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Murray Inc Trust PLC (MUT)

  Print      Mail a friend       Annual reports

Tuesday 12 February, 2008

Murray Inc Trust PLC

Interim Results

Murray Income Trust PLC
12 February 2008


Murray Income Trust PLC

Results for the half year ended 31 December 2007

The Directors of Murray Income Trust PLC report the unaudited results for the
half year ended 31 December 2007.


Key Facts
     
•    Murray Income's Net Asset Value total return for the six months to 31
     December 2007 was -4.5%.

•    Shareholder total return for the period was -5.8%.

•    Second and third interim dividends of 5.25p each, representing an
     increase of 5% over the comparable prior 6-month period, will be paid on 18
     April 2008 and 18 July 2008 respectively.


Interim Board Report

Performance

The UK equity market fell over the six month period to 31 December 2007, with a
negative Net Asset Value total return for the Company of 4.5%.  This compares
with the benchmark, the FTSE All-Share Index, which fell by 2.1%.  The share
price declined by 5.8% on a total return basis, and stood at 642p on 31 December
2007, which reflected a marginal increase in the discount to net asset value at
which the shares trade.


Background

The key theme during the half year has been the evolution of sub-prime concerns
emanating from the United States and their impact on credit markets and economic
growth.  Memorable images of savers queuing up to withdraw their deposits from
the Northern Rock were the public manifestation of heightened LIBOR rates and
reduced inter-bank lending.  At a time when housing demand was slowing given
prior interest rate rises, the reduced availability of credit only served to
accelerate this weakness.  Although the decision by the Fed to cut rates by 50bp
in September helped to provide a temporary fillip to the equity market driven by
cyclical plays, the appetite of investors for risk declined steadily throughout
the remainder of the period.   However, demand from emerging markets remained
strong helping both oil and certain commodity prices reach record levels.

UK macroeconomic newsflow began to reflect a more difficult environment towards
the end of the period with July's interest rate rise reversed in December as the
Monetary Policy Committee (MPC) focused on short-term financial stability rather
than price stability. CPI inflation has fallen from 2.4% in July to 2.1% in
December.  However, food and oil prices remain elevated, tempering the MPC's
ability to reduce rates aggressively. Although unemployment remains historically
low, indicators have started to reflect a slowdown in the economy, with recent
retail sales and manufacturing output data supporting a reduction in economic
growth at a time when Government finances are beginning to come under pressure.

Performance of the Company was affected by short-term style factors, as
companies with strong earnings and price momentum led performance tables, while
those companies with higher yields underperformed. The names that had been the
subject of takeover speculation tended to underperform as widening credit
spreads made debt-financed takeover activity less likely. However, merger and
acquisition activity did not evaporate completely, with the Company itself
benefiting from bids for Kelda, Resolution, Scottish & Newcastle and Emap. From
a size perspective, mid- and smaller-cap companies underperformed, the reversal
of a well-established trend, explainable as a function of their greater domestic
earnings focus.


Activity

During the period, a number of new holdings were added to the portfolio.  We
introduced a position in Daily Mail and General Trust, given its attractive
business to business operations and appealing valuation, as well as Close
Brothers, due to its diversified earnings base and attractive dividend yield.
These were partly funded through the sale of Mitchells & Butlers following a
strong performance over the last couple of years and a stretched valuation.

We continued the process of recycling capital from some of the
stronger-performing companies, including British American Tobacco, Standard
Chartered and Rio Tinto, into more attractively-valued companies such as
AstraZeneca, GKN and Tomkins.  Weakness in consumer-related investments, such as
Kesa and Ladbrokes, provided the opportunity to increase our exposure, while our
view that property-related holdings had been oversold prompted further purchases
of SEGRO, Barratt Developments and Wolseley.  We sold Mondi and International
Personal Finance which  off from Anglo American and Provident Financial.
Towards the end of the period, we sold Kelda and Resolution following the bids
for both companies, and reinvested the proceeds in a new holding in Tesco, given
its longer-term growth prospects, and Whitbread, now predominantly a budget
hotel company with significant asset backing.


