Baillie Gifford Funds N-CSRCertified annual shareholder report (management investment company)

Baillie Gifford China A Shares Fund

Baillie Gifford Developed EAFE All Cap Fund

Baillie Gifford EAFE Plus All Cap Fund

Baillie Gifford Emerging Markets Equities Fund

Baillie Gifford Global Alpha Equities Fund

Baillie Gifford Global Stewardship Equities Fund

Baillie Gifford International Alpha Fund

Index

Baillie Gifford China A Shares Fund

Market Conditions and Review of Performance during 2020

It has been a very positive year for the Fund in terms of both absolute and relative performance. China's rapid recovery from the novel coronavirus ("COVID-19") pandemic has allowed for a return to broad-based economic growth and an acceleration in many of the thematic trends to which the Fund has exposure. Fund returns have generally been driven by stock-specific factors deriving primarily from continued operational strength. We aim to hold a small number of exceptional growth companies whose culture, competitive advantages and structural opportunities position them to be long-term winners.

Asymchem Laboratories and Glodon were among the positive contributors to performance over the 12-month period.

Asymchem Laboratories is a contract development and manufacturing organization offering comprehensive services to pharmaceutical companies ranging from research and development to manufacturing. It has a blue-chip client list of the world's leading pharmaceutical companies. We believe Asymchem's core advantages come from patents in flow chemistry relating to continuous manufacturing. This can dramatically shorten the time required for production and speed up the commercialization of relevant drugs, whilst lowering waste, reducing environmental impact and improving safety. We believe Asymchem is benefiting from the shift in demand for contract operations to lower cost markets, as well as China's attempt to reduce generic drug pricing and nurture more innovative drug discovery companies.

Glodon is a proprietary software company with a leading market share in construction engineering, procurement and costing software. The company has been steadily shifting their business model from a license-fee based model to a cloud-based subscription service model. Renewal rates have been very positive, and we expect the incentives for companies to invest in software technology will continue to rise in this environment. Given the low starting point, we believe the addressable market for Glodon is likely to be significantly larger than today, and we believe the longevity of growth is being underestimated

with the cultural and financial factors which will allow the company to capitalize on this opportunity. We have an additional due diligence checklist which helps focus further attention on governance, financials, ownership and potential risks. Our aim is to identify the exceptional growth businesses in China and hold them for long enough that the advantages of their business models and strength of their cultures become dominant drivers of their stock prices. We believe our patience and long-term time horizons are a significant differentiator from the short-term focus of the market.

Baillie Gifford Developed EAFE All Cap Fund

Market Conditions and Review of Performance during 2020

What a year 2020 has been. The COVID-19 pandemic has swept across the globe. It continues to impact people's health and well-being, but also their habits and lives more generally. The observation often attributed to Lenin that, "there are decades where nothing happens and there are weeks where decades happen," has rarely seemed so apt. In many cases, the measures to combat the COVID-19 pandemic included lockdowns of public life to varying, often extreme, degrees. Unsurprisingly, this has had an immense impact on some of the businesses held in the Fund.

As long-term fundamental stock pickers, we cannot and do not attempt to predict the events of the future, but we can take steps to try to ensure that the Fund's holdings are prepared for any eventuality they might face. We do this by investing in what we perceive to be good quality growth companies with characteristics that make them "anti-fragile." That is, businesses that we believe will not only survive and endure through thick and thin, but those that we think will disrupt incumbents and create profits over the long term, as well as emerge stronger than their peers over time. For some of the Fund's holdings, it has been a time of tremendous progress and opportunity. The large-scale social experiment of confining a significant portion of the world's population to their homes over the past year in many ways reinforced and accelerated existing trends. Nowhere has this been more obvious and pronounced than in retail, which witnessed a dramatic increase in e-commerce penetration.

In terms of stock attribution, three of the top performers for the past year have been Zalando, Avanza and Spotify.

Zalando was a notable contributor to 2020 performance. The e-commerce company specializes in fashion retail and is the European leader in this space. We believe it has an enormous potential market with the shift of fashion to online, and the company has made long-term investments in its logistics infrastructure. Over the last year it had strong operating results, a significant uptick in user numbers as people migrated online for apparel spend, and also increased spend per user. Even more encouragingly, it has partnered with a number of brick and mortar retailers and is also exploring opportunities to enter new markets.

