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Scottish Mortgage Interim Management Report.

Lawrence Burns, Investment Manager, Partner Tom Slater, Portfolio Manager, Partner James Anderson, Investment Manager, Partner

The Scottish Mortgage managers deliver their interim management report.


We aim to identify, own and support the world’s most exceptional growth companies whether public or private; companies that offer the potential of genuinely transformative returns. Over the long-run, it is such companies that drive stock-market returns. They make equity investing truly worthwhile.

The value of shares in Scottish Mortgage, and any income from them, can fall as well as rise and investors may not get back the amount invested.

We see our role as partners to these companies. Supporting them through the provision of both capital and patience and backing them to do incredible things. Their path will rarely be a straight-line. All great companies face periods of difficulty and market doubt, if not outright hostility. These periods can be difficult to endure but great returns cannot be achieved without such testing journeys.

This requires us to be resolutely long term through both good times and bad. The road ahead will have its fair share of bumps, some companies will not work out as hoped but we believe it is through supporting and holding onto just a small number of extraordinary companies that exceptional returns can be achieved.


This approach has driven our returns. Over ten years Scottish Mortgage’s net asset value per share with debt at fair value (NAV) has increased by 1,072% versus a 275% increase in the FTSE All-World index (both in total return terms). Over five years it has increased by 341% against 83%. Six months of data is always too short a period to infer much that is useful from stock prices. However, since the end of March our NAV rose by 16% compared to a 9% increase in the index.

Although our focus remains on long-term capital appreciation, we are aware that a small but consistent dividend is of value to many shareholders. Acknowledging the Company's recent performance, the Board is recommending an interim dividend of 1.52p, an increase of 5% over last year's payment of 1.45p.


Over short periods, such as the last six months, the market has naturally found various things to worry about. A long-term approach is helpful here. It enables us to focus not on the cacophony of the stock-markets but the more predictable drumbeat of deep underlying progress. It has been the long-term and exponential improvements in computing technologies, genomic sequencing and energy storage that continue to strike us as the most important determinates of long-term returns.

These long-term trends may be too slow to shape financial news headlines in a single period but they compound over time as they grow in impact. Moreover, the powerful trends in computing technologies appear to not just be continuing but broadening in utility and application beyond the narrow remits of consumer internet to industries larger and far more diverse.

This broadening is slowly being reflected in the changing shape of the portfolio. The Trust’s investment in healthcare and biology companies for example has grown from 11.6% a year ago to 21.4% today. We are finding and supporting a growing number of businesses that we believe are benefiting from the intersection of biology and information technology.

Our largest holding, Moderna has been the greatest contributor to this change, writing what is effectively code in the form of RNA to program human cells. Moderna has helped the world to start escaping the tragedies and confinement of the last 18 months. However, it is the breadth and scalability of its mRNA technology platform rather than its Covid vaccine that holds the greatest promise. Its pipeline of programs is both large and growing, targeting diseases such as flu, Zika, HIV, cancer and many more.

Recursion Pharmaceuticals and Tempus are successfully leveraging growing quantities of big data combined with machine learning to powerful effect in drug discovery and cancer treatment. We took a new holding in 10x Genomics whose products enable the analysis of single cells complementing Illumina’s next generation sequencing and enabling a more granular understanding of biology.

We continue to see opportunities for technology platforms to improve resource allocation in the economy across a growing range of areas such as freight, food and finance. At the same time the question of how to regulate big tech platforms continues to challenge law-makers across the globe. China has taken to this task with particular vigour. It has demonstrated far greater speed and forcefulness in approach than elsewhere. This sharp adjustment has naturally presented challenges both in market sentiment and for technology businesses that are having to adapt to a rapidly altering regulatory environment. At the same time there has been a push for the rewards of China’s growing prosperity to be more evenly distributed. Together these shifts have negatively impacted the share prices of many of our Chinese holdings.

The underlying progress of the companies however remains surprisingly strong. Alibaba and Tencent both continue to grow revenue in excess of 20% whilst Meituan and Pinduoduo are both growing considerably faster. The companies themselves are keenly aware of their need to contribute not just to shareholder returns but to society to ensure true sustainability. We will continue to assess the long-term implications of the new regulatory approach as they apply to each of our holdings.


