Dunedin Smaller Companies Investment Trust PLC Annual Report

Dunedin Smaller Companies Investment Trust PLC Annual Report for the year ended 31 October 2016 January 2017 Ed Beal, Senior Investment Manager Aberdeen Asset Management

Dunedin Smaller Companies Investment Trust PLC Objective • The achievement of long-term growth from a portfolio of smaller companies in the United Kingdom Benchmark • FTSE Small Cap Index (excluding Investment Companies) Investment Policy • The Company aims to attract long term private and institutional holders wanting to benefit from the growth prospects of smaller companies by investment in a relatively risk averse investment trust 2

Financial summary Performance to 31 Oct 16 1 year return % 3 year return % 5 year return % Share price +0. 8 -6. 5 +56. 0 Net asset value per share +4. 3 +8. 8 +71. 8 FTSE Small. Cap Index (ex investment companies) +3. 6 +11. 4 +90. 3 Share price +4. 1 +1. 5 +81. 1 Net asset value per share +7. 0 +16. 8 +96. 2 FTSE Small. Cap Index (ex investment companies) +6. 7 +20. 6 +118. 0 Capital return Total return (Capital return plus dividends paid) Past performance is not a guide to future results Source: Dunedin Smaller Companies Investment Trust PLC Annual Report 31 Oct 16 3

Dividends Rate per share (p) XD date Record date Payment Date Proposed final dividend 2016 4. 00 12 Jan 17 13 Jan 17 10 Feb 17 Interim dividend 2016 2. 15 7 Jul 16 8 Jul 16 29 Jul 16 2016 6. 15 Final dividend 2015 3. 85 14 Jan 16 15 Jan 16 12 Feb 16 Interim dividend 2015 2 Jul 15 3 Jul 15 24 Jul 15 2015 6. 00 Past performance is not a guide to future results Source: Dunedin Smaller Companies Investment Trust PLC Annual Report 31 Oct 16 4

Financial highlights For year ended 31 Oct 16 31 Oct 15 % Change Total assets less current liabilities (before deducting bank loan) £ 122, 618, 000 £ 117, 823, 000 4. 1 Equity shareholders’ funds (net assets) £ 117, 618, 000 £ 112, 823, 000 4. 3 £ 96, 672, 000 £ 95, 894, 000 0. 8 Share price (mid market) 202. 00 p 200. 38 p 0. 8 Net asset value per share 245. 77 p 235. 75 p 4. 3 FTSE Small. Cap Index (ex Investment Companies) (capital gains basis) 4, 325. 05 4, 174. 82 3. 6 17. 81% 15. 00% 2. 65% 0. 47% 16. 02 p 23. 19 p Revenue return per share 5. 98 p 6. 17 p -3. 1 Dividends per share. C 6. 15 p 6. 00 p 2. 5 0. 97 1. 03 £ 4, 823, 000 £ 4, 832, 000 Excluding performance fees 0. 81% Including performance fees 0. 83% 1. 03% Market capitalisation Discount (difference between share price and net asset value) Where borrowings are deducted at par Gearing Net cash. A Dividends and earnings Total return per share. B Dividend cover (including proposed final dividend) Revenue reserves. D Ongoing charges. E 5 A Calculated in accordance with Association of Investment Companies guidance “Gearing Disclosures post Retail Distribution Review” B Measures the total revenue and capital return for the year divided by the weighted average number of Ordinary shares in issue C The figures for dividends per share reflect the years in which they were earned D The revenue reserve figure does not take account of the proposed final dividend amounting to £ 1, 914, 000 (2015 £ 1, 843, 000) E The ongoing charges figures have been calculated in accordance with the guidance issued by the Association of Investment Companies as the total of investment management fees and administrative expenses divided by the average cum income net asset value throughout the year Past performance is not a guide to future results Source: Dunedin Smaller Companies Investment Trust PLC Annual Report 31 Oct 16

Sector breakdown 31 Oct 16 31 Oct 15 Technology Financials Telecommunications Consumer Services Health Care Consumer Goods Industrials Basic Materials Oil & Gas 0% Source: Aberdeen Asset Managers Jan 17 6 5% 10% 15% 20% 25% 30% 35% 40% 45%

