Half-year Report

RNS Number : 7167S

Scottish Mortgage Inv Tst PLC

08 November 2019

 

RNS Announcement
Scottish Mortgage Investment Trust PLC
Legal Entity Identifier: 213800G37DCS3Q9IJM38
Results for the six months to 30 September 2019
The following is the unaudited Interim Financial Report for the six months to 30 September 2019 which was approved by the Board on 7 November 2019.
Interim management report

We are determined long term growth investors. We continue to believe that the opportunities available today are compelling. We have not become pessimists. But none of this resolute optimism is to deny that there are and will always be periods of underperformance. We have endured such a period over the last six months. Since the end of March our net asset value per share, with debt at fair value ('NAV'), rose but only by 3.2% compared with 9.9% for the FTSE All-World Index (both in total return terms). As is often the case, this has been exacerbated by the shares falling to a discount from the premium that has been the case for most of our recent history. The longer term performance record remains good. Over five years the NAV has gained 137.5% versus 86.5% and over 10 years it has increased by 415.1% against 204.4% (both against the index).

Although shareholders are well-aware that our focus is on the generation of long term increases in capital values we, in turn, are aware that a small but consistent dividend is of value to many investors. The Board is therefore recommending an unchanged interim dividend of 1.39p. This is despite a 18.5% fall in earnings on this occasion.

Portfolio

Whilst the short term oscillations of markets frequently contain little meaning and much noise, we always endeavour to winnow through events to discern if beneath emotions and market positioning there have been structural changes that we should reflect in our portfolio. The last six months have seen markets become so concerned at the current low levels of global economic growth and political harmony that the equities of preference have been those perceived to possess minimal sensitivity to the perils of stagnation. This is, though, no more our preoccupation than the equally common perception of twelve months ago that US economic growth was so formidable that interest rates would rise remorselessly.

But we must acknowledge underlying concerns where they exist. The most significant may be gathering evidence of cracks in the dominance of some of the internet platforms that we have invested in both heavily and successfully in the last decade. This suggests that their longevity may be more questionable than we thought. But there is an irony here. It's not in the US that these fissures have emerged despite market nerves provoked by regulatory and media scrutiny. Instead the issues have been in China. The threat to incumbents has come neither from regulators nor public discontent but from extraordinary dynamism. The major casualty has been Baidu (once a very significant holding) and the major disruptor has been Bytedance. That we own a holding in the unquoted Bytedance is some compensation.

The contrasting relative fortunes of Baidu and Bytedance are not isolated examples of a divergence between quoted and unquoted competitors. Contrary to the mood of the moment our experience has been that in both underlying progress and valuation, our unquoted companies are generally outperforming their listed counterparts. It is common knowledge that there are high profile examples of unquoted or recently listed companies that have suffered serious problems but it seems to us that generalising from these distinctly colourful sagas is misguided. The flaws of their business models were not impossible to identify. Although we are wary of treating our unquoted assets as a separate portfolio our experience remains encouraging. In aggregate since our first unquoted investment on 2 June 2010 to 30 September 2019 the return of all the stocks that we initially owned in unquoted form (whether now listed or not) has been 445.3% versus 341.4% for Scottish Mortgage overall and 183.8% for the FTSE All-World. In specific developments, two still unquoted companies, Ginkgo Bioworks (synthetic biology) and You and Mr Jones (digital advertising) have enjoyed substantial business progress and consequent valuation increases whilst the now quoted Meituan and HelloFresh continue to reverse initial market scepticism in impressive fashion.

Unquoted philosophy and commitment

This seems the appropriate moment to stress as strongly as we can that we believe that our ability and willingness to invest in unquoted companies at scale and globally as part of a portfolio offering high overall liquidity is critically important to both our future returns and to the unique proposition Scottish Mortgage can offer to individual shareholders. We are convinced that the long term risk taking, essential to economic and social progress, is continuing to migrate to private markets and at an accelerating pace. It's important that all our shareholders, from the smallest holders to the very largest, have access to such innovative enterprises and the enduring real value which they create. That we offer this whilst our ongoing charges have edged down once again (to 0.36% of average assets over the rolling twelve month period to the end of September) seems to us to be a worthwhile achievement that is not a common characteristic of the industry in general or managers of unquoted equities in particular. We have no intention of being deterred from this philosophy of investing or from driving charges lower.

Outlook

We are emphatically optimistic about the aggregate and underlying progress of our companies and therefore our portfolio. We see no evidence that the dim global economic conditions or the unappealing international political environment are undermining the tectonic shifts and structural advances driven by broadening and accelerating technological progress. We look forward to putting this case to investors in the months and years ahead.

The principal risks and uncertainties facing the Company are set out at the end of this document.

7 November 2019

Past performance is not a guide to future performance.

Total return information sourced from Refinitiv.

See disclaimer at end of this document.