Avanza was a notable strong performer in 2020. As Sweden's leading online savings platform, it saw strong

Investment strategies used to manage the Fund

Baillie Gifford is a growth manager with a bottom-up approach to stock picking. Bottom-up investing is an investment approach that focuses on the analysis of individual stocks and deemphasizes the significance of economic cycles and market cycles. We aim to invest in companies that will generate sustainable earnings growth above the market over the long-term. In determining the potential of a company, we analyze industry background, competitive advantages, management capabilities, financial strength and valuation. From the outset, we also consider aspects which may derail the investment case and revisit the thesis for the Fund's holdings on a regular basis to ensure that our expectations are being met. The International All Cap Portfolio Construction Group is responsible for the overall strategy and stock selection process. It meets regularly to discuss both buy and sell

Baillie Gifford EAFE Plus All Cap Fund

Market Conditions and Review of Performance during 2020

What a year 2020 has been. The COVID-19 pandemic has swept across the globe. It continues to impact people's health and well-being, but also their habits and lives more generally. The observation often attributed to Lenin that, "there are decades where nothing happens and there are weeks where decades happen," has rarely seemed so apt. In many cases, the measures to combat the COVID-19 pandemic included lockdowns of public life to varying, often extreme, degrees. Unsurprisingly, this has had an immense impact on some of the businesses held in the Fund.

As long-term fundamental stock pickers, we cannot and do not attempt to predict the events of the future, but we can take steps to try to ensure that the Fund's holdings are prepared for any eventuality they might face. We do this by investing in what we perceive to be good quality growth companies with characteristics that make them "anti-fragile." That is, businesses that we believe will not only survive and endure through thick and thin, but those that we think will disrupt incumbents and create profits over the long term, as well as emerge stronger than their peers over time. For some of the Fund's holdings, it has been a time of tremendous progress and opportunity. The large-scale social experiment of confining a significant portion of the world's population to their homes over the past year in many ways reinforced and accelerated existing trends. Nowhere has this been more obvious and pronounced than in retail, which witnessed a dramatic increase in e-commerce penetration.

In terms of stock attribution, three of the top performers for the past year have been Zalando, Taiwan Semiconductor Manufacturing Company and Sartorius.

Zalando was a contributor to 2020 performance. The e-commerce company specializes in fashion retail and is the European leader in this space. We believe it has an enormous potential market with the shift of fashion to online, and the company has made long-term investments in its logistics infrastructure. Over the last year, it had strong operating results, a significant uptick in user numbers as people migrated online for apparel spend, and also increased spend per user. Even more encouragingly, it has partnered with a number of brick and mortar retailers and is also exploring opportunities to enter new markets.

Taiwan Semiconductor Manufacturing Company, the world's largest dedicated semiconductor foundry, had a good 2020 and was a contributor to the Fund's 2020

As investors it's natural for us to be asked for predictions about the future. In those moments it's worth recalling a quote attributed to U.S. baseball player Yogi Berra: "It's tough to make predictions, especially about the future." We must remain humble about what we (can) know and be willing and ready to change our minds as new facts emerge. We do, however, strongly believe that a careful selection of great growth businesses which are run by aligned management teams should thrive over the long term. Our task then is to focus on finding these exceptional companies and develop the fortitude to own them for, not just the year ahead, but long periods of time.

Investment strategies used to manage the Fund

Baillie Gifford is a growth manager with a bottom-up approach to stock picking. Bottom-up investing is an investment approach that focuses on the analysis of individual stocks and deemphasizes the significance of economic cycles and market cycles. We aim to invest in companies that will generate sustainable earnings growth above the market over the long-term. In determining the potential of a company, we analyze industry background, competitive advantages, management capabilities,

Baillie Gifford Emerging Markets Equities Fund

Market conditions and review of performance during 2020

We hope that our long-standing shareholders will forgive the broken record, but before commenting on more recent performance, it is worth re-stating our long-standing view on performance measurement. We are resolutely long term in our investment approach and as such we don't believe genuine conclusions about a fund manager's skill can be drawn by looking at a single year of portfolio performance. It may be that this is especially true this year.

That said, it has been pleasing to see that operational results at companies at very different ends of the portfolio have been strong over the last year. This does give us confidence that the 'barbell' strategy is working well. On the one hand, several structural growth stocks with improving competitive positions are amongst those that have contributed most to more recent performance. Equally, we have seen companies in more cyclical areas, such as the materials sector, also amongst the strong performers.