Our attention remains focused on maximising returns over the next ten years for Scottish Mortgage shareholders. We have no right to claim insight over the possible gyrations of stock markets over shorter time periods.

As we anticipate the next decade we are both optimistic and enthused. It strikes us that there are multiple drivers of change and thus opportunity. These include the continuing digitisation of our economy, the intersection of information technology and biology and the much-needed energy transition. Together they provide an opportunity set that is profound and diverse. We look forward to continuing to back the companies and visionaries that drive and take advantage of these powerful long-term trends.

Annual Past Performance to 30 September Each Year (Net %)

Past performance is not a guide to future returns.


Annual Past Performance to 30 September Each Year (Net %)

Past performance is not a guide to future returns.


Important information and risk factors

This communication was produced and approved in November 2021 and has not been updated subsequently. It represents views held at the time of presentation and may not reflect current thinking.

This communication should not be considered as advice or a recommendation to buy, sell or hold a particular investment. This communication contains information on investments which does not constitute independent investment research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions.

Baillie Gifford & Co Limited is authorised and regulated by the Financial Conduct Authority. Baillie Gifford & Co Limited is the authorised Alternative Investment Fund Manager and Company Secretary of the Trust.

A Key Information Document for the Scottish Mortgage Investment Trust PLC is available here.

The Scottish Mortgage Investment Trust is a listed UK company, and is not authorised or regulated by the Financial Conduct Authority. The value of its shares can fall as well as rise and investors may not get back the amount invested.

The trust invests in overseas securities. Changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up.

The trust invests in emerging markets where difficulties in dealing, settlement and custody could arise, resulting in a negative impact on the value of your investment.

The trust has significant exposure to private companies. The Trust’s risk could be increased as these assets may be more difficult to buy or sell, so changes in their prices may be greater.

All data is source Baillie Gifford & Co unless otherwise stated.

Any index data referenced is the property of one or more third party index provider(s) and is used under license. Such index providers accept no liability in connection with this document. For full details, see


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Lawrence Burns

Investment Manager, Partner

Lawrence is an Investment Manager of Baillie Gifford strategies that share a focus on transformative growth companies and is deputy Fund Manager of Scottish Mortgage Investment Trust. He has been a member of the International Growth Portfolio Construction Group since October 2012 and took over as Deputy Chair in July 2019. Lawrence is also a co-manager of International Concentrated Growth and Global Outliers. He joined Baillie Gifford in 2009, spent time working in both the Emerging Markets and UK Equity Departments, and became a partner in 2020. Lawrence graduated BA in Geography from the University of Cambridge in 2009.

Tom Slater

Portfolio Manager, Partner

Tom joined Baillie Gifford in 2000 and became a Partner of the firm in 2012. After serving as Deputy Manager for five years, Tom was appointed Joint Manager of Scottish Mortgage Investment Trust in 2015. During his time at Baillie Gifford he has worked in the Developed Asia, UK Equity and Long Term Global Growth teams. Tom’s investment interest is focused on high growth companies both in listed equity markets and as an investor in private companies. He graduated BSc in Computer Science with Mathematics from the University of Edinburgh in 2000.

James Anderson

Investment Manager, Partner

James has been the Manager and then Joint Manager of Scottish Mortgage Investment Trust since 2000. He is a co-manager of the International Concentrated Growth and Global Outliers Strategies. James Chaired the International Growth Portfolio Group from its inception in 2003 until July 2019 and remains co-manager of Vanguard International Growth. In 2003, James also co-founded our Long Term Global Growth Strategy. Prior to this, he headed our European Equity Team. James has served as a member of the Advisory Board of the government sponsored Kay Review and as Chair of the subsequent industry working group that set up the UK Investor Forum. He joined Baillie Gifford in 1983 and became a Partner in 1987. James graduated BA in History from the University of Oxford and after postgraduate study in Italy and Canada he gained an MA in International Affairs in 1982. James is a Trustee of the Johns Hopkins University and Chairman of Swedish investment company Kinnevik.

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