Pacific Horizon Investment Trust PLC

Annual Report • Oct 17, 2023

Annual Report and Financial Statements   PLC 31 July 2023 Notes None of the views expressed in this document should be construed as advice to buy or sell a particular investment. Investment trusts are UK public listed companies and as such comply with the requirements of the Financial Conduct Authority. They are not authorised or regulated by the Financial Conduct Authority.   Ordinary Shares can qualify to be considered as a mainstream investment product and can be recommended by Independent Financial Advisers to ordinary retail investors in accordance with the rules of the Financial Conduct Authority in relation to non-mainstream investment products. This document is important and requires your immediate attention. If you reside in the United Kingdom and you are in any doubt as to   adviser authorised under the Financial Services and Markets Act 2000   If you have sold or otherwise transferred all of your ordinary shares in     was or is being effected for delivery to the purchaser or transferee. Investor disclosure document The UK Alternative Investment Fund Managers Regulations requires certain information to be made available to investors prior to their  Disclosure Document is available for viewing at .  01 Introduction Financial highlights 02   Strategic report           One year summary 22   Ten year record 26 Review of investments 28 Portfolio executive summary 32 Valuing private companies 36     Governance report             Financial report             Shareholder information               Contents Introduction Annual Report and Financial Statements 2023 02 Financial highlights Year to 31 July 2023 Share price * (8.9%) NAV * (3.6%) Comparative index * † 0.8%    Comparatives for 2022 can be found on page 22. † The comparative index is the MSCI All Country Asia ex Japan Index (in sterling terms). Past performance is not a guide to future performance. Total returns *  03 Introduction Annual Report and Financial Statements 2023 04 Growth 2 : embracing growth, disruption and innovation.  is to invest in the Asia-  Japan) and in the Indian Sub-continent in order to achieve capital growth. An introduction to  Investment Trust PLC Our philosophy Long-term This matters. Stock prices are wildly unpredictable in  the earnings capability of a company. So when we   the patience that allows a good decision to prove its worth. Growth We have found the most persistent source of alpha   the long-term. This trend persists irrespective of starting valuation. Active We would observe three particular features which emphasise the need for active management in the  a quarter of the index still consists of State Owned    when we want to take advantage of the tailwind provided by economic cycles in certain countries and times when we want to limit our exposure.  by a very small number of companies that do exceptionally well. Being highly selective is imperative.  05 Our structure   Underpinning everything is a genuine commitment to low costs. We believe our duty to shareholders is to  into shareholders keeping more of the returns generated from their investment. Our scale and commitment to low costs enables us to offer genuine   involved. See bailliegifford.com. Our structure Company status     money to make additional  gearing can amplify investment returns.      changes.   after the interests of our shareholders. They meet several times a year and are responsible for various  performance. Democratising access to unlisted (private) companies   liquid access to private companies – a distinct    uninterrupted on their journey from private to public – shareholders  compounded returns.   companies is dependent upon relationships and reputation – our  from the access we enjoy but without paying fees normally associated with private equity funds. Accessibility      our shares are openly tradeable for investors from around the world.   fees or minimum investment restrictions.    reporting when compared with other structures that hold private companies. Permanent capital   structure provides a pool of permanent capital.  the portfolio remains intact and is not impacted by shareholder demand.   invest for the long term and hold assets that can be harder to buy and sell – such as private companies.    by our companies. This alignment underpins the prospect of enduring relationships. This strategic report, which includes pages 7 to 55 and incorporates the Chairman’s statement, has been prepared in accordance with the Companies Act 2006. Strategic report  07  statement The portfolio managers aim to invest in high growth  in the world. In the last year these markets have been   tension between the US and China and rising US interest rates and the consequent US dollar strength. These have all challenged growth expectations and  challenging environment for growth investors. It is to be expected that there will be periods during which growth investment will not be rewarded. We are in such a phase now. As the portfolio managers present  returns have been considerable and the premium currently paid for growth is modest. While it is too early to forecast an immediate improvement in  as if growth share valuations are at attractive levels across the region. Performance   negative 3.6% * and for the share price a negative  * . This compared to a positive total return of 0.8% * for the MSCI All Country Asia ex Japan Index in sterling terms over the same period. The shares ended the period at an 8.0% discount to the NAV per  The notable positive stock contributors to the   EO Technics and the notable detractors were     Angus Macpherson Chairman     Past performance is not a guide to future performance. Strategic report Annual Report and Financial Statements 2023 08     during the same period. Environmental, Social and Governance (‘ESG’) Your Board is committed to responsible investment. It agrees with the managers that a thoughtful approach is required when looking at ESG factors in emerging markets. It is not appropriate to impose a developed market standard on emerging markets companies indiscriminately. The economic miracle of the last forty years has resulted in over 800 million people in Asia being lifted out of poverty through economic reform and globalisation. This wealth is resulting in increased consumption and carbon  levels seen in developed markets. Growth in carbon emissions has also been stimulated by the West    long-term investment is that the businesses they invest in must be sustainable. Asian countries need  play their part. The timescales for this will however  different starting points on their paths to prosperity.  and working with companies towards achieving positive change. We further endorse the view that the absolute levels of emissions are not the basis on which to judge a company but rather its approach to all   critical component in manufacturing electric vehicles. Gearing The Board continues to set the gearing parameters within which the portfolio managers are permitted to operate. These parameters are reviewed regularly and at present the agreed range of equity gearing     active consideration at present. The Company has a multi-currency revolving credit facility with The Royal Bank of Scotland International  March 2025 and provides for potential gearing  Earnings and dividend   year. After the deduction of the management fee and  dividend. The Board is therefore recommending that     consider investing in this Company if they require income from their investment as the Company typically invests in high growth stocks with little or no yield.   shares were issued from treasury at a premium to   year-on-year net 0.85% reduction in the amount of shares in issue. The issuance occurred early  Company was being promoted into the FTSE 250    been bought back.   Issuance will continue to be undertaken only at  dilution for existing investors. When this authority   spreads the operating expenses of the Company      be asking shareholders to renew the authority to    of any shares held in treasury at a premium to the  held in treasury at present. The Board intends  considering not only the level of the discount but also the underlying liquidity and trading volumes   09 Board to seek to address any imbalance between  that results in a large discount to NAV whilst being cognisant that current and potential shareholders have expressed a desire for continuing liquidity. Private Company Investments  the maximum permissible investment in unlisted  measured at the point of initial investment). As at  assets invested in 5 private companies compared   reasonableness of private company valuations in the light of the share price volatility of listed companies.   using the services of Markit Valuation Services (now S&P Global) for external advice. The Board is comfortable that marked-to-market values are kept as current as possible for the purpose of calculating   although based on many external (market) and  considered a number of methodologies in line with International Private Equity and Venture Capital   expertise in this area and we are comfortable with the strategy adopted by the managers to invest in later stage private companies. This is very different to being a venture capital investor which often involves taking seats on company boards and  the business. While private company investing has  commensurate reward. Taking as an example one of our private company   was US$25 billion. At our holding equity valuation of US$225 billion that implies an EBITDA multiple of 8x. This is a conservative valuation for a company  than 30% and 80% respectively year on year. It is   risks of investing in private companies. The Board is supportive of the managers continuing to invest in them. Details on the process and quantum of private company valuations undertaken over the year can be found on page 36. Changes to the Board     over a period where the Company has made considerable progress. The NAV of the Company   constituent of the FTSE 250 and provided a total    conditions and growth investing being seemingly  managed growth focussed long term investment strategy such as that used by the portfolio manager.  continue to reward patient long term shareholders in the future.  stand down as Chair and a member of the Board. Someone new should have the opportunity of chairing this Company and it is time for me to pursue other roles. I will leave the Board once a suitable    for giving me the opportunity to Chair the Company  best for the future. The Company’s portfolio managers    the role vacated by Mr Roderick Snell when he was   Mr Durrant is an investment manager in Baillie   RBS in its Group Strategy and Corporate Finance   Strategic report Annual Report and Financial Statements 2023 10 TCFD and Consumer Duty Recently introduced regulations by the FCA require   product-level reports on the climate-related risks and opportunities in the respective investment vehicle. These are known as TCFD (Task Force on Climate-related Financial Disclosures) reports and they are based on historic data at a single point in time. The report produced by Baillie Gifford for our   . The FCA also introduced a new set of rules labelled      consumers and includes a number of obligations that will need to be met. One of these obligations is to undertake an Assessment of Value on the   meaning that distributors will be able to undertake their assessments and continue to make shares in  shareholders. It should be noted that in addition to   and Board assess various costs levied by third-party service providers as well as the Managers and  with performance; this will continue to be the case. Annual General Meeting     to allow time to register. There will be a presentation   I hope to see many of you there.   website at  Stock Exchange regulatory news service.  The invasion of Ukraine ended the geopolitical consensus that prevailed since the fall of the Berlin Wall. This consensus was an impetus for globalisation and a key component of growth in Asia.    dominant West were likely to grow. US and Western sanctions on a seemingly increasing number of Chinese companies have made some of them uninvestible. There is little doubt that foreign  at least in the short term. Should these sanctions   the market as a whole uninvestible. Domestic considerations in China are also of concern. The Chinese Government is developing  remains to be seen. Coupled with escalating tensions  likely to be greater complexity and risk in securing  Excess investment return is generated by judging and managing risks. On the basis of the information  believe that the risks of investment in China and the  rewards. China is a critical trading partner of the West and only the most extreme geopolitical confrontation would justify the economic disruption of severing economic ties entirely.       from key drivers of long-term growth such as the  to renewable energy and an AI led digital age of  portfolio managers to unearth the right investments.  has served investors well in the past. The region remains one of the fastest growing   Board is of the view that investing in the fastest growing companies in the fastest growing region still offers attractive long-term investment opportunities for patient growth investors. The portfolio managers  Angus Macpherson Chairman 5 October 2023  11    Past performance is not a guide to future performance. Overview   one of the fastest growing regions over the coming decades and we strive to be invested in its fastest growing companies. It is growth multiplied by growth  Such an investment style has been well rewarded   All Country Asia ex Japan Index (in sterling terms)    over these time periods. 5 year 3 year NAV total return   Share price total return   MSCI All Country Asia ex Japan total return (in sterling terms)    there will inevitably be periods of time when our growth style of investing will be out of favour with    compared to the comparative index which rose 0.8%     to reach their nadir as President Xi cemented his grip on power during the 20th Chinese Communist     Investment Manager  Ben Durrant Deputy Manager Appointed 2023 Strategic report Annual Report and Financial Statements 2023 12 Chinese economy disappointed and concerns over  Markets will likely remain volatile as investors continue to grapple with an uncertain global   optimistic. Whilst many Western economies have experimented with money printing and ultra low    Events in China will continue to play an important  the country faces several headwinds including  an imminent collapse of the economy are misplaced. The government has moved to support the domestic   domestic property market appear overly pessimistic. The broad exposure of the portfolio remains similar       valued at nearly the same price-to-earnings multiple  yet they are expected to grow their earnings at   long-term outlook for the region. Asia already cemented itself as the lead contributor to global  more to global growth in US dollar terms than the      Philosophy We are growth investors endeavouring to invest in the top twenty percent of the fastest growing companies in Asia. Across the region we have found the most persistent source of outperformance to be   long term. This trend persists irrespective of starting     to come from earnings growth.   01. Underappreciated growth duration We believe one of the greatest investment   are volatile from one quarter to the next. The market   generation even if the long-term growth rate turns  willing to reinvest in their business and with greater ambition. This presents us with exciting investment  near term volatility to be ignored. 02. Underappreciated growth pace The market consistently underestimates the likelihood of rapid growth. The evidence shows that most investors cluster around a narrow range of   potential to grow very rapidly. Our process is focused  and searching for low probability but high impact  the broader market. 03. Underappreciated growth surprise  interaction between top-down and bottom-up   of ignoring macroeconomics. Purely bottom-up investment is a path to ruin in a universe where industrial and economic cycles can dominate investment returns over multi-year periods. The long-term earnings for a vast number of companies  sectors – are determined by exogenous macro factors beyond their control. This also provides opportunities.  13 Our analysis shows that while it may pay to invest in those companies that display consistently high levels  in those companies that transition from poor levels    providing a two-fold kicker to share price performance – but identifying the drivers behind this change      direction of travel is hugely valuable.    will lead to a concentration in particular sectors or     MSCI AC Asia ex Japan Index  trailing compound annual growth to    One year forecast earnings growth        Active share 82%  Portfolio turnover     Review In the last Interim management statement we articulated three key reasons why Asian economies  especially when compared to developed markets. They are:      many major European countries.     it is Asian countries that behaved like orthodox developed countries while much of the developed world behaved like the emerging markets of old. (Perhaps we are seeing the beginning of    a decade and the region is therefore far less   superior to much of the developed world. Combine  valuations at multi-year lows relative to developed     investors. China certainly faces a number of  lockdowns and regulatory crackdowns have inhibited  domestic economy. But the extreme pessimism over the economy is too one-sided. There are a number of signs that household   and June compared to the same pre-lockdown  are rapidly returning to pre-pandemic levels. Our consumer related holdings in China have posted      accelerating economic growth and mobilising the  over the past couple of years. Time and patience is  ended at the start of the year. Increasing policy support is also likely to be a   government has clearly and very publicly stated its support for the private sector. Notably in July the CCP Central Committee and the State Council issued Strategic report Annual Report and Financial Statements 2023 14 a joint statement on ‘promoting the development  private sector as ‘a driving force behind promoting       clampdown that particularly impacted technology and platform businesses for the past couple of  – is receding.  extremely depressed. Stripping out cash and      book value. We believe this presents us with a number of excellent long term investment opportunities and we increased our listed equity exposure  Chinese companies. Most additions were made to     and its subsidiary Ping An Bank. One new purchase  analogue chips in China (listed in Taiwan). Silergy has the largest market share among domestic  of Chinese attempts to become self-reliant in semiconductor chips.      Connect. The business makes loans to small and     are then packaged and sold on the Micro Connect exchange. The company was founded by the former    remains the best structural growth story of any     advantage of share price weakness by adding to our       overweight. Funding came from three main sources. The most  (<60bp) holdings in South Korea. These were across a range of sectors including green energy    due to some small additions to other names in   manufacturer for semiconductors) and Samsung  weighting increased modestly over the period to    selling both Nickel Industries and Vale Indonesia. We have become concerned by the huge capital     convert non-battery grade nickel into battery grade nickel) commercially viable and this is likely to bring  than expected. We also reduced our exposure to India. Notable        15 We are keeping our eye on several interesting   a successful export manufacturing industry. For   of government reforms and the establishment of  that manufacturing is starting to move to India. For  expanding in India with iPhone exports quadrupling   a strong export manufacturing base it has the potential to transform the economy over the coming years.  