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1、ANNUAL REPORT 2022Annual Report for the year ended 31 December 20222INVESTING FOR GENERATIONSInvestment objectiveThe Companys objective is to be 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 Company in
2、vests primarily in global equities across a wide range of different sectors and industries to achieve its objective.Catering for every generation,Alliance Trust aims to grow your capital over time and provide rising income by investing in global equities.CONTENTSStrategic ReportIntroduction 3Our Per
3、formance 4Chairmans Statement 6Investment Managers Report 8Our Stock Pickers 18Investment Portfolio 20Dividend 32Ongoing Charges and Discount 34How We Manage Our Risks 35Directors ReportBoard of Directors 42Corporate Governance 50Viability and Going Concern Statements 62Audit and Risk Committee 64 D
4、irectors Responsibilities 67Remuneration Report 68Independent Auditors Report 74Financial Statements 83Other InformationConnecting with Shareholders 108 Alternative Performance Measures 110 Glossary of Terms 111 Information for Shareholders 113 Ten Year Record 116Annual Report and Financial Accounts
5、 202231.As rated by Willis Towers Watson.2.MSCI All Country World Index.3.Apart from GQG Partners,which also manages a dedicated emerging markets mandate with up to 60 stocks.A CORE HOLDING FOR ALL GENERATIONSOur portfolios unique blend of Stock Pickers and their customised stock selections make All
6、iance Trust a strong,core holding for long-term investors seeking capital growth and rising income.Whatever your financial goal,be it saving for university or a first home,building a pension or leaving a legacy,were built to help you achieve this.Proven resilienceEstablished in 1888,weve successfull
7、y navigated two world wars,multiple economic crises,the Covid-19 pandemic and numerous political upheavals.Low maintenanceOur ready-made portfolio does all the hard work for you.With thousands of funds to choose from,it can be daunting finding the time and having the confidence to be your own wealth
8、 manager.By using experts to select and monitor a team of top-rated1 Stock Pickers,who in turn choose their most attractive stocks,we provide a simple,high-quality way to invest in global equities at a competitive cost.Diversified by country,industry,and styleOur approach doesnt depend on the skill
9、of a single high-profile individual.Its a team effort which means the portfolio can add value through varying stock market cycles and deliver more consistent returns.All of our Stock Pickers have different but complementary approaches to investing.This means our holdings are well diversified across
10、countries,industries and investment styles to seek a wide range of opportunities while minimising risk.Focused stock pickingAlthough well diversified,we avoid hugging the Companys benchmark index2 by asking the Stock Pickers to choose no more than 20 stocks3 in which they have the highest level of c
11、onviction.When combined,our portfolios country and sector exposures resemble the index2 but its individual holdings are very different.This high level of divergence is designed to maximise potential for outperformance.Expert manager selectionAll the Stock Pickers are chosen by our investment manager
12、,Willis Towers Watson(WTW),a leading global investment business.WTW researches thousands of managers globally,before selecting a diverse team of best-in-class1 Stock Pickers for Alliance Trust.To control risk,WTW then balances the amount of capital allocated to each of them.Due to the modular constr
13、uction of the portfolio,if a Stock Picker needs to be replaced,this can be done smoothly.Responsible ownershipOur approach to investment is forward-thinking.To help protect the returns of the next generations,we include consideration of environmental,social and governance factors in the selection of
14、 our Stock Pickers who in turn include these factors in their investment processes.We place particular emphasis on engaging with companies to drive change in harmful business practices that may threaten long-term corporate profitability.Rising dividendWere proud of our 56-year track record of divide
15、nd growth,which is one of the longest in the investment trust industry.Our unique approach brings together the best ideas from world-class1 Stock Pickers.Each is responsible for investing in a selection of high conviction equities.”Gregor Stewart ChairmanINTRODUCTION41.Alternative Performance Measur
16、e(see page 110 for further information).2.GAAP Measure.31 December 2019Year to 31 December 2019Year to 31 December 201931 December 2020Year to 31 December 2020Year to 31 December 2020Strategic ReportFINANCIAL HIGHLIGHTSAS AT 31 DECEMBER 2022OUR PERFORMANCE840.0p13.96p23.1%901.0p14.38p8.5%KEY PERFORM
17、ANCE INDICATORSOn these two pages we set out the Key Performance Indicators(KPIs)the Board uses to measure performance.The benchmark we use is the MSCI All Country World Index(MSCI ACWI)in sterling with net dividends reinvested.Share PriceTotal Dividend2NAV Total Return131 December 202131 December 2
18、022Year to 31 December 2021Year to 31 December 20221032.0p948.0p19.05p24.00pYear to 31 December 2021Year to 31 December 202218.6%-7.1%5-1001020304050601 year3 years5 yearsSince 1 April 2017-8.1-7.123.919.645.155.539.452.1NAV TOTAL RETURN(%)1This measures the performance of our assets.It combines any
19、 change in the NAV with dividends paid by the Company.Source:Morningstar and MSCI Inc.NAV Total Return based on NAV including income with debt at fair value and after Stock Picker and WTW investment fees.Alliance TrustAlliance TrustMSCI ACWIPeer Group MedianAIC Global Sector Average NAV Total Return
20、(unweighted)-1001020304050601 year3 years5 yearsSince 1 April 2017-8.1-5.823.920.045.155.540.054.7-20-1001020304050601 year3 years5 yearsSince 1 April 2017-10.1-20.3-7.120.56.819.639.529.650.047.639.452.102004006008001000120020182019202020212022723.6875.9933.9989.51090.0TOTAL SHAREHOLDER RETURN(%)1T
21、his demonstrates the return our shareholders receive through dividends and capital growth of the Company.COMPARISON AGAINST PEERS(%)This shows our NAV Total Return against the Total Return of the Morningstar universe of UK retail global equity funds(open ended and closed ended)and the AIC Global Sec
22、tor.NET ASSET VALUE(PENCE)2This shows the value per share of the investments held by the Company less its liabilities(including borrowings).Source:Morningstar and MSCI Inc.Source:Morningstar and Association of Investment Companies.Alliance TrustMSCI ACWISource:BNY Mellon Performance&Risk Analytics E
23、urope Limited.Net Asset Value includes income and with debt at fair value.OUR PERFORMANCE6Strategic ReportCHAIRMANS STATEMENTVOLATILE MARKET BACKDROPThere were few places for investors to hide in 2022.The return of high inflation after a 40-year absence,the war in Ukraine,higher interest rates and f
24、ears of recession,sent most asset prices tumbling.Equities suffered less than bonds but still ended the year down on the previous year.Against this challenging backdrop,the Company delivered an encouraging performance against its benchmark index,the MSCI All Country World Index(MSCI ACWI)and outperf
25、ormed most of its competitors in the Association of Investment Companies(AIC)Global Sector.In its report,our Investment Manager,Willis Towers Watson(WTW)analyses this performance.While any negative annual return is frustrating,we remain focused on long-term performance and are encouraged by last yea
26、rs progress relative to competitors and the index.RESILIENT PERFORMANCE In the year to 31 December 2022,the Companys Net Asset Value(NAV)Total Return was-7.1%(2021:18.6%),outperforming our benchmark index,the MSCI ACWI which returned-8.1%(2021:19.6%).The Companys Total Shareholder Return(TSR)was-5.8
27、%(2021:16.5%),as the discount to NAV at which the shares traded narrowed.The average TSR of the AIC Global Sector peer group was-23.2%.Our portfolios longer term returns also compare well with our peers.Between 1 April 2017,when we adopted our multi-manager strategy,and 31 December 2022,the Companys
28、 TSR was 54.7%against the average share price return of the AIC Global Sector peer group of 41.2%.We estimate that anyone investing 100 in April 2017 will have seen the value of their investment grow to 155 if they had reinvested their dividends.The Board is satisfied that the Companys long-term per
29、formance has been consistent with its objective of delivering real returns and a rising dividend.It is also pleased with the performance versus peers.The only disappointment is that the Company has not yet outperformed its benchmark index by the target set when the investment strategy was adopted on
30、 1 April 2017.As part of its annual review of the performance of the Investment Manager,the Board also considered WTWs performance over the first five-year period since its appointment.Further details on the nature and outcome of the review can be found on page 49.The main findings of the review rei
31、nforced the Boards judgement that the investment strategy is sound,and the Board continues to endorse WTWs investment approach.INCREASED DIVIDENDThe Board has declared a fourth interim dividend of 6.0p per share which brings the full year dividend to 24.0p.Following the step up in dividend levels fr
32、om the second half of 2021,this is a 26%increase on the prior year and the 56th consecutive annual increase in the ordinary dividend.With a share price of 948.0p at year end,the full year dividend represents a yield of 2.5%.Following a year of particularly high income from certain stocks in the port
33、folio,I am pleased to report that Earnings Per Share(EPS)for the year ended 31 December is 26.14p per share(2021:15.48p).Given this high level of earnings in 2022,the Board has taken the opportunity to take advantage of the Companys structure as an investment trust and add to the Companys already si
34、gnificant distributable reserves.BORROWING AND GEARINGThere were no major changes to the Companys long-term borrowing arrangements during 2022.As market interest rates rose,the value of the fixed rate loans on the Companys balance sheet declined resulting in a higher NAV,thus enhancing overall perfo
35、rmance for the year.Further details on the revaluation of debt and its contribution to shareholder returns can be found on page 9.7CHAIRMANS STATEMENTWe are pleased that our performance was more resilient than the market and ahead of most of our peers in the AIC Global Sector.”Gregor Stewart Chairma
36、nSTABLE DISCOUNT As shareholders are aware,one of the Boards strategic objectives is the maintenance of a stable discount.The Companys average discount over the year was 5.9%,equal to that of the prior year.As at 31 December 2022 the Companys discount was 4.2%(2021:5.3%).This compared favourably wit
37、h the average discount for the AIC Global Sector of 7.4%as at the year end.During the year under review,the Company bought back 15.5 million shares.These share buybacks helped to support the stability of the discount and enhanced the NAV Total Return by 0.3%.The Board will continue to use share buyb
38、acks as appropriate,and invest in promotional activity,such as investor events,designed to raise the Companys profile,to support the management of the discount.We hope,in time,to convert our discount into a premium as the benefits of our long-term strategy gain wider recognition.Further details on t
39、he Companys discount can be found on page 34.STRENGTHENED OPERATING MODELAs previously announced,we made some operational changes at the end of 2022 which were the outcome of the work undertaken by the Board to strengthen the Companys operating model.Juniper Partners Limited(Juniper)has been appoint
40、ed as Company Secretary and will also provide finance,fund administration and accounting services to the Company from 1 April 2023.WTW was also appointed to provide further marketing,public relations,and investor relations services.The changes will benefit shareholders by reducing risk in the Compan
41、ys operating model and should also enhance the Companys communications.The Board is pleased that despite the changes,it has been able to continue to work with members of the Companys Executive team in their new roles with either Juniper or WTW.You can read more about the changes including details of
