MURRAY INTERNATIONAL TRUST PLC

HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2010

The Directors of Murray International Trust PLC report the unaudited results of the Company for the six months ended 30 June 2010.

INTERIM BOARD REPORT

Background

A mood of pessimism resulting from sovereign debt problems in Europe, the UK, the United States and Japan overshadowed global equity markets over the past six months.  Many politicians and policymakers intensified demands for fiscal rectitude and a return to balanced budgets by proposing widespread austerity measures.  Such pronouncements were easy to make, but may prove much more problematic to deliver.  Already struggling from enormous debt overload in both private and public sectors, the developed world remained precariously positioned as government policies began to tighten.  Optimists still talked of "normal economic recovery", but pragmatists focused more on rising deflationary risks associated with widespread deleveraging.   Concerns over future corporate profitability against an economic backdrop dominated by spending constraints merely added to despondency.  Bond markets performed well as inflationary concerns evaporated, but equity markets suffered from increased uncertainty and rising risk aversion.  Consequently, over the period, in local and sterling terms, most global equity markets declined.

Investment Changes

During the period transaction activity was very light.  Periods of market strength were used to selectively reduce positions in companies which had performed well.  Partial sales were implemented in Petrobras and Schneider, whilst holdings in Portugal Telecom and Procter & Gamble were sold outright.  New positions in Swiss pharmaceutical company, Novartis, Banco Bradesco in Brazil and Singapore Telecom were established during the period.  As of period end, the proportion of net assets of the Trust invested in equities was 104%, which is the same as the 31 December 2009 level.

Income showed a solid increase in the six months compared to that received in the equivalent period last year, primarily due to increased dividends paid by many of our companies.  On 30 April 2010 the Directors announced a first interim dividend of 6.8p per Ordinary share for the current year compared with 5.6p per share last year.  Since the end of June a second interim dividend also of 6.8p (2009 - 5.6p) has been announced and will be paid to shareholders on 15 November 2010.

Performance

The net asset value total return, with net income reinvested, for the six months to 30 June 2010 was +3.7% compared with a return of -4.2% on the Trust's benchmark (40% the FTSE World UK and 60% FTSE World ex UK).  Over the six months the share price rose by +7.8%, reflecting the move to a premium to net asset value on which the shares trade.

Absolute and relative performance was enhanced by maintaining low levels of investment in the UK and having significant exposure to Asia and Latin America.  Positive contributions from stock selection in Mexico, Malaysia, Indonesia and India were also material, as was the impact of reducing exposure to cyclical companies earlier in the year.

Issue of New Shares

During the period under review the Company issued 5.28 million new Ordinary shares at a premium to the prevailing net asset value per Ordinary share at the time of each issue.  Subsequent to the period end, a further 1.4 million new Ordinary shares have been issued. Since the start of the issuance programme, approximately £100 million of new funds has been raised through the issue of new shares and, by issuing these shares at a premium, the Company is able to improve the liquidity of its shares and enhance very slightly the net asset value per share. Such issuance is also important for Share Plan Participants and other regular purchasers of the Company's shares because it ensures that the premium is managed and does not become too large. At the AGM of the Company held on 30 April 2010, shareholders authorised the Company to issue new Ordinary shares for cash representing up to 10 per cent. of the issued share capital. The Board will continue to authorise the issue of new shares, at a premium, as and when there is unfulfilled demand in the market and subject to the overriding Listing Rule requirement not to issue more than 10 per cent. of the outstanding equity in any rolling 12 month period.

290,732 new Ordinary shares have also been issued following the conversion of a like number of B Ordinary shares in the period to 23 June 2010.

Gearing

In the Annual Report I advised that your Board had been considering the options in regard to the loan of approximately Yen 8.4 billion (£55.9 million) which formed part of our gearing and was due to be repaid in March.  I am pleased to confirm that the Company has entered into a new five year Yen 8.4 billion facility with The Royal Bank of Scotland plc at an all-in fixed rate of 3.17 per cent. until 13 May 2015.

Outlook

We have long subscribed to the view that the process of debt deleveraging is deflationary.  Judging by current evidence, most of the developed world is beginning to suffer from this problem.  Economic history clearly shows how difficult it is for one country to deleverage from excessive credit creation even when the rest of the world is growing.  Japan's poor economic record over the past twenty years is testimony to that.  Now we have most of the Northern Hemisphere, around sixty percent of global GDP, about to embark on the painful path towards fiscal rectitude and debt reduction.  The process is unlikely to be pleasant for those involved.  From an investment standpoint, powerful deflationary forces are generally negative for equity markets, because as consumption contracts, corporate profits come under intense pressure from declining revenues.  For companies in the developed world orientated purely to their own domestic markets this is likely to be the case.  In growth markets, mainly in the Southern Hemisphere, rising real incomes, positive demographics and surplus savings support robust demand for goods and services.  Fortunately, an increasing number of companies, located both in the developed and emerging world, are now in a position to capitalise on this growth.  It is to such companies that the portfolio will remain exposed.

J F H Trott

Chairman,

5 August 2010

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.

Further details in respect of the risks associated with investment in the Company are detailed in note 19 to the financial statements in the Annual Report and Accounts for the year ended 31 December 2009.

Related Party Transactions

Aberdeen Asset Managers Ltd acts as Manager and Company Secretary to the Company and details of the service and fee arrangements can be found in the Annual Report for 2009 a copy of which is available on the Company's website.

Directors' Responsibility Statement

The Directors are responsible for preparing this half-yearly financial report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

-     the condensed set of financial statements contained within the half-yearly financial report has been prepared in accordance with the Accounting Standards Board's Statement "Half Yearly Financial Reports"; and,

-     the Interim Board Report (constituting the interim management report) includes a fair review of the information required by rule 4.2.7R of the UK Listing Authority Disclosure and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year) and 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could so do).

The Half-Yearly Report for the six months to 30 June 2010 comprises the Interim Board Report and a condensed set of financial statements, and has not been audited or reviewed by the auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

For and on behalf of the Board of Murray International Trust PLC

J F H Trott

Chairman

5 August 2010

INCOME STATEMENT

 

INCOME STATEMENT (Cont'd)

 

INCOME STATEMENT (Cont'd)

 

BALANCE SHEET

 

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

 

CASH FLOW STATEMENT

NOTES TO THE ACCOUNTS

12.        A summary of investment changes for the six months to 30 June 2010, a summary of net assets as at 30 June 2010 and a schedule of the fifty largest investments as at 30 June 2010 are attached.

By order of the Board

ABERDEEN ASSET MANAGEMENT PLC, SECRETARY

5 August 2010

The Half Yearly Report will be printed and issued to shareholders and further copies will be available to the public at the registered office of the Company, 40 Princes Street, Edinburgh EH2 2BY and on the Company's web site www.murray-intl.co.uk.

SUMMARY OF INVESTMENT CHANGES

SUMMARY OF NET ASSETS

 

INVESTMENT PORTFOLIO

AS AT 30 JUNE 2010