Annual Review - Alliance Trust · 2017-07-31 · Annual Review for the period ended 31 December Printed by MLG, Edinburgh Alliance Trust PLC 8 West Marketgait Dundee DD1 1QN Tel +44

Annual Review for the period ended 31 December

Printed by MLG, Edinburgh

Alliance Trust PLC 8 West Marketgait Dundee DD1 1QN

Tel +44 (0)1382 321000 Email [email protected]

www.alliancetrust.co.uk

Contact

Dividend Source: Alliance Trust

9.00p

8.395p

8.15p

8.00p

7.90p

2011 (Dec)

2011 (Jan)

2009 (Jan)†

2010 (Jan)

2008 (Jan)

Pence 0 2 4 6 8 10

† excludes special dividend of 0.5p

Company highlightsContents

Objective and Corporate Structure 2Chairman’s Statement 4Chief Executive’s Review 6Key Performance Indicators 10Portfolio Review 12Subsidiary Businesses 18Risk Factors 20Corporate Responsibility 22Summary Financial Performance 24Summary Directors’ Report 25Directors 26Summary Directors’ Remuneration 28Independent Auditor’s Report 31Summary Financial Statements 32Information for Shareholders 34

Net Asset Value Source: Alliance Trust

405.8p

439.0p

377.7p

316.8p

402.3p

2011 (Dec)

2011 (Jan)

2009 (Jan)

2010 (Jan)

2008 (Jan)

Pence 0 100 200 300 400 500

Share Price Source: FactSet

342.8p

364.0p

313.0p

268.0p

338.0p

2011 (Dec)

2011 (Jan)

2009 (Jan)

2010 (Jan)

2008 (Jan)

Pence 0 100 200 300 400 500

Total Expense Ratio Source: Alliance Trust

0.65%

0.63%

0.69%

0.70%

0.54%

2011 (Dec)*

* Annualised

2011 (Jan)

2009 (Jan)

2010 (Jan)

2008 (Jan)

% 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8

9.00pDividend

• OutperformedGlobalGrowthSectoraverage

• Ranked5th,6th,10thand10thoutof32membersoftheGlobalGrowthSectorover1,3,6monthsandtheperiod

• TopquartileTotalShareholderReturnwithintheGlobalGrowthSector

• Ranked6thoutofthe32membersoftheGlobalGrowthSectorfortheperiod

• Dividendof9.00p,anincreaseof7.2%onlastyear

• 45thconsecutivedividendincreaseandhighestincreaseinregulardividendsin20years

• Paidoutofcurrentyearearnings

• CostsremaininthelowestquartilewithintheGlobalGrowthSector

Net Asset Value(pershare)

405.8pNetAssetValue

342.8pSharePrice

0.65%TotalExpenseRatio

-5.7%

-3.5%

7.2%

2bps

Total Return

Total Shareholder

Return

2|Alliance Trust PLCAnnualReviewDecember2011

Who we are What we did in 2011 What we will do in 2012Statement of Investment

Objective and Policy

AllianceTrustisaself-managedinvestmentcompanywithinvestmenttruststatus.Ourobjectiveistobeacoreinvestmentforinvestorsseekingincreasingvalueoverthelongterm.Wehavenofixedassetallocationbenchmarkandweinvestinawiderangeofassetclassesthroughouttheworldtoachieveourobjective.Ourfocusistogeneratearealreturnforshareholdersoverthemediumtolongtermbyacombinationofcapitalgrowthandarisingdividend.

Wepursueourobjectiveby:

• Investinginbothquotedandunquotedequitiesacrosstheglobeindifferentsectorsandindustries;

• Investinginternationallyinfixedincomesecurities;

• Investinginotherassetclassesandfinancialinstruments,eitherdirectlyorthroughinvestmentvehicles;and

• Investinginsubsidiariesandassociatedbusinesseswhichallowustoexpandintootherrelatedactivities.

Wearepreparedtoinvestanyproportionofthetotalcorporatecapitalinanyoftheaboveassetclasses,subjectonlytotherestrictionsimposedonusbytheregulatoryorfiscalregimewithinwhichweoperate.However,wewouldexpectequitiestocompriseatleast50%ofourportfolio.Changestotheassetallocationwillbedependentuponattractiveinvestmentopportunitiesbeingavailable.

Wheremarketconditionspermit,wewillusegearingofnotmorethan30%ofournetassetsatanygiventime.Wecanusederivativeinstrumentstohedge,enhanceandprotectpositions,includingcurrencyexposures.

Weareaninvestmenttrustwhosepurposeistogrowthevalueofthecapitalthatourshareholdershaveinvestedwithus.Thishasbeenouraimforover120yearsandwemaintainaprudentapproachtoinvestmentwithanemphasisonlongtermreturns.

WearetheUK’slargestgeneralistinvestmenttrustbymarketvaluelistedontheLondonStockExchange.Asat31December2011wemanagednetassetsofover£2.4bn.

Ourfocusisoninvestmentinglobalequitiesandfixedincome,whichwebelievewillprovidegoodlongtermgrowthandincome.Wealsoholdotherinvestmentswhereweseethatvaluecanbeachievedoveralongerperiod.Theserepresentedonlyasmallproportionofournetassetsattheperiodend.

AllianceTrustPLC

AllianceTrustInvestments

Weareaboutiquefundmanagementbusinesswhichlauncheditsfirstfundin2009andwhichoffersabroadselectionofopenendedfundsandinvestmentsolutions.Asat31December2011wemanagedthirdpartyassetsofover£125m.

OurpurposeistoutilisetheexperienceandskillsofthemanagerswhoinvesttheTrust’sfundstoprovideaflexibleandbespokeservicewhichwillaimtoattractthirdpartyassets.ThiswillprovidetheTrustwithanadditionalprofileand,throughthemanagementfeeincomeearnedasthelevelofinvestmentsgrows,anadditionalrevenuestream.

AllianceTrustSavings

Since1986wehavebeenprovidingataxefficientwayforshareholderstoholdsharesinAllianceTrust.Todayweprovidehighqualityfinancialproductstoprivateinvestors,financialadvisersanddiscretionaryfundmanagers.

Overthelastthreeyearsthebusinesshasbeensignificantlydevelopedandisnowanestablished,awardwinning,ISAandpensionproviderwithacomprehensiveonlinesharedealingandinvestmentplatformservice.

ThefocusistohaveabusinesswhichbothaddsvalueandincreasesthevisibilityoftheTrusttopotentialinvestors.

Alliance Trust PLC(Investment Trust)

Alliance Trust Savings(Financial Products)

Alliance TrustInvestments

(Asset Management)

ObjectiveandCorporateStructure

Alliance Trust PLCAnnualReviewDecember2011|3

Monthly IncomeBond Fund

Europe

Asia-Paci�c 44.6

12.6

154.3

33.9

207.5

52.7

45.0

Global

Japan

North America

UK

0£millions 50 100 150 200 250

Funds by Value (£m) at 31 Dec 2011 Source: Alliance Trust

(7.7)Net Debt

% -20 0 20 40 60 80 100

Other Assets(inc subs)

Fixed Income

Quoted Equities 96.4

5.0

3.3

0.9

2.1

Private Equity

Property

Holdings (%) at 31 Dec 2011 Source: Alliance Trust

Transactional chargesRecurring fee income

Interest earned on deposits

Other income

21.2%

26.0%

40.8%

12.0%

Revenue source (%)

Source: Alliance Trust

We will continue the work that has been taking place over the last few years and which has been aimed at streamlining the portfolio to deliver improved investment performance.

We will seek to deliver strong performance in order to narrow the discount between our Net Asset Value and share price.

Who we are What we did in 2011 What we will do in 2012

Wehaverestructuredourequityexposuretoconcentrateonfourgeographicalregions:UK,NorthAmerica,EuropeandAsia.

Weboughtbackover10%ofoursharecapital.

Ournetdebtendedtheperiodat7.7%ofnetassetsdownfrom10.8%atthebeginningoftheperiod.

Wereducedourprivateequityandpropertyinvestments.

OurTotalShareholderReturnwasinthetopquartileoftheGlobalGrowthSectorfortheperiod.

We will launch new funds where we have the appropriate level of skills and identify a demand. In addition to the existing funds, all of which are available to individuals as well as institutional investors, we will increase awareness of the skills of our investment team to attract third party fund management mandates.

WerecruitedadditionalresourcetotargetbothIndependentFinancialAdvisersandtheinstitutionalinvestmentmarket.

WesawsignificantinflowsofthirdpartyassetsintoourMonthlyIncomeBondFund.

AttheendoftheperiodanewGlobalThematicOpportunityFundwaslaunched.

Welaunchedinternationalequities,ajuniorISAandalsorepricedourproducts.

WerestructuredourbusinessmodeltomakeitlessreliantonbaseratesandwideneddistributionthroughtheIndependentFinancialAdvisermarket.

Wesawsignificantyearonyearnewaccountgrowthofaround80%.

We will build on the growth and momentum achieved in recent years. We will continue to enhance our customer and adviser propositions and further significantly develop our online capabilities. Our i.nvest platform is well positioned in both the retail and intermediated markets to take full advantage of the changes being introduced through the Retail Distribution Review in 2013.


Chairman’sStatement

Investment performance

InmyfinalChairman’sstatementIampleasedtoreportthecontinuingimprovementininvestmentperformanceduringtheyearagainsttheKeyPerformanceIndicatorswhichwesetoutinlastyear’sreview.OverthefinancialperiodourTotalShareholderReturnandNetAssetValuetotalreturnranked6/32and10/32respectivelyagainstourpeergroupofGlobalGrowthinvestmenttrustscomparedto24/33and22/33inthepreviousyear.WecontinuedtogrowthedividendandmaintainedtightcontroloftheCompany’scoststoreflectthechallengingmarketconditions.Investmentperformanceremainsourtoppriorityandthisfocuswillcontinueunderthechairmanshipofmysuccessor,KarinForseke.

Dividend

Werecognisethatmanyofourshareholdersdependonasteadilyrisingdividendalongsidecapitalgrowth.Wehavemaintainedourrecordofannualincreasesinthedividendfora45thconsecutiveyear,withanincreaseinthefullyeardividendof7.2%from8.395ppershareto9.00ppersharedespitetheshortened11monthfinancialperiodfollowingthechangeofouryearend.Importantly,thisdividendiscoveredfromearningsandwehavenotneededtocallonourreserves.Theestablishmentofourfixedincometeamhasgivenusgreaterflexibilitytomeetshareholders’expectationswhilecontinuingtoinvestinequitieswhereweseegrowthopportunities.

Discount and share buybacks

Therewasmuchdebateaboutthediscountbetweenoursharepriceandournetassetvalueduringtheyear.Aresolutiontointroducearigiddiscountcontrolmechanismwhichwasrequisitionedbyashareholderwasdefeatedbyasubstantialmajorityatour2011AGMfollowinganunprecedentedturnoutfromourshareholders.TheBoardwasclearthroughoutinitsviewthatarigidmechanism,whichfailstotakeintoaccountfactorssuchasperformance,peergroupdiscountsandgeneralmarketconditions,isnotappropriateforAllianceTrust.

InourmanymeetingswithshareholdersoverthisperiodwerecognisedconcernsastothelevelofdiscountandtheBoardgavecarefulconsiderationtotheactionswhichcouldbetakentonarrowthediscount.FollowingtheAGMinMay2011weconfirmedourcommitmenttotheongoingflexibleuseofbuybacks,takingintoaccounttheCompany’sdiscountrelativetothepeergroup.Duringtheperiodunderreviewweboughtbackjustover10%oftheCompany’ssharecapital.Thiscontributedtoareductioninthevolatilityofthediscountduringaperiodofturbulentmarketconditionsandtoanarrowingfrom

“2011wasayearinwhichyourCompanyhadtoconfrontthechallengesarisingfromdifficulteconomicandmarketconditions.Attheendoftheyear,althoughweforeseecontinueduncertainty,particularlyintheEurozone,IbelievethatyourCompanyiswellplacedtotakeadvantageoftheopportunitieswhichmayemerge.“

LesleyKnox


17.1%to15.5%.OverhalfofthoseshareswereboughtbackbetweenMayandJuly2011,withbuybackscontinuingthroughouttheremainderoftheperiod.Wewouldnotexpecttomaintainthislevelofbuybackactivityinnormalmarketconditions.

The Board

IwritethisstatementwiththanksfortheguidanceandsupportIhavereceivedfromshareholders,otherdirectorsandmanagementthroughoutmy10yearsontheBoardofyourCompany,andalsowithoptimismforitsfutureunderKarinForseke,whowillbecomeChairmanon2AprilwhenIstanddownfromtheBoard.Karin’sextensiveexperienceoffinancialservicesandherinternationalperspectivemakeherideally-suitedtotheopportunitiesandchallengeswhichthefuturewillbring.

SincethelastAGMwehavewelcomedConsueloBrooketotheBoardasanon-executivedirector.Consuelo’sexperienceofover40yearsasafundmanagerunderlinestheBoard’srecognitionthatinvestmentperformanceisattheheartofyourCompany,andshewillbeaworthysuccessortoHughBollandwhosadlyhasdecidedtoretireatthisyear’sAGM.Hughhasplayedanimportantrolebothasanon-executivedirectorofyourCompanyandlatterlyasthechairmanofourassetmanagementbusiness,andIamgratefultohimforhiscontribution.

TimothyIngramhasalsodecidednottostandforre-electionbecauseofanticipatedincreasedcommitmentselsewhere.IwouldliketothankhimforhiswisecounselandinsightduringhistimeontheBoard,duringwhichhehasalsoservedasChairmanoftheRemunerationCommittee.

ChrisMasters,whohasbeenanon-executivedirectorsince2002andSeniorIndependentDirectorsince2007,wouldalsohaveretiredatthisyear’sAGMhavingservednineyears.Howeverhehasagreedtostandforre-electionand,ifre-elected,willremainontheBoardforaperiodofupto12monthstoassistwiththetransitionoftheBoard.RobertBurgessstooddownasChiefExecutiveofAllianceTrustSavingsandlefttheBoardinFebruary2012.HeleaveswithourthanksfortheworkhehasdoneindevelopingAllianceTrustSavingsandourbestwishesforthefuture.

Duringtheyear,followingpublicationofLordDavies’review“WomenonBoards”,therehasbeenacontinuingdebateabouttheimportanceofdiversityonboardsoflistedcompanies.YourBoardwholeheartedlyendorsesthis;diversitybringsdifferentperspectivestobearontheopportunitiesandchallengesfacingeverycompany.WehavechosennottoadoptatargetforgenderdiversityandourpolicythroughouttheCompanyisasimpleone–atalllevelstoappointthebest-qualifiedpersonforthejob.

Currentlywomencompriseone-thirdoftheBoardandofourExecutiveCommittee,whichincludestheexecutivedirectorsandotherseniorexecutives.Womencomprisearoundone-quarterofourSeniorLeadershipGroupandmorethanhalfofourtotalworkforcearewomen.Wecontinuetoencouragethedevelopmentofallemployeestoequipthemforboththeircurrentandfutureroles.

