Alliance Trust Investment Funds ICVC Report & Accounts

Transcription

1 Alliance Trust Investment Funds ICVC Report & Accounts For the period 1 January 2013 to 31 December

2 Contents Alliance Trust Investment Funds ICVC Management and Administration 1 Statement of the Authorised Corporate Director s ( ACD ) Responsibilities 2 Report of the ACD to the Shareholders 3 Statement of the Depositary s Responsibilities and Report of the Depositary 3 Independent Auditor s Report to the Shareholders 4 Aggregated Financial Statements for Alliance Trust Investment Funds ICVC 5 Alliance Trust North American Equity Fund 12 Alliance Trust European Equity Fund 25 Alliance Trust Monthly Income Bond Fund 37 Alliance Trust Global Thematic Opportunities Fund 66 Alliance Trust Dynamic Bond Fund 83

3 Report & Accounts December 2013 Management and Administration 1 Management and Administration The Authorised Corporate Director ( ACD ) of Alliance Trust Investment Funds ICVC ( the Company ) is: Alliance Trust Investments Limited The registered office of the ACD and the company is 8 West Marketgait, Dundee, DD1 1QN Alliance Trust Investments Limited is authorised and regulated by the Financial Conduct Authority ( FCA )* and is a member of the Investment Management Association ( IMA ). The ultimate holding company of Alliance Trust Investments Limited is Alliance Trust PLC which is incorporated in Scotland. * With effect from 1 April 2013, the FCA became the successor regulator to the Financial Services Authority (the FSA ) and Alliance Trust Investments Limited became regulated by the FCA in both conduct and prudential matters. Further details on the FCA can be found on their website at Alliance Trust Investments was regulated by the FSA during the period. Directors of the ACD Katherine Garrett-Cox Leigh Grubb (resigned 31 January 2013) Alan Trotter Edward Troughton (resigned 7 November 2013) Lynne Dalgarno (appointed 30 January 2014) Patrick Mill (appointed 30 January 2014) Ramsay Urquhart (appointed 30 January 2014) Depositary National Westminster Bank plc Trustee and Depositary Services Younger Building First Floor, 3 Redheughs Avenue Edinburgh EH12 9RH Auditor Deloitte LLP Lomond House 9 George Square Glasgow G2 1QQ United Kingdom Administrator The Bank of New York Mellon (International) Limited 1 Piccadilly Gardens, Manchester, M1 1RN Registrar The Bank of New York Mellon (International) Limited 12 Blenheim Place, Edinburgh, EH7 5ZR Company Information The Company is an investment company with variable capital under regulation 12 of the Open-Ended Investment Company Regulations 2001, incorporated in Scotland, under registered number IC000716, and authorised by the FSA on 28 November At the period end the Company offered three sub-funds, the Alliance Trust Global Thematic Opportunities Fund, the Alliance Trust Monthly Income Bond Fund and the Alliance Trust Dynamic Bond Fund. The termination of the Alliance Trust Asia- Pacific Equity Fund, the Alliance Trust Japan Equity Fund and the Alliance Trust UK Equity Fund was completed during the period. The Alliance Trust European Equity Fund and the Alliance Trust North American Equity Fund commenced termination during Q and it is anticipated that the termination of these sub-funds will be completed during Q The Company is a UCITS scheme which complies with the FCA s Collective Investment Schemes Sourcebook and is structured as an umbrella company so that different sub-funds may be established from time to time by the ACD with the approval of the FCA and the agreement of the Depositary. Changes to the Prospectus during the period During the period to 31 December 2013, changes were made to the Company and therefore the following changes were reflected in the Prospectus and/or Instrument of Incorporation of the Company. Classification of Changes As agreed with the Depositary and, where relevant approved by the FCA, the changes made were not deemed to be significant in the context of the FCA Rules and, as such, are being notified, post event, in this Report & Accounts. Details of the Changes From 1 April 2013 the Company and the ACD are authorised and regulated by the FCA. As the end of the accounting period was after this date all references to the predecessor of the FCA, the FSA have been replaced; Changes have been made to the Prospectus of the Company to reflect the coming into effect of guidelines on ETFs and other UCITS issues published by the European Securities and Markets Authority (ESMA) on 17 December 2012 (ref: ESMA/2012/832) which came into effect on 18 February These guidelines introduced increased disclosure requirements for investors in UCITS schemes in relation to exposure obtained through financial derivative instruments and efficient portfolio management techniques and in the case of funds which are deemed for the purposes of the ESMA guidelines to be Index Tracking UCITS, further disclosure regarding the index being tracked by the fund and the fund s strategy along with measurement of tracking the particular index. Following FCA approval, with effect from 20 December 2013, the Company took on Protected Cell status and the Company s Prospectus and Instrument of Incorporation were amended accordingly. From this date the new segregated liability regime took effect and the sub-funds are regarded as a segregated

