requirements, the Committee intends to undertake a further tender process no later than the year to To fulfil its responsibility for oversight of 31 May 2033. the external audit process the Committee considered and reviewed: Regulatory compliance ș the Auditor’s engagement letter; The Committee confirms that the Company is in ș the Auditor’s proposed audit strategy; compliance with the requirements of the Statutory Audit Services for Large Companies Market ș the audit fee; and Investigation (Mandatory Use of Competitive Tender ș a report from the Auditor on the Processes and Audit Committee Responsibilities) conclusion of the audit. Order 2014, which relates to the frequency and governance of tenders for the appointment of Ernst & Young LLP was appointed as the Company’s the external Auditor and the setting of policy Auditor, by the Directors, in October 2023. The on the provision of non-audit services. audit partner responsible for the audit is to be rotated at least every five years in accordance with professional and regulatory standards in order to Accountability and audit protect independence and objectivity and to provide The respective responsibilities of the Directors fresh challenge to the business. Mr Ahmer Huda, and the Auditor in connection with the Financial the current audit partner, will continue as audit Statements are set out on pages 80 and 81. partner until the conclusion of the 2028 audit. Ernst & Young LLP has confirmed that it believes it is independent within the meaning of regulatory and On behalf of the Board professional requirements and that the objectivity Graham Paterson of the audit partner and staff is not impaired. Audit Committee Chair 21 August 2024 Having carried out the review described above, the Committee is satisfied that the Auditor has remained independent and effective for the purposes of this year’s audit. There are no contractual obligations restricting the Committee’s choice of external Auditor. Audit tender The Committee acknowledges its responsibility to monitor and, at suitable junctures, to test the external audit market in order to ensure that the provision of external audit services to the Company remains of a high quality as well as cost proportionate, by reference to developing industry practice and expectations. The Committee is aware that the scope, complexity and associated cost of external audit engagements continues to increase across the market, driven by a number of factors including growing regulatory expectations, new auditing standards, the significant volume of work required to deliver a high-quality audit and a challenging audit labour market. Following the audit tender process conducted during the year to 31 May 2023, the Board unanimously decided to appoint Ernst & Young LLP as Auditor with effect from the audit of the Financial Statements for the year to 31 May 2024. 75 Governance report # Directors' remuneration report **This report has been prepared in accordance with the requirements of the Companies Act 2006.** ## **Statement by the Chair** The Directors' remuneration policy is subject to shareholder approval every three years or sooner if an alteration to the policy is proposed. The remuneration policy, which is set out below, was last approved at the Annual General Meeting in September 2022 and no changes to the policy are proposed. An ordinary resolution for the approval of the remuneration policy will be put to the members at the Annual General Meeting in September 2025. For the year to 31 May 2024 the Directors' remuneration was set at £30,755 per annum for each Director other than the Chair, who received an additional £11,665 per annum, Chair of the Audit Committee, who received an additional £7,000 per annum, and the Senior Independent Director who received an additional £1,590 per annum. The Board reviewed the level of fees during the year and agreed that, with effect from 1 June 2024 the fee for the Chair would increase to £43,777, the Directors' fees would increase to £31,739, the additional fee for the Chair of the Audit Committee would increase to £7,224 and the additional fee for the Senior Independent Director would increase to £1,641. The fees were last increased on 1 June 2023. 76 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc | Directors’ remuneration policy | Limits on Directors’ remuneration | | --- | --- | | The Board is composed wholly of non-executive | The fees for the non-executive Directors are | | Directors, none of whom has a service contract with | payable monthly in arrears and are determined | | the Company. There is no separate remuneration | within the limit set out in the Company’s Articles of | | committee and the Board as a whole considers | Association which is currently £300,000 per annum | | changes to Directors’ fees from time to time. | in aggregate. Any change to this limit requires | shareholder approval. The Board’s policy is that the remuneration of Directors should be set at a reasonable level that is The basic and additional fees payable to Directors commensurate with the duties and responsibilities in respect of the year ended 31 May 2024 and the of the role and consistent with the requirement fees payable in respect of the year ending 31 May to attract and retain Directors of the appropriate 2025 are set out in the table below. The fees payable quality and experience. The Board believes that to the Directors in the subsequent financial periods the fees paid to the Directors should reflect the will be determined following an annual review of the experience of the Board as a whole, be fair and Directors’ fees. should take account of the level of fees paid by Expected Fees for comparable investment trusts. Any views expressed fees for the year by shareholders on the fees being paid to Directors | | the year | ended | | --- | --- | --- | | will be taken into consideration by the Board when | ending 31 | 31 May | | | May 2025 | 2024 | reviewing the Board’s policy on remuneration. Baillie £ £ Gifford & Co Limited, the Company Secretaries, Chair’s fee 43,777 42,420 provides comparative information when the Board considers the level of Directors’ fees. Non-executive Director fee 31,739 30,755 Additional fee for 7,224 7,000 Directors are not eligible for any other remuneration Audit Committee Chair or benefits apart from the reimbursement of Additional fee for the 1,641 1,590 allowable expenses. There are no performance Senior Independent Director conditions relating to Directors’ fees and there Total aggregate annual fees that can 300,000 300,000 are no long-term incentive schemes or pension be paid to the Directors in any year schemes. There is no notice period and no under the Directors’ remuneration compensation is payable on loss of office. policy, as set out in the Company’s Articles of Association 77 Governance report Directors’ remuneration for the year (audited) The Directors who served during the year received the following remuneration in the form of fees and taxable benefits. This represents the entire remuneration paid to the Directors. For the year ended 31 May 2024 For the year ended 31 May 2023 Taxable Taxable Fees benefits * Total Fees benefits * Total Name £ £ £ £ £ £ TJW Burnet (Chair) 42,420 – 42,420 40,400 – 40,400 GD Paterson (Audit Committee Chair) 37,755 – 37,755 34,340 – 34,340 SP Inglis (Senior Independent Director) 32,345 – 32,345 30,805 77 30,882 CRD van der Kuyl 30,755 – 30,755 29,290 157 29,447 RL Palmer 30,755 4,782 35,537 29,290 6,288 35,578 174,030 4,782 178,812 164,125 6,522 170,647 * Comprises expenses incurred by Directors in the course of travel to attend Board and Committee meetings held at the offices of Baillie Gifford & Co Limited, the Company’s Secretaries. These amounts have been grossed up for income tax. The taxable benefits in the prior year were grossed up for income tax and national insurance. The total taxable benefits payable to Directors for the year ended 31 May 2023 would have been £6,039 if prepared on the same basis as the current year. Annual report on remuneration Directors’ interests (audited) An ordinary resolution for the approval of this report The Directors at the financial year end, and their will be put to the members at the forthcoming interests in the Company, were as shown below. Annual General Meeting. There have been no changes intimated in the Directors’ interests up to 16 August 2024. The law requires the Company’s Auditor to audit certain of the disclosures provided in this report. | | | | | Ordinary 1p | Ordinary 1p | | --- | --- | --- | --- | --- | --- | | Where disclosures have been audited, they are | | | Nature | shares held at | shares held at | | | Name | of interest | | 31 May 2024 | 31 May 2023 | indicated as such. The Auditor’s opinion is included in Ernst & Young LLP’s report on pages 83 to 89. TJW Burnet Beneficial 126,040 126,040 SP Inglis Beneficial 50,000 50,000 GD Paterson Beneficial 80,000 80,000 CRD van der Kuyl Beneficial 285,314 285,314 RL Palmer n/a – – Annual percentage change in remuneration This represents the annual percentage change in the total remuneration paid to the Directors. | | % change | % change | | % change | % change | | | --- | --- | --- | --- | --- | --- | --- | | | from 2023 | from 2022 | | from 2021 | from 2020 | | | Name | to 2024 | | to 2023 | to 2022 | | to 2021 | TJW Burnet 5.0 1.0 15.9 – SP Inglis 4.7 1.3 24.5 # – GD Paterson 9.9 1.0 17.2 – | CRD van der Kuyl (appointed 1 June 2021) 4.4 1.5 – | * | n/a | | --- | --- | --- | | RL Palmer (appointed 1 June 2021) (0.1) 11.7 – | * | n/a | | * These percentage movements reflect the Directors’ appointments in the period. | | | | # When the Board reviewed the level of fees during the year to 31 May 2021 an additional fee of £1,500 for the Senior Independent Director was | | | introduced for the first time. In addition to this, Director fees were increased from £24,500 to £29,000 due to the increase in private company holdings. 78 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc | Statement of voting at Annual General Meeting | Company performance | | --- | --- | | At the Annual General Meeting held on | The following graph compares, for the period from | | 16 September 2022 of the proxy votes received | 23 March 2018, launch date and first trade date, to | | in respect of the Directors’ remuneration policy, | 31 May 2024, the share price total return (assuming | | 99.77% were in favour, 0.20% were against | all dividends are reinvested) to the Company’s | | and votes withheld were 0.03%. At the Annual | ordinary shareholders compared to the total | | General Meeting held on 18 September 2023, | shareholder return on a notional investment made | | of the proxy votes received in respect of the | up of shares in the component parts of the FTSE | | Directors’ remuneration report, 99.66% were | All-Share Index. This index was chosen for | | in favour, 0.28% were against and votes withheld | comparison purposes as it is a widely used | | were 0.06%. | measure of performance for UK listed companies. | Comparative index provided for information Relative importance of spend on pay purposes only. As the Company has no employees, the Directors | do not consider it appropriate to present a table | Performance graph | | | --- | --- | --- | | comparing remuneration paid to employees with | The Company’s share price, FTSE All-Share Index | | | distributions to shareholders. The Directors’ | and comparative index | * | | remuneration for the year and the expected fees | (figures have been rebased to 100 at 23 March 2018) | | for the year to 31 May 2025 are set out on page 77. The table below shows the actual expenditure during the year in relation to Directors’ remuneration and 350 distributions to shareholders. 300 2024 2023 Change 250 £’000 £’000 % 200 Directors’ 179 171 4.7 150 remuneration 100 Share buy-backs 14,550 – n/a 50 2024202320222021202020192018 Directors’ service details BG US Growth share price Date of Due date for * Name appointment re-election Source: LSEG/Baillie Gifford and relevant underlying index providers. See TJW Burnet 5 March 2018 AGM in 2024 disclaimer on page 120. SP Inglis 5 March 2018 AGM in 2024 All figures are total returns (see Glossary of terms and alternative performance measures on pages 124 to 127). CRD van der Kuyl 1 June 2021 AGM in 2024 *S&P 500 Index total return (in sterling terms). See disclaimer on page 120. RL Palmer 1 June 2021 AGM in 2024 GD Paterson 5 March 2018 AGM in 2024 Past performance is not a guide to future performance. Approval The Directors’ remuneration report on pages 76 to 79 was approved by the Board of Directors and signed on its behalf on 21 August 2024. Tom Burnet 400 Chair 79 Comparative index FTSE All-Share Index Governance report ## Statement of ## Directors’ responsibilities The Directors are responsible for preparing the The Directors are responsible for keeping adequate Annual Report and the Financial Statements in accounting records that are sufficient to show and accordance with applicable law and regulations. explain the Company’s transactions and disclose with reasonable accuracy at any time the financial Company law requires the Directors to prepare position of the Company and enable them to financial statements for each financial year. Under ensure that its financial statements comply with the that law they have elected to prepare the Financial Companies Act 2006. They are responsible for such Statements in accordance with applicable law and internal controls as they determine are necessary to United Kingdom Accounting Standards including enable the preparation of financial statements that FRS 102 ‘The Financial Reporting Standard are free from material misstatement, whether due applicable in the UK and Republic of Ireland’. to fraud or error, and have general responsibility for Under company law the Directors must not approve taking such steps as are reasonably open to them to the Financial Statements unless they are satisfied safeguard the assets of the Company and to prevent that they give a true and fair view of the state of and detect fraud and other irregularities. affairs of the Company and of the profit or Under applicable laws and regulations, the Directors loss of the Company for that period. In preparing the are also responsible for preparing a Strategic Financial Statements, the Directors are required to: report, Directors’ report, a Directors’ remuneration ș select suitable accounting policies and then report and a Corporate governance statement that apply them consistently; complies with that law and those regulations. ș make judgements and accounting estimates that The Directors have delegated responsibility to the are reasonable and prudent; Managers for the maintenance and integrity of the corporate and financial information included on the ș state whether applicable United Kingdom Company website. Legislation in the United Kingdom Accounting Standards have been followed, governing the preparation and dissemination of subject to any material departures disclosed and financial statements may differ from legislation in explained in the Financial Statements; other jurisdictions. ș assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and ș use the going concern basis of accounting unless they either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. 80 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Responsibility statement of the Directors in respect of the Annual Financial Report We confirm that, to the best of our knowledge: ș the Financial Statements, which have been prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’, give a true and fair view of the assets, liabilities, financial position and net return of the Company; ș the Annual Report and Financial Statements taken as a whole is fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s performance, business model and strategy; and ș the Strategic report and Directors’ report include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. On behalf of the Board Tom Burnet 21 August 2024 81 ## Financial ## report The Financial Statements for the year to 31 May 2024 are set out on pages 90 to 111 and have been prepared in accordance with FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’. Baillie Gifford US Growth Trust plc ## Independent ## Auditor’s report to the members of Baillie Gifford US Growth Trust plc Opinion The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company We have audited the financial statements of Baillie and we remain independent of the Company in Gifford US Growth Trust plc (the ‘Company) for the conducting the audit. year ended 31 May 2024 which comprise the Income Statement, Balance Sheet, Statement of Changes Conclusions relating to going concern in Equity, Cash Flow Statement, and the related notes 1 to 17, including the principal accounting In auditing the financial statements, we have policies. The financial reporting framework that concluded that the Directors’ use of the going has been applied in their preparation is applicable concern basis of accounting in the preparation of the law and United Kingdom Accounting Standards financial statements is appropriate. Our evaluation of including FRS 102 ‘The Financial Reporting Standard the Directors’ assessment of the Company’s ability applicable in the UK and Republic of Ireland’ (United to continue to adopt the going concern basis of Kingdom Generally Accepted Accounting Practice). accounting included: In our opinion, the financial statements: ș Confirming our understanding of the Company’s going concern assessment process by engaging ș give a true and fair view of the Company’s affairs with the Directors and the Company Secretary as at 31 May 2024 and of its profit for the year to determine if all key factors were considered then ended; in their assessment. We considered whether | ș have been properly prepared in accordance with | | | the factors taken account of in the Directors’ | | --- | --- | --- | --- | | | United Kingdom Generally Accepted Accounting | | assessment addressed those matters which we | | | Practice; and | | considered important. | | ș have been prepared in accordance with the | | ș Inspecting the Directors’ assessment of going | | | | requirements of the Companies Act 2006. | | concern, including the revenue forecast, for | the period to 21 August 2025 which is at least Basis for opinion 12 months from the date the financial statements were authorised for issue. The Company has We conducted our audit in accordance with concluded that it is able to continue to meet its International Standards on Auditing (UK) (ISAs financial obligations as they fall due. (UK)) and applicable law. Our responsibilities under those standards are further described in the ș Reviewing the factors and assumptions applied Auditor’s responsibilities for the audit of the financial to the Company’s forecast, liquidity review and statements section of our report. We believe that the covenant compliance assessment as prepared audit evidence we have obtained is sufficient and by the Company Secretary. We considered appropriate to provide a basis for our opinion. the appropriateness of the methods, used to calculate the revenue forecast and the liquidity Independence assessment and determined, through testing We are independent of the Company in accordance of the methodology and calculations, that the with the ethical requirements that are relevant to our methods, inputs and assumptions utilised were audit of the financial statements in the UK, including appropriate to be able to make an assessment for the FRC’s Ethical Standard as applied to public the Company. interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. 