Gearing

At the end of the interim period, the Company's gearing stood at 7.3%.  This
increase, compared to 5.7% at the end of the last financial year, is due to a
small increase in borrowings during the market fall in August, and a fall in the
value of the Company's assets.


Treasury Shares

At the Annual General Meeting held in October 2007, Shareholders renewed the
authority for the Company to hold shares bought back by it as Treasury shares,
rather than cancel them immediately.  During the period from 1 July to 31
December 2007, 224,250 Ordinary shares were bought back and held in Treasury.
As of 31 January 2008, the total number of Ordinary shares bought back and held
in Treasury was 1,724,800.  To date, no shares have been re-issued from
Treasury.


Dividends

A first interim dividend of 5.25p was paid on 18 January 2008 to Shareholders on
the register at the close of business on 14 December 2007.  A second interim
dividend of 5.25p will be paid on 18 April 2008 to Shareholders on the register
at the close of business on 14 March 2008.  The third interim dividend of 5.25p
will be paid on 18 July 2008 to Shareholders on the register at the close of
business on 13 June 2008.


Outlook

At the time of writing,  the UK equity market has fallen by over 10% since the
start of the new calendar year and by over 15% from the peak last June.  At
certain stages during the period, the market appeared overvalued, in our view,
prompting the purchase of some portfolio protection for the Company, from which
it has benefited since the start of the year.  On a medium-term basis, it does
seem that valuations overall now look more reasonable, with the market having
already factored in significant earnings downgrades in a number of high-profile,
domestically-oriented cyclical sectors, coupled with liquidity support from
sovereign wealth funds, companies and central banks.  However, the ultimate
level of sub-prime losses, and the extent to which this will lead to slower
economic activity, remains opaque, and this uncertainty is likely to lead to
continued levels of market volatility.


VAT on Management Fees

HM Revenue and Customs, on 5 November 2007, accepted the European Court of
Justice ruling in the case brought by JPMorgan Claverhouse Investment Trust
against them. Consequently, the Company has not been subject to VAT on its
investment management fees from that date. It is also probable that at least
some of the VAT suffered in the past on such fees will be recoverable.
Appropriate steps have been taken to protect the Company's position in this
respect. The Board is in discussion with the Manager on this issue, and a number
of legal and procedural matters need to be resolved. No asset is as yet,
therefore, being recognised.


Risks and uncertainties

The Board has identified a number of key risks that affect its business:
     
•    Resource risk - the Company relies on services provided by third parties, 
     including, in particular, the Manager, to whom responsibility for the
     management of the Company has been delegated under an investment management
     agreement (the 'Agreement'). The terms of the Agreement cover the scope of 
     the duties and obligations expected of the Manager. The Board reviews the
     performance of the Manager on a regular basis, and their compliance with 
     the Agreement formally on an annual basis.

•    Investment objective - the objective of the Company is to achieve a high 
     and growing income combined with capital growth. As a consequence, the
     investment portfolio may not always match that of the stockmarket as a 
     whole, with a consequential impact on Shareholder returns. The Board's aim 
     is to maximise absolute returns to Shareholders while managing risk by 
     ensuring an appropriate diversification of stocks and sectors.

•    Investment policy and gearing - a major risk affecting the Company is
     inappropriate sector and stock selection, leading to under-performance 
     relative to the Company's benchmark index and peer group. In addition, the 
     use of borrowing facilities to invest in markets may have a negative impact 
     if markets fall. To mitigate these risks, the Manager operates within 
     investment guidelines and agreed levels of borrowing. Performance against 
     the benchmark index and the peer group is regularly monitored. During the 
     period, an element of portfolio protection was put in place by the purchase 
     of put options.

•    Discount volatility - investment trust shares tend to trade at discounts to 
     their underlying net asset values, which can fluctuate considerably.  To 
     seek to minimise the impact of such fluctuations, the Company has operated 
     a share buy-back programme for a number of years.