4 Alliance Trust Investment Funds ICVC 2 portfolio of assets, with the assets of a sub-fund belonging exclusively to that sub-fund. The assets of a sub-fund shall not be used or made available to discharge (directly or indirectly) the liabilities of, or claims against, any other person or body, including the Company and any other sub-fund, and shall not be available for any such purpose. The conversion to Protected Cell status also means that sub-funds within the Company may invest in other sub-funds within the Company, subject to certain qualifications. Changes to the investment objective of the Alliance Trust Dynamic Bond Fund Recent changes to the FCA s Handbook require funds that indicate in their name, investment objectives or fund literature, through use of descriptions such as absolute return, total return or similar, an intention to deliver positive returns in all market conditions (and where there is no actual guarantee of such returns), to make additional statements in the fund s investment objectives specifying: (i) that capital is in fact at risk; (ii) the investment period over which the authorised fund aims to achieve a positive return; and (iii) there is no guarantee that this will be achieved over that specific, or any, time period; Accordingly, in accordance with of rule 4.2.5(3)(ca) of the FCA s Collective Investment Schemes Sourcebook ( COLL ), amendments have been made to the investment objective of the Alliance Trust Dynamic Bond Fund to reflect these changes. The original investment objective was as follows: Original Objective The Fund aims to provide a positive absolute return over 12 month rolling periods whilst seeking to provide an annualised total return (a combination of growth and income) of 6% over three year rolling periods. For the avoidance of doubt, the Fund does not offer any form of guarantee with respect to investment performance and no form of capital protection will apply. The amended investment objective is as follows: Amended Objective The Fund aims to provide a positive absolute return over 12 month rolling periods whilst seeking to provide an annualised total return (a combination of growth and income) of 6% over three year rolling periods. For the avoidance of doubt, the Fund does not offer any form of guarantee with respect to investment performance over any time period. No form of capital protection will apply and capital is therefore at risk. There has been no change to the investment strategy of the sub-fund. The change is considered to be a clarification of the existing strategy. Class P shares Performance Fee At the request of the Depositary, the description of the performance fee calculation in Appendix B of the Prospectus was amended to clarify that, in calculating the performance fee, the distributable income which is to be added back to the NAV includes any tax which may have been withheld on that distributable income. This is a change in wording only and not a change in the method of calculation of the performance fee. Updates to performance, dilution adjustment and SDRT details Performance figures, dilution adjustment and SDRT details have been updated for each of the sub-funds. A copy of the Prospectus is available on request from the ACD. Statement of the Authorised Corporate Director s Responsibilities The Authorised Corporate Director ( ACD ) of Alliance Trust Investment Funds ICVC ( Company ) is responsible for preparing the Annual Report and the financial statements in accordance with the Open-Ended Investment Companies Regulations 2001 ( the OEIC Regulations ), the Financial Conduct Authority s Collective Investment Schemes Sourcebook ( COLL ) and the Company s Instrument of Incorporation. The OEIC Regulations and COLL require the ACD to prepare financial statements for each annual accounting period which: are in accordance with United Kingdom Generally Accepted Accounting Practice ( United Kingdom Accounting Standards and applicable law ) and the Statement of Recommended Practice: Financial Statements of Authorised Funds issued by the Investment Management Association ( IMA SORP ) in October 2010; and give a true and fair view of the financial position of the Company and each of its sub-funds as at the end of that period and the net revenue and the net capital gains on the property of the Company and each of its sub-funds for that period. In preparing the financial statements, the ACD is required to: select suitable accounting policies and then apply them consistently; make judgments and estimates that are reasonable and prudent; state whether applicable UK Accounting Standards, applicable law and the IMA SORP have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in operation.

5 Report & Accounts December The ACD is responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable it to ensure that the financial statements comply with the applicable IMA SORP and United Kingdom Accounting Standards and applicable law. The ACD is also responsible for the system of internal controls, for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and other irregularities. In accordance with COLL 4.5.8BR, the Annual Report and the audited financial statements were approved by the board of directors of the ACD of the Company and authorised for issue on 29 April Report of the ACD to the Shareholders of the Company The ACD, as sole director, presents its report and the audited financial statements of the Company for the period from 1 January 2013 to 31 December The Company is a UCITS scheme which complies with the FCA s Collective Investment Schemes sourcebook. The shareholders are not liable for the debts of the Company. The investment objectives and policies of each sub-fund of the Company are covered in the section for each sub-fund. The names and addresses of the ACD, the Depositary and the Auditor are detailed on page 1. The Protected Cell Regime ( PCR ) for OEICs in the UK is now in place following the approval of the Open-Ended Investment Companies (Amendment) Regulations 2011 by Parliament on 21 December Under the PCR, the assets of a sub-fund of an umbrella OEIC belong exclusively to that sub-fund and are not available to discharge the liabilities of any other sub-fund or any claim against the umbrella OEIC. The company completed its conversion in December In the future there may be other sub-funds of the Company. The ACD is of the opinion that it is appropriate to continue to adopt the going concern basis in the preparation of the financial statements as the assets of the sub-funds consist predominantly of securities that are readily realisable and, accordingly, the sub-funds have adequate financial resources to continue in operational existence for the foreseeable future. Statement of the Depositary s responsibilities and report of the Depositary to the shareholders of Alliance Trust Investment Funds ICVC ( the Company ) for the period ended 31 December The Depositary is responsible for the safekeeping of all of the property of the Company (other than tangible moveable property) which is entrusted to it and for the collection of revenue that arises from that property. It is the duty of the Depositary to take reasonable care to ensure that the Company is managed in accordance with the Financial Conduct Authority s Collective Investment Schemes Sourcebook ( COLL ), as amended, the Open-Ended Investment Companies Regulations 2001 (SI 2001/1228), as amended ( the OEIC Regulations ), the Company s Instrument of Incorporation and Prospectus, in relation to the pricing of, and dealings in, shares in the Company; the application of the revenue of the Company; and the investment and borrowing powers applicable to the Company. Report of the depositary to the shareholders of the company Having carried out such procedures as we considered necessary to discharge our responsibilities as depositary of the company, it is our opinion, based on the information available to us and the explanations provided, that in all material respects the Company, acting through the Authorised Corporate Director: i) has carried out the issue, sale, redemption, cancellation and calculation of the price of the Company s shares and the application of the Company s revenue, in accordance with COLL and, where applicable, the OEIC Regulations, the Instrument of Incorporation and the Prospectus of the Company; and ii) has observed the investment and borrowing powers and restrictions applicable to the Company. For and on behalf of National Westminster Bank plc 29 April Directors Statement In accordance with the Regulations, we hereby certify the report on behalf of the directors of Alliance Trust Investments Limited. Katherine Garrett-Cox Director 29 April 2014 Alan Trotter Director 29 April 2014

