Annual Financial Report Annou

RNS Number : 8336N

Murray International Trust PLC

25 February 2009

 



MURRAY INTERNATIONAL TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008

1.    CHAIRMAN' STATEMENT

Highlights

-    Net Asset Value Total Return of -12.3%;

-    Benchmark Total Return of -21.7%;

-    Total proposed dividend increased by 10.5% versus 2007;

-    Shares trading at a premium to net asset value per Ordinary share for most of the year;

-    £20m of new shares issued at a premium during the year.

Performance

The total return on net asset value during the year was -12.3%, significantly ahead of the return on the benchmark index of -21.7%. The share price total return was -8.1% reflecting a move in the share price from trading at a discount of 10.2% to net asset value at the end of 2007 to a discount of 5.9% at the end of 2008. The Investment Manager's Review in the Annual Report contains an attribution analysis which shows the factors affecting net asset performance. Overall, although any capital loss is unwelcome, the Board believes that the performance was encouraging bearing in mind the considerably higher falls which occurred in many of the World markets in which we invest.

Background

2008 will be remembered as one of the most eventful years in modern financial history. Seldom has such economic adversity and financial pain been felt by so many countries simultaneously. What had begun as a sub-prime property collapse in the United States in 2007 escalated to a worldwide credit crisis as trust in financial institutions declined. In the second half of the year recessionary conditions affected the Western world as banks denied heavily indebted consumers further credit. Structurally leveraged businesses and financial products dependent on borrowed money suffered particularly under the pressure of relentless selling. In the UK, the banking system came close to insolvency as public mistrust and a run on deposits emphasised its fragile state. The Government ultimately intervened by guaranteeing savings and semi-nationalising the most vulnerable institutions, but not before substantial systemic damage had been done. Europe also suffered from the shift in global attitude towards credit, but the impact was less than in the UK as current indebtedness in most countries in Europe is running at a lower percentage of GDP in both public and private sectors. Although Asia and Latin America continued to expand domestically, without reducing savings ratios, little attention was paid to such economic progress. Regional stockmarkets declined in line with most international bourses as risk aversion took precedence over fundamentals. The long-awaited decoupling of emerging markets from developed markets clearly failed to materialise, but last year's events added to the economic power shift from West to East. Given prevailing economic conditions, market declines were not unexpected, but the severity and volatility of these declines surpassed anything witnessed for a long time. Weakness in Sterling, however, helped soften the blow given the Trust's broad international exposure.

Dividends

I am pleased to report that revenue generation from the Company's portfolio remained strong during the year and we have been able to increase the level of the three interim dividends that have been paid to 4.8p (2007: 4.3p). Your Board is now recommending a final dividend of 8.8p (2007: 8.1p) which, subject to the approval of shareholders at the Annual General Meeting, will be paid on 15 May 2009 to shareholders on the register on 3 April 2009. The smaller percentage increase in the recommended final dividend continues the policy of reducing the disparity between the interim and final dividends. If approved, the total dividend for the year will amount to 23.2p, an increase of 10.5% from last year (2007: 21.0p). B Ordinary shares now receive their capitalisation issue of B Ordinary shares at the same time as each dividend is paid. Accordingly, subject to approval at the Annual General Meeting, B Ordinary shareholders will be issued on 15 May 2009 with new B Ordinary shares equivalent in Net Asset Value to the recommended final dividend for the year just ended.

VAT on Management Fees Update

Shareholders will be aware from my previous statements that HM Revenue & Customs have agreed that VAT on management fees should not have been incurred by UK investment trusts. The Board is pleased to be able to report that our income this time includes a sum of £1,337,190, representing the VAT charged on our management fees between 2004 and 2007 (exclusive of interest thereon) which has not been offset previously by the Company. This repayment has been split in accordance with the Company's accounting policy, with £1,027,064 being credited to capital and £310,126 being credited to revenue. We expect, in due course, to be able to recognise further sums, once there is more certainty as to the amounts recoverable by the Manager in respect of the VAT incurred on management fees in prior periods.

Gearing

The Company's gearing with cash netted against borrowings was 11.1% as at 31 December 2008. During the year the Board negotiated a new £40,000,000 multi currency facility with Barclays Bank plc. 4.15 billion yen (approximately £20.2 million) under this facility was used to repay expiring yen facilities and the remaining 4.1 billion yen (approximately £19.8 million) was new borrowing. The Board believes that the low level of confidence that currently exists will provide attractive opportunities for profitable investment. A small part of this gearing was invested in November and December but the bulk is still held in cash awaiting investment. We have continued the policy of eliminating the currency risk on these borrowings by covering the yen exposure back into sterling.

Issue of New Shares

At the Annual General Meeting held in April 2008 shareholders authorised Directors to issue up to 5% of the Company's issued share capital for cash at a premium to the prevailing asset value at the time of each issue. During the year 3.16 million new Ordinary shares or approximately 3.5% of our capital were issued under this authority at a weighted average premium of approximately 2.5%, resulting in a modest enhancement to net asset value for existing shareholders. Given the continuing demand for the Company's shares the Board will be seeking approval from shareholders to increase the level of this authority for 2009 to 10% of the issued share capital. As in previous years, new shares will only be issued at a premium to net asset value in order to avoid diluting the assets of the Company. Resolutions to this effect will be proposed at the Annual General Meeting and the Directors strongly encourage shareholders to support this proposal.

Directorate

Mr Benson has served on the Board since October 1999 and has now decided to retire as a Director of the Company at the forthcoming Annual General Meeting. I would like to take this opportunity to thank David both personally and on behalf of the Board for the service that he has provided to the Company over the years. We shall miss his wise counsel.

Annual General Meeting

As shareholders will be aware, from time to time the Company holds its Annual General Meeting in London in order to allow the considerable number of shareholders based in the South East to meet the Directors. This year's Annual General Meeting has therefore been convened for Wednesday 22 April 2009 at 12.30 p.m. in the Capital Suite at the London Chamber of Commerce and Industry, 33 Queen Street, London EC4R 1AP. As at previous AGMs, there will be a presentation from the Manager and an opportunity to meet the Directors and Manager and ask questions. I would be grateful if you would confirm your attendance by completing the notice that will accompany the Annual Report and returning it together with an indication of any particular questions that you would like to ask.

Outlook

There has been no respite for global equity markets since the year end. High volatility and widespread selling pressure has continued to push markets lower. There can be no denying that countries such as the US and UK face deep economic recessions that will be painful to endure. However the indiscriminate nature of global equity market declines is uncovering numerous valuation anomalies. When at last stability returns to the global financial system, many companies in the developed world should be well placed to capitalise on recovery given the demise of worldwide competitors whilst the developed world, unburdened by debt and the structural weakness that accompanies it, can look forward to reaping the rewards of earlier saving and investing in an increasingly competitive world. It is the Board and Manager's belief that with many high quality, financially strong companies now yielding over twice the level of Government Bonds, the case for equities is improving. With its liquidity position still high, the Trust remains well positioned to capitalise on further opportunities as they arise.  

J F H Trott

Chairman

24 February 2009

2.    MANAGER'S REVIEW

Background

The past twelve months will be remembered for delivering the worst global equity returns since the Great Depression. Against a backdrop of deteriorating economic fundamentals and outright seizure of credit markets, the history books will show just how close the world came to systemic financial collapse. Banks in the United States and the UK buckled under the burden of escalating bad debts and deteriorating capital structures, leaving respective Governments with no option but to quasi-nationalise domestic banking systems. Billions of pounds of taxpayers' money was used in attempts to restore confidence. As financial panic spread around the world, Central Banks began co-ordinated monetary easing in order to provide debt service relief and tempt individuals to spend. Interest rates were slashed to extremely low levels, but persistently rising unemployment, multiple corporate bankruptcies and collapsing confidence prevented any meaningful response from consumers. Recession gripped the debt-laden Anglo Saxon world with policymakers virtually impotent to respond. Not that they did not try. In what will likely turnout to be the largest fiscal stimulus the world has ever seen, the United States and the UK more than tripled their respective budget deficits in pursuit of financing insolvent institutions and stimulating demand. New debt was piled upon existing debt with scant regard to future financing requirements or eventual repayments. Alas, in the hostile uncharted economic territory that evolved in 2008, populist policies prevailed over the need for more pragmatic longer-term solutions. The structural imbalances of the debt ridden world that dominated and destroyed the economic landscape last year need time to unwind. Unfortunately time is the one thing impatient capital markets and nervous investors cannot seem to give. As if to compound the economic misery of 2008, spectacular declines in commodity prices adversely affected many exporting countries of the emerging world, further correlating the general contraction. High savings rates and low capital requirements in Asia and Latin America counted for nothing in a year totally dominated by negative investment sentiment.

Stockmarket returns over the year were universally negative with relatively low variance. The collapse in Sterling against most leading currencies, however, had a material impact on cushioning declines. The devaluation of Sterling, which had begun to take hold last year, gained momentum as investors watched Base Rates collapse and the UK budget deficit balloon to record levels. Against the Yen, US Dollar and Euro, Sterling lost 40%, 27% and 23% respectively of its value. Nor did Sterling fare much better against most other global currencies. This greatly enhanced relative performance for the portfolio, as did the low exposure to UK equities and high exposure to cash and government fixed income securities.