42、 the revised fee payable to WTW on page 55.BOARD SUCCESSIONAs part of our succession planning,we have made a number of changes to the Board over the past three years.The most recent of these being the appointment of Vicky Hastings and Milyae Park to the Board in September 2022.Vicky has extensive ex
43、perience in fund management,both as a fund manager and business leader,while Milyaes diverse career spans financial services,retail,and technology.They have brought further diversity of skills and fresh perspectives to the Board.I would like to express my thanks to Anthony Brooke for his significant
44、 contribution to the Board over the past seven and a half years.Anthony joined the Board in 2015 and will complete his tenure at the Annual General Meeting on 27 April 2023.PORTFOLIO WELL POSITIONED FOR UNCERTAIN ECONOMIC OUTLOOKThe outlook for the global economy remains highly uncertain and equity
45、markets remain volatile.If inflation and interest rates have peaked in the US and the UK,as some analysts believe,and the war in Ukraine comes to an end,equity markets may rally.On the other hand,they may fall further if we descend into a deep recession.Coherent arguments can be made for both a bull
46、 and a bear case.The good news is that the success of our investment strategy does not hinge on macroeconomic outcomes.Regardless of the immediate outlook,our Stock Pickers remain resolutely focused on finding excellent businesses with exciting prospects.The speculative froth topping the valuations
47、of many growth stocks has been blown away by higher interest rates and harsher economic conditions.We now look forward to the possibility of company fundamentals,not sentiment,driving share prices,if not for the short term,certainly in the long run.Gregor Stewart Chairman 8 March 20238Strategic Repo
48、rtINVESTMENT MANAGERS REPORT“AN ISLAND OF STABILITY”The Collins Dictionarys word for the year is“permacrisis”,a portmanteau of“permanent”and“crisis”.It seems appropriate,as the world has lurched from one unprecedented event to another in the past few years.First Brexit,then the Covid pandemic,quickl
49、y followed in February last year by Russias invasion of Ukraine.The return of a land war to Europe began to reshape geo-politics and triggered sharp rises in food and energy prices,adding to inflationary pressures already building due to supply chain disruption and ultra-loose monetary policy linked
50、 to Covid.Interest rates decisively reversed direction,finally ending the cycle of rate reductions that began in the Great Financial Crisis.It hardly needs to be said that 2022 was one of the toughest environments on record for investors.It was also a year in which it was difficult for investment ma
51、nagers focusing on bottom-up stock picking to add value.Not surprisingly,most asset classes delivered negative returns.With the war driving up energy and raw materials prices,only commodities bucked the downward trend as shown in the top chart opposite.The Companys benchmark,the MSCI ACWI,which incl
52、udes developed and developing markets,returned-8.1%during the year.The Companys NAV Total Return also fell but was more resilient than the benchmark returning-7.1%,while a narrowing of the discount meant that TSR declined by 5.8%.The portfolio therefore outperformed the index in a challenging market
53、 environment.It also declined in value by a lot less than those investment trusts with a growth-style bias which have led the way in recent years.In the words of one analyst,Alliance Trust was“an island of stability”.1-20-1001020304050Fixed IncomeCommodities(incl Energy)Real EstateEquitiesReturn%COM
54、MODITIES OUTPERFORMED OTHER ASSET CLASSESSource:WTW,MSCI Inc.(Total Returns in GBP).Data from 1st January 2022 to 31st December 2022.1.Source:Quoted Data.Source:WTW,Morningstar.1 year Total Shareholder Returns and Volatilities of the investment companies in the Association of Investment Companies Gl
55、obal Sector,as at 31 December 2022.ALLIANCE TRUST DELIVERED SOLID RETURNS IN 2022 WITH LOW VOLATILITY1 Year Return(Annualised)1 Year Volatility(Annualised)00510-10-20-30-40-50-601520253035404550Alliance TrustLowHigh9INVESTMENT MANAGERS REPORTGROWTH STOCKS LED MARKET DECLINEWithin the equity market,p
56、reviously high-flying growth stocks in the US suffered some of the sharpest declines.Having contributed the most to performance in prior years,stocks such as Meta,Tesla,Alphabet,Microsoft,Amazon and Apple,accounted for approximately half of the decline in the MSCI ACWI in 2022.2 Lesser-known growth
57、stocks,such as Shopify,Snap,and DocuSign also suffered steep declines in value.Meanwhile,defensive,and less glamorous value stocks generally did well,though measuring returns in aggregate by investment style masked what was largely a switch in fortune between the technology(tech)and energy sectors,w
58、ith the latter soaring in value.The about-turn in sector performance is easily explained by the abrupt reversal in the interest rate cycle since late 2021/early 2022.Higher borrowing costs dented optimism about the future earnings potential for many jam tomorrow tech companies,while soaring prices f
59、or commodities boosted near-term cash flows and profits for jam today energy and raw materials companies.On a country basis,the UK stock market did relatively well last year,with the FTSE 100 managing a modest gain of 0.9%,due to its concentration of energy and raw materials companies.Chinese equiti
60、es fell significantly,as its economy remained semi-closed through much of the year due to persistent Covid lockdowns,though these had begun to ease by the end of 2022 because of public pressure.BALANCED STOCK EXPOSURE HELPED PERFORMANCEThe portfolios outperformance versus the market and most peers i
61、n 2022 stemmed from maintaining a balanced exposure to countries,sectors,and styles,and focusing on stock picking as the primary source of returns,although having slightly more money in aggregate invested in the UK than the index added value.In addition,the Companys NAV Total Return benefitted over
62、the period from the decline in the fair value of the Companys fixed rate debt with rising bond yields.Offsetting some of this benefit was the impact of the portfolio being geared in a falling market as you can see from the table below.CONTRIBUTION ANALYSIS(%)12 months to 31 December 2022%Portfolio-7
63、.4Gearing-0.8Cost of Gearing-0.3Share Buybacks 0.3Expenses-0.6Cash&accruals0.1Change in Fair Value of debt1.6NAV Total Return-7.1Change in discount 1.3Total Shareholder Return-5.8MSCI ACWI Total Return-8.1Source:WTW,Bank of New YorkMellon.Data as at 31 December 2022.2.Source:WTW,FactSet.10Strategic
64、ReportINVESTMENT MANAGERS REPORTWhereas in previous years,our diversified stance had held back performance versus the market and many growth-style peers,due to the concentration of returns in a handful of expensive US growth stocks,in 2022 it enabled us to avoid the worst of the tech rout and,at the
65、 same time,benefit from the recovery in energy stocks.Not owning Tesla and Apple boosted relative returns versus the index,and although we continue to own some other fallen growth stars such as Amazon, and Alphabet,the relative modesty of our exposures helped to contain the damage.The oil companies
66、ExxonMobil in the US(held by GQG Partners GQG),BP in the UK(held by Jupiter Asset Management Jupiter)and Petrol Brasileiro(Petrobras)in Brazil(held by GQG)were among the biggest contributors to relative returns.Our Stock Pickers also found winners in defence,where BAE Systems(held by Veritas Asset M
67、anagement Veritas)and Booz Allen Hamilton(held by Black Creek Investment Management Black Creek)benefitted from rising demand due to increased government spending.Our positions in healthcare and financials,with US-based UnitedHealth Group(held by GQG and Veritas),and Indian bank HDFC(held by GQG)als
68、o boosted returns.In terms of the Stock Pickers,GQG contributed most to the portfolios outperformance,having correctly timed its exit from many overpriced tech stocks in 2021 and increased its exposure to cheaper energy companies.Jupiter and Black Creek,which both have a bias towards value stocks,al
69、so did well,while the Stock Pickers with a growth-style bias,such as Sands Capital(Sands)and Sustainable Growth Advisors(SGA),which had performed well in prior years during the growth boom,were hit by the deratings of many of the stocks that they owned.We retain high conviction in the skill of both
70、Sands and SGA to add value to the portfolio in the longer term,even though many of the stocks that they own may have been out of favour during 2022.TOP 5 STOCK CONTRIBUTORS AND DETRACTORS TO RETURN RELATIVE TO BENCHMARK IN 2022 Top 5 contributorsNameCountrySectorAverage Active Weight (%)2022 Total R
71、eturn in Sterling (%)Attribution Effect Relative to Benchmark(%)PetrobrasBrazilEnergy1.771.90.9TeslaUnited StatesConsumer Discretionary(1.1)(60.6)0.7ExxonMobilUnited StatesEnergy0.9107.90.6H&R BlockUnited StatesConsumer Discretionary0.578.40.5BAE SystemsUnited KingdomIndustrials0.760.90.4Top 5 detra
72、ctorsNameCountrySectorAverage Active Weight (%)2022 Total Return in Sterling (%)Attribution Effect Relative to Benchmark(%)United StatesInformation Technology1.1(41.9)(0.5)Charter CommunicationsUnited StatesCommunication Services0.9(41.9)(0.4)AdidasGermanyConsumer Discretionary0.8(45.7)(0.4)Alphabet
73、United StatesCommunication Services1.5(32.1)(0.4)Sea LimitedSingaporeCommunication Services0.2(74.2)(0.3)Source:WTW,The Bank of New York Mellon,FactSet.Data as at 31 December 2022.Average active weight is the average difference between the weight of the stock in the portfolio and the weight of the s
74、tock in the benchmark over the period.11INVESTMENT MANAGERS REPORTPORTFOLIO TURNOVER REFLECTED NEW OPPORTUNITIESOur role as Investment Manager is to select the best Stock Pickers available globally and blend them together into a balanced portfolio,reallocating capital between them where necessary to
75、 control risk.We consciously did not change the strategic stance of the portfolio during the year,although we terminated River and Mercantile Asset Managements(R&M)mandate in March due to a change in corporate ownership which we thought could undermine the firms investment culture.At the time,R&Ms r
76、elatively small allocation accounted for approximately 6%of the portfolio.This capital was redistributed to existing Stock Pickers with similar investment approaches,principally Jupiter and Black Creek,to retain the portfolios overall style balance,although some of the capital also went to GQG.Stock
77、 Picker weights evolved naturally during the year due to share price fluctuations and there was some turnover in positions by the Stock Pickers,most notably GQGs shift between sectors.Total stock turnover was 56.7%,partly due to the reallocation of R&Ms capital,without which it would have been below
78、 50%.At that level,stock turnover equates to an average two-year holding period.This may seem short for an investment approach focused on investing for generations.However,last year was anything but normal.The volatility of share prices created many new opportunities and our Stock Pickers actively e
79、xploited them.Examples of outright sales in 2022 included Novo Nordisk,which was disposed of by SGA and replaced with ICON.ICON is a leading contract research organisation specialising in the strategic development,management,and analysis of programs that support clinical development.ICONs scale enab
80、les it to expedite the clinical trial process and provide more comprehensive offerings,allowing it to charge premium prices.Sands purchased Keyence and sold Twilio.Twilio,a California-based business selling communication tools,was sold due to weakening fundamentals,indications of a deteriorating com
81、petitive position,and waning confidence in managements execution.Keyence is a leading designer of high-end factory automation sensors and sensor systems.Despite the tech sell off,Sands expects the company to maintain its leadership position as it expands into new industries,solutions,and application
82、s over the next decade,that should hopefully result in sustained above-average earnings growth.Vulcan Value Partners(Vulcan)added CBRE Group and General Electric Co.(GE)to the portfolio.CBRE is the largest commercial real estate services provider in the world,with over 100,000 employees generating$1
83、7bn of net revenue.CBRE serves both corporate occupiers of real estate and real estate investors.GE is an industrial company that operates in aviation,healthcare,renewal energy,and power.Vulcan believes that GEs management has made considerable progress in simplifying the companys structure and de-r
