Welcome! I have great pleasure sending you our first new half-yearly magazine for shareholders. This magazine, along with our interim report, is the first communication to all shareholders following the merger and is part of our ongoing commitment to you. The aim is to keep you in touch with what’s going on at Alliance Trust and also to include items of general interest or information for investors.

In this issue, we include an update from Alan Harden, Chief Executive, who gives an overview to shareholders on developments since the merger of the two trusts.

You will also find news updates from different parts of our company as well as on the activities of our financial services subsidiaries.

In our feature article, we take a look at property investment with expert views on the sector and where we are in the market cycle, as well as a guide to the different routes open to private investors.

Each magazine will also feature commentary from one of our managers on a region, country or sector, and in this issue Senior Portfolio Manager Tathagata Guha Roy presents his view on India. You will also find news about our Research Centre, led by Shona Dobbie. She and her team have already published some interesting analysis and we will bring you regular updates on the work they are doing.

We hope that you enjoy reading our shareholder magazine and find it informative. As always, we welcome your feedback and suggestions for future issues.

Kelly O’Donnell
Head of Investor Relations

Download Alliance Trust Investor Magazine, Autumn 2006

PDF format, 413KB, 8Pages.

Merge and Grow
Alan Harden, Chief Executive

The merger of The Alliance Trust PLC with The Second Alliance PLC in June has already made 2006 a momentous year for us. We expect this to be the start of a period of growth that will mark this year as a watershed.

You, our shareholders, welcomed the merger as a logical step in a long and successful partnership. You also recognised that in a changing corporate landscape, our company needed to be more efficient and adaptable to take advantage of the opportunities open to an investment company such as ours. One of the traditional strengths of Alliance Trust has been its freedom from ties to any region or asset class, which allows it great flexibility when choosing where to invest.

Having been focused for a long time on quoted equities, we have moved into a period where other investment opportunities, such as private equity, property and our financial services subsidiary will improve our ability to generate wealth and preserve capital. These investments will not only enhance returns but also help manage risk in changing market cycles. Our property portfolio is gradually expanding and our existing financial services business, which includes pensions, investment dealing, banking and administration is rapidly growing.

Building on our proven investment expertise, we are preparing to launch an asset management company in
Hong Kong. This new subsidiary will allow us to generate income for the Company, to accept third-party opportunities as skilled investors that were previously unavailable to us, and to create new, more specialist investment funds that will give investors more ways to invest with us.

Throughout our group we are investing in the systems to give our investment managers the best information available when making choices in an evermore sophisticated market. Our company, its subsidiaries and our customers will all soon have access to a new, modern investment dealing platform that will allow far more investment choices and greater efficiency. We will also be developing a new banking platform within the business. Customers are already seeing the benefit with a greater choice of investments that includes more OEICs and property funds. They will benefit even more from this innovation before the end of the year when they will be able to deal online.

In our financial services subsidiary, Alliance Trust Pensions, we have fully integrated the acquisition we made last year. We remain confident that we can go on developing our pensions business to become a market leader offering the best SIPP in the UK.

At all levels of this new Alliance Trust, there is energy and purpose. We are working to improve the skills you already value us for – our stock-picking skills and our risk awareness. Meanwhile, we are moving forward into areas where we can excel and expand. Just like our merger, these are logical steps that mean Alliance Trust can go on developing to its full potential.

Investor Q & A

After the Merger, how many shares do I now hold?

Using the formula agreed with shareholders, the assets of both companies were calculated on 15 June 2006. The calculation for The Alliance Trust PLC gave a value per share of 3812.8889p and for The Second Alliance Trust PLC gave 3334.48766p per share. These two figures were then used to calculate the number of 2.5p shares that shareholders of each company would receive in Alliance Trust PLC. Shares previously held in The Alliance Trust PLC as 25p ordinary shares were split on a 10 for 1 basis with 10,000 ordinary 25p shares converted into 100,000 ordinary 2.5p shares. Shares previously held in The Second Alliance Trust PLC as 25p ordinary shares were converted so that 10,000 ordinary 25p shares became 87,453 ordinary 2.5p shares.

Individual shareholdings did not vary significantly in value, in either The Alliance Trust PLC or The Second Alliance Trust PLC, before or immediately after the share split and new share issue took place. Am I liable for tax from the cancellation of my Second Alliance shares and issue of my new Alliance Trust shares?

Clearance has been received under section 138 of the Taxation of Chargeable Gains Act 1992 in relation to the Scheme of Arrangement. The cancellation of The Second Alliance PLC shares and the issue of Alliance Trust PLC shares pursuant to the Scheme of Arrangement should not constitute a disposal of your investment by those shareholders for the purposes of UK taxation of chargeable gains. Instead, The Second Alliance Trust PLC shareholders should be treated as acquiring their Alliance Trust PLC shares at the same time and for the same consideration as their existing holding of The Second Alliance Trust PLC shares.

Previous shareholders of The Second Alliance PLC who are in any doubt about their tax position, or who are resident, or otherwise subject to taxation, in a jurisdiction outside the United Kingdom, should consult their own independent professional advisers without delay.

About Alliance Trust:

Alliance Trust is an international investment and financial services group, specialising in fund management, pensions and investment services. Alliance Trust PLC is currently the UK’s largest generalist investment trust company investing on a global basis across all major markets and sectors. We manage over £2.8 billion of assets (as at 31/01/07). Established in 1888, our historic headquarters is in Dundee with other offices in Edinburgh, London and Hong Kong.

Our objective at Alliance Trust PLC is to be a core investment for investors seeking a long term store of increasing value. We allocate our capital across a broad range of asset classes to enhance and preserve total returns and to provide shareholders with real growth over the medium to long term. We can use investment techniques such as gearing and hedging to enhance returns and reduce risks within our portfolio. We do not benchmark against any equity index as we retain the freedom to move not only between equity markets as opportunities arise but also to invest in other asset classes.

In 2006, we launched a new Asia-Pacific Asset Management subsidiary in Hong Kong. This offers investors the potential for participation in the exciting growth prospects of the Asia-Pacific region. Our experience and knowledge of the region developed within Alliance Trust PLC is enhanced by our local presence there.

Our other financial services subsidiary company, Alliance Trust Savings Limited, offers a range of competitive investment dealing products including share dealing Investment Plans, ISAs and SIPPs. Our customers can choose from over 3000 UK securities and our Full SIPP allows any investment permitted by the regulations including commercial property and unquoted equities. We have recently enhanced our service with the launch of an Online Dealing Service which provides flexibility, freedom and more choice for our customers.

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