Performance

The Net Asset Value Total Return for the year to 31 December 2008 with net dividends reinvested was -12.3% compared with a negative return on the benchmark of -21.7%. A full attribution analysis is given in the Annual Report which details the various influences on portfolio performance. In summary, of the 1170 basis points (before expenses) of performance above the index, asset allocation contributed 110 basis points and stock selection 740 basis points. Structural effects relating to the fixed income portfolio, net of borrowing and hedging costs, added a further 320 basis points of positive relative performance, a reflection of the out-performance of bonds relative to equities. Within the equity asset allocation, positive contributions came from the underweighting of the UK and overweighting towards Asia and Japan, but the majority of out-performance can be attributed to superior stock selection in Europe, North America, Asia and Latin America.

USA

The United States endured horrendous economic conditions in 2008. Financial deleveraging throughout the economy gathered momentum causing widespread corporate and individual distress. Access to capital came to an abrupt end. Numerous irregularities were uncovered as some of the leading protagonists in the structured financing industry - underwriters, rating agencies, bankers and hedge funds - were exposed as unscrupulous practitioners, having profited from positions of trust and the ignorance of others. As fears of economic depression intensified, policymakers pledged hundreds of billions of dollars in mortgage debt relief, banking sector bailouts and corporate support programs. Unfortunately this witnessed the socialisation of bad debts, with imprudent private sector practices being bailed out by the public purse. Many argued the Government had no option but to follow such quasi nationalisation of the financial sector but in reality such practices merely prolong the agony. Until such times that distressed assets are properly priced and unsustainable businesses are allowed to go bust, true recovery of the US economy cannot begin. Indeed the most worrying aspect of the current crisis is that, despite the deluge of deteriorating economic data reported over the past eighteen months, there remain no signs of stabilisation. Property prices continue to plummet, consumer spending contracts, unemployment is rising sharply and confidence is evaporating. Against this backdrop it would be premature to predict an end to the credit crunch. This suggests another very tough year ahead for the US economy and those companies that derive most of their profits from it. This keeps us very cautious on the prospects for the US market and the US dollar, especially if the relentless expansion of the budget deficit continues. There was very little portfolio activity over the period, with a new position in leading global household product company Procter & Gamble being the most notable addition. 

UK

Frightening is not an adjective commonly used to describe an economy, but the language required to accurately describe the unfolding economic malaise in the UK required such brutal honesty in 2008. For in no uncertain terms, the UK economy hit the proverbial wall. Political rhetoric claimed the nation had never been in better shape heading into a downturn - in reality it was the complete opposite. The banking sector was the first major casualty. Tightening credit conditions exposed gross mismanagement of balance sheets where insufficient deposits and over-dependency on wholesale funding quickly led to financial collapse. In Scotland three hundred years of hard earned respect and reputation was destroyed in three months as the leading commercial banks went caps in hand to the Government. As trust evaporated from the banking system, so too did consumer confidence. Property prices sharply declined and retail sales severely contracted as economic activity ground to a halt. In response policymakers outwardly delivered assurances whilst internally they panicked. Interest rates were slashed to historical lows whilst simultaneously fiscal pledges and spending rocketed. The effects of such drastic measures have yet to be felt, but given the chronic state of the banking system and the sheer scale of debt outstanding, the UK economy is likely to suffer the worst recession of all G7 countries. Then there is Sterling. Sharply lower interest rates, heavily indebted public and private sectors, large fiscal and current account deficits, recessionary conditions and a structurally flawed banking system are characteristics historically consistent with a weak currency. Not surprising then that Sterling sharply devalued against its major trading partners last year. Unfortunately in the absence of any economic improvement whatsoever, the pressure on Sterling is unlikely to abate. It was against this backdrop that further reduction to UK exposure occurred last year although this was entirely related to divestment of the large holding in Resolution Life in April. A new holding in international mining company Rio Tinto was established towards year end, but general concerns over domestic profitability and dividend growth from UK companies kept the overall exposure low. This is likely to continue over the medium term.

Europe

For much of the year Europe coped relatively well with the capital dislocations associated with the global financial crisis. The banking sectors in Italy, France and Germany acted promptly and transparently to declare bad debt exposure. Write-downs and credit-losses associated with structured finance loans were identified and capital raising measures promptly embarked upon. The European Central Bank provided liquidity when necessary and for the most part deleveraging was systematic and orderly. Unfortunately this came to an abrupt end in September and October with the collapse of Lehman Brothers Investment Bank in the United States and the subsequent panic that ensued. Exaggerated weaknesses were suddenly exposed at both country and corporate level. The IMF was hastily called into Iceland, Hungary and the Ukraine to provide emergency funding as bank deposits poured out of these countries. The worldwide collapse of oil and commodity prices was perceived as being particularly negative for Russia, causing rapid capital flight and a 67% decline in the equity market. And the Baltic States, relatively new to the world of international capitalism, were badly affected as trust in fledgling banking systems evaporated. This prompted the European Central Bank to embark on its boldest ever series of interest rate cuts which in turn were replicated around all other European countries. By year end, the Region was mired in recessionary fears. What now then for a united Europe in an increasingly despondent world? Declining demand from export markets and falling consumer activity will constrain growth in Europe over the coming year but the downturn will be more cyclical. With the exception of perhaps Spain and Ireland, most Europeans are not overleveraged and hence unshackled by the need to repay punitive amounts of debt. This leaves more potential scope for recovery when it comes. Corporates in Europe have also profited from implementing strict capital discipline during the previous seven years of plenty. They remain well placed to manage through any impending famine. As valuations declined dramatically last year, additional funds were added to existing positions in companies such as E.On, ENI, Mapfre, Nordea and Total, and a new position was established in Schneider Electric, a leading global manufacturer of power distribution systems based in France. The long term profit outlook for these and many other European companies remain good despite the complete lack of near term transparency. 

Japan

The developed world's credit crunch, debt deflation, property collapse and recessionary contraction was nothing new for Japan. The country has experienced nearly every negative economic condition imaginable over the past twenty years due to widely recognised policy mistakes that accompanied financial meltdown in the early 1990's. As the world grappled to avoid debilitating deflation, the 'Japanese case' was constantly quoted as what not to do. Such hindsight is always so clear. Of more relevance was how the evolving global economic landscape was impacting Japan now. The sharp worldwide slowdown in capital expenditure experienced in 2008 significantly hurt Japanese exports of machine tools and industrial products to Europe and Asia. The nascent recovery in domestic loan growth was halted prematurely by falling confidence and GDP growth turned negative for the sixth time this decade. The response from policymakers was muted, but then Japan used up all its monetary and fiscal initiatives many years ago. This left corporate Japan with no option but to deal with the hostile conditions itself. Fortunately Japanese companies have become very adept at operating in deflationary conditions where volumes and prices are falling. Core portfolio holdings such as Takeda Pharmaceutical and Astellas Pharmaceutical both delivered solid earnings and double digit dividend growth last year. Early indications suggest this can be repeated again this year. Indeed with both companies now yielding close to 4% their global attractiveness is rising. New money was added to existing positions in Canon, one of the worlds leading manufacturers of imaging products and Parco, a domestic operator of retail shopping centres. Such companies have consistently delivered for shareholders during all stages of the business cycle and provide important diversification in a global portfolio. Somewhat ironically, Yen strength against Sterling resulted in the Japanese portfolio declining the least in 2008, a feat which was most welcome. 

Asia and Emerging Markets

The shockwaves from economic contraction in the Western world rippled into Asia in varying degrees throughout the year. Those countries heavily reliant on exports suffered most with China topping the list of worst affected. This prompted aggressive policy responses from the Chinese Monetary and Fiscal Authorities, although it remains to be seen just how effective such measures will be. What is clearly less ambiguous is that China, and indeed Asia, faces distinctly different macro-economic conditions than those prevailing elsewhere. Unlike the developed world, which faces a structural debt-deflation bust manifested in a vicious cycle of deleveraging, Asia must confront a severe cyclical shock. This will force the Orient to further pursue domestic-led growth initiatives. The relative lack of financial leverage in the region plus the strength of domestic banking systems can facilitate this. When it will occur is more difficult to predict, but history will show the financial crisis of 2008 as being another step in the movement of economic power from West to East. Unfortunately, this structural/cyclical distinction emerging in the world remained of only academic relevance in terms of market performance last year, which became almost completely Wall Street correlated. The index correlation between the S&P500 Composite and the MSCI AC Asia ex Japan indices soared from 0.6 in 2007 to 0.97 in 2008. So much for market decoupling! Such irrational selling was unwelcome, but it did provide some excellent long term buying opportunities. Money was added to existing positions in Taiwan Mobile, PTT Exploration, the leading oil and gas company in Thailand, and QBE Insurance, one of the world's leading insurance companies based in Australia. With strong balance sheets, powerful free cash flows and competitive positions within their respective markets, such companies continue to form the bedrock of our Asian and Emerging market exposure. In a world of slowing economic activity, relatively superior profitability and dividend growth must at some point be recognised by the market place in the future. 

