ANNUAL REPORT

FOR THE YEAR ENDED

31 DECEMBER 2022

CONTENTS

Strategic Report

Company Overview 2

Financial Highlights 3

Chairman’s Statement 4

Fund Manager’s Review 8

Our Approach to Responsible Investment 16

Twenty Largest Listed Equity Holdings 26

Ten Year Record 28

Business Review 30

Purpose, Values and Investment Objective 30

Section 172 Statement 32

Key Stakeholder and Shareholder Engagement 33

Principal Policies 35

Key Performance Indicators 38

Principal and Emerging Risks 40

Long-Term Viability 43

Governance Report

Board of Directors 45

Directors’ Report 47

Corporate Governance Report 53

Report of the Management Engagement

Committee 56

Report of the Nomination Committee 58

Report of the Audit Committee 59

Directors’ Remuneration Report 65

Statement of Directors’ Responsibilities 69

Independent Auditor’s Report 70

Financial Report

Income Statement 78

Statement of Changes in Equity 79

Balance Sheet 80

Statement of Cash Flows 81

Notes to the Accounts 82

Notice of Annual General Meeting 107

Other Information

Management and Advisers 112

Additional Information for Shareholders 113

How to Invest 114

Alternative Performance Measures 115

Glossary of Terms 118

2023-24 Financial Calendar

Annual General Meeting 27 April 2023

Final dividend for 2022 payable 11 May 2023

Interim Results for 2023 announced end July 2023

First interim dividend for 2023 payable August 2023

Second interim dividend for 2023 payable November 2023

Third interim dividend for 2023 payable February 2024

Final Results for 2023 announced March 2024

Final dividend for 2023 payable May 2024

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the

action you should take, you are recommended to seek your own independent financial advice from your stockbroker,

bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and

Markets Act 2000 if you are in the United Kingdom or, if not, from another appropriately authorised financial adviser. If

you have sold or otherwise transferred all your ordinary shares in F&C Investment Trust PLC please forward this document,

together with the accompanying documents, immediately to the purchaser or transferee or to the stockbroker, bank or

agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. If you have sold or

otherwise transferred only part of your holding of shares, you should retain these documents.

TRUE TO OUR GOAL

FOR OVER 150 YEARS

Our focus has never wavered since the day we were

founded in 1868. Our approach aims to deliver long-

term growth in capital and income. To achieve this,

we invest on the world’s major and developing stock

markets in the shares of established companies,

strong newcomers and rising stars.

It’s a diverse portfolio strategy that also gives

investors exposure to a range of well managed

private equity funds and co-investments. Whether

you’re new to investing or looking to add a firm

foundation to your existing portfolio, our approach

could be right for you.

COMPANY OVERVIEW

F&C Investment Trust PLC (the ‘Company’ or ‘FCIT’ or ‘F&C’) was founded in 1868 as the first investment trust with the

purpose of providing the investor of more moderate means access to the same opportunities and advantages as the very

largest investors.

This purpose continues today, providing a foundation for the long-term investment needs of large and small investors

through a diversified, convenient and cost effective global investment choice.

Our objective is to achieve long-term growth in capital and income through a policy of investing primarily in an

internationally diversified portfolio of publicly listed equities, as well as unlisted securities and private equity, combined

with the use of gearing.

Our approach is designed to obtain the investment performance benefits from a range of individually concentrated global

and regional portfolios alongside the diversification benefits of lower risk and lower volatility achieved by managing

these portfolios in combination. Offering a globally diversified portfolio of growth assets, the Company aims to be a core

investment choice through all available channels.

The Company continues to evolve, allowing it to keep pace with new investment opportunities and maintain its relevance in

today’s world. A commitment has been made to transition the Company's portfolio to net zero carbon emissions by 2050,

at the latest. The Company is suitable for retail investors in the UK, professionally advised private clients and institutional

investors who seek growth in capital and income from investment in global markets and who understand and are willing to

accept the risks, as well as the rewards, of exposure to equities.

VISIT OUR WEBSITE AT FANDC.COM

The Company is registered in England and Wales with company registration number 12901

Legal Entity Identifier: 213800W6B18ZHTNG7371

FORWARD-LOOKING STATEMENTS

This document may contain forward-looking statements with respect to the financial condition, results of operations and business of the

Company. Such statements involve risk and uncertainty because they relate to future events and circumstances that could cause actual

results to differ materially from those expressed or implied by forward-looking statements. The forward-looking statements are up to

date as at the date of this report and are based on the Directors’ current view and on information available to them as at that date. There

is no obligation to update the statements and nothing should be construed as a profit forecast.

DIVIDEND

HERO

Strategic Report

Annual Report and Accounts 2022

FINANCIAL HIGHLIGHTS

-0.9% Share Price Total

Return*

-0.9%

DELIVERING LONG-TERM GROWTH IN CAPITAL AND INCOME

Potential investors are reminded that the value of investments and the income from dividends may go down as well as up

and investors may not receive back the full amount invested. Tax benefits may vary as a result of statutory changes and

their value will depend on individual circumstances.

* See Alternative Performance Measures on page 115.

† The final dividend for 2022 is subject to shareholder approval at the forthcoming Annual General Meeting.

Total dividends*† per share – pence

Share price discount/premium* to net asset

value* at 31 December – %

A dividend has been paid every year since inception and has increased every year for the past 52 years. Over the last ten years

it has increased by 58.8% (4.7% compound per annum), compared with inflation of 30.3% (2.7% compound per annum).

Source: Columbia Threadneedle Investments

Net asset value* per share with debt at market

value at 31 December – pence

Mid-market price per share at 31 December –

pence

100

200

300

400

500

600

700

800

900

1,000

2022202120202019201820172016201520142013

Source: Columbia Threadneedle Investments

Source: Columbia Threadneedle Investments Source: Columbia Threadneedle Investments

In the last ten years the Company has grown a £1,000 investment, with dividends reinvested, to £3,407.

Net Asset Value Total Return*

(with debt at market value) of

-5.3%, which was ahead of the

return from our benchmark, the

FTSE All-World Index, of -7.7%

-5.3%

Annual dividend*† per share

up by 5.5% to 13.5p, our 52nd

consecutive annual increase

52nd

Our Discount* to NAV, moved

from 7.3% to end the year at 3.0%

3.0%

100

200

300

400

500

600

700

800

900

1,000

2022202120202019201820172016201520142013

-12

-10

-8

-6

-4

-2

2022202120202019201820172016201520142013

CHAIRMAN’S STATEMENT

"REFLECTING FURTHER ON LONGER-TERM RETURNS AND

THE POWER OF COMPOUNDING, OVER THE TWENTY-YEAR

PERIOD TO 31 DECEMBER 2022 THE COMPANY’S SHARE

PRICE TOTAL RETURN WAS +743.5%, EQUIVALENT TO

+11.2% PER ANNUM.”

Dear Shareholder,

2022 was a challenging year for the world and for financial

markets, with global equities delivering their weakest

annual returns since the Global Financial Crisis of 2008.

At the same time, government bond markets suffered

their steepest losses in decades. Investors grappled with

geopolitical concerns, dominated by the war in Ukraine, and

the impact of sharp rises in inflation, leading to aggressive

rises in interest rates. Against this backdrop, a sharp decline

in sterling against major currencies helped to cushion

the decline in our Net Asset Value (‘NAV’). Our NAV total

return, taking debt at market value, of -5.3% outperformed

the return from our benchmark of -7.7% and the discount

on which our share price traded relative to NAV per share

narrowed, from a start of year level of 7.3%, to end the

year at 3.0%. The narrowing of our discount enhanced

shareholder returns, resulting in a share price total return of

-0.9%. While it is disappointing to report negative returns

for shareholders, this return was the strongest amongst our

peer group of global investment companies.

Our strong performance, in comparison to other UK listed

companies, led to our promotion, for the first time since

2009, to the FTSE 100 in September 2022. Our inclusion

in the index of the largest 100 UK companies increases

the Company’s profile to investors and may lead to

higher demand for our shares, which in turn may assist in

narrowing the discount at which they trade.

Our NAV per share, with debt at market value, fell from

998.7p per share to 932.1p per share and our share price fell

from 926.0p to 904.0p. Again, while disappointing to report

a decline, this was modest by comparison to deeper losses

in equity markets.

I am pleased to report that our portfolio was relatively

well positioned for the volatility which unfolded during

the year, with cash levels raised and gearing reduced

ahead of significant market declines. A reduction in our

long position on sterling, which fell by -10.7% against the

US dollar in response to rising US interest rates, declining

investor risk appetite and UK domestic political concerns,

as well as the sale of our small cap allocation also helped

returns. A significant positive contributor was the material

reduction in exposure to expensive growth stocks, which

provided some protection against their underperformance.

Our private equity holdings once again outperformed their

listed equivalents which declined in value and lagged the

return from the benchmark. The impact of gearing in a weak

market environment detracted from our returns but we

made significant mark-to-market gains on the fair value of

our outstanding debt as a result of rises in global interest

rates.

Within our listed portfolio, all regions lost value over the

year although the sharp decline in sterling against major

currencies reduced the scale of the losses. Value and

income-oriented strategies delivered strong excess returns

against both the market and growth-focused portfolios.

While we were tilted towards these outperforming areas

in our listed portfolio, the underperformance from stock

specific exposure offset the positive impact of this decision.

Indeed, while there were some notable highlights, it was

a year of disappointing returns from a number of our

underlying fund managers, leading to our listed exposure

underperforming the benchmark for the year.

5Annual Report and Accounts 2022

Strategic Report

In contrast to lacklustre returns from listed equities, our

private equity holdings had another strong year with our

recent commitments delivering gains in absolute terms.

While there is typically a lag in recognising changes in

valuations of private equity holdings and one must take a

long-term perspective in considering results, it is pleasing

that our portfolio of unlisted investments held up well in

this challenging market environment. The Company holds

very limited exposure to unlisted disruptive technology

companies, many of which have been the subject of

significant reductions in valuation. Nonetheless, the Board

remains mindful of the risks associated with unlisted

investments and continues to adopt a careful approach to

both valuation and any new commitment opportunities.

A CONTINUED FOCUS ON THE LONG-TERM

While it was disappointing to lose value for shareholders in

2022, we remain firmly focused on the delivery of growth

in both capital and income for shareholders over the long-

term. The past decade remains a period where investors

in global equities have enjoyed exceptional returns and

your Company has delivered a total shareholder return

of +240.7% over the ten-year period to the end of 2022,

equivalent to +13.0% per annum. 2022 was only the second

year in the past decade during which shareholder returns

have been negative, with 2018 seeing a similarly modest

decline (0.6%).

Reflecting further on longer-term returns and the power of

compounding, over the twenty-year period to 31 December

2022 the Company’s share price total return was +743.5%,

equivalent to +11.2% per annum. Our capital-only return

over the past twenty years was +454.6%. Dividends paid to

shareholders have risen by 4.7% per annum over the past

decade and by 7.0% per annum over the past twenty years.

Such results continue to demonstrate the importance of

compounding income and capital gains over long periods

in the process of value creation for shareholders.

FCIT NAV and share price performance vs Benchmark

(1)

over 10 years

Increase in FCIT annual dividend per share vs

Consumer Price Index over 10 years

Source: Columbia Threadneedle Investments & Refinitiv Eikon

100

150

200

250

300

350

400

2015 20202012 2013 2016 2017 2018 20192014

FCIT - NAV total return

FCIT - Share price total return

2021

FTSE All-World Index

2022

100

110

120

130

140

150

160

170

2015 20202012 2013 2016 2017 2018 20192014

Consumer Price index

FCIT annual dividend per share

2021 2022

Source: Columbia Threadneedle Investments & Refinitiv Eikon

(1) See glossary of terms on page 118 for explanation of "benchmark".

FIFTY SECOND CONSECUTIVE ANNUAL DIVIDEND

INCREASE

After a sharp downturn in our revenue during 2020, we

enjoyed a robust recovery in 2021 which continued over the

course of 2022. Our earnings rose on the year to £72.6m,

a record high, while special dividends increased slightly to

£1.6m (2021: £1.4m). The impact of currency movements

added £4.9m to our income (2021: detracted £4.0m). Our

Net Revenue Return per share rose by 26.7% to 13.92 pence

per share from 10.99 pence per share in 2021.

Inflation rose sharply over the year and, while annual rates

of Consumer Price Index ('CPI') increases may now be past

their highs, the backdrop is one where price pressures are

expected to remain elevated for some time to come. While

it remains the ambition of the Board to deliver real rises

in dividends for shareholders over the long-term, it is also

our intention to deliver sustainable rises in dividends. I am

therefore delighted to report that the proposed annual

dividend will be fully covered by our revenue.

Subject to approval at the Annual General Meeting (‘AGM’),

shareholders will receive a final dividend of 3.9 pence per

share on 11 May 2023, bringing the total dividend for 2022

to 13.5 pence: an increase of 5.5% over that of 2021. The

increase compares to the 10.5% rise in inflation as measured

by the CPI, which in October reached its highest level for

over forty years. In addition, as well as being our fifty second

consecutive rise in annual dividends, it is our one hundred

and fifty fifth annual dividend payment.

Shareholders can also take comfort that in addition to our

substantial revenue reserve (£97.5m at the year end), we

have capital reserves which stood at £4.3bn at the year end.

We therefore remain in a very strong position to continue

our track record of increasing annual dividends well into the

future.

MARKETING

We launched our new branding at the FCIT sponsored

lecture held last July at The Guildhall, London. The lecture,

which focused on “Smart Choices for a Smarter Future”

was a great success and we hope to host another such

event in 2024. The new branding has been supported by a

marketing campaign which will continue into 2023 and is

aimed at increasing awareness of the benefits of investing

in the Company and attracting new investors. We hope

shareholders like the new look of our Annual Report.

COMPANY RATING AND EFFICIENCY

Prior to the Covid-19 pandemic your Company was trading

at a premium rating and we issued shares in both 2018

and 2019. In 2020 and 2021 we saw the re-emergence of a

discount in our share price relative to NAV but it is pleasing

to report an improvement in the Company’s rating over the

course of last year. We bought back a total of 8.4m shares

into treasury as part of our commitment towards achieving

a sustainably low deviation between the share price and

NAV. The discount averaged 7.5% over 2022 and ended the

year at 3.0%, narrower than the 7.3% level at the start of the

year. The narrowing in our discount was accretive to the

shareholder total return over the year.

Our Ongoing Charges figure remained at 0.54%, the same

level as 2021, with an increase in marketing expenses being

offset by a reduction in the management fee paid. From

1 January 2023, as explained in last year's Annual Report,

the management fee was reduced to a rate of 0.3% on our

market capitalisation up to £4 billion and at 0.25% thereafter.

The Board remains focused on delivering value for money for

shareholders as part of its performance objectives.

BORROWINGS

In recent years we have taken advantage of historically low

interest rates to secure long-dated fixed rate borrowings.

We reported in last year’s Annual Report that, in the closing

stages of 2021, we had agreed £140m of borrowings with

repayment dates between 2037 and 2061. These borrowings

were drawn down during the first quarter although, given the

near term caution of the Fund Manager, they have not yet

been invested into equity markets.

As at the end of 2022 we had outstanding debt of £581.3m

and a blended borrowing rate of less than 2.4%. These are

exceptionally low rates of borrowing for your Company and

represent a low hurdle which we expect the returns from our

investments to exceed and, therefore, expect that the use

of these borrowings will prove accretive to returns over the

long-term. At the year end, we held £244m in cash and cash

equivalents leading to an effective gearing level (with debt

at par value) of 7.3% (2021: 9.4%).

A notable feature of the year was the sharp rise in borrowing

costs for both governments and companies. The rise in

market based borrowing costs led to a substantial reduction

(£182m) in the fair value of our outstanding debt. Indeed,

taking debt at fair value, our effective gearing level fell from

9.8% at the start of the year to 3.5% at the end.

CHAIRMAN’S STATEMENT (CONTINUED)

7Annual Report and Accounts 2022

Strategic Report

BOARD COMPOSITION

Julie Tankard joined the Board on 1 August 2022 as

Chairman of the Audit Committee, replacing Jeffrey

Hewitt, who retired at the conclusion of the 2022 Annual

General Meeting. Her appointment continues our planned

sequence of Board changes and again reflects our focus

on maintaining the highest level of skills and knowledge

on the Board. I would like to thank Jeff once again for his

significant contribution in chairing the Audit Committee for

10 years.

Francesca Ecsery will retire at the conclusion of the

forthcoming AGM and the process to appoint her successor

is in progress. We thank Francesca for her very considerable

contribution over almost 10 years, through her expertise

in consumer marketing and branding and her guidance

on the effective promotion of the Company’s investment

proposition.

ANNUAL GENERAL MEETING

It was a great pleasure to be able to meet shareholders

again last year as we returned to an in-person AGM. It was a

“hybrid” meeting, as we also enabled shareholders to view

the AGM and participate by asking questions and voting

online. We will again offer shareholders the opportunity to

participate online at this year’s AGM. Full details of how to

do so are set out in the letter that accompanies your Form

of Proxy or Form of Direction.

Voting at this year’s AGM will again be conducted by way of

a poll and you are requested to lodge your votes ahead of

the meeting by completing your Form of Proxy or Form of

Direction in accordance with the instructions. Its completion

and return will not preclude you from attending the meeting

and voting in person. If you are unable to attend the AGM,

you are requested to submit any questions you may have

with regard to the resolutions proposed at the AGM, or the

performance of the Company, in advance of the meeting to

fcitagm@columbiathreadneedle.com. Following the AGM,

the Fund Manager’s presentation will be available on the

Company’s website www.fandc.com.

OUTLOOK

In 2022 we witnessed a profound change in the backdrop

which had supported equity markets in recent decades.

High inflation and rising interest rates punctured extended

valuations in equity markets and delivered sharp losses for

investors in the most expensive segments of the market.

While company fundamentals in many leading businesses

may not have changed significantly, the price which

investors are willing to ascribe to the prospect of future

success has diminished.

Despite declines in equity markets last year leading to

a more reasonable valuation backdrop, there are still

significant near-term risks. While recent rises in food and

energy prices are a challenge, especially to consumers and

businesses in Europe and the UK, domestically generated

inflation remains uncomfortably high in the US and UK in

particular. The bulk of tightening may now be behind us, but

there are likely to be more interest rate rises to come and

risks to economic growth and corporate earnings are high.

Indeed, there is a possibility of recession in coming quarters

in many developed economies and corporate margins are

likely to remain under pressure over the course of this year.

While the near-term outlook for equity markets remains

challenging, we continue to have a long-term investment

focus. We have secured long-dated fixed borrowings at the

lowest rates of interest for generations and recent setbacks

in markets should provide greater prospective returns for

the patient investor. We have significant cash which can

be deployed to take advantage of long-term opportunities

that we expect to arise. In doing so, we will continue to

be mindful of our approach to investing responsibly and

to our commitment to transition the Company's portfolio

to net zero carbon emissions by 2050, at the latest. While

the period of exceptional returns from equity markets and

from US equities in particular appears to be over, we remain

focused on our overriding objective in the delivery of long-

term growth in capital and income for our shareholders.

Beatrice Hollond

8 March 2023

FUND MANAGER’S REVIEW

"DESPITE EXTREMELY CHALLENGING MARKET CONDITIONS,

THE COMPANY PRODUCED A NAV TOTAL RETURN OF -5.3%

ON THE YEAR AGAINST THE BENCHMARK RETURN OF -7.7%

WHILE OUR SHAREHOLDER TOTAL RETURN WAS -0.9%.”

MARKET BACKDROP

2022 was a year of significant volatility in financial markets.

As inflation rose to a 40-year high, global central banks

shifted decisively towards a hawkish stance, marking the

end of a period of ultra-low interest rates and easy money

that had served as a tailwind for both equity and fixed

income markets for over a decade.

Tight global labour markets, resulting in strong wage

growth, and the accumulation of consumer savings

during the pandemic, along with disruption in local and

global supply chains, all played a role in the onset of high

inflation. The war in Ukraine, which has exerted a terrible

humanitarian cost, also led to sharp rises in energy and food

prices, exacerbating inflationary pressures and creating

a challenging backdrop for consumers, most notably in

Europe and the UK. Central banks were unable to deal with

the causes of the supply shock and were left grappling with

a backdrop of high and rising inflation amidst concerns that

rising inflationary expectations were becoming embedded.

At the start of the year the widespread expectation was

that heightened inflationary pressures would prove to

be transitory and that central banks would raise interest

rates only modestly. Investors had initially expected the

US Federal Reserve to raise interest rates by 0.75% for the

full year but, as inflation surged, it became clear that this

would not be sufficient. Interest rates in the US finished

the year 4.25% higher in the most aggressive post-war US

interest rate hiking cycle on record. The European Central

Bank also increased rates, with the main refinancing rate

rising above zero for the first time since 2016. In response to

rapidly tightening monetary policy, the bellwether US S&P

500 equity index declined by over 18% in the year; the worst

year of annual returns since the Global Financial Crisis of

2008. Aggressive interest rate increases and rising inflation

led to higher government bond yields, with investor losses

comparable to those suffered in equity markets, and the

worst bear market in developed government bonds on

record.

After posting strong gains in 2021, growth stocks suffered,

with technology share prices some of the hardest hit, and

the US Nasdaq index declining by just under 25% in sterling

terms. Conversely, energy stocks saw strong performance

on the back of higher oil and gas prices.

FCIT share price 2022 (pence per share)

745

765

785

805

825

845

865

885

905

925

945

Dec

2021

Mar

2022

Jun

2022

Sep

2022

Dec

2022

Source: Columbia Threadneedle Investments & Refinitiv Eikon

9Annual Report and Accounts 2022

Strategic Report

UK equities outperformed the US and Europe, rallying from

what were very depressed valuations, following a long

period of underperformance.

As the year progressed, while economic data in the US

remained surprisingly robust, cracks began to appear in

the US housing market, with a sharp slowdown in activity.

In Europe, the suspension of the Nord Stream gas pipeline

generated serious concerns that the severity of the energy

supply shock would push the region into recession.

Ongoing increases in interest rates and rising concern over

widespread recession, along with geopolitical uncertainty,

led to a flight to safe haven assets that was supportive

for the US Dollar throughout the year, which had risen by

almost 20% in trade weighted terms at its peak.

Huge rises in the cost of European energy led to

governments subsidising both consumers and businesses

in an attempt to mitigate some of the impact. In response

to the cost-of-living crisis in the UK, the short-lived Truss

government announced unprecedented government

borrowing to finance the largest unfunded programme

of tax cuts in decades. As a result, expectations for UK

interest rate increases increased rapidly. Amidst the market

turmoil afflicting UK assets, sterling fell to all-time intra-day

lows against the US Dollar as domestic financial stability

and ability to service government debt were called into

question. UK government bonds lost over 20% in 2022,

with 10-year yields peaking at 4.5% shortly after the

‘Mini-Budget’ – culminating in intervention by the Bank of

England. Fortunately, this particular crisis in the UK was

over relatively quickly, with Rishi Sunak taking over as

Prime Minister and the Government’s ‘U-turn’, helping to

improve credibility. The decline in sterling, which fell by

10.7% against the US dollar, helped to cushion returns for

UK investors in overseas assets in 2022.

As the year drew to a close, central banks were still striking

a hawkish tone and signalling more interest rate increases

to follow in 2023, however, there were tentative signs that

rates of inflation have peaked. The US Federal Reserve

signalled a step-down to smaller interest rate increases and

focus shifted to the persistence of inflation and the outlook

for growth, which would inform how quickly central banks

could begin to cut interest rates. The hope that they may be

cut in 2023 and the end of the zero-Covid policy in China

helped to buoy broader market sentiment as the year drew

to a close.

INVESTMENT PERFORMANCE

As explained on page 30, our investment strategy remains

one of managing the Company’s assets across a range of

diversified investment portfolios, each adopting their own

individual investment approach. Each individual portfolio

invests on a global or a regional basis using a wide range

of skills and resources available from the Manager or, in the

Contributors to total returns in 2022 (%)

Portfolio return

(1)

(7.9)

Management fees (0.4)

Interest and other expenses (0.4)

Buy backs 0.2

Change of value of debt 4.2

Gearing/other (1.0)

NAV total return (5.3)

Change in share price discount 4.4

Share price total return (0.9)

FTSE All-World total return (7.7)

Source: Columbia Threadneedle Investments

(1) See Glossary of terms on page 118 for explanation of "Portfolio return".

Underlying Classification of Listed Equity Investment

Portfolio as at 31 December 2022

Technology 19.4

Financials 16.4

Healthcare 14.9

Consumer Discretionary 14.6

Industrials 13.6

Consumer Staples 5.0

Energy 4.3

Basic Materials 4.2

Telecommunications 4.0

Real Estate 2.1

Utilities 1.5

100.0

Source: Columbia Threadneedle Investments

FUND MANAGER’S REVIEW (CONTINUED)

case of the majority of our US exposure, from external third-

party managers. We invest in both public and private equity

opportunities across the world and adopt this diversified

approach to smooth returns for investors with the objective

of delivering growth in both capital and income over the

long-term.

Despite extremely challenging market conditions, the

Company produced a NAV total return of -5.3% on the year

against the benchmark return of -7.7% while our shareholder

total return was -0.9%. Our portfolio of investments

delivered a return of -7.9%.

Year-end allocations and underlying geographic exposures

are shown in the table above.

LISTED EQUITIES

It was a poor year for listed equities with our regional

strategies posting declines of up to 13.5% (Japan), while

even our best performing area, Europe, posted a loss

of 7.2%. Emerging markets (-13.8%) underperformed

developed markets while the region with our largest

amount of exposure, North America, declined by 9.2%.

2022 saw significant dispersion in returns between highly

valued growth stocks and more lowly rated value holdings,

with global value stocks outperforming growth counterparts

by the widest margin since 2000, and the aftermath of the

bursting of the “dotcom” bubble. Rising inflation and interest

rates drove a derating in more expensive areas of the

market, with companies trading on high valuations or with

limited near-term prospects for profitability the hardest hit.

In contrast, companies with exposure to commodity prices,

such as energy, performed best over the year.

Our North American returns were in line with those of the

benchmark. Our value portfolio, managed by Barrow, Hanley,

posted the strongest returns from any of our listed strategies

(+8.4%), exceeding comparator returns, and our core US

exposure (-5.8%), managed by Columbia Threadneedle,

declined by less than the index. While we have significantly

reduced our exposure to the T Rowe Price strategy, and

growth stocks more generally, in recent years, the extent of

underperformance from this area offset the benefits of this

allocation decision. T Rowe Price delivered returns of -29.6%

which were the weakest of all of our listed strategies and

underperformed comparator growth-based indices. Post the

year end, we have divested entirely from T Rowe Price.

The US value portfolio benefited from holdings in several

energy companies, including Hess and Phillips 66 which

gained by 117% and 67% respectively, while Pioneer Natural

Resources posted a return of 55%. Hess was among the

Company’s top performing holdings this year, with the

company announcing nine new high quality oil discoveries

on the Stabroek Block offshore Guyana, adding to the

block’s previously anticipated recoverable resource of

approximately 11 billion barrels of oil. The company now

expects annualised production growth of over 10% through

to 2026 and this, in tandem with management's decision

Weighting, stock selection and performance over one year in each investment portfolio strategy and underlying

geographic exposure versus Index at 31 December 2022

Investment

Portfolio

Strategy

Our portfolio

strategy

weighting %

Underlying

geographic

exposure

(1)

Benchmark

weighting %

Our strategy

performance

in sterling %

Net index

performance

in sterling %

North America 39.6 58.4 61.5 (9.2) (9.2)

Europe inc UK

(4)

11.4 23.3 16.6 (7.2) (5.1)

Japan 4.6 7.2 6.4 (13.5) (5.2)

Emerging Markets 6.9 8.3 10.6 (13.8) (10.0)

Developed Pacific 2.8 4.9 (1.6)

Global Strategies

(2)

25.2 (7.3) (7.7 )

Private Equity

(3)

12.3 3.6

(1) Represents the geographic exposure of the portfolio, including underlying exposures in private equity and fund holdings.

(2) The Global Strategies allocation consists of Global Income, Global Value and Global Sustainable Opportunities.

(3) Includes the holdings in Schiehallion and Syncona.

(4) Includes the holdings in Gilts.

Source: Columbia Threadneedle Investments

11Annual Report and Accounts 2022

Strategic Report

to increase the company's dividend by 50% in March 2022,

acted to support returns. Phillips 66 and Pioneer Natural

Resources both saw strong earnings growth in 2022,

benefitting from higher energy prices and well diversified

portfolios of assets.

Las Vegas Sands, a poor performer in the prior year, posted

a strong recovery, gaining 42.9%. The resort operator saw a

bounce back in demand as a relaxation of travel restrictions

continued to support a recovery in tourism and it delivered

particularly strong returns in the final quarter on news of

China reopening – Macau being a major market for the

company. Healthcare stocks Merck (+67.1%) and Elevance

Health (+25.1%) also delivered strong returns, reflecting

their depth of pipeline opportunities and investor rotation

towards defensive segments of the market. Merck also

continued to benefit from strong demand for vaccines,

with sales of the company’s Gardasil product projected to

double between 2021 and 2030.

Our US growth manager produced poor returns. Large

holdings in Alphabet and Amazon, accounting for around

a fifth of this portfolio, both posted significant losses,

demonstrating concentration risk. Fortunately, we had

reduced exposure to these poorly performing stocks but

significant declines in these, and other holdings, such as

Microsoft (-19.5%) and Meta (-60.0%), were detrimental to

our returns. Positive contributions came from a number of

holdings in financials, such as Goldman Sachs, Mastercard

and Visa, all of which posted good returns while healthcare

holding Eli Lilly gained by over 50%.

