Annual Financial Report Announcement

RNS Number : 9631B

Murray International Trust PLC

11 March 2014

MURRAY INTERNATIONAL TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2013

1. STRATEGIC REPORT - COMPANY SUMMARY AND FINANCIAL HIGHLIGHTS

The Company

Murray International Trust PLC (the "Company") is an investment trust traded on the London Stock Exchange and is a constituent of the FTSE Actuaries All-Share Index. Its Ordinary and B Ordinary shares are listed on the premium segment of the London Stock Exchange. Some 25,000 of its shareholders are private investors. Murray International Trust PLC offers the advantage of exposure to world markets. The Company is invested in a diversified portfolio of international equities and fixed income securities.

What is an Investment Trust?

Investment trusts are a way to make a single investment that gives you a share in a much larger portfolio. A type of collective investment, they let you spread your risk and access investment opportunities you might not find on your own.

Investment Objective

The primary aim of the Company is to achieve a total return greater than its benchmark by investing predominantly in equities worldwide. Within this objective the Manager will seek to increase the Company's revenues in order to maintain an above average dividend yield.

Company Benchmark

The Company's benchmark is a composite index comprising 40% of the FTSE World UK Index and 60% of the FTSE World ex-UK Index.

Manager

The Company is managed by Aberdeen Asset Managers Limited ("AAM" or the "Manager").

Website

Up-to-date information can be found on the Company's website - www.murray-intl.co.uk

Financial Highlights

	2013	2012
Net asset value per Ordinary and B Ordinary share total return	+4.6%	+14.0%
Share price total return	+4.1%	+19.0%
Benchmark total return	+21.2%	+11.4%
Net asset value performance against the benchmark total return	-16.6%	+2.6%
Earnings per share (revenue)	43.8p	39.8p
Dividends per share{A}	43.0p	40.5p
{A} The proposed final dividend of 14.5p per Ordinary share is subject to shareholder approval at the Annual General Meeting.

2. STRATEGIC REPORT - OVERVIEW OF STRATEGY

Aim

The business of the Company is that of an investment trust and the Directors do not envisage any change in this activity in the foreseeable future. The Company's overall objective and key results are shown on above. A review of the Company's activities is given in the Chairman's Statement and the Manager's Review. The review includes an analysis of the business of the Company and its principal activities, likely future developments of the business, the recommended dividend and details of any acquisition of its own shares by the Company.

Business Model - Investment Policy

Asset Allocation

The Company's assets are invested in a diversified portfolio of international equities and fixed income securities spread across a range of industries and economies. The Company's investment policy is flexible and it may, from time to time, hold other securities including (but not limited to) index-linked securities, convertible securities, preference shares, unlisted securities, depositary receipts and other equity-related securities. The Company may invest in derivatives for the purposes of efficient portfolio management. The Company's investment policy does not impose any geographical, sectoral or industrial constraints upon the Manager.

It is the investment policy of the Company to invest no more than 15% of its gross assets in other listed investment companies (including listed investment trusts) at the time of purchase. The Company currently does not have any investments in other investment companies.

Risk Diversification

The Manager actively monitors the Company's portfolio and attempts to mitigate risk primarily through diversification. The Company is permitted to invest up to 15% of its investments by value in any single stock (at the time of purchase).

Gearing

The Board considers that returns to shareholders can be enhanced by the judicious use of borrowing. The Board is responsible for the level of gearing in the Company and reviews the position on a regular basis. Any borrowing, except for short-term liquidity purposes, is used for investment purposes or to fund the purchase of the Company's own shares. Total gearing is not in normal circumstances to exceed 30% of Net Assets with cash deposits netted against the level of borrowings. At the year end there was net gearing of 15.1% (calculated in accordance with AIC guidance) and particular care is taken to ensure that any bank covenants permit maximum flexibility of investment policy.

Changes to Investment Policy

Any material change to the investment policy will require the approval of the shareholders by way of an ordinary resolution at a general meeting. The Company will promptly issue an announcement to inform the shareholders and the public of any change of its investment policy.

Delivering the Investment Policy

Day to day management of the Company's assets has been delegated to Aberdeen Asset Managers Limited ("AAM" or the "Manager"). The Manager invests in a diversified range of international companies in accordance with the investment objective.

The investment manager, Bruce Stout, has responsibility for portfolio construction across all regional segments. The Manager utilises a "Global Equity Buy List" which is constructed by each of the specialist country management teams. This list contains all buy (and hold) recommendations for each management team, which are then used as the investment universe. Stock selection is the major source of added value.

Top-down investment factors are secondary in the Manager's portfolio construction, with stock diversification rather than formal controls guiding stock and sector weights. Market capitalisation is not a primary concern.

A detailed description of the investment process and risk controls employed by the Manager is disclosed in the Annual Report. A comprehensive analysis of the Company's portfolio is disclosed below including a description of the twenty largest investments, the portfolio of investments by value, attribution analysis, distribution of investments and distribution of equity investments.

At the year end the Company's portfolio consisted of 50 equity and 10 bond holdings. The Manager is authorised by the Board to hold between 50 and 150 stocks in the portfolio.

Principal Risks and Uncertainties

The Board has adopted a matrix of the key risks that affect the business. The major financial risks associated with the Company are detailed in note 19 to the Financial Statements and the other principal risks are summarised below. Further detail on the Principal Risks and Uncertainties is provided in the Company's Prospectus dated 21 December 2010 which is available on the website at www.murray-intl.co.uk/doc.nsf/Lit/ProspectusUKClosedMINT.

Details of the management of the risks and the Company's internal controls are disclosed in the Annual Report.

The Shares

The market value of, and the income derived from, the shares can fluctuate and, notwithstanding the Board's discount and premium control policy, may not always reflect the Net Asset Value per share. There can be no guarantee that any appreciation in the value of the Company's investments will occur and investors may not get back the full value of their investment. No assurance can be given that any sale of the Company's investments would realise proceeds which would be sufficient to repay any borrowings or provide funds for any capital repayment to shareholders. Shareholders will bear the rewards and risks of the success or otherwise of the Company's investments.

The market value of the shares, as well as being affected by their Net Asset Value, also takes into account their dividend yield and prevailing interest rates, supply and demand for the shares, market conditions and general investor sentiment.

Borrowings

The Company uses borrowings for investment purposes. Whilst the use of borrowings should enhance the total return on the shares where the return on the Company's underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the underlying return is falling, further reducing the total return on the shares. As a result, the use of borrowings by the Company may increase the volatility of the Net Asset Value and market price per share.

There is no guarantee that any borrowings of the Company would be refinanced on their maturity either at all or on terms that are acceptable to the Company.

Foreign Currency Risks

The Company's investments are principally in overseas securities. The Company accounts for its activities and reports its results in pounds sterling. The Company currently hedges most of the foreign currency exposure in respect of the liabilities attached to its borrowings. Where the Company does not hedge its currency exposure, which is currently the case with the investment portfolio, the movement of exchange rates may have a favourable or unfavourable effect on the gains and losses experienced on investments and the income derived from investments which are made or realised in currencies other than pounds sterling.

Discount and Premium Control Policy

The Company operates a discount and premium control policy. The operation of the discount control element of this policy could lead to a significant reduction in the size of the Company over time, which would increase the Company's total expense ratio and prejudice the ability of the Company to pay satisfactory levels of dividend to shareholders. While the Company intends to issue new shares and to resell shares held in treasury at a small premium to the Net Asset Value per share where demand exceeds supply, this will be dependent upon the Company being able to issue new shares and to resell shares held in treasury at a premium, on market conditions generally at the relevant time, upon shareholders in general meeting conferring appropriate authorities on the Board to issue further shares and, where required under the Prospectus Rules, upon a prospectus having been approved by the Financial Conduct Authority and published. The ability of the Company to operate the discount control policy will depend on the Company being able to purchase its own shares, which will be dependent upon shareholders in general meeting conferring authority on the Board to purchase its own shares. The Directors will seek renewal of this authority from shareholders annually and at other times should this prove necessary. However, there can be no guarantee that requisite shareholder approvals will be obtained.

In accordance with the Listing Rules, the extent of each buy-back authority which will be sought by the Company from shareholders in general meeting will be limited to 14.99% of the Company's issued share capital as at the date on which such authority is granted. In order to continue purchasing its own shares once any such authority has been exhausted, the Company would be required to seek a renewal of such authority from shareholders in general meeting.

The ability of the Company to purchase its own shares will be subject to the Companies Act 2006 and all other applicable legislation, rules and regulations of any government, regulatory body or market applicable to the Directors or the Company and, in particular, will be dependent on the availability of distributable reserves.

Regulatory Risks

Cessation of Investment Trust Status: The Company attempts to conduct its business so as to satisfy the conditions for approval as an investment trust under Part 24 Chapter 4 of the Corporation Tax Act 2010. In respect of each accounting period for which approval is granted, the Company will be exempt from United Kingdom taxation on its capital gains. Any breach of the tests that a company must meet to obtain approval as an investment trust company could lead to the Company being subject to tax on capital gains.

Tax and Accounting: Any change in the Company's tax status or in taxation legislation or accounting practice could affect the value of the investments held by the Company, affect the Company's ability to provide returns to shareholders or alter the post-tax returns to shareholders. Representations in this document concerning the taxation of investors are based upon current tax law and practice which are subject to change. Any change in accounting standards may adversely affect the value of the Company's assets in its books of account or restrict the ability of the Company to pay dividends.

The Alternative Investment Fund Managers Directive: The Directive will be fully implemented in the UK by July 2014 although the Treasury is intending to amend the supporting Regulations to provide that, if a transitional AIFM's application for authorisation or registration is submitted without sufficient time for the FCA to determine the application by 22 July 2014 (the end of the transitional year), that AIFM will be able to continue managing Alternative Investment Funds until the FCA has determined the application. The Directive has significant consequences for the Company (and all similar investment companies) which will increase compliance and regulatory costs. The Directive may be subject to further implementation guidance, and the Board will continue to monitor the progress and likely implications of the Directive.

Referendum on Scottish Independence

The Company is registered in Scotland and the Board is mindful that there is uncertainty arising in relation to the referendum on Scottish independence due on 18 September 2014. The Board considers that a 'Yes' vote, in favour of independence, may prolong this uncertainty until implications for the Company, positive or negative, of an independent Scotland are understood and quantified in relation to the legislative and regulatory environment in which the Company operates.

Other Risks

Other risks, in addition to the principal ones outlined above include those associated with:

Dividend Payments by the Company

Investment Objective and Strategy

Debt Instruments

Market Price Risk

Charges to Capital

Reliance upon the Manager and Other Third Party Service Providers

Fluctuations in Operating Results

Key Performance Indicators (KPIs)

At each Board meeting, the Directors consider a number of performance measures to assess the Company's success in achieving its objectives. Below are the main KPIs which have been identified by the Board for determining the progress of the Company:

Net Asset Value

Share Price

Discount/Premium

Benchmark

Dividend

Level of Gearing

A record of these measures is disclosed under Financial Highlights below.

Board Diversity

The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge in order to allow the Board to fulfil its obligations. At 31 December 2013, there were four male Directors and two female Directors. The Company has no employees. The Board's statement on diversity is set out in the Annual Report.

Environmental, Social and Human Rights Issues

The Company has no employees as it is managed by Aberdeen Asset Managers Limited. There are therefore no disclosures to be made in respect of employees. The Company's socially responsible investment policy is outlined in the Annual Report.

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from the operations of its business, nor does it have responsibility for any other emission producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

Duration

The Company does not have a fixed life.