Scottish independence

WenotetheproposalbytheScottishGovernmenttoholdareferendumonScottishindependencein2014.YourBoarddoesnotbelieveitisappropriatetotakeapoliticalstanceonthisissue–itwillbefortheelectoratetocasttheirvotesastheyseefithavingheardthearguments.WewillhoweverendeavourtoensurethattheimplicationsofanindependentScotlandinareassuchaseconomicandfiscalpolicyandregulationoffinancialservicesareclearlyspeltout.Inparticularwewillwishtoestablishthatthebenefitsofinvestmenttruststatusandthepositionofourinvestorsandcustomers,wherevertheylive,willbepreservedinordertoensurethatthestrengthofScotland’sinvestmentsectorispreservedregardlessoftheoutcomeofthevote.

Annual General Meeting

OurAnnualGeneralMeetingwillbeheldinDundeeonFriday27April2012.IthasbeenanhonourtoserveasChairmanofyourCompanyandIhaveenjoyedmeetingmanyshareholdersovertheyears.IhopethatasmanyofyouaspossiblewilltaketheopportunitytoattendtowelcomeKarin,whowillbechairingherfirstAGM,andtomeettherestoftheBoardaswellashearingaboutyourCompany’sprogressandoutlook.


ChiefExecutive’sReview

(8.0%) 10/32

Peer Group* RankingAlliance1 Feb to

31 Dec 2011

(5.7%)NAV Total Return

Total Shareholder Return

(8.6%) 6/32(3.5%)

* Global Growth Sector

Overview

2011wasayearinwhichthemarketsweredrivenbynon-financialnews.Theyearstartedwithaseriesofnaturaldisasters.ThehumansufferingwasinstantlyvisiblearoundtheworldasimagesoffloodsinQueensland,earthquakesinChristchurchandthedevastatingtsunamiinNorthEastJapan,werebroadcastacrosssocialmedianetworks.Thefullscaleofthedisastertothosecaughtupintheseeventscannotbefullyunderstoodbymostpeople,andthehumancostoftheFukushimatsunamiisincalculable.

Thefocusoftheworld’spressthenmovedtoNorthAfrica,wheretheArabspringuprisingspreadeastfromTunisiathroughNorthAfricaandonintotheMiddleEast.

Whilemarketsdidnotreactparticularlytotheuprisings,theydidreactwhenthefinancialcrisisinEuropehittheheadlinesinJuly,tothepointwherethemarketstookfrightand,despiteregularmeetingsofEuropeanleaders,westillseemtobealongwayawayfromfindingasolutionthatwillsatisfyinvestorsforthelong-term.ThistimelastyearourviewwasthattheEurowouldsurvive.ThereisnoexitclauseintheTreatiesandthereforethereisnolegalwayinwhichacountrycanbeexpelled,noryetexpelitself.Overthelastyear,therehasbeenasubtle,butperceptiblechangetothatthinkingandmorepeopleareconsideringhowtomitigateandcontainwhatislikelytobeahugelydifficultexperienceforall.

WhiletheEurodominatedtheheadlinesoverthesummer,itwasnottheonlyregionwherefinancialdevelopmentsaffectedthemarkets.InearlyAugust,theUSmarketsuffereditslargestonedayfallsinceNovember2008whentheratingsagency,Standard&Poors,downgradedthecreditratingoftheUnitedStates.Thiswasthefirstinaseriesofsuchevents,themostrecentofwhichhasbeenthedowngradingofFrance,AustriaandsevenotherEuropeancountries.TheeffectofthelattereventistoincreasethecostoffundingfortheEuropeanFinancialStabilityFacility(EFSF),whichinturn,increasesthecostofbailingoutEurope.

TheUKwasnotimmunefromtheseevents.TheausteritypackageimplementedbytheCoalitionhasbeenrelativelywellreceived,withtheresultthatborrowingcostsfortheUKGovernmenthavereducedsignificantly,unlikethemeteoricriseexperiencedinSouthernEurope.ThegrowthoftheUKeconomyhasbeensluggishatbestandthereisconcernthatcurrentplanswillacttostifleanysignsofrecovery.Inflationhas,however,stabilisedandstartedtofall.

TheoverallincreaseinthelevelsofindebtednessoftheUSGovernmentisalarmingandwillcontinuetoactasadragoneconomicgrowthbutquantitativeeasingandmonetarypolicyhavekeptfundingcostsclosetoalltimelows.

“Ourperformanceovertheperiodunderlinesourabilitytoprotecttheportfoliofromthejarringshocksthathavebecomesomuchofafeatureofequitymarketsoverthelastfouryears.Wehavealsomanagedtogenerateincreasedlevelsofincomethatenableustopay,outofcurrentyearearnings,asubstantiallyincreaseddividend.”

KatherineGarrett-Cox


Portfolio performance and attribution

Forthefirsttime,weareprovidingperformanceattributionfortheTrust.Thiswillhelpexplainhow,whyandwheretheTrusthasperformedagainstaspecifiedreferencepoint.Wewillusethistoaidunderstandingbutitisimportanttorecognisethattheportfoliodifferssignificantlyfromthatofthereferenceindexintermsofweightingsanditisanticipatedthatthiswillremainthecasegoingforward.Thisshouldthereforenotbeviewedasafixedassetallocationbenchmark.Wewillcontinuetomanagetheportfolioonthebasisoftheunderlyingfundamentalsofthecompaniesconcernedwiththeobjectiveofprotectingandgrowingourshareholders’capitalirrespectiveoftheregionalandsectorweightingsoftheindex.Ourinvestmentstyleisfocusedonthedriversofinvestmentperformanceintheequityportfolio.

TotalShareholderReturn(TSR)outperformedtheNAVTotalReturn(NAVTR)by2.2%,asaresultoftheclosingofthediscountfrom17.1to15.5%andtheNAVTRoutperformedthereferencepointbyafurther0.2%.Thiswasprimarilydowntothesuccessfulassetallocationdecisions,mostnotablybymaintainingoverweightpositionsinUKequitiesandfixedincome,andunderweightintheunderperformingEuropean,AsianandEmergingMarkets,whichadded0.5%totheoutperformance,tacticalallocationdecisionswhichaddedafurther0.2%andbuybackswhichadded1.7%.Overallstockselectionwasnegative0.3%,althoughacrossthequotedequityportionoftheTrustwasneutralovertheperiod.ThecostofrunningtheTrustinperformancetermsis0.6%andtheimpactofgearingreducedthereturnbyafurther0.9%asmarketsfell.

Income Generation

Weareparticularlypleasedtobeabletodeclareadividendfortheperiodof9.0p,up7.2%onlastyearandpaidoutofcurrentyearearnings.Overthelastsixyearswehavebeenworkingtorebuildtherevenuereservestothepointwheretheyrepresentnearlytwoyears’dividendcover,enablingustodistributeagreaterproportionofthecurrentyearearnings.Goingforward,wewillstrivetopayagrowingdividendfromcurrentyearearningsconsciousthat,formanyofourshareholders,theimportanceofthedividendthatAllianceTrustpaysouthasincreasedsignificantlyoverthelastfouryears.Thisisparticularlyrelevantasinterestrateshavefallentohistoricallylowlevels.

AverywelcomedevelopmentoverrecentyearshasbeentheinitiationofdividendpaymentsbyAsiancompanies.TogetherwiththecontributionfromourFixedIncomefund,thishasallowedustoadjustourregionalassetallocationawayfromtheUK,withoutforegoingsignificantlevelsofincome.Aswehavegrownconcernedabouttheshort-termoutlookforequitymarkets,sowehavemovedtheportfoliotobemoredefensivelypositioned.Despitethisshiftwehavebeenabletogenerateayieldofover3%fromourAsianassets,somethingthatwouldhavebeeninconceivableevenfiveyearsago.However,theUKcontinuestoprovideconsistentdividendsastotalpayouttoshareholdersrosebynearly20%toarecord£67.8bnin2011.

Asset Stock Average Average Allocation Selection Attribution Weight (%) Return (%) Weight (%) Return (%) (%) (%)

UK 32.1 (2.7) 8.2 (2.9) 0.7 0.1

NorthAmerica 24.9 (1.3) 46.3 0.9 (1.5) (0.6)

EuropeexUK 13.6 (13.0) 17.4 (16.8) 0.4 0.5

Asia 17.0 (10.9) 21.8 (11.4) 0.3 0.1

Global 4.4 (11.8) 3.0 (6.2) (0.0) (0.2)

EmergingMarkets 4.2 (10.3) 3.3 (13.2) (0.1) 0.1

Contribution from Equities 96.2 (5.8) 100.0 (5.9) (0.2) 0.0

FixedIncome 4.3 (0.1) 0.0 0.0 0.5 (0.3)

OtherAssets 7.8 (0.5) 0.0 0.0 (0.0) (0.0)

Discretionary Assets 108.3 (6.4) 100.0 (5.9) 0.3 (0.3)

Expenses (0.6)

Cash 3.3 0.5

ImpactofGearing (11.6) (0.9)

EffectofBuybacks 1.7

Total Return 100.0 (5.7) 100.0 (5.9)

Source:AllianceTrust

Alliance Trust FTSE All World Index

Asset Allocation: measurestheeffectofstrategicallyoverweightingorunderweightingassetclassescomparedtothereferencepoint,theFTSEAllWorldIndex.

Stock Selection: measureshowthestockswithineachassetclasshaveperformedcomparedtothereferencepoint,theFTSEAllWorldIndex.Effect of Buybacks: measurestheeffectofdecreasingthenumberofsharesinissuethroughsharebuybacks.Impact of Gearing: measurestheimpactofborrowingsontheportfolioreturn.


ChiefExecutive’sReview

EmergingMarkets

AsiaEuropeNorthAmerica

UK

% Geographic weight Revenue split

Revenue

0

5

10

15

20

25

30

35

40

37.3

7.0

28.730.4

15.119.7 18.9

23.0

9.5

Source: Alliance Trust

Asset Allocation

DuringtheyearwehavecontinuedtheprocessoffocusingtheTrustbackonitscorecompetencies;investinginequitiesandfixedincome.InMarch,weannouncedthedecisiontoexittheprivateequitymarketandwehavenowsignificantlyreducedourexposuretothatassetclass.Wehavemorethanhalvedourundrawncommitmentsandwillnotbetakingonanynewliabilities.WehavealsomanagedtosellourexistingholdingsatNAVorbetter,reflectingthequalityoftheassetsheldintheportfolio.WehavealsocontinuedtoselldownourpropertyportfolioandbytheendofDecember2011retainedonlytwoofourproperties;weoccupythepropertyinEdinburghandwealsoownMonteithHouseinGlasgow.

Wehavestreamlinedourequityportfoliostofocusonthefourmainregionsofexpertise:theUK,NorthAmerica,EuropeandAsia.AlthoughweremainpessimisticabouttheUKeconomy,wecontinuetohaveover30%oftheportfoliolistedintheUKaswerecognisethatalistingintheUKisnotsynonymouswithexposuretotheUKeconomy.Infact,ouranalysisshowsthatwhiletheUKportfoliorepresentsover30%ofourequityportfolioonthebasisofwhereourinvestmentsarelisted,only7%oftheincomeearnedbythecompaniesinwhichweinvestissourcedintheUK.AsthemarketpeakedinearlyJuly,wetookadvantageoftherallytorefocustheportfolioandreducedouremergingmarketexposure,allowingustoincreaseourexposuretomoredevelopedmarkets.ThiswasfollowedbyafurtherreductionintheAsianportfolioandageneralshifttowardsamoredefensiveslanttotheportfolioasStandard&PoorsdowngradedthecreditratingoftheUSinearlyAugust.

Wewereactiveinthederivativesmarket.Howeverthiswaslimitedtoassistingwithmarkettimingforefficientportfoliomanagement.Wewouldtypicallyinvestinfuturesinordertoadjusttheregionalweighting,andthenexpectthatthefundmanagerwouldunwindthepositionintoorfromhisunderlyingassets.

Managingthecurrencyexposureintheportfolioisanintegralpartofourinvestmentprocess.OvertheyearwetookadvantageoftheflexibilityofourmulticurrencybankingfacilitytoborrowinEuroswiththeviewthatthecurrencywouldweaken.ByreducingourexposuretotheweakeningEurowehelpedprotectthevalueofourunderlyingequityholdings.InthethirdquarteroftheyeartherelativestrengthofSterlingagainsttheUSdollaralsogaveusanopportunitytoincreaseourweightingtothedollarandthenunwindourpositionasthepoundsubsequentlyweakened.Bothofthesestrategiesaddedtoperformance.Currencyfluctuationscanhaveasignificantimpactonthevalueofouroverseasholdingsandwecontinuetomonitorsuchmovementsandtakeactiontoprotectagainstthem.

Gearing

Wehavelongbeenabletocommandverycompetitiveratesofborrowing,whichaveraged2.0%attheendoftheyear.Wehavebeenabletoexploittheshort-termnatureofourborrowingfacilitiestoadjustourlevelofexposuretoequitymarketsinordertoreflectourrelativelevelofconfidenceintheoutlookforthevariousassetclasses.Overtheperiodwehavereducedthelevelofnetdebtfrom10.8%atthestartoftheyearto£184m(7.7%ofnetassets)aswebecameincreasinglyconcernedabouttheimplicationsoftheEurozonecrisisoverthesummer.Wemaintainanongoingprogrammeofrenewingandreplacingborrowingfacilitiestoprovideuswiththeflexibilitytoenhanceequityreturnsbygearingtheportfolio.

Risk

AssessinginvestmentriskisafundamentalpartofmanagingtheTrust’sassets.Weseektodiversifyriskacrosstheportfoliobyinvestinginover200discreteholdingsacrossdifferentassetclasses,regionsandsectors.Someoftheseassetsarecorrelatedbutbyspreadingtheriskacrossthisnumberofholdingsweaimtoreducethesinglestockspecificrisksignificantlytherebykeepingvolatilitylower.Weutiliseanindustrystandardriskmodeltoanalysethetechnicalaspectsofrisksandlooktoachieveabalancebetweenriskandrewardwhenconsideringportfoliostructure.Wemanagetheportfoliorisksactivelyandlooktoreduceriskintimesofuncertaintyandincreaseitwhenouroutlookismorefavourable.

Outlook

ItseemsinevitablethatpoliticswillcontinuetodrivemarketsentimentacrosstheglobeuntiltheuncertaintiesinEuropeandthemacroeconomicissuessubside.Therearemajorissuesfacingpolicy-makersintheUK,EuropeandtheUS.ForthcomingpresidentialelectionsinFranceandtheUSlaterthisyearwillcausefurtheruncertaintyandtheFrenchelection,inparticular,islikelytoleadtoachangeofpolitical


Investmentcredibilitycomesprimarilyfromtheperformanceoftheportfoliorelativetoourpeers.Inordertoachievethisweneedtoensurethatwehavethepeople,systemsandprocessesinplace.