Our European portfolio lagged its benchmark return,

delivering a decline in value of 7.2% against the index loss of

5.1%. Despite this, a number of financial holdings, including

Bank of Ireland, UBS Group and DNB Bank benefited from

higher interest rates and strong corporate results while

NovoNordisk (+37.2%) and AstraZeneca (+32.4%) also

performed well, helped by strong sales growth in key drugs.

Outside of these positive components, underperformance

was driven by sectoral positioning, with an overweight

stance on technology and underweight position in mining

and oil and gas amongst negative contributors. Higher

energy costs were a headwind for paper packaging

manufacturer Smurfitt Kappa and for Wizz Air. Online food

ordering holdings Delivery Hero and JustEat both had

another poor year, each halving in value, suffering from the

sell-off in growth stocks and from increased competition in

their respective market segments.

Japan delivered material underperformance against the

benchmark, posting losses of 13.5% versus the 5.2% decline

of the benchmark. Most of the underperformance occurred

early in the year as the market rotated aggressively towards

value stocks and defensive holdings. This rotation hit a

number of our higher quality holdings which were trading

on premium ratings. While a number of more defensive

areas, such as telecoms business KDDI (+19.8%) and

pharmaceutical holding Takeda (+34.9%), delivered positive

contributions to returns, stock selection within industrials

and consumer discretionary areas drove underperformance

in the strategy. In terms of stock contributions, haematology

business Sysmex (-49.1%) was a headwind as the stock

struggled due to demand and delivery disruptions in

China, power tools manufacturer Makita (-37.0%) suffered

from softening housing and weak DIY demand following

lockdowns, as well as higher logistical and raw material

costs while Electronics business Murata (-28.1%) declined

on worries over smartphone demand and a build-up in

inventory.

Our emerging markets portfolio also lagged benchmark

returns, with a decline of 13.8% against a benchmark loss of

10.0%. The Chinese equity market was exceptionally volatile

with the impact of its strict zero-Covid policy weighing on

economic output and social cohesion before authorities

abruptly relaxed restrictions in the latter part of the year.

There were a number of other significant events in China

through the course of the year, which saw President Xi

Jinping confirmed as the de facto ruler for life at the 20th

National Congress of the Chinese Communist Party. There

were also continued signs of stress in the property sector

(which remains in a precarious, over-leveraged state) while

there was also a significant escalation of tensions with

Taiwan (where China again firmly reinforced its view that

Taiwan was part of China and that, if necessary, force would

be used). This fed into the risk aversion towards Taiwan

equities (which had enjoyed a strong period in 2020 and

2021) with the market repricing against a more uncertain

backdrop. This was not the only issue facing the market of

course, where weaker demand for semi-conductors and a

drop in consumer demand from China also contributed to

the heightened risk aversion.

Positive contributions came from exposure to financials

such as AIA Group (+25.9%), Bank Central Asia (+22.4%)

and HDFC Bank (+4.1%) and an overweight position in

both Indonesia and Mexico, where markets rose by 17%

FUND MANAGER’S REVIEW (CONTINUED)

and 10%, respectively. A lack of exposure to Brazil, which

gained by an impressive 28% on the year, in sterling terms,

was detrimental to returns. Elsewhere, security selections

in Taiwan and Korea also cost relative performance where

an exposure to Win Semi-conductor in Taiwan was down

61.2% on the back of disappointing results, significantly

weaker demand from its key market China, the overarching

negative sentiment towards Taiwan and changes in its

senior leadership. Other notable under performers included

search engine provider Naver in South Korea who suffered

significantly after its surprise acquisition of a re-sale

marketplace in the US named Poshmark.

Within our Global Strategies, we started the year with

exposure to Global Income, Global Smaller Companies,

Global Sustainable Opportunities and Global Value. The

combined return from these components was -7.3%, just

ahead of the index decline (-7.7%). We sold out of Global

Smaller Companies in the early part of the year and enjoyed

good returns from our Global Value strategy, which gained

by 3.0%, while our Global Income component declined by

a relatively modest 2.5% on the year. Contrasting strong

outperformance from these areas was underperformance

from our Global Sustainable Opportunities portfolio, which

produced a return of -13.7%. Here, there were positive

contributions from holdings such as health care company

Humana and pharmaceutical company AstraZeneca, which

posted gains of 24.4% and 32.4% respectively, and from a

lack of exposure to the big disruptive technology stocks,

and Tesla, all of which performed poorly. Nonetheless,

these positive contributions were offset by large losses on

a number of holdings, including Paypal (-58.6%) and SVB

Financial Group (-62.0%).

We still hold very limited exposure to two Russian securities.

The local market exchange has reopened and, once liquidity

permits, we will divest all direct exposure to Russian

equities.

PRIVATE EQUITY

2022 was another good year for our holdings in private

equity where positive returns of 3.6% were generated,

exceeding those of our listed investments. After a strong

2021, Private Equity returned to a more normalised period

of deal activity, with volume and deal value only marginally

down on 2019 levels. Recent commitments, managed

by Columbia Threadneedle Investments, delivered gains

of 11.5% on the year. Exposure here has been committed

to a range of opportunities with a focus on mid-market

businesses which have strong business models with high

levels of cashflow and attractive valuations.

One of the larger realisations of the year was £8.4m from

Pan-European growth equity investor Volpi Fund I relating

to the exit of Version 1, the provider of IT and managed

services in Europe to the public and private sector, returning

Investment portfolio strategies attribution in sterling to 31 December 2022

1 year % 3 years % 5 years %

Region Return Index return Return Index return Return Index return

North America (9.2) (9.2) 30.2 34.1 67.2 69.9

Europe inc UK

(1)

(7.2) (5.1) 14.9 14.2 21.0 22.7

Japan (13.5) (5.2) 7.3 7.2 7.5 13.3

Emerging Markets (13.8) (10.0) (3.2) 1.5 0.2 4.8

Global Strategies

(2)

(7.3) (7.7 ) 19.2 23.9 37.8 45.6

Private Equity 3.6 53.1 83.4

The Company’s benchmark is the FTSE All-World Index whereas for the purposes of this table the relevant regional sub-indices are used for comparison, except

in the case of emerging markets where the MSCI Emerging Markets Index is used.

(1) Performance prior to 30 June 2018 represents Europe ex UK.

(2) The Global Strategies allocation consisted of Global Income, Global Value and Global Sustainable Opportunities as at 31 December but performance also

includes the historic allocation to Global Multi-Manager and Global Smaller Companies.

Source: Columbia Threadneedle Investments

13Annual Report and Accounts 2022

Strategic Report

5.9x cost and 39% internal rate of return. This is an excellent

exit which returns more than our full commitment to the

fund in a single transaction. £4.3m was distributed from

pan-European and North American fund MED Platform

I relating to the exit of BOMI, the Italian provider of cold

chain pharmaceutical logistics, returning 3.8x cost and

delivering a 54% internal rate of return.

In recent years we have invested in a bespoke Pantheon

Future Growth programme which invests in leading growth

and venture private equity managers on a global basis. Our

programme became fully committed ($180m) early in the

year and we agreed a further commitment programme of

$180m with Pantheon, again into market leading growth

and venture managers. It will be several years before our

commitments in these two programmes are fully drawn

and a decade or more before investment outcomes can be

properly assessed. Nonetheless, these recent commitments

bear limited sensitivity to recent corrections in market

valuations which have also been felt in private markets and

one has to take a long-term perspective on this exposure.

Syncona (-14.6%), a backer of healthcare companies, and

our holding in Schiehallion C shares both had a poor year.

Schiehallion is managed by Baillie Gifford and invests in late

stage disruptive technology businesses. While the manager

has historically delivered good returns, this segment of the

market was amongst the worst performing areas in 2022.

The shares moved from a large premium to a discount, with

the shares falling by 56.1% on the year.

Older fund investments which we hold with Harbourvest

and Pantheon declined modestly in value (-3.6%). We

continue to work with the managers to realise value from

these holdings as they head towards their end of life. They

represented 1.2% of total portfolio value as at end of 2022.

PORTFOLIO ACTIVITY

As highlighted earlier, we made further steps to reduce

our exposure to highly rated large cap growth stocks with

a divestment of around £100m from our US manager, T

Rowe Price, early in the year. This followed substantial sales

from this strategy over the course of 2021 and the closure

of an internally managed US growth strategy in the second

half of 2020. The rotation from growth into cheaper, more

value-oriented areas of the portfolio was driven by a desire

to create more balanced exposure in the portfolio and by

concerns over extended valuations in expensive growth

segments of the market. A less supportive economic

environment for growth investors also led to us increasing

exposure to higher yielding segments of the market. We

have, following the year end, completely divested from T

Rowe Price, allocating capital from that strategy to a new

manager, JPMorgan Asset Management, who will manage

our exposure to US large capitalisation growth stocks.

Private Equity portfolio

Commitment outstanding

31 December 2022

£’000s

Value of holding

31 December 2022

£’000s

Total Private Equity portfolio

(1)

Brought forward 187,083 518,867

Committed in 2022

(2)

334,608 –

Cash drawn in 2022

(2)

(57,617) 57,617

Cash returned in 2022

(2)

– (56,438)

Valuation movements

(3)

– 30,034

Exchange movements

(3)

19,279 24,780

Total Private Equity portfolio

(3)

Carried forward 483,353 574,860

(4)

(1) Exchange rates ruling at 31 December 2021

(2) At actual exchange rates in 2022

(3) Exchange rates ruling at 31 December 2022

(4) Total does not include investments in Syncona and Schiehallion, which are classified as Level 1 investments.

Source: Columbia Threadneedle Investments

For many years, the Company has held exposure to

smaller companies through distinct mandates, first to gain

exposure to US smaller companies and, in more recent

years, to invest into smaller companies globally. Having

reduced exposure in the latter stages of 2021, we made

the decision to divest from this area of the market entirely

in the early part of the year. This decision was driven by

considerations over portfolio focus and concerns that the

fundamental backdrop would prove less supportive for

smaller companies for some time to come.

As well as these changes in the portfolio, we were net

sellers of European equities over the year. We entered 2022

with optimism that the value led rotation may lead investors

away from US equities into cheaper regions, such as

Europe and the UK. Indeed, early in the year we increased

allocations to both UK and European equities. We quickly

reversed our decision to increase our European equities

exposure on concerns over the impact of the conflict in

Ukraine. We retained, and increased, our exposure to UK

equities through an exchange traded fund, on the basis that

UK equity valuations would provide support and a positive

view on the UK market composition in the face of rising

commodity prices and interest rates.

Our Private Equity allocation ended the year at 12.3% of

our portfolio. As noted above, performance was positive

in this area and we made another $180m commitment to

Pantheon’s bespoke Future Growth Programme. We also

made a small number of selective co-investments during

the year including a €14.5m allocation to an electric bike

assembler based in Bulgaria and an investment into a

Canadian dental services organisation.

We raised cash levels significantly during the first half

and ended the year with cash holdings totalling £244m.

In March we received £140m of proceeds from our issue

of fixed rate senior unsecured notes and made net sales

from equities, choosing to leave proceeds in cash rather

than invest into equity markets. This decision was based on

concerns over the short-term outlook for the asset class in

the face of rising interest rates, extended market valuations

and increasing signs that the US and global economies

were likely to enter recession, with negative implications

for corporate earnings. Unusually for the Company, we

found ourselves with substantial cash holdings, increasingly

attractive rates of interest and a near term desire to

preserve capital rather than make investments into equity

markets. Consequently, we have made some investments

into short-dated gilts totalling £60m to provide a yield pick

up to that which is available from deposit rates.

Finally, as we explained in the 2020 and 2021 Annual

Reports we have, in recent years, held a strategic and partial

sterling hedge on our overseas currency exposure. We held

£300m in sterling against the US dollar at the beginning of

2021 which was reduced to £200m by the end of that year.

Ahead of the pronounced decline in sterling, we closed

out much of our long position, ending 2022 with £20m.

This position produced a loss of £16m on the year, though

our action to effectively increase exposure to the dollar

prevented larger losses which would have resulted from this

position.

REVENUE RETURNS

We enjoyed another year of strong growth in our revenue in

2022 as company dividend payments continued their post-

pandemic recovery. Our gross income increased by 24%

and our net income per share by 26.7% from 10.99 pence

per share to 13.92 pence per share. Special dividends rose

slightly from £1.4m in 2021 to £1.6m in 2022. The impact

of sterling added £4.9m to our revenue over the year,

compared with a negative impact of £4.0m in 2021.

The strength of recovery in our revenue over the past two

years has been such that net revenue per share ended the

year at a high, exceeding that delivered before the onset

of the global pandemic, in 2019. It is pleasing to report

this robust recovery and our planned dividend payment is

now below that of our annual revenue, meaning that we

will modestly increase the level of our revenue reserves.

Our revenue reserve ended the year at £97.5m. If approved

at this year’s Annual General Meeting, we will deliver our

fifty second consecutive annual dividend increase for

shareholders in May of this year.

GEARING

Our gearing stood at 7.3% at the end of the year, below our

starting year level of 9.4%. Gearing detracted 1.0% from our

NAV total return on the year, whilst the effect of sharply

rising government bond yields reduced the fair value of our

debt and added 4.2% to our NAV returns.

We entered an agreement to issue £140m of fixed rate

senior unsecured notes in December 2021, at an average

rate of less than 2% and with maturities extending out to

40 years, and this money was drawn in March, as noted

above. Given our high net cash weighting and changes in

FUND MANAGER’S REVIEW (CONTINUED)

15Annual Report and Accounts 2022

Strategic Report

the overall cost of borrowings we decided not to renew our

revolving credit facility when it matured during the year.

At year end, our total borrowings were £581.8m in

aggregate. Our blended average interest rate on our

outstanding loans was less than 2.4%, which remains

exceptionally low by historic standards. Over the long

run, we expect the returns from the investments made

from these borrowings to exceed the cost of our debt and

therefore be accretive to NAV returns.

CURRENT MARKET PERSPECTIVE

Throughout 2022, rising inflation and interest rates, in

conjunction with geopolitical concerns concentrated around

the war in Ukraine and the zero-Covid policy in China,

weighed on global equities with valuations falling sharply

over the course of the year. As central banks have moved

swiftly to combat the inflation threat, bond yields have risen

sharply, offering a much more attractive return prospect

than they have done for many years. In the coming year,

restrictive monetary and fiscal policy, in combination with

global economic slowdown will likely continue to pressure

parts of the equity market that have enjoyed outsized

performance and rich valuations in recent years.

The exiting of a low interest rate world has fundamentally

changed the investment environment, with equities having

benefited greatly from the easy liquidity that has been a

feature over the past decade. Furthermore, structurally

higher interest rates will have a profound effect on the

cost of servicing increased levels of global debt after the

pandemic. While households, companies and governments

have been able to lock in low interest rates, looking forward,

business models which have been reliant on cheap debt to

finance growth will struggle. This should have the effect of

refocusing investors’ attention on businesses with strong

corporate fundamentals and robust earnings prospects.

As rates surged in 2022, investors shunned the most

expensive segments of the market, marking the end of a

period of exceptional returns for US equities driven by the

clear valuation discount of international equities. This, in

conjunction with gains in energy prices and the US dollar,

proved particularly supportive of the UK equity market in

2022, with investors taking advantage of its prolonged poor

run and significant valuation discount to the US.

There is hope that inflation levels will now moderate from

current, lofty rates but it is unlikely that interest rates will

fall to the low levels seen in recent years. Investors must

adapt to a new investment landscape. A backdrop where

the cost of debt is higher, margins are under pressure,

where there is greater sensitivity to valuations and where a

narrow, growth-oriented, segment of the market no longer

persistently leads. Coming years may also see greater

opportunity for performance from markets outside of the

US and improved prospects from emerging markets, partly

driven by valuation differentials. Regardless, our flexible and

diversified approach makes us well placed to navigate a

changed investment backdrop and we remain confident in

the long-term prospects for your Company.

Paul Niven

Fund Manager

8 March 2023

OUR APPROACH TO RESPONSIBLE

INVESTMENT

AS STEWARDS OF £5.0 BILLION OF ASSETS, WE TAKE A RESPONSIBLE APPROACH

TO INVESTING AND HAVE A DUTY THROUGH OUR MANAGER TO INFLUENCE AND

SUPPORT POSITIVE CHANGE.

OUR APPROACH

We believe in the power of engaged, long-term ownership as a

force for positive change. As a responsible investor, we need to

ensure we, and the companies we invest in, have credible plans

to transition to a low carbon, climate resilient economy and are

working to implement those plans. The companies we invest in

also need to have good governance and be responsible about

their management of workforce and social issues in order to

be sustainable over the long-term. We have a Manager that

applies high standards of Responsible Investment in managing

the investments on behalf of our shareholders.

Our approach covers our own governance responsibilities

on matters such as the composition of the Board, but most

importantly, our portfolio of investments represents the

greatest impact we can have. As Responsible Investment

and sustainability are integral to the longer-term delivery

of growth in capital and income, we believe that our

disclosures should go beyond minimum standards. In

setting and reporting on our Responsible Investment

policies, we have considered relevant regulatory guidance

including the Companies Act 2006 (the 'Act') and the UK

and AIC Corporate Governance Codes. We are also aware

of important emerging standards and legislation, including

on climate reporting with the introduction of mandatory

reporting in line with the Task Force on Climate-related

Financial Disclosures ('TCFD'); and work underway on

International Sustainability Standards Setting.

The primary purpose of this report is to provide

shareholders with a clear understanding of our approach

to Responsible Investment and how that is integrated into

the Manager’s investment process. It also outlines how we

are implementing our commitment to achieving a net zero

carbon portfolio by 2050, at the latest. We also explain

our stewardship in terms of engagement with portfolio

companies and our voting practice; how we will measure

our progress; and how we have performed against those

measures. We recognise the importance of disclosing

information that is relevant, reliable and, as far as possible,

ensuring that it is presented in a consistent way from year

to year in order that our progress can be assessed.

The Financial Conduct Authority ('FCA') has now published

regulations that require the Company’s Manager, as its

Alternative Investment Fund Manager (‘AIFM’), to report

against TCFD at both the AIFM and product level by June

2024. This means that there will be a TCFD disclosure

specific to the Company’s portfolio available in the future,

which will be published on the Manager’s website. The

Manager has produced a report on its overall climate

change approach, which is structured using the TCFD

categories and is available on its website.

The impact of climate change on the value of the

Company's investments has been considered and more

information is given in the following pages, and in note 2(c)

(xiii) to the Accounts.

STEWARDSHIP

We and our Manager believe that companies with

strong management focus on environmental, social and

governance issues have the potential to reduce risks facing

their business and deliver sustainable performance over

the longer-term. Investee company boards are expected

to disclose to their shareholders that they are applying

appropriate oversight on material issues such as labour

standards, environmental management and tax policies.

If we have concerns, we also believe that engaging with

companies is usually best in the first instance rather than

simply divesting or excluding investment opportunities.

However, the Board believes that there are some business

activities which are incompatible with a responsible approach

to investment and where divestment is the only option: namely,

tobacco product producers, cluster bombs and landmines and

thermal coal. We exclude companies with exposure to these

activities exceeding certain revenue thresholds.

Active use of our voting rights is also an important

component of our stewardship approach. In the absence

of explicit instructions from the Board, our Manager has

been empowered to exercise discretion in the use of

the Company's voting rights, in accordance with its own

corporate governance policies. These policies take a robust

17Annual Report and Accounts 2022

Strategic Report

line on key governance issues such as executive pay and

integrate sustainability issues into the voting process,

particularly climate change and board level gender diversity.

Columbia Threadneedle Investments is a signatory to the UK

Stewardship Code. Its statement of compliance can be found

on the Managers’ website at columbiathreadneedle.com.

CLIMATE CHANGE

Climate change and the energy transition present a major

global macroeconomic shift which presents both risks and

opportunities to our investments. We aim to support the

global effort to tackle climate change and support the low-

carbon transition, whilst continuing to maximise returns

to our shareholders, taking the risks and opportunities

presented by the changing environment.

The Board has committed to a target of net zero emissions

by 2050, at the latest for the Company's portfolio. Our

Manager has selected the Net Zero Investment

Framework

(1)

(‘NZIF’) to implement this commitment,

reflecting our belief in the power of investor engagement,

and our aim to achieve emissions reductions through

encouraging our investee companies to take on and

implement ambitious targets and credible transition plans

to deliver it. However, engagement will not be open-ended

and we will ultimately divest from companies that are

unresponsive and/or fail to meet our expectations.

PRIVATE EQUITY

Many aspects of our Responsible Investment activities and

reporting focus on our listed equity investments. However,

sustainability issues are equally significant in private

markets. Whilst obtaining consistent data and metrics is a

challenge, we believe that there are approaches that can

be effective in identifying Responsible Investment risks and

opportunities and include in this report an example of how

our managers are implementing this.

For the past four years, we have disclosed the weighted-

average carbon intensity of the Company’s listed

investments, in line with the TCFD.

PERFORMANCE IN 2022

While the carbon intensity of our portfolio has increased

over the past year it remains lower than that of our

benchmark. Nonetheless, while making a commitment

to a net zero target we aim to strike a balance between

reduction in the carbon intensity of our portfolio over the

medium to longer-term with our overriding objective to

deliver growth in income and capital for shareholders.

Recent years have seen a marked outperformance from

carbon-intensive industries and we have, for the benefit of

shareholders, increased portfolio exposure to these areas in

our pursuit of shareholder returns.

The weighted-average carbon intensity of the Company’s

equities portfolio rose in 2022. Energy market conditions

played a major part in the 2022 increase, as we sought

to adjust positions in the sector to capitalise from energy

price rises. MIndful of our net zero goal, we also worked

to engage with the companies in the energy and energy-

intensive industries, to look beyond the immediate market

conditions and prepare for the longer-term transition

toward a low-carbon global environment.

CLIMATE CHANGE AND OUR NET ZERO COMMITMENT

Weighted-average carbon intensity

2019

100

150

200

250

FCIT

Benchmark

(2)

Tons CO2e / sales $m

185

125

2020

158

Source: MSCI ESG

2021

155

124

2022

165

(1) See www.parisalignedinvestment.org for further details.

(2) See Glossary of terms on page 118 for explanation of "benchmark".

OUR APPROACH TO RESPONSIBLE INVESTMENT (CONTINUED)

One position that increased in 2022 was in oil & gas services

and logistics company Phillips 66, reflecting the strong

year the sector has experienced. Our Manager has been

engaging with this company and was pleased to see it set

net emissions targets; however, these still fall well short of

a trajectory consistent with a future 1.5 degree temperature

rise globally (see case study on page 23). A new investment

in the portfolio in 2022 was Pinnacle West Capital

Corporation which operates power plants in Arizona, US. It

still has gas and coal-fired power generation alongside its

nuclear and renewables fleet, but has set a 2031 deadline

for phasing out the use of coal and a target for net zero

emissions by 2050.

We are pleased, however, that the portfolio carbon intensity

remains well below the benchmark, which also rose in 2022.

As companies in our portfolio take steps to implement their

emissions reductions goals, we expect to see the weighted-

average carbon intensity fall again, in line with our net zero

commitment.

OUR NET ZERO APPROACH

Our Manager is using the NZIF as a basis for its approach

and has published details of how it is implementing this

methodology, for equities and corporate credit

(1)

The primary focus of the approach is to assess the

current net zero alignment of each of the companies

in the Company’s portfolio and to engage with those

companies which fall short. The methodology has three key

components:

• Using a range of data sources, our Manager assesses

companies’ performance on a range of criteria relating

to their emissions management and strategy, and

uses this to assign an alignment rating. These ratings

range from ‘Aligned’ for the strongest performers,

to ‘Aligning’ for those meeting core expectations,

‘Committed’ for those with net zero targets but lacking

implementation and ‘Not Aligned’ for those lacking

adequate policies. We seek to increase the proportion

of ‘Aligned’ companies and to ensure that at least 70%

of portfolio emissions are from companies that are

either Aligned or are under active engagement when

classified as either aligning, committed to aligning or

not aligned.

• We calculate portfolio-level emissions intensity

(2)

and

seek to reduce this in line with a net zero trajectory.

• We monitor our investment in firms providing low-

carbon solutions.

The charts here show the Company’s current performance

on these metrics, as well as the targets that we have set.

The data shows an improvement over the end-2021 figures,

with 59% (was 49%) in the ‘Aligning’ category, and 30%

(was 42%) in the ‘Not Aligned’ category.

The Manager has a target for 70% of financed emissions

to be represented by companies that are either ranked as

Aligned or are under active engagement. For 2022, this

figure was 68%, almost reaching this target.

Aligned 1%

Aligning 59%

Committed 8%

Not Aligned 30%

Not Assessed 2%

Company-level alignment status, as a % of total

portfolio financed emissions

(1) See www.columbiathreadneedle.com and search ‘net zero’.

(2) The main metric we consider is financed emissions intensity, in line with The Partnership for Carbon Accounting Financials (PCAF).

19Annual Report and Accounts 2022

Strategic Report

The grey line in the chart above represents a net zero-

aligned benchmark trajectory. It is based on taking the

financed emissions intensity of the FTSE All-World Index,

which is the market benchmark for the Company, as at the

end of 2019 and reducing this by 50% by 2030. The bars

represent financed emissions intensity for the Company,

showing data for end-2021 and end-2022. This has slightly

increased, from 43.7 to 44.5 tCO2e/$m invested, for the

reasons already outlined.

Our aim is, at a minimum, to keep this within the net

zero trajectory for the benchmark – however, given that

the Company’s starting point was already below the

benchmark, we will strive to significantly outperform this

target. Having said that, we may choose to retain our

investments in certain higher-emissions companies and

sectors if we feel those companies are strongly aligned to

net zero or that our engagement is making good progress.

Where companies are not yet net zero aligned, we will

make active use of our stewardship influence to move

them in this direction. This will include continued active

engagement through our Manager, as well as the use of our

annual general meeting voting power. We will focus initially

on companies which are not yet aligned and are high

contributors to portfolio emissions.

Engagement will have clear objectives and be time-limited.

If companies fail to respond and continue to fall short of our

minimum expectations, we will divest our holding.

This approach applies to our listed equity holdings. Different

considerations apply to private equity, where data is not

available in the same way and net zero methodologies are

more nascent.

100

2021 2030

Net zero aligned benchmark trajectory

Financed emissions intensity,

tonnes CO2e/$m invested

2022 2023 2024 2025 2026 2027 2028 2029

FCIT

Source: Columbia Threadneedle Investments & Refinitiv Eikon

Financed emissions intensity

CLIMATE CHANGE AND PRIVATE EQUITY

In 2022 we were pleased to see further progress in the

analysis and reporting of climate risk and opportunity

by our three private equity managers.

Both HarbourVest Partners and Pantheon Ventures have

signed up to be supporters of the TCFD. HarbourVest

has worked with a carbon accounting platform to

develop a proxy emissions dataset available to its

clients, and is working with its General Partners to

encourage them to provide accurately reported data.

Pantheon is working to increase the climate data

available to its clients, which will include the analysis of

both transition and physical risks and opportunities.

Columbia Threadneedle Investments includes questions

on net zero alignment in its annual ESG survey of our

private equity fund managers and co-investments.

In the 2022 survey, 19% of managers reported that

they track and monitor greenhouse gas emissions

and 14% have net zero targets, of which 50% use

carbon offsetting to help achieve these.

(1)

Columbia

Threadneedle Investments will seek to leverage its

position to influence private equity managers and drive

the development of reporting on financed emissions

and encourage net zero targets.

(1) CT Private Equity Trust - ESG Report.pdf (columbiathreadneedle.com)

OUR APPROACH TO RESPONSIBLE INVESTMENT (CONTINUED)

VOTING

Exercising the right to vote is a key part of our stewardship

responsibilities and an opportunity to influence change.

The Manager applies its voting policy to all listed portfolio

holdings. During 2022, the Manager voted against at

least one management proposal at 21% of shareholder

meetings. This compared to 19% in 2021 and 21% in 2020.

One of the most contentious voting issues continued

to be remuneration. The Manager did not support 43%

(2021:42%) of all management resolutions relating to

pay, often due to either concerns around the structure of

the proposed remuneration or a misalignment between

pay and performance. In the case of concerns relating to

decision-making on company boards, the lack of genuinely

independent directors or directors overcommitted through

other directorships, the Manager cast votes against 17%

(2021:17%) of those standing for re-election. In certain cases,

votes were also cast against management for climate or

labour concerns.

The Manager’s approach to voting is reviewed and

developed each year. For 2023, it will implement more

stringent diversity guidelines and have a continued focus

on climate change. These are topics that the Manager has

engaged with companies on for many years and, in some

cases, already voted against management resolutions or

supported shareholder resolutions. Ensuring expectations on

these issues remains up-to-date and relevant is a significant

priority.

356 UNIQUE

MEETINGS VOTED

votes with

management 79%

votes against

management 21%

ENGAGEMENT

During 2022, the Manager engaged with 166 listed

companies in our portfolio to encourage stronger policies

and disclosure on a range of Responsible Investment issues.

