RNS Announcement

Baillie Gifford UK Growth Trust plc

Legal entity identifier: 549300XX386SYWX8XW22

For the six months to 31 October 2022

Over the six month period to 31 October 2022, the Company's net asset value per share total return was negative 10.9% compared to a negative 5.8% for the FTSE All-Share Index total return. The share price total return for the same period was negative 11.9%.

¾    Two new positions were initiated in the period: IT infrastructure provider Softcat; and, the digitisation specialist Kainos. One position was sold: online food ordering and delivery company Just Eat Takeaway.com.

¾    The net revenue return per share was 2.22p compared to 2.28p in the corresponding period last year. As highlighted previously, no interim dividend will be declared as all dividends are paid as a single final dividend.

¾    Over the period a total of 2,100,000 shares were bought back for treasury. Following the purchase of a further 300,000 shares since the period end, as at 28 November 2022 the Company has 9,821,700 shares held in treasury accounting for 6.5% of the Company's current shares in issue.^*

¾    Notwithstanding the near term economic challenges, the Board and portfolio managers believe that there is an interesting and growing disconnect between top-down perceptions of the UK market and the long-term opportunities for growth investors.

* This percentage calculation excludes treasury shares from the denominator.

Total return information is sourced from Baillie Gifford/Refinitiv. See disclaimer at the end of this announcement. For a definition of terms see Glossary of Terms and Alternative Performance Measures at the end of this announcement.

Baillie Gifford UK Growth Trust plc invests to achieve capital growth predominantly from investment in UK equities with the aim of providing a total return in excess of the FTSE All-Share Index.

The Company is managed by Baillie Gifford & Co, an Edinburgh based fund management group with around £227 billion under management and advice as at 29 November 2022.

Baillie Gifford UK Growth is a listed UK company. The value of its shares and any income from them can fall as well as rise and investors may not get back the amount invested. The Company is listed on the London Stock Exchange and is not authorised or regulated by the Financial Conduct Authority. You can find up to date performance information about Baillie Gifford UK Growth at bgukgrowthtrust.com^‡.

Past performance is not a guide to future performance. See disclaimer at end of this announcement.

‡      Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.

29 November 2022

For further information please contact:

Anzelm Cydzik, Baillie Gifford & Co  

Tel: 0131 275 2000

Jonathan Atkins, Four Communications

Tel: 0203 920 0555 or 07872 495396

Responsibility Statement

We confirm that to the best of our knowledge:

a)  the condensed set of Financial Statements has been prepared in accordance with FRS 104 'Interim Financial Reporting';

b)  the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (indication of important events during the first six months, their impact on the Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the year); and

c)  the Interim Financial Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

Carolan Dobson

Chairman

29 November 2022

Interim Management Report

Performance

Over the six months to 31 October 2022, the Company's net asset value ('NAV') total return per share declined by 10.9% which compares to a 5.8% decrease in the FTSE All-Share Index, total return, over the same period. The share price total return over the six months declined by 11.9% as the shares moved from a discount of 11.8% to the NAV per share to a discount of 13.0%. Our short term performance continued to disappoint, with the headwinds against our pronounced growth style, that we discussed in the Annual Report, continuing to persist. The paradox is that in operational terms the portfolio in general is continuing to perform satisfactorily and therefore portfolio activity was relatively low.

The main detractors from performance in the period included the kitchen company Howden Joinery, car platform AutoTrader and clean air solution provider Volution. In all three cases, despite strong trading, the market is worried about the impact of an economic downturn in the short term although all of these businesses have compelling growth opportunities over the longer term and strong balance sheets to weather any near term turbulence. Our exposure to fast growing unlisted technology businesses through Molten Ventures was another notable detractor as markets correctly assumed that the fall in valuations in the quoted market would have an impact on the carrying value of Molten's investments; although the pessimism baked into its share price, when compared to its most recent written down valuation of its assets, seems excessive to us. Finally, not owning the major oil stocks in the period was again the other notable detractor to our relative performance.

In terms of positives, we benefitted from a couple of businesses that agreed to be taken over; namely the home emergency service business HomeServe and the information, data and events business Euromoney Institutional Investor. In both cases we were actually supportive of management's growth strategy and although both bids were at significant premiums to the pre bid share price, we would have been happy to have remained owners of both businesses. However, it was clear that the boards of both were determined to accept the bids and we reluctantly decided to accept both offers. The other notable positive in the period was Wise, the foreign exchange platform that offers a more compelling and cheaper proposition to consumers and small businesses than using banks. Like many growth businesses, its shares had been pummelled but our old adage that share prices will reflect fundamentals was partially borne out, with the shares recovering strongly following a very encouraging trading statement where growth was much stronger than expected; this bodes wells for the future.