6 Alliance Trust Investment Funds ICVC 4 Independent auditor s report to the shareholders of Alliance Trust Investment Funds ICVC We have audited the financial statements of Alliance Trust Investment Funds ICVC ( the company ) for the year ended 31 December 2013 which comprise Aggregated Statement of Total Return, the Aggregated Statement of Change in Net Assets Attributable to Shareholders, the Aggregated Balance Sheet, the related notes 1 to 11 and for each sub-fund: the Statement of Total Return, the Statement of Change in Net Assets Attributable to Shareholders, the Balance Sheet, the related notes, and the distribution tables. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), the Statement of Recommended Practice: Financial Statements of Authorised Funds issued by the Investment Management Association in October 2010, the Collective Investment Schemes Sourcebook and the Instrument of Incorporation. This report is made solely to the company s shareholders, as a body, in accordance with Paragraph R of the Collective Investment Schemes Sourcebook of the Financial Conduct Authority. Our audit work has been undertaken so that we might state to the company s shareholders those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company s shareholders as a body, for our audit work, for this report, or for the opinions we have formed. Respective Responsibilities of the Depositary, the Authorised Corporate Director (ACD) and the Auditor As explained more fully in the Depositary s Responsibilities Statement and the ACD s Responsibilities Statement, the Depositary is responsible for safeguarding the property of the company and the ACD is responsible for the preparation of the financial statements. Our responsibility is to audit and express an opinion on the financial statements in accordance with the requirements of the Collective Investment Schemes Sourcebook, applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. Scope of the audit of the financial statements from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the ACD; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements: give a true and fair view of the financial position of the company and the sub funds as at 31 December 2013 and of the net revenue and the net capital gains on the property of the company and the sub funds for the year ended 31 December 2013; and have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, the Statement of Recommended Practice Financial Statements of Authorised Funds, the rules in the Collective Investment Schemes Sourcebook and the Instrument of Incorporation. Opinion on other matters prescribed by the Collective Investment Schemes Sourcebook In our opinion: proper accounting records for the company and the sub funds have been kept and the financial statements are in agreement with those records; we have received all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and the information disclosed in the Annual Report for the year ended 31 December 2013 for the purpose of complying with Paragraph 4.5.9R of the Collective Investment Schemes Sourcebook is consistent with the financial statements. Deloitte LLP Chartered Accountants and Statutory Auditor Edinburgh, United Kingdom 29 April 2014 An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free

7 Report & Accounts December Aggregated statement of total return for the period 1 January 2013 to 31 December 2013 Note Income Net capital gains 2 46,246,337 61,523,174 Revenue 3 24,920,534 22,873,407 Expenses 4 (2,020,578) (3,102,680) Finance costs: Interest 6 (30,362) (77,252) Net revenue before taxation 22,869,594 19,693,475 Taxation 5 (755,359) (656,367) Net revenue after taxation 22,114,235 19,037,108 Total return before distributions 68,360,572 80,560,282 Finance costs: Distributions 6 (24,820,730) (21,393,851) Change in net assets attributable to shareholders from investment activities 43,539,842 59,166,431 Aggregated statement of change in net assets attributable to shareholders for the period 1 January 2013 to 31 December 2013 Opening net assets attributable to shareholders 649,766, ,652,939 Movement due to issue and cancellation of shares: Amounts received on creation of shares 61,216, ,672,716 Amounts payable on the cancellation of shares (158,203,851) (144,574,216) Amounts due to Alliance Trust PLC* (18,836) - (97,006,413) 38,098,500 Dilution levy 4,692 36,132 Unclaimed distributions - (2) Stamp duty reserve tax (89) (1,321) Change in net assets attributable to shareholders from investment activities 43,539,842 59,166,431 Retained distribution on accumulation shares 4,872,224 5,813,980 Closing net assets attributable to shareholders 601,176, ,766,659 *On commencement of termination of the European Equity Fund and the North American Equity Fund amounts were retained to cover contingent liabilities arising in the period between commencement and the subsequent completion of termination of the funds. Any residual balance remaining from these retained amounts is due to Alliance Trust PLC as it was the last remaining shareholder in these funds at the commencement of termination. Aggregated balance sheet as at 31 December 2013 Note ( ) ( ) ( ) ( ) Assets Investment assets 593,880, ,464,408 Debtors 7 8,507,571 10,012,661 Cash and bank balances 8 10,524,357 27,195,778 Total other assets 19,031,928 37,208,439 Total assets 612,912, ,672,847 Liabilities Investment liabilities (8,885,622) (4,744,438) Amount held at futures clearing houses and brokers - (220,104) Creditors 9 (914,484) (3,233,715) Distribution payable on income shares (1,934,907) (1,592,046) Bank Overdraft (282) (115,885) Total other liabilities (2,849,673) (5,161,750) Total liabilities (11,735,295) (9,906,188) Net assets attributable to shareholders 601,176, ,766,659 Notes to the Financial Statements are on page 6 to 11.