•    Regulatory risk - the Company operates in a complex regulatory environment 
     and faces a number of related risks. A breach of Section 842 of the Income 
     and Corporation Taxes Act 1988 could result in the Company being subject to 
     capital gains tax on the sale of its investments. Serious breach of other
     regulations, such as the UKLA Listing Rules and the Companies Acts, could 
     lead to suspension from the Stock Exchange and reputational damage. The 
     Board receives monthly compliance reports from the Manager to monitor 
     compliance with regulations.


Directors' Responsibility Statement

The Directors are responsible for preparing the half-yearly financial report, in
accordance with applicable law and regulations. The Directors confirm that, to
the best of their knowledge:
     
•    the condensed set of financial statements within the half-yearly financial 
     report has been prepared in accordance with the Accounting Standards
     Board's statement 'Half-Yearly Financial Reports'; and

•    the Interim Board Report includes a fair review of the information required 
     by 4.2.7R (indication of important events during the first six months of 
     the year) and 4.2.8R (disclosure of related party transactions and changes
     therein) of the FSA's Disclosure and Transparency Rules.

The half-yearly financial report for the six months to 31 December 2007
comprises the Interim Board Report, the Directors' Responsibility Statement and
a condensed set of financial statements, and has not been audited or reviewed by
the auditors pursuant to the Auditing Practices Board guidance on Review of
Interim Financial Information.


By order of the Board
Aberdeen Asset Management PLC
Secretary
12 February 2008


MURRAY INCOME TRUST PLC
INCOME STATEMENT (UNAUDITED)

                                                                             Six months ended
                                                                             31 December 2007
                                                                      Revenue       Capital         Total
                                                           Notes        £'000         £'000         £'000

Realised gains on investments                                                -       21,308        21,308
Unrealised (losses) /gains on investments                                    -     (51,694)      (51,694)
Investment income                                              3         9,228            -         9,228
Interest receivable                                                        122            -           122
Investment management fees                                               (701)        (701)       (1,402)
Administrative expenses                                                  (453)            -         (453)
                                                                    __________   __________    __________
Net return before finance costs and taxation                             8,196     (31,087)      (22,891)

Finance costs                                                            (565)        (565)       (1,130)
                                                                    __________   __________    __________
Return on ordinary activities before and after                           7,631     (31,652)      (24,021)
taxation
                                                                    __________   __________    __________
Return per Ordinary share (pence):                                        11.7       (48.7)        (37.0)
                                                                    __________   __________    __________


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

The Company had no recognised gains or losses other than those recognised in the
Income Statement.

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



Ordinary dividends on equity shares (£'000)                   2         9,272             -         9,272
                                                                   __________    __________    __________


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




MURRAY INCOME TRUST PLC
INCOME STATEMENT (UNAUDITED)

                                                                             Six months ended
                                                                             31 December 2006
                                                                      Revenue         Capital         Total
                                                          Notes         £'000           £'000         £'000

Realised gains on investments                                               -          12,526        12,526
Unrealised (losses) /gains on investments                                   -          31,325        31,325
Investment income                                             3         7,448               -         7,448
Interest receivable                                                        43               -            43
Investment management fees                                              (741)           (741)       (1,482)
Administrative expenses                                                 (400)               -         (400)
                                                                   __________      __________    __________
Net return before finance costs and taxation                            6,350          43,110        49,460

Finance costs                                                           (345)           (345)         (690)
                                                                   __________      __________    __________
Return on ordinary activities before and after                          6,005          42,765        48,770
taxation
                                                                   __________      __________    __________
Return per Ordinary share (pence):                                        9.2            65.6          74.8
                                                                   __________      __________    __________



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

The Company had no recognised gains or losses other than those recognised in the
Income Statement.