Kevin Carter

Chairman

10 March 2014

3. CHAIRMAN'S STATEMENT

Highlights

· Net Asset Value return with income reinvested of 4.6%

· Benchmark Total Return of 21.2%

· Total Ordinary dividend increased by 6.2% compared with 2012

· £43m of new shares issued at a premium during the year

Performance

At the beginning of 2013 conservative expectations would have been satisfied by a prospective increase of 4.6% in net asset value total return plus a 6.2% increase in a fully covered dividend. In the event this was achieved. Unfortunately, however, this represented the Trust's largest annual relative underperformance against its benchmark for a very long time. Exceptional returns from low yielding markets such as the United States and Japan, to which the Trust is underexposed, drove the composite benchmark higher, whilst overexposure to out of favour regions such as Latin America and Asia adversely affected relative performance. The Manager's Review contains an attribution analysis which shows the factors affecting net asset performance. Outwith the positives of preserving capital and growing the dividend, contributions from asset allocation and stock selection were mostly negative on total relative performance. The underperformance against the benchmark resulted in the Company clawing back £5.3 million of previously earned but unpaid performance fees in accordance with the terms of the management agreement.

Background

Monetary policy in the US and the UK saw no change to abnormally low short term interest rates and ongoing bond purchases by central banks through quantitative easing programmes. Japan also embraced this formula and the European Central Bank indicated its willingness to join in as the year progressed. Faced with this environment, and with real returns not available on cash, stock markets rose. Ignoring still fragile economic fundamentals in most of the developed world, liquidity found its way into perceived safe haven equity markets such as the United States, the UK and Europe. Equity multiples increased and dividend yields fell as positive sentiment proved a dominant force. Even the prospect of reduced monetary stimulus in the United States was not enough to dent these hopeful expectations. Setbacks occurred, but were not sustained for long. An about turn in sentiment towards emerging markets also featured prominently as investors judged that any reduction in US monetary stimulus would cause an outflow of capital from these markets. This became self-fulfilling as emerging market currencies and capital markets experienced material declines. The Trust was caught in the crossfire of this large change in sentiment, even though the basic long-term fundamentals for these markets remain sound. Rising real income growth, abundant resources of natural materials and numerous growth opportunities were increasingly ignored by all but committed long term investors. In its desire for long-term balanced, diversified exposure to fulfil its investment objectives, the Trust therefore experienced a painful period of relative performance. The portfolio remained focused on quality and the Manager kept alert to valuation levels. Given current uncertainties maintaining investment discipline is all important.

Dividends

We have been able to continue the trend of increasing the level of dividends paid and three interim dividends of 9.5p were declared (2012: three interims of 9.0p). Your Board is now recommending a final dividend of 14.5p (2012: 13.5p) which, subject to the approval of shareholders at the Annual General Meeting, will be paid on 16 May 2014 to shareholders on the register on 4 April 2014. Subject to the approval of the final dividend, the total Ordinary dividend for the year will amount to 43.0p, an increase of 6.2% from last year (2012: 40.5p). B Ordinary shares will 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 16 May 2014 with new B Ordinary shares equivalent in Net Asset Value to the recommended final dividend for the year just ended.

Issue of New Shares

At the Annual General Meeting held in April 2013 shareholders renewed the annual authority to issue up to 10% 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 we have continued to see a strong demand for the Company's shares resulting in the issue of 3.8 million new Ordinary shares. These new shares were issued predominantly in the first half of the year which helped to minimise the effect of revenue dilution. The Board will be seeking approval from shareholders to renew the authority to issue new shares for cash in 2014 and as in previous years, to avoid diluting the asset value of existing shareholders, new shares will only be issued at a premium to net asset value. Resolutions to this effect will be proposed at the Annual General Meeting and the Directors strongly encourage shareholders to support this proposal. Subsequent to the period end, the Ordinary shares have continued to trade at a premium to NAV per share albeit at a reduced level. At the time of writing the inclusive of income NAV per share was 949.45p and the share price was 995.0p equating to a premium of 4.8% per share.

Gearing

At the year end total borrowings amounted to the equivalent of £190.8 million representing net gearing of 15.1% (2012: 10.1%) of which approximately £70.7 million has been drawn in Yen with the remainder drawn in sterling. During the year the Company negotiated two new £60 million facilities with the Royal Bank of Scotland ("RBS") which were both drawn in full and fixed for five years. At the same time two maturing Yen loans totalling Yen 8.2 billion were repaid. Subsequent to the period end a new £15 million facility has been agreed with RBS and drawn in full, fixed for just over two years. The new facility was used to repay a maturing Yen 2.3 billion loan with surplus funds invested in the portfolio. At the year end the proportion of net assets invested in equities was 106% (2012 - 104%).

Alternative Investment Fund Managers Directive

Shareholders will be aware of the Alternative Investment Fund Managers Directive (the "AIFMD"), which creates a European-wide framework for regulating managers of alternative investment funds ("AIF"s). Listed investment companies such as Murray International Trust fall within the definition of an AIF. The AIFMD is intended to reduce systemic risk created by the financial sector and aims to improve regulation, enhance transparency and investor protection, develop a single EU market for AIFs and implement effective mechanisms for micro- and macro-prudential oversight. The AIFMD came into force in July 2013 but a transitional period means that investment companies have until July 2014 to comply with the relevant regulations. Your Board has agreed in principle to appoint a subsidiary of Aberdeen Asset Management PLC to act as the Company's AIFM and is currently in the process of finalising the appointment of a Depositary as well as revising the investment management agreement, both consequences of implementing the AIFMD.

Scottish Independence

On 18 September this year voters in Scotland will be asked the question "Should Scotland be an independent country?" in a referendum. In the event of a majority "Yes" vote Scotland would be likely to secede from the United Kingdom some time in 2016. As the Trust is registered in Scotland, the Board has been considering the implications that this might have for the Company. Among matters of significance to the Company would be currency arrangements, financial regulation and the tax regime of an independent Scotland. The Board is continuing to monitor developments closely but considers that it is too early to prejudge the outcome of a vote, or of any subsequent negotiations as they may affect the Trust and its shareholders.

Annual General Meeting

This year's Annual General Meeting will be held in London on 29 April 2014 at 12.30 p.m. at the Mermaid Conference Centre, Puddle Dock, London EC4V 3DB. 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. I hope as many as possible will be able to attend.

Directorate

Fred Shedden has indicated that he intends to retire from the Board at the conclusion of the Annual General Meeting on 29 April 2014. Fred joined the Board in 2000 and has served the Company in exemplary fashion as both Senior Independent Director and as Chairman of the Audit Committee. I would like to join with my fellow Directors in thanking Fred for his wise counsel and support, and for the contribution that he has made to the smooth and effective running of the Board since 2000.

In advance of Fred's retirement, Marcia Campbell has now assumed the role of Audit Committee Chairman and I am pleased to advise that Lady Balfour has agreed to become Senior Independent Director with effect from Fred's retirement. Lady Balfour has served on the Board for more than nine years, but, as explained in the Statement of Corporate Governance, the Board considers all Directors to be independent of the Manager and her broad experience on the Company's Board and elsewhere makes her ideally suited for the role of Senior Independent Director.

The Board via the Nomination Committee is searching for a new independent non executive Director and has engaged the services of an independent recruitment consultant to assist in this process.

Outlook

At any point in time, the level of share prices is governed by an interplay between economic and company fundamentals, and investor sentiment. Reflecting on the past year, sentiment has played an unusually large role in the relative pricing of currencies and assets in developed and developing countries. This is neither new nor unprecedented in the behavioural science of investment, but it nevertheless presented a tough environment for the Trust to negotiate. As central banks attempt to reduce excessive monetary stimulus, steer a path between economic recovery or recession and encourage fiscal prudence, sentiment changes will likely continue to feature prominently. The gap between positive perceptions of the developed world and negative views of developing nations has seldom been as great, even while the reality of long-term fundamentals suggests a very different picture. This will give rise to investment opportunities for those able to practise true global diversification and Murray International's flexible mandate will allow it to seek out such opportunities in the year ahead.

Kevin Carter

Chairman

10 March 2014

4. MANAGER'S REVIEW

Background

"Money; made round to go round and made flat to pile up." Such a definition of the global financial system is unlikely to be found in any economic textbook but it does concisely describe the two dominant influences on financial markets throughout 2013, namely credit and savings. Under rational circumstances, credit lubricates the wheels of international trade and commerce whilst savings provide fuel for investment and efficient allocation of capital. In the distorted economic climate that prevailed over the past twelve months, such economic orthodoxy was absent. Credit markets remained slaves to excessive balance sheet expansion by governments throughout the developed world. Printing presses pumped out ever-increasing quantities of banknotes, layering more debt on top of existing debt in desperate attempts to numb the pain of increasing economic austerity. Sovereign creditworthiness gripped the attention of investors and rating agencies alike, the former relentlessly divesting governments bonds, the latter taking a knife to credit quality status. For UK sovereign debt it marked an end to its coveted triple A status held since 1978. Seemingly oblivious to the dangers of deteriorating debt-dependent dynamics, equity investors positively salivated over excess liquidity sloshing about in the global financial system. Traditional judgements on valuation and risk accounted for little as funds were channelled into constantly rising stock markets. Conversely, prudent savers continued watching their wealth eroded by inflation, as effectively zero interest rates compelled banks to pay paltry nominal returns on deposit accounts. Compounding the misery for those of a thrifty disposition was a constant erosion of capital in bond markets. Sensing a distinct attitude change towards the unsustainable practice of quantitative easing, pension funds, Insurance companies and sovereign wealth funds joined the buying boycott of government treasuries. Central banks, becoming increasingly impotent to dictate the daily direction of fragile fixed income markets, watched with trepidation as bond yields spiked higher. History will show savers suffered some of the worst bond market losses for close to twenty years. Faced with such anaemic returns from cash and negative returns from bonds, savers increasingly capitulated to the seductive influences of equity markets. Convinced global economic growth was gathering momentum and prosperity would follow, equity investors overlooked the harsh realities of declining real incomes and disappointing corporate earnings. Hope, sentiment and liquidity triumphed over reality for the second consecutive year. In one further ironic twist, an enormous wave of negative sentiment towards emerging markets began to gather disciples. As if to justify excessive exuberance towards one asset class another had to be vilified. So it was with Latin America and Asia being on the receiving end of constant criticism and derision from the financial chattering classes. Consensus unequivocally concluded an imminent demise of emerging markets in a world of rising capital costs. Financial markets were in no mood to argue. The resulting depreciation in equity prices and currencies reflected this rising risk aversion but to suddenly write off the geographical custodians of fifty per cent of global GDP appeared somewhat extreme and premature, to say the least. Call it innate cynicism if you like, but such polarised extremes in sentiment are seldom accurate and rarely reflective of reality. Alas, such were the dominant influences on financial markets that fundamentals accounted for very little during the period under review.

In 2013, inspired by renewed optimism for developed markets and uninspiring expectations from alternative asset classes, investors poured money into equity markets. Regionally, North America recorded the largest gains in Sterling terms, led by 30% return from the US. Somewhat paradoxically this occurred without the support of corporate earnings growth as US companies struggled to deliver mid-single digit profit growth despite significant share buybacks. Japan also recorded spectacular equity market performance as investors reacted euphorically to political initiatives aimed at ending domestic deflation. Despite a brutal 24% decline in the Yen, a total return from the Tokyo stock market of 25% in Sterling terms was significant under the circumstances. The same could be said for Europe. Toiling under the economics of austerity with predominantly woeful business conditions, aggregate profitability of European companies actually fell over the period. Ironically this didn't deter equity speculators driving the European composite index up over 25% with lower quality financials leading the charge. Not to be outdone, the UK market managed to return close to 19%, slightly less than the composite benchmark but way in excess of long term averages. At the opposite end of the spectrum, widespread scepticism towards emerging markets constrained Asian returns to just 3% and sent Latin America 10% lower in Sterling terms. Solid earnings, dividend growth and robust trading statements offered little support against deflating confidence towards this asset class within the global financial community.

Performance

The Net Asset Value total return for the year to 31 December 2013 with net dividends reinvested was 4.6% compared with a return on the benchmark of 21.2%. A full attribution analysis is given in the annual Report which details the various influences on portfolio performance. In summary of the 1,580 basis points (before expenses) of performance below the benchmark, asset allocation deleted 1,190 basis points and stock selection deleted 390 basis points. Structural effects relating to the fixed income portfolio and gearing net of borrowing and hedging costs deleted a further 80 basis points of negative relative performance.