8 Alliance Trust Investment Funds ICVC 6 Notes to the aggregated financial statements for the period from 1 January 2013 to 31 December Accounting policies a) Basis of accounting The Financial Statements have been prepared under the historical cost basis, as modified by the revaluation of investments, and in accordance with the Statement of Recommended Practice of Financial Statements of Authorised Funds ( IMA SORP ) issued by the Investment Management Assocation (IMA) in October As described in the Statement of Authorised Corporate Director s (ACD) Responsibilities on page 2, the ACD continues to adopt the going concern basis in preparation of the Financial statements. The ACD has considered the impact of the closure of the Alliance Trust European Equity and Alliance Trust North American Equity Funds and has determined that these closures do not have an impact on the going concern assessment of the company s financial statements. b) Aggregated accounts The aggregated accounts represent the sum of the individual Funds within the umbrella company. Further analysis of the distributions per share and the net asset positions can be found within the financial statements of the individual Funds. c) Valuation of investments The valuation of the Funds listed investments is based on the bid-market prices, excluding any accrued interest in the case of debt securities, at the close of business on the last day of the accounting period on 31 December 2013, in accordance with the provisions of the Prospectus. Unquoted securities are valued by the Authorised Corporate Director ( ACD ) on a net realisable value basis taking into account, where appropriate, latest dealing prices, valuations from reliable sources, financial performance and other relevant factors. For Collective Investment Schemes managed by other management groups, investments are valued at the bid price for dual priced Funds and at the single price for single priced Funds. Valuations should take into account any agreed rate of redemption charge. d) Revenue Dividends on quoted ordinary shares and preference shares are recognised when the securities are first quoted ex-dividend. Revenue from unquoted equity investments is recognised when the entitlement to the dividend is established. In compliance with FRS 16 Current Tax, dividend revenue is shown net of any tax credits. Any entitlement to a repayment of tax credits is shown as a deduction from the tax charge rather than as dividend revenue. Dividends and witholding tax recoverable from overseas authorities are treated as receivable on the date on which the security is quoted ex-dividend where the amounts can be reasonably determined. Foreign dividends are grossed up at the appropriate rate of tax. Revenue from fixed rate securities and bank deposits is recognised on an effective interest rate basis. Accrued interest purchased and sold on interest bearing securities is excluded from the capital cost of these securities and dealt with as part of the revenue of the Fund. Revenue within the financial statements for the Monthly Income Bond Fund has been calculated on an effective yield basis but distributions are based on a coupon basis. Interest included in the value of purchases and sales of debt securities is treated as revenue and forms part of the distribution. Revenue from stock lending activities is accounted for net of management fees and is recognised on an accruals basis. Underwriting commission is generally treated as income. However, where a Fund is required to take up all or a proportion of the shares underwritten, the commission received is treated as a reduction in the cost of the shares received. Furthermore, where a Fund is required to take a proportion of the shares underwritten, the same proportion of the commission received is treated as a reduction in the cost of shares received and the balance is taken to revenue. Distributions from collective investment schemes are recognised as revenue on the date the securities are quoted ex-dividend. Equalisation on distribution from collective investment scheme is deducted from cost of investment and does not form part of the sub-funds distribution. e) Rebates of ACD fees Rebates of ACD fees are recognised on an accrual basis. These rebates are treated as revenue or capital based on the underlying fund s treatment of the ACD fees. f) Stock dividends The ordinary element of a stock dividend is recognised as revenue to the extent that its market value is equivalent to the market value of the underlying shares on the date the shares are quoted ex-dividend. Where an enhancement is offered, the amount by which the market value of the shares (on the date they are quoted ex-dividend) exceeds the cash value of the dividend will be taken to the capital of a Fund. The ordinary element of the stock dividend is treated as revenue and forms part of the distribution. g) Special dividends and share buy backs Special dividends and share buy backs are treated as repayments of capital except where there is sufficient evidence to indicate that they should be treated, in whole or in