In e-commerce, MercadoLibre in Latin America was particularly strong during the 12-month period. MercadoLibre recently passed the milestone of 300 million live listings on the site and has responded admirably to a material uptick in demand, despite physical retail starting to reopen in many of its key markets. Over many years of investing in emerging market ("EM") companies, one important feature we've seen in many of the longest duration growth businesses in the portfolio is a willingness to continually reinvest in themselves, to remain ahead of competition and to stay relevant for customers. Taiwan Semiconductor Manufacturing Company and Ping An Insurance are great examples of this in the Fund, both spending multiple billions per year on research and development and/or capital projects. Interestingly, though at a different stage of evolution, we are now seeing comparable behavior from MercadoLibre. For this business, we believe the more they can invest in building out their own logistics network (Mercado Envios), the less they have to rely on third party logistics services where the quality is variable, and so the better the service they can provide to their customers. We've been very encouraged by the focus of the management team on building out their logistics capabilities. In our meeting with MercadoLibre's Chief Financial Officer earlier in the year, it was clear that logistics is MercadoLibre's number one priority when it

the 12-month period. In particular, we still believe that Sberbank looks excellent in an EM banking context and in a global context. We perceive a growth opportunity for both loan growth and ongoing penetration of credit in Russia. In fact, there are probably no other EM banks looking as attractive as this in our view, given Sberbank's dominance and its undemanding starting valuation. We used market volatility earlier in 2020 to add to the position. The bank has leading market shares in retail loans and mortgage loans and a semi-monopolistic position in retail deposits too. This allows it to generate high net interest margins and positive net income throughout the business cycle, which we expect to compound for many years.

2020 ends with COVID-19 still exacting its terrible human and economic cost, but we believe there is some light at the end of the tunnel. Thanks to the heroic efforts of scientists around the world, it now appears there are a number of viable vaccines which will likely, in time, allow us to return to some sort of normality through the course of 2021. Moreover, it currently appears that while the West will prioritize its own people, it will also commit to underwrite vaccinations for the poorer parts of the world so everyone can be free of the virus in the future.

Investment strategies used to manage the Fund

We are long-term, active growth investors and invest in companies that we believe have the most substantial long-term growth prospects. To do so, we look for businesses that enjoy sustainable competitive advantages and which we believe will grow their earnings significantly faster than the market average. As emerging markets investors, we operate in a different opportunity set to global or developed market investors: economic and industrial cycles are often shorter or sharper and information is frequently incomplete. We have significant experience in

Baillie Gifford Global Alpha Equities Fund

Market Conditions and Review of Performance during 2020

"We view our role as supporting ambition and helping special businesses to meet their full potential."

The above quote from our Global Alpha Stewardship Report may never be more relevant than it is at present. The past year has been hugely challenging; 'normal' life has been redefined by the global COVID-19 pandemic. We believe that patient and supportive stewardship is of paramount importance during challenging times. In contrast to many market participants, we have encouraged companies to forego near-term profitability in favor of the best long-term interests of their stakeholders. In some cases, we have supported holdings with further capital earmarked to underpin future growth. Following the onset of the pandemic in March 2020, we undertook resiliency analysis of the Fund's portfolio. With the vast majority of the holdings on a firm financial footing, we then switched focus to the future in an effort to move on and identify exciting long-term growth opportunities. While the pandemic has riddled many aspects of our lives with uncertainty, this has not extended to the approach we take to managing the Fund's assets. We continue to seek further opportunities and are wary of complacency.

We remain focused and open-minded to seek what we perceive to be the best growth companies globally, spread across our four growth categories — Stalwart, Rapid, Cyclical and Latent — a framework that is intended to encapsulate how the companies generate growth. The objective is to build a diversified portfolio that remain resilient through both secular and cyclical changes.

Over the past five years, there has been a deliberate reduction in the Fund's exposure to cyclical growth companies from a peak of ~30% of the Fund in 2014 to ~15% as of the end of 2020. The result is that exposure to economically sensitive companies was limited as the pandemic hit and economies around the world stalled. It is perhaps unsurprising that several of the main detractors from performance during 2020 came from the Fund's limited exposure to such areas. In particular Kirby (U.S. barge operator) and EOG Resources (oil and gas producer) have both had weak performance during the 12-month period as a result of economic uncertainty. In addition, capital allocation has proven a headache at Kirby, and this

case, from a growing number of cloud-based software businesses, a handful of which were purchased for your portfolio last quarter. Elsewhere, we elected to add to CBRE, a leading player in the commercial real estate market.

Taking the above transactions into account, the Fund's annual turnover was 23% for the period, in line with its long-term investment horizon.

Our investment approach remains a tried and tested one which centers on bottom-up stock-picking and an ability to invest in growth companies anywhere in the world. We undertake regular thematic reviews of the portfolio, the most recent of which highlights what we believe is a proliferating and reassuringly diverse range of underlying exposures. Our approach has supported a calm and measured response to the developments of 2020 and has allowed us to make modest changes to position the portfolio for future growth. Inherent in this is a desire to invest in companies run by management teams that are sensible stewards of capital and are capable of navigating and adapting to what the future brings. As we begin a new year, many economic and market commentators will set about predicting all manner of variables and outcomes for the next 12 months. Instead, our approach means that we have begun assessing potential areas of interest for our 2021 research agenda. Suggestions have been plentiful and diverse, including, for example, the future of food, new frontiers of the internet and how the Fund would be positioned in an inflationary environment. Ultimately, this will influence where we hunt for new ideas but, always, our approach will be to assess the fundamental long-term growth prospects of companies. Through this lens, opportunities appear plentiful. This is what underpins our confidence that, whatever lies ahead, the Fund will be positioned to deliver superior long-term returns.

