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Scottish Mortgage trounces benchmark index

SCOTTISH Mortgage Investment Trust trounced its benchmark in the year to March 31, its latest results show.

And, in its results statement yesterday, chairman John Scott declared it was not the board's intention to take a political stance over the referendum on Scottish independence.

The international trust, managed by Edinburgh-based investment house Baillie Gifford's James Anderson and Tom Slater, achieved a total return on net asset value of 23.1% in the 12 months to March. Its benchmark, the FTSE All-World Index, recorded a total return of only 6.8%.

Mr Scott said: "It was a landmark year for the company in many aspects: our share price crossed the £10 threshold, our gross assets exceeded £3 billion and, by some measures, we became the largest UK conventional investment trust."

In spite of the trust's strong performance in the year to March, Mr Scott said: "Again, I urge shareholders not to pay too much attention to short-term numbers, no matter how good they may be. While the company is required to report these on an annual basis, the investment approach adopted has a much longer horizon."

He declared the results of the trust over five and 10 years were also "excellent".Scottish Mortgage has made respective total returns on net asset value of 196% and 241% over five and 10 years, ahead of corresponding figures for its benchmark of 101% and 132%.

Mr Scott gave the trust's view that, in the event of a Yes vote in the September 18 referendum, there would be ample time to formulate its response afterwards.

He said: "Scottish Mortgage, as its name suggests, is registered as a Scottish company and the managers, Baillie Gifford & Co, form a Scottish partnership. The board is well aware of the issues arising out of the vote and there are many actions that might be taken to prepare for various contingencies, and all of these come at a cost.

"Consequently, our current view is that to start any processes now, before the result of the vote is known and before the relevant putative issues have emerged, would not be a good use of shareholders' funds and management resource."

He added: "In the event of a Yes vote, we understand that there will be a period of negotiations, which will probably be followed by a transitional period following independence. Consequently, the board believes it will have ample time to assess the economic (including taxation and currency), political, and regulatory landscape which might emerge and to formulate Scottish Mortgage's response accordingly.

"This referendum is only one of a variety of political risks facing the company which are considered by the board on a regular basis. The directors are aware that a large number of shareholders are resident outside Scotland and they will act in a pragmatic and measured way to ensure that shareholders' interests as a whole are protected."

Scottish Mortgage's largest holding at March 31 was in online retailer Amazon. This stake was worth £228m on March 31. Its second and third largest stakes were in biotechnology equipment company Illumina and online search engine Baidu.

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