Climate change continued to be a high priority, accounting

for 22% of total engagement undertaken. Through both

one-to-one dialogue and collaborative work – particularly

with the Climate Action 100+

(1)

initiative – the Manager

called on companies to align their businesses with a global

goal of net zero emissions by 2050 and to put in place

robust implementation strategies to achieve this, including

shorter-term targets, capital expenditure plans and aligning

executive pay to climate goals. Labour standards was also

an area of particular focus and accounted for 22% of total

engagement undertaken. Indeed, the Manager saw growing

focus on social issues such as human rights through the

year and expects this to continue in 2023. The Manager also

stepped up engagement on environmental stewardship in

2022, recognising the fundamental interlinkages between

climate change and wider environmental challenges such

as deforestation. The Manager was one of the founders of

the new Nature Action 100 initiative, which seeks to engage

with companies which are globally significant in their direct

or supply-chain biodiversity impacts, with a view to driving

enhanced strategies to identify, manage and disclose risks

and develop mitigation strategies.

(1) See Glossary of terms on page 118 for explanation of Climate Action 100+.

21Annual Report and Accounts 2022

Strategic Report

Climate Change 22%

Environmental Stewardship 15%

Business Conduct 5%

Human Rights 12%

Labour Standards 22%

Public Health 7%

Corporate Governance 17%

2022

895 ISSUES RAISED

WITH 166 LISTED

COMPANIES ACROSS

28 COUNTRIES.

2021

765 ISSUES RAISED

WITH 168 LISTED

COMPANIES ACROSS

27 COUNTRIES.

Climate Change 22%

Environmental Stewardship 11%

Business Conduct 4%

Human Rights 6%

Labour Standards 23%

Public Health 12%

Corporate Governance 22%

BROADCOM

(0.96% OF THE COMPANY’S PORTFOLIO)

TARGET: SDG 12 - RESPONSIBLE CONSUMPTION AND PRODUCTION;

SDG 16 - PEACE, JUSTICE AND STRONG INSTITUTIONS

ISSUE: HUMAN RIGHTS, LABOUR STANDARDS

We had several engagement interactions with Broadcom

in 2022, covering topics including human rights due

diligence, labour standards and diversity & inclusion.

As part of the Corporate Human Rights Benchmark

engagement, we spoke with the supplier of

semiconductor and infrastructure software on their

performance on human rights. The company is

lagging on the benchmark, but has made progress

on its human rights efforts, such as conducting due

diligence assessment and working on a tailored supplier

engagement programme. However, Broadcom relies on

supplier self-assessment surveys and audits to identify

poor practices. We recommended the company conduct

a comprehensive human rights due diligence assessment

and disclose salient risks, enabling it to proactively

address any potential risks. We also encouraged

extending the assessment beyond their tier 1 suppliers

and using audits as a supplementary tool after a human

rights assessment has been conducted.

On diversity & inclusion and human capital management,

we were pleased that Broadcom enhanced the

disclosure of the frequency and metrics from its

Employee Ethical Culture Survey. We had previously

encouraged the company to share this information

to enable stakeholders to track progress regarding

employee satisfaction.

We continued our engagement by recommending

diversity and inclusion target setting, conducting racial

equity audits and increasing disclosure of lagging areas

and action plans linked to the employee engagement

surveys.

KEYENCE CORP

(0.54% OF THE COMPANY’S PORTFOLIO)

TARGET: SDG 5 - GENDER EQUALITY

ISSUE: BOARD DIVERSITY AND BOARD EFFECTIVENESS

Keyence, maker of industrial automation systems, is one

of the larger listed companies in Japan. The company

has been a posterchild for the challenges faced by

Japanese corporations. An insulated board with minimal

independent representation has led us historically to

oppose several resolutions at each shareholder meeting.

We have actively engaged with the company since

2013 on issues around board composition and have

seen some progress. In 2020, the company appointed

two outside directors to the board, increasing the

proportion of independent representation from 0% to

22%. In 2022, the board appointed an additional outside

independent director. This appointment now means the

board comprises one-third outside directors, meeting

the minimum level of outside oversight we expect from

Japanese companies.

Early in 2022, Keyence also appointed a new female,

independent, non-executive director, the first female

appointment to the board. This improvement of the

board's gender diversity can help enhance the overall

effectiveness of the board. We had encouraged this

action through engagement and voting.

ENGAGEMENT CASE STUDIES

OUR APPROACH TO RESPONSIBLE INVESTMENT (CONTINUED)

provided by our Manager

23Annual Report and Accounts 2022

Strategic Report

PHILLIPS 66

(0.84% OF THE COMPANY’S PORTFOLIO)

TARGET: SDG 7 - AFFORDABLE AND CLEAN ENERGY;

SDG 13 - CLIMATE ACTION

ISSUE: ENERGY TRANSITION

As a major refiner of oil products, Phillips 66 is

significantly exposed to climate and energy transition

risks as the world moves towards lower carbon fuels.

In late 2021 Phillips 66 became the first U.S. refiner

and second U.S. oil company to set Scope 3 emissions

targets, pledging a 15% reduction in emissions intensity

by 2030. It also announced a goal of reducing Scope 1

and 2 operational emissions intensity by 30%, shortly

followed by a 2050 target for a 50% operational

emissions intensity reduction.

Whilst these actions signify progress in a region where

Scope 3 emissions targets in particular are hard to come

by, the company’s strategy remains far from aligned

with a pathway to limit the increase in temperatures

to 1.5 degrees celsius. Both sets of targets are on an

intensity basis so do not guarantee absolute emissions

reductions. We have engaged the company on the

underlying assumptions and drivers behind their

strategy, highlighting that we feel their assumptions for

renewable energy availability and cost advantages are

unrealistic to the downside and that there are greater

opportunities for decarbonising their operations.

On the positive side the company has made numerous

investments across the energy transition value chain

over the past 18 months, including in hydrogen and EVs,

which will help with their scope 3 decarbonisation plans.

The company has been open to engagement and

we have had good access to their experts and senior

management, who have all given the impression of a

company cautiously feeling its way through the energy

transition. A positive sign of their intent is the aim to link

quantitative emissions reductions to remuneration, to

replace current qualitative measures. Overall we believe

that Phillips 66 needs to significantly increase their level

of ambition.

OUR APPROACH TO RESPONSIBLE INVESTMENT (CONTINUED)

SUPPORTING SUSTAINABLE DEVELOPMENT

The Board views Responsible Investment issues not just

as a source of risk, but also of opportunity. Considering

the alignment of our investments to global sustainability

trends can help us benefit from growth in solution provider

companies, as well as to understand the positive social and

environmental impact we can make through investing.

The framework we use to understand our impact – both

positive and negative – is that of the UN Sustainable

Development Goals (SDGs). These 17 goals, adopted by all

United Nations Member States in 2015, provide a shared

blueprint for peace and prosperity for people and the

planet, now and into the future.

The accompanying SDG alignment chart shows how the

listed companies that we hold support the achievement of

the SDGs through their products and services. We map the

investment portfolio against the SDGs, based on an analysis

of the main sources of revenue for each of the investee

companies. Specifically, we measure how the individual

sources of revenue for each company correspond to the

169 targets that underlie the goals - so that one company,

depending on its mix of goods and services, may have links

to more than one goal.

The overall pattern is similar to what was reported in last

year’s annual report – with 57% of investee company

revenues having a positive link to the SDGs, up from 55%.

The goal most represented was again SDG 8 – Decent

Work and Economic Growth. This reflects holdings in

technology companies such as Apple, Microsoft and Taiwan

Semiconductor Manufacturing Co, which support Target

8.2 in calling for boosting economic productivity through

technological upgrading and innovation; and in financial

companies including American Express and Indian bank

HDFC, which we map to Target 8.10, focusing on access to

financial services.

Alignment to SDG 9 – Industry, Innovation and Infrastructure

– remained at 11%. A diverse range of holdings align with

this goal, including gas and chemicals companies providing

essential solutions to the energy transition, such as Linde and

Air Liquide, and telecommunications companies that support

stronger communications infrastructure through the provision

of wireless services, such as T-Mobile US and Crown Castle.

This year, our analysis identified a slight drop in negative

mapping, from 11% to 9%. This change represents certain

products or services offered by companies that could

hinder the achievement of some of the SDGs. These mostly

relate to climate change through SDG 7 – Affordable and

Clean Energy – and SDG 13 – Climate Action, as well as

health (SDG 3 – Good Health and Well-being). We continue

to hold several companies in the oil & gas and mining

sectors, as well as some auto manufacturers such as Ferrari

and Toyota Motor Corp. Many of these companies remain

subject to our engagement on climate change and related

environmental issues. Companies involved in alcohol

production continue to be the source of our negative

mapping to SDG 3.

25Annual Report and Accounts 2022

Strategic Report

SDG alignment as at 31 December 2022

positive revenue

alignment with

the SDGs

FCIT

Source: Columbia Threadneedle Investments, as at 31st December 2022, designed for illustrative purposes, subject to change.

Only SDGs with more than a 2% revenue alignment are shown. All SDGs less than 2% aligned are accounted for in the ‘Other’ sections of

the chart (both positive and negative alignments). Due to a lack of data, investments in private equity markets are not currently mapped.

REVENUE ALIGNMENT

BREAKDOWN:

POSITIVE 57%

NEGATIVE 9%

NEUTRAL 18%

CASH & SOVEREIGNS 15%

UNMAPPED 1%

OTHER (POSITIVE LINK)

NEUTRAL

CASH

UNMAPPED

OTHER (NEGATIVE LINK)

TWENTY LARGEST LISTED EQUITY HOLDINGS

1. MICROSOFT (1)

US listed technology company focused on software

products and cloud computing. The company also

designs and sells hardware devices.

2.09% TOTAL INVESTMENTS

£103.9M VALUE

2. UNITEDHEALTH (6)

US listed company offering healthcare products and

insurance services. One of the largest healthcare

companies in the world by revenue.

2.01% TOTAL INVESTMENTS

£100.1M VALUE

3. APPLE (4)

US listed technology company predominantly

involved in design, development and sale of consumer

electronics and software worldwide.

1.84% TOTAL INVESTMENTS

£91.9M VALUE

4. ELEVANCE HEALTH (PREVIOUSLY

ANTHEM) (11)

US listed health benefits and insurance company

providing health, dental, vision and pharmacy services

across employer, individual and Medicaid/Medicare

markets in the US.

1.33% TOTAL INVESTMENTS

£66.3M VALUE

5. ALPHABET (2)

US listed parent company of Google. Google’s primary

business is focused on internet related services and

products, including its internet search engine and its

Android smartphone operating system.

1.32% TOTAL INVESTMENTS

£65.7M VALUE

6. AMAZON.COM (3)

US listed e-commerce and cloud computing company.

Largest listed internet retailer in the world based on

market capitalisation.

1.11% TOTAL INVESTMENTS

£55.6M VALUE

7. BROADCOM (8)

US designer and supplier of semiconductor and

infrastructure software solutions.

0.96% TOTAL INVESTMENTS

£47.6M VALUE

8. VICI PROPERTIES (–)

US listed real estate investment company that owns one

of the largest portfolios of market-leading entertainment

destinations, including the world-renowned Caesars Palace.

0.92% TOTAL INVESTMENTS

£45.7M VALUE

9. MERCK (18)

US listed healthcare company primarily focused on

pharmaceuticals.

0.91% TOTAL INVESTMENTS

£45.4M VALUE

10. HESS (37)

US listed energy exploration and production company.

Hess develops, produces, purchases, transports, and

sells crude oil, natural gas liquids, and natural gas.

0.84% TOTAL INVESTMENTS

£41.9M VALUE

27Annual Report and Accounts 2022

Strategic Report

The value of the twenty largest listed equity holdings represents 20.96% (2021: 20.79%) of the Company’s total investments.

The figures in brackets denote the position within the portfolio at the previous year end.

There were no convertible securities in the total portfolio at 31 December 2022 (2021: nil). There were fixed interest gilts of £60m included in the investments as at

31 December 2022 (2021: nil).

These are the largest listed equity holdings excluding collective investment schemes. If the whole portfolio was considered then PE Investment Holdings 2018 LP

(£235.7m), Inflexion Strategic Partners (£79.6m) and Pantheon Access SICAV (£78.6m) would have been included in the list.

The Company’s full list of investments is just under 400 and is published monthly on the website at fandc.com.

11. PHILLIPS 66 (49)

US listed energy manufacturing and logistics company,

operating through four segments: Midstream,

Chemicals, Refining, and Marketing and Specialties.

0.84% TOTAL INVESTMENTS

£41.8M VALUE

12. DOLLAR GENERAL (9)

US listed operator of discount retail stores across

primarily the southern, southwestern, midwestern and

eastern US. It offers a broad range of merchandise

including both consumables and non-consumables.

0.83% TOTAL INVESTMENTS

£41.2M VALUE

13. AIR PRODUCTS (111)

US listed provider of atmospheric and specialty gases,

equipment, and related services.

0.78% TOTAL INVESTMENTS

£39.1M VALUE

14. AMERICAN INTERNATIONAL GROUP (53)

US listed insurance provider serving commercial,

institutional, and individual customers.

0.78% TOTAL INVESTMENTS

£38.9M VALUE

15. ASTRAZENECA (73)

UK listed company that engages in the research and

development of pharmaceutical products. Manufacturer

of the Oxford–AstraZeneca COVID-19 vaccine.

0.76% TOTAL INVESTMENTS

£37.8M VALUE

16. MASTERCARD (14)

US listed financial services company providing financial

transaction procession services worldwide as well as

offering credit and debit cards and internet payment

systems.

0.75% TOTAL INVESTMENTS

£37.1M VALUE

17. TAIWAN SEMICONDUCTOR

MANUFACTURING (TSMC) (7)

Taiwanese listed manufacturer and designer of

semiconductors.

0.74% TOTAL INVESTMENTS

£37.1M VALUE

18. LAS VEGAS SANDS (54)

US listed company that develops, owns, and operates

integrated resorts in Macau and Singapore.

0.73% TOTAL INVESTMENTS

£36.4M VALUE

19. WELLS FARGO (30)

US listed diversified financial services company that

provides banking, investment, mortgage, and finance

products and services internationally.

0.72% TOTAL INVESTMENTS

£36.1M VALUE

20. COMCAST (15)

US listed provider of media and television broadcasting

services. The company also offers video streaming,

television programming, internet and communication

services to customers worldwide.

0.70% TOTAL INVESTMENTS

£34.9M VALUE

TEN YEAR RECORD (UNAUDITED)

Assets at 31 December

£m 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Total assets less current

liabilities (excl loans) 2,401 2,657 2,838 3,001 3,461 3,960 3,817 4,545 4,919 5,831 5,232

Loans and debentures 322 227 261 299 248 292 325 436 407 550 582

Available for ordinary

2,079 2,430 2,577 2,702 3,213 3,668 3,492 4,109 4,512 5,281 4,650

Number of ordinary

shares (million)

(1)

577 570 562 559 547 542 542 543 537 527 518

All Company data are based on assets, liabilities, earnings and expenses as reported in accordance with the Company’s

accounting policies and are unaudited but derived from the audited Accounts or specified third-party data providers.

Net Asset Value (NAV) at 31 December

pence 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

NAV per share – with

debt at par 360.2 426.1 458.4 483.4 587.9 676.5 643.9 757.3 840.7 1002.5 896.9

NAV per share – with

debt at market value

357.6 424.8 458.4 483.4 587.2 675.8 642.9 753.9 831.8 998.7 932.1

NAV total return % – 5

years

(2)

48.9

NAV total return % – 10

years

(2)

210.2

Share price at 31 December

pence 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Middle market price per

share 320.5 378.0 421.2 449.2 544.0 6 47.0 633.0 765.0 787.0 926.0 904.0

(Discount)/premium to

NAV with debt at

market value %

(10.4) (11.0) (8.1) (7.0) (7.4) (4.3) (1.5) 1.5 (5.4) (7.3) (3.0)

Share price High 321.6 383.0 425.9 465.0 544.0 649.0 741.0 778.0 807.0 941.0 946.0

Share price Low 282.5 320.5 363.0 401.6 391.2 542.0 612.0 636.0 478.0 750.0 770.0

Share price total return

% – 5 years

(2)

51.3

Share price total return

% – 10 years

(2)

240.7

29Annual Report and Accounts 2022

Strategic Report

Revenue for the year ended 31 December

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Available for ordinary

shares – £’000s

(3)

40,841 44,037 37,857 47,262 58,393 63,486 69,438 70,937 52,480 58,500 72,595

Net revenue return per

share – pence

7.02 7.69 6.69 8.42 10.57 11.67 12.81 13.06 9.71 10.99 13.92

Dividends per share –

pence

8.50 9.00 9.30 9.60 9.85 10.40 11.00 11.60 12.10 12.80 13.50

Cost of running the Company

% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Expressed as a

percentage of average

net assets:

Total Expense Ratio

(4)

0.55 0.5 0.53 0.53 0.53 0.52 0.56 0.53 0.51 0.47 0.48

Ongoing Charges

(4)

0.90 0.86 0.87 0.80 0.79 0.79 0.65 0.63 0.59 0.54 0.54

Total Costs

(4) (5 )

– – – – – 1.06 1.01 1.05 1.19 1.16 1.12

Gearing

(4)

at 31 December

% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Net gearing

14.3 8.0 8.9 8.6 6.9 7.2 6.6 9.9 8.0 9.4 7.3

(1) Shares entitled to dividends.

(2) Source: Morningstar UK Limited.

(3) Management fees and finance costs allocated 25% to revenue account from 2015 onwards (previously 50%).

(4) See Alternative Performance Measures on page 115 for explanation.

(5) Not calculated for years prior to 2017.

PURPOSE, VALUES AND INVESTMENT

OBJECTIVE

Our purpose is essentially unchanged since inception in

1868; at the outset it was to provide the investor of relatively

moderate means access to the same opportunities and

advantages as the very largest investors and to diminish

risk by investing broadly. We now invest in global equities,

both listed and private, and continue to provide a diversified,

convenient and cost-effective global investment choice to

meet the longer-term investment needs of large and small

investors. Our values centre around integrity, innovation,

adaptation and diversification and are integral to and

inherent in our long-term strategy. More recently, we have

incorporated a commitment to transitioning the portfolio

to net zero carbon emissions by 2050, at the latest, with a

greater focus on investing responsibly.

Our investment objective is to secure long-term growth in

capital and income for our shareholders. Our investment

strategy is therefore designed to produce outperformance

and real rises in dividends over the longer-term. We do this

by investing mainly in public and private equity markets,

using borrowings to enhance returns and by managing costs

carefully. Our investments are held in a number of portfolios

that are individually concentrated but are managed as a

whole to provide global diversification, lower volatility and

lower risk. In an ever changing environment in which there is

a greater need for individuals to take control of their future

financial wellbeing, our wider business strategy aims to

position us as a core investment choice through all available

channels.

BUSINESS MODEL

As an investment trust company with no employees, we

believe that the best way to achieve our objective is to

have an effective and strong working relationship with our

appointed manager, Columbia Threadneedle Investment

Business Limited (the ‘Manager’). Within policies set and

overseen by the Board of Directors, our Manager has

been given overall responsibility for the management of

the Company's assets, including asset allocation, gearing,

stock and sector selection as well as risk management. The

Manager has the flexibility to use other fund managers by

delegating the management of some investment portfolios

externally. These currently include the North American

listed equity portfolios and a proportion of the Private

Equity holdings. Engagement on Responsible Investment

matters is undertaken through a global team within

Columbia Threadneedle Investments composed of staff in

Columbia Threadneedle Management Limited, Columbia

Management Investment Advisers LLC and Threadneedle

Asset Management Limited, as affiliates acting on behalf of

the Manager. The Board remains responsible for the matters

listed on pages 53 and 54.

To provide a breadth of sources of return, the individual

investment portfolios are managed on a global or regional

basis. While we invest primarily in listed equities, we retain

complete investment flexibility to invest in other types of

securities or assets depending on the return prospects

and in consideration of the implications for the broader

portfolio. Furthermore, as a closed-end, listed investment

trust company we are not constrained by asset sales to

meet redemptions. Our share capital structure gives us

the flexibility to take a longer-term view and stay invested,

while taking advantage of illiquidity throughout normal and

volatile market conditions. Having the ability to borrow to

invest gives us a significant advantage over a number of

other investment fund structures. These features combine to

form a resilient and adaptable business model that helped

us to weather the impact of the Covid-19 pandemic, as it did

during many a world crisis before.

ALIGNMENT OF VALUES AND CULTURE

In addition to strong investment performance from our

Manager, we expect it to adhere to the highest standards of

Responsible Investment, transparency, corporate governance

and business ethics and that its values and culture align

with our own. As a founder signatory to the United Nations

Principles for Responsible Investment (‘UNPRI’), Columbia

Threadneedle Investments continues to perform well in the

2021 UNPRI assessment, and compared to our peers for key

areas of their Responsible Investment approach and active

ownership in listed equities. For us, therefore, a key aspect

of the change of ownership of BMO GAM was the cultural fit

with Columbia Threadneedle and the Board considered the

Manager’s culture and shared values as part of the annual

assessment of its performance and in determining whether

its reappointment is in the interests of shareholders.

RESPONSIBLE INVESTMENT IMPACT

Our environmental, social and governance principles are key

elements of our Responsible Investment approach and are

central to our objective to deliver sustainable investment

performance over the long-term. We continue to review

and challenge our approach to Responsible Investment,

recognising our globally diversified strategy. As we continue

BUSINESS REVIEW

31Annual Report and Accounts 2022

Strategic Report

to evolve our approach, our Responsible Investment

principles will remain at the core of our strategy.

The direct impact of the Company’s activities is minimal as

it has no employees, premises, physical assets or operations,

either as a producer or a provider of goods or services and

it does not have customers in the traditional sense. It is

therefore exempt from reporting on its energy and carbon

emissions under the Streamlined Energy and Carbon

Reporting requirements.

MANAGER EVALUATION AND ALIGNMENT OF

SHAREHOLDER INTERESTS

An important responsibility of our wholly independent

Board of non-executive Directors is the robust annual

evaluation of the Manager’s performance and its capabilities

and resources, given that investment performance and

Responsible Investment are fundamental to delivering

sustainable long-term growth in capital and income for our

shareholders. This evaluation is an essential element in the

strong governance and mitigation of risk, as outlined under

the Principal Risks identified on page 40. The process for

the evaluation of our Manager for the year under review

and the basis on which the reappointment decision was

made are set out on page 56. The management fee is based

on the Company’s market capitalisation, thus aligning the

Manager’s interests with shareholders’ interests through

share price performance. Details of the management fee

arrangements are set out in the Report of the Management

Engagement Committee.

MANAGING RISKS AND OPPORTUNITIES

We seek to make effective use of our corporate structure

and the investment opportunities that lead to long-term

growth in capital and income for our shareholders. These

opportunities do not come without risks and therefore the

performance of our Manager is monitored at each Board

meeting on a number of levels. In addition to managing

the investments, the ancillary functions of administration,

company secretarial, accounting and marketing services are

all carried out by the Manager. It reports on the Company's

investment portfolios; the wider portfolio structure; risks;

compliance with borrowing covenants; income, dividend

and expense forecasts; errors; internal control procedures;

marketing; shareholder and other stakeholder issues,

including the Company’s share price discount or premium

to NAV; and accounting and regulatory updates. The

performance of each individual investment portfolio is

reviewed through a series of presentations given by each

specialist investment management team throughout the

year.

Shareholders can assess the Company’s financial

performance from the Key Performance Indicators that

are set out on pages 38 and 39. On pages 40 to 42 are set

out what the Directors consider to be the principal and

emerging risks that it faces. In addition to monitoring our

Manager’s performance, commitment, available resources

and its systems and controls, the Directors also review the

services provided by other principal suppliers. These include

the Custodian and Depositary in the safeguarding of the

Company's assets.

The principal policies that support our investment and

business strategy are set out on pages 35 to 37, whilst

the Fund Manager’s review of activity in the year can be

found on pages 8 to 15. In light of the Company’s strategy,

investment processes and control environment (relating

to both the oversight of its service providers and the

effectiveness of the risk mitigation activities), we have set

out in our long-term viability statement on pages 43 and 44

our reasonable expectation that the Company will continue

in operation for at least the next ten years.

FUND MANAGER AND MANAGEMENT OF THE ASSETS

As Fund Manager on behalf of our Manager, Paul Niven

is responsible for developing and implementing the

investment strategy with the Board and for the day to day

management of the total portfolio, covering the entire range

of individual investment portfolio strategies. His role covers

tactical decisions over the allocation of assets between

the different investment portfolios as well as determining

the level and timing of gearing within the range prescribed

by the Board. He has responsibility for overall portfolio

composition but delegates stock selection decisions. The

underlying specialist portfolio management teams are

responsible and accountable to him and ultimately to the

Board for their investment performance.

MARKETING

The routes and access to stock markets have changed

beyond all recognition since the Company first set out

to provide investment opportunities to investors of more

moderate means but, with the majority of the Company's

shares now in the hands of tens of thousands of retail

investors, the Company continues to serve its purpose well.

Reflecting changes in the market in more recent years,

an increasing proportion of the Company’s shareholders

hold their investments via third-party platforms, as well

as through the Columbia Threadneedle Savings Plans

which remain a cost effective and flexible way to invest.

Recognising the changes in how our key target market is

choosing to invest, as well as the benefits of the Company

continuing to maintain and grow a well-diversified

underlying shareholder base, a key focus of our marketing

activities is to maintain, and ideally increase, the proportion

of shares held via third-party platforms and the Columbia

Threadneedle Savings Plans. This has been on an upward

trend in recent years, as shown in the Key Performance

Indicators on page 39. During the year we launched

new branding for the Company and supported it with a

marketing campaign aimed at increasing awareness of the

benefits of investing in the Company and attracting new

investors, which will continue into 2023.

BUSINESS REVIEW (CONTINUED)

SECTION 172 STATEMENT

Section 172(1) of the Companies Act 2006 ('Section 172')

requires that a Director must act in the way they consider,

in good faith, would be most likely to promote the

success of the Company for the benefit of its members

(i.e. shareholders) as a whole and in doing so, have regard

(amongst other matters) to the likely consequences of any

decision in the long-term; the need to foster the Company’s

business relationships with suppliers, customers and others;

the impact of the Company’s operations on the community

and the environment; the desirability of the Company

maintaining a reputation for high standards of business

conduct; and the need to act fairly as between members of

the Company.

The Directors have had regard to the matters set out in

Section 172 and have continued to act to promote the

success of the Company for the benefit of its shareholders

as a whole. This included the likely consequences of their

decisions in the longer-term and how they have taken wider

stakeholders’ needs into account. Details of the Company's

key stakeholders and the engagement undertaken in 2022

are set out below.

As a long-term investor we always look to the future and

to the success of the Company from that perspective. We

believe that the Company provides a clear investment

choice, not only for investors large and small, but also for

those starting their investment journey. As reported above,

we continue therefore to promote the Company through

marketing and public relations initiatives and, at a wider

social level, by supporting broader financial education

across schools and universities. We have continued to work

on these initiatives and towards the optimal delivery of the

Company’s investment proposition and to promote the

success of the Company for the benefit of all shareholders,

stakeholders and the community at large.

33Annual Report and Accounts 2022

Strategic Report

KEY STAKEHOLDER AND SHAREHOLDER ENGAGEMENT

Stakeholders Engagement and Outcomes in 2022

The Manager

The Board's main working relationship

is with our Manager, with the aim of

achieving the Company’s investment

objective in an effective, responsible

and sustainable way in the interests

of shareholders, future investors and

society at large.

Engagement with our Manager is ongoing through regular Board meetings and

discussion. Emphasis was on investment performance and our progress towards

transitioning the Company’s investment portfolio to net zero carbon emissions

by 2050, at the latest. Our approach towards Responsible Investment and

aspects concerning environmental, social and governance issues are set out on

pages 16 to 25. We also show the key performance indicators that are now in

place to measure our progress in meeting this objective. The portfolio activities

undertaken by our Manager and the impact of decisions affecting investment

performance are set out in the Fund Manager’s Review on pages 8 to 15.

With Columbia Threadneedle we are well placed to encourage awareness and

dialogue on responsible investment issues amongst the wider community. As in

2018 and 2020, we sponsored a lecture at The Guildhall, London in 2022, with

the theme "Smart Choices for a Smarter Future". It included information on the

Company's investment approach. Video clips are available on the Company’s

website at www.fandc.com/smart-choices-for-a-smarter-future/

Lenders

Our lenders are key stakeholders as we

use borrowings to enhance returns to

shareholders over the longer-term.

We keep our lenders informed through monthly covenant compliance reporting.

During the year we drew a further £140m of fixed rate senior unsecured private

placement notes that were issued in late 2021. The pricing levels were highly

attractive by historic comparisons and improved further the maturity profile of

the Company’s borrowings.

Child Trust Fund, Junior ISA and other young investors

Many of our underlying shareholders

are young and hold their shares

through their parents in Columbia

Threadneedle’s Child Trust Fund and

Junior ISA. We hope to retain these

investors for the longer-term and also

foster education among young people

more generally.

Now that many Child Trust Fund accounts have reached maturity, our focus

is on keeping as many of these young investors with us as possible. Ahead of

account maturity, Columbia Threadneedle writes to their parents setting out

their options. In due course we will be able to judge how successful this initiative

has been in keeping these young investors, but retention rates are currently in

line with expectations.

We paused our financial education programme in 2022, pending our rebranding.

In the coming year we will resume this programme, which is designed to

help people understand better the opportunities and significance of not just

of saving, but how their savings can work much harder through investment

over the long-term. We also plan to run the “F&C Investment Trust Prize”,

a competition designed to inspire financial thinking among students and

showcase their financial knowledge.