'A week is a long time in politics' and other market musings

Perhaps one of the main reasons why it's difficult to be a long-term investor is that when events keep coming thick and fast there is natural human tendency to want to make sense of them (or be asked to comment on them). This six month period is no exception.  Although it seems a long time ago now, it was only at the beginning of the period that Boris Johnson dramatically lost the confidence of his MPs and resigned as leader of the Conservative Party, triggering a leadership election that resulted in Liz Truss being appointed as Prime Minister. This ceremonial handing over of power was poignantly the last official act of our late Queen Elizabeth. Her passing, after an incredible seventy years on the throne, led to understandable mourning by many people in the UK and beyond. Yet, with barely a pause, we witnessed yet more astonishing events with the implosion of the Truss Government after a disastrously received 'mini' budget which ultimately led to her resignation as Prime Minister after just 49 days. The subsequent appointment of Rishi Sunak as our first British Asian Prime Minister, and the youngest for over a century and a half, was a moment of tremendous symbolism, yet few would envy his task of trying to restore calm to the market and to attempt to sort out the finances of the Government in the midst of a difficult economic backdrop with a fractious governing party on to its fifth prime minister since the Brexit referendum.

What interested us in this tumultuous period was less the hurly burly of politics and more the attempt by some commentators to sum up the changes seen in this country over the long reign of our late Monarch. In particular, in this 'instant analysis' there was a fundamental misunderstanding of progress in our view. Of course, today we have many pressing social and economic challenges and it's also true that Britain's relative standing in the world has declined in part because of self-inflicted mistakes over the decades. However, what this gloomy, near term focussed analysis forgets is the astonishing progress and general increase in prosperity over the last seventy years. Frankly, much of this progress would amaze previous generations so it begs the question of why this misunderstanding? The answer is deceptively simple: behaviourally, after the novelty wears off, we take most instances of progress, such as a new product, for granted, but quietly and gradually these all incrementally add up over time to something quite dramatic. This is exactly the same when it comes to investing in companies over the long term. However, as mentioned at the start of this commentary, most people don't think like that and would rather we comment on Sterling, interest rates, inflation, domestic and world politics etc. This isn't daft, as they are big questions and, as a former colleague said once, "we all have bosses". Why wouldn't you want to know if you thought we might have the answer? But we don't.

Instead, we'd rather have the honesty and humility in communicating with fellow shareholders to acknowledge that forecasting macro-economic events is a skill we simply don't possess. Moreover, it is a skill that is anathema to our bottom-up style of researching and investing in companies that we believe have superior growth prospects. Of course, we're not blind to the tougher near-term environment but we're also alert to understanding what the opportunities might be for the many businesses that have superior business models and competitive positions. As we've seen many times before, these companies usually come out of tough times with enhanced competitive positions.

Portfolio Update

In terms of portfolio activity, we made some modest changes in the period. The thinking is straightforward. It has clearly been a very tough market for growth stocks, and we have been monitoring a number where the share price has been beaten up but the operational performance is, in fact, ahead of expectations. We, therefore, added to existing holdings in Wise (foreign exchange transfers) and Experian (credit checking) as both stocks have been unfairly derated given their strong fundamentals, and, as noted earlier, it was pleasing that, subsequent to our purchase, Wise reported much better than expected trading.

We also decided to take new holdings in Softcat and Kainos - two businesses which we know well but where valuation has been a stumbling block. Both are beneficiaries of what we think is a very compelling long-term structural trend, namely growth in corporate IT investment. The Covid-19 pandemic has only reinforced the imperative for companies of all shapes and sizes to invest in their IT estate and develop capabilities in areas such as data management and analytics, cyber security and the cloud in order to remain competitive. Softcat is a value-added reseller, mainly serving SMEs in the UK. We think it possesses a differentiated corporate culture which has enabled it to outperform the underlying market consistently and meaningfully. Kainos is a Northern Irish company which leads digitisation projects for the government (but increasingly corporates as well) and is also one of only a handful of Workday software implementation partners globally. Workday is a US enterprise software company which has successfully disrupted the on-premise HR and financial software market with its cloud-based offering. We think Kainos will continue to benefit from the global roll out of Workday's product suite.