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 and Transparency Rules 4.2.7R (indication of important events during the first six months, their impact on the condensed set of 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 and Transparency Rules 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

Fiona McBain

Chairman

7 November 2019

Income statement (unaudited)

	For the six months ended  30 September 2019			For the six months ended  30 September 2018
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains on investments	-	289,983	289,983	-	1,219,964	1,219,964
Currency losses	-	(10,394)	(10,394)	-	(12,186)	(12,186)
Income from investments and interest receivable	18,860	-	18,860	22,481	-	22,481
Investment management fee (note 3)	-	(11,613)	(11,613)	-	(11,270)	(11,270)
Other administrative expenses	(1,926)	-	(1,926)	(2,080)	-	(2,080)
Net return before finance costs and taxation	16,934	267,976	284,910	20,401	1,196,508	1,216,909
Finance costs of borrowings	-	(15,741)	(15,741)	-	(14,259)	(14,259)
Net return on ordinary activities before taxation	16,934	252,235	269,169	20,401	1,182,249	1,202,650
Tax on ordinary activities	(622)	-	(622)	(1,194)	-	(1,194)
Net return on ordinary activities after taxation	16,312	252,235	268,547	19,207	1,182,249	1,201,456
Net return per ordinary share (note 4)	1.10p	17.01p	18.11p	1.35p	83.03p	84.38p
Dividends proposed per ordinary share (note 5)	1.39p			1.39p

The accompanying notes on the following pages are an integral part of the Financial Statements.

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

All revenue and capital items in this statement 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.

Balance sheet (unaudited)

	At 30 September 2019 £'000	At 31 March 2019 (audited) £'000
Fixed assets
Investments held at fair value through profit or loss (note 6)	8,297,688	8,098,819
Current assets
Debtors	5,932	27,892
Cash and cash equivalents	156,273	35,587
	162,205	63,479
Creditors
Amounts falling due within one year:
Bank loans (note 7)	(296,194)	(280,112)
Debenture stock (note 7)	(20,305)	-
Other creditors	(13,446)	(28,907)
	(329,945)	(309,019)
Net current liabilities	(167,740)	(245,540)
Total assets less current liabilities	8,129,948	7,853,279
Creditors
Amounts falling due after more than one year:
Loan notes	(274,536)	(274,526)
Debenture stocks	(128,254)	(148,823)
	(402,790)	(423,349)
	7,727,158	7,429,930
Capital and reserves
Share capital	74,239	73,713
Share premium account	764,521	710,569
Capital redemption reserve	19,094	19,094
Capital reserve	6,852,992	6,602,885
Revenue reserve	16,312	23,669
Shareholders' funds	7,727,158	7,429,930
Net asset value per ordinary share (after deducting borrowings at book)*	520.4p	504.0p
Ordinary shares in issue (note 9)	1,484,780,880	1,474,255,880

*          See Glossary of Terms and Alternative Performance Measures at the end of this announcement.

The accompanying notes on the following pages are an integral part of the Financial Statements.

 

Statement of Changes in Equity (unaudited)

For the six months ended 30 September 2019

	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 April 2019	73,713	710,569	19,094	6,602,885	23,669	7,429,930
Net return on ordinary activities after taxation	-	-	-	252,235	16,312	268,547
Shares issued (note 9)	526	53,952	-	-	-	54,478
Dividends paid during the period (note 5)	-	-	-	(2,128)	(23,669)	(25,797)
Shareholders' funds at 30 September 2019	74,239	764,521	19,094	6,852,992	16,312	7,727,158

For the six months ended 30 September 2018

	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 April 2018	71,086	352,375	19,094	5,741,352	3,849	6,187,756
Net return on ordinary activities after taxation	-	-	-	1,182,249	19,207	1,201,456
Shares sold from treasury (note 9)	-	91,044	-	42,069	-	133,113
Shares issued (note 9)	1,416	152,283	-	-	-	153,699
Dividends paid during the period (note 5)	-	-	-	(19,917)	(3,849)	(23,766)
Shareholders' funds at 30 September 2018	72,502	595,702	19,094	6,945,753	19,207	7,652,258

* The Capital Reserve balance at 30 September 2019 includes investment holding gains on fixed asset investments of £4,129,108,000 (30 September 2018 - gains of £4,368,413,000).

The accompanying notes on the following pages are an integral part of the Financial Statements.

Cash flow statement (unaudited)

	Six months to  30 September 2019 £'000	Six months to  30 September 2018 £'000
Cash flows from operating activities
Net return on ordinary activities before taxation	269,169	1,202,650
Gains on investments	(289,983)	(1,219,964)
Currency losses	10,394	12,186
Finance costs of borrowings	15,741	14,259
Overseas withholding tax refunded	145	1,665
Overseas withholding tax incurred	(767)	(1,194)
Changes in debtors and creditors	(748)	763
Cash from operations	3,951	10,365
Interest paid	(16,053)	(12,437)
Net cash outflow from operating activities	(12,102)	(2,072)
Net cash inflow/(outflow) from investing activities	98,419	(430,173)
Equity dividends paid (note 5)	(25,797)	(23,766)
Stamp duty paid on shares bought back	-	(67)
Shares sold from treasury	-	133,113
Shares issued	54,478	150,995
Bank loans repaid	-	(28,221)
Bank loans drawn down and loan notes issued (note 7)	-	226,207
Net cash inflow from financing activities	28,681	458,261
Increase in cash and cash equivalents	114,998	26,016
Exchange movements	5,688	7,811
Cash and cash equivalents at start of period	35,587	34,974
Cash and cash equivalents at end of period†	156,273	68,801