Baillie Gifford Global Stewardship Equities Fund

Market Conditions and Review of Performance during 2020

In a year dominated by the COVID-19 pandemic, equity markets were volatile but ultimately produced a positive return. The first few months of 2020 witnessed the outbreak and spread of the COVID-19 pandemic, along with the impact on economic activity of the increasingly stringent lockdown measures which were put into place. Global equities fell significantly in response; for example, the MSCI All Country World Index (ACWI), the Fund's benchmark, was down 21% in dollar terms during the first quarter of the year. However, share prices subsequently recovered, partially as a result of the huge interventions by central banks and governments around the world to prop up markets and pump-prime economies. More recently the final three months of 2020 saw equities continue to rise following the release of the hugely encouraging results of the trials of the first COVID-19 vaccines. Remarkably, therefore, the MSCI ACWI ended the year up 16.82%.

Against this backdrop, the Fund performed very well. Having held up better than the wider market during the downturn in February and March, the portfolio then rose considerably as markets recovered, with Class K shares delivering a return over the 12 months of 75.39%. In addition, the Fund's more important and more meaningful longer-term performance figures were also strong, both in absolute terms and when compared to the Fund's benchmark. A healthy dose of humility is required in recognizing that the outlook for the global economy and equity markets is highly uncertain. Investors should not be surprised if we continue to experience short-term volatility as the world recovers from the COVID-19 pandemic. That said, we are delighted to have been able to protect and grow clients' capital in a difficult period.

Positive performance over the past year was driven by the Fund's exposure to technology companies which we believed would gradually alter and improve the way in which we work, shop, learn and communicate. 2020 witnessed a dramatic step-change in the uptake of these disruptive services and, in many cases, this has resulted in remarkable growth for the companies concerned.

One of the clearest examples of this was the Fund's holding in Canadian e-commerce platform Shopify. The company was quick to introduce and widen access to new features to help its merchants during the pandemic, including extended free trials, gift card capabilities and adapted pickup and delivery options. These measures

advantages, management capabilities, financial strength and valuation, along with environmental, social and governance (ESG) factors. From the outset, we also consider aspects which may derail the investment case and revisit the thesis for the Fund's holdings on a regular basis to ensure that our expectations are being met. The Global Stewardship Portfolio Construction Group is responsible for the overall strategy and stock selection process. It meets regularly to discuss both buy and sell ideas and the level of conviction for existing holdings. Ongoing monitoring of the long-term prospects for the Fund's holdings enables appropriate changes to be made where applicable.

Baillie Gifford International Alpha Fund

Market Conditions and Review of Performance during 2020

The quote "there are decades where nothing happens and there are weeks where decades happen" feels a particularly apt way to describe the year. Through this volatile period, the Fund has enjoyed both relative and absolute outperformance. After the initial slump in international equity markets, we have seen a resurgence in the second half of the year with the MSCI ACWI (ex U.S.) Index, the Fund's benchmark, providing an 11.13% return for the 2020 calendar year. The Fund comfortably outperformed its benchmark over the period. Relative outperformance was driven overwhelmingly by stock selection over the period, which is what we would expect from a bottom-up strategy. Stock selection was a positive contributor to performance across all major regions on a relative basis. From a sector standpoint, communication services and consumer discretion were the top two contributors to performance during the 12-month period, while an underweight position in the healthcare industry relative to the Fund's benchmark contributed negatively during the period.

As long-term fundamental stock pickers, we cannot and do not attempt to predict the future, but we can take steps necessary to try to prepare your portfolio for any eventuality it might face. We prepare by investing in what we perceive to be quality growth companies with characteristics that make them "anti-fragile." That is, we seek to invest in businesses that we expect will be bastions of stability through thick and thin, that we believe will disrupt incumbents and create new profit pools, that we perceive as being able to emerge stronger than their peers, and that we anticipate are able to take advantage of a crisis. We believe these businesses likely have a natural immunity, which makes them durable investments.

In terms of stock attribution, two of the top performers for the period have been MercadoLibre and Spotify.