These purchases have been funded by reductions in our holdings in the information business RELX and the distributor Bunzl. Both have held up much better in share price terms than many holdings, but their growth profiles are more sedate, so we decided to reallocate capital to our new holdings. We also decided to sell Just Eat Takeaway.com. Although we reduced our holding when it completed the now disastrous US acquisition, it was a mistake not to sell out completely. Our worry is that fierce competition by incumbents and other parties encouraging competition, such as Amazon, will result in businesses never able to exploit network benefits. We have also utilised some borrowings to fund some of purchases and equity gearing stood at 3% as at 31 October 2022.

Outlook

We're currently working hard at developing a pipeline of new investment ideas that might be mispriced in the current environment. We are not market timers or forecasters, but the evidence of a growing opportunity set of potential investments shows there is an interesting and growing disconnect between top-down perceptions of the UK market and what we are starting to see in terms of long-term opportunities for growth investors, notwithstanding the near term economic challenges. In plain English and with apologies to Charles Dickens: it was the worst of times, it was the best of times.

Iain McCombie & Milena Mileva

Baillie Gifford & Co

29 November 2022

Valuing Private Companies

We aim to hold our private company investments at `fair value' i.e., the price that would be paid in an open-market transaction. Valuations are adjusted both during regular valuation cycles and on an ad hoc basis in response to `trigger events'. Our valuation process ensures that private companies are valued in both a fair and timely manner.

The valuation process is overseen by a valuations committee at Baillie Gifford which takes advice from an independent third party (S&P Global). The portfolio managers feed into the process, but the valuations committee owns the process and the portfolio managers only receive final valuation notifications once they have been applied.

We revalue the private holdings on a three-month rolling cycle, with one-third of the holdings reassessed each month. The prices are also reviewed twice per year by the Company's Board and are subject to the scrutiny of external auditors in the annual audit process.

Beyond the regular cycle, the valuations committee also monitors the portfolio for certain `trigger events'. These may include: changes in fundamentals; a takeover approach; an intention to carry out an Initial Public Offering (IPO); or significant changes to the valuation of comparable public companies.

The valuations committee also monitors relevant market indices on a weekly basis and updates valuations in a manner consistent with our external valuer's (S&P Global) most recent valuation report where appropriate. When market volatility is particularly pronounced the team undertake these checks daily. Any ad hoc change to the fair valuation of any holding is implemented swiftly and reflected in the next published NAV. There is no delay.

As at 31 October 2022, the valuation for Wayve was based on the recent purchase price adjusted for market movements in comparable companies.

List of Investments at 31 October 2022

 (U)  Denotes unlisted (private company) investment.

Stocks highlighted in bold are the 20 largest holdings.

Income Statement (unaudited)

The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital columns are prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in the above statements derive from continuing operations.

A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.

The accompanying notes below are an integral part of the Financial Statements.

Balance Sheet (unaudited)

* See Glossary of Terms and Alternative Performance Measures below.

The accompanying notes below are an integral part of the Financial Statements.

Statement of Changes in Equity (unaudited)

For the six months ended 31 October 2022

For the six months ended 31 October 2021

* The Capital Reserve balance at 31 October 2022 includes investment holding losses of £38,250,000 (31 October 2021 - gains of £64,943,000).

The accompanying notes below are an integral part of the Financial Statements.

Condensed Cashflow Statement (unaudited)

* Cash from operations includes dividends received of £5,470,000 (2021 - £5,218,000).

† Cash and cash equivalents represent cash at bank and short term money market deposits repayable on demand.

The accompanying notes below are an integral part of the Financial Statements.

Notes to the Condensed Financial Statements (unaudited)

1.   The condensed Financial Statements for the six months to 31 October 2022 comprise the statements set out above together with the related notes below. They have been prepared in accordance with FRS 104 'Interim Financial Reporting' and the AIC's Statement of Recommended Practice issued in November 2014 and updated in July 2022 with consequential amendments and have not been audited or reviewed by the Auditor pursuant to the Auditing Practices Board Guidance 'Review of Interim Financial Information'. The Financial Statements for the six months to 31 October 2022 have been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements at 30 April 2022.