portfolio continuing to look different to many of our  largest exposures remain focused on the themes of   cyclical industries including materials and industrials which make up the two largest relative positions within the portfolio.      Performance    periods have been more challenging as our growth   with generally poor Asian markets held back by  and a surging US Dollar syphoning liquidity from the region. Our portfolio maintains a strong growth bias; we have faith in the long-term growth prospects of the region and believe we are well placed to  markets turn.    comparative index which rose by 0.8% in sterling  underperformance came from weakness in three     Jadestone is an oil exploration and production      resulting in production halting for several months. The lack of cash strained the balance sheet at a time when the company was gearing up for a major investment phase to bring several new assets on    success of the company very much rests on this asset coming on stream in a timely manner.     the company was a 5.5% holding at the start of the  at the end of 2022 were weak. M&A integration challenges and a slowdown in broader ecommerce growth in India pushed the share price down by 52%. We are hopeful these issues are short term     their lows).  JD.com was weak despite reasonable operational performance. Revenue growth was slower  ByteDance taking some low-end market share as it leveraged its large user base to enter the  Strategic report Annual Report and Financial Statements 2023 16   of its scale and in-house logistics capabilities.    performed strongly. Our top contributor to performance was Ramkrishna Forgings which   on automotive and commercial vehicles. After completing a major capacity expansion over the past few years the company is seeing rapid sales growth  Other industrial companies in India also performed  manufacturers of telecom and power transmission  demand for power infrastructure. Tata Motors was also strong as the domestic commercial vehicle and auto business continued to see buoyant demand  impressed.  but stock selection in South Korea was the most         demand for its laser products is likely to hit an   and drills will need to be replaced by lasers in the  this holding towards the end of the period.  mainly from strength in our copper companies MMG and Zijin Mining. This was followed by Real  Utilities where we had no holdings while the sector   followed by Communication Services and Consumer Discretionary due to the weakness in our Chinese names. Environmental, social and governance (‘ESG’) considerations  based on identifying and holding high quality growth businesses that enjoy sustainable competitive advantages in their marketplace.   proprietary research to build up our in-depth knowledge of an individual company and form a view  Social and Governance matters which affect the   long-term investment returns. Such issues are considered throughout the investment process  Our approach is guided by our ESG principles:   ownership of growing businesses: we want  and encourage them to ignore the short-term pressures of the market.   businesses engaging in practices that are harmful to society may be capable of generating attractive returns in the short term but are unlikely to do so over the periods we seek to invest.    not reliant on formulaic and backward-looking screens.   consider the likely direction of change in otherwise promising investments and engage accordingly. Company engagement is key to our process. We encourage steps to maximise opportunities and minimise risks where we believe it is material to the success of the company. Engagement priorities are set through a combination of a subjective assessment of the materiality of an issue and our  inputs to provide direction. We vote wherever possible and will vote against management if we believe that its actions are not in the interests of shareholders. We are supported by a dedicated emerging markets    17 Baillie Gifford statement on stewardship Baillie Gifford’s overarching ethos is that we are ‘Actual’ investors. We have a responsibility to behave as supportive and constructively engaged long-term investors. We invest in companies at different stages of their evolution, across many different industries and geographies, and we focus on their unique circumstances and opportunities. Consequently, we are wary of prescriptive policies and rules, believing that these often run counter to thoughtful  favours a small number of simple principles which help shape our interactions with companies and give appropriate latitude to diverse processes of our different investment teams. These principles do not  teams acquire. Prioritisation of long-term value creation  focusing on long-term value creation and capital  resist demands from shareholders with shorter  way to achieve better investment outcomes. We regard it as our responsibility to encourage holdings  towards activities that create genuine economic and stakeholder value over the long run. We are happy that our value will often be in supporting  A constructive and purposeful board We believe that boards play a key role in supporting corporate success and representing the interests of    these responsibilities. We believe good governance works best when there are diverse skill sets and    the thinking of management. Strategic report Annual Report and Financial Statements 2023 18 Long-term focused remuneration with stretching targets  transparent and reward superior strategic and operational endeavour. We believe incentive  encourage policies which create genuine long-term alignment with external capital providers. We are  these are commensurate with outstanding long-run  outcomes or short-termism. We generally think that performance hurdles should be skewed towards long-term results and that remuneration plans should be subject to shareholder approval.  We believe it is in the long-term interests of all companies to maintain strong relationships with     governance and ownership structures may need   and accountability should be prioritised at all appropriate times. Sustainable business practices  dependent on maintaining its social licence to operate and look for holdings to work within the spirit and not just the letter of the laws and regulations that govern them. We expect all holdings   impact their long-term success. Environmental practices should recognise the current pace     with appropriately ambitious policies and targets focused on the relevant material dimensions. Boards and senior management with superior prospects for long-term value creation should   alongside plans for ongoing improvement.  19   holdings is as important as selecting the right  are aligned with our stewardship principles and describe our approach to proxy voting and company   While these guidelines are intended to provide an     on what we believe to be in the best long-term  a policy. A broad cross section of our investment staff are involved in our ongoing work on stewardship. In the same way that our investment approach is based  voting and engagement is led by the individual investment teams. In keeping with our decentralised    we report accordingly in the proxy voting disclosure on our website. We also have clear processes in     disclosure is available on our website.     Company meeting record Voting distribution Number of meetings voted with management  Number of meetings with at least   Number of votes for  Number of votes against 8% Number of votes abstain 2% Strategic report Annual Report and Financial Statements 2023 20  investment activities and, where necessary, effect change within our holdings, ultimately with the goal of achieving better returns for our shareholders. The three examples below demonstrate our stewardship approach through constructive, ongoing engagement. Environmental, social and governance engagement Brilliance China Automotive – governance Brilliance is a Chinese automotive company which manufactures and sells BMW vehicles and auto components. It has strategic partnerships and  manufacturers. Our escalation activities date from the suspension   issues. Following several attempts to engage with      be completed and an indicative timeline detailing   information was crucial for shareholders to assess   further by sending separate letters to the boards   communication with the market while its shares were suspended. We outlined our belief that the  complete for shareholders and investors to appraise   absolute commitment to work in the best interests of all shareholders and achieve the resumption of   guidance set out by the stock exchange.  our letter with substantial improvements in     it required the company to complete for its shares to resume trading. Measures included: an independent investigation into the audit issues;     we spoke to investor relations ahead of the annual general meetings. Brilliance underwent     to work in the interests of its shareholders.  21 Reliance Industries – the energy transition We are deeply interested in companies that are helping to facilitate social and economic  at emerging Asia. This could be one of the important investment themes for investing in Asia over the coming decades. A country which is particularly interesting for us in this regard is India where there are many new online businesses that have come to market in recent years that are helping with this  food delivery.  important here: Reliance Industries. This is a   retail and green energy. When determining their        of lives.  in India that led data prices to collapse from an unaffordable US$3 per gigabyte to less than eight cents today. Domestic calls became free. This pulled     after the US and China. Reliance aims to become    energy by 2030. Over the last year we engaged with Reliance  sustainability ambitions in more detail. We wanted  and how this relates to each of the business units. And we have also discussed methane at some  long-term sustainable development. We have also  and carbon emissions further. Zijin Mining – maintaining a social license  Zijin Mining is a large state-owned metals and mining   China and other parts of the world. The historic  is coming from copper. Most recently there have been aspirations to move into battery materials     success. We have discussed with Zijin how it carries out human rights due diligence. We have also  to community engagement in Peru and water use in Inner Mongolia and have followed up with some additional questions for other mines. The company has established community grievance   Global Industry Standards on Tailings Management. In April we wrote to the company to ask about: its plans for human rights impact assessments (for  community engagement in Peru; water quality; and the recent allegations regarding illegal mining in Inner Mongolia. We received detailed answers to our questions and in October 2022 we met with   management systems and environmental practices. The company highlighted differences between the  by third-party rating providers. We encouraged the company to provide more detailed updates on human rights due diligence work and discussed  rating agencies. We were pleased with the transparency and openness of the company to discuss these issues. It was helpful to learn more about the approach to ESG management. We will seek to hear more about the ESG assessments being planned which would include human rights assessment and will continue to follow up further with the company on these topics. Strategic report Annual Report and Financial Statements 2023 22 31 July 2023 31 July 2022 % change    Gearing ‡ (2%)  Net asset value per ordinary share    Share price 586.00p   MSCI All Country Asia ex Japan Index (in sterling terms) †#    Dividend proposed per ordinary share  3.25p 3.00p Revenue earnings per ordinary share   Ongoing charges ‡¶   Discount ‡¶ (8.0%)  Active share ‡ 82% 83% Year to 31 July 2023 2022 Total return #‡ Net asset value per ordinary share ¶ (3.6%)  Share price ¶   MSCI All Country Asia ex Japan Index (in sterling terms) † 0.8% (8.2%) The following information  has performed over the year to 31 July 2023.   † The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. #  ‡  ¶ Key Performance Indicator. Past performance is not a guide to future performance.    23   † The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. #  ‡  ¶ Key Performance Indicator. Past performance is not a guide to future performance. Year to 31 July 2023 2023 2022 2022 Year’s high and low High Low High Low Net asset value per ordinary share     Share price  523.00p  602.00p  ‡¶     Year to 31 July 2023 2022 Net return per ordinary share Revenue return   Capital return (30.05p)  Total return (25.49p) (118.80p) Net assets per ordinary share (4.1%) 2023  2022  Share price per ordinary share (9.4%) 2023 586.00p 2022   † (1.9%) 2023  2022  Strategic report Annual Report and Financial Statements 2023 24 * The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. †   #   Past performance is not a guide to future performance.   Five year total return performance † share price, net asset value and index  20232018 2019 2020 2021 2022 Cumulative to 31 July ● NAV total return † ● Share price total return † ● Comparative index total return Source: Baillie Gifford/Refinitiv and relevant underlying index providers # . Dividends are reinvested. 50 300 200 150 100 250 Annual share price and net asset value total returns † 2023 2019 2020 2021 2022 Years to 31 July ● NAV total return † ● Share price total return † Source: Baillie Gifford/Refinitiv. Dividends are reinvested. (40%) 80% 60% 40% 20% (20%) 0% The following charts indicate  performed relative to its comparative index * and the relationship between share price and net asset value  31 July 2023.  25 20232019 2020 2021 2022 Years to 31 July ● NAV total return † ● Share price total return † Source: Baillie Gifford/Refinitiv and relevant underlying index providers # . Dividends are reinvested. (20%) 60% 40% 20% 0% Premium/(discount) to net asset value †  Relative annual share price and net asset value total returns † (compared to the MSCI All Country Asia ex Japan Index) 20232018 2019 2020 2021 2022 Years to 31 July ● Pacific Horizon premium/(discount) † Source: Baillie Gifford/Refinitiv # . (15%) 15% 10% 5% 0% (10%) (5%) * The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. †   #   ‡  Past performance is not a guide to future performance. Five year active share † (compared to the MSCI All Country Asia ex Japan Index) 20232018 2019 2020 2021 2022 Years to 31 July ● Active share † Source: Baillie Gifford and relevant underlying index providers # . 0% 100% 80% 60% 20% 40% Five year turnover ‡  20232018 2019 2020 2021 2022 Years to 31 July ● Turnover ‡ Source: Baillie Gifford. 0% 40% 20% 30% 10% Strategic report Annual Report and Financial Statements 2023 26 Capital At 31 July Total assets * £’000 Borrowings £’000 Shareholders’ funds * £’000 Net asset value per share * p Share price p Premium/ (discount) * %   –                  (8.2)     223.58        286.00       363.00 3.3      320.00  2020            802.00 3.2 2022  –     2023 580,355 – 580,355 637.18 586.00 (8.0) Revenue Gearing ratios Year to 31 July Gross revenue £’000 Available for ordinary shareholders £’000 Revenue earnings per ordinary share † p Dividend paid and proposed per ordinary share (net) p Ongoing charges * % Gearing * % Gross gearing * %        –       2 3    0.35 0.35  8     (0.30) 0.35  3     (0.38) –      (328) (0.60) –  8    8  –  8  2020    0.25   8     –    2022    3.00   – 2023 9,580 4,166 4.56 3.25 0.72 (2) –  record   † The calculation of earnings per ordinary share is based on the revenue from ordinary activities after taxation and the weighted average number  Past performance is not a guide to future performance.  27  At 31 July Net asset value per share * Net asset value total return * † Share price Share price total return * † Comparative index †# Comparative index total return †# Retail price index †                                            232 236        208    2020 265  322 328        522    2022 365       2023 350 359 374 384 152 196 150 Compound annual returns (%) 5 year       5.8         Cumulative to 31 July 20232013 2015 2018 2020 20222014 20172016 2019 2021 ● Pacific Horizon share price Source: Refinitiv and underlying data providers. See disclaimer on page 122. All figures are total return (see glossary of terms and alternative performance measures on pages 123 and 124). ● NAV total return † ● MSCI All Country Asia ex Japan Index (in sterling terms) 0 600 300 200 100 500 400 Ten year total return performance *   †  # The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured. Past performance is not a guide to future performance. Strategic report Annual Report and Financial Statements 2023 28 Review of investments A review of the Company’s ten largest investments as at 31 July 2023. *  Samsung Electronics Samsung is a global leader in semiconductors and electronics. Its core business is highly   capital that permits it to invest and innovate at scale. Ping An Insurance Ping An is the leading private insurance company in China. It has been investing heavily in technology which gives it superior competitive advantage compared with its state-owned peers. Insurance penetration in China is low and has the potential to be a long-term growth opportunity for the company. Geography Korea Valuation  % of total assets    (% of total assets  5.5%)   Nil) Geography China Valuation  % of total assets    (% of total assets   (Net purchases in year   © Samsung.  29 *   Ramkrishna Forgings is one of  exports of forging components. The company has been well   expansion and order wins is likely to experience strong growth. Delhivery Delhivery is an Indian logistics  independent provider of end-  a national network used by all ecommerce players. The scale and modernity of its network has allowed it to deliver both the lowest costs and a reliable  of the best-placed operators to  of Indian ecommerce. This was previously a private company investment. Dailyhunt (VerSe Innovation)  Dailyhunt is an Indian consumer media company. Its short form video and news aggregator apps are popular across the country. Its localised and user-generated  which is valued by advertisers looking to reach the Indian mass-market. Geography India Valuation  % of total assets 3.2%   (% of total assets  5.5%) (Net sales in year   Geography India Valuation  % of total assets 3.3%   (% of total assets   (Net sales in year   Geography India Valuation  % of total assets 3.0%   (% of total assets     Nil)  Strategic report Annual Report and Financial Statements 2023 30 Zijin Mining Group   engaged in the exploration   broad portfolio of high quality  to generate strong production  years. Tata Motors Tata Motors is an Indian automotive manufacturer with a       The domestic Indian business is seeing a strong cyclical  efforts in electric vehicles appear to be the best in the country. EO Technics EO Technics manufactures lasers used in the manufacturing   and dicing. As semiconductors become smaller and more  be needed to replace more traditional equipment including  to rapid growth for EO Technics. *  Geography China Valuation  % of total assets    (% of total assets  2.0%)   Nil) Geography India Valuation  % of total assets 2.8%   (% of total assets  2.2%) (Net purchases in year   Geography Korea Valuation  % of total assets    (% of total assets  0.8%) (Net purchases in year    31 *  Samsung Engineering Samsung Engineering is an  services to Samsung Group companies and the hydrocarbon sectors predominantly in the Middle East and ASEAN. The company continues to receive strong orders in these  expertise in sustainable energy solutions are making impressive progress. JD.com JD.com is the largest Chinese   and it is the second-largest player in overall Chinese ecommerce. It has a strong logistics network  which is driving increased revenue and market share. Geography Korea Valuation  % of total assets 2.6%   (% of total assets   (Net sales in year   Geography China Valuation  % of total assets 2.6%   (% of total assets  3.3%) (Net purchases in year   Strategic report Annual Report and Financial Statements 2023 32 Performance 1 year % 3 years % 5 years % 10 years % Share price    283.8 NAV (3.6)   258.5 Benchmark 0.8     †  * Benchmark: MSCI All Country Asia ex Japan Index (in sterling terms). †      Contributors Absolute performance % * Ramkrishna Forgings  Samsung Engineering  EO Technics  Tata Motors  Skipper  Detractors Absolute performance % * Jadestone  Delhivery  JD.com   (56.2) Dailyhunt (VerSe Innovation)  Key contributors and detractors to performance – year to 31 July 2023   Denotes listed investment previously held in the portfolio as a private company investment. Denotes private company investment. Source: Revolution.  