83 Financial report ș Assessing the risk of breaching the debt An overview of the scope of our audit covenants as a result of a reduction in the value Tailoring the scope of the Company’s portfolio. We calculated and reviewed the Company’s compliance with debt Our assessment of audit risk, our evaluation of covenants throughout the year, validated the materiality and our allocation of performance inputs used to the underlying information and materiality determine our audit scope for the we performed reverse stress testing in order to Company. This enables us to form an opinion on identify what factors would lead to the Company the financial statements. We take into account breaching the financial covenants. size, risk profile, the organisation of the Company and effectiveness of controls, the potential impact ș Considering the mitigating factors that are of climate change and changes in the business within the control of the Company. We reviewed environment when assessing the level of work to be the Company’s assessment of the liquidity of performed. All audit work was performed directly investments held and evaluated the Company’s by the audit engagement team which included our ability to sell those investments in order to cover valuation specialists. working capital requirements should revenue decline significantly. Climate change ș Reviewing the Company’s going concern There has been increasing interest from stakeholders disclosures included in the annual report to assess as to how climate change will impact companies. whether the disclosures were appropriate and in The Company has determined that climate problems conformity with the reporting standards. may impact investee company valuations and in turn the Company’s own share price. This is explained Based on the work we have performed, we have on page 49 in the principal and emerging risks not identified any material uncertainties relating to section, which form part of the “Other information”, events or conditions that, individually or collectively, rather than the audited financial statements. Our may cast significant doubt on the Company’s ability procedures on these disclosures therefore consisted to continue as a going concern for a period to solely of considering whether they are materially 21 August 2025, which is at least 12 months from consistent with the financial statements, or our the approval of these financial statements on knowledge obtained in the course of the audit or 21 August 2024. otherwise appear to be materially misstated. In relation to the Company’s reporting on how it has Our audit effort in considering climate change applied the UK Corporate Governance Code, was focused on the adequacy of the Company’s we have nothing material to add or draw attention disclosures in the financial statements as set out in to in relation to the Directors’ statement in the Note 1a and conclusion that there was no further financial statements about whether the Directors impact of climate change to be taken into account as considered it appropriate to adopt the going concern the investments are valued based on market pricing basis of accounting. as required by FRS 102. Unquoted investments Our responsibilities and the responsibilities of the are valued with reference to recent transaction Directors with respect to going concern are described prices, market approaches using comparable in the relevant sections of this report. However, trading multiples and benchmark performance and because not all future events or conditions can be therefore are reflective of market participants views. predicted, this statement is not a guarantee as to the We also challenged the Directors’ considerations of Company’s ability to continue as a going concern. climate change in their assessment of viability and associated disclosures. Overview of our audit approach Key audit matters ș Risk of incorrect valuation or ownership of the investment portfolio ș Risk of incomplete or inaccurate revenue recognition, including the classification of special dividends as revenue or capital in the Income Statement Materiality ș Overall materiality of £6.44m which represents 1% of shareholders’ funds 84 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters. Key observations communicated to Risk Our response to the risk the Audit Committee Incorrect valuation or ownership We performed the following procedures: The results of of the investment portfolio our procedures We obtained an understanding of Baillie Gifford’s processes and (as described on page 74 in the identified no material controls surrounding legal title and pricing of quoted and unquoted report of the Audit Committee and misstatement in investments by performing walkthrough procedures in which we as per the accounting policy set relation to the risk of evaluated the design of controls. out on page 95). incorrect valuation For all quoted investments in the portfolio, we compared the market or ownership of the The valuation of the investment prices and exchange rates applied to an independent pricing investment portfolio. portfolio at 31 May 2024 was vendor and recalculated the investment valuations as at the year- £678.23m (2023: £605.91m) end. consisting of quoted investments We reviewed the prices for all quoted investments in the portfolio with an aggregate value of £447.04m near the year end of the Company to identify any stale prices. (2023: £396.27m) and unquoted Our testing of quoted investments did not identify any prices investments with an aggregate value for which there was no active market. of £231.19m (2023: £209.64m). For the unquoted investments held as at 31 May 2024 the audit The valuation of the assets held in team, with the assistance of our valuation specialists, reviewed and the investment portfolio is the key challenged a sample of the the valuations. This included: driver of the Company’s net asset ș Reviewing the valuation papers prepared by the valuation group value and total return. Incorrect to gain an understanding of, and comment on, the valuation investment pricing or a failure to methodologies and assumptions. maintain proper legal title to the investments held by the Company ș We have assessed the competence, capability and objectivity could have a significant impact on of the valuations group. the portfolio valuation and the return ș Discussing the unquoted valuations with the valuations group generated for shareholders. to understand their valuation approach and a follow up meeting The fair value of quoted investments to challenge certain areas of their approach, documentation is determined by reference to and valuation conclusions. bid value or the last traded price ș Assessing whether the valuations have been performed in line depending on the convention of the with the valuation approaches as set out in the International exchange on which the investment Private Equity and Venture Capital (‘IPEV’) guidelines and is quoted. FRS 102. Unquoted investments are valued ș Assessing the appropriateness of the data inputs (including at fair value by the Directors supporting evidence) and challenging the assumptions used following a detailed review and to support the valuations. appropriate challenge of the ș Assessing other facts and circumstances, such as market valuations proposed by the Baillie movement and comparative company information, that have an Gifford private company valuations impact on the fair market value of the investments and assessing group (‘the valuation group’). The whether managements, valuation is reasonable. unquoted investment policy applies | methodologies consistent with the | We recalculated the unrealised gains/(losses) on investments as at | | --- | --- | | International Private Equity and | the year-end using the book-cost reconciliation. | | Venture Capital Valuation (‘IPEV’) | We compared the Company’s investment holdings at 31 May 2024 | | guidelines and FRS 102. | to independent confirmations received directly from the Company’s | | The valuation of unquoted | Custodian or from the investee company. | investments, and the resultant impact on the unrealised gains/ (losses), is the area requiring the most significant judgement and estimation in the preparation of the financial statements and has been classified as an area of fraud risk as highlighted below on page 88. 85 Financial report Key observations communicated to Risk Our response to the risk the Audit Committee Incomplete or inaccurate revenue We have performed the following procedures: The results of recognition, including the our procedures We obtained an understanding of Baillie Gifford’s processes and classification of special dividends identified no material controls surrounding revenue recognition performing walkthrough as revenue or capital items in the misstatement in procedures. Income Statement (per the Audit relation to the risk For all dividends, we recalculated the income by multiplying the Committee report set out on page of incomplete or investment holdings at the ex-dividend date, traced from the 74 and the accounting policy set inaccurate revenue accounting records, by the dividend per share, which was agreed out on page 96). recognition. to an independent data vendor. We agreed a sample to bank The total revenue for the year statements and, where applicable, we also agreed the exchange to 31 May 2024 was £0.60m rates to an external source. (2023: £0.85m). To test completeness of recorded income, we tested that dividends There is a risk of incomplete or had been recorded for a sample of investee companies with inaccurate recognition of revenue reference to investee company announcements obtained from through the failure to recognise an independent data vendor. proper income entitlements or to For all dividends accrued at the year end, we reviewed the apply an appropriate accounting investee company announcements to assess whether the dividend treatment. obligation arose prior to 31 May 2024. We agreed the dividend rate When received, the Directors may to corresponding announcements made by the investee company, be required to exercise judgement recalculated the dividend amount receivable and confirmed this in determining whether income was consistent with cash received as shown on post year end receivable in the form of special bank statements. dividends should be classified For all investments held during the year, we compared the type of as ‘revenue’ or ‘capital’ in the dividends paid with reference to an external data source to identify Income Statement and has been any which were ‘special’. We confirmed there were no special classified as an area of fraud risk as dividends in the accounting period. highlighted below on page 88. In the prior year, the predecessor did not include a key audit matter on revenue recognition or the valuation of quoted assets but did include a key audit matter on unlisted investments. There have been no other changes to the areas of audit focus raised in the above risk table. Our application of materiality Performance materiality We apply the concept of materiality in planning and The application of materiality at the individual performing the audit, in evaluating the effect of account or balance level. It is set at an amount to identified misstatements on the audit and in forming reduce to an appropriately low level the probability our audit opinion. that the aggregate of uncorrected and undetected misstatements exceeds materiality. Materiality On the basis of our risk assessments, together The magnitude of an omission or misstatement that, with our assessment of the Company’s overall individually or in the aggregate, could reasonably control environment, our judgement was that be expected to influence the economic decisions performance materiality was 75% of our of the users of the financial statements. Materiality planning materiality, namely £4.83m. We have set provides a basis for determining the nature and performance materiality at this percentage due to extent of our audit procedures. our experience of working in prior years with the We determined materiality for the company to be key service providers that indicates a lower risk of £6.44 million, which is 1% of shareholders’ funds. misstatements, both corrected and uncorrected. We believe that shareholders’ funds provides us Given the importance of the distinction between with a materiality aligned to the key measure of the revenue and capital for investment trusts, we have Company’s performance. applied a separate testing threshold for the revenue column of the Income Statement of £0.32m, being our reporting threshold. 86 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Reporting threshold Opinions on other matters prescribed by the An amount below which identified misstatements Companies Act 2006 are considered as being clearly trivial. In our opinion the part of the Directors’ remuneration report to be audited has been properly prepared in We agreed with the Audit Committee that we would accordance with the Companies Act 2006. report to them all uncorrected audit differences in excess of £0.32m (2023 predecessor auditor: In our opinion, based on the work undertaken in the £0.31m) which is set at 5% of planning materiality, course of the audit: as well as differences below that threshold that, in ș the information given in the Strategic report and our view, warranted reporting on qualitative grounds. the Directors’ report for the financial year for We evaluate any uncorrected misstatements against which the financial statements are prepared is both the quantitative measures of materiality consistent with the financial statements; and discussed above and in light of other relevant ș the Strategic report and Directors’ reports have qualitative considerations in forming our opinion. been prepared in accordance with applicable legal requirements. Other information The other information comprises the information Matters on which we are required to report included in the annual report other than the financial by exception statements and our auditor’s report thereon. The In the light of the knowledge and understanding Directors are responsible for the other information of the Company and its environment obtained in contained within the annual report. the course of the audit, we have not identified Our opinion on the financial statements does not material misstatements in the Strategic report cover the other information and, except to the extent or Directors’ report. otherwise explicitly stated in this report, we do not We have nothing to report in respect of the following express any form of assurance conclusion thereon. matters in relation to which the Companies Act 2006 Our responsibility is to read the other information requires us to report to you if, in our opinion: and, in doing so, consider whether the other ș adequate accounting records have not been kept, information is materially inconsistent with the or returns adequate for our audit have not been financial statements or our knowledge obtained in received from branches not visited by us; or the course of the audit or otherwise appears to be materially misstated. If we identify such material ș the financial statements and the part of the inconsistencies or apparent material misstatements, Directors’ remuneration report to be audited are we are required to determine whether this gives not in agreement with the accounting records and rise to a material misstatement in the financial returns; or statements themselves. If, based on the work we ș certain disclosures of Directors’ remuneration have performed, we conclude that there is a material specified by law are not made; or misstatement of the other information, we are required to report that fact. ș we have not received all the information and explanations we require for our audit. We have nothing to report in this regard. Corporate governance statement We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review by the UK Listing Rules. 