84、isking the balance sheet.Black Creek sold Nutrien,the worlds largest crop nutrient company,whose share price increased sharply as fertiliser prices rose to all-time highs,and purchased Stericycle,a leading global provider of regulated waste disposal services to businesses.Black Creek was attracted b
85、y Stericyless valuation,which is temporarily depressed as it goes through a multi-year restructuring programme which will leave it stronger in the long run.12Strategic ReportINVESTMENT MANAGERS REPORTThe portfolios positioning at the end of the year remained broadly neutral versus the benchmark acro
86、ss countries,sectors,and styles.Even so,the portfolio was marginally overweight in the UK and in industrials where some of our Stock Pickers see opportunities from investment in new capacity.The portfolio was also underweight in the US.These overweight and underweight sector/country positions were t
87、he byproducts of bottom-up stock selection versus top-down allocations and were well within our risk tolerance.Despite top-down similarities,the portfolio was vastly different to the index in terms of stocks,with an Active Share of 79%,ensuring stock selection drives relative returns.Number of Compa
88、nies as at 31 December 2022Portfolio186MSCI ACWI(benchmark index)2,885Source:WTW,Bank of New York Mellon,MSCI Inc.Data as at 31 December 2022.All figures may be subject to rounding differences.RegionREGIONAL AND SECTOR WEIGHTSNorth America 53.1%Asia&Emerging Markets 17.1%Europe 15.7%UK 11.2%Stock Pi
89、cker Cash 2.9%All figures may be subject to rounding differences.Source:WTW,Bank of New York Mellon.Data as at 31 December 2022.All figures may be subject to rounding differences.Source:WTW,Bank of New York Mellon.Data as at 31 December 2022.SectorInformation Technology 23.6%Utilities 1.3%Real Estat
90、e 0.9%Stock Picker Cash 2.9%Industrials 13.9%Financials 12.6%Health Care 11.0%Communication Services 9.4%Consumer Discretionary 8.4%Energy 6.2%Consumer Staples 5.3%Materials 4.5%Portfolio WeightPortfolio Weight13INVESTMENT MANAGERS REPORTUNCERTAIN MARKET OUTLOOK After a tough year for investors,it m
91、ay be tempting to think that the worst of the bear market is over.However,we expect continued economic uncertainty to produce more market volatility.On the positive side,there are some encouraging signs that inflation pressures may have peaked in the US and UK.This means we may be approaching the en
92、d of the cycle of rising interest rates.If that is the case,it is plausible that the global economy could achieve a soft landing,in other words a cyclical slowdown that avoids a deep and widespread recession.But a hard landing seems just as likely if interest rates remain at current levels and corpo
93、rate earnings fail to meet optimistic expectations.Hence gross gearing at year end was 7.8%,at the lower end of our typical 7.5-12.5%range,reflecting our caution about the market outlook.We believe the Companys portfolio is well positioned,with balanced exposure to stocks that can survive,and even t
94、hrive,in the current high inflation environment,as well as many companies who are financially strong enough to weather a recession.We also have exposure to many high-quality cyclical stocks with temporarily depressed valuations that could benefit disproportionately from an economic rebound.This refl
95、ects the fact that our approach does not attempt any big calls on the future direction of the market.We believe there are potential mispricing opportunities across the market,whether it is among growth stocks that have been oversold or value stocks whose earnings prospects are underappreciated.Our g
96、oal is simply for our Stock Pickers to pick the right companies with the best long-term opportunities for superior returns.FUNDAMENTALS DRIVE RETURNS IN THE LONG TERMWe are reassured that,altogether,the portfolio has more attractive characteristics than our benchmark,namely a lower valuation,a highe
97、r dividend yield and more stable projected earnings growth.We also take comfort from empirical evidence that,notwithstanding short-term fluctuations due to changes in market sentiment,share prices follow company fundamentals in the long run.All figures may be subject to rounding differences.Notes:Th
98、e Price to Earnings ratio,also called the P/E ratio,is an indication of the worth of a company.It is the amount per share that an investor will pay for each 1 of that companys earnings.One way to calculate the P/E ratio is to use actual reported earnings over the past 12 months.This is referred to a
99、s the trailing P/E ratio.The P/E ratio can also be calculated using an estimate of future earnings(the forward P/E).The lower the P/E ratio the better value that company should be.Earnings per Share is an indicator of how much money a company makes for each share of its stock,it is a measure of a co
100、mpanys profitability.Earnings per Share Growth gives a good picture of the rate at which a company has grown its profitability over a given period,with higher levels suggesting a company has products or services in strong demand and is able to grow its earnings faster.Earnings per Share Stability is
101、 a measure of the level of fluctuation in a companys Earnings per Share over a given time period,the higher the value the more predictable future earnings should be.Source:BNY Mellon Performance&Risk Analytics Europe Limited.Data as of 31 December 2022.PORTFOLIO FUNDAMENTALS ARE STRONG Portfolio Fun
102、damentals at 31 December 2022051015202530Price/Earnings(Trailing)Price/Earnings(Forward 1 Year)Price to Book ValueDividend YieldDebt to EquityEarnings Per Share Growth(Forecast 1 Year)Earnings Per ShareStability(5 Year)18.5x17.5x13.8x14.7x2.5x2.4%2.3x2.9%1.1x1.0 x7.9%26.1%12.6%27.5%MSCI ACWI IndexAl
103、liance Trust PortfolioPortfolio has more attractive valuation than the benchmark.with higher dividend yield.and higher and more stable earnings growth14Strategic ReportINVESTMENT MANAGERS REPORTIt is notable that since our appointment on 1 April 2017,the price appreciation achieved through improveme
104、nts in the underlying businesses of portfolio companies,as opposed to changes in market sentiment,is much greater than that of the benchmark.The charts opposite detail the components of returns for the Companys portfolio,the MSCI ACWI and S&P 500.By contrast,the benchmark has benefitted disproportio
105、nally in recent years from over-excitement about the earnings potential of fashionable high tech growth stocks.As the more challenging economic environment forces investors to become increasingly hard-headed in their assessment of corporate prospects,we believe that the fundamentally strong companie
106、s in the Companys portfolio,whether they are classified as growth or value or something in between,will gain greater recognition.Since the adoption of the multi-manager approach on 1 April 2017,after all costs,the NAV Total Return has performed in line with low-cost passive products and has outperfo
107、rmed the AIC Global Sector.Given that market returns are no longer as concentrated as they have been in recent years we are growing more confident that we will outperform the benchmark from here.It is a trite analogy,but we believe that a slow and steady pace wins the investment race,even if it lack
108、s the excitement and bursts of speed associated with more adventurous strategies.We aim to offer investors a smooth path to the finishing line.Source:WTW,MSCI Inc.Data from 30 April 2017 to 31 December 2022 based on Price to Book.Equity portfolio log return gross of fees,which excludes the impact of
109、 gearing on returns and cost of gearing.The Ongoing Charges Ratio for 2022 was 0.61%.Source:WTW,Robert Shiller(http:/www.econ.yale.edu/shiller/).Data as at 31 December 2021 based on Price to Earnings(Trailing).COMPANY FUNDAMENTALS DRIVE SHARE PRICES IN THE LONG TERMComponents of Gross Equity Portfol
110、io Return for the Alliance Trust portfolio,2017-2022(%)S&P 500 Components of Stock Returns over 150 years,1871-2021(%)-4-2024681012Alliance TrustMSCI ACWI0102030405060708090100Fundamental GrowthFundamental GrowthInvestor SentimentInvestor Sentiment15CHAIRMANS STATEMENTINVESTMENT MANAGERS REPORT1.Sou
111、rce:https:/www.hermes- INVESTMENT:THE ALLIANCE TRUST APPROACHAs stewards of approximately 3bn of assets,we apply high standards of Responsible Investment to managing the investment portfolio on behalf of shareholders.Environmental,Social and Governance(ESG)factors can all have a significant impact o
112、n the Companys ability to deliver growth in capital and rising dividends.ESG risk factors are therefore integrated into the investment processes by the Companys Investment Manager,Willis Towers Watson(WTW),to protect financial returns.WTW has a rigorous approach to Responsible Investing:1.WTW conduc
113、ts due diligence on the Companys Stock Pickers to ensure they have a long-term mindset,exercise voting rights and engage with companies on ESG considerations.2.WTW has appointed EOS at Federated Hermes(EOS),a renowned stewardship specialist,to provide an additional layer of engagement with companies
114、,policy makers and regulators.With over$1.6 trillion1 under advice,this gives EOS more weight when lobbying for profitable change than one Stock Picker would have as a standalone investor.3.WTW monitors the portfolio and challenges the Stock Pickers when it feels their analysis could be improved,par
115、ticularly in relation to climate change.WTW has extensive resources in this area,comprising 90 specialists analysing company-by-company the financial implications of climate change.TARGETING NET ZERO GREENHOUSE GAS (GHG)EMISSIONSClimate change poses significant risks to investment returns from many
116、companies,which is why the Company has pledged to have its assets managed to achieve Net Zero by 2050 at the latest,with an interim target of reducing portfolio emissions by 50%by 2030,relative to 2019.However,the transition to Net Zero by 2050 will not be linear.There will be times when it will be
117、attractive to invest in innovative companies developing solutions to climate change.But there will also be times when it will make financial sense to buy mispriced shares in traditional energy companies.We benefitted last year from GQG correctly seeing in 2021 that the shares of many traditional ene
118、rgy companies were trading well below levels that were justified by their future profitability.Increased allocations to high-emitting stocks such as Heidelberg Materials,ExxonMobil and Petrobras,among others,meant that overall portfolio emissions rose year-on-year.However,the weighted average carbon
119、 intensity(which measures carbon emissions as a proportion of revenue)ended the year lower than the index.Although there was a handful of stocks driving up portfolio emissions last year,two-thirds of the portfolio holdings by weight were either on or transitioning towards a clear path to Net Zero.Th
120、e key to tackling the laggards is to engage and keep encouraging them in the right direction.16GQG,as a responsible owner of ExxonMobil,for example,made two specific engagements in the past 18 months.During these discussions,GQG urged ExxonMobil to improve its climate disclosures,as it believes that
121、 ExxonMobil is investing in de-carbonisation more widely than is appreciated.GQG is encouraged that three new directors with sustainability expertise have been appointed to the ExxonMobil board of directors and that ExxonMobil announced its ambition for Net Zero greenhouse gas emissions by 2050.GQG
122、has also recently engaged with Petrobras on our behalf.In addition to GQGs efforts with these companies,EOS has an ongoing programme of engagement with them and some of the worlds largest emitters of greenhouse gases,arguing for more sustainable long-term business models,reductions in greenhouse gas
123、es and improved governance and disclosure.EOS plays a key role in support of Climate Action 100+1,an investor led initiative with the support of over 700 investors,representing more than$68 trillion2 of assets under management that aims to ensure the worlds largest corporate greenhouse emitters take
124、 the necessary action on climate change.Climate Action 100+1 is engaging with 166 companies,accounting for over 80 percent of global corporate industrial greenhouse gas emissions.While many of these companies are improving their disclosures,and embracing Net Zero commitments,their real-world activit