Shareholders

Albeit not in the traditional sense, we

see our shareholders as customers

who we hope will stay invested with us

and reap the benefits of investing over

the long-term.

The Chairman and Senior Independent Director are always available to engage

with shareholders. Access to the daily publication of our NAV and monthly

factsheet is available from our website.

We also publish our detailed half year and annual results for main register

shareholders and Columbia Threadneedle Savings Plan investors. As an

alternative, we provide the option of a short notification summary with the

main highlights and access details to where the full information can be found. In

addition to main register shareholders, savings plan investors are encouraged to

participate fully at shareholder meetings.

In 2022, we held a “hybrid” Annual General Meeting for the first time. This

allowed many more of our shareholders to view the meeting, and to ask

questions and vote, online. Voting at the annual general meeting was taken on

a poll and the results on each resolution, which were all strongly in favour, were

published on the website. The 2023 AGM will follow the same format.

The Company has very few institutional shareholders and instances of

engagement are therefore rare but will always be reported to the Board.

Wealth managers and independent financial advisers

Columbia Threadneedle has a

team dedicated to fostering good

relations with wealth managers

and independent financial advisers

and keeping underlying investors

informed, with the aim to promote the

Company’s investment proposition and

improve the share price.

This team organises meetings with wealth managers and independent financial

advisers as well as preparing webinars, interviews, newsletters and videos

shared via several media channels. The team gathers feedback and answers

questions in relation to the Company and its investment strategy. Feedback

from these meetings, webinars and interviews is reported regularly to the Board.

On pages 40 to 42 we show how we employ our strategies to mitigate the principal and

emerging risks associated with our:

• Investment performance

• Effectiveness of Appointed Manager

• Cyber Threats and Data Protections

• Loss of Key person

• Transition to Net Zero

Further to the provisions of the Companies Act 2006 relating to the preparation of a Strategic Report and concerning non-financial and

diversity information, we have integrated the information required for a Non-Financial Information Statement (‘NFIS’) into this Strategic

Report with a view to cohesive reporting. The NFIS requirements are explained on page 120, together with a guide to the location of the

embedded information.

BUSINESS REVIEW (CONTINUED)

35Annual Report and Accounts 2022

Strategic Report

PRINCIPAL POLICIES

The Board has responsibility for the Company’s principal

policies, which support its investment objective of

achieving long-term growth in capital and income for our

shareholders.

INVESTMENT

Our publicly stated investment objective and policies are

designed to help shareholders, prospective investors and

stakeholders understand the scope of our investment remit

and the constraints imposed under it. Any material changes

to the stated objective or policies can only be made with

shareholder approval. No immediate changes are necessary

as a result of the decision to transition our investments to

net zero carbon emissions by 2050, at the latest.

Our remit is global. Risk diversification is achieved through

geographic asset allocation and industry sector and stock

selection across a wide range of markets. Within the general

policy of maintaining a diversified portfolio, there are no

specific geographic or industry sector exposure limits for

the publicly listed equities. A limit of 5% of the value of the

total portfolio, excluding private equity investments, has

been placed on unlisted securities at the time of acquisition.

Any unlisted investment requires specific Board approval,

with the exception of new private equity investments,

responsibility for which has been delegated to our Manager.

Shareholder approval would be sought in the event that it

is considered that the long-term exposure to Private Equity

investments could exceed 20% of the value of the total

portfolio.

Under the Company's Articles of Association, with limited

exceptions, no single investment may be made which

exceeds 10% of the value of the total portfolio at the time

of acquisition. Under the Listing Rules, no more than 10% of

the total assets may be invested in other listed closed-end

investment companies, unless such investment companies

have themselves published investment policies to invest

no more than 15% of their total assets in other closed-end

investment companies, in which case the limit is 15%. A limit

of 5% of the value of the total portfolio has been placed on

investment funds managed by the Manager at the time of

acquisition and any such investment requires specific Board

approval.

The Company will typically remain fully invested in

equities but is not prohibited from investing in other

types of securities or assets. Derivatives may be used

for the purposes of income enhancement and efficient

portfolio management, covering tactical asset allocation

and risk mitigation, including protection against currency

risks within strict limits. Short dated government bond

instruments, such as UK Gilts and US Treasuries, may be

used as an alternative to holding cash.

Due diligence with regard to the investment policies

is carried out at each Board meeting, with regular,

comprehensive reporting from the Fund Manager.

Confirmation of adherence to the investment restrictions

set by the Board is required, and given, at each meeting.

The Fund Manager’s Review on pages 8 to 15 provides

an overview of the outcome from the application of the

investment policies during the course of the year.

BORROWING

Using our closed-end investment company structure, we

have a long record of successfully using gearing to enhance

shareholder returns. Our policy is to borrow in sterling or

foreign currency over short, medium or long-term periods

and normally within a range of 0 – 20% of shareholders’

funds. Borrowing levels and covenant headroom are

monitored at each Board meeting. In his report, under

Gearing, the Fund Manager explains the impact and longer-

term performance potential for our returns as a result of our

borrowings.

DIVIDEND

Our revenue account is managed with a view to delivering

a rising income stream in real terms over the long-term

for shareholders. Prudent use of our Revenue Reserve

established over many decades is made whenever

necessary to help meet any revenue shortfall and to

weather periods of crisis. The Revenue Reserve meant

that we had the capacity to continue to pay an increased

dividend in recent years, despite the impact on our earnings

of the Covid-19 pandemic. Worldwide economic and

financial instability continues and the ongoing conflict in

Ukraine is of great concern, but in the year under review our

net return per share increased by 26.7% on 2021 and as a

result the proposed dividend for the year is covered by our

earnings. Dividends can also be paid from Capital Reserves,

although we have no current need, or intention, to do so.

The Board applies due diligence and determines dividend

payments by taking account of timely income forecasts,

brought forward distributable reserves, prevailing inflation

rates, the Company’s dividend payment record and

Corporation Tax rules governing investment trust status.

Risks to the dividend have been considered as part of the

Principal and Emerging Risks reviews noted on page 40.

They include worldwide economic, financial and political

instability leading to significant deterioration in the level of

income we receive and unforeseen and significant changes

to our regulatory environment. We have sufficient liquid

resources to fund envisaged levels of dividend payment.

Information on the dividend for 2022 is reported on page 6.

DISCOUNT/PREMIUM

Over many years we have consistently applied a share

“buyback” policy. Under this policy we buy back the

Company’s shares in the market for the benefit of

shareholders where we see value and, importantly, in pursuit

of a sustainably low deviation between the share price

and NAV per share and to dampen discount volatility, in

normal market conditions. The policy and the levels within

which it has operated are continually reviewed, with the

aim of achieving the long-held aspiration of the Company’s

shares trading at or close to NAV per share. Shares bought

back may be cancelled or held in treasury. Those held in

treasury can be re-issued, or new shares issued, in order to

satisfy shareholder demand and to moderate the premium

to which the share price can rise in relation to the NAV per

share. The discount or premium levels are reviewed at each

Board meeting. Information on the results of this policy can

be found on page 6.

RESPONSIBLE INVESTMENT

The Board has committed to transition the Company’s

portfolio to net zero carbon emissions by 2050, at the

latest. Over the past year, our Manager has been working

on an implementation methodology. Our approach reflects

our belief in the power of investor engagement rather than

simply divesting or excluding stocks or sectors. However,

the activities of some companies are incompatible with our

Responsible Investment approach; namely tobacco product

producers, cluster bombs and landmines and thermal coal.

We exclude companies with exposure to these activities

exceeding certain revenue thresholds.

BOARD DIVERSITY

Our policy towards the appointment of non-executive

directors to the Board is based on our belief in the benefits

of having a diverse range of experience, skills, length of

service and backgrounds, including gender, ethnicity and

contributions from an international perspective. The policy

is always to appoint the best person for the role and, by

way of this policy statement, we confirm that there is not

and will not be any discrimination on the grounds of gender,

race, ethnicity, religion, sexual orientation, age or disabilities.

The overriding aim of the policy is to ensure that the Board

is composed of the best combination of people for ensuring

the delivery of investment performance for shareholders

over the longer-term in the form of sustainable growth

in both capital and income. We apply the policy for the

purpose of appointing individuals that, together as a

board, will continue to achieve that aim as well as ensuring

optimal promotion of our investment proposition in the

marketplace. In terms of progress in achieving diversity,

the current gender balance of four men and four women

Directors exceeds the target of 33% of women on FTSE

350 company boards set under The Hampton-Alexander

Review

(1)

. As a result of the process currently underway to

recruit a successor to Francesca Ecsery, we expect to meet

the FCA requirement that, with effect from the current

financial year, the Board has at least one director from an

ethnic minority background (following the recommendation

of the Parker Review Committee

(1)

). The Board will strive

to ensure that it continues to comprise individuals with

diverse and complementary skills and experience in order to

meet the Company's objectives. In accordance with Listing

Rule 9.8.6R (9), (10) and (11) the Board has provided the

following information in relation to its diversity:

Board Gender as at 31 December 2022

(1)

Number

of Board

members

Percentage

of the Board

Number

of senior

positions on

the Board

Men 4 50% 1

Women 4 50%

(2)

(3)

(1) The Company does not disclose the number of Directors in executive

management as this is not applicable for an externally managed investment

trust company.

(2) This meets the Listing Rules target of 40%.

(3) This meets the Listing Rules target of 1. The position of the Chairman of

the Audit Committee is held by a woman. This role is not currently defined as

a senior position under the Listing Rules, however the Board believes that, for

an investment trust company, it should be regarded as such as it is broadly

equivalent to the Chief Financial Officer of a trading company.

BUSINESS REVIEW (CONTINUED)

(1) See Glossary of Terms on page 118.

37Annual Report and Accounts 2022

Strategic Report

Board Ethnic Background as at 31 December 2022

(1)

Number

of Board

members

Percentage

of the

Board

Number

of senior

positions

on the

Board

White British

or other White

(including

minority-white

groups)

8 100% 3

(2)

Mixed/Multiple

Ethnic Groups

–

(3)

– –

(1) The Company does not disclose the number of Directors in executive

management as this is not applicable for an externally managed investment

trust company.

(2) The three senior positions are: Chairman of the Board, Senior Independent

Director and Chairman of the Audit Committee.

(3) The Board expects to meet the FCA requirement that, with effect from

the current financial year, the Board has at least one director from an ethnic

minority background.

The information included in the above tables has been

obtained through questionnaires completed by the

individual Directors.

TAXATION

As an investment trust company, it is essential that we

retain our tax status by complying at all times with Section

1158 of the Corporation Tax Act 2010 (‘Section 1158’) such

that UK Corporation Tax is not suffered on our capital gains.

Taxation returns are submitted annually and any taxation

due is settled promptly. Where possible, all taxes suffered in

excess of taxation treaty rates on non-UK dividend receipts

are claimed back in a timely manner. The Board’s policy

towards taxation is one of full commitment to complying

with applicable legislation and statutory guidelines. In

applying due diligence towards the retention of Section 1158

status and adhering to our tax policies, the Board receives

regular reports from the Manager. We have received

approval from HMRC as an investment trust under Section

1158 and have since continued to comply with the eligibility

conditions.

MODERN SLAVERY ACT 2015

The values that we hold, our culture and the rationale

for the appointment of the Manager are explained on

page 30. Columbia Threadneedle Investments is an

organisation committed to respecting human rights and

stands against all forms of slavery and human trafficking.

It is recognised as a leader in responsible investment and

works with policymakers worldwide to deliver market-

wide improvements in standards and regulations. In

2022 approximately 34% of its engagement across the

companies in which the Manager invests for its clients was

on social themes, with extensive work on labour practices.

The Manager is an investor signatory to the Workforce

Disclosure Initiative (‘WDI’) which aims at enhancing

relevant and material workforce-related disclosure on a

wide range of workforce issues, covering companies’ direct

operations and supply chains. As part of its commitment to

the WDI, in 2022 the Manager held 68 engagements with

59 companies seeking improved transparency of workforce

management. We are very supportive of the Manager's

approach and whose formal statement can be found on its

website at columbiathreadneedle.com.

Our own supply chain consists predominately of

professional advisers and service providers in the financial

services industry, which is highly regulated. We believe

therefore that the potential risk of acts of modern slavery or

human trafficking in our own environment is extremely low.

INTEGRITY AND BUSINESS ETHICS

We apply a strict anti-bribery and anti-corruption policy

insofar as it applies to the Directors and any directors or

employees of the Manager or of any other organisation

with which we conduct business. The Board ensures that

adequate procedures are in place and followed in respect

of third-party appointments, acceptance of gifts and

hospitality and similar matters.

KEY PERFORMANCE INDICATORS

We assess the efficacy of our strategy by comparing the

Company’s long-term performance against the following

five key measures: Performance, Dividend, Discount,

Efficiency and Marketing. Detailed commentary on these

measures can be found in the Chairman’s Statement and in

the Fund Manager’s Review.

Our Key Performance Indicators ('KPIs') have been set

to help us achieve our overriding strategic objective of

delivering long-term growth in capital and income for our

shareholders. Whilst the NAV per share is an important

indicator of our portfolio performance, we recognise that

the share price total return, which is the change in the share

price and assumes all dividends are reinvested, is most

important to shareholders. Income is important and we

aspire to a rising dividend in real terms over the long run,

but this is not achieved at the expense of risking capital

growth potential. A balance is struck between income

and capital needs, which may result in periods when the

dividend is not covered by earnings in pursuit of superior

total returns. Nevertheless, with our substantial revenue

reserve and the flexibility to use capital reserves, we are

in the enviable position of being able to continue our

long track record of dividend increases, even in recent

years when many companies passed or cut their dividend

payments. 2022 marks the fifty second consecutive

increased annual dividend and the one hundred and fifty

fifth annual dividend payment.

Volatility in the share price discount to the NAV per share

can be regarded by many as an investment opportunity but

can be unsettling for shareholders. We therefore show this

disparity between the share price and the NAV per share as

a KPI and have set a policy aspiration to see the Company’s

shares trading consistently at, or close to, the NAV per

share. Whilst not a panacea for controlling the discount, the

application of a consistent buyback policy over many years

has seen the disparity narrow significantly. The share price

moved to a small premium at the end of 2019 but has since

moved back to a discount. The Board remains resolute in

applying the necessary measures towards achieving this

important policy aspiration.

We are also very focused on costs. The recognised method

of cost measurement within the investment trust industry

is Ongoing Charges

(1)

and the Company's Ongoing Charges

ratio has shown a downward trend in recent years. In

2022 it was 0.54%, the same level as in 2021, and remains

highly competitive within the investment trust sector. Our

Total Costs

(1)

ratio, which includes interest and transaction

costs, was 1.12%. Many competing products in the financial

services industry are not required to disclose the Total Costs

measure and like-for-like comparisons against investment

trust companies are therefore not possible. Our Ten Year

Record on page 29 shows the extent to which we have

kept costs under control, which has made a considerable

contribution to our results over multiple years.

We promote and market the Company in a number of

ways. One of our KPIs is a marketing performance measure

that tracks the percentage of the Company’s shares held

on retail platforms as we recognise that these can provide

investors with convenient and relatively low cost access to

the Company’s shares and an important source of demand.

A healthy level of demand will show the extent to which

we are continuing to meet our purpose and should help

to support the share price. In turn, a well-supported share

price should help towards achieving the Board's aspiration

of the Company's shares trading consistently at, or close

to, the NAV per share. The percentage of shares held on

platforms has continued on an upward trend in 2022 having

been set back slightly in 2020 following the market shock

and uncertainty around Covid-19.

In 2021, the Board added KPIs to measure progress towards

transitioning the Company’s portfolio to net zero carbon

emissions by 2050, at the latest. Those KPIs are shown

within the Responsible Investment report on pages 16 to 25.

(1) See Alternative Performance Measures on page 115 for explanation.

BUSINESS REVIEW (CONTINUED)

39Annual Report and Accounts 2022

Strategic Report

(1) See Alternative Performance Measures on page 115 for explanation.

(2) See Glossary of terms on page 118 for explanation of “benchmark”.

(3) These are considered by the Board to be the most relevant and reliable industry-standard peer group performance measures.

Efficiency: Costs

Year to 31 December:

2018

2019

2020

2021

2022

Our policy is to control the costs of running the

Company

Ongoing charges

(1)

0.65 0.63 0.59 0.54 0.54

This data measures the running costs as a

percentage of the average net assets in the year.

Total costs are inclusive of interest expense and

transaction charges.

Total costs

(1)

1.01 1.05 1.19 1.16 1.12

Source: Columbia Threadneedle Investments

(Discount)/premium: Share price (discount)/premium to NAV

2018

2019

2020

2021

2022

We aspire to seeing the shares trading at or

close to NAV per share

(Discount)/premium at 31 December

(1)

(1.5) 1.5 (5.4) (7.3) (3.0)

This is the difference between the share price

and the NAV per share. It is an indicator of

excess supply over demand for the Company’s

shares in the case of a discount and the excess

demand over supply in the case of a premium.

Average discount in year (1.3) (2.2) (6.1) (7. 2) (7.5)

Source: Columbia Threadneedle Investments

Dividend: Dividend Growth per annum to 31 December 2022 (Annualised)

Year

Years

We aim to deliver a rising dividend stream in

real terms over the longer-term

Dividend

(1)

5.5 5.2 5.4 4.7 This shows the Company’s compound annual

dividend growth rate and compares it to the

Consumer Price Index.

Consumer Price Index 10.5 5.4 3.9 2.7

Source: Columbia Threadneedle Investments and Refinitiv Eikon

Performance: Total returns to 31 December 2022 (Cumulative)

Year

Years

We aim to secure long-term growth in capital

and income

Share price

(1)

(0.9) 23.8 51.3 240.7

This compares the Company's share price and

NAV total return against those produced by the

constituents of the benchmark and our peer

group, and against inflation.

The ten year figures for the benchmark take

into account the change in January 2013 from a

composite benchmark (40% FTSE All-Share/60%

FTSE WI World Index ex UK) to the FTSE All-

World Index.

NAV (with debt at market value)

(1)

(5.3) 29.4 48.9 210.2

Benchmark

(2)

(7.7) 23.9 45.0 191.4

AIC Global Sector Median share price

(investment companies)

(3)

(16.8) 4.8 34.7 195.9

AIC Global Sector Median NAV

(investment companies)

(3)

(12.3) 17.0 40.4 169.1

IA Global Sector Median

(open-ended funds)

(3)

(11.6) 20.3 37.5 162.7

Consumer Price Index 10.5 17. 2 21.2 30.3

Source: Columbia Threadneedle Investments, Morningstar UK Limited and Refinitiv Eikon

Marketing: Platforms

As at 31 December:

2018

2019

2020

2021

2022

We promote access to FCIT’s shares through all

available distribution channels with the aspiration

of being on as many platforms as possible.

Platforms 64.94 64.97 64.86 65.52 67.06

This shows how the percentage of shares held

through platforms, including the Columbia

Threadneedle Investment Savings Plans, has been

increasing.

Other individuals, advisers and

institutions

35.06 35.03 35.14 34.48 32.94

Source: Columbia Threadneedle Investments

PRINCIPAL AND EMERGING RISKS

The Board has carried out a robust review and assessment

of the Company's Principal and Emerging Risks and the

uncertainties that could threaten its future success. This

includes near-term risks such as those posed by the change

of ownership of the Manager and longer-term risks, such

as climate change. The consequences for the Company’s

strategy, business model, liquidity, future prospects, long-

term viability and its commitment to transition the portfolio

to net zero carbon emissions by 2050, at the latest, form

an integral part of this review. As a result of the Board's

assessment, the following risk disclosures have been

reviewed and revised to reflect what it believes to be the

Principal and Emerging Risks that the Company faces at

present.

In the past two years we have highlighted, as emerging risks,

the extent and impact of the response from governments

to meet the costs of Covid-19 and the potential for the

imposition of controls and taxes that could be detrimental

to the savings industry and investors themselves. These risks

are feeding through, with the UK and many other countries

now close to or in recession as the impact of the various

fiscal measures is being felt.

Economic and market shocks in one form or another,

and their consequences, are risks that have long been on

the Board’s risk assessment. The effects of the Covid-19

pandemic have eased but there can be no complacency. The

Company’s purpose, strategy, investment policy and innate

characteristics, most notably portfolio diversification and an

embedded long-term outlook, again demonstrated its strong

resilience in the face of a global crisis. Our risk evaluation

forms an inherent part of our strategy determination, which

seeks to mitigate risks and to pursue the opportunities that

arise, not least at times of great turmoil.

BMO GAM has been acquired by Ameriprise and its

integration with the business of Columbia Threadneedle

Investments is well advanced. The Board looks favourably

upon this acquisition and there has been little change for

your Company, however an acquisition of such magnitude

introduces some uncertainty until the integration of systems

is fully implemented. The Board will continue to monitor this

risk closely.

The following sets out what the Board regards as the

Principal and Emerging Risks faced by the Company,

whether those risks have changed in the year under review

and how those risks are mitigated.

PRINCIPAL RISKS

Investment Performance

Inappropriate asset allocation, sector and stock selection,

currency exposure and use of gearing and derivatives may

give rise to under-performance and impact the Company’s

dividend paying capacity. Political risk factors, including

the potential emergence of restrictive government controls,

could also impact performance as could market shocks

such as those experienced as a result of Covid-19 and geo

political factors. Russia’s invasion of Ukraine, continuing

economic and market uncertainty and political instability

indicates that this risk has increased.

Under our Business Model, a Manager is appointed with

the capability and resources to manage the Company’s

assets through asset allocation, sector and stock selection,

gearing and risk management. The Manager can delegate

the management of investment portfolios externally to

third party managers. The individual global and regional

investment portfolios are managed as a whole to provide

diversification, lower volatility and lower risk. The

performance of the Company relative to its benchmark, its

peers and inflation is a KPI measured by the Board on an

ongoing basis and is reported on page 39.

The Company’s portfolio is well diversified and its closed

end structure enables it to continue to take a long-term

view. Detailed reports provided by the Fund Manager

are reviewed by the Board at each of its meetings. The

Manager’s Performance and Risk Oversight team provide

independent oversight on investment risk management

for the directly managed portfolios. As outlined in the

Fund Manager’s Review starting on page 8 and reported

in the Key Performance Indicators on page 39, long-term

performance remains in line with expectations. In 2020 the

Company purchased a series of forward currency contracts

to the value of £300m as a partial hedge against the US

dollar. This was reduced by £100m in late 2021 and further

reduced in 2022 to £20m. Prudent management of the

Company’s Revenue Reserve means that its dividend paying

capacity remains strong.

BUSINESS REVIEW (CONTINUED)

41Annual Report and Accounts 2022

Strategic Report

Effectiveness of Appointed Manager

The Business Model is based on the premise of an effective

and strong working relationship with the appointed

Manager, while an important responsibility of the Board is

the robust annual evaluation of its performance, capabilities

and resources, leading to the decision as to whether to

reappoint it. Succession planning concerning any potential

significant management changes is shared with the

Board. Internal performance KPIs and Manager errors are

monitored by the Board for indications of continuity or

other Manager issues.

The Board met with Columbia Threadneedle’s senior

management to discuss the acquisition of BMO GAM and

comfort was taken as to Columbia Threadneedle’s long-

term financial strength and resources and its policies and

commitment towards the investment trust business and the

savings plans.

The Manager’s systems and staffing capabilities continued

to operate satisfactorily throughout 2022. Thorough reviews

and challenges were made through the Audit Committee,

Management Engagement Committee and the Board.

Whilst the Board has confirmed the reappointment of

the Manager, the integration of BMO GAM and Columbia

Threadneedle's systems inevitably introduces a degree of

uncertainty. A critical milestone is the move to a new order

management system, Aladdin, widely regarded as the

market leading system. It is expected that this change will

be completed in the first half of 2023. This risk is therefore

categorised as unchanged.

Cyber Threats and Data Protections

The ancillary functions of administration, company

secretarial, accounting and marketing services are all carried

out by the Manager. The Board monitors the effectiveness

and efficiency of the service providers’ processes through

internal efficiency KPIs.

The Audit Committee and the Board have reviewed

regularly the Company’s risk management framework with

the assistance of the Manager. Regular control reports from

the Manager covering risk, compliance and oversight of

its own third-party service providers, including IT security

and cyber threats, have also been reviewed. The Manager

maintains regular contact with its key outsourced service

providers and has received assurances regarding the

continuity of their operations. Service levels are monitored

by the Manager with any deviations from the service level

agreements escalated immediately, both internally and with

the relevant third party. The Board has reviewed reports

from the Depositary, which is liable for loss of any of the

Company’s securities and cash held in custody unless

resulting from an external event beyond its reasonable

control. Whilst the risk of loss remains high, Board and

management vigilance also remains heightened and

therefore this risk is categorised as unchanged.

Loss of Key Person

The Board has considered who are the key people that

could potentially pose a risk to the Company should

they leave Columbia Threadneedle Investments and

are confident that those people could be replaced

appropriately through internal promotion or external

recruitment. The person posing the largest key person risk

is the Company’s Fund Manager, Paul Niven, who is Head of

Asset Allocation (Europe, Middle East & Africa) at Columbia

Threadneedle Investments and as such is a key person in

managing the Company’s assets. He has been our Fund

Manager for almost 9 years.

The Board meets with members of the wider Columbia

Threadneedle investment management team to ensure that

relationships are fully developed at all levels. Succession

planning concerning any potential significant management

changes is shared with the Board. Paul’s team is 20 strong

and it is divided into sectors with lead individuals who have

detailed knowledge of the portfolio within their remit. The

Board has received assurance from senior management at

Columbia Threadneedle Investments that Paul’s team has

the necessary breadth and experience if they were required

to manage without him. The Board is confident that the

structure that supports Paul could manage in the event

that he was to become incapacitated or leave the firm. The

Board considers that this risk is unchanged but has chosen

to identify it separately as a principal risk.

EMERGING RISK

Transition to Net Zero

The Board has made a commitment to transition the

Company's portfolio to net zero carbon emissions by

2050, at the latest. Responsible Investment is a field that is

evolving rapidly and it can present both opportunities and

threats to the long-term investment performance that we

aim to deliver to our shareholders.

The Manager believes in the power of engaged, long-

term ownership as a force for positive change. It applies

high standards of Responsible Investment in managing

the investments on behalf of our shareholders and takes

seriously its stewardship responsibilities, actively engaging

with investee companies. The Board meets with Columbia

Threadneedle’s Responsible Investment team on a

regular basis. We recognise the importance of disclosing

information on Responsible Investment that is relevant,

reliable and, as far as possible, ensuring that it is presented

in a consistent way from year to year in order that our

progress can be assessed.

The Board has continued to work with the Manager in

managing the Company’s risks. A risk summary is produced

by the Manager in consultation with the Board to identify

the risks to which the Company is exposed, the controls in

place and the actions being taken to mitigate them. The

Board, through the Audit Committee, has a robust process

for considering the resulting risk control assessment at

regular meetings and on an ongoing basis reviews the

significance of the risks and the reasons for any changes.

The Board carried out a thorough review of the risks that

could impact the sustainable success of the Company.

The purpose of the exercise was to reassess the principal

risks and identify any new, emerging risks and to take any

necessary action to mitigate their potential impact. The

Risk Control Assessment was then revised in line with the

conclusions that were reached. It was agreed that the risk

to investment performance had increased as a result of

market uncertainty and political instability; that key person

risk should be regarded as a principal risk; and that, whilst

the risk of loss through cyber threats remained heightened,

there had been increased Board and management vigilance

and therefore the risk remained unchanged. The Board

continues to review and challenge the risks that the

Company faces.

GOING CONCERN

The Directors confirm their reasonable expectation that

the Company has adequate resources to continue in

operational existence for a period of at least twelve months

from the date of approval of these financial statements.

This confirmation is based on a review of assumptions that

took into account the outlook for global stock markets and

economies; the diversified portfolio of readily realisable

securities which can be used to meet short-term funding

commitments; and the ability of the Company to meet all

of its liabilities and ongoing expenses. The Directors also

took account of the Company’s resilience in withstanding

the impact of the substantial fall in stock markets in March

2020 triggered by the Covid-19 pandemic and have carried

out stress tests covering the period to 31 March 2024 that

enabled them to assess the impact of varying degrees of:

• falls in the value of the publicly listed investments;

• increased buyback volumes;

• illiquidity and early calls on private equity

commitments;

• adverse fluctuations in exchange rates; and

• falls in annual revenue.

In addition to the stress tests, a reverse stress test was

carried out to establish the extent to which markets and

revenue would need to fall and exchange rates move such

that the Company would breach its most onerous financial

loan covenants. These covenants stipulate that the net

assets of the Company must not fall below £750m and

that gearing must not exceed 35% of the adjusted portfolio

value

(1)

. The results of the test illustrated that a 62% fall

in the values of the public and private equity portfolios

alongside a 50% fall in revenue and adverse exchange

rate movements of 20% would take the gearing position

to over 35% of the adjusted portfolio value

(1)

and would

therefore be in breach. The test was illustrative only and

undertaken without any assumptions of intervention that

would mitigate their effect. Such an event is therefore

highly unlikely. Under any scenario of prolonged severe

market falls that could threaten the Company’s ability to

continue as a going concern, the Board would work with

the Manager to take mitigating action that could include

portfolio restructuring, reduced dividend payments and

share buybacks and cost cutting.

The Company’s €72m loan was repaid in July 2022.

