Alliance Trust PLC (ATST) 2019年年度報告「LSE」.pdf

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1、Annual Report for the year ended 31 December 2019ANNUAL REPORT 2019CONTENTSStrategic ReportInvesting for Generations 3Our Performance in 2019 4Chairmans Statement 6Investment Managers Report 8The Stock Pickers 19Investment Portfolio 29Investment Disposals 33Cost and Performance Measures 34Dividends

2、35Discount and Share Buybacks 36Risk Management 37Corporate Responsibility 42Directors ReportBoard of Directors 46Corporate Governance 50Viability and Going Concern Statements 55Audit and Risk Committee 56Remuneration Committee 60Other Governance 64Independent Auditors Report 68Financial StatementsI

3、ncome Statements 77Statement of Comprehensive Income 77Statement of Changes in Equity 78Balance Sheet 79Cash Flow Statement 80Notes 81Other InformationGlossary:Performance Measures and Other Terms 104Information for Shareholders 106Ten-year Record 109INVESTMENT OBJECTIVEThe Trusts objective is to be

4、 a core investment for investors that delivers a real return over the long term through a combination of capital growth and a rising dividend.The Trust invests primarily in global equities across a wide range of different sectors and industries to achieve its objective.Annual Report and Financial Ac

5、counts 20192Whether you are paying for university,saving for a pension or leaving a legacy,Alliance Trust can help you achieve your goals,as it has for generations of investors since 1888.THE BENEFITS OF OWNING SHARES IN THE TRUSTOur carefully constructed global equity portfolio is designed to deliv

6、er,over the long term,higher returns than world stock markets,while at the same time shielding you from some of the risks that active investing usually entails.The Trust also produces regular and rising income,having increased its dividend every year for 53 years.It does all this at a competitive co

7、st.We find,select and monitor highly skilled Managers each with their own,different investment approach from around the world,and they invest only in their top stock picks.We combine these in the Alliance Trust portfolio,which is broadly diversified across countries and sectors to manage risk.But th

8、e individual holdings are quite different from those in a tracker fund.Performance is driven by stock selection rather than sector or country allocation.HOW THE TRUST MANAGES YOUR INVESTMENTWe use nine of the best Stock Pickers in the world,as rated by Willis Towers Watson(WTW),our Investment Manage

9、r.Each of our Stock Pickers invests in a bespoke selection of usually 20 or fewer stocks.Research shows that high conviction investing can deliver market-beating returns,but it can also be risky if using just one Stock Picker whose style may fall in and out of favour.This is why we combine a range o

10、f Stock Pickers rather than rely on one persons skill and judgement.The portfolio benefits from a rich mix of investment styles which smooths out the peaks and troughs of one Stock Pickers performance and reduces the risk of isolated losses damaging the performance of the portfolio as a whole.Howeve

11、r,our focus on high conviction positions avoids the disadvantages of traditional multi-manager strategies,which can end up virtually reproducing the index,often at high costs.The Trusts portfolio has around 200 stocks,compared to approximately 3,000 in our benchmark,the MSCI All Country World Index.

12、WTWs scale and global research help us keep our annual charges competitive.By combining the outperformance potential of high conviction investing with the reduced risk of loss and volatility that manager diversification provides,we believe Alliance Trust makes an ideal long-term core holding,either

13、on its own or as a building block in a broader portfolio.INVESTING FOR GENERATIONS:PAST,PRESENT AND FUTURE3STRATEGIC REPORTFINANCIAL HIGHLIGHTS AT 31 DECEMBER 2019OUR PERFORMANCE IN 2019KEY PERFORMANCE INDICATORSShare PriceNAV Total Return1Net Asset Value220152016201720182019517.0638.0746.5688.0840.

14、00200400600800100020152016201720182019559.0667.5777.7723.6875.9020040060080010000204060801001 yearSince 1 April 20173 years5 years21.723.132.627.125.538.176.276.60204060801001 yearSince 1 April 20173 years5 years22.423.131.327.124.438.166.576.6SHARE PRICE(PENCE)This is a simple means of identifying

15、the change in the value of the Trust.NET ASSET VALUE(PENCE)2This shows the value per share of the investments held by the Trust less its liabilities(including borrowings).COMPARISON AGAINST PEERS(%)This shows our NAV Total Return against that of the Morningstar universe of UK retail global equity fu

16、nds (open ended and closed ended).NAV TOTAL RETURN(%)1This measures the performance of our assets,including the contribution of dividends.Source:FactSet.Source:Alliance Trust.Net Asset Value includes income and with debt at fair value.Source:Morningstar and MSCI Inc.NAV Total Return based on NAV inc

17、luding income with debt at fair value and after Managers fees(including WTWs fees).Source:Morningstar.On these two pages we set out the Key Performance Indicators(KPIs)the Board uses to measure performance.UP 22.1%from 688p(2018)UP TO 23.1%from-5.4%(2018)UP 21.0%from 723.6p(2018)MSCI ACWIMorningstar

18、 Global Equity MedianAlliance TrustAlliance TrustAnnual Report and Financial Accounts 20194Discount1Total Shareholder Return1Total Dividend2201520162017201820190.590.430.540.650.640.00.20.40.60.891011121314910111213142015201620172018201912.4310.971.4612.7713.1613.5513.960204060801001 yearSince 1 Apr

19、il 20173 years5 years21.724.332.628.925.539.076.295.1-202468201520162017201820197.54.44.04.94.1ONGOING CHARGES RATIO(%)1This shows the cost of running the Trust as a percentage of our average NAV.It is an indicator of how efficiently the Trust is managed.TOTAL DIVIDEND(PENCE)2 YEAR TO 31 DECEMBERA s

20、teadily rising dividend is one of the objectives of the Trust.TOTAL SHAREHOLDER RETURN(%)1This demonstrates the return our shareholders receive through dividends and capital growth of the Trust.DISCOUNT(%)1 ON 31 DECEMBERThis is the difference between the share price of the Trust and its NAV and is

21、an indicator of demand for our shares.Source:Alliance Trust and FactSet.Source:Alliance Trust.Source:Morningstar and MSCI Inc.Source:WTW and Association of Investment Companies(AIC).A negative value in the chart above means that shares are being traded at a premium rather than a discount.UP TO 24.3%

22、from-6.1%(2018)DOWN TO 4.1%from 4.9%(2018)UP 3.0%from 13.55p(2018)Ordinary DividendMSCI ACWISpecial DividendAlliance TrustAlliance TrustGlobal Sector Weighted Average1.Alternative Performance Measure(refer to Glossary on page 104).2.GAAP Measure.5STRATEGIC REPORTThe Trust delivered a strong investme

23、nt performance in 2019.We ended the year with a NAV Total Return of 23.1%and a Total Shareholder Return(TSR)of 24.3%;our benchmark index,the MSCI ACWI,returned 21.7%.The main reason for this,which is explained in more detail in our Investment Managers report,is down to the performance of the stocks

24、selected by our nine Stock Pickers.We are a long-term investor so we do not want to concentrate too much on performance over 12 months.Our multi-manager approach is also delivering over a longer period.Between 1 April 2017,when we appointed WTW as our Investment Manager and 31 December 2019,our NAV

25、Total Return was 27.1%and our TSR was 28.9%,both comfortably ahead of the MSCI ACWI which returned 25.5%for the same period.On page 8 we provide an estimate of how the Trust would have performed had we not owned Alliance Trust Savings or held the non-core investments,which we have now sold.COMMITTIN

26、G TO AN INCREASING DIVIDENDI am pleased to report that we are declaring a fourth interim dividend for 2019 of 3.49p per share.This brings the total dividend for the year to 13.96p,an increase of 3%on last year.The Trust has increased its ordinary dividend for the past 53 years and the Board expects

27、this to continue.The Trust has strong revenue reserves from which it can continue to pay dividends even if there should be a shortfall in the income from our portfolio in any year.To further strengthen our dividend coverage and provide the potential to increase dividends,we are asking shareholders t

28、o approve a conversion of our Merger Reserve to a distributable reserve;if successful this change will mean we will have an additional 645.3m available to support increased dividend levels in the future.We will also be giving our shareholders the opportunity to approve our progressive Dividend Polic

29、y.We report in more detail on page 35.We are introducing a Dividend Reinvestment Plan which will be administered by our Registrars.This will be available for the June 2020 dividend and shareholders will be able to join the Plan from 31 March 2020.This will enable shareholders to increase their holdi

30、ng in the Trust in a cost-effective way.NARROWING OUR DISCOUNTWe increased our focus on the Trusts sales,marketing and investor relations activities in 2019 and we have seen demand for the Trusts shares from existing as well as new investors.These activities included an increased number of meetings

31、with shareholders and potential shareholders,which helped us maintain our understanding of the needs of investors.The increased demand for shares will naturally narrow the discount at which our shares trade,thereby benefitting existing shareholders.This focus will continue in 2020.During 2019,the Tr

32、ust bought back a total of only 4.6m shares compared to 14.0m in 2018 and added 1.9m to the Net Asset Value for remaining shareholders.The average discount for the year was 5.0%and we ended the year at 4.1%(4.9%in 2018).While I am pleased at the progress made to date,we expect to see the discount na

33、rrow further as a result of continuing strong performance and increased demand.We report in more detail on our discount and share buyback activity on page 36.CONTROLLING COSTSWe have continued to control costs resulting in the Trusts administrative expenses reducing to 5.9m from 6.5m in 2018.This in

34、cludes the reduction in Directors remuneration that we implemented in July 2019.At the year-end we are reporting an Ongoing Charges Ratio of 0.64%,which remains competitive for a global,active equity,multi-manager trust.We report in more detail on our costs on page 34.INVESTING RESPONSIBLYWe believe

35、 that if we invest responsibly not only will our shareholders benefit but so will wider society.All of our Managers have processes in place to ensure that they have regard for Environmental,Social and Governance(ESG)matters when they select investments for the Trust.We have strengthened our approach

36、 to responsible investing by appointing external experts Hermes EOS(Equity Ownership Services)1.Hermes EOS not only provides guidance to our Managers on voting at company meetings,but uses its size(they represent asset owners and asset managers with more than 662bn)to encourage positive change in th

37、e way companies run their businesses.You can read more about this topic on page 17.BORROWING TO IMPROVE PERFORMANCEWe regularly review the funding structure of the Trust and at the end of the year one of our existing facilities was expiring.We took the opportunity to refinance all of our other short

38、-term borrowings and entered two new revolving credit facilities totalling 200m.Following the refinancing exercise,the Trusts weighted average interest on all borrowings remained at 3.1%.CREATING A DIVERSE AND EFFECTIVE BOARDOn behalf of the Board,I would like to thank Lord Smith for his hard work a

39、nd dedication as Chairman and for successfully leading the Board through a period of significant change.I am pleased to welcome Jo Dixon who joined the Board in January 2020 and takes on the role of Chair of the Audit&Risk Committee in March.Jos appointment adds to the Boards existing skills and exp

40、ertise,particularly its financial and audit knowledge,and also means that we have achieved our target of 33%female representation on the Board.I am delighted that in my first Chairmans Statement I can report that 2019 was a good year for the Trust,despite these unusual and uncertain times overshadow