9 Report & Accounts December part, as revenue. Amounts recognised as revenue will form part of the distribution. The tax treatment will follow the accounting treatment of the receipt. h) Expenses Expenses are recognised on an accruals basis and are charged against revenue except for Stamp Duty Reserve Tax ( SDRT ) and costs associated with the purchase and sale of investments, which are allocated to the capital of the Fund. For the purposes of determining the distribution, all or part of the ACD s periodic charge may be borne by the capital account of the Fund. Currently only the Monthly Income Bond Fund charges the ACD s periodic charge against capital. In addition to the Annual Management Charge, for certain share classes, the ACD is entitled to a performance related fee of 20% of outperformance of the relevant index by each share class of each sub-fund and is calculated to the end of the accounting period in December each year. The relevant indices can be found in the performance section of the Investment Review for each sub-fund. The full amount of any performance fee is calculated on an accruals basis and is chargeable against capital in determining distribution. Further details of the calculation can be found in the Prospectus. i) Allocation of revenue and expenses to multiple share classes The allocation of revenue and expenses to each share class is based on the proportion of the Fund s assets attributable to each share class on the day the revenue is earned or the expense is incurred. The ACD s periodic charge and registration fees are allocated on a share class specific basis. j) Taxation Corporation tax is charged at 20% of the income liable to corporation tax, less expenses. Deferred tax is provided for at the rate at which taxation is likely to become payable in respect of all timing differences between the accounting and taxation treatment of items. k) Distributions The net revenue available for distribution at the end of each distribution period will be paid as a dividend or interest distribution. Should the expenses of a Fund (including taxation) exceed the revenue of a Fund, there will be no distribution and the shortfall will be set against the capital of a Fund. Any revenue attributable to accumulation shareholders is retained within a Fund at the end of the distribution period and represents a reinvestment of income on behalf of the accumulation shareholders. For the Monthly Income Bond Fund all the interim distributions are based on a fixed rate for each share class and any income available for distribution at the end of the accounting period will be distributed or accumulated. The financial statements have been prepared on an effective yield basis but the Fund distributes on a coupon basis. Where the coupon basis is higher, the additional amount, above that recorded in revenue, is transferred from capital in order to make the distribution. A reconciliation of the net distribution to the net revenue of the fund as reported in the Statement of Total Return is shown in note 6 on page 48. l) Exchange rates Transactions in foreign currencies are translated into Sterling at the rate of exchange ruling on the date of the transaction. Investments and other assets and liabilities denominated in foreign currencies are translated into Sterling at the exchange rates applicable at the end of the accounting period. m) Financial instruments Where appropriate, certain permitted financial instruments such as derivative contracts or forward exchange contracts are used for the purpose of efficient portfolio management. Where such financial instruments are used to protect or enhance revenue, the revenue and expenses derived therefrom are included in Revenue or Expenses in the Statement of Total Return. Where such financial instruments are used to protect or enhance capital, the returns derived there from are included in Net capital gains/(losses) on investments in the Statement of Total Return. Any positions in respect of such instruments open at the year end are reflected in the portfolio statement at their market value. Where positions generate total returns, such returns are apportioned between capital and revenue to properly reflect the nature of the transaction. The amounts held at futures clearing houses in respect of these financial instruments are included in the cash and bank balances and detailed in the Notes to the Financial Statements. Transaction costs associated with derivatives are charged to revenue when incurred. All forward contracts outstanding at financial reporting dates are marked to market. Some of the subfunds may enter into permitted transactions such a derivative contracts or forward currency transactions as outlined in the relevant Investment Objective and Policy of the Fund. Derivative financial instruments are initially recorded at transaction value on the date on which the derivative contract is entered into. All contracts outstanding at the financial reporting date are carried at a value provided by independent pricing providers.

10 Alliance Trust Investment Funds ICVC 8 Notes to the aggregated financial statements for the period from 1 January 2013 to 31 December 2013 (continued) 2. Net capital gains/(losses) Gains on non-derivative securities 46,344,847 62,339,347 (Losses) on derivative securities (1,433,216) (1,053,997) Gains on forward currency contracts 1,465, ,552 (Losses) on currencies (118,167) (239,361) Transaction charges (13,054) (77,367) Net capital gains 46,246,337 61,523, Revenue Bank interest 12,714 1,654 Interest from overseas debt securities 8,955,598 5,332,071 Interest from debt securities 9,336,503 9,231,679 Interest from interest rate swaps 8,283 3,192 Non-taxable overseas dividends 5,885,735 5,736,927 Taxable overseas dividends 247, ,517 UK dividends 410,671 2,121,475 US REIT dividend 63,112 88,384 Total revenue 24,920,534 22,873, Expenses Payable to the Manager, associates of the Manager, and agents of either of them: ACD s periodic charge 926,833 1,242,171 Registration fees 130, ,428 Performance fee 106,177 82,117 1,163,607 2,201,716 Payable to the Depositary, associates of the Depositary, and agents of either of them: Depositary fees 237, ,892 Safe custody fees 31,714 48, , ,130 Other expenses Administration fee 504, ,846 Auditors fees 37,070 57,600 Dividend ADR charges 231 4,702 FCA fee (2,207) 223 Legal fee 8,210 7,191 Management Accounts fees 15,869 25,020 Printing fees (3,182) 1,228 Reconciliation fees 2,898 5,371 Retained amount for closure 10,000 - Sundry expense 14,249 - Retained amount for terminating funds - 20,000 Professional Service fees - 5,286 RIY Calculation fees - 4,408 Indian SEB fee - 3,276 Distribution fee provision - (317) 587, ,834 Total expenses 2,020,578 3,102,680

11 Report & Accounts December Notes to the aggregated financial statements for the period from 1 January 2013 to 31 December 2013 (continued) 5. Taxation a) Analysis of charge in period Corporation tax Direct Charge - 29,979 Overseas tax 758, ,408 Prior year adjustment (853) - Tax Credit (2,546) (172) Total current tax charge for the period (see note 5(b)) 755, ,367 b) Factors affecting current tax charge for the period The taxation assessed for the period is lower than the standard rate of corporation tax in the UK for an OEIC (20%). The differences are explained below: Net revenue before taxation 22,869,594 19,693,475 Return on ordinary activities multiplied by the standard rate of Corporation Tax of 20% 4,573,919 3,938,695 Capitalised fees 136, ,503 Corporation tax effect expenses disallowed Excess expense for which no relief taken 75, ,956 Expensed overseas tax (2,624) (5,486) Expenses not deductible for tax purposes 3,190 2,286 Franked investment revenue at 20% (82,134) (424,296) Non-taxable overseas dividends (1,058,147) (1,144,286) Non-taxable stock dividend (15,835) (3,094) Overseas tax 758, ,418 Precompte (2,396) (162) Prior year adjustment (682) - Tax deductible interest distributions (3,630,822) (2,830,319) Current tax charge for the period (see note 5(a)) 755, ,367 As OEICs are exempt from tax on capital gains, capital returns are not included in the above reconciliation.