Outlook

For the second consecutive year our global economic and market review does not make positive reading. We make no apologies for this. Prevailing financial conditions dictated the narrative's content and these were overwhelmingly negative. Unfortunately, as the private sector intensifies its deleveraging, the economic backdrop is likely to get worse before it gets better. This is primarily because in the stampede towards reducing debt, as dictated by higher unemployment and collapsing consumer confidence, rising savings provide the power to actually intensify the recession. This paradox of thrift represents a real danger to economic stability in 2009. Should everyone save money during times of recession, then aggregate demand falls further, compounding declines in economic growth. In this form, a prisoner's dilemma arises, since saving is beneficial to each individual yet in total, harmful to everyone. This is a paradox because it runs contrary to common intuition. With Governments in the Western World well aware of such private sector risks, they have no alternative but to further expand public sector debt in an attempt to offset declining demand. Just how much further the United States and the UK can increase already mountainous budget deficits without inflicting irrevocable damage to their respective currencies remains our major economic concern for the year ahead.

Turning to the outlook for global equity markets, arguably another paradox arises. We cannot and will not make the case that equity markets will not go lower, but we have seen more value opportunities emerge over the past three months than we can remember for quite some time. Earnings expectations are declining faster than actual profits bringing much needed realism to the market place. Companies are going bust, thereby removing over-capacity from a wide range of industries, leaving the survivors much more operationally geared into recovery when it comes. Common intuition might again deduce that such near term economic and financial uncertainty is no backdrop to be investing in equities but, taking a longer term view, we are becoming more optimistic that decent returns can be made in selective opportunities from current levels, especially given the flexibility a global mandate provides.

Bruce Stout

Investment Manager

24 February 2009

3.    BUSINESS REVIEW

A review of the Company's operations is given in the Chairman's Statement and the Manager's Report. This includes a review of the business of the Company and its principal activities, likely future developments of the business, recommended final dividend and details of the issue of new shares during the year by the Company. The major risks associated with the Company are detailed below and in Note 19 to the Financial Statements. 

Principal Risks and Uncertainties

Many of the stocks in which the Company invests are exposed to the risk of political change, exchange controls, tax or other regulations which may affect their value and marketability. Currency fluctuations may also affect the value of the Company's investments and the income derived therefrom. Companies in emerging markets are not always subject to the equivalent accounting, auditing and financial standards of those in the United Kingdom. There may therefore be less supervision and regulation in this respect.

Currently 70% of the investment management fee and finance costs and 100% of the performance fee are taken out of capital. This increases distributable income at the expense of capital growth, which will either be eroded or constrained. Maintaining a high level of dividend may also diminish capital value. In common with most investment trusts, Murray International Trust is able to borrow for investment purposes. The use of gearing is likely to lead to volatility in the Net Asset Value (NAV), meaning that a relatively small movement either down or up in value of the Company's total assets will result in a magnified movement in the same direction of that NAV. There is no guarantee that the market price of shares in investment trusts will fully reflect their underlying NAV.

The market prices of fixed interest stocks and, to a lesser extent, convertibles may be affected by changes in interest rates.

4.    STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and Accounts and the financial statements, in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with UK Accounting Standards.

The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

-    select suitable accounting policies and then apply them consistently;  

-    make judgments and estimates that are reasonable and prudent; and,

-    state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 1985 and Companies Act 2006, where applicable. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations.

The financial statements are published on www.murray-intl.co.uk which is a website maintained by the Company's Manager. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors confirm that to the best of our knowledge:

-    the financial statements, prepared in accordance with the applicable UK Accounting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

-    the Directors' Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces.

For Murray International Trust PLC

J F H Trott

Chairman

24 February 2009

  5 INCOME STATEMENT 

For the year ended 31 December 2008 

		Year ended 31 December 2008			Year ended 31 December 2007
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments	10	-	(93,840)	(93,840)	-	68,348	68,348
Income	2	32,242	8	32,250	26,776	-	26,776
Investment management fees	3	(1,018)	(2,374)	(3,392)	(966)	(2,253)	(3,219)
Performance fees	4	-	(2,269)	(2,269)	-	(2,151)	(2,151)
VAT recoverable on investment management and performance fees	20	310	1,027	1,337	-	-	-
Currency losses		-	(2,200)	(2,200)	-	(3,550)	(3,550)
Other expenses	5	(1,469)	-	(1,469)	(1,251)	-	(1,251)
		_______	_______	_______	_______	_______	_______
Net return/(loss) before finance costs and taxation		30,065	(99,648)	(69,583)	24,559	60,394	84,953
Finance costs	6	(885)	(2,066)	(2,951)	(609)	(1,422)	(2,031)
		_______	_______	_______	_______	_______	_______
Return/(loss) on ordinary activities before tax		29,180	(101,714)	(72,534)	23,950	58,972	82,922
Tax on ordinary activities	7	(7,282)	1,619	(5,663)	(5,550)	3,625	(1,925)
		_______	_______	_______	_______	_______	_______
Return/(loss) attributable to equity shareholders		21,898	(100,095)	(78,197)	18,400	62,597	80,997
		_______	_______	_______	_______	_______	_______
Return/(loss) per Ordinary share (pence)	9	25.0	(114.4)	(89.4)	21.2	72.3	93.5
		_______	_______	_______	_______	_______	_______
Return/(loss) per Ordinary share assuming full conversion of the B Ordinary shares (pence)	9	24.7	(113.0)	(88.3)	21.0	71.4	92.4
		_______	_______	_______	_______	_______	_______

The total column of this statement represents the profit and loss account of the Company.

A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement.

All revenue and capital items in the above statement derive from continuing operations. 

No operations were acquired or discontinued in the year. 

The accompanying notes are an integral part of these financial statements. 

Ordinary dividends on equity shares (£'000)	8	19,148	-	19,148	14,028	-	14,028
		_______	_______	_______	_______	_______	_______
The above dividend information does not form part of the Income Statement.

  6. BALANCE SHEET 

As at 31 December 2008 

		As at		As at
		31 December 2008		31 December 2007
	Notes	£'000	£'000	£'000	£'000
Non-current assets
Investments listed at fair value through profit or loss	10		618,212		679,577
Current assets
Debtors	11	22,202		4,376
Cash and short term deposits		99,301		44,687
		________		________
		121,503		49,063
		________		________
Creditors: amounts falling due within one year
Bank loans	12/13	-		(18,662)
Other creditors	12	(8,233)		(3,213)
		________		________
		(8,233)		(21,875)
		________		________
Net current assets			113,270		27,188
			________		________
Total assets less current liabilities			731,482		706,765
Creditors: amounts falling due after more than one year
Bank loans and debentures	12/13	(159,107)		(56,931)
Other creditors	12	(3,548)		(3,597)
		________		________
			(162,655)		(60,528)
			________		________
Net assets			568,827		646,237
			________		________
Capital and reserves
Called-up share capital	14		22,725		21,926
Share premium account			19,167		22
Capital redemption reserve			8,230		8,230
Capital reserve	15		477,931		578,035
Revenue reserve			40,774		38,024
			________		________
Equity shareholders' funds			568,827		646,237
			________		________
Net Asset Value per Ordinary and B Ordinary share (pence)	16		625.8		736.8
			________		________

  7 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 

For the year ended 31 December 2008

			Share	Capital
		Share	Premium	Redemption	Capital	Revenue
		Capital	Account	Reserve	Reserve	Reserve	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2007		21,926	22	8,230	578,035	38,024	646,237
Return on ordinary activities after taxation		-	-	-	(100,095)	21,898	(78,197)
Dividends paid	8	-	-	-	-	(19,148)	(19,148)
Issue of new shares		799	19,145	-	(9)	-	19,935
		_______	________	_________	_______	_______	_______
Balance at 31 December 2008		22,725	19,167	8,230	477,931	40,774	568,827
		_______	________	_________	_______	_______	_______
For the year ended 31 December 2007
			Share	Capital
		Share	Premium	Redemption	Capital	Revenue
		Capital	Account	Reserve	Reserve	Reserve	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2006		21,919	22	8,230	515,445	33,652	579,268
Return on ordinary activities after taxation		-	-	-	62,597	18,400	80,997
Dividends paid	8	-	-	-	-	(14,028)	(14,028)
Issue of new shares		7	-	-	(7)	-	-
		_______	________	_________	_______	_______	_______
Balance at 31 December 2007		21,926	22	8,230	578,035	38,024	646,237
		_______	________	_________	_______	_______	_______

  8 CASH FLOW STATEMENT 

For the year ended 31 December 2008 

		Year ended		Year ended
		31 December 2008		31 December 2007
	Notes	£'000	£'000	£'000	£'000
Net cash inflow from operating activities	17		24,172		19,666
Returns on investments and servicing of finance
Interest paid		(2,646)		(1,998)
		_________		_________
Net cash outflow from servicing of finance			(2,646)		(1,998)
Corporation tax paid			(1,751)		(414)
Financial investment
Purchases of investments		(202,651)		(135,699)
Sales of investments		169,789		179,642
		_________		_________
Net cash (outflow)/inflow from financial investment			(32,862)		43,943
Equity dividends paid			(19,148)		(17,317)
			_________		_________
Net cash (outflow)/inflow before financing			(32,235)		43,880
Financing
Share Issue		19,935		-
Loans repaid		(19,850)		-
Loans drawn down		38,915		-
		_________		_________
Net cash inflow from financing			39,000		-
			_________		_________
Increase in cash	18		6,765		43,880