33 New buys FPT Jio Financial Services Mobile World Investment Corporation Silergy SK hynix TISCO Complete sales China Conch Environment Protection China Conch Venture  Flitto    Jiangxi Copper Co  Korea Zinc   Nickel Mines PT Aneka Tambang PT Vale Indonesia S-Fuelcell SK IE Technology  Zomato Reductions  Delhivery  Prestige Estate Projects Ramkrishna Forgings Phoenix Mills Merdeka Copper Gold  Samsung Engineering MMG Alibaba Group Baidu.com Chalice Mining Dada Nexus ADR EO Technics Indiabulls Real Estate Jadestone JD.com  Meituan Military Commercial Joint Stock Bank Ping An Bank Ping An Insurance Tata Motors  Additions Denotes listed investment previously held in the portfolio as a private company investment. Strategic report Annual Report and Financial Statements 2023 34 Distribution of total assets *  Geographical 2023 Sectoral 2023 1 2 3 4 6 5 7 8   # The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured.   <£1bn>£25bn £10–25bn £1–2bn£2–5bn£5–10bn Source: Baillie Gifford/Refinitiv and relevant underlying index providers. See disclaimer on page 122. ● Pacific Horizon ● MSCI All Country Asia ex Japan index # % of portfolio and index stocks 0% 60% 50% 40% 30% 10% 20% 3 4 5 8 7 2 6 1 Geographical 2023 % 2022 %  China 28.5  2 India   3 Korea    Vietnam   5 Taiwan   6 Indonesia     5.2  8 Singapore 3.5 6.5   0.3   Other      0.3 Sectoral 2023 % 2022 %  Information Technology 22.0  2 Consumer Discretionary 20.3 20.2 3 Financials    Materials   5 Industrials   6 Communication Services 8.6   Real Estate   8 Energy    Consumer Staples 0.5 0.3    0.6  Net liquid assets  0.3  35 Strategic report Annual Report and Financial Statements 2023 36 We aim to hold our private company investments  open-market transaction. Valuations are adjusted both during regular valuation cycles and on an ad hoc  process ensures that private companies are valued in both a fair and timely manner. The valuation process is overseen by a valuations  independent third party (S&P Global). The valuations group is independent from the investment team with all voting members being from different operational   been applied. We revalue the private holdings on a three month  reassessed each month. During stable market  investment would be valued two times in a six month  reviewed twice per year by the respective investment trust boards and are subject to the scrutiny of external auditors in the annual audit process.   These may include: changes in fundamentals; a takeover approach; an intention to carry out an    of comparable public companies. Any ad hoc change to the fair valuation of any holding is implemented  value. There is no delay. The valuations team also monitors relevant market indices on a weekly basis and updates valuations  (S&P Global) most recent valuation report where appropriate. Continued market volatility has meant that recent pricing has moved much more frequently than would have been the case with the quarterly valuations cycle.  Instruments (lines of stock reviewed) 6 Revaluations performed  Percentage of portfolio revalued 2+ times  Percentage of portfolio revalued 5+ times 33%  been decreases. A handful of companies have raised capital at an increased valuation. The average movement in both valuation and share price for those which have decreased in value is shown below. Average movement in company valuation Average movement in share price   (28.8%) *   Share prices have decreased less than headline  of stock with preferential liquidation rights and therefore providing down side protection.     in the event of a corporate sale or liquidation. Valuing private companies  37 Private companies summary Transaction value  Historical snapshot   Portfolio activity – year to 31 July 2023 No new capital was deployed in private companies during the year. No private companies listed or were taken-over during the year. 0 40,000 30,000 20,000 10,000 Follow on Buy Listed 20222021 202020182017 Concentration   Private exposure  Total private company exposure Private company exposure within  – 3.0%  04 private companies listed since initial purchase 05 private companies currently held Dailyhunt (VerSe Innovation)  ByteDance  Chime Biologics  Eden Biologics  Philtown Properties (Nil) Total private company exposure  Strategic report Annual Report and Financial Statements 2023 38 Jul 2023 Jul 2022 Jul 2016 Jul 2017 Jul 2018 Jul 2019 Jul 2020 Jul 2021 Source: Baillie Giff ord. Total assets in sterling (left hand axis) Private company securities as a % of total assets (right hand axis) Private company securities and listed securities previously held in the portfolio as private comany securities as a % of total assets (right hand axis) * See Glossary of Terms and Alternative Performance Measures on pages 123 to 124. £ million 25 0 10 15 % 20 5 1,000 200 800 400 600 0 Private company securities and listed securities previously held as private company securities as a percentage of total assets  Performance of listed holdings held previously as private company investments from date of initial investment of each holding to 31 July 2023 (absolute performance in sterling terms as a %) Absolute performance from initial investment to initial public offering Absolute performance from initial public offering to 31 July 2023 or sale Total absolute performance from initial investment to 31 July 2023 or sale No te: Absolute performance returns cannot be added together as they are geometric. Source: Revolution/Baillie Gifford. Star Health Zomato Delhivery 80 10 0 -100 20 6040-80 -60 -40 -20 0 80 10 0 -100 20 6040-80 -60 -40 -20 0 Listed holdings at 31 July 2023 Listed holdings sold in the year to 31 July 2023  39 2023 £’000 2022 £’000    Purchases at cost –  Sales – proceeds received – –   – – Change in listing –  Change in fair value   Closing balance 31 July 29,427 37,243 Overview Valuation movements – year to 31 July 2023  Our private company exposure tends to be weighted  late stage private companies who are scaling up and  Pacific Horizon -29.7% Average change at company level Year to 31 July 2023 Private companies ByteDance Chime Biologics Dailyhunt (VerSe Innovation) Eden Biologics Valuation changes (40%) 60% 0% (60%) 20% 40% (20%) (80%) Pacific Horizon -40.54% Average write-down per company Year to 31 July 2023 (excluding companies revalued up)  Cap Total equity value (US$) Portfolio % Number of holdings Micro <$300m  3 Small $300m–$2bn – – Medium  – –   5.0 2 5.1 5  Instruments valued 6 Revaluations performed   56% Valued 5 times or more 33% Strategic report Annual Report and Financial Statements 2023 40 List of investments  Name Geography Business 2023 Value £’000 2023 % of total assets Samsung Electronics Korea  manufacturer    China    Ramkrishna Forgings India Auto parts manufacturer  3.3 Delhivery India   3.2 Dailyhunt (VerSe Innovation) Series I Preferred India Indian news aggregator application  2.3 Dailyhunt (VerSe Innovation) Series Equity India Indian news aggregator application   Dailyhunt (VerSe Innovation) Series J Preferred India Indian news aggregator application  0.3  3.0  China Gold and copper miner   Tata Motors India Automobile manufacturer  2.8 EO Technics Korea Manufacturer and distributor of semiconductor laser markers   Samsung Engineering Korea Korean construction  2.6 JD.com China Online and mobile commerce  2.6 Alibaba Group China Online and mobile commerce  2.5 MMG China Chinese copper miner  2.5 Bank Rakyat Indonesia Consumer bank   Samsung SDI Korea Electrical equipment manufacturer  2.3 Reliance Industries India Indian petrochemical company   Indiabulls Real Estate India Domestic and commercial real estate provider    China Sportswear apparel supplier  2.0  Singapore Internet gaming and ecommerce  2.0  China Social media  2.0 Merdeka Copper Gold Indonesia Indonesian miner    India Owner and operator of a chain of Indian hotels and resorts    Vietnam Consumer bank   Phoenix Mills India Commercial property manager   Baidu.com China Internet provider   PT Astra International Indonesia Automobile distributor   Accton Technology Taiwan Server network equipment manufacturer    41 Name Geography Business 2023 Value £’000 2023 % of total assets Dragon Capital Vietnam Enterprise Investments Vietnam Vietnam investment fund    Vietnam Steel and related products manufacturer    China Real-estate platform    China Real-estate platform 655    Midea A Shares China    Prestige Estate Projects India Owner and operator of residential real estate properties   Skipper India Transmission and distribution structures provider   Meituan China    Dada Nexus ADR China Chinese ecommerce distributor of online consumer products   TSMC Taiwan Semiconductor manufacturer   Zhejiang Supor Co A Shares China Chinese manufacturer of cookware and home appliance products   MediaTek Taiwan Taiwanese electronic component manufacturer   Jadestone Singapore Oil and gas explorer and producer    China     Korea Korean shipbuilder   Coupang Korea Ecommerce business   Military Commercial Joint Stock Bank Vietnam Retail and corporate bank   TISCO Thailand Retail and corporate bank   Koh Young Technology Korea 3D inspection machine manufacturer   Silergy Taiwan Semiconductor manufacturer   Ningbo Peacebird Fashion A Shares China Chinese fashion    India Indian mortgage provider  0.8  China Chinese semiconductor manufacturer  0.8 SK hynix Korea Semiconductor manufacturer  0.8  Korea Electronic component and device manufacturer   Geely Automobile China Automobile manufacturer   Kingdee International Software China Enterprise management software distributor    China Manufacturer of trailers and trucks   SDI Corporation Taiwan Stationary and lead frames for semiconductors manufacturer   Strategic report Annual Report and Financial Statements 2023 42 Name Geography Business 2023 Value £’000 2023 % of total assets Ping An Bank A Shares China Consumer bank  0.6  India   0.6 Mobile World Investment Corporation Vietnam Electronic and grocery retailer  0.6 Chalice Mining China Miner  0.6 Property Guru Singapore Real-estate platform  0.5  Vietnam Food producer  0.5 Tsugami Precision China Industrial machinery manufacturer  0.5  A Shares China  energy and lithium battery equipment   AirTac International Group Taiwan Pneumatic components manufacturer   Techtronic Industries  Power tool manufacturer  0.3 Jio Financial Services India Financial service business  0.2 Binh Minh Plastics Joint Stock Company Vietnam Plastic piping manufacturer  0.2 Nexteer Automotive China Producer of automotive components  0.2 Brilliance China Automotive China Minibus and automotive components manufacturer  0.2 FPT Vietnam IT service provider   Chime Biologics China Biopharmaceutical company   Eden Biologics Taiwan Biopharmaceutical company   Philtown Properties Philippines Property developer – – Total Investments 572,748 98.7  7,607 1.3 Total Assets 580,355 100.0    Denotes private company investment. Denotes listed investment previously held in the portfolio as a private company investment. Listed equities % Private company investments * % Net liquid assets † % Total assets % 31 July 2023 93.6 5.1 1.3 100.0    0.3  Figures represent percentage of total assets. * Includes holdings in ordinary shares and preference shares. †    43 Business model Business and status 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. Investment trusts are UK public listed companies  Exchange. They invest in a portfolio of assets in      demand. The Company has been approved as an  to the Company continuing to meet the eligibility conditions. The Directors are of the opinion that the Company has continued to conduct its affairs so as to enable it to comply with the ongoing requirements  the Investment Trust (Approved Company) (Tax)  The Company is an Alternative Investment Fund  Investment Fund Managers Regulations. Purpose    capital growth for shareholders. Investment objective   Indian Sub-continent in order to achieve capital growth. The Company is prepared to move freely between the markets of the region as opportunities for growth vary. The portfolio will normally consist principally of quoted securities. Investment policy  principally through investment in companies listed  (excluding Japan) and the Indian Sub-continent. The Company may also invest in companies based in the region and in investment funds specialising in the region or particular countries or sectors within it even if they are listed elsewhere. The maximum  total assets at time of investment. Business review Strategic report Annual Report and Financial Statements 2023 44 The portfolio contains companies which the managers   comprise part of any index. The portfolio is actively managed and will normally consist principally of   investments may be held. The maximum exposure  the time of initial investment. The Company is also   markets of the region. In constructing the equity portfolio a spread of    the thematic characteristics of the portfolio are  sector weights have been set by the Board except as imposed from time to time by banking covenants on borrowings. The Company may use derivatives which will be   in its investments. These typically take the form of  transactions. The Company has a maximum approved equity    funds. Borrowings are invested in securities when it is considered that investment opportunities merit the Company taking a geared position. The Company is also permitted to be less than   Board and Managers at every Board meeting. Culture As an externally managed investment company  expressed through its Board and its third party  their interactions with shareholders and other       Borrowings Facility Lender Maturing 2023 2022  million Royal Bank of Scotland International   2025 No outstanding drawings No outstanding drawings The main covenants relating to the loan are that borrowings should not exceed 30% of the    covenants during the year.  45 The Board also has regard to the total return of the  Country Asia ex Japan Index (in sterling terms)) and considers the performance of comparable  looks for relative outperformance over the long  investment policy and the growth characteristics of the portfolio investments may entail periods of underperformance over the short and medium term.  and performance. Key performance indicator  indicators (KPIs) to measure the progress and performance of the Company over time when discharging its duties as set out on page 67. These KPIs are established industry measures. Share price and net asset value total returns (APM) The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend. -50 0 50 100 150 200 250 300 ● NAV total return ● Share price total return 1 year 5 years10 years  (APM) As stock markets and share prices  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. If the share price is higher  is called a premium. -8 -6 -4 -2 0 ● Average discount/premium of NAV to share price 1 year 5 years10 yea rs % Ongoing charges (APM) Ongoing charges are the total recurring expenses (excluding  investments and borrowing costs) incurred by the Company as a percentage of the daily average net asset value. -0.5 -0.4 -0.3 -0.2 -0.1 0.0 ● Ongoing charges movement 1 year 5 years10 years % Performance Strategic report Annual Report and Financial Statements 2023 46 Viability statement Notwithstanding that the continuation of the Company is subject to approval of shareholders      Company over a three year period. The Directors continue to believe this period to be appropriate  approach. In the absence of any adverse change to the regulatory environment and the favourable tax  period is one over which they do not expect there  risks and to the adequacy of the mitigating controls in place. The Directors do not envisage any change  foresee any events that would prevent the Company from continuing in existence over that period.   current position and have conducted a robust  emerging risks and uncertainties (as detailed on   (excluding Japan) and the Indian Sub-continent equity markets would adversely impact the value of the investment portfolio. The Directors have also    projected income and expenditure. The vast majority  and can be sold to meet its liabilities as they fall     affecting their respective services to the Company.  services required by the Company are outsourced to  can be replaced at relatively short notice where necessary.   of increasing geopolitical tensions. The stress testing did not indicate any matters of material concern.  at which the shares trade and the Company has  deemed by the Board to be in the best interests of the Company and its shareholders. In the year to          there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next three years.  47   the Company on a regular basis. The Directors have carried out a robust assessment of the principal   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  trust. Their impact is considered within the relevant risks. Financial risk   mainly of listed securities  portfolio) and its principal and  therefore market related and include market risk (comprising   liquidity risk and credit risk. An explanation of those risks and how they are managed  Financial Statements on pages  How is it mana  considered the impact of heightened market volatility during recent months due to macroeconomic factors such  rates and geopolitical concerns.  Board considers at each meeting various metrics including regional  top and bottom stock contributors to performance along with sales and purchases of investments. Individual investments are discussed with the portfolio manager together with general views on the various investment markets and sectors. A strategy session is held annually. Current This risk is increasing due to increased market volatility as a result of heightened macroeconomic and geopolitical concerns. Investment strategy risk  Pursuit of an investment  objective which the market perceives to be unattractive or  implementation of an attractive  lead to reduced returns for  a decreased demand for the   trading at a widening discount to their net asset value. How is it mana  regularly reviews and monitors   the investment portfolio and   value at which the shares trade and movements in the share register and raises any matters of concern with the Managers. Current This risk is increasing as the    during the recent period of heightened macroeconomic and geopolitical concern. Decreasing RiskIncreasing Risk No Change Strategic report Annual Report and Financial Statements 2023 48 Political and associated economic   The Board is of the view that political change in areas in which the Company invests or  consequences for the Company. How is it mana Political developments are closely monitored and considered by the  tensions between the USA and China regarding tariffs and unrest  from the Russian invasion of Ukraine. It monitors portfolio   to mitigate against the negative impact of military action or trade barriers. The Board believes  which predominantly comprises companies listed on the stock  (excluding Japan) and the Indian  mitigate such political risks. Current This risk is increasing due to the ongoing Russia-Ukraine  between China and the US. Discount risk    trade relative to its net asset value can change. The risk of a widening discount is that it may  in the Company. How is it mana  Board monitors the level of  shares trade and the Company has authority to buy back its  by the Board to be in the best interests of the Company and its shareholders. Current  widened during the year. Regulatory risk  Failure to comply with applicable legal and regulatory requirements such as the tax rules for investment trust  Rules and the Companies Act could lead to suspension of the    Company being subject to tax on capital gains. How is it mana    Compliance Departments provide regular reports to the Audit Committee on Baillie  Major regulatory change could impose disproportionate compliance burdens on the Company. In such circumstances representation is made to ensure that the special circumstances of investment trusts are recognised. Shareholder documents and   and Annual Report and Financial  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. Current All control procedures are working effectively. There have been no material regulatory changes that have impacted the Company during the year. Decreasing RiskIncreasing Risk No Change  49 Custody and depositary risk   assets may be compromised through control failures by the  of cyber security. How is it mana  Committee receives six-monthly reports from the Depositary   Custodian. Cash and portfolio holdings are independently  records by the Managers who   from investee companies. The  controls reports are reviewed  Department and a summary of the key points is reported to the Audit Committee and any concerns investigated. Current All control procedures are working effectively. Operational risk   systems or those of other third party service providers could lead to an inability to provide accurate reporting and monitoring or a misappropriation of assets. How is it mana  has a comprehensive business continuity plan which facilitates continued operation of the business in the event of a service disruption. The Audit Committee  on Internal Controls and reports 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. The other key third party service providers have not experienced  affecting their respective services to the Company. Current All control procedures are working effectively. Decreasing RiskIncreasing Risk No Change Strategic report Annual Report and Financial Statements 2023 50   The Company may borrow money for investment purposes.  