12 Alliance Trust Investment Funds ICVC 10 Notes to the aggregated financial statements for the period from 1 January 2013 to 31 December 2013 (continued) 6. Finance costs Distributions Interims 19,609,214 17,404,696 Final 3,932,810 3,449,675 23,542,024 20,854,371 Add: revenue deducted on cancellation of shares 1,428, ,349 Less: revenue received on creation of shares (150,079) (312,869) Net distribution 24,820,730 21,393,851 Interest 30,362 77,252 Total finance costs 24,851,092 21,471,103 Reconciliation of distributions: Net revenue after taxation 22,114,235 19,037,108 Add: capitalised expenses 684,795 1,458,484 Adjustment for effective yield 2,042, ,089 Revenue (surplus) at the period end - (83,830) Surplus transferred to capital* (20,685) - Net distribution 24,820,730 21,393,851 * The surplus transferred to capital is the amounts left on the balance sheet at , which relate to the remaing cash balance net of expenses. 7. Debtors Accrued revenue 8,005,579 7,545,277 Amounts receivable on creation of shares 428,008 1,244,217 Overseas tax recoverable 73, ,736 Amounts due from the ACD - 68,305 Sales awaiting settlement - 1,034,126 Total debtors 8,507,571 10,012, Cash and bank balances Amount held at futures clearing houses and brokers 1,731, ,559 Cash and bank balances 8,792,842 26,386,219 Total cash and bank balances 10,524,357 27,195, Creditors Accrued expenses 513,699 1,345,345 Amount payable on termination 18,836 - Amounts payable on cancellation of shares 75, ,465 Corporation tax payable Income tax payable 301, ,921 Purchases awaiting settlement 4,930 1,479,832 Total creditors 914,484 3,233,715

13 Report & Accounts December Notes to the aggregated financial statements for the period from 1 January 2013 to 31 December 2013 (continued) 10. Contingent liabilities There were no contingent liabilities or outstanding commitments at the balance sheet date. 11. Related party transactions Alliance Trust PLC is regarded as a controlling party by virtue of being the ultimate parent company of the ACD, Alliance Trust Investments Limited, giving the ability to act in concert in respect of the operations of the Company. The ACD s Periodic charge, performance fees and registration fees paid to Alliance Trust Investments Limited and its associates are shown in note 4 of each sub-fund and details of shares issued and cancelled by Alliance Trust Investments Limited are shown in the Statement of Change in Net Assets Attributable to Shareholders. The balance due to Alliance Trust Investments Limited and its associates at the period end was 186,113 (prior period: 963,985). The balance due to the Company at the period end from the ACD is nil (prior period: 68,306). The total expense due to Alliance Trust Investments Limited and its associates for the period was 1,057,430 (prior period: 1,725,445). Any material holdings or dealings in sub-fund shares are disclosed in the respective sub-fund financial statements. For the terminating sub-funds, amounts due to Alliance Trust PLC are disclosed in note 9 of the sub-fund accounts

14 Alliance Trust Investment Funds ICVC 12 Alliance Trust North American Equity Fund Alliance Trust North American Equity Fund Report for the period from 1 January 2013 to 31 December 2013 Investment objective and policy The Fund aims to produce long-term total return from investment in a portfolio of companies in any economic sector in the United States and Canada. Holdings are listed on a regulated stock exchange or market in either the United States or Canada. The Fund aims to meet its objective by investing in a concentrated portfolio of North American companies. The portfolio is diversified and unconstrained by reference to North American indices, or by market cap. The manager employs a fundamental, long-term approach to stock selection with a focus on Value/ Growth at a Reasonable Price. Currently, it is intended that the Fund will enter into derivative and forward transactions only for the purposes of efficient portfolio management (including hedging) ( EPM ). The specific aims of EPM are the reduction of risk, the reduction of cost or the generation of additional capital or income with a risk level which is consistent with the risk profile of the Fund and the risk diversification rules laid down in COLL. Investment review As the Fund was closed in the period the following commentary covers the period 1 January 2013 to 30 June There was insufficient investment activity from July onwards to require an update to this commentary. Market review The fund s benchmark index, the MSCI North American index, rose over 15% to the middle of May before the gains were pared to nearly 11% at the end of June Investors enthusiasm for equities seemed to peter out amid concerns that quantitative easing could be withdrawn by the US Federal Reserve earlier than anticipated. The US dollar strengthened against Sterling further boosting investment returns. Portfolio Outlook Following a full review of our fund range after a decision to restructure the Alliance Trust PLC equity portfolio, the Alliance Trust North American Equity Fund commenced termination on 28 June Material Portfolio Changes The fund commenced termination on the 28th of June 2013 and as such sold all holdings in underlying securities. Risk and Reward Profile The Risk and Reward Indicator table demonstrates where the Fund ranks in terms of its potential risk and reward. The higher the rank the greater the potential reward but the greater the risk of losing money. It is based on past data, may change over time and may not be a reliable indication of the future risk profile of the Fund. The shaded area in the table below shows the Fund s ranking on the Risk and Reward Indicator. Typically lower rewards, lower risk Typically higher rewards, higher risk This Fund is ranked at 6 because funds of this type have experienced high rises and falls in value in the past. Please note that even the lowest risk class can lose you money and that extreme market circumstances can mean you suffer severe losses in all cases. The indicator does not take into account the following risks of investing in this fund: By focusing its investments in North America, the fund will have greater exposure to the market, political and economic risks of that region than if it was more diversified across a number of countries. Investing globally can bring additional returns and diversify risk. However, currency exchange rate fluctuations may have a positive or negative impact on the value of your investment. This fund holds a limited number of investments. If one of these investments falls in value this can have a greater impact on the Fund s value than if it held a larger number of investments.

