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25 February 2003

Annual General Meeting 2

The directors of The Scottish Investment Trust have noted the stated intentions through the columns of the press by a shareholder, Hermes Focus Asset Management, to demand that a new chairman of SIT be selected from outside the existing board, and for all the present directors to offer their resignations following the appointment of the new chairman so that he may select his own appointees as directors.

SIT has a strong and experienced board which is clearly independent of the management. As previously stated, there is no preconception as to whether the new chairman will come from the present board or from outside.

Hermes have provided no justification for their alleged demand for all directors to resign. There is absolutely no reason for the directors to do so under any current or proposed corporate governance rules. On the contrary, this would leave a nomination committee of one person, the new chairman, to whom all new board members would be beholden.

The board questions the motives behind this further attempt to attack SIT through an unjustified corporate governance approach.

The directors believe that the chairman, Sir Angus Grossart, will be re-elected at the AGM on Friday 28 February. Thereafter the process of selecting a new chairman will commence.