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2 June 2008

Results for the six months to 30 April 2008

• Over the 6 months to 30 April 2008, the stock price fell by 6.6%, reflecting a decrease of 9.1% in NAV in weak stockmarkets partially offset by a narrowing of the discount to 8.6%.
• Since 31 January 2004, the NAV has risen by 55.4% compared with the 40.6% capital return from the All-World Index and 41.7% from the UK All-Share Index.
• Effective gearing levels increased in January to take advantage of market weakness.
• The interim dividend has been increased by 3.5% to 4.45p per ordinary stock unit.

The Scottish Investment Trust PLC invests internationally and is independently managed. It is categorised as a global growth trust by the Association of Investment Companies.

Commenting on the results, Chairman, Douglas McDougall said:-

"In the six months to 30 April 2008, the net asset value per ordinary stock unit (NAV) fell by 9.1% (with borrowings at par) having deducted dividends proposed but not yet paid from the NAV at the company's year end, 31 October 2007. Over the period, the company's stock price fell by 6.6%, reflecting the decrease in NAV and a narrowing of the discount to 8.6% (with borrowings at market value).  The company's principal comparator indices – the FTSE All-World Index™ and the UK FTSE All-Share Index™ – both fell, by 5.8% and 10.3% respectively.  Under current accounting standards, the final and special dividends for the previous financial year are deducted from the NAV when the dividends are approved, in this case January 2008. This has had the impact of penalising the NAV performance at the 2008 interim stage by a further 1.0 percentage point to the -10.1% shown in the summary of results.

"Since the introduction of the current investment approach in 2004, the NAV with borrowings at par has performed strongly and since 31 January 2004 has risen by 55.4% compared with the 40.6% capital return from the All-World Index and 41.7% from the UK All-Share Index.

"After another period of double-digit gains in the year to October 2007, the impact of the unfolding credit crisis was felt in this financial year. Global stockmarkets initially fell in November and by a further 8% in January on signs of continued deterioration in the US housing market and fears over the subsequent impact on the US economy. Economic fears were compounded by the persistently high oil price which exceeded $90 by the end of January. Between the end of October and mid-March, global equities had retreated by 15% as US investment bank Bear Stearns fell victim to the credit crisis enveloping the US banking industry. Its merger with JPMorgan Chase, orchestrated by the Federal Reserve (Fed), was followed by an equity market rally of over 15% lasting into mid-May. Economic fears were also assuaged by the aggressive interest rate action of the Fed which cut rates by 2.5 percentage points over the period to stand at just 2.0%. Rates were also cut in the UK, by 0.75%, and there was concerted central bank activity to provide extraordinary amounts of liquidity to the financial system.

"Regional sterling equity market returns were heavily affected by currency movements as sterling weakened materially against both the Euro and the Japanese Yen. All regional returns were negative in local currency terms but in sterling terms, the strongest returns came from Latin America (+7.7%) with the weak local returns of Europe (ex UK) and Japan both transformed by the currency move to leave them down by only 4.0% and 2.4% respectively. Industry sector returns were skewed towards Oil & Gas (+7.3%) and Basic Materials (+4.2%) which were the only ones to generate gains. The other major sector groups were in a fairly narrow range of between 0% and -12% with Financials and Technology returns at the lower end of that range.

"The global equity portfolio depreciated in value by £71.2m over the six months. Net additions to the portfolio amounted to £19.8m primarily due to the employment of an additional £36m of gearing, mainly in late-January 2008, to take advantage of weak stockmarkets. The net investments over the period and stock buybacks of £12.6m were financed from net current assets. Consequently, effective gearing rose from 105% to 111%.

"During the period, we added £51.8m to Latin American holdings across a number of sectors including Oil & Gas and added a further £15.8m to North American holdings, bolstering further the exposure to oil producers and service companies. These additions were financed from net current assets and by reductions to UK and Europe (ex UK) as well as profit-taking in Asia Pacific after a prolonged period of strong returns. Our presence in the Middle East & Africa region was increased by £7.0m as a holding in regional telecoms group MTN (South Africa) was taken.  Viewed in sector terms, we added £17.5m to Oil & Gas and £23.0m to Basic Materials with additions to Mining sector holdings and US seed specialist Monsanto. Reductions were made to Financials (-£23.3m) and Technology (-£12.9m).

"The largest gains were made in Oil & Gas which appreciated by £15.0m with good contributions from a number of holdings and BG (UK) in particular. We also did well in Basic Materials, with strong returns from Monsanto (US) and Rio Tinto (UK), as well as a number of pharmaceutical and healthcare stocks including CSL (Australia), Gilead Sciences (US) and Fresenius Medical Care (Germany). However, despite selling over £74.3m of Financials in the last financial year, our progress over this period was hindered by losses in bank holdings and also in a number of medium sized holdings exposed to personal consumption and UK residential property.

"The number of listed portfolio holdings was reduced from 98 to 85 over the period.

"Earnings per ordinary stock unit increased in comparison to the 2007 interim period by 22.3% from 5.30p to 6.48p owing to strong dividend growth and the effect of our stock buybacks over the last 12 months.

"At the AGM in January, stockholders voted to renew the company's authority to repurchase its own stock for cancellation. These powers are used in the stock buyback scheme which is intended to maintain the company's stock price discount to NAV at 9% or lower (with borrowings taken at market value). Over the first half of the year, the company repurchased for cancellation 2.5m stock units (utilising 0.6 % of the current 14.99% authority) at an average discount of 9.6% and a cost of £12.6m inclusive of dealing expenses. The average daily discount over the first half of the year was 8.7%.

"The board has declared an interim dividend of 4.45p, an increase of 3.5% on 2007, which will be payable on 18 July 2008."

Principal risks and uncertainties

The principal risks and uncertainties facing the business are as follows: investment and market price risk, interest rate risk, liquidity risk and foreign currency risk.

Responsibility statement

The board of directors confirms that to the best of its knowledge:

• the condensed set of financial statements, which has been prepared in accordance with applicable accounting standards, gives a true and fair view of the assets, liabilities, financial position and net return of the company;
• the interim report includes a fair review of; important events that have occurred during the first six months of the financial year and their impact on the financial statements; and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
• no transactions with related parties took place during the first six months of the financial year.

For and on behalf of the board

Douglas McDougall
Chairman

30 May 2008

For further information, please contact:- John Kennedy, Manager  0131 225 7781
Colin Browne, The Maitland Consultancy  0773 310 3800