Annual Financial Report

Securities Trust of Scotland plc

Annual report
Year to 31 March 2009

The financial information set out below does not constitute the company's
statutory accounts for the years ended 31 March 2009 or 2008 but is derived from
those accounts.  Statutory accounts for 2008 have been delivered to the
Registrar of Companies and those for 2009 will be delivered following the
company's annual general meeting.  The auditor's have reported on those
accounts; their reports were unqualified, did not draw attention to any matters
by way of emphasis without qualifying their report and did not contain
statements under s237(2) or (3) Companies Act 1985.

Copies of the Annual Report and Accounts for the year ended 31 March 2009 have
been submitted to the UK Listing Authority and will shortly be available for
inspection at the UK Listing Authority's Document Viewing Facility situated at:

Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS.

A copy of the full annual report can be downloaded at www.securitiestrust.com

The annual general meeting of the company will be held at the offices of Martin
Currie, Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2ES on Wednesday 22
July 2009 at 12.30pm.  Full notice of the meeting can be found within the Annual
Report and Accounts.

The unedited full text of those parts of the annual report and accounts for the
year ended 31 March 2009, which require to be published are set out on the
following pages.

Financial Summary

Key data

                  As at         As at 31    % change
                  31 March      March 2008
                  2009
Net asset value   75.41p        123.92p     -39.1%
per share
Benchmark*        1,984.17      2,927.05    -32.2%
Share price       66.25p        116.00p     -42.9%
Discount**        12.15%        6.39%

*FTSE All Share
** The volatility in stock markets resulted in a significant widening of the
discount prior to the 31 March 2009, the cumulative average discount (on a cum-
income basis) for the 12 weeks prior to the year end was 5.1%.

Income

                  As at         As at 31
                  31 March      March 2008
                  2009
Revenue return    5.41p         5.68p
per share
Dividend per      5.45p         5.45p
share


Total expenses

                  As at         As at 31
                  31 March      March 2008
                  2009
As percentage of  0.7%          0.6%
shareholders'
funds

Annual total returns with dividends reinvested over 12 month periods to 31 March

              2009    2008  2007  2006*

 Securities   (39.1%)(14.5%)17.0% 34.5%
 Trust share
 price
 FTSE All     (29.3%)(7.7%) 11.1% 32.2%
 Share index
 Securities   (35.9%)(15.0%)13.5% 33.5%
 Trust net
 asset value
 per share

*since launch on 28 June 2005
Source: Fundamental Data



Chairman's Statement

Welcome to the latest report covering the 12 months to 31 March 2009. After five
years of rising stock markets between 2002 and 2007, we have now had two
successive years of negative returns for equities in the UK.

As Ross Watson says in his report, the cuts in dividends in the UK led to a 6.9%
fall in income received by the portfolio. This brings to an end a long period of
strong dividend growth for UK companies.

In the period under review the total return of the net asset value per share
fell by 35.9%, compared with the 29.3% fall in the FTSE All-Share Index.  Income-
orientated investments were some of the hardest hit over the past year as
dividends, normally a resilient source of value, came under significant
pressure.

Dividends
At 31 March 2009 the company's shares offered a yield of 8.2%, compared to the
5.1% available from the FTSE All-Share Index.

The revenue return over the year to 31 March was 5.41p per share a fall of 4.8%
compared to 5.68p in the previous year. Three interim dividends of 1.15p per
share have already been paid and the board has declared a fourth interim
dividend of 2.00p per share making a total of 5.45p per share. This will be paid
on 30 June 2009 to shareholders on the register on 5 June 2009.

We have maintained the dividend at the level that was paid in to the year to 31
March 2008.  In order to achieve this we have marginally dipped into revenue
reserves.

Although the outlook for dividends is challenging the board will endeavour to
maintain the current dividend to 31 March 2010.

Revenue hedging
In recent years the proportion of the company's revenue that is declared in US
dollars has increased and currency fluctuations have meant that revenue
forecasting has become more uncertain.  In order to offset these fluctuations
the company has taken out forward contracts to hedge the expected revenue from a
number of portfolio constituents. In aggregate, this will protect 61.8% of the
remaining US dollar denominated dividends for the period to March 2010 at a rate
of $1.5650.

Borrowing
We continued to maintain a low level of borrowing throughout the year,
reflecting our manager's prudent approach. Gearing remained well below the
maximum permitted level of 15% throughout the year.

Discount management
The cumulative average discount to net asset value at which shares traded over
the 12 weeks prior to the year-end was 2.91% on an ex-income basis.

Looking to the future
A year ago I stated that the economic outlook was likely to be testing and this
would be reflected in lower profit and dividend growth at the company level.
With UK savings rates so low, investors looking for a regular income are not
spoiled for choice. Government bonds have been in demand during a `flight to
quality', but the 10-year gilt yield fell to just 3%. The corporate bonds of
some large, secure companies offer attractive opportunities, but yields are
likely to fall.

In this environment, the attraction of investing in companies that have a
commitment to paying solid, reliable dividends is, I believe, a strong one. Our
investment manager is confident that the majority of large companies that will
cut their dividends have already done so and that there are good opportunities
to buy into companies with both an attractive starting yield and the prospect of
dividend growth. Many of these are larger, more defensive companies that are
inexpensive and although they are not yet back in favour with investors we
believe they will be in due course.

The current economic uncertainty should create a number of selective buying
opportunities from which we expect shareholders to benefit.
Neil Donaldson
26 May 2009



Manager's Review

The twelve months under review have been one of the worst periods for equity
investors for many years for not only have capital values fallen very sharply
but dividends, normally a more resilient source of value, have also come under
pressure.

The period began with equities rising, benefiting from the belief that the
liquidity crisis affecting the banking market would not seriously impact
economic activity. Commodity prices including oil were trading at record levels
as investors expected strong demand to continue. Within a few months sentiment
had changed markedly as economic activity weakened rapidly and the survival of
many banks became a pressing issue. The support given to the UK banking system
may have stabilised the situation but existing investors were heavily diluted.
The fall in activity has been so sharp that the UK economy may contract by close
to 4% during 2009.

Equities fell sharply as the outlook for profits deteriorated and the fall in
the FTSE All-Share of 32.2% was the worst for many years. The income bias of the
equity portfolio did not provide the support that might have been expected and
fell by 32.1%. The capital return of the net asset value was (39.1%).

