Investment policy

SIT invests in an integrated global portfolio constructed through an investment process whereby assets are primarily allocated on the basis of the investment merits of individual stocks rather than that of regions, sectors or themes.

SIT's portfolio is actively managed and typically will contain 70 to 120 listed international equity investments. The portfolio is widely diversified both by industrial sector and geographic location of investments in order to spread investment risk.

Whilst performance is measured against major global and UK indices, the composition of indices has no influence on investment decisions or the construction of the portfolio. As a result, it is expected that SIT's investment portfolio and performance may deviate from the comparator indices.

Since SIT's assets are invested globally and without regard to the composition of any index, there are no restrictions on maximum or minimum exposures to specific geographic regions, industry sectors or unlisted investments. However, such exposures are reported in detail to, and monitored by, the board at each board meeting in order to ensure that adequate diversification is maintained.

Liquidity and long-term borrowings are managed with the aim of improving returns to shareholders. In pursuing its investment objective, from time to time SIT will hold certain financial instruments comprising equity and non-equity shares, fixed income securities, interests in limited partnerships, structured products, cash and liquid resources. SIT may use derivatives for hedging or tactical investment purposes with the prior authorisation of the board and subject always to the investment restriction which prohibits SIT from making any investment in which there is unlimited liability. SIT has the ability to enter into contracts to hedge against currency risks on both capital and income.

SIT's investment activities are subject to the following limitations and restrictions:

• Under SIT's articles of association, up to 40% of SIT's total assets on the last audited balance sheet may be used to make investments of up to a maximum of 8% of the value of total assets in any one company, at the time the investment is made. Thereafter, individual investments may not exceed 3% of the value of total assets, at the time the investment is made.
• The levels of effective and potential gearing are monitored closely by the board and manager. SIT applies a ceiling on effective gearing of 120%. While effective gearing will be employed in a typical range of 100% to 120%, SIT retains the ability to lower equity exposure below 100% if deemed appropriate.
• SIT has a policy not to invest more than 15% of gross assets in other UK listed investment companies.
• SIT may not make investments in respect of which there is unlimited liability.