MercadoLibre, the Latin American e-commerce business, was the standout contributor to performance over the year. The company's heavy investment in its logistics network in 2019 has seemingly provided solid foundations for growth in an environment where the ongoing uncertainty of COVID-19 seems to have fast-tracked the adoption of online retail and e-commerce, both of which remain in Latin America at levels far below other major global regions. We are confident that in the long-term this is a business which will continue to grow its e-commerce platform and its payment platform Mercado Pago.

thrive, not just from quarter to quarter, or even year to year, but from cycle to cycle and decade to decade, in our view. Investors who are prepared to seek out such companies and have the patience to stay with them for the journey may be rewarded with extraordinary long-term returns.

Investment strategies used to manage the Fund

The investment strategy remains unchanged. The Fund invests in growth stocks based on bottom-up company analysis. In determining the potential of a company, we analyze industry opportunity, competitive advantage, management attitudes, financial strength, and valuation. We also consider whether we have a different view from the market. We think that the market, in general, is too short term and inward looking. Our ability to add value is derived from having a much longer time horizon and from our differentiated sources of information. We believe our patient investment approach, and reputation as a long-term investor, allows us to develop much deeper relationships with management teams and have more meaningful conversations with company leaders.

Baillie Gifford International Concentrated Growth Equities Fund

Market conditions and Review of Performance during 2020

It has been an extraordinary year for both absolute and relative performance. Fund returns have generally been driven by stock specific factors deriving primarily from continued operational strength. Operational progress for certain portfolio holdings has been accelerated by some changes in how we live our lives, brought about by lockdown measures. However, while lots has changed in the production, distribution and consumption of goods and services, change is by no means temporary. We recognize that societies and economies are in a deep, structural period of transformation, which is driven by exponential advances in technology combined with innovative business models. Exceptional businesses are by their very nature rare, which is why we invest in a small number (20 to 35) of what we believe to be the most exceptional international growth companies.

Top contributors to performance during 2020 included Tesla and MercadoLibre.

Tesla, the U.S. electric vehicles, solar cell and energy storage company, has enjoyed a considerable increase in share price over the last 12 months as the market is finally recognizing years of excellent operational progress. Demand for the Model 3 has been high, and news of further significant battery life improvement has added to growing awareness of the long-term potential of the auto segment. When viewing the tremendous upside potential for Tesla, we contend that the view must consider not just the potential of incredible electric vehicles, as we're witnessing, but also autonomous vehicles and world leading battery technology transforming our entire energy infrastructure.

MercadoLibre, the Latin American e-commerce company, has also been a strong contributor to performance over the last year, as lockdown measures across a broad range of Latin American countries helped to catalyze uptake. Business segments (including e-commerce, advertising and financial services) are starting from a very low penetration in Latin America, and MercadoLibre is investing heavily over the long-term to grow market share.

Among the key detractors from performance over the 12-month period were Trip.com and Inditex.

belief that much more lies ahead. This belief stems from a recognition of exponential growth in technologies being used by innovative business models to create real disruption across whole swathes of the index.

Investment strategies used to manage the Fund

The Fund invests in growth stocks based on bottom-up company analysis. In determining the potential of a company, we conduct a process of Idea Generation, Initial Research, Investment Decision and Ownership. Within Initial Research, we consider questions relating to exceptional growth potential, durable edge, stewardship, financial strength and perspective.

We think that the market, in general, is too short term and inward looking. Our ability to add value is derived from having a much longer time horizon, from being

Baillie Gifford International Growth Fund

Market conditions and review of performance during 2020

Despite the tumultuous events of 2020, international equity markets delivered surprisingly good returns. The MSCI ACWI (ex U.S.) Index, the Fund's benchmark, rose by 11.13% over the 12-month period. Many listed companies adapted quickly and effectively to the pandemic, and some had their future prospects improved by it. A rise in savings rates and substantial liquidity provision by authorities around the world may also have boosted equities when the returns available in other asset classes appeared unappealing.

The Fund significantly outperformed its benchmark with a return of 62.96% for Class 2 shares over the 12-month period. During the period positive contributors included M3, MercadoLibre and Meituan while negative contributors included Rolls-Royce, Alibaba and Inditex.

M3's share price rose by more than 200% during the 12-month period. The Japanese company's position as a leading international provider of digital medical services was certainly propitious in 2020. M3 engaged quickly with efforts to boost COVID-19 diagnosis through digital imaging. Demand for its online healthcare service, offered in place of face-to-face doctor visits, understandably soared in the last 12 months. M3's core business of replacing pharmaceutical sales rep visits to doctors by digital means also more than doubled during the period. In our view the healthcare industry has undoubtedly had its practices changed for good by the pandemic, and we believe M3 has attractive opportunities ahead.