USA

Choosing to accentuate the positive has long been ingrained in the US psyche. In a year when politics and policy-debate dominated the economic backdrop, a constant flow of positive rhetoric was required to counteract the reality of lacklustre fundamentals. In this respect the US did not disappoint. The most prominent portrayals of such imaginative interpretations involved assessment of economic recovery and debt reduction. Desperate for evidence of economic stabilisation following five years of post credit crunch disruption, policymakers championed falling unemployment, rising consumer confidence and expanding GDP as evidence the US economy had turned the corner. In reality, underlying activity remained extremely fragile. Rising bond yields quickly extinguished signs of recovery in the housing market; real incomes across the country continued to contract; plus subdued revenue growth and margin pressure for corporate America curtailed capital spending and long-term investment decisions. In the presence of anaemic earnings growth eternal optimists extolled the virtues of stock buybacks, but at ever increasing valuations this was hardly in the best interests of existing shareholders. Such financial engineering of reported profits masked the weakness of underlying earnings growth, so much so that over 75% of equity market returns over the period were due to pure price/earnings multiple expansion. In essence higher prices were constantly paid for virtually no improvement in profits. Expectations soared as positive sentiment suppressed reality, not only with respect towards the economy and the equity market but also towards debt. Even the most myopic observer must surely have noticed the ever-expanding debt mountain that continued to haunt the outlook. Acknowledging that sovereign balance sheet expansion could not extend into perpetuity proved painful for US policymakers, but the public face of promoting an end to printing money was positively presented. The Federal Reserve proved adept at providing reassurance. Quantitative easing would gradually decline but only if economic activity kept expanding, only if unemployment kept falling and only if interest rates were kept lower for longer. Acceptance of such policy directives was grudgingly given by most equity investors but proved less than palatable for domestic fixed income markets. Consequently US bond markets suffered some of the worst annual returns for many years. With the drip feed of liquidity no longer favourable, corporate profits must now be delivered in the US if valuations are to be supported. Against this evolving backdrop of stuttering growth and deflationary debt dynamics there remains enormous scope for disappointment. Recent portfolio additions of communications company Verizon and leading global healthcare company Baxter International were introduced to maintain the high quality, defensive positioning of total exposure.

Living with lower expectations: perhaps reflecting more realistic expectations of economic developments, recent trends witnessed over the past year engendered a mood of cautious optimism. Common sense prevailed as consensus welcomed positive increases in production and service activity, but cautioned against excessive house price rises misallocating precious capital. Economic growth accelerated to its fastest pace in three years, a headline number welcomed by everyone except the bond market, but expectations remained in check. With the country still experiencing its slowest recovery in a century, having recouped less than two thirds of the output lost during the financial crisis, progress was solid but unspectacular. Thankfully persistent talk of "economic normalisation" and "back to trend growth" was absent from most informed comment. The possibility of UK GDP growing around 2% increasingly became accepted as a realistic pace of economic recovery, given deleveraging and deflationary headwinds that persist for consumers and companies alike. So far so good, but not all aspects of economic life succumbed to the evolving sense of realism. Policymakers continually paid lip-service to the dangers of boom-bust property cycles yet actively encouraged policy directives destined to ultimately distort prices. Lectures were preached on thrift, abstinence and austerity yet simultaneously the Bank of England kept printing bank notes causing further distress to the country's sovereign balance sheet. More worryingly, Britain's desire to become an internationally competitive exporter remained thwarted by relentless appreciation of Sterling. Consequently, the net trade deficit constrained growth whilst a ballooning current account deficit rekindled genuine fears over future financing. On balance, prevailing economic fundamentals marginally improved but rising bond yields left the heavily indebted mortgage owning UK public suffering disproportionately and increasingly weakened in terms of spending power. For an economy so dependent on consumption for growth this will pose a tough hurdle to negotiate in the coming year, especially once the stimulus of unsustainable monetary support is eventually withdrawn. Like most developed equity markets, UK equity returns proved excessive relative to evolving fundamentals so great caution is warranted. A new position in BHP Billiton, a leading international resource company, was established using capital recycled from more expensive investments elsewhere.

Europe

With the past four years of crisis witnessing financial bailouts of five European nations, policymakers continued to struggle with practical agendas as opposed to theoretical rhetoric. Economic dislocation remained rife throughout Europe as contagion between banks and sovereign debt periodically threatened to destabilise the financial system. Progress towards establishing a banking union persistently stalled as demands for national discretion repeatedly hindered the banking reform process. Strict rules across twenty seven countries was always an ambitious target given the enormous range of balance sheet exposures, liabilities and capital ratios that prevail. Powerful self-interest and reluctance to yield power ultimately ground the process to an effective halt. Less ambiguous and infinitely more transparent was the evolving state of the Eurozone economy. Regional growth flirted with recession throughout most of the year. The economics of austerity prevailed in most European countries, exerting further downward pressure on prices. Emphasising just how fearful the Authorities became over potential outright deflation, interest rates were cut to record lows. While the prospect of negative deposit rates were not welcomed by savers, the severity of Europe's debt-ridden fundamentals arguably gave the European Central Bank little choice. Plagued by record unemployment and rising levels of debt defaults, policy options rapidly ran out for Europe's decision makers. Within such a difficult and distorted economic landscape, the only real bright spot was Germany. Invigorated by being "pegged" to the globally competitive Euro, the German export sector went from strength to strength. As exports boomed the importance of the Eurozone to Germany was increasingly evident. Any threat to Euro currency sustainability clearly threatens future German prosperity suggesting vested interests will prevail in preserving the Eurozone as is. What this ultimately means for companies operating elsewhere across the demand-depressed continent is more difficult to predict. Revenue growth remains the greatest concern as gross margin contraction exerts enormous pressure to cut costs, employment, capital spending, research and development or whatever in pursuit of maintaining profitability. Current European portfolio holdings delivered solid operating results but tended to underperform market returns where more financially leveraged companies incurred most favour. Whilst disappointing from a relative short-term perspective, the emphasis on defensive high quality positions will be maintained.

Latin America

Hostage to constantly changing sentiment towards perceived risk assets, Latin American financial markets endured a torrid twelve months. Conventional logic decreed reduced monetary stimulus in the US must translate into higher borrowing costs for all capital dependent Emerging Market nations. Twenty years ago such intellectual reasoning was unequivocally accurate with widespread evidence of value destruction to support it. Fearful history would repeat itself, investors were quick to withdraw funds from Latin America. No one considered the enormous strides made by Mexico and Brazil over the intervening years to wean themselves off US Dollar debt. Overall sovereign debt levels less than half the bloated average of Developed nations counted for nothing. Nor did substantial domestic savings held in long duration domestic bonds, nor indeed significant foreign exchange reserves. As investors picked at the scab of the 1994 Tequila crisis, structural progress was ignored. Latin American currencies weakened in response, bond yields spiked sharply upwards and equity markets declined. Opinion rapidly polarised from previous plaudits over potential opportunity to persistent pessimism over past mistakes. Yet paradoxically economic trends remained essentially positive. Mexico delivered stable policies, controlled inflation, responsible government finances, respectable corporate profit growth and commitment to embrace pro-market reforms. Despite market weakness, Mexican portfolio exposure returned over 10% in Sterling terms with above average dividend growth enhancing total income accrued. In Brazil, the increasingly fractious Presidential leadership of Dilma Rouseff undoubtedly aggravated economic pressures caused by rising interest rates and relatively weak growth. Domestic spending and credit growth stayed subdued in line with Central Bank objectives, but negative international sentiment arguably reflected rising political uncertainty rather than structural economic hardship. A 32% decline in the value of the Real against Sterling over the past two years quantifies the magnitude of concern currently discounted in Brazilian assets. Against relative values and historical norms this appears excessive. Such extremes provided periodic opportunities to add to Vale, Bradesco and Petrobras, companies where long term growth prospects remain attractive.

Japan and Asia

The financial and economic landscape in Japan changed markedly over the period but not necessary for the better. All areas of society were influenced by the Bank of Japan's radical monetary stimulus. Headline statistics showed the largest yearly gain in Japanese equity prices in four decades with the Yen declining to its lowest level against the US Dollar in five years. Whilst Japanese shares finally got the world's attention, investors clinically examined the sustainability of the Great Reflation Plan. Dramatic currency depreciation immediately translated into rapid rises in food and energy costs. With prices escalating five times faster than wages, consumers' purchasing power and confidence were severely constrained. In the misguided pursuit of generating inflation the government appealed for companies to raise wages. Such calls, not surprisingly, fell on deaf ears. Faced with rising costs squeezing profitability there was no appetite within corporate Japan to stomach further competitive erosion through wage hikes. Structural rigidity also prevailed in financing terms as the demographically aging nation faced the mammoth task of funding a sovereign debt burden now more than twice the size of the economy and a deteriorating trade deficit. Adding to the potentially growth retardant impacts from an imminent consumption tax hike there can be no doubt systemic risk to the Japanese bond market has risen significantly. The safest place to observe evolving economic events in Japan is from the side-lines so current low exposure will be maintained.

Capital withdrawal and portfolio outflows constantly stoked demand for US dollars throughout the rest of Asia. Currency weakness was the dominant theme all year. As devaluations gathered momentum, inflationary pressures rose, with those countries particularly dependent on inelastic imports of food and energy worst affected. India and Indonesia fell into this category, suffering a miserable year of rising consumer prices and deteriorating current account deficits. Fear and uncertainty restricted economic activity, causing widespread cyclical slowdowns in growth throughout the region. South Korea, Thailand and Taiwan could only manage around three per cent growth rates, and Asian heavyweights India and China slowed to their lowest levels of growth for over a decade. Consequently Asian equity markets underperformed developed markets by the widest margin since 1998, the year of the Asian Crisis. Not only was this strange, and arguably excessive, fundamentals bore no resemblance to those prevailing fifteen years ago. Whilst history illustrates the folly of standing in the way of short term capital flows, it also illustrates longer term pricing anomalies that present attractive investment opportunities when such practices persist. That point is rapidly approaching. The portfolio remains focused on companies where earnings and dividend prospects are deemed robust regardless of the prevailing macro-economic backdrop. Further price and currency depreciation will be viewed as an opportunity to add further exposure to the Region should this materialise.

Conclusion

Hope springs eternal. There is nothing intrinsically wrong with investing in hope. Most decisions regarding the future involve an assessment of the unknown. The key to success requires matching expectations against reality thus minimising the scope for disappointment. In the world of financial investment it is no different. The previous twelve months witnessed an enormous amount of hope being invested in equity markets in expectation that numerous challenges will be conquered. Severely stretched valuations reflect belief that the developed world can successfully wean itself off its chronic dependency on printing money without threatening fragile economic recoveries: that savers continue subsidising the profligacy of governments and irresponsible bank-bailouts; that deflationary pressures abate enabling corporate profit margins to breathe again; and that earnings will be delivered in sufficient quantity to satisfy high expectations currently baked-in to equity prices. Any rational analysis of current economic conditions would suggest such hopes are very unlikely to be fulfilled. For a world recovering from the worst economic crisis since the Great Depression, progress will be slow. The enormous debt legacy remains deflationary by nature, constraining spending and investment alike. Essential debt reduction required across the board exerts a significant negative influence on growth and profitability. If the challenge twelve months ago was how to preserve capital in an environment of rising bond yields, the focus is now compounded by how to protect capital when earnings expectations remain too high. Protecting margins becomes of prime importance, so the portfolio will remain focused on those companies deemed well positioned to achieve this. Unfashionable as it may be, most value is still to be found in developing markets where earnings and dividend growth rates remain realistic. The focus on widespread global diversification to achieve capital and income objectives remains core to portfolio positioning.

Bruce Stout

Aberdeen Asset Managers Limited

Investment Manager

10 March 2014

5. DIRECTORS' REPORT

Introduction

The current Directors, K J Carter, J D Best, P W Dunscombe, A C Shedden, Lady Balfour of Burleigh and M Campbell held office throughout the year under review and were the only Directors who served during the year.

The Directors present their report and the audited financial statements for the year ended 31 December 2013.