125、ies are not yet sufficient to shift their business models to align with Net Zero goals.This demonstrates the need to continue to escalate engagement activity with the highest emitters to ensure Net Zero goals are met.As the transition gains momentum,EOS will continue to engage with such companies to
126、 ensure that they recognise the reality of a Net Zero economy,that they factor this into their financial and strategic planning,and that they deploy capital to address the risks and capture the opportunities presented by the transition.Source:WTW,MSCI ESG Research LLC,data as at 31 December 2021 and
127、 31 December 2022.Based on Portfolio and Benchmark investment of$1,000,000,000.CARBON EMISSIONS FOR ALLIANCE TRUST PORTFOLIO COMPARED TO MSCI ACWI0204060801001201401602021t CO2e/$M Invested2022109.379.099.9140.1MSCI ACWIAlliance TrustSource:WTW,MSCI ESG Research LLC,data as at 31 December 2021 and 3
128、1 December 2022.Based on Portfolio and Benchmark investment of$1,000,000,000.WEIGHTED AVERAGE CARBON INTENSITY FOR ALLIANCE TRUST PORTFOLIO COMPARED TO MSCI ACWI0204060801001201401602021t CO2e/$M sales2022121.6151.1160.9117.0MSCI ACWIAlliance Trust1.https:/www.climateaction100.org/2.Source https:/ww
129、w.climateaction100.org/about/Strategic ReportINVESTMENT MANAGERS REPORT17Audit Related 1.2%Capitalisation 3.1%Company Articles 1.9%Compensation 23.8%Corporate Governance 4.3%Director Election 35.6%Director Related 4.6%Environmental 6.2%Miscellaneous 0.9%Non-Routine Business 1.9%Routine Business 1.5%
130、Social 13.3%Strategic Transactions 0.9%Takeover Related 0.6%Number of votes with management 87.5%Number of votes against management 9.4%Number of votes abstained 3.2%Source:WTW,EOS at Federated Hermes data as at 31 December 2022.Note:Total percentages may not add up to 100 due to rounding difference
131、s.REASONS FOR VOTING AGAINST MANAGEMENTENGAGEMENT TO DRIVE POSITIVE CHANGEAs well as engaging on climate change,we,together with EOS and our Stock Pickers are also focused on a wide range of governance and social issues.These issues get less scrutiny by regulators concerned about greenwashing and ar
132、e not always as easy to assess with data.It is,however,possible to address them through engagement.For example,Jupiter successfully engaged with Bayer,the German listed pharmaceutical,consumer health and agricultural sciences company,to help persuade the CEO to step down after a series of missteps b
133、y voting against management,supervisory boards and the remuneration report.Metropolis Capital(Metropolis)engaged with News Corp over the companys use of a“poison pill”provision to prevent activist investors,competitors or other potential acquirers from taking control of the company.The provision had
134、 never been voted upon by shareholders.Following feedback from investors,including Metropolis,News Corp terminated the provision.Sands challenged Entegris on how it sources materials and tools for semiconductor manufacturing.Semiconductor companies have exposure to conflict minerals such as tantalum
135、,tin,tungsten,and gold,given that many of these are integral components of manufacturing electronic circuits.Sands is encouraged that Entegris has hired a senior employee to enhance its public disclosures and responsible mineral sourcing and is transitioning away from materials sourced from Russia.I
136、n addition to engagements by the Stock Pickers,EOS engaged with 103 companies within the Alliance Trust portfolio on 493 issues and objectives throughout the year.Of these engagements,the environmental category accounted for 27%of total engagement,with 75%of environmental engagements relating to cli
137、mate change.Meanwhile,our Stock Pickers voted on all voteable proposals,casting votes on 3,444 resolutions at investee company meetings.Of these resolutions,they voted against company management on 323 and abstained from voting on 109 occasions.Of the key votes against management,the issues voted on
138、 were governance-related issues such as remuneration and director election.The topics and breakdown of the ways in which our Stock Pickers voted are detailed opposite.Source:WTW,EOS at Federated Hermes data as at 31 December 2022.Note:Total percentages may not add up to 100 due to rounding differenc
139、es.HOW WE VOTEDINVESTMENT MANAGERS REPORT18Strategic ReportOUR STOCK PICKERSHOW WE MANAGE THE COMPANYS PORTFOLIO We have overall responsibility for the management of the Companys portfolio.We have built and manage a team of diverse,best-in-class1 Stock Pickers,each of whom invest in a bespoke select
140、ion of typically 10-20 of their best ideas.Investing For Generations is the backbone of the philosophy of the Company.It brings long-term principles into how we invest your money,including ESG considerations.This helps us define our investment approach,ensuring that the Stock Pickers thinking and pr
141、actices are aligned with the core beliefs of the Company and that they invest responsibly.We consider this a key factor for long-term success.HOW WE CHOOSE OUR STOCK PICKERS We aim to forge abiding partnerships with our Stock Pickers,enabling them to focus on what they do best.Our Stock Pickers are
142、focused on the long term and do not necessarily look at volatility as a risk,but more as an opportunity:risk is more associated with the permanent loss of capital.There was one change to the Stock Picker line up in 2022.R&Ms mandate was terminated after a change in ownership.We were concerned that t
143、his could prove a distraction for the investment team.The capital allocated to R&M was redistributed among the remaining Stock Pickers with similar characteristics to retain balanced exposure to different styles of investment,sectors and regions.We are,however,always on the lookout for new Stock Pic
144、kers and the advantage of the multi-manager structure is that we can easily change the line-up without disrupting the whole portfolio.We invest significant time,research and effort in identifying Stock Pickers for the Companys portfolio,leveraging our extensive research network,robust process and ex
145、pertise.Our approach involves identifying the skills and characteristics we believe are essential in good Stock Pickers.We believe the key to identifying tomorrows high-performing Stock Pickers lies in extensive due diligence combined with qualitative and quantitative analysis.This due diligence foc
146、uses on:the investment processes,resources and decision-making that make up the Stock Pickers competitive advantage;the culture and alignment of the organisation that leads to sustainability of that competitive advantage;their approach to responsible investment.We aim to appoint Stock Pickers who ac
147、tively engage with the companies in which they invest and have an effective voting policy.When necessary,we challenge the Stock Pickers and guide them towards better practices;and the operational infrastructure that minimises risk from a compliance,regulatory and operational perspective.We do not be
148、lieve that quantitative assessments on their own provide enough information to give us an advantage in assessing the potential of a Stock Picker to outperform.Our Manager Research team formulates a view on each Stock Picker we seek to rate over a series of meetings.We look beyond past performance nu
149、mbers to try to understand what competitive edge each Stock Picker has and whether that edge is likely to be sustainable in the future.We dig deeper into the investments made by each Stock Picker using a case study methodology to understand the depth of fundamental analysis involved in investment de
150、cisions.We look at matters such as the teams process for selecting stocks,adherence to this process through different market conditions,relevant team dynamics,training and experience as well as performance track record.We see the track record as just a single data point and,without the context of th
151、e additional data we assess,it is unlikely to persuade us that a Stock Picker is skilled.Our expectation of success further rises where we engage with Stock Pickers to structure bespoke high conviction,concentrated strategies usually of 10 to 20 stocks,at an attractive cost and we believe portfolios
152、 are more robust when we diversify across Stock Pickers with differing approaches.High Active Share and concentrated portfolios are advantageous.Academic research supports this2.The broadest opportunity set is provided by unrestricted global mandates,to allow skilled Stock Pickers the widest scope.1
153、.As rated by WTW.2.Sebastian&Attaluri,Conviction in Equity Investing,The Journal of Portfolio Management,Summer 2014.19INVESTMENT MANAGERS REPORTOUR STOCK PICKERS AS AT 31 DECEMBER 2022 Stock PickerBackgroundInvestment Style%of portfolio by value at 31 December 2022Black Creek Investment ManagementB
154、lack Creek is based in Toronto and was founded in 2004.Assets under management as at 31 December 2022 were$8.7bn.Long-term contrarian value-orientated buyers of leading businesses across the market cap spectrum.14%(11%at 31 Dec 2021)GQG PartnersGQG is a boutique investment management firm focused on
155、 global and emerging markets equities.Headquartered in Fort Lauderdale,Florida,USA,it managed assets of$88bn as at 31 December 2022.Seeks large capitalisation,high-quality companies,with durable earnings growth over the long-term;quality at a reasonable price.20%(19%at 31 Dec 2021)(Includes both glo
156、bal and emerging markets mandates)Jupiter Asset Management3Jupiter was established in London in 1985 as a specialist investment boutique.Since then it has expanded beyond the UK and managed 50.2bn as at 31 December 2022.Looks for out-of-favour and undervalued businesses with prominent franchises and
157、 sound balance sheets.11%(7%at 31 Dec 2021)Lyrical Asset ManagementLyrical Asset Management is a boutique advisory firm based in New York,with 250 clients and discretionary assets under management(AUM)of over$6.4bn as at 31 December 2022.Looks for quality US companies with simpler business models an
158、d attractive growth amid the cheapest 20%of their universe.7%(7%at 31 Dec 2021)Metropolis CapitalMetropolis is a UK-based firm with a value-based investment style.It had 2.6bn assets under management at 31 December 2022.Focuses on long-term market recognition of the fundamental value of their invest
159、ments and income generated from those investments.10%(10%at 31 Dec 2021)Sands CapitalSands is an independent,employee-owned firm based in Greater Washington DC,USA.As at 31 December 2022,it had assets under management of$38.9bn.Focuses on finding high-quality,wealth-creating growth businesses that c
160、an sustain above-average earnings growth over the long term.5%(8%at 31 Dec 2021)Sustainable Growth Advisers(SGA)SGA is based in Stamford,Connecticut USA,and manages US,global,emerging markets and international large-cap growth portfolios.It had assets of$20.7bn as at 31 December 2022.Seeks different
161、iated companies thathave strong pricing power with recurringrevenue,strong cash flow generation and long runways of growth.11%(11%at 31 Dec 2021)Veritas Asset ManagementVeritas was established in 2003 and is run with a partnership structure and culture.It has offices in London and Hong Kong.As at 31
162、 December 2022 it managed 19.5bn.Aims to grow real wealth over five-year periods by looking for highly cash generative protected businesses benefitting from enduring growth trends.15%(13%at 31 Dec 2021)Vulcan Value PartnersVulcan is based in Birmingham,Alabama,USA,and was founded in 2007.As at 31 De
163、cember 2022 it managed$8.1bn for a range of clients including endowments,foundations,pension plans and family offices.Focuses on protecting capital and generating returns by investing in companies with high-quality business franchises trading at attractive prices.7%(8%at 31 Dec 2021)3.JUPITER and ar
164、e the trade marks of Jupiter Investment Management Group Ltd.River&Mercantile Asset Managements mandate was terminated in March 2022.As at 31 December 2021,it managed 6%of the Companys portfolio.20Strategic ReportCountry of ListingUnited StatesSectorCommunication ServicesValue of Holding(m)103.3Net
165、purchases in 2022(m)40.4%of Total Assets3.3%of MSCI ACWI1.8%Average Portfolio Weight 3.8%Total Return-32.1Country of ListingUnited StatesSectorInformation TechnologyValue of Holding(m)95.4Net sales in 2022(m)33.9%of Total Assets3.1%of MSCI ACWI0.6%Average Portfolio Weight 3.0%Total Return7.312OUR LA
