Final Results

RNS Number : 0500G

Scottish Mortgage Inv Tst PLC

06 May 2011

 



 SCOTTISH MORTGAGE INVESTMENT TRUST PLC

Scottish Mortgage's results for the year to 31 March 2011 showed strong increases in the share price and net asset per share of 22% and 18% respectively, both well ahead of the FTSE All World Index which rose by 6% in sterling terms. The share price closed at 742p, a new record for the financial year end.

§ A long term view is taken and the five year figures are important to shareholders. The five year total return (capital and dividends) was 58% in share price terms (53% in net asset value) while the benchmark total return was 35%. Scottish Mortgage was the top performing trust in the Global Growth Sector over five years in NAV terms as shown by the Association of Investment Companies' rankings at 31 March 2011.

§ A final dividend of 6.2p is proposed. If approved this will give a total for the year of 12.0p, a 6.2% increase on last year and the 29^th successive dividend increase greater than the prevailing rate of UK inflation. Earnings per share rose 19% to 13.3p.

§ The period was marked by continued recovery in equity markets and companies generally have performed well. Scottish Mortgage is managed neither on short term nor a market led basis but instead the focus is on careful analysis of individual companies while considerable effort is also made to identify major changes in trends that might take place within intervals of decades rather than individual years.

§ The Managers remain enthusiastic about the long term outlook and currently find an abundance of interesting long term investment propositions. Two important contentions are that: many countries are growing rapidly and developing a large, mainly urban and consumption driven, middle class;   and that the pace of technological discovery is accelerating with the impact likely to be felt beyond the traditionally defined technology sector.

§ The Managers fully support the Board's desire to maintain Scottish Mortgage's low cost advantage.  At 0.51% of shareholders' funds the total expense ratio is amongst the lowest of similar, actively managed international funds. Low costs significantly boost cumulative long term returns

6 May 2011

For further information please contact:

James Budden, Baillie Gifford & Co       07750 201208 or 0131 275 2816

Roland Cross, Broadgate                       07831 401309 or 020 7726 6111

Scottish Mortgage is managed by Baillie Gifford & Co, the Edinburgh based fund management group with around £75 billion under management and advice as at 5 May 2011.

Investment Trusts are UK public listed companies and are not authorised or regulated by the Financial Services Authority.

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

 

Chairman's Statement

Investment Performance

The past year has again been a good one for Scottish Mortgage: net asset value (NAV) per share rose by 18% and the share price by 22%, both well ahead of the 6% increase in our benchmark (the FTSE All World Index in sterling terms).  Closing at 742 pence, the share price set a new record for the year end.  Despite the reverses seen in the wake of the 2008 Lehman-precipitated financial crisis our five year figures, too, are excellent.  These in many ways are more important to shareholders and at 31 March 2011 the five year total return (capital and dividends) was 58% in share price terms (53% in net asset value) while the benchmark total return was 35%.  While shareholders should remember that not every year will be as good as the period just ended, it is pleasing to report that Scottish Mortgage was the top performing trust in the Global Growth Sector over five years in NAV terms as shown by the Association of Investment Companies' rankings at 31 March 2011.

Investment Philosophy

The Managers' investment philosophy has not changed and remains one to which the Directors fully subscribe.  Companies are analysed by the Managers using a process which includes appraisal of: the strength of management, competitive position, the customer perspective, the prospects for sales and margins and the current and potential valuation.  Also of particular importance to the Managers' view is establishing how their assessment differs from the market and trying to answer the question "what will happen after five years?".   The approach and perspective is neither short term nor market led.  Instead considerable effort is made to identify major changes in trends that might take place within intervals of decades rather than individual years.  The Managers' Review contained within the Annual Report gives an original view of the investment perspective and provides insight into Baillie Gifford's modus operandi and investment process, both of which are central to what this Trust offers its owners.

The Managers also fully support the Board's desire to maintain Scottish Mortgage's low cost advantage.  At 0.51%, the total expense ratio is amongst the lowest of similar international funds. Low costs significantly boost cumulative long term returns.

As pointed out in previous years, Scottish Mortgage does not attempt to track any index and as we have seen its performance is therefore likely to diverge from the benchmark we have adopted as most suitable for a global growth fund.  There will be some years when relative returns are negative as well as years when returns are positive but when the index does better than the Company.  That is the characteristic of Scottish Mortgage's investment proposition and, in the Directors' view, the shares are an investment for those who can tolerate this volatility and who consequently are likely to be long term holders.