   9 NOTES:

For the year ended 31 December 2008
1.	Accounting policies
	(a)	Basis of preparation
		The financial statements have been prepared in accordance with applicable UK Law and Accounting Standards (UK Generally Accepted Accounting Practice) and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' (issued in January 2009). They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis.
	(b)	Income Dividends receivable on equity shares (other than special dividends) are treated as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available dividends are recognised on their due date. Provision is made for any dividends not expected to be received. Special dividends are credited to capital or revenue, according to their circumstances. The fixed returns on debt securities are recognised on a time apportionment basis so as to reflect the effective yield on the debt securities and shares.  Interest receivable from cash and short-term deposits and interest payable is accrued to the end of the year.
	(c)	Expenses All expenses are accounted for on an accruals basis and are charged to the Income Statement. Expenses are charged against revenue except as follows: -  transaction costs on the acquisition or disposal of investments are charged to the capital account in the Income Statement; - expenses are charged to realised capital reserves where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect the investment management fee has been allocated 30 per cent to revenue and 70 per cent to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth. The performance fee has been charged 100% to realised capital reserves, as the fee will have arisen wholly or predominantly by virtue of the capital performance of the investments.
	(d)	Taxation
		Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the Balance Sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the Balance Sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods. Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws enacted or substantively enacted at the Balance Sheet date. Due to the Company's status as an investment trust company and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
		The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue within the Income Statement on the same basis as the particular item to which it relates using the Company's effective rate of tax for the year, based on the marginal basis.
	(e)	Investments
		All investments have been designated upon initial recognition as fair value through profit or loss. This is done because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Company's documented investment strategy, and information about the grouping is provided internally on that basis. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are measured initially at fair value. Subsequent to initial recognition, investments are valued at fair value through profit or loss. For listed investments, this is deemed to be bid market prices or closing prices for SETS (London Stock Exchange's electronic trading service) stocks sourced from the London Stock Exchange. Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Income Statement and are ultimately recognised in the unrealised capital reserve.
	(f)	Borrowings
		Monies borrowed to finance the investment objectives of the Company are stated at the amount of the net proceeds immediately after issue plus cumulative finance costs less cumulative payments made in respect of the debt. The finance costs of such borrowings are allocated to years over the term of the debt at a constant rate on the carrying amount and are charged 30 per cent to revenue and 70 per cent to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth.
	(g)	Exchange rates
		Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction.
		Translation of all other foreign currency balances including foreign assets and foreign liabilities is at the middle rates of exchange at the year end. Differences arising from translation are treated as capital gain or loss to capital or revenue within the Income Statement depending upon the nature of the gain or loss.
	(h)	Derivative financial instruments
		Financial derivatives are measured at fair value. Changes in the fair value of derivative financial instruments are recognised in the Income Statement. If capital in nature, the associated change in value is presented as a capital item in the Income Statement.

		2008	2007
2.	Income	£'000	£'000
	Income from investments:
	UK dividends	3,982	5,679
	UK unfranked investment income	1,879	2,815
	Overseas dividends	20,695	15,009
	Overseas interest	2,966	2,660
		__________	__________
		29,522	26,163
	Interest:	__________	__________
	Deposit interest	1,208	613
	Money market interest	1,512	-
		__________	__________
		2,720	613
		__________	__________
	Total income	32,242	26,776
		__________	__________
	Income from investments comprises:
	Listed UK	5,861	8,494
	Listed overseas	23,661	17,669
		__________	__________
		29,522	26,163
		__________	__________

		2008			2007
		Revenue	Capital	Total	Revenue	Capital	Total
3.	Investment management fees	£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fees	1,018	2,374	3,392	902	2,104	3,006
	VAT paid	-	-	-	64	149	213
		_______	_______	_____	_______	______	_____
		1,018	2,374	3,392	966	2,253	3,219
		_______	_______	_____	_______	______	_____
	Details of the fee basis are contained in the Annual Report (Directors' Report).
	The VAT paid charged during the current and previous year has been affected as a consequence of the ruling highlighted in note 20. The Company was charged VAT on fees for the period 1 January to 30 September 2007, though no VAT was charged after these dates.

		2008			2007
		Revenue	Capital	Total	Revenue	Capital	Total
4.	Performance fees	£'000	£'000	£'000	£'000	£'000	£'000
	Performance fees	-	2,269	2,269	-	2,523	2,523
	VAT paid	-	-	-	-	(372)	(372)
		_______	_______	______	_______	_______	_______
		-	2,269	2,269	-	2,151	2,151
		_______	_______	______	_______	_______	_______
	Details of the fee basis are contained in the Annual Report (Directors' Report).  As a consequence of the VAT ruling detailed in note 20, there has been no VAT charged for the 2008 performance fee and for any elements of previous year's fees still outstanding. VAT previously accrued was written off during the year ended 31 December 2007.

		2008			2007
		Revenue	Capital	Total	Revenue	Capital	Total
5.	Other expenses	£'000	£'000	£'000	£'000	£'000	£'000
	Shareholders' services{A}	668	-	668	592	-	592
	Directors' remuneration	111	-	111	99	-	99
	Irrecoverable VAT	102	-	102	71	-	71
	Secretarial fees	100	-	100	100		100
	Auditors fees:						-
	- fees payable to the Company's auditors for the audit of the annual accounts	21	-	21	20	-	20
	- fees payable to the Company's auditors for the review of the interim accounts	8	-	8	5	-	5
	- fees payable to the Company's auditors for other services	2	-	2	-	-	-
	Other expenses	457	-	457	364	-	364
		_______	_______	_______	_______	______	_______
		1,469	-	1,469	1,251	-	1,251
		_______	_______	_______	_______	______	_______
	{A} Includes registration, savings scheme and other wrapper administration and promotion expenses, of which £518,000 (2007 - £474,000) was paid to Aberdeen Asset Managers Limited (AAM) to cover marketing activities during the year. There were no sums due to AAM at the year end (2007 - £nil).

		2008			2007
		Revenue	Capital	Total	Revenue	Capital	Total
6.	Finance costs	£'000	£'000	£'000	£'000	£'000	£'000
	Bank loans and overdrafts	866	2,020	2,886	590	1,376	1,966
	Debenture Stock	19	46	65	19	46	65
		_______	_______	_____	_______	______	_____
		885	2,066	2,951	609	1,422	2,031
		_______	_______	_____	_______	______	_____

			2008			2007
			Revenue	Capital	Total	Revenue		Capital		Total
7.	Taxation		£'000	£'000	£'000	£'000		£'000		£'000
	(a)	Tax charge
		The tax charge comprises:
		Current UK tax	7,039	(1,619)	5,420	5,247		(1,559)		3,688
		Overseas tax	1,813	-	1,813	1,316		-		1,316
		Double taxation relief	(1,669)	-	(1,669)	(1,230)		(2,066)		(3,296)
		Prior year adjustment	19	-	19	-		-		-
			_______	_______	_____	_______		______		_____
		Current tax charge	7,202	(1,619)	5,583	5,333		(3,625)		1,708
		Deferred tax	80	-	80	217		-		217
			_______	_______	_____	_______		______		_____
		Total tax	7,282	(1,619)	5,663	5,550		(3,625)		1,925
			_______	_______	_____	_______		______		_____
	(b)	Factors affecting the tax charge for the year  The tax assessed for the year is lower than the effective rate of corporation tax rate of 28.5% (2007 - 30%). The effective rate for 2008 was calculated using a rate of 30% until 31 March 2008 and 28% from 1 April 2008. The differences are explained below:
							2008		2007
							Revenue		Revenue
							£'000		£'000
		Revenue on ordinary activities before taxation					29,180		23,950
							_________		_________
		Revenue on ordinary activities multiplied by the applicable rate of corporation tax of 28.5% (2007 - 30%)					8,316		7,185
		Effects of:
		Non taxable UK dividends					(1,135)		(1,704)
		Double tax relief					(1,669)		(1,227)
		Irrecoverable overseas tax suffered					1,813		1,293
		Movement in overseas income accruals					(142)		(214)
		Prior year adjustment					19		-
							_________		_________
		Current tax charge					7,202		5,333
							_________		_________
	Deferred tax is assessed at a rate of 28% due to a change in the expected tax rate when the liability is due to be settled.