MercadoLibre's share price rose by 193% during the 12-month period. Before the pandemic it had been enjoying rapid growth as Latin American customers increasingly shopped online, using its platform more than any other. This growth accelerated as COVID-19 restrictions kicked in, with users and volumes of goods sold almost doubling by the end of 2020. The group's payments business also developed rapidly. Our main question mark around the company had been its competitive position, however we believe its competitive position has been strengthened substantially by the growth in its business in 2020.

Meituan is the leading player in China's offline-to-online market, providing customers with a digital platform to purchase meals, travel, cinema tickets, etc. Its share price rose by 191% during the 12-month period. Food delivery,

believe things will revert back when the pandemic is mercifully over. Incumbent companies are being challenged in a way they did not expect to be at this point of time, and the younger companies disrupting them have achieved positions of strength much sooner than otherwise anticipated.

We believe these are fertile conditions in which to find growth stocks. While the valuation of many growth stocks has reflected the boost such companies received in 2020, we do not believe the long-term opportunities presented by accelerating change are being fully considered. We believe the best investments over the long term will be those disruptive companies in the vanguard of such change.

Investment strategies used to manage the Fund

The Fund invests in growth stocks based on bottom-up company analysis. In determining the potential of a company, we analyze industry background, competitive advantage, management attitudes, financial strength and valuation. We seek to own stocks that have the potential to

Baillie Gifford International Smaller Companies Fund

Market Conditions and Review of Performance during 2020

The Fund performed strongly in absolute and relative terms in 2020, returning 48.61% compared to a benchmark return of 14.67%.

2020 has witnessed a truly staggering turn of events with enforced adaption by individuals, institutions, business and society. While costs to the healthcare system are still widespread and ongoing, there does at least appear to be a path to progress based on a deeper understanding of COVID-19 as a disease and therapeutic agents that can either mitigate its impact or severely blunt its spread. In under a year since an unknown, insidious pathogen emerged, it has been extensively characterized, a range of diagnostic tests developed, therapies fast-tracked and vaccines developed and extensively tested. The speed at which this insight has been gleaned and then harnessed is breath-taking and speaks to much of the accelerated entrepreneurial spirit that necessity can bring about.

During this extraordinary year, we've observed the acceleration of many of the trends to which the portfolio already had exposure. Importantly, we believe that this will not be limited to a short-term effect and that we will continue to feel its impact over the years ahead. From here we still view further societal change as more likely than a reversion to pre-pandemic lives. In light of this, we'd reiterate our conviction that our growth investing style, focused on owning the long-term beneficiaries of change, remains fully appropriate for this rapidly evolving world.

Avanza Bank, a Swedish online-only bank providing deposit and investment accounts, stock brokerage, and occupational pension services, was the top contributor to Fund performance in the last 12 months. Avanza's proposition is based on offering services which are simpler and cheaper than its competitors, with a strong focus on customer service. They have performed well through the pandemic, with their online-only model allowing customers to open account and transact at a time when more traditional banking channels (bricks & mortar, call centers) were closed. Results released during the fourth quarter of 2020 demonstrate this, with Avanza increasing customer numbers by 31% and savings capital by 40%. Their improved market position is emphasized by the fact they are now receiving roughly 20% of all inflows into the Swedish savings market. What's particularly encouraging,

production shutdowns felt in the past year in these industries, has impacted the company's progress over the period. The near term damage felt by U-Blox, however, doesn't necessarily mean that the longer term mega-trends the company is geared into will be impacted. We see the opportunity as relatively simple — the future is likely to see more and more connected devices (e.g., electric vehicles), and technology is improving to enable this (e.g., 5G). By using a fabless manufacturing model, we believe U-Blox will suffer from minimal internal bottlenecks along the way. Also, as an engineering-centric business, the company has delivered a number of 'world firsts' in positioning technology. We continue to monitor the company's progress, while admiring U-Blox's efforts-to-date.

Investment strategies used to manage the Fund

The investment strategy used to manage the Fund is unchanged over the year. The Fund employs bottom-up, fundamental research to build a portfolio of growing companies. The Fund's portfolio is constructed with an awareness of the asset class. New purchases are typically below $2 billion in market capitalization at time of purchase, and we typically do not seek to add to a position once a company's value increases beyond $5 billion. Most investments will be sold before they reach $10 billion in market capitalization. International smaller companies present a vast and incredibly diverse investment universe. This Fund seeks to find the exceptional businesses within that, companies with the potential to deliver strong returns for our clients, while also acknowledging that these companies can do so in different ways. Our edge in this comes from our portfolio managers, who bring a range of experiences in managing small and all-cap portfolios across different geographies, and our ability to employ a longer-term investment horizon than most of the market. This long-termism is fundamental to how we exploit the asymmetry available in equity returns.