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

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

Holding period of investments as at 30 September 2019

More than 5 years			2-5 years			Less than 2 years
Name	% of total assets		Name	% of total assets		Name	% of total assets
Amazon.com10	9.0		Netflix	2.4		Ant InternationalU	2.5
Illumina	7.5		Ginkgo BioworksU	1.9		Tempus Labs IncU	1.0
Alibaba GroupP	6.1		Delivery Hero	1.9		Shopify	0.8
Tencent Holdings10	6.1		Spotify Technology SAP	1.8		CarbonU	0.7
Tesla Inc	4.6		You & Mr JonesU	1.5		BytedanceU	0.7
ASML	3.8		NVIDIA	1.4		ZiplineU	0.7
Kering10	3.3		Meituan DianpingP	1.3		Space Exploration   TechnologiesU	0.7
Ferrari	3.0		TransferWiseU	1.2
Inditex	2.4		GrailU	1.0		Pinduoduo	0.6
Alphabet10	1.7		AnaplanP	0.8		TaniumU	0.5
Facebook	1.4		Indigo AgricultureU	0.8		Uptake TechnologiesU	0.5
Workday	1.4		Bluebird Bio Inc	0.8		HeartFlowU	0.5
Intuitive Surgical10	1.3		Rocket Internet	0.7		Recursion   PharmaceuticalsU	0.5
Zalando	1.3		HelloFreshP	0.7
Ctrip.com10	1.2		Vir BiotechnologyU	0.7		Away Inc (JRSK) U	0.5
Housing Development   Finance Corporation10	1.1		LyftP	0.6		The Production BoardU	0.4
			ThumbtackU	0.6		Bolt ThreadsU	0.4
Baidu10	1.1		Orchard TherapeuticsP	0.6		NIOP	0.4
Kinnevik	1.1		Auto1U	0.4		Full Truck AllianceU	0.3
Atlas Copco10	1.0		JAND Inc (Warby Parker) U	0.4		AffirmU	0.3
Renishaw	0.6		Denali TherapeuticsP	0.4		KSQ TherapeuticsU	0.2
Essence HealthcareU	0.6		Palantir TechnologiesU	0.3		AuroraU	0.2
Innovation Works   Development FundU	0.3		AirbnbU	0.3		Grubhub	0.2
			Clover HealthU	0.3		Slack TechnologiesP	0.2
Alnylam   Pharmaceuticals	0.3		EventbriteP	0.3		Zoom	0.2
			Rubius TherapeuticsP	0.3		Sana BiotechnologyU	0.1
WI Harper Fund VIIIU	0.1		Intarcia TherapeuticsU	0.2		ARCH Ventures Fund XU	<0.1
WI Harper Fund VIIU	0.1		ZocdocU	0.2		Arch Ventures Fund X   OverageU	<0.1
Level E Maya Fund	0.1		Unity BiotechnologyP	0.2
			CureVacU	0.2
			ARCH Ventures Fund IXU	0.1
			Funding CircleP	0.1
			UdacityU	0.1
			Sinovation Fund IIIU	0.1
Total	60.5		Total	24.6		Total	13.1

^{U        Denotes unlisted security.}

^{p            Denotes listed security previously held in the portfolio as an unlisted security.}

^{10          Denotes security held for more than 10 years.}

^{Net liquid assets represent 1.8% of total assets. See Glossary of Terms and Alternative Performance Measures at the end of this announcement.}

List of investments at 30 September 2019 (unaudited)