The Company and its Objective

The Company is an investment trust and its Ordinary shares are listed on the premium segment of the London Stock Exchange. The primary aim of the Company is to achieve a total return greater than its benchmark by investing predominantly in equities worldwide. Within this objective the Manager will seek to increase the Company's revenues in order to maintain an above average dividend yield.

A review of the Company's activities is given in the Strategic Report. This includes the overall strategy of the business of the Company and its principal activities, main risks faced by the Company, likely future developments of the business, the recommended dividend and any details of acquisition of its own shares by the Company.

Status

The Company has been approved by HM Revenue & Customs ("HMRC") as an investment trust for the purposes of Sections 1158 - 1159 of the Corporation Tax Act 2010 ("Sections 1158 -1159") for the year ended 31 December 2012. During the year, the Company was approved by HMRC under Sections 1158-1159 and Part 2 Chapter 1 Statutory Instrument 2011/2999 for all financial years commencing on or after 1 January 2012, subject to the Company continuing to meet the relevant eligibility criteria.

The Directors are of the opinion that the Company has conducted its affairs for the year ended 31 December 2013 so as to be able to continue to obtain approval as an investment trust under Section 1158 of the Corporation Tax Act 2010 for that year.

The affairs of the Company were conducted in such a way as to satisfy the requirements as a qualifying security for Individual Savings Accounts. The Directors intend that the Company will continue to conduct its affairs in this manner in the future.

The Company is registered as a public limited company. The Company's registration number is SC014692. The Company has no employees and the Company makes no political donations.

Results and Dividends

The total gain attributable to equity shareholders for the year amounted to £52.2 million.

A final dividend for the year ended 31 December 2012 of 13.5p per Ordinary share was paid on 16 May 2013. Interim dividends of 9.5p each were paid on 16 August 2013, 15 November 2013 and 18 February 2014 making a total distribution to Ordinary shareholders of £52.2 million. The Directors are recommending a final dividend for the year ended 31 December 2013 of 14.5p per Ordinary share payable on 16 May 2014 to holders of Ordinary shares on the register at close of business on 4 April 2014.

Whenever a cash dividend is paid on the Ordinary shares, a bonus issue of B Ordinary shares is made to the holders of B Ordinary shares. In connection with the final dividend the Directors will make a corresponding capitalisation issue of B Ordinary shares credited as fully paid. This capitalisation issue will be equivalent in asset value to the final dividend now recommended on the Ordinary shares but excluding any tax credit thereon. Subject to the approval of shareholders of the final dividend, definitive certificates in respect of the capitalisation issue will be posted on 16 May 2014. Fractional entitlements will be sold for the benefit of B Ordinary shareholders. The new B Ordinary shares will rank equally with the existing B Ordinary shares.

Resolution No. 11 to approve the final dividend will be proposed at the Annual General Meeting.

The Net Asset Value per Ordinary and B Ordinary share at 31 December 2013 was 981.0p (2012 - 975.8p).

Management and Secretarial Arrangements

Investment management services are provided to the Company by Aberdeen Asset Managers Limited. Company secretarial, accounting and administrative services are provided by Aberdeen Asset Management PLC.

For the year ended 31 December 2013, the management and secretarial fees payable to the Manager were calculated and charged on the following basis:

· an investment management fee payable to the Manager, Aberdeen Asset Managers Limited, of 0.5% per annum of the value of total assets, less unlisted investments and all current liabilities excluding monies borrowed to finance the investment objectives of the Company, averaged over the six previous quarters. A fee of 1.5% per annum is charged on the value of unlisted investments. The investment management fee is chargeable 30% against revenue and 70% against realised capital reserves.

Included in the charge of 0.5% above is a secretarial fee of £100,000 per annum which is chargeable 100% to revenue.

In addition, the Manager is entitled to a performance fee on the following basis:

· a fee of 5% of the first 2% of any outperformance of the Company's net asset total return over that of its benchmark;

· a fee of 10% of any additional outperformance against the benchmark.

The total amount of the fee earned by the Manager in any one year (comprising the basic management fee and the performance fee) is capped at 0.8% of the average value of the Company's total assets less current liabilities. Any performance fee is paid in equal instalments over a four year period with any future underperformance offset against the fee payable.

No fees are charged in the case of investments managed or advised by Aberdeen Asset Management Group. The management agreement may be terminated by either party on the expiry of one year's written notice. On termination the Manager would be entitled to receive fees which would otherwise have been due up to that date.

The Board considers the continued appointment of the Manager on the terms agreed to be in the interests of the shareholders as a whole because the Aberdeen Asset Management Group has the investment management, secretarial, marketing and administrative skills required for the effective operation of the Company.

The Board has agreed in principle to appoint Aberdeen Fund Managers Limited ("AFML") as the Company's Alternative Investment Fund Manager ("AIFM"). AFML is the appropriately authorised entity within the Aberdeen Group in accordance with the AIFM Directive which came into force in July 2013. In general terms, the new management arrangements will be very similar to the existing arrangements with Aberdeen Asset Managers Limited albeit they have been updated to reflect current market practice and the regulatory requirements arising as a result of the Financial Services and Markets Act 2000 (as amended) and the AIFM Directive. It is expected that under the new management agreement the Company will appoint AFML as its AIFM to carry out, in particular, the functions of risk management and portfolio management.

Directors' & Officers' Insurance

The Company purchases and maintains liability insurance covering the Directors and officers of the Company. The Company's Articles of Association provide an indemnity to the Directors out of the assets of the Company against any liability incurred in defending proceedings or in connection with any application to the Court in which relief is granted.

Corporate Governance

The Statement of Corporate Governance contained in the Annual Report forms part of this Directors' Report and covers the Company's compliance with The UK Corporate Governance Code.

Going Concern

In accordance with the Financial Reporting Council's guidance on Going Concern and Liquidity Risk issued in October 2009 the Directors have undertaken a rigorous review of the Company's ability to continue as a going concern. The Company's assets consist of a diverse portfolio of listed equity shares and bonds which in most circumstances are realisable within a very short timescale.

The Directors are mindful of the principal risks and uncertainties disclosed in the Strategic Report and have reviewed forecasts detailing revenue and liabilities and the Directors believe that the Company has adequate financial resources to continue its operational existence for the foreseeable future and at least 12 months from the date of this Annual Report. Accordingly, the Directors continue to adopt the going concern basis in preparing these financial statements.

Accountability and Audit

Each Director confirms that, so far as he or she is aware, there is no relevant audit information of which the Company's auditor is unaware, and he or she has taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

Independent Auditor

During the year the Audit Committee conducted a tender for audit services. The Company's policy is to conduct a regular review of its audit arrangements and the last tender had taken place in 2004. Following a detailed and rigorous process involving large and medium-sized audit firms which culminated in presentations from the shortlisted firms, the Board, on the recommendation of the Audit Committee has resolved to recommend to shareholders the reappointment of Ernst & Young LLP at the forthcoming Annual General Meeting.

The auditor, Ernst & Young LLP, has expressed its willingness to continue in office. Resolution No. 9 to re-appoint Ernst & Young LLP as the Company's auditor will be put to the forthcoming Annual General Meeting, along with Resolution No. 10 to authorise the Directors to fix their remuneration. Details of fees relating to non-audit services are disclosed in the Annual Report.

Annual General Meeting

The Notice of Annual General Meeting is contained in the Annual Report.

Discount Management Policy and Special Business at Annual General Meeting

Share Buybacks

At the Annual General Meeting held on 11 April 2013, shareholders approved the renewal of the authority permitting the Company to repurchase its Ordinary shares.

The Directors wish to renew the authority given by shareholders at the previous Annual General Meeting. The principal aim of a share buyback facility is to enhance shareholder value by acquiring shares at a discount to Net Asset Value, as and when the Directors consider this to be appropriate. The purchase of shares, when they are trading at a discount to Net Asset Value per share, should result in an increase in the Net Asset Value per share for the remaining shareholders. This authority, if conferred, will only be exercised if to do so would result in an increase in the Net Asset Value per share for the remaining shareholders and if it is in the best interests of shareholders generally. Any purchase of shares will be made within guidelines established from time to time by the Board. It is proposed to seek shareholder authority to renew this facility for another year at the Annual General Meeting.

Under the Listing Rules, the maximum price that may be paid on the exercise of this authority must not be more than the higher of (i) an amount equal to 105% of the average of the middle market quotations for a share taken from the London Stock Exchange Daily Official List for the 5 business days immediately preceding the day on which the share is purchased; and (ii) the higher of the last independent trade and the current highest independent bid on the trading venue where the purchase is carried out. The minimum price which may be paid is 25p per share.

It is currently proposed that any purchase of shares by the Company will be made from the capital reserve of the Company. The purchase price will normally be paid out of the cash balances held by the Company from time to time.

Special Resolution No. 14 will permit the Company to buy back shares and to hold the shares bought back as treasury shares rather than cancel them immediately. The benefit of the ability to hold treasury shares is that such shares may be resold. This should give the Company greater flexibility in managing its share capital and improve liquidity in its shares. The Company would only sell on treasury shares at a premium to net asset value. When shares are held in treasury, all voting rights are suspended and no distribution (either by way of dividend or by way of a winding up) is permitted in respect of treasury shares. If the Directors believe that there is no likelihood of re-selling shares bought back, such shares would be cancelled.

Special Resolution No. 14 in the Notice of Annual General Meeting will renew the authority to purchase in the market a maximum of 14.99% of shares in issue at the date of the Annual General Meeting (amounting to 18,772,907 Ordinary shares and 141,578 B Ordinary shares as at 10 March 2014). Such authority will expire on the date of the 2015 Annual General Meeting or on 30 June 2015, whichever is earlier. This means in effect that the authority will have to be renewed at the next Annual General Meeting or earlier if the authority has been exhausted.

During the year ended 31 December 2013 and up to the date of this Report no share repurchases have taken place.

Issue of Shares

In terms of the Companies Act 2006 (the "Act") the Directors may not allot unissued shares unless so authorised by the shareholders. Resolution No. 12 in the Notice of Annual General Meeting which will be proposed as an Ordinary Resolution will, if passed, give the Directors the necessary authority to allot the unissued share capital up to an aggregate nominal amount of £3,154,517 (equivalent to 12,523,620 Ordinary shares and 94,448 B Ordinary shares or 10% of the Company's existing issued share capital at 10 March 2014), the latest practicable date prior to the publication of this Annual Report. Such authority will expire on the date of the next Annual General Meeting or on 30 June 2015, whichever is earlier. This means that the authority will have to be renewed at the next Annual General Meeting.

When shares are to be allotted for cash, Section 561 of the Companies Act 2006 provides that existing shareholders have pre-emption rights and that the new shares must be offered first to such shareholders in proportion to their existing holding of shares. However, shareholders can, by special resolution, authorise the Directors to allot shares otherwise than by a pro rata issue to existing shareholders. Special Resolution No. 13 will, if passed, also give the Directors power to allot for cash equity securities up to an aggregate nominal amount of £3,154,517 (equivalent to 12,523,620 Ordinary shares and 94,448 B Ordinary shares or 10% of the Company's existing issued share capital at 10 March 2014), the latest practicable date prior to the publication of this Annual Report, as if Section 561 of the Companies Act 2006 does not apply. This is the same nominal amount of share capital which the Directors are seeking the authority to allot pursuant to Resolution No. 12. This authority will also expire on the date of the 2015 Annual General Meeting or on 30 June 2015, whichever is earlier. This authority will not be used in connection with a rights issue by the Company.

The Directors intend to use the authority given by Resolutions No. 12 and 13 to allot shares and disapply pre-emption rights only in circumstances where this will be clearly beneficial to shareholders as a whole. Accordingly, issues will only be made where shares can be issued at a premium of 0.5% or more to Net Asset Value. At present, shares are available under the savings plans operated by the Manager. In circumstances where the share price of the Company stands at a premium of 0.5% or more to Net Asset Value, it may be advantageous for the Company to allot new shares directly to participants in the savings plans or to other prospective purchasers. Such issues would only be made at prices greater than Net Asset Value, and would involve no dilution for existing shareholders. The issue proceeds would be available for investment in line with the Company's investment policy. No issue of shares will be made which would effectively alter the control of the Company without the prior approval of shareholders in general meeting. Resolution No. 13 will also disapply pre-emption rights on the sale of treasury shares as envisaged above. Once again, the pre-emption rights would only be disapplied where the treasury shares are sold at a premium to Net Asset Value of not less than 0.5%.

