Risk factors

Any investment in an investment trust involves risk. You should be aware of the following risks when considering investing.

The value of your investment
The value of your investment and any income from it is not guaranteed and may go down as well as up and you may not get back the amount invested. This is because the share price is determined by the changing conditions in the relevant stockmarkets in which the Trust invests and by the supply and demand for the Trust's shares. You should regard your investment as long-term.

Overseas investment
As the Trust invests in overseas securities changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up.

Gearing
The Trust can borrow money to make further investments. This is commonly referred to as gearing. The risk is that when this money is repaid by the Trust, the value of these investments may not be enough to cover the borrowing and interest costs, and the Trust will make a loss. If the Trust's investments fall in value, gearing will increase the amount of this loss. The more highly geared the Trust, the greater this effect will be.

Share buy-backs
The Trust can buy back and cancel its own shares. The risks from borrowing, referred to above, are increased when the Trust buys back and cancels its shares.

Derivatives
The Trust can make use of derivatives. Derivatives are most often used to offset possible adverse currency and market movements. As a result, there is a risk that potential gains may be restricted in a rising market. If derivatives were ever used for speculative purposes, there would be a high risk of loss to the Trust because of the highly volatile nature of these financial instruments.

Property investment
The Trust has some direct investments in property which may be difficult to sell. Valuations of property are only estimates based on the valuer's opinion rather than of fact. These estimates may not be achieved when the property is sold and this would have the effect of reducing the value of the Trust. Property values are affected by such factors as the level of interest rates, economic growth, fluctuations in property yields and tenant default. Therefore on the realisation of any property, the Trust may receive less than the original amount invested.

Charges to capital
The Trust charges 50% of the investment management and property management fees and 50% of borrowing costs to capital. Consequently, capital growth is reduced. In addition to this, where income is low, the remaining expenses may exceed the total income received and the Trust may not pay a dividend and the capital value would be further reduced.

Regulation
The Trust is a UK public listed company and is not authorised or regulated by the Financial Services Authority.

Baillie Gifford staff interests
The Trust Directors and the staff of Baillie Gifford & Co. may hold shares in the Trust, or may buy or sell such shares.

Information subject to change
The information and opinions expressed on this website are subject to change without notice.