In September 2022, the Company’s £150m unsecured

revolving credit facility expired and was not renewed, the

£50m drawn on that facility having been repaid in March

2022. As a result it does not have any revolving credit

facilities in place and currently its gearing is provided

entirely by a perpetual debenture and fixed rate senior

unsecured loan notes, with various rates of interest and

maturities. Should the Board wish to take out a short term

BUSINESS REVIEW (CONTINUED)

(1) See Glossary of Terms on page 118 for an explanation of adjusted portfolio value.

43Annual Report and Accounts 2022

Strategic Report

loan facility, based on past experience, it does not believe

that it would have difficulty in obtaining such a facility.

Based on their assessment of the magnitude of the events

that would cause the Company to fail to meet its liabilities

as they fall due, and their knowledge and experience of

the Company’s portfolio and stock markets, the Directors

continue to adopt the going concern basis in preparing the

accounts for the year ended 31 December 2022. See also

note 25 to the Accounts.

LONG-TERM VIABILITY

The Directors carried out scenario testing in order to

consider the Company’s long-term viability over a period of

ten years to 31 December 2032. The tests commenced with

a base case scenario that covered a range of assumptions to

which sensitivity analysis was then applied in order to assess

the impact of more extreme scenarios. A key assumption

in each scenario included no change to the Company’s

dividend policy.

The worst case scenario tested by the Directors addressed

the potential impact of falls of 40% in the value of the

listed investments; 35% for the private equity investments;

20% in income; and adverse exchange rate movements

of 20% all occurring in 2023 with further significant falls

compounding the impact in the short term and less volatile

listed equity market movements thereafter. The fall in value

of investments may occur for a variety of reasons, including

climate change. Under this scenario the early payment of the

private equity commitments would increase the proportion

of that portfolio as a percentage of the total value of the

investments as a whole. All loans were assumed to have

been repaid at the beginning of the year. Private equity

valuations were assumed to make a modest recovery in later

years, while exchange rate movements would fluctuate from

year to year.

The results from the worst-case scenario showed that under

such highly adverse conditions the net assets would fall to

no lower than £1.4 billion and would be back to around the

£2.1 billion level by 31 December 2032. Dividend payments to

shareholders could continue to be paid through the support

of Capital Reserves.

Under a scenario based on the movements in income,

inflation and valuations over the ten-year period that

followed the financial crisis of 2008, net assets would rise to

£8.9 billion at 31 December 2032.

The assumptions used for these tests purposefully did not

take into account that under such severe conditions the

Board and Manager would have taken action to mitigate

RESILIENT, RESPONSIBLE AND PROSPEROUS FOR OVER 150 YEARS

• We have set a target to transition our portfolio to net

zero carbon emissions by 2050, at the latest.

• We have a strong record of taking advantage of

investment opportunities that arise from market

shocks and volatility.

• We have substantial headroom under our loan

covenants which is rigidly monitored.

• We have a long-term investment strategy under

which we invest mainly in readily realisable, publicly

listed securities and which restricts the level of

borrowings.

• We are able to take advantage of our closed-end

investment trust structure to deliver on our objective

over the long-term and have secured borrowings

with terms well in excess of ten years at historically

low interest rates.

• Our business model and strategy are not time limited

and, as a global investment trust, we are unlikely to

be adversely impacted materially as a direct result of

geo-political events over the longer-term.

• We can hold a proportion of our long-term less liquid

private equity investments over very many years

without pressure to realise them ahead of time.

• Our revenue and expenditure forecasts are subject

to regular and robust review throughout the year

against a backdrop of large revenue and capital

reserves.

• We retain title to all assets held by the Custodian

which are subject to further safeguards imposed on

the Depositary.

BUSINESS REVIEW (CONTINUED)

the risks and offset the impact. Furthermore, the tests

were a theoretical and illustrative scenario exercise, the

assumptions for which are extreme and highly unlikely. Their

purpose was to help inform the Directors of the Company’s

resilience under conditions so severe that they would impact

global economies, markets, companies and businesses alike.

The tests help to support the Board’s assessment of the

Company’s long-term viability. The results do not represent

its views or give an indication of the likely outcome.

Having considered its current position and the principal and

emerging risks that the Company faces and having applied

stress tests under worst-case scenarios that would severely

impact global economies and markets alike, the Board

confirms that it has assessed the Company’s prospects, to

the extent that it is able to do so, over the next ten years.

In concluding that ten years is an appropriate period for

this assessment, the Board considers that this approximates

to a suitable period over which its longer-term investment

performance is measurable and comparable; the periods

over which it would typically commit to and benefit from its

private equity investments; and the tenure of the Directors

from a corporate governance perspective.

The Board also took into consideration the long-term

duration of the Company’s debt, the perceived viability of

the Company’s principal service providers, the potential

effects of expected regulatory changes and the potential

threat from competition. The Company’s business model,

strategy and the embedded characteristics have helped

define and maintain its stability over many decades. The

Board expects this to continue over many more years to

come.

The Directors confirm therefore, that they have a reasonable

expectation that the Company will be able to continue in

operation and meet its liabilities in full over the coming ten

years to 31 December 2032.

On behalf of the Board

Beatrice Hollond

Chairman

8 March 2023

45Annual Report and Accounts 2022

Governance Report

BOARD OF DIRECTORS

BEATRICE HOLLOND

(2)

Chairman Appointed to the Board on 1

September 2017 and as Chairman of the Board

and the Management Engagement Committee

on 1 January 2020. She was appointed

Chairman of the Nomination Committee on 1

September 2019.

Experience and contribution: Beatrice brings

to the Board investment knowledge and

expertise in regard to both equities and global

fixed income. She also brings leadership skills

from her time as a Managing Director of Credit

Suisse Asset Management, LLC where she

spent 16 years in global fixed income. Beatrice

was a non-executive director of Templeton

Emerging Markets Investment Trust PLC until

2022.

Other listed appointments: Beatrice is a non-

executive director at Telecom Plus PLC, where

she is Senior Independent Director.

FRANCESCA ECSERY

(2)

Appointed to the Board on 1 August 2013.

Experience and contribution:

Francesca brings special expertise in

omnichannel consumer marketing, branding

and commercial strategies and provides

guidance for the effective promotion of the

Company's investment proposition and access

to its shares. She previously held the role of

Global Business Development Director at

Cheapflights Media and held senior executive

roles with STA travel, the Thomas Cook Group

and Thorn EMI plc. Francesca was previously

a non-executive director of Marshall Motors

Holding plc.

Other listed appointments: Francesca is a non-

executive director of Henderson High Income

Trust plc.

EDWARD KNAPP

(1)

Appointed to the Board on 25 July 2016.

Experience and contribution:

Edward brings a combination of investment,

operational and general management experience

worldwide, with expertise in the digital

transformation of large-scale organisations,

portfolio management, risk, strategy and

technology. Edward was previously a Managing

Director and Global Head of Business

Management within the Technology function at

HSBC, and prior to that he was a Chief Operating

Officer at Barclays Bank. Until 2012 he was at

McKinsey & Company, providing board and

advisory services to clients worldwide, focusing

on financial services, strategy, risk management

and technology. His wide ranging advisory

experience includes being a former senior

advisor to Revolut Limited.

Other listed appointments: Edward is Chairman

of the Board Risk and Compliance Committee of

Mattioli Woods PLC, where he serves as a non-

executive director.

TOM JOY

(2)

Appointed to the Board on 1 January 2021.

Experience and contribution:

Tom has extensive investment knowledge,

expertise and experience in global equity

markets. He is Chief Investment Officer of the

Church Commissioners for England which is

responsible for managing the endowment

portfolio of the Church of England. He began

his career at Royal Sun Alliance Investment

Management and later joined Schroders

holding a variety of different roles ultimately

becoming Head of Investment – Multi-Manager.

He then joined RMB Asset Management where

he was Chief Investment Officer until his

appointment at the Church Commissioners for

England in October 2009.

Other listed appointments: None

QUINTIN PRICE

(1)

Senior Independent Director

Appointed to the Board on 10 March 2020.

Experience and contribution:

Quintin brings investment banking and

investment management knowledge and

expertise to the Board from a 30 year career

working at a senior level for a number of

leading companies. From 2005 to 2015 he was

at BlackRock where he was Global Head of

Alpha Strategies and a member of the Global

Executive Committee.

Other listed appointments: Quintin is a non-

executive director of Liontrust plc.

RAIN NEWTON-SMITH

(2)

Appointed to the Board on 11 May 2021.

Experience and contribution:

Rain has considerable economic and political

insight as well as expertise in sustainability,

governance on reducing carbon emissions

and in developing environmental, social and

governance (‘ESG’) reporting. She recently

joined Barclays as Managing Director,

Sustainability & ESG Strategy and Policy.

Rain was formerly Chief Economist at the

Confederation of British Industry, where she

provided business leaders with advice on the

UK economic outlook and global risks. Prior

to that, Rain was Head of Emerging Markets

at Oxford Economics, where she was the lead

expert on China and a research advisor to the

Bank of England’s Monetary Policy Committee.

Other listed appointments: None

STEPHEN RUSSELL

(1)

Appointed to the Board on 1 February 2022.

Experience and contribution:

Stephen brings the highest level of investment

skills and knowledge to the Board. He is

Investment Director and a member of the multi

asset investment committee at Ruffer LLP,

where he helps direct its investment strategy.

He joined Ruffer in 2003 and has managed

its flagship pooled funds and developed its

institutional pension fund offering into one

of the largest multi asset/absolute return

fund managers in the UK. Stephen previously

managed segregated pension funds at Sun Life

of Canada and advised pension fund managers

as a strategist at HSBC.

Other listed appointments: None.

JULIE TANKARD

(1)

Chairman of the Audit Committee

Appointed to the Board and as Chairman of the

Audit Committee on 1 August 2022.

Experience and contribution:

A fellow of the Chartered Institute of

Management Accountants, Julie has a strong

financial background. She is the Chief Financial

Officer and a Board member of the Port

of London where, as well as finance, she is

responsible for risk, procurement, legal and

information technology. Julie previously

chaired the audit committee of Leeds & York

NHS Foundation Trust, prior to which she held

various senior positions at BT plc.

Other listed appointments: None.

(1) Member of the Audit Committee

(2) Member of the Nomination Committee

All the Directors are members of the Management Engagement Committee. No Director has a shared directorship elsewhere with other Directors.

BOARD OF DIRECTORS (CONTINUED)

47Annual Report and Accounts 2022

Governance Report

DIRECTORS’ REPORT

The Directors submit the Annual Report and Accounts of

the Company for the year ended 31 December 2022. The

Corporate Governance statement, Directors’ biographies, the

Reports of the Management Engagement, Nomination and

Audit Committees and the Remuneration Report all form

part of this Directors’ Report.

STATEMENT REGARDING ANNUAL REPORT AND

ACCOUNTS

The Directors consider that, following advice from the

Audit Committee, the Annual Report and Accounts of the

Company for the year ended 31 December 2022, taken as

a whole, is fair, balanced and understandable and provides

the information necessary for shareholders to assess the

Company’s position and performance, business model and

strategy. The Audit Committee reviewed the draft Annual

Report and Accounts for the purpose of this assessment

having also put in place, as explained on page 63, an

independent process to provide additional comfort to the

Directors in making this statement. The Chairman’s Outlook

for the Company can be found on page 7. The Board’s

assessment of the Company’s Principal and Emerging Risks

can be found on pages 40 to 42 with further information

in note 26 to the Accounts. The Directors have evaluated

the period since the financial year end and have not

identified any subsequent events to be disclosed. There

are no instances where the Company is required to make

disclosures in respect of Listing Rule 9.8.4R.

RESULTS AND DIVIDENDS

The results for the year are set out in the attached Accounts.

The three interim dividends totalling 9.6 pence per share,

together with the final dividend of 3.9 pence per share,

which will be paid on 11 May 2023 to shareholders registered

on 11 April 2023 subject to approval at the forthcoming AGM

(Resolution 4), will bring the total dividend for the year to

13.5 pence per share. This represents an increase of 5.5%

over the comparable 12.8 pence per share paid in respect of

the previous year.

COMPANY STATUS

The Company is a public limited company and an investment

company as defined by section 833 of the Act. The

Company is registered in England and Wales with company

registration number 12901 and is subject to the FCA Listing

Rules, Disclosure Guidance and Transparency Rules (‘DTRs’)

and other applicable legislation and regulations including

company law, financial reporting standards, taxation law and

its own Articles of Association.

TAXATION

As set out on page 37 and in note 7 to the Accounts,

the Company is exempt from UK Corporation Tax on its

worldwide dividend income and from UK Corporation

Tax on any capital gains arising from the portfolio of

investments, provided it complies at all times with Section

1158 of the Corporation Tax Act 2010. Dividends received

from investee companies domiciled outside the UK are

subject to taxation in those countries in accordance with

relevant double taxation treaties.

PREVENTION OF THE FACILITATION OF TAX EVASION

The Board is committed to compliance with the Criminal

Finances Act 2017, designed to prevent tax evasion in the

jurisdictions in which the Company operates. The policy is

based on a risk assessment undertaken by the Board and

professional advice is sought as and when deemed necessary.

ACCOUNTING

The Financial Statements, starting on page 78, comply

with current UK Financial Reporting Standards (FRS) 102,

supplemented by the Statement of Recommended Practice

‘Financial Statements of Investment Trust Companies

and Venture Capital Trusts’ (‘SORP’) published by the

Association of Investment Companies (‘AIC’). The significant

accounting policies of the Company are set out in note 2

to the Accounts. The unqualified auditors’ opinion on the

Financial Statements appears on page 70. Shareholders will

be asked to approve the adoption of the Annual Report and

Accounts at the forthcoming AGM (Resolution 1).

STATEMENT AS TO DISCLOSURE OF INFORMATION TO

THE AUDITORS

Each Director confirms that, to the best of their knowledge

and belief, there is no information relevant to the preparation

of the Annual Report and Accounts of which Ernst & Young

LLP (‘EY’ or the ‘auditors’) is unaware and that they have

taken all the steps a Director might reasonably be expected

to have taken to be aware of relevant audit information and

to establish that EY is aware of that information.

REAPPOINTMENT OF AUDITORS

EY have indicated their willingness to continue in office as

auditors to the Company and a resolution proposing their

reappointment and authorising the Audit Committee to

determine their remuneration for the ensuing year will be put

to shareholders at the AGM (Resolutions 12 and 13). Further

information in relation to their reappointment can be found

on page 63.

CAPITAL STRUCTURE

As at 31 December 2022 there were 561,819,016 ordinary

shares of 25 pence each (‘ordinary shares’) in issue, of

which 43,407,160 were held in treasury. Therefore, the total

number of voting rights in the Company at that date was

518,411,856. As at 6 March 2023 (being the latest practicable

date before publication of this report) the number of shares

in issue remained as 561,819,016 and the number held in

treasury was unchanged.

All ordinary shares rank equally for dividends and

distributions and carry one vote each. There are no

restrictions concerning the transfer of securities in the

Company, no special rights with regard to control attached

to securities, no agreements between holders of securities

regarding their transfer known to the Company and no

agreement which the Company is party to that affects

its control following a takeover bid. Details of the capital

structure can be found in note 17 to the Accounts. The

revenue profits of the Company (including accumulated

Revenue Reserve), together with the realised capital profits

of the Company, are available for distribution by way of

dividends to the holders of the ordinary shares. Upon a

winding-up, after meeting the liabilities of the Company, the

surplus assets would be distributed to shareholders pro rata

to their holdings of ordinary shares. Full details are set out

in the Company’s Articles of Association.

The Company may only adopt new Articles of Association

by special resolution passed by shareholders at a general

meeting.

BUYBACK AND ISSUE OF SHARES

At the annual general meeting held on 3 May 2022,

shareholders renewed the Board’s authority to purchase

up to 14.99% of its own issued ordinary shares, (excluding

any shares held in treasury) at a discount to NAV per share.

The shares bought back can either be cancelled or held

in treasury, to be re-issued as and when the share price

is at a premium to the NAV per share. Shareholders also

authorised the Board to issue new ordinary shares or sell

shares from treasury up to 5% of the number then in issue.

A total of 8,371,284 ordinary shares were bought back

during the year, all of which were placed in treasury. The

shares bought back represented 1.6% of the shares in issue

(calculated exclusive of any shares held in treasury) as at

31 December 2021. The purchases were made at prices

ranging between 775.6 pence and 926.7 pence and the

aggregate consideration paid for the shares, including

stamp duty and commissions, was £70.7m. No further

ordinary shares have been bought back into treasury

between 31 December 2022 and 6 March 2023.

VOTING RIGHTS AND PROPORTIONAL VOTING

At 6 March 2023 the Company’s 561,819,016 ordinary

shares in issue less the 43,407,160 shares held in treasury

represented a total of 518,411,856 voting rights. As at 31

December 2022 and since that date no notifications of

significant voting rights have been received under the DTRs.

Approximately 44% of the Company’s share capital is held

on behalf of non-discretionary clients through the Columbia

Threadneedle savings plans. For those planholders who do

not return their voting directions for the forthcoming AGM,

the nominee company will vote their shares in proportion

to those who do (‘proportional voting’). Implementation

of this arrangement is subject to a minimum threshold

of 5% of the shares held in these plans being voted. A

maximum limit of 570,000 shares that any one individual

investor can vote, being approximately 5% of the minimum

threshold, also applies. Any shares voted by an investor in

excess of the maximum limit remain valid, but do not form

part of the proportional voting basis. Planholders have the

right to exclude their shares from the proportional voting

arrangement.

BORROWINGS

The Company has issued various fixed rate senior unsecured

private placement notes (the ‘Notes’). The Company also

has a perpetual debenture stock. At present it does not

have any revolving credit facilities. Further information is

given on pages 14 and 15 and in notes 13, 15 and 16 to the

Accounts.

REMUNERATION REPORT

At the annual general meeting held on 7 May 2020,

shareholders approved the Directors’ remuneration policy.

It is a requirement that shareholder approval is sought

at least every three years and therefore shareholders will

be asked to approve the Directors’ remuneration policy

at the forthcoming AGM (Resolution 2). The Directors’

Remuneration Report, which includes the policy and can

be found on pages 65 to 68, provides detailed information

on the remuneration arrangements for Directors of the

Company. Shareholders will be asked to approve the

Directors' Remuneration Report at the AGM (Resolution 3).

DIRECTORS’ REPORT (CONTINUED)

49Annual Report and Accounts 2022

Governance Report

APPOINTMENTS TO THE BOARD

Under the Articles of Association of the Company, the

number of Directors on the Board may be no less than

three and no more than fifteen. Directors may be appointed

by the Company by ordinary resolution or by the Board.

All Directors so appointed are subject to re-election by

shareholders at the next annual general meeting. An

induction process is in place for new appointees and all

Directors are encouraged to attend relevant training courses

and seminars.

REMOVAL OF DIRECTORS

The Company may by special resolution remove any

Director and may by ordinary resolution appoint another

person who is willing to act to be a Director in their place.

The provisions under which a Director would automatically

cease to be a Director are set out in the Company’s Articles

of Association.

CONTRIBUTION AND INDEPENDENCE OF DIRECTORS

The Board is composed solely of independent non-

executive Directors. The Nomination Committee has

considered each Director's performance and the Board has

concurred with its assessment that each Director continues

to make a valuable and effective contribution and remains

committed in their role. Furthermore, no Director has a

past or current connection with the Manager and each

remains independent in character and judgement with no

relationships or circumstances relating to the Company that

are likely to affect their judgement. The Board has therefore

concurred with the Nomination Committee’s assessment

that all the Directors are independent of the Manager and of

the Company itself. For these reasons and those set out on

page 58, the tenure of Francesca Ecsery, who has served on

the Board for nine years, is not considered to compromise

her independence. However, she will retire at the conclusion

of the forthcoming AGM.

The table overleaf sets out the Directors’ meeting

attendance record in 2022. The Board also held a separate

meeting in September 2022 to consider strategic issues.

DIRECTOR RE-ELECTIONS

The biographies of the Directors are set out on pages 45

and 46 and are incorporated into this report by reference.

The skills and experience each Director brings to the Board

for the long-term sustainable success of the Company are

also set out there. Jeffrey Hewitt retired from the Board

on 3 May 2022. With the exception of Stephen Russell and

Julie Tankard, who were appointed on 1 February 2022 and

1 August 2022 respectively, all of the other Directors held

office throughout the year under review. All Directors will

stand for re-election by shareholders at the forthcoming

AGM in accordance with the Company’s Articles of

Association, with the exception of Francesca Ecsery, who

will retire from the Board at the conclusion of the meeting

(Resolutions 5 to 11).

DIRECTORS’ INTERESTS AND INDEMNIFICATION

There were no contracts of significance to which the

Company was a party and in which a Director is, or

was, materially interested during the year. There are no

agreements between the Company and its Directors

concerning compensation for loss of office.

The Company has granted a deed of indemnity to the

Directors in respect of liabilities that may attach to them

in their capacity as Directors of the Company. This covers

any liabilities that may arise to a third party for negligence,

default or breach of trust or duty. This deed of indemnity is

a qualifying third-party provision (as defined by section 234

of the Act) and has been in force throughout the year under

review and remains in place as at the date of this report.

It is available for inspection at the Company’s registered

office during normal business hours and at the AGM. The

Company also maintains directors’ and officers’ liability

insurance.

CONFLICTS OF INTEREST

A company director has a statutory obligation to avoid a

situation in which they have, or potentially could have, a

direct or indirect interest that conflicts with the interests

of the company of which they are a director (a ‘situational

conflict’). The Board therefore has procedures in place for

the authorisation and review of potential conflicts relating

to the Directors. Limits can be imposed as appropriate.

Other than the formal authorisation of the Directors’ other

directorships, no authorisations have been sought. Those

authorisations were reviewed in January 2023. Aside

from situational conflicts, the Directors must also comply

with the statutory rules requiring company directors to

declare any interest in an actual or proposed transaction or

arrangement with the Company.

SAFE CUSTODY OF ASSETS

The Company’s listed investments are held in safe custody

by JPMorgan Chase Bank (the ‘Custodian’). Operational

matters with the Custodian are carried out on the

Company’s behalf by Columbia Threadneedle in accordance

with the provisions of the investment management

agreement. The Custodian is paid a variable fee dependent

on the volume of transactions and the value and location of

the securities held.

DEPOSITARY

JPMorgan Europe Limited (the ‘Depositary’) acts as the

Company’s Depositary in accordance with the Alternative

Investment Fund Managers Directive (‘AIFMD’). The

Depositary’s responsibilities, which are set out in an Investor

Disclosure Document on the Company’s website, include:

cash monitoring; ensuring the proper segregation and safe

keeping of the Company’s financial instruments that are held

by the Custodian; and monitoring the Company’s compliance

with investment and leverage limits requirements. The

Depositary receives for its services a fee of one basis point

per annum on the first £1 billion of the Company’s net assets

and 0.25 basis points per annum on net assets in excess of

that amount, payable monthly in arrears.

Although the Depositary has delegated to the Custodian

the safekeeping of all assets held within the Company’s

investment portfolio, in the event of loss of those

assets that constitute financial instruments under the

AIFMD, the Depositary will be obliged to return to the

Company financial instruments of an identical type, or the

corresponding amount of money, unless it can demonstrate

that the loss has arisen as a result of an external event

beyond its reasonable control, the consequences of which

would have been unavoidable despite all reasonable efforts

to the contrary.

MANAGEMENT FEES

Information on the management fees payable by the

Company is set out in the Report of the Management

Engagement Committee on page 56.

AGM

The Company's AGM will be held at The Merchant

Taylors’ Hall, 30 Threadneedle Street, London EC2R 8JB

on Thursday 27 April 2023 at 12.00 noon. The Notice

of Meeting is set out on pages 107 to 111 and includes

a map of the venue location. The Fund Manager will

give a presentation at the meeting and there will be an

opportunity to ask questions. If you are unable to attend

the AGM, you are requested to submit any questions

you may have with regard to the resolutions proposed

at the AGM or the performance of the Company, in

advance of the meeting to the following email address:

Directors’ attendance in 2022

Board Audit Committee

Nomination

Committee

Management

Engagement

Committee

No. of meetings

7 3 3 1

Beatrice Hollond

(1)

7 3 3 1

Francesca Ecsery 7 n/a 3 1

Jeffrey Hewitt

(2)

3 1 n/a 1

Tom Joy 7 n/a 3 1

Edward Knapp 7 3 n/a 1

Quintin Price 7 3 n/a 1

Rain Newton-Smith

(3)

7 n/a 2 1

Stephen Russell 7 3 n/a 1

Julie Tankard

(4)

2 1 n/a n/a

(1) Attended but was not a member of the Audit Committee.

(2) Retired from the Board on 3 May 2022.

(3) Appointed to the Nomination Committee on 8 February 2022.

(4) Appointed to the Board on 1 August 2022. Mrs Tankard was absent from one Board meeting as a result of a prior commitment which was notified to the

Chairman before her appointment.

DIRECTORS’ REPORT (CONTINUED)

51Annual Report and Accounts 2022

Governance Report

fcitagm@columbiathreadneedle.com. The Fund Manager’s

presentation will be available to view on the Company’s

website, www.fandc.com, following the meeting.

The AGM this year will be a "hybrid" meeting, with

shareholders being able to attend the meeting in person or

online. For shareholders choosing to view the AGM online,

they will be able to participate by asking questions and

voting. Details of how to do so are given in the letter that

accompanies your Form of Proxy or Form of Direction.

Voting on all resolutions will be conducted by way of a

poll. You are therefore requested to lodge your votes either

through the online portal or by completing and returning

your Form of Proxy or Form of Direction in accordance with

the guidance set out below. The results of each poll will be

announced via a regulatory announcement and posted on

the Company’s website at fandc.com after the meeting.

AUTHORITY TO ALLOT SHARES AND SELL SHARES FROM

TREASURY (RESOLUTIONS 14 AND 15)

By law, directors are not permitted to allot new shares (or

to grant rights over shares) unless authorised to do so by

shareholders. In addition, directors require specific authority

from shareholders before allotting new shares (or granting

rights over shares) for cash or selling shares out of treasury,

without first offering them to existing shareholders in

proportion to their holdings.

Resolution 14 gives the Directors the necessary authority

to allot securities up to an aggregate nominal amount of

£12,960,296 (51,841,184 ordinary shares), being equivalent

to approximately 10% of the Company’s issued share capital

(calculated exclusive of any shares held by the Company in

treasury) as at 6 March 2023, being the latest practicable

date before the publication of the notice of the AGM.

Resolution 15 empowers the Directors to allot such

securities for cash, other than to existing shareholders on

a pro rata basis and also to sell treasury shares without

first offering them to existing shareholders in proportion

to their holdings, up to an aggregate nominal amount of

£12,960,296 (representing approximately 10% of the issued

ordinary share capital of the Company at 6 March 2023,

calculated exclusive of the shares held in treasury).

These authorities provide the Directors with a degree

of flexibility to increase the assets of the Company by

issuing new shares or re-issuing shares from treasury, in

accordance with the policies set out on page 36 or should

any other favourable opportunities arise to the advantage

of shareholders. The Directors expect that they will use the

authorities mainly to satisfy demand from participants in

the Columbia Threadneedle savings plans when they believe

it is advantageous to such participants and the Company’s

shareholders to do so. Under no circumstances would the

Directors issue shares or re-issue treasury shares at a price

which would result in a dilution of the NAV per ordinary

share.

AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN

SHARES (RESOLUTION 16)

At the annual general meeting held in 2022 the Company

was authorised to purchase approximately 14.99% of its own

shares for cancellation or to be held in treasury. The number

of shares remaining under that authority as at 31 December

2022 was 74,234,188 shares or 14.32% of the issued share

capital, exclusive of the number of shares held in treasury.

Resolution 16 will authorise the renewal of such authority,

enabling the Company to purchase in the market up to a

maximum of 77,709,000 ordinary shares (equivalent to

approximately 14.99% of the issued share capital, exclusive

of treasury shares) and sets out the minimum and maximum

prices at which they may be bought exclusive of expenses,

reflecting requirements of the Act and the Listing Rules.

The Directors will continue to use this authority in

accordance with its share buyback policy. Under the Act,

the Company is allowed to hold its own shares in treasury

following a buyback, instead of cancelling them. This gives

the Company the ability to reissue shares from treasury

quickly and cost-effectively (including pursuant to the

authority under Resolution 15, see above) and provides the

Company with additional flexibility in the management of

its capital base. Such shares may be resold for cash but all

rights attaching to them, including voting rights and any

right to receive dividends are suspended whilst they are

held in treasury. Purchases of ordinary shares under the

authority will be financed out of realised revenue and/or

capital reserves and funded from the Company’s own cash

resources or, if appropriate, from borrowings. The Board

intends to seek a renewal of such authority at subsequent

annual general meetings.

FORM OF PROXY FOR AGM VOTING

If you are a registered shareholder you will have received

a Form of Proxy for use at the AGM. You will also have

the option of lodging your proxy vote using the Internet.

For shares held through CREST, proxy appointments may

be submitted via the CREST proxy voting system. Please

either complete, sign and return the Form of Proxy in the

envelope provided as soon as possible in accordance with

the instructions or, alternatively, lodge your proxy vote via

the Internet or the CREST proxy voting system, whether or

not you intend to be present at the AGM.

All proxy appointments should in any event be returned or

lodged so as to be received not later than 12.00 noon on

Tuesday 25 April 2023.