Recommendation

The Directors consider that the authorities granted above are in the best interests of the shareholders taken as a whole and recommend that all shareholders vote in favour of the resolutions, as the Directors intend to in respect of their own beneficial holdings of Ordinary shares amounting in aggregate to 87,716 shares, representing approximately 0.07% of the Company's issued share capital as at 10 March 2014.

Additional Information

The following further information is disclosed in accordance with the Companies Act 2006 and DTR 7.2.6:

- The Company's capital structure and voting rights are summarised in note 14;

- Details of the substantial shareholders in the Company are listed in the Annual Report;

- The rules concerning the appointment and replacement of Directors are contained in the Company's Articles of Association and are summarised in the annual Report;

- Amendment of the Company's Articles of Association and powers to issue or buy back the Company's shares requires a special resolution to be passed by shareholders;

- There are: no restrictions concerning the transfer of securities in the Company; no special rights with regard to control attached to securities; no agreements between holders of securities regarding their transfer known to the Company; no agreements which the Company is party to that might affect its control following a takeover bid;

- There are no agreements between the Company and its Directors concerning compensation for loss of office.

By order of the Board of Murray International Trust PLC

Aberdeen Asset Management PLC

Secretary

40 Princes Street,

Edinburgh EH2 2BY

10 March 2014

6. STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Directors' Report 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they 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 accounting 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 adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of 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.

Each of the Directors confirms that to the best of his or her knowledge:

· the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

· the Strategic Report and Directors' Report include 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; and

· that in the opinion of the Board, the Annual Report and Accounts taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Company's performance, business model and strategy.

For Murray International Trust PLC

Kevin Carter

Chairman

10 March 2014

7. INCOME STATEMENT

For the year ended 31 December 2013

		Year ended 31 December 2013			Year ended 31 December 2012
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments	10	-	150	150	-	101,381	101,381
Income	2	63,717	-	63,717	55,141	-	55,141
Investment management fees	3	(2,038)	(4,756)	(6,794)	(1,763)	(4,116)	(5,879)
Performance fees	4	-	5,336	5,336	-	(3,246)	(3,246)
Currency (losses)/gains	18	-	(411)	(411)	-	692	692
Other expenses	5	(1,964)	-	(1,964)	(1,944)	-	(1,944)
		_______	_______	_______	_______	_______	_______
Net return before finance costs and taxation		59,715	319	60,034	51,434	94,711	146,145

Finance costs	6	(1,384)	(3,229)	(4,613)	(1,246)	(2,911)	(4,157)
		_______	_______	_______	_______	_______	_______
Return on ordinary activities before tax		58,331	(2,910)	55,421	50,188	91,800	141,988

Tax on ordinary activities	7	(3,514)	310	(3,204)	(3,532)	382	(3,150)
		_______	_______	_______	_______	_______	_______
Return attributable to equity shareholders		54,817	(2,600)	52,217	46,656	92,182	138,838
		_______	_______	_______	_______	_______	_______

Return per Ordinary share assuming full conversion of the B Ordinary shares (pence)	9	43.8	(2.1)	41.7	39.8	78.5	118.3
		_______	_______	_______	_______	_______	_______

The total column of this statement represents the profit and loss account of the Company. The 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies.
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.

		£'000	£'000	£'000	£'000	£'000	£'000
Ordinary dividends on equity shares	8	51,328	-	51,328	44,911	-	44,911
		_______	_______	_______	_______	_______	_______

The above dividend information does not form part of the Income Statement.

8. BALANCE SHEET

As at 31 December 2013

		As at		As at
		31 December 2013		31 December 2012
	Notes	£'000	£'000	£'000	£'000
Non-current assets
Investments listed at fair value through profit or loss	10		1,421,277		1,327,532

Current assets
Debtors	11	6,827		5,169
Cash and short term deposits		4,535		25,940
		_______		_______
		11,362		31,109
		_______		_______

Creditors: amounts falling due within one year
Bank loans	12/13	(13,212)		(58,525)
Other creditors	12	(5,114)		(14,873)
		_______		_______
		(18,326)		(73,398)
Net current liabilities			(6,964)		(42,289)
			_______		_______
Total assets less current liabilities			1,414,313		1,285,243

Creditors: amounts falling due after more than one year
Bank loans and Debentures	12/13	(177,595)		(87,664)
Other creditors	12	-		(5,336)
		_______		_______
			(177,595)		(93,000)
			_______		_______
Net assets			1,236,718		1,192,243
			_______		_______

Capital and reserves
Called-up share capital	14		31,516		30,546
Share premium account			324,866		282,240
Capital redemption reserve			8,230		8,230
Capital reserve	15		803,986		806,596
Revenue reserve			68,120		64,631
			_______		_______
Equity shareholders' funds			1,236,718		1,192,243
			_______		_______

Net Asset Value per Ordinary and B Ordinary share (pence)	16		981.0		975.8
			_______		_______

9 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

For the year ended 31 December 2013
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2012		30,546	282,240	8,230	806,596	64,631	1,192,243
Return on ordinary activities after taxation		-	-	-	(2,600)	54,817	52,217
Dividends paid	8	-	-	-	-	(51,328)	(51,328)
Issue of new shares		970	42,626	-	(10)	-	43,586
		_______	______	______	_______	______	_______
Balance at 31 December 2013		31,516	324,866	8,230	803,986	68,120	1,236,718
		_______	______	______	_______	______	_______

For the year ended 31 December 2012
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2011		28,000	185,712	8,230	714,424	62,886	999,252
Return on ordinary activities after taxation		-	-	-	92,182	46,656	138,838
Dividends paid	8	-	-	-	-	(44,911)	(44,911)
Issue of new shares		2,546	96,528	-	(10)	-	99,064
		_______	______	______	_______	______	_______
Balance at 31 December 2012		30,546	282,240	8,230	806,596	64,631	1,192,243
		_______	______	______	_______	______	_______

The revenue reserve represents the amount of the Company's reserves distributable by way of dividend.
The accompanying notes are an integral part of these financial statements.

10 CASH FLOW STATEMENT

For the year ended 31 December 2013

		Year ended		Year ended
		31 December 2013		31 December 2012
	Notes	£'000	£'000	£'000	£'000
Net cash inflow from operating activities	17		45,916		42,571

Returns on investments and servicing of finance
Interest paid		(4,435)		(4,233)
		________		________
Net cash outflow from servicing of finance			(4,435)		(4,233)

Financial investment
Purchases of investments		(224,593)		(162,382)
Sales of investments		131,949		77,474
		________		________
Net cash outflow from financial investment			(92,644)		(84,908)

Equity dividends paid	8		(51,328)		(44,911)
			________		________
Net cash outflow before financing			(102,491)		(91,481)

Financing
Share issue	14	43,586		99,064
Loan drawdown		53,924		-
		________		________
Net cash inflow from financing			97,510		99,064
			________		________
(Decrease)/increase in cash	18		(4,981)		7,583
			________		________

11 NOTES TO THE FINANCIAL STATEMENTS

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 and Venture Capital Trusts'. 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 treated as a capital item in the Income Statement and ultimately recognised in the capital reserve 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% to revenue and 70% to the capital reserve to reflect the Company's investment policy and prospective income and capital growth. The performance fee has been charged 100% to the capital reserve, 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 treated in net profit or loss for the period as a capital item in the Income Statement and are ultimately recognised in the 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 accounted for on an accruals basis using the effective interest rate method and are charged 30% to revenue and 70% to capital in the Income Statement 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 rates of exchange at the year end. Differences arising from translation are treated as a 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 based on an appropriate model. 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.

		2013	2012
2.	Income	£'000	£'000
	Income from investments:
	UK dividends	8,864	7,721
	UK unfranked investment income	703	1,025
	Overseas dividends	48,389	41,477
	Overseas interest	5,756	4,913
		___________	___________
		63,712	55,136
		___________	___________

	Interest:
	Deposit interest	5	5
		___________	___________
	Total income	63,717	55,141
		___________	___________

		2013	2012
	Income from investments comprises:	£'000	£'000
	Listed UK	9,567	8,746
	Listed overseas	54,145	46,390
		___________	___________
		63,712	55,136
		___________	___________

		2013			2012
		Revenue	Capital	Total	Revenue	Capital	Total
3.	Investment management fees	£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fees	2,038	4,756	6,794	1,763	4,116	5,879
		_______	_______	______	_______	_______	_______

	Details of the fee basis are contained in the Directors' Report.

		2013			2012
		Revenue	Capital	Total	Revenue	Capital	Total
4.	Performance fees	£'000	£'000	£'000	£'000	£'000	£'000
	Performance fees	-	(5,336)	(5,336)	-	3,246	3,246
		_______	_______	_____	_______	_______	_______

	Details of the fee basis are contained in the Annual Report. Due to underperformance against the Company's benchmark during the year, a claw-back of previously earned but unpaid performance fees of £5,336,000 was triggered under the terms of the performance fee agreement.

		2013	2012
5.	Other expenses	£'000	£'000
	Shareholders' services{A}	755	757
	Directors' remuneration	155	148
	Irrecoverable VAT	52	67
	Secretarial fees	100	100
	Auditor's fees for:
	- Statutory audit	23	23
	- Other assurance services	8	7
	- Tax compliance	9	19
	Administrative expenses{B}	862	823
		_______	_______
		1,964	1,944
		_______	_______

	{A} Includes registration, savings scheme and other wrapper administration and promotion expenses, of which £558,000 (2012 - £579,000) was payable to Aberdeen Asset Managers Limited (AAM) to cover marketing activities during the year. At the year end £122,000 (2012 - £145,000) was due to AAM.
	{B} Includes bank charges and custody fees of £477,000 (2012 - £462,000), stock exchange fees of £130,000 (2012 - £146,000) and printing, postage and stationery costs of £84,000 (2012 - £99,000).

		2013			2012
		Revenue	Capital	Total	Revenue	Capital	Total
6.	Finance costs	£'000	£'000	£'000	£'000	£'000	£'000
	Bank loans and overdrafts	1,293	3,017	4,310	1,019	2,381	3,400
	Swap contracts	89	208	297	225	526	751
	Debenture Stock	2	4	6	2	4	6
		_______	_______	______	_______	_______	_______
		1,384	3,229	4,613	1,246	2,911	4,157
		_______	_______	______	_______	_______	_______

			2013			2012
			Revenue	Capital	Total	Revenue	Capital	Total
7.	Taxation		£'000	£'000	£'000	£'000	£'000	£'000
	(a)	Tax charge
		The tax charge comprises:
		Current UK tax	651	-	651	486	-	486
		Tax relief to capital	310	(310)	-	382	(382)	-
		Overseas tax	4,360	-	4,360	4,176	-	4,176
		Overseas tax reclaimable	(1,156)	-	(1,156)	(1,026)	-	(1,026)
		Double taxation relief	(651)	-	(651)	(486)	-	(486)
			_______	_______	______	_______	______	_______
		Total tax	3,514	(310)	3,204	3,532	(382)	3,150
			_______	_______	______	_______	______	_______

	(b)	Factors affecting the tax charge for the year
		The UK corporation tax rate was 24% until 31 March 2013 and 23% from 1 April 2013, giving an effective rate of 23.25% (2012 - 24.5%). The tax assessed for the year is lower than the effective corporation tax rate. The differences are explained below:

			2013			2012
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
		Return on ordinary activities before taxation	58,331	(2,910)	55,421	50,188	91,800	141,988

		Tax thereon at an effective rate of 23.25% (2012 - 24.5%)	13,562	(677)	12,885	12,296	22,491	34,787
		Effects of:
		Non taxable UK dividends	(2,061)	-	(2,061)	(1,892)	-	(1,892)
		Gains on investments not taxable	-	(34)	(34)	-	(24,838)	(24,838)
		Currency losses/(gains) not taxable	-	95	95	-	(170)	(170)
		Non taxable overseas dividends	(10,540)	-	(10,540)	(9,536)	-	(9,536)
		Irrecoverable overseas tax suffered	4,360	-	4,360	4,176	-	4,176
		Overseas tax reclaimable	(1,156)	-	(1,156)	(1,026)	-	(1,026)
		Double taxation relief	(651)	-	(651)	(486)	-	(486)
		Tax relief obtained by expenses capitalised	310	(310)	-	382	(382)	-
		Expenses charged to capital available to be utilised	(616)	616	-	(2,517)	2,517	-
		Excess management expenses	306	-	306	2,135	-	2,135
			_______	_______	______	_______	______	_______
			3,514	(310)	3,204	3,532	(382)	3,150
			_______	_______	______	_______	______	_______

		No provision for deferred tax has been made in the current or prior accounting period.