87 Financial report Based on the work undertaken as part of our audit, Auditor’s responsibilities for the audit of the we have concluded that each of the following Financial Statements elements of the Corporate Governance Statement is Our objectives are to obtain reasonable assurance materially consistent with the financial statements or about whether the financial statements as a whole our knowledge obtained during the audit: are free from material misstatement, whether due to ș Directors’ statement with regards to the fraud or error, and to issue an auditor’s report that appropriateness of adopting the going concern includes our opinion. Reasonable assurance is a basis of accounting and any material uncertainties high level of assurance, but is not a guarantee that identified set out on page 71; an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it ș Directors’ explanation as to their assessment exists. Misstatements can arise from fraud or error of the Company’s prospects, the period this and are considered material if, individually or in the assessment covers and why the period is aggregate, they could reasonably be expected to appropriate set out on page 53; influence the economic decisions of users taken on ș Directors’ statement on whether they have a the basis of the financial statements. reasonable expectation that the Company will be able to continue in operation and meets its Explanation as to what extent the audit liabilities set out on page 71; was considered capable of detecting ș Directors’ statement on fair, balanced and irregularities, including fraud understandable set out on pages 80 and 81; Irregularities, including fraud, are instances of non- compliance with laws and regulations. We design ș Board’s confirmation that it has carried out a procedures in line with our responsibilities, outlined robust assessment of the emerging and principal above, to detect irregularities, including fraud. The risks set out on pages 48 to 52; risk of not detecting a material misstatement due ș the section of the annual report that describes to fraud is higher than the risk of not detecting one the review of effectiveness of risk management resulting from error, as fraud may involve deliberate and internal control systems set out on pages concealment by, for example, forgery or intentional 70 and 71; and misrepresentations, or through collusion. The extent ș the section describing the work of the Audit to which our procedures are capable of detecting Committee set out on page 73. irregularities, including fraud, is detailed below. However, the primary responsibility for the Responsibilities of Directors prevention and detection of fraud rests with both As explained more fully in the Directors’ those charged with governance of the Company responsibilities statement set out on page 80, the and management. Directors are responsible for the preparation of the ș We obtained an understanding of the legal and financial statements and for being satisfied that regulatory frameworks that are applicable to the they give a true and fair view, and for such internal Company and determined that the most significant controls as the Directors determine are necessary are United Kingdom Generally Accepted to enable the preparation of financial statements that Accounting Practice, the Companies Act 2006, are free from material misstatement, whether due to the UK Listing Rules, UK Corporate Governance fraud or error. Code, the Association of Investment Companies’ | In preparing the financial statements, the Directors | Corporate Governance Code and Statement of | | --- | --- | | are responsible for assessing the Company’s | Recommended Practice, Section 1158 of the | | ability to continue as a going concern, disclosing, | Corporation Tax Act 2010 and The Companies | | as applicable, matters related to going concern | (Miscellaneous Reporting) Regulations 2018. | and using the going concern basis of accounting ș We understood how the Company is complying unless the Directors either intend to liquidate the with those frameworks through discussions with Company or to cease operations, or have no realistic the Audit Committee and Company Secretary and alternative but to do so. review of Board minutes. 88 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc ș We assessed the susceptibility of the Company’s Use of our report financial statements to material misstatement, This report is made solely to the Company’s including how fraud might occur by considering members, as a body, in accordance with Chapter 3 the key risks impacting the financial statements. of Part 16 of the Companies Act 2006. Our audit We identified a fraud risk with respect to the work has been undertaken so that we might state incomplete or inaccurate revenue recognition to the Company’s members those matters we are through incorrect classification of special required to state to them in an auditor’s report and dividends as revenue or capital items in the for no other purpose. To the fullest extent permitted Income Statement. We also identified a fraud by law, we do not accept or assume responsibility to risk with respect to the incorrect valuation of the anyone other than the Company and the Company’s unquoted investments and the resultant impact members as a body, for our audit work, for this on unrealised gains/(losses). Further discussion report, or for the opinions we have formed. of our approach is set out in the section on key audit matters above which include our response to the fraud risks and other areas of audit focus. Ahmer Huda (Senior statutory auditor) for and on behalf of Ernst & Young LLP, ș Based on this understanding we designed our Statutory Auditor audit procedures to identify non-compliance London with such laws and regulations. Our procedures 21 August 2024 involved review of the reporting to the Directors with respect to the application of the documented policies and procedures and review of the financial statements to ensure compliance with the reporting requirements of the Company. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Other matters we are required to address Following the recommendation from the Audit Committee, we were appointed by the Company to audit the financial statements for the year ending 31 May 2024 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments is 1 year, covering the year ending 31 May 2024. The audit opinion is consistent with the additional report to the Audit Committee. 89 Financial report ## Income ## statement For the year ended 31 May | | 2024 | 2024 | 2024 | | 2023 | 2023 | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | | | Revenue | Capital | Total | Revenue | | Capital | Total | | Notes | £’000 | £’000 | £’000 | | £’000 | £’000 | £’000 | Gains/(losses) on investments 9 – 95,288 95,288 – (10,169) (10,169) Currency gains/(losses) 15 – 878 878 – (700) (700) Income 2 603 – 603 850 – 850 Investment management fee 3 (3,581) – (3,581) (3,345) – (3,345) Other administrative expenses 4 (726) – (726) (670) – (670) Net return before finance costs (3,704) 96,166 92,462 (3,165) (10,869) (14,034) and taxation Finance costs of borrowings 5 (2,528) – (2,528) (1,482) – (1,482) Net return before taxation (6,232) 96,166 89,934 (4,647) (10,869) (15,516) Tax on ordinary activities 6 (50) – (50) (71) – (71) Net return after taxation (6,282) 96,166 89,884 (4,718) (10,869) (15,587) Net return per ordinary share 7 (2.07p) 31.73p 29.66p (1.55p) (3.56p) (5.11p) The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital return columns are prepared under guidance published by the Association of Investment Companies. All revenue and capital items in this statement derive from continuing operations. A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement. The accompanying notes on pages 94 to 111 are an integral part of the Financial Statements. 90 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc # Balance sheet As at 31 May | | Notes | 2024 £'000 | 2024 £'000 | 2023 £'000 | 2023 £'000 | | --- | --- | --- | --- | --- | --- | | **Fixed assets** | | | | | | | Investments held at fair value through profit or loss | 9 | | 678,234 | | 605,908 | | **Current assets** | | | | | | | Debtors | 10 | 605 | | 657 | | | Cash and cash equivalents | 17 | 6,620 | | 3,440 | | | | | 7,225 | | 4,097 | | | **Creditors** | | | | | | | Amounts falling due within one year | 11 | (41,526) | | (41,406) | | | **Net current liabilities** | | | (34,301) | | (37,309) | | **Net assets** | | | **643,933** | | **568,599** | | **Capital and reserves** | | | | | | | Share capital | 12 | | 3,073 | | 3,073 | | Share premium account | 13 | | 250,827 | | 250,827 | | Special distributable reserve | 13 | | 168,942 | | 168,942 | | Capital reserve | 13 | | 247,547 | | 165,931 | | Revenue reserve | 13 | | (26,456) | | (20,174) | | **Total shareholders' funds** | | | **643,933** | | **568,599** | | **Net asset value per ordinary share*** | 14 | | **216.65p** | | **186.33p** | The Financial Statements of Baillie Gifford US Growth Trust plc (Company Registration number 11194060) were approved and authorised for issue by the Board and were signed on 21 August 2024. Tom Burnet Chair * Net asset value per ordinary share after deducting borrowings at book value. See Glossary of terms and alternative performance measures on pages 124 to 127. The accompanying notes on pages 94 to 111 are an integral part of the Financial Statements. 91 Financial report ## Statement of ## changes in equity For the year ended 31 May 2024 | | | | Share | | Special | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | premium | | distributable | | Capital | Revenue | | Shareholders’ | | | | capital | account | | | reserve | reserve | reserve | | | funds | | Notes | £’000 | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | Shareholders’ funds at 1 June 2023 3,073 250,827 168,942 165,931 (20,174) 568,599 Ordinary shares bought back into treasury 13 – – – (14,550) – (14,550) Net return after taxation – – – 96,166 (6,282) 89,884 Shareholders’ funds at 31 May 2024 3,073 250,827 168,942 247,547 (26,456) 643,933 For the year ended 31 May 2023 | | | | Share | | Special | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | premium | | distributable | | Capital | Revenue | | Shareholders’ | | | | capital | account | | | reserve | reserve | reserve | | | funds | | Notes | £’000 | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | Shareholders’ funds at 1 June 2022 3,073 250,827 168,942 176,800 (15,456) 584,186 Ordinary shares bought back into treasury 13 – – – – – – Net return after taxation – – – (10,869) (4,718) (15,587) Shareholders’ funds at 31 May 2023 3,073 250,827 168,942 165,931 (20,174) 568,599 The accompanying notes on pages 94 to 111 are an integral part of the Financial Statements. 92 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc # Cash flow statement For the year ended 31 May | | Notes | 2024 £'000 | 2024 £'000 | 2023 £'000 | 2023 £'000 | | --- | --- | --- | --- | --- | --- | | **Cash flows from operating activities** | | | | | | | Net return before taxation | | | 89,934 | | (15,516) | | *Adjustments to reconcile company profit before tax to net cash flow from operating activities* | | | | | | | Net (gains)/losses on investments | | | (95,288) | | 10,169 | | Currency (gains)/losses | | | (878) | | 700 | | Finance costs of borrowings | | | 2,528 | | 1,482 | | *Other capital movements* | | | | | | | Overseas withholding tax incurred | | | (50) | | (71) | | Changes in debtors | | | 51 | | (298) | | Changes in creditors | | | 191 | | (10) | | **Cash from operations*** | | | (3,512) | | (3,544) | | Finance costs paid | | | (2,308) | | (1,481) | | **Net cash outflow from operating activities** | | | **(5,820)** | | **(5,025)** | | **Cash flows from investing activities** | | | | | | | Acquisitions of investments | | (95,852) | | (63,894) | | | Disposals of investments | | 118,814 | | 69,383 | | | **Net cash inflow from investing activities** | | | **22,962** | | **5,489** | | **Cash flows from financing activities** | | | | | | | Ordinary shares bought back into treasury and stamp duty thereon | 13 | (13,769) | | - | | | Bank loans drawn down | | 20,577 | | - | | | Bank loans repaid | | (20,577) | | - | | | **Net cash outflow from financing activities** | | | **(13,769)** | | **-** | | **Increase in cash and cash equivalents** | | | **3,373** | | **464** | | Exchange movements | | | (193) | | (31) | | Cash and cash equivalents at 1 June | 15 | | 3,440 | | 3,007 | | **Cash and cash equivalents at 31 May** | 15 | | **6,620** | | **3,440** | * Cash from operations includes dividends received of £331,000 (2023 – £472,000) and interest received of £35,000 (2023 – £154,000). The accompanying notes on pages 94 to 111 are an integral part of the Financial Statements. 93 Financial report # Notes to the Financial Statements Baillie Gifford US Growth Trust plc was incorporated under the Companies Act 2006 in England and Wales as a public limited company with registered number 1194060. The Company is an investment company within the meaning of section 833 of the Companies Act 2006 and carries on business as an investment trust. ## 01 Principal accounting policies The Financial Statements for the year to 31 May 2024 have been prepared in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and on the basis of the accounting policies set out below which are unchanged from the prior year and have been applied consistently. ### a. Basis of accounting All of the Company's operations are of a continuing nature and the Financial Statements are prepared on a going concern basis under the historical cost convention, modified to include the revaluation of fixed asset investments at fair value through profit or loss, and on the assumption that approval as an investment trust under section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011 will be retained. The Board has, in particular, considered the impact of heightened market volatility due to macroeconomic and geopolitical concerns but does not believe the Company's going concern status is affected. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis. As at 31 May 2024 the Company had a net current liability of £34.3 million primarily as a result of the two US$25 million revolving credit facilities. The Company has continued to comply with the investment trust status requirements of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011. Accordingly, the Financial Statements have been prepared on the going concern basis as it is the Directors' opinion, having assessed the principal and emerging risks and other matters set out in the viability statement on page 53 which assesses the prospects of the Company over a period of five years, that the Company will continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements. The Financial Statements have been prepared in accordance with the Companies Act 2006, applicable UK Accounting Standards, the Association of Investment Companies ('AIC') Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in November 2014 and updated in July 2022 with consequential amendments, except for certain financial information required by paragraph 82(c) regarding unquoted holdings with a value greater than 5% of the portfolio or included in the top 10, where information is not publicly available (see note 9 on page 101). In order to reflect better the activities of the Company and in accordance with guidance issued by the AIC, supplementary information which analyses the profit and loss account between items of a revenue and capital nature has been presented in the Income Statement. Although the Company invests in US dollar investments, the Directors have determined the Company's functional currency to be sterling, as the Company's share capital is denominated in sterling, the entity is listed on a sterling stock exchange in the UK, the Company's shareholders are predominantly based in the UK and the Company and its Managers, who are subject to the UK's regulatory environment, are also UK based. Financial assets and financial liabilities are recognised in the Company's Balance Sheet when it becomes a party to the contractual provisions of the instrument. ### b. Significant accounting estimates and judgements The preparation of the Financial Statements requires the use of estimates, assumptions and judgements. These estimates, assumptions and judgements affect the reported amounts of assets and liabilities at the reporting date. While estimates are based on best judgement using information and financial data available, the actual outcome may differ from these estimates. The key sources of estimation and uncertainty relate to the fair valuation of the unlisted investments. #### Judgements The Directors consider that the preparation of the Financial Statements involves the following key judgements: - (i) the determination of the functional currency of the Company as sterling (see rationale in 1a above); and The key judgements in the fair valuation process are: - (i) the Managers' determination of the appropriate application of the International Private Equity and Venture Capital Valuation ('IPEV') Guidelines 2022 to each unlisted investment; 94 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc (ii) the Directors’ consideration of whether each fair The key assumptions for the multiples approach are value is appropriate following detailed review and that the selection of comparable companies provides a challenge. The judgement applied in the selection of the reasonable basis for identifying relationships between methodology used (see 1c below) for determining the fair enterprise value, revenue and growth to apply in the value of each unlisted investment can have a significant determination of fair value. Other assumptions include the impact upon the valuation; discount applied for reduced liquidity versus listed peers. (iii) the selection of appropriate comparable companies Valuations are cross-checked for reasonableness to in order to derive revenue multiples and meaningful alternative market-based approaches or benchmark index relationships between enterprise value, revenue and movements as appropriate. earnings growth. Comparable companies are chosen c. Investments on the basis of their business characteristics and growth The Company’s investments are classified, recognised patterns; and and measured at fair value through profit or loss in (iv) the selection of a revenue metric (either historical or accordance with sections 11 and 12 of FRS 102. Changes forecast). in fair value of