Investment portfolio – twenty largest investments As at 31 Oct 16 Market value 2016 £’ 000 Total assets % Value of holding 2015 £’ 000 General industrials 5, 034 4. 1 4, 824 Dechra Pharmaceuticals & biotechnology 4, 700 3. 8 4, 164 XP Power Electronic & Electrical Equipment 4. 573 3. 7 4, 263 Fisher (James) & Sons Industrial transportation 4, 013 3. 3 3, 214 Wilmington Group Media 3, 743 3. 1 3, 881 Euromoney Institutional Investor Media 3, 707 3. 0 3, 386 Elementis Chemicals 3, 509 2. 9 3, 456 AVEVA Group Software & Computer Services 3, 367 2. 7 3, 759 BBA Aviation Industrial Transportation 3, 323 2. 7 3, 323 Smart Metering Systems Support Services 3, 307 2. 7 - 39, 276 32. 00 Company Sector RPC Group Top ten equity investments Victrex Chemicals 3, 274 2. 7 3, 071 Hansteen Holdings Real Estate Investment Trusts 3, 218 2. 6 3, 715 Ultra Electronic Aerospace & Defence 3, 140 2. 5 2, 844 Acal Support Services 3, 046 2. 5 3, 310 Oxford Instruments Electronic & Electrical Equipment 2, 904 2. 4 1, 941 Robert Walters Support Services 2, 795 2. 3 2, 494 Fuller Smith & Turner ‘A’ Travel & Leisure 2, 777 2. 3 3, 139 Genus Pharmaceutical & Biotechnology 2, 758 2. 2 1, 688 Morgan Sindall Construction & Materials 2, 753 2. 2 3, 161 Interserve Support Services 2, 650 2. 2 2, 905 68, 591 55. 9 Top twenty equity investments Source: Dunedin Smaller Companies Investment Trust PLC Annual Report 31 Oct 16 7

Main changes to portfolio over the year Complete sales Reductions Additions New purchases • Bellway • Numis • Restaurant Group • Bloomsbury • Berendsen • Helical Bar • RPC • BBA Aviation • Chesnara • Exova • Xaar • Hansteen • Fenner • Dechra Pharmaceuticals • SMS • Burford Capital • Assura • Cairn Homes • Genus These securities have been used for illustrative purposes only to demonstrate the investment management style and not as an investment recommendation or indication of future performance. Your portfolio may not include these securities. Source: Aberdeen Asset Management, Bloomberg Jan 17 8

Summary and Outlook • Brexit has led to significant uncertainty • As have the US Presidential elections • And various European ones • Unsurprisingly equity markets are volatile But we have been operating in these conditions for several years • UK economy has performed relatively well • Aggregate corporate earnings likely to continue to remain under pressure, though sterling weakness will provide some benefit • Market dividend growth likely to slow • High quality companies attracting premium valuations • Merger and Acquisition activity may increase • Potential for previously out of favour sectors to continue to do well Engagement will be increasingly important to us 9

Contact details Should you require further information please do not hesitate to contact us: Private investors: 0808 500 0040 Institutional investors: Andrew Leigh +44 (0)207 463 6312 andrew. leigh@aberdeen-asset. com or Kenneth Harper +44 (0)131 528 4224 kenny. harper@aberdeen-asset. com 10

Disclaimer Important information Risk factors you should consider prior to investing: • The value of investments and the income from them can fall and investors may get back less than the amount invested. • Past performance is not a guide to future results. • Investment in the Company may not be appropriate for investors who plan to withdraw their money within 5 years. • The Company may borrow to finance further investment (gearing). The use of gearing is likely to lead to volatility in the Net Asset Value (NAV) meaning that any movement in the value of the company's assets will result in a magnified movement in the NAV. • The Company may accumulate investment positions which represent more than normal trading volumes which may make it difficult to realise investments and may lead to volatility in the market price of the Company's shares. • The Company may charge expenses to capital which may erode the capital value of the investment. • The Company invests in the securities of smaller companies which are likely to carry a higher degree of risk than larger companies. • There is no guarantee that the market price of the Company's shares will fully reflect their underlying Net Asset Value. • As with all stock exchange investments the value of the Company's shares purchased will immediately fall by the difference between the buying and selling prices, the bid-offer spread. If trading volumes fall, the bid-offer spread can widen. • In the event that certain performance criteria are met the Company will pay its investment manager an additional management fee. Details of the criteria to be met and the amount of any payment are given in the Company's annual report. • Specialist funds which invest in small markets or sectors of industry are likely to be more volatile than more diversified trusts. • Yields are estimated figures and may fluctuate, there are no guarantees that future dividends will match or exceed historic dividends and certain investors may be subject to further tax on dividends. Other important information: Issued by Aberdeen Asset Managers Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Registered Office: 10 Queen’s Terrace, Aberdeen AB 10 1 YG. Registered in Scotland No. 108419. An investment trust should be considered only as part of a balanced portfolio. Under no circumstances should this information be considered as an offer or solicitation to deal in investments. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis, should not be taken as an indication or guarantee of any future performance analysis forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI” Parties) expressly disclaims all warranties (including without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages (www. msci. com). FTSE International Limited (‘FTSE’) © FTSE 2016. ‘FTSE®’ is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. RAFI® is a registered trademark of Research Affiliates, LLC. All rights in the FTSE indices and / or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and / or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent. 11