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


Ordinary dividends on equity shares (£'000)                  2         7,956                -         7,956
                                                                  __________       __________    __________



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




MURRAY INCOME TRUST PLC
INCOME STATEMENT  (UNAUDITED)
                                                                                Year ended
                                                                               30 June 2007
                                                                        Revenue       Capital         Total
                                                          Notes           £'000         £'000         £'000
Realised gains on investments                                                 -        39,826        39,826
Unrealised (losses) /gains on investments                                     -        27,674        27,674
Investment income                                             3          19,147             -        19,147
Interest receivable                                                         104             -           104
Investment management fees                                              (1,532)       (1,532)       (3,064)
Administrative expenses                                                   (860)             -         (860)
                                                                     __________    __________    __________
Net return before finance costs and taxation                             16,859        65,968        82,827

Finance costs                                                             (765)         (765)       (1,530)
                                                                     __________    __________    __________
Return on ordinary activities before and after                           16,094        65,203        81,297
taxation
                                                                     __________    __________    __________
Return per Ordinary share (pence):                                         24.7         100.0         124.7
                                                                     __________    __________    __________




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

The Company had no recognised gains or losses other than those recognised in the
Income Statement.

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


Ordinary dividends on equity shares (£'000)                  2           14,476             -        14,476
                                                                     __________    __________    __________



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



MURRAY INCOME TRUST PLC
BALANCE SHEET (UNAUDITED)


                                                                 As at             As at             As at
                                                           31 December       31 December           30 June
                                                                  2007              2006              2007
                                               Notes             £'000             £'000             £'000
Non-current assets
Investments at fair value through profit                       516,051           519,445           543,269
or loss

Current assets
Debtors                                                          2,358             1,672             8,292
Cash and short-term deposits                                    11,063             1,299             2,073
                                                            __________        __________        __________
                                                                13,421             2,971            10,365

Creditors: amounts falling due within one                      (6,645)             (333)           (1,017)
year
                                                            __________        __________        __________
Net current assets                                               6,776             2,638             9,348
                                                            __________        __________        __________
Total assets less current liabilities                          522,827           522,083           552,617

Creditors: amounts falling due after more
than one year
Bank loan                                                     (35,000)          (25,000)          (30,000)
                                                            __________        __________        __________
Net assets                                                     487,827           497,083           522,617
                                                            __________        __________        __________

Capital and reserves
Called-up share capital                                         16,604            16,604            16,604
Share premium account                                            7,955             7,955             7,955
Capital redemption reserve                                       4,997             4,997             4,997
Capital reserve - realised                                     339,186           295,025           320,641
Capital reserve - unrealised                                    97,842           153,187           149,536
Revenue reserve                                                 21,243            19,315            22,884
                                                            __________        __________        __________
Equity Shareholders' funds                                     487,827           497,083           522,617
                                                            __________        __________        __________
Net asset value per Ordinary share                 5             751.5             762.4             802.3
(pence):
                                                            __________        __________        __________






MURRAY INCOME TRUST PLC
Reconciliation of Movement in Shareholders' Funds (Unaudited)

Six months ended 31 December 2007

                                                 Share     Capital     Capital     Capital
                                     Share     premium  redemption   reserve -   reserve -     Revenue
                                   Capital     account     reserve    realised  unrealised     reserve      Total
                                     £'000       £'000       £'000       £'000       £'000       £'000      £'000

Balance at 30 June 2007             16,604       7,955       4,997     320,641     149,536      22,884    522,617
Repurchase of own shares                 -           -           -     (1,497)           -           -    (1,497)
Return on ordinary activities            -           -           -      20,042    (51,694)       7,631   (24,021)
after taxation
Dividends paid                           -           -           -           -           -     (9,272)    (9,272)
                                  ________ ___________ ___________ ___________ ___________ ___________ __________
Balance at 31 December 2007         16,604       7,955       4,997     339,186      97,842      21,243    487,827
                                  ________ ___________ ___________ ___________ ___________ ___________ __________
Six months ended 31 December 2006

                                                 Share     Capital     Capital     Capital
                                     Share     premium  redemption   reserve -   reserve -     Revenue
                                   capital     account     reserve    realised  unrealised     reserve      Total
                                     £'000       £'000       £'000       £'000       £'000       £'000      £'000