FORM OF DIRECTION

If you are an investor in any of the Columbia Threadneedle

savings plans, you will have received a Form of Direction for

use at the AGM and you will also have the option of lodging

your voting directions using the Internet.

All voting directions should be made as soon as possible in

accordance with the instructions on the Form of Direction

and, in any event, not later than 12.00 noon on Thursday

20 April 2023, so that the nominee company can submit a

Form of Proxy within the required period.

VOTING RECOMMENDATION

The Board considers that the resolutions to be proposed

at the AGM are in the best interests of shareholders as a

whole. It therefore recommends that shareholders vote in

favour of each resolution, as the Directors intend to do in

respect of their own beneficial holdings.

By order of the Board

Columbia Threadneedle Investment Business Limited

Company Secretary

8 March 2023

DIRECTORS’ REPORT (CONTINUED)

53Annual Report and Accounts 2022

Governance Report

CORPORATE GOVERNANCE REPORT

On pages 45 and 46 are brief biographies of the Directors

responsible for the governance of the Company. The

Company invests in a wide range of companies and, as a

Board, we believe that good governance creates value and

expect the companies in which we invest to apply high

standards. In maintaining the confidence and trust of our

own investors, we set out to adhere to the very highest

standards of corporate governance, business and ethics

transparency. We remain committed to doing so.

GOVERNANCE OVERVIEW

The Board has established an Audit Committee,

Management Engagement Committee and Nomination

Committee. The roles and responsibilities of those

committees are set out in their respective reports, which

follow. As the Board has no executive directors and no

employees and is composed solely of non-executives, it does

not have a Remuneration Committee. Detailed information

on the remuneration arrangements for the Company’s

Directors can be found in the Remuneration Report on

pages 65 to 68 and in note 5 to the Accounts.

The Company has appointed the Manager to manage the

investment portfolios as well as to carry out the day to day

management and administrative functions. An explanation

of the reporting arrangements from the Manager is set out

in the Strategic Report on page 33 and in the Report of

the Audit Committee in respect of risk management and

internal control on pages 60 to 61. Explanations regarding

the Board’s appointment of the Manager, including reference

to the strength and depth of its resources, measurement of

performance and alignment with the values of the Board can

be found on page 30.

The Board has direct access to the company secretarial

advice and services of the Manager which, through the

Company Secretary, is responsible for ensuring that Board

and committee procedures are followed and applicable laws

and regulations are complied with. The proceedings at all

Board and committee meetings are fully recorded through a

process that allows any Director’s concerns to be recorded

by the Company Secretary in the minutes. The Board has

the power to appoint or remove the Company Secretary in

accordance with the terms of the investment management

agreement.

COMPOSITION OF THE COMMITTEES

Committee membership is noted in each Director’s

biography on pages 45 and 46, while the respective terms

of reference can be found on the Company’s website at

fandc.com. Further detail is given on the composition of

the Audit Committee on page 60.

COMPLIANCE

The Board is committed to high standards of corporate

governance. It has considered the principles and provisions

of the AIC Code of Corporate Governance published in

2019 (the ‘AIC Code’), which addresses the principles

and provisions set out in the UK Corporate Governance

Code (the ‘UK Code’) published in 2018, as they apply to

investment trust companies. It considers that reporting

against the AIC Code, therefore, provides more appropriate

information to the Company’s shareholders. The Board

confirms that the Company has complied with the principles

and provisions of the AIC Code, in so far as they apply to

the Company’s business, throughout the year under review.

As all of the Company’s day-to-day management and

administrative functions are outsourced to third parties, it

has no executive directors, employees or internal operations

and therefore has not reported in respect of the following:

• the role of the executive directors and senior

management;

• executive directors’ and senior management

remuneration; and

• the workforce

The need for an internal audit function is addressed on

page 61.

None of the Directors standing for re-election at the

forthcoming AGM has served in excess of nine years. We

explain our tenure policy on page 58.

Copies of the AIC Code and UK Code and can be found on

the following websites: www.theaic.co.uk and

www.frc.org.uk.

BOARD LEADERSHIP

The Board, led by the Chairman, is responsible for the

effective stewardship of the Company’s affairs and has in

place a schedule of matters that is reserved for its decision,

which are reviewed annually. These are categorised and

reviewed under strategy, policy, finance, risk, investment

restrictions, performance, marketing, appointments, the

Board and public documents. It has responsibility for all

corporate strategic issues, principal policies and corporate

governance matters, which are all reviewed regularly.

At each meeting the Board reviews the Company’s

investment performance and considers financial analyses

and other reports of an operational nature. The Board

monitors compliance with the Company’s objectives and is

responsible for setting investment and gearing limits within

which the Fund Manager has discretion to act and thus

supervises the management of the investment portfolio

which is contractually delegated to the Manager. The Board

has the right of veto over the appointment of sub-managers

recommended by the Fund Manager. It has responsibility for

the approval of all investments in in-house funds managed

or advised by the Manager and any unlisted investments

with the exception of new private equity investments,

responsibility for which has been delegated to the Manager.

DIVISION OF BOARD RESPONSIBILITIES

As an externally managed investment company, there

are no executive directors; all the Directors are non-

executive. The Chairman is responsible for the leadership

and management of the Board and promotes a culture

of openness, challenge and debate. The Chairman sets

the agenda for all Board meetings under a regular

programme of items in conjunction with the Company

Secretary. Building on the strong working relationship with

the Manager, the Fund Manager and other management

company personnel attend the meetings throughout the

year and report to the Board. Discussions at all levels

are held in a constructive and supportive manner with

appropriate challenge and strategic guidance and advice

from the Board whenever necessary consistent with the

culture and values.

Quintin Price is the Board’s Senior Independent Director. He

acts as an experienced sounding board for the Chairman

and an intermediary for other Directors and shareholders

and he leads the annual evaluation of the Chairman.

In order to enable them to discharge their responsibilities,

all Directors have full and timely access to relevant

information. Directors are able to seek independent

professional advice at the Company’s expense in relation to

their duties. No such advice was taken during 2022.

BOARD SUCCESSION

The Report of the Nomination Committee sets out on page

58 the process undertaken in respect of the appointment

of Julie Tankard. Julie was appointed following Jeffrey

Hewitt's retirement at the conclusion of the 2022 AGM. As

reported on page 46, Julie is the Chief Financial Officer and

a Board member of the Port of London where, as well as

finance, she is responsible for risk, procurement, legal and

information technology. Julie’s appointment ensures that we

retain the highest level of financial expertise. The succession

plan is now focused on replacing Francesca Ecsery, who will

retire from the Board at the conclusion of the 2023 AGM.

BOARD EVALUATION AND EFFECTIVENESS

The 2022 annual evaluation of the Board, its committees

and the individual Directors was carried out by an

independent third party, Board Level Partners (‘BLP’). BLP

has no other connection with the Company or any of the

Directors.

The process included confidential unattributable one-to-

one interviews between the external evaluator and each

Director, key members of the Columbia Threadneedle

investment trust team and fund manager Paul Niven.

After attending a board and two committee meetings as

silent observers and reviewing past board papers, the BLP

evaluators discussed the findings of the external evaluation

with the Chairman and delivered a comprehensive report of

their findings to the Board. As part of the external review,

BLP conducted an appraisal of the Chairman and delivered

its findings to the Senior Independent Director.

Progress in achieving the priorities and critical success

factors identified and considered in previous annual board

appraisals were reviewed as part of the external review.

Despite significant disruption caused by Covid-19, the Board

successfully implemented a major Board refreshment,

including the appointment of a new Audit Committee

Chairman, and embarked on a rebranding exercise to

ensure that the Company remains relevant for new and

existing investors. It also announced plans to ensure

the Company achieves its commitment to transition the

investment portfolio to net zero carbon emissions by 2050,

at the latest. The Board restructured bank borrowings and,

after constructive discussions with its Manager, reduced

management fee rates.

CORPORATE GOVERNANCE REPORT (CONTINUED)

55Annual Report and Accounts 2022

Governance Report

The external review did not highlight any material

weaknesses or concerns, but it did identify some areas

for focus in 2023 and beyond. These include continued

Board refreshment to address the planned departure of

long-serving Directors; the need for ongoing training for

Directors; ongoing monitoring of the Company’s rebranding

exercise and marketing, investor relations and distribution

activities and continued work on the Board’s relationship

with Columbia Threadneedle.

The appraisal concluded that the Board oversees the

management of the Company effectively and has the

skills and expertise necessary to safeguard stakeholders’

interests. All Directors demonstrate commitment to their

roles and, drawing on diverse but complementary skills and

experience (see Directors’ biographies, pages 45 and 46),

provide constructive challenge to the Fund Manager. All

Directors provide valuable contributions to the deliberations

of the Board commensurate with their experience and

responsibilities, so contributing to the Company’s long-term

success.

The activities of the Nomination, Management Engagement

and Audit Committees were considered as part of the board

appraisal process. The conclusion from this process was

that the Committees continued to operate effectively, with

the right balance of membership, experience and skills.

AUDIT, RISK MANAGEMENT AND INTERNAL CONTROL

The Board has a well established and effective Audit

Committee, whose report is set out on pages 59 to 64.

The report includes an explanation of the assessment

of the Company’s going concern status and how the

Board oversees the risk management and internal control

framework and the procedures under which risk is

managed. The Company also considers the Company’s

long-term viability and the nature and extent of the

principal risks the Company is willing to take in order

to achieve its long-term strategic objectives as well as

identifying emerging risks. The rationale for the Company

not having established its own internal audit function

is explained on page 61, while further information on

the Company’s risk management and internal control

framework can be found on pages 60 to 61.

The report of the Audit Committee provides an overview

of how the Board satisfies itself on the integrity of financial

statements and how the independence and effectiveness of

the external auditor is assessed. An explanation is also given

on the process under which the Board satisfied itself that

the Annual Report and Accounts, taken as a whole, presents

a fair, balanced and understandable assessment of the

Company’s position and prospects.

RELATIONS WITH SHAREHOLDERS AND STAKEHOLDERS

Information on the Company’s engagement with its key

stakeholders is set out on pages 33 and 34.

REMUNERATION

The Directors' remuneration policy is explained on page

65. As non-executive Directors, fees are set at a level

commensurate with the skills and experience necessary

for the effective stewardship of the Company and the

contribution towards the delivery of the investment

objective. While there are no executive directors and no

employees, shareholders should expect that the fees paid

to the Manager are aligned with the Company’s purpose,

values and the successful delivery of its long-term strategy.

This is achieved by charging the management fee on

the Company’s market capitalisation, on a tiered basis.

This assists in bringing down the Company’s cost ratio

as it grows, with the benefits of scale being passed on to

shareholders.

By order of the Board

Columbia Threadneedle Investment Business Limited

Company Secretary

8 March 2023

REPORT OF THE MANAGEMENT

ENGAGEMENT COMMITTEE

ROLE OF THE COMMITTEE

The primary role of the Management Engagement

Committee is to review the investment management

agreement and monitor the performance of the Manager

for the investment, company secretarial, financial,

administration, marketing and support services that it

provides under that agreement. It also reviews the terms

of the agreement, including the level and structure of fees

payable, the length of notice period and best practice

provisions generally. All of the Committee’s responsibilities

have been carried out over the course of 2022 and 2023 to

date.

MANAGER EVALUATION PROCESS

The Committee met once during the year and again in

January 2023 for the purpose of the formal evaluation of

all aspects of the Manager’s performance. Its performance

is considered by the Board at every meeting, with a formal

evaluation by the Committee each year. For the purposes of

its ongoing monitoring, the Board receives detailed reports

and views from the Fund Manager on investment policy,

asset allocation, stock selection, gearing and risk, together

with quarterly presentations on the Columbia Threadneedle

managed portfolio strategies. Quarterly updates are

received from the US sub-managers. The Board receives

comprehensive performance data from the Manager and

also from Morningstar UK Limited and Refinitiv Eikon,

which are leading data suppliers. These enable it to assess:

the success or failure of the management of the total

portfolio against the performance objectives set by the

Board; the sources of positive and negative contribution

to portfolio returns in terms of asset allocation, sector

and stock selection and gearing; and the performance of

each investment portfolio against its local index, where

applicable, and the risk/return characteristics. Portfolio

performance information, which is relevant in monitoring

the Manager, the sub-managers and the Private Equity

funds of funds managers, is set out on pages 8 to 15.

MANAGER REAPPOINTMENT

The annual evaluation that took place in January 2023

included presentations from the Fund Manager and the

Manager's Head of Investment Trusts. This focused primarily

on the objectives set by the Board and the Manager’s

contribution towards achieving those objectives particularly

with regard to investment strategy and marketing. As part

of the evaluation, the Fund Manager and the Manager's

Head of Investment Trusts reported on progress of the

integration of the business of Columbia Threadneedle

with that of BMO GAM. They also presented to the Board

on the strength of its current business, the resources and

opportunities of the enlarged business and its continued

support for the investment trust business. With regard to

performance, the Company’s share price and net asset

value total returns have comfortably outperformed the

benchmark over both five and ten years to 31 December

2022, meeting the Company’s objective of delivering

long-term growth in capital and income. The Committee

met in closed session following the presentations and

concluded that, in its opinion, the continuing appointment

of the Manager on the terms agreed was in the interests

of shareholders as a whole. The Board ratified this

recommendation.

THE MANAGER’S FEE

An important responsibility of the Committee is the

regular review of the Manager’s fee. The management fee

is reviewed by the Committee every three years and was

last reviewed in December 2021. With effect from 1 January

2022 the fee was reduced to a rate of 0.325% per annum

of the market capitalisation of the Company up to £3.0

billion, then 0.30% between £3.0 and £4.0 billion and 0.25%

above £4.0 billion. With effect from 1 January 2023 there

has been a further reduction, to a rate of 0.30% up to a

revised first tier of £4.0 billion and 0.25% thereafter. The

fee is calculated and paid monthly in arrears and is subject

to a reimbursement for amounts earned from investments

in other investment vehicles managed by the Manager. As

part of the current fee arrangement, the Manager makes an

annual contribution to the Company’s budget for marketing

activities in each of the three years to and including 2024.

The next review of the management fee is scheduled for

February 2025.

In the year under review, the amount paid was £14.1m, a

decrease of 4.7% from £14.8m paid in 2021, reflecting the

reduction in the fee rate and the lower average market

capitalisation of the Company over the year. Note 4 to the

Accounts provides detailed information in relation to the

management fee.

During the year, the Manager delegated the management of

the US portfolios to T. Rowe Price International and Barrow,

Hanley, Mewhinney & Strauss for which it incurs fees. The

Company reimburses the Manager for these fees, which in

2022 amounted to £4.2m (2021: £5.0m) (see note 4 to the

Accounts). Subsequent to the year end, the Manager has

divested from T. Rowe Price International and appointed

57Annual Report and Accounts 2022

Governance Report

JPMorgan Asset Management as a new US portfolio

manager.

PRIVATE EQUITY MANAGEMENT FEES

No additional fees (beyond the annual fee detailed above)

are paid to the Manager for any future commitments made

to Private Equity that fall within its remit. The Manager and

certain individuals employed by the Manager are, however,

entitled to participate in a performance fee arrangement

in the form of carried interest over secondary or co-

investments made within the Private Equity programme.

The fees paid to the Private Equity managers in respect

of the Private Equity funds amounted to £2.6m for 2022

(2021: £3.1m) (see note 4 to the Accounts) all of which were

incurred indirectly through the funds. Some of the funds

have arrangements whereby the Private Equity managers

share in the profits once certain “hurdle” rates of return

to investors have been achieved. These arrangements are

varied and complex, but are on normal commercial terms

within the Private Equity funds of funds industry. Fees

payable by the underlying funds are negotiated by each

manager. The arrangements also vary from fund to fund,

but management fees of 2% per annum and a 20% carried

interest, once an agreed hurdle rate of return for investors

has been achieved, are normal.

PE Investment Holdings 2018 LP pays an annual fee of

£1,000 to the General Partner. This is not directly incurred

by the Company but is reflected in the underlying value

of the investment. The investment in Inflexion Strategic

Partners is a direct investment in that business and

therefore no fees are incurred in relation to it.

USE OF THE “F&C” NAME

The Company was previously named Foreign & Colonial

Investment Trust PLC and continues to own the name

“Foreign & Colonial” while the Manager owns the name

“F&C”. The terms under which the Company can use the

“F&C” name are set out in a separate trade mark licence

agreement with the Manager dated 1 March 2018. The

licence agreement is royalty free subject to there being

no material change to the Company’s management

arrangements with the Manager within the next 10 years.

COMMITTEE EVALUATION

The activities of the Management Engagement Committee,

which comprises all Directors, were considered as part of the

externally facilitated Board evaluation process completed

in accordance with standard governance arrangements

as summarised on page 54. The evaluation found that the

Committee functioned well, with an appropriate balance of

membership, skills and experience, so contributing to the

Company's long-term success.

Beatrice Hollond

Chairman, Management Engagement Committee

8 March 2023

REPORT OF THE NOMINATION COMMITTEE

ROLE OF THE COMMITTEE

The primary role of the Nomination Committee is to

review and make recommendations with regard to

Board structure, size and composition, the balance of

knowledge, experience, range of skills and diversity and to

consider succession planning and tenure policy. All of the

Committee’s responsibilities have been carried out over the

course of 2022 and 2023 to date. The Committee met on

three occasions during 2022 and specifically considered,

monitored and reviewed the following matters:

• the structure and size of the Board and its composition

particularly in terms of succession planning and the

experience and skills of the individual Directors and

diversity across the Board as a whole;

• tenure policy;

• the criteria for future Board appointments and the

methods of recruitment, selection and appointment;

• the selection and appointment of a new Director, Julie

Tankard, and the reappointment of those Directors

standing for re-election at annual general meetings;

• the need for any changes in membership of the

committees;

• the attendance and time commitment of the Directors

in fulfilling their duties, including the extent of their

other directorships;

• each Director’s independence;

• the authorisation of each Director’s potential conflicts

of interests in accordance with the provisions of the Act

and the policy and procedures established by the Board

in relation to those provisions; and

• the fees of the Directors for the financial year ahead

with a recommendation to the Board.

DIVERSITY AND TENURE

The Board’s diversity policy, objective and progress in

achieving it are set out on pages 36 and 37. Director

searches are undertaken in accordance with this objective

and policy, with the recruitment process open to a diverse

range of candidates.

The Board is also of the view that length of service will not

necessarily compromise the independence or contribution

of directors of an investment trust company or, indeed, its

chairman. This is because continuity and experience can add

significantly to the strength of investment trust company

boards where the characteristics and relationships tend to

differ from those of trading companies. Notwithstanding

this, the Chairman and Directors are normally expected to

serve for a nine-year term. This may be adjusted for reasons

of flexibility in succession planning and to ensure continuity.

SUCCESSION PLANNING

The Committee has in place a succession plan for the

Directors, with the emphasis on maintaining the highest

level of skills, knowledge and experience on the Board.

When recruiting a new Director to the Board, the

Committee refers to a matrix that sets out the skills and

experience and considers the remaining tenure of each

of the Directors. This assists in identifying the desired

attributes of the new Director and ensures that the Board

continues to be composed of individuals with appropriate

and complementary skills and experience and provides

continuity.

Consideration of three search firms in February 2022 led to

the appointment of Nurole Limited and the implementation

of a recruitment and selection process for potential

candidates. As a result of that process, Julie Tankard was

appointed in August 2022 to succeed Jeffrey Hewitt who

retired at the conclusion of the 2022 AGM. Consideration of

three search firms in November 2022 led to the appointment

of Sapphire Partners to recruit a successor to Francesca

Ecsery, who will retire at the conclusion of the 2023 AGM.

The appointment of Sapphire Partners reflected their

strong track record of producing diverse candidate lists. It is

expected that a new Director will be appointed shortly.

The services provided by Nurole Limited and Sapphire

Partners have been for the sole purpose of recruiting the

eventual appointees and there were no other business

relationships in place with those firms, nor do they provide

any other services to the Company. The final decision on

appointing new Directors always rests with the Board.

COMMITTEE EVALUATION

The activities of the Nomination Committee were considered

as part of the externally facilitated Board evaluation process

completed in accordance with standard governance

arrangements summarised on page 54. The evaluation found

that the Committee functioned well, with the appropriate

balance of membership, skills and experience, so contributing

to the Company's long-term success.

Beatrice Hollond

Chairman, Nomination Committee

8 March 2023

59Annual Report and Accounts 2022

Governance Report

I am pleased to present to you the Report of the Audit

Committee for the year ended 31 December 2022, my first

as Chairman of the Committee.

ROLE OF THE COMMITTEE

The primary responsibilities of the Audit Committee are

to ensure the integrity of the financial reporting and

statements of the Company, to oversee the preparation and

audit of the annual accounts, the preparation of the half

year accounts and the risk management and internal control

processes. The Committee met three times during the year

with the Manager’s Investment Trust Accountant, Head of

Investment Trusts, Risk Managers and the Fund Manager in

attendance. EY attended on two occasions and have met

in private session with the Committee. The Board Chairman

was invited to, and regularly attended, Committee meetings.

Specifically, the Committee considered, monitored and

reviewed the following matters:

• The operational performance of the Manager and third-

party service providers in terms of business continuity.

• The financial statements, including advice to the Board

as to whether the annual report and accounts taken as

a whole is fair, balanced and understandable;

• The accounting policies of the Company;

• A report setting out the review of going concern

undertaken by the Manager and reviewed and assessed

the basis and results of its associated reverse stress

test;

• The principal and emerging risks faced by the

Company and the effectiveness of the Company’s

system of risk management and internal control

environment;

• The assumptions and results of the scenario testing of

the long-term viability of the Company and the basis of

the Long-Term Viability statement;

• How the Company has applied the principles and

complied with the provisions of the AIC Code;

• The effectiveness of the external audit process and the

current independence and objectivity of the auditor,

EY;

• The appointment, remuneration and terms of

engagement of EY;

• The policy on the engagement of the external auditor

to supply non-audit services and approval of any such

services;

• Whether to change the Company’s current policy by

establishing its own Internal Audit function;

• The implications of the acquisition of BMO GAM

by Ameriprise Inc. in terms of the integration of

the systems, risk management and internal control

infrastructure with its existing asset management arm,

Columbia Threadneedle Investments;

• The ISAE/AAF and SSAE16 reports or their equivalent

from the Manager, the Custodian, Depositary, the

Private Equity managers and the sub-managers and

a due diligence report from the Company’s Share

Registrar;

• Bank counterparties;

• The Company’s trademarks and intellectual property

rights; and

• The Committee’s terms of reference for approval by the

Board.

Comprehensive papers relating to each of these matters

were prepared for discussion. These were debated by

the Committee and any recommendations were fully

considered if there was a judgement to be applied in

arriving at conclusions. Recommendations were then made

to the Board as appropriate. With regard to the change of

ownership of BMO GAM that took effect in November 2021,

the Committee has received confirmation from the Manager

that the existing systems and controls are unchanged

and have continued to operate effectively throughout the

year under review and thereafter without any material

change to the date of this report. The integration of BMO

GAM and Columbia Threadneedle is well advanced, but

the Committee continues to monitor it closely from a risk

management and internal control perspective.

The Board retains ultimate responsibility for all aspects

relating to external financial statements and other

significant published financial information, as noted in

the Statement of Directors’ Responsibilities on page 69.

On broader control policy issues, the Committee has

reviewed, and is satisfied with, the Code of Conduct and

the Anti-Bribery and Anti-Corruption Operating Directive

to which the Manager's employees are subject. The Board

is responsible for ensuring appropriate procedures and

processes are in place to enable issues of concern to be

raised. Mindful of this, the Committee has reviewed the

Manager's Whistleblowing Policy, under which its directors

and staff may, in confidence, raise concerns about possible

improprieties in financial reporting or other matters. The

necessary arrangements are in place for communication by

the Manager to this Committee where matters might impact

the Company, with appropriate follow-up action. In 2022

REPORT OF THE AUDIT COMMITTEE

there were no such concerns raised with the Committee and

this was reported to the Board.

COMPOSITION OF THE COMMITTEE

The Board recognises the requirement for at least one

member of the Committee to have recent and relevant

financial experience and for the Committee as a whole

to have competence relevant to the sector in which

the Company operates. The Committee comprises four

independent non-executive Directors. I, Julie Tankard, was

appointed Chairman of the Committee with effect from

1 August 2022. I am a fellow of the Chartered Institute of

Management Accountants and currently Chief Financial

Officer of Port of London, where I am also responsible

for risk. The other members of the Committee have a

combination of financial, investment (including investment

trust sector) and business experience through the

senior posts held throughout their careers. Details of the

Committee members can be found on pages 45 and 46.

The Committee’s terms of reference can be found on the

Company's website at fandc.com.

MANAGEMENT OF RISK

The Manager’s Operational Risk Department provides

regular control reports to the Committee covering risk and

compliance, while the Company’s management agreement

requires that any significant issues of direct relevance to the

Company are reported to the Committee and to the Board

without delay. Following the Covid-19 pandemic, most staff

at the management company have continued to operate a

“hybrid” working arrangement, sharing their working time

between their office and working remotely. The necessary

arrangements for remote working are well established,

with staff having the facilities to operate effectively and

they are experienced in working from home. Whilst there

is some dependency on third parties, reassurance on their

ongoing arrangements was received and are robust. The

Manager and its third parties have continued to monitor

the well-being of staff throughout the year and provided

equipment where necessary. Online meetings continue

to ensure regular communication amongst teams, whilst

staff meetings and updates continue to ensure regular

engagement by senior management.

The Manager has therefore been able to continue to

serve the Company without interruption or incident and

its Operational Risk Department continued to provide

regular control reports to the Committee covering risk and

compliance. Any significant issues of direct relevance to the

Company are required to be reported to the Committee and

Board immediately. There were no such reports during the

year under review and up to the date of this report.

For the management of risk, a key risk summary is

produced by the Manager in consultation with the Board

to identify the risks to which the Company is exposed,

the controls that are in place and the actions being taken

to mitigate them. The Board has a robust process for

considering the resulting risk control assessment at regular

meetings and dynamically reviews the significance of the

risks and the reasons for any changes. The Company’s

Principal Risks and the process for the identification

of emerging risks, are set out on pages 40 to 42, with

additional information given in note 26 to the Accounts.

Included within these disclosures is information detailing

the reverse stress test that has again been carried out as

part of the Board’s assessment of the Company’s going

concern status and the scenario testing that encapsulates

the long-term viability of the Company. Those tests consider

the combination and magnitude of plausible events that

could potentially force the Company to discontinue its

operations or impact its resilience and its ability to meet its

liabilities over the coming ten years.

The Committee noted the extent and robustness of the

Board’s review and its assessment of the principal risks

and identification of emerging risks and participated in the

process as Board members themselves. The integration of

the risks identified into the analyses underpinning the Long-

Term Viability statement on page 43 was considered fully

and the Committee concluded that the Board’s statement

was soundly based. The period of ten years was also agreed

as remaining appropriate for the reasons given in the

statement, whilst recognising that it remains longer than

that used by many other companies.

RISK MANAGEMENT AND INTERNAL CONTROL

The Board has overall responsibility for the Company’s

system of risk management and internal control, for

reviewing its effectiveness and ensuring that risk

management and internal control processes are embedded

in the Manager's day-to-day operations. The Committee

has reviewed and reported to the Board on those controls,

which aim to ensure that the assets of the Company are

safeguarded, proper accounting records are maintained

and the financial information used within the business and

for publication is reliable. Control of the risks identified,

covering financial, operational, compliance and overall

REPORT OF THE AUDIT COMMITTEE (CONTINUED)

61Annual Report and Accounts 2022

Governance Report

risk management, is exercised by the Committee through

regular reports provided by the Manager. The reports

cover investment performance, performance attribution,

compliance with agreed and regulatory investment

restrictions, financial analyses, revenue estimates,

performance of the third-party administrators of Columbia

Threadneedle's savings plans and on other relevant

management issues.

The system of risk management and internal control is

designed to manage rather than eliminate the risk of

failure to achieve business objectives and can only provide

reasonable, but not absolute, assurance against material

misstatement or loss or fraud. Further to the review by the

Committee, the Board has assessed the effectiveness of

the Company’s internal controls. The assessment included

a review of the Manager’s risk management infrastructure

and the report on its policies and procedures in operation

and tests for the year to 31 October 2022 and subsequent

confirmation from the Manager that there had been no

material changes to the control environment in the period

to 8 March 2023. This had been prepared by the Manager,

for all its investment trust clients, to the International

Standard on Assurance Engagement (ISAE) No. 3402 and

to the standards of the Institute of Chartered Accountants

in England and Wales Technical Release AAF (01/06)

(the ‘ISAE/AAF Report’). The ISAE/AAF Report from

independent reporting accountants KPMG sets out the

Manager’s control policies and procedures with respect to

the management of clients’ investments and maintenance

of their financial records. The effectiveness of those controls

is monitored by the Manager’s Group Audit and Compliance

Committee which, for the year to 31 October 2022, received

regular reports from its Corporate Audit department.

Procedures are also in place to capture and evaluate any

failings and weaknesses within the Manager’s control

environment and those extending to any outsourced service

providers to ensure that action would be taken to remedy

any significant issues. Any errors or breaches relating to

the Company are reported at each Committee and Board

meeting by the Manager, including those relating to the

administration of their savings plans and related complaint

levels. Material issues would be reported earlier to the

Chairman. No failings or weaknesses that were material

to the overall control environment or financial statements

were identified in the year under review. The Committee

also reviewed the control reports of the Custodian, the

Depositary, T. Rowe Price, Barrow, Hanley, Mewhinney

& Strauss, the Private Equity managers and the Share

Registrars' due diligence report and was satisfied that there

were no material exceptions.