166、RGEST 30 INVESTMENTSAT 31 DECEMBER 2022INVESTMENT PORTFOLIOAlphabetAlphabet is a holding company that engages in the acquisition and operations of different firms.It is best known as a parent company for Google but holds other subsidiaries as well.The company,through its subsidiaries,provides web-ba
167、sed search,advertisements,maps,software applications,mobile operating systems,consumer content,enterprise solutions,commerce,and hardware product.Alphabet dominates the online search market with Googles global share above 80%,via which it generates strong revenue growth and cash flow.VisaVisa is an
168、American multinational financial services corporation.It describes itself as a global payments technology company that works to enable consumers,businesses,banks,and governments to use digital currency.It facilitates electronic funds transfers throughout the world,most commonly through Visa branded
169、credit cards,debit cards and prepaid cards across a broad clientele from retail to corporate use.The company is a dominant player within payment solutions and with cross-border travel volumes increasing,this could help sustain double-digit revenue growth for years to come.21INVESTMENT PORTFOLIOCount
170、ry of ListingUnited StatesSectorInformation TechnologyValue of Holding(m)93.7Net purchases in 2022(m)2.2%of Total Assets3.0%of MSCI ACWI3.0%Average Portfolio Weight 2.8%Total Return-20.93MicrosoftMicrosoft develops,manufactures,licenses,sells and supports software products including operating system
171、s,server applications,business&consumer applications and software/development tools for the Internet and intranets.In addition,it develops video game consoles and digital music entertainment devices.Microsoft is an established player in the tech sector and continues to evolve and innovate to maintai
172、n this position.We see the potential for solid growth driven by a still significant opportunity for its Azure cloud-computing business and within its suite of office and productivity solutions.4MastercardMastercard is an American technology company in the global payments business.It works with a wid
173、e range of consumers across individuals to corporations to governments to enable and facilitate electronic forms of payment.It provides technological solutions and enablement of electronic payment solutions.Mastercard is a firm that has shown good stability and quality with its earnings,holding one
174、of the dominant positions amongst payment solutions.Country of ListingUnited StatesSectorInformation TechnologyValue of Holding(m)66.0Net purchases in 2022(m)0.9%of Total Assets2.1%of MSCI ACWI0.5%Average Portfolio Weight 1.8%Total Return9.322Strategic ReportOUR LARGEST 30 INVESTMENTSAT 31 DECEMBER
175、2022INVESTMENT PORTFOLIOCountry of ListingUnited StatesSectorConsumer DiscretionaryValue of Holding(m)61.9Net purchases in 2022(m)26.8%of Total Assets2.0%of MSCI ACWI1.4%Average Portfolio Weight 1.9%Total Return-44.35AA is an American multinational technology company that focuses on e-commerce,onlin
176、e advertising,cloud computing,digital streaming,and artificial intelligence.Amazon offers personalised shopping services,web-based credit card payment,direct shipping to customers,as well as operating a cloud platform offering services globally.Amazons revenue growth does not only benefit from incre
177、ases in online shopping.The opportunity for growth is also driven by the strength and execution in AWS,its cloud computing business.6UnitedHealth GroupUnitedHealth Group describes itself as a health and well-being company,offering health care coverage and benefits through UnitedHealthcare,and techno
178、logy and data-enabled care delivery through Optum.It also manages organised health systems across the United States and provides employers products and resources to plan and administer employee benefit programs.UnitedHealth Group is the largest health insurer in the world.Due to its size,stability,d
179、ividends,and positioning,it holds a dominant position in the largest healthcare industry in the world.Country of ListingUnited StatesSectorHealth CareValue of Holding(m)53.8Net purchases in 2022(m)11.9%of Total Assets1.7%of MSCI ACWI0.9%Average Portfolio Weight 1.6%Total Return19.623INVESTMENT PORTF
180、OLIO8HDFC BankHDFC Bank is Indias largest private sector bank and one of the largest banks in the world(by market cap).It offers a wide range of services to the global corporate sector.It also provides corporate banking and custodial services and is active in the treasury and capital markets.HDFC ma
181、rkets project advisory services and capital market products such as Global Deposit Receipts,Euro currency loans,and Euro currency bonds.The firm is one of the largest on the Indian stock exchange and also one of the major employers in the country.Country of ListingIndiaSectorFinancialsValue of Holdi
182、ng(m)47.4Net purchases in 2022(m)14.2%of Total Assets1.5%of MSCI ACWI0.0%Average Portfolio Weight 1.1%Total Return18.77ExxonMobilExxonMobil is a global oil and gas company that explores for,produces,and sells crude oil,natural gas and petroleum products.It holds an industry-leading inventory of glob
183、al oil and gas resources and is a world leading refiner and marketer of petroleum products.It has been in existence for over a century and is known for innovation and being a leader in the energy and chemical manufacturing business.ExxonMobil markets fuels,lubricants,and chemicals under four brands:
184、Esso,Exxon,Mobil and ExxonMobil.Country of ListingUnited StatesSectorEnergyValue of Holding(m)49.0Net sales in 2022(m)7.8%of Total Assets1.6%of MSCI ACWI0.8%Average Portfolio Weight 1.5%Total Return107.924Strategic ReportOUR LARGEST 30 INVESTMENTSAT 31 DECEMBER 2022INVESTMENT PORTFOLIO10ValeVale is
185、a metal and mining company in Brazil.It produces and sells iron ore,pellets,manganese,alloys,gold,nickel,copper,kaolin,bauxite,alumina,aluminium,potash and more.Amongst these,the firm is the largest producer of iron ore and nickel in the world and runs the Carajas mine,the largest iron mine in the w
186、orld.Iron ore exports in Brazil account for about one third of the worlds supply.The company is Brazils largest public company,and locally it owns and operates railroads and maritime terminals.Country of ListingBrazilSectorMaterialsValue of Holding(m)36.6Net sales in 2022(m)28.6%of Total Assets1.2%o
187、f MSCI ACWI0.1%Average Portfolio Weight 0.8%Total Return44.19PetrobrasPetroleo Brasileiro S.A.(Petrobras)explores for and produces oil and natural gas.The company refines,markets,trades,transports and supplies oil products.Petrobras operates oil tankers,distribution pipelines,marine,river and lake t
188、erminals,thermal power plants,fertiliser plants,and petrochemical units.Brazil houses the second largest oil reserves in South America,this is where Petrobras operates and produces the majority of its oil and gas.Though majority owned by the Brazilian Government,the firm competes on the world stage
189、as one of the largest producers.Country of ListingBrazilSectorEnergyValue of Holding(m)43.7Net purchases in 2022(m)0.9%of Total Assets1.4%of MSCI ACWI0.1%Average Portfolio Weight 1.8%Total Return71.925INVESTMENT PORTFOLIONameCountry of ListingValue of Holding m%of Total Assets%Average Portfolio Weig
190、ht 11Interpublic GroupUnited States36.31.21.0Interpublic Group is an organisation of advertising agencies and marketing service companies.The company operates globally in various sectors.12TotalEnergiesFrance34.11.10.7TotalEnergies,established in 1924,is a France-based oil and gas company.The compan
191、y explores for,produces,transports,and supplies crude oil and natural gas.They also produce low carbon electricity(for example,solar energy).13AstraZenecaUnited Kingdom34.11.10.9AstraZeneca operates as a holding company.The company,through its subsidiaries,researches,manufactures,and sells both phar
192、maceutical and medical products.14British American TobaccoUnited Kingdom33.21.10.7British American Tobacco has been in existence for over a century and operates as a holding company for a group of companies that manufactures,markets,and sells cigarettes and other tobacco products including cigars an
193、d roll-your-own tobacco.15SafranFrance32.61.00.9Safran supplies aerospace and defence systems and equipment.The company sells engines for aeroplanes and helicopters,launch vehicle,etc.Safran serves aviation and defence industries worldwide.16Bureau VeritasFrance31.21.00.9Bureau Veritas is a world le
194、ading company that provides a range of consulting services,including global inspection and audit,tests and certification applied to quality,hygiene,safety and health.The firm was founded in 1827.17DBS BankSingapore29.81.01.0DBS Bank and its subsidiaries provide a variety of financial services.The co
195、mpany offers services including mortgage financing,lease and hire purchase financing,nominee and trustee,funds management,corporate advisory,and brokerage.26Strategic ReportOUR LARGEST 30 INVESTMENTSAT 31 DECEMBER 2022INVESTMENT PORTFOLIONameCountry of ListingValue of Holding m%of Total Assets%Avera
196、ge Portfolio Weight 18Berkshire HathawayUnited States29.51.00.5Berkshire Hathaway is a holding company owning subsidiaries in a variety of business sectors.The companys principal operations are insurance businesses,conducted nationwide on a primary basis,and worldwide on a reinsurance basis.19Heidel
197、berg MaterialsGermany29.20.90.8Heidelberg Materials produces and markets cement and aggregates(two essential raw materials for concrete)as one of the worlds largest building materials companies.Downstream activities include mainly the production of ready-mixed concrete as well as asphalt and other b
198、uilding products.20Canadian PacificCanada29.10.91.0Canadian Pacific is a Class 1 transcontinental railway,providing freight and intermodal services over a network in Canada and the United States,hauling goods such as grain,energy products,coal,fertiliser,automotive products,sulphur,food products,and
199、 more.21MercadoLibreUruguay28.90.90.8MercadoLibre operates an online trading site for the Latin American markets and is noted as the largest online commerce and payments ecosystem in Latin America.The companys website allows businesses and individuals to list items,conduct sales,and purchases online
200、 in either a fixed-price and auction format.22MakitaJapan27.80.90.8Makita,founded in 1915,manufactures electric power tools,including battery-operated power tools,stationary wood working machines,pneumatic devices,and gardening tools for global distribution.The Company also produces power tool attac
201、hments and accessories and provides parts replacement and repair services.23VINCIFrance27.40.90.8VINCI,founded in 1899,is a global player in concessions,energy,and construction with expertise in building,civil,hydraulic,and electrical engineering.It offers construction-related specialties and road m
202、aterials production,as well as finance,management,operations,and maintenance of public infrastructures.24AIAHong Kong27.30.90.7AIA competes to be the largest life insurance group in Asia,offering life insurance,medical insurance,accident protection insurance,critical illness insurance,disability pro
203、tection insurance,and savings and investment plans to individuals.The firm was founded in 1919 and is currently headquartered in Hong Kong.27INVESTMENT PORTFOLIONameCountry of ListingValue of Holding m%of Total Assets%Average Portfolio Weight 25GlencoreSwitzerland26.90.90.7Glencore is one of the wor
204、lds largest diversified natural resources companies.The company operates in metals and minerals,energy products,and agricultural products.It is also a market leader in recycling copper and precious metals.It offers products and services to a global network of clients in automotive,power generation,s
205、teel production,food processing and more.26Murata ManufacturingJapan26.20.80.7Murata Manufacturing manufactures and sells electronic modules and components.The company produces communication modules,power supply modules,multilayer ceramic capacitors,noise countermeasure components,timing devices,sen
206、sor devices,high frequency components,batteries,and other products.27ConvatecUnited Kingdom26.10.80.8Convatec manufactures medical and surgical equipment,marketing its products worldwide.The company offers urine meters,dressings,negative pressure wound systems,adhesive removers,and infusion devices.
