Alliance Trust PLC : Interim Management Statement

31 October 2013

Objective

Alliance Trust is a self-managed investment company with investment trust status. Our objective is to be a core investment for investors seeking increasing value over the long term. We have no fixed asset allocation benchmark and we invest in a wide range of asset classes throughout the world to achieve our objective.

Our focus is to generate a real return for shareholders over the medium to long term by a combination of capital growth and a rising dividend.

Financial Highlights for the 3 months to 30 September 2013

	30 September 2013	Change (%)	Total Return (%)
Share Price	425.7p	(0.4)	0.2
NAV per share (inc income)	492.5p	(0.6)	(0.1)
Discount (inc income)	13.6%

Key Information

Total Assets (£m):	£3,098m	EPIC Code:	ATST
Net Assets (£m):	£2,758m	Year End:	31 December
Total Borrowings (£m):	£340m	Date of Incorporation:	21 April 1888
Net gearing:	12.3%	Issued Share Capital:	561,129,146

Dividends paid:	April, June, September, December
Ongoing Charges Ratio (to 31 Dec 12):	0.67%

Source: Alliance Trust

Review of the three months to 30 September 2013

The Trust's Total Shareholder Return for the third quarter of 2013 was 0.2% and 15.4% year to date. The NAV Total Return (with debt at fair value and inclusive of income) was -0.1% over the quarter and 12.2% year to date.

Over the quarter, the best performing sectors were Materials (+4.7%), Industrials (+4.0%) and Consumer Discretionary (+3.3%). Year to date, the best performing sectors were Consumer Discretionary (+27.0%), Health Care (+25.8%) and Industrials (+19.9%).

The cum income discount traded in a tight range between 12.2% and 14.7% and finished the period at 13.6%. There were no buy backs during the period.

Portfolio update

Over the period, gearing has remained unchanged at 12.3%. The total global equity exposure has risen slightly from 94.5% to 95.5% of NAV and the Fixed Income exposure has reduced slightly from 8.4% to 7.9%, mainly due to the outperformance of equities. This balance is consistent with our view that there are significant opportunities for equity investors over the medium and longer term.

While we invest on the basis of what a company does and not where it is listed, the equity portfolio has been affected by the relative underperformance of the US market - in which we are more heavily invested than at any time in over 20 years - over the summer, when compared to other major markets. We continue to see the companies in which we are invested as well positioned for the medium to long term and expect that while we may experience slow growth in the near term, these stocks will deliver returns to our shareholders over the long term.

There have been a number of significant changes to the equity portfolio over the third quarter; these can be seen in the table of our top 20 holdings below. However, notable new additions are Vodafone, 21^st Century Fox, Swedbank and Accenture. These have been funded by profit taking in some holdings and sales of stocks including Apple, Adecco, Microsoft and Bank of Nova Scotia. Our two largest sector exposures remain in Financials and Health Care. Our regional equity exposure is largely unchanged over the quarter, although it is important to remember that both the sector and regional allocation are a function of the stock selection process,

Alliance Trust Investments

On 15 October we announced the Ed Troughton, who joined as Managing Director of Alliance Trust Investments (ATI) in 2008, had decided that the time was right for him to pursue another opportunity in the industry. He will leave the business before the end of the year. We have an experienced senior management team in place who continue to manage the business while a process is underway to identify what additional resources are required to take the business forward. Fund management responsibilities remain unchanged and, as Chief Executive, Katherine Garrett-Cox will continue to oversee the overall business.

ATI manages almost £2.1bn, of which over £1.6bn is in third party funds. During the period we announced that we had won four mandates, including our first segregated mandate. ATI manages 11 funds, focused on Global Equities, Fixed Income and Sustainable and Responsible Investment. Of these, nine funds have a three year track record and seven are ranked above median in their peer group.

Alliance Trust Savings

We have continued to make excellent progress in the third quarter of 2013. As anticipated, the introduction of the Retail Distribution Review (RDR) has had a positive impact on the business in both the intermediated and direct channels. Assets under Administration are now over £5bn, which represents a 32% increase in the last 12 months. Our development of a service to intermediaries is working well and we have seen a significant increase in the number of accounts being opened in this way. We have made good progress with our reputation in the intermediary market and have recently been identified as the platform that Advisers are most likely to consider in the future in a survey by Platforum.