Through the reviews noted above and by direct enquiry of

the Manager and other relevant parties, the Committee and

the Board are satisfied that there were no material control

failures or exceptions affecting the Company’s operations

during the year under review or in 2023 to the date of this

report.

Based on the processes and controls in place within the

management company, the Committee has concluded, and

the Board has concurred, that there is no current need for

the Company to have a separate internal audit function.

EXTERNAL AUDIT PROCESS AND SIGNIFICANT ISSUES

CONSIDERED BY THE COMMITTEE

In carrying out its responsibilities, the Committee has

considered the planning arrangements, scope, materiality

levels and conclusions of the external audit for 2022. The

table on page 62 describes the significant judgements

and issues considered by the Committee in relation to the

financial statements for the year and how these issues were

addressed. Specifically, the most significant judgement for

the year concerned the private equity investment, Inflexion

Strategic Partners, which was written up in value again.

The Committee also included in their review the areas of

judgements, estimates and assumptions referred to in

note 2(c)(xiii) to the Accounts. Likewise, the Committee

reviewed the disclosure and description of the Alternative

Performance Measures provided on pages 115 to 117 and is

satisfied that the disclosure is fair and relevant.

With the increasing complexity of the Private Equity

investments, the Committee continues to scrutinise and

challenge the valuation of those investments. It questioned

all the Private Equity managers on their processes in

meetings during the year. The year end valuation is an

estimate based on the September valuations extrapolated

to the year end by adjusting for cash flows and any known

events (as described in notes 2(c)(ii) and 26(d) to the

Accounts). The Committee reviewed prior year experience

on the validity of this estimation process by comparing

variances in the estimated value with the actual audited

values as at 31 December 2021 (which become known in

May/June of the following year). The variances were not

significant, but in some cases higher than in previous years:

where this was the case, the Committee understood the

reasons through discussion with the managers. In testing

and challenging underlying adjustments made by the

Private Equity managers the Committee ensures that the

highest levels of oversight and scrutiny are applied. The

process for valuing the direct Private Equity valuations

was reviewed and confirmed by the Committee as being

appropriate.

The Committee met in February 2023 to discuss the

final draft of the Annual Report and Accounts, with

representatives of EY and the Manager in attendance. EY

submitted their year end report and indicated that at that

stage they would have no reason not to issue an unqualified

audit opinion in respect of the Annual Report and Accounts.

The Committee established that there were no material

issues or findings arising which needed to be brought to the

attention of the Board.

The Committee recognises the importance of continually

improving non-financial reporting and the increased

focus on the Strategic Report by investors and regulators.

Therefore, the Committee has carefully considered the

disclosures made in the Annual Report and Accounts

particularly in relation to those made under section 172(1)

of the Act, including how wider stakeholder interests

have been taken into account by the Directors while

performing their duties and related disclosures with regard

Significant Judgements and Issues considered by the Committee in 2022

Matter Action

Investment Portfolio Valuation

The Company’s portfolio of

investments comprises large

cap, liquid securities quoted on

recognised stock exchanges,

together with illiquid Private Equity

funds of funds and one direct

investment. The Private Equity

vehicles, which are subject to

signed agreements covering long-

term commitments and funding,

hold a diversity of unquoted

investments whose values are

subjective.

The Committee reviewed annual audited internal control reports from the Manager, the

sub-managers and Private Equity funds of funds managers. These reports indicated

that the relevant systems and controls surrounding daily pricing, cash and holdings

reconciliations, security valuation and Private Equity funding had operated satisfactorily.

In addition, with regard to Private Equity vehicles, the Committee: discussed controls

directly with the managers; reviewed the managers’ estimated valuations in detail at six

monthly intervals; and performed a thorough review and comparison of each Private

Equity fund’s 31 December 2021 or most recent audited value versus the managers’

estimated valuation adopted by the Company in its own reporting. The review indicated

that the Private Equity managers’ estimated valuations could continue to be relied upon

as being at fair value in accordance with the Company’s accounting policy. The process

for valuing the direct private equity valuations, including the write-up of the value of

Inflexion Strategic Partners was reviewed and agreed by the Committee.

Misappropriation of Assets

Misappropriation of the Company’s

investments or cash balances could

have a material impact on its NAV.

The Committee reviewed the annual audited internal control reports of the Manager

and the Custodian. Neither of these reports indicated any failures of controls over

the existence and safe custody of the Company’s investments and cash balances. The

Committee reviews regularly the list of banks which the Manager and sub-managers

are authorised to place cash and deposits with. The Company’s Depositary reported

quarterly on the safe custody of the Company’s investments and the operation of

controls over the movement of cash in settlement of investment transactions. Through

these reports the Committee is satisfied that the assets remained protected throughout

the year.

Income Recognition

Incomplete controls over, or

inaccurate recognition of, income

could result in the Company

misstating its revenue receipts and

associated tax, with consequences

for overall performance, payment

of dividends to shareholders, and

compliance with taxation rules.

The Committee’s review of the Manager’s annual audited controls report indicated that

there were no control failures in the year. The Committee satisfied itself that special

dividends had been correctly treated in accordance with the Company’s accounting

policy. Investment income was tested and reported on by the Manager and agreed by

the Committee.

REPORT OF THE AUDIT COMMITTEE (CONTINUED)

63Annual Report and Accounts 2022

Governance Report

to Responsible Investment issues. The Committee has had

regard to the non-financial reporting requirements in the

Act, which is an area of reporting that continues to evolve.

The Committee also noted that an independent,

experienced and objective third-party consultant was

engaged to review the Annual Report and Accounts and

comment on its fairness, balance and comprehension. The

Committee recommended to the Board that the Annual

Report and Accounts was in its view, fair, balanced and

understandable in accordance with accounting standards,

regulatory requirements and best practice.

The Independent Auditor’s Report which sets out the

unqualified audit opinion, the scope of the audit and the

areas of focus, in compliance with applicable auditing

standards, can be found on pages 70 to 77.

AUDITOR ASSESSMENT, INDEPENDENCE AND

APPOINTMENT

The Committee reviews the reappointment of the auditor

every year and has been satisfied with the effectiveness

of EY’s performance. The audit partner rotates at least

every five years, in accordance with professional guidelines.

James Beszant is the senior statutory auditor and this

is his second year as audit partner. The Committee is

satisfied that EY are independent of the Company and have

complied with relevant auditing standards. In evaluating EY,

the Committee has taken into consideration the standing,

skills and experience of the firm and of the audit team. From

direct observation and indirect enquiry of management,

the Committee is satisfied that EY will continue to provide

effective independent challenge in carrying out their

responsibilities.

The Committee also considered the evaluation of EY’s audit

performance through the FRC’s Audit Quality Inspection

Report for 2021/22. The FRC reviewed 17 of EY’s audits, of

which 11 (65%) were assessed as requiring no more than

limited improvements. This reflects a fall compared with the

previous year (79%) and these results are below the FRC’s

overall inspection findings, which showed that 75% of audits

(72 out of 96) required no more than limited improvements

(2020/21: 71%). The Committee discussed these findings

with EY's audit partner, who confirmed that EY had acted

on the findings.

The FRC’s ethical standards continue to press for ever

higher quality auditing standards which means that

audit firms are incurring substantial costs. It also expects

audit firms to demonstrate that they are economically

sustainable. This upward pressure on costs has been

reflected in significant increases in the audit fee in recent

years. The audit fee for 2022, excluding VAT, was £143,000

(2021: £134,000). More details can be found in Note 5 to the

Accounts. The Committee has a duty to consider carefully

the audit for value and effectiveness and, as part of its

annual review, the need for putting the audit out to tender

for reasons of quality, independence or value. The Company

is required to carry out a tender every ten years with the

next due no later than 2026. In view of the substantial

increases in the fee over recent years and the potential for

further increases in future years, the Committee continues

to monitor developments and take market soundings on

audit quality and fees as appropriate.

The Committee confirms that the Company is in compliance

with the requirements of the Statutory Audit Services for

Large Companies Market Investigation (Mandatory Use

of Competitive Tender Processes and Audit Committee

Responsibilities) Order 2014. This order relates to the

frequency and governance of tenders for the appointment

of the external auditor and the setting of the policy on the

provision of non-audit services.

NON-AUDIT SERVICES

The Committee regards the continued independence of

the external auditor to be a matter of the highest priority.

The Company’s policy with regard to the provision of

non-audit services by the external auditor ensures that no

engagement will be permitted if:

• the provision of the services would contravene any

regulation or ethical standard;

• the auditors are not considered to be expert providers

of the non-audit services;

• the provision of such services by the auditor creates a

conflict of interest for either the Board or the Manager;

and

• the services are considered to be likely to inhibit the

auditor’s independence or objectivity as auditors.

In particular, the Committee has a policy that the

accumulated costs of all non-audit services sought from

the auditors in any one year should not exceed 30% of

the likely audit fees for that year and not exceed 70%

cumulatively over three years. Any individual service likely

to exceed £5,000 is agreed by the Committee prior to the

commencement of the services. There were no non-audit

services for the year ended 31 December 2022 (2021: nil).

In May 2022, the Government published its response to

its March 2021 consultation paper on audit and corporate

governance reform, in which it confirmed that significant

reforms will be made to audit and corporate governance

in the UK. We understand that in the first quarter of 2023,

the FRC will consult on changes to the UK Corporate

Governance Code, with the revised Code expected to apply

to accounting periods beginning on or after 1 January 2024.

In the first half of 2024 it is expected that the FRC will be

replaced by the Audit Reporting and Governance Authority

(‘ARGA’), which will have greater powers to sanction

Directors in respect of corporate reporting and audit.

Amongst the likely changes, it is expected that Boards will

be required to:

• Formally confirm the legality of proposed dividend

payments.

• Make explicit disclosures on the effectiveness of

internal controls, including a report on the steps taken

to prevent and detect fraud.

• Issue a Resilience Statement covering short and

medium term threats, to replace the existing

requirements for Going Concern and Viability

statements.

• Adopt and publish an Audit and Assurance Policy.

• Engage a “challenger” firm to conduct part or all of

their annual audit.

The Company will not be required to comply with all of

these requirements because, although as a listed company

it is a Public Interest Entity (‘PIE’), there are expected to be

exemptions for PIEs with less than 750 employees. However,

given that each of these elements is expected to become

best market practice, the Board may consider it prudent to

comply with the new requirements.

COMMITTEE EVALUATION

The activities of the Audit Committee were considered

as part of the externally facilitated Board evaluation

process completed in accordance with standard

governance arrangements as summarised on page 54. A

full evaluation was undertaken on the effectiveness, roles

and responsibilities of the Committee in accordance with

the FRC’s current guidance. The evaluation found that the

Committee functioned well, with an appropriate balance of

membership, skills and experience, so contributing to the

Company's long-term success.

Julie Tankard

Chairman, Audit Committee

8 March 2023

REPORT OF THE AUDIT COMMITTEE (CONTINUED)

65Annual Report and Accounts 2022

Governance Report

DIRECTORS’ REMUNERATION POLICY

The Board’s policy is to set Directors’ remuneration at

a level commensurate with the skills and experience

necessary for the effective stewardship of the Company

and the expected contribution of the Board as a whole in

continuing to achieve the Company’s objectives. The time

committed to the Company’s business and the specific

responsibilities of the Chairman, Senior Independent

Director, Directors and the chairmen and members of

the various committees of the Board and their retention

are taken into account. The policy aims to be fair and

reasonable in relation to comparable investment trust

companies and other similar sized financial companies. This

includes provision for the Company’s reimbursement of

all reasonable travel and associated expenses incurred by

the Directors in attending Board and committee meetings,

including those treated as a benefit in kind subject to tax

and national insurance.

This policy was last approved by shareholders in May

2020 with 90.3% voting in favour, 5.5% voting against,

while 4.2% of the proxy votes received were withheld,

however a vote withheld is not a vote in law and is not

counted in the calculation of the votes for and against

a resolution. The Board has not subsequently received

any views from shareholders in respect of the levels of

Directors’ remuneration. It is a requirement that shareholder

approval is sought at least every three years and therefore

shareholders will be asked to approve the Directors’

remuneration policy at the forthcoming AGM, with the

intention that it will continue for the three year period

ending at the conclusion of the annual general meeting in

2026.

The Company’s Articles of Association limit the aggregate

fees payable to the Board to a total of £500,000 per

annum. Within that limit, it is the responsibility of the

Board as a whole to determine and approve the Directors’

fees, following a recommendation from the Chairman

and, in the case of the Chairman’s fees, from the Senior

Independent Director. The fees are fixed and are payable

in cash, quarterly in arrears. Directors are not eligible for

bonuses, pension benefits, share options or long-term

incentive schemes. The Board considers the level of

Directors’ fees annually. In January 2023, the Board agreed

the recommendation of the Nomination Committee that,

commencing 1 January 2023, all fees should be increased by

4.75% to the levels shown in the table below.

Annual fees for Board Responsibilities

2023

2022

Board

Chairman 81,705 78,000

Senior Independent Director 47,660 45,500

Director 40,850 39,000

Additional fees payable for committee membership:

Audit Committee

Chairman 14,665 14,000

Members 5,760 5,500

Nomination Committee

Chairman 3,400 3,250

Members 3,400 3,250

No additional fees are payable for membership of the

Management Engagement Committee.

The Board is composed solely of non-executive Directors,

none of whom has a service contract with the Company

and therefore the Board has not established a separate

remuneration committee. Each Director has signed a terms

of appointment letter with the Company, in each case

including one month’s notice of termination by either party.

There is no provision for compensation for loss of office.

The letters of appointment are available for inspection

by emailing the Company Secretary at FCITCoSec@

columbiathreadneedle.com and will be available for 15

minutes before, and during, the forthcoming AGM. The

dates on which each Director was appointed to the Board

are set out in their biographies on pages 45 and 46.

DIRECTORS' REMUNERATION REPORT

DIRECTORS’ SHAREHOLDINGS

There is no requirement under the Company’s Articles of Association for the Directors to hold shares in the Company. The

beneficial shareholdings of the Directors who held office at the end of the financial year are shown below:

Directors’ share interests (audited)

At 31 December 2022 2021

Beatrice Hollond 6,752 5,348

Francesca Ecsery 29,105 21,338

Tom Joy 3,500 3,500

Edward Knapp 8,575 8,401

Rain Newton-Smith 165 165

Quintin Price 12,461 12,461

Stephen Russell

(1)

– n/a

Julie Tankard

(2)

333 n/a

(1) Appointed to the Board 1 February 2022

(2) Appointed to the Board 1 August 2022

The Company’s register of Directors’ interests contains full details of Directors’ shareholdings.

Since the year end, and up to 6 March 2023 (being the

latest practicable date before the publication of the Annual

Report and Accounts), the following Directors have acquired

further ordinary shares in the Company: Francesca Ecsery 13,

Beatrice Hollond 219, Edward Knapp 34 and Julie Tankard 1.

There have been no changes in any of the other Directors’

shareholdings detailed above. No Director held any interests

in the issued stock or shares of the Company other than as

stated above.

As at 6 March 2023 the Fund Manager held 191,697 ordinary

shares in the Company.

POLICY IMPLEMENTATION

The Directors’ Remuneration Report is subject to an annual

advisory vote and therefore an ordinary resolution for its

approval will be put to shareholders at the forthcoming AGM.

At the 2022 AGM, shareholders approved the Remuneration

Report in respect of the year ended 31 December 2021: of

the total votes received, 89.1% were cast in favour of the

resolution, 5.3% were against and 5.6% of the proxy votes

received were withheld, however a vote withheld is not a vote

in law and is not counted in the calculation of the votes for

and against a resolution.

SINGLE TOTAL FIGURE OF REMUNERATION

The single total figure of remuneration for the Board as a

whole for the year ended 31 December 2022 was £387,200.

The single total figure of remuneration for each Director is

detailed overleaf, together with the prior year comparative.

The amounts paid by the Company to the Directors were for

services as non-executive Directors.

DIRECTORS' REMUNERATION REPORT (CONTINUED)

67Annual Report and Accounts 2022

Governance Report

The following table sets out the annual percentage change in Directors’ fees for the years to 31 December 2021 and 2022:

Single total figure table (audited)

Fees

£’000s

Taxable Benefits

(1)

£’000s

Total

£’000s

Director 2022 2021 2022 2021 2022 2021

Beatrice Hollond

(2)

81.3 78.0 1.2 0.7 82.5 78.7

Sarah Arkle

(3)

3.8 42.8 0.0 1.5 3.8 44.3

Sir Roger Bone

(4)

n/a 18.7 n/a 0.0 n/a 18.7

Francesca Ecsery 42.3 40.5 0.9 0.9 43.2 41.4

Jeffrey Hewitt

(5)

18.0 51.0 0.8 0.7 18.8 51.7

Tom Joy

(6)

42.3 40.0 1.3 1.5 43.6 41.5

Edward Knapp 44.5 42.8 1.2 1.4 45.7 44.2

Rain Newton-Smith

(7)

41.4 24.0 0.8 1.1 42.2 25.1

Quintin Price

(8)

51.0 46.7 1.1 1.5 52.1 48.2

Stephen Russell

(9)

40.5 n/a 0.9 n/a 41.4 n/a

Julie Tankard

(10)

22.1 n/a 0.5 n/a 22.6 n/a

Total 387.2 384.5 8.7 9.3 395.9 393.8

(1) Comprises amounts reimbursed for expenses incurred in carrying out business for the Company, which have been grossed up to include PAYE and NI

contributions.

(2) Highest paid Director.

(3) Retired from the Board on 31 January 2022.

(4) Retired immediately following the AGM on 10 May 2021.

(5) Retired immediately following the AGM on 3 May 2022.

(6) Appointed to the Board on 1 January 2021 and the Nomination Committee on 9 February 2021.

(7) Appointed to the Board on 11 May 2021 and to the Nomination Committee on 8 February 2022.

(8) Became Senior Independent Director on 11 May 2021.

(9) Appointed to the Board and Audit Committee on 1 February 2022.

(10) Appointed to the Board and as Chairman of the Audit Committee on 1 August 2022.

Annual Percentage Change in Directors' fees

% change from 2021 to 2022 % change from 2020 to 2021

Sarah Arkle

(1)

(91.1) 0

Sir Roger Bone

(2)

n/a (64.0)

Francesca Ecsery 4.4 0.0

Jeffrey Hewitt

(3)

(64.7) 0

Beatrice Hollond 4.2 0.0

Tom Joy

(4)

5.8 n/a

Edward Knapp 4.0 0.0

Rain Newton-Smith

(5)

72.5 0.0

Quintin Price

(6)

9.2 38.6

Stephen Russell

(7)

n/a n/a

Julie Tankard

(8)

n/a n/a

(1) Retired from the Board on 31 January 2022.

(2) Retired immediately following the AGM on 10 May 2021.

(3) Retired immediately following the AGM on 3 May 2022.

(4) Appointed to the Board on 1 January 2021 and the Nomination Committee on 9 February 2021.

(5) Appointed to the Board on 11 May 2021 and to the Nomination Committee on 8 February 2022.

(6) Appointed to the Board on 10 March 2020, the Audit Committee on 7 May 2020 and became Senior Independent Director on 11 May 2021.

(7) Appointed to the Board and Audit Committee on 1 February 2022

(8) Appointed to the Board and as Chairman of the Audit Committee on 1 August 2022

Shareholder total return vs benchmark total return

over ten years

Source: Columbia Threadneedle Investments & Refinitiv Eikon

100

125

150

175

200

225

250

275

300

325

350

375

400

2015 20202012 2013 2016 2017 2018 20192014

FTSE All World Index

(total return)

F&C Investment Trust Ord

2021 2022

The following table shows the total remuneration, excluding

taxable benefits, for the Chairman over the five years ended

31 December 2022:

Remuneration for the Chairman over the five years

ended 31 December 2022

Year ended 31 December Fees £’000s

2022 81.3

2021 78.0

2020 78.0

2019 77.0

2018 75.0

DIRECTORS' REMUNERATION REPORT (CONTINUED)

The table below is shown to enable shareholders to assess

the relative importance of spend on remuneration. It

compares the remuneration, excluding taxable benefits,

against the shareholder distributions of dividends and share

buybacks.

Actual expenditure

2022

£’000s

2021

£’000s

Change

Aggregate Directors’

Remuneration

387.2 384.5 0.7

Aggregate Dividends paid

to shareholders

68,983 65,578 5.2

Aggregate cost of ordinary

shares repurchased

70,749 84,326 (16.1)

COMPANY PERFORMANCE

An explanation of the performance of the Company for the

year ended 31 December 2022 is given in the Chairman’s

Statement and Fund Manager’s Review.

A comparison of the Company’s performance over the last

ten years is set out on the graph below. This shows the total

return (assuming all dividends are reinvested) to ordinary

shareholders compared with that of the Company’s

benchmark, the FTSE All-World Index (total return). The

Board believes that this index is the most appropriate for

performance comparison purposes as it reflects the Fund

Manager’s investment universe.

ANNUAL STATEMENT

On behalf of the Board and in accordance with Part 2 of

Schedule 8 of the Large and Medium-sized Companies and

Groups (Accounts and Reports) (Amendment) regulations

2013, it is confirmed that the above Remuneration Report

summarises, as applicable, for the year to 31 December

2022:

• The major decisions on Directors’ remuneration;

• Any substantial changes relating to Directors’

remuneration made during the year; and

• The context in which the changes occurred and

decisions have been taken.

On behalf of the Board

Beatrice Hollond

Chairman

8 March 2023

69Annual Report and Accounts 2022

Governance Report

The Directors are responsible for preparing the Annual

Report and Accounts in accordance with applicable law and

regulations.

Company law requires the Directors to prepare financial

statements for each financial year. Under that law the

Directors have prepared the financial statements in

accordance with United Kingdom Accounting Standards,

comprising FRS 102 “The Financial Reporting Standard

applicable in the UK and Republic of Ireland”.

Under company law the Directors must not approve the

financial statements unless they are satisfied that they give

a true and fair view of the state of affairs of the Company

and of the return or loss of the Company for that period.

In preparing these financial statements, the Directors are

required to:

• select suitable accounting policies and then apply them

consistently;

• make judgements and accounting estimates that are

reasonable and prudent;

• state whether applicable UK Accounting Standards

have been followed, subject to any material departures

disclosed and explained in the financial statements

respectively; and

• prepare the financial statements on the going concern

basis unless it is inappropriate to presume that the

Company will continue in business.

The Directors confirm that they have complied with the

above requirements in preparing the financial statements.

Further details can be found in notes 2 and 25 to the

Accounts.

The Directors are responsible for keeping adequate

accounting records that are sufficient to show and explain

the Company’s transactions and disclose with reasonable

accuracy at any time the financial position of the Company

and enable them to ensure that the financial statements

comply with the Act. They are also responsible for

safeguarding the assets of the Company and hence for

taking reasonable steps for the prevention and detection of

fraud and other irregularities.

Under applicable law and regulations, the Directors are

also responsible for preparing a Strategic Report, Directors’

Report, Directors’ Remuneration Report and Corporate

Governance Report that comply with that law and those

regulations.

The Annual Report and Accounts is published on the

fandc.com website, which is maintained by the Manager.

The Directors are responsible for the maintenance and

integrity of the Company’s website. The work undertaken

by the auditor does not involve consideration of the

maintenance and integrity of the website and, accordingly,

the auditor accepts no responsibility for any changes that

have occurred to the financial statements since they were

initially presented on the website. Visitors to the website

need to be aware that legislation in the United Kingdom

governing the preparation and dissemination of financial

statements may differ from legislation in other jurisdictions.

Each of the Directors listed on pages 45 and 46 confirm to

the best of their knowledge that:

• the financial statements, prepared in accordance with

applicable accounting standards, give a true and fair

view of the assets, liabilities, financial position and

profit of the Company;

• the Strategic Report includes a fair review of the

development and performance of the business and the

position of the Company, together with a description of

the principal risks and uncertainties that it faces; and

• in the opinion of the Directors the Annual Report

and Accounts, taken as a whole, is fair, balanced

and understandable and provides the information

necessary for shareholders to assess the Company’s

position and performance, business model and

strategy.

On behalf of the Board

Beatrice Hollond

Chairman

8 March 2023

STATEMENT OF DIRECTORS’

RESPONSIBILITIES

INDEPENDENT AUDITOR’S REPORT TO THE

MEMBERS OF F&C INVESTMENT TRUST PLC

OPINION

We have audited the financial statements of F&C

Investment Trust PLC (the ‘Company’) for the year ended

31 December 2022 which comprise the Income Statement,

Statement of Changes in Equity, Balance Sheet, Statement

of Cash Flows and the related Notes to the Accounts 1 to

27, including a summary of significant accounting policies.

The financial reporting framework that has been applied

in their preparation is applicable law and United Kingdom

Accounting Standards including FRS 102 “The Financial

Reporting Standard applicable in the UK and Republic of

Ireland” (United Kingdom Generally Accepted Accounting

Practice).

In our opinion, the financial statements:

• give a true and fair view of the Company’s affairs as

at 31 December 2022 and of its loss for the year then

ended;

• have been properly prepared in accordance with

United Kingdom Generally Accepted Accounting

Practice; and

• have been prepared in accordance with the

requirements of the Companies Act 2006.

BASIS FOR OPINION

We conducted our audit in accordance with International

Standards on Auditing (UK) (ISAs (UK)) and applicable

law. Our responsibilities under those standards are further

described in the Auditor’s responsibilities for the audit of

the financial statements section of our report. We believe

that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

INDEPENDENCE

We are independent of the Company in accordance with

the ethical requirements that are relevant to our audit of the

financial statements in the UK, including the FRC’s Ethical

Standard as applied to public interest entities, and we have

fulfilled our other ethical responsibilities in accordance with

these requirements.

The non-audit services prohibited by the FRC’s Ethical

Standard were not provided to the Company and we remain

independent of the Company in conducting the audit.

CONCLUSIONS RELATING TO GOING CONCERN

In auditing the financial statements, we have concluded that

the Directors’ use of the going concern basis of accounting

in the preparation of the financial statements is appropriate.

In our evaluation of the Directors’ assessment of the

Company’s ability to continue to adopt the going concern

basis of accounting, we have performed the following

procedures:

• We confirmed our understanding of the Company’s

going concern assessment process and held

discussions with the Directors and Columbia

Threadneedle Investment Business Limited (‘CTIB’

or the ‘Manager’) to determine if all key factors that

we have become aware of during our audit were

considered in their assessment during our attendance

at the Audit Committee.

• We inspected the Directors’ assessment of going

concern, including the revenue forecast for the period

to 31 March 2024, the stress and reverse stress tests

and the liquidity assessment of the investments.

• We discussed the assessment with the Directors

and the Manager and reviewed Board minutes for

risks, events or contrary evidence that, individually

or collectively, may cast significant doubt on the

Company’s ability to continue as a going concern.

• We reviewed the factors and assumptions as applied

to the revenue forecast, stress and reverse stress

tests prepared by the Manager. We considered the

appropriateness of the methods used to calculate the

revenue forecast and determined, through testing of

the methodology and calculations, that the methods,

inputs and assumptions utilised were appropriate to

be able to make an assessment for the Company. We

also considered the likelihood of the occurrence of the

reverse stress test scenario and any available mitigating

actions that could be taken.

• In relation to the Company’s borrowing arrangements,

we inspected the Company’s assessment of the risk

of breaching the debt covenants as a result of a

reduction in the value of the Company’s portfolio. We

recalculated the Company’s compliance with debt

covenants in the scenarios assessed by the directors

in order to identify what factors would lead to the

Company breaching the financial covenants.

• We reviewed the Directors' assessment of the principal

risks facing the Company, including those that would

threaten its business model, future performance,

solvency or liquidity and compared them to our

understanding of the Company’s risks.

• We reviewed the Company’s going concern disclosures

included in the annual report in order to assess whether

the disclosures were appropriate and in conformity

with the reporting standards.

71Annual Report and Accounts 2022

Auditor’s Report

Based on the work we have performed, we have not

identified any material uncertainties relating to events

or conditions that, individually or collectively, may cast

significant doubt on the Company’s ability to continue as a

going concern for the period to 31 March 2024.

In relation to the Company’s reporting on how they have

applied the UK Corporate Governance Code, we have

nothing material to add or draw attention to in relation to

the Directors’ statement in the financial statements about

whether the Directors considered it appropriate to adopt

the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors

with respect to going concern are described in the relevant

sections of this report. However, because not all future

events or conditions can be predicted, this statement is not

a guarantee as to the Company’s ability to continue as a

going concern.

AN OVERVIEW OF THE SCOPE OF OUR AUDIT

Tailoring the scope

Our assessment of audit risk, our evaluation of materiality

and our allocation of performance materiality determine our

audit scope for the Company. This enables us to form an

opinion on the financial statements. We take into account

size, risk profile, the organisation of the Company and

effectiveness of controls, the potential impact of climate

change and changes in the business environment when

assessing the level of work to be performed.

Climate change

The Company has determined that the most significant

future impacts from climate change on its operations will

be from the impact of climate change on the valuation of

its investment portfolio. This is explained on pages 41 to 42

in the principal and emerging risks section of the annual

report. The Company has also explained their climate

commitments on page 17 of the annual report. All of these

disclosures form part of the “Other information,” rather

than the audited financial statements. Our procedures on

these unaudited disclosures therefore consisted solely of

considering whether they are materially inconsistent with

the financial statements or our knowledge obtained in the

course of the audit or otherwise appear to be materially

misstated, in line with our responsibilities on “Other

information”.