207、28UnileverUnited Kingdom26.00.80.8Unilever manufactures personal care products.The company offers consumer goods,food,detergents,fragrances,beauty,home,and personal care products.It serves customers worldwide.29AdidasGermany25.30.80.8Adidas manufactures sports shoes and sports equipment.The company
208、produces products that include footwear,sports apparel,and golf clubs and balls.Adidas sells its products worldwide.30AirbusFrance25.10.80.1Airbus is a global firm in the aerospace industry,operating in the commercial aircraft,helicopters,defence,and space sectors.Also,the company produces military
209、fighter aircraft,military,missiles,satellites,and telecommunications and defence systems,as well as offering military and commercial aircraft conversion and maintenance services.Airbus is the largest aerospace firm in Europe and serves customers worldwide.Source:WTW,The Bank of New York Mellon,MSCI
210、Inc.Note:All figures are subject to rounding differences.28Strategic ReportOUR OTHER INVESTMENTSAT 31 DECEMBER 2022INVESTMENT PORTFOLIONameCountry of Listing%of Total AssetsValue of Holding mBaiduChina0.825.0ASMLNetherlands0.824.9General ElectricUnited States0.824.7Charter CommunicationsUnited State
211、s0.824.7YumUnited States0.824.4DanaherUnited States0.824.4The Cooper CompaniesUnited States0.824.4State StreetUnited States0.824.2KyndrylUnited States0.824.0ExelonUnited States0.823.6EnbridgeCanada0.823.4IntuitUnited States0.723.3News CorpUnited States0.723.2Imperial BrandsUnited Kingdom0.723.2Steri
212、cycleUnited States0.723.0Fleetcor TechnologyUnited States0.722.8Standard CharteredUnited Kingdom0.722.5BPUnited Kingdom0.722.3Kuehne&NagelSwitzerland0.722.2ICONIreland0.722.2HumanaUnited States0.721.2AutodeskUnited States0.721.1S&P GlobalUnited States0.721.0Booking HoldingsUnited States0.720.9KKRUni
213、ted States0.720.8WorkdayUnited States0.720.5Schwab(Charles)United SUnited States0.620.1FiservUnited States0.620.0ContinentalGermany0.619.9CovestroGermany0.619.5Smiths GroupUnited Kingdom0.619.3Molson CoorsUnited States0.619.3PaypalUnited States0.619.2Weir GroupUnited Kingdom0.619.1AenaSpain0.619.0As
214、hteadUnited Kingdom0.618.8ComcastUnited States0.618.7GSKUnited Kingdom0.618.7EbaraJapan0.618.329NameCountry of Listing%of Total AssetsValue of Holding mBayerGermany0.618.1Schneider ElectricFrance0.617.8Texas InstrumentsUnited States0.617.8Harley DavidsonUnited States0.617.7IntelUnited States0.617.6A
215、madeus ITSpain0.617.6Skyworks SolutionUnited States0.517.0CVS HealthUnited States0.516.8WalmartUnited States0.516.8BroadcomUnited States0.516.2United RentalsUnited States0.516.2Santen PharmaceuticalJapan0.516.1TransdigmUnited States0.516.0DKSH HoldingSwitzerland0.516.0AdmiralUnited Kingdom0.515.7Fle
216、xUnited States0.515.3CignaUnited States0.515.2WPPUnited Kingdom0.514.8Cisco SystemsUnited States0.514.7Hargreaves LansdownUnited Kingdom0.514.7Swire PacificHong Kong0.514.6Ameriprise FinancialUnited States0.514.4CBRE GroupUnited States0.514.3TP ICAPUnited Kingdom0.414.0SignifyNetherlands0.413.9Aerca
217、pIreland0.413.7Carlyle Group United States0.413.7DexcomUnited States0.413.4HCA HealthcareUnited States0.412.9ITCIndia0.412.8Housing Development FinanceIndia0.412.8Zebra TechnologiesUnited States0.412.7KingfisherUnited Kingdom0.412.3TS TechJapan0.411.8Western UnionUnited States0.411.5KubotaJapan0.411
218、.4ServiceNowUnited States0.411.3KeyenceJapan0.411.0OracleUnited States0.310.6Sonic HealthcareAustralia0.310.4INVESTMENT PORTFOLIO30Strategic ReportOUR OTHER INVESTMENTSAT 31 DECEMBER 2022INVESTMENT PORTFOLIONameCountry of Listing%of Total AssetsValue of Holding mSynnexUnited States0.310.1NRG EnergyU
219、nited States0.39.9Intercontinental ExchangeUnited States0.39.5Liberty GlobalUnited Kingdom0.39.3WhirlpoolUnited States0.39.2Kato SangyoJapan0.39.0Global PaymentsUnited States0.38.9AdientIreland0.38.6Lithia MotorsUnited States0.38.3EbayUnited States0.38.0METAUnited States0.37.9Reliance IndustriesIndi
220、a0.27.5EntegrisUnited States0.27.3Edwards LifesciencesUnited States0.27.1BlockUnited States0.27.1AndritzAustria0.27.1SnowflakeUnited States0.27.1NetflixUnited States0.26.6Taiwan Semiconductor ManufacturingTaiwan0.26.4Liberty MediaUnited States0.26.4AtlassianUnited States0.26.3GrumaMexico0.26.3AdyenN
221、etherlands0.26.1ShopifyCanada0.25.9Itau UnibancoBrazil0.25.8ICICI BankIndia0.25.7SeaSingapore0.25.7Lincoln NationalUnited States0.25.3Western DigitalUnited States0.25.2EletrobrasBrazil0.25.2State Bank of IndiaIndia0.24.9Philip Morris InternationalUnited States0.24.9Bank Central AsiaIndonesia0.24.8Wa
222、l-Mart de MexicoMexico0.14.6Bharti AirtelIndia0.14.4HeinekenNetherlands0.14.4ShellUnited Kingdom0.14.2Sun Pharmaceutical IndustriesIndia0.14.0America MovilMexico0.13.9HanesbrandsUnited States0.13.931NameCountry of Listing%of Total AssetsValue of Holding mBank MandiriIndonesia0.13.9Bread FinancialUni
223、ted States0.13.8CloudflareUnited States0.13.7Commscope HoldingsUnited States0.13.6Coca-ColaUnited States0.13.6CiplaIndia0.13.5Petrochina Co LtdChina0.13.5EniItaly0.12.9BanorteMexico0.12.6KasikornbankThailand0.12.5POSCOSouth Korea0.12.4Tata SteelIndia0.12.4Power GridIndia0.12.3BTG PactualBrazil0.12.3
224、Ping An InsuranceChina0.12.2MoodysUnited States0.12.1JSW SteelIndia0.12.0B3Brazil0.11.9SK TelecomSouth Korea0.11.8Banco BradescoBrazil0.11.6Zijin Mining GroupChina0.11.6PICC Property and CasualtyChina0.01.3Turkish AirlinesTurkey0.01.3Paramount GlobalUnited States0.00.9Bajaj FinservIndia0.00.9TpraTur
225、key0.00.5Standard BankSouth Africa0.00.4AkbankTurkey0.00.3China Resources LandHong Kong0.00.2Koc HoldingTurkey0.00.2Garanti BBVATurkey0.00.2China Overseas LandHong Kong0.00.2Bank Negara IndonesiaIndonesia0.00.1Sitios LatinoamricaMexico0.00.1China HongqiaoChina0.00.0B?MTurkey0.00.0Source:The Bank of
226、New York Mellon.Note:All figures are subject to rounding differences.INVESTMENT PORTFOLIO32Strategic ReportDIVIDENDDIVIDEND POLICYSubject to market conditions and the Companys performance,financial position and outlook,the Board will seek to pay a dividend that increases year on year.The Company exp
227、ects 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 financial year.DIVIDENDAs previously noted in the Chairmans Statement on page 6,the Company has increased its total dividend for the
228、 year ended 31 December 2022 to 24.00p per ordinary share (2021:19.05p),a 26%increase on the previous year.During the year under review,the Board was pleased to be able to pay shareholders a consistent quarterly dividend of 6.0p per ordinary share,being an increase on the corresponding quarterly div
229、idend payments in the previous financial year.The total of the first and second interim dividends represented an increase of 62.1%on the same payments for 2021.Details of the payments can be found below.Dividend2022(p)2021(p)%increase1st Interim6.03.70262.12nd Interim6.03.70262.13rd Interim6.05.8253
230、.04th Interim6.05.8253.0The Board is of the opinion that the increased level of total dividend is both sustainable and affordable and it expects to extend the Companys 56-year track record of annual dividend increases for many years.The Companys Dividend Policy(as detailed above),Investment Objectiv
231、e(as detailed on page 2)and Investment Strategy all remain unchanged.The following chart shows the growth in the Companys dividend over the last 56 years.Dividend per Share(p)2022 Dividend per Share(p)Total ReturnCapital ReturnThe Board aims to continue delivering a rising dividend year after year a
232、s well as capital growth.The chart also shows what has been achieved for investors to date.If you had invested 100 in the Company at the start of 1968 and you had reinvested your dividends in additional shares,you would have shares worth 23,926 at the end of 2022,and 5,643 if you did not.In determin
233、ing 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 the yield on similar investment trusts.The Board will continue to take advantage of the Companys structure as an investment trust a
234、nd will use both its investment income and its significant accumulated distributable reserves to fund dividend payments.The Company policy of paying quarterly interim dividends means that shareholders have certainty of the date on which they will receive their income but means they are not asked to
235、approve the final dividend.However,each year shareholders are given the opportunity to share their views on the Companys dividend by being asked to approve the Companys Dividend Policy.202220132018200820031998199319881983197819731968Dividend per Share(p)Return rebased to 100 at 31 January 1968051015
236、20250500010,00015,00020,00025,00030,000Source:WTW and Alliance Trust.Past performance is not a reliable indicator of future returns.Total Return is the sum of the change in the share price plus dividend income reinvested whereas Capital Return excludes the impact of dividends reinvested.33DIVIDENDIN
237、COME&DISTRIBUTABLE RESERVESThe Companys income receipts from dividends in 2022 saw a significant increase to 94.9m(2021:61.9m).The same level of dividend income may not continue in 2023.The Companys distributable reserves at 31 December 2022 were 2.9bn(2021:3.3bn).Of these,the Companys revenue reser
238、ve was 102.3m(2021:95.2m),realised capital reserves were 2.7bn(2021:2.8bn)and unrealised capital reserves were 0.1bn(2021:0.5bn).Both elements of the capital reserves are readily convertible to cash.FOURTH INTERIM DIVIDEND DECLARATIONA fourth interim dividend of 6.0p per ordinary share will be paid
239、on 31 March 2023 to shareholders who are on the register at close of business on 10 March 2023.The fourth interim dividend will be fully paid from income,with no requirement to utilise revenue reserves.The payment dates for the 2023 financial year can be found on page 115.If you had invested 100 in
240、the Company at the start of 1968 and you had reinvested your dividends in additional shares,you would have shares worth 23,926 at the end of 2022.”34Strategic ReportONGOING CHARGES1 The Companys Ongoing Charges Ratio(OCR)marginally increased to 0.61%(2021:0.60%).Total administrative expenses were 6.