The worst performing sectors within the market were inevitably those most
exposed to the turmoil in financial markets with banks, real estate and life
assurance amongst those worst hit. Within the portfolio the biggest contributors
to the under performance were Aviva, a life assurance company, and Intermediate
Capital Group which invests in corporate buyouts and reorganisations. Both were
hit by falling investment values within their portfolios and concerns about
their dividends and capital position.

The strong cash flow and consistent dividend growth at BAT have meant that it
has been a significant part of the portfolio for some time and these strengths
meant that it made the biggest positive contribution to performance. It was
followed by Next, the retailer, which did well despite a difficult background
for the consumer. Active management of costs and stocks meant that it generated
a strong cash flow. The number of holdings within the portfolio was reduced over
the period as stocks sold were not replaced with new ideas. This reflected the
cautious view of the managers in assessing new opportunities for investment.
Stocks sold included Wolseley, Persimmon, Inchcape, Johnston Press, BT and
Barclays.  In addition, the holding in Lloyds Banking Group was further reduced.
In recent weeks however a number of new holdings, including WPP and Friends
Provident have been added to the portfolio. Other new holdings included
Unilever, Petrofac, Carillion and Royal Sun Alliance.

In addition to sharp falls in capital values UK investors have had to contend
with significant reductions in dividends from a number of companies,
particularly the UK banks. Even the strongest bank, HSBC, has now halved its
dividend. The loss of dividends from this sector made the biggest contribution
to the 6.9% fall in income received by the portfolio as growth in other holdings
did not compensate. The reduction in dividend income brings to an end a long
period of strong dividend growth for UK shareholders. The outlook for dividends
remains difficult but I believe that the majority of companies that will cut
their dividends, particularly larger ones, have already done so. The year to
March 2010 will be the most difficult one for income generation for the
portfolio but I do not expect a significant reduction from current forecasts.
There are opportunities to buy companies with both an attractive starting yield
and the prospect of dividend growth. Many of these are larger, more defensive
companies that are inexpensive although they are not currently favoured by the
stock market.

The economic background is very difficult. Equity values have however already
started to rally in anticipation of a better outlook, even if a return to trend
economic growth takes some years. Shares in early cycle sectors such as house
builders and retailers reached their lowest levels several months ago. The UK
banks have also rallied sharply from their lowest levels as fears over
nationalisation have eased. It will be some years before dividend payments from
many of these stocks resume however. A notable feature of the stock market in
recent months has been the large number of companies raising new equity capital
to repair their balance sheets. This is a sign of confidence in the future by
investors, although much of the money has come by selling other stocks.   More
companies can be expected to follow suit. The recent rally in equity prices is
welcome although share prices remain well below the levels of last summer.
Sentiment has certainly improved but equity prices remain vulnerable to setbacks
on disappointing economic data or renewed concerns over financial markets. I
believe, however, that equity investors may look forward to better returns over
the medium term than they have endured over the last year.


Portfolio Summary

Portfolio distribution as at 31 March 2009

By asset class   2009   2008
                 %      %
Equities         106    107
Fixed interest   4      3
Cash             2      1
Less borrowings  (12)   (11)
                 100    100


By Sector           2009     2008
(excluding cash)    %        %
Oil and gas         20       12
Financials          17       31
Consumer goods      12       12
Consumer services   10       8
Healthcare          10       5
Industrials         10       9
Basic materials     7        10
Telecommunications  6        7
Utilities           6        5
Technologies        2        1
                    100      100




Market           Securities Trust of     FTSE All-Share
capitalisation   Scotland
of equity
investments
                 Weighting   No. of      Weighting    No. of
                 %           stocks      %           stocks
                 2009  2008  2009  2008  2009  2008  2009  2008
FTSE 100         79.0  77.6  27    30    87.3  83.9  100   100
FTSE 250         17.6  18.2  15    18    10.8  13.1  250   250
FTSE 350         96.6  95.8  42    48    98.1  97.0  350   350
FTSE small cap   2.4   1.4   3     2     1.9   3.0   260   310
Non-index        1.0   2.8   3     4     -     -     -     -
stocks
                100.0 100.0  48    54    100.0 100.0 610   660




Largest Holdings  2009       2009     2008      2008
                  Market     % of     Market    % of
                  Value      total    value     total
                  £000       portfolio £000     portfolio

BP                8,212      9.83     8,917     6.47
Royal Dutch       6,948      8.32     7,697     5.58
Shell
British American  5,046      6.04     8,486     6.16
Tobacco
GlaxoSmithKline   5,012      6.00     4,271     3.10
Vodafone          4,527      5.42     5,565     4.04
AstraZeneca       3,136      3.76     2,411     1.74
BAE Systems       2,839      3.40     2,718     1.97
Scottish and      2,633      3.15     3,721     2.70
Southern Energy
Imperial Tobacco  2,582      3.09     2,546     1.84
National Grid     2,417      2.89     3,417     2.48
HSBC              2,232      2.67     8,806     5.87
Next              2,222      2.66     1,911     1.39
BHP Billiton      2,115      2.53     2,282     1.66
Aviva             1,796      2.15     5,947     4.31
Go-Ahead          1,699      2.03     944       0.68
RSA Insurance     1,652      1.98     -         -
Unilever          1,634      1.96     -         -
Rio Tinto         1,631      1.95     3,632     2.64
Melrose           1,291      1.55     -         -
Sage              1,257      1.50     1,397     1.01




United Kingdom      Market Value    % of total
                    £               portfolio