15 Report & Accounts December 2013 Alliance Trust North American Equity Fund 13 Performance record as at 31 December 2013 Launch date 6 February 2009 Share price history Calendar year Highest price Lowest price 2013 A Accumulation* 182.3p 148.5p A Income* 179.2p 145.9p B Accumulation* 115.2p 99.63p B Income* 115.2p 99.63p P Accumulation* 188.2p 152.8p P Income* 179.9p 146.0p 2012 A Accumulation 155.3p 134.7p A Income 152.9p 132.8p B Accumulation 159.4p 137.6p B Income 153.2p 132.8p 2011 A Accumulation 142.4p 116.6p A Income 140.7p 114.8p B Accumulation 144.9p 118.4p B Income 141.1p 114.8p 2010 A Accumulation 139.2p 115.0p A Income 137.7p 114.6p B Accumulation 141.1p 115.8p B Income 138.1p 115.0p 2009 A Accumulation** 124.3p 82.59p A Income*** 123.4p 98.78p B Accumulation** 125.1p 82.63p B Income*** 123.9p 99.09p * To 28 June 2013 ** From 9 February 2009 *** From 4 August 2009 The existing B Accumulation and B Income shares were re-named P Accumulation and P Income respectively on 31 January New B Accumulation and B Income shares were launched at 100p on 31 January General price information Fund period end price price A Accumulation p A Income p B Accumulation - - B Income - - P Accumulation p P Income p The existing B Accumulation and B Income shares were re-named P Accumulation and P Income respectively on 31 January New B Accumulation and B Income shares were launched at 100p on 31 January 2013.

16 Alliance Trust Investment Funds ICVC 14 Alliance Trust North American Equity Fund Performance record as at 31 December 2013 (continued) Income record The record of net distributions per share and per 1,000 invested is shown below. Calendar year per share per 1, * A Accumulation** p 2.21 A Income** p 2.64 B Accumulation** - - B Income** - - P Accumulation** p 8.06 P Income** p A Accumulation p 1.61 A Income p 2.42 B Accumulation p B Income p A Accumulation p 3.16 A Income p 2.99 B Accumulation p B Income p A Accumulation p 7.46 A Income p 8.57 B Accumulation p B Income p A Accumulation p 5.69 A Income - - B Accumulation p 8.45 B Income - - * To 28 June 2013 ** From 9 February 2009 *** From 4 August 2009 The existing B Accumulation and B Income shares were re-named P Accumulation and P Income respectively on 31 January New B Accumulation and B Income shares were launched at 100p on 31 January Net Asset Value Fund period end Shares in issue Net Asset Value Net Asset Value per share 31 December 2013* A Accumulation A Income B Accumulation B Income P Accumulation P Income December 2012 A Accumulation 3,433,802 5,099, p A Income 203, , p B Accumulation 30,512,439 46,612, p B Income 4,785,172 6,985, p 31 December 2011 A Accumulation 3,073,199 4,150, p A Income 145, , p B Accumulation 30,851,684 42,567, p B Income 4,096,246 5,456, p * The fund closed June 2013 The existing B Accumulation and B Income shares were re-named P Accumulation and P Income respectively on 31 January New B Accumulation and B Income shares were launched at 100p on 31 January 2013.

17 Report & Accounts December 2013 Alliance Trust North American Equity Fund 15 Performance record as at 31 December 2013 (continued) Ongoing Charges Figure* (previously Total Expense Ratio) Total Including performance fee 31 December 2013 A Accumulation 1.35% 1.35% A Income 1.34% 1.34% B Accumulation 0.55% 0.55% B Income 0.52% 0.52% P Accumulation 0.63% 0.63% P Income 0.52% 0.52% *The Ongoing Charges Figure (OCF) represents the annual operating expenses of the Fund expressed as a percentage of the average net assets for the period - it does not include initial charges or performance fees. The OCF includes the annual management charge and all charges which are deducted directly from the Fund. The OCF is expressed as an annual percentage rate. In addition to the above, the sub-fund is charged a performance fee. A performance fee of 20% is payable to the ACD on any outperformance of the subfund s benchmark. There was no performance fee charged for the period. The existing B Accumulation and B Income shares were re-named P Accumulation and P Income respectively on 31 January New B Accumulation and B Income shares were launched on 31 January As this fund closed in June 2013 it is no longer available for investment. Statement of total return for the period ended 31 December 2013 Note Income Net capital gains 2 8,231,594 5,074,206 Revenue 3 651,430 1,048,802 Expenses 4 (229,512) (464,229) Finance costs: Interest 6 (40) (99) Net revenue before taxation 421, ,474 Taxation 5 (81,169) (133,021) Net revenue after taxation 340, ,453 Total return before distributions 8,572,303 5,525,659 Finance costs: Distributions 6 (337,892) (518,140) Change in net assets attributable to shareholders from investment activities 8,234,411 5,007,519 Statement of change in net assets attributable to shareholders for the period ended 31 December 2013 Opening net assets attributable to shareholders 58,994,182 52,368,920 Movement due to issue and cancellation of shares: Amounts received on creation of shares 10,343,909 3,569,353 Amounts paid on cancellation of shares (77,574,637) (2,409,120) Amounts due to Alliance Trust PLC on completion of the termination of the fund* (1,698) - (67,232,426) 1,160,233 Dilution levy 3,833 2,631 Change in net assets attributable to shareholders from investment activities 8,234,411 5,007,519 Retained distribution on accumulation shares - 454,879 Closing net assets attributable to shareholders - 58,994,182 Notes to the Financial Statements are on pages 17 to 23. * See note 11. Related party transactions