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

Chairman's Statement (Ctd)

World View

The past twelve months have been marked by continued recovery in equity markets as, notwithstanding earthquakes, well explosions and revolutions, confidence has largely been maintained.  Companies generally have performed well, the financial system has been relatively stable as banks strengthen their balance sheets and, in the public sector in some countries (notably the UK), attention has turned to cutting government expenditure and debt.  Interest rates in the US and Europe have stayed low, many economies have been subject to continued stimulus through quantitative easing and other measures while inflation, though present, has not generally proved problematic.

The strength of the German economy has been particularly impressive while those who feared a double dip recession in the US and other parts of the developed world have been spared such disappointment.  Peripheral parts of Europe have struggled considerably and are likely to require support from the centre for some time yet.  However bleak the current financial outlook for several troubled Eurozone states, for now the indications from (particularly) Germany are that the bail-outs required by Greece, Ireland and Portugal are a price that has to be paid to defend the integrity of the Euro and to protect the balance sheets of those banks whose lending to other Eurozone countries has perhaps verged on the imprudent.

That great engine of growth, the Chinese economy, has been restrained somewhat by central policy tightening, a welcome necessity given earlier fears of overheating.  Nonetheless, in 2010 Chinese growth was still a remarkable 10.3% and the year will be remembered as the one when China overtook Japan to become the world's second largest economy.  Many developing nations continue to enjoy good growth rates and have increasingly stable financial, social and political systems as well as a rapidly expanding class of consumers.

Gearing

We continue to believe in the use of gearing as a tool to enhance shareholder returns, particularly when we are able to access borrowings at low cost, assisted by the Company's Aaa long term credit rating. Throughout the period Scottish Mortgage's gearing ratios have been maintained at a broadly constant level.  As asset prices rose, this entailed additional borrowings and a further €61 million was taken out during the year.  At the year end gross assets totalled £2,500 million and borrowings of £370 million represented 15% of that total.  If the value of our cash deposits and bond portfolio is taken into account, net gearing was approximately 10%.

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

Chairman's Statement (Ctd)

Earnings and Dividend

Earnings at 13.3p per share were buoyant, increasing 19% on the previous year and a final dividend of 6.2p (2010 - 5.8p) is proposed.  This will give a total for the year of 12p, a 6.2% increase on last year's 11.3p and an increase over the past five years of 41%.  If approved by shareholders, this provides a doubling of the dividend in ten years and will represent for the 29^th successive year a dividend increase greater than the prevailing rate of UK inflation.

Discount and Buybacks

The discount has narrowed during the year; while the Board finds this gratifying, we often wonder, given the remarkable changes which this Company has seen in the past decade and the performance record achieved, why our shares trade at a discount at all.  The Managers continue to focus their marketing efforts on maintaining a good flow of relevant information to existing shareholders and potential shareholders.  Attracting new generations of long term owners is important for our future and Scottish Mortgage continues to invest in this project.

As in previous years, when supply exceeded immediate demand shares were bought back.  Over the year 3 million shares were re-purchased (considerably fewer than the 12.6 million re-purchased in the preceding year) and were transferred into treasury, thus enhancing NAV per share by 1.1p.

AGM

The Annual General Meeting will be held in Edinburgh at Baillie Gifford's offices at 4.30pm on 30th June.

One resolution to be put to the Meeting is a request to increase the limit on Directors' fees.  Although the current level remains within the allowed ceiling authorised by the Company's Articles, the Resolution seeks to replace specific limits with an aggregate limit for all Directors which will provide flexibility in future years.

At the Meeting, James Anderson, your Manager, and his Deputy, Tom Slater, will make short presentations on the investments.  The Directors very much hope that we will meet you then.

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

Chairman's Statement (Ctd)

Outlook

We are living in times of extraordinary economic change and any coherent investment strategy needs to take account of the growing importance of China and the rapid economic development of countries such as Brazil and India; and at the same time the relative stagnation of so many economies in what used to be called the developed world.  In the past 20 years, the Chinese economy has grown over sixfold, far outstripping the US and Japan.