BP                  8,211,536       9.83
Royal Dutch Shell   6,948,474       8.32
British American    5,046,383       6.04
Tobacco
GlaxoSmithKline     5,012,059       6.00
Vodafone            4,526,702       5.42
AstraZeneca         3,136,349       3.76
BAE Systems         2,839,313       3.40
Scottish and        2,633,287       3.15
Southern Energy
Imperial Tobacco    2,581,977       3.09
National Grid       2,417,493       2.89
HSBC                2,231,583       2.67
Next                2,221,791       2.66
BHP Billiton        2,114,549       2.53
Aviva               1,796,477       2.15
Go-Ahead            1,698,642       2.03
RSA Insurance       1,651,800       1.98
Unilever            1,633,608       1.96
Rio Tinto           1,631,229       1.95
Melrose             1,291,337       1.55
Sage                1,256,621       1.50
Petrofac            1,145,183       1.37
Hiscox              1,095,819       1.31
Wincanton           1,067,240       1.28
Carillion           1,053,672       1.26
Savills             1,050,303       1.26
Admiral             1,038,982       1.24
Croda               976,313         1.17
Halfords            967,488         1.16
Land Securities     919,524         1.10
Abbey National      906,442         1.09
(10.375% preference
shares)
Babcock             877,696         1.05
international
IMI                 838,358         1.00
Informa             831,676         1.00
3i Infrastructure   824,769         0.99
General Accident    820,000         0.98
(7.875% preference
shares)
United Business     815,094         0.98
Media
WPP                 812,007         0.97
Premier Foods       799,689         0.96
Elementis           730,769         0.88
Man Group           677,217         0.81
Tullett Prebon      619,607         0.74
Lloyds Banking      539,000         0.65
Group (9.75%
preference shares)
Corporate Services  532,315         0.64
(10% guaranteed
loan note)
Intermediate        508,427         0.61
Capital
TUI Travel          505,158         0.60
Rugby Estates       473,641         0.57
Investment Trust
Royal Bank of       358,448         0.43
Scotland
Lloyds Banking      287,443         0.34
Group
Summit Germany      206,298         0.25
SIG                 150,966         0.18
NR Nordic and       105,274         0.13
Russia Properties
Friends Provident   96,218          0.12

Total portfolio     83,512,246      100.0



Revenue and dividends
Gross revenue for the year amounted to £6,224,000 (2008: £6,682,000) and the
revenue return per share was 5.41p (2008: 5.68p). Interim dividends totalling
5.6p have been paid during the year.

The directors recommend a fourth interim dividend of 2.00p per share payable on
30 June 2009 to holders on the register at the close of business on 5 June 2009,
making a total for the period of 5.45p (2008: 5.45p).

Related Party Transactions
There were no related party transactions during the year.

Going concern status
After making enquiries, the directors have a reasonable expectation that the
company has adequate resources to continue in operational existence for the
foreseeable future. Accordingly they adopt the going concern basis in preparing
the annual report and accounts.

The company has a loan facility of £20,000,000 which expires in June 2009, of
which £9,000,000 was drawn down at the year end date. The purpose of the
facility is to enable the manager to enhance the return for shareholders by
borrowing and investing where the return is expected to exceed the cost of
borrowing. Therefore the company has adequate financial resources in the form of
readily realisable listed securities and as a result the directors assess that
the company is able to continue in operational existence without the facility.


Risks and Uncertainties

Management of principal risks
With the assistance of the manager, the board has drawn up a risk matrix, which
identifies the key risks to the company.  These key risks fall broadly under the
following categories and the implementation of specific mitigating measures and
procedures has taken place in order to reduce the probability and impact of each
risk to the greatest extent possible.


Risk Mitigation

Loss of s842 status - In order to qualify as an investment trust, the company
must comply with Section 842 of the Income and Corporation Taxes Act 1988.
Section 842 qualification criteria are continually monitored by Martin Currie.
Operational disruption at the manager's premises - Martin Currie has in place a
full disaster recovery and business continuity plan which facilitates continued
operation of the business should the manager's premises be subject to
operational disruption. The plan, including a full staff call chain test, was
last tested in November 2008 with successful results. The manager maintains a
fully operational off-site disaster recovery centre for use by key staff during
any disruption.

Regulatory, accounting/internal control breach - The company must comply with
the Companies Acts 1985 and 2006 and the UKLA Listing Rules. The board relies on
the services of its company secretary and its professional advisers to ensure
compliance.  Details of how the board monitors the services provided by Martin
Currie and the key elements designed to provide effective internal control are
included within the internal control section of the Corporate Governance Report.

Loss of investment team or Investment Manager - The manager takes steps to
reduce the likelihood of such an event by ensuring appropriate succession
planning and the adoption of a team based approach, as well as special efforts
to retain key personnel.

Failure to manage the discount - The board regularly discusses discount policy
and has set parameters for the manager and the company's broker to follow.

Investment underperformance - The board manages the risk of investment
underperformance by diversification of investments and through a set of
investment restrictions and guidelines that are monitored and reported on by the
manager.  The board monitors the implementation and results of the investment
process with the manager, who attends all board meetings, and reviews data that
show statistical measures of the company's risk profile.

Interest rate risk - From time to time the company finances its operations
through bank borrowings. The amount of such borrowings will not exceed 15% of
the company's total assets.  Details are provided in note 17 to the financial
statements.

Currency risk  - The board regularly monitors the impact of currency rate risk.
In recent years the proportion of the company's revenue that is declared in US
dollars has increased and currency fluctuations have meant that revenue
forecasting has become more uncertain.  In order to offset these fluctuations
the company has taken out forward contracts to hedge the expected revenue from a
number of portfolio constituents. In aggregate, this will protect 61.8% of the
remaining US dollar denominated dividends for the period to March 2010 at a rate
of $1.5650.

Counterparty risk - Martin Currie monitors counterparty relationships on behalf
of the board. This process includes identifying major counterparties, mapping
exposure and analysing the risks through Martin Currie's risk, compliance,
dealing, operations and middle office teams. The aim is to enable the board to
determine an appropriate level of counterparty risk exposure, and to diversify
or mitigate this, as required. This process is subject to continual monitoring
and review with any recommendations made to the board.


Directors' Responsibility

The directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company as at the end of the year and of the net return for the year. In
preparing those financial statements, the directors are required to:

  -    Select suitable accounting policies and then apply them consistently;

  -    Make judgments and estimates that are reasonable and prudent;

  -    State whether applicable accounting standards have been followed, subject
       to any material departures disclosed and explained in the financial statements;
       and

  -    Prepare the financial statements on the going concern basis unless it is
       inappropriate to assume that the company will continue in business.

The directors confirm that the financial statements comply with the above
requirement.

The directors are responsible for ensuring that proper accounting records are
kept which disclose with reasonable accuracy at any time the financial position
of the company and enable them to ensure that the financial statements comply
with the Companies Acts 1985 and 2006. They are also responsible for
safeguarding the assets of the company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.

The financial statements are published on the www.securitiestrust.com website,
which is maintained by the company's investment manager. The maintenance and
integrity of the website maintained by Martin Currie is, so far as it relates to
the company, the responsibility of Martin Currie.