41、ed by Brexit and now the coronavirus.We saw strong returns from our investments,outperforming our benchmark and our peers not only over the last 12 months but also since we adopted our multi-manager strategy in April 2017.We have also increased our ordinary dividend for the past 53 years.Virtually a

42、ll of our non-core investments have been sold;the Trust is now well-positioned for continued outperformance.”“Annual Report and Financial Accounts 20196It was gratifying that the work carried out to refocus the Trust was recognised in the 2019 Citywire Investment Trust awards in which we were named

43、Best Board.The judges commended the Board for the changes that had been made,saying it had tackled issues“head on”and implemented significant change“at a rapid pace”.In the table below,you can see what we have achieved against the commitments we made following the announcement of the strategic revie

44、w in 2016 and subsequently.ANNUAL GENERAL MEETINGWe are again intending to hold our AGM in Dundee in 2020.We are aware of the potential impact of the coronavirus on such meetings and,if we need to make any change to our plans,we will do what we can to provide as much notice as possible to shareholde

45、rs.Normally,I would look forward to welcoming you to meet some of our managers after the AGM.This year,I am sure you will understand why,we have decided not to hold an investor forum after the meeting.We will,however,aim to arrange something similar in Scotland in the not too distant future.I hope a

46、s many shareholders as possible will be able to attend the event and meet with me,or one of my fellow Directors,and some of our Stock Pickers.We announced the outcome of our strategic review and our intention to move to a multi-manager global equity investment in December 2016.Since then we have tak

47、en a number of decisions to enable us to complete the simplification of the Trust and we set out below the progress we have made.1.Known as EOS at Federated Hermes since 1 January 2020.In addition to the normal AGM business and giving shareholders the opportunity to approve our Dividend Policy(see p

48、age 35)and changes to our Merger Reserve,we will be asking shareholders to approve some minor changes to our Articles of Association and the appointment of BDO as the Trusts new Auditor.As always,I and my other Directors,would be delighted to talk to any shareholders who manage to attend.OUTLOOKThe

49、outlook for the global economy and financial markets is,as always,uncertain.The coronavirus is an international problem that will impact directly or indirectly everyone.Our Stock Pickers have made some minor changes as part of their ongoing review of their stock selections.We are confident that the

50、Trust remains well placed to be a core investment for our shareholders for generations to come,through a portfolio designed to outperform but with less volatility and risk than investments in equity funds with only one manager.Gregor Stewart ChairmanCHAIRMANS STATEMENTDecisionWhat has been achievedT

51、o focus on global equities through a multi-manager approach.Following a shareholder vote,WTW was appointed on 1 April 2017.The Trust is now almost completely invested in global equities.To increase our outperformance target to 2%p.a.over the MSCI All Country World Index,net of costs,over rolling thr

52、ee-year periods.We outperformed the MSCI ACWI between 1 April 2017 and 31 December 2019 by 3.4%in terms of our Total Shareholder Return and by 1.6%in terms of our NAV Total Return and are encouraged by performance to date as we approach the third anniversary of WTWs appointment.See page 8 for furthe

53、r information.To maintain our progressive dividend policy and build on Alliance Trusts record of year-on-year dividend growth.We have now increased our dividend for 53 consecutive years.Actions are underway to further enhance dividend payment capability.To seek outperformance at a competitive cost,b

54、elow 0.65%.At the end of 2019,our OCR was 0.64%.Sales of Alliance Trust Investments and Alliance Trust Savings.The sale of Alliance Trust Investments completed in April 2017 and that of Alliance Trust Savings in June 2019.A total of 72.5m was received for these two businesses which was invested in g

55、lobal equities.A proactive programme of share buybacks to be introduced and to achieve significantly narrower discount.At the end of November 2016,the month before we announced the outcome of our strategic review,the discount was 10.3%.As at 31 December 2019,it had narrowed to 4.1%.Between those dat

56、es,1.3bn was spent on share buybacks.The extent of share buybacks reduced by 67%between 2018 and 2019.7STRATEGIC REPORTINVESTMENT MANAGERS REPORTSTRONG PERFORMANCE IN A CHALLENGING MARKET FOR ACTIVE MANAGERS The Trusts Total Shareholder Return for the year was 24.3%and the Trusts NAV Total Return wa

57、s 23.1%,against the MSCI ACWI return of 21.7%.The Trusts NAV Total Return includes the impact of the Trusts buybacks,gearing,fees and costs.In future,the NAV Total Return will be better aligned with the return generated by the equity portfolio,given the sale of the Trusts legacy assets and Alliance

58、Trust Savings(ATS).The Trusts Equity Portfolio Total Return before fees for the year was 22.9%.Between 1 April 2017 when we were appointed and 31 December 2019,the Equity Portfolio Total Return before fees was 29.2%,3.7%ahead of the Trusts benchmark.The Trusts Equity Portfolio Total Return before fe

59、es between 1 April 2017 and 31 December 2019 is a good approximation of what the Trusts NAV Total Return would have been had the Trust not held its legacy non-core investments.The Equity Portfolio Total Return excludes the positive impact of leverage and buybacks seen in the NAV.The strong performan

60、ce of the Trusts equity portfolio demonstrates the value of investing longer term in a portfolio of our Stock Pickers highest conviction stocks.This performance has been achieved in what has been a challenging environment for active managers,given the low dispersion and narrow leadership of US mega

61、cap technology stocks driving markets.RELATIVE RETURNS AGAINST BENCHMARK SINCE APPOINTMENT OF WTW(%)Total Shareholder ReturnRelative performanceNAV Total ReturnEquity Portfolio Total Return before feesPassive alternative iShares ETF Peer Group Median 3.41.63.70.1-1.1-2-101234Source:BNY Mellon Perfor

62、mance&Risk Analytics Europe Limited,Morningstar and MSCI Inc.The passive alternative iShares is the BlackRock iShares MSCI ACWI ETF.The Peer Group is the Morningstar universe of UK retail global equity funds(open ended and closed ended).The performance of the Passive Alternative iShares ETF and Peer

63、 Group is after fees.The Trusts NAV Total Return reflects the impact of holding non-core investments and Alliance Trust Savings until 30 June 2019.Willis Towers Watson(WTW),a leading investment group with roots dating back to 1828,was appointed as the Trusts Investment Manager in April 2017.It,in tu

64、rn,has appointed a number of Stock Pickers to invest in their highest conviction stock ideas for the Trust.WTW has drawn on its in-depth knowledge of over 1,500 equity managers and 16,850 equity investment products to select skilled Stock Pickers.Performance of the Trusts overall portfolio is manage

65、d by WTWs Alliance Trust Investment Committee.This committee is responsible for driving investment outperformance,monitoring and overseeing Stock Picker performance,reviewing portfolio blending,balancing risk at the stock,sector and geographical level,implementing any hedging and gearing-as well as

66、tight cost management.Annual Report and Financial Accounts 20198We are very pleased with the performance of the Trust since we took over management of the Trusts portfolio and believe we are well positioned for continued success.”Craig Baker Global Chief Investment Officer,WTWMARKET UNCERTAINTY LEAD

67、S TO NEW RISKS AND OPPORTUNITIES Global equity markets experienced solid growth in 2019,rebounding strongly from the sell-off in the fourth quarter of 2018.Softening global economic data saw central banks act.The Federal Reserve in the US changed its tightening course and cut interest rates in July,

68、September and October.Similar measures were adopted across many other regions to help stimulate economic activity.This accommodating central bank stance helped spur equity markets on,despite the economic weakness seen globally and continued market uncertainty,with the US/China trade dispute continui

69、ng to dominate headlines for a second year.The impact of the trade dispute was particularly felt across emerging markets,with the MSCI Emerging Markets benchmark lagging the main index,up only 13.9%in sterling terms over the year.Yet again,US markets dominated most major regions,up 25.8%in sterling

70、terms versus 21.7%for the MSCI ACWI,mostly led by large cap technology companies.The Information Technology sector was up 41.2%in sterling terms over 2019.The weakest sector was Energy,up 8.4%,with performance dragged down by unease about sluggish global growth and oversupply as well as worrying hea

71、dlines,particularly regarding Middle East tensions and global climate concerns.Investment in US companies in aggregate represented the Trusts largest holding,accounting for over 50%of the portfolio,at 31 December 2019.Information Technology was also a significant exposure,accounting for 18.5%of the

72、portfolio.This contributed positively to the absolute portfolio return.The Trust had only 3%allocated to Energy stocks.Whilst US large cap technology stocks led the market for a significant part of the year,it was not plain sailing all the time.Towards the end of summer 2019 we saw a reversal in the

73、 trend,with some of the more growth focused stocks pulling back in favour of value stocks.As such,the Trusts value Managers were able to recover some ground,whereas the Trusts growth Managers strong momentum was somewhat tapered in the latter part of the year.The divergent returns from different sty

74、les,countries and sectors has been significant and has persisted for many years.It is unpredictable as to when their directions might change.This unpredictability is a key driver behind our risk management approach of balancing the allocation of the Trusts portfolio across a range of global Stock Pi

75、ckers with different perspectives and investment approaches to control the overall risk of the portfolio.Our focus on risk management has meant that the Trusts portfolio demonstrated its all-weather robustness this year,able to perform strongly in both phases of the market,solidly keeping up while g

76、rowth momentum dominated,as well as in the reversal back towards value.THE NEXT PHASE OF BREXITWith the Brexit Withdrawal Bill passing in the House of Commons,the UK is now in the negotiation phase for a trade deal with the European Union.This clearly means that uncertainty remains,with a no deal ou

77、tcome still on the table.However,one hurdle has been overcome.The Trust had 12%allocated to UK stocks as at end December 2019,with 4.8%in UK stocks in the MSCI ACWI benchmark.This is an overweight versus the benchmark,but an underweight relative to many Investment Trust peers that often have a great

78、er allocation to the UK.The Trust has a global portfolio,focusing on seeking opportunities across a wide universe.Many of the UK stocks the portfolio invests in,are global companies,with global revenues.How UK shares will fare during 2020 will depend,in part,on the outcome of the negotiations.Howeve

79、r,the thorough bottom-up analysis undertaken by our Stock Pickers should ensure that the Trust holds companies with attractive long-term fundamentals,which should fare well in the long run,whatever the outcome.GROWING CONCERNS AROUND CLIMATE RISK IMPACTS2019 saw increasingly common heatwaves,floods

80、and wildfires around the globe having a devastating impact on lives and livelihoods,as well as the environment.There is rising public awareness and pressure on world leaders to address climate risk and reconsider their dependency on fossil fuels,and to design a transition to net zero carbon emission

81、s.Corporations and investors are now also starting to more consistently evaluate their impact on the environment and reassess their investment beliefs.We have identified climate change as a critical and systemic priority,given the risk it presents to our clients investments,the ongoing resilience of

82、 the savings universe,and the planet as a whole.Within the Trusts investment process,we consider the potential impacts of Environmental,Social and Governance(ESG)factors such as climate change.We cover this in more detail on page 15.WTW Investment Committee:Stuart Gray,Mark Davis and Craig Baker.“9S

83、TRATEGIC REPORTINVESTMENT MANAGERS REPORTcontinuedSTOCK PERFORMANCE ANALYSISLooking in more detail at stocks that drove the Trusts performance relative to its benchmark index,the table below illustrates the stocks that made the biggest difference to the Trusts performance against its benchmark index

