The Scottish Investment Trust PLC

Interim Management Statement

Three Months to 31 July 2012

Objectives

To provide investors, over the longer term, with above-average returns through a diversified portfolio of international equities and to achieve dividend growth ahead of UK inflation.

Review of the three months to 31 July 2012

In the three months to 31 July 2012, the company's net asset value per share (NAV) total return, with borrowings at market value, was -0.9% and with borrowings at par was 1.4%.  The global equity portfolio achieved a total return of 1.5%.  This compares with the 0.6% sterling total return of the FTSE All-World Index^TM and -1.0% from the UK FTSE All-Share Index^TM.  The share price total return was -0.5%.

The level of effective equity gearing rose from 99% to 104% (with borrowings at market value).

On 28 May 2012, the board announced an interim dividend of 4.60p (2011 - 4.60p) per share which was paid to shareholders on 13 July 2012.

At the AGM in January, shareholders voted to renew the company's authority to repurchase its own shares for cancellation.  These powers are used as part of the share buyback policy which is intended to keep the discount to ex-income NAV at or below 9% (with borrowings at market value).  Over the three months, the company repurchased for cancellation 0.7m shares at an average discount of 9.9% and at a cost of £3.2m.  The average discount over the period was 9.1% and the average discount since the introduction of the scheme was 8.7%

Financial Summary

Important information

The Scottish Investment Trust PLC (SIT) is not authorised to give financial advice.  This information should not be considered an offer or solicitation to deal in investments. 

Past performance is not a guide to future performance.  The value of shares and the income from them can go down as well as up as a result of market and currency fluctuations.  You may not get back the amount you invest.

SIT has a long-term policy of borrowing money to invest in equities in the expectation that this will improve returns and, should stockmarkets fall, such borrowings would magnify losses on these investments. The Trust can buy back and cancel its own shares.  All other things being equal this would have the effect of increasing gearing.

All sources SIT unless otherwise stated.

Industry Classification Benchmark (ICB): Source and copyright ^© FTSE International Limited. All rights therein reserved.

NAV is net asset value per share.

In line with our reporting policy, the NAVs are calculated taking the valuation of investments at closing bid or last price, as the case may be. The latest NAVs are unaudited.

"Borrowings at par" is the nominal value of the borrowings less any unamortised issue expenses.

Borrowings at market value is the company's estimate of the 'fair value' of its borrowings. The current estimated fair value of the company's borrowings is based on the redemption yield of the relevant existing reference gilt plus a margin derived from the spread of AA UK corporate bond yields (15 years+) over UK gilt yields (15 years+). The reference gilt for the secured bonds is the 6% UK Treasury Stock 2028 and the reference gilt for the perpetual debenture stocks is the longest dated UK Treasury stock listed in the Financial Times.

"Total assets" means total assets less current liabilities.

Gearing is calculated using borrowings at market value.