In accordance with Chapter 4 of the Disclosure and Transparency Rules, and to
the best of their knowledge, each director of Securities Trust of Scotland plc
("the company") confirms that the financial statements have been prepared in
accordance with the applicable set of accounting standards and give a true and
fair view of the assets, liabilities, financial position and profit or loss of
the company. Furthermore each director certifies that the report of the
directors includes a fair review of the development and performance of the
business and the position of the company, together with a description of the
principal risks and uncertainties that the company faces.

Edward Murray
Chairman of the Audit Committee
26 May 2009


Income Statement

                      Year ended 31 March
                             2009
              Notes   Revenue  Capital  Total
                      £000     £000     £000

Losses on     8       -       (48,939) (48,939)
investments
Currency              -            (3)      (3)
(losses)/gains

Income        3      6,224         63    6,287
Investment             (83)      (154)    (237)
management
fee
VAT           16        54        148      202
recoverable
on Investment
management
fee
Other         4       (453)        -      (453)
expenses
Net return           5,742    (48,885) (43,143)
before
finance costs
and taxation
Finance Costs 5       (219)      (406)    (625)
- debt
Finance Costs 6     (5,694)        -    (5,694)
- shareholders'
funds
Return on             (171)   (49,291) (49,462)
ordinary
activities
before
taxation
Taxation on   7         (5)        -        (5)
ordinary
activities
Return                (176)   (49,291) (49,467)
attributable
to ordinary
redeemable
shareholders
Returns per   2       5.41p   (48.34p) (42.93p)
ordinary
redeemable
share


                   Year ended 31 March
                           2008

              Notes    Revenue   Capital   Total
                          £000      £000    £000

Losses on     8             -    (26,985)(26,985)
investments
Currency                    -         10      10
(losses)/gain
s
Income        3         6,682        635   7,317
Investment               (142)      (264)   (406)
management
fee
VAT           16            -          -       -
recoverable
on Investment
management
fee
Other         4          (441)         -    (441)
expenses
Net return              6,099    (26,604)(20,505)
before
finance costs
and taxation
Finance Costs 5          (301)      (558)   (859)
- debt
Finance Costs 6        (6,368)         -  (6,368)
- shareholders'
funds
Return on                (570)   (27,162)(27,732)
ordinary
activities
before
taxation
Taxation on   7            (3)         -      (3)
ordinary
activities
Return                   (573)   (27,162)(27,735)
attributable
to ordinary
redeemable
shareholders
Return per    2          5.68p   (26.64p)(20.96p)
ordinary
redeemable
share


The total columns of this statement are the profit and loss accounts of the
company.

The revenue and capital items are presented in accordance with The Association
of Investment Companies (AIC) SORP.

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

No operations were acquired or discontinued in 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.


Balance sheet

                        As at 31          As at 31
                        March 2009        March 2008

                 Note   £000     £000     £000      £000
Non-current
assets
Investments at
fair value
through profit
or loss
Listed on                      83,407            137,823
Exchanges in
the UK
Listed on                         105                  -
Exchanges
abroad
                 8             83,512            137,823

Current Assets
Loans and        9      1,031            1,994
receivables
Cash at bank            3,198              451
                        4,229            2,445
Creditors
Amounts falling  10   (10,850)         (13,910)
due within one
year

Net current                    (6,621)           (11,465)
liabilities
Shareholders'                  76,891            126,358
funds (prior to
shareholders'
redemption
liability)

Creditors
Distributable    11           (74,065)          (123,356)
capital and
reserves
attributable to
shareholders on
redemption
                                2,826              3,002
Distributable
capital and
reserves
Revenue reserve                 2,826              3,002
Net asset value  2              75.41p            123.92p
per ordinary
redeemable
share (prior to
shareholders'
redemption
liability)


The revenue reserve represents the amount of the company's reserves
distributable by way of dividend.

The aggregate amount of called up share capital is £1,019,702



Statement of cash flow

                 Note  Year to 31      Year to 31
                       March 2009      March 2008

                      £000   £000      £000    £000
Net cash inflow  13         6,406             5,836
from operating
activities

Servicing of
finance
Finance costs -       (629)          (878)
debt
Finance costs -     (5,694)        (6,368)
equity
Net cash                   (6,323)           (7,246)
outflow from
servicing of
finance

Taxation
Overseas                (5)            (3)
taxation paid
Net cash                       (5)               (3)
outflow from
taxation

Capital
expenditure and
financial
investment
Payments to        (19,632)        (44,647)
acquire
investments
Receipts from       26,854          45,335
disposal of
investments
Net cash inflow             7,222               688
from investing
activities

Net cash                    7,300              (725)
inflow/(outflow
) before use of
liquid
resources and
financing

Financing
Net movement in     (4,550)          (450)
short-term
borrowings
Net cash                   (4,550)            (450)
outflow from
financing
Increase/(decre             2,750           (1,175)
ase) in cash
for the year
Reconciliation
of net cash
flow to
movements in
net debt
Increase/(decre       2,750         (1,175)
ase) in cash as
above
Net movement in       4,550            450
short-term
borrowings
Change in net                7,300            (725)
debt resulting
from cash flows
Foreign                         (3)             10
exchange
movements

Movement in net              7,297            (715)
debt in the
year
Opening net                (13,099)        (12,384)
debt
Closing net                 (5,802)        (13,099)
debt




 Reconciliation of movements in shareholders' funds

For the      Called up      Capital        Special     Capital    Revenue    Total
year ended   ordinary    redemption  distributable     reserve    reserve     £000
31 March     share          reserve        capital     £000       £000
2009         capital           £000        reserve
                £000                          £000



As at 31       1,019             62        111,145      11,130      3,002  126,358
March 2008
Return             -              -              -     (49,291)      (176) (49,467)
attributab
le to
shareholde
rs
Balance at     1,019             62       111,145      (38,161)     2,826   76,891
31 March
2009



For the      Called up      Capital        Special     Capital    Revenue    Total
year ended   ordinary    redemption  distributable     reserve    reserve     £000
31 March     share          reserve        capital     £000       £000
2008         capital           £000        reserve
                £000                          £000

As at 31       1,019             62        111,145      38,292     3,575   154,093
March 2007
Return             -              -              -     (27,162)     (573)  (27,735)
attributab
le to
shareholde
rs
Balance at     1,019             62        111,145      11,130     3,002   126,358
31 March
2008

The revenue reserve represents the amount of the company's reserves
distributable by way of dividend.