any borrowings will magnify the impact of this loss. If borrowing facilities are not  have to sell investments to repay borrowings. The Company can also make use of derivative contracts. How is it mana  require the prior approval of the Board and leverage levels are discussed by the Board and Managers at every meeting. Covenant levels are monitored regularly. The majority of the  quoted securities that are readily realisable. Further information on leverage can be found on page  and Alternative Performance  Current  facility remains undrawn. Climate and governance risk  Perceived problems on   in an investee company  shares being less attractive to   to potential valuation issues arising from any direct impact of the failure to address the ESG weakness on the operations or management of the investee company (for example in the event of an industrial accident or spillage). Repeated failure by the Managers to identify ESG weaknesses in investee companies could lead to the   adversely affecting its own share price. How is it mana  strong ESG stewardship and engagement policies which are  bailliegifford.com which have been reviewed and  which have been fully integrated into the investment process. Due diligence includes assessment of the risks inherent in climate change (see page 55). Current The Investment Manager continues to employ strong ESG stewardship and engagement policies. Decreasing RiskIncreasing Risk No Change  51 Cyber security risk   network or that of a third party service provider could impact  availability of data and systems. How is it mana  Committee reviews Reports on Internal Controls published by Baillie Gifford and other third party service providers. 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. Current All control procedures are working effectively. Emerging risk   the Annual Report and Financial  regular discussions on principal  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 escalating geopolitical  risks including developing AI and quantum computing  coronavirus variants or similar public health threats. How is it mana  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. Current No change in emerging risks. Decreasing RiskIncreasing Risk No Change Strategic report Annual Report and Financial Statements 2023 52 Promoting the success of the Company (section 172 statement)  the directors of a company must act in the way  to promote the success of the company for the  so have regard (amongst other matters and to the extent applicable) to: a) the likely consequences       maintaining a reputation for high standards of  between members of the company.  being an externally-managed investment company   potential new shareholders; its externally-appointed managers (Baillie Gifford); other professional service  and depositary); lenders; wider society and the environment. The Board considers that the interests of the  of wishing to see the Company deliver sustainable     being merely a matter of emphasis on those elements.   are set out below.  Why we engage How we engage and what we do Shareholder  owners: providing them with a return for their  investment policy and objective is the reason for its existence. The Board places great importance on communication with shareholders. The Annual General Meeting provides an opportunity for the Board and Managers to present to  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  to the Board. Directors also attend certain shareholder  hand. Shareholders may also communicate with members of   communication opportunities help inform the Board when considering how best to promote the success of the Company   53  Why we engage How we engage and what we do Baillie Gifford – Managers and Secretaries      Gifford. Baillie Gifford is therefore responsible for the substantial activities of the Company   subject to the oversight and strategic direction provided by the Board.    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    highest standards of business conduct. Portfolio companies  conducted by third party professional  investment portfolio which have the primary real-world impact in terms of social and     The investee companies have an interest in  rationale in order to assure themselves that long-term business strategies will be supported. The Board is cognisant of the need to consider the impact  society and the environment. The Board considers that its  matters is an important part of its responsibility to all  an assessment of their ESG approach and its application in making investment decisions. The Board regularly reviews    Brokers   institutional shareholders.   Board apprised of shareholder and wider market sentiment regarding the Company. They also arrange forums for  the normal general meeting cycle. Registrars  interface with those shareholders who  The Company Secretaries liaise with the registrars to ensure the frequency and accuracy of communications  correspondence to ensure that the level of service provided   the outcome of this review to the Board. Auditor   Financial Statements as a whole are free from       information requested by the auditor in connection with the  complete and accurate in all respects. Strategic report Annual Report and Financial Statements 2023 54  Why we engage How we engage and what we do Depositary and Custodian The depositary is responsible for the   page 62.  other service providers in a collaborative and collegiate   challenge is brought and evaluation conducted. This approach aims to enhance service levels and strengthen relationships    maintaining the highest standards of business conduct.      as described on page 8 and have an interest  and viability.   and advise the Board on the appropriateness of the terms and covenants therein. The Managers and Secretaries   that correspondence from the lenders receives a prompt response.  The Association of Investment Companies  industry peers have an interest in the  as adverse market sentiment towards one investment trust can affect attitudes towards the wider industry.      Investment platforms Investment platforms provide an interface with shareholders who invest in the Company indirectly. The Managers liaise with the various investment platforms on strategies for improving communications with the  platforms. An annual timetable of key dates is published on  shareholders. Wider society and the environment        negative impacts insofar as is possible.  stakeholders as noted above form the principal forms of direct engagement with wider society and in respect of the  health and resources). The Board recognises the importance of keeping   making. The Company Secretaries are available at all times to the Board to ensure that suitable consideration is given to the range of factors to which the Directors should have regard. In addition   actions during the year which required the Directors to have regard to applicable section    shares into treasury at a discount to net asset   their shares when natural market demand was  value for remaining shareholders.   on two separate occasions on a non pre-emptive basis at a premium to net asset value.  55 Employees, human rights and community issues The Board recognises the requirement to provide  and community issues. As the Company has no    human rights and community issues. Gender representation   two female. The Company has no employees. The  Environmental, social and governance policy  responsible investment can be found under Corporate Governance and Stewardship on  approach to socially responsible investment set   and the Baillie Gifford statement on stewardship  United Nations Principles for Responsible Investment  Asset Managers Initiative and are also members of the International Corporate Governance Network and the Asian Corporate Governance Association. The Company considers that it does not fall within    Company considers its supply chains to be of low risk as its suppliers are typically professional advisers. A statement by the Managers under the  at bailliegifford.com. Climate change The Board recognises that climate change poses a  to 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 published the   footprint and exposure to climate risk are measured and reported. Companies disclosing their emission and communicating emissions plans will be a helpful place from which to begin more useful discussions  regulators. the Managers believe that carbon footprint metrics in isolation  others is a mostly meaningless observation. More  patient capital into innovative new technologies with the potential to accelerate the transition away from carbon. An external provider was engaged to map the carbon footprint of the portfolio. This analysis     emissions and other carbon related characteristics. Under the Streamlined Energy and Carbon Reporting  disclose energy and carbon information (see page 66). Future developments of the Company The outlook for the Company is set out in the    by the Board of Directors and signed on its behalf on 5 October 2023. Angus Macpherson Chairman Governance report This governance report, which includes pages 57 to 82 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.  57 Directors and management Angus Macpherson Chairman  Sir Robert Chote Director Appointed 2020      non-executive director of Schroder Japan Trust plc     Sir Robert Chote was appointed a Director in 2020.      as an advisor to the International Monetary Fund and  a senior adviser to governance reform consultancy FMA and a visiting professor at the Department of  on advisory boards at the Warwick Manufacturing Group and the Centre for Economic Performance of  Directors Governance report Annual Report and Financial Statements 2023 58 Angela Lane Audit Committee Chair   She is Chairman of the Audit Committee and is  accountant and has held several non-executive and advisory roles for small and medium capitalised companies across a range of industries. Previously she  for 3i plc. She is a non-executive director and Chair of the Audit Committee of BlackRock Throgmorton   Joe Studwell Director     at Dragonomics and author under the name of      an experienced Asian analyst and fund manager.        Companies Trust plc she became lead manager in    a director of Melville Paisley Investments. Wee-Li Hee Director Appointed 2020  Management Engagement and Audit Committee.  59 Roddy is an Investment Manager in the Emerging        he has also spent time in the UK and European  Medical Biology from the University of Edinburgh in 2006. Ben is an Investment Manager in the Emerging      Private Companies teams. Prior to joining Baillie  Strategy and Corporate Finance Team. Ben is a     Investment Manager  Ben Durrant Deputy Manager Appointed 2023 Portfolio Managers Governance report Annual Report and Financial Statements 2023 60 The Company has appointed Baillie Gifford & Co     services to Baillie Gifford & Co. Dealing activity and transaction reporting have been further   Baillie Gifford & Co is an investment management    Baillie Gifford is one of the largest investment trust managers in the UK and currently manages thirteen close-ended investment companies. Baillie Gifford  together with investment portfolios on behalf of   the management or advice of Baillie Gifford totalled  the leading privately owned investment management    are both authorised and regulated by the Financial Conduct Authority.  61 The Directors present their Report together with the Financial Statements of the Company for the year to 31 July 2023.  Corporate governance The Corporate Governance Report is set out on  Managers and company secretaries      management services to Baillie Gifford & Co. Dealing activity and transaction reporting have been further sub-delegated to Baillie Gifford Overseas  The Investment Management Agreement sets out the matters over which the Managers have authority in accordance with the policies and     notice. Compensation fees would only be payable in respect of the notice period if termination were to occur within a shorter notice period. The Board is of the view that calculating the fee with reference to performance would be unlikely to exert a positive    million of net assets and 0.55% on the remaining net assets. Governance report Annual Report and Financial Statements 2023 62  management and secretarial arrangements on an ongoing basis and a formal review is conducted by the Management Engagement Committee annually.  in the review:      to date; and   Secretaries.  of the Management Engagement Committee that the continuing appointment of Baillie Gifford & Co  of the investment management services to Baillie Gifford & Co and the further sub-delegation of dealing activity and transaction reporting to Baillie   the interests of shareholders as a whole due to   trust sector and the quality of the secretarial and  the Directors also considered the execution of the agreed investment strategy and the relative performance over the medium term. Depositary   in accordance with the requirements of the UK Alternative Investment Fund Managers Regulations.    a record of other assets and monitoring the    Directors   and 58. All of the Directors are retiring at the Annual General  for re-election. Following formal performance   continues to be effective and that they remain committed to the Company and capable of devoting  recommends their re-election to shareholders.  The Company has entered into qualifying third party deeds of indemnity in favour of each of its Directors.     default or breach of trust or duty. The Directors   incurred in connection with criminal proceedings in which the Director is convicted or civil proceedings brought by the Company in which judgement is given  apply to any liability to the extent that it is recovered from another person. The Company also maintains    interest to the Nomination Committee on an annual  taking into account the circumstances surrounding them and makes a recommendation to the Board  authorised. Board authorisation is for a period of one year.  there were no situations which gave rise to a direct  with interests of the Company.  63 Dividends   invest in companies based on the level of income they may pay out as dividends.   or maintain dividends. This year the net revenue available for distribution to shareholders amounted  to require a distribution to be made to maintain investment trust status. The Directors are therefore recommending the   ordinary shares will be paid on 30 November 2023 to shareholders on the register at the close of      Share capital Capital structure      no restrictions concerning the holding or transfer  special rights attached to any of the shares. Dividends The ordinary shares carry a right to receive dividends. Interim dividends are determined by the  subject to shareholder approval. Capital entitlement   shareholders in proportion to their shareholdings. Voting Each ordinary shareholder present in person or by   Major interests disclosed in the Company’s shares Name Ordinary 10p shares held at 31 July 2023 % of issue  *  8.5% *  Analysis of shareholders at 31 July 2023 Number of shares held 2023 % 2022 Number of shares held 2022 % Institutions     Intermediaries  50.2   Individuals     Marketmakers     91,081,949 100.0 91,860,961 100.0   Service. There have been no changes to the major  3 October 2023. Annual General Meeting  proposed resolutions and information on the   their own name on the main register will be provided with a Form of Proxy. If you hold shares through a  encourage you to contact these organisations directly as soon as possible to arrange for you to vote at the AGM. The resolutions relating to the   Issuance of shares   authority to issue shares and also an authority to issue shares or sell shares held in treasury on a non  to existing shareholders pro-rata to their existing holdings) for cash up to an aggregate nominal  the forthcoming Annual General Meeting and the   Governance report Annual Report and Financial Statements 2023 64         premium to net asset value (on the basis of debt valued at par value) on two separate occasions at a weighted average price of 688.00 pence per     3 October 2023.  Meeting seeks a general authority for the Directors to issue ordinary shares up to an aggregate nominal    latest practicable date prior to the publication of  No issue of ordinary shares will be made pursuant  effectively alter the control of the Company without the prior approval of shareholders in general meeting.    cash without having to offer such shares to existing     the latest practicable date prior to publication of this document. The Directors consider that the authority proposed   a premium to net asset value and the level of natural liquidity in the market is unable to meet demand. The Directors do not intend to use this authority to sell or issue ordinary shares on a non pre-emptive basis at a discount to net asset value. While the level of the authority being sought is greater than the 5% recommended by the Pre-Emption Group in their Statement of Principles on disapplying pre-emption   seeking authority to issue shares at a premium to the  normally raise concerns and the Directors consider    continue until the conclusion of the Annual General   Such authorities will only be used to issue shares or sell 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 buy back shares at a discount and re-sell them or issue new shares at a premium are useful tools in smoothing supply and demand.   way of a special resolution) to renew the authority  shares in issue (excluding treasury shares) as at    (excluding treasury shares) on the date on which the resolution is passed). This authority will expire at the end of the Annual General Meeting of the Company  made at a discount to the prevailing net asset value. The Company may hold bought back shares in treasury and then: a. sell such shares (or any of them) for cash (or its equivalent under the Companies Act 2006); or b. cancel such shares (or any of them). Shares will only be re-sold from treasury at (or at a premium to) the net asset value per ordinary share.  