Moody's Issuer Rating

Scottish Mortgage Inv Tst PLC
21 September 2004


                               RNS announcement.

                    SCOTTISH MORTGAGE INVESTMENT TRUST PLC.


Scottish Mortgage has been assigned Moody's highest Issuer Rating, Aaa.


The Chairman of Scottish Mortgage, Sir Donald MacKay, said:


'I am very pleased that Moody's has awarded Scottish Mortgage a Aaa issuer
rating. Not only is Scottish Mortgage the first UK investment trust to have been
awarded such a high rating, but it is also the only Aaa rated company in the
FTSE All-Share Index.'


'The Board of Scottish Mortgage believes that the judicious use of gearing can
raise shareholders' returns.  We decided to seek a credit rating in order to
obtain independent confirmation of our view that the current policy on the use
of borrowing is conservative.  We are therefore very encouraged that Scottish
Mortgage has been assigned Moody's highest rating, Aaa.'


'I believe that the shares of large global investment trusts can be excellent
vehicles for long term investment and savings.  Scottish Mortgage, which has
established a good trading record over very many years under its managers
Baillie Gifford & Co, gives investors exposure to a diversified global portfolio
at reasonable cost.'


Moody's issuer ratings are opinions of the ability of entities to honour senior
unsecured financial obligations and contracts. Moody's analysis highlights:

  • The Board's sensitivity to the judicious use of leverage
  • The Trust's modest leverage and plain vanilla capital structure
  • The long track record of the Trust and the length of experience of the
    Trust's managers in the equity market
  • Well-diversified portfolio of liquid assets, which cover the borrowings
    almost 6 times


Date 21/09/04

Ends


For further information, please contact:


Robert O'Riordan,                               0131 275 3181
Baillie Gifford & Co                            07730 412 007 (mobile)


Mike Lord                                       020 7726 6111
Broadgate Marketing

NOTES TO EDITORS


Moody's rates funds such as Scottish Mortgage on their ability to meet debt
obligations.  It is expressly not an opinion on the suitability of Scottish
Mortgage ordinary shares as an investment.


Scottish Mortgage has total assets of £1.3 bn and  has been trading since 1909.
It invests internationally with a core of exposure to the UK market and its
objective is to maximise total return whilst also generating real dividend
growth.


Moody's received several extensive written submissions from the Company's
Managers and also visited Edinburgh to interview the Chairman of Scottish
Mortgage and partners and staff of Baillie Gifford & Co..


In support of the issuer rating, Scottish Mortgage will be subject to periodic
asset coverage tests by Moody's to track its ongoing ability to cover its senior
obligations. The periodic asset coverage test simulates a stressful market
scenario to ensure a notional capital cushion that is sufficient to withstand a
severe market downturn. The discounted market value of the portfolio represents
an important factor in Moody's assessment of the trusts ability to meet its
financial commitments.


The evaluation is partly quantitative and partly qualitative.


The main quantitative elements are:

-         the extent of gearing

-         the nature and diversity of the Company's assets

-         the liquidity and financial flexibility of the Company


The main qualitative aspects are:

-         the consistency and conservatism of management

-         the nature of risk controls

-         the appropriateness of company policy towards gearing


As at 31st August 2004, Scottish Mortgage's Total Assets were £1,282m.  When
debentures and bank borrowings are deducted with the debentures valued at par
Shareholders Funds were £ 1,084m and when the debentures are valued at their
market price £ 1,032m.


As at 31 August the Company's share capital consisted of  295,605,115 issued and
fully paid ordinary shares of 25p each.


The loan capital consisted of:

£20m               8% -14% Stepped Interest Debenture Stock 2020

£75m               6.875% Debenture Stock 2023

£50m               6% -12% Stepped Interest Debenture Stock 2026

£675,000         4.5% Irredeemable Debenture Stock


Bank loans were:

US Dollars 40m at 1.78% p.a. from 09 December 2003 to 6 December 2004

(equivalent to £22m as at 31 August 2004)

Yen 5,900m at 0.65% p.a. from 8 June 2004 to 8 July 2007

(equivalent to £30m as at 31 August 2004)


Investment trusts that invest in overseas securities will be affected by
currency fluctuations.


The staff of Baillie Gifford & Co and/or trust directors may have positions in
the trusts mentioned in this release, or may buy, sell or offer to make a
purchase or sale of such securities from time to time.


Baillie Gifford & Co who act as Secretaries and Managers of Scottish Mortgage
are authorised and regulated by the Financial Services Authority and are based
at Calton Square, 1 Greenside Row, Edinburgh, EH1 3AN.



                      This information is provided by RNS
            The company news service from the London Stock Exchange