		The Company has not provided for deferred tax on chargeable gains or losses arising on the revaluation or disposal of investments as it is exempt from corporation tax on these items because of its status as an investment trust company.

		The Company has an unrecognised deferred tax asset of £2,111,000 (2012 - £2,769,000) arising as a result of unutilised management expenses and loan relationship deficits of £10,555,000 (2012 - £12,039,000). Any excess management expenses will be utilised against any taxable income that may arise.

		2013	2012
8.	Ordinary dividends on equity shares	£'000	£'000
	Amounts recognised as distributions paid during the year:
	Third interim for 2012 of 9.0p (2011 - 8.0p)	10,915	8,891
	Final dividend for 2012 of 13.5p (2011 - 13.0p)	16,643	14,818
	First interim for 2013 of 9.5p (2012 - 9.0p)	11,885	10,499
	Second interim for 2013 of 9.5p (2012 - 9.0p)	11,885	10,703
		_______	_______
		51,328	44,911
		_______	_______

	In accordance with UK GAAP the third interim dividend and proposed final dividend for 2013 have not been included as liabilities in these financial statements. The proposed final dividend for 2013 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 Sections 1158-1159 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £54,817,000 (2012 - £46,656,000).

		2013	2012
		£'000	£'000
	Three interim dividends for 2013 of 9.5p (2012 - 9.0p)	35,657	32,117
	Proposed final dividend for 2013 of 14.5p (2012 - 13.5p)	18,159	16,631
		_______	_______
		53,816	48,748
		_______	_______

	Subsequent to the year end the Company has issued a further 110,000 Ordinary shares; therefore the amount reflected above for the cost of the proposed final dividend for 2013 is based on125,236,207 Ordinary shares in issue, being the number of Ordinary shares in issue at the date of this Report.

9.	Returns per share	2013	2012
	Returns have been based on the following figures:
	Weighted average number of Ordinary shares	124,315,341	116,468,656
	Weighted average number of B Ordinary shares	918,448	883,841
		_______	_______
	Weighted average number of Ordinary shares assuming conversion of B Ordinary shares	125,233,789	117,352,497
		_______	_______

		£'000	£'000
	Revenue return attributable to equity shareholders	54,817	46,656
	Capital return attributable to equity shareholders	(2,600)	92,182
		_______	_______
	Total return attributable to equity shareholders	52,217	138,838
		_______	_______

		2013	2012
10.	Investments listed at fair value through profit or loss	£'000	£'000
	Opening valuation	1,327,532	1,140,963
	Opening investment holdings gains	(403,974)	(314,276)
		_______	_______
	Opening book cost	923,558	826,687
	Movements during the year:
	Purchases	224,593	162,382
	Sales - proceeds	(131,949)	(77,474)
	Sales - realised gains	35,814	11,683
	Amortisation of fixed income book cost	951	280
		_______	_______
	Closing book cost	1,052,967	923,558
	Closing investment holdings gains	368,310	403,974
		_______	_______
	Closing valuation	1,421,277	1,327,532
		_______	_______

		2013	2012
	The portfolio valuation	£'000	£'000
	Listed on stock exchanges at bid valuation:
	United Kingdom:
	- equities	204,452	177,556
	- fixed income	16,650	16,083
	Overseas:
	- equities	1,114,407	1,066,169
	- fixed income	85,768	67,724
		_______	_______
	Total	1,421,277	1,327,532
		_______	_______

		2013	2012
	Gains on investments	£'000	£'000
	Realised gains based on book cost	35,814	11,683
	Net movement in investment holdings gains	(35,664)	89,698
		_______	_______
		150	101,381
		_______	_______

	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 gains on investments in the Income Statement. The total costs were as follows:

		2013	2012
		£'000	£'000
	Purchases	485	301
	Sales	208	71
		_______	_______
		693	372
		_______	_______

		2013	2012
11.	Debtors: amounts falling due within one year	£'000	£'000
	Current taxation	1,121	916
	Other debtors	53	52
	Prepayments and accrued income	5,653	4,201
		_______	_______
		6,827	5,169
		_______	_______

	None of the above amounts are overdue.

		2013	2012
12.	Creditors	£'000	£'000
	Amounts falling due within one year:
	Bank loans (note 13)	13,212	58,525
	Swap contracts	-	315
	Forward contracts	2,413	8,805
	Accruals	2,701	5,753
		_______	_______
		18,326	73,398
		_______	_______

		2013	2012
	Amounts falling due after more than one year:	£'000	£'000
	Bank loans and Debentures (note 13)	177,595	87,664
	Accruals	-	5,336
		_______	_______
		177,595	93,000
		_______	_______

	Management fees of £1,765,000 (2012 - £1,522,000) were outstanding at the year end to the Manager.

	A performance fee of £nil (2012 - £8,768,000) was outstanding at the year end to the Manager. In 2012 £5,336,000 fell due after more than one year.

	All financial liabilities are included at amortised cost or at fair value for swap and forward contracts.

			2013	2012
13.	Bank loans and Debentures		£'000	£'000
	Secured by floating charge and repayable other than by instalments or at the Company's option:
	-	4% Debenture Stock	150	150
	Unsecured bank loans repayable:
	within one year
	-	Yen 1,900,000,000 at 0.77657% - 4 June 2013	-	13,519
	-	Yen 6,325,600,000 at 0.77657% - 4 June 2013	-	45,006
	-	Yen 2,300,000,000 at 2.03% - 16 February 2014	13,212	16,364
	in more than one year but no more than five years
	-	Yen 8,400,000,000 at 3.17% - 13 May 2015	48,254	59,766
	-	Yen 1,600,000,000 at 2.82% - 15 May 2016	9,191	11,384
	-	£60,000,000 at 2.21% - 31 May 2017	60,000	-
	-	£60,000,000 at 2.575% - 31 May 2018	60,000	-
			_______	_______
			190,807	146,189
			_______	_______

	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, then no such charges are included in the cash flows used to determine their effective interest rate.

	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 four fixed rate term loan facilities with The Royal Bank of Scotland plc ("RBS"), all of which are fully drawn down and have maturity dates of 16 February 2014, 13 May 2015, 31 May 2017 and 31 May 2018 respectively.

	On 14 February 2014 the Company agreed a new £15 million loan facility with RBS which was drawn in full and fixed at an interest rate of 2.00% until 15 May 2016. At the same time the Yen 2.3 billion loan expiring on 16 February 2014 was repaid in full.

	Financial covenants contained within the relevant loan agreements provide, inter alia, that borrowings shall at no time exceed 40% of net assets and that the net assets must exceed £600 million. At 31 December 2013 net assets were £1,236,718,000 and borrowings were 15.4% thereof.

		2013		2012
14.	Share capital	Number	£'000	Number	£'000
	Allotted, called up and fully paid:
	Ordinary shares of 25p each	125,126,207	31,282	121,283,242	30,321
	B Ordinary shares of 25p each	935,633	234	899,997	225
		_______	_______	______	_______
		126,061,840	31,516	122,183,239	30,546
		_______	_______	______	_______

	During the year 3,840,500 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 ranged from 1054p to 1243p and raised a total of £43,586,000, net of expenses. These expenses have been offset against the capital reserve.

	In accordance with Article 131 of the Company's Articles of Association, 8,716 B Ordinary shares, 12,832 B Ordinary shares, 8,039 B Ordinary shares, and 8,514 B Ordinary shares were allotted by way of capitalisation of reserves on 18 February, 16 May, 16 August and 15 November 2013 respectively.

	On 1 July 2013, 2,465 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 1 July 2013 was 1018.10p 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.

	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.

		2013	2012
15.	Capital reserve	£'000	£'000
	At 31 December 2012	806,596	714,424
	Movement in fair value gains	150	101,381
	Capitalised expenses (net of tax)	(2,339)	(9,891)
	Issue of shares	(10)	(10)
	Currency (losses)/gains	(411)	692
		_______	_______
	At 31 December 2013	803,986	806,596
		_______	_______

	Included in the total above are investment holdings gains at the year end of £368,310,000 (2012 - £403,974,000).

16.	Net asset value per share
	The 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
		2013	2012	2013	2012
		p	p	£'000	£'000
	Ordinary and B Ordinary shares (note 14)	981.0	975.8	1,236,718	1,192,243
		_______	_______	______	_______

17.	Reconciliation of net return before finance costs and	2013	2012
	taxation to net cash inflow from operating activities	£'000	£'000
	Net return before finance costs and taxation	60,034	146,145
	Add: gains on investments	(150)	(101,381)
	Add: currency losses/(gains)	411	(692)
	Amortisation of fixed income book cost	(951)	(280)
	(Increase)/decrease in accrued income	(1,452)	1,192
	(Increase)/decrease in other debtors	(1)	115
	(Decrease)/increase in accruals	(8,566)	363
	Tax on unfranked income - overseas	(3,409)	(2,891)
		_______	_______
		45,916	42,571
		_______	_______

		At 31 December	Currency	Cash	Non-cash	At 31 December
		2012	differences	flows	movements	2013
18.	Analysis of changes in net debt	£'000	£'000	£'000	£'000	£'000
	Cash and short term deposits	25,940	(16,424)	(4,981)	-	4,535
	Forward contracts	(8,805)	6,392	-	-	(2,413)
	Swap	(315)	315	-	-	-
	Debt due within one year	(58,525)	3,152	58,525	(16,364)	(13,212)
	Debt due after more than one year	(87,664)	6,154	(112,449)	16,364	(177,595)
		_______	_______	______	_______	_______
		(129,369)	(411)	(58,905)	-	(188,685)
		_______	_______	______	_______	_______

		At 31 December	Currency	Cash	Non-cash	At 31 December
		2011	differences	flows	movements	2012
		£'000	£'000	£'000	£'000	£'000
	Cash and short term deposits	32,600	(14,243)	7,583	-	25,940
	Forward contracts	2,715	(11,520)	-	-	(8,805)
	Swap	(1,151)	836	-	-	(315)
	Debt due within one year	-	9,790	-	(68,315)	(58,525)
	Debt due after more than one year	(171,808)	15,829	-	68,315	(87,664)
		_______	_______	______	_______	_______
		(137,644)	692	7,583	-	(129,369)
		_______	_______	______	_______	_______

	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 swap contracts, 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 explained in the Strategic Report 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 Company'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 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 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 facilities are used to finance opportunities at low rates and, the revolving and uncommitted facilities to provide flexibility in the short-term. Current bank covenant guidelines state that the total borrowings will not exceed 40% of the adjusted net tangible assets of the Company.