Balance at 30 June 2006             16,604       7,955       4,997     284,030     121,862      21,266    456,714
Repurchase of own shares                 -           -           -       (445)           -           -      (445)
Return on ordinary activities            -           -           -      11,440      31,325       6,005     48,770
after taxation
Dividends paid                           -           -           -           -           -     (7,956)    (7,956)
                                  ________ ___________ ___________ ___________ ___________ ___________ __________
Balance at 31 December 2006         16,604       7,955       4,997     295,025     153,187      19,315    497,083
                                  ________ ___________ ___________ ___________ ___________ ___________ __________
Year ended 30 June 2007

                                                 Share     Capital     Capital     Capital
                                     Share     premium  redemption   reserve -   reserve -     Revenue
                                   capital     account     reserve    realised  unrealised     reserve      Total
                                     £'000       £'000       £'000       £'000       £'000       £'000      £'000

Balance at 30 June 2006             16,604       7,955       4,997     284,030     121,862      21,266    456,714
Repurchase of own shares                 -           -           -       (918)           -           -      (918)
Return on ordinary activities            -           -           -      37,529      27,674      16,094     81,297
after taxation
Dividends paid                           -           -           -           -           -    (14,476)   (14,476)
                                  ________ ___________ ___________ ___________ ___________ ___________ __________
Balance at 30 June 2007             16,604       7,955       4,997     320,641     149,536      22,884    522,617
                                  ________ ___________ ___________ ___________ ___________ ___________ __________






MURRAY INCOME TRUST PLC

CASH FLOW STATEMENT  (UNAUDITED)


                                                          Six months          Six months              Year
                                                               ended               ended             ended
                                                         31 December         31 December           30 June
                                                                2007                2006              2007
                                                               £'000               £'000             £'000

Net return before finance costs and taxation                (22,891)              49,460            82,827
Adjustments for:
Realised gains on investments                               (21,308)            (12,526)          (39,826)
Unrealised losses/(gains) on investments                      51,694            (31,325)          (27,674)
Decrease/(increase) in accrued income                            594                 225           (1,065)
Increase in prepayments                                         (19)                (35)               (6)
Increase/(decrease) in accruals                                   41               (297)             (117)
                                                       _____________       _____________     _____________
Net cash inflow from operating activities                      8,111               5,502            14,139

Servicing of finance
Interest paid                                                  (880)               (678)           (1,525)
                                                       _____________       _____________     _____________
Net cash outflow from servicing of finance                     (880)               (678)           (1,525)

Financial investment
Purchases of investments                                    (62,868)            (37,797)          (96,057)
Sales of investments                                          70,120              42,573            95,810
                                                       _____________       _____________     _____________
Net cash inflow/(outflow) from financial                       7,252               4,776             (247)
investment

Equity dividends paid                                        (9,272)             (7,956)          (14,476)

Management of liquid resources
Cash drawn/(placed) on short-term deposit                        400                   -           (1,600)
                                                       _____________       _____________     _____________
Net cash inflow/(outflow) before financing                     5,611               1,644           (3,709)

Financing
Drawdown of loans                                              5,000                   -             5,000
Purchase of own shares                                       (1,221)               (445)             (918)
                                                       _____________       _____________     _____________
Net cash inflow/(outflow) from financing                       3,779               (445)             4,082
                                                       _____________       _____________     _____________
Net increase in cash                                           9,390               1,199               373
                                                       _____________       _____________     _____________


Notes to the Financial Statements


     
1.   Accounting policies
          
     (a)  Basis of accounting

          The accounts have been prepared under the historical cost convention, 
          as modified to include the revaluation of investments and in 
          accordance with applicable UK Accounting Standards, with 
          pronouncements on half-yearly reporting issued by the Accounting 
          Standards Board and with the Statement of Recommended Practice for 
          'Financial Statements of Investment Trust Companies' (December 2005). 
          They have also been prepared on the assumption that approval as an 
          investment trust will continue to be granted.

          The financial statements and the net asset value per share figures 
          have been prepared in accordance with UK Generally Accepted Accounting
          Practice (UK GAAP).

          The interim accounts have been prepared using the same
          accounting policies as the preceding annual accounts.

           
     (b)  Dividends payable

          Dividends are recognised in the period in which they are paid.