84、 in the year and includes both stocks held and those not held by the Trust.NameCountrySectorAverage Active Weight2019 Total Return in SterlingAttribution Effect relative to benchmarkTOP 5 CONTRIBUTORSQorvo,Inc.United StatesInformation Technology0.4%84%0.5%New Oriental Education&Technology GroupChina

85、Consumer Discretionary0.7%113%0.4%Charter CommunicationsUnited StatesCommunication Services1.0%64%0.3%Crown Holdings,Inc.United StatesMaterials0.9%68%0.3%CGGFranceEnergy0.4%136%0.3%TOP 5 DETRACTORSApple,Inc.*United StatesInformation Technology-2.1%81%-0.9%Qurate Retail,Inc.United StatesConsumer Disc

86、retionary0.5%-58%-0.6%Glanbia PlcUnited KingdomConsumer Staples0.5%-40%-0.4%Baidu,Inc.ChinaCommunication Services0.7%-23%-0.4%Pearson PLCUnited KingdomCommunication Services0.5%-31%-0.3%Equity Portfolio Total Return22.9%1.2%MSCI ACWI21.7%Source:FactSet and WTW;Estimated attribution metrics calculate

87、d using the Brinson methodology using monthly data.*Apple,Inc.was not held by the Trust and as such represents an opportunity loss rather than a financial loss.STOCKS THAT IMPROVED PERFORMANCEThe Trusts strongest driver of relative performance in 2019 was Qorvo,a US-based semiconductor company that

88、is one of the three major players that make radio frequency and power amplification systems for mobile devices including mobile phones,tablets and,increasingly,devices included in the Internet of Things.There is a meaningful tailwind to this industry and business as the transition from 4G to 5G occu

89、rs across the globe.Qorvos share price increased strongly in the fourth quarter after the company posted quarterly results that topped analysts expectations.New Oriental Education(EDU),a leading provider of tutoring services in China,was the second-best contributor to performance.It posted impressiv

90、e growth over the past year,benefiting from classroom expansions and strong increases in student enrolment.An area of recent strength has been its Overseas Testing segment,which has benefited from reforms that management made to its offering catering to younger students.Greater classroom utilisation

91、 and lower outlays for sales and marketing have also provided a lift to its margins.STOCKS THAT DETRACTED FROM PERFORMANCE Among the stocks in the portfolio,the main detractor during the year was Qurate,which was down 58%for the year.Qurate is a leader in TV-based retail shopping,and one of the larg

92、est e-commerce retailers in the US.Qurates first two earnings reports were disappointments,missing estimates by 17%and 9%as the company experienced changes in product mix that impacted profitability,as well as increases in customer acquisition costs.There have been similar challenges in the past at

93、the company,and these have proven temporary.During the year,the companys multiple compressed from 10 x to 6x forward earnings,making it very attractive from a valuation perspective.Apple is a stock we did not hold in the portfolio as it did not constitute one of our Stock Pickers best ideas.The stoc

94、k benefited from the US technology mega cap momentum and rallied strongly over the year.It is the largest stock in the index,accounting for over 2%of the MSCI ACWI benchmark and hence had a meaningful impact on the relative performance of the portfolio versus the benchmark.Annual Report and Financia

95、l Accounts 201910STOCK PICKERS PERFORMANCEWe are very pleased with how the Stock Pickers we have selected for the Trust performed over the year.Many active managers have struggled to outperform a market driven by the narrow leadership of US mega cap information technology stocks,that we have experie

96、nced over the last two years.If we were to take all the stocks in the MSCI ACWI and re-weight them at each quarter-end evenly so that they are equal weight,their performance over 2018 and 2019 would have been 4.6%and 6.1%lower than that of the actual MSCI ACWI market cap weighted index in US dollar

97、terms.This illustrates the dominance of a small number of very large stocks over the period,with many other stocks in the index under-performing,making this a rather challenging environment.ANNUAL PERFORMANCE(%)YearMSCI ACWI Equal Weighted(US$)MSCI ACWI(US$)201921.1827.302018-13.52-8.93201726.4224.6

98、2Source:MSCI Inc.As would be expected,there was some variation in the manager returns,with some performing strongly and others doing less well.Of the Trusts nine global Stock Pickers,six have outperformed the MSCI ACWI over 2019 and six have also outperformed in the period between 1 April 2017 and 3

99、1 December 2019.The emerging markets stocks in the Trusts portfolio have come in line with the MSCI Emerging Markets index over both time frames.Two of the global Stock Pickers have outperformed by more than 20%since April 2017,one has underperformed by more than 20%over the same time frame,with the

100、 remaining Stock Pickers within a+/-10%range since April 2017.DIVERSIFIED HIGH CONVICTION SMOOTHS RETURNSThe chart below illustrates just how critical risk management of the portfolio exposures is.An individual Managers return path can be quite volatile.Allocating to a single managers concentrated p

101、ortfolio can be a bumpy ride.However,blending the stock selection of complementary Stock Pickers into a portfolio that is risk-managed in terms of style,sector and country exposures,and diversified across a number of manager strategies,leads to a much smoother return path.Returns relative to MSCI(%)

102、Dec 2019Sep 2019Jun 2019Mar 2019Dec 2018Sep 2018Jun 2018Mar 2018Dec 2017Sep 2017Jun 2017Mar 2017Stock PickersAlliance Trust equity portfolio-30-20-100102030Source:BNY Mellon Performance&Risk Analytics Europe Limited,Morningstar and MSCI Inc.Individual Stock Picker returns,before fees,are benchmarked

103、 against MSCI All Country World Index NDR(Net Dividends Reinvested)in sterling and the MSCI Emerging Markets Index NDR.The Trusts returns are benchmarked against the MSCI all Country World Index NDR in sterling.11STRATEGIC REPORTINVESTMENT MANAGERS REPORTcontinuedSource:WTW and FactSet.Estimated att

104、ribution metrics calculated using the Brinson methodology using monthly data.Source:The Bank of New York Mellon(International)Ltd and MSCI Inc.Source:The Bank of New York Mellon(International)Ltd and MSCI Inc.Source:WTW and FactSet.Estimated attribution metrics calculated using the Brinson methodolo

105、gy using monthly data.PERFORMANCE OF THE TRUST RELATIVE TO ITS BENCHMARKOver 2019,the Trusts equity portfolio,before costs,has outperformed its MSCI ACWI benchmark by 1.2%.We believe in the power of stock selection.We look to find and appoint the best Stock Pickers.We blend their best ideas stock ch

106、oices into a diversified and risk-controlled portfolio that exhibits no significant sector,regional or currency tilts.Performance in the long term is therefore driven by those stocks and not macro risks.During 2019,we did not implement any currency hedging for the Trust nor did the Trust have any ex

107、posure to derivative products.Our reference benchmark is unhedged,and our currency exposure is in line with our country allocations.As part of our portfolio risk management we monitor and manage our country and currency exposure,aiming to not diverge significantly away from the benchmark allocations

108、.We are able to hedge currency risk as required,depending on our view of the risk profile.The charts below demonstrate the total added value through sector and regional allocation as well as stock selection impacts.ATTRIBUTION BY SECTOR(%)ATTRIBUTION BY REGION(%)Stock selection was the key driver of

109、 performanceIn 2019 the Trusts sector allocation had a slightly positive impact on performance.An overweight to Information Technology and underweight to Energy benefited performance,however,this was partially offset by a small negative impact from a cash drag in a rising equity market.Stock selecti

110、on was positive over the year,especially among Materials and Financials.In terms of regional positioning,the Trust had an underweight position to the US versus the MSCI ACWI,and overweight to the UK and Europe.This,along with our small cash position,acted as a drag on relative performance against th

111、e benchmark in 2019 leading to a slightly negative allocation impact.Asset allocation by sectorStock selection within sectors1.00.20.00.20.40.60.81.01.2Asset allocation by regionStock selection within regions1.7-1.0-0.50.00.51.01.52.0-0.5REGIONSECTORInformation Technology 18.5%North America 50.7%Rea

112、l Estate 0.8%Stock Picker Cash 2.8%Consumer Discretionary 14.6%Europe 20.3%Financials 13.9%Industrials 13.1%Asia&Emerging Markets 14.1%Communication Services 12.0%UK 12.1%Stock Picker Cash 2.8%Health Care 10.3%Consumer Staples 5.7%Materials 5.2%Energy 3.1%Annual Report and Financial Accounts 201912P

113、ORTFOLIO CHANGES During 2019,the Trust announced the appointment of Vulcan Value Partners as an additional Stock Picker.Vulcan adds a differentiated source of active return and gives us an additional way to manage.In particular,Vulcan gives more flexibility to manage the portfolios exposure to the U

114、S,which accounts for over 50%of global equity markets.It was an opportune time to add Vulcan as it had only reopened its strategy to new business in the early part of 2019.We were pleased to have secured Vulcan for the Trust.Vulcans primary objective is to minimise the risk of permanently losing cap

115、ital over a long-term,five-year time horizon.It seeks to invest in quality companies that display substantial competitive advantages that will allow them to earn attractive cash returns and demands a high margin-of-safety in terms of value over price.If the team is not comfortable holding a stock fo

116、r five years,then it will not qualify for investment.Vulcan is a quality value investor and specialises in larger cap stocks.The team there has a global perspective and,like the Trusts other eight global Stock Pickers,has no geographical constraints on the stocks they choose for the Trusts portfolio

117、.Vulcan tends to invest mostly in US-domiciled businesses.The team focus on capital preservation and long-term compounding opportunities from very high-quality businesses that can grow in value over the long term.The Trust strengthened its approach to responsible investment in 2019 through the appoi

118、ntment of Hermes EOS.*Hermes EOS provides voting recommendations to the Trusts Stock Pickers.They also engage with companies that the Trust invests in and on public policy.We cover this more on page 17.In 2019,turnover was 52%.This reflected the day-to-day investment activities of our Stock Pickers,

119、the appointment of Vulcan with a subsequent rebalancing of the portfolio and the investment of proceeds from the sale of non-core investments.Significant additions to the Trusts portfolio over the course of the year included US technology firm Nvidia,designer of graphics processing units(GPUs)for th

120、e gaming market as well as computer electronics systems for the mobile computing and automotive sectors.The Trust also established a position in KKR and Co,a US-based investment firm with specific focus in private equity and corporate buyouts.KKR has developed a global portfolio of companies,totalli

121、ng over 100,generating over US$120bn in annual sales.Its portfolio includes UK-based cybersecurity consultants Darktrace and US-based consumer electronics company Sonos.The Trusts positions in IMCD,a UK-based chemical and food ingredients distributor,and in Daikin,a Japanese air conditioning manufac

122、turer were sold following share price appreciation.*Hermes EOS was renamed EOS at Federated Hermes in January 2020.13STRATEGIC REPORTINVESTMENT MANAGERS REPORTcontinuedPORTFOLIO RISK AND POSITIONING The Trusts portfolio continues to show a level of absolute volatility that is similar to that of the

123、benchmark index(with an annualised volatility of 12.3%for the portfolio and 11.8%for the benchmark as at 31 December 2019).Risk summaryActive Risk2.3%Portfolio volatility12.3%Active Share80%Benchmark volatility11.8%Beta1.02Number of Companies as at 31 December 2019*Portfolio164Benchmark3,050Source:F