The Managers remain enthusiastic about the long term outlook and currently find an abundance of interesting long term investment propositions.  Two familiar and important contentions suggest that this is a good time to take a long term view of markets.  First, many countries are growing rapidly and developing a large, mainly urban and consumption driven, middle class.  Secondly, we appear to be in a phase of accelerating technological discovery, the impact of which is likely to be felt beyond the traditionally defined technology sector including, amongst others, in the fields of healthcare, biotech, robotics, artificial intelligence, agriculture and alternative energy. These themes are developed in the Managers' Review which is contained within the Annual Report.

Concurrent with these economic changes, the interested investor has a dazzling array of schemes and opportunities to have money managed in ever more exotic, ostensibly scientific - and often expensive - manners.  Yet it is far from clear that any of these approaches has, on a reasonably consistent basis, outperformed the entirely straightforward approach that Scottish Mortgage pursues. Indeed, once high and often multiple levels of management fees are taken into account in these more complex approaches, it is rarely the investor who comes out in front.

So, this is a good moment to reflect on what Scottish Mortgage is seeking to offer its shareholders: 99% of our equity exposure is achieved by holding the shares of companies individually selected by our Managers, as distinct from investing in other funds or derivatives.  Our aim is to provide a long term transparent, low cost and tradeable investment vehicle which captures exposure to a diversified portfolio of companies around the world, capable of delivering returns that exceed both inflation and the market average.  By any measure, our Managers have succeeded in recent years and I know that shareholders will join me in congratulating them on their continuing success.

John Scott

Chairman

5 May 2011

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

 

The following is the unaudited preliminary statement for the year to 31 March 2011 which was approved by the Board on 5 May 2011. The Board of Scottish Mortgage Investment Trust PLC is recommending to the Annual General Meeting of the Company to be held on 30 June 2011 the payment of a final dividend of 6.20p (5.80p last year) per ordinary share making 12.00p (11.30p last year) for the year ended 31 March 2011.

INCOME STATEMENT

(unaudited)

	For the year ended 31 March 2011				For the year ended 31 March 2010
	Revenue £'000	Capital £'000	Total £'000		Revenue £'000	Capital £'000	Total  £'000
Gains on investments	-	325,193	325,193		-	837,604	837,604
Currency (losses)/gains	-	(4,578)	(4,578)		-	1,593	1,593
Income (note 2)	53,703	-	53,703		49,174	-	49,174
Investment management fee	(3,638)	(3,638)	(7,276)		(3,027)	(3,027)	(6,054)
Other administrative expenses	(2,438)	-	(2,438)		(2,289)	-	(2,289)
Net return before finance costs and taxation	47,627	316,977	364,604		43,858	836,170	880,028
Finance costs of borrowings	(8,814)	(8,814)	(17,628)		(8,414)	(8,414)	(16,828)
Net return on ordinary activities before taxation	38,813	308,163	346,976		35,444	827,756	863,200
Tax on ordinary activities	(4,439)	-	(4,439)		(5,244)	1,143	(4,101)
Net return on ordinary activities after taxation	34,374	308,163	342,537		30,200	828,899	859,099
Net return per ordinary share (note 3)	13.32p	119.40p	132.72p		11.18p	306.88p	318.06p

The total column of this statement is the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year.

A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above statement. 

 SCOTTISH MORTGAGE INVESTMENT TRUST PLC

BALANCE SHEET

(unaudited)

	At 31 March  2011	At 31 March 2010
	£'000	£'000
FIXED ASSETS
Investments held at fair value through profit or loss	2,486,251	2,130,489
CURRENT ASSETS
Debtors	15,468	9,824
Cash and short term deposits	14,699	18,898
	30,167	28,722
CREDITORS
Amounts falling due within one year (note 5)	(178,745)	(167,751)
NET CURRENT LIABILITIES	(148,578)	(139,029)
TOTAL ASSETS LESS CURRENT LIABILITIES	2,337,673	1,991,460
CREDITORS
Amounts falling due after more than one year (note 5)	(205,379)	(151,552)
	2,132,294	1,839,908
CAPITAL AND RESERVES
Called-up share capital	71,086	71,086
Capital redemption reserve	19,094	19,094
Capital reserve	1,965,865	1,677,917
Revenue reserve	76,249	71,811
SHAREHOLDERS' FUNDS	2,132,294	1,839,908