investments and gains and losses on disposal are recognised as capital items in the Income Estimates Statement. The key estimate in the Financial Statements is the determination of the fair value of the unlisted investments Recognition and initial investment by the Managers for consideration by the Directors. This Purchases and sales of investments are accounted for on estimate is key as it significantly impacts the valuation of a trade date basis. Upon initial recognition investments the unlisted investments at the Balance Sheet date. The in securities are recognised at fair value, which is fair valuation process involves estimation using subjective transaction value. Expenses incidental to purchase and inputs that are unobservable (i.e. for which market data is sale are written off to capital at the time of acquisition or unavailable). The main estimates involved in the selection disposal. All investments are classified as valued at fair of the valuation process inputs are: value through profit or loss upon initial recognition and are measured at subsequent reporting dates at fair value. (i) the application of an appropriate discount factor to reflect the reduced liquidity of unlisted companies versus Measurement and valuation their listed peers; Listed investments (ii) the estimation of the probability assigned to an The fair value of listed security investments is the last exit being through an initial public offering (‘IPO’) or a traded price on recognised overseas exchanges. company sale; Unlisted investments (iii) the selection of an appropriate industry benchmark Unlisted investments are valued at fair value by the index to assist with the valuation validation or the Directors following a detailed review and appropriate application of valuation adjustments, particularly in the challenge of the valuations proposed by the Managers. absence of established earnings or closely comparable The Managers’ unlisted investment valuation policy peers; and applies techniques consistent with the IPEV Guidelines. (iv) the calculation of valuation adjustments derived from The techniques applied are predominantly market-based milestone analysis (i.e. incorporating operational success approaches. The market-based approaches available against the plan/forecasts of the business into the under the IPEV guidelines are set out below and are valuation). followed by an explanation of how they are applied to the Fair value estimates are cross-checked to alternative Company’s unlisted portfolio: estimation methods where possible to improve the ș Multiples; robustness of the estimates. As the valuation outcomes may differ from the fair value estimates a price sensitivity ș Industry Valuation Benchmarks; and analysis is provided in Other Price Risk Sensitivity in note ș Available Market Prices. 17 on pages 106 to 109 to illustrate the effect on the Financial Statements of an over or under estimation of The nature of the unlisted portfolio currently will influence fair values. The risk of an over or under estimation of fair the valuation technique applied. The valuation approach values is greater when methodologies are applied using recognises that, as stated in the IPEV Guidelines, the more subjective inputs. price of a recent investment, if resulting from an orderly transaction, generally represents fair value as at the Assumptions transaction date and may be an appropriate starting point The determination of fair value by the Managers involves for estimating fair value at subsequent measurement key assumptions dependent upon the valuation technique dates. However, consideration is given to the facts and used. As explained in 1c below, the primary technique circumstances as at the subsequent measurement date, applied under the IPEV Guidelines is the multiples including changes in the market or performance of the approach. Where the multiples approach is used the investee company. Milestone analysis is used where valuation process recognises also, as stated in the appropriate to incorporate the operational progress of IPEV Guidelines, that the price of a recent investment the investee company into the valuation. Additionally, the may be an appropriate starting point for estimating fair background to the transaction must be considered. As value. The multiples approach involves subjective inputs a result, various market-based techniques are employed and therefore presents a greater risk of over or under to assess the valuations particularly in those companies estimation and particularly in the absence of a recent with established revenues. Discounted cashflows are used transaction. where appropriate. An absence of relevant industry peers may preclude the application of the industry valuation 95 Financial report benchmarks technique and an absence of observable (ii) they relate directly to the buy-back/issuance of shares, prices may preclude the available market prices approach. in which case they are added to the buy-back cost or All valuations are cross-checked for reasonableness by deducted from the share issuance proceeds. employing relevant alternative techniques. h. Finance costs The unlisted investments are valued according to a three Finance costs are accounted for on an accruals basis monthly cycle of measurement dates. The fair value of and on an effective interest rate basis and are charged the unlisted investments will be reviewed before the through the revenue account. next scheduled three monthly measurement date on the i. Taxation following occasions: Current tax assets and liabilities are measured at the (i) at the year end and half year end of the Company; and amount expected to be recovered from or paid to taxation (ii) where there is an indication of a change in fair value as authorities. The tax rates and tax laws used to compute defined in the IPEV Guidelines (commonly referred to as the amount are those enacted or substantively enacted at ‘trigger’ events). the reporting date. Gains and losses Deferred taxation is provided on an undiscounted basis on all timing differences which have originated but not Gains and losses on investments, including those reversed by the Balance Sheet date, calculated at the arising from foreign currency exchange differences, are tax rates expected to apply when the timing differences recognised in the Income Statement as capital items. reverse, based on what has been enacted or substantially The Managers monitor the investment portfolio on a fair enacted, relevant to the benefit or liability. Deferred tax value basis and use the fair value basis for investments assets are recognised only to the extent that it is more in making investment decisions and monitoring financial likely than not that there will be taxable profits from which performance. underlying timing differences can be deducted. d. Cash and cash equivalents j. Foreign currencies Cash and cash equivalents include cash in hand and Transactions involving foreign currencies are converted deposits repayable on demand. Deposits are repayable at the rate ruling at the time of the transaction. Assets on demand if they can be withdrawn at any time without and liabilities in foreign currencies are translated at the notice and without penalty or if they have a maturity or closing rates of exchange at the Balance Sheet date. period of notice of not more than one working day. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as e. Financial liabilities an exchange gain or loss in the capital reserve or revenue Bank loans are classified as loans and are measured at reserve as appropriate. Foreign exchange movements on amortised cost. They are initially recorded at the proceeds investments are included in the Income Statement within received net of direct costs. gains or losses on investments. f. Income k. Special distributable reserve (i) Income from equity investments is brought into account The special distributable reserve can be used for the on the date on which the investments are quoted ex- repurchase of shares and may be distributed by way dividend or, where no ex-dividend date is quoted, when of dividend. the Company’s right to receive payment is established. l. Capital reserve (ii) If scrip dividends are taken in lieu of dividends in cash, Gains and losses on disposal of investments, changes the net amount of the cash dividend declared is credited in the fair value of investments held and realised and to the revenue account. Any excess or shortfall in the unrealised foreign exchange differences of a capital value of the shares received over the amount of the cash nature are dealt with in this reserve after being recognised dividend foregone is recognised as capital. in the Income Statement. Purchases of the Company’s (iii) Special dividends are treated as repayments of capital own shares may be funded from this reserve or income depending on the facts of each particular case. m. Revenue reserve (iv) Overseas dividends include the taxes deducted at The revenue profit or loss for the year is taken to or from source. this reserve. The revenue reserve, when in surplus, may (v) Interest receivable on bank deposits and underwriting be distributed by way of a dividend. commission are recognised on an accruals basis. n. Single segment reporting g. Expenses The Company is engaged in a single segment of business, All expenses are accounted for on an accruals basis. being investment business, consequently no business Expenses are charged through the revenue column of the segmental analysis is provided. Income Statement except where: (i) they relate directly to the acquisition or disposal of an investment (transaction costs), in which case they are recognised as capital within losses/gains on investments; and 96 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc 02 Income 2024 2023 £’000 £’000 Income from investments Overseas dividends 536 472 Overseas interest 32 224 568 696 Other income Deposit interest 35 154 Total income 603 850 03 Investment management fee 2024 2023 £’000 £’000 Investment management fee 3,581 3,345 Details of the Investment Management Agreement are set out on page 61. The annual management fee is 0.70% on the first £100 million of net assets, 0.55% on the next £900 million of net assets and 0.50% on the remaining net assets. Management fees are calculated and payable quarterly. 04 Other administrative expenses | | 2024 | 2023 | | --- | --- | --- | | | £’000 | £’000 | | Directors’ fees (see Directors’ remuneration report page 78) | 174 164 | | Auditor’s remuneration for audit services 158 135 General administrative expenses 198 179 Marketing * 110 84 Custody fees 12 10 Depositary fees 58 82 Registrar fees 16 16 726 670 * The Company is part of a marketing programme which includes all the investment trusts managed by the Managers. The marketing strategy has an ongoing objective to stimulate demand for the Company’s shares. The cost of this marketing strategy is borne in partnership by the Company and the Managers. The Managers match the Company’s marketing contribution and provide the resource to manage and run the programme. There were no non-audit fees paid to the external auditor in the year to 31 May 2024 or 2023. 05 Finance costs of borrowings 2024 2023 £’000 £’000 Interest on bank loans (see note 11) 2,528 1,482 Finance costs include the initial arrangement fee and non-utilisation fees. 97 Financial report ## 06 Tax | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | **Analysis of charge in year** | | | | Overseas withholding tax | 50 | 71 | | **Factors affecting the tax charge for the year** | | | | The tax charge for the year is higher than the standard rate of corporation tax in the UK of 25% (2023 – 20%). The differences are explained below: | | | | **Net return before taxation** | **89,934** | **(15,516)** | | Net return before taxation multiplied by the standard rate of corporation tax in the UK of 25% (2023 – 20%) | 22,484 | (3,103) | | Capital returns not taxable | (24,042) | 2,174 | | Overseas dividends not taxable | (134) | (95) | | Current year management expenses and non-trade loan relationship deficit not utilised | 1,692 | 1,024 | | Overseas withholding tax incurred | 50 | 71 | | **Tax charge for the year** | **50** | **71** | As an investment trust, the Company's capital gains are not taxable in the United Kingdom. ### Factors that may affect future tax charges At 31 May 2024 the Company had surplus management expenses and losses on non-trading loan relationships of £29,164,000 (2023 – £22,395,000). No deferred tax asset has been recognised in respect of these amounts because the Company is not expected to generate taxable income in a future period in excess of the deductible expenses of that future period and, accordingly, it is unlikely that the Company will be able to reduce future tax liabilities through the use of existing surplus expenses. ## 07 Net return per ordinary share | | 2024 Revenue | 2024 Capital | 2024 Total | 2023 Revenue | 2023 Capital | 2023 Total | | --- | --- | --- | --- | --- | --- | --- | | Net return after taxation | (2.07p) | 31.73p | 29.66p | (1.55p) | (3.56p) | (5.11p) | Revenue return per ordinary share is based on the net revenue loss after taxation of £6,282,000 (2023 – net revenue loss after taxation of £4,718,000) and on 303,075,968 (2023 – 305,153,700) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during each period. Capital return per ordinary share is based on the net capital profit for the financial period of £96,166,000 (2023 – net capital loss of £10,869,000) and on 303,075,968 (2023 – 305,153,700) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during each period. Total return per ordinary share is based on the total profit for the financial period of £89,884,000 (2023 – total loss of £15,587,000) and on 303,075,968 (2023 – 305,153,700) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during each period. There are no dilutive or potentially dilutive shares in issue. ## 08 Ordinary dividends There are no dividends paid or proposed in respect of the financial year. There is no investment income available for distribution by way of dividend for the year to 31 May 2024 due to the revenue loss of £6,282,000 in the year (2023 – revenue loss of £4,718,000). 98 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc ## 09 Fixed assets – investments | As at 31 May 2024 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | --- | --- | --- | --- | --- | | Listed equities | 447,044 | – | – | 447,044 | | Unlisted ordinary shares | – | – | 38,928 | 38,928 | | Unlisted preference shares* | – | – | 189,986 | 189,986 | | Unlisted convertible promissory notes | – | – | 2,276 | 2,276 | | Unlisted CVR† | – | – | – | – | | **Total financial asset investments** | **447,044** | **–** | **231,190** | **678,234** | | As at 31 May 2023 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | --- | --- | --- | --- | --- | | Listed equities | 396,272 | – | – | 396,272 | | Unlisted ordinary shares | – | – | 37,307 | 37,307 | | Unlisted preference shares* | – | – | 168,162 | 168,162 | | Unlisted convertible promissory notes | – | – | 4,167 | 4,167 | | Unlisted CVR† | – | – | – | – | | **Total financial asset investments** | **396,272** | **–** | **209,636** | **605,908** | * The investments in preference shares are not classified as equity holdings as they include liquidation preference rights that determine the repayment (or multiple thereof) of the original investment in the event of a liquidation event such as a take-over. † The Abiomed CVR (see 'Contingent value rights' on page 127 for details) had a fair value of nil at 31 May 2024 and 31 May 2023. During the year to 31 May 2024 investments with a book cost of £5,725,000 (31 May 2023 – no investments) were transferred from Level 3 to Level 1 on becoming listed. Investments in securities are financial assets held at fair value through profit or loss. In accordance with FRS 102, the tables above provide an analysis of these investments based on the fair value hierarchy described below, which reflects the reliability and significance of the information used to measure their fair value. ### Fair value hierarchy The fair value hierarchy used to analyse the fair values of financial assets is described below. The levels are determined by the lowest (that is the least reliable or least independently observable) level of input that is significant to the fair value measurement for the individual investment in its entirety as follows: **Level 1** – using unadjusted quoted prices for identical instruments in an active market; **Level 2** – using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and **Level 3** – using inputs that are unobservable (for which market data is unavailable). The valuation techniques used by the Company are explained in the accounting policies on pages 95 and 96. A sensitivity analysis by valuation technique of the unlisted securities is given on pages 106 to 109. 99 Financial report 09 Fixed assets – investments (continued) | | Listed | Unlisted | 2024 | 2023 | | --- | --- | --- | --- | --- | | securities | | securities* | Total | Total | | | £’000 | £’000 | £’000 | £’000 | Cost of investments at start of year 376,349 203,001 579,350 608,422 Investment holding gains at start of year 19,923 6,635 26,558 13,165 Value of investments at start of year 396,272 209,636 605,908 621,587 Movements in year: Purchases at cost 87,608 8,244 95,852 63,894 Sales – proceeds received (118,814) – (118,814) (69,383) – realised losses on sales (15,089) (8,010) † (23,099) (23,583) Gains on investments 91,342 27,045 118,387 13,393 Change in categorisation # 5,725 (5,725) – – Value of investments at end of year 447,044 231,190 678,234 605,908 Cost of investments at end of year 335,779 197,510 533,289 579,350 Investment holding gains at end of year 111,265 33,680 144,945 26,558 Value of investments at end of year 447,044 231,190 678,234 605,908 * Includes holdings in ordinary shares, preference shares and convertible promissory notes. † Loss arose from the investment in Convoy which was written off in the period subsequent to the company ceasing operations. # During the year to 31 May 2024 investments with a book cost of £5,725,000 and fair value of £6,314,000 (31 May 2023 – no investments) were transferred from Level 3 to Level 1 on becoming listed. The Company received £118,814,000 from investments sold in the year (2023 – £69,383,000). The book cost of these investments when they were purchased was £141,913,000 (2023 – £92,966,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments. Transaction costs of £21,000 (2023 – £12,000) and £28,000 (2023 – £14,0000) were suffered on purchases and sales respectively. 