124、actSet,BNY Mellon Performance&Risk Analytics Europe Limited and MSCI Inc.The Glossary on page 104 explains the meaning of the above terms.*The figures shown in the Number of Companies table above for Portfolio and Benchmark are different from those used for the calculation of the corresponding risk

125、analysis.This is due to the classification of stocks for risk purposes,that we may invest in more than one class of share in a company and limited data coverage for certain stocks.The Trust delivers a very high level of Active Share(80%as at 31 December 2019)with significantly lower active risk and

126、a similar level of absolute risk to the Trusts benchmark.We have retained a broadly balanced exposure of manager styles,sector and geographical exposures in 2019 relative to the benchmark.This has been an appropriate method to manage risk as performance of the different investment styles,markets and

127、 sectors has evolved during 2019.This has helped the Trust deliver robust performance and avoid being held hostage to any one particular risk factor.The Trusts global Stock Pickers are not constrained by geography or sectoral limits and are able to seek out opportunities in a global universe.This me

128、ans that the stocks selected by each individual Stock Picker can have quite different sector or country allocations,that are a direct outcome of their stock picks.Whilst constructing the Trusts portfolio,our top-down portfolio risk management process ensures that no significant style,sector or count

129、ry positions relative to the benchmark are present and that the risk and return profile of the portfolio is driven by stock selection as opposed to macro tilts.GEARING TO ENHANCE RETURNSWe manage the gearing level for the Trust in accordance with the gearing policy set by the Board.We have maintaine

130、d a gross level of gearing for the Trust of around 7.5%-8.5%throughout the year.This has had a positive impact on performance.By late March 2019,when equity valuations were back at pre-October 2018 levels,we reduced the Trusts gearing slightly.This decision was proved right during May when volatilit

131、y returned to the market.We moved the Trusts gearing back to around 8%and then managed it in the range of approximately 7.5%to 8.5%for the rest of the year.In December we replaced the Trusts short-term credit facilities with two new short-term credit facilities totalling 200m.During the process the

132、Trust received several offers from which the Board was able to select the most attractive pricing.The Trusts total gearing level remained unchanged as a result of the new facilities.OUTLOOKThe coronavirus has dominated news flow in early 2020.Undoubtedly,the Chinese and global economy will suffer so

133、me short-term cyclical impacts.However,whilst there are a wide number of potential outcomes,we believe that most scenarios lead to modestly improving levels of global growth by 2021 and beyond.Despite these comments,risks remain skewed to the downside in areas such as the feeble manufacturing sector

134、 straining from the onslaught of the trade war impacts.Central banks now have little ammunition left to prevent potential recessionary pressures.This,as well as headwinds from the continued geopolitical risks,the initial shock of the coronavirus,and with US elections and further Brexit trade deal ne

135、gotiation uncertainty still ahead,may result in subdued equity returns.Performance momentum in 2019 was yet again dominated by a continuation of the US large cap technology theme although,as we progressed through the year,we saw glimpses of a turnaround towards other parts of the market.The jury is

136、still out on whether we are seeing a blip in the market or whether this is a true rotation back towards value stocks that will be sustained going forward.If the global economy starts to pick up,these stocks may indeed come back in favour;many of them are currently priced at very attractive levels,we

137、ll positioned for a strong rebound.Because economic policy and political uncertainty are elevated globally,it is increasingly difficult to predict economic outcomes.In such uncertain markets,diversification and robust risk management is critical.Annual Report and Financial Accounts 201914OUR APPROAC

138、H TO RESPONSIBLE INVESTMENTA core part of our research,selection and monitoring procedure is an assessment of ESG risks and opportunities.We expect Stock Pickers to have a demonstrable process in place that identifies and assesses material ESG factors.Where sustainability themes could realistically

139、impact stock prices over the possible holding period,Stock Pickers are expected to reflect this in their investment thesis,decision-making and/or ownership activities.We explore how they identify,assess and act on the sustainability risks inherent in their stock selections for the Trust,using intern

140、al and external ESG information in order to analyse,monitor and challenge their approach.When constructing the Trusts portfolio,we review it through a sustainability lens which aims to measure the portfolios resiliency to ESG risks,including climate risk and long-term trends that could materially im

141、pact it.An illustration of the Trusts Climate Risk exposures as at 31 December 2019 is set out opposite above.This shows that at that time the Trusts portfolios carbon footprint is significantly better than its benchmark.The graph below shows it has much lower exposure to companies owning fossil fue

142、l reserves.The graphs are based on MSCI ESG Research data,which is one of the various data sources we utilise in our analysis.Although the Trusts portfolios carbon footprint should be generally lower than that of the benchmark over the long term,there are shorter term scenarios where this might not

143、be the case.Some companies may be making very significant progress on moving to carbon neutrality,and so their historic emissions used in carbon metric calculations,may be a poor guide to future emissions.While the Trust has not placed any ethical or value-based restrictions on the types of stocks i

144、n which its Stock Pickers can invest,it has prohibited investment in armaments made illegal under international law via the Inhuman Weapons Convention,and those weapons covered by standalone conventions.050100150200250138.4227.2189.089.9129.3113.9Carbon Emissions/$M InvestedCarbon IntensityWeighted

145、Average Carbon Intensity0123456782.44.77.44.83.01.50.62.4Any ReservesThermal CoalPercent of Market ValueGasOilAlliance Trust equity portfolioAlliance Trust equity portfolioMSCI ACWIMSCI ACWISource:MSCI ESG Research LLC.Source:MSCI ESG Research LLC.CLIMATE RISK EXPOSURES(tCO2e)WEIGHT OF HOLDINGS OWNI

146、NG FOSSIL FUEL RESERVES(%)15STRATEGIC REPORTINVESTMENT MANAGERS REPORTcontinuedVOTING SUMMARYELIGIBLE VOTES EXERCISED THAT WERE AGAINST MANAGEMENTNumber of votes exercised with management on each topic 88.8%Board Structure 38.1%Business Strategy and Risk Management 8.6%Capital Structure 20.6%Environ

147、mental 1.6%Of which climate change related 0.4%Other governance 6.2%Remuneration 20.2%Social or Ethical 2.7%Other 1.6%Number of eligible votes exercised that were against management 8.4%Number of eligible votes that were abstentions 2.8%Source:WTW.Source:WTW.Effective StewardshipWe support the Trust

148、s view that by engaging with the companies in which it invests,the Trust can contribute to the long-term success of those companies,help reduce the negative impacts that they may have on the environment and society and improve long-term returns to the Trusts shareholders by managing downside risks.W

149、e take a strong and engaged approach to the investment industry,helping to shape it for the benefit of all participants through our collaborative initiatives,not least the Thinking Ahead Institute.This is a not-for-profit research think-tank,which brings together asset owners,asset managers and acad

150、emics to debate the issues surrounding responsible investing.The aim is to use collective power and action to raise standards and improve outcomes for end investors.More information can be found at:www.thinkingaheadinstitute.orgAssessing a managers level of stewardship is an integral part of our man

151、ager research,selection and monitoring process.We aim to appoint Stock Pickers for the Trust who actively engage with the companies in which they invest.When necessary,we also engage with the Trusts Stock Pickers and guide them towards better practices.The Trusts Stock Pickers exercise the voting ri

152、ghts in respect of the stocks in which they have invested for the Trust.Between 1 January 2019 and 31 December 2019,they cast 3,082 votes at company meetings.They voted against or abstained from voting on 344 of these.Of the votes against management,the key topics voted on were Board Structure,with

153、38.1%of the votes against management as well as Capital Structure and Remuneration both representing just over 20%of votes against management.Annual Report and Financial Accounts 201916ISSUES AND OBJECTIVES ENGAGEDMILESTONE STATUS OF ENGAGEMENTFOCUS ON ENGAGEMENT AND CASE STUDIESIn June 2019,Hermes

154、EOS was engaged,via WTW,to assist the Trust in meeting its responsibilities as a long-term shareholder.Hermes EOS is a leading stewardship provider with a focus on achieving positive change.It works on behalf of investors including corporate sponsored and sector pension funds,sovereign wealth funds,

155、wealth managers and asset managers from 13 countries who entrust it with the stewardship of approximately 662bn in assets under advice(as at 31 December 2019),which provides Hermes EOS with significant leverage during its engagement activities.Its dedicated team of engagement and voting specialists

156、enables pension funds and other longer-term institutional investors to achieve their fiduciary responsibilities and be more active owners of companies.In addition to providing the Trusts Stock Pickers with voting advice and recommendations to help them make better informed decisions,Hermes EOS also

157、engages with companies in which its clients have invested and engages on public policy on their behalf.Hermes EOS is also involved in a number of collaborative engagements,including Climate Action 100+,which is an investor-led initiative to ensure the worlds largest corporate greenhouse gas emitters

158、 take necessary action on climate change.Hermes EOS is among over 370 investors with over US$35tn under management who have signed up to the initiative.We provide an illustration of the activity undertaken by Climate Action 100+within the BP case study on page 18.As a holder of BP,we voted in favour

159、 of the shareholder resolution brought forward by Climate Action 100+at the companys Annual General Meeting.The Climate Action 100+resolution encouraged further disclosures by BP,including enhanced reporting requirements,which would provide clarity on how the companys strategy is consistent with the

160、 Paris Agreement.The Paris Agreement aims to keep the increase in global average temperature to well below 2 degrees Celsius.Greater disclosure across companies will allow investors to more clearly evaluate the climate risk exposure present in their portfolio and take appropriate action.It will also

161、 help companies to set out robust plans towards a transition to a low carbon economy.This is a good example of discussions with companies undertaken over a period of time,leading to successful resolutions being passed to implement positive change.Since their appointment in June 2019,Hermes EOS has e

162、ngaged on a range of 248 Environmental,Social and Governance issues and objectives with 65 companies held by the Trust.Of the 130 specific engagement objectives Hermes EOS discussed with the companies during the period,it recorded progress on 23%using its milestone measurement system.Hermes EOS meas

163、ures and monitors progress on all engagements,setting clear objectives and specific milestones for its most intensive engagements.The specific milestones used to measure progress in an engagement vary depending on each concern and its related objective.In selecting companies for engagement,it takes

164、account of ESG risks,its ability to create long-term shareholder value and the prospects for engagement success.Environmental 21.8%No changeSocial and Ethical 27.0%Positive progressGovernance 30.2%Strategy,Risk and Communication 21.0%Source:Hermes EOS.Source:Hermes EOS.0102030405060Strategy,Risk and

165、 Communication258413012411111GovernanceSocial and EthicalEnvironmentalNumbers of Engagement Objectives17STRATEGIC REPORTBPAs part of the Climate Action 100+initiative1,Hermes EOS have been co-leading the collaborative investor engagement with BP.The company had demonstrated leadership on climate cha

166、nge.However,Hermes EOS remained concerned that the company had not yet demonstrated that its strategy is consistent with the goals of the 2015 Paris Agreement.In addition,they wanted the company to explain the consequences of this strategy for its future business model and long-term investment propo

167、sition.Following a lengthy period of collaborative engagement,Hermes EOS helped facilitate the development of a shareholder resolution calling for the company to set out a business strategy that is consistent with the goals of the Paris Agreement on climate change.It was co-filed by 9.6%of sharehold