241、5m(2021:5.9m)and investment management expenses were 12.8m(2021:14.1m).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 which is consistent with the Association of Investment Companies(AIC)S
242、tatement of Recommended Practice:Financial Statements of Investment Trust Companies and Venture Capital Trusts.The Companys costs remain competitive for an actively managed multi-manager global equity investment company.The chart below shows how the Companys costs compared to the other constituents
243、of the AIC Global Sector.SHARE BUYBACKS The Company bought back 5.0%of its issued share capital during the year,purchasing 15,537,581 shares for cancellation.The total cost of the share buybacks was 149.6m.The weighted average discount of shares bought back in the year was 6.3%.All the shares bought
244、 back were cancelled.Share buybacks contributed a total of 0.3%to the Companys NAV performance in the year.DISCOUNT1 One of the Companys strategic objectives is the maintenance of a stable share price discount to Net Asset Value.During the year under review,the Companys share price traded at an aver
245、age discount of 5.9%.As at 31 December 2022,the Companys share price discount was 4.2%(2021:5.3%).The average discount(unweighted)for the AIC Global Sector was 7.4%.ONGOING CHARGES&DISCOUNTSource:WTW,Bank of New York Mellon.1.Alternative Performance Measure(see page 110 for details).DISCOUNT AND SHA
246、RE BUYBACKSOUR COSTS ARE COMPETITIVE05,00010,00015,00020,00025,00030,000DecNovOctSepAugJulJunMayAprMarFebJan012345678Discount(%)Cost of share buybacks(000s)Share BuybackDiscount01.002.003.004.005.006.00Costs per annum(%)Constituents of the AIC Global SectorAlliance TrustNotes:The charges are shown f
247、or the investment companies in the AIC global equity sector and include Ongoing Costs,Portfolio Transaction Costs and Performance Fees.Data sourced on 29 December 2022 by WTW from each investment companys Key Information Documents(KIDs)available on their website.As such,cost data may be as at differ
248、ent dates.35STRATEGIC OBJECTIVESThe strategic objectives of the Company 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 lev
249、els of risk that it is prepared to accept to achieve the Companys strategic objectives.It then monitors whether there is a possibility of any of these risk levels being breached(through Early Warning Indicators,or EWIs)and,if there is,it will take action to bring the level of risk back within the EW
250、I it has set.During the year,the EWIs were reviewed to ensure they remained appropriate.No changes were made to the list of EWIs.At the year end,there were three measures which triggered their EWIs.Details of which are as follows:Portfolio Performance:The EWI was triggered due to the underperformanc
251、e of the portfolio against the MSCI ACWI over a rolling three-year period.Portfolio Turnover:The EWI was triggered as a result of increased turnover due to Stock Picker changes and trading in the portfolio when Stock Pickers took advantage of opportunities in the market.Operational Risk:The EWI was
252、triggered as a result of factsheet errors.Additional controls have subsequently been put in place to mitigate the risk of future errors being made.PRINCIPAL AND EMERGING RISKSIn common with other financial services organisations,the Companys business model results in inherent risks.The Directors hav
253、e carried out a robust assessment of the principal and emerging risks facing the Company and how these are continuously monitored and managed.As an investment company,investment risk has the potential to impact the Company significantly.We explain on the next page how we mitigate against the potenti
254、al impact of this risk.2022 was a challenging year as a result of geopolitical tension,inflation and the risk of many economies entering into recession,all of which adversely impacted the global economy.The market outlook for 2023 remains highly uncertain as policy makers continue to battle inflatio
255、n without triggering a deep recession.The backdrop of the war in Ukraine also continues to impact market and investor confidence.The other area where we see risk evolving relates to ESG matters and we cover the actions being taken on this within the portfolio on pages 15 to 17 and operationally on p
256、age 39.In addition to considering the potential adverse impact of ESG factors on the Companys reputation and financial performance,a specific climate change risk,along with mitigating activities at Company and portfolio level,is being monitored.Set out on the next five pages are the Companys princip
257、al and emerging risks that could impact on the achievement of the strategic objectives and the Boards view of each risk.HOW WE MANAGE OUR RISKSHOW WE MANAGE OUR RISKS36Strategic ReportHOW WE MANAGE OUR RISKSInvestment,Counterparty and Financial Risks RiskRisk Trend during 2022 Mitigating ActivitiesM
258、arket RiskRisk of a general fall in equity markets that would lead to a lower valuation of the Companys investments.IncreasedAfter a strong 2021,2022 was challenging for global equity markets with concerns over the economic implications of the Russia-Ukraine conflict,the potential need for a faster
259、pace of interest rate hikes to combat higher inflation,and renewed Covid-19 outbreaks in China led to an increased volatility in equities.Active management of the concentrated high conviction approach employed by the Company means that it should be able to take advantage of any volatility caused by
260、external factors as it creates opportunities.The investment approach focuses on company fundamentals with stock selection being the main driver of investment performance rather than sentiment-driven market movements.The portfolio is managed to be broadly balanced in terms of style,sector,and geograp
261、hical exposures relative to the benchmark,avoiding being held hostage to any one particular risk factor that might fall out of favour at any point in time which is near impossible to predict.The Company can use derivative instruments to hedge,enhance and protect positions including currency exposure
262、s.Investment Performance RiskInvestment performance fails to deliver long-term capital growth and rising income that meet the targets set by the Board.DecreasedWhilst the Companys portfolio returned negatively in 2022,it outperformed its benchmark over the period.The Company is closed-ended and,unli
263、ke open-ended funds,does not have to sell investments at low valuations in volatile markets.This allows Stock Pickers to remain invested for the long term and adhere to their disciplined investment process.The Companys multi-manager approach benefits from a rich mix of investment styles which reduce
264、s the risk of isolated losses normally associated with a single Stock Picker.The portfolio is designed to outperform the market over the long term,regardless of the market conditions,by blending the stocks invested in by Stock Pickers with different complementary styles into a diversified,high convi
265、ction global equity portfolio expected to deliver consistent outperformance with lower volatility.The Investment strategy and the performance of the Stock Pickers as well as the composition,allocation/re-balancing and diversification of the portfolio are regularly reviewed.The Board actively conside
266、rs the prevailing external environment and outlook in its decision-making process.The global market appears to be less skewed towards large US technology stocks.This offers more opportunity for active Stock Pickers to add value through high conviction stock selection and for the portfolio to outperf
267、orm its index.37Investment,Counterparty and Financial Risks continuedRiskRisk Trend during 2022 Mitigating ActivitiesCredit and Counterparty RiskCredit 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
268、Company.Counterparty risk is the risk that a counterparty to an agreement will fail to discharge an obligation or commitment that it has entered into with the Company.UnchangedThe credit and service quality of the third parties that the Company dealt with in 2022 remained at appropriate levels.The C
269、ompany 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.A due diligence process is followed when selecting third-party service providers.Outsourced prov
270、iders are subject to regular oversight by the Board,the Company Secretary1 and the Depositary.The Companys Depositary is responsible for the safekeeping of the Companys assets and liable to the Company for any loss of assets.Reports from the Depositary and Custodian are reviewed regularly by the Boa
271、rd,the Company Secretary1 and WTW.Daily reconciliation of the Companys assets is undertaken.1.For the year ended 31 December 2022,this was undertaken by the Executive team.Capital Structure and Financial RiskThe capital structure is not appropriate to support the Companys strategic objectives,risk a
272、ppetite and overall operations.The Company does not have sufficient liquid resources to ensure it can meet its liabilities as they fall due and the fair value of the assets of the Company is amplified by any gearing that the Company may have.UnchangedThe Board used the tools at its disposal to manag
273、e the share capital,reserves,discount and gearing at stable levels.The Board regularly reviews the capital structure of the Company including,but not limited to,issued share capital,discount and share buybacks,capital and other reserves,and gearing.The Board(and the Companys Broker)monitors the disc
274、ount level closely and has taken the powers,which it seeks to renew each year,for share issuance,buybacks and cancellation to support the management of the discount.In 2021,the Company was granted Court approval for the conversion of the Companys merger reserve into a distributable reserve.This has
275、provided the Company with increased flexibility in the way it can fund dividend payments.Stress and scenario testing is carried out on the portfolio and reported to the Committee by WTW.Liquidity analysis,including liquidity stress testing,is carried out on the portfolio and reported to the Committe
276、e by WTW.The Companys portfolio comprises quoted equities which are readily realisable.HOW WE MANAGE OUR RISKS38Strategic ReportHOW WE MANAGE OUR RISKSOperational Risks RiskRisk Trend during 2022 Mitigating ActivitiesCyber attackFailure to ensure that the business is adequately protected against the
277、 threat of cyber attack,which may lead to significant business disruption or external fraud.IncreasingThe Russian-Ukraine conflict increased the risk of global cyberattacks on critical systems and business applications with the risk of spillover cyberattacks against non-primary targets becoming more
278、 widespread.The Company 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.Business continuity plans are in place should a cyber attack occur.OutsourcingLoss arising from inad
279、equate or failed processes,people and/or systems of outsourced functions.UnchangedThe outsourced providers and Executive team continued to provide services under a hybrid working model during 2022 with no adverse impact on the standard of service received.WTW monitors and reports on the performance
280、of outsourced providers to the Board which also receives control reports from certain service providers.WTW itself is monitored by the Board and the Company Secretary,and the Depositary which also monitors the Custodian.The Board also monitors the performance of Juniper Partners Limited following it
281、s appointment as Company Secretary on 31 December 2022.39HOW WE MANAGE OUR RISKSEnvironmental,Social and Governance(ESG)factors RiskRisk Trend during 2022 Mitigating ActivitiesEnvironmental,Social and Governance(ESG)factorsFailure to consider the impact of ESG factors adversely affecting the Company
282、s reputation and financial performance.The adverse impact of climate-related risks (both physical and transition risks)on the Companys business strategy,operating model,investment strategy and financial planning.IncreasedIncreasing volume,short implementation deadlines and lack of commonality of new
283、 ESG regulations issued by multiple regulators,accompanied by increased regulatory focus and labelling and marketing of investment products as having ESG characteristics increase the perceived risk of greenwashing.In 2022,some of the Stock Pickers found attractive opportunities in the Energy sector,
284、leading to an increase in the portfolios carbon footprint.WTWs approach to ESG is embedded within its overall assessment of the Companys Stock Pickers.The appointment of the EOS(Equity Ownership Services team)at Federated Hermes has strengthened the Companys commitment to responsible investment.The
285、Board will continue to consider developments in this area such as the recommendations from the Task Force on Climate-related Financial Disclosures,and the FCAs Sustainability Disclosure Regulation currently under consultation.The Company committed to transitioning its portfolio to Net Zero greenhous
286、e gas emissions by 2050.Stocks with significant exposure to thermal coal and tar sands are excluded from the portfolio.WTW is a signatory to the Net Zero Asset Managers Initiative,the Principles for Responsible Investment and the UK Stewardship Code.EOS and a number of our Stock Pickers are signator
287、ies to the Climate Action 100+initiative.The Company calculates its carbon footprint based on the GHG Protocol Corporate Accounting and Reporting Standard and verified by Carbon Footprint Limited.WTW monitors the carbon intensity of the Companys portfolio against recognised benchmarks.The Company ha
288、s a small physical presence with a limited impact on the environment.40Legal and Regulatory Non-ComplianceRiskRisk Trend during 2022 Mitigating ActivitiesLegal and Regulatory non-complianceFailure of not meeting and complying with all relevant legal and regulatory requirements and responsibilities.U
289、nchangedThere were no material legal or regulatory issues for the Company that arose during 2022.The Board receives updates from WTW,the Company Secretary and the Companys legal advisers on legal and regulatory developments and changes.1 WTW reviews and monitors the Companys Investment Trust status
290、and reports on this regularly to the Board.On at least an annual basis,the Board receives updates from the Companys third-party service providers in respect of their compliance with legal and regulatory obligations.The Board conducts an annual internal review on its and its Committees effectiveness.