Name		Business	Fair value 30 September 2019 £'000		% of total assets		Contribution to absolute performance* %	Notes †		Fair value 31 March 2019 £'000
Amazon.com		Online retailer and cloud computing	762,431		9.0		0.4			778,843
Illumina		Biotechnology equipment	634,701		7.5		0.5			613,045
Alibaba GroupP		Online retailing and financial services	516,072		6.1		(0.2)			532,441
Tencent Holdings		Internet services	515,163		6.1		(0.3)			531,946
Tesla Inc		Electric cars, autonomous driving   and solar energy	389,756		4.6		(0.6)			428,304
ASML		Lithography	324,645		3.8		1.2			233,003
Kering		Luxury goods producer and retailer	281,205		3.3		(0.1)			299,236
Ferrari		Luxury automobiles	250,829		3.0		0.7			246,825
Ant International   Limited Class C Ord.U		Online financial services platform	212,275		2.5		0.3			191,858
Netflix		Subscription service for tv shows   and movies	201,685		2.4		(0.6)			254,115
Inditex		Global clothing retailer	198,970		2.4		0.3			178,783
Ginkgo Bioworks Inc   Series D Pref.U		Bio-engineering company	76,637		0.9		0.7			22,796
Ginkgo Bioworks Inc   Series C Pref.U		Bio-engineering company	74,524		0.9		0.7			21,867
Ginkgo Bioworks Inc   Series E Pref.U		Bio-engineering company	12,883		0.1		-	New purchase		-
			164,044		1.9		1.4			44,663
Delivery Hero		Online food delivery service	162,182		1.9		0.5			124,960
Spotify Technology SAP		Online music streaming service	153,136		1.8		(0.3)			176,293
Alphabet		Holding company for Google and   associated ventures	145,156		1.7		0.1			132,109
You & Mr Jones Class   A UnitsU		Digital advertising	122,535		1.5		0.8			50,650
NVIDIA		Visual computing	122,227		1.4		-			119,284
Facebook		Social networking site	119,499		1.4		0.2			105,764
Workday		Enterprise information technology	116,054		1.4		(0.1)			124,657
Meituan DianpingP		Local services aggregator	107,964		1.3		0.5			67,254
Intuitive Surgical		Surgical robots	107,048		1.3		-			106,974
Zalando		International online clothing retailer	105,635		1.3		0.3	Significant reduction		116,867
Transferwise Ltd   Series D Pref.U		Online money transfer services	47,929		0.6		-			45,327
Transferwise Ltd   Series Ord.U		Online money transfer services	20,372		0.3		-			19,266
Transferwise Ltd   Series A Pref.U		Online money transfer services	11,147		0.1		-			10,542
Transferwise Ltd   Series B Pref.U		Online money transfer services	10,139		0.1		-			9,588
Transferwise Ltd   Series E Pref.U		Online money transfer services	5,797		0.1		-			5,482
Name	Business		Fair value 30 September 2019 £'000	% of total assets		Contribution to absolute performance* %			Notes †		Fair value 31 March 2019 £'000
Transferwise Ltd   Series Seed Pref.U	Online money transfer services		2,713	<0.1		-					2,565
Transferwise Ltd   Series C Pref.U	Online money transfer services		426	<0.1		-					403
			98,523	1.2		-					93,173
Ctrip.com	Travel agent		97,996	1.2		(0.5)					138,253
Housing Development   Finance Corporation	Indian mortgage provider		96,109	1.1		0.1					92,568
Baidu	Online search engine		93,428	1.1		(0.6)					141,665
Kinnevik	Investment company		90,783	1.1		0.1					84,359
Atlas Copco	Engineering		87,312	1.0		0.2					71,839
Grail Inc Series B   Pref.U	Clinical stage biotechnology   company		86,544	1.0		0.3					66,768
Tempus Labs Inc   Series E Pref.U	Offers molecular diagnostics tests for   cancer and aggregates clinical   oncology records		62,224	0.7		0.1			Significant addition		40,849
Tempus Labs Inc   Series F Pref.U	Offers molecular diagnostics tests for   cancer and aggregates clinical   oncology records		22,860	0.3		-			New purchase		-
			85,084	1.0		0.1					40,849
Anaplan Inc CommonP	Enterprise planning software		71,324	0.8		0.2					56,535
Indigo Agriculture Inc   Series D Pref.U	Analyses plant microbiomes to   increase crop yields		49,321	0.6		(0.1)					55,273
Indigo Agriculture Inc    Series E Pref. U	Analyses plant microbiomes to   increase crop yields		21,615	0.2		-					22,152
			70,936	0.8		(0.1)					77,425
Shopify	Cloud-based commerce platform   provider		65,910	0.8		0.3					41,338
Bluebird Bio Inc	Provider of biotechnological   products and services		64,949	0.8		(0.5)					123,604
Carbon Inc Series D    Pref.U	Manufactures and develops 3D   printers		38,908	0.4		-					36,796
Carbon Inc Series E   Pref.U	Manufactures and develops 3D   printers		24,345	0.3		-					23,023
			63,253	0.7		-					59,819
Bytedance Ltd Series   E Pref.U	Social media		60,862	0.7		-			New purchase		-
Zipline International Inc   Series D Pref.U	Logistics company that designs,   manufactures and operates drones   to deliver medical supplies		32,460	0.4		-					30,697
Zipline International Inc   Series C Pref.U	Logistics company that designs,   manufactures and operates drones   to deliver medical supplies		27,713	0.3		-					26,209
			60,173	0.7		-					56,906
Rocket Internet	Internet start-up factory		58,883	0.7		0.1					54,691
HelloFreshP	Grocery retailer		57,090	0.7		0.3					33,661