2024 2023 £’000 £’000 Net gains/(losses) on investments Losses on sales* (23,099) (23,583) Changes in investment holding gains 118,387 13,393 Provision for Stripe put right – 21 95,288 (10,169) * Includes losses on Convoy which was written off in the period subsequent to the company ceasing operations. The holdings in Convoy had a book cost of £8,010,000 when written off. 100 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc 09 Fixed assets – investments (continued) Significant holdings Details of significant holdings are noted below in accordance with the disclosure requirements of paragraph 82 of the AIC Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (updated in July 2022), in relation to unlisted investments included in the twenty largest holdings within the list of investments disclosed on pages 41 to 44. As required, this disclosure includes turnover, pre-tax profits and net assets attributable to investors as reported within the most recently audited financial statements of the investee companies, where possible. | As at 31 May 2024 | | | | | | | | | Income | | | Pre-tax | | Net assets | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Latest | | Book | Market | recognised from | | | | | profit/ | attributable to | | | | | | | financial | | cost | value | | holding in the | | Turnover | | (loss) | shareholders | | | | | | statements | | | £’000 | £’000 | | period £’000 | | | £’000 | £’000 | | | £’000Name Business | | Space | Rocket and | | | n/a 11,225 51,864 Nil Information not publicly available* | | | | | | | | | | | | | Exploration | spacecraft | | | | | | | | | | | | | | | | Technologies | company | | | | | | | | | | | | | | | | Stripe Online payment | | | | n/a 25,463 32,007 Nil Information not publicly available* | | | | | | | | | | | | platform Brex Corporate credit n/a 14,536 20,666 Nil Information not publicly available* cards for start-ups Zipline Drone-based n/a 6,131 14,779 Nil Information not publicly available* medical delivery | Faire | Online wholesale | n/a 17,699 13,085 Nil Information not publicly available* | | --- | --- | --- | | Wholesale | marketplace | | | Databricks Data and AI | | n/a 10,140 12,082 Nil Information not publicly available* | platform | As at 31 May 2023 | | | | | | | | | Income | | | Pre-tax | | Net assets | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Latest | | Book | Market | recognised from | | | | | profit/ | attributable to | | | | | | | financial | | cost | value | | holding in the | | Turnover | | (loss) | shareholders | | | | | | statements | | | £’000 | £’000 | | period £’000 | | | £’000 | £’000 | | | £’000Name Business | | Space | Rocket and | | | n/a 11,225 39,220 Nil Information not publicly available* | | | | | | | | | | | | | Exploration | spacecraft | | | | | | | | | | | | | | | | Technologies | company | | | | | | | | | | | | | | | | Stripe Online payment | | | | n/a 25,463 25,681 Nil Information not publicly available* | | | | | | | | | | | | platform Brex Corporate credit n/a 14,536 15,624 Nil Information not publicly available* cards for start-ups Zipline Drone-based n/a 6,131 14,548 Nil Information not publicly available* medical delivery | Faire | Online wholesale | n/a 17,699 13,449 Nil Information not publicly available* | | --- | --- | --- | | Wholesale | marketplace | | | Discord Communication | | n/a 11,551 11,006 Nil Information not publicly available* | software * Confidentiality agreements prevent the disclosure of this information. 101 Financial report ## 10 Debtors | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | **Amounts falling due within one year:** | | | | Income accrued (net of withholding taxes) | 427 | 472 | | Other debtors and prepayments | 178 | 185 | | | **605** | **657** | None of the above debtors are financial assets designated at fair value through profit or loss. The carrying amount of debtors is a reasonable approximation of fair value. There are no debtors that were past due or impaired at 31 May 2024 or 31 May 2023. ## 11 Creditors – amounts falling due within one year | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Bank loans | 39,271 | 40,342 | | Investment management fee | 923 | 819 | | Other creditors and accruals | 560 | 245 | | Buyback payable | 772 | – | | | **41,526** | **41,406** | ### Borrowing facilities The US$25 million five-year revolving credit facility with ING Bank N.V., London Branch matured on 31 July 2023 and was refinanced with a new unsecured US$25 million three-year revolving credit facility from ING Bank N.V., London Branch on 26 July 2023. At 31 May 2024 there were drawings of US$25 million at an interest rate of 7.01% (2023 – US$25 million at an interest rate of 6.87%). The US$25 million three-year fixed rate facility with ING Bank N.V., London Branch matured on 23 October 2023 and was refinanced with a new unsecured US$25 million three-year revolving credit facility, from The Royal Bank of Scotland International Limited, on 18 October 2023. At 31 May 2024 there were drawings of US$25 million at an interest rate of 6.61% (2023 – US$25 million at an interest rate of 1.90%). The main covenants relating to the loans are that borrowings should not exceed 30% of the Company's adjusted net asset value or adjusted portfolio value and the Company's minimum adjusted net asset value or adjusted portfolio value shall be £140 million. The adjusted net asset value and adjusted portfolio value calculations include the deduction of 100% of the value of any unlisted securities. There were no breaches in the loan covenants during the year to 31 May 2024 (31 May 2023 – none). ## 12 Share capital | | 2024 Number | 2024 £'000 | 2023 Number | 2023 £'000 | | --- | --- | --- | --- | --- | | Allotted, called up and fully paid ordinary shares of 1p each | 297,228,700 | 2,972 | 305,153,700 | 3,051 | | Treasury shares of 1p each | 10,131,300 | 101 | 2,206,300 | 22 | | | **307,360,000** | **3,073** | **307,360,000** | **3,073** | In the year to 31 May 2024, the Company issued no shares (2023 – nil). Over the period from 1 June 2024 to 16 August 2024 the Company has issued no shares. The Company's authority to buy back shares up to a maximum of 14.99% of the Company's issued share capital was renewed at the Annual General Meeting held on 18 September 2023. In the year to 31 May 2024, 7,925,000 shares with a nominal value of £79,250 were bought back at a total cost of £14,550,000 and held in treasury (2023 – nil). At 31 May 2024 the Company had authority to buy back 37,817,539 ordinary shares. Over the period from 1 June 2024 to 16 August 2024 the Company bought back 1,950,000 shares. 102 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc 13 Capital and reserves | | | Share | | Special | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Share | premium | | distributable | | Capital | Revenue | | Shareholders’ | | | capital | account | | | reserve | reserve | reserve | | | funds | | £’000 | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | At 31 May 2023 3,073 250,827 168,942 165,931 (20,174) 568,599 Net loss on sales of investments – – – (23,099) – (23,099) Changes in investment holding gains – – – 118,387 – 118,387 Exchange differences on bank loans – – – 1,071 – 1,071 Other exchange differences – – – (193) – (193) Ordinary shares bought back – – – (14,550) – (14,550) into treasury Revenue return after taxation – – – – (6,282) (6,282) At 31 May 2024 3,073 250,827 168,942 247,547 (26,456) 643,933 | | | Share | | Special | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Share | premium | | distributable | | Capital | Revenue | | Shareholders’ | | | capital | account | | | reserve | reserve | reserve | | | funds | | £’000 | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | At 31 May 2022 3,073 250,827 168,942 176,800 (15,456) 584,186 Net loss on sales of investments – – – (23,583) – (23,583) Changes in investment holding gains – – – 13,393 – 13,393 Provision for Stripe put right released – – – 21 – 21 Exchange differences on bank loans – – – (669) – (669) Other exchange differences – – – (31) – (31) Revenue return after taxation – – – – (4,718) (4,718) At 31 May 2023 3,073 250,827 168,942 165,931 (20,174) 568,599 The capital reserve includes investment holding gains on fixed asset investments of £144,945,000 (2023 – gains of £26,558,000) as disclosed in note 9. The revenue reserve, the capital reserve (to the extent it constitutes realised profits) and the special distributable reserve may be distributed by way of dividend. The special distributable reserve and the capital reserve can be used for the repurchase of shares. 14 Net asset value per ordinary share The net asset value per ordinary share and the net asset value attributable to the ordinary shareholders at the year end calculated in accordance with the Articles of Association were as follows: 2024 2023 2024 2023 £’000 £’000 Shareholders’ funds 216.65p 186.33p 643,933 568,599 The movements during the period of the assets attributable to the ordinary shares are shown in note 13. Net asset value per ordinary share is based on the net assets as shown above and on 297,228,700 (2023 – 305,153,700) ordinary shares, being the number of ordinary shares in issue (excluding treasury shares) at 31 May 2024 and 31 May 2023 respectively. 103 Financial report 15 Analysis of change in net debt | At 31 May | | | | Exchange | | At 31 May | | | --- | --- | --- | --- | --- | --- | --- | --- | | | 2023 | Cash flows | | movement | | | 2024 | | | £’000 | | £’000 | | £’000 | | £’00 | Cash and cash equivalents 3,440 3,373 (193) 6,620 Loans due within one year (40,342) – 1,071 (39,271) (36,902) 3,373 878 (32,651) 16 Transactions with related parties and the Managers and Secretaries The Directors’ fees and shareholdings are detailed in the Directors’ remuneration report on pages 76 to 79. No Director has a contract of service with the Company. During the period no Director was interested in any contract or other matter requiring disclosure under section 412 of the Companies Act 2006. Baillie Gifford & Co Limited has been appointed as the Company’s Alternative Investment Fund Managers and Company Secretaries. Details of the terms of the Investment Management Agreement are set out on page 61 and details of the fees during the period and the balance outstanding at the period end are shown in notes 3 and 11 respectively. 17 Financial instruments As an investment trust, the Company invests in listed and unlisted securities and makes other investments so as to achieve its investment objective of maximising capital appreciation from a focussed and actively managed portfolio of investments predominantly in listed and unlisted US companies. The Company may borrow money when the Board and Managers have sufficient conviction that the assets funded by borrowed monies will generate a return in excess of the cost of borrowing. In pursuing its investment objective, the Company is exposed to various types of risk that are associated with the financial instruments and markets in which it invests. These risks are categorised as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. The Board monitors closely the Company’s exposures to these risks but does so in order to reduce the likelihood of a permanent loss of capital rather than to minimise short-term volatility. Risk provides the potential for both losses and gains. In assessing risk, the Board encourages the Managers to exploit the opportunities that risk affords. The risk management policies and procedures outlined in this note have not changed significantly from the previous accounting period. Market risk The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. The Board of Directors reviews and agrees policies for managing these risks and the Company’s Managers both assess the exposure to market risk when making individual investment decisions and monitor the overall level of market risk across the investment portfolio on an ongoing basis. Details of the Company’s investment portfolio are shown in note 9. The Company may, from time to time, enter into derivative transactions to hedge specific market, currency or interest rate risk. In the year to 31 May 2024 and the year to 31 May 2023 no such transactions were entered into. The Company’s Managers may not enter into derivative transactions without the prior approval of the Board. i. Currency risk The Company’s assets, liabilities and income are principally denominated in US dollars. The Company’s functional currency and presentational currency is sterling. Consequently, movements in the US dollar/sterling exchange rate will affect the sterling value of those items. The Managers monitor the Company’s US dollar exposure (and any other overseas currency exposure) and report to the Board on a regular basis. The Managers assess the risk to the Company of the foreign currency exposure by considering the effect on the Company’s net asset value and income of a movement in the rates of exchange to which the Company’s assets, liabilities, income and expenses are exposed. However, the country in which a company is listed is not necessarily where it earns its profits. The movement in exchange rates on overseas earnings may have a more significant impact upon a company’s valuation than a simple translation of the currency in which the company is quoted. US dollar borrowings can limit the Company’s exposure to anticipated future changes in exchange rates which might otherwise adversely affect the value of the portfolio of investments. 104 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc 17 Financial instruments (continued) i. Currency risk (continued) Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability is quoted, is shown below. | | | | Cash and | | Bank | Other debtors | | | Net | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Investments | | deposits | | loans | and creditors* | exposure | | | | At 31 May 2024 | | £’000 | | £’000 | £’000 | £’000 | | £’000 | | US dollar 678,234 6,237 (39,271) 171 645,371 Total exposure to currency risk 678,234 6,237 (39,271) 171 645,371 Sterling – 383 – (1,821) (1,438) 678,234 6,620 (39,271) (1,650) 643,933 | * Includes non-monetary assets of £172,000. | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Cash and | | Bank | Other debtors | | | Net | | | Investments | | deposits | | loans | and creditors* | exposure | | | | At 31 May 2023 | | £’000 | | £’000 | £’000 | £’000 | | £’000 | | US dollar 605,908 3,074 (40,342) (556) 568,084 Total exposure to currency risk 605,908 3,074 (40,342) (556) 568,084 Sterling – 366 – 149 515 605,908 3,440 (40,342) (407) 568,599 * Includes non-monetary assets of £172,000. Currency risk sensitivity At 31 May 2024, if sterling had strengthened by 5% against the US dollar, with all other variables held constant, total net assets and total return would have decreased by £32,269,000 (2023 – £28,404,000). A 5% weakening of sterling against the US dollar, with all other variables held constant, would have had an equal but opposite effect on the Financial Statement amounts. The analysis is performed on the same basis as it was for 2023. A change of 5% in foreign currency rates has been considered to be a reasonably plausible change. ii. Interest rate risk Interest rate movements may affect directly the level of income receivable on cash deposits and the interest payable on any variable rate borrowings. They may also impact upon the market value of investments as the effect of interest rate movements upon the earnings of a company may have a significant impact upon the valuation of that company’s equity. The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions and when entering into borrowing agreements. The Board reviews on a regular basis the amount of investments in cash. The Company finances part of its activities through borrowings within approved levels. The amount of any such borrowings and the approved levels are monitored and reviewed regularly by the Board. The interest rate risk profile of the Company’s financial assets and liabilities at 31 May 2024 and 31 May 2023 are shown below. Financial assets | | | | | 2024 | | | 2024 | | | | | 2023 | | | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2024 | | Weighted | | | Weighted | | | 2023 | | Weighted | | | Weighted | | | Fair value | | | average | | average period | | | Fair value | | | average | | average period | | | | | £’000 | interest rate | | | until maturity | | | | £’000 | interest rate | | | until maturity | | | Cash US dollar 6,237 2.2% n/a 3,074 2.3% n/a Sterling 383 1.0% n/a 366 1.1% n/a 6,620 3,440 The cash deposits generally comprise overnight call or short-term money market deposits and earn interest at floating rates based on prevailing bank base rates. The table above does not include interest bearing investments because these investments have fixed interest rates and therefore are not subject to interest rate sensitivity. 