NET ASSET VALUE PER ORDINARY SHARE	816.5p	692.8p
(After deducting borrowings at fair value) (note 6)
NET ASSET VALUE PER ORDINARY SHARE	833.5p	711.2p
(After deducting borrowings at par)
ORDINARY SHARES IN ISSUE (note 7)	256,519,897	259,519,897

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

(unaudited)

For the year ended 31 March 2011

	Share capital £'000	Capital redemption reserve £'000	Capital reserve† £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 April 2010	71,086	19,094	1,677,917	71,811	1,839,908
Net return on ordinary activities after taxation	-	-	308,163	34,374	342,537
Shares bought back (note 7)	-	-	(20,215)	-	(20,215)
Dividends paid during the year	-	-	-	(29,936)	(29,936)
Shareholders' funds at 31 March 2011	71,086	19,094	1,965,865	76,249	2,132,294

For the year ended 31 March 2010

	Share capital £'000	Capital redemption reserve £'000	Capital reserve†   £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 April 2009	71,086	19,094	918,702	71,455	1,080,337
Net return on ordinary activities after taxation	-	-	828,899	30,200	859,099
Shares bought back (note 7)	-	-	(69,684)	-	(69,684)
Dividends paid during the year	-	-	-	(29,844)	(29,844)
Shareholders' funds at 31 March 2010	71,086	19,094	1,677,917	71,811	1,839,908

 ^{†The Capital Reserve balance at 31 March 2011 includes investment holding gains on fixed asset investments of £838,328,000} (31 March 2010 - gains of £622,630,000).

 SCOTTISH MORTGAGE INVESTMENT TRUST PLC

SUMMARISED CASH FLOW STATEMENT (unaudited)
	For the year ended 31 March 2011		For the year ended 31 March 2010
	£'000	£'000	£'000	£'000
Net cash inflow from operating Activities		49,530		40,740
NET CASH OUTFLOW FROM SERVICING OF FINANCE		(18,323)		(18,968)
TAXATION
Income tax refunded/(paid)	21		(13)
Overseas tax incurred	(4,488)		(4,080)
TOTAL TAX PAID		(4,467)		(4,093)
FINANCIAL INVESTMENT
Acquisitions of investments	(446,404)		(460,680)
Disposals of investments	414,713		527,163
Realised currency profit/(loss)	1,099		(1,508)
Net cash (OUTFLOW)/INFLOW from financial investment		(30,592)		64,975
EQUITY DIVIDENDS PAID (note 4)		(29,936)		(29,844)
NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING		(33,788)		52,810
FINANCING
Shares bought back (note 7)	(20,215)		(69,684)
Bank loans repaid	(151,049)		(66,874)
Bank loans drawn down	200,853		66,872
NET CASH INFLOW/(OUTFLOW) FROM FINANCING		29,589		(69,686)
DECREASE IN CASH		(4,199)		(16,876)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Decrease in cash in the period		(4,199)		(16,876)
(Increase)/decrease in bank loans		(49,804)		2
Exchange movement on bank loans		(5,677)		3,101
Other non-cash changes		174		153
MOVEMENT IN NET DEBT IN THE YEAR		(59,506)		(13,620)
NET DEBT AT 1 APRIL		(295,779)		(282,159)
NET DEBT AT 31 MARCH		(355,285)		(295,779)
RECONCILIATION OF NET RETURN BEFORE FINANCE COSTS AND TAXATION TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Net return on ordinary activities before finance costs and taxation		364,604		880,028
Gains on investments - securities		(325,193)		(837,604)
Currency losses/(gains)		4,578		(1,593)
Amortisation of fixed income book cost		(46)		(79)
Decrease in accrued income		1,028		270
(Increase)/decrease in debtors		(362)		449
Increase/(decrease) in creditors		4,921		(731)
NET CASH INFLOW FROM OPERATING ACTIVITIES		49,530		40,740

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

 

DISTRIBUTION OF ASSETS

 (unaudited)

 