65 Treasury shares do not receive distributions and the Company will not be entitled to exercise the voting rights attaching to them. In accordance with  expenses) that may be paid on the exercise of the authority shall be an amount equal to the higher of: i. 5 per cent. above the average closing price on the   date of the purchase; and ii. the higher of the price of the last independent trade and the highest current independent bid for  The minimum price (again exclusive of expenses) that may be paid will be the nominal value of an ordinary share. Purchases of ordinary shares will   warrants or options in issue. The Directors intend  only if to do so would result in an increase in net asset value per ordinary share for the remaining shareholders and if it is in the best interest of shareholders generally. Recommendation The Board considers that all the resolutions to be proposed at the Annual General Meeting are in the best interests of the Company and its shareholders  recommends that you vote in favour of all of the   Financial instruments   borrowings and debtors and creditors that arise directly from its operations such as sales and purchases awaiting settlement and accrued income.   the exposure of the Company to risk are disclosed  Future developments of the Company The outlook for the Company is set out in the   Going concern   Directors have undertaken a rigorous review of the   market related. An explanation of these risks and    heightened market volatility over recent months   is affected.  are investments in quoted securities which are  All borrowings require the prior approval of the Board. The Board approves borrowing and gearing limits and reviews regularly the amounts of any borrowing and the level of gearing as well as compliance with borrowing covenants. Stress testing was performed in the year and no matters were raised. The Company has continued to comply with the investment trust status requirements of  the Investment Trust (Approved Company) (Tax)        right to vote on the continuation of the Company  Financial Statements have been prepared on the going concern basis; having assessed the principal and emerging risks and other matters set out in the  prospects of the Company over a period of three  will continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements. Articles of Association  amended by special resolution at a general meeting of shareholders. Governance report Annual Report and Financial Statements 2023 66 Disclosure of information to auditor  the Directors is aware there is no relevant audit  unaware and the Directors have taken all the steps that they might reasonably be expected to have taken as Directors in order to make themselves aware of any relevant audit information and to  of that information. Independent Auditor     and remuneration will be submitted to the Annual General Meeting. Post balance sheet events    thereto up to 5 October 2023. Greenhouse Gas Emissions and Streamlined Energy & Carbon Reporting (‘SECR’)  to third parties. The Company therefore has no greenhouse gas emissions to report from its  any other emissions producing sources under the Companies Act 2006 (Strategic Report and   itself to be a low energy user under the SECR  energy and carbon information. Bribery act  bribery and is committed to carrying out business   procedures in place to prevent bribery. Criminal Finances Act 2017  towards the criminal facilitation of tax evasion. On behalf of the Board Angus Macpherson Chairman 5 October 2023  67 Compliance  who report against the AIC Code will be meeting their obligations in relation to the UK Code (the AIC Code can be found at ). The Board  the year under review with the relevant provisions of the Code and the recommendations of the AIC Code with the exception that the Company does not have a separate internal audit function as explained on  The Board The Board has overall responsibility for the  formally reserved for its approval including   governance policy. A strategy session is held annually. The Board also reviews the Financial  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.   non-executive and independent.   effectiveness and setting its agenda.   concerns not properly addressed to the Chairman.  and chairs the Nomination Committee when it  Corporate governance report The Board is committed to achieving and demonstrating high standards of Corporate Governance. This statement outlines how the principles of the 2018 UK Corporate Governance Code (‘Code’), which can be found  principles of the Association of Investment Companies (‘AIC’) Code of Corporate Governance (‘AIC Code’) issued in 2019 were  year. The AIC Code provides a  investment companies and can  Governance report Annual Report and Financial Statements 2023 68 Board of Directors Comprises independent non-executive directors Chair: Angus Macpherson Senior Independent Director: Angela Lane Audit Committee Chair: Angela Lane Purpose: The primary purpose of a    of internal controls and compliance with laws and regulations. Management Engagement Committee Chair: Angus Macpherson Purpose: The role of the Management Engagement Committee is to ensure that the Managers remain suitable to manage  contract is competitive and reasonable for  maintains appropriate administrative and company secretarial support. Nomination Committee Chair: Angus Macpherson Purpose: The main purpose of the Nomination Committee is to oversee Board recruitment and succession planning as well as Board appraisals including identifying training needs. Third-party service providers appointed by the Board Alternative Investment Fund Managers and Company Secretary:  subsidiary of Baillie Gifford & Co) Dealing activity and transaction reporting:    Auditor The Bank of New York Mellon  Depositary Computershare Investor Services  Registrar JP Morgan    69 The executive responsibility for investment      The Directors believe that the Board has a balance of skills and experience that enable it to provide effective strategic leadership and proper governance    There is an agreed procedure for Directors to   Appointments to the Board  recommendation to the Board by the Nomination  appointments are set out in formal letters of appointment which are available for inspection on request.   required to retire and seek approval by shareholders at the next Annual General Meeting. In accordance with the AIC Code of Corporate  re-election. The names of Directors retiring and offering themselves for re-election together with the reasons why the Board supports this are set out on page 62. Independence of Directors All the Directors are considered by the Board to be independent of the Managers and free of any business or other relationship which could interfere with the exercise of their independent judgement. The Directors recognise the importance of succession planning for company boards and review  the view that length of service will not necessarily compromise the independence or contribution of   Board. The Board concurs with the view expressed in the AIC Code that long serving Directors should not be prevented from being considered independent. In accordance with the AIC Code of Corporate  re-election. Following a formal performance  continued to be independent in character and judgement and their skills and experience added  Meetings There is an annual cycle of Board meetings which    policy and communication with shareholders.  regularly to discharge its duties effectively. The table below shows the attendance record for the core  excluding ancillary and sub-committee meetings. The Annual General Meeting was attended by all Directors. Directors’ attendance at meetings Board Audit Committee Nomination Committee Management Engagement Committee Number of meetings 4 2 1 1 RA Macpherson  2   RW Chote  2     2     2   RF Studwell  2   Chairperson and Directors’ tenure The Nomination Committee has considered the question of tenure for directors and has concluded that there should not be a set maximum time limit for a director or chairperson to serve on the Board. The Nomination Committee keeps under review   ensuring the Board has the right combination of   bringing in fresh ideas and perspective. Governance report Annual Report and Financial Statements 2023 70 Management Engagement Committee All Directors are members of the Management  Chairman of the Board. The Board considers each member of the Committee to be independent. To  year to consider: the performance and suitability of the Manager; the terms and conditions of   Terms of Reference are available on request from  . Nomination Committee The Nomination Committee consists of all the non-executive Directors and the Chairman of the Board is Chairman of the Committee. The Committee meets on an annual basis and at such other times as may be required. The Committee has written terms of reference that include reviewing  nominating new candidates for appointment to the  succession including overseeing development of  The Committee also considers whether Directors should be recommended for re-election by shareholders. The Committee is responsible for  and for making recommendations to the Board on   Terms of Reference are available on request from  . Diversity policy Appointments to the Board are made on merit   cognitive and personal strengths. The priority in appointing new directors is to identify the candidate with the best range of skills and experience to complement existing Directors. Within the context    number of senior roles are available. The Board  Rules diversity targets more often than not but  implemented thoughtfully and having regard to the   result in periods when the diversity targets are not  of directors may prevent them from being able to undertake the responsibilities of a senior role. In  by their inclusion outweighs the ambition of meeting diversity targets. Board composition  the importance of having a range of skilled and  length of service and knowledge of the Company with the desirability of ensuring regular refreshment of the Board. The Board reviews its composition annually. The following disclosures are provided in respect  board should be women; ii) at least one senior role should be held by a woman; and iii) at least one board member should be from a non-white ethnic  Statistics criteria. As an externally managed investment company   guidance are Chair and Senior Independent Director  Chair to represent a senior role within this context. The Board currently complies in all respects with the  Gender Number % Senior roles Men 3 60  Women 2   Prefer not to say – – –  Number % Senior roles White  80 2   20 – Prefer not to say – – –  71 Performance evaluation  a performance evaluation and review of both the Board as a whole and of the individual Committees was carried out during the year. After inviting each Director and the Chairman to consider and respond  each Director was appraised by the Chairman and      contribution of individual Directors and the overall effectiveness of the Board and its Committees.   Board and its Committees continues to be effective and each Director and the Chairman are committed      commitments during the year. Induction and training New Directors are provided with an induction programme which is tailored to the particular circumstances of the appointee. During the year updates on industry and regulatory matters were provided to the Board by the Managers and Secretaries. Other relevant training for Directors is provided as necessary. Remuneration As all the Directors are non-executive there is no requirement for a separate Remuneration  Board as a whole within the limits approved by    Audit Committee The report of the Audit Committee is set out on   The Directors acknowledge their responsibility  internal controls systems and for reviewing their   Statements. These systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable but not absolute assurance against material misstatement or loss.    accordance with the FRC guidance ‘Guidance on   The practical measures to be taken in relation to the    the maintenance of effective operational and compliance controls have been delegated to the Managers and Secretaries. The Board oversees the functions delegated to the Managers and Secretaries and the controls managed by the AIFM in accordance with the UK Alternative Investment Fund Managers Regulations (as detailed   risk function provide the Audit Committee with regular reports on their monitoring programmes. The reporting procedures for these departments  agreement. Baillie Gifford & Co conducts an annual review of its system of internal controls which is documented within an internal controls report which  on Controls at a Service Organisation. This report is independently reviewed by Baillie Gifford &  Committee. Governance report Annual Report and Financial Statements 2023 72 A report identifying the material risks faced by the Company and the key controls employed to manage these risks is reviewed by the Audit Committee. These procedures ensure that consideration is given regularly to the nature and extent of risks facing the Company and that they are being actively monitored.  the year they also provide a mechanism to assess whether further action is required to manage these risks.   and internal controls systems which accord with  Internal Control and Related Financial and Business  review their effectiveness on a regular basis. No  under review and up to the date of this Report.   year and continue to be in place up to the date of approval of this Report. To comply with the UK Alternative Investment Fund    AIFM.     compliance with investment limits and leverage requirements. The Depositary is liable for the loss of  will ensure that any delegate segregates the assets   prepares reports on its key controls and safeguards which are independently reviewed by its appointed   summary of the key points is reported to the Audit Committee and any concerns are investigated. The Depositary provides the Audit Committee with a report on its monitoring activities. The AIFM has established a permanent risk management function to ensure that effective risk management policies and procedures are in place and to monitor compliance with risk limits. The AIFM has a risk management policy which covers the risks associated with the management of the  this policy is reviewed and approved at least annually. This review includes the risk management processes and systems and limits for each risk area.     monitored and the sensitivity of the portfolio to key risks is undertaken periodically as appropriate to ascertain the impact of changes in key variables in the portfolio. Exceptions from limits monitoring  Business Risk Department are escalated to the AIFM and reported to the Board along with remedial measures being taken. Relations with shareholders The Board places great importance on communication  regularly with shareholders and their representatives  Chairman and Directors also attend shareholder   communication with market participants and investors  in order to ascertain views on corporate matters. The Chairman is available to meet with shareholders as appropriate. Shareholders wishing to communicate with any members of the Board may do so by writing     73  a forum for communication with all shareholders. The level of proxies lodged for each resolution is announced at the meeting and is published on the   subsequent to the meeting. The notice period for the Annual General Meeting is at least twenty working days. Shareholders and potential investors may obtain up-to-date information on the Company at . Corporate governance and stewardship The Company has given discretionary voting powers to Baillie Gifford & Co. The Managers vote against  rights or economic interests and report their actions to the Board.    retaining investments and has asked the Managers to take these issues into account as long as the investment objectives are not compromised. The Managers do not exclude companies from their investment universe purely on the grounds of ESG factors but adopt a positive engagement approach whereby matters are discussed with management with the aim of improving the relevant policies and management systems and enabling the Managers to consider how ESG factors could  statement of compliance with the UK Stewardship  bailliegifford.com reviewed and endorsed by the Board. Baillie Gifford  considered the Sustainable Finance Disclosures   On behalf of the Board Angus Macpherson Chairman 5 October 2023 Governance report Annual Report and Financial Statements 2023 74 The Audit Committee consists of all the Directors. The members of the Committee consider that   responsibilities of the Committee. Ms AC Lane is Chairman of the Audit Committee. Audit committee report   which are available on request from the Company Secretaries and at . The terms of reference are reviewed annually.   evaluation process. At least once a year the Committee meets with the external Auditor without any representative of the Managers being present. Main activities of the committee The Committee met twice during the year and BDO    risk function provided reports on their monitoring programmes for each of these meetings.  by the Committee during the course of the year included the following:   Interim Reports;       the Annual Report and Financial Statements and whether it provided the information necessary     control environment;   engagement of the external Auditor;  75   out to tender;   Auditor to supply non-audit services;   Auditor and the effectiveness of the audit process;   audit function;   Managers and Custodian; and    concerns about possible improprieties in matters  Internal audit The Committee continues to believe that the compliance and internal controls systems and the internal audit function in place within the Investment      The external auditor has adopted a wholly substantive approach to testing and therefore the absence of an internal audit function has not had an impact on audit procedures. Financial reporting  areas of risk likely to impact the Financial Statements   the accuracy and completeness of income from investments. The majority of the investments are in quoted securities and market prices are readily available from independent external pricing sources. The  Internal Controls which details the controls in place regarding recording and pricing of investments and the reconciliation of investment holdings to third party data.  2023 were agreed to external price sources. The  for investments in unlisted (private) companies (as described on page 36) and approved the valuation of the private investments following a detailed review of the valuation of each investment and relevant challenge where appropriate. The listed portfolio    investee companies.  Internal Controls which details the controls in place regarding completeness and accurate recording of investment income. The accounting treatment of each special dividend received or receivable during the year was reviewed by the Managers.    years and its ability to continue as a going concern for at least twelve months from the date of signing  from the Managers on the cash position and cash     as they fall due. The Committee also reviewed  on going concern on page 65. Following this  Board the appropriateness of the going concern basis in preparing the Financial Statements and  and statement on going concern.  Committee that they were not aware of any material misstatements in the context of the Financial Statements as a whole and that the Financial Statements are in accordance with applicable law and accounting standards.  The Committee reviewed the effectiveness of the    Governance report Annual Report and Financial Statements 2023 76 External auditor   Committee reviewed:   from the Auditor describing its arrangements to manage auditor independence and received    external Auditor. There were no non-audit fees for   the Committee reviewed and considered:     of the audit team; and    audit process the Committee considered and reviewed:         audit.    