		2008	2007
8.	Ordinary dividends on equity shares	£'000	£'000
	Third interim for 2007 of 4.30p	3,724	-
	Final dividend for 2007 of 8.10p (2006 - 7.60p)	7,016	6,580
	First interim for 2008 of 4.80p (2007 - 4.30p)	4,173	3,724
	Second interim for 2008 of 4.80p (2007 - 4.30p)	4,235	3,724
		_________	_________
		19,148	14,028
		_________	_________
	In accordance with UK GAAP the third interim and proposed final dividend for 2008 have not been included as liabilities in these financial statements. The proposed final dividend for 2008 is subject to approval by Shareholders at the Annual General Meeting.  We set out below the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Section 842 of the Income and Corporation Taxes Act 1988 are considered. The revenue available for distribution by way of dividend for the year is £21,898,000 (2007 - £18,400,000).
		2008	2007
		£'000	£'000
	Three interim dividends for 2008 of 4.80p (2007 - 4.30p)	12,718	11,173
	Proposed final dividend for 2008 of 8.80p (2007 - 8.10p)	7,901	7,016
		_________	_________
		20,619	18,189
		_________	_________

9.	Returns per share	2008	2007
	Returns have been based on the following figures:
	Weighted average number of Ordinary shares	87,497,567	86,598,500
	Weighted average number of B Ordinary shares	1,101,541	1,089,525
		_________	_________
	Weighted average number of Ordinary shares assuming conversion of B Ordinary shares	88,599,108	87,688,025
		_________	_________
		£'000	£'000
	Revenue return attributable to equity shareholders	21,898	18,400
	Capital return attributable to equity shareholders	(100,095)	62,597
		_________	_________
	Total return attributable to equity shareholders	(78,197)	80,997
		_________	_________

			2008	2007
10.	Investments listed at fair value through profit or loss		£'000	£'000
	Opening valuation		679,577	655,634
	Opening investment holdings gains		(195,023)	(199,310)
			_________	_________
	Opening book cost		484,554	456,324
	Movements during the year:
	Purchases		202,651	135,699
	Sales	- proceeds	(169,789)	(179,642)
		- realised gains	22,737	72,635
	Amortisation of fixed income book cost		(387)	(462)
			_________	_________
	Closing book cost		539,766	484,554
	Closing investment holdings gains		78,446	195,023
			_________	_________
	Closing valuation		618,212	679,577
			_________	_________
			2008	2007
	The portfolio valuation		£'000	£'000
	Listed on stock exchanges at market valuation:
	United Kingdom:
	-	equities	78,075	119,845
	-	fixed income	31,384	67,122
	Overseas:
	-	equities	472,976	452,747
	-	fixed income	35,777	39,863
			_________	_________
	Total		618,212	679,577
			_________	_________
			2008	2007
	(Losses)/gains on investments		£'000	£'000
	Realised gains based on book cost		22,737	72,635
	Net movement in investment holdings gains		(116,577)	(4,287)
			_________	_________
			(93,840)	68,348
			_________	_________
	All investments are categorised as held at fair value through profit and loss and were designated as such upon initial recognition.
	Transaction costs During the year expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within (losses)/gains on investments in the Income Statement. The total costs were as follows:
			2008	2007
			£'000	£'000
	Purchases		344	318
	Sales		99	257
			_________	_________
			443	575
			_________	_________

		2008	2007
11.	Debtors: amounts falling due within one year	£'000	£'000
	Current taxation	335	172
	Other debtors	-	141
	Forward contracts	16,619	508
	VAT recoverable (see note 20){A}	1,325	-
	Prepayments and accrued income	3,923	3,555
		_________	_________
		22,202	4,376
		_________	_________
	{A} Net of irrecoverable VAT of £12,000.
	None of the above amounts is overdue.

		2008	2007
12.	Creditors	£'000	£'000
	Amounts falling due within one year:
	Bank loans (note 13)	-	18,662
	Other creditors	8	8
	Swap contracts	1,711	-
	Corporation tax payable	2,019	-
	Provision for deferred tax	297	217
	Accruals	4,198	2,988
		_________	_________
		8,233	21,875
		_________	_________
		2008	2007
		£'000	£'000
	Amounts falling due after more than one year:
	Bank loans and debentures (note 13)	159,107	56,931
	Accruals	3,548	3,597
		_________	_________
		162,655	60,528
		_________	_________
	Management fees of £861,000 were outstanding at the year end to AAM. (2007 - £nil)
	A performance fee of £5,865,000 is outstanding at the year end to AAM (2007 - £5,775,000). Of this amount £3,548,000 (2007 - £3,597,000) falls due after more than one year. No VAT has been accrued due to the changes in the treatment of VAT on performance fees as detailed in note 20.
	All financial liabilities are included at amortised cost.

			2008	2007
13.	Bank loans and Debentures		£'000	£'000
	Secured by floating charge and repayable other than by instalments within five years or at the Company's option:
	-	4% Debenture Stock	1,620	1,620
	Unsecured bank loans repayable:
	within one year
	-	Yen 1,900,000,000 at 2.48% - 30 June 2008	-	8,544
	-	Yen 2,250,000,000 at 2.40% - 30 June 2008	-	10,118
	in more than one year but no more than five years
	-	Yen 8,400,000,000 at 2.97% - 10 March 2010	64,451	37,773
	in more than five years
	-	Yen 1,900,000,000 at 1.53% - 4 June 2013	14,578	-
	-	Yen 6,325,000,000 at 1.53% - 4 June 2013	48,535	-
	-	Yen 2,300,000,000 at 2.03% - 16 February 2014	17,647	10,343
	-	Yen 1,600,000,000 at 2.82% - 15 May 2016	12,276	7,195
			_________	_________
			159,107	75,593
			_________	_________
	The terms of these loans permit early repayment at the borrower's option which may give rise to additional amounts being either payable or repayable in respect of fluctuations in interest rates since drawdown. Since the Directors, currently, have no intention of repaying the loans early, they have been included in the accounts to 31 December 2008 at their principal amounts.
	The Company currently has a fixed rate term loan facility with ING Bank N.V., which is fully drawn down and has a maturity date of 15 May 2016.
	The Company currently has two loan facilities with Barclays Bank, which are fully drawn down and have maturity dates of 4 June 2013. The rates for these loans have been fixed for 5 years through a swap. The swap is separate from the loan and under this the borrower either pays or receives the difference between LIBOR and the swap rate so that the actual rate paid is always the same. The interest charged on the loan is at LIBOR plus the margin. For Yen the LIBOR is re-set every 6 months and the LIBOR rate under the loan and as reset under the swap should be identical to each other at every 6 month interval to preserve the 'fixed' nature of the overall interest costs.
	The Company currently has a fixed rate term loan facility with Royal Bank of Scotland plc, which is fully drawn down and has a maturity date of 16 February 2014.
	The Company also has an additional JPY8,400,000,000 term loan facility with The Royal Bank of Scotland plc which expires on 10 March 2010 and an uncommitted facility of £25,000,000. The full JPY8,400,000,000 facility (approx £64,451,000) has been drawn down. None of the £25,000,000 facility has been drawn down.
	Financial covenants contained within the relevant loan agreements provide, inter alia, that borrowings shall at no time exceed 50% of Net Assets and that the net assets must exceed £250 million. The net assets were £568.8 million at 31 December 2008.

		2008		2007
14.	Share capital	Number	£'000	Number	£'000
	Allotted, called up and fully paid:
	Ordinary shares of 25p each	89,788,992	22,447	86,612,772	21,653
	B Ordinary shares of 25p each	1,111,928	278	1,090,350	273
		_________	_______	_________	_______
		90,900,920	22,725	87,703,122	21,926
	Unissued:
	Unclassified shares of 25p each	53,225,080	13,306	56,422,878	14,105
		_________	_______	_________	_______
	Authorised	144,126,000	36,032	144,126,000	36,031
		_________	_______	_________	_______
	During the year 3,176,220 Ordinary shares were issued pursuant to the Company's block listing facility. All of these shares were issued at a premium to net asset value, enhancing net assets per share for existing shareholders. The issue prices range from 510p to 751p and raised a total of £19,935,000, net of expenses. These expenses have been offset against the share premium account
	In accordance with Article 131 of the Company's Articles of Association, 6,724 B Ordinary shares, 12,264 B Ordinary shares, 7,696 B Ordinary shares, and 7,664 B Ordinary shares were allotted by way of capitalisation of reserves on 14 February, 16 May, 11 August and 14 November 2008 respectively.
	On 30 June 2008, 12,770 B Ordinary shares were converted into a like number of Ordinary shares of 25p in accordance with Article 47 of the Company's Articles of Association. When the nominal value of the allotted and fully paid B Ordinary shares is less than £100,000 the Directors may, under the terms of Article 47(B), require the conversion of such shares into Ordinary shares. The net asset value at the conversion date of 30 June 2007 was 699.5 pence per share.
	On a winding up of the Company, any surplus assets available after payment of all debts and satisfaction of all liabilities of the Company shall be applied in repaying the Ordinary and B Ordinary shareholders the amounts paid up on such shares. Any surplus shall be divided among the holders of Ordinary and B Ordinary shares pari passu according to the amount paid up on such shares respectively.
	The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance.
	The capital structure of the Company consists of debt, cash and cash equivalents and equity, comprising issued capital, reserves and retained earnings.
	The Board reviews the capital structure on an annual basis. As a part of this review the Board considers the cost of capital and the risks associated with each class of capital. Based on recommendations of the committee the Company will balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the issue of new debt or the redemption of existing debt.
	The Company's overall strategy remains unchanged from 2007.
	Voting rights
	In accordance with the Articles of Association of the Company, on a show of hands, every member (or duly appointed proxy) present at a general meeting of the Company has one vote; and, on a poll, every member present in person or by proxy shall have 89 votes for every 25p nominal amount of Ordinary or B Ordinary shares held.

			2008	2007
15.	Capital reserve		£'000	£'000
	At 31 December 2007		578,035	515,445
	Movement in fair value gains		(93,840)	68,348
	Capitalised expenses		(5,090)	(2,201)
	VAT on investment management and performance fees recoverable		1,027	-
	Issue of shares		(9)	(7)
	Stock dividends		8	-
	Currency gains/(losses)		(2,200)	(3,550)
			_________	_________
	At 31 December 2008		477,931	578,035
			_________	_________
	Included within the total above are investment holdings gains at the year end of £78,446,000 (2007 - £195,023).