Name	Business	Fair value 30 September 2019 £'000	% of total assets	Contribution to absolute performance* %	Notes †	Fair value 31 March 2019 £'000
Vir Biotechnology Inc    Series A Pref.U	Biotechnology company developing    anti-infective therapies	37,897	0.5	0.1		30,697
Vir Biotechnology Inc   Series B Pref.U	Biotechnology company developing    anti-infective therapies	18,948	0.2	-		15,349
		56,845	0.7	0.1		46,046
Space Exploration   Technologies Corp   Series J Pref.U	Designs, manufactures and   launches rockets and spacecraft	56,019	0.7	0.1		50,502
Pinduoduo Inc	Chinese e-commerce	54,576	0.6	0.2		39,711
Renishaw	Electronic equipment	53,026	0.6	-		53,663
Lyft IncP	Ridesharing services	51,171	0.6	(0.5)		92,448
Thumbtack Inc Series   G Pref.U	Online directory service for local   businesses	40,575	0.5	0.2		25,791
Thumbtack Inc Series   H Pref.U	Online directory service for local    businesses	8,115	0.1	-	New purchase	-
		48,690	0.6	0.2		25,791
Orchard TherapeuticsP	Gene therapy for rare diseases	46,499	0.6	(0.3)		64,778
Essence Healthcare   Series 3 Pref.U	Cloud-based health provider	45,673	0.6	-		46,105
Tanium Inc Class B   CommonU	Provides security and systems   management solutions	45,267	0.5	-		46,813
Uptake Technologies   Inc Series D Pref.U	Designs and develops enterprise   software	44,861	0.5	-		47,427
HeartFlow Inc Series   E Pref.U	Develops software for   cardiovascular disease diagnosis   and treatment	42,601	0.5	-		40,065
Recursion   Pharmaceuticals Inc   Series C Pref.U	Uses image recognition/machine   learning and automation to   improve drug discovery	40,575	0.5	-		38,372
JRSK Inc (Away)   Series D Pref.U	Luggage designer, manufacturer   and retailer	22,823	0.3	-	New purchase	-
JRSK Inc (Away)   Series Seed Pref.U	Luggage designer, manufacturer   and retailer	15,215	0.2	-	New purchase	-
		38,038	0.5	-		-
Auto1Group GmbH   Series E Pref.U	Online retailer of used cars	36,234	0.4	0.1		31,269
JAND Inc (Warby   Parker) Series D Pref.U	Online and physical glasses retailer	19,179	0.2	-		17,087
JAND Inc (Warby   Parker) Series A   CommonU	Online and physical glasses retailer	12,367	0.1	-		11,019
JAND Inc (Warby   Parker) Series E Pref.U	Online and physical glasses retailer	4,661	0.1	-		4,220
		36,207	0.4	-		32,326
Denali TherapeuticsP	Biotechnology	36,174	0.4	(0.2)		51,851
The Production Board   Series A-2 Pref.U	Holding company for food   technology companies	35,056	0.4	-		31,925
Bolt Threads Inc   Series D Pref.U	Natural fibres and fabrics   manufacturer	29,625	0.4	-		31,182
Name	Business	Fair value 30 September 2019 £'000	% of total assets	Contribution to absolute performance* %	Notes †	Fair value 31 March 2019 £'000
NIO IncP	Designs and manufactures electric   and autonomous vehicles	28,248	0.4	(0.8)		87,726
Full Truck Alliance Ltd   Series A-15 Pref.U	Freight-truck matching platform	27,830	0.3	0.1		23,023
Palantir Technologies    Inc Series J Pref.U	Data integration software and   service provider	26,517	0.3	-		23,394
Airbnb Inc Series E   Pref.U	Online market place for travel   accommodation	25,946	0.3	0.1		20,648
Clover Health   Investments Series D   Pref.U	Healthcare insurance provider	23,862	0.3	0.1		19,190
Innovation Works   Development FundU	Venture capital fund	23,488	0.3	-		22,300
Eventbrite IncP	Online ticketing service	23,405	0.3	-		23,924
Affirm Inc Series F   Pref.U	Online platform which provides   lending and consumer credit   services	23,127	0.3	-		21,872
Rubius Therapeutics   IncP	Biotechnology	21,794	0.3	(0.3)		47,558
Alnylam   Pharmaceuticals	Biotechnology	21,319	0.3	-		23,459
Intarcia Therapeutics   Inc Convertible BondU	Implantable drug delivery system	12,057	0.1	-		11,511
Intarcia Therapeutics   Inc Series EE Pref.U	Implantable drug delivery system	8,500	0.1	-		8,039
		20,557	0.2	-		19,550
Aurora Innovation Inc   Series B Pref.U	Developer of driverless vehicle   technology	20,287	0.2	-	New purchase	-
KSQ Therapeutics Inc    Series C Pref.U	Biotechnology company	20,287	0.2	-		19,186
Zoom	Remote conferencing service   provider	18,504	0.2	0.1	New purchase	-
Grubhub	US online food services	17,808	0.2	-		20,797
Slack Technologies IncP	Enterprise messaging platform	17,792	0.2	0.1		10,338
Zocdoc Inc Series D-2   Pref.U	Online platform for searching for   doctors and booking   appointments	17,698	0.2	-		17,492
Unity BiotechnologyP	Clinical stage biotechnology   company	15,909	0.2	-		20,003
CureVac AG Series   B Pref.U	Biotechnology	14,744	0.2	(0.1)		21,542
ARCH Ventures Fund   IXU	Venture capital fund to invest in   biotech start-ups	11,183	0.1	-		8,242
Funding CircleP	Facilitates loans to small and   medium enterprises	10,260	0.1	(0.4)		42,748
Udacity Inc Series D Pref.U	Online education	9,673	0.1	-		9,606
Sinovation Fund IIIU	Venture capital fund	8,793	0.1	-		8,256
Name	Business	Fair value 30 September 2019 £'000	% of total assets	Contribution to absolute performance* %	Notes †	Fair value 31 March 2019 £'000
Sana Biotechnology   Inc Series A-2 Pref.U	Biotechology company creating and   delivering engineered cells as   medicine	8,061	0.1	-		6,395
WI Harper Fund VIIIU	Venture capital fund	7,764	0.1	-		6,970
WI Harper Fund VIIU	Venture capital fund	6,996	0.1	-	Return of capital	9,885
Level E Maya Fund	Artificial intelligence based   algorithmic trading	4,969	0.1	-		4,846
ARCH Ventures Fund   XU	Venture capital fund to invest in   biotech start-ups	710	<0.1	-	Additional investment	413
ARCH Ventures Fund   X OverageU	Venture capital fund to invest in   biotech start-ups	649	<0.1	-	Additional investment	397
Total Investments		8,297,688	98.2
Net liquid assets#		148,759	1.8
Total Assets#		8,446,447	100

