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BAILLIE GIFFORD FUNDS
Plan pursuant to Rule 18f-3 under the
INVESTMENT COMPANY ACT OF 1940
Effective June 29, 2000
This Plan (the "Plan") is adopted by Baillie Gifford Funds (the "Trust")
pursuant to Rule 18f-3 under the Investment Company Act of 1940 (the "Act") and
sets forth the general characteristics of, and the general conditions under
which the Trust may offer, multiple classes of shares of its now existing and
hereafter created portfolios ("Funds"). This Plan may be revised or amended from
time to time as provided below.
CLASS DESIGNATIONS
Each Fund of the Trust may from time to time issue one or more of the
following classes of shares: Class I Shares, Class II Shares and Class III
Shares. Each of the classes of shares of any Fund will represent interests in
the same portfolio of investments and, except as described herein, shall have
the same rights and obligations as each other class. Each class shall be subject
to such investment minimums and other conditions of eligibility as are set forth
in the Trust's prospectus or statement of additional information as from time to
time in effect (the "Prospectus").
CLASS ELIGIBILITY
Class eligibility is generally dependent on the size of the client's total
account under the management of Baillie Gifford Overseas Limited, the Trust's
investment adviser (referred to herein as "BGO") and its affiliates, as
described from time to time in the Prospectus. With certain exceptions described
below, eligibility for Class I, Class II and Class III Shares depends on a
client's "TOTAL INVESTMENT" with BGO.
A client's Total Investment will be determined by BGO as of December 31 of
each year and on such other dates as may be determined by BGO (each a
"Determination Date"). As provided below, a client's Total Investment as of any
Determination Date will equal the market value of assets managed by BGO and its
affiliates for the client (whether in a pooled vehicle or otherwise) as of such
Determination Date.
Investments by defined contribution pension plans (such as 401(k) plans)
will always be invested in the class of shares of the relevant Fund(s) with the
highest Shareholder Service Fee offered from time to time by the relevant
Fund(s) regardless of the size of the investment, and will not be eligible to
convert to other classes.
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BGO will make all determinations as to aggregation of client accounts for
purposes of determining eligibility.
CLASS CHARACTERISTICS
The sole difference among the various classes of shares is the level of
shareholder service fee ("Shareholder Service Fee") borne by the class for
client and shareholder service, reporting and other support provided to such
class by BGO.
The multiple class structure reflects the fact that, as the size of the
client relationship increases, the cost to service that relationship is expected
to decrease as a percentage of the account. Thus, the Shareholder Service Fee is
lower for classes for which eligibility criteria generally require greater
assets under BGO's management.
Certain Funds are or may be subject to either an initial purchase premium,
a redemption fee, or both. The initial purchase premium and redemption fee, if
any, may, in some limited cases, be subject to reduction or waiver if BGO
determines that there are minimal brokerage and/or transaction costs incurred as
a result of the purchase or redemption, as set forth in the Prospectus in effect
from time to time.(1)
ALLOCATIONS TO EACH CLASS
EXPENSE ALLOCATIONS
Shareholder Service Fees payable by the Trust to the shareholder servicer
of the Trust's shares, which may be BGO (the "Shareholder Servicer"), shall be
allocated, to the extent practicable, on a class-by-class basis. Subject to the
approval of the Trust's Board of Trustees, including a majority of the
independent Trustees, the following "Class Expenses" may (if such expense is
properly assessable at the class level) in the future be allocated on a
class-by-class basis: (a) transfer agency costs attributable to each class, (b)
printing and postage expenses related to preparing and distributing materials
such as shareholder reports, prospectuses and proxy statements to current
shareholders of a specific Class, (c) SEC registration fees incurred with
respect to a specific class, (d) blue sky and foreign registration fees and
expenses incurred with respect to a specific class, (e) the expenses of
administrative personnel and services required to support shareholders of a
specific class (including, but not limited to, maintaining telephone lines and
personnel to answer shareholder inquiries about their accounts or about the
Trust), (f) litigation and other legal expenses relating to a specific class of
shares, (g) Trustees' fees or expenses incurred as a result of issues relating
to a specific class of shares, (h) accounting and
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(1) All purchase premiums are paid to and retained by the relevant Fund and
are intended to cover the brokerage and other costs associated with putting an
investment to work in the relevant markets. All redemption fees are paid to and
retained by the relevant Fund and are designed to allocate transaction costs
caused by shareholder activity to the shareholder generating the activity.
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consulting expenses relating to a specific class of shares, (i) any fees imposed
pursuant to a non-Rule 12b-1 shareholder service plan that relate to a specific
class of shares, and (j) any additional expenses, not including advisory or
custodial fees or other expenses related to the management of the Trust's
assets, if these expenses are actually incurred in a different amount with
respect to a class, or if services are provided with respect to a class, or if
services are provided with respect to a class that are of a different kind or to
a different degree than with respect to one or more other classes.