We also took the decision to become an early adopter of "clean" share classes, where the only charges levied are those retained by the manager. This further enhanced our transparent charging structure well in advance of the implementation of RDR 2 which will come into effect from 6th April 2014. The majority of the other platforms have followed our lead, but there continues to be downward pressure on their pricing, with the focus on total cost of ownership.

There will be a number of announcements from competitors over the coming months as they reveal their transparent charging model in readiness for RDR2. We expect these announcements to help to build our business further as clients come to understand the true cost of ownership on other platforms.

Outlook

Although the US government shutdown was always going to be short lived, it masks the deeper rooted problem of the overall level of government debt. Whilst the likelihood of a government debt default remains low, bond and equity markets will remain nervous until a political compromise is reached. There is always the possibility of an external shock resulting in increased volatility; however we expect that abundant liquidity and ongoing economic improvements will continue to support investor confidence. Equity valuations continue to suggest a favourable return over the medium to long-term and we believe that in this environment, the key to success is to focus on the fundamental drivers of long-term stock specific returns.

Cumulative returns (%) periods to 30 September 2013

	YTD	1 Year	2 Years	3 Years	5 Years
Share Price	15.4	17.8	38.9	39.3	70.7
NAV*	12.2	15.3	36.1	28.4	55.4

Source FactSet & Fundamental Data

*NAV is calculated with debt at fair value and including accrued income.
Past performance is not a guide to future performance.

Asset Allocation (%)

	30-Sep-13	30-Jun-13
Equities	95.5	94.5
Fixed Income	7.9	8.4
Private Equity	4.1	4.3
Operating Subsidiaries	1.7	1.7
Property	0.7	0.7
Cash	1.3	1.7
Other Assets	1.1	1.0
Gross Assets	112.3	112.3
Gearing	(12.3)	(12.3)
Net Assets (incl income)	100.0	100.0

Source: Alliance Trust

Equity portfolio sector allocation (%)*

	30-Sep-13	30-Jun-13
Financials	23.2	22.5
Health Care	13.6	14.1
Industrials	11.1	10.8
Information Technology	11.1	13.5
Consumer Discretionary	10.7	9.2
Consumer Staples	8.9	9.5
Energy	7.4	7.6
Utilities	5.8	5.5
Telecommunication Services	4.3	2.9
Materials	4.0	4.3

Equity portfolio geographic breakdown (%)*

	30-Sep-13	30-Jun-13
United Kingdom	23.2	19.8
North America	46.1	48.8
Europe Ex UK	17.5	18.0
Asia	11.3	12.5
Emerging Markets	2.0	0.9

Source: Alliance Trust

Equity portfolio top 20 holdings*

30 Jun 2013	Direction	30 Sep 2013	Holding	% of Equity Portfolio
1	-	1	Pfizer	2.5
3	Up	2	United Technologies	2.5
4	Up	3	Qualcomm	2.2
2	Down	4	Walt Disney	2.2
6	Up	5	Samsung Electronics	2.0
5	Down	6	Enterprise Products Partners	1.9
9	Up	7	Prudential	1.8
-	New	8	Accenture	1.8
-	New	9	Visa	1.7
7	Down	10	Express Scripts	1.7
10	Down	11	HSBC	1.6
-	New	12	Amgen	1.6
8	Down	13	CVS Caremark	1.5
-	New	14	Eni	1.5
11	Down	15	Wells Fargo	1.4
17	Up	16	Danaher	1.4
15	Down	17	Reckitt Benckiser	1.4
-	New	18	National Grid	1.4
-	New	19	Twenty-First Century Fox	1.4
-	New	20	Resolution	1.4

Source: Alliance Trust

*Weightings are calculated on a look-through basis whereby the Trust's exposure is combined with that of its holdings in Alliance Trust Investments' funds in order to calculate total exposure.
The views, information and data in this statement should not be deemed as a financial promotion or recommendation. Alliance Trust PLC, Alliance Trust Savings and Alliance Trust Investments are not authorised to give financial advice.

For further information, please contact:

Evan Bruce-Gardyne                                    Conor McClafferty / Clare Dundas
Director of Investor Relations                         RLM Finsbury
Alliance Trust PLC                                               
Tel: [phone]                               Tel: [phone]
Email: [e-mail]               Email: [e-mail]
Website: www.alliancetrust.co.uk                  Website: www.rlmfinsbury.com

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Source: Alliance Trust PLC via Thomson Reuters ONE

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