Notes to the Financial Statements

1  Accounting Policy

a) The financial statements have been prepared in accordance with UK Generally
 Accepted Accounting Practice (UK GAAP) and the Statement of Recommended
 Practice for Financial Statements of Investment Trust Companies and Venture
 Capital Trusts' (SORP), issued in January 2009.

The disclosures on going concern on page 10 of the directors' report form
part of the financial statements.

Dividends - In accordance with FRS 21: "Events after the balance sheet
date", dividends are included in the financial statements in the period in
which they are paid.

 Functional currency - In accordance with FRS 23: "The effects of changes in
 foreign currency", the company is required to nominate a functional currency,
 being the currency in which the company predominately operates. The board has
 determined that sterling is the company's functional currency, which is also
 the currency in which these financial statements are prepared.

b)  Income from equity investments is determined on the date on which the
 investments are quoted ex-dividend, or where no ex-dividend date is quoted,
 when the company's right to receive payment is established. Income from fixed
 interest securities is recognised on an effective yield basis. UK dividends
 received are accounted for at the amount receivable and are not grossed up for
 any tax credit. Other income includes any taxes deducted at source. Gains and
 losses arising from the translation of income denominated in foreign
 currencies are recognised in the revenue reserve. Scrip dividends are treated
 as unfranked investment income; any excess in value of shares received over
 the amount of the cash dividend is recognised in capital reserves. Income from
 underwriting commission is recognised as earned.

c) Interest receivable and payable and management expenses are treated on an
 accruals basis.

d) The management fee and interest costs are allocated 65% to capital and 35% to
 revenue in accordance with the board's expected long-term split of returns in
 the form of capital gains and income, respectively. The performance fee is
 wholly allocated to capital.

e) Transactions denominated in foreign currencies are converted at actual
 exchange rates as at the date of the transaction. Assets and liabilities
 denominated in foreign currencies at the year end are translated at the rates
 of exchange prevailing at the year end. Any gain or loss arising from a change
 in exchange rates subsequent to the date of the transaction is included in the
 income statement as an exchange gain or loss in revenue or capital, depending
 on whether the gain or loss is of a revenue or capital nature.

f)   Revenue received and interest paid in foreign currencies are translated at
 the rates of exchange ruling on the transaction date. Any exchange differences
 relating to revenue items are taken to the revenue account.

g)  The company's investments are classified as `financial assets at fair value
 through profit or loss' and are therefore valued at bid price. Gains and
 losses arising from changes in fair value are included in the capital return
 for the period.

h)  All financial assets and liabilities are recognised in the financial
 statements.

i)   Deferred tax is recorded in accordance with Financial Reporting Standard 19
 (Deferred Tax). Deferred tax is provided on all timing differences that have
 originated but not reversed by the balance sheet date. A deferred tax asset is
 only recognised to the extent that it is regarded as recoverable. Due to the
 company's status as an investment trust company, and the intention to continue
 meeting the conditions required to obtain approval in the foreseeable future,
 the company has not provided for deferred tax on any capital gains and losses
 arising on the revaluation or disposal of investments. Tax relief is allocated
 to expenses charged to the capital column of the income statement on the
 marginal basis. On this basis, if taxable income is capable of being entirely
 offset by revenue expenses, then no tax relief is transferred to the capital
 column.

j)   Transaction costs incurred on the purchase and disposal of investments are
 recognised as a capital item in the income statement.

k)  Shareholders funds - Under FRS25 "Financial instruments: Disclosure and
 presentation", when shares are issued, any component that creates a financial
 liability in the balance sheet is measured initially at fair value net of
 transaction costs and thereafter at amortised cost until extinguished on
 redemption. The corresponding dividends relating to the liability component
 are charged as finance costs in the income statement.

l)   Share buy backs are funded through the capital reserve.



2.

                         2009         2008

Returns and net
asset value Revenue
return

Revenue return      (£176,000)   (£573,000)
attributable to
ordinary redeemable
shareholders
Add back finance    £5,694,000   £6,368,000
costs:
shareholders' funds
                    £5,518,000   £5,795,000

Average number of  101,970,223  101,970,223
shares in issue
during the year
Revenue return per       5.41p        5.68p
ordinary redeemable
share
Capital return
Capital return   (£49,291,000) (£27,162,000)
attributable to
ordinary redeemable
shareholders
Average number of  101,970,223  101,970,223
shares in issue
during the year
Capital return per    (48.34p)     (26.64p)
ordinary redeemable
share
Total return
Total return per      (42.93p)     (20.96p)
ordinary redeemable
share
Net asset value per
share
Net assets          £76,891,000  £126,358,000
attributable to
shareholders
Number of shares in 101,970,223   101,970,223
issue at year end
Net asset value per      75.41p       123.92p
share


3.

Income           2009        2008
                 £000        £000

From listed
investments
Franked income  5,075       5,873
- equities
Franked income    293         287
- fixed
interest and
convertibles
Unfranked         660         314
income -
equities
Unfranked          76          86
income - fixed
interest and
convertibles
                6,104       6,560
Other income
Interest on        75         106
deposits
Underwriting       45          16
commission
                6,224       6,682

During the year to 31 March 2009 the company received a capital dividend of
£62,000 from NR Nordic and Russia properties (31 March 2008: £635,000 from
Smiths Group).

4.

Other expenses                2009         2008
                              £000         £000

Savings plan administration   (2)          24
and advertising
Directors' fees               101          101
Employers' national insurance 9            10
contributions
Secretarial fee               84           80
Printing and postage          36           35
Registrar's fees              40           33
Legal fees                    9            7
Bank charges                  9            11
Other                         115          89
Irrecoverable VAT             38           37
                              439          427
Auditors' remuneration:
Payable to Deloitte LLP for   13           -
the audit of the company's
annual accounts
Payable to Chiene and Tait    -            14
for the audit of the
company's annual accounts
Non-audit fees:
Payable to Chiene and Tait    1            -
for other assurance services
                              453          441

Details of the contract between the company and Martin Currie for provision of
investment management and secretarial services are given in the report of the
directors on page 10 of the full annual report.