     
2.   Ordinary dividends

     Ordinary dividends paid on equity shares deducted from reserves:

                                                               Six months         Six months            Year
                                                                    ended              ended           ended
                                                              31 December   31 December 2006         30 June
                                                                     2007                               2007
                                                                    £'000              £'000           £'000

      2006 third interim dividend - 4.70p                               -              3,066           3,066
      2006 final dividend - 7.50p                                       -              4,890           4,890
      2007 first interim dividend - 5.00p                               -                  -           3,260
      2007 second interim dividend - 5.00p                              -                  -           3,260
      2007 third interim dividend - 5.00p                           3,257                  -               -
      2007 final dividend - 9.25p                                   6,015                  -               -
                                                            _____________      _____________    ____________
                                                                    9,272              7,956          14,476
                                                            _____________      _____________    ____________


                                                          Six months ended  Six months ended            Year
                                                                                                       ended
                                                          31 December 2007  31 December 2006         30 June
                                                                                                        2007
3.   Investment income                                               £'000             £'000           £'000

     UK dividend income                                              8,480             7,295          18,238
     Bond interest                                                     748               153             909
                                                             _____________     _____________    ____________
                                                                     9,228             7,448          19,147
                                                             _____________     _____________    ____________


                                                       Six months ended   Six months ended             Year
                                                                                                      ended
                                                       31 December 2007   31 December 2006               30
                                                                                                  June 2007
4.   Return per share                                                 p                  p                p
     Revenue return                                                11.7                9.2             24.7
     Capital return                                              (48.7)               65.6            100.0
                                                          _____________      _____________     ____________
     Total return                                                (37.0)               74.8            124.7
                                                          _____________      _____________     ____________

     The figures are based on the following attributable assets:
                                                       Six months ended   Six months ended             Year
                                                                                                      ended
                                                       31 December 2007   31 December 2006          30 June
                                                                                                       2007
                                                                  £'000              £'000            £'000

     Revenue return                                               7,631              6,005           16,094
     Capital return                                            (31,652)             42,765           65,203
                                                          _____________      _____________     ____________
     Total return                                              (24,021)             48,770           81,297
                                                          _____________      _____________     ____________
     Weighted average number of Ordinary shares in           65,035,750         65,205,621       65,194,984
     issue
                                                          _____________      _____________     ____________


                                                                    As at             As at           As at
5.   Net asset value per share                           31 December 2007  31 December 2006         30 June
                                                                                                       2007
     Attributable net assets (£'000)                              487,827           497,083         522,617
     Number of Ordinary shares in issue                        64,914,658        65,202,958      65,138,908
     Net asset value per Ordinary share (p)                         751.5             762.4           802.3



6.      Transaction costs

         During the period, 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 investment in the
Income Statement. The total costs were as follows:


                                                         Six months ended  Six months ended            Year
                                                                                                      ended
                                                         31 December 2007  31 December 2006         30 June
                                                                                                       2007
                                                                    £'000             £'000           £'000
     Purchases                                                        413               222             502
     Sales                                                             65                57             116
                                                            _____________     _____________    ____________
                                                                      478               279             618



7.       The financial information in this report comprises non-statutory
accounts within the meaning of Section 240 of the Companies Act 1985. The
financial information for the half years to 31 December 2007 and 31 December
2006 has not been audited or reviewed by the Company's auditors. The financial
information for the year ended 30 June 2007 has been extracted from published
audited accounts that have been delivered to the Registrar of Companies and on
which the report of the auditors was unqualified under Section 235 of the
Companies Act 1985.



8.       Copies of the Company's report for the half year ended 31 December 2007
will be posted to shareholders in February 2008 and will be available thereafter
from the Company's website: www.murray-income.co.uk and from the Secretary at
the Registered Office, 40 Princes Street, Edinburgh EH2 2BY.