18 Alliance Trust Investment Funds ICVC 16 Alliance Trust North American Equity Fund Balance Sheet as at 31 December 2013 Note Income Investment assets - 57,937,170 Debtors 7-71,692 Cash and bank balances 8 17,585 1,151,501 Total other assets 17,585 1,223,193 Total assets 17,585 59,160,363 Liabilities Creditors 9 (17,585) (128,432) Distribution payable on income shares - (37,749) Total other liabilities (17,585) (166,181) Total liabilities (17,585) (166,181) Net assets attributable to shareholders - 58,994,182 The notes on pages 17 to 23 form an integral part of these financial statements.

19 Report & Accounts December 2013 Alliance Trust North American Equity Fund 17 Notes to the financial statements for the period ended 31 December Accounting policies The accounting policies for the sub-fund are set out in note 1 of the aggregate accounts on pages 6 and Net capital gains Gains on non-derivative contracts 7,845,159 5,142,900 Currency gains/(losses) 387,418 (62,091) Transaction charges (983) (6,603) Net capital gains 8,231,594 5,074, Revenue Interest from overseas debt securities 33,132 39,159 Non-taxable overseas dividends 515, ,010 Taxable overseas dividends 39,443 53,249 US REIT dividends 63,112 88,384 Total revenue 651,430 1,048, Expenses Payable to the ACD, associates of the ACD, and agents of either of them: ACD s periodic charge 172, ,668 Performance Fee - 66,687 Registration fees 2,824 6, , ,823 Payable to the Depositary, associates of the Depositary, and agents of either of them: Depositary fees 16,882 28,797 Safe custody fees 625 1,732 17,507 30,529 Other expenses Administration fees 27,608 47,500 Audit fee 5,979 8,100 FCA fees* (1,875) 483 Management accounts fees 1,940 4,011 Printing fees (3,861) 1,545 Reconciliation fees Retained amount for closure 5,000 - RIY Calculation fees Sundry expenses 1,636-37,027 62,877 Total expenses 229, ,229 Irrecoverable VAT is included in the above expenses where relevant. * With effect from 1 April 2013, the Financial Services Authority (FSA) ceased to exist and was replaced by the Financial Conduct Authority (FCA). The current period figures are negative as they are reversals of the previous period s accrual. The actual FCA and printing fee charge for period was nil.

20 Alliance Trust Investment Funds ICVC 18 Alliance Trust North American Equity Fund Notes to the financial statements for the period ended 31 December 2013 (continued) 5. Taxation a) Analysis of charge in period Irrecoverable overseas tax suffered 81, ,021 Total current tax charge for the period (see note 5(b)) 81, ,021 b) Factors affecting current tax charge for the period The taxation assessed for the period is lower (2012:higher) than the standard rate of corporation tax in the UK for a OEIC (20%). The differences are explained below: Net revenue before taxation 421, ,474 Return on ordinary activities multiplied by the standard rate of Corporation Tax of 20% 84, ,895 Effects of: Excess expense for which no relief taken 19,665 59,359 Expensed overseas tax (1,892) (2,652) Expenses not deductible for tax purposes 1,000 - Non-taxable overseas dividends (103,149) (173,602) Overseas tax 81, ,021 Total current tax charge for period (see note 5(a)) 81, ,021 At 31 December 2013 the fund had surplus management expenses of 1,010,104 (prior period: 911,780). It is unlikely that the fund will generate sufficient taxable profits in the future to utilise these expenses and, therefore, a deferred tax asset of 202,021 (prior period: 182,356) has not been recognised. Each sub-fund of an authorised OEIC is exempt from tax on capital gains made within the sub-fund. 6. Finance costs The distributions take account of revenue received on the issue of shares and revenue paid on the cancellation of shares, and comprise: Interim - 227,008 Final - 291, ,180 Add: revenue deducted on cancellation of shares 340,121 3,060 Less: revenue received on creation of shares (2,229) (3,100) Net distribution 337, ,140 Interest Total finance costs 337, ,239 Reconciliation of distributions: Net revenue after taxation 340, ,453 Expenses charged to capital - 66,687 Surplus transferred to capital* (2,817) - Net distribution 337, ,140 The Distribution per share is set out in the table on page 24. Refer to note k) Distributions, on page 7. *The surplus transferred to capital is the amounts left on the balance sheet as , which relate to the remaining cash balance net of expenses. This balance is included in the creditors on the balance sheet as it is payable to Alliance Trust PLC. Please refer to note Debtors Accrued revenue - 71,562 Amounts receivable for creation of shares Total debtors - 71, Cash and bank balances Cash and bank balances 17,585 1,151,501 Total cash and bank balances 17,585 1,151,501