with Mr Neil Fung-On as the lead audit partner. The audit partners responsible for the audit are to be  with professional and regulatory standards in order to protect independence and objectivity and to   audit as partner.  independent within the meaning of regulatory and professional requirements and that the objectivity of the audit partner and staff is not impaired.   independent and effective for the purpose of this  necessary to put the audit services contract out to tender. There are no contractual obligations restricting the  Accountability and audit The respective responsibilities of the Directors and the Auditor in connection with the Financial  On behalf of the Board  Chairman of the Audit Committee 5 October 2023  77  remuneration report  shareholder approval every three years or sooner if an alteration to the policy is proposed. As the Remuneration Policy was last approved at the Annual General Meeting  being sought at the forthcoming Annual General Meeting. Your attention is drawn to Resolution 2 in the Notice of  approval is being sought is set out below and is unchanged from that currently in force. Directors’ remuneration policy  none of whom has a service contract with the Company. There is no separate remuneration committee and the      should be set at a reasonable level that is commensurate with the duties and responsibilities of the role and consistent with the requirement to attract and retain Directors of the appropriate quality and experience. The Board believes that the fees paid to the Directors  be fair and should take account of the level of fees paid by comparable investment trusts. Any views expressed by shareholders on the fees being paid to Directors will be taken into consideration by the Board when reviewing the  Non-executive Directors are not eligible for any other  allowable expenses. There are no performance conditions  incentive schemes or pension schemes. There is no notice  This report has been prepared in accordance with the requirements of the Companies Act 2006. Governance report Annual Report and Financial Statements 2023 78 Statement by the Chairman The Board reviewed the level of fees during the year and it was agreed that the principal consideration when assessing the level of fees was balancing the cost of remuneration with ensuring that the Company had the ability to attract and retain   The Board were of the view that the investment      and regulatory framework. The Company also had exposure to both listed and private equities and could be exposed to complex securities such as   the scope of oversight required for this necessitated a range of specialist skills to properly understand the investment activities of the Company. Following discussion and consideration of:       increased modestly year on year;      over the medium to long term was outperforming; and   to the Trust Associates September 2022 report based on the data from around 300 investment    I        Co Independent Director). Fees were last increased  Limits on Directors’ remuneration The fees for the non-executive Directors are payable monthly in arrears and are determined   in aggregate. Any change to this limit requires shareholder approval. The fees paid to Directors in respect of the year   out in the table below. The fees payable to the  be determined following an annual review of the  Expected fees for the year ending 31 July 2024 £ Fees as at 31 July 2023 £    Non-executive Director fee   Additional fee for Audit Committee Chair   Total aggregate annual fees that can be paid to the Directors in    Association   Annual report on remuneration An ordinary resolution for the approval of this report will be put to the members at the forthcoming Annual General Meeting.  of the disclosures provided in this report. Where     79 Directors’ remuneration for the year (audited) The Directors who served during the year received the following remuneration in the form of fees and  Name 2023 Fees £ 2023 Taxable   £ 2023 Total £ % change in year 2022 Fees £ 2022 Taxable   £ 2022 Total £ RA Macpherson   42,654    37,837 RW Chote   31,751    29,072   – 28,000    25,254    37,876    33,989 RF Studwell   30,606 6.8   28,662 161,000 9,887 170,887 10.4 142,500 12,314 154,814 * Comprises travel and subsistence expenses incurred by or on behalf of the Directors in the course of travel to attend Board and Committee meetings  Annual percentage change in remuneration This represents the annual percentage change in the entire remuneration paid to the Directors. Name % from 2022 to 2023 % from 2021 to 2022 % from 2020 to 2021 RA Macpherson    RW Chote  85.3   †     #  35.3  RF Studwell 6.8   *     †     #     being a 35.3% increase. Directors’ interests (audited) The Directors at the end of the year under review and their interests in the Company are as shown in the following table. There have been no  3 October 2023. Name Nature of interest Ordinary 10p shares held at 31 July 2023 Ordinary 10p shares held at 1 August 2022 RA Macpherson    RW Chote  500 –         RF Studwell     hold shares in the Company. Governance report Annual Report and Financial Statements 2023 80 Statement of voting at Annual General Meeting    were against and votes withheld were 0.3%. At the  Remuneration Policy was considered (November   Relative importance of spend on pay The table below shows the actual expenditure during  distributions to shareholders. 2023 £’000 2022 £’000 Change %      to shareholders    Company performance   return (assuming all dividends are reinvested) to  the total shareholder return on a notional investment made up of shares in the component parts of the FTSE All-Share Index. This index was chosen for comparison purposes as it is a widely used measure of performance for UK listed companies.  information purposes only. Performance graph    Past performance is not a guide to future performance. Approval  to 80 was approved by the Board of Directors and signed on its behalf on 5 October 2023. Angus Macpherson Chairman Cumulative to 31 July 20232013 2015 2018 2020 20222014 20172016 2019 2021 ● Pacific Horizon share price Source: Refinitiv and underlying data providers. See disclaimer on page 122. All figures are total return (see glossary of terms and alternative performance measures on pages 123 and 124). ● FTSE All-Share Index ● MSCI All Country Asia ex Japan Index (in sterling terms) 0 600 300 200 100 500 400  81 The Directors are responsible for keeping adequate    position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a website. Financial Statements  accordance with legislation in the United Kingdom governing the preparation and dissemination  legislation in other jurisdictions. The maintenance   responsibility also extends to the ongoing integrity of the Financial Statements contained therein. The Directors have delegated responsibility to the Managers for the maintenance and integrity of the  The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare  that law the Directors have prepared the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United    Under company law the Directors must not approve  that they give a true and fair view of the state of  the Company for that period. In preparing these    them consistently;   are reasonable and prudent;     disclosed and explained in the Financial Statements;   concern basis unless it is inappropriate to presume that the Company will continue in business; and    comply with the requirements of the Companies Act 2006.  responsibilities in respect of the Annual Report and the Financial Statements Governance report Annual Report and Financial Statements 2023 82  Each of the Directors, whose names and functions are listed within the Directors and Managers section      Kingdom Generally Accepted Accounting Practice)     Company;     for shareholders to assess the Company’s     and the position of the Company, together with a  that it faces.  Angus Macpherson Chairman  Notes          may differ from legislation in other jurisdictions. Financial report The Financial Statements for the year to 31 July 2023 are set out on pages 91 to 111 have been prepared in accordance with FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’. Financial report Annual Report and Financial Statements 2023 84 Independent   Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those  responsibilities for the audit of the Financial Statements section of our report. We believe that  and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the audit committee. Independence Following the recommendation of the audit     uninterrupted engagement including retenders and   independent of the Company in accordance with the ethical requirements that are relevant    our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the Company. Opinion on the Financial Statements In our opinion the Financial Statements:    return for the year then ended;   United Kingdom Generally Accepted Accounting Practice; and   requirements of the Companies Act 2006.         has been applied in their preparation is applicable   Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).  85     ability to continue as a going concern for a period of at least twelve months from when the Financial Statements are authorised for issue.   have nothing material to add or draw attention to in  Statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Overview 2023 2022 Key audit matters Valuation and ownership of investments Materiality Company Financial Statements as a whole   An overview of the scope of our audit Our audit was scoped by obtaining an understanding   assessing the risks of material misstatement in the Financial Statements. We also addressed the risk of  assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. Conclusions relating to going concern   concern basis of accounting in the preparation of the Financial Statements is appropriate. Our evaluation  ability to continue to adopt the going concern basis of accounting included:   method of assessing going concern in light of market volatility and the present uncertainties in economic recovery by reviewing the information used by the Directors in completing their assessment;    challenging assumptions and judgements made   we considered the liquidity of the portfolios and the available cash resources relative to the forecast expenditure which was assessed against the prior year for reasonableness;       by agreeing to actual results; and   ability to meet its short-term obligations by assessing the net asset position and available cash balance. Financial report Annual Report and Financial Statements 2023 86 Key Audit Matters   our audit of the Financial Statements of the current  risks of material misstatement (whether or not due to   Key Audit Matter How the scope of our audit addressed the Key Audit Matter Valuation and ownership of investments (Note 1 and Note 9) The investment portfolio at the year-end comprised quoted   We considered the valuation and ownership of investments to be   principal activity of the entity. Whilst we do not consider the valuation of the quoted equity    year end.  selecting a valuation methodology and a high level of estimation uncertainty involved in determining their valuations. There is also a risk that errors made in the recording of  investments owned by the Company. For these reasons and the materiality of the balance in relation to  key audit matter. We responded to this matter by testing the valuation and ownership of the portfolio of investments. We performed the following procedures: With respect to the quoted equity investments we:   externally quoted prices;    appropriate indication of fair value by considering the realisation period for individual holdings;   per equity investment from the custodian regarding all investments held at the balance sheet date; and   shares held per the statement obtained from the custodian by the valuation per share.     methodology applied under the International Private Equity  accounting framework;   methodology selected;   sources and challenged subjective inputs including comparison to independent information where appropriate and performing stress and reverse stress testing; and    inclnuding consideration of relevant experience and  objectivity of the expert. We considered the appropriateness of the methodology and assumptions employed by the expert through review of the accounting framework and valuation guidelines followed. Key observations: Based on our procedures performed we did not identify any matters to suggest the valuation or ownership of the quoted equity or private company investments was not appropriate.  efforts of the engagement team. These matters were addressed in the context of our audit of the Financial   on these matters.  87 Our application of materiality We apply the concept of materiality both in planning  effect of misstatements. We consider materiality to   of reasonable users that are taken on the basis of the Financial Statements. In order to reduce to an appropriately low level the probability that any misstatements exceed    these levels will not necessarily be evaluated as immaterial as we also take account of the nature   their effect on the Financial Statements as a whole.  determined materiality for the Financial Statements as a whole and performance materiality as follows: Company Financial Statements 2023 2022 Materiality   Basis for determining materiality  net assets  of net assets Rationale for the benchmark applied  value is the key measure of performance for users of the Financial Statements. Performance materiality   Basis for determining performance materiality   Rationale for the percentage applied for performance materiality The level of performance materiality applied was set after having considered a number of factors including the expected total value of known and likely misstatements and the level of transactions in the year. Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in    Other information The directors are responsible for the other information. The other information comprises the information included in the annual report and Financial Statements other than the Financial  Our opinion on the Financial Statements does   we do not express any form of assurance conclusion thereon. Our responsibility is to read the other  other information is materially inconsistent with the Financial Statements or our knowledge obtained  be materially misstated. If we identify such material  we are required to determine whether this gives rise to a material misstatement in the Financial    required to report that fact. We have nothing to report in this regard. Corporate governance statement   viability and that part of the Corporate Governance  with the provisions of the UK Corporate Governance   we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the Financial Statements or our knowledge obtained during the audit. Financial report Annual Report and Financial Statements 2023 88 Directors’ remuneration  report to be audited has been properly prepared in accordance with the Companies Act 2006. Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which the Companies Act 2006    or returns adequate for our audit have not been received from branches not visited by us; or    not in agreement with the accounting records and returns; or      explanations we require for our audit. Responsibilities of Directors   the preparation of the Financial Statements and   determine is necessary to enable the preparation of Financial Statements that are free from material      and using the going concern basis of accounting unless the Directors either intend to liquidate the  alternative but to do so. Going concern and longer-term viability   appropriateness of adopting the going concern basis of accounting and any material uncertainties     assessment covers and why the period is appropriate. Other code provisions  understandable;   robust assessment of the emerging and principal risks;   review of effectiveness of risk management and internal control systems; and   Committee. Other Companies Act 2006 reporting Based on the responsibilities described below and  we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. Strategic Report and Directors’ Report  course of the audit:    which the Financial Statements are prepared is consistent with the Financial Statements; and   been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Company and its environment obtained in  material misstatements in the strategic report or   89 Auditor’s responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole   includes our opinion. Reasonable assurance is a  an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error    the basis of these Financial Statements. Extent to which the audit was capable of detecting irregularities, including fraud  non-compliance with laws and regulations. We    to which our procedures are capable of detecting  Non-compliance with laws and regulations Based on:   industry in which it operates;   with governance;   policies and procedures regarding compliance with laws and regulations;     industry practice represented by the AIC SORP and the applicable accounting framework. Our procedures in respect of the above included:   to underlying supporting documentation;   governance relating to the existence of any non- compliance with laws and regulations;   with governance throughout the period for instances of non-compliance with laws and regulations; and   Trust status compliance to check that the Company was meeting its requirements to retain its Investment Trust status. Fraud  statement to material misstatement including fraud. Our risk assessment procedures included:   governance regarding any known or suspected instances of fraud;   policies and procedures relating to:   and   related to fraud;   with governance for any known or suspected instances of fraud; and   how and where fraud might occur in the Financial Statements.  areas most susceptible to be management override of controls and the valuation of private company investments. Our procedures in respect of the above included:   section above for private company investments;   management in the Financial Statements to assess their appropriateness and the existence of any systematic bias;   of adjustments made in the preparation of the Financial Statements; and   indications of bias or deliberate misstatement. Financial report Annual Report and Financial Statements 2023 90  and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. Our audit procedures were designed to respond to risks of material misstatement in the Financial  detecting a material misstatement due to fraud is higher than the risk of not detecting   misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and  the less likely we are to become aware of it. A further description of our responsibilities is  website at: .  