Scottish Investment Trust considers futures selling

The Scottish Investment Trust has reported a rise in income, as share prices have fallen and dividends increased.

For the year ending October 31, 2011, income rose by 10.2% to £21.5m, “reflecting good dividend growth and a higher dividend yield achieved on investment purchases than on investment sales,” says a statement to the stock exchange

Dividends per share rose over this same period, from 10.05p to 10.40p, while share prices fell 3.7% to 452.0p.

The trust has also reported investment losses. In 2010, £83,571 in gains were recorded on the investments held but £8,445 in losses were returned for 2011.

The board of the trust has also proposed changes to its investment strategy which would allow it to take on more risk, although SIT emphasises the role equity hedging within the portfolio will play in reducing liabilties.

The board has urged shareholders to back changes to the Articles of Association which would allow the company to sell futures contracts, at the next AGM.

“While the sale of equity futures contracts gives rise to an unlimited liability owing to the unknown price to be paid on delivery or on early settlement of the contract, in practical terms this liability would be always be capped by the company’s diverse holdings of highly liquid international listed equities in the regions in which the futures contracts would be sold,” the company said in a statement.