		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				Weighted														Non-
				which				average						Fixed				Floating				interest
				rate is fixed				interest rate						rate				rate				bearing
		At 31 December 2013		Years				%						£'000				£'000				£'000
		Assets
		Sterling		4.09				5.38						16,650				4,522				204,452
		US Dollar		16.33				6.81						63,326				-				346,915
		Euro		11.47				4.50						14,364				-				112,172
		Other		11.82				9.75						8,078				13				655,320
				_______				_______						______				_______				_______
		Total assets												102,418				4,535				1,318,859
				_______				_______						______				_______				_______

		Liabilities
		Bank loans		2.93				2.58						(190,657)				-				-
		Debenture Stock		-				-						(150)				-				-
				_______				_______						______				_______				_______
		Total liabilities												(190,807)				-				-
				_______				_______						______				_______				_______

				Weighted
				average
				period for				Weighted														Non-
				which				average						Fixed				Floating				interest
				rate is fixed				interest rate						rate				rate				bearing
		At 31 December 2012		Years				%						£'000				£'000				£'000
		Assets
		Sterling		5.09				5.38						16,083				25,920				177,556
		US Dollar		12.53				7.16						41,330				-				282,176
		Euro		12.47				4.50						13,176				-				107,199
		Other		12.86				9.75						13,218				20				676,794
				_______				_______						______				_______				_______
		Total assets												83,807				25,940				1,243,725
				_______				_______						______				_______				_______

				Weighted
				average
				period for				Weighted														Non-
				which				average						Fixed				Floating				interest
				rate is fixed				interest rate						rate				rate				bearing
				Years				%						£'000				£'000				£'000
		Liabilities
		Bank loans - Japanese Yen		1.53				2.06						(146,039)				-				-
		Debenture Stock		-				-						(150)				-				-
		Accruals		-				-						-				-				(5,336)
				_______				_______						______				_______				_______
		Total liabilities												(146,189)				-				(5,336)
				_______				_______						______				_______				_______

		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.
		Forward currency contracts are measured at fair value. Other 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 2013		£'000			£'000		£'000			£'000				£'000			£'000			£'000
		Bank loans		13,212			48,254		9,191			60,000				60,000			-			190,657
		Debenture Stock{A}		-			-		-			-				-			150			150
		Interest cash flows on bank loans and Debenture Stock		4,684			3,924		3,015			2,212				776			217			14,828
		Cash flow on forward currency contracts		2,413			-		-			-				-			-			2,413
		Cash flows on other creditors		2,701			-		-			-				-			-			2,701
				_____			_____		____			_______				_____			_____			_______
				23,010			52,178		12,206			62,212				60,776			367			210,749
				_____			_____		____			_______				_____			_____			_______

		{A} The Debenture Stock is perpetual and has therefore been disclosed as maturing after more than 5 years.

																			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 2012		£'000			£'000		£'000			£'000				£'000			£'000			£'000
		Bank loans		58,525			16,364		59,766			11,384				-			-			146,039
		Debenture Stock{A}		-			-		-			-				-			150			150
		Interest cash flows on bank loans and Debenture Stock		2,585			2,420		1,283			167				6			223			6,684
		Interest cash flows on swaps		356			-		-			-				-			-			356
		Cash flow on forward currency contracts		8,805			-		-			-				-			-			8,805
		Cash flows on other creditors		5,752			2,755		1,769			812				-			-			11,088
				_______			_______		_____			_______				_____			_____			_______
				76,023			21,539		62,818			12,363				6			373			173,122
				_____			_____		_____			_______				_____			_____			_______

		{A} The Debenture Stock is perpetual and has therefore been disclosed as maturing after more than 5 years.

		Interest rate sensitivity
		The sensitivity analyses below have been determined based on the exposure to interest rates for 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. There is no interest rate risk exposure from derivative instruments.

		If interest rates had been 100 basis points higher or lower (based on current parameter used by the Manager's Investment Risk Department on risk assessment) and all other variables were held constant, the Company's:
		revenue return for the year ended 31 December 2013 would increase/decrease by £45,000 (2012 - increase/decrease by £259,000). 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 £4,381,000 (2012 - increase/decrease by £10,205,000). 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, is in foreign currency as at 31 December 2013. 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 2013 the Company had a foreign currency contract, details of which are disclosed below. During the year a loss of £28,332,000 (2012 - loss of £14,614,000) was realised.

		The revenue account is subject to currency fluctuation arising on overseas income. The Company does not hedge this currency risk.

		Currency risk exposure (excluding foreign exchange contracts due to the reason their being entered into is to mitigate foreign currency risk) by currency of denomination:

			31 December 2013										31 December 2012
			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	346,915		-			346,915					282,176					-				282,176
		Sterling	204,452		4,522			208,974					177,556					25,920				203,476
		Euro	112,172		-			112,172					107,199					-				107,199
		Swiss Franc	99,729		-			99,729					88,148					-				88,148
		Taiwan Dollar	71,155		11			71,166					75,020					14				75,034
		Hong Kong Dollar	67,330		-			67,330					94,222					-				94,222
		Canadian Dollar	55,907		-			55,907					56,052					-				56,052
		Swedish Krone	47,286		-			47,286					25,839					-				25,839
		Malaysian Ringgit	46,978		-			46,978					46,214					-				46,214
		Brazilian Real	46,122		-			46,122					65,777					-				65,777
		Singapore Dollar	41,517		-			41,517					40,173					-				40,173
		Indonesian Rupiah	36,117		-			36,117					42,488					-				42,488
		Australian Dollar	35,783		-			35,783					19,439					-				19,439
		Mexican Peso	29,012		-			29,012					36,223					-				36,223
		South African Rand	27,523		2			27,525					-					-				-
		Japanese Yen	38,624		(70,657)			(32,033)					53,436					(58,519)				(5,083)
		Thailand Baht	12,237		-			12,237					13,153					-				13,153
		Indian Rupee	-		-			-					20,610					-				20,610
			_______		_______			______					_______					_______				_______
		Total	1,318,859		(66,122)			1,252,737					1,243,725					(32,585)				1,211,140
			_______		_______			______					_______					_______				_______

		The asset allocation between specific markets can vary from time to time based on the 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 and excludes foreign exchange contracts due to the reason their being entered into is to mitigate foreign currency risk). The sensitivity analysis includes foreign currency denominated monetary items and adjusts their translation at the year end for a 10% change in foreign currency rates.

					2013						2013					2012					2012
					Revenue						Equity{A}					Revenue					Equity{A}
					£'000						£'000					£'000					£'000
		US Dollar			1,738						34,692					875					28,218
		Euro			768						11,217					700					10,720
		Swiss Franc			382						9,973					339					8,815
		Taiwan Dollar			286						7,116					242					7,502
		Hong Kong Dollar			266						6,733					286					9,422
		Brazilian Real			-						-					222					6,578
					_______						_______					______					_______
		Total			3,440						69,731					2,664					71,255
					_______						_______					______					_______

		{A} Represents equity exposures to the relevant currencies.

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

																				Unrealised loss at
											Amount									31 December
					Settlement						JPY				Contracted					2013
		Date of contract			date						'000				rate					£'000
		3 December 2013			6 March 2014						12,300,000				173.95					2,413

		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 2013 would have increased/decreased by £142,128,000 (2012 - increase/decrease of £132,753,000) 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 as the fall due in line with the maturity profile analysed below.

		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 counterparty 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 Manager makes an investment in a bond, corporate or otherwise, the credit ratings of the issuer are taken into account so as to manage 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 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 daily basis. In addition, both stock and cash reconciliations to the custodian's records are performed on a daily basis to ensure discrepancies are investigated 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 acceptable credit quality. 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 2013 was as follows:

						2013											2012
						Balance				Maximum							Balance				Maximum
						Sheet				exposure							Sheet				exposure
						£'000				£'000							£'000				£'000
		Non-current assets
		Securities at fair value through profit or loss				1,421,277				1,421,277							1,327,532				1,327,532

		Current assets
		Current taxation				1,121				1,121							916				916
		Other debtors				53				53							52				52
		Accrued income				5,653				5,653							4,201				4,201
		Cash and short term deposits				4,535				4,535							25,940				25,940
						_______				_______							______				_______
						1,432,639				1,432,639							1,358,641				1,358,641
						_______				_______							______				_______

		None of the Company's financial assets is secured by collateral or other credit enhancements.

		Fair values of financial assets and financial liabilities
		The fair value of borrowings has been calculated at £195,401,000 as at 31 December 2013 (2012 - £150,759,000) compared to an accounts value in the financial statements of £190,807,000 (2012 - £146,189,000) (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. The carrying value of all other assets and liabilities is an approximation of fair value.

20.		Fair value hierarchy
		FRS 29 'Financial Instruments: Disclosures' requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following levels:

		Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
		Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (ie as prices) or indirectly (ie derived from prices); and
		Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

		The financial assets and liabilities measured at fair value in the Balance Sheet are grouped into the fair value hierarchy at the reporting date as follows:

					Level 1	Level 2	Level 3	Total
	As at 31 December 2013			Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities			a)	1,318,859	-	-	1,318,859
	Quoted preference shares			a)	5,900	-	-	5,900
	Quoted bonds			b)	96,518	-	-	96,518
					_______	_______	______	_______
	Total				1,421,277	-	-	1,421,277
					_______	_______	______	_______

	Financial liabilities at fair value through profit or loss
	Foreign exchange forward contracts			c)	-	(2,413)	-	(2,413)
	Net fair value				1,421,277	(2,413)	-	1,418,864

					Level 1	Level 2	Level 3	Total
	As at 31 December 2012			Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities			a)	1,243,725	-	-	1,243,725
	Quoted preference shares			a)	5,585	-	-	5,585
	Quoted bonds			b)	78,222	-	-	78,222
					_______	_______	______	_______
	Total				1,327,532	-	-	1,327,532
					_______	_______	______	_______

	Financial liabilities at fair value through profit or loss
	Foreign exchange forward contracts			c)	-	(8,805)	-	(8,805)
	Derivatives			d)	-	(315)	-	(315)
					_______	_______	______	_______
	Total				-	(9,120)	-	(9,120)
					_______	_______	______	_______
	Net fair value				1,327,532	(9,120)	-	1,318,412
					_______	_______	______	_______

	a)		Quoted equities and preference shares
			The fair value of the Company's investments in quoted equities and preference shares has been determined by reference to their quoted bid prices at the reporting date. Quoted equities and preference shares included in Fair Value Level 1 are actively traded on recognised stock exchanges.
	b)		Quoted bonds
			The fair value of the Company's investments in quoted bonds has been determined by reference to their quoted bid prices at the reporting date. Bonds included in Fair Value Level 1 include Government Bonds and Corporate Bonds.
	c)		Foreign exchange forward contracts
			The fair value of the Company's investment in foreign exchange forward contracts has been determined in relation to models using observable market inputs and hence are categorised in Fair Value Level 2.
	d)		Derivatives
			The fair value of the Company's investment in derivatives has been determined in relation to models using observable market inputs and hence are categorised in Fair Value Level 2.

21.	Capital management policies and procedures
	The investment objective of the Company is to achieve a total return greater than its benchmark by investing predominantly in equities worldwide.

	The capital of the Company consists of equity, comprising issued capital, reserves and retained earnings. 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 Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes :
	- the planned level of gearing which takes into account the Investment Manager's views on the market;
	- the level of equity shares in issue; and
	- the extent to which revenue in excess of that which is required to be distributed should be retained.

	The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.

	Details of the Company's gearing facilities and financial covenants are detailed in note 13 of the financial statements.

The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 31 December 2013 are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2012 and 2013 statutory accounts received unqualified reports from the Company's auditors and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.498 of the Companies Act 2006. The financial information for 2012 is derived from the statutory accounts for 2012 which have been delivered to the Registrar of Companies. The 2012 accounts will be filed with the Registrar of Companies in due course.

The Annual Report will be posted to shareholders in March 2014 and additional copies will be available from the registered office of the Company and on the Company's website, http://www.murray-intl.co.uk/doc.nsf/Lit/ReportUKClosedMINTAnnual*

The Annual General Meeting will be held at 12.30 pm on 29 April 2014 at The Mermaid Conference Centre, Puddle Dock, London, EC4V 3DB

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.

*Neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.