168、ers,supported by the board and subsequently passed with the support of over 99%of shareholders.1.A global investor engagement initiative to reduce greenhouse gas emissions.It targets the worlds 100+largest corporate greenhouse gas emitters steering them towards necessary action on climate change.HER

169、MES EOS CASE STUDIESTo provide some context of the type of discussions Hermes EOS are involved in,we illustrate below two case studies of their engagement activities.This demonstrates Hermes EOSs collective bargaining power and how,over a number of years,they can influence companies to bring about p

170、ositive change.The above case studies demonstrate the power of engagement,especially when performed by skilled professionals,pulling asset power from many stakeholders,and joining in a common voice to deliver better outcomes for investors,as well as society at large.FACEBOOKIn May 2019,Facebook sign

171、ed up to the Christchurch Call to Action to tackle the spread of terrorist content online and introduced a“one-strike”policy for those who violate new livestreaming rules1.Hermes EOS have pushed for the company to be clearer on its strategy to extricate itself from the reputational,legal and regulat

172、ory issues it faces.There has been more investment in content governance but there is no clear,coherent plan with objectives and milestones so that stakeholders can judge progress.As a result,Hermes EOS recommended a vote against the lead director and the chair of the audit and risk committee.Hermes

173、 EOS backed shareholder proposals,including a request for a report concerning the content governance crisis,which would help to resolve in part their concerns.Hermes EOS continues to engage with the company,including as part of the Christchurch Call to Action.1.https:/www.bbc.co.uk/news/technology-4

174、8276802INVESTMENT MANAGERS REPORTcontinuedAnnual Report and Financial Accounts 201918THE STOCK PICKERSOver the next nine pages we provide examples of investments chosen by our Stock Pickers and details of their best performing stocks.Further information on all of our Stock Pickers can be found on th

175、e Trusts website(www.alliancetrust.co.uk).UK retail investors can only access the Stock Pickers 10 to 20 best stock picks through the Trust.19STRATEGIC REPORTTHE STOCK PICKERS continuedSTOCK SPOTLIGHT:DKSH HOLDINGSectorValue at 31 December 2019(m)First invested by Stock Picker%Sterling loss in 2019I

176、ndustrials17.13-Oct-1821.6Founded in 1865,DKSH Holding(DKSH)is a Swiss-headquartered market leader in Asian expansion services.It provides sales,marketing,research,logistics,distribution and after sales-care to its customers in the consumer,health care,specialty ingredients and technology industries

177、.DKSH provides investors with an opportunity to participate in the growth in Pan-Asian economies,which have a rising middle class(consumer products,technology)and also an ageing population(health care).We began building a position in DKSH for the Trust in October 2018.The opportunity to purchase DKS

178、H came when stocks with emerging markets exposure were out of favour with investors.Long-term contrarian value-orientated buyers of leading businesses across the market cap spectrum.11%of the Trusts portfolio at 31 December 2019.Bill Kanko,Founder and President.Bill was the Lead Manager for the succ

179、essful Trimark Fund and Trimark Select Growth Fund,with combined assets of more than$13bn.LARGEST 3 INVESTMENTSSectorCommunication ServicesValue at 31 December 2019(m)25.2First invested by Stock Picker11-Mar-19%Sterling gain in 2019 3.7SectorHealth CareValue at 31 December 2019(m)24.7First invested

180、by Stock Picker19-Jan-18%Sterling gain in 2019 23.8SectorHealth CareValue at 31 December 2019(m)21.1First invested by Stock Picker11-Apr-17%Sterling gain in 2019 29.4Annual Report and Financial Accounts 201920STOCK SPOTLIGHT:UBISOFTSectorValue at 31 December 2019(m)First invested by Stock Picker%Ste

181、rling loss in 2019Communication Services 21.917-Jul-19 22.6Based in France,Ubisoft is the worlds third-largest independent video game producer.Over the course of the last decade,the video game industry has shifted from one-time physical unit sales to digital downloaded sales of games and additional

182、content.This industry trend strengthened Ubisofts business model by extending the lifecycle of its games,which meaningfully increased the amount of revenues that are annually recurring.The combination of the companys attractive profitability,with operating margins in the low 20%range,and limited tan

183、gible asset needs produces strong returns on capital employed.Seek companies with high-quality business models,financial strength and strong management at a significant discount.10%of the Trusts portfolio at 31 December 2019.Pierre Py and Greg Herr have an average of over 20 years investing experien

184、ce.LARGEST 3 INVESTMENTSSectorIndustrialsValue at 31 December 2019(m)29.7 First invested by Stock Picker12-Apr-17%Sterling gain in 2019 29.3 SectorCommunication ServicesValue at 31 December 2019(m)21.9 First invested by Stock Picker17-Jul-19%Sterling loss in 2019 22.6SectorIndustrialsValue at 31 Dec

185、ember 2019(m)20.6 First invested by Stock Picker12-Apr-17%Sterling gain in 2019 26.9 21STRATEGIC REPORTTHE STOCK PICKERS continuedSTOCK SPOTLIGHT:NOVARTISSectorValue at 31 December 2019(m)First invested by Stock Picker%Sterling gain in 2019Health Care12.824-May-194.5Novartis is a global health care

186、company that discovers,develops,and manufactures drugs for the treatment of human diseases.Human health products are centred on drugs that span many therapeutic areas,including oncology,gastroenterology,infectious disease,cardiovascular,ophthalmology,central nervous system,transplantation,dermatolog

187、y,respiratory,and arthritis.The company is among the largest global pharmaceutical companies in the world,with annual sales north of US$50bn.Novartis is the only global company with drug discovery and developmental capabilities across small molecule,biologics,cell therapy,gene therapy and radiothera

188、py.These capabilities not only yield a robust pipeline,but the highly technical expertise required to develop these drugs makes it more difficult for competitors to reproduce such efforts in a quick,cost-effective manner.Seek high-quality sustainable businesses at reasonable prices whose strengths s

189、hould outweigh the macro environment.14%of the Trusts portfolio at 31 December 2019.GQG manages both a global equity and emerging markets portfolio for the Trust.Rajiv Jain founded GQG Partners in June 2016,having previously worked at Vontobel Asset Management for 22 years where he was responsible f

190、or over 30bn of assets.LARGEST 3 INVESTMENTSSectorInformation TechnologyValue at 31 December 2019(m)22.0First invested by Stock Picker31-Jul-18%Sterling gain in 2019 50.7SectorCommunication ServicesValue at 31 December 2019(m)20.2First invested by Stock Picker07-Apr-17%Sterling gain in 2019 21.7Sect

191、orHealth CareValue at 31 December 2019(m)20.2First invested by Stock Picker07-Apr-17%Sterling gain in 2019 13.6Annual Report and Financial Accounts 201922JUPITER and are the trade marks of Jupiter Investment Management Group Ltd.STOCK SPOTLIGHT:KATO SANGYOSectorValue at 31 December 2019(m)First inve

192、sted by Stock Picker%Sterling gain in 2019Consumer Staples7.515-Jan-1911.7Kato Sangyo is a food and beverages wholesaler operating in Japan.It supplies the major retailers with a broad range of products,runs their distribution systems and helps them with product ranging and display.The business is r

193、easonably stable and has a very high return on operating assets.The business also has net cash and investments that make up the entire market capitalisation of the company.In addition the food wholesaling business generates 11bn of operating profit which in effect you are receiving for free.This ext

194、reme valuation is prevalent in some medium and small sized companies in Japan.There is some change in corporate governance and attitude in Japan which may well highlight this value.Look for out-of-favour and undervalued businesses with prominent franchises and sound balance sheets.10%of the Trusts p

195、ortfolio at 31 December 2019.Ben Whitmore has over 20 years of experience and joined Jupiter in 2006.He worked at Schroders,managing both retail and institutional portfolios and around 2bn of assets.Ben is supported by Dermot Murphy,Co-Portfolio Manager.LARGEST 3 INVESTMENTSSectorCommunication Servi

196、cesValue at 31 December 2019(m)23.5First invested by Stock Picker12-Dec-18%Sterling gain in 2019 33.4SectorFinancialsValue at 31 December 2019(m)22.5First invested by Stock Picker03-Nov-17%Sterling gain in 2019 23.6SectorInformation TechnologyValue at 31 December 2019(m)22.2First invested by Stock P

197、icker08-Apr-17%Sterling gain in 2019 55.723STRATEGIC REPORTTHE STOCK PICKERS continuedSTOCK SPOTLIGHT:HANESBRAND SectorValue at 31 December 2019(m)First invested by Stock Picker%Sterling loss in 2019Consumer Discretionary16.74-Apr-1918.2Hanesbrands(Hanes)is the worlds largest maker of basic apparel,

198、including underwear,activewear,intimates,socks,and shapewear.Hanes has leading market share in over a dozen countries,including the U.S.and much of Europe.Basic apparel is a business where brand matters and Hanes ranks number one or two across most of their categories and geographies.Hanes has one o

199、f the largest and lowest cost apparel manufacturing operations in the world.With an efficient manufacturing footprint,this profitability has delivered returns on tangible invested capital above 30%.Over the next several years,we expect high-single-digit to low-double-digit earnings growth.Additional

200、 upside exists should the company continue to make accretive acquisitions or deliver on its additional margin expansion targets.The stock trades at an attractive valuation of just 8.4x 2020 earnings per share.Look for US companies in cheapest decile of valuation with high returns on invested capital

201、 and ability to grow profitability.13%of the Trusts portfolio at 31 December 2019.Lyrical Asset Managements investment management team is led by Co-Founder and Chief Investment Officer,Andrew Wellington.LARGEST 3 INVESTMENTSSectorHealth CareValue at 31 December 2019(m)37.5First invested by Stock Pic

202、ker12-Oct-17%Sterling gain in 2019 15.2SectorMaterialsValue at 31 December 2019(m)30.1First invested by Stock Picker15-Jan-19%Sterling gain in 2019 46.6SectorIndustrialsValue at 31 December 2019(m)27.5First invested by Stock Picker04-Apr-19%Sterling gain in 2019 31.6Annual Report and Financial Accou

203、nts 201924STOCK SPOTLIGHT:BAIDU SectorValue at 31 December 2019(m)First invested by Stock Picker%Sterling loss in 2019Communication Services 21.522-Jun-17 23.4Baidu,the leading internet search engine in China,is a top-decile-scoring Recovery PVT(Potential,Valuation and Timing)stock within our propri

204、etary global stock screen(MoneyPenny).Baidu has recovery Potential because its share price and return on capital are depressed after a period of significant investment in new areas of growth.This coincided with a period of weaker performance from its core search business.The Valuation of Baidu is ve

205、ry low after stripping out its large cash pile and stakes in other quoted companies.The Timing is improving,with profits starting to beat expectations.Strength in smaller companies and recovery situations identifying value at different stages of a companies lifecycle.9%of the Trusts portfolio at 31

206、December 2019.Hugh Sergeant is the Chief Investment Officer of Equities having previously been in a similar role at Societe Generale Asset Management(SGAM)and prior to that at UBS/Phillips&Drew and Gartmore.LARGEST 3 INVESTMENTSSectorCommunication ServicesValue at 31 December 2019(m)21.5First invest