^{*    Contribution to absolute performance has been calculated on a total return basis over the period 1 April 2019 to 30 September 2019. For a definition of total return please see the Glossary of Terms and Alternative Performance Measures at the end of this announcement.}

†  Significant additions and reductions to investments have been noted where the change is at least a 20% movement from the value of the holding at 31 March 2019. The change in value over the period also reflects the share price performance and the movement in exchange rates.

# See Glossary of Terms and Alternative Performance Measures at the end of this announcement.

^{U   Denotes unlisted security.} 

^{p    Denotes listed security previously held in the portfolio as an unlisted security.}

The following investments were completely sold during the period: Home24, SurveyMonkey and Tableau Software

Source: Baillie Gifford/StatPro. See disclaimer at the end of this announcement.

Past performance is not a guide to future performance.

Distribution of assets* (unaudited)

			At 30 September 2019 %	At 31 March 2019 %
North America			54.7	52.8
	United States		53.9	52.3
	Canada		0.8	0.5
Europe			24.2	24.2
	United Kingdom		2.6	3.5
	Eurozone		17.7	16.6
	Developed Europe (non Euro)		3.9	4.1
Asia			21.1	23.0
	China		20.0	21.9
	India		1.1	1.1
Total assets (before deduction of loans and debentures)			100.0	100.0

	Listed Equities %	Unlisted Securities† %	Unlisted Bonds %	Net Liquid Assets %	Total %
30 September 2019	76.0	22.1	0.1	1.8	100.0
31 March 2019	82.2	17.3	0.1	0.4	100.0

*      Total assets before deduction of debentures, long and short term borrowings. See Glossary of Terms and Alternative Performance Measures at the end of this announcement.

†      Includes holdings in preference shares and ordinary shares.

Notes to the condensed financial statements (unaudited)

1.	The condensed Financial Statements for the six months to 30 September 2019 comprise the statements set out in the previous pages 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 October 2019. They have not been audited or reviewed by the Auditor pursuant to the Auditing Practices Board Guidance on 'Review of Interim Financial Information'. The Financial Statements for the six months to 30 September 2019 have been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements at 31 March 2019.
	Going Concern The Directors have considered the nature of the Company's assets, its liabilities, projected income and expenditure together with its investment objective and policy, dividend policy and principal risks and uncertainties, as set out at the end of this document. The Company's assets, the majority of which are in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis. Accordingly, the Directors considered 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 in operational existence for 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 435 of the Companies Act 2006. The financial information for the year ended 31 March 2019 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 matter to which the Auditor drew attention by way of emphasis without qualifying its report and did not contain statements 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 management fee is 0.30% on the first £4 billion of total assets less current liabilities (excluding short term borrowings for investment purposes) and 0.25% thereafter, calculated and payable quarterly.
4.	Net return per ordinary share	Six months to  30 September 2019 £'000	Six months to 30 September 2018 £'000
	Revenue return on ordinary activities after taxation	16,312	19,207
	Capital return on ordinary activities after taxation	252,235	1,182,249
	Total net return	268,547	1,201,456
	Weighted average number of ordinary shares in issue	1,482,684,432	1,423,915,955
	Net return per ordinary share figures are 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.

Notes to the condensed financial statements (unaudited) (ctd)

5.	Dividends			Six months to  30 September 2019 £'000		Six months to 30 September 2018 £'000
	Amounts recognised as distributions in the period:
	Previous year's final dividend of 1.74p (2018 - 1.68p), paid 2 July 2019			25,797		23,766
				25,797		23,766
	Dividends proposed in the period:
	Interim dividend for the year ending 31 March 2020 of 1.39p (2019 - 1.39p)			20,638		20,229
				20,638		20,229
	The interim dividend was declared after the period end date and has therefore not been included as a liability in the Balance Sheet. It is payable on 6 December 2019 to shareholders on the register at the close of business on 22 November 2019.  The ex-dividend date is 21 November 2019. The Company's Registrars offer a Dividend Reinvestment Plan and the final date for elections for this dividend is 25 November 2019.
6.	Fair Value The fair value hierarchy used to analyse the basis on which the fair values of financial instruments held at fair value through the profit and 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 Company's investments are financial assets designated at fair value through profit or loss. An analysis of the Company's financial asset investments based on the fair value hierarchy described above is shown below.
	Investments held at fair value through profit or loss
	As at 30 September 2019	Level 1 £'000	Level 2 £'000		Level 3 £'000		Total £'000
	Equities/funds	6,419,597	-		-		6,419,597
	Unlisted ordinary shares	-	-		290,282		290,282
	Unlisted preference shares	-	-		1,575,752		1,575,752
	Unlisted convertible note	-	-		12,057		12,057
	Total financial asset investments	6,419,597	-		1,878,091		8,297,688
	As at 31 March 2019 (audited)	Level 1 £'000	Level 2 £'000		Level 3 £'000		Total £'000
	Equities/funds	6,680,183	-		-		6,680,183
	Unlisted ordinary shares	-	-		268,956		268,956
	Unlisted preference shares	-	-		1,138,169		1,138,169
	Unlisted convertible note	-	-		11,511		11,511
	Total financial asset investments	6,680,183	-		1,418,636		8,098,819

