Full Report - Alliance Trust

13
During the financial year to 31 January 2004, we invested a net
£8.2m into that portion of our portfolio managed on a global
sector basis. We focused primarily on resources and basic
industries, where we invested £7.9m, encouraged by significant
infrastructure developments in Asia and the consequent demand
for metals and resources. We also added a net £2.9m to
financials, focusing predominantly on the UK. We made net
sales in health care and pharmaceuticals, reducing our exposure
to several US holdings in anticipation of US Medicare reform. In
the information technology sector we increased our exposure to
software and service companies in the US and UK, but this was
offset by sales of some of our hardware related investments.
Investments Managed Regionally
Although more than half our portfolio is managed on a ‘global
sector’ basis, this approach may not be suitable for many sectors
which have a domestic rather than an international bias. A good
example is the retail sector where trading and profits are
closely linked to conditions in the local economy, and where
formats rarely travel well across international boundaries. We
continue to manage these sectors on a geographical basis,
paying particular attention to the expected economic, industrial
and stock market influences in each individual country.
Over the last year we increased our exposure to UK industries
by a net £18.4m, focusing our activity in the media sector
where recent legislation is expected to encourage further
corporate activity. We also increased our exposure to beverage
companies and utilities, both of which offer attractive
opportunities. In Asia, we have been particularly encouraged by
China’s recent and expected economic growth and gained
exposure to this not just through Chinese companies but also
through companies located elsewhere in Asia. The graph on this
page illustrates the relatively strong performance achieved by
stock markets in Thailand, China, Hong Kong and Taiwan. We
invested a net £26.8m into the ‘rest of the world’ during our
financial year, focusing purchases on opportunities in real
estate stocks, construction related activities and support services.
We also reduced our exposure to US industries by £4.6m.
Stock Selection
The table below shows our largest holdings and the detailed
review of our portfolio follows on pages 14 to 25.
The Twenty
Largest Investments £m
Shell Transport & Trading 44.6
Royal Bank of Scotland 43.2
BP 42.8
GlaxoSmithKline 42.6
Vodafone 34.1
HBOS 26.2
Barclays 19.9
Diageo 17.5
Aviva 15.8
HSBC 15.5
Rio Tinto 15.1
Abbott Laboratories 14.8
Lloyds TSB 14.3
Persimmon 14.3
BHP Billiton 14.0
Slough Estates 13.8
Wal-Mart 13.0
EMAP 12.8
Standard Chartered 12.6
Unilever 12.5
This list excludes the Company’s holding in its subsidiary, Alliance Trust (Finance)
Limited (“ATF”), which amounted to £18.1m gross, or £6.1m net of the loan which
ATF has advanced to the Company (see note 8 on page 48 and note 17 on page 50).
Asian Markets - Sterling Adjusted
31 January 2003 to 31 January 2004
220
200
180
160
140
Thailand
China
120
100
80
Hong Kong
Taiwan
Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan
Source: Thomson Financial Datastream