Wehavedemonstratedourabilitytodeliverperformanceinturbulentequitymarketsandwearefocusedonmakingthedecision-makingprocessmoreflexibleinorderthatwecanidentifysystemicchangestotheoutlookonamoretimelybasis.

Torestoreinvestmentcredibility

Toregenerateourinvestorbase

WeareworkingtoincreasethelevelofunderstandingoftheTrustwithaviewtoensuringthatthereissustainabledemandforthesharesoftheTrust,whichwillinturnhelptodeliveranarrowerdiscount.

Webelievethatourcoreshareholderisandshouldultimatelyremaintheprivateinvestor.Weprovideaccesstoequityinvestmentsfromallovertheworld,whichweunderstandismoreappealingtothoseinvestorswhodonothavetheresourcestoundertaketheirownregionallydiversifiedassetallocation.Themostcost-effectivewaytoachievethisistofocusonthosewhoadviseandmanagetheportfoliosofprivateindividuals.

Key Priorities

Since2009wehavefocusedonfivekeyprioritieswhichwebelievedwerenecessarytoenableustoachieveourobjectiveofdeliveringlong-termvalueforshareholders.

Theseweretofocusoninvestmentinequities,continuetoimproveinvestmentperformance,manageourcostbaseinlinewithmarketconditions,developoursubsidiarybusinessesandinvestinthedevelopmentofourpeople.

Goingforward,wewillconcentrateondeliveringagainstthetwooverarchingprioritiesbelow.

direction,whereasweexpectlittlechangefromtheUSelectioninNovember.EuropewilldoubtlessdominatethenewsintheshorttermaspoliticiansstruggletoresolvethecomplexproblemoftheEuro.Atthetimeofwriting,theGreekdefaultissuewouldseemtobeinabeyancehoweverourcentralcaseisthattheissuehasnotbeenpermanentlyresolvedandsomeformofdefault,leadingtotheeventualdepartureofGreecefromtheEuro,willprobablyoccurinthenextcoupleofyears.Closertohome,austeritymeasuresarelikelytoleadtoaprolongedperiodofweakgrowthandfurtherpressureontheconsumer.AcrossWesterneconomiesweanticipatefurtherquantitativeeasingwillbedeployed,shouldgrowthstallfurther.

Againstthisbackdrop,equitymarketsarelikelytoremainvolatileintheshortterm,howeverequitiesremaingoodvaluerelativetootherassets,particularlygovernmentbondsandtheyremainourfavouredassetclass.Corporatebalancesheetsremainrobustandvaluationsforsomecompanieslookcompelling,particularlyforlong-terminvestorssuchasAllianceTrust.Manycompanieshaveweatheredthisfinancialstormbetterthantheydidin2008andareinamuchstrongerpositiontocapitaliseonanyrecovery.Theyhavereducedtheirlevelsofborrowingandwhatremainsiscostingthemlesstoservice.Theyhavealsobuiltupsignificantcashreservesandarewaitingfortheopportunitytoputittoworkinthemarketwhentheyfeelmoreconfidentabouttheeconomicoutlook.

Wearenotcurrentlyforecastingaglobalrecession,althoughwebelievethattheissueisfinelybalanced.InvestorsarewaitingforconfirmationthattherecentpickupineconomicactivityissustainableinordertobringthembackintothemarketandawayfromUK,USandGermangovernmentbondswheresomerecentauctionshavepricedwithnegativerealyields.Weconsiderthatthispositionisunsustainableandthatacorrectionisoverdueandourexposuretothisassetclassislargelyrestrictedtocorporate,notgovernmentbonds.Ourcentralcaseisthattherecoveryofequitymarketswillbealongdrawn-outaffair,butasweinvestforthelongterm,thisprovidesinterestinginvestmentopportunities.Weseecompaniestradingatvaluationsthatdonotreflecttheirtrueworthandtheopportunity,onastock-specificbasis,toinvestatlevelswehavenotseenforsometime.Theproblemthereforeisnotsomuchthedirectionthatmarketswilltake,butquitewhentheywillsetoff.


Key Performance Performance What we did during Indicators the period

WereporthereonthefourKeyPerformanceIndicators(KPIs)thatweusetomonitorthefinancialperformanceofourbusiness.

ThesemeasuresprovidetheBoardwiththeinformationitrequirestomonitorhowourperformancematchesourstrategyandobjectivesascontainedinourbusinessplan.

EachoftheseKPIsformpartoftheCorporateTargetswhichareusedtodeterminerewardsforourExecutiveDirectors.

PercentagechangeinNetAssetValueagainstthepeergroupover6months,1,3and5yearsonarollingbasis.

ThiswasselectedasameasuretoshowhowourinvestmentperformanceranksagainstotherinvestmenttrustsintheAICGlobalGrowthsector.Weconsiderperformancefromtheshorttothelongterm.

PercentagechangeinTotalShareholderReturnagainstthepeergroupover6months,1,3and5yearsonarollingbasis.

ThisKPIcomplementsthefirstKPIastheBoardisconsciousthatinvestmentperformanceofitselfdoesnotalwaysreflectthereturntoourshareholders.Againweconsiderperformancefromtheshorttothelongterm.

Dividendgrowthover1,3and5years.

WehaveanestablishedpolicyofpayingaprogressivedividendandbyincorporatingthisasoneofourKPIsweensureitiskeptattheforefrontoftheBoard’sconsideration.

ManagementoftheCompany’scostbaseinlinewithmarketconditions.

Inthecurrenteconomicconditionsitismoreimportantthaneverthatcloseattentionispaidtothecostofrunningthebusiness.

KeyPerformanceIndicators


On an NAV basis, Alliance Trust is ranked 5th, 6th, 10th and 10th out of the 32 stocks in the Global Growth sector over 1, 3, 6 months and the period respectively. The comparative rankings at the start of the period were 29th, 28th, 25th and 22nd.

Key Performance Performance What we did during Indicators the period

Total Shareholder Return was comfortably ahead of the indices, ranking 6th out of 32 trusts in the Global Growth Sector and ahead of the other large trusts in our sector for the 11 month period.

The final dividend will be 2.577p, payable on 2 April 2012. The total dividend of 9.00p, up 7.2%, will be the 45th annual consecutive dividend increase and will be paid out of the current year earnings of the Trust.

Trust costs have been controlled, even after including the necessary expenses associated with the additional professional fees relating to the shareholder resolutions at our Annual General Meeting in May. Our costs remain in the lowest quartile of the peer group.

Alliance Trust

6 months 11 months* 3 Years 5 Years

(9.0%) (5.7%) 7.3%

Global Growth Sector

NAV TotalReturn

(11.3%) (8.0%) 10.1%

2.3% 2.3%

29.9%

34.4%

(4.5%) (2.8%)

* 11 months for this reporting period only

Out/(under)Performance

Alliance Trust

6 months 11 months* 3 Years 5 Years

(10.1%) (3.5%) 6.8%

Global Growth Sector

Total ShareholderReturn

(11.7%) (8.6%) 9.1%

1.6% 5.1%

30.0%

39.0%

(9.0%) (2.3%)

* 11 months for this reporting period only

Out/(under)Performance

Total over the period

11 months* 3 Years 5 Years

7.2%

In the period

Dividend Growth

7.2%

12.5%

* 11 months for this reporting period only† Compound average growth

4.0% pa†

18.8%

3.5% pa†

Company Expenses

Dec 11 Jan 11 Jan 10

£16.0m

Total Expense Ratio

Costs

0.65%*

£17.0m

0.63%

£16.0m

0.69%

* Administrative expenses have been annualised given the �nancial reporting period is for 11 months, except for incentives which are on an actual basis


PortfolioReview

North Emerging Total Total UK America Europe Asia Markets Dec ‘11 Jan ‘11 % % % % % % %

Oil&Gas 7.6 3.2 0.8 1.2 - 12.8 13.2BasicMaterials 4.5 1.4 0.8 1.5 - 8.2 9.0Industrials 3.4 5.6 2.4 3.5 - 14.9 17.0ConsumerGoods 4.5 2.4 4.0 2.0 - 12.9 12.0HealthCare 3.6 4.3 2.4 0.7 - 11.0 7.6ConsumerServices 1.3 2.5 0.7 1.0 - 5.5 6.8Telecommunications 1.2 0.1 - 2.5 - 3.8 1.2Utilities 1.6 0.3 - 0.3 - 2.2 1.6Financials 6.5 4.5 2.7 3.3 - 17.0 17.9Technology - 4.4 1.0 1.9 - 7.3 10.7Core Equity Portfolio 34.2 28.7 14.8 17.9 - 95.6 97.0OtherAssets 0.1 0.5 - - 0.8 1.4 1.7PrivateEquity 3.1 - - - - 3.1 3.9Subsidiaries 1.2 - - - - 1.2 0.6Property 0.9 - - - - 0.9 1.5FixedIncome 5.0 - - - - 5.0 5.1Total Investments 44.5 29.2 14.8 17.9 0.8 107.2 109.8NetCash/(Debt) (6.4) 0.2 (2.0) 0.2 0.3 (7.7) (10.8)OtherNetAssets 0.5 - - - - 0.5 1.0 Net Assets Dec 2011 38.6 29.4 12.8 18.1 1.1 100.0 100.0Net Assets Jan 2011 34.6 25.2 12.2 21.7 6.3 100.0

AssetsheldinourEmergingMarketsandGlobalPortfolioswerereallocatedduringtheperiodtootherportfolios.

Classification of Investments


% of Country Value quoted Stock of listing Sector £m equities

RoyalDutchShell UK Oil&GasProducers 67.1 2.9%GlaxoSmithKline UK Pharmaceuticals&Biotechnology 58.3 2.5%BP UK Oil&GasProducers 50.8 2.2%HSBCHoldings UK Banks 44.6 2.0%RioTinto UK Mining 42.7 1.8%BritishAmericanTobacco UK Tobacco 38.8 1.7%BHPBilliton UK/Australia Mining 38.0 1.6%BG UK Oil&GasProducers 37.3 1.6%Pfizer USA Pharmaceuticals&Biotechnology 35.5 1.5%Diageo UK Beverages 31.8 1.4%Prudential UK LifeInsurance 31.5 1.4%AmericanTower USA MobileTelecommunications 31.2 1.4%Unilever UK FoodProducers 31.2 1.3%AstraZeneca UK Pharmaceuticals&Biotechnology 29.1 1.3%Vodafone UK MobileTelecommunications 27.9 1.2%CleanHarbors USA SupportServices 27.4 1.2%Nestlé Switzerland FoodProducers 26.3 1.1%PhilipMorrisInternational USA Tobacco 25.6 1.1%StandardChartered UK Banks 25.4 1.1%NationalGrid UK Gas,Water&Multiutilities 23.9 1.0%NewYorkCommunityBancorp USA Banks 23.0 1.0%InterOil Canada Oil&GasProducers 22.9 1.0%BankofNovaScotia Canada Banks 22.7 1.0%Carillion UK SupportServices 22.5 1.0%Apple USA TechnologyHardware&Equipment 21.5 0.9%YamanaGold Canada Mining 20.4 0.9%Visa USA FinancialServices 20.4 0.9%Legal&General UK LifeInsurance 20.1 0.9%WeirGroup UK IndustrialEngineering 20.0 0.9%SAP Germany Software&ComputerServices 19.7 0.9%RossStores USA GeneralRetailers 19.4 0.8%AshmoreGlobalOpportunities UK MutualFund 19.4 0.8%Anheuser-BuschInBev Belgium Beverages 19.2 0.8%Total France Oil&GasProducers 18.9 0.8%SuncorEnergy Canada Oil&GasProducers 18.7 0.8%Amdocs USA Software&ComputerServices 18.4 0.8%Pearson UK Media 17.9 0.8%EnterpriseProductsPartners USA Oil&GasProducers 17.5 0.8%Sanofi France Pharmaceuticals&Biotechnology 17.3 0.8%Fresenius Germany HealthCareEquipment&Services 17.2 0.8%Elementis UK Chemicals 16.9 0.7%UnitedTechnologies USA Aerospace&Defense 16.8 0.7%Melrose UK IndustrialEngineering 16.7 0.7%TaiwanSemiconductorManufacturingCo. Taiwan TechnologyHardware&Equipment 16.4 0.7%LionsGateEntertainment USA Media 16.2 0.7%Apache USA Oil&GasProducers 16.1 0.7%DaVita USA HealthCareEquipment&Services 15.7 0.7%TullowOil UK Oil&GasProducers 15.4 0.7%CanadianPacificRailway Canada IndustrialTransportation 14.9 0.6%MedcoHealthSolutions USA HealthCareEquipment&Services 14.9 0.6%

Top 50 quoted equity holdings as at 31 December 2011

Theseinvestmentsmaybehelddirectlyand/orindirectlythroughinvestmentinAllianceTrustInvestmentFunds.Afulllistofthecompaniesinwhichweinvestcanbefoundonourwebsitewww.alliancetrust.co.uk


Theme Portfolio activity Case studies

PortfolioReview

Thecombinationofincreasedindustrialization,thegrowthbothinthenumberandwealthoftheAsianconsumerandthemassivepublicsectorinfrastructuredevelopmentsinChinaandothermarkets,arecreatingmassivedemandforrawmaterialssuchascopperandsteel.Thesefactorsarealsocreatingopportunitiesforcompaniesfromallpartsoftheeconomicspectrumtoservicethesenewmarkets.TherehasbeenaslightcoolingoffoftheexpectationsforAsianeconomiesasfearofcontagionfromtheEurozoneissuedampenstheoutlook,butconsensusGDPgrowthforChinafor2012is8.4%andforIndiais7.3%,whichcompareswithaforecastcontractionwithinWesternEuropeof0.3%.

Asiangrowth

Eurozonecrisis

ThefutureforEuropeisfarfromclear.Europe(exUK)hasbeenamongtheworstperformingmarketsoverthelasttwoyearsandalthougheventscametoaheadinJuly,nosolutiontowhatisanintractableproblemhasbeenagreeduponbytheEuropeanpoliticians.Thisuncertaintycrippledtheregion’sequitymarketswhich,duringtheperiod,fellaround17%,whereasAsiawasdownaround12%,theUKwasdownaround4%andtheUSwasupover1%insterlingterms.Atthesametime,Europeanbondyieldsrosesharplyandthecurrencyhasweakened.

Incomegeneration

ThedividendswereceivefromtheinvestmentportfolioaredistributedtoshareholdersafterthecostsoftheTrusthavebeenpaid.Wehavegrownthedividendpaidtoshareholdersineachofthelast45yearsandthisyearwewillincreasethedividendby7.2%to9.00p,oratotalpaymentfortheperiodofaround£54.8m.

PORTFOLIO

Stock Review

PortfolioConstruction

MonitoringTeam

Discussion

In house:Research

Centre, Valuation Model, Stock

Selection

Companymeetings,site visits,

on the ground fact�nding

Researchmeetings

Theobjectiveofourinvestmentstrategyistoselectstocksthatcanaddtoshareholdervaluethroughouttheeconomiccycleandinsomecaseshaveaparticularnichethatallowsthemtocapitaliseonregionalspecificthemes.Forus,stockpickingrequiresdetailedanalysisofcompanyaccounts,meetingwithseniormanagementandafullunderstandingofwhatgivesthemtheedgeovertheircompetitors.