5.


                         2009                    2008

               Revenue  Capital  Total  Revenue  Capital  Total
                  £000     £000   £000     £000     £000   £000
Finance costs
- debt
Interest           219      406    625      301      558    859
payable on
bank loans
and
overdrafts


6.

                               2009                     2008

                    Revenue  Capital  Total   Revenue  Capital  Total
                       £000     £000   £000      £000     £000   £000
Finance costs -
shareholders' funds
Year ended 31 March       -        -      -     1,071        -  1,071
2007 - third
interim dividend of
1.05p
Year ended 31 March       -        -      -     1,937        -  1,937
2007 - fourth
interim dividend of
1.90p
Year ended 31 March       -        -      -     1,122        -  1,122
2008 - first
interim dividend of
1.10p
Year ended 31 March       -        -      -     1,122        -  1,122
2008 - second
interim dividend of
1.10p
Year ended 31 March       -        -      -     1,122        -  1,122
2008 - third
interim dividend of
1.10p
Year ended 31 March   2,192        -   2,192        -        -      -
2008 - fourth
interim dividend of
2.15p
Year ended 31 March   1,173        -   1,173        -        -      -
2009 - first
interim dividend of
1.15p
Year ended 31 March   1,173        -   1,173        -        -      -
2009 - second
interim dividend of
1.15p
Year ended 31 March   1,173        -   1,173        -        -      -
2009 - third
interim dividend of
1.15p
Refund of unclaimed    (17)        -     (17)      (6)       -     (6)
dividends by
registrar
                     5,694         -   5,694    6,368        -  6,368


Set out below are the total dividends payable in respect of the period, which
forms the basis on which the requirements of Section 842 of the Income and
Corporation Taxes Act 1988 are considered.



                              2009         2008
                              £000         £000
First interim dividend of     1,173        1,122
1.15p for the year ended 31
March 2009 (2008 - 1.10p)
Second interim dividend of    1,173        1,122
1.15p for the year ended 31
March 2009 (2008 -1.10p)
Third interim dividend of     1,173        1,122
1.15p for the year ended 31
March 2009 (2008 -1.10p)
Fourth interim dividend of    2,039        2,192
2.00p for the year ended 31
March 2009 (2008 - 2.15p)
Refund of unclaimed dividends (17)         (6)
by registrar
                              5,541        5,552

7.

Taxation on ordinary          2009         2008
activities                    £000         £000

Withholding tax on income     5            3
from overseas investments

In accordance with the SORP issued in 2009, the company has adopted the marginal
method for allocating tax relief between income and capital.  The revenue
account tax charge for the period is lower than the standard rate of corporation
tax in the UK for an investment trust company (28%) (2008: 30%).  The
differences are explained below.

Taxation on ordinary          2009         2008
activities                    £000         £000

Net return before finance     (43,143)     (20,505)
costs and taxation
Less finance costs - debt        (625)        (859)
Return on ordinary activities (43,768)     (21,364)
before tax
Corporation tax at standard   (12,255)      (6,409)
rate of 28% (2008: 30%)
Adjustments:
Losses on investments not      13,703        8,095
taxable
UK dividends not taxable       (1,503)      (2,039)
Expenses not deductible            -            22
Movement in taxable accrued        2            10
income
Currency losses/(gains) not        1            (3)
taxable
Excess management expenses        105          324
not utilised
Non-taxable income                (53)           -
Overseas tax suffered               5            3
Current year tax charge             5            3

The company has an unrecognised deferred tax asset of £1,052,764 (2008:
£934,263).  This has arisen from deductible expenses exceeding taxable income.


8.

Investments       2009       2009     2008      2008
                  £000       £000     £000      £000


Fair value
through profit
or loss
Valuation at 1             137,823           166,595
April
Opening                      7,510           (28,792)
investment
holding
losses/(gains)
Cost at 1 April            145,333           137,803
Add:  additions             21,176            43,854
at cost
Less: disposal    (26,611)           (46,276)
proceeds
received
Less: realised    (22,169)             9,952
(losses)/gains
on disposals
Less: disposals            (48,780)          (36,324)
at cost
Cost at 31 March           117,729            145,333
Closing                    (34,217)           (7,510)
investment
holding losses
Valuation at 31             83,512            137,823
March

The carrying value of the fixed interest securities as at 31 March 2009 was
£2,797,000 (2008: £4,204,000).

Details of the interest risk profile of the fixed interest securities are
contained within note 17.

Transaction costs
During the year expenses were incurred in acquiring or disposing of investments
classified as fair value through profit or loss.  These have been expensed
through capital and are included within gains on investments in the income
statement.  The total costs were as follows:


Investments           2009       2008
                      £000       £000

Realised losses for   (22,169)   9,952
the current period
Capital dividend          (63)    (635)
received during
current period
Movement in           (26,707) (36,302)
investment holdings
(losses)/gains
Losses on             (48,939) (26,985)
investments


                      2009       2008
                      £000       £000
Acquisitions           87         261
Disposals              39          76
                      126         337



9.

Loans and             2009       2008
receivables           £000       £000

Dividends receivable  749        1,620
Interest accrued       32           35
Due from brokers        -          306
Tax recoverable        21            7
Other debtors         229           26
                    1,031        1,994


10.

Creditors -           2009       2008
Amounts falling due   £000       £000
within one year

Interest accrued         12         16
Due to brokers        1,693        149
Sterling bank loan    9,000     13,550
Other creditors         145        195
                     10,850     13,910

The company has a £20,000,000 loan facility with Lloyds Banking Group which
expires on 30 June 2009.  Under this agreement £9,000,000 was drawn at 31 March
2009 at a rate of 1.8697%.  On 6 April 2009 the loan was rolled-over at a rate
of 1.5142% with a maturity date of 6 May 2009.  On 6 May 2009 the loan was
rolled-over and a further £2,000,000 drawn down at a rate of 1.3239% with
maturity date of 5 June 2009.

The fair value of the sterling loan is not materially different from its
carrying value.  The interest rate is set at each roll-over date at LIBOR plus a
margin.

11.