105 Financial report 17 Financial instruments (continued) Financial liabilities | | | | | 2024 | 2024 | | | | | 2023 | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2024 | | Weighted | | Weighted | | 2023 | | Weighted | | Weighted | | Book value | | | average | | average period | Book value | | | average | | average period | | | £’000 | interest rate | | | until maturity* | | £’000 | interest rate | | | until maturity* | Bank loans Floating rate – US$ denominated 39,271 6.8% 826 days 20,171 5.2% 61 days Fixed rate – US$ denominated – – – 20,171 1.9% 145 days 39,271 40,342 * Based on expected maturity date. The three-year floating rate facilities are rolled forward on a three-monthly basis. The amount drawn down over the term of the facilities is reviewed at every roll forward date. Interest rate risk sensitivity An increase of 100 basis points in interest rates, with all other variables held constant, would have decreased the Company’s total net assets and total return for the year ended 31 May 2024 by £307,000 (2023 – decreased by £146,000). This is due to the Company’s exposure to interest rates on its revolving floating rate bank loans and cash balances. A decrease of 100 basis points would have had an equal but opposite effect. iii. Other price risk Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the Company’s net assets. The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Managers. The Board meets regularly and at each meeting reviews investment performance, the investment portfolio and the rationale for the current investment portfolio positioning to ensure consistency with the Company’s objectives and investment policies. The portfolio does not seek to reproduce the comparative index. Investments are selected based upon the merit of individual companies and therefore performance may well diverge from the comparative index. Other price risk sensitivity A full list of the Company’s investments is given on pages 41 to 44. In addition, an analysis of the investment portfolio by broad industrial or commercial sector is shown on page 32. 69.4% (2023 – 69.7%) of the Company’s net assets are invested in quoted equities. A 5% increase in quoted equity valuations at 31 May 2024 would have increased total assets and total return by £22,352,000 (2023 – £19,814,000). A decrease of 5% would have had an equal but opposite effect. 35.9% (2023 – 36.7%) of the Company’s net assets are invested in private company investments. The fair valuation of the private company investments is influenced by the estimates, assumptions and judgements made in the fair valuation process (see 1b on pages 94 and 95). 106 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc 17 Financial instruments (continued) iii. Other price risk (continued) Other price risk sensitivity (continued) The private company sensitivity analysis below recognises that the valuation methodologies employed involve different levels of subjectivity in their significant unobservable inputs and illustrates the sensitivity of the valuations to these inputs as it involves more significant subjective estimation than the recent transaction method. The inputs have been flexed by +/-10%. The table also provides the range of values for the key unobservable inputs. As at Significant unobservable inputs* 31 May 2024 | | Fair value of | Key | | Other | | | Weighted | | | | Sensitivity to changes | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | investments | unobservable | | unobservable | | | average | | Sensitivity | | in significant | | Valuation technique | £’000 | inputs | | inputs | † | Range | | range# | | % | unobservable inputs | | Recent transaction | 119,699 n/a | | ^ | a,b n/a n/a 10.0% If the recent | | | | | | | | | price | | | | | | | | | | | transaction price | changed by +/- 10%, the fair value would change by £11,896,255 and -£11,593,406. | Benchmark | 86,637 Selection of | | | a,b,c,f (26.0%) | | (0.7%) 10.0% If input comparable | | | --- | --- | --- | --- | --- | --- | --- | --- | | performance | | comparable | | | – 15.8% | | company performance | | | | companies | | | | | changed by +/- 10%, | | | | and relevant | | | | | the fair value would | | | | indices | ‡ | | | | change by £7,117,989 | and -£6,908,997. | Market approach | 24,854 EV/LTM | | | a,b,c,d | 1.6x – | 5.6x | 10.0% | If EV/LTM multiples | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | using comparable | | revenue | | | 8.1x | | | changed by +/- 10%, | | trading multiples | | multiple | ¶ | | | | | the fair value would | change by £1,878,772 and -£1,838,372. | EV/NTM | | a,b,c,d | 6.9x | 6.9x | 10.0% | If EV/NTM multiples | | --- | --- | --- | --- | --- | --- | --- | | revenue | | | | | | changed by +/- 10%, | | multiple | § | | | | | the fair value would | change by £221,252 and -£221,232. Illiquidity e (10.0%) (10.0%) 10.0% If the illiquidity discount discount is changed by -/+ 10%, the fair value would change by £219,574 and -£191,262. | Transaction | g | (49.7%) | (49.7%) | 10.0% | If a +/- 10% | | --- | --- | --- | --- | --- | --- | | implied | | | | | adjustment is applied | | premiums and | | | | | to the calculated | | discounts | | | | | premiums and | discounts, the fair value would change by £133,781 and -£120,733. † See explanation of significant unobservable inputs on page 109 (sections ‘a’ to ‘g’ as relevant). # Weighted average is calculated by reference to the fair value of holdings as at the respective year end. This therefore gives a clearer indication of the typical multiple or adjustment being applied across the portfolio. ‡ See explanation for the selection of comparable companies on page 109, section ‘c’. The percentage movements reflect the movement in overall company value for the basket of comparable companies relevant to each holding since the most recent transaction or since the last assessed. ¶ Enterprise value (EV) divided by the last twelve months (LTM) revenue. § Enterprise value (EV) divided by the next twelve months (NTM) forecast revenue. ^ Whilst a recent transaction price may be the most appropriate basis for a valuation, it will be corroborated by other techniques which factor in the unobservable inputs noted in the above table. However, the transaction price itself is observable. * Significant unobservable inputs The unobservable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each unlisted company valuation. An explanation of each of the key unobservable inputs is provided below and includes an indication of the range in value for each input, where relevant. The assumptions made in the production of the inputs are described in note 1b on pages 94 and 95. 107 Financial report 17 Financial instruments (continued) As at Significant unobservable inputs* 31 May 2023 | | Fair value of | Key | | Other | | | Weighted | | | | Sensitivity to | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | investments | unobservable | | unobservable | | | average | | Sensitivity | | changes in significant | | Valuation technique | £’000 | inputs | | inputs | † | Range | | range# | | % | unobservable inputs | | Recent transaction | 95,711 n/a | | ^ | a,b n/a n/a n/a n/a | | | | | | | | price | Benchmark | 83,399 Selection of | | | a,b,c,f (36.3%)– | | (9.8%) 10.0% If input comparable | | | --- | --- | --- | --- | --- | --- | --- | --- | | performance | | comparable | | | 21.2% | | company performance | | | | companies | | | | | changed by +/-10%, | | | | and relevant | | | | | the fair value would | | | | indices | ‡ | | | | change by £5,463,779 | and -£5,331,196. | Market approach | 30,526 EV/LTM | | | a,b,c,d 1.9x–6.9x 4.8x 10.0% If EV/LTM multiples | | | --- | --- | --- | --- | --- | --- | | using comparable | | revenue | | | changed by +/-10%, | | trading multiples | | multiple | ¶ | | the fair value would | change by £1,418,080 and -£1,390,974. | EV/NTM | | a,b,c,d 4.4x–4.9x 4.6x 10.0% If EV/NTM multiples | | | --- | --- | --- | --- | | revenue | | | changed by +/-10%, | | multiple | § | | the fair value would | change by £715,920 and -£715,110. Illiquidity e (10.0%) (10.0%) 10.0% If the transaction discount implied premium/ discount is changed by -/+ 10%, the fair value would change by £241,009 and -£237,884. Transaction g n/a n/a n/a n/a implied premiums and discounts** † See explanation of significant unobservable inputs on page 109 (sections ‘a’ to ‘g’ as relevant). # Weighted average is calculated by reference to the fair value of holdings as at the respective year end. This therefore gives a clearer indication of the typical multiple or adjustment being applied across the portfolio. ‡ See explanation for the selection of comparable companies on page 109, section ‘c’. The percentage movements reflect the movement in overall company value for the basket of comparable companies relevant to each holding since the most recent transaction or since the last assessed. ¶ Enterprise value (EV) divided by the last twelve months (LTM) revenue. § Enterprise value (EV) divided by the next twelve months (NTM) forecast revenue. ^ Whilst a recent transaction price may be the most appropriate basis for a valuation, it will be corroborated by other techniques which factor in the unobservable inputs noted in the above table. However, the transaction price itself is observable. ** Due to fewer transactions in the last 12 months and to avoid stale valuations, there were no transaction implied premiums or discounts directly impacting the valuations. * Significant unobservable inputs The unobservable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each unlisted company valuation. An explanation of each of the key unobservable inputs is provided below and includes an indication of the range in value for each input, where relevant. The assumptions made in the production of the inputs are described in note 1(b) on pages 94 and 95. 108 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc 17 Financial instruments (continued) a. Application of valuation basis Each investment is assessed independently, and the valuation basis applied will vary depending on the circumstances of each investment. When an investment is pre-revenue, the focus of the valuation will be on assessing the recent transaction and the achievement of key milestones since investment. Adjustments may also be made depending on the performance of comparable benchmarks and companies. For those investments where a trading multiples approach can be taken, the methodology will factor in revenue, earnings or net assets as appropriate for the investment, and where a suitable correlation can be identified with the comparable companies then a regression analysis will be performed. Discounted cash flows will also be considered where appropriate forecasts are available. b. Probability estimation of liquidation events The probability of a liquidation event such as a company sale, or alternatively an initial public offering (‘IPO’), is a key variable input in the transaction-based and multiples-based valuation techniques. The probability of an IPO versus a company sale is typically estimated from the outset to be 50:50 if there has been no indication by the company of pursuing either of these routes. If the company has indicated an intention to IPO, the probability is increased accordingly to 75% and if an IPO has become a certainty the probability is increased to 100%. Likewise, in a scenario where a company is pursuing a trade sale the weightings will be adjusted accordingly in favour of a sale scenario. The Company typically invests in higher ranking preference shares which carry more protection, and this can therefore influence the end valuation. Option pricing models are used to corroborate the valuations where there has been more notable company underperformance to ensure that the economic reality of the shares held by Baillie Gifford US Growth remain appropriate. c. Selection of comparable companies The selection of comparable companies is assessed individually for each investment at the point of investment, and the relevance of the comparable companies is continually evaluated at each valuation. The key criteria used in selecting appropriate comparable companies are the industry sector in which they operate, the geography of the company’s operations, the respective revenue and earnings growth rates and the operating margins. Typically, between four and ten comparable companies will be selected for each investment, depending on how many relevant comparable companies are identified. The resultant revenue or earnings multiples or share price movements derived will vary depending on the companies selected and the industries they operate in. d. Estimated sustainable earnings The selection of sustainable revenue or earnings will depend on whether the company is sustainably profitable or not, and where it is not then revenues will be used in the valuation. The valuation approach will typically assess companies based on the last twelve months of revenue or earnings, as they are the most recent available and therefore viewed as the most reliable. Where a company has reliably forecasted earnings previously or there is a change in circumstance at the business which will impact earnings going forward, then forward estimated revenue or earnings may be used instead. e. Application of liquidity discount The application of an illiquidity discount will be applied either through the calibration of a valuation against the most recent transaction, or by application of a specific discount. The discount applied where a calibration (see ‘g’ below) is not appropriate is typically 10%, reflecting that the majority of the investments held are substantial companies with some secondary market activity. f. Selection of appropriate benchmarks The selection of appropriate benchmarks is assessed individually for each investment. The industry and geography of each company are key inputs to the benchmark selection, with either one or two key indices or benchmarks being used for comparison where applicable. g. Transaction implied premium and discount Where there is an implied company valuation available as a result of an external arm’s length transaction, the ongoing valuation will be calibrated to this by deriving a company valuation with reference to the average multiple from a set of comparable companies and comparing this to a transaction implied valuation, and could result in an implied premium or discount compared to comparable companies at the point of transaction. This discount or premium will be considered in future valuations, and may be reduced due to factors such as period of time since the transaction and company performance. Where a calibrated approach is not appropriate, a discount for illiquidity will be applied as noted in ‘e’ above. 109 Financial report ## 17 Financial instruments (continued) ### Liquidity risk This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. 65.2% of the Company's total assets as at 31 May 2024 were investments in quoted securities that are readily realisable mitigating liquidity risk. The Board provides guidance to the Managers as to the maximum exposure to any one holding and to the maximum aggregate exposure to substantial holdings. The Company has the power to take out borrowings, which give it access to additional funding when required. The Company's current borrowing facilities are detailed in note 11. Under the terms of the borrowing facility, borrowings are repayable on demand at their current carrying value. ### Credit risk This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss. This risk is managed as follows: - (i) where the Managers make an investment in a bond or other security with credit risk, that credit risk is assessed and then compared to the prospective investment return of the security in question; - (ii) the Depositary is liable for the loss of financial instruments held in custody. The Depositary will ensure that any delegate segregates the assets of the Company. The Managers monitor the Company's risk by reviewing the Custodian's internal control reports and reporting its findings to the Board; - (iii) investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the Managers. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company's Custodian bank ensures that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities away from the Company is completed; - (iv) the creditworthiness of the counterparty to transactions involving derivatives, structured notes and other arrangements, wherein the creditworthiness of the entity acting as broker or counterparty to the transaction is likely to be of sustained interest, are subject to rigorous assessment by the Managers; and - (v) cash is only held at banks that are regularly reviewed by the Managers. At 31 May 2024 and 31 May 2023 all cash deposits were held with the Custodian bank. The Company owns a number of unquoted preference share securities. Some of these may have been classified as debt by the issuer. There are no material amounts past due in relation to these securities. As these instruments (alongside the ordinary share securities) have been recognised at fair value through profit and loss, the fair value takes into account credit, market and other price risk. ### Credit risk exposure The maximum exposure to credit risk at 31 May was: | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Fixed interest investments | 2,276 | 4,167 | | Cash and short term deposits | 6,620 | 3,440 | | Debtors and prepayments | 605 | 657 | | | **9,501** | **8,264** | The maximum exposure to cash during the year to 31 May 2024 was £15,196,000 (31 May 2023 – £23,049,000) and the minimum was -£5,015,000 (31 May 2023 – £1,213,000). None of the Company's financial assets are past due or impaired. 110 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc 17 Financial instruments (continued) Fair value of financial assets and financial liabilities The Directors are of the opinion that the financial assets and liabilities of the Company are stated at fair value in the Balance Sheet with the exception of long-term borrowings. The fair values of the Company’s borrowings are shown below. | | | 2024 | | 2024 | | 2023 | | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Book value | | Fair value | | Book value | | Fair value | | | | | £’000 | | £’000 | | £’000 | | £’000 | | Floating rate multi-currency loan* | | 39,271 39,271 20,171 20,171 | | | | | | | Fixed rate multi-currency loan – – 20,171 19,733 39,271 39,271 40,342 39,904 * All short-term floating rate borrowings are stated at book cost which is considered to be equal to their fair value given the facilities are revolving credit facilities. Capital management The capital of the Company is its share capital and reserves as set out in notes 12 and 13 together with its borrowings (see note 11). The objective of the Company is to invest predominantly in listed and unlisted US companies in order to achieve capital growth. The Company’s investment policy is set out on pages 45 and 46. In pursuit of the Company’s objective, the Board has a responsibility for ensuring the Company’s ability to continue as a going concern and details of the related risks and how they are managed are set out on pages 48 to 53. The Company has the authority to issue and buy back its shares and changes to the share capital during the period are set out in notes 12 and 13. The Company does not have any externally imposed capital requirements other than the covenants on its loans which are detailed in note 11. 