For Murray International Trust PLC

Aberdeen Asset Management PLC, Secretaries

10 March 2014

12 SUMMARY OF INVESTMENT CHANGES DURING THE YEAR

	Valuation		Appreciation/		Valuation
	31 December 2013		(depreciation)	Transactions	31 December 2012
	£'000	%	£'000	£'000	£'000	%
Equities
United Kingdom	204,452	14.3	8,419	18,477	177,556	13.2
North America	200,641	14.1	4,444	61,243	134,954	10.0
Europe ex UK	259,187	18.2	38,695	(694)	221,186	16.5
Japan	38,624	2.7	1,487	(16,299)	53,436	4.0
Asia Pacific ex Japan	311,117	21.8	(9,392)	(30,810)	351,319	26.1
Latin America	277,315	19.4	(34,791)	6,832	305,274	22.7
Africa	27,523	1.9	1,590	25,933	-	-
	__________	________	_________	_________	_______	______
	1,318,859	92.4	10,452	64,682	1,243,725	92.5
	__________	________	_________	_________	_______	______

Fixed income
United Kingdom	16,650	1.2	402	165	16,083	1.2
Europe ex UK	14,364	1.0	1,083	105	13,176	1.0
Asia Pacific ex Japan	8,078	0.6	(5,144)	4	13,218	1.0
Latin America	63,326	4.4	(6,643)	28,639	41,330	3.1
	__________	________	_________	_________	_______	______
	102,418	7.2	(10,302)	28,913	83,807	6.3
	__________	________	_________	_________	_______	______
Other net assets	6,248	0.4	(9,988)	-	16,236	1.2
	__________	________	_________	_________	_______	______
Total assets	1,427,525	100.0	(9,838)	93,595	1,343,768	100.0
	__________	________	_________	_________	_______	______

13 TWENTY LARGEST INVESTMENTS

As at 31 December 2013

			Valuation	Total	Valuation
			2013	assets{A}	2012
Company		Country	£'000	%	£'000
1 (1)	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	57,822	4.1	57,647
2 (2)	Aeroporto del Sureste ADS
Grupo Aeroporto del Sureste operates airports in Mexico. The company holds long-term concessions to manage airports in leading tourist resorts such as Cancun and Cozumel, plus cities such as Oaxaca, Veracruz and Merida.		Mexico	56,445	4.0	52,521
3 (9)	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	41,029	2.9	34,994
4 (5)	Vale do Rio Doce{C}
Vale is one of the world's largest, fully-integrated, natural resources companies. Based in Brazil, the company produces iron-ore, manganese, alloys, gold, nickel, copper, aluminium, potash and numerous other minerals. In addition to its mining assets, Vale also owns and operates railways and maritime terminals.		Brazil & USA	37,809	2.6	39,385
5 (20)	Roche Holdings
Roche Holdings develops and manufactures pharmaceutical and diagnostic products. The company produces prescription drugs in the areas of cardiovascular, respiratory diseases, dermatology, metabolic disorders, oncology and organ transplantation.		Switzerland	37,204	2.6	27,206
6 (8)	Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing Company is one of the largest integrated circuit manufacturers in the world. The company is involved in component design, wafer manufacturing, assembly, testing and mask production of integrated circuits which are used in the computer, communication and electronics industries.		Taiwan	37,014	2.6	35,721
7 (4)	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	36,117	2.5	42,488
8 (-)	Nordea
Nordea is a financial services group that provides banking services, financial products and related advisory services. The company's activities include investment banking, deposit and credit services, insurance products and securities trading. Nordea predominantly services the Scandinavian countries and the Baltic region.		Sweden	35,779	2.5	25,839
9 (-)	Casino
Casino operates a wide range of hypermarkets, supermarkets and convenience stores. In addition to domestic operations in France the company operates various retail formats in Vietnam, Thailand, Colombia and Brazil.		France	34,838	2.4	24,554
10 (3)	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	34,252	2.4	51,824
Top ten investments			408,309	28.6

11 (6)	Taiwan Mobile
Taiwan Mobile is the leading provider of cellular telecommunications services in Taiwan. Although predominantly a wireless network operator, the company also sells and leases cellular telephony equipment.		Taiwan	34,141	2.4	39,299
12 (14)	Fomento Economico Mexicano
Fomento Economico Mexicano (FEMSA) produces, distributes and markets non-alcoholic beverages throughout Latin America as part of the Coca Cola system. The company also owns and operates OXXO convenience stores in Mexico and Colombia and holds a stake in the Heineken brewing company.		Mexico	33,675	2.4	29,114
13 (11)	Telus
Telus is a telecommunications company providing a variety of communication products and services. The company provides voice, data, internet and wireless services to businesses and consumers throughout Canada.		Canada	33,240	2.3	32,148
14 (12)	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	32,640	2.3	31,470
15 (19)	Total
Total is a fully integrated international energy company involved in exploration, production, refining, transportation and marketing of oil and natural gas. The company also operates a chemical division which produces polypropylene, polyethylene, polystyrene, rubber, paint, ink, adhesives and resins.		France	32,231	2.2	27,519
16 (-)	Zurich Financial Services
Zurich provides insurance-based financial services. The company offers general and life insurance products and services for individuals, small businesses, commercial enterprises, mid-sized and large corporations plus multinational companies.		Switzerland	31,564	2.2	24,528
17 (13)	Royal Dutch Shell
Royal Dutch Shell, through numerous international subsidiaries and global partnerships, explores for and produces oil, gas and petroleum products. In addition to producing fuels, chemicals and lubricants, the company owns and operates petrol filling stations worldwide.		UK	31,008	2.2	29,580
18 (-)	Wing Hang Bank
Wing Hang Bank provides corporate banking, retail banking, foreign exchange and treasury services. Based in Hong Kong, the bank also provides share brokerage, insurance broking, and nominee services.		Hong Kong	30,014	2.1	24,872
19 (-)	BHP Billiton
BHP Billiton is the world's largest diversified resources group with a global portfolio of high quality assets. Core activities comprise the production and distribution of minerals, mineral products and petroleum.		Australia	29,904	2.1	-
20 (16)	Singapore Telecommunications
Singapore Telecommunications is a communications company providing a diverse range of communications services including fixed-line telephony, mobile, data, internet, satellite and pay television. The company operates throughout the Asian Pacific region.		Singapore	29,323	2.1	27,922
Top twenty investments			726,049	50.9


{A} The total assets less current liabilities as shown on the Balance Sheet with the addition of Prior Charges
{B} Holding comprises UK and Malaysia securities split £35,618,000 (2012 - £34,331,000) and £22,204,000 (2012 - £23,316,000).
{C} Holding comprises equity and fixed income securities split £24,091,000 (2012 - £28,709,000) and £13,718,000 (2012 - £10,676,000).


The value of the 20 largest investments represents 50.9% (2012 - 53.0%) of total assets. The figures in brackets denote the position at the previous year end. (-) denotes not previously in 20 largest investments.

Portfolio of Investments - Other Investments

		Valuation	Total	Valuation
		2013	assets{A}	2012
Company	Country	£'000	%	£'000
Johnson & Johnson	USA	29,306	2.0	22,856
Kimberly Clark de Mexico	Mexico	29,012	2.0	36,223
Tenaris ADR	Mexico	29,003	2.0	28,361
MTN	South Africa	27,523	1.9	-
ENI	Italy	27,210	1.9	27,816
Verizon Communications	USA	26,692	1.9	-
HSBC	UK	25,834	1.8	20,054
PetroChina	China	25,122	1.8	32,996
Pepsico	USA	25,035	1.8	21,052
Public Bank	Malaysia	24,774	1.7	22,898
Top thirty investments		995,560	69.7
Daito Trust Construction	Japan	23,975	1.7	24,584
Banco Bradesco{D}	Brazil	23,562	1.6	23,707
Baxter International	USA	22,673	1.6	-
Potash Corporation of Saskatchewan	Canada	22,666	1.6	23,904
Petrobras ADR	Brazil	22,158	1.6	22,571
Telefonica Brasil	Brazil	21,678	1.5	27,678
Weir Group	UK	21,320	1.5	23,002
Coca-Cola Amatil	Australia	18,390	1.3	-
GDF Suez	France	17,894	1.3	15,901
QBE Insurance Group	Australia	17,393	1.2	19,439
Top forty investments		1,207,269	84.6
Petroleos Mexicanos 5.5% 27/06/44	Mexico	16,528	1.2	-
Nestlé	Switzerland	15,504	1.1	14,020
Novartis	Switzerland	15,457	1.1	22,395
Astellas Pharmaceutical	Japan	14,650	1.0	14,594
Portugal Telecom 4.5% 16/06/25	Netherlands	14,364	1.0	13,176
Vodafone Group	UK	14,220	1.0	12,974
Centrica	UK	13,908	1.0	13,344
PTT Exploration and Production	Thailand	12,237	0.9	13,153
Swire Pacific 'B'	Hong Kong	12,194	0.8	12,715
Oversea-Chinese Bank	Singapore	12,194	0.8	12,251
Top fifty investments		1,348,525	94.5
Wilson & Sons	Brazil	11,869	0.8	13,954
Republic of Venezuela 8.5% 08/10/14	USA	11,774	0.8	7,530
Atlas Copco	Sweden	11,507	0.8	-
Telefonica Emisiones 5.375% 02/02/18	UK	10,751	0.8	10,498
Hypermarcas 6.5% 20/04/21	USA	10,133	0.7	10,653
Republic of Indonesia 9.5% 15/07/23	Indonesia	4,070	0.3	6,548
Republic of Indonesia 10% 15/02/28	Indonesia	4,008	0.3	6,670
General Accident 7.875% Cum Irred Pref	UK	3,094	0.2	2,938
Santander 10.375% Non Cum Pref	UK	2,805	0.2	2,647
Federal Republic of Brazil 11% 17/08/40	USA	2,741	0.2	3,082
Total investments		1,421,277	99.6
Net current assets		6,248	0.4
Total assets{A}		1,427,525	100.0
{A} The total assets less current liabilities as shown on the Balance Sheet with the addition of Prior Charges
{D} Holding comprises equity and fixed income securities split £15,130,000 (2012 - £14,319,000) and £8,432,000 (2012 - £9,388,000).

14 FINANCIAL HIGHLIGHTS

	31 December 2013	31 December 2012	% change
Total assets less current liabilities (before deducting prior charges)	£1,427,525,000	£1,343,768,000
Equity shareholders' funds (Net Assets)	£1,236,718,000	£1,192,243,000
Market capitalisation	£1,328,538,000	£1,281,016,000	+3.7
Share price - Ordinary share (mid market)	1052.0p	1048.0p	+0.4
Share price - B Ordinary share (mid market)	1305.0p	1107.5p	+17.8
Net Asset Value per Ordinary and B Ordinary share	981.0p	975.8p	+0.5
Premium to Net Asset Value on Ordinary shares	7.2%	7.4%

Gearing (ratio of borrowings less cash to shareholders' funds)
Net gearing{A}	15.1%	10.1%

Dividends and earnings per Ordinary share
Revenue return per share	43.8p	39.8p	+10.1
Dividends per share{B}	43.0p	40.5p	+6.2
Dividend cover (including proposed final dividend)	1.02	0.98
Revenue reserves{C}	£68,120,000	£64,631,000

Ongoing charges{D}
Excluding performance fee	0.66%	0.71%
Including performance fee	0.66%	1.02%

{A} Calculated in accordance with AIC guidance "Gearing Disclosures post RDR"
{B} The figure for dividends per share reflects the years in which they were earned (see note 8) and assuming approval of the 14.5p (2012 - 13.5p) final dividend.
{C} The revenue reserve figure does not take account of the third interim and final dividends amounting to £11,887,000 and £18,159,000 respectively (2012 - £10,915,000 and £16,631,000).
{D} Ongoing charges are calculated in accordance with guidance issued by the AIC as the total of the investment management fee and administrative expenses divided by the average cum income net asset value throughout the year.

Performance (total return)

	1 year	3 year	5 year	10 year
	% return	% return	% return	% return
Share price{A}	+4.1	+25.5	+115.8	+288.8
Net asset value per Ordinary and B Ordinary share	+4.6	+19.1	+91.0	+227.6
Benchmark	+21.2	+28.9	+81.5	+127.9
Total return represents the capital return plus dividends reinvested.
{A} Mid to mid.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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