November 2021

Scottish Mortgage interim management report

Lawrence Burns – Deputy manager, Scottish Mortgage

Tom Slater – Manager, Scottish Mortgage

James Anderson – Investment manager

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.

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 %)






The Scottish Mortgage Investment Trust PLC
30.4 29.0 -6.4 97.8 44.5
FTSE All World Index
15.5 13.4 7.8 5.7 22.7
Source: Morningstar, share price, total return. Sterling.

Past performance is not a guide to future returns.


About the author - Lawrence Burns

Deputy manager, Scottish Mortgage

Lawrence Burns was appointed deputy manager of Scottish Mortgage in 2021. He joined Baillie Gifford in 2009 and became a partner of the firm in 2020. During his time at the firm, his investment interest has become focused on transformative growth companies. He has been a member of the International Growth Portfolio Construction Group since October 2012 and in 2020 became a manager of Vanguard’s International Growth Fund. Lawrence is also co-manager of the International Concentrated Growth and Global Outliers strategies. Prior to this, he also worked in both the Emerging Markets and UK Equity teams. Lawrence graduated BA in Geography from the University of Cambridge in 2009.

About the author - Tom Slater

Manager, Scottish Mortgage

Tom Slater is manager of Scottish Mortgage. He joined Baillie Gifford in 2000 and became a partner of the firm in 2012. Tom joined the Scottish Mortgage team as deputy manager in 2009, before assuming the role of Manager in 2015. Beyond that, he is the head of the US Equities team and a member of another long-term growth equity strategy. During his time at Baillie Gifford, Tom has also worked in the Developed Asia and UK Equity 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.

About the author - James Anderson

Investment manager

James was the manager and then joint manager of Scottish Mortgage Investment Trust between 2000 and 2022. He was also 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 was also Co-Manager of Vanguard International Growth. In 2003, James co-founded our Long Term Global Growth Strategy. Before that, he headed our European Equity team. James 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 currently a Trustee of the Johns Hopkins University and Chairman of the Swedish investment company Kinnevik.

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