111 ## Shareholder ## information Baillie Gifford US Growth Trust plc ## Notice of ## Annual General Meeting Primrose St Sun St Liverpool A10 Street The Annual General Meeting of the Company will Sun St Passage be held at the offices of Herbert Smith Freehills Liverpool St in London (Exchange House, Primrose Street, London, EC2A 2EG) on Friday, 27 September 2024, at 9.00am. You will find directions to the venue by scanning the QR code above. The Board encourages all shareholders to submit proxy voting forms as soon as possible and, in any event, by no later than 9.00am on 25 September 2024. Should shareholders have questions for the Board or the Managers or any queries as to how to vote, they are welcome as always to submit them by email to trustenquiries@bailliegifford.com or call 0800 917 2112. Baillie Gifford may record your call. 113 Shareholder information Notice is hereby given that the sixth Annual General Meeting of Baillie Gifford US Growth Trust plc (the 'Company') will be held at the offices of Herbert Smith Freehills in London (Exchange House, Primrose Street, London, EC2A 2EG) on Friday, 27 September 2024 at 9.00am for the purposes of considering and, if thought fit, passing the following resolutions, of which resolutions 1 to 10 will be proposed as ordinary resolutions and resolutions 11 and 12 will be proposed as special resolutions. # Ordinary business 1. To receive and adopt the Annual Report and Financial Statements of the Company for the financial year ended 31 May 2024 together with the Reports of the Directors and of the Independent Auditor thereon. 2. To approve the Directors' Annual Report on Remuneration for the financial year ended 31 May 2024. 3. To re-elect Mr TJW Burnet as a Director of the Company. 4. To re-elect Ms SP Inglis as a Director of the Company. 5. To re-elect Mr GD Paterson as a Director of the Company. 6. To re-elect Mr CRD van der Kuyl as a Director of the Company. 7. To re-elect Ms RL Palmer as a Director of the Company. 8. To re-appoint Ernst & Young LLP as Independent Auditor of the Company to hold office until the conclusion of the next Annual General Meeting at which the Financial Statements are laid before the Company. 9. To authorise the Directors to determine the remuneration of the Independent Auditor of the Company. 10. That, in substitution to any existing authority but without prejudice to the exercise of any such authority prior to the date hereof, the Directors of the Company be and they are hereby generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the 'Act') to exercise all the powers of the Company to allot ordinary shares in the capital of the Company, or C shares convertible into ordinary shares, provided that such authority shall be limited to the allotment of ordinary shares and grant of rights in respect of ordinary shares with an aggregate nominal value of up to £984,262.33 (representing approximately one-third of the nominal value of the issued share capital excluding treasury shares as at 16 August 2024), such authority to expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or on the expiry of 15 months from the passing of this resolution, whichever is the earlier, unless previously revoked, varied or extended by the Company in a general meeting, save that the Company may at any time prior to the expiry of this authority make an offer or enter into an agreement which would or might require ordinary shares or C shares to be allotted or granted after the expiry of such authority and the Directors shall be entitled to allot or grant ordinary shares or C shares in pursuance of such an offer or agreement as if such authority had not expired. 11. That, subject to the passing of Resolution 10 above, and in substitution to any existing authorities but without prejudice to the exercise of any such authority prior to the date hereof, the Directors of the Company be and they are hereby generally empowered, pursuant to sections 570 and 573 of the Companies Act 2006 (the 'Act') to allot equity securities (within the meaning of section 560(1) of the Act, and including ordinary shares and C shares) 114 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc | for cash pursuant to the authority given by | (b) the minimum price (excluding expenses) | | | --- | --- | --- | | Resolution 10 above and to sell treasury shares | | which may be paid for each ordinary share | | for cash as if section 561(1) of the Act did not | | shall be the nominal value of that share; | apply to any such allotment or sale, provided that (c) the maximum price (excluding expenses) this power: which may be paid for any ordinary share (a) expires at the conclusion of the next purchased pursuant to this authority shall not Annual General Meeting of the Company be more than the higher of: after the passing of this Resolution or on the (i) 5% above the average closing price expiry of 15 months from the passing of this on the London Stock Exchange of an Resolution, whichever is the earlier, save that ordinary share over the five business the Company may, before such expiry, make days immediately preceding the day of an offer or agreement which would or might purchase; and require equity securities to be allotted after such expiry and the Directors may allot (ii) the higher of the price of the last equity securities in pursuance of any such independent trade and the highest current offer or agreement as if the power conferred independent bid for an ordinary share in hereby had not expired; and the Company on the trading venues where the market purchases by the Company (b) shall be limited to the allotment of equity pursuant to the authority conferred by this securities or the sale of treasury shares up to Resolution 12 will be carried out; and an aggregate nominal value of £ 295,278.70 | (representing approximately 10% of the | (d) unless previously varied, revoked or renewed | | | --- | --- | --- | | nominal value of the issued share capital | | by the Company in a general meeting, the | | excluding treasury shares of the Company as | | authority hereby conferred shall expire at | | at 16 August 2024). | | the conclusion of the next Annual General | Meeting, save that the Company may, prior to 12. That, in substitution for any existing authority such expiry, enter into a contract to purchase but without prejudice to the exercise of any such ordinary shares under such authority which authority prior to the date hereof, the Company will or might be completed or executed wholly be generally and unconditionally authorised, in or partly after the expiration of such authority accordance with section 701 of the Companies and may make a purchase of ordinary shares Act 2006 (the ‘Act’) to make market purchases pursuant to any such contract or contracts. (within the meaning of section 693(4) of the Act) of fully paid ordinary shares of 1p each in the capital of the Company (‘ordinary shares’) By Order of the Board (either for retention as treasury shares for future Baillie Gifford & Co Limited reissue, resale or transfer or for cancellation) Managers and Secretaries provided that: 28 August 2024 (a) the maximum aggregate number of ordinary shares hereby authorised to be purchased is 44,262,277, or, if less, the number representing approximately 14.99% of the issued ordinary share capital (excluding treasury shares) of the Company as at the date of the passing of this Resolution; 115 Shareholder information Notes | 01. As a member you are entitled to appoint a proxy | | 04. In order for a proxy appointment or instruction | | | --- | --- | --- | --- | | | or proxies to exercise all or any of your rights | | made using the CREST service to be | | | to attend, speak and vote at the AGM. A proxy | | valid, the appropriate CREST message (a | | | need not be a member of the Company but | | ‘CREST Proxy Instruction’) must be properly | | | must attend the AGM to represent you. You may | | authenticated in accordance with Euroclear | UK & International Limited’s specifications, appoint more than one proxy provided each and must contain the information required for proxy is appointed to exercise rights attached to such instruction, as described in the CREST different shares. You can only appoint a proxy Manual. The message, regardless of whether using the procedure set out in these notes and it constitutes the appointment of a proxy or the notes to the proxy form. You may not use is an amendment to the instruction given to a any electronic address provided either in this previously appointed proxy must, in order to notice or any related documents (including be valid, be transmitted so as to be received the Financial Statements and proxy form) to by the Company’s registrar (ID 3RA50) no communicate with the Company for any purpose later than 9.00am two days (excluding non- other than those expressly stated. working days) before the time of the meeting | 02. A proxy form for use by shareholders at the | | or any adjournment. For this purpose, the | | --- | --- | --- | | | meeting is enclosed with this document. Proxies | time of receipt will be taken to be the time | | | must be lodged with the Company’s registrar, | (as determined by the timestamp applied to | | | Computershare Investor Services PLC, The | the message by the CREST Application Host) | from which the Company’s registrar is able to Pavilions, Bridgwater Road, Bristol BS99 6ZY or retrieve the message by enquiry to CREST in eproxyappointment.com, not less than two days the manner prescribed by CREST. After this time (excluding non-working days) before the time any change of instructions to proxies appointed appointed for the meeting together with any through CREST should be communicated to the power of attorney or other authority (if any) appointee through other means. under which it is signed. Completion of the proxy form will not prevent a shareholder from 05. CREST members and, where applicable, attending the meeting and voting in person. their CREST sponsors, or voting service providers should note that Euroclear UK & 03. CREST members who wish to appoint a proxy International Limited does not make available or proxies through the CREST electronic proxy special procedures in CREST for any particular appointment service may do so by using the message. Normal system timings and procedures described in the CREST Manual limitations will, therefore, apply in relation to and/or by logging on to the website the input of CREST Proxy Instructions. It is the euroclear.com/CREST. CREST personal responsibility of the CREST member concerned members or other CREST sponsored members, to take (or, if the CREST member is a CREST and those CREST members who have appointed personal member, or sponsored member, or a voting service provider(s), should refer to their has appointed a voting service provider(s), CREST sponsor or voting service provider(s), to procure that his or her CREST sponsor or who will be able to take the appropriate action voting service provider(s) take(s)) such action on their behalf. as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. 06. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 116 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc 07. The return of a completed proxy form or other 12. Any corporation which is a member can appoint instrument of proxy will not prevent you attending one or more corporate representatives who the AGM and voting in person if you wish. may exercise on its behalf all of its powers as a member provided that they do not do so in 08. Pursuant to Regulation 41 of the Uncertificated relation to the same shares. Securities Regulations 2001 and section 311 of | the Companies Act 2006 the Company specifies | 13. As at 16 August 2024 (being the last practicable | | | --- | --- | --- | | that to be entitled to attend and vote at the | | date prior to the publication of this notice) the | | Annual General Meeting (and for the purpose of | | Company’s issued share capital (excluding | | the determination by the Company of the votes | | treasury shares) consisted of 295,278,700 | | they may cast), shareholders must be registered | | ordinary shares of 1p each, carrying one vote | | in the Register of Members of the Company no | | each. Therefore, the total number of voting | | later than 9.00am two days (excluding non- | | rights in the Company as at 16 August 2024 | | working days) prior to the commencement of the | | were 295,278,700 votes. | AGM or any adjourned meeting. Changes to the 14. Any person holding 3% or more of the total Register of Members after the relevant deadline voting rights of the Company who appoints a shall be disregarded in determining the rights of person other than the Chair of the meeting as any person to attend and vote at the meeting. his or her proxy will need to ensure that both | 09. The members of the Company may require the | | he/she and his/her proxy complies with their | | --- | --- | --- | | | Company to publish, on its website, (without | respective disclosure obligations under the UK | | | payment) a statement (which is also passed | Disclosure Guidance and Transparency Rules. | to the Auditor) setting out any matter relating 15. No Director has a contract of service with to the audit of the Company’s Financial the Company. Statements, including the Auditor’s report and the conduct of the audit. The Company will be required to do so once it has received such requests from either members representing at least 5% of the total voting rights of the Company or at least 100 members who have a relevant right to vote and hold shares in the Company on which there has been paid up an average sum per member of at least £100. Such requests must be made in writing and must state your full name and address and be sent to the Company at Calton Square, 1 Greenside Row, Edinburgh EH1 3AN. 10. Information regarding the Annual General Meeting, including information required by section 311A of the Companies Act 2006, is available from the Company website at bgusgrowthtrust.com. 11. Members have the right to ask questions at the meeting in accordance with section 319A of the Companies Act 2006 117 Shareholder information ## Further shareholder ## information Baillie Gifford US Growth Trust plc Key dates (‘Baillie Gifford US Growth’) is an investment The Company pays the minimum permissible level of trust. Investment trusts offer investors final dividend and no interim dividend. If a dividend the following: was payable this would be due soon after the Annual General Meeting. ș participation in a diversified portfolio of shares; ș constant supervision by experienced Share register enquiries professional managers; and Computershare Investor Services PLC maintains ș the Company is free from capital gains tax the share register on behalf of the Company. In the on capital profits realised within its portfolio, event of queries regarding shares registered in your although investors are still liable for capital gains own name, please contact the registrar on tax on profits when selling their investment. 