HSBC, listed in the UK, has less than 20% of reported profits coming from Europe. Over 50% comes from Asia and it has a network of 7,500 offices in over 80 countries. It has survived the turmoil in the financial markets because of its strong balance sheet and business model that has benefitted from Asian growth and that of other emerging markets in the Americas, Middle East and Africa. Its share price has benefitted from the rise of consumerism in many of its markets augmented by the bank’s strong capital base, prudent lending policy and strict expense discipline which also allows it to reward shareholders through dividends.

HSBC represented 4.8% of our UK portfolio at the end of the period.


Over18%oftheportfolioislistedinAsia,butouranalysisshowsthatover25%oftherevenuesthattheunderlyingcompaniesweareinvestedinisderivedfromAsianmarkets.Weanalyseourentireportfolionotonlyonthebasisofwherethestockislistedandthesectoritisin,butalsowithreferencetowherethecompanyinquestionderivesitsincome.Forexample,withsignificantrevenuesofanumberofUKlistedcompaniesbeingderivedoutsidetheUK,weexploittheopportunitytoaccessAsianmarketswithouttakingthecurrencyriskorsufferingwithholdingtaxonincomegeneratedwhichisinevitablewheninvestingdirectlyintherelevantmarket.ThesituationisthesameintheUSandEurope,whereweinvestinbrandswithanestablishedpresenceintheregion.

Barry Callebaut is the world leader in cocoa and chocolate products and its share price rose almost 27% in the period. It is the only fully integrated manufacturer with a global presence. This enables them to take advantage of the outsourcing trend as large producers such as Cadbury/Kraft look to cut costs in the highly capital intensive cocoa processing and semi-finished product stage.

Barry Callebaut represented 4.5% of our European portfolio at the end of the period.

Whilethemarketfellsharply,ourholdingsintheregionoutperformedbecausewewereinvestedincompanieswhichwerelesscorrelatedwithmarketmovements.Atasectorlevelthedivergencebetweentheperformanceoftheutilitiesandthefinancialssectorswhichbothfellalmost40%insterlingtermsandtheConsumerGoodsandHealthCaresectorswhichshowedpositivereturnsofover10%wasstark.WhenlookingatstocksthatareactiveinEurope,wehavebeenalerttothelikelyimpactontheirearningsofthecostofresolvingtheEurozonecrisis,whichwillinevitablyfallhardestonthosecompanieswithhighlevelsofdependencyontheperipheralEuropeanmarkets.However,westillbelievethatthereareinvestmentopportunitiesinEurope.Weremainheavilyexposedtointernationalcompaniesinlesscyclicalindustries.

National Grid rose 13% and performed well operationally over the period. Their focused efforts to improve their underperforming US assets delivering cost savings ahead of target. Rate reviews and relationships with US regulatory bodies appear to be improving too and this culminated in better cash delivery and greater dividend confidence for the future. Based on consensus market forecasts, the expected dividend for 2012 is over 6%.

National Grid represented 2.9% of our UK portfolio at the end of the period.

Ourmanagersconsiderthedividendpolicyofthecompaniesinwhichtheyinvestbecausewebelievethatadividendpolicyisausefuldisciplineforcompanies.Overrecentyearswehavereducedourexposuretothehigh-yieldingUKportfolio,butsourceincomeelsewheretomatchourdividendcommitment.OurUKinvestmentsgeneratedayieldof4%intheyear.Wehavebeenabletodiversifyincomegenerationwhichnowincludesasignificantcontributionfromthefixedincomeportfolio,yieldingover6%.FiveofthesixlargestholdingsinAsiaareyieldingaround4%ormoreandtheAsianequityportfolioasawholegeneratedayieldofover3%.



PortfolioReview

Thegrowingpopulationoftheworldhasanimpactonmanypartsoftheeconomy.Itputsgreaterpressureonlanduseandastheaverageincomeofthedevelopingeconomyrises,thisinturnincreasesthedemandforfoodandfurtherdowntheline,consumerdiscretionaryitems.WesawincreasesinthecostofsomefoodstuffsinIndiaofalmost70%lastyear.

Demographicsandpressureontheconsumer

Divergenceofviewsbetweeneconomistsandinvestors

Despitethestrongrecoveryincorporateprofits,theeconomicrecoveryintheUShasnotfedthroughtomosthouseholds.Therehasbeenaminimalriseinemployment,noriseinhousepricesandnexttonowagegrowth.Thishasbeenthecaseforsometimeandisunlikelytoeasesubstantiallyforsometimetocome.

Deleveraging

ForUKhouseholdsthedeleveragingprocesstoreducelevelsofindebtednessbeganin2008andtheyarenowdownfromtheirpeak.However,manydevelopedcountriesnowhavehigherlevelsofSovereigndebtthancountriesinemergingmarketswheretherehasbeenaquantumshiftinsavingratiosandbalanceofpayments,overanumberofyears,resultinginmanynowhavingastrongfiscalandmonetaryposition.

Technologicaladvances

OneareaofrobustgrowthisgasandoilproductionfromshalebedsandoilsandsacrossNorthAmerica.Technologicalinnovationhasopenedupnewproductionfronts,buttightandtighteningenvironmentalstandardsmeansthereisalotofcleanupandwastepreventionwork.

Aspartofthisfundamentalanalysiswehavetoassesswhatisafairpriceforastockthatclearlydemonstratesthesecharacteristics.Inmanycasesthiscompetitiveadvantagemayalreadybepricedintoashareprice,leavinglittleinthewayofupsidepotential.However,inothersitmaynotandthesearethestocksweaimtoinvestin.Thecurrentenvironment,wheremanydomesticeconomiesarestruggling,cancreategreatopportunitiesassharepricesaredrivenintheshort-termbyeconomicconcernsandnotbycompanyfundamentals.However,overthelong-termthesefundamentalcompanyspecificdriverswillre-assertthemselvesandprovidesignificantrewardsforthepatientinvestor.

TheprocessofmonitoringandassessingthepotentialvalueofstocksalreadyintheportfolioallowsustoshapetheTrusttobenefitfromthekeydriversoflong-termvalue.Italsoallowsustoisolateholdingsthathavereachedtheirfullpotentialortheircompetitiveadvantagehaschangedtotheextentthatwewouldselltheholding.

Asaninvestorwearecommittedtoalong-termrelationshipwiththecompaniesinwhichweinvest.WewelcomedtheintroductionoftheUKStewardshipCodewhichpromotesdialoguebetweenshareholdersandtheboardsoftheirinvesteecompaniesandtransparencyabouthowinvestorsoverseethosecompanies.Wereportonourvotingactivitiesonpage22.

WearealsosignatoriestotheUNPrinciplesforResponsibleInvestmentwhichadvocatesenvironmental,socialandcorporategovernanceconsiderationswhentakinginvestmentdecisions.Weuseanonprofitmakingorganisation,EthicalInvestmentResearchServices,toassistintheprocess.


Sanofi, a French company, is engaged in the research, development, manufacture and marketing of healthcare products. Their products are available in over 170 countries with emerging markets accounting for nearly one third of total sales and, more importantly, their highest growth rate for sales in 2011; up 10%. Over the past two years new management have refocussed the business and dramatically reduced cost resulting in some of the valuation potential of the business being realised. Shareholders also benefit from a yield of nearly 5%.

Sanofi represented 4.9% of our European portfolio at the end of the period.


Despiteongoinggovernmentpressuretosqueezehealthcarespending,ageingpopulationsinthedevelopedworldandrisingwealthinemergingnationsaredrivingdemandforpharmaceuticals.Weaddedsignificantlytothissectorovertheyearaslowvaluationsandimprovingnewdrugprospectsofferedmuchpotential.Achangetodomesticspendingpatternswasalsoathemethatwedevelopedovertheperiod.

Ross Stores, a US company which sells discounted end of line branded goods, continues to generate profitable sales growth and is attractively valued. This strong domestic market strategy is against a poor US economic backdrop but is designed to benefit from the change in consumer attitudes which looks set to continue for some time.

Ross Stores represented 3.2% of our North American portfolio at the end of the period.

Weholdmanyworldclassinternationalcompanieswithintheportfoliototakeadvantageoftheirexposuretoeconomicgrowth.

Thereareotherdomesticplayswherecompanieshaveacompetitiveadvantageornichemarketwhichcanleadtosuperiorreturnstoshareholders.Bydevelopinginvestmentthemeswecanfocusourexposureinregionsandsectorswhereweseeclearandsignificantbenefits.Wealsolookforopportunitiesfromcompaniesthatusetheenvironmentintheirowneconomiestotheiradvantagebyadaptingaparticularsalesstrategytosuittheneedsoftheircustomers.

Unilever, a UK listed consumer group, derives less than one third of its revenue from the UK economy. More than 50% of its business is in emerging markets and its products are sold in over 180 countries including a number of higher growth markets where its brands are seen as the product of choice. Of the eleven product areas in which it operates it is the global leader in seven of them. It has launched a global Sustainability Living Plan which aims to help more than a billion people improve their health and well-being.

Unilever represented 4.0% of our UK portfolio at the end of the period.

AtageographiclevelmuchoftheTrust’sexposureremainsintheUK,EuropeandtheUSwherethelevelsofpublicdebtaretoohighandeconomicactivityremainssluggish.However,therevenuesreceivedbytheTrustbearlittleresemblancetothisgeographicsplit.ForexampletheUKportfolioaccountsfor34%oftheTrust’sequitiesbutonly7%oftheTrust’srevenuesaregeneratedintheUKbythoseUKlistedinvestments.Thisistheresultofourdeliberatestrategyofinvestingincompanieswithinternationalexposuretohighergrowthmarketswherethereareconsumerswithsavingsandawillingnesstospendandgovernmentswhoarenotconstrainedbyfiscalpressures.

Clean Harbors, a US company known for their expertise in cleaning up off-shore oil spills, have been rapidly building up their land based waste prevention services. The vigorous activity in North America to extract oil and gas by deep water drilling and using the new ‘fracking’ technology has resulted in the services provided by them being in high demand. Clean Harbors does much of the clean up and waste handling in this area and performed extremely well against this backdrop.

Clean Harbors represented 4.6% of our North American portfolio at the end of the period.

TheBPdisasterintheGulfofMexicoresultedinrenewedfocusonregulationwithintheoilsector.Tobenefitfromthischangewelookedforcompanieswithaproventrackrecordinanareathatwouldbepositivelyaffectedfromthechanges.Wastedisposalandpostcrisiscleanupoperationsaswellaslandbasedwastepreventionservicesareanareathatplaytothistheme.


BydeliveringexcellentinvestmentperformanceourobjectiveistobuildlongstandingrelationshipsandgenerateprofitswhichwillflowthroughtotheTrust.

ThecontinuinginflowintoourMonthlyIncomeBondFundistestamenttothecredibilityofourfixedincometeamanditsattractivenesstoclientsseekingincome.Wehavebeenencouragedbythelevelofinterestexperiencedinourlatestfund,theGlobalThematicOpportunitiesFund,whichlaunchedattheendoftheperiod.

Wehaveidentifiedthefollowingdriverstoourfuturegrowth:

• InvestmentPerformance–fouroutoffiveequityfundshaveperformedinthetophalfoftheirsectorfortheperiod.WhiletheMonthlyIncomeBondFundwasinthelowestquartileofitspeergroupitdiddeliveritsinvestmentobjectivewithanannualisedincomereturnof6%.

•Distribution–throughourexperiencedbusinessdevelopmentteamwenowhaveastrongbasefromwhichtobuildonourrelationshipswithprivatewealthmanagersandinstitutionalinvestors.Ourfundsarenowavailableon11platforms.

• Profile–duringtheperiodourmarketingactivityincreasedawarenessofourinvestmentofferingsandourchangeofnamefromAllianceTrustAssetManagementhasrefreshedourbrandwhilereinforcingourlinkswiththeTrust.

• Choice–wenowhavesevenfundsmanagedbyourequityandfixedincometeams.Wewilllooktolaunchadditionalfundswhereweseepotentialgrowthinthemarketsuchasincomefundsoraroundaglobalinvestmenttheme.

• Wehaveaninnovativeapproachtofees,structuringourfundsintosharecategorieswhichcaneitherincludeorexcludeadditionalfeesforoutperformance.

Alliance Trust Investments was launched in 2009 with the aim of developing and fully utilising the skills of the Trust’s investment team. It allows third parties the opportunity to invest through a range of open ended funds. During the past year we made solid progress with third party assets under management rising over 50% to £125m at the period end. Our Monthly Income Bond Fund has averaged net inflows of over £1m per week in a corporate bond sector which has seen large net outflows over much of the period.

Key Differentiators

• Weareaboutiqueinvestmentmanagementcompanywiththebackingofastrongparent

• WehavebeenabletorecruitexperiencedandwellqualifiedmanagersattractedbytheopportunitytomanageboththirdpartyfundsandtheTrust’sownassets.


Thestrongbusinessmodelnowinplacepositionsuswelltotakeadvantageoftheconsiderablemarketopportunitiestogrowthebusinessanddelivervaluetoshareholders.

Ourbusinessmodelhadbeenbuiltaroundprovidingahighqualityandlowpriceservice.Historicallywewerereliantoninterestratesreceivedoncustomerdepositsforasignificantproportionofourincome.Thecontinuedlowbaserateenvironmentpromptedustoreviewourbusinessmodel.

Ourbusinessmodelnowhasinplacethefollowingdriverstofutureprofitability:

• Pricing–wehaveincreasedpricingtobothourexistingandnewcustomers,toalevelmoreinlinewiththemarket,whilstsufferinglittleattritiontocustomernumbers.

• Scaleability–oursystemsandprocesseshavecapacitytoaddsignificantnewvolumes.

• Transactionactivity–webenefitfromtheincreasingusebycustomersofouronlinedealingfacility.

• Market

- ourshareoftheUKplatformandFullSIPPmarketisaround5%–weexpectthismarkettogrowthroughmigrationfromDefinedBenefitpensionstoproductssuchasthoseofferedbyus.

- growingdesireamongstinvestorstoconsolidateassetsinoneplace.Ourplatformprovidesthatfacility.

- intheshortertermweseethelowyieldenvironmentprovidingcontinuingimpetusforinvestorsseekingtoreplacelostdepositincomewithhigheryieldingmutualfunds.Ouri.nvestplatformoffersover1,500funds.

- higherpersonaltaxratesintheUKshouldunderpininflowsintoourSIPPsandISAs.

• Regulatory–RetailDistributionReview

- weexpectanincreaseinourdirectcustomerbasefromindividualswhohavechosennottoseekadvice.

- IndependentFinancialAdviserswillberequiredtohavemorethanoneplatform.

Alliance Trust Savings is held as an investment on which the Trust seeks to make a commercial return. We made strong progress, reporting a loss of £3.1m against £5.4m the previous year. Overall the number of accounts grew by 8% in the period.