291、An external review is carried out at least every three years and the last such review was in 2021.Members of the Board and representatives from WTW and Company Secretary1 periodically attend relevant industry training events.Shareholder documentation including the Companys Interim and Annual Reports
292、 are subject to stringent review.Processes and procedures are in place to ensure compliance with applicable requirements such as the Market Abuse Directive.1.For the year ended 31 December 2022,this was undertaken by the Executive team.The Strategic Report(including pages 2 to 40 of this document,th
293、e s172 statement on pages 59 to 61 and the viability statement on pages 62 and 63)has been approved by the Board and signed on its behalf by:Gregor Stewart ChairmanStrategic ReportHOW WE MANAGE OUR RISKSDIRECTORS REPORT42SARAH BATES Senior Independent DirectorMember of Audit and Risk Committee.Membe
294、r of the Nomination Committee.Sarah joined the Board in 2021.Sarah is a Fellow of CFA UK and was previously Chair of the Association of Investment Companies.Sarah was also previously Chair of Polar Capital Technology Trust plc,Merian Global Investors Limited,St James Place plc,JPMorgan American Inve
295、stment Trust plc,Witan Pacific Investment Trust plc(now Baillie Gifford China Growth Trust PLC)and chair of the audit committees of New India Investment Trust plc and of U and I Group plc.Sarah was a founder of the Diversity Project and an Ambassador for Chapter Zero.Current AppointmentsWorldwide He
296、althcare Trust plcChair of the Nomination Committee and Senior Independent DirectorJohn Lewis Partnership Trust for PensionsChairBBC Pension SchemeIndependent Member of the Investment Committee and Chair of BBC Pension Investment LimitedUSS Investment Management LimitedChairBOARD OF DIRECTORSDirecto
297、rs ReportGREGOR STEWART Chairman(Independent)Chair of the Nomination Committee.Gregor joined the Board in 2014 and chaired the Audit and Risk Committee until his appointment as Chairman in September 2019.Gregor is a Chartered Accountant and was Finance Director for the insurance division of Lloyds B
298、anking Group,including Scottish Widows,and a member of the Groups Finance Board.He worked for more than 20 years at Ernst&Young,with 10 years as a Partner in the firms Financial Services practice.Current AppointmentsDirect Line Insurance Group plcNon-Executive DirectorFNZ(UK)Limited and its holding
299、companyChair of FNZ(UK)Limited and Non-Executive Director of its holding company 43BOARD OF DIRECTORSANTHONY BROOKE Independent Non-Executive DirectorMember of Audit and Risk Committee.Member of the Nomination Committee.Anthony joined the Board in 2015.Anthony was a Vice Chairman of S.G.Warburg&Co.L
300、td.and from 1999 to 2008 a partner in Fauchier Partners,a manager of alternative investments.Until 2010,Anthony was a Non-Executive Director of the PR consultancy,Huntsworth PLC.Anthony will retire as a Non-Executive Director of the Company with effect from the conclusion of the Annual General Meeti
301、ng on 27 April 2023.Current AppointmentsInvestment Committee of the National Portrait GalleryMemberInvestments Committee of Christs College,CambridgeMember Various EndowmentsAdviserGuide to current appointmentsListed operating companies and their subsidiariesUnlisted operating companies and their su
302、bsidiariesInvestment companies and Investment TrustsOtherDEAN BUCKLEY Independent Non-Executive DirectorMember of Audit and Risk Committee.Member of the Nomination Committee.Dean joined the Board in 2021.Dean is a qualified actuary and has enjoyed a career in fund management.Dean was previously Chie
303、f Executive Officer of Scottish Widows Investment Partnership.Prior to that,Dean held several positions at HSBC Bank plc,most recently as Chief Executive Officer of HSBC Asset Management UK&Middle East.Dean held senior fund management positions at Prudential Portfolio Managers and was also previousl
304、y a Non-Executive Director of Saunderson House Limited.Current AppointmentsFidelity Special Values PLCChairJPMorgan Asia Growth&Income plcChair of the Audit Committee,Remuneration Committee and Senior Independent DirectorBaillie Gifford&Co LimitedNon-Executive DirectorEvelyn Partners Fund Solutions
305、LimitedChair44CLARE DOBIE Independent Non-Executive DirectorMember of Audit and Risk Committee.Member of the Nomination Committee.Clare joined the Board in 2016.Clare started as a journalist working at the BBC,Times and Independent,where she was City Editor.From there she joined Barclays Global Inve
306、stors,where she was Head of Marketing,and later she moved to GAM as Group Head of Marketing.She then ran a marketing consultancy serving financial services firms.She is a former Non-Executive Director of Aberdeen New Thai Investment Trust,CT Capital and Income IT,Schroders UK Mid Cap Fund and Southe
307、nd Hospital.Current AppointmentsRoman River Music charityTrustee Directors ReportBOARD OF DIRECTORSJO DIXON Independent Non-Executive DirectorChair of Audit and Risk Committee.Member of the Nomination Committee.Jo joined the Board in 2020 and was appointed Chair of the Audit and Risk Committee in Ma
308、rch 2020.Jo is a chartered accountant and has previously held senior positions within the NatWest Group and was Finance Director of Newcastle United plc.She was Commercial Director,UK,Europe and the Middle East at Serco Group and sat on various advisory boards in the education and charity sector.Jo
309、was also previously Chair of JPMorgan European Growth and Income PLC.Current AppointmentsBellevue Healthcare Trust PLC(formerly BB Healthcare Trust PLC)Non-Executive Director and Chair of Audit CommitteeStrategic Equity Capital PLCNon-Executive Director and Chair of Audit CommitteeThe Global Smaller
310、 Companies Trust PLC (formerly BMO Global Smaller Companies PLC)Non-Executive Director and Chair of Audit CommitteeVentus VCT PLC(in members voluntary liquidation)Non-Executive Director45BOARD OF DIRECTORSMILYAE PARK Independent Non-Executive DirectorMember of Audit and Risk Committee.Member of the
311、Nomination Committee.Milyae joined the Board in 2022.Milyae began her career as a Chartered Accountant in the US and holds an MBA from The Wharton School.She has held senior global executive positions spanning investment banking and other financial services,retail,consumer and technology.Milyae has
312、experience running and advising companies from FTSE 100 to start-up in scale in over 40 countries.In addition,her recent advisory experience has focused on digital transformation and growth,as well as ESG.VICKY HASTINGS Independent Non-Executive DirectorMember of Audit and Risk Committee.Member of t
313、he Nomination Committee.Vicky joined the Board in 2022.Vicky has over 30 years experience in the investment management industry.She was a European Equity fund manager before holding senior leadership roles at Merrill Lynch Investment Managers and JO Hambro Capital Management.Vicky was previously an
314、Independent Non-Executive Director of JPMorgan Asset Management UK Ltd and JP Morgan Asset Management International Ltd and a Non-Executive Director of Henderson Global Trust Plc and Charter European Trust Plc.Current AppointmentsFidelity European Trust PLCNon-Executive DirectorMuseum of London Gove
315、rnor,Chair of the subsidiary Museum of London(Trading)Ltd Faber and Faber LimitedNon-Executive Director Current AppointmentsHenderson European Focus Trust PlcChairEdinburgh Investment Trust PlcNon-Executive Director and Senior Independent DirectorImpax Environmental Markets PlcNon-Executive Director
316、 Moorfields Eye CharityTrustee 46BOARD OF DIRECTORSDirectors ReportBOARD AND COMMITTEE ATTENDANCESIn 2022,in addition to the Boards regular quarterly meetings,several ad hoc Board meetings were held.There were four scheduled Audit and Risk Committee meetings and no ad hoc Audit and Risk Committee me
317、etings were held(although there was a decision between meetings circulated by email).The Nomination Committee was established on 1 November 2022.There were no matters that required to be considered by the committee between its establishment and prior to the financial year end.The committee will meet
318、 for the first time in 2023.Scheduled Meeting AttendancesBoardAudit and RiskNominationDirectorActualPossibleActualPossibleActualPossibleGregor Stewart14422-Sarah Bates4444-Anthony Brooke4444-Dean Buckley4444-Jo Dixon4444-Clare Dobie4444-Vicky Hastings21111-Milyae Park21111-Chris Samuel32222-1.Gregor
319、 Stewart stepped down as a Member of the Audit and Risk Committee on 1 July 2022.2.Vicky Hastings and Milyae Park joined the Board on 29 September 2022.3.Chris Samuel left the Board on 21 April 2022.Several ad hoc working group meetings also took place to deal with specific activities during the yea
320、r which involved some,or all,of the Directors.This included the Marketing Oversight Group.Details of its activities can be found on page 51.47BOARD OF DIRECTORSPOLICY ON BOARD DIVERSITYThe Boards Policy on Board Diversity is as follows:The Company recognises the benefits of having a diverse Board,an
321、d sees diversity at Board level as important in maintaining good corporate governance and Board effectiveness.The Board members should have different skills,geographical and industry experience,backgrounds,ethnicity,race and gender.These differences will be considered in determining the composition
322、of the Board and when possible should be balanced appropriately.All Board appointments must be made on merit,in the context of the skills,experience,independence and knowledge which the Board as a whole requires to be effective.In reviewing Board composition the benefits of all aspects of diversity
323、will be considered,including,but not limited to,those described above,in order to enable it to discharge its duties and responsibilities.In identifying the best candidates for appointment to the Board,the Board will consider candidates from a range of differing perspectives and backgrounds against o
324、bjective criteria with due regard to the benefits of diversity on the Board.As part of the selection process,where search agents are used,they are currently required in preparing their long list to include candidates that will improve the ethnic diversity of the Board given the Boards alignment with
325、 the Parker Review target for ethnic diversity by 2024.The Board reports on its succession plans on page 53.When making appointments,the Board will ensure that the positive steps taken to increase the Boards gender diversity over the last two years will be applied to other areas of diversity in whic
326、h the Board could improve.The Board at the year end comprised three males and five females.One of the Directors is of a minority ethnic origin and of the two senior Board positions(Chairman and Senior Independent Director)one is male and the other female.While the Board has met its targets for gende
327、r and ethnic diversity,it will continue to seek to consider all aspects of diversity for future appointments.A table showing the gender and ethnicity of the Directors and workforce can be found on page 60.In accordance with the AIC Code,as part of its succession planning program,the Board appointed
328、Cornforth Consulting,an independent external search consultant to undertake a search for at least one Non-Executive Director.As a result of this search,Vicky Hastings and Milyae Park were appointed as Directors of the Company on 29 September 2022.48BOARD OF DIRECTORSDirectors ReportBOARD EVALUATIONT
329、he annual review of individual Directors performance is usually supported by an independent external facilitator and undertaken by way of questionnaire and discussions between the Chairman and each of the Directors.A review of the performance of the Chairman is undertaken by the other Directors,led
330、by the Senior Independent Director.A more extensive review is undertaken every third year,with the last review having been undertaken for 2021.During the year under review,the Board appointed Lintstock Limited(Lintstock)to support its annual appraisal of the effectiveness of the Board,its Committees
331、 and the individual Directors.Lintstock,has no other connections with the Company or individual Directors and was therefore deemed independent.The findings of the external evaluation were discussed with the Chairman,and with the Senior Independent Director in respect of the Chairmans evaluation,and
332、all findings were considered by the Board after the year-end.The results of the evaluation confirmed that the Chairman continues to lead the Board in an effective manner.It also confirmed that all Directors continue to demonstrate commitment to their roles,provide constructive challenge to the Inves
333、tment Manager,and provide valuable contributions to the deliberations of the Board.No material weaknesses or concerns were highlighted by Lintstock.Some focal points were highlighted to the Board for 2023.These included ensuring the new operating model is effective and continuing to develop the Companys partnership with WTW with a particular focus on the Companys marketing and distribution activit
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