INVESTMENT PORTFOLIO

AS AT 31 DECEMBER 2007


                                                                             Valuation    Total assets
Investment                        Sector                                         £'000               %
Royal Dutch Shell                 Oil & Gas Producers                           28,842             5.5
BP                                Oil & Gas Producers                           26,322             5.0
HSBC                              Banks                                         22,945             4.4
GlaxoSmithKline                   Pharmaceuticals & Biotechnology               16,627             3.2
Royal Bank of Scotland            Banks                                         16,246             3.1
British American Tobacco          Tobacco                                       15,720             3.0
Barclays                          Banks                                         14,520             2.8
Vodafone                          Mobile Telecommunications                     14,132             2.7
National Grid                     Gas, Water & Multi-utilities                  13,552             2.6
Centrica                          Gas, Water & Multi-utilities                  13,252             2.5
                                                                           ___________     ___________
Top ten investments                                                            182,158            34.8
                                                                           ___________     ___________
Lloyds TSB                        Banks                                         12,744             2.5
Aviva                             Life Insurance                                12,450             2.4
Rio Tinto                         Mining                                        12,229             2.4
AstraZeneca                       Pharmaceuticals & Biotechnology               11,902             2.3
BT                                Fixed Line Telecommunications                 11,575             2.2
Morrison                          Food & Drug Retailers                         10,948             2.1
Anglo American                    Mining                                        10,780             2.1
Unilever                          Food Producers                                10,584             2.0
AMEC                              Support Services                               9,810             1.9
SEGRO                             Real Estate                                    9,633             1.9
                                                                           ___________     ___________
Top twenty investments                                                         294,813            56.6
                                                                           ___________     ___________
Arriva                            Travel & Leisure                               9,620             1.8
Ladbrokes                         Travel & Leisure                               9,471             1.8
Imperial Tobacco                  Tobacco                                        9,221             1.8
Friends Provident                 Life Insurance                                 9,191             1.8
Associated British Foods          Food Producers                                 9,112             1.7
Land Securities Group             Real Estate                                    9,036             1.7
Premier Foods                     Food Producers                                 8,804             1.7
GKN                               Automobiles & Parts                            8,133             1.6
Daily Mail & General Trust 'A'    Media                                          7,958             1.5
Ord
Cobham                            Aerospace Defence                              7,921             1.5
                                                                           ___________     ___________
Top thirty investments                                                         383,280            73.5
                                                                           ___________     ___________
Venture Production                Oil & Gas Producers                            7,849             1.5
Emap                              Media                                          7,480             1.4
Standard Chartered                Banks                                          7,468             1.4
Wolseley                          Support Services                               7,346             1.4
Kesa Electricals                  General Retailers                              6,893             1.3
Scottish & Newcastle              Beverages                                      6,636             1.3
Weir Group                        Industrial Engineering                         6,476             1.2
Tomkins                           General Industrials                            6,291             1.2
Millennium & Copthorne Hotels     Travel & Leisure                               5,923             1.1
HMV Group                         General Retailers                              5,825             1.1
                                                                           ___________     ___________
Top forty investments                                                          451,467            86.4
                                                                           ___________     ___________
Mothercare                        General Retailers                              5,823             1.1
Close Bros Group                  General Financial                              5,700             1.1
Provident Financial               General Financial                              5,584             1.1
British American Tobacco Reverse  Tobacco                                        5,521             1.1
Convertible
Whitbread                         Travel & Leisure                               5,460             1.0
Citigroup Global Certificate      Mobile Telecommunications                      5,372             1.0
Vodafone
Tesco                             Food & Drug Retailers                          5,250             1.0
Aga Foodservice Group             Household Goods                                5,234             1.0
Barratt Developments              Household Goods                                5,011             1.0
BBA Aviation                      Industrial Transportation                      4,823             0.9
                                                                           ___________     ___________
Top fifty investments                                                          505,245            96.7
                                                                           ___________     ___________
Citigroup Global Certificate BT   Fixed Line Telecommunications                  4,579             0.9
Aberforth Smaller Companies Trust Equity Investment Instrument                   4,404             0.8
FTSE 100 Index Flex Put Expiry 18 Traded options                                 1,823             0.3
/04/08
                                                                           ___________     ___________
Total investments                                                              516,051            98.7
                                                                           ___________     ___________
Net current assets                                                               6,776             1.3
                                                                           ___________     ___________
Total assets                                                                   522,827           100.0






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