Interim Management Statement - Revised
Securities Trust of Scotland plc
Interim management statement - 8th August 2007
For Period from 1 April to 30 June 2007
Profile
Objective: To achieve rising income and long-term capital growth by investment
in the UK.
Benchmark: FTSE All-Share index
Sector: UK Growth & Income
Listed: 28 June 2005
Portfolio
Asset class 31 Mar 30 Jun
Equities 104.7% 106.3%
Fixed interest 3.1% 0.5%
Cash 1.3% 1.6%
Borrowings (9.1%) (8.4%)
Equity allocation 31 Mar 30 Jun
Financials 33.3% 32.8%
Oil and gas 12.5% 12.1%
Consumer goods 11.6% 11.5%
Consumer services 10.7% 10.6%
Industrials 8.9% 9.1%
Basic materials 8.2% 8.7%
Telecommunications 6.2% 8.2%
Utilities 5.2% 3.8%
Healthcare 3.5% 3.2%
Top 10 equity holdings (42.3% of total portfolio)
BP 6.3%
HSBC 6.1%
Royal Dutch Shell 5.7%
Royal Bank of Scotland 4.9%
British American Tobacco 4.6%
Vodafone 4.6%
Barclays 3.1%
GlaxoSmithKline 3.1%
BHP Billiton 2.8%
BT 2.6%
Number of holdings 58
Key facts
Net assets £154 million
Share price 135.3p
Net asset value per share 151.2p
Discount/(premium) 10.5%
Net yield** 3.7%
**The dividend for year to 31 March 2007 was 5.05p.
This was paid quarterly with the last payment of 1.9p paid on 29 June 2007
Manager's commentary
Review
This was a good quarter for the FTSE All-Share (+4.5%) and the portfolio
performed in line. Most gains came in April and May, with June subdued. The FTSE
100 outperformed (+ 5.6%); bonds performed poorly.
Oil & gas, telecoms and basic materials were the strongest sectors.
Rate-sensitive sectors (housebuilders, financials, retailers and real estate)
suffered. After prolonged underperformance, the largest index components did
well. With valuations relatively low, there is scope for further outperformance
here. Among the fund's best performers were bid targets Hanson and PFI
Infrastructure. We sold both. Negatives came mainly from rate-sensitive stocks.
New holdings included Kingston Communications, Johnston Press and Rugby Estates
Investment. After strong performance, we sold Go-Ahead. We also sold a
substantial amount of Scottish & Southern Energy, although we retain a large
holding. We exited Queens Walk; conditions in the mortgage market have reduced
its dividend payment.
Outlook
We expect rising interest rates to impact the UK consumer in 2007. This perhaps
explains why small and mid-cap stocks have begun to underperform after several
years at the forefront. These companies typically have greater exposure to the
domestic economy.
Ross Watson
Interim management statement - 1 April to 30 June 2007 August 2007
*Past performance is not a guide to future returns.
Source: Martin Currie and Fundamental Data. Bid to bid basis with net income
reinvested over the periods shown in sterling terms. These figures do not
include the costs of buying and selling shares in an investment trust. If these
were included, performance figures would be reduced.
Although Martin Currie complies with the Global Investment Performance Standards
(GIPS), the fund returns used in this document are calculated on the net asset
value and therefore fall outside the scope of the GIPS standards.
The risks outlined at the end of this document relating to gearing and single
country markets are particularly relevant to this trust but should be read in
conjunction with all warnings and comments given.
All sources (unless indicated): Martin Currie as at 30 June 2007.
Performance*
Discrete performance over 12 months to 30 June
2007 2006 2005 2004 2003
Share price 17.5% 15.4% - - -
NAV 20.2% 20.0% - - -
Benchmark 18.4% 19.7% - - -
Cumulative performance over periods to 30 June 2007
One Three Six One Three Five Since
month months months year years years launch*
Share price (2.3%) (3.0%) (1.7%) 17.5% - - 42.3%
NAV (0.7%) 4.5% 4.8% 20.2% - - 44.9%
Benchmark (0.8%) 4.5% 7.6% 18.4% - - 42.4%
Change in equity allocation
From 31 March to 30 June 07
Financials (0.5%)
Oil and gas (1.9%)
Consumer goods (0.1%)
Consumer services 1.4%
Industrials 0.2%
Basic materials 0.7%
Telecommunications 2.0%
Utilities (1.4%)
Healthcare (0.3%)
Capital structure
Ordinary shares 101,970,223
Board of directors
Neil Donaldson (chairman)
Charles Berry
Anita Frew
Andrew Irvine
Edward Murray
Manager's biography
Ross Watson started his investment career in 1983 as a trainee analyst with
First Scottish Investment Trust. He joined Gartmore in 1988, where he spent 12
years managing their high income UK equity portfolios. In 2000 he moved to
Aberdeen Asset Managers. During his four years there, he managed Murray Income
Trust, Jersey Phoenix Trust, Murray Extra Return Investment Trust and The Income
& Growth Trust. He joined Martin Currie in 2005.
Key dates
Year end 31 March
Annual general meeting July
Interim dividends paid March, June, September, December
Website
The trust has its own website at www.securitiestrust.com. There you will find
further details about the trust, information on Martin Currie, daily share
prices, and you can access regular webcasts by the manager.
Management fee and expenses at 31 March 2007
Annual management fee† 0.3%
Total expense ratio* 0.8%
†Percentage of net assets.
*Percentage of shareholders' funds. Includes annual management fee.
Dealing information
Epic code STS
Reuters code STS.L
Net asset value and dividend history
As at Share NAV Discount/ Dividend
31 March price per share (premium) per share
2006 125.5p 135.6p 7.4% 2.85p
2007 141.3p 148.8p 4.8% 5.05p
Past performance is not a guide to future returns.
www.securitiestrust.com
Risk factors
Please note that, as the shares in investment trusts are traded on a
stockmarket, the share price will fluctuate in accordance with supply and demand
and may not reflect the underlying net asset value of the shares.
Depending on market conditions and market sentiment, the spread between the
purchase and sale price can be wide. As with all stock exchange investments the
value of investment trust shares purchases will immediately fall by the
difference between the buying and selling prices, the bid-offer spread.
Investment trusts may also borrow money in order to make further investments.
This is known as "gearing" and can enhance shareholder returns in rising markets
but, conversely, can reduce them in falling markets.
Past performance is not a guide to future returns.
The value of investments and the income from them may go down as well as up and
is not guaranteed. An investor may not get back the amount originally invested.
The majority of charges will be deducted from the capital of the trust. This
will constrain the capital growth of the trust in order to maintain the income
streams.
Exposure to a single country market increases potential volatility.
Important notice: This information is issued and approved by Martin Currie
Investment Management Ltd in its capacity as investment manager.
It does not in any way constitute investment advice or an invitation or
inducement to invest. This document is for the recipient only and should not be
given or sent to other parties.
Martin Currie Investment Management Ltd, registered in Scotland (no 66107)
Registered office: Saltire Court, 20 Castle Terrace, Edinburgh EH1 2ES
Tel: 0808 100 21 25 Fax: 0131 222 2532 www.martincurrie.com
Authorised and regulated by the Financial Services Authority and a member of the
Investment Management Association.
Please note that calls to the above number will be recorded.
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