16.	Diluted Net Asset Value per share
	The diluted Net Asset Value per share and the net asset value attributable to the Ordinary shares (including conversion of the B Ordinary shares), at the year end calculated in accordance with the Articles of Association were as follows:
		Net Asset Value		Net Asset Value
		per share		attributable
		2008	2007	2008	2007
		p	p	£'000	£'000
	Basic
	Ordinary and B Ordinary shares (note 14)	625.8	736.8	568,827	646,237
	Diluted
	Ordinary and B Ordinary shares (note 14)	625.8	736.8	568,827	646,237

17.	Reconciliation of net return before finance costs and	2008	2007
	taxation to net cash inflow from operating activities	£'000	£'000
	Net (loss)/return before finance costs and taxation	(69,583)	84,953
	Add: losses/(gains) on investments	93,840	(68,348)
	Add: currency losses	2,200	3,550
	Amortisation of fixed income book cost	387	462
	Increase in accrued income	(368)	(172)
	Decrease in prepayments	-	15
	Increase in other debtors	(1,184)	(102)
	Increase in accruals	857	517
	Tax on unfranked income - overseas	(1,977)	(1,209)
		________	________
		24,172	19,666
		________	________

		At				At
		31 December	Currency	Cash	Non-cash	31 December
		2007	differences	flows	movements	2008
18.	Analysis of changes in net debt	£'000	£'000	£'000	£'000	£'000
	Cash and short term deposits	44,687	47,849	6,765	-	99,301
	Forward contracts	508	16,111	-	-	16,619
	Swap	-	(1,711)	-	-	(1,711)
	Debt due within one year	(18,662)	(1,188)	19,850	-	-
	Debt due after more than one year	(56,931)	(63,261)	(38,915)	-	(159,107)
		_________	_________	________	_________	_________
		(30,398)	(2,200)	(12,300)	-	(44,898)
		_________	_________	________	_________	_________
		At				At
		31 December	Currency	Cash	Non-cash	31 December
		2006	Differences	flows	movements	2007
		£'000	£'000	£'000	£'000	£'000
	Cash and short term deposits	3,870	(3,063)	43,880	-	44,687
	Forward contracts	(2,439)	2,947	-	-	508
	Debt due within one year	-	(867)	-	(17,795)	(18,662)
	Debt due after more than one year	(72,159)	(2,567)	-	17,795	(56,931)
		_________	_________	________	_________	_________
		(70,728)	(3,550)	43,880	-	(30,398)
		_________	_________	________	_________	_________
	A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis.

19.	Derivatives and other financial instruments
	Risk management
	The Company's financial instruments, other than derivatives, comprise securities and other investments, cash balances, loans and debentures and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income. The Company also has the ability to enter into derivative transactions in the form of forward foreign currency contracts, futures and options, for the purpose of managing currency and market risks arising from the Company's activities.
	The Manager has a dedicated investment management process, which ensures that the investment policy is achieved. Stock selection procedures are in place based on the active portfolio management and identification of stocks. The portfolio is reviewed on a periodic basis by a Senior Investment Manager and also by the Manager's Investment Committee.
	The Company's Manager has an independent Investment Risk department for reviewing the investment risk parameters of all core equity, fixed income and alternative asset classes on a regular basis. The department reports to the Manager's Performance Review Committee which is chaired by the Manager's Chief Investment Officer. The department's responsibility is to review and monitor ex-ante (predicted) portfolio risk and style characteristics using best practice, industry standard multi-factor models.
	Additionally, the Manager's Compliance department continually monitors the trust's investment and borrowing powers and reports to the Manager's Risk Management Committee.
	The main risks the Company faces from its financial instruments are (i) market price risk (comprising interest rate risk, currency risk and other price risk), (ii) liquidity risk and (iii) credit risk.
	The Board regularly reviews and agrees policies for managing each of these risks. The Manager's policies for managing these risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short-term debtors and creditors, other than for currency disclosures.
	(i)	Market price risk
		The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - interest rate risk, currency risk and other price risk.
		Interest rate risk
		Interest rate movements may affect:
		- the fair value of the investments in fixed interest rate securities;
		- the level of income receivable on cash deposits;
		- interest payable on the Company's variable rate borrowings.
		The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.
		The Board reviews on a regular basis the values of the fixed interest rate securities.
		The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise fixed rate, revolving, and uncommitted facilities. The fixed rate Yen facilities are used to finance opportunities at low rates and, the revolving and uncommitted facilities to provide flexibility in the short-term. Current guidelines state that the total borrowings will not exceed 30 per cent of the net assets of the Company. The Company currently has two loan facilities with Barclays Bank, which are fully drawn down and have maturity dates of 4 June 2013. The rates for these loans have been fixed for 5 years through a swap. The swap is separate from the loan and under this the borrower either pays or receives the difference between LIBOR and the swap rate so that the actual rate paid is always the same. The interest charged on the loan is at LIBOR plus the margin. For JPY, the LIBOR is re-set every 6 months and the LIBOR rate under the loan and as reset under the swap should be identical to each other at every 6 month interval to preserve the 'fixed' nature of the overall interest costs. Details of borrowings at 31 December 2008 are shown in note 13.
		Interest risk profile
		The interest rate risk profile of the portfolio of financial assets and liabilities at the Balance Sheet date was as follows:

			Weighted average
			period for which	Weighted average	Fixed	Floating	Non interest
			rate is fixed	interest rate	rate	rate	bearing
		At 31 December 2008	Years	%	£'000	£'000	£'000
		Assets
		Sterling	6.17	5.52	31,384	54,667	78,075
		US Dollar	30.62	8.72	14,532	-	122,422
		Euro	-	-	-	24,170	107,114
		Other	4.99	9.66	21,245	20,464	243,440
			_________	_________	________	_______	_________
		Total assets	-	-	67,161	99,301	551,051
			_________	_________	________	_______	_________
		Liabilities
		Bank loans - Japanese Yen	3.41	2.28	(157,487)	-	-
		Debenture Stock	-	-	(1,620)	-	-
		Accruals	-	-	-		(3,548)
			_________	_________	________	_______	_________
		Total liabilities	-	-	(159,107)	-	(3,548)
			_________	_________	________	_______	_________
			Weighted average
			period for which	Weighted average	Fixed	Floating	Non interest
			rate is fixed	interest rate	rate	rate	bearing
		At 31 December 2007	Years	%	£'000	£'000	£'000
		Assets
		Sterling	3.95	5.59	67,122	39,615	119,845
		US Dollar	23.81	7.05	19,820	-	108,819
		Euro	-	-	-	-	95,644
		Other	3.66	8.96	20,043	5,072	248,284
			_________	_________	________	_______	_________
		Total assets	-	-	106,985	44,687	572,592
			_________	_________	________	_______	_________
		Liabilities
		Bank loans - Japanese Yen	2.91	2.63	(73,973)	-	-
		Debenture Stock	-	-	(1,620)	-	-
		Accruals	-	-	-	-	(3,597)
			_________	_________	________	_______	_________
		Total liabilities	-	-	(75,593)	-	(3,597)
			_________	_________	________	_______	_________

The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on bank loans is based on the interest rate payable, weighted by the total value of the loans. The maturity dates of the Company's loans are shown in note 13 to the financial statements. The floating rate assets consist of cash deposits on call earning interest at prevailing market rates. The non-interest bearing assets represent the equity element of the portfolio. Short-term debtors and creditors have been excluded from the above tables. All financial liabilities are measured at amortised cost.

Maturity profile The table below shows the timing of cash outflows to settle the Company's financial liabilities at the Balance Sheet date.
						More
	Within	Within	Within	Within	Within	than
	1 year	1-2 years	2-3 years	3-4 years	4-5 years	5 years	Total
At 31 December 2008	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Bank loans	-	64,451	-	-	63,113	29,923	157,487
Debenture Stock	-	-	-	-	-	1,620	1,620
Interest cash flows on bank loans and Debenture Stock	3,294	1,742	1,380	1,380	1,029	1,063	9,888
Interest cash flows on swaps	355	355	355	355	151	-	1,571
Cash flows on other creditors	3,431	1,784	1,198	567	-	-	6,980
	______	_______	________	_______	_________	_______	________
	7,080	68,332	2,933	2,302	64,293	32,606	177,546
	______	_______	________	_______	_________	_______	________
	Within	Within	Within	Within	Within	than
	1 year	1-2 years	2-3 years	3-4 years	4-5 years	5 years	Total
At 31 December 2007	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Bank loans	18,662	-	37,773	-	-	17,538	73,973
Debenture Stock	-	-	-	-	-	1,620	1,620
Interest cash flows on bank loans and Debenture Stock	1,815	1,604	690	478	478	768	5,768
Cash flows on other creditors	2,525	1,750	1,216	631	-	-	6,122
	______	_______	________	_______	_________	_______	________
	23,002	3,354	39,679	1,109	478	19,926	87,483
	______	_______	________	_______	_________	_______	________