Baillie Gifford Long Term Global Growth Fund

Market Conditions and Review of Performance during 2020

Amidst the tumult and severe challenges facing the global economy and stock markets in 2020, Class 2 shares of the Fund delivered a return of 101.77% during the period (84.95% ahead of the Fund's benchmark). This was a period in which deep multi-decade transitions — such as the rise of e-commerce, cloud-based enterprise software, home entertainment and fitness, and revolutionary advances in healthcare — accelerated in the pandemic environment. Many companies in the Fund's portfolio are spearheading, enabling or benefiting from such transitions and have demonstrated robust growth in their businesses during the year. Other holdings, mainly those whose businesses still depend on bricks and mortar retail or travel, have been affected by lockdowns and travel restrictions.

Looking back on 2020, Tesla, Pinduoduo and Meituan were among the top positive contributors to the Fund's relative performance during the year.

Tesla's share price grew more than sevenfold during the year — a period during which the company delivered remarkable operational progress. Despite its main factory in Fremont, California experiencing a temporary closure due to pandemic restrictions, Tesla produced and delivered close to half a million vehicles in 2020 (its 5-year compound annual growth rate now stands at over 45%). The company has continued to invest in production capacity, battery technology, software, manufacturing, charging infrastructure, and its rapidly-scaling energy business — and all whilst generating profits.

Meanwhile, Pinduoduo's share price more than tripled during 2020 as the company continued to transform China's e-commerce market. With nearly 650 million monthly active users and growing at around 50% year-on-year, it has surpassed JD.com in scale and is gaining on Alibaba. Strikingly, it has achieved this scale in only five years. Whilst the company is best known for its group-buy e-commerce deals, it is also seemingly revolutionizing Chinese agriculture and manufacturing to benefit both suppliers and consumers.

Also in China, Meituan's on-demand food service grew to nearly 35 million meal deliveries per day on average, with a rising average value per order. Whilst travel restrictions due to the pandemic temporarily impinged on Meituan's in-store, hotel and travel business, the company

analyze industry background, competitive advantage, management attitudes and financial strength, and finally we consider valuation. We meet the management of the companies within our investment universe and revisit the investment case for the Fund's holdings on a regular basis to ensure that our expectations are being met.

The Long Term Global Growth team is responsible for the overall strategy and stock selection process. We interact regularly to discuss both buy and sell ideas and the level of conviction for existing holdings. We will continue to monitor the long-term prospects for the Fund's holdings and make changes where appropriate.

Baillie Gifford Positive Change Equities Fund

Market Conditions and Review of Performance during 2020

Global equities ended the year well into positive territory despite the COVID-19 pandemic and against this backdrop, the Fund significantly outperformed its benchmark. The Fund aims to deliver attractive investment returns and to contribute towards a more sustainable world, and 2020 saw a number of companies in the portfolio providing a solution to the pandemic and accordingly performing very well. 2020 was, therefore, a year of very strong operational performance for the majority of holdings in the Fund, providing good progress towards delivering on both our financial and positive change objectives over our 5-year time horizon.

The largest contributors to financial performance over the year were Tesla and M3.

While the COVID-19 pandemic was the topic of most new headlines over the last year, Tesla is certainly helping to contribute to a solution to climate change, another important global challenge, through provision of its electric vehicles and energy storage products. The company was once again the top contributor to Fund performance in 2020. Tesla demonstrated very strong progress towards meeting its 2020 target of delivering around 500,000 electric vehicles, an increase of more than 30% on last year. This is an impressive feat given its California gigafactory had to close for almost two months earlier this year due to the pandemic outbreak. We attended Tesla's 'Battery Day' in September 2020 where Tesla's Chief Executive Officer Elon Musk outlined plans for the company to reduce battery cell cost, which has been a bottleneck in the ongoing transition to electric vehicles. We believe Tesla's lead in battery technology looks set to become further entrenched which could have profound implications — not only for the car business, but also for the energy generation and storage business.

M3 helps pharmaceutical companies and doctors access information online. Its platform uses technology and data to take costs out of healthcare systems and drive efficiencies for both doctors and pharmaceutical companies in its home country of Japan. Over the year M3's drug marketing platform has seen a rapid increase in activity from both companies and doctors as social distancing rules have severely curtailed physical drug sales activities. M3 has an early stage partnership with dominant Japanese social media platform LINE and is providing free online doctor consultations in collaboration with the

for individual companies along with the portfolio's overall contribution to the U.N. Sustainable Development Goals. A copy of our most recent Impact Report is available on our website at https://www.bailliegifford.com/en/usa/professional-investor/literature-library/positive-change-impact-report/positive-change-impact-report-full-year-2019-for-us-investors/.

Investment strategies used to manage the Fund

The Fund seeks capital appreciation by investing in high quality growth businesses that deliver a positive social or environmental change in the following areas: social inclusion and education, healthcare, the environment, and that address basic needs and aspirations of the world's poorest populations.