            Called       Capital       Special        Capital   Total
            up           redemption    distributable  reserve   £000
            ordinary     reserve       capital        £000
            share        capital       reserve
            capital      £000             £000
               £000
Memorandum
- Net
asset
value
attributable
to shareholders

As at 31      1,019        62         111,145       11,130   123,356
March 2008

Losses on         -         -               -      (22,232)  (22,232)
realisation
of investments
at fair
value

Realised          -         -               -           (3)       (3)
currency
losses
during the
year

Movement          -         -               -      (26,707)  (26,707)
in fair
value
losses

Capitalised       -         -               -         (560)     (560)
expenses

VAT               -         -               -           148       148
Recoverable
on
capital
expenses

Capital           -         -               -            63        63
dividends
received
As at 31      1,019        62         111,145      (38,161)    74,065
March 2009


Called up share capital        2009         2008


Ordinary shares of 1p   305,000,000  305,000,000

Authorised:
Ordinary shares in      101,970,223  101,970,223
issue at the beginning
of the year

Ordinary shares in      101,970,223  101,970,223
issue at the end of the
year


Under FRS 25, the ordinary share capital of the company is classified as a
liability rather than equity.  This classification arises from the company's
prospectus, which allows shareholders to redeem their shares if the average
discount exceeds 7.5% over the twelve week period before the financial year end.
Accordingly, a long-term liability for net assets attributable to shareholders
on redemption has been recognised.

               Realised       Investment      Total capital
               capital        holding         reserve
               reserve        losses          £000
               £000           £000
As at 31        18,640         (7,510)         11,130
March 2008
Losses on      (22,232)             -         (22,232)
realisation
of
investments
at fair value
Realised            (3)             -              (3)
currency
losses during
the year
Movement in          -        (26,707)        (26,707)
fair value
losses
Capitalised       (560)             -            (560)
expenses
VAT                148              -             148
recoverable
on capital
expenses
Capital             63              -              63
dividends
received
As at 31        (3,944)        (34,217)       (38,161)
March 2009

The above split in capital reserve is shown in accordance with provisions of the
Statement of Recommended Practice `Financial Statements of Investment Trust
Companies and Venture Capital Trusts'.

12.

Revenue Reserve       2009     2008
                      £000     £000

As at 31 March 2008  3,002    3,575
Return attributable   (176)    (573)
to ordinary
redeemable
shareholders
As at 31 March 2009  2,826    3,002

The revenue reserve represents the amount of the company's reserves
distributable by way of a dividend.


13.

                                2009       2008
                                £000       £000
Reconciliation of net return
before finance costs and
taxation to net cash inflow
from operating activities
Net return before finance       (43,143)   (20,505)
costs
Decrease/(increase) in accrued      671       (294)
income and other debtors
Decrease in creditors               (50)      (337)
Currency movements                    3        (10)
Net losses on investments        48,939     26,985
Taxation withheld from income       (14)        (3)
on investments
Net cash inflow from operating    6,406      5,836
activities



14.

              2008        Cashflow    Exchange       2009
              £000        £000        movements      £000
                                      £000
Analysis of
net debt
Cash at bank      451     2,750        (3)          3,198
Bank          (13,550)    4,550         -          (9,000)
borrowings -
sterling loan
- note 10
Net debt      (13,099)    7,300        (3)         (5,802)


15.

Directors'          2009           2008
shareholdings       No. of shares  No. of
                    held           shares held
Neil Donaldson      26,057         21,466
Edward Murray        6,228          5,527
Charles Berry       13,200         11,604
Anita Frew          12,000         12,000
Andrew Irvine       80,000         80,000

Directors who held office at the end of the year and their shareholdings in the
company are shown above. Charles Berry's holding of 13,200 shares includes a
beneficial and family interest of 6,600 shares.  Andrew Irvine's holding of
80,000 shares includes a beneficial and family interest of 50,000 shares.

From the year end to 26 May 2009 Neil Donaldson's shares have increased to
26,682.

Anita Frew has declared a conflict of interest through her position as non-
executive director of City of London Investment Trust, a peer group competitor
of Securities Trust of Scotland.  This conflict has been properly considered and
authorised by the board.

16 VAT recoverable
On 5 November 2007, the European Court of Justice ruled that management fees
should be exempt from VAT. HMRC has announced its intention not to appeal
against this case to the UK VAT Tribunal and therefore protective claims which
have been made in relation to the company will be processed in due course.

The manager has submitted a claim to the HMRC, which has been agreed between
Martin Currie Investment Management and the company only, to refund £202,000 to
the company for VAT charged on investment management fees for the period 15
April 2005 to 30 June 2007 and this has been recognised on a virtually certain
basis in these financial statements. This repayment has been allocated to
capital and revenue in line with the accounting policy of the company for the
periods in which the VAT was charged. The VAT on the management fee was split
35% to revenue and 65% to capital (the performance fee is allocated 100% to
capital). The repayment will only be received by the company from the manager
once HMRC refunds certain amounts to the manager.

17 Derivatives and other financial instruments
The company's financial instruments comprise securities and other investments,
cash balances, loans and debtors and creditors that arise directly from its
operations; for example, in respect of sales and purchases awaiting settlement,
and debtors for accrued income. The company also has the ability to enter into
derivative transactions in the form of forward foreign currency contracts,
futures and options, for the purpose of managing currency and market risks
arising from the company's activities though there has been no exposure to such
investments during the year.

The main risks the company faces from its financial instruments are (i) market
price risk (comprising interest rate risk and other price risk), (ii) liquidity
risk and (iii) credit risk.
The board regularly reviews and agrees policies for managing each of these
risks. The manager's policies for managing these risks are summarised below and
have been applied throughout the year. The numerical disclosures exclude short-
term debtors and creditors.

(i) Market price risk
The fair value or future cash flows of a financial instrument held by the
company may fluctuate because of changes in market prices. This market risk
comprises two elements - interest rate risk and other price risk.

Interest rate risk

Interest rate movements may affect:
 - the fair value of the investments in fixed interest rate securities;
 - the level of income receivable on cash deposits;
 - the level of interest payable on borrowings

The possible effects on fair value and cash flows that could arise as a result
of changes in interest rates are taken into account when making investment and
borrowing decisions.

The board imposes borrowing limits to ensure gearing levels are appropriate to
market conditions and reviews these on a regular basis. The company has a
variable rate facility with Lloyds Banking Group which provides flexibility to
finance opportunities in the short term. Current guidelines state that the total
borrowings will not exceed 15 per cent of the total assets of the company.
Details of borrowings at 31 March 2009 are shown in note 10.