Key differentiators

• Wehavethebackingofastrongparentandareindependentoflifecompanyproductproviders

• AlreadyRetailDistributionReviewcompliant

• Werefundtoourcustomerstheentirecommission(circa£0.7mp.a.)receivedbyus

• Wehaveaflatfeechargingstructure.

An Award Winning Business

Principal risks Mitigation Key developments


RiskFactors

Thefollowingsectionsetsoutourapproachtoriskmanagementandfocusesontheprincipalrisksthatwebelievecouldimpactontheperformanceofthebusiness.Effectiveriskmanagementisakeycomponentofthebusiness’soperatingmodelandassistsinensuringthatthedifferentpartsofthegroupoperatewithinacceptableriskparameters.

TheBoardhasoverallresponsibilityforsettingthelevelofriskwhichitispreparedtoaccept.TheriskframeworkisoverseenbytheRiskCommitteewhichischairedbytheFinanceDirectorandismadeupofrepresentativesfromAllianceTrustandeachofitsregulatedsubsidiarybusinesses.TheChairmanoftheAuditCommitteealsoattendsatleastonemeetingeachyear,toprovideadditionaloversightandaNon-executiveperspective.Eachbusinessmaintainsandreviewsitsriskregisterandthecontrolsinplacetomitigate,reduceorpreventlossarisingfromtheirkeyrisks.Acommonriskcategorisationisinplaceforallbusinessunits.

DuringtheperiodtheRiskCommitteemetoneightoccasionsandreceivedexternalpresentationsonfraudriskandtheproposednewregulatoryenvironmentintheUKaswellasinternalreviewsoninformationtechnologysecurity,dataprotection,upcomingregulatorychangeandtheresultsofglobalrisksurveys.TheCommitteedividesitstimebetweenidentifyingandevaluatingemergingrisks,challengingbusinessselfassessmentriskprofilesandperforminganoversightroleforthecompletionofremediatingactions.

WecontinuetoenhancetheRiskFrameworkandintheperiodimprovedourriskreportingcapabilitieswiththecreationofKeyRiskIndicatorswhicharereportedatbothManagementandBoardlevel.

Inappropriateobjectiveandstrategyinrelationtoinvestordemandsinarapidlychangingfinancialservicesmarket.

Strategy

Market

TheTrustcurrentlyinvestsprimarilyinUKandoverseasequitiesanditsprincipalrisksarethereforemarketrelatedandincludemarketrisk(currency,interestrateandotherpricerisk).

SomenationsintheEuropeanUnion(EU)haveseentheirsovereigndebtcomeunderpressureamiddeterioratingeconomicandfiscalconditions.ThishasincreasedtheriskofagovernmentdefaultoracountrybeingforcedtoexittheEuroarea.

AllianceTrusthasdirectexposuretotheEUvia(i)itsEuropeanportfolio(ii)holdingsinfundsmanagedbyitssubsidiarycompanyAllianceTrustInvestments,and(iii)investmentsmadebyitsPrivateEquitybusiness.WithintheaboveourexposuretoGreece,Italy,Ireland,PortugalandSpainisminimal(<1%totalNetAssetsoftheTrustasat31December2011).

Otherrisksareassociatedwithassetallocation,sectorandstockselectionwhichcouldleadtoinvestmentunderperformance.

Gearing

TheTrusthastheabilitytoborrowmoneyforinvestmentpurposes.Iftheunderlyinginvestmentfallsinvalue,anyborrowingswillmagnifytheextentofthisloss.Ifborrowingfacilitiesarenotrenewed,theTrustmayhavetosellinvestmentstorepayborrowings.

Accounting,legalandregulatory

InordertoqualifyasaninvestmenttrusttheCompanymustcomplywithsections1158-59oftheCorporationTaxAct2010.FailuretodosowouldresultintherealisedcapitalgainsoftheCompany’sportfoliobeingsubjecttoCorporationTax.

MajorregulatorychangecouldimposeunnecessarycomplianceburdensontheTrustorthreatentheviabilityofitsbusinessmodel.

Operational

FailureoftheTrust’saccountingorinternalcontrolsystemsorthoseofotherthirdpartysupplierscouldleadtoaninabilitytoprovideaccuratereportingandmonitoringoramisappropriationofassets.


• DecisiontowithdrawfromPrivateEquityinfavourofquoted equities.

• DiscounthasnarrowedwhiletheGlobalGrowthsectoraverage has widened during the period.

Principal risks Mitigation Key developments

TheBoardregularlyreviewsthestrategyoftheTrustandthelevelandsourcesofdemand.TheBoardrecognisestheneedforconsistentlygoodperformanceinordertodriveinvestordemand.

ThesubsidiarybusinessesareasourceofvaluegoingforwardandtheirneedtodeliveragainstbusinessplanisrecognisedbytheBoard.

• Strengtheningofcapabilitiesofequity investment team.

• LaunchofGlobalThematicOpportunitiesFund.

• Ranked6/32ofPeerGroupforTSRand10/32forNAV return over the period.

TheAssetAllocationCommitteemeetsatleastmonthlytomanagetheallocationofthecapitaloftheCompanybetweenandamongtheassetclassesapprovedbytheBoardwithintheriskparameters,policiesandotherlimitsandguidelinessetbytheBoard.

OurinternalResearchCentreprovidesananalysisofeconomies,marketsandsocio-economicissuesthatmayaffectmarketstoinforminvestmentdecisions.

WecloselymonitorexposurestoEuropewithinourinvestmentportfoliosandconsiderbothdirectandindirectexposures.

AllborrowingsrequirethepriorapprovaloftheBoardandgearinglevelsarereviewedbytheBoardandtheAssetAllocationCommitteeateverymeeting.ThemajorityoftheTrust’sinvestmentsareinquotedequitiesthatarereadilyrealisable.

• Paceofregulatorychangeremainsachallengeto the Group. This includes not just legislation emanating from the UK and Europe but also from the US such as the Foreign Account Tax Compliance Act.

TheFinanceDirectorregularlymonitorsthecompliancecriteriaundersections1158-59oftheCorporationTaxAct2010.

TheGroup’sComplianceDepartmentmaintainsaforwardradarofupcomingregulatorychanges.WhereasignificantdetrimentaleffectontheTrustisenvisaged,representationiseithermadeindividuallyorviatradebodies.ManagementoftheregulatoryforwardradarisoverseenbytheRiskCommittee.TheComplianceDepartmentperformmonitoringactivitiesduringtheyeartoensurecompliancewithrelevantregulations.AnybreachesarereportedtotheBoardandwhererelevanttotheappropriateauthorities.

• DuringtheyeartheeffectivenessoftheContinuityofBusiness Plan was tested by way of a crisis scenario workshop. The result of the test was positive.

TheTrustmaintainsaContinuityofBusinessPlanwhichfacilitatesthecontinuedoperationofthebusinessintheeventofaservicedisruptionormajordisaster.

AreportontheeffectivenessofinternalcontrolsisreviewedbytheBoardandexternalreportsonthecontrolenvironmentsofsignificantthirdpartyserviceprovidersareobtainedandreviewed.

• Anewfacilityforupto£100mwasapprovedwiththe same lender to replace an existing facility of the same amount.

• Borrowingcommitmentsarewithdifferentbanksand over different durations.

Accounting,legalandregulatory

Operational


CorporateResponsibility

Marketplace – meeting the expectations of our investors and customers

Ourprioritiesare:

• toconsideralloftherisks,includingnon-financialandreputationalrisk,whenwetakeinvestmentdecisions

• tooffercompetitiveproductsinwhichourcustomerscaninvestwithaclearunderstandingofthelikelyrisksandreturns.

BothAllianceTrustPLCandAllianceTrustInvestmentsaresignatoriestotheStewardshipCodepublishedbytheFinancialReportingCouncil,whichisintendedtosetoutthestandardsexpectedofresponsibleinvestors.Ourstewardshippolicystatementsandfulldetailsofourvotingactivityonaquarter-by-quarterbasisarepublishedonourwebsite.During2011wealsobecamesignatoriestothePrinciplesforResponsibleInvestment,backedbytheUN,whichprovidesaninternationally-recognisedframeworkforinvestorstotakeaccountofenvironmental,socialandcorporategovernanceissues.

Ourinvestmentmanagerslooknotjustatthefinancialperformanceofthecompaniesinwhichweinvest,butalsoconsidertheirenvironmental,socialandgovernance(ESG)profileinordertoidentifyanyaspectsoftheirbusinessactivitieswhichmightgiverisetounexpectedlossofvalue.Wemeetregularlywiththemanagementofcompaniesandraiseanyconcernswhichwehaveidentified.

Ourpolicyistovotewhereverpossible–inmostcaseswesupportmanagementbutwillvoteagainstmanagementwherewebelieveproposalsarenotinshareholders’interestsandhavebeenunabletoeffectchangethroughengagement.

Duringtheyearwevotedasfollows:

Infavourofmanagementrecommendations 146Againstmanagementrecommendations 16Abstentions 1

VotesagainstmanagementweremostlyinrelationtoUScompaniesandinfavourofhavinganannualadvisoryvoteonremuneration.

Wealsoaimtomaintaineffectiverelationshipwithourownshareholders,bothindividualandinstitutional,meetingwiththemregularlyduringtheyearandpublishingregularperformancereportsonourwebsite.

BothAllianceTrustInvestmentsandAllianceTrustSavingsofferproductswithinaregulatedframeworkwhichpromotesfairtreatmentofcustomers.Ourproductsaredesignedandmarketedinawaywhichmakescleartocustomersthenatureoftheinvestmentandtherisksinvolved.

Allofouremployeesaresubjecttopoliciesongiftsandhospitalityandconflictsofintereststoremovetheriskofundueinfluenceorbias.DuringtheyearweissuedaCodeofBusinessConducttogiveadditionalguidanceonthebehavioursweexpectfromemployees.

Inordertomeetourcorporateobjectiveofgeneratingarealreturnforshareholdersoverthemediumtolongtermweneedbeabletodemonstratethatwebehaveresponsiblytowardsourcustomers,ouremployees,thewidercommunityandtheenvironment.Thissectionexplainshowweachievethis.

Weweredelightedtowinthe2011HRNetwork(Scotland)OrganisationalDevelopmentAward.Thejudgestookintoaccountourorganisationandstructure,leadershipandtalentprogramme,culture,valuesandbehavioursandoverallemploymentexperience.Wewereabletodemonstratetheengagementofemployeesatalllevelsaswellaseffectivecollaborationbetweenthedifferentpartsoftheorganisation.

Thisawardunderlinesourcommitmenttorespectingourpeopleandgivingthemeveryopportunitytomaximisetheirpotential.Italsohelpsinattractinghighqualitycandidatesacrossalllevelsoftheorganisation.


Workplace – providing an environment in which our employees can realise their full potential

Ourprioritiesare:

• tomaintainasafeanddiscrimination-freeworkingenvironment

• toofferallemployeesopportunitiestolearnanddevelopnewskillsforthebenefitoftheCompanyandthemselves.

Wehavewell-establishedpoliciesandprocedurestoremoveallformsofunlawfuldiscriminationandencourageouremployeestotreateachotherwithrespect.Thesearesupportedbyaconfidentialwhistleblowingfacilitythroughwhichemployeescanraiseconcernsindependentlyoftheirownmanager.Wealsoundertookanemployeeengagementsurveyduringtheyearwhichachievedaresponserateof82%ofemployees,upfrom76%inthepreviousyear.Inthesewayswealsomeetourhealthandsafetyobligationsandtreatdisabledemployeesinaccordancewithourstatutoryobligations.

EmployeesareencouragedtotakeaninterestintheprogressoftheCompany.Aswellasteammeetings,regularcompany-widebriefingstakeplacewhereseniormanagerscommentontheprogressofourthreebusinesses.ThisinterestisreinforcedbyopportunitiesforemployeestoacquiresharesintheCompany,includingourAll-EmployeeShareOwnershipPlanwhichoffersanannualallocationofsharesbasedoncompanyperformance.AllemployeeswhojoinedtheCompanybeforeAugust2010areshareholdersandtheaverageholdingisover5,000shares.

Wecontinuedourgraduaterecruitmentprogrammeandnowhavealeadershipdevelopmentprogrammethatallowsustoidentifyandoffertailoredtraininganddevelopmentopportunitiestoindividualsacrossourbusinesswhowebelievehavethepotentialtoprogressandbecometheleadersofthefuture.

Community – playing our part to support the wider community

Ourprioritiesare:

• tosupportthedisadvantaged,particularlyyoungpeople,inourlocalcommunity

• topromoteasenseofresponsibilityinourownemployees.

Againthisyearwesupportedlocalorganisationsthroughourstafffoundation,matchingtheamountraisedbyouremployeesthroughtheirfund-raisingactivities.Wemadedonationsof£2,925intotaltosupportorganisationsworkingwithyoungpeopleinTaysideandFife.

Wealsocontinuedtoencourageemployeestoundertakevolunteeringactivitiesandatotalof15dayswerespentbyemployeesattheBraeDundeeRidingAbilityCentreduringtheyear.

AsignificantdevelopmentduringtheyearwastheAllianceTrustCateranYomp.This52mileteamevent,basedontheCateranTrailinPerthshireandtheAngusGlensandsponsoredbytheCompany,attractedover200participantsincluding53staffandraised£282,000throughsponsorshipandentryfeesinaidofABFtheSoldiers’CharityandthePrince’sScottishYouthBusinessTrust.

Environment – using natural resources and energy responsibly

Ourprioritiesare:

• tominimiseenergyconsumption

• toencouragerecyclingofwaste

OurprincipalofficeinDundeewasdesignedtomaximiseenergyefficiencyandrecyclingopportunities.Weusepaperfromsustainablesourceswhereverpracticableandcost-effectiveandcomputerequipmentiseitherrefurbishedorrecycledattheendofitsusefullife.

WealsoencourageshareholderstoreceivecommunicationselectronicallyandmakeadonationtotheWoodlandTrustforeachshareholderwhooptstoreceivetheircommunicationselectronically.

Carbon footprint reporting

Wereportoncarbondioxide(CO2)emissionsbasedontheGreenhouseGasProtocolCorporateReportingandAccountingStandardusing:

Scope1:gas,fueloil,refrigerantloss

Scope2:non-renewableelectricitypurchased

Scope3:businesstravelbypersonalcar,airandrail

OurCO2emissionsduringtheyearamountedto870tonnes,anetdecreaseof5.5%comparedtothepreviousyear.Thisrepresents3.19tonnesperfull-timeemployee.Thereductionispredominantlyduetoyear-on-yearreductionsinelectricityandgasconsumptionatourHeadOffice,offsetinpartbyanincreaseindomesticandothershort-haulflights.Abreakdownisshownbelow.