Notes to the condensed financial statements (unaudited) (ctd)

	During the period an investment with a book cost of £8,644,000 was transferred from Level 3 to Level 1 on becoming listed. The fair value of listed investments is bid value or, in the case of holdings on certain recognised overseas exchanges, last traded price. 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 The Company's holdings in unlisted investments are categorised as Level 3. 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 techniques consistent with the International Private Equity and Venture Capital Valuation Guidelines 2018 ('IPEV'). The techniques applied are predominantly market-based approaches. The market-based approaches available under IPEV are set out below and are followed by an explanation of how they are applied in the Company's unlisted portfolio: -      Multiples; -      Industry Valuation Benchmarks; and -      Available Market Prices. The nature of the unlisted portfolio will influence the valuation technique applied. The valuation approach recognises that, as stated in the IPEV Guidelines, the price of a recent investment, if resulting from an orderly transaction, generally represents fair value as at the transaction date and may be an appropriate starting point for estimating fair value at subsequent measurement dates. However, consideration is given to the facts and circumstances as at the subsequent measurement date, including changes in the market or performance of the investee company. Milestone analysis is used where appropriate to incorporate the operational progress of the investee company into the valuation. Additionally, the background to the transaction must be considered. As a result, various multiples-based techniques are employed to assess the valuations particularly in those companies with established revenues. Discounted cashflows are used where appropriate. An absence of relevant industry peers may preclude the application of the Industry Valuation Benchmarks technique and an absence of observable prices may preclude the Available Market Prices approach. All valuations are cross-checked for reasonableness by employing relevant alternative techniques. The unlisted investments are valued according to a three monthly cycle of measurement dates. The fair value of the unlisted investments will be reviewed before the next scheduled three monthly measurement date on the following occasions: -      At the year end and half year end of the Company; and -      Where there is an indication of a change in fair value as defined in the IPEV guidelines (commonly referred to as 'trigger' events).
7.	The total value of the borrowings (at book) is £719,289,000 (31 March 2019 - £703,461,000). The bank loans falling due within one year are a US$200 million revolving 2 year loan with National Australia Bank Limited ('NAB'), a US$80 million revolving 3 year loan with The Royal Bank of Scotland International Limited ('RBS') and a US$85 million revolving 2 year loan with RBS (31 March 2019 - US$200 million revolving 2 year loan with NAB, a US$80 million revolving 3 year loan with RBS and a US$85 million revolving 2 year loan with RBS). The debenture stock maturing within one year is the £20 million 8-14% stepped interest debenture (maturing 30 September 2020). There were no bank loans falling due in more than one year (31 March 2019 - none). During the period the US$85 million revolving 2 year loan with RBS was replaced with a US$85 million revolving 2 year loan with RBS.
8.	The fair value of the borrowings at 30 September 2019 was £798,748,000 (31 March 2019 - £750,745,000).

Notes to the condensed financial statements (unaudited) (ctd)

9.		At  30 September 2019 Number of shares	At 31 March 2019 (audited) Number of shares
	Share capital: Ordinary shares of 5p each
	Allotted, called up and fully paid	1,484,780,880	1,474,255,880
	In the six months to 30 September 2019, the Company issued 10,525,000 ordinary shares at a premium to net asset value raising net proceeds of £54,477,000 (year to 31 March 2019 - 26,367,671 shares sold from treasury raising net proceeds of £133,113,000 and issued 52,525,000 ordinary shares, with a nominal value of £2,627,000, at a premium to net asset value, raising proceeds of £269,777,000). In the six months to 30 September 2019 no ordinary shares were bought back (year to 31 March 2019 - nil). At 30 September 2019 the Company had authority remaining to buy back 221,658,011 ordinary shares.
10.	Transaction costs on acquisitions within the portfolio amounted to nil (30 September 2018 - £517,000) and transaction costs on sales amounted to £133,000 (30 September 2018 - £246,000). These costs are included in the book cost of acquisitions and in the net proceeds of disposals.
11.	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.