		At 31 March 2011 %	At 31 March 2010 %
North America		33.6	28.2
South America		4.0	8.7
Europe		34.5	35.6
	United Kingdom	9.6	11.1
	Eurozone	11.0	8.6
	Developed Europe (non Euro)	7.8	9.7
	Rest of Europe	6.1	6.2
Africa and Middle East		0.4	0.5
Asia		20.1	19.0
	China	13.6	8.9
	India	1.3	1.6
	Japan	1.6	3.9
	Rest of Asia	3.6	4.6
Australasia		1.1	1.3
Total equities		93.7	93.3
UK corporate bonds		0.9	0.7
Euro denominated bonds		0.1	0.2
Brazilian real denominated bonds		4.7	4.7
Net liquid assets		0.6	1.1
Total assets (before deduction of loans and debentures)		100.0	100.0

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

THIRTY LARGEST EQUITY HOLDINGS AND EQUITY PERFORMANCE at 31 March 2011  (unaudited)
Name	Business	Fair value 31 March 2011 £'000	% of total assets	Performance †		Contribution to absolute performance %	Fair value 31 March 2010 £'000
				Absolute %	Relative %
Baidu.com	Online search engine	172,596	6.9	118.2	101.4	5.3	77,278
Amazon.com	Online retailer	167,061	6.7	25.5	15.8	2.1	120,009
PPR	Luxury goods producer and   retailer	104,138	4.2	11.7	3.1	0.5	47,517
Atlas Copco	Engineering	101,279	4.0	65.3	52.5	2.6	83,831
Banco Santander	Banking	84,357	3.4	(12.1)	(18.9)	(0.4)	84,691
Tencent Holdings	Internet service portal	83,026	3.3	14.7	5.8	0.5	30,900
Deere	Farm machinery	72,557	2.9	56.4	44.3	1.5	47,030
First Solar	Solar energy technology	63,624	2.5	24.0	14.4	0.5	30,640
Vale (CVRD)	Iron ore and nickel mining	58,576	2.3	2.7	(5.3)	0.1	58,268
Google	Online search engine	49,369	2.0	(2.2)	(9.8)	(0.2)	47,770
Schlumberger	Oil services	40,716	1.6	40.9	30.0	0.6	29,280
Telekomunikacja    Polska	Fixed and mobile telecoms	39,726	1.6	13.7	4.9	0.5	26,050
Intuitive Surgical	Medical equipment	38,235	1.5	(8.5)	(15.6)	(0.2)	13,744
New Oriental    Education &    Technology	Education and training	37,832	1.5	10.7	2.2	0.2	34,118
Berkshire Hathaway	Insurance	36,542	1.5	(2.6)	(10.2)	-	37,503
Garanti Bankasi	Banking	35,449	1.4	(4.1)	(11.5)	-	24,781
Meggitt	Aerospace equipment and   systems	34,450	1.4	15.4	6.5	0.3	30,731
Nintendo	Games consoles and software	34,334	1.4	(21.6)	(27.7)	(1.2)	71,659
Progressive     Insurance	Property and casualty  insurance	33,629	1.3	10.7	2.1	0.2	37,106
Walgreen	Pharmacy chain	32,561	1.3	4.3	(3.8)	(0.1)	43,022
ABB	Electronic and electrical   equipment	32,095	1.3	7.0	(1.3)	0.1	30,747
Novozymes	Enzyme manufacturer	32,088	1.3	32.0	21.8	0.5	24,441
Brown-Foreman	Wine and spirits producer	31,988	1.3	11.9	3.3	0.2	29,384
Intertek Group	Business support providers	29,751	1.2	41.9	31.0	0.6	21,336
Whole Foods    Market	General retailer	28,929	1.2	72.8	59.4	0.6	16,773
Australia and New    Zealand Banking     Group	Banking	27,922	1.1	5.4	(2.7)	0.1	27,916
British American    Tobacco	Tobacco	27,200	1.1	15.5	6.6	0.3	24,694
KGHM	Copper mining	26,560	1.1	65.1	52.3	0.4	34,170
Petrobras	Oil producer	25,660	1.0	(11.9)	(18.7)	(1.1)	108,260
Omnicom	Advertising agency	25,614	1.0	21.6	12.2	0.2	21,398
		1,607,864	64.3				1,315,047

^† Absolute and relative performance has been calculated on a total net return basis over the period 1 April 2010 to
   31 March 2011.  Absolute performance is in sterling terms; relative performance is against the benchmark: FTSE

   All World Index (in sterling terms).