Going Concern

Having considered the nature of the Company's principal risks and uncertainties, as set out below, together with its current position, investment objective and policy, its assets and liabilities and projected income and expenditure, together with the Company's dividend policy, it is the Directors' opinion that the Company has adequate resources to continue in operational existence for the foreseeable future. The Board has, in particular, considered the ongoing impact of market volatility since the Covid-19 pandemic and over recent months due to macroeconomic and geopolitical concerns, including the Russia-Ukraine conflict, but does not believe the Company's going concern status is affected. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly and could be sold to repay borrowings if required. All borrowing facilities require the prior approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis. In accordance with the Company's Articles of Association, shareholders have a right to vote on the continuation of the Company every five years, the next vote being in 2024. Accordingly, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing these Financial Statements and confirm that they are not aware of any material uncertainties which may affect the Company's ability to continue to do so over a period of at least twelve months from the date of approval of these Financial Statements.

2.   The financial information contained within this Interim Financial Report does not constitute statutory accounts as defined in sections 434 to 436 of the Companies Act 2006. The financial information for the year ended 30 April 2022 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The Auditor's Report on those accounts was not qualified, did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report, and did not contain a statement under sections 498(2) or (3) of the Companies Act 2006.

3.   Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed by the Company as its Alternative Investment Fund Manager (AIFM) and Company Secretary. The investment management function has been delegated to Baillie Gifford & Co. The management agreement can be terminated on six months' notice. The annual fee is 0.5% of net asset value, calculated and payable quarterly.

4.  

Net return per ordinary share is based on the above totals of revenue and capital and the weighted average number of ordinary shares in issue during each period. There are no dilutive or potentially dilutive shares in issue.

5.  

6.   Fair Value Hierarchy

The fair value hierarchy used to analyse the basis on which the fair values of financial instruments held at fair value through the profit or loss account are measured is described below. Fair value measurements are categorised on the basis of the lowest level input that is significant to the fair value measurement.

Level 1 - using unadjusted quoted prices for identical instruments in an active market;

Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and

Level 3 - using inputs that are unobservable (for which market data is unavailable).

* The unlisted preference shares investment represents a holding in Wayve Technologies Limited.

The fair value of listed investments is either bid price or last traded price depending on the convention of the exchange on which the investment is listed. Listed investments are categorised as Level 1 if they are valued using unadjusted quoted prices for identical instruments in an active market and as Level 2 if they do not meet all these criteria but are, nonetheless, valued using market data. Unlisted investments are valued at fair value by the Directors following a detailed review and appropriate challenge of the valuations proposed by the Managers. The Managers' unlisted investment policy applies methodologies consistent with the International Private Equity and Venture Capital Valuation Guidelines ('IPEV').

These methodologies can be categorised as follows: (a) market approach (multiples, industry valuation benchmarks and available market prices); (b) income approach (discounted cash flows); and (c) replacement cost approach (net assets). The Company's holding in an unlisted investment is categorised as Level 3 as unobservable data is a significant input to its fair value measurement.

7.   At 31 October 2022 the Company had borrowings of £14,450,000 (30 April 2022 - £6,450,000). This was drawn down under the one year £30 million unsecured revolving credit loan facility with The Royal Bank of Scotland International Limited which expires in July 2023.

8.   At 31 October 2022, the Company had the authority to buy back 22,226,628 ordinary shares and to allot or sell from treasury 15,299,548 ordinary shares without application of pre-emption rights in accordance with the authorities granted at the AGM in September 2022. During the six months to 31 October 2022, no shares were sold from treasury (year to 30 April 2022 - 475,000 ordinary shares were sold from treasury at a premium to net asset value, with a nominal value of £119,000 raising net proceeds of £1,141,000). During the six months to 31 October 2022, 2,100,000 ordinary shares with a nominal value of £525,000 were bought back at a total cost of £3,317,000 and held in treasury (year to 30 April 2022 - no shares were bought back).

9.   During the period, transaction costs on equity purchases amounted to £58,000 (31 October 2021 - £23,000) and on equity sales £6,000 (31 October 2021 - £2,000).

10.   Related Party Transactions

There have been no transactions with related parties during the first six months of the current financial year that have materially affected the financial position or the performance of the Company during that period and there have been no changes in the related party transactions described in the last Annual Report and Financial Statements that could have had such an effect on the Company during that period.

None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

Glossary of Terms and Alternative Performance Measures (APM)

Total Assets

Total assets less current liabilities, before deduction of all borrowings.

Net Asset Value

Net Asset Value (NAV) is the value of total assets less liabilities (including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares in issue (excluding treasury shares).