Use of our report    work has been undertaken so that we might state   for no other purpose. To the fullest extent permitted     Chris Meyrick (Senior Statutory Auditor)   5 October 2023  in England and Wales (with registered number   91 For the year ended 31 July Notes 2023 Revenue £’000 2023 Capital £’000 2023 Total £’000 2022 Revenue £’000 2022 Capital £’000 2022 Total £’000   –  (25,404) –  (118,594)   –  (791) –  1,292 Income 2  – 9,580  – 11,067 Investment management fee 3  – (3,419)  – (4,036) Other administrative expenses   – (762)  – (1,093)  and taxation 5,399 (26,195) (20,796) 5,938 (117,302) (111,364) Finance costs of borrowings 5  – (403)  – (756) Net return before taxation 4,996 (26,195) (21,199) 5,182 (117,302) (112,120) Tax 6 (830)  (2,086)   3,936 Net return after taxation 4,166 (27,451)  3,830 (112,014) (108,184) Net return per ordinary share 7 4.56p (30.05p) (25.49p) 4.21p (123.01p) (118.80p)  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 the Company does not have any other comprehensive income and the net return after taxation is   Income statement Financial report Annual Report and Financial Statements 2023 92 As at 31 July Notes 2023 £’000 2023 £’000 2022 £’000 2022 £’000 Fixed assets     Current assets Debtors    Cash and cash equivalents      Creditors Amounts falling due within one year: Other creditors and accruals    Net current assets   Total assets less current liabilities 584,447 613,566 Creditors Amounts falling due after more than one year: Provision for tax liability    Net assets 580,355 610,550 Capital and reserves Share capital    Share premium account    Capital redemption reserve    Capital reserve    Revenue reserve    Shareholders’ funds 580,355 610,550 Net asset value per ordinary share 15 637.18p 664.65p   Angus Macpherson Chairman  Balance sheet  93 For the year ended 31 July 2023 Notes Share capital £’000 Share premium account £’000 Capital redemption reserve £’000 Capital reserve £’000 Revenue reserve £’000 Shareholders’ funds £’000       610,550 Net return after taxation – – –   (23,285) Ordinary shares bought back into treasury  – – –  – (5,541) Ordinary shares sold from treasury  –  –  – 1,376 Ordinary shares issued  – – – – – – Dividends paid during the year 8 – – – –  (2,745) Shareholders’ funds at 31 July 2023 9,208 254,120 20,367 287,783 8,877 580,355 For the year ended 31 July 2022 Notes Share capital £’000 Share premium account £’000 Capital redemption reserve £’000 Capital reserve £’000 Revenue reserve £’000 Shareholders’ funds £’000       687,231 Net return after taxation – – –   (108,184) Ordinary shares bought back into treasury  – – –  – (1,454) Ordinary shares sold from treasury  – – – – – – Ordinary shares issued  365  – – – 32,957 Dividends paid during the year 8 – – – – – – Shareholders’ funds at 31 July 2022 9,208 253,946 20,367 319,573 7,456 610,550  Statement of  Financial report Annual Report and Financial Statements 2023 94  For the year ended 31 July Notes 2023 £’000 2023 £’000 2022 £’000 2022 £’000  Net return before taxation   Net losses on investments      Finance costs of borrowings 5   Overseas withholding tax incurred   Indian tax paid on transactions   Changes in debtors 523 (580) Change in creditors   Cash from operations   Interest paid    4,447 2,522  Acquisitions of investments   Disposals of investments    10,297 (901)  Ordinary shares bought back into treasury    Ordinary shares sold from treasury   – Proceeds from ordinary shares issued  –  Borrowings drawn down –  Borrowings repaid –  Equity dividends paid 8  –  (6,910) (32,082) Increase/(decrease) in cash and cash equivalents 7,834 (30,461) Exchange movements      Cash and cash equivalents at 31 July 12,442 5,399 *   statement  95 01 Principal accounting policies   Reporting Standard applicable in the UK and Republic of  which are unchanged from the prior year and have been applied consistently. a. Basis of accounting  nature and the Financial Statements are prepared on a    assumption that approval as an investment trust under  Investment Trust (Approved Company) (Tax) Regulations    explanation of these risks and how they are managed is   impact of heightened market volatility over recent months   is affected.    the prior approval of the Board. The Board approves borrowing and gearing limits and reviews regularly the amounts of any borrowing and the level of gearing as well as compliance with borrowing covenants. The Company has continued to comply with the investment trust status       affecting their respective services to the Company.  shareholders have the right to vote on the continuation  2026. The Financial Statements have been prepared on the going concern basis; having assessed the principal and emerging risks and other matters set out in the  prospects of the Company over a period of three years)  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  UK Accounting Standards and with the Statement of Recommended Practice ‘Financial Statements of  issued by the Association of Investment Companies  consequential amendments.    and loss account between items of a revenue and capital nature has been presented in the Income Statement. The allocation of items to revenue and capital is reviewed on an annual basis and is considered to remain appropriate for the current year.      b. Financial instruments   party to the contractual provisions of the instrument.   The preparation of the Financial Statements requires    reporting date. While estimates are based on best  the actual outcome may differ from these estimates. The key sources of estimation and uncertainty relate to the assumptions used in the determination of the   Notes to the Financial Statements Financial report Annual Report and Financial Statements 2023 96 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  ii. the fair valuation of the unlisted investments. The key judgements in the fair valuation process are:  application of the International Private Equity and  unlisted investment; and  value is appropriate following detailed review and challenge. The judgement applied in the selection of the methodology used for determining the fair value of each  the valuation. Estimates The key estimate in the Financial Statements is the determination of the fair value of the unlisted investments by the Managers for consideration by the Directors. This  the unlisted investments at the Balance Sheet date. The fair valuation process involves estimation using subjective inputs that are unobservable (for which market data is unavailable). The main estimates involved in the selection of the valuation process inputs are: i. the selection of appropriate comparable companies in order to derive revenue multiples and meaningful  earnings growth. Comparable companies are chosen on the basis of their business characteristics and growth patterns; ii. the selection of a revenue metric (either historic or forecast); iii. the application of an appropriate discount factor to  versus their listed peers; iv. the estimation of the probability assigned to an exit  company sale; v. the selection of an appropriate industry benchmark index to assist with the valuation validation or the  absence of established earnings or closely comparable peers; and vi. the calculation of valuation adjustments derived from milestone analysis (i.e. incorporating operational  the valuation). d. Investments    Investment purchases and sales are recognised on a trade date basis. Expenses incidental to purchase and sale are written off to capital at the time of acquisition or disposal. Gains and losses on investments are recognised in the Income Statement as capital items. Investments are designated as held at fair value through  at subsequent reporting dates at fair value. The fair    fair value of suspended investments is the last traded  of the suspension. Unlisted investments are valued at fair value by the Directors following a detailed review and appropriate challenge of the valuations proposed by  applies methodologies consistent with the International Private Equity and Venture Capital Valuation guidelines   benchmarks and available market prices); (b) income  cost approach (net assets). The valuation process  the price of a recent investment may be an appropriate  be evaluated using the techniques described above. The Managers monitor the investment portfolio on a fair value basis and use the fair value basis for investments  performance. e. Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits repayable on demand. Deposits are repayable on demand if they can be withdrawn at any time without notice and without penalty or if they have a maturity or period of notice of not more than one working day. f. Income i. Income from equity investments is brought into account on the date on which the investments are quoted   established. ii. If scrip dividends are taken in lieu of dividends in  is credited to the revenue column of the Income Statement. Any excess in the value of the shares received over the amount of the cash dividend foregone is recognised in the capital column of the Income Statement.  97 iii. Special dividends are treated as capital or income depending on the facts of each particular case. iv. Unfranked investment income and overseas dividends include the taxes deducted at source.  an accruals basis using the effective interest rate basis. vi. Underwriting commission and interest receivable on deposits are recognised on an accruals basis. g. Expenses All expenses are accounted for on an accruals basis and are charged through the revenue column of the   off to capital when incurred.  Interest bearing bank loans are recorded at the proceeds  measured at amortised cost. Finance costs are accounted for on an accruals basis and are charged through the revenue column of the Income statement. i. Taxation Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation authorities. The tax rates and tax laws used to compute the amount are those enacted or substantively enacted at the reporting date. j. Deferred taxation    at the current tax rate relevant to the realisation of the  only to the extent that it will be more likely than not that  differences can be deducted.   Transactions involving foreign currencies are converted at the rate ruling at the time of the transaction. Assets and liabilities in foreign currencies are translated at the closing rates of exchange at the balance sheet date. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the Income Statement as capital or revenue as appropriate. l. Capital redemption reserve  distributable reserve into which amounts are transferred  shares. m. Capit al rese rve  in the fair value of investments held and realised and unrealised exchange differences of a capital nature are dealt with in this reserve after being recognised in the    n. Revenue reserve  this reserve. The revenue reserve may be distributed by way of dividend. o. Single segment reporting   segmental analysis is provided. p. Dividend distributions Final dividends are recognised in the period in which the  Financial report Annual Report and Financial Statements 2023 98 02 Income 2023 £’000 2022 £’000 Income from investments Overseas dividends   Other income Deposit interest   Total income 9,580 11,067 Total income comprises:       9,580 11,067 03 Investment management fee 2023 £’000 2022 £’000 Investment management fee 3,419 4,036   fees are calculated and payable on a quarterly basis.   2023 £’000 2022 £’000 General administrative expenses   Custody charges 255     Marketing *  85 Depositary fee    † 50 32    762 1,093 * The Company is part of a marketing programme which includes all the investment trusts managed by the Manager. The marketing strategy has an   †  05 Finance costs of borrowings 2023 £’000 2022 £’000  403 756 *   99   2023 Revenue £’000 2023 Capital £’000 2023 Total £’000 2022 Revenue £’000 2022 Capital £’000 2022 Total £’000 Overseas taxation 830 – 830  – 1,352 Indian tax paid and provided for –  1,256 –  (5,288) 830 1,256 2,086 1,352 (5,288) (3,936) 2023 £’000 2022 £’000 Factors affecting the tax charge for the year The tax assessed for the year is higher (2022 – higher) than the average standard rate of  Net return before taxation (21,199) (112,120) Net return multiplied by the average standard rate of corporation tax in the    Capital loss not deductible   Overseas dividends not taxable in the UK      Overseas withholding tax incurred 830  Revenue tax charge for the year 830 1,352    Payments of Indian tax in the period   Capital tax charge for the year 1,256 (5,288) Total tax 2,086 (3,936) *   repayment is included within interest income. The capital tax charge results from the provision for tax liability in respect of Indian  Factors that may affect future tax charges    expenses in future periods. The potential deferred tax asset has been calculated using a corporation tax rate of 25% (2022 – 25%). Financial report Annual Report and Financial Statements 2023 100   2023 Revenue 2023 Capital 2023 Total 2022 Revenue 2022 Capital 2022 Total Net return after taxation 4.56p (30.05p) (25.49p) 4.21p (123.01p) (118.80p)   issue (excluding treasury shares) during the year.   issue (excluding treasury shares) during the year.   (excluding treasury shares) during the year. There are no dilutive or potentially dilutive shares in issue.   2023 2022 2023 £’000 2022 £’000 Amounts recognised as distributions in the year:  3.00p –  –    2023 2022 2023 £’000 2022 £’000   3.25p 3.00p     As at 31 July 2023 Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000    – 543,321 Unlisted company equities – –  2,555 Unlisted company preference shares # – –  26,872  542,048 1,273 29,427 572,748 As at 31 July 2022 Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000    – 571,296 Unlisted company equities – –  4,051 Unlisted company preference shares # – –  33,192  570,801 495 37,243 608,539 *   # The investments in preference shares 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.  becoming listed.     101  (continued) Fair value hierarchy   for the individual investment in its entirety as follows: Level 1 – using unadjusted quoted prices for identical instruments in an active market; Level 2 that are directly or indirectly observable (based on market data); and Level 3 – using inputs that are unobservable (for which market data is unavailable).   companies. The determinations of fair value included assumptions that the comparable companies and scenarios chosen for the performance assessment provide a reasonable basis for the determination of fair value. In some cases the latest dealing price is  Listed equities £’000 Unlisted equities £’000 2023 Total £’000 2022 Total £’000    488,845     119,694  Value of investments at 1 August 2022 571,296 37,243 608,539 725,122 Movements in year: Purchases at cost  – 88,831  Sales – proceeds received  – (99,218)  – gains on investments  – 14,553  Change in fair value   (39,957)   543,321 29,427 572,748 608,539    493,011     79,737   543,321 29,427 572,748 608,539      2023 £’000 2022 £’000  Realised gains on sales   Changes in investment holding gains and losses   (25,404) (118,594)  Details are disclosed below in accordance with the requirements of paragraph 82 of the AIC Statement of Recommended Practice     Financial report Annual Report and Financial Statements 2023 102  (continued) As at 31 July 2023 Latest Financial Statements  £’000  Value £’000 Income recognised from holding in the period £’000 Turnover (‘000) Pre-tax  (loss) (‘000) Net assets attributable to shareholders (‘000)Name Business Dailyhunt (VerSe Innovation) Indian news aggregator application    Nil Information not publicly available As at 31 July 2022 Latest Financial Statements  £’000  Value £’000 Income recognised from holding in the period £’000 Turnover (‘000) Pre-tax  (loss) (‘000) Net assets attributable to shareholders (‘000)Name Business Dailyhunt (VerSe Innovation) Indian news aggregator application    Nil Information not publicly available 10 Debtors 2023 £’000 2022 £’000 Amounts falling due within one year: Income accrued (net of withholding taxes)   Sales for subsequent settlement –  Other debtors and prepayments   420 1,248     2023 £’000 2022 £’000  non-utilisation fee 52 52 Investment purchases awaiting settlement –  Investment management fee   Other creditors and accruals 238  1,163 1,620     There were no breaches in the loan covenants during the year.   103       depending on the value and timing of any future sales of such investments and future Indian tax rates. 13 Share capital 2023 Number 2023 £’000 2022 Number 2022 £’000          22 92,074,961 9,208 92,074,961 9,208          Articles of Association share buy-backs are funded from the capital reserve.  14 Capital and reserves Share capital £’000 Share premium account £’000 Capital redemption reserve £’000 Capital reserve £’000 Revenue reserve £’000 Shareholders’ funds £’000       610,550 Net gains on sales of investments – – –  – 14,553 Changes in investment holding gains and losses – – –  – (39,957) Other exchange differences – – –  – (791) Indian CGT paid and provided for – – –  – (1,256) Ordinary shares bought back into treasury – – –  – (5,541) Ordinary shares sold from treasury –  –  – 1,376 Revenue return after taxation – – – –  4,166 Dividends paid during the year – – – –  (2,745)  9,208 254,120 20,367 287,783 8,877 580,355 T   Financial report Annual Report and Financial Statements 2023 104   The net asset value per ordinary share and the net assets attributable to the ordinary shareholders at the year end calculated in accordance with the Articles of Association were as follows: 2023 Net asset value per share 2022 Net asset value per share 2023 Net assets attributable £’000 2022 Net assets attributable £’000 Ordinary shares 637.18p 664.65p 580,355 610,550      At 1 August 2022 £’000  £’000 Exchange movement £’000 At 31 July 2023 £’000 Cash at bank and in hand 5,399 7,834 (791) 12,442 17 Transactions with related parties and the managers and secretaries  with the Company. During the year no Director was interested in any contract or other matter requiring disclosure under section       18 Financial instruments       of a permanent loss of capital rather than to minimise short term volatility. Risk provides the potential for both losses and gains.  The risk management policies and procedures outlined in this note have not changed substantially from the previous accounting period.     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.    enter into derivative transactions without the prior approval of the Board.  105 18 Financial instruments (continued)    value of those items.      which the company is quoted.  otherwise adversely affect the value of the portfolio of investments.   At 31 July 2023 Investments £’000 Cash and cash equivalents £’000 Other debtors and creditors £’000 Net exposure £’000   – – 142,684 Indian rupee    136,710 Korean won  –  100,571 US dollar   – 49,460 Indonesian rupiah  – – 32,637 Taiwan dollar   – 32,600 Vietnam dong   32 33,499 Chinese yuan  – – 30,189 Thai baht  – – 5,447 Australian dollar  – – 3,311 Chinese renminbi – – – –  558,583 12,383 (3,858) 567,108 Sterling    13,247 572,748 12,442 (4,835) 580,355 At 31 July 2022 Investments £’000 Cash and cash equivalents £’000 Other debtors and creditors £’000 Net exposure £’000   –  135,269 Indian rupee    132,537 Korean won  –  101,271 US dollar    60,185 Indonesian rupiah  – – 46,508 Taiwan dollar   – 26,974 Vietnam dong   – 25,323 Chinese yuan  200 – 43,341 Australian dollar  – – 9,995 Chinese renminbi –   –  578,477 5,296 (2,370) 581,403 Sterling    29,147 608,539 5,399 (3,388) 610,550 Financial report Annual Report and Financial Statements 2023 106 18 Financial instruments (continued)      of change is considered to be reasonable based on observations of current market conditions. The analysis is performed on the same basis for 2022. 2023 £’000 2022 £’000    Indian rupee   Korean won   US dollar   Indonesian rupiah   Taiwan dollar   Vietnam dong   Chinese yuan   Thai baht  – Australian dollar  500 28,355 29,070  Interest rate movements may affect directly:            account when making investment decisions and when entering borrowing agreements. The Board reviews on a regular basis the  other similar investments.      Financial assets 2023 Fair value £’000 2023 Weighted average interest rate 2023 Weighted   rate period * 2022 Fair value £’000 2022 Weighted average interest rate 2022 Weighted   rate period * Cash and cash equivalents: Overseas currencies       Sterling     0.5%  12,442 5,399 * Based on expected redemption date.  107 18 Financial Instruments (continued)  Financial liabilities    2023 Within 1 year £’000 2022 Within 1 year £’000  52 52  The sensitivity analysis below has been determined based on the exposure to interest rates at the Balance Sheet date and with      would have had an equal but opposite effect.  Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the      and investment policies. The portfolio does not seek to reproduce the index. Investments are selected based upon the merit of individual companies and therefore performance may well diverge from the comparative index.       reasonable based on observations of current market conditions.    