Glossary of Terms and Alternative Performance Measures (APM) Total Assets Total assets less current liabilities, before deduction of all borrowings. Net Asset Value Also described as shareholders' funds. Net Asset Value (NAV) is the value of total assets less liabilities (including borrowings). Net Asset Value is calculated on the basis of borrowings stated at book or fair value. An explanation of each is provided below. The NAV per share is calculated by dividing this amount by the number of ordinary shares in issue (excluding treasury shares). Net Asset Value (Borrowings at Book)/Shareholders' Funds Borrowings are valued at adjusted net issue proceeds. The value of the borrowings at book is set out in note 7 above. Net Asset Value (Borrowings at Fair Value) (APM) Borrowings are valued at an estimate of their market worth. The value of the borrowings at fair is set out in note 8 above and a reconciliation to Net Asset Value with borrowings at book value is provided below.

			30 September 2019				31 March 2019
Net Asset Value per ordinary share (borrowings at book value)			520.4p				504.0p
Shareholders' funds (borrowings at book value)			£7,727,158k				£7,429,930k
Add:  book value of borrowings			£719,289k				£703,461k
Less: fair value of borrowings			(£798,748k)				(£750,745k)
Net Asset Value (borrowings at fair value)			£7,647,699k				£7,382,646k
Shares in issue at year end (excluding treasury shares)			1,484,780,880				1,474,255,880
Net Asset Value per ordinary share (borrowings at fair value)			515.1p				500.8p
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. 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. Gearing represents borrowings at book value less cash and cash equivalents (including any outstanding trade settlements) expressed as a percentage of shareholders' funds. Turnover (APM) Annual turnover is calculated by dividing the lower of purchases and sales by the average of opening and closing total assets. 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. 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.
		30 September 2019				30 September 2018
		NAV (book)		NAV (fair)	Share price	NAV (book)	NAV (fair)	Share price
Closing NAV per share/share price	(a)	520.4p		515.1p	503.5p	527.7p	524.9p	541.3p
Dividend adjustment factor*	(b)	1.0033		1.0033	1.0036	1.0034	1.0040	1.0031
Adjusted closing NAV per share/share price	(c = a x b)	522.1p		516.8p	505.3p	529.5p	527.0p	543.0p
Opening NAV per share/share price	(d)	504.0p		500.8p	512.0p	443.5p	439.9p	442.2p
Total return	(c ÷ d) - 1	3.6%		3.2%	(1.3%)	19.4%	19.8%	22.8%

*      The dividend adjustment factor is calculated on the assumption that the final dividend of 1.74p (2018 - 1.68p) paid by the Company during the period was reinvested into shares of the Company at the cum income NAV per share/share price, as appropriate, at the ex-dividend date.

Principal Risks and Uncertainties The principal risks facing the Company are financial risk, unlisted investments risk, investment strategy risk, discount risk, regulatory risk, custody and depositary risk, operational risk, leverage risk and political risk. An explanation of these risks and how they are managed is set out on pages 8 and 9 of the Company's Annual Report and Financial Statements for the year to 31 March 2019 which is available on the Company's website: www.scottishmortgageit.com.‡ The principal risks and uncertainties have not changed since the date of that report. Shareholders will be notified on or around 20 November 2019 that the Interim Financial Report has been published and will be available on the Scottish Mortgage page of the Managers' website www.scottishmortgageit.com. ‡

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

Scottish Mortgage Investment Trust PLC is an actively managed, low cost investment trust, investing in a concentrated global portfolio of companies with the aim of maximising its total return over the long term. It looks for strong businesses with above-average returns and aims to achieve a greater return than the FTSE All-World Index (in sterling terms) over a five year rolling period.

You can find up to date performance information about Scottish Mortgage on the Scottish Mortgage page of the Managers' website at www.scottishmortgageit.com‡

‡      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.

Scottish Mortgage is managed by Baillie Gifford & Co, the Edinburgh based fund management group with over £207 billion under management and advice in active equity and bond portfolios for clients in the UK and throughout the world (as at 7 November 2019).

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

Past performance is not a guide to future performance.  The value of an investment and any income from it is not guaranteed and may go down as well as up and investors may not get back the amount invested. This is because the share price is determined by the changing conditions in the relevant stock markets in which the Company invests and by the supply and demand for the Company's shares.

7 November 2019

For further information please contact:

Catharine Flood, Baillie Gifford & Co

Tel: [phone]

Campbell MacKenzie, Baillie Gifford & Co  

Tel: [phone]

Mark Knight, Director, Four Communications

Tel: [phone] or 07803 758810

Automatic Exchange of Information

In order to fulfil its obligations under UK tax legislation relating to the automatic exchange of information, Scottish Mortgage Investment Trust PLC is required to collect and report certain information about certain shareholders.

The legislation requires investment trust companies to provide personal information to HMRC on certain investors who purchase shares in investment trusts. Accordingly, Scottish Mortgage Investment Trust PLC will have to provide information annually to the local tax authority on the tax residencies of a number of non-UK based certificated shareholders and corporate entities. Shareholders, excluding those whose shares are held in CREST, who come on to the share register will be sent a certification form for the purposes of collecting this information.

For further information, please see HMRC's Quick Guide: Automatic Exchange of Information - information for account holders https://www.gov.uk/government/publications/exchange-of-information-account-holders.

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