Interest rate sensitivity The sensitivity analyses below have been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the Balance Sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. If interest rates had been 100 basis points higher or lower (based on current parameter used by Manager's Investment Risk Department on risk assessment) and all other variables were held constant, the Company's:  -     profit for the year ended 31 December 2008 would increase/decrease by          £993,000 (2007 - increase/decrease by £447,000). This is mainly attributable to          the Company's exposure to interest rates on its floating rate cash balances. These         figures have been calculated based on cash positions at each year end.        -        equity reserves would increase/decrease by £1,107,000 (2007 - increase/                 decrease by £725,000). This is also mainly attributable to the Company's                  exposure to interest rates on cash balances and its fixed interest portfolio. These                  figures have been calculated based on cash and fixed interest portfolio positions                  at each year end. In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the interest rate risk management process used to meet the Company's objectives. The risk parameters used will also fluctuate depending on the current market perception. Foreign currency risk A significant proportion of the Company's investment portfolio is invested in overseas securities and the Balance Sheet can be significantly affected by movements in foreign exchange rates. It is not the Company's policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investment with foreign currency borrowings. A significant proportion of the Company's borrowings, as detailed in note 13, are in foreign currency as at 31 December 2008. The Manager seeks, when deemed appropriate, to manage exposure to currency movements on borrowings by using forward foreign currency contracts as a hedge against potential foreign currency movements. At 31 December 2008 the Company had a foreign currency contract, details of which are listed below. During the year a gain of £42,509,000 (2006 - loss of £4,242,000) was realised. The revenue account is subject to currency fluctuation arising on overseas income. The Company does not hedge this currency risk. Foreign currency risk exposure by currency of denomination:

	31 December 2008			31 December 2007
	UK and			UK and
	Overseas	Net	Total	Overseas	Net	Total
	Equity	Monetary	currency	Equity	Monetary	currency
	Investments	Assets	exposure	Investments	Assets	exposure
	£'000	£'000	£'000	£'000	£'000	£'000
US Dollar	122,422	-	122,422	104,106	20,702	124,808
Canadian Dollar	-	-	-	4,713	-	4,713
Euro	107,114	24,170	131,284	95,644	130	95,774
Japanese Yen	72,193	-	72,193	68,137	(18,563)	49,574
Hong Kong Dollar	26,932	-	26,932	27,618	(7)	27,611
Korean Won	3,562	-	3,562	5,729	-	5,729
Indian Rupee	-	-	-	7,860	-	7,860
Taiwan Dollar	20,351	63	20,414	13,943	5,165	19,108
Swiss Franc	11,412	-	11,412	8,404	40	8,444
Norwegian Krone	-	20,401	20,401	-	-	-
Hungarian Forint	-	-	-	-	5,369	5,369
Australian Dollar	14,304	-	14,304	7,296	4,876	12,172
Malaysian Ringgit	19,503	-	19,503	21,349	82	21,431
Swedish Krone	7,938	-	7,938	6,923	-	6,923
Singapore Dollar	9,759	-	9,759	11,391	-	11,391
Brazilian Real	14,074	-	14,074	12,923	27	12,950
Thailand Baht	12,840	-	12,840	13,370	-	13,370
Mexican Peso	12,287	-	12,287	30,084	6,249	36,333
Indonesian Rupiah	15,927	-	15,927	9,026	4,137	13,163
New Zealand Dollar	2,358	-	2,358	4,231	-	4,231
Sterling	78,075	135,797	213,872	119,845	105,966	225,811
	__________	_________	_________	__________	_________	__________
Total	551,051	180,431	731,482	572,592	134,173	706,765
	__________	_________	_________	__________	_________	__________

The asset allocation between specific markets can vary from time to time based on the Investment Manager's opinion of the attractiveness of the individual markets. Foreign currency sensitivity The following table details the Company's sensitivity to a 10% increase and decrease in sterling against the major foreign currencies in which the Company has exposure (based on exposure >5% of total exposure). The sensitivity analysis includes foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.

	2008	2008	2007	2007
	Profit		Profit
	& loss	Equity	& loss	Equity
	£'000	£'000	£'000	£'000
Euro	631	10,711	374	9,564
US Dollar	173	12,243	219	12,481
Japanese Yen	182	7,219	101	4,957
Brazilian Real	-	-	228	1,295
	__________	_________	_________	__________
Total	986	30,173	922	28,298
	__________	_________	_________	__________

Foreign exchange contracts The following Japanese Yen forward contracts were outstanding at the Balance Sheet date:

				Unrealised gain at
	Settlement	Amount JPY	Contracted	31 December 2008
Date of contract	date	'000	rate	£'000
3 December 2008	6 March 2009	20,251,060	145.49	16,619
		_________	_________	__________
The fair value of forward foreign currency contracts is based on forward exchange rates at the Balance Sheet date.
Other price risk
Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.
It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. The allocation of assets to international markets and the stock selection process, both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on various stock exchanges worldwide.
Other price risk sensitivity
If market prices at the Balance Sheet date had been 10% higher or lower while all other variables remained constant, the return attributable to ordinary shareholders for the year ended 31 December 2008 would have increased/decreased by £7,808,000 (2007 - increase/decrease of £11,984,000) and equity reserves would have increased / decreased by the same amount.

	(ii)	Liquidity risk
		This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
		Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of loan and overdraft facilities (note 13).
	(iii)	Credit risk
		This is failure of the counter party to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.
		The risk is not significant, and is managed as follows:
		-     where the Investment Manager makes an investment in a bond, corporate or otherwise, the credit rating of the issuer is taken into account so as to minimise the risk to the Company of default;
		-     investments in quoted bonds are made across a variety of industry sectors and geographic markets so as to avoid concentrations of credit risk;
		-     transactions involving derivatives are entered into only with investment banks, the credit rating of which is taken into account so as to minimise the risk to the Company of default;
		-     investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the investment manager, and limits are set on the amount that may be due from any one broker;
		-     the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a monthly basis. In addition, the Custodian carries out a stock reconciliation to third party administrators' records on a monthly basis to ensure discrepancies are picked up on a timely basis. The Manager's Compliance department carries out periodic reviews of the Custodian's operations and reports its finding to the Manager's Risk Management Committee.
		-     cash is held only with reputable banks with high quality external credit enhancements. It is the Manager's policy to trade only with A- and above (Long Term rated) and A-1/P-1 (Short Term rated) counterparties.
		Credit risk exposure
		In summary, compared to the amounts in the Balance Sheet, the maximum exposure to credit risk at 31 December 2008 was as follows:

			2008		2007
			Balance	Maximum	Balance	Maximum
			Sheet	exposure	Sheet	exposure
			£'000	£'000	£'000	£'000
		Non-current assets
		Securities at fair value through profit or loss	67,161	67,161	106,985	106,985
		Current assets		-
		Current taxation	335	335	172	172
		Other debtors	-	-	141	141
		Forward contracts	16,619	16,619	508	508
		VAT recoverable (see note 20)	1,325	1,325	-	-
		Accrued income	3,879	3,879	3,511	3,511
			__________	_________	_________	__________
			89,319	89,319	111,317	111,317
			__________	_________	_________	__________

None of the Company's financial assets are secured by collateral or other credit enhancements. Fair values of financial assets and financial liabilities The fair value of borrowings has been calculated at £167,570,000 as at 31 December 2008 (2007 - £76,808,000) compared to an accounts value in the financial statements of £159,107,000 (2007 - £75,593,000) (note 13). The fair value of each loan is determined by aggregating the expected future cash flows for that loan discounted at a rate comprising the borrower's margin plus an average of market rates applicable to loans of a similar period of time and currency. All other assets and liabilities of the Company are included in the Balance Sheet at fair value.

20.	Contingent assets On 5 November 2007, the European Court of Justice ruled that management fees on investment trusts should be exempt from VAT. HMRC has announced its intention not to appeal against this ruling to the UK VAT Tribunal and therefore protective claims which have been made in relation to the Company will be processed by HMRC in due course. The Company has not been charged VAT on its investment management fees from 1 October 2007.
	The Manager has agreed to refund £1,337,000 to the Company for VAT charged on investment management fees for the period 1 January 2004 to 30 September 2007 and this has been included in these financial statements. This repayment has been allocated to revenue and capital in line with the accounting policy of the Company for the periods in which the VAT was charged. The reclaim for previous periods and the timescale for receipt are at present uncertain and the Company has taken no account in these financial statements of any such repayment.

21.    Subsequent Events. Since the year end, equity markets have fallen, and the Company's net asset value per share (including income) as at 23 February 2009 was 527.3p per share, a decrease of 15.7% from the net asset value per share as at the balance sheet date.

22.    The figures and financial information for the year ended 31 December 2008 are compiled from an extract of the latest accounts of the Company and do not constitute the statutory accounts for that year. Those accounts included the report of the auditors which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985. They have not yet been delivered to the Registrar of Companies. The figures and financial information for the year ended 31 December 2007 are compiled from an extract of the latest published accounts of the Company and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985.

23.    The annual results will be circulated to Shareholders in the form of an Annual Report, copies of which will be available at the Company's registered office, 40 Princes Street, Edinburgh EH2 2BY and on the Company's website www.murray-intl.co.uk. 

24.    The Annual General Meeting will be held on 22 April 2009 at The London Chamber of Commerce and Industry, 33 Queen Street, London.

