Scot.Inv.Trust PLC - Interim Management Statement

The Scottish Investment Trust PLC

Interim Management Statement

Three Months to 31 January 2012

Objectives

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

Review of the three months to 31 January 2012

In the three months since the company year-end, from 31 October 2011 to 31 January 2012, the company's net asset value per share (NAV) total return, with borrowings at market value, was 5.1% and with borrowings at par was 4.2%. The global equity portfolio achieved a total return of 4.8%. This compares with the +4.9% sterling total return of the FTSE All-World Index^TM and +3.2% from the UK FTSE All-Share Index^TM.

As stated in the Chairman's Statement in December 2011, with effect from the beginning of the current financial year the company has amended the basis for valuing its borrowings. The estimated fair value of the company's borrowings is now based on the redemption yield of the relevant existing reference gilt plus a margin derived from the spread of AA UK corporate bond yields (15 year+) over UK gilt yields (15 year+). The change in basis increased the NAV total return, with borrowings at market value, by 1.7%.

There has been little portfolio activity in the period and the increase in the effective equity gearing level from 94% to 96% was largely due to the decrease in the market value of the borrowings and the final dividend going xd.

At the AGM in January, shareholders approved the declaration of a final dividend of 5.80p per share which was paid on 6 February 2012.

A resolution to amend the company's articles of association was also passed allowing the company to sell index futures for efficient portfolio management purposes.

Shareholders again voted to renew the company's authority to repurchase its own shares. These powers are used as part of the share buyback scheme which is intended to keep the discount to ex-income NAV at or below 9% (with borrowings at market value). Over the three months, the company repurchased for cancellation 0.7m shares at an estimated average discount of 9.9% and at a cost of £3.3m. The average discount over the period was 9.5%.

Financial Summary