INTERIM MANAGEMENT STATEMENT
For Quarter Ending 31 October 2009
Material developments
Over the last quarter, global equities have performed strongly. Total return on
the FTSE All-World Index (£) was 7.5% and the FTSE All-Share Index 10.7%.
Yields on Government Bonds fell, while commodity prices have been strong with
both oil and gold up over 10%. Currencies have been very volatile, with
Sterling and the US dollar under pressure, particularly against the Euro and
Yen. Economic and earnings data have improved and provided a better fundamental
backdrop for asset markets.
• We have continued to increase the core equity exposure of the Trust to 90.6%
of Net Assets with net debt at 2.0%, switching the equity portfolio towards
those sectors and stocks that will benefit from the anticipated upturn in
economic activity. We still believe that the consumer will remain subdued for
some time, hence our underweight positions in Consumer Goods and Services as
well as Utilities and Healthcare. Our largest overweight positions remain in
Oil & Gas, Industrials and Basic Materials.
• Most companies beat market expectations this quarter. Guidance and clarity
for 2010 and beyond is improved, which should provide support for current
market valuations, which were starting to look a little stretched in certain
areas. Our concerns regarding the withdrawal of Quantitative Easing and the
associated risks remain. However, on balance, we remain cautiously optimistic
and continue to seek out long-term opportunities in quality companies with
strong balance sheets, good cash flow and high-quality management.
• For the first time, on 14 October 2009, Alliance Trust bought back some of
its own shares. 4.85m shares (0.7%) were purchased costing £15.4m, at a
discount of over 18%. The decision, approved by the Board, was undertaken as an
investment decision; it does not presage the introduction of a discount control
policy.
• We are monitoring the progress of the draft Alternative Investment Fund
Managers (AIFM) directive in the European Parliament. The current draft of the
directive does not take account of the structure of investment trusts, thus
reducing choice and increasing costs for investors. The revised draft proposed
by the Swedish Presidency of the European Council has addressed some issues,
but others remain. We are making representations directly and through trade
bodies to address these concerns.
KEY FACTS
Total Net Assets: £2,429.4m
NAV Total Return from 31/07/09 8.5%
to 31/10/09:
Total Expense Ratio (year to 0.70%
31/01/09):
NAV: 365.2p+
The NAV is published daily on
our website
www.alliancetrust.co.uk
Discount 17.3%+
Share price*: 302.0p+
* Source: Fundamental Data + At 30 October 2009
ASSET ALLOCATION %
Equities 90.6
Private 3.2
Equity
Preference 1.7
Shares
Subsidiaries 0.8
Property 2.5
Other 2.8
investments
Cash 0.5
Other Net 0.3
Assets
Gross Assets 102.5
Gearing (2.5)
Net Assets 100.0
EQUITY PORTFOLIO DISTRIBUTION
GEOGRAPHIC (EQUITY ONLY) INDUSTRY (EQUITY ONLY)
% %
United Kingdom 42.0 Financials 22.0
North America 28.2 Industrials 16.5
Pan Asia 16.0 Oil & Gas 15.7
Europe 13.6 Consumer Goods 9.9
Emerging Markets 0.2 Technology 8.8
Basic Materials 8.4
Consumer Services 7.0
Health Care 6.7
Telecommunications 3.2
Utilities 1.8
Top 20 equity investments
Rank Movement Rank last Name Value £m
qtr
1 - (1) BP 78.3
2 - (2) HSBC 77.7
3 - (3) Royal Dutch Shell 58.2
4 ▲ (6) Rio Tinto 53.1
5 - (5) Vodafone 36.4
6 ▲ (7) British American Tobacco 35.2
7 ▼ (4) GlaxoSmithKline 34.2
8 ▲ (11) BHP Billiton 34.2
9 ▲ (10) Diamond Offshore 33.2
10 ▼ (8) Phillip Morris 32.9
11 ▲ (18) Prudential 30.9
12 (new) Suncor Energy 30.6
13 ▲ (16) Diageo 29.7
14 ▼ (9) Scottish and Southern 26.9
15 (new) InterOil 26.7
16 ▼ (13) Standard Chartered 26.4
17 ▼ (14) Republic Services 26.4
18 (new) Tesco 25.9
19 ▼ (15) New York Community Bancorp 25.6
20 ▼ (19) Reckitt Benckiser 23.3
Petro-Canada, Johnson & Johnson and Cisco have dropped out of the Top 20.
Total Equity Investments: £2,203.6m
Top 10 as % of Net Assets: 19.5% Top 20 as % of Total: 30.7%
TRUST PERFORMANCE
1 Year 2 Years 3 Years 5 Years 10 Years
Price 23.5% -18.6% -16.8% 16.4% -1.8%
Total Return 27.0% -14.0% -10.3% 31.4% 25.9%
NAV Total Return 16.6% -16.3% -5.9% 32.1% 25.9%
FTSE All-World 18.3% -15.8% -5.3% 23.7% -15.4%²
Index (£) -Price¹
FTSE All-World 22.0% -10.9% 2.5% 39.9% 16.0%²
Index (£) -Total
Return¹
¹ Alliance Trust does not have a fixed benchmark
² 10 Year returns are based on the performance of the FTSE World Index (£)
Source: Internal/Fundamental Data
SECTOR WEIGHTINGS
Top 5 overweight/underweight sector holdings**†
Overweight/
(underweight)%
Mining 3.9
Oil & Gas Producers 2.9
Support Services 2.8
Tobacco 2.1
Life Insurance 1.9
Pharmaceuticals & (1.7)
Biotechnology
Software & Computer (1.7)
Services
Food Producers (1.8)
Industrial Metals (1.9)
General Financial (2.7)
Top 5 active overweight/underweight holdings**†
Overweight/
(underweight)%
BP 2.8
HSBC Holdings 2.7
Rio Tinto 2.1
Royal Dutch Shell 1.9
Diamond Offshore 1.5
Chevron (0.6)
International Business (0.6)
Machines
Apple (0.7)
Microsoft (1.0)
Exxon Mobil (1.4)
Portfolio weight is calculated as a % of equity only.
**FTSE All-World Index used
† Weightings are calculated on a look through basis whereby holdings in the
Trust's exposure is combined with that of its holdings in Alliance Trust Asset
Management's funds in order to calculate total exposure.
For further information, please contact:
Evan Bruce-Gardyne
Head of Investor Relations
Alliance Trust PLC
8 West Marketgait
Dundee
DD1 1QN
Tel: +44 (0)1382 321000
Email: investor@alliancetrust.co.uk