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.

For Murray International Trust PLC

Aberdeen Asset Management PLC, Secretaries

24 February 2009

  10 SUMMARY OF INVESTMENT CHANGES

	Valuation		Appreciation/		Valuation
	31 December 2008		(depreciation)	Transactions	31 December 2007
	£'000	%	£'000	£'000	£'000	%
Equities
United Kingdom	78,075	10.7	(32,337)	(9,433)	119,845	16.5
North America	68,624	9.3	576	12,990	55,058	7.6
Europe ex UK	126,463	17.3	(31,974)	47,467	110,970	15.3
Japan	72,194	9.9	(4,664)	8,721	68,137	9.4
Asia Pacific ex Japan	125,534	17.2	(9,370)	13,091	121,813	16.8
Latin America	80,161	10.9	(21,252)	4,644	96,769	13.4
	________	________	__________	__________	_______	_______
	551,051	75.3	(99,021)	77,480	572,592	79.0
	________	________	__________	__________	_______	_______
Fixed income
United Kingdom	31,384	4.2	(754)	(34,984)	67,122	9.3
North America	23,201	3.3	3,674	(293)	19,820	2.7
Europe ex UK	-	-	734	(5,970)	5,236	0.7
Asia Pacific ex Japan	6,379	0.9	1,202	(3,631)	8,808	1.2
Latin America	6,197	0.8	325	(127)	5,999	0.8
	________	________	__________	__________	_______	_______
	67,161	9.2	5,181	(45,005)	106,985	14.7
	________	________	__________	__________	_______	_______
Other net (liabilities)/assets{A}	113,270	15.5	62,249	5,171	45,850	6.3
	________	________	__________	__________	_______	_______
Total assets	731,482	100.0	(31,591)	37,646	725,427	100.0
	________	________	__________	__________	_______	_______
{A} Figure for 2008 has £nil bank loans. The figure for 2007 has bank loans of £18,662,000 which were shown as a current liability.

  11 TWENTY LARGEST INVESTMENTS

As at 31 December 2008

			Valuation	Total	Valuation
			2008	assets{D}	2007
Company		Country	£'000	%	£'000
1 (1)	Petrobras ADR{A}
Petrobras, Brazil's leading energy group, produces oil and gas from extensive reserves throughout the country. It also produces a wide range of derivative products, petrochemicals and fuel alcohol.		Brazil	22,168	3.0	36,822
2 (4)	British American Tobacco{B}
British American Tobacco is the holding company for a group of companies that manufacture, market and sell cigarettes and other tobacco products. The group sells over 300 brands in approximately 180 markets around the world.		UK & Malaysia	21,664	3.0	17,534
3 (17)	Unilever Indonesia
Unilever Indonesia, the majority owned subsidiary of Unilever NV, manufactures soaps, detergents, margarine, oil and cosmetics. The company also produces dairy based foods, ice cream and tea beverages.		Indonesia	15,927	2.2	9,026
4 (-)	Rio Tinto{C}
Rio Tinto is an International mining company. The company has interests in a broad range of mineral assets including aluminium, coal, copper, gold, silver, lead and iron-ore. The company's mining operations are located throughout the world.		UK & USA	14,331	2.0	-
5 (-)	QBE Insurance Group
QBE Insurance Group is an Australian based insurance company which underwrites most types of commercial and industrial insurance policies. The company provides its services both domestically and internationally.		Australia	14,304	2.0	7,296
6 (6)	Souza Cruz
Souza Cruz produces and sells cigarettes and other tobacco products in Latin America. Brand names include Lucky Strike, Carlton, Derby, and Hollywood. The company also manufactures paper for cigarettes and packaging.		Brazil	14,074	1.9	12,923
7 (9)	ENI
Based in Italy, ENI is a truly global energy company with hydrocarbon production in Africa, the North Sea, the Gulf of Mexico and Kazakhstan. The company owns and operates gas pipelines, and also has a network of gasoline service stations.		Italy	13,192	1.8	10,750
8 (3)	Tenaris ADR
Tenaris manufactures, markets and distributes welded and seamless pipe. The company produces casing, tubing, pipeline and mechanical tubes for the oil and gas and energy industries and for mechanical applications and distributes its products worldwide.		Mexico	13,114	1.8	17,928
9 (-)	Procter & Gamble
Procter & Gamble is one of the world's leading household and consumer products manufacturers. The company provides products in the laundry and cleaning, paper, beauty care, food and beverage, and health care markets.		USA	12,895	1.8	-
10 (5)	PTT Exploration
PTT Exploration is a subsidiary of the Petroleum Authority of Thailand. The company produces oil and natural gas, and also explores and develops new crude oil and gas prospects.		Thailand	12,839	1.8	13,370
Top ten investments			154,508	21.3
{A} Holding comprises equity and fixed income securities, split £18,455,000 (2007 - £33,833,000)and £3,713,000 (2007 - £2,989,000) respectively.   {B} Valuation comprises equity holdings in both UK and Malaysia split £9,900,000 (2007 - £10,808,000) and £11,764,000 (2007 - £6,726,000) respectively.  {C} Holding comprises equity and fixed income securities, split £5,662,000 (2007 - nil) and £8,669,000 (2007 - nil) respectively.
11 (-)	Standard Chartered
Standard Chartered is an international banking group operating principally in Asia, Africa, Latin America and the Middle East. The company offers its products and services to a wide range of customers in over fifty countries worldwide.		UK	12,026	1.6	5,062
12 (-)	Taiwan Mobile
Taiwan Mobile is the leading provider of cellular telecommunications services in Taiwan. Although predominately a wireless network operator, the company also sells and leases cellular telephony equipment.		Taiwan	11,838	1.6	6,722
13 (-)	Telecomunicacoes de Sao Paulo
Telesp provides local telecommunication services throughout the Brazilian State of Sao Paulo. The company provides voice, data, broadband and digital video services to consumers, business and government entities.		Brazil	11,831	1.6	7,653
14 (-)	Philip Morris International
Spun out from the Altria Group in 2008, Philip Morris International is one of the world's leading global tobacco companies. It manufactures and sells leading recognisable brands such as Marlboro, Parliament and Virginia Slims.		USA	11,800	1.6	-
15 (8)	Total Fina
Total is a fully integrated global energy company. In addition to exploring for, producing, refining and marketing oil and natural gas, the company also operates a chemical division which produces polyethylene, polyotyrene, paint, adhesives and resins.		France	11,662	1.6	11,046
16 (10)	E.ON
E.ON is a leading global utility company. The company generates, distributes and trades electricity and distributes gas and drinking water to industrial, commercial and residential customers. E.ON operates in Europe, the Americas and Asia.		Germany	11,519	1.6	10,687
17 (20)	Zurich Financial Services
Based in Switzerland, Zurich Financial Services provides insurance based financial services. The company offers general and life insurance products and services for private individuals, corporations and multinational organisations.		Switzerland	11,412	1.6	8,404
18 (-)	Belgacom
Belgacom provides communication services and products to residential, business and corporate customers both domestically and Internationally. Through its subsidiaries Belgacom Mobile and Belgacom Skynet the company further offers mobile phone and Internet services.		Belgium	10,833	1.5	8,299
19 (-)	Takeda Chemical
Takeda Pharmaceutical Company mainly manufactures and sells pharmaceuticals, food supplements and chemical products like polyurethane. Takeda researches, develops and promotes its products through its related companies and distribution networks in the United States, Europe and Asia.		Japan	10,634	1.5	3,976
20 (19)	Centrica
Centrica, through various subsidiaries provides gas and energy related products and services to residential and business customers throughout the UK. Spun off from British Gas in 1997, the company also offers indirect telecom services.		UK	10,607	1.5	8,610
Top twenty investments			268,670	37.0
The value of the 20 largest investments represents 37.0% (2007 - 35.9%) of total assets. The figures in brackets denote the position at the previous year end. (-) denotes not previously in 20 largest investments.

  12 FINANCIAL HIGHLIGHTS

	31 December 2008	31 December 2007	% change
Total assets less current liabilities (before deducting prior charges)	£731,482,000	£725,427,000
Equity shareholders' funds (Net Assets)	£568,827,000	£646,237,000
Share price - Ordinary share (mid market)	589.0p	662.0p	-11.0
Share price - B Ordinary share (mid market)	527.0p	660.9p	-20.3
Net Asset Value per Ordinary and B Ordinary share	625.8p	736.8p	-15.1
Discount to Net Asset Value on Ordinary shares	5.9%	10.2%
Gearing (ratio of borrowing to shareholders' funds)
Actual gearing ratio	11.1%	5.3%
Potential gearing ratio	28.0%	11.7%
Dividends and earnings per Ordinary share
Revenue return per share	25.0p	21.2p	+17.9
Dividends per share{A}	23.2p	21.0p	+10.5
Dividend cover (including proposed final dividend)	1.08	1.01
Revenue reserves{B}	£40,774,000	£38,024,000
Operating costs
Total expense ratio	0.82%	0.74%
{A} The figure for dividends per share reflect the years in which they were earned (see note 8).
{B} The revenue reserve figure does not take account of the proposed third interim and final dividends amounting to £4,287,000 and £7,901,000 respectively (2007 - £3,724,000 and £7,016,000).

 

END

 

 

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