Net Liquid Assets

Net liquid assets comprise current assets less current liabilities, excluding borrowings.

Discount/Premium (APM)

As stockmarkets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share 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 the NAV per share, it is said to be trading at a premium.

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.

* The dividend adjustment factor is calculated on the assumption that the dividends of 3.91p (2021 - 2.42p) paid by the Company during the year were reinvested into shares of the Company at the cum income NAV per share/share price, as appropriate, at the ex-dividend date.

Ongoing Charges (APM)

The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average net asset value. The ongoing charges have been

calculated on the basis prescribed by the Association of Investment Companies.

Turnover (APM)

Annual turnover is a measure of portfolio change or trading activity in a portfolio. Turnover is calculated as the minimum of purchases and sales in a month,

divided by the average market value of the portfolio, summed to get rolling 12 month turnover data.

Gearing (APM)

At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets.

Equity gearing is the Company's borrowings adjusted for cash and cash equivalents expressed as a percentage of shareholders' funds.

Potential gearing is the Company's borrowings expressed as a percentage of shareholders' funds.

Leverage (APM)

For the purposes of the Alternative Investment Fund Managers (AIFM) Regulations, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company's exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company's positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other.

Active Share (APM)

Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index.

Unlisted (Private) Company

An unlisted (private) company means a company whose shares are not available to the general public for trading and not listed on a stock exchange.

Principal Risks and Uncertainties

The principal risks facing the Company are financial risk, investment strategy risk, climate and governance risk, discount risk, regulatory risk, custody and depositary risk, operational risk, cyber security risk, leverage risk, political risk and emerging risks. An explanation of these risks and how they are managed is set out on pages 7 to 9 of the Company's Annual Report and Financial Statements for the year to 30 April 2022 which is available on the Company's website: bgukgrowthtrust.com. The principal risks and uncertainties have not changed since the date of that report.

Third Party Data Provider Disclaimer

No third party data provider ('Provider') makes any warranty, express or implied, as to the accuracy, completeness or timeliness 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 to any recipient of the data for any inaccuracies, errors or omissions in the index data included in this document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom.

No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate.

Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract (including under an indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, recommendations, forecasts, judgements, or any other conclusions, or any course of action determined, by you or any third party, whether or not based on the content, information or materials contained herein.

FTSE Index Data

London Stock Exchange Group plc and its group undertakings (collectively, the 'LSE Group'). © LSE Group 2022. FTSE Russell is a trading name of certain of the LSE Group companies. 'FTSE®' 'Russell®', FTSE Russell ®, is/are a trade mark(s) of the relevant LSE Group companies and is/are used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept 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 communication.

No further distribution of data from the LSE Group is permitted without the relevant LSE Group company's express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.

Sustainable Finance Disclosure Regulation ('SFDR')

The EU Sustainable Finance Disclosure Regulation ('SFDR') does not have a direct impact in the UK due to Brexit, however, it applies to third-country products marketed in the EU. As Baillie Gifford UK Growth Trust plc is marketed in the EU by the AIFM, BG & Co Limited, via the National Private Placement Regime (NPPR) the following disclosures have been provided to comply with the high-level requirements of SFDR.

The AIFM has adopted Baillie Gifford & Co's Governance and Sustainable Principles and Guidelines as its policy on integration of sustainability risks in investment decisions.

Baillie Gifford & Co's approach to investment is based on identifying and holding high quality growth businesses that enjoy sustainable competitive advantages in their marketplace. To do this it looks beyond current financial performance, undertaking proprietary research to build an in-depth knowledge of an individual company and a view on its long-term prospects. This includes the consideration of sustainability factors (environmental, social and/or governance matters) which it believes will positively or negatively influence the financial returns of an investment.

More detail on the Managers' approach to sustainability can be found in the Governance and Sustainability Principles and Guidelines document, available publicly on the Baillie Gifford website (bailliegifford.com).

Taxonomy Regulation

The Taxonomy Regulation establishes an EU-wide framework of criteria for environmentally sustainable economic activities in respect of six environmental objectives. It builds on the disclosure requirements under SFDR by introducing additional disclosure obligations in respect of Alternative Investment Funds that invest in an economic activity that contributes to an environmental objective. The Company does not commit to make sustainable investments as defined under SFDR. As such, the underlying investments do not take into account the EU criteria for environmentally sustainable economic activities.

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