Air travel

Natural Gas/Fuel Oil

Electricity use

Air conditioning refrigerant loss

Personal carbusiness travel

60.5%

18.6%

15.2%

4.1%

Rail travel 1.1%

Company vehicle use 0.1%

0.5%

Corporate carbon footprint

Source: Corporate Citizenship


SummaryFinancialPerformance

Financial year end

Aspreviouslycommunicated,theCompany’sfinancialyearendhaschangedto31December.Ourresultsto31December2011arethereforeforan11monthperiodandthecomparitives,whichareinbrackets,arefortheyearended31January2011.Referencesbelowtoannualisedpercentageincreasesfromtheprioryearhavebeenincludedtoreflectthisinlinewithbestpractice.Therehasbeennocostimplicationasaresultofthischange.

Consolidated Results

Fortheperiodended31December2011theconsolidatedlosspersharewas30.75p(gain68.46p)comprisingrevenueearningpershareof8.91p(8.20p)andcapitallosspershareof39.66p(gain60.26p).

Consolidatedadministrativeexpenseschargedagainstrevenueprofitswere£37.4m(£38.1m).Consolidatedadministrativeexpenseschargedagainstcapitalprofitswere£2.0m(£2.7m).

Company Total Return

TheCompanygeneratesreturnsthroughrevenueearningsandcapitalgrowth.Fortheperiodended31December2011therevenueearningspersharewere9.87p(9.67p)andthecapitallosspersharewas41.06p(gain58.93p)representingatotallosspershareof31.19p(gain68.60p).

Company Revenue Performance

RevenueearnedfromtheCompany’sassetsincreasedbyanannualised6.9%to£85.1m(£86.8m).Incomefrominvestmentsincreasedbyanannualised8.8%to£81.4m(£81.6m)duetoincreaseddividendreceipts.

RentalincomeontheCompany’spropertyportfolioreducedto£2.2m(£3.5m),followingthesaleoftwopropertiesduringtheyear.

Company Capital Performance

Lastyearsawadeclineinthefinancialmarketsandournetassetvaluepersharefellby7.6%(increase16.2%).Lossesonourinvestmentportfoliototalled£254.8m(gains£391.9m).

Company Expenses

TheannualisedTotalExpenseRatio(TER)fortheperiodwas0.65%(0.63%).TheTERexcludestheexpensesofoursubsidiarybusinessesasthesecostsdonotrelatetorunningtheinvestmenttrust,consistentwithindustrypractice.

Weremainconsciousofprevailingmarketconditionsandtherequirementtoapplystrictcostcontrolsacrossthebusiness.Companycostsincreased0.9%onanannualisedbasisto£16.0m.ThiswasachieveddespitenecessaryadditionalprofessionalfeesrelatingtotheMay2011AGM

requisitionssubmittedbyshareholdersandtheclosureofourprivateequitybusiness.ClosureofourDefinedBenefitSchemetoaccrualduringtheyearresultedinaone-offgainof£0.8m.

Dividend

TheCompanyhasapolicyofgrowingthedividendand,subjecttoexternalfactorssuchaschangesintheeconomicenvironmentandtaxation,theDirectorsseektomanagetheassetsoftheCompanytogenerateagrowingrevenuestreamwhichwillallowthemtocontinuetodeclareincreasingdividendsyearonyear.

Havingpaidthreeinterimdividendsof2.141pforlastperiod,theDirectorshavedeclaredafourthinterimdividendof2.577ppersharepayableon2April2012.Thetotaldividendfortheperiod,of9.00p,isanincreaseof7.2%onthe8.395ppaidforthepreviousyear.

Intheabsenceofanyunforeseendevelopments,weexpecttobeabletorecommendquarterlyinterimdividendsof2.3175p,payableonoraround2July2012,1October2012and31December2012andafourthinterimdividendofatleast2.3175p,payableonoraround2April2013.

Subsidiary Businesses

Bothofoursubsidiarybusinesseshavemadegoodprogressduringtheyearasoutlinedonpages18and19.AllianceTrustInvestmentsmadealossof£4.8m(£3.4m)inlinewithourstartupplanforthebusiness.AllianceTrustSavingsmadealossof£3.1m(£5.4m),benefitingfromincreasedsalesandtightcontrolofcosts.

Borrowing Facilities

At31December2011wehadnetdebtof7.7%(11%).TheCompanyhadcommittedfundinglinesof£450m(£450m)inplaceattheperiodendandgoodcovenantcover.


SummaryDirectors’Report

Summary Financial Statement

ThisSummaryFinancialStatementhasbeenpreparedvoluntarilybytheDirectorsinaccordancewithsection426oftheCompaniesAct2006.ItdoesnotcontainsufficientinformationtoallowafullunderstandingoftheresultsandstateofaffairsoftheCompanyandofitspoliciesandarrangementsconcerningDirectors’remuneration.Forfurtherinformation,thefullannualfinancialstatements,theAuditor’sReportonthosefinancialstatementsandtheDirectors’Reportshouldbeconsulted.AcopyoftheAnnualReport,whichmaybeobtainedfreeofchargefromtheCompanySecretary,willbedeliveredtotheRegistrarofCompaniesaftertheAnnualGeneralMeeting.ShareholderswishingtoreceivethefullAnnualReportinfutureyearsmayopttodosobywritingtotheCompanySecretary.DeloitteLLPhavereportedontheCompany’sAnnualAccountsandtheauditablepartoftheDirectors’RemunerationReportfortheperiodended31December2011;thisreportwasunqualifiedandcontainednostatementundersection496oftheCompaniesAct2006.

Review of Business

AsummaryoftheCompany’sactivitiescanbefoundonpages4to19,RiskFactorsareonpages20and21,ourCorporateResponsibilityReportisonpages22to23andaSummaryofFinancialPerformanceisonpage24.

Corporate Governance

TheBoardconfirmsthatthroughouttheperiodtheCompanyhascompliedwiththeprinciplesoftheCombinedCodeonCorporateGovernanceissuedinJune2008.DuringtheyearweconsideredthetermsoftheUKCorporateGovernanceCodeissuedinJune2010andtheAICCodeofCorporateGovernanceissuedinOctober2010.

ThefullCorporateGovernanceReportissetoutintheAnnualReportfortheperiodended31December2011,whichisavailableonapplicationtoourCompanySecretaryoronourwebsitewww.alliancetrust.co.uk.

The Board

TheBoardsetsthelong-termobjectivesoftheCompanyandapprovesitsbusinessplansandstrategicdirection.Itisresponsibleforensuringthatthereisinplaceaframeworkofprudentcontrolstoenablerisktobemanagedeffectively.Itprovidesleadershipandreviewsbusinessperformance.

EachDirectorbringsdifferentskillsandexperiencestotheBoardandtheseareoutlinedonpages26and27.TheyarehoweverallresponsibleforthedecisionstakenbytheBoard.TheChairmanwasconsideredindependentuponappointmentandnoneoftheNon-ExecutiveDirectorshashadapreviousrelationshipwiththeCompanyotherthanasshareholder.TheNon-ExecutiveDirectorstakenopartindaytodaymanagementoftheCompanyandareallconsideredtobeindependent.

Re-election of Directors

ConsueloBrookewasappointedon25November2011andKarinForsekeon1March2012.TheirappointmentfallstobeconfirmedbyshareholdersattheAnnualGeneralMeeting.HughBolland,TimothyIngramandLesleyKnoxarestandingdownfromtheBoard.TheBoardhasdecidedthatinlinewiththeUKCorporateGovernanceCodealloftheDirectorswillbesubjecttore-electioneveryyear.Thereforetheremainingdirectorswillstandforre-electionatthismeeting.

TheindividualperformanceofeachDirectorandtheirongoingsuitabilityforelectionorre-electionwasconsideredandendorsedbytheNominationCommittee.Allarerecommendedforelectionorre-electionattheforthcomingAnnualGeneralMeeting.EachofourDirectorshasconfirmedthattheyremaincommittedtotheirroleandhavesufficienttimeavailabletomeetwhatisexpectedofthem.

DrMastershasagreedtoofferhimselfforre-electiondespitehavingservedasanindependentnon-executivedirectorfornineyears,inordertoassistwiththetransitionoftheBoard.HewillretirefromtheBoardduringthecourseoftheyear.TheBoardisoftheviewthatDrMastersremainsindependentincharacterandjudgement–independencecannotbedeterminedbylengthoftimealone,andDrMasterscontinuestodemonstratetheconstructivechallengetomanagementexpectedfromnon-executivedirectors.HisexperienceofseniormanagementrolesoutsidethefinancialservicessectoralsoaddstothediversityofviewsaroundtheBoardtable.

Investment Trust Status

TheCompanyisaninvestmenttrustandseeksannualapprovalfromHMRevenueandCustomstomaintainitsstatusasaninvestmenttrust.Thelastsuchapprovalwasgrantedinrespectofthefinancialyearending31January2011.


Directors

Lesley Knox Chairman s JoinedtheBoard2001, AppointedChairman 2004 Chairman, Nomination Committee

LesleyKnoxgraduatedwithanMAinLawfromtheUniversityofCambridge,qualifiedasalawyerandworkedintheUKandUS.ShewasagroupdirectorwithKleinwortBensonandalsoHeadofInstitutionalAssetManagementatKleinwortBensonInvestmentManagement.

SheisChairmanofGrosvenorGroupLtdandDundeeDesignLtd.HerotherboardappointmentsincludeTurcanConnellAssetManagement,SABMillerplcandCentricaPLC.

Herexperienceofassetmanagementandcorporatefinance,togetherwithherongoinginvolvementintheboardsofbothlistedandprivatebusinessesacrossawiderangeofsectors,enablehertoleadadiverseboardwithvariedskillsandexperience.

Karin Forseke Chairman Designate s JoinedtheBoard2012

KarinForsekestudiedEconomics,SociologyandMarketingbeforemovingintofinancialservicesintheUSandtheninLondon.SheservedasChiefOperatingOfficerofLondonInternationalFinancialFuturesExchange,(LIFFE),andthenjoinedDCarnegie&CoABbecomingitsChiefExecutiveOfficer.

ShehasbeenaNon-ExecutiveDirectoroftheFinancialServicesAuthority(FSA)sinceDecember2004andiscurrentlyitsDeputyChairmanandChairmanofitsAudit,RemunerationandNonExecutiveDirectorscommittees.SheservesasaNon-ExecutiveDirectorofWalleniusLines,aNon-ExecutiveDirectoroftheRoyalOperainStockholmandisaBoardmemberoftheEuropeanCouncilonForeignRelations(ECFR).

HerwideexperienceofthefinancialservicessectorandmorerecentlyfromaregulatoryperspectivecomplementsthoseoftheotherDirectors.Combinedwithherbroadgeographic,economicandpoliticalknowledgesheisequippedwiththerequiredlevelofskillsandunderstandingtoprovideconstructivechallengeacrossthegroupandtoleadtheBoard.

Christopher Masters Senior Independent Director l n s JoinedtheBoard2002

ChristopherMasterstookhisdoctorateinChemistryattheUniversityofLeeds.HeworkedinternationallywithShellandalsoChristianSalvesenwherehewasChiefExecutive.HewasExecutiveChairmanofAggrekoPLCandisChairmanoftheFestivalCityTheatresTrustandamemberoftheCourtoftheUniversityofEdinburgh.

OtherdirectorshipsincludeTheCrownAgents,JohnWoodGroupPLCandSpeedyHirePLC.

Comingfromindustryratherthanthefinancialservicessector,andhavingworkedintheUSandEuropeaswellintheUK,hecanbringadifferentperspectivetoBoarddiscussionsandofferconstructivechallengebasedonhisownexperience.

Hugh Bolland l n s JoinedtheBoard2007

HughBollandgraduatedwithaBA(Hons)inEconomicsandStatisticsfromtheUniversityofExeter.HehasheldvariousroleswithSchrodersincludingInvestmentDirectorandthenManagingDirectorofSchrodersinHongKongandlaterChiefExecutiveofSchrodersAustralia.IntheUKhehasbeenChairmanofSchroderUnitTrusts,ChiefExecutiveandlatterlyViceChairmanofSchroderInvestmentManagement.

HeisaNon-ExecutiveDirectorofJPMorganIndianInvestmentTrustPLC,FidelityAsianValuesPLCandDutchlistedEurocommercialPropertiesN.V.

Drawingonhismanyyearsofhands-onexperienceoffund

Non-executiveDirectors

Chairman

1 2 3

4

1

2

3l MemberoftheAuditCommittee

n Memberofthe RemunerationCommittee

s Memberofthe NominationCommittee


managementacrosstheglobe,hecanspeakwithauthorityonthiscentralelementoftheCompany’sbusiness.

John Hylands l n s JoinedtheBoard2008 Chairman, Audit Committee

JohnHylandsgraduatedwithaBScinMathematicsfromtheUniversityofGlasgow.InhiscareerwithStandardLifeheheldvariousactuarial,financeandmanagementpositionsincludingservingasFinanceDirector.

HeisamemberoftheAvivaUKLifeWithProfitsCommitteeandisaNon-ExecutiveDirectoroftheBoardofEcclesiasticalInsuranceGroupPLC.HealsochairsthetrusteesoftheStandardLifeandBOCpensionschemes.

Hisqualificationasanactuaryandsubsequentexperienceinseniorrolesinthefinancialservicessectorenablehimtoapplyarigorousandanalyticalapproach,inparticularinhisroleasChairmanoftheAuditCommittee.

Timothy Ingram l n s JoinedtheBoard2010 Chairman, Remuneration Committee

TimothyIngramgraduatedwithanMAinEconomicsfromtheUniversityofCambridgeandanMBAfromINSEADBusinessSchool.HehasbeenFinanceDirector,ChiefExecutiveandlaterChairmanofFirstNationalFinanceCorporation,aManagingDirectorofAbbeyNationalandChiefExecutiveofCaledoniaInvestmentsPLC.

HeisChairmanofCollins

StewartPLC,SeniorIndependentDirectorofSavillsPLC,aNon-ExecutiveDirectorofAlokIndustriesLimitedandwas,untilMay2011,SeniorIndependentDirectorofSagePLC.

Hisexperienceofleadingaself-managedinvestmenttrust,coupledwithhiswiderknowledgeofthefinancialservicessector,meanthathehasaclearunderstandingoftheopportunitiesandchallengesfacingtheCompanyandthemanagementteam.

Consuelo Brooke l n s JoinedtheBoard2011

ConsueloBrookegraduatedwithaB.Sc(Hons)inpolitics,economicsandinternationalrelationsfromtheUniversityofSouthampton.ShehasworkedforS.G.Warburg,MercuryAssetManagementandMerrillLynchInvestmentManagers.ShesubsequentlyestablishedherownfirmCBrookeInvestmentPartnersLtd.

ConsueloBrookehaspreviouslyheldNon-ExecutiveDirectorshipsatBTGplcandXansaplcandiscurrentlyanIndependentMemberoftheCouncilofSussexUniversityofwhichshewasTreasurerfrom2002-2011andaTrusteeofSussexCommunityFoundation.

WithabackgroundinassetmanagementshebringsaconsiderableamountofinvestmentknowledgetotheBoard.Herpreviousnon-executivedirectorshipsprovideherwiththeexperiencetoenablehertocontributetoBoarddiscussions.