The Fund applies Baillie Gifford's core approach to stock picking as well as inhouse, proprietary research on positive impact when considering holdings for the Fund.

Baillie Gifford is a growth manager with a bottom-up approach to stock picking. We aim to invest in companies that will generate sustainable earnings growth over the long term. In determining the potential of a company, we analyze industry background, competitive advantage, management attitudes and financial strength, and finally we consider valuation. We meet the management of the

Baillie Gifford U.S. Equity Growth Fund

Market Conditions and Review of Performance during 2020

In this most unusual of years, COVID-19 dominated the global landscape. Health agencies and governments came to recognize the expansion of the virus as a pandemic, and governments around the world locked down their societies and economies, bolstered their healthcare systems and embarked on wartime-like stimulus packages to prop up mothballed industries. Perhaps amplified by the stress of the situation and by the political rhetoric of a divisive U.S. Presidential election, issues of social, racial and wealth inequality came to the fore in the summer of 2020. Politics dominated the headlines as the U.S. election approached and continued after we might have expected a confirmed result, as signs of second and third waves of the COVID-19 virus emerged.

But there are causes for optimism. The pandemic has accelerated shifts in business and society that were underway already but have taken on new importance in a socially distanced and restricted world. Climate change and our impact on the planet remained on the agenda even amidst the crisis. We may eventually look back and associate 2020 not just with the COVID-19 pandemic, but also with the beginning of the end of the carbon era. We believe a revolution in energy is underway. We should also not forget that, despite the tragic toll of the COVID-19 virus, extraordinary developments in technology have enabled the development of several vaccines which are already being distributed at scale. Technology has helped many of us to live in relative comfort under what might have seemed like impossible restrictions.

Against this backdrop, the Fund delivered a return that was ahead of the Russell 1000 Growth and the S&P 500 indices, the Fund's benchmarks. The Fund's investment strategy is based on holding companies which are capable of transformational growth in the belief that the successes will generate significant share price returns for patient investors. This approach has produced positions in companies which are redefining commerce, leisure, enterprise and finance online. In a world of accelerated change, several holdings have seen their opportunities for growth expand significantly.

The e-commerce platform Shopify was a significant contributor to returns. Shopify offers scale as a service to entrepreneurs by giving them access to world-class online tools and back office functions for a monthly subscription. It allows small retailers to compete on a level playing field

Apple which saw strong share price performance during 2020. Although there is much to admire about both businesses, we don't think that they are amongst the most compelling stock opportunities for the next five years, and we do not hold them in the Fund.

We are excited about the long-term future for a select group of innovative and disruptive U.S. companies. Normal will be different after the pandemic passes. We think it would be a mistake to expect a reversion to how things were before. We expect online disruptors in retail and business will continue on a faster path to growth and that our attitudes to experimenting with new services have changed. We think people will demand greater convenience and flexibility and that healthcare will shift to prevention instead of treating us when we are sick. We also expect that companies like Tesla will be at the vanguard of a revolution in energy. We can't tell you exactly when this will happen or predict what's in store for 2021, but we expect these trends to dominate the next 10 years and will continue to strive to place the Fund on the right side of innovation by seeking out what we view as exceptional companies. In times of dramatic change, we believe it pays to be patient.

Investment strategies used to manage the Fund

The Fund seeks to meet its objective by identifying exceptional growth businesses and owning them for long

As a shareholder of Baillie Gifford China A Shares Fund, Baillie Gifford Developed EAFE All Cap Fund, Baillie Gifford EAFE Plus All Cap Fund, Baillie Gifford Emerging Markets Equities Fund, Baillie Gifford Global Alpha Equities Fund, Baillie Gifford Global Stewardship Equities Fund, Baillie Gifford International Alpha Fund, Baillie Gifford International Concentrated Growth Equities Fund, Baillie Gifford International Growth Fund, Baillie Gifford International Smaller Companies Fund, Baillie Gifford Long Term Global Growth Fund, Baillie Gifford Positive Change Equities Fund and/or Baillie Gifford U.S. Equity Growth Fund, you incur two types of costs: (1) transaction costs, which may include purchase fees and redemption fees and (2) ongoing costs, including advisory fees, administration and supervisory fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in the other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2020 to December 31, 2020.

Actual Expenses

The first line of each table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide the account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During the Period" to estimate the expenses you paid on your account during this period.

Expenses are calculated using the annualized expense ratio for the Fund, which represents the ongoing expenses as a percentage of net assets for the period ended December 31, 2020. Expenses are calculated by multiplying the annualized expense ratio by the average account value for the period; then multiplying the result by the number of