Scottish Investment Trust’s overhaul pays off – annual report summary

Scottish Investment Trust uses a diversified portfolio of international equities to target above average returns and grow its dividend ahead of inflation.

Our annual report summary series delivers a condensed analysis of a selected investment trust's annual report, including details of the trust's aim, investment style, portfolio focuses, gearing policy, charges and performance.

Scottish Investment Trust

Alasdair McKinnon has been lead manager of The Scottish Investment Trust (SCIN) since February 2015. He and the other three managers have all been with SCIN since at least 2004.

McKinnon favours a high-conviction, global contrarian investment approach.He has whittled the portfolio down to 70 holdings, chosen on a bottom-up basis, but ensures it is sufficiently diversified by sector and geographic location to spread investment risk.

At the 31 October year-end the trust’s top 20 holdings accounted for 53.2 per cent of the portfolio. The largest were Australian-based Treasury Wine Estates, Sands China, Microsoft and Rentokil Initial.

Companies quoted in the UK accounted for a third of the portfolio, North America for 24.9 per cent and Europe for 14.9 per cent. Gearing ended the year unchanged at 5 per cent. Ongoing charges were trimmed to 0.49 per cent.

Net asset value (NAV) and share price total returns were 29.4 and 30 per cent respectively, placing SCIN in the top quartile of its global peer group. With earnings per share up from 15.9p to 21.6p, the regular dividend, which is paid in two tranches, was raised for the 33rd consecutive year, to 13.5p. A special dividend of 9p was also paid.

The board seeks to restrict the discount to 9 per cent in normal market conditions. Nearly 9 per cent of the issued capital was bought back last year at an average discount of 10.6 per cent.

Read the full report on the Scottish Investment Trust website.

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