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28 November 2003

THE SCOTTISH INVESTMENT TRUST PLC
Preliminary figures for the year to 31 October 2003

1. Equity markets start to recover
2. NAV increased by 8.7 %
3. Dividend increased by 4.0%

The Scottish Investment Trust invests internationally and is independently managed. Its objectives are to achieve, over the longer term, asset growth in excess of the trust's stated composite benchmark index and dividend growth ahead of inflation.

Over the year to 31 October 2003, net asset value per share rose by 8.7%. Though this was a welcome change of direction after two years of sharp declines in equity markets, it was a disappointing outcome in relation to our benchmark, which rose by 11.5%. Over the first half of the year our invested assets performed broadly in line with the benchmark. We aim to run well diversified portfolios biased towards stable businesses which demonstrate good returns on capital and whose shares are reasonably valued. In recent years our stock selection has been good but towards the end of our year, we did not fully participate in the sharp price rises in many cyclical recovery shares. This phase in the market may now have run its course and we see good relative value in many high quality companies whose shares have lagged in the recovery.

The board is recommending an increase of 4.0% in the dividend for the year which compares with UK inflation of 2.6%. We have increased our regular dividend in each of the last twenty years and the objective of the board is that the dividend should rise by more than the rate of inflation in the UK.

Over the year we had on average approximately £110m of our long term borrowings of £222.6m invested in equities. The effect of our gearing on performance was slightly positive, after taking account of interest costs, having been negative in our two prior years. The weighted average cost of our borrowings is 6.9% and the directors believe that, over the long term, equities can produce a combined return of dividends and capital growth which will exceed this cost.

For many years the discount of SIT's share price to NAV remained within a relatively stable band. It is disappointing that the discount rose towards 18% in October 2002 and that it has remained around this level over the last year. The directors recognise the importance for the discount of NAV performance and are reviewing the approach to the management of the portfolio in order to improve this.

Stockholders will be aware that Sir Angus Grossart retired as chairman of SIT on 6 October 2003 and the board extends its thanks to him for his commitment and leadership over many years. I am pleased that Mr Hamish Buchan was appointed to the board on 17 November 2003. Mr Buchan has had a long and distinguished career in the investment trust industry. I am also pleased to announce the appointment of a new manager, John Kennedy, who is presently head of investment. Ian McLeish will retire as manager with effect from 31 December, 2003.

OUTLOOK

Led by the USA, the major world economies appear to have turned the corner and growth in 2004 is expected to accelerate to levels higher than were being forecast a few months ago. Companies have cut costs and restructured so that improving sales are flowing through strongly to profits.

However, risks are being taken with the US economy. The budget and the current account deficits are at record levels which has led to a loss of confidence in the US dollar. It may be difficult for the US authorities to restore the appropriate balance in the economy without a further decline in the value of the currency. Furthermore, US personal borrowing is still very high and further growth in consumer spending is dependent on a continuation of low interest rates and further tax rebates.

2004 is an election year in the USA and the continued growth of the economy will remain a priority of the Bush administration. This, and China's continued growth, should help to promote expansion globally. Meanwhile, the shares of many strong companies are selling at reasonable valuations by past standards. We are therefore prepared to continue with our present level of gearing despite the imbalances in the world's leading economy.

1. SIT's benchmark index is made up of 50% FTSE Actuaries UK All Share Index and 50% FTSE World ex UK Index Series. ™

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* Earnings per ordinary stock unit for 2003 have been increased by 0.90p due to an accounting change relating to the allocation of tax relief on interest and expenses between revenue and capital required by the revised Statement of Recommended Practice: Financial Statements of Investment Trust Companies.

* The revenue column of this statement is the profit and loss account of the company

NOTES:
The directors recommend a final dividend of 5.20p per ordinary stock unit which, together with the interim dividend of 2.60p per unit paid on 17 July 2003, makes a total of 7.80p for the year. The final dividend absorbs £10,936,000 and is payable on 10 February 2004 to stockholders registered at 9 January 2004.

The income figure is made up as follows:

The weighted average number of ordinary stock units in issue throughout the year was 210,489,029 and this figure has been used to calculate the return per ordinary stock unit shown in the statement of total return. The net asset value per ordinary stock unit at 31 October 2003 has been calculated using the number of ordinary stock units in issue on that date which was 210,304,399.

The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 31 October 2003 or 2002. The financial information for the year ended 31 October 2002 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under s237(2) or (3) Companies Act 1985. The statutory accounts for the year ended 31 October 2003 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the company's annual general meeting.