Katherine Garrett-Cox Chief Executive s JoinedtheCompanyas ChiefInvestmentOfficer in2007.Appointed ChiefExecutivein2008

KatherineGarrett-CoxgraduatedwithaBA(Hons)inHistoryfromDurhamUniversityandisamemberoftheUKSocietyofInvestmentProfessionals;CFAInstitute.

ShehasheldChiefInvestmentOfficerandExecutiveDirectorroleswithAberdeenAssetManagementPLCandMorleyFundManagement,nowAvivaInvestors.SheisamemberoftheSupervisoryBoardofDeutscheBankAG.

Inherrolesheisresponsibleforboththeinvestmentpolicyandassetallocationofthecompanyaswellasexecutiveoversightforthebusiness.Shehasmorethan22years’experienceintheinvestmentindustry,havingmanagedNorthAmerican,EmergingMarketandGlobalEquitiesportfolios.

Herhands-onfundmanagementexperience,combinedwithseniorleadershiprolesinmajorinvestmenthousesandacommitmenttothedevelopmentofthenextgenerationofbusinessleaders,giveherthenecessaryskillstoleadtheCompanyandtoevolveitsstrategyforfuturegrowth.

Alan Trotter Finance Director JoinedtheBoard2010

AlanTrottergraduatedwithaBAcc(Hons)inAccountancyfromtheUniversityofGlasgowandwithanLLBfromtheUniversityofLondon.

HequalifiedasacharteredaccountantwithErnst&YoungworkinginboththeUKandHongKong.HeheldseniorfinanceroleswithStandardLife,StandardLifeBankandRoyalBankofScotlandbeforemovingtoLegalandGeneralwherehewasGroupCorporateDevelopmentDirectorwithresponsibilityforthecentralfinancefunction.HeisamemberoftheUniversityofEdinburghAuditCommitteeandoftheFinancialReportingReviewPanel.

Histechnicalandanalyticalskills,gainedbothinprofessionalpracticeandsubsequentlyinseveralmajorfinancialservicesbusinesses,equiphimwelltoleadthefinanceandcontrolfunctionsandtocontributetotheshapingofthefuturestrategyforthebusiness.

ExecutiveDirectors

98

7

5

6

4

5

6

7

8

9


SummaryDirectors’Remuneration

Remuneration Approach

AtthestartoftheperiodweconsideredtheimplicationsoftheFSARemunerationCodeandreportedonthislastyear.

Performanceassessment:WehaveinplacethroughouttheCompanyanannualperformancereviewbasedonachievementofpersonalobjectivesalignedtotheCompany’sKeyPerformanceIndicators(KPIs).

Guarantees:Theuseofguaranteedbonuseshasalwaysbeenlimitedandthiswillcontinuetobethecase.

Severance:TheCompany’spolicyisonlytomakepaymentsonearlyterminationthatreflecttheleaver’scontractualentitlementsandotheramountswhichacourtortribunalwouldbelikelytoaward.

Leverage:TheRemunerationCommitteehasreviewedtheproportionofvariablepaytoannualsalaryofDirectorsandotherseniormanagersandissatisfiedthatitisappropriate.

Multi-yearframework:TheCompanycurrentlyoperatesacombinationofannualandthreeyearperformanceconditionstogetherwitharequirementforDirectorsandotherseniormanagerstodeferpartofanyawardintheformofshares.

Ourinvestmentmanagersareeligibleforannualbonusesbasedonachievementofannualperformancetargetsrelevanttotheirownportfolioandthewiderequityportfolio.Atleastonehalfofanyannualbonusisdeferredforthreeyears.Attheendofthethreeyeardeferralperiodamatchingawardmayvestbasedonindividualportfolioperformance(includingconsiderationofconsistencyoffundperformance,riskprofileofthefundandmarketconditions)andachievementofthecorporatetargetassetbytheBoard.

Otherseniormanagers’annualbonusesarebasedonperformanceagainstbusinessandindividualobjectivesduringtheyear,withthelong-termelementbasedoncorporateand/orbusinessperformancemeasures.

InsettingthelevelsofremunerationfortheExecutiveDirectors,theRemunerationCommitteetakesaccountofthelevelsofremunerationofotheremployees,particularlyatseniorlevel,withintheCompanyandoftheoveralllevelofpayawardsmade.TheExecutiveDirectors’remunerationisnotsetthroughanyformulaicapproachormultipleofanyotheremployeesengagedwithinthebusiness,butisdrivenbytheirexperienceandmarketratesforcomparableroles.

WehaveusedourKPIstosetthefollowingCorporateTargetsforthedeterminationoftheamountofanyannualbonusandinthecaseoftheExecutiveDirectorsbetween25%and70%oftheirannualbonusisbasedonachievementofthesetargetsovertheperiod:

• PercentagechangeinNetAssetValueagainstthepeergroup

• PercentagechangeinTotalShareholderReturnagainstthepeergroup

• Dividendgrowth

• Achievementofcostbudget

ThepeergroupistheAICGlobalGrowthInvestmentTrustsector.

Thisyearwehavenotreducedthelevelofincentiveawardsmadetoreflectthattheywerebeinggivenforan11monthperiodratherthanforafullyearbuttheCommitteetookintoaccountperformanceagainsttargetsovertheshorterperiod.InrespectoftheCorporateTargetstherewerenosignificantdifferencesbetweenthepositionoftheendoftheperiodandthatattheendofJanuary2012.

Basic Salary

ThePolicyadoptedbytheCommitteeisthatbasesalariesofexecutivesshouldbetargetedatmarketmedianforjobsofasimilarsizeandcomplexity.Asat31December2011thesalariesofalloftheExecutiveDirectorsarebeloworaroundthemarketmedian.NosalaryincreaseshavebeenawardedtoExecutiveDirectorsfor2012.

All Employee Share Ownership Plan

ExecutiveDirectorsandallemployeesmayparticipateintheCompany’sAllEmployeeShareOwnershipPlan.

AllfulltimeparticipantswhowereinthePlanforthefullfinancialperiodwillreceivethemaximumawardofshares,valuedat£3,000.Part-timestaffandthosethatjoinedthePlanpartwaythroughtheperiodwillreceiveaproratedaward.

Variable Pay

Therearetwocomponentstovariablepay;firstlytheAnnualBonusand,secondly,awardsmadeundertheCompany’sLongTermIncentivePlan(LTIP)whichwasapprovedbyshareholdersin2007.

Annual Salary

ThetablebelowshowstheannualsalariesofeachofourExecutiveDirectors.

Salary at 1/2/09 (£) 1/2/10 (£) 1/2/11 (£) 1/1/12 (£)

KatherineGarrett-Cox 405,000 405,000 425,250 425,250RobertBurgess 230,000 250,000 262,500 262,500AlanTrotter - 210,000 225,000 225,000


Annual Bonuses

KatherineGarrett-Coxiseligibleforanannualbonusofupto150%ofsalary.OtherExecutiveDirectorsareeligibleforanannualbonusofupto100%oftheirsalary.Allaretotallydependentuponperformance.Atleast50%ofanyannualbonusawardmustbedeferredintoshareswithintheLTIPdescribedbelow.TheDirectorcanchoosetoreceivetherestofanybonusincashorhaveitdeferredintotheLTIP.

TheCorporatetargets,detailedonthepreviouspage,comprised70%ofthepotentialbonusawardforKatherineGarrett-Cox,50%forAlanTrotterand25%ofthepotentialawardforRobertBurgess.Theremainderofthepotentialawardwassubjecttoperformanceagainstacombinationofbusinessandindividualobjectivesdeterminedatthestartoftheyearassetoutbelow.

Corporate Business Individual Director objectives objectives objectives

KatherineGarrett-Cox 70% 20% 10%RobertBurgess 25% 55% 20%AlanTrotter 50% 30% 20%

ThebusinessandindividualtargetsforKatherineGarrett-CoxreflectedbothherroleasChiefInvestmentOfficerandChiefExecutive,andincludedfinancialperformanceofthesubsidiarybusinesses,peopledevelopment,oversightandinvestorrelations.

ThebusinessandindividualobjectivesforRobertBurgessrelatedtothefinancialperformanceofAllianceTrustSavings,thestrategicdevelopmentandoperationaleffectivenessofthegroupanddevelopingtheAllianceTrustSavingsmanagementteam.TheobjectivesforAlanTrotterrelatedtotheembeddingofriskmanagementandinternalcontrolsacrossthebusiness,leadershipinfinancialmattersandbusinessplanning.

Thefollowingbonusesinrespectoftheperiodending31December2011wereawardedandwerepayableaftertheperiodend.

Director Bonus % of maximum

KatherineGarrett-Cox £527,850 83%RobertBurgess £157,500 60%AlanTrotter £194,175 86%

Long Term Incentive Plans

Thecurrenttarget,asapprovedbytheshareholdersin2011,isbasedonacombinationoftwoseparateperformancemeasures–onerelatingtogrowthinNAVandanothertoTSR–eachofwhichwilldeterminetheextenttowhich50percent.ofanawardvests.Undertheseconditions,theTSRandNAVgrowthofyourCompanywillbemeasuredoveraperiodofthreeconsecutivefinancialyears(commencingwiththefinancialyearinwhichtheawardinquestionisgranted)andthencomparedtothecorrespondingperformanceofeachcompanyinacomparatorgroupcomprisedoftheAICglobalgrowthinvestmenttrusts(themembersofthecomparatorgroupattheendofthefinancialperiodcanbefoundonpage31).

However,notwithstandingtheleveloftheCompany’sperformanceagainsttheTSRandNAVgrowthconditionsnopartofanawardwillvestunlesstheCompanyhasdeclaredaprogressivedividendinrespectofeachofthefinancialyearsthatmakeuptheperformanceperiod.

Itisintendedthatallawardswillbesatisfiedfromsharespurchasedontheopenmarketandnonewshareswillbeissuedtosatisfyawards.

Fixed and Variable Remuneration

Maximum that could be received1

2

566,751

Total (£)

461,751Actual received 66% 34%

46%54%

Robert Burgess


2

487,734

Total (£)

456,909Actual received 58% 42%

46%54%

Alan Trotter


2

1,769,861

Total (£)

1,034,175Actual received

Fixed Cash

49% 51%

36%29% 35%

Variable Cash Variable Share AwardKatherine Garrett-Cox 1

Includes Salary, Car Allowance, Taxable Bene�ts and Other Payments.1

Refers to the Annual Bonus awarded in respect of the period but paid after the period end.2

If the LTIP target had been met the Director would have received shares in the period from the awards made in 2008 (valued at the Market Price of shares on the date of award (5 May 2008: £3.51)).

3

2

3


Directors’ Shareholdings

AllDirectorsarerequiredtoacquire3,000sharesintheCompany.DetailsoftheshareholdingsofallDirectors,togetherwithdetailsofsharesacquiredintheyear,areshownbelow.TheCompanyhasissuednooptionstosubscribeforshares.

Directors’ Shareholdings*

As at 1 Feb 11 Acquired or date of between appointment As at 31 Dec 11 Name if later 31 Dec 11 & 1 Mar 12

LesleyKnox 156,976 160,109 746HughBolland 10,000 10,000 -ConsueloBrooke - 3,000 -RobertBurgess 58,724 89,764 2,651KatherineGarrett-Cox 287,522 343,828 3,776JohnHylands 65,073 66,595 387TimothyIngram 38,182 44,524 -ChristopherMasters 11,401 11,657 95AlanTrotter 8,771 18,181 79

*Unaudited

KarinForsekewasappointedduringthecloseperiodpriortoannouncementoftheCompany’sresultsfortheperiodending31December2011.Sheintendstopurchasetherequisiteholdingfollowingannouncementoftheresultson6March2012.

TheRemunerationCommitteehasadoptedapolicythatExecutiveDirectorsshould,overtime,accumulateapersonalholdingofsharesintheCompanyequivalenttotheirannualsalary.

Company performance graph

WedonothaveabenchmarkbutarerequiredbylawtoincludeagraphshowingthetotalshareholderreturnoftheCompanyagainstabroadequitymarketindexoverafiveyearperiod.ThecomparatorwhichhasbeenselectedasabroadmeasureofourperformanceistheFTSEAll-WorldIndex.

ItshouldbenotedthattheCompanydoesnotseektotrackthisindex.

Performance relative to Peer Group*

Name 11 Months 3 Years 5 Years

TSRRanking 6/32 29/32 20/31

*ThepeergroupconsistsofthecompaniesintheAICGlobalGrowthsectorandislistedopposite.

Source:MorningstarandFactSet

SummaryDirectors’Remuneration

1Thisincludesthebonuspayableinrespectoftheperiodending31December2011andwaspaidaftertheyearend.2Thisshowsthemaximumtotalnumberofawardsmadeunderlongtermincentiveplans.Awardsarefornilpricedoptions.Awardsonlyvestafterthreeyearsfromthedateoftheawardandaresubjecttoperformanceconditions.Noawardsvestedfortheyearand178,251awardsheldbyKatherineGarrett-Coxlapsedduringtheyear.3ThisIncludesDirectorfeesandadditionalpayments,asappropriatetotheindividualDirector,forChairmanshipormembershipofRemunerationandAuditCommittees,ChairmanshipormembershipofsubsidiaryboardsandtheroleofSeniorIndependentDirector.

Total Emoluments Total Emoluments 1/2/11 to 1/2/10 to Long Term Long Term Executive Date of 31/12/111 31/01/11 Incentive awards Incentive awards Director Contract (£) (£) as at 31/12/112 as at 31/01/112

KatherineGarrett-Cox 20/04/07 1,034,175 842,645 989,880 876,730RobertBurgess 02/02/10 461,751 549,572 584,831 380,680AlanTrotter 01/02/10 456,909 405,833 311,484 158,209

Non-executive Date of Director Appointment

LesleyKnox 15/06/01 91,667 90,000HughBolland3 01/07/07 37,583 39,000ConsueloBrooke3 25/11/11 3,600 -JohnHylands3 22/02/08 42,167 44,000TimothyIngram3 24/09/10 33,000 11,994ChristopherMasters3 15/11/02 37,583 39,000ClareSheikh3 14/09/05 10,024 31,500

Summary Table of Salary and Benefits

Company performance Source: FactSet

Dec2011

Jan2011

Jan2010

Jan2009

Jan2008

% Alliance Trust FTSE All-World Index

Jan2007

-25

-15

-5

5

15

25

35

-25

-15

-5

5

15

25

35


Peer Group (AIC Global Growth Sector)BankersBritishEmpireSecuritiesBrunnerCaledoniaInvestmentsCayenneEdinburghWorldwideEPGlobalOpportunitiesEstablishmentForeign&ColonialF&CGlobalSmallerCompanies

F&CManagedPortfolioGrowthHendersonGlobalIndependentJPMElectManagedGrowthJPMorganOverseasJupiterPrimadonaGrowthLawDebentureLindsellTrainMajedieMartinCurriePortfolioMidWyndInternationalMitonWorldwideGrowth

MonksNewStarPersonalAssetsRITCapitalPartnersRuffer(fromOct2011)ScottishInvestmentScottishMortgageSVMGlobalFundWitanWorldTrustFund

IndependentAuditor’sReport

INDEPENDENT AUDITOR’S STATEMENT TO THE MEMBERS OF ALLIANCE TRUST PLC

Wehaveexaminedthesummaryfinancialstatementforthe11monthperiodended31December2011whichcomprisestheSummaryConsolidatedandCompanyIncomeStatement,SummaryConsolidatedandCompanyBalanceSheet,SummaryDirectors’ReportandtheSummaryDirectors’RemunerationReport.