Interest risk profile

The interest rate risk profile of the portfolio of financial assets and
liabilities at the respective balance sheet date were as follows:

                   Weighted       Weighted   Fixed   Floating       Non-
                   average         average    rate       rate       interest
                   period for     interest    £000       £000       bearing
                   which rate         rate                          £000
                   is fixed              %
                   Years

At 31 March 2009
Assets
Sterling -         -                 5.69    2,265      3,198       80,715
undated
Sterling - dated   2                14.29      532          -            -
                                             2,797      3,198       80,715
Liabilities
Bank loan -        0.1               1.87    9,000          -            -
sterling

At 31 March 2008
Assets
Sterling -         -                 7.96    3,482        451      133,619
undated
Sterling - dated   3                10.53      722          -            -
                                             4,204        451      133,619

Liabilities
Bank loan -        0.1               6.11   13,550          -            -
sterling

The weighted average interest rate is based on the current yield of each asset,
weighted by its market value. The weighted average interest rate on the bank
loan is based on the interest rate payable on each tranche drawn down, which is
set at each tranche draw down, weighted by its value. The maturity date of the
company's loan is shown in note 10.

The floating rate assets consist of cash deposits on call earning interest at
prevailing market rates.

The non-interest bearing assets represent the equity element of the portfolio.

Interest rate sensitivity

The sensitivity analysis below has been determined based on the exposure to
interest rates at the balance sheet date and the stipulated change taking place
at the beginning of the financial year and held constant throughout the
reporting period in the case of instruments that have floating rates.
The following table illustrates the sensitivity of the return after taxation to
an increase or decrease of 100 basis points in interest rates. This is mainly
attributable to the company's exposure to the interest rate on its bank loan.

                 2009       2009      2008       2008
                 Increase   Decrease  Increase   Decreas
                 in rate    in rate   in rate    e in
                                                 rate
Effect on        1          (1)       (43)       43
revenue return
Effect on        (59)       59        (88)       88
capital return
Effect on total  (58)       58        (131)      131
return and on
net assets

In the opinion of the directors, the above sensitivity analysis is not
representative of the year as a whole, since exposure changes as investments are
made, borrowings are drawn down and repaid throughout the year.

Other price risk

Other price risks (ie changes in market prices other than those arising from
interest rate or currency risk) may affect the value of the quoted investments.
It is the board's policy to hold an appropriate spread of investments in the
portfolio in order to reduce the risk arising from factors specific to a
particular sector. The allocation of assets and the stock selection process, as
detailed on page 5 of the full annual report, both act to reduce market risk.
The manager actively monitors market prices throughout the year and reports to
the board, which meets regularly in order to review investment strategy.
The investments held by the company are mainly listed on the London Stock
Exchange with one holding listed on Euronext Amsterdam. Analysis of the
company's investments is given on pages 5 to 6 of the full annual report this
shows that the majority of the investments' value is in the UK. Accordingly
there is a concentration of exposure to that country. However it should be noted
that an investment's country of domicile or listing does not necessarily equate
to its exposure to the economic conditions of that country.

Other price risk sensitivity

The following table illustrates the sensitivity of the return after taxation and
the net asset value to an increase or decrease of 15% in the fair value of the
company's equities. The calculations are based on the portfolio valuations, as
at the respective balance sheet dates, and are not representative of the year as
a whole.

                     2009                     2008
            Increase    Decrease    Increase     Decrease
            in fair     in fair     in fair      in fair
            value £000  value £000  value £000   value £000

Effect on      (13)          13        (22)           22
revenue
return
Effect on   12,502      (12,502)    20,633       (20,633)
capital
return
Effect on   12,489      (12,489)    20,611       (20,611)
total
return and
on net
assets

The effect of the performance fee is not included in this sensitivity analysis.

(ii) Liquidity risk

This is the risk that the company will encounter difficulty in meeting
obligations associated with financial liabilities.
Liquidity risk is not considered to be significant as the company's assets
comprise mainly readily realisable securities, which can be sold to meet funding
commitments if necessary. Short-term flexibility is achieved through the use of
loan facilities (note 10).

The contractual maturities of the financial liabilities at the year end, based
on the earliest date on which payment can be required are as follows:

                      2009                      2008

            Three   More     Total    Three    More    Total
            months  than     £000     months   than    £000
            or less three             or less  three
            £000    months            £000     months
                    £000                       £000
Creditors:
amounts
falling
due within
one year
Interest       12      -        12       16      -        16
accrued
Due to      1,693      -     1,693      149      -       149
brokers
Sterling    9,000      -     9,000   13,550      -    13,550
bank loan
Other         145      -       145      195      -       195
creditors
           10,850      -    10,850   13,910      -    13,910


(iii) Credit risk

This is the risk of failure of the counterparty to a transaction to discharge
its obligations under that transaction that could result in the company
suffering a loss.

The risk is not significant, and is managed as follows:

- investment transactions are carried out with a large number of brokers, whose
credit rating is taken into account so as to minimise the risk to the company of
default;
- investment transactions are carried out with a large number of brokers, whose
credit-standing is reviewed periodically by the investment manager, and limits
are set on the amount that may be due from any one broker; and
- cash is held only with reputable banks with high quality external credit
enhancements.

None of the company's financial assets is secured by collateral or other credit
enhancements.

Fair values of financial assets and financial liabilities All financial assets
and liabilities of the company are included in the balance sheet at fair value
or the balance sheet amount is a reasonable approximation of fair value.


18 Capital management policies and procedures

The company's capital management objectives are:
- to ensure that the company will be able to continue as a going concern; and
- to maximise the income and capital return to its equity shareholders through
an appropriate balance of equity capital and debt.

The capital of the company consists of equity, comprising issued capital,
reserves and retained earnings.

The board monitors and reviews the broad structure of the company's capital on
an ongoing basis. This review includes the nature and planned level of gearing,
which takes account of the manager's views on the market and the extent to which
revenue in excess of that which is required to be distributed should be
retained.


19 Post balance sheet events

On 26 May 2009 the board declared a fourth interim dividend of 2.00p per share.
There are no other post balance sheet events.



Website
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in the trust and their advisers. It includes price and performance statistics,
monthly update, webcasts, online versions of the trust's annual and interim
reports and information on how to invest.