207、ed by Stock Picker22-Jun-17%Sterling loss in 2019 23.4SectorConsumer DiscretionaryValue at 31 December 2019(m)20.8First invested by Stock Picker11-Apr-17%Sterling gain in 2019 23.2SectorConsumer DiscretionaryValue at 31 December 2019(m)19.5First invested by Stock Picker18-Sep-19%Sterling loss in 201

208、9 6.725STRATEGIC REPORTTHE STOCK PICKERS continuedSTOCK SPOTLIGHT:SALESFORCE SectorValue at 31 December 2019(m)First invested by Stock Picker%Sterling gain in 2019Information Technology19.33-Oct-1714.1S is a leading provider of enterprise software-as-a-service(SAAS)applications that address the cust

209、omer relationship management functions of companies of all sizes.The companys broad suite of SAAS applications continues to be market leading in vision,function and innovation.Salesforce allows its enterprise customers to reduce upfront license and installation costs as well as outsource operational

210、 responsibility and upgrade complexity,further enhancing its value proposition.Customers pay recurring annual subscription fees with high renewal rates,leading to a highly recurring and predictable business with strong visibility into the companys future cash flow generation.Additionally,the“digital

211、 revolution”has created a tailwind that should sustain approximately 20%top line growth in the coming years.Seek differentiated companies that have strong pricing power,recurring revenue generation and long runways of growth.11%of the Trusts portfolio at 31 December 2019.Sustainable Growth Advisers(

212、SGA)was founded in 2003 by George Fraise,Gordon Marchand and Rob Rohn who jointly manage SGAs stock picks for the Trust.They average over 30 years of investment experience.LARGEST 3 INVESTMENTSSectorConsumer DiscretionaryValue at 31 December 2019(m)22.8First invested by Stock Picker29-Nov-18%Sterlin

213、g gain in 2019 48.7SectorInformation TechnologyValue at 31 December 2019(m)22.3First invested by Stock Picker22-Jan-18%Sterling gain in 2019 37.2SectorFinancialsValue at 31 December 2019(m)21.2First invested by Stock Picker08-Apr-17%Sterling gain in 2019 23.2Annual Report and Financial Accounts 2019

214、26STOCK SPOTLIGHT:FACEBOOK SectorValue at 31 December 2019(m)First invested by Stock Picker%Sterling gain in 2019Communication Services 31.719-Mar-18 51.2Facebook was a good quality stock that had some short-term concerns after the Cambridge Analytica affair in 2018.The stock has risen on strong fun

215、damental performance with the first two concerns being largely allayed.The company looks to have achieved 26%growth in 2019.Costs have risen markedly,largely because of regulation,but these have also been significantly less than guided and provide an increased barrier to entry.We remain positive on

216、Facebook because engagement remains strong and is growing and advertisers still have strong intent and there are still tools which can be monetised further.Aim to grow real wealth over five-year periods by researching thematic trends that drive medium-term growth.13%of the Trusts portfolio at 31 Dec

217、ember 2019.Andy Headley is Head of Global Strategies at Veritas Asset Management.Andy has over 20 years investment experience.LARGEST 3 INVESTMENTSSectorCommunication ServicesValue at 31 December 2019(m)37.4First invested by Stock Picker07-Apr-17%Sterling gain in 2019 22.4SectorCommunication Service

218、sValue at 31 December 2019(m)34.9First invested by Stock Picker07-Apr-17%Sterling gain in 2019 63.6SectorCommunication ServicesValue at 31 December 2019(m)31.7First invested by Stock Picker19-Mar-18%Sterling gain in 2019 51.227STRATEGIC REPORTSTOCK SPOTLIGHT:QORVOSectorValue at 31 December 2019(m)Fi

219、rst invested by Stock Picker%Sterling gain in 2019Information Technology45.422-Aug-19 43.7Qorvo is one of the two major providers of radio frequency(RF)systems to mobile device manufacturers and in the Internet of Things(IoT)space.It enjoys a deep and widening moat as it would take many years for ot

220、her competitors to replicate.As RF systems become more complex,their content value increases.The company lowered its guidance for 2019 as Smartphone growth slowed giving us an opportunity to purchase shares at a meaningful discount to our estimate of intrinsic value.We believe this slowdown is a tem

221、porary setback,and the increasing complexity presented as China and the Western world transition to 5G will continue to drive increased content per handset.The increased complexity of content,coupled with the continuing explosive growth of the IoT,will provide opportunity for significant future grow

222、th.Focus on protecting capital by investing in companies with high quality business franchises trading at attractive prices.9%of the Trusts portfolio at 31 December 2019.C.T.Fitzpatrick,Chief Investment Officer of Vulcan Value Partners,LLC has over 30 years experience and he is the lead portfolio ma

223、nager for the Trusts mandate.LARGEST 3 INVESTMENTSSectorInformation TechnologyValue at 31 December 2019(m)45.4First invested by Stock Picker22-Aug-19%Sterling gain in 2019 43.7SectorFinancialsValue at 31 December 2019(m)45.0First invested by Stock Picker22-Aug-19%Sterling gain in 2019 4.1SectorInfor

224、mation TechnologyValue at 31 December 2019(m)30.3First invested by Stock Picker22-Aug-19%Sterling gain in 2019 26.9THE STOCK PICKERS continuedAnnual Report and Financial Accounts 201928INVESTMENT PORTFOLIOThe following are the largest 20 global stocks selected by our Stock Pickers.In total these sto

225、cks account for 29.4%of the Trusts portfolio.A number of these stocks have been invested in by more than one of our Stock Pickers.A full list of all of our holdings can be found on our website at www.alliancetrust.co.uk*includes the value of cash held by the Stock Pickers for investment.LARGEST 20 I

226、NVESTMENTS AT 31 DECEMBER 2019Alphabet Inc.is the holding company for Google but also has other subsidiaries which provide web-based search,advertisements,maps,software applications,mobile operating systems,consumer content,enterprise solutions,commerce and hardware products.Country of ListingUnited

227、 StatesSectorCommunication ServicesSelected by Stock Pickers5%of the equity portfolio*3.8%of MSCI ACWI0.8Value of Holding(m)120.0Microsoft Corporation develops,manufactures,licenses,sells and supports software products including Microsoft Office.The company offers a range of other software products

228、including operating systems,server applications,business and consumer applications.It also offers software development tools and software for the Internet and intranets.In addition,it develops video game consoles and digital music entertainment devices.Country of ListingUnited StatesSectorInformatio

229、n TechnologySelected by Stock Pickers4%of the equity portfolio2.5%of MSCI ACWI2.2Value of Holding(m)77.2A,Inc.is an American multinational technology company based in Seattle that focuses on e-commerce,cloud computing,digital streaming and artificial intelligence.Country of ListingUnited StatesSecto

230、rConsumer DiscretionarySelected by Stock Pickers3%of the equity portfolio2.0%of MSCI ACWI1.5Value of Holding(m)63.3Alibaba Group Holding Limited is a Chinese multinational conglomerate holding company specialising in e-commerce,retail,Internet and technology.Country of ListingChinaSectorConsumer Dis

231、cretionarySelected by Stock Pickers3%of the equity portfolio1.7%of MSCI ACWI0.7Value of Holding(m)52.0Mastercard Incorporated is an American multinational financial services corporation headquartered in the Mastercard International Global Headquarters in Purchase,New York,United States.Its principal

232、 business is to process payments.Country of ListingUnited StatesSectorInformation TechnologySelected by Stock Pickers2%of the equity portfolio1.5%of MSCI ACWI0.5Value of Holding(m)48.529STRATEGIC REPORTINVESTMENT PORTFOLIOcontinuedLARGEST 20 INVESTMENTS AT 31 DECEMBER 2019HDFC Bank Ltd.is an Indian

233、banking and financial services company headquartered in Mumbai,Maharashtra.HDFC Bank is Indias largest private sector lender by assets.Country of ListingIndiaSectorFinancialsSelected by Stock Pickers3%of the equity portfolio1.5%of MSCI ACWI0.0Value of Holding(m)46.6Nvidia Corporation is an American

234、technology company incorporated in Delaware and based in Santa Clara,California.It designs graphics processing units for the gaming and professional markets,as well as system-on-a-chip units for the mobile computing and automotive market.Country of ListingUnited StatesSectorInformation TechnologySel

235、ected by Stock Pickers3%of the equity portfolio1.5%of MSCI ACWI0.3Value of Holding(m)46.1Qorvo is an American semiconductor company that designs,manufactures and supplies radio-frequency systems for applications that drive wireless and broadband communications,as well as foundry services.Country of

236、ListingUnited StatesSectorInformation TechnologySelected by Stock Pickers1%of the equity portfolio1.4%of MSCI ACWI0.0Value of Holding(m)45.4KKR&Co.Inc.is an American global investment firm that manages multiple alternative asset classes,including private equity,energy,infrastructure,real estate,cred

237、it and,through its strategic partners,hedge funds.Country of ListingUnited StatesSectorFinancialsSelected by Stock Pickers1%of the equity portfolio1.4%of MSCI ACWI0.0Value of Holding(m)45.0Airbus SE is a European multinational aerospace corporation.They design,manufacture and deliver industry-leadin

238、g commercial aircraft,helicopters,military transports,satellites and launch vehicles,as well as provide data services,navigation,secure communications,urban mobility and other solutions for customers on a global scale.Country of ListingFranceSectorIndustrialsSelected by Stock Pickers2%of the equity

239、portfolio1.2%of MSCI ACWI0.2Value of Holding(m)37.9Annual Report and Financial Accounts 201930LARGEST 20 INVESTMENTS AT 31 DECEMBER 2019UnitedHealth Group Incorporated owns and manages organised health systems in the United States and internationally.It provides products for employers to enable them

240、 to plan and administer employee benefit programs.UnitedHealth also provides specialised care services for the elderly.Country of ListingUnited StatesSectorHealth CareSelected by Stock Pickers2%of the equity portfolio1.2%of MSCI ACWI0.5Value of Holding(m)37.9HCA Healthcare,Inc.offers health care ser

241、vices in the United States and the UK.This includes diagnosis,treatments,consultancy,nursing,surgeries as well as medical education,physician resource centres and training programs.Country of ListingUnited StatesSectorHealth CareSelected by Stock Pickers1%of the equity portfolio1.2%of MSCI ACWI0.1Va

242、lue of Holding(m)37.5Visa Inc.is an American multinational financial services corporation headquartered in Foster City,California,United States.It facilitates electronic funds transfers throughout the world,most commonly through Visa-branded credit cards,debit cards and prepaid cards.Country of List

243、ingUnited StatesSectorInformation TechnologySelected by Stock Pickers2%of the equity portfolio1.2%of MSCI ACWI0.6Value of Holding(m)37.5Citigroup Inc.or Citi is an American multinational investment bank and financial services corporation headquartered in New York City.It specialises in banking and f

244、inancial solutions.Country of ListingUnited StatesSectorFinancialsSelected by Stock Pickers2%of the equity portfolio1.2%of MSCI ACWI0.4Value of Holding(m)37.2Charter Communications,Inc.operates as a cable telecommunications company.It offers cable broadcasting,internet,voice,and other business servi

245、ces in the United States.Country of ListingUnited StatesSectorCommunication ServicesSelected by Stock Pickers1%of the equity portfolio1.1%of MSCI ACWI0.1Value of Holding(m)34.931STRATEGIC REPORTLARGEST 20 INVESTMENTS AT 31 DECEMBER 2019Abbott Laboratories is an American medical devices and health ca