A sensitivity analysis is provided below which recognises that the valuation methodologies employed involve subjectivity in their   table also provides the range of values for the key unobservable inputs. Financial report Annual Report and Financial Statements 2023 108 18 Financial Instruments (continued)   As at 31 July 2023  Valuation technique Fair value as at 31 July 2023 £’000 Key unobservable inputs Other unobservable inputs † Range Weighted average range # Sensitivity % Sensitivity to changes  unobservable inputs Market approach using comparable trading multiples   revenue multiple ‡   3.6x    the fair value would   Transaction implied premium and discounts g 88%   If the transaction implied premium is changed  value would change   Illiquidity discounts e    If the illiquidity discount is changed by  would change by  Benchmark performance  Selection of comparable companies §     If input comparable company performance  the fair value would  †   # 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. ‡  §  company value for the basket of comparable companies relevant to each holding since the most recent transaction or since the last assessed. *  The variable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each private company valuation. An explanation of each of the key unobservable inputs is provided below and includes    109 18 Financial Instruments (continued)   As at 31 July 2022  Valuation technique Fair value as at 31 July 2022 £’000 Key unobservable inputs Other unobservable inputs † Range Weighted average range # Sensitivity % Sensitivity to changes  unobservable inputs Market approach using comparable trading multiples   revenue multiple ‡    3.5x    fair value would change   Illiquidity discounts e    If the transaction implied   the fair value would   Comparable company performance  Selection of comparable companies §  -23%   If input comparable company performance  the fair value would   Recent transaction price        †  # 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.     value for the basket of comparable companies relevant to each holding since the most recent transaction or since the last assessed. *  The variable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each private company valuation. An explanation of each of the key unobservable inputs is provided below and includes   Financial report Annual Report and Financial Statements 2023 110 18 Financial Instruments (continued)   a. Application of valuation basis   achievement of key milestones since investment. Adjustments may also be made depending on the performance of comparable    where appropriate forecasts are available. b. Probability estimation of liquidation events  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      c. Selection of comparable companies  relevance of the comparable companies is continually evaluated at each valuation. The key criteria used in selecting    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  where it is not then revenues will be used in the valuation. The valuation approach will typically assess companies based on  Where a company has reliably forecasted earnings previously or there is a change in circumstance at the business which will  e. Application of illiquidity discount The application of an illiquidity discount will be applied either through the calibration of a valuation against the most recent   activity.   The selection of appropriate benchmarks is assessed individually for each investment. The industry and geography of  comparison. g. Transaction implied premium and discount  will be calibrated to this by deriving a company valuation with reference to the average multiple from a set of comparable   be reduced due to factors such as period of time since the transaction and company performance. Where a calibrated approach     Board provides guidance to the Managers as to the maximum exposure to any one holding and to the maximum aggregate exposure to substantial holdings.     111 18 Financial Instruments (continued)  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:   compared to the prospective investment return of the security in question;        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;   wherein the creditworthiness of the entity acting as broker or counterparty to the transaction is likely to be of sustained      2023 £’000 2022 £’000 Cash and cash equivalents   Debtors and prepayments   12,862 6,647    approximate their fair value. Capital management        Shareholder information  113 Notice of Annual General Meeting The Board encourages all shareholders to submit proxy voting   . Should shareholders have questions for the Board or the   to trustenquiries@bailliegifford.com Baillie Gifford may record your call.        will be proposed as special resolutions: Ordinary business             05. To re-elect Mr RA Macpherson as a Director of the Company. 06. To re-elect Sir RW Chote as a Director of the Company. The Annual General Meeting of the Company will be held at the   John Lewis A8 Princes Street Georg e Street Calton Square Bus Station Omni Centre Balmoral Hotel L e i t h S t r e e t Queen Street W a t e r l o o P l a c e C a l t o n H i l l C a l t o n R o a d St Andrew Square Edinburgh Waverley Station Leith Walk A7 North Bridge York Place G r e e n s i d e R o w Tram Stop St Andrew Square St Andrew Square Tram Stop By Rail:  By Bus: Lothian Buses local services include: 1, 3, 5, 7, 8, 10, 14, 15, 16, 25, 34 By Tram: Stops at St Andrew Square and Picardy Place Access to Waverley Train Station on foot Shareholder information Annual Report and Financial Statements 2023 114          Annual General Meeting at which the Financial Statements are laid before the Company.   the Independent Auditor of the Company.   a. the Directors be generally and unconditionally authorised   to subscribe for or convert any security into shares in the  and b. the authority given by this Resolution: i. shall be in addition to all pre-existing authorities under     at the conclusion of the Annual General Meeting of the   agreement which would or might require the allotment  subscribe for or to convert any security into shares in          provided that such power: a. shall be limited to the allotment of equity securities or the sale of treasury shares up to an aggregate nominal  b. shall be in addition to all pre-existing powers under   save that the Company may before expiry of the power conferred on the Directors by this Resolution make an offer or agreement which would or might require equity securities to be allotted after such expiry.   prejudice to the exercise of any such authority prior to the       that: a. the maximum number of ordinary shares hereby authorised   share capital of the Company on the date on which this Resolution is passed; b. the minimum price (excluding expenses) which may be paid for each ordinary share shall be the nominal value of that share; c. the maximum price (excluding expenses) which may be paid for any ordinary share purchased pursuant to this authority shall not be more than the higher of: i. 5 per cent. above the average closing price on the   purchase; and ii. the higher price of the last independent trade of an ordinary share and the highest current independent bid    conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2023   ordinary shares under such authority which will or might be completed or executed wholly or partly after the expiration of such authority and may make a purchase of ordinary shares pursuant to any such contract or contracts. By Order of the Board  Company Secretaries   115 Notes    at the AGM. A proxy need not be a member of the Company but must attend the AGM to represent you. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You can only appoint a proxy using the procedure set out in these notes and the notes to the proxy form. You may not use any electronic address provided either in this notice or any related documents (including the Financial Statements and proxy form) to communicate with the Company for any purpose other than those expressly stated. 02. To be valid any proxy form or other instrument appointing a   received by post or (during normal business hours only) by hand at the Registrars of the Company at Computershare  eproxyappointment.com no later than  non-working days) before any adjourned meeting). 03. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the  euroclear.com/CREST. CREST personal members or other    will be able to take the appropriate action on their behalf.     authenticated in accordance with Euroclear UK & Ireland    the appointment of a proxy or is an amendment to the      time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST  able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.   sponsors or voting service provider(s) should note that  special procedures in CREST for any particular message.  apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned    or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST service by any particular time. In this    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    proxy will not prevent you attending the AGM and voting in person if you wish.     attend and vote at the AGM (and for the purpose of the determination by the Company of the votes they may   non-working days) prior to the commencement of the AGM or any adjourned meeting. Changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting.       (or to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such   instructions to the shareholder as to the exercise of voting rights.    not apply to Nominated Persons. The rights described in those Notes can only be exercised by shareholders of the Company. Shareholder information Annual Report and Financial Statements 2023 116     payment) a statement (which is also passed to the Auditor)   conduct of the audit. Such requests must be made in writing and must state your full name and address.    representing at least 5% of the total voting rights of all the members who have a right to vote on the resolution to which  right to vote on the resolution to which the requests relate and hold shares in the Company on which there has been  Such requests should be sent to the Company at      .      corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares.         rights of the Company who appoints a person other than the   respective disclosure obligations under the UK Disclosure Guidance and Transparency Rules.    117  trusts offer investors the following:       realised within its portfolio although investors are still liable for  How to invest   by asking a professional adviser to do so. If you are interested in  are a number of companies offering real time online dealing services. Sources of further information on the Company The price of shares is quoted daily in the Financial Times (under   trustnet.com are also available on the Baillie Gifford website. These are available from Baillie Gifford on request.         Key dates   The Annual General Meeting is normally held in October or November. Capital gains tax    between the ordinary shares and the warrants as set out in the  costs are:       follows (Source: Thomson Reuters): Ordinary share 55.00p    Share register enquiries  register on behalf of the Company. In the event of queries             Transfer forms.  at  management website service which allows you to:   your shares;        electronic format;       and enter your Shareholder Reference Number and Company Code (this information can be found  Further shareholder information Shareholder information Annual Report and Financial Statements 2023 118 Dividend reinvestment plan Computershare operate a Dividend Reinvestment Plan which can be used to buy additional shares instead of receiving your dividend via cheque or into your bank account. For further information log on to  and follow the instructions or telephone 0370 702 0000. Electronic proxy voting If you hold stock in your own name you can choose to vote by returning proxies electronically at eproxyappointment.com. If you have any questions about this service please contact  CREST proxy voting If you are a user of the CREST system (including a CREST  give an instruction to a proxy by having an appropriate CREST message transmitted. For further information please refer to the CREST Manual. Data protection  security of any personal data provided to it. Further details on how personal data is held and processed on behalf of the Company  website . Alternative investment fund managers regulations (AIFMR) In accordance with the UK Alternative Investment Fund Managers     bailliegifford.com    at bailliegifford.com.    Leverage exposure Gross method Commitment method Maximum limit   Actual   Automatic Exchange of Information    information about certain shareholders. The legislation requires investment trust companies to provide    the local tax authority on the tax residencies of a number of non-      Automatic Exchange of Information – information for account holders  account-holders.  119 Communicating with shareholders    Trust published twice a year. It provides an insight to our investment    Trust plays an important role in helping to explain our products so that readers can really understand them.  bailliegifford.com/trust Suggestions and questions Any suggestions on how communications with shareholders can be improved are welcomed. Please contact the Baillie Gifford Client Relations Team and give them your suggestions. They will also be very happy to answer questions that you may have about    .   Client relations team contact details You can contact the Baillie Gifford Client Relations Team by   Your call may be recorded for training or monitoring purposes. Email: trustenquiries@bailliegifford.com Website: bailliegifford.com Address: Baillie Gifford Client Relations Team Calton Square   Please note that Baillie Gifford is not permitted   Shareholder information Annual Report and Financial Statements 2023 120 Asia ex Japan: opportunities and challenges    discusses how the trust seeks out the fastest growing companies in the most rapidly growing and populous region of the world. The Indonesian companies powering the green transition   makes it crucial to a low-carbon future.  Investment Trust by John Newlands  investment trust rode the tiger of growth.  121      disclosures have been provided to comply with the high-level requirements of SFDR.  Guidelines as its policy on integration of sustainability risks in investment decisions.  sustainable in the long run if its approach to business is fundamentally out of line with changing societal expectations.     identifying and holding high quality growth businesses that enjoy sustainable competitive advantages in their marketplace. To do  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   returns of an investment. The likely impact on the return of the portfolio from a potential or actual material decline in the value of  governance event or condition will vary and will depend on several   and existence of any mitigating factors. Sustainable Finance Disclosure    otherwise stated within in its Investment Objective & Policy. Baillie Gifford & Co can invest in any companies it believes could  result in investments being made in companies that ultimately cause a negative outcome for the environment or society.  sustainability can be found in the ESG Principles and Guidelines  bailliegifford.com. The underlying investments do not take into account the EU criteria for environmentally sustainable economic activities established under the EU Taxonomy Regulation. Shareholder information Annual Report and Financial Statements 2023 122  provider disclaimer   of the data contained herewith nor as to the results to be obtained by recipients of the data. No Provider shall in any way be liable    therefrom.  data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate.         materials contained herein. MSCI Index data Source: MSCI. The MSCI information may only be used for your  form and may not be used as a basis for or a component of any  information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.    and the user of this information assumes the entire risk of any       purpose) with respect to this information. Without limiting any of    (msci.com). FTSE Index data      company under license. All rights in the FTSE Russell indexes   any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this    sponsor or endorse the content of this communication.  123 Total assets  the total value of all assets held less all liabilities (other than liabilities in the form of borrowings). Shareholders’ funds and Net Asset Value  is the value of all assets held less all liabilities (including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares (excluding treasury shares) in issue. Net liquid assets Net liquid assets comprise current assets less current liabilities (excluding borrowings) and provisions for deferred liabilities. Discount/premium (APM)  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.  price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than  2023 2022 Net asset value per ordinary share (a)   Share price (b) 586.00p  (Discount)/premium ((b) – (a)) ÷ (a) (8.0%) (2.7%) Turnover Turnover is calculated as the minimum of purchases and sales     Ongoing charges (APM)  of dealing in investments and borrowing costs) incurred by the  as detailed below: 2023 £’000 2022 £’000 Investment management fee   Other administrative expenses   Total expenses (a) 4,181 5,129 Average net asset value (b)   Ongoing charges ((a) ÷ (b) expressed as a percentage) 0.72% 0.74% China ‘A’ shares     Investor system. Treasury shares The Company has the authority to make market purchases of its ordinary shares for retention as Treasury Shares for future  do not receive distributions and the Company is not entitled to exercise the voting rights attaching to them. Unlisted (private) 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. Shareholder information Annual Report and Financial Statements 2023 124 Leverage (APM) For the purposes of the Alternative Investment Fund Managers Regulations leverage is any method which increases the   exposure and its net asset value and can be calculated on a    any hedging and netting arrangements. Under the commitment  cash balances and after certain hedging and netting positions are offset against each other. Active share (APM)  is the percentage of the portfolio that differs from its comparative  the portfolio that overlaps with the comparative index. An active   Compound annual return (APM) The compound annual return converts the return over a period of longer than one year to a constant annual rate of return applied to the compound value at the start of each year. Gearing (APM)   additional investments for its portfolio. The effect of the borrowing   more because the debt remains the same. But if the value of  can therefore enhance performance in rising markets but can adversely impact performance in falling markets.   2023 £’000 2022 £’000 Borrowings (at book cost) (a) – –     settlement –  Add: purchases for subsequent settlement –  Adjusted borrowings (b)      Gearing: (b) as a percentage of (c) (2%) (1%)   2023 £’000 2022 £’000 Borrowings (at book value) (a) – –    Gross gearing: (a) as a percentage of (b) – – Total return (APM) The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.  2023 NAV 2023 Share price 2022 NAV 2022 Share price  (a)  586.00p   Dividend adjustment factor * (b)     Adjusted closing NAV per share/share price (c) = (a) x (b) 640.75p 589.34p 664.65p 647.00p  (d)    802.00p Total return (c) ÷ (d) -1 (3.6%) (8.9%) (14.5%) (19.3%) *     125  information Directors Chairman: RA Macpherson RW Chote   RF Studwell Registrar Computershare Investor Services PLC The Pavilions Bridgwater Road   Alternative Investment Fund Managers and Company Secretaries Baillie Gifford & Co Limited Calton Square    bailliegifford.com Depositary  (International) Limited     25 Bank Street Canary Wharf  Independent Auditor BDO LLP 55 Baker Street  Company details        Further information Client Relations Team Baillie Gifford & Co Calton Square    trustenquiries@bailliegifford.com  Computershare Investor Services PLC    Copyright © Baillie Gifford & Co 2023.   