All expenses not now or hereafter designated as Class Expenses ("Fund
Expenses") will be allocated to each class on the basis of the net asset value
of that class in relation to the net asset value of the relevant Fund.
However, notwithstanding the above, a Fund may allocate all expenses other
than Class Expenses on the basis of any methodology permitted by Rule 18f-3(c)
under the Act, provided, however, that until such time as this Plan is amended
with respect to the Fund's allocation methodology, the Fund will allocate all
expenses other than Class Expenses on the basis of relative net assets.
WAIVERS AND REIMBURSEMENTS
BGO (and the Shareholder Servicer, if different) may choose to waive or
reimburse Shareholder Service Fees, or any other Class Expenses, on a voluntary
or temporary basis.
INCOME, GAINS AND LOSSES
Income and realized and unrealized capital gains and losses shall be
allocated to each class on the basis of the net asset value of that class in
relation to the net asset value of the relevant Fund.
Each Fund may allocate income and realized and unrealized capital gains and
losses to each share based on any methodology permitted by Rule 18f-3(c)(2)
under the Act, consistent with the provisions set forth in "Expense Allocations"
above.
CONVERSION AND EXCHANGE FEATURES
On December 31 of each year and on such other dates as may be determined by
BGO (each a "DETERMINATION DATE") the value of each client's Total Investment
with BGO will be determined. Based on that determination, each client's shares
of each Fund will be automatically converted to the class of shares of such Fund
which is then being offered with the lowest Shareholder Service Fee for which
the client is eligible based on the amount of their Total Investment or Total
Fund Investment, as the case may be, on the Determination Date. The conversion
will occur within 15 business days following the Determination Date. Also, if a
client makes an additional investment in a Fund or puts additional assets under
BGO's management so as to cause the client to be eligible for a new class of
shares, such determination will be made as of
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the close of business on the last day of the calendar quarter in which the
investment was made, and the conversion will be effected within 15 business days
of that quarter. Notwithstanding the foregoing, there will be no automatic
conversion from a class of shares with a lower Shareholder Service Fee to a
class of shares with a higher Shareholder Service Fee unless appropriate
disclosure regarding the higher Shareholder Service Fee has been given to the
affected client(s) in the Prospectus or otherwise.
Shares of one class will always convert into shares of another class on the
basis of the relative net asset value of the two classes, without the imposition
of any sales load, fee or other charge. The conversion of a client's investment
from one class of shares to another is not a taxable event, and will not result
in the realization of gain or loss that may exist in Fund shares held by the
client. The client's tax basis in the new class of shares will equal their basis
in the old class before conversion. The conversion of shares from one class to
another class of shares may be suspended if the opinion of counsel obtained by
the Trust that the conversion does not constitute a taxable event under current
federal income tax law is no longer available.
Notwithstanding anything to the contrary in this Plan, pursuant to Article
VI, Section 3 of the Trust's Agreement and Declaration of Trust, the Trust has
the right to redeem unilaterally any shareholder of any Fund if at such time
such shareholder owns shares of any Fund or class thereof "having an aggregate
net asset value of less than an amount determined from time to time by the
Trustees."
DIVIDENDS
Dividends paid by the Trust with respect to its Class I, Class II and Class
III Shares, to the extent any dividends are paid, will be calculated in the same
manner, at the same time and will be in the same amount, except that any
Shareholder Service Fee payments relating to a class of shares will be borne
exclusively by that class and, if applicable, Class Expenses relating to a class
shall be borne exclusively by that class.
VOTING RIGHTS
Each share of the Trust entitles the shareholder of record to one vote.
Each class of shares of the Trust will vote separately as a class on matters for
which class voting is required under applicable law.
RESPONSIBILITIES OF THE TRUSTEES
On an ongoing basis, the Trustees will monitor the Trust for the existence
of any material conflicts among the interests of the eight classes of shares.
The Trustees shall further monitor on an ongoing basis the use of waivers or
reimbursement of expenses by BGO to guard against cross-subsidization between
classes. The Trustees, including a majority of the independent Trustees, shall
take such action as is reasonably necessary to eliminate any such conflict that
may develop.
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REPORTS TO THE TRUSTEES
BGO (or the Shareholder Servicer if different) will be responsible for
reporting any potential or existing conflicts among the three classes of shares
to the Trustees.
AMENDMENTS
The Plan may be amended from time to time in accordance with the provisions
and requirements of Rule 18f-3 under the Act.
Adopted this 29th day of June, 2000
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