0370 707 1711. This helpline also offers an automated self-service How to invest functionality (available 24 hours a day, 7 days a The Company’s shares are traded on the London week) which allows you to: Stock Exchange. They can be bought by placing an ș hear the latest share price; order with a stockbroker, or by asking a professional adviser to do so. If you are interested in investing ș confirm your current share holding balance; and directly in Baillie Gifford US Growth Trust, you can ș order change of address and stock transfer do so online. There are a number of companies forms. offering real time online dealing services. Find out more by visiting the investment trust pages at You can also check your holding on the registrar’s bailliegifford.com. website at investorcentre.co.uk. They also offer a free, secure share management Sources of further information website service which allows you to: on the Company ș view your share portfolio and see the latest The ordinary shares of the Company are listed market price of your shares; on the London Stock Exchange and their price is shown in the Financial Times. The price of shares ș calculate the total market price of each can also be found on the Company website at shareholding; bgusgrowthtrust.com, Trustnet at trustnet.co.uk and ș view price histories and trading graphs; on other financial websites. Company factsheets ș change address details; and are also available on the Baillie Gifford website and are updated monthly. These are available from ș use online dealing services. Baillie Gifford on request. To take advantage of this service, please log in at investorcentre.co.uk and enter your Shareholder Baillie Gifford US Growth share identifiers Reference Number and Company Code (this ISIN GB00BDFGHW41 information can be found on your share certificate). Sedol BDFGHW4 Ticker USA Legal Entity Identifier 213800UM1OUWXZPKE539 118 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Electronic proxy voting Leverage If you hold stock in your own name you can choose The Company’s maximum and actual leverage levels to vote by returning proxies electronically at (see Glossary of terms and alternative performance eproxyappointment.com. measures on pages 124 to 127) at 31 May 2024 are shown below: If you have any questions about this service please | contact Computershare on 0370 707 1711. | | Gross | Commitment | | | --- | --- | --- | --- | --- | | | | method | | method | | CREST proxy voting | Maximum limit 2.50:1 2.00:1 | | | | | If you are a user of the CREST system (including | Actual 1.06:1 1.06:1 | | | | a CREST Personal Member), you may appoint one or more proxies or give an instruction to a proxy by having an appropriate CREST message Automatic exchange of information transmitted. For further information please refer In order to fulfil its obligations under UK tax to the CREST Manual. legislation relating to the automatic exchange of Where this has been received in a country where information, Baillie Gifford US Growth Trust plc is the provision of such a service would be contrary to required to collect and report certain information local laws or regulations, this should be treated as about certain shareholders. information only. The legislation will require investment trust companies to provide personal information to How to vote your shares HMRC on certain investors who purchase shares in As a shareholder you have a say on how the investment trusts. As an affected company, Baillie Company is run. The following link will take Gifford US Growth Trust plc will have to provide you through to The Association of Investment information annually to the local tax authority on Companies (AIC) website where there is information the tax residencies of a number of non-UK based on how to vote your shares if you hold them via one certificated shareholders and corporate entities. of the major platforms: theaic.co.uk/how-to-vote- Shareholders, excluding those whose shares are your-shares. held in CREST, who come on to the share register will be sent a certification form for the purposes of Alternative Investment Fund Managers collecting this information. (AIFM) Regulations For further information, please see HMRC’s In accordance with the AIFM Regulations, Quick Guide: Automatic Exchange of Information information in relation to the Company’s leverage – information for account holders gov.uk/ and the remuneration of the Company’s AIFM, government/publications/exchange-of-information- Baillie Gifford & Co Limited, is required to be made accountholders. available to investors. Data protection AIFM remuneration The Company is committed to ensuring the In accordance with the Regulations, the AIFM confidentiality and security of any personal data remuneration policy is available at bailliegifford.com provided to it. Further details on how personal data or on request (see contact details in the ‘Company is held and processed on behalf of the Company information’ section on page 129). The numerical can be found in the privacy policy available on the remuneration disclosures in respect of the AIFM’s Company’s website bgusgrowthtrust.com. reporting period are available at bailliegifford.com. 119 Shareholder information ## Third party ## data provider ## disclaimer No third party data provider (‘Provider’) makes any any index to accurately represent the asset class warranty, express or implied, as to the accuracy, or market sector that it purports to represent and completeness or timeliness of the data contained neither S&P Dow Jones Indices LLC, Dow Jones herewith nor as to the results to be obtained by Trademark Holdings LLC, their affiliates nor their recipients of the data. third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the No Provider shall in any way be liable to any data included therein. recipient of the data for any inaccuracies, errors or omissions in the index data included in this FTSE Index data document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom. 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Neither LSE Group nor its licensors otherwise, in respect of any loss or damage suffered accept any liability for any errors or omissions in the by you as a result of or in connection with any indexes or data and no party may rely on any indexes opinions, recommendations, forecasts, judgements or data contained in this communication. or any other conclusions, or any course of action No further distribution of data from the LSE Group is determined, by you or any third party, whether or permitted without the relevant LSE Group company’s not based on the content, information or materials express written consent. The LSE Group does not contained herein. promote, sponsor or endorse the content of this communication. S&P Index Data The S&P 500 Index (‘Index’) is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (‘SPDJI’). Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (‘S&P’); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (‘Dow Jones’). Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of 120 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc ## Sustainable Finance ## Disclosure Regulation ## ('SFDR') The EU Sustainable Finance Disclosure Regulation complexity and duration of an event or condition, (‘SFDR’) does not have a direct impact in the UK prevailing market conditions and existence of any due to Brexit. However, it applies to third-country mitigating factors. products marketed in the EU. As Baillie Gifford Whilst consideration is given to sustainability US Growth is marketed in the EU by the AIFM, matters, there are no restrictions on the investment Baillie Gifford & Co Limited, via the National Private universe of the Company, unless otherwise stated Placement Regime (‘NPPR’) the following disclosures within in its investment objective & policy. Baillie have been provided to comply with the high-level Gifford & Co can invest in any companies it believes requirements of SFDR. could create beneficial long-term returns for The AIFM has adopted Baillie Gifford & Co’s investors. However, this might result in investments stewardship principles and guidelines as its policy being made in companies that ultimately cause a on integration of sustainability risks in investment negative outcome for the environment or society. decisions. More detail on the Managers’ approach to Baillie Gifford & Co believes that a company sustainability can be found in the stewardship cannot be financially sustainable in the long run if principles and guidelines document, available its approach to business is fundamentally out of publicly on the Baillie Gifford website line with changing societal expectations. It defines bailliegifford.com and by scanning the QR ‘sustainability’ as a deliberately broad concept which code below. encapsulates a company’s purpose, values, business The underlying investments do not take into account model, culture and operating practices. the EU criteria for environmentally sustainable Baillie Gifford & Co’s approach to investment is economic activities established under the EU based on identifying and holding high quality growth Taxonomy Regulation. businesses that enjoy sustainable competitive advantages in their marketplace. To do this it looks beyond current financial performance, undertaking proprietary research to build up an in-depth knowledge of an individual company and a view on its long-term prospects. This includes the consideration of sustainability factors (environmental, social and/or governance matters) which it believes will positively or negatively influence the financial returns of an investment. The likely impact on the return of the portfolio from a potential or actual material decline in the value of investment due to the occurrence of an environmental, social or governance event or condition will vary and will depend on several factors including but not limited to the type, extent, 121 Shareholder information ## Communicating ## with shareholders Trust magazine Baillie Gifford US Growth web page at bgusgrowthtrust.com Trust magazine Baillie Gifford US Growth on the Web Trust is the Baillie Gifford investment trust magazine Up-to-date information about Baillie Gifford which is published twice a year. It provides an insight US Growth can be found on the Company website to Baillie Gifford’s investment approach by including at bgusgrowthtrust.com. You will find full details on interviews with Baillie Gifford’s fund managers, as Baillie Gifford US Growth, including recent portfolio well as containing investment trust news, investment information and performance figures. features and articles about the trusts managed by Baillie Gifford, including Baillie Gifford US Growth. Client Relations Team contact details Trust plays an important role in helping to explain You can contact the Baillie Gifford Client Relations Baillie Gifford’s products so that readers can really Team by telephone, email or post: understand them. Telephone: +44 (0)800 917 2112 You can subscribe to Trust magazine or view a digital Your call may be recorded for training or monitoring copy at bailliegifford.com/trust. purposes. Email: trustenquiries@bailliegifford.com Suggestions and questions Website: bailliegifford.com Any suggestions on how communications with | shareholders can be improved are welcomed, so | Baillie Gifford Client Relations Team | | --- | --- | | please contact the Baillie Gifford Client Relations | Calton Square | | Team and give them your suggestions. They will also | 1 Greenside Row | | be very happy to answer questions that you may | Edinburgh EH1 3AN | have about Baillie Gifford US Growth. Please note that Baillie Gifford is not permitted to give financial advice. If you would like advice, please ask an authorised intermediary. 122 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc A year of opportunity in US Growth The American Dream made real The Long View by Kirsty Gibson by Ben James Exploring the inefficiencies of At the heart of the American Articles by our US Equities Team the US stock market and the Dream is the idea that anyone exploring what matters most to unique opportunities it presents can start a business and change optimistic, long-term investors. for growth. the world through ingenuity, hard work and investment. 123 Shareholder information # Glossary of terms and alternative performance measures ('APM') An alternative performance measure ('APM') is a financial measure of historical or future financial performance, financial position or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework. The APMs noted below are commonly used measures within the investment trust industry and serve to improve comparability between investment trusts. ## Total assets This is the Company's definition of adjusted total assets, being the total value of all assets held less all liabilities (other than liabilities in the form of borrowings). ## Shareholders' funds and net asset value Shareholders' funds is the value of all assets held less all liabilities, with borrowings deducted at book cost. Net asset value ('NAV') is the value of all assets held less all liabilities, with borrowings deducted at either fair value or book value as described below. Per share amounts are calculated by dividing the relevant figure by the number of ordinary shares in issue. ## Borrowings at book value Borrowings are valued at adjusted net issue proceeds. The value of the borrowings at book is set out on page 111. ## Borrowings at fair value (APM) Borrowings are valued at an estimate of their market worth. The value of the borrowings at fair is set out on page 111. ## Net asset value (reconciliation of NAV at book value to NAV at fair value) | | 2024 | 2023 | | --- | --- | --- | | Net asset value per ordinary share (borrowings at book value) | 216.65p | 186.33p | | Shareholders' funds (borrowings at book value) | £643,933,000 | £568,599,000 | | Add: book value of borrowings | £39,271,000 | £40,342,000 | | Less: fair value of borrowings | (£39,271,000) | (£39,904,000) | | **Net asset value (borrowings at fair value)** | **£643,933,000** | **£569,037,000** | | **Number of shares in issue** | **297,228,700** | **305,153,700** | | **Net asset value per ordinary share (borrowings at fair value)** | **216.65p** | **186.48p** | ## Net liquid assets Net liquid assets comprise current assets less current liabilities (excluding borrowings). 124 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Discount/premium (APM) As stock markets and share prices vary, an investment trust’s share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the NAV per share from the share price and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, it is said to be trading at a premium. 2024 2023 Net asset value per ordinary share a 216.65p 186.48p (after deducting borrowings at fair value) Share price b 192.40p 144.80p Discount (borrowings at fair value) (b-a) ÷ a 11.2% 22.4% 2024 2023 Net asset value per ordinary share a 216.65p 186.33p (after deducting borrowings at book value) Share price b 192.40p 144.80p Discount (borrowings at book value) (b-a) ÷ a 11.2% 22.3% Total return (APM) The total return is the return to shareholders after reinvesting any dividend on the date that the share price goes ex-dividend. The Company does not pay a dividend, therefore, the total returns for the share price and NAV per share at book and fair value are the same as the percentage movements in the share price and NAV per share at book and fair value as detailed on page 20. Ongoing charges (APM) The total recurring expenses (excluding the Company’s cost of dealing in investments and borrowing costs) incurred by the Company as a percentage of the average net asset value (with debt at fair value). | 31 May | 31 May | | --- | --- | | 2024 | 2023 | | £’000 | £’000 | Investment management fee 3,581 3,345 Other administrative expenses 726 670 Total expenses a 4,307 4,015 Average net asset value b 616,958 578,722 Ongoing charges (a ÷ b expressed as a percentage) 0.70% 0.69% 125 Shareholder information Turnover (APM) Annual turnover is a measure of portfolio change or trading activity in a portfolio. Turnover is calculated as the minimum of purchases and sales in a month, divided by the average market value of the portfolio, summed to get rolling 12 month turnover data. Gearing (APM) At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders’ assets is called ‘gearing’. If the Company’s assets grow, the shareholders’ assets grow proportionately more because the debt remains the same. But if the value of the Company’s assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets. Gearing is the Company’s borrowings at book value less cash and cash equivalents (including any outstanding trade settlements) expressed as a percentage of shareholders’ funds. | 31 May | 31 May | | --- | --- | | 2024 | 2023 | | £’000 | £’000 | Borrowings (at book cost) £39,271 £40,342 Less: cash and cash equivalents (£6,620) (£3,440) Adjusted borrowings (a) £32,651 £36,902 Shareholders’ funds (b) £643,933 £568,599 Gearing: (a) as a percentage of (b) 5% 6% Gross gearing is the Company’s borrowings expressed as a percentage of shareholders’ funds. | 31 May | 31 May | | --- | --- | | 2024 | 2023 | | £’000 | £’000 | Borrowings (at book cost) (a) £39,271 £40,342 Shareholders’ funds (b) £643,933 £568,599 Gross gearing: (a) as a percentage of (b) 6% 7% 126 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc Leverage (APM) For the purposes of the Alternative Investment Fund Managers Regulations, leverage is any method which increases the Company’s exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company’s exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company’s positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other. Active share (APM) Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index. Treasury shares The Company has the authority to make market purchases of its ordinary shares for retention as treasury shares for future reissue, resale, transfer or cancellation. Treasury shares do not receive distributions and the Company is not entitled to exercise the voting rights attaching to them. Private (unlisted) company An unlisted or private company means a company whose shares are not available to the general public for trading and are not listed on a stock exchange. Contingent value rights ‘CVR’ after an instrument name indicates a security, usually arising from a corporate action such as a takeover or merger, which represents a right to receive potential future value, should the continuing company achieve certain milestones. The Abiomed CVR arose on Johnson & Johnson’s takeover of Abiomed. The milestones relate to the performance of the technologies acquired through the takeover. Any value attributed to this holding reflects both the amount of the future value potentially receivable and the probability of the milestones being met within the time frames in the CVR agreement. 127 Shareholder information 128 Annual Report and Financial Statements 2024 Baillie Gifford US Growth Trust plc ## Company ## information Directors Company details Registered office Chair: TJW Burnet bgusgrowthtrust.com Baillie Gifford & Co Limited SP Inglis | CRD van der Kuyl | Company Registration No. 11194060 | 3 St Helen’s Place | | --- | --- | --- | | RL Palmer | | London | | GD Paterson | ISIN: GB00BDFGHW41 | EC3A 6AB | Sedol: BDFGHW4 Ticker: USA Legal Entity Identifier 213800UM1OUWXZPKE539 Alternative Investment Fund | Further information | Managers and Secretaries | Registrar | | --- | --- | --- | | Baillie Gifford Client Relations Team | Baillie Gifford & Co Limited | Computershare Investor Services PLC | | Calton Square | Calton Square | The Pavilions | | 1 Greenside Row | 1 Greenside Row | Bridgwater Road | | Edinburgh | Edinburgh | Bristol | | EH1 3AN | EH1 3AN | BS99 6ZZ | | T: +44 (0)800 917 2112 | T: +44 (0)131 275 2000 | T: +44 (0)370 707 1711 | | trustenquiries@bailliegifford.com | bailliegifford.com | | Depositary Company broker Independent Auditor The Bank of New York Mellon Panmure Liberum Limited Ernst & Young LLP (International) Limited 40 Gracechurch Street Atria One 160 Victoria Street London 144 Morrison Street London EC3V 0BT Edinburgh EC4V 4LA EH3 8EX 129 ## bgusgrowthtrust.com Calton Square, 1 Greenside Row, Edinburgh EH1 3AN Telephone +44 (0)131 275 2000