246、re company with headquarters in Abbott Park,Illinois,United States.Country of ListingUnited StatesSectorHealth CareSelected by Stock Pickers2%of the equity portfolio1.1%of MSCI ACWI0.3Value of Holding(m)34.3Oracle Corporation supplies software for enterprise information management.It offers database

247、s and relational servers,application development,decision support tools and enterprise business applications.Oracles software runs on a variety of hardware options including network computers,personal digital assistants,set-top devices,PCs,mainframes and massively parallel computers.Country of Listi

248、ngUnited StatesSectorInformation TechnologySelected by Stock Pickers2%of the equity portfolio1.0%of MSCI ACWI0.2Value of Holding(m)32.3Facebook,Inc.is an American social media and technology company based in Menlo Park,California.Country of ListingUnited StatesSectorCommunication ServicesSelected by

249、 Stock Pickers1%of the equity portfolio1.0%of MSCI ACWI1.0Value of Holding(m)31.7Crown Holdings is an American company headquartered in Philadelphia,Pennsylvania.It is a leading supplier of beverage packaging,food packaging,aerosol packaging,metal closures and specialty packaging products.Country of

250、 ListingUnited StatesSectorMaterialsSelected by Stock Pickers1%of the equity portfolio1.0%of MSCI ACWI0.0Value of Holding(m)30.1Ryanair Holdings plc provides low fare passenger airline services to destinations in Europe.Country of ListingIrelandSectorIndustrialsSelected by Stock Pickers1%of the equi

251、ty portfolio0.9%of MSCI ACWI0.0Value of Holding(m)29.7INVESTMENT PORTFOLIOcontinuedAnnual Report and Financial Accounts 201932INVESTMENT DISPOSALSPRIVATE EQUITYIn 2018,a sales process was undertaken to sell most of the Trusts remaining assets and the sale was completed in December 2018 leaving holdi

252、ngs valued at 14.8m in limited partnerships that were close to their termination dates.In 2019,these investments were realised and at the end of 2019 the Trust holds interests in only a handful of investments which are in the process of winding up and as such have no residual value and one investmen

253、t where there is the potential of some return,dependent on an international arbitration process(it is currently held at a value of 63,000).The total distributions received in 2019 were 9.0m.The net proceeds received from these disposals and distributions were reinvested in the Trusts global equity p

254、ortfolio.Private Equity had a negligible impact on the Trusts performance in 2019.MINERAL RIGHTSThe Trust has held mineral rights in North America for over 100 years.The Board decided to market these assets for sale in 2018 and by the end of that year an agreement had been entered into to sell more

255、than half the holdings.By 31 December 2019 the sales process was complete and all of the mineral rights held in North America have now been sold.Sales proceeds of 11.1m after costs of disposal were received in 2019 which were reinvested in the Trusts global equity portfolio.Mineral Rights had a negl

256、igible impact on the Trusts performance in 2019.ALLIANCE TRUST SAVINGS(ATS)The sale of ATS to Interactive Investor Limited completed on 28 June 2019.The total consideration payable for the business,including the office premises was 40m,subject to post-completion adjustments.The net proceeds after co

257、sts associated with the disposal of 34.2m were reinvested in the Trusts global equity portfolio.ATS had a negligible impact on the Trusts performance in 2019.33STRATEGIC REPORTThe Trust has reduced its Ongoing Charges Ratio from 0.65%to 0.64%.Total administrative expenses were 5.9m,a reduction from

258、2018 when they were 6.5m.Investment management expenses were 11.7m(2018:10.9m).The Trust incurred several one-off costs during the year including the transaction costs relating to the sale of Alliance Trust Savings,office relocation,property and IT separation.The total of one-off costs for the year

259、was 0.7m,of which 0.4m was related to property matters which are not connected to the ongoing investment business of the Trust.The Board has a policy of adopting a one quarter revenue and three quarters capital allocation for management fees,financing costs and other indirect expenses where this is

260、consistent with the AIC Statement of Recommended Practice:Financial Statements of Investment Trust Companies and Venture Capital Trusts.In 2019 the Trust completed its business simplification.The Trusts portfolio is now almost wholly listed equities which are valued daily.Going forward the Trust wil

261、l report on its OCR calculated using its average daily NAV in accordance with AIC guidelines,rather than its historic approach of using the average of the 1 January and 31 December NAV values.The OCR for 2019 calculated using the average daily NAV was 0.62%.COST AND PERFORMANCE MEASURES2015201620172

262、01820190.590.430.540.650.640.00.20.40.60.82015201620172018201924.016.817.417.417.60510152025201520162017201820190.800.540.580.680.660.00.20.40.60.8Source:Alliance Trust and FactSet.An explanation of how the Ongoing Charges Ratio is calculated can be found on page 105.Source:Alliance Trust and FactSe

263、t.Source:Alliance Trust and FactSet.An explanation of how the Total Expense Ratio is calculated can be found on page 105.ONGOING CHARGES RATIO(%)TOTAL EXPENSES(M)TOTAL EXPENSE RATIO(%)Annual Report and Financial Accounts 201934DIVIDENDSDIVIDEND POLICYSince 2006 the Trust has paid quarterly interim d

264、ividends on or around the ends of June,September,December and March.Due to the timing of our Annual General Meeting,in April or May,the Trust has not proposed a final dividend(paid in March)to the AGM for approval,preferring to give shareholders certainty of the dates on which they will receive thei

265、r income.Recognising that shareholders should be able to make their views on the Trusts dividend known,the Board has decided to submit its Dividend Policy to shareholders for approval each year.The Trust will continue to have a progressive dividend policy,paying a dividend that increases year on yea

266、r.The wording of the Policy is intended to give shareholders clarity on the Boards approach to making decisions on the amount,structure and timing of returns to shareholders.The following Policy will be submitted for approval to the next Annual General Meeting:Subject to market conditions and the Co

267、mpanys performance,financial position and outlook,the Board will seek to pay a dividend that increases year on year.The Company expects to pay four interim dividends per year,on or around the last day of June,September,December and March,and will not,generally,pay a final dividend for a particular f

268、inancial year.In determining the level of future dividends,the Board will take into account factors such as any anticipated increase or decrease in dividend cover,projected income,inflation and yield on similar investment trusts.The Board will seek to use the income from investments to satisfy its d

269、ividend payments,but may also,when this income is insufficient,use part of the Companys distributable reserves.In addition,should there be a year in which income is unexpectedly high,some of that income may be retained in the distributable reserves or a special dividend may be declared.DISTRIBUTABLE

270、 RESERVESWhile all of the dividends paid in the calendar year ending 31 December 2019 have been met from income without recourse to the Trusts reserves,the Board recognises that when the Trusts income is insufficient to meet the cost of an increased dividend,part of its distributable reserves may be

271、 used to meet the cost.We do not set an income target for our Investment Manager as this could unnecessarily constrain its freedom to act.The Trust currently cannot use its Merger Reserve(645.3m)for payment of dividends.The Board is proposing to convert its Merger Reserve into a distributable reserv

272、e which could,if necessary,be used to support the payment of dividends.This is a process which requires shareholder and Court approval.If approved by shareholders and the Court,the Board has no intention of making immediate use of the funds currently forming the Merger Reserve.The proposal is being

273、recommended as a means of providing additional flexibility in the future.In terms of process,the Merger Reserve would have to be capitalised and a share issue declared.This is a technical step and would not require any shares to be physically issued.These shares would then be cancelled with Court ap

274、proval.Once approved by shareholders,a Court hearing would then take place.Assuming the approval of the Court is given(a process expected to take 10 weeks),the Merger Reserve would then be converted into a reserve that could be distributed.The process will not reduce the total capital of the Trust b

275、ut,if approved,will increase the proportion of the Trusts reserves capable of being distributed in the future.Details of the Trusts reserves can be found on page 91.DIVIDEND DECLARATIONThe Ordinary Dividend for 2019 will increase by 3%to 13.96p.A fourth interim dividend of 3.49p will be paid on 31 M

276、arch 2020 to shareholders who are on the register on 20 March 2020.The payments dates for the 2020 financial year can be found on page 108.A GROWING DIVIDENDThe chart below shows the growth in our dividend over the last 53 years.20192013200820031998199319881983197819731968Dividend per Share(p)Return

277、 rebased to 100 at 31 January 1968 05101520040008000120001600020000Dividend per Share(p)Total ReturnCapital ReturnSource:WTW and Alliance Trust.35STRATEGIC REPORTThe discount at which the Trusts shares trade compared to its Net Asset Value continued to be relatively stable during the year,trading in

278、 a range of 6.5%to 3.1%.The discount was 4.9%at the start of the period and at the end of the year was 4.1%.During the year there was very little buyback activity in the first quarter.The weighted average discount of shares bought back in the year was 5.4%.All of the shares bought back were cancelle

279、d.Share buybacks and the reduction in our discount contributed a total of 1.3%to our performance in the year.The Board will continue to monitor the stability of the discount and will take advantage of any significant widening of the discount to produce additional return for shareholders.The top char

280、t opposite shows our discount during 2019 and the level of buyback activity during the year.The bottom chart shows the progress that has been made in reducing the amount expended on buybacks while maintaining a relatively stable discount.DISCOUNT AND SHARE BUYBACKS0500100015002000DecNovOctSepAugJulJ

281、unMayAprMarFebJan02468Discount(%)Shares(000s)020040060080010001200024681012Weighted average discount(%)Cost of share buybacks(m)20152016201720182019DISCOUNT AND SHARE BUYBACKS(2019)DISCOUNT AND SHARE BUYBACKS(5 YEARS)Share buybackCost of share buybacks Average discountWeighted average discount Sourc

282、e:Bloomberg and Morningstar.Source:Bloomberg and Morningstar.Annual Report and Financial Accounts 201936RISK MANAGEMENTINTRODUCTIONThe Audit and Risk Committee has delegated responsibility from the Board to provide oversight and to challenge the appropriateness of the actions being taken to mitigate

283、 the risks which could impact the Trust.All of the Directors are members of the Committee.Gregor Stewart,who was Chairman of the Committee,continued to be a member after he was appointed the Trusts Chairman.The Committee receives and considers regular reports from the Executive team and from WTW.The

284、 Strategic Objectives of the Trust are to:Consistently meet the investment performance targets set by the Board;Continue its policy of paying a progressive dividend;Maintain a stable discount;and Provide good value to its shareholders.The Board determines the level of risk that it is prepared to acc

285、ept to achieve these objectives.The Committee monitors whether there is a possibility of any of these risk levels being breached(through Early Warning Indicators(EWIs)and if there is,it will take action to bring the level of risk back within the EWIs set by the Board.At the year end,we had three mea

286、sures which had breached their EWI and one where the limit was breached.This breach related to the overall expenses budget for the year which was exceeded due to the increase in the value of the portfolio and a consequential increase in Managers fees.PRINCIPAL RISKS We set out below the Trusts princ

287、ipal risks which could impact on the achievement of the Strategic Objectives and whether the level of risk changed during the year.We also indicate whether the Board is prepared in 2020 to accept more or less risk in the future compared to 2019.RiskDescription Mitigating ActivitiesMarket,Counterpart