Thisreportismadesolelytothecompany’smembers,asabody,inaccordancewithsection428oftheCompaniesAct2006.Ourworkhasbeenundertakensothatwemightstatetothecompany’smembersthosematterswearerequiredtostatetotheminanauditors’reportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthanthecompanyandthecompany’smembersasabody,forourauditwork,forthisreport,forourauditreport,orfortheopinionswehaveformed.

Respective responsibilities of directors and auditors

ThedirectorsareresponsibleforpreparingthesummarisedannualreportinaccordancewithapplicableUnitedKingdomlaw.

Ourresponsibilityistoreporttoyououropinionontheconsistencyofthesummaryfinancialstatementwithinthesummarisedannualreportwiththefullannualfinancialstatements,theDirectors’RemunerationReportandtheDirectors’Report,anditscompliancewiththerelevantrequirementsofsection428oftheCompaniesAct2006andtheregulationsmadethereunder.

Wealsoreadtheotherinformationcontainedinthesummarisedannualreportasdescribedinthecontentssection,andconsidertheimplicationsforourreportifwebecomeawareofanyapparentmisstatementsormaterialinconsistencieswiththesummaryfinancialstatement.

WeconductedourworkinaccordancewithBulletin2008/3issuedbytheAuditingPracticesBoard.Ourreportonthecompany’sfullannualfinancialstatementsdescribesthebasisofourauditopiniononthosefinancialstatements,theDirectors’RemunerationReport,andtheDirectors’Report.

Opinion

Inouropinion,thesummaryfinancialstatementisconsistentwiththefullannualfinancialstatements,theDirectors’ReportandtheDirectors’RemunerationReportofAllianceTrustplcforthe11monthperiodended31December2011andcomplieswiththeapplicablerequirementsofsection428oftheCompaniesAct2006,andtheregulationsmadethereunder.

Deloitte LLP

CharteredAccountantsandStatutoryAuditorsLondon,UnitedKingdom

5March2012


Summary consolidated income statement for the 11 month period ended 31 December 2011

11 months to December 2011 Year to January 2011

£000 Revenue Capital Total Revenue Capital Total

Revenue

Income 104,610 - 104,610 101,943 - 101,943

(Loss)/Profitonfairvalue

designatedinvestments - (253,611) (253,611) - 404,536 404,536

(Loss)/Profitoninvestmentproperty - (240) (240) - 589 589

Total revenue 104,610 (253,851) (149,241) 101,943 405,125 507,068

Administrativeexpenses (37,419) (1,957) (39,376) (38,138) (2,684) (40,822)

Finance(costs)/income (8,736) 5,914 (2,822) (5,306) (4,462) (9,768)

Impairmentlosses - - - - (297) (297)

Lossondisposalofofficepremises - (5) (5) - - -

Lossonrevaluationofofficepremises - - - - (47) (47)

Foreignexchangegains - 1,275 1,275 30 95 125

(Loss)/Profit before tax 58,455 (248,624) (190,169) 58,529 397,730 456,259

Tax (2,562) (100) (2,662) (4,439) (73) (4,512)

(Loss)/Profit for the period 55,893 (248,724) (192,831) 54,090 397,657 451,747

All(loss)/profitfortheperiodisattributabletoequityholdersoftheparent

Earnings per share from

continuing operations attributable

to equity holders of the parent

Basic(ppershare) 8.91 (39.66) (30.75) 8.20 60.26 68.46

Diluted(ppershare) 8.89 (39.66) (30.77) 8.17 60.10 68.27

Summary Company income statement for the 11 month period ended 31 December 2011

11 months to December 2011 Year to January 2011

£000 Revenue Capital Total Revenue Capital Total

Revenue

Income 85,117 - 85,117 86,837 - 86,837

(Loss)/Profitonfairvalue

designatedinvestments - (254,584) (254,584) - 391,349 391,349

(Loss)/Profitoninvestmentproperty - (240) (240) - 589 589

Totalrevenue 85,117 (254,824) (169,707) 86,837 391,938 478,775

Administrativeexpenses (14,824) (1,159) (15,983) (15,110) (1,924) (17,034)

Financecosts (3,026) (2,950) (5,976) (3,244) (2,302) (5,546)

Lossondisposalofofficepremises - (5) (5) - - -

Lossonrevaluationofofficepremises - - - - (47) (47)

Foreignexchangegains - 1,275 1,275 - 862 862

(Loss)/Profit before tax 67,267 (257,663) (190,396) 68,483 388,527 457,010

Tax (5,369) 100 (5,269) (4,696) 328 (4,368)

(Loss)/Profit for the period 61,898 (257,563) (195,665) 63,787 388,855 452,642

All(loss)/profitfortheperiodisattributabletoequityholdersoftheparent

Earnings per share from continuing

operations attributable to equity

shareholders

Basic(ppershare) 9.87 (41.06) (31.19) 9.67 58.93 68.60

Diluted(ppershare) 9.84 (41.06) (31.22) 9.64 58.77 68.41

SummaryFinancialStatements


Summary balance sheet as at 31 December 2011

Group Company

£000 Dec 11 Jan 11 Dec 11 Jan 11

Non-current assets

Investmentsheldatfairvalue 2,625,615 3,237,614 2,560,576 3,172,639

Investmentproperty 9,775 28,515 9,775 28,515

Property,plantandequipment:

Officepremises 6,025 6,270 6,025 6,270

Otherfixedassets 15 27 15 27

Intangibleassets 1,598 2,345 390 542

Pensionschemesurplus 3,150 846 3,150 846

Deferredtaxasset 907 182 907 151

2,647,085 3,275,799 2,580,838 3,208,990

Current assets

Outstandingsettlements

andotherreceivables 190,644 47,051 22,171 29,687

Withholdingtaxdebtor 789 1,413 789 1,413

Corporationtaxdebtor 179 79 179 79

Cashandcashequivalents 415,435 295,355 72,349 27,511

607,047 343,898 95,488 58,690

Total assets 3,254,132 3,619,697 2,676,326 3,267,680

Current liabilities

Outstandingsettlements

andotherpayables (600,539) (383,505) (22,661) (32,613)

Taxpayable (141) (2,260) (3,991) (1,198)

Bankoverdraftsandloans (248,768) (338,997) (248,768) (338,997)

(849,448) (724,762) (275,420) (372,808)

Total assets less current liabilities 2,404,684 2,894,935 2,400,906 2,894,872

Non-current liabilities

Deferredtaxliability (907) (303) (907) (303)

Amountspayableunderlongterm

InvestmentIncentivePlan (404) (128) (205) (65)

Net assets 2,403,373 2,894,504 2,399,794 2,894,504

Equity

Sharecapital 14,833 16,527 14,833 16,527

Capitalreserve 1,665,692 2,158,630 1,629,129 2,131,651

Mergerreserve 645,335 645,335 645,335 645,335

Capitalredemptionreserve 4,165 2,471 4,165 2,471

Revenuereserve 73,348 71,541 106,332 98,520

Total Equity 2,403,373 2,894,504 2,399,794 2,894,504

Allnetassetsareattributabletoequityholdersoftheparent

Net Asset Value per ordinary

share attributable to

equity holders of the parent

Basic(£) £4.06 £4.39 £4.06 £4.39

Diluted(£) £4.05 £4.38 £4.04 £4.38

ThesummaryfinancialstatementswereapprovedbytheBoardofDirectorsandauthorisedforissueon5March2012.

Theyweresignedonitsbehalfby:

Lesley Knox Katherine Garrett-Cox

Chairman ChiefExecutive


Incorporation

AllianceTrustPLCisincorporatedinScotlandwiththeregisterednumber1731.

TheCompany’sRegisterofMembersisheldatComputershareInvestorServicesPLC,LochsideHouse,7LochsideAvenue,EdinburghPark,EdinburghEH129DJ.

General Enquiries

IfyouhaveanenquiryabouttheCompany,pleasecontacttheCompanySecretaryatourregisteredoffice:

8 West Marketgait, Dundee DD1 1QNTel:01382321000Fax: 01382321185Email: [email protected]

Forsecurityandcompliancemonitoringpurposestelephonecallsmayberecorded.

Investor Relations

OurHeadofInvestorRelationscanbecontactedatourregisteredoffice(detailedabove).

Ourwebsitewww.alliancetrust.co.ukcontainsinformationabouttheCompany,includingdailysharepriceandnetassetvalue.TheInvestorRelationssectionofthewebsitecontainsthetermsofreferenceoftheAudit,RemunerationandNominationCommittees.

Registrars

Ourregistrarsare:

Computershare Investor Services PLC PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH

ChangeofaddressnotificationsandregistrationenquiriesforshareholdingsregisteredinyourownnameshouldbesenttotheCompany’sregistrarsattheaboveaddress,whichshouldalsobecontactedifyouwouldlikedividendsonsharesregisteredinyourownnametobesenttoyourbankorbuildingsocietyaccount.YoumaycheckyourholdingsandviewotherinformationaboutAllianceTrustsharesregisteredinyourownnameatwww.computershare.com.

Data Protection

TheCompanyisadatacontrollerasdefinedundertheDataProtectionAct1998.Informationreceivedfromoraboutshareholdersorinvestors(forexamplefromastockbroker),whetherbytelephoneorinwriting,byfaxorbyanyotherelectronicordigitalmeansofcommunicationmaybeprocessed.

InformationheldontheCompany’sRegisterofMembersis,bylaw,informationtowhichthepublicmay,foraproperpurpose,haveaccessandtheCompanycannotpreventanypersoninspectingitorhavingcopiesofitforsuchpurpose,onpaymentofthestatutoryfee.

Electronic Communications

Ifyouholdyoursharesinyourownname,weareabletosendyouannualreportsandnoticesofmeetingselectronicallyinsteadofinpaperformat.Ifyouwishtoregisterforthisservicepleaselogontowww.alliancetrust.co.uk/ec.htmwhichwillprovideyouwithalinktoourregistrars’website.

Taxation

IfyouareinanydoubtaboutyourliabilitytotaxarisingfromashareholdingintheCompanyyoushouldseekprofessionaladvice.

Income Tax

DividendspaidbytheCompanycarryataxcreditat10%ofthegrossdividend.Dividendsarepaidnetofthetaxcredit.

Ifyouholdyoursharesinyourownname,thetaxvoucherwhichyouneedforyourtaxrecordswillbesenttotheaddresswehaveforyouontheregistermaintainedbyComputershare.TheRegistrarwillsendaconsolidatedtaxvouchertomembersafterthefinaldividendduringthetaxyearispaid.

Ifyourdividendsarereceivedbyanominee,suchasyourstockbroker’snominee,youmustcontactthatpersonforthetaxvoucher.IfyouinvestintheCompanythroughAllianceTrustSavings,itwillautomaticallysupplyyouwithaconsolidatedincometaxvoucherforincomereceivedforyouintheInvestmentDealingAccount.

Capital Gains Tax

Forinvestorswhopurchasedsharespriorto31March1982,thecostofthosesharesforcapitalgainstaxpurposesisdeemedtobethepriceoftheshareonthatdate.ThemarketvalueofeachAllianceTrustPLCordinary25pshareonthatdatewas£2.85which,whenadjustedforthesplitona10for1basison21June2006,givesanequivalentvalueof£0.285pershare.ThemarketvalueofeachSecondAllianceTrustPLCordinary25pshareon31March1982was£2.35.HoldersofSecondAllianceTrustPLCsharesreceived8.7453ordinary2.5psharesforeach25pordinarysharetheyheldon20June2006andaretreatedasthoughtheyacquiredthesesharesatthesametimeandatthesamecostastheSecondAllianceTrustsharestheypreviouslyheld.Thisgivesanequivalentvalueof£0.269pershare.

Informationforshareholders


Risks

IfyouwishtoacquiresharesintheCompany,youshouldtakeprofessionaladviceastowhetheraninvestmentinoursharesissuitableforyou.Youshouldbeawarethat:

• Investmentshouldbemadeforthelongterm

• ThepriceofasharewillbeaffectedbythesupplyanddemandforitontheLondonStockExchangeandmaynotfullyrepresenttheunderlyingvalueoftheassetsoftheCompany.ThepricegenerallystandsbelowthenetassetvalueoftheCompany(‘atadiscount’)butitmayalsostandaboveit(‘atapremium’).Yourcapitalreturnwilldependuponthemovementofthediscount/premiumovertheperiodyouowntheshare,aswellasthecapitalperformanceoftheCompany’sownassets

• TheassetsownedbytheCompanymayhaveexposuretocurrenciesotherthanSterling.Changesinmarketmovementsandinratesofexchangemaycausethevalueofyourinvestmenttogoupordown

• Pastperformanceisnotaguidetothefuture.Whatyougetbackwilldependoninvestmentperformance.Youmaynotgetbacktheamountyouinvest.

Important dates

Oureventsgiveustheopportunitytomeetandhearfromourshareholdersandclients,andareanidealoccasiontogetanupdateonwhatishappeningatAllianceTrust.YoucanmeetseniorrepresentativesfromtheCompanyincludingKatherineGarrett-Cox,ourChiefExecutive,andotherkeymembersofourteam,andlearnaboutourproductsandservices.Therewillbemanyopportunitiesduringtheeventtoaskquestions.

Annual General Meeting

The124thAnnualGeneralMeetingoftheCompanywillbeheldat11.00amonFriday27April2012attheApexCityQuayHotel,Dundee.TheNoticeofMeeting,detailingthebusinessofthemeeting,issenttoallshareholders.

Investor Forums

Wearepleasedtoannouncethatwewillbeholdingtwoinvestorpresentationsduring2012.

27 AprilApexHotel,Dundee

27 SeptemberVictoriaPlazaHotel,London

Detailsoftheseandfutureeventscanbefoundatwww.alliancetrust.co.uk/events.

Financial Calendar

Proposeddividendpaymentdatesforthefinancialperiodto31December2012areonoraround:

2July20121October201231December20122April2013

Report and Accounts for the period ended 31 December

Alliance Trust PLC

Report & Accounts D

ecember 2011

Printed by MLG, Edinburgh

Alliance Trust PLC 8 West Marketgait Dundee DD1 1QN

Tel +44 (0)1382 321000 Email [email protected]

www.alliancetrust.co.uk

Contact

Documents

Annual Review - Alliance Trust · 2017-07-31 · Annual Review for the period ended 31 December Printed by MLG, Edinburgh Alliance Trust PLC 8 West Marketgait Dundee DD1 1QN Tel +44