Source: Baillie Gifford & Co/StatPro

Past performance is not a guide to future performance.

 SCOTTISH MORTGAGE INVESTMENT TRUST PLC

NOTES

(unaudited)

1.	The financial statements for the year to 31 March 2011 have been prepared on the basis of the accounting policies set out in the Company's Annual Financial Statements at 31 March 2010. The Directors consider the Company's functional currency to be sterling as the Company's shareholders are predominantly based in the UK and the Company is subject to the UK's regulatory environment.
								2011									2010
								£'000									£'000
2.	Income
	Income from investments and interest receivable							53,379									48,581
	Other income							324									593
								53,703									49,174
							2011 £'000								2010 £'000
3.	Net return per ordinary share
	Revenue return on ordinary activities after taxation						34,374								30,200
	Capital return on ordinary activities after taxation						308,163								828,899
	Total net return						342,537								859,099
	Weighted average number of ordinary shares						258,103,596								270,102,144
	Net return per ordinary share figures are based on the above totals of revenue and capital and the weighted average number of ordinary shares during each period. There are no dilutive or potentially dilutive shares.
		2011				2010				2011 £'000						2010 £'000
4.	Ordinary dividends
	Amounts recognised as distributions in the year:
	Previous year's final (paid 1 July 2010)	5.80p				5.50p				14,968						14,955
	Interim (paid 3 December 2010)	5.80p				5.50p				14,968						14,889
		11.60p				11.00p				29,936						29,844
	We also set out below the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered.  The revenue available for distribution by way of dividend for the year is £34,374,000 (2010 - £30,200,000).

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

NOTES (Ctd)

(unaudited)

		2011		2010					2011 £'000						2010 £'000
4.	Ordinary dividends (Ctd)
	Dividends paid and payable in the year:
	Interim dividend per ordinary share (paid 3 December 2010)	5.80p		5.50p					14,968						14,889
	Proposed final dividend per ordinary share (payable 4 July 2011)	6.20p		5.80p					15,904						15,052
	Adjustment to the previous year's final dividend re shares bought back								(84)						(10)
		12.00p		11.30p					30,788						29,931
	The final dividend was declared after the period end date and has therefore not been included as a liability in the balance sheet. If approved the final dividend will be paid on 4 July 2011 to all shareholders on the register at the close of business on 3 June 2011.  The ex-dividend date is 1 June 2011.
5.	The bank loans falling due within one year comprise US$99 million, US$80 million and €59.8 million (2010 - US$99 million, ¥8,500 million and CHF60.5 million). The bank loans falling due in more than one year comprise €61 million (2010 - Nil). During the year bank loans of US$99 million and £100 million were renewed and a new two year €61 million facility entered into.
6.	The fair value of borrowings at 31 March 2011 was £407,861,000 (2010 - £356,653,000). Net asset value per share (after deducting borrowings at fair value) was 816.5p (2010 - 692.8p).
							2011 Number									2010 Number
7.	Share capital: Ordinary shares of 25p each
	Allotted, called-up and fully paid					256,519,897								259,519,897
	Treasury shares					27,826,279								24,826,279
	Total					284,346,176								284,346,176
	The Company's authority permits it to hold shares bought back 'in treasury'. Such treasury shares may be subsequently either sold for cash (at, or at a premium to, net asset value per ordinary share) or cancelled.  In the year to 31 March 2011 a total of 3,000,000 (2010 - 12,570,000) ordinary shares with a nominal value of £750,000 (2010 - £3,142,500) were bought back at a total cost of £20,215,000 (2010 - £69,684,000) and held in treasury.  At 31 March 2011 the Company had authority to buy back a further 37,134,677 ordinary shares.

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

NOTES (Ctd)

(unaudited)

8.	The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 March 2011. The financial information for 2010 is derived from the statutory accounts for 2010 which have been delivered to the Registrar of Companies.  The Auditors have reported on the 2010 accounts, their report was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.  The statutory accounts for 2011 are unaudited, however it is expected that the Auditors will issue an unqualified opinion. The statutory accounts for 2011 will be finalised on the basis of the financial information presented in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
9.	The Report and Accounts will be available on the Managers' website www.scottishmortgageit.com‡ on or around 23 May 2011.
	None of the views expressed in this document should be construed as advice to buy or sell a particular investment. ‡ 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

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