288、y and Financial Risks (no change in level of acceptable risk in 2020)Investment Risk Unchanged in 2019Investment performance fails to deliver long-term capital growth and rising income or is impacted by adverse currency movements.The portfolio is designed to outperform the market over the long term

289、regardless of the market conditions by blending the stocks invested in by Managers with different complementary styles into a diversified,high-conviction global equity portfolio expected to deliver consistent outperformance with lower volatility.The investment strategy and the performance of the Man

290、agers as well as the composition and diversification of the portfolio are regularly reviewed.The sale of Alliance Trust Savings has been completed.The process to sell the Trusts private equity investments and mineral rights has been completed and the proceeds were used for equity investment.Whilst i

291、n 2019 currency risk was not considered a material risk,the Trust now has the ability to borrow in US Dollars and Euros as well as sterling.37STRATEGIC REPORTRISK MANAGEMENTcontinuedRiskDescription Mitigating ActivitiesMarket,Counterparty and Financial Risks continued(no change in level of acceptabl

292、e risk in 2020)Credit and Counterparty Risk Unchanged in 2019Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Trust.Counterparty risk is the risk that a counterparty to an agreement will fail to

293、 discharge an obligation or commitment that it has entered into with the Trust.The Trust contracts only with creditworthy counterparties.Its main transactions relating to investments are carried out with well-established brokers on a cash against receipt,or cash against delivery,basis.Outsourced pro

294、viders are subject to regular oversight by the Board,the Executive team and the Depositary.The Trusts Depositary is responsible for the safekeeping of the Trusts assets and liable to the Trust for any loss of assets.Reports from the Depositary and Custodian are reviewed regularly by the Depositary,C

295、ustodian,the Executive team and WTW.Daily reconciliation of the Trusts assets is undertaken.Capital Structure and Financial Risk Decreased in 2019The capital structure is not appropriate to support the Trusts strategic objectives,risk appetite and overall operations.(Following the sale of Alliance T

296、rust Savings,the Trust has ceased to be a bank holding company and no longer requires to hold a minimum amount of regulatory capital.)The Board regularly reviews the capital structure of the Trust including,but not limited to,issued share capital,discount and share buybacks,capital and other reserve

297、s,and gearing.Stress and scenario testing is carried out on the portfolio and reported to the Committee by WTW.Liquidity Risk Unchanged in 2019The Trust does not have sufficient liquid resources to ensure that it can meet its liabilities as they fall due and the movement in the fair value of the ass

298、ets of the Trust is amplified by any gearing that the Trust may have.The Trust is now invested solely in listed equities partly due to the sale of Alliance Trust Savings and the Trusts private equity and other non-core investments.Equities are more liquid than the private equity and mineral rights i

299、nvestments.Liquidity analysis,including liquidity stress testing,is carried out on the portfolio and reported to the Committee by WTW.Annual Report and Financial Accounts 201938RiskDescription Mitigating ActivitiesOperational Risks (reduction in the level of acceptable risk in 2020)Cyber-attack Decr

300、eased in 2019Failure to ensure that the business is adequately protected against the threat of cyber-attack,which may lead to significant business disruption or external fraud.(Following the sale of Alliance Trust Savings,the Trust no longer shares IT with a business holding personal and financial d

301、ata.)The Trust benefits from the level of IT security put in place by its third-party IT service provider.This includes having in place security designed to protect systems from cyber-attack and a programme of training for staff on privacy-related risks and data security.Business continuity plans ar

302、e in place should a cyber-attack occur.Outsourcing Unchanged in 2019Loss arising from inadequate or failed processes,people and/or systems of outsourced functions.The outsourced providers,having been in place for over two years,have greater experience and understanding of the Trust.WTW monitors and

303、reports on the performance of outsourced providers to the Board,which also receives control reports from certain service providers.WTW itself is monitored by the Board and the Executive team,and the Depositary who also monitors the Custodian.Corporate Governance (no change in level of acceptable ris

304、k in 2020)Corporate Governance Unchanged in 2019The risk of not meeting and being in compliance with legal and regulatory responsibilities.The Board conducts an annual internal review on its and its Committees effectiveness.An external review is carried out at least every three years and the last su

305、ch review was in November 2019.Members of the Board or the Executive team periodically attend relevant industry training events.The Board receives updates from WTW,the Executive team and the Trusts legal advisers on legal and regulatory developments and changes.Investment Trust Status (no change in

306、level of acceptable risk in 2020)Loss of Investment Trust status Unchanged in 2019The risk of not complying with Sections 1158-59 of the Corporation Tax Act and the organisation losing Investment Trust status.WTW reviews and monitors the Trusts Investment Trust status and reports on this regularly t

307、o the Board.39STRATEGIC REPORTRISK MANAGEMENTcontinuedRiskDescription Mitigating ActivitiesStrategy Risk (no change in level of acceptable risk in 2020)Performance impacted by external factors Unchanged in 2019Stock market action involving the Trust as a result of external factors,such as political

308、uncertainty and shareholder influence,results in uncertainty around the business model and impact on performance(current and future).The Board expects active management of the concentrated high conviction approach employed by the Trust will be able to take advantage of any volatility caused by exter

309、nal factors as it creates opportunities.The Board agreed to switch AIFM from TWIMI to TWIM as a result of Brexit(see page 64).The Board considered the implications of Brexit and concluded that by investing in a global equity portfolio it is unlikely to be adversely impacted as a direct result of Bre

310、xit regardless of the final direction that it takes.The Trust now has a stable shareholder base and continues to take action through its buyback programme to support the management of the discount at which the Trusts shares trade.An increased level of engagement with shareholders is being facilitate

311、d by the Head of Marketing and Investor Relations who has now been in role for over 18 months.Share price and discount Unchanged in 2019The risk that the Companys share price trades at a wide discount to its underlying net asset value.The Board(and Broker)monitors the discount level closely and has

312、taken the powers,which it seeks to renew each year,for share issuance,buybacks and cancellation to support the management of the discount.The Board believes that consistently delivering investment performance in accordance with the target set by the Board will drive demand for the shares.Reputationa

313、l (no change in level of acceptable risk in 2020)Reputational Unchanged in 2019Damage to the Trusts reputation that could lead to negative publicity and adverse impact on financial performance.Due diligence process is in place for selecting third-party service providers.These providers are regularly

314、 monitored by the Committee or Board.Annual Report and Financial Accounts 201940RiskDescription Mitigating ActivitiesEnvironmental,Social and Governance(ESG)factors (reduction in the level of acceptable risk in 2020)Environmental,Social and Governance(ESG)factors Decreased in 2019Failure to consider

315、 the impact of ESG factors adversely affecting the Trusts reputation and financial performance.WTWs approach to ESG is fully embedded within WTWs overall assessment of the Managers.It considers each Managers stewardship credentials and integration of ESG factors into the portfolio management process

316、.The appointment of Hermes EOS(Equity Ownership Services)has strengthened the Trusts commitment to responsible investment(see page 17).Regulatory Non-Compliance (reduction in the level of acceptable risk in 2020)Regulatory non-compliance Decreased in 2019Failure to ensure that systems and controls a

317、re adequate to allow compliance with all relevant regulatory requirements.The Trust no longer has to comply with the regulations of the Prudential Regulation Authority applicable to bank holding companies following the sale of Alliance Trust Savings.The change in the Trusts AIFM means that it no lon

318、ger has an Irish AIFM subject to Central Bank of Ireland regulations.The Board receives updates from WTW and the Executive team on regulatory developments and changes.The Trusts third-party service providers have a good understanding of the activities of the Trust and its regulatory obligations.Shar

319、eholder documentation including the Trusts Interim and Annual Reports are subject to stringent review.Processes and procedures are in place to ensure compliance with applicable requirements such as the Market Abuse Directive.41STRATEGIC REPORTCORPORATE RESPONSIBILITYTHE TRUSTS PURPOSEThe Trust is an

320、 investment company with investment trust status.It aims to generate capital growth over the medium to long-term while maintaining an increasing dividend for its shareholders.It does all this at a competitive cost.On page 3 we set out the Trusts Investment Objective.This,together with the Investment

321、 Policy set out below,was approved by shareholders at the Annual General Meeting held in April 2019.INVESTMENT POLICYThe Trust,through its investment manager,appoints a number of Stock Pickers with different styles and approaches,each of which will select and invest in stocks for the Trusts single i

322、nvestment portfolio;it will achieve an appropriate spread of risk by holding a diversified portfolio in which no single investment may exceed 10%of the Trusts total assets at the time of investment.Where market conditions permit,the Trust will use gearing of not more than 30%of its net assets at any

323、 given time.The Trust can use derivative instruments to hedge,enhance and protect positions,including currency exposures.While the primary focus of the Trust is investment in global equities,the Trust may also invest from time to time in fixed interest securities,convertible securities and other ass

324、ets.Annual Report and Financial Accounts 201942RESPONSIBLE INVESTMENTIn our Investment Managers Report(on page 16),WTW describes the responsible investment activities it has undertaken for the Trust and discloses how the Stock Pickers have voted in respect of the stocks in which they have invested f

325、or the Trust as well as some of the company-specific engagements undertaken by Hermes EOS.The Trust supports the UK Stewardship Code(the Code)published by the Financial Reporting Council(FRC)which aims to enhance the quality of engagement between institutional investors and the companies in which th

326、ey invest to help improve long-term risk-adjusted returns to shareholders and the efficient exercise of governance responsibilities.The Trust has published its statement of how it complies with the principles contained in the Code on its website (www.alliancetrust.co.uk).A Statement on Responsible I

327、nvestment can also be found on the Trusts website.CHARITIESThe Board,while supportive of the aims of many charities,believes that the Trust should not divert shareholders funds to finance them save in occasional circumstances where there is a close link to the Trust or its heritage.The Trust,which h

328、as supported the V&A Museum of Design,Dundee since 2015,made a payment of 50,000 in the year and provided 200 to fund prizes at Dundee University.EMPLOYMENTThe Trust seeks to attract and retain staff with the requisite skills and experience required to manage and administer the Trusts business affai

329、rs.Recruitment,development and promotion are based solely on the individuals suitability.There should be no discrimination either before or during employment on the basis of gender,sexual orientation,age,race,nationality,disability,political or religious belief.Should any worker become disabled they

330、 should not suffer any discrimination and reasonable adjustments will be made to allow them to continue to have the same opportunities as any other employee.The table below provides the gender split of the Board and workforce of the Trust as at 31 December 2019.The Trust has five employees of whom t

331、wo are part time(one male and one female).As at 31 December 2019MaleFemaleBoard41Senior Managers21Other Staff02Total Workforce(including Directors)64MODERN SLAVERYThe Trust considers that it does not fall within the scope of the Modern Slavery Act 2015 and it is not,therefore,obliged to make a slave

332、ry and human trafficking statement.In any event,the Trust considers its supply chains to be of low risk as its suppliers are typically professional advisers.A statement from WTW,the Trusts Investment Manager,on the steps it takes to investigate and mitigate the risk of modern slavery and human traff

333、icking can be found on WTWs website ENVIRONMENTAL IMPACTAs an investment trust with a small number of employees,the Trusts environmental impact is limited.On page 67,we report on our carbon footprint.The Trust seeks to influence how its investee companies operate in relation to environmental impact through its responsible investment activities,about which more can be found on pages 15 to 18.43STRA