In planning and performing our audit we assessed the

potential impacts of climate change on the Company’s

business and any consequential material impact on its

financial statements.

The Company has explained in Note 2 (c)(xiii) how it has

reflected the impact of climate change in its financial

statements. Significant judgements and estimates relating

to climate change are included in Note 2 (c)(xiii).

Our audit effort in considering the impact of climate change

on the financial statements was focused on evaluating

management’s assessment of the impact of climate risk,

physical and transition, their climate commitments, the

Audit

Scope

Key audit

matters

Materiality

OVERVIEW OF OUR AUDIT APPROACH

• Incorrect valuation or ownership of unquoted investments and the

resulting impact on the Income Statement.

• Incomplete or inaccurate revenue recognition, including the

classification of special dividends as revenue or capital items in the

Income Statement.

• Incorrect valuation or ownership of the quoted investment portfolio.

• Overall materiality of £46.5m which represents 1% of net assets.

effects of material climate risks disclosed on pages 17 and

41 to 42 and the significant judgements and estimates

disclosed in note 2 (c)(xiii) and whether these have been

appropriately reflected in the valuation of quoted and

unquoted investments.

We also challenged the Directors’ considerations of climate

change risks in their assessment of going concern and

viability and associated disclosures. Where considerations

of climate change were relevant to our assessment of going

concern, these are described above.

Based on our work we have not identified the impact of

climate change on the financial statements to be a key audit

matter or to impact a key audit matter.

Key audit matters

Key audit matters are those matters that, in our professional

judgment, were of most significance in our audit of the

financial statements of the current period and include the

most significant assessed risks of material misstatement

(whether or not due to fraud) that we identified. These

matters included those which had the greatest effect on:

the overall audit strategy, the allocation of resources in the

audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit

of the financial statements as a whole, and in our opinion

thereon, and we do not provide a separate opinion on these

matters.

INDEPENDENT AUDITOR’S REPORT (CONTINUED)

73Annual Report and Accounts 2022

Auditor’s Report

Risk Our response to the risk

Incorrect valuation or ownership of

unquoted investments and the resulting

impact on the Income Statement (2022:

£575.2m, 2021: £519.2m)

Refer to the Audit Committee Report

(page 62); Accounting policies (page 83);

and Note 10 of the Financial Statements

(page 91)

The Company invests in a number of

unlisted private equity holdings, either

through fund investments or through co-

investments managed by the Company’s

specialist private equity managers (‘PE

Managers’). The primary PE Managers

are CTIB, HarbourVest Partners LLP and

Pantheon Ventures (UK) LLP. Primary

PE fund investments are held through

the Company while secondary or

co-investment opportunities are held

through PE Investment Holdings 2018

LP (‘PE LP’), an investment vehicle in

which the Company is the sole Limited

Partner. The Company also holds a

direct investment in Inflexion Strategic

Partners, a Private Equity Investment

Management business.

Valuation

The Company’s accounting policy for

the valuation of these investments is as

follows;

• Funds and co-investments – the

directors rely on unaudited valuations

of the underlying unlisted investments

as supplied by the PE managers, rolled

forward for any calls and distributions

in the subsequent period.

• Direct investment – As at 31 December

2022, fair valued by CTIB with

reference to a probability weighted

valuation model.

There is the risk that inaccurate

judgments and estimates made in the

assessment of fair value could materially

misstate the value of the investment

portfolio in the Balance Sheet, and the

unrealised gains/(losses) in the Income

Statement. There is also incentive

and opportunity for the Manager to

inflate valuations to meet shareholders'

expectations.

Ownership

The Manager is responsible for

processing and monitoring the

ownership of the unquoted investments.

There is a risk that the incorrect number

of shares are recorded, particularly

where trades are initiated or settled close

to the Balance Sheet date.

We have performed the following procedures:

Valuation

• We obtained an understanding of the Manager’s processes and controls for the valuation of the

unquoted investments by performing walkthrough procedures and reviewing the Manager’s

internal controls report to evaluate the design and implementation of controls.

• We obtained an understanding of the governance of unlisted valuations through discussion with

the Manager and inspecting oversight of the unquoted valuation process at Board level through

reading minutes and reports provided to Board meetings throughout the year.

• To address the risk of management override, we tested a sample of manual journal entries

posted in relation to unquoted investments during the year.

Fund co-investments

• We performed a back-testing exercise to assess the historical accuracy of a sample of valuations

of unquoted investments’ in the 31 December 2021 financial statements. We compared the

valuations per the Company’s 2021 audited financial statements, which were estimates at the

time, to the unquoted investment values subsequently reported by the respective PE Manager

as at 31 December 2021. For this sample, we also confirmed that the PE Managers are following

fair value accounting principles by reviewing the valuation policies disclosed in their latest

audited accounts or quarterly valuation report.

• We agreed the NAV of all unquoted investments on the investment report to the estimated

NAV valuations included in the 31 December 2022 NAV statements provided directly by the

GPs or PE fund administrators, whether held directly by the Company or indirectly through

PE LP. Where 31 December 2022 estimated NAV valuations were not available, we obtained

the 30 September 2022 NAV statements from the GPs or PE fund administrators and tested

management’s roll forward exercise which adjusts for cash flows, foreign exchange movements

and any other adjustments, in the period to 31 December 2022.

• We held meetings with HarbourVest Partners LLC, Pantheon Ventures (UK) LLP and the CTIB

private equity team to discuss and challenge:

– The annual performance of the investment funds during the year to 31 December 2022 and

the valuation approaches adopted.

– The reasons for any material variances noted between estimated and actual NAVs for the

year ended 31 December 2021.

– Whether any post balance sheet information is available that would require adjustments to

be made to the estimated 31 December 2022 NAVs.

• We recalculated the valuation of all unquoted investments in foreign currencies using exchange

rates from third party sources to gain assurance over the reasonableness of currency rates used.

• We recalculated the unrealised profits on the revaluation of all unquoted investments.

• For a sample of unquoted investments, we confirmed the realised gains/(losses) to the notices

received from the relevant PE Manager. These are calculated as the difference between

distribution proceeds less return of capital.

• We compared the Company’s valuation methodology to the requirements of International

Private Equity and Venture Capital Valuation Guidelines.

Direct Investment

• With the assistance of our specialist valuation team, we performed the following procedures:

– Understood the Inflexion Strategic Partners investment thesis through discussions with the

CTIB private equity team;

– Reviewed the CTIB valuation model and assessed its appropriateness in line with FRS 102

and the International Private Equity and Venture Capital Valuation Guidelines;

– Challenged management’s judgments and assumptions, including: the change of valuation

model from the prior year, the choice of comparable quoted companies and the discount

applied compared to comparable quoted company multiples; and

– Performed an independent valuation analysis to derive a reasonable valuation range.

• The audit team verified the inputs to the model to third party data (earnings, net debt,

comparable quoted company multiples), and recalculated the valuation using the model inputs

to verify the mathematical accuracy of the calculation.

Ownership

• We obtained an understanding of the Manager’s processes and controls for the ownership of

the unquoted investments by performing walkthrough procedures.

• For all investments, we agreed independently obtained confirmations from the underlying GPs

or PE fund administrators to the Company’s records to confirm the total committed capital and

the amount drawn down at the year end.

Key observations communicated to the Audit Committee

The results of our procedures identified no material misstatement in relation to the incorrect valuation or ownership of unquoted investments

and the resulting impact on the Income Statement.

Based on the work performed, we had no matters to report to the Audit Committee.

INDEPENDENT AUDITOR’S REPORT (CONTINUED)

Risk Our response to the risk

Incomplete or inaccurate revenue recognition, including

the classification of special dividends as revenue or

capital items in the Income Statement (Special dividends

- 2022: £2.1m, 2021: £2.9m; Other revenue - 2022:

£94.6m, 2021: £76.2m)

Refer to the Audit Committee Report (page 62);

Accounting policies (page 84); and Note 3 of the Financial

Statements (page 86)

The investment income received by the Company during

the year directly affects the Company’s revenue return.

There is a risk of incomplete or inaccurate recognition of

revenue through the failure to recognise proper income

entitlements or failure to apply appropriate accounting

treatment.

The income received during the year consisted primarily

of dividend income from listed investments.

Special dividends represent dividends paid by investee

companies that are additional to the normal or expected

dividend cycle for that company. In accordance with the

AIC SORP, special dividends can be included within either

the revenue or capital columns of the Income Statement,

depending on the commercial circumstances behind the

payments. The Directors may be required to exercise

judgment in determining whether income receivable in the

form of special dividends should be classified as ‘revenue’

or ‘capital’.

As such, there is a potential manual and judgemental

element in classifying special dividends between revenue

and capital. The revenue column of the Income Statement

is the main driver of the minimum dividend calculation.

We have performed the following procedures:

• We obtained an understanding of the Manager’s and State Street Bank and

Trust’s (the ‘Administrator’) processes and controls surrounding revenue

recognition and classification of special dividends by reviewing their internal

controls report and performing our walkthrough procedures to evaluate the

design and implementation of controls.

• For 100% of dividends received and accrued, we recalculated the dividend

income by multiplying the investment holdings at the ex-dividend date,

traced from the accounting records, by the dividend per share, which was

agreed to an independent data vendor. We have agreed a sample of dividend

receipts to bank statements. Where dividends were received or accrued in

foreign currency, we translated the amount into the reporting currency of the

Company using exchange rates sourced from an independent data vendor.

• To test completeness of recorded income, we verified that expected dividends

for each investee company held during the year had been recorded as revenue

with reference to investee company announcements obtained from an

independent data vendor.

• For 100% of dividends accrued, we reviewed the investee company

announcements to assess whether the dividend obligation arose prior to 31

December 2022.

• For 100% of dividends received and accrued during the period, we reviewed

the type of dividends paid with reference to an independent external data

vendor to identify those which are special.

• The Administrator’s special dividend listing contained 25 special dividends

received during the year; 21 classified as revenue (£1.6m) and 4 classified as

capital (£0.5m). For a sample of special dividends, including the one special

dividend above our testing threshold, we assessed the appropriateness of the

director’s classification as either revenue or capital by reviewing the rationale

for the underlying distribution.

Key observations communicated to the Audit Committee

The results of our procedures identified no material misstatement in relation to the incomplete or inaccurate revenue recognition, including

the classification of special dividends as revenue or capital items in the Income Statement.

Based on the work performed, we had no matters to report to the Audit Committee.

Incorrect valuation or ownership of the quoted

investment portfolio (2022: £4,408.8m, 2021:

£5,260.0m)

Refer to the Audit Committee Report (page 62);

Accounting policies (page 83); and Note 10 of the

Financial Statements (page 91)

The Company holds a portfolio of quoted investments

both in the UK and overseas. The quoted portfolio is

managed by the Manager who in turn sub-delegates the

role of investment management for a proportion of the

portfolio to T.Rowe Price International Ltd and Barrow,

Hanley, Mewhinney and Strauss LLC (together the ‘Sub-

Managers’).

Per the Company’s accounting policy, the fair value of

investments is the bid value at the close of business on

the Balance Sheet date.

Certificates of investment ownership are held by

JPMorgan Chase (the ‘Custodian’) and not directly by the

Company. JPMorgan Europe Limited (the ‘Depositary’)

has a regulatory obligation to oversee the investment

holdings stated by the Administrator and the Custodian.

The incorrect valuation of the investment portfolio,

including incorrect application of exchange rates, could

have a significant impact on the financial statements. In

addition, there is a risk of failure to maintain proper legal

title of the quoted investments held by the Company

which could have a significant impact on the portfolio

valuation and the return generated for shareholders.

We have performed the following procedures:

Valuation

• We obtained an understanding of the Manager's and the Administrator’s

processes and controls surrounding investment pricing by performing our

walkthrough procedures and reviewing the Manager’s and the Administrator's

internal control reports.

• For 100% of quoted investments in the portfolio, we verified market prices

and exchange rates to an independent pricing vendor and recalculated the

investment valuations as at the year-end.

• We inspected the stale pricing report produced by the Administrator as at

31 December 2022 to identify prices that have not changed around the year-

end and verified whether the listed price is a fair value through review of

trading activity.

Ownership

• We obtained an understanding of the Administrator's and the Custodian’s

processes and controls for asset recognition by inspecting their internal control

reports.

• We agreed the Company’s investment holdings at 31 December 2022 to an

independent confirmation received directly from the Company’s Custodian

and Depositary for the listed investments. No reconciling items were identified.

Key observations communicated to the Audit Committee

The results of our procedures identified no material misstatement in relation to the incorrect valuation or ownership of the quoted investment

portfolio.

Based on the work performed, we had no matters to report to the Audit Committee.

75Annual Report and Accounts 2022

Auditor’s Report

OUR APPLICATION OF MATERIALITY

We apply the concept of materiality in planning and

performing the audit, in evaluating the effect of identified

misstatements on the audit and in forming our audit opinion.

Materiality

The magnitude of an omission or misstatement that,

individually or in the aggregate, could reasonably be

expected to influence the economic decisions of the

users of the financial statements. Materiality provides a

basis for determining the nature and extent of our audit

procedures.

We determined materiality for the Company to be £46.5

million (2021: £52.8 million), which is 1% (2021: 1%) of net

assets. We believe that net assets is the most appropriate

measure as it is the primary measure that investors use to

assess the performance of the Company.

During the course of our audit, we reassessed initial

materiality and made no changes to the basis of calculation

from our original assessment at the planning stage.

Performance materiality

The application of materiality at the individual account

or balance level. It is set at an amount to reduce to an

appropriately low level the probability that the aggregate

of uncorrected and undetected misstatements exceeds

materiality.

On the basis of our risk assessments, together with our

assessment of the Company’s overall control environment,

our judgment was that performance materiality was 75%

(2021: 75%) of our planning materiality, namely £34.9m

(2021: £39.6m). We have set performance materiality

at this percentage based on our understanding of the

control environment that indicates a lower risk of material

misstatements, both corrected and uncorrected.

Given the importance of the distinction between revenue

and capital for investment trusts, we have also applied a

separate testing threshold for the revenue column of the

Income Statement of £4.1m (2021: £3.3m) being 5% of the

net revenue return on ordinary activities before taxation.

Reporting threshold

An amount below which identified misstatements are

considered as being clearly trivial.

We agreed with the Audit Committee that we would report

to them all uncorrected audit differences in excess of £2.3m

(2021: £2.6m), which is set at 5% of planning materiality, as

well as differences below that threshold that, in our view,

warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both

the quantitative measures of materiality discussed above

and in light of other relevant qualitative considerations in

forming our opinion.

OTHER INFORMATION

The other information comprises the information included

in the annual report, other than the financial statements

(including notes to the accounts 1 to 27) and our auditor’s

report thereon. The directors are responsible for the other

information contained within the annual report.

Our opinion on the financial statements does not cover

the other information and, except to the extent otherwise

explicitly stated in this report, we do not express any form

of assurance conclusion thereon.

Our responsibility is to read the other information and,

in doing so, consider whether the other information is

materially inconsistent with the financial statements or our

knowledge obtained in the course of the audit or otherwise

appears to be materially misstated. If we identify such

material inconsistencies or apparent material misstatements,

we are required to determine whether this gives rise

to a material misstatement in the financial statements

themselves. If, based on the work we have performed, we

conclude that there is a material misstatement of the other

information, we are required to report that fact.

We have nothing to report in this regard.

OPINIONS ON OTHER MATTERS PRESCRIBED BY THE

COMPANIES ACT 2006

In our opinion the part of the Directors’ Remuneration

Report to be audited has been properly prepared in

accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course

of the audit:

• the information given in the Strategic Report and the

Directors’ Report for the financial year for which the

financial statements are prepared is consistent with the

financial statements; and

• the Strategic Report and Directors’ Report have

been prepared in accordance with applicable legal

requirements.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY

EXCEPTION

In the light of the knowledge and understanding of the

Company and its environment obtained in the course of the

audit, we have not identified material misstatements in the

Strategic Report or Directors’ Report.

We have nothing to report in respect of the following

matters in relation to which the Companies Act 2006

requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or

returns adequate for our audit have not been received

from branches not visited by us; or

• the financial statements and the part of the Directors’

Remuneration Report to be audited are not in

agreement with the accounting records and returns; or

• certain disclosures of Directors’ remuneration specified

by law are not made; or

• we have not received all the information and

explanations we require for our audit.

Corporate Governance Report

We have reviewed the Directors’ statement in relation to

going concern, long-term viability and that part of the

Corporate Governance Report relating to the Company’s

compliance with the provisions of the UK Corporate

Governance Code specified for our review by the Listing

Rules.

Based on the work undertaken as part of our audit, we

have concluded that each of the following elements of the

Corporate Governance Statement is materially consistent

with the financial statements or our knowledge obtained

during the audit:

• Directors’ statement with regards to the

appropriateness of adopting the going concern basis

of accounting and any material uncertainties identified

set out on page 42;

• Directors’ explanation as to its assessment of the

Company’s prospects, the period this assessment

covers and why the period is appropriate set out on

pages 43 and 44;

• Director’s statement on whether it has a reasonable

expectation that the Company will be able to continue

in operation and meets its liabilities set out on page 42;

• Directors’ statement on fair, balanced and

understandable set out on page 69;

• the Board’s confirmation that it has carried out a robust

assessment of the emerging and principal risks set out

on page 40;

• The section of the annual report that describes the

review of effectiveness of risk management and

internal control systems set out on pages 60 and 61;

and;

• The section describing the work of the Audit

Committee set out on page 59.

Responsibilities of Directors

As explained more fully in the Directors’ responsibilities

statement set out on page 69, the Directors are responsible

for the preparation of the financial statements and for being

satisfied that they give a true and fair view, and for such

internal control as the Directors determine is necessary to

enable the preparation of financial statements that are free

from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are

responsible for assessing the Company’s ability to continue

as a going concern, disclosing, as applicable, matters

related to going concern and using the going concern basis

of accounting unless the Directors either intend to liquidate

the Company or to cease operations, or have no realistic

alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE

FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about

whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and

to issue an Auditor’s Report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not

a guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when

it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they

could reasonably be expected to influence the economic

decisions of users taken on the basis of these financial

statements.

Explanation as to what extent the audit was considered

capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-

compliance with laws and regulations. We design

procedures in line with our responsibilities, outlined above,

INDEPENDENT AUDITOR’S REPORT (CONTINUED)

77Annual Report and Accounts 2022

Auditor’s Report

to detect irregularities, including fraud. The risk of not

detecting a material misstatement due to fraud is higher

than the risk of not detecting one resulting from error, as

fraud may involve deliberate concealment by, for example,

forgery or intentional misrepresentations, or through

collusion. The extent to which our procedures are capable

of detecting irregularities, including fraud is detailed below.

However, the primary responsibility for the prevention

and detection of fraud rests with both those charged with

governance of the Company and management.

• We obtained an understanding of the legal and

regulatory frameworks that are applicable to the

Company and determined that the most significant

are UK Generally Accepted Accounting Practice,

Companies Act 2006, the Listing Rules, the UK

Corporate Governance Code, the Association

of Investment Companies’ Code, Statement of

Recommended Practice, Section 1158 of the

Corporation Tax Act 2010 and The Companies

(Miscellaneous Reporting) Regulations 2018.

• We understood how the Company is complying with

those frameworks through discussions with the Audit

Committee and Company Secretary and review of

Board minutes and the Company's documented

policies and procedures.

• We assessed the susceptibility of the Company’s

financial statements to material misstatement,

including how fraud might occur, by considering

the key risks impacting the financial statements. We

identified fraud risks with respect to incomplete or

inaccurate revenue recognition through incorrect

classification of special dividends between revenue

and capital and the incorrect valuation of the unquoted

investment portfolio and resulting impact on the

Income Statement. Further discussion of our approach

is set out in the section on key audit matters above.

• Based on this understanding we designed our audit

procedures to identify non-compliance with such laws

and regulations. Our procedures involved: journal

entry testing with a focus on manual journals posted

in relation to unquoted investments during the year,

a review of the Company Secretary’s reporting to

the Directors with respect to the application of the

documented policies and procedures and review of the

financial statements to confirm compliance with the

reporting requirements of the Company.

A further description of our responsibilities for the audit

of the financial statements is located on the Financial

Reporting Council’s website at

https://www.frc.org.uk/auditorsresponsibilities.

This description forms part of our Auditor’s Report.

Other matters we are required to address

• Following the recommendation from the Audit

Committee, we were appointed by the Company on 26

April 2016 to audit the financial statements for the year

ending 31 December 2016 and subsequent financial

periods.

The period of total uninterrupted engagement

including previous renewals and reappointments is 7

years, covering the years ending 31 December 2016 to

31 December 2022.

• The audit opinion is consistent with the additional

report to the audit committee.

USE OF OUR REPORT

This report is made solely to the Company’s members,

as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken

so that we might state to the Company’s members 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

members as a body, for our audit work, for this report, or for

the opinions we have formed.

James Beszant (Senior Statutory Auditor)

For and on behalf of Ernst & Young LLP,

Statutory Auditor

London

8 March 2023

INCOME STATEMENT

for the year ended 31 December

Revenue

£’000s

Capital

£’000s

2022

Total

£’000s

Revenue

£’000s

Capital

£’000s

2021

Total

£’000s

(Losses)/gains on investments – (527,760) (527,760) – 879,862 879,862

19,22

Exchange movements on foreign currency loans,

cash balances and derivatives 387 (11,382) (10,995) (176) 4,251 4,075

Income 96,235 – 96,235 77,629 – 77,629

Management fees (4,582) (13,747) (18,329) (4,935) (14,805) (19,740)

Other expenses (5,567) (46) (5,613) (3,500) (57) (3,557)

Net return before finance costs and taxation 86,473 (552,935) (466,462) 69,018 869,251 938,269

Finance costs (3,495) (10,486) (13,981) (2,778) (8,335) (11,113)

Net return on ordinary activities before taxation 82,978 (563,421) (480,443) 66,240 860,916 927,156

Taxation on ordinary activities (10,383) (551) (10,934) (7,740) (138) (7,878)

Net return attributable to shareholders 72,595 (563,972) (491,377) 58,500 860,778 919,278

Net return per share – basic (pence) 13.92 (108.14) (94.22) 10.99 161.74 172.73

The total column of this statement is the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations.

The net return attributable to shareholders is also the total comprehensive income.

The notes on pages 82 to 106 form an integral part of the financial statements.

Notes

79Annual Report and Accounts 2022

Financial Report

STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2022

Notes

capital

£’000s

Capital

redemption

reserve

£’000s

Capital

reserves

£’000s

Revenue

reserve

£’000s

Total

shareholders’

funds

£’000s

Balance brought forward 31 December 2021 140,455 122,307 4,924,320 93,852 5,280,934

Dividends paid

– – –

(68,983) (68,983)

Shares repurchased by the Company and held in

treasury

– –

(70,749)

–

(70,749)

Net return attributable to shareholders

– –

(563,972) 72,595 (491,377)

Balance carried forward 31 December 2022 140,455 122,307 4,289,599 97,464 4,649,825

for the year ended 31 December 2021

Notes

capital

£’000s

Capital

redemption

reserve

£’000s

Capital

reserves

£’000s

Revenue

reserve

£’000s

Total

shareholders’

funds

£’000s

Balance brought forward 31 December 2020 140,455 122,307 4,147, 868 100,930 4,511,560

Dividends paid – – – (65,578) (65,578)

Shares repurchased by the Company and held in

treasury

– – (84,326) – (84,326)

Net return attributable to shareholders – – 860,778 58,500 919,278

Balance carried forward 31 December 2021 140,455 122,307 4,924,320 93,852 5,280,934

The notes on pages 82 to 106 form an integral part of the financial statements.

BALANCE SHEET

at 31 December

Notes

£’000s

2022

£’000s £’000s

2021

£’000s

Fixed assets

Investments 4,924,533 5,779,123

Current assets

Investments 59,424 –

Debtors 11,061 8,267

Cash and cash equivalents 243,836 53,111

314,321 61,378

Creditors: amounts falling due within one year

13,22

Loans – (110,452)

Other (7,190) (9,277)

(7,190) (119,729)

Net current assets/(liabilities) 307,131 (58,351)

Total assets less current liabilities 5,231,664 5,720,772

Creditors: amounts falling due after more than one year

15,22

Loans (581,264) (439,263)

16,22

Debenture (575) (575)

(581,839) (439,838)

Net assets 4,649,825 5,280,934

Capital and reserves

Share capital 140,455 140,455

Capital redemption reserve 122,307 122,307

Capital reserves 4,289,599 4,924,320

Revenue reserve 97,464 93,852

Total shareholders’ funds 4,649,825 5,280,934

Net asset value per share – prior charges at nominal value (pence) 896.94 1,002.49

The notes on pages 82 to 106 form an integral part of the financial statements.

The Financial Statements were approved by the Board on 8 March 2023 and signed on its behalf by

Beatrice Hollond, Chairman

81Annual Report and Accounts 2022

Financial Report

STATEMENT OF CASH FLOWS

for the year ended 31 December

Notes

2022

£’000s

2021

£’000s

Cash flows from operating activities before dividends received and interest paid (34,064) (27,576)

Dividends received 93,292 77,652

Interest paid (13,239) (11,037)

Cash flows from operating activities 45,989 39,039

Investing activities

Purchases of investments (2,068,248) (2,527,995)

Sales of investments 2,338,540 2,483,392

Other capital charges and credits (50) (56)

Cash flows from investing activities 270,242 (44,659)

Cash flows before financing activities 316,231 (5,620)

Financing activities

Equity dividends paid (68,983) (65,578)

Repayment of loans (110,329) (120,000)

Drawdown of loans 140,000 270,000

Cash flows from share buybacks into treasury (71,534) (83,961)

Cash flows from financing activities (110,846) 461

Net increase/(decrease) in cash and cash equivalents 205,385 (5,159)

Cash and cash equivalents at the beginning of the year 53,111 46,654

Effect of movement in foreign exchange (14,660) 11,616

Cash and cash equivalents at the end of the year 243,836 53,111

Represented by:

Cash at bank 144,096 27,798

Short-term deposits 99,740 25,313

Cash and cash equivalents at the end of the year 243,836 53,111

The notes on pages 82 to 106 form an integral part of the financial statements.

NOTES TO THE ACCOUNTS

1. GENERAL INFORMATION

F&C Investment Trust PLC is an Investment Company, incorporated in the United Kingdom with a premium listing on the London

Stock Exchange. The Company Registration number is 12901, and the Registered office is Exchange House, Primrose Street, London,

EC2A 2NY, England. The Company has conducted its affairs so as to qualify as an Investment Trust under the provisions of Section

1158 of the Corporation Tax Act 2010. Approval of the Company under Section 1158 has been received. The Company intends to

conduct its affairs so as to enable it to continue to comply with the requirements of Section 1158. Such approval exempts the

Company from UK Corporation Tax on gains realised in the relevant year on its portfolio of fixed asset investments and derivatives.

There have been no significant changes to the Company’s accounting policies during the year ended 31 December 2022, as set out

in note 2 below.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Going concern

As referred to in note 25 and the Business Review, the Directors believe that it is appropriate for the accounts to be prepared on a

going concern basis.

(b) Basis of accounting

The accounts of the Company have been prepared on a going concern basis under the historical cost convention, modified to

include fixed asset investments and derivatives at fair value, and in accordance with the Act, Financial Reporting Standard (FRS)

102 applicable in the United Kingdom and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust

Companies and Venture Capital Trusts’ issued in July 2022 ('SORP').

The functional and presentational currency of the Company is pounds sterling because that is the currency of the primary economic

environment in which the Company operates.

All of the Company’s operations are of a continuing nature.

The Company had no operating subsidiaries at any time during the years ended 31 December 2022 and 31 December 2021.

Consequently, consolidated accounts have not been prepared.

The Directors are of the opinion that the Company’s activities comprise a single operating segment, which is investing

internationally in equities to secure long-term growth in income and capital.

In accordance with the SORP, the Income Statement has been analysed between a Revenue Account (dealing with items of a

revenue nature) and a Capital Account (relating to items of a capital nature). Revenue returns include, but are not limited to,

dividend income and operating expenses and tax (insofar as the expenses and tax are not allocated to capital, as described in notes

2(c)(vii) and 2(c)(viii)). Net revenue returns are allocated via the revenue account to the Revenue Reserve, out of which interim and

final dividend payments are made. The amounts paid by way of dividend are shown in the Statement of Changes in Equity. Capital

returns include, but are not limited to, realised and unrealised profits and losses on fixed asset investments and derivatives and

currency profits and losses on cash and borrowings. The Company may distribute net capital returns by way of dividend. It is the

Board’s current stated intention to continue paying dividends to equity shareholders out of the Revenue Reserve.

The policies set out below have been applied consistently throughout the year ended 31 December 2022 and the prior year.

(i) Financial instruments

Financial instruments include fixed asset investments, derivative assets and liabilities, long-term debt instruments, cash and short-

term deposits, debtors and creditors. FRS102 recognises a hierarchy of fair value measurements, for financial instruments measured

at fair value in the Balance Sheet, which gives the highest priority to unadjusted quoted prices in active markets for identical assets

83Annual Report and Accounts 2022

Financial Report

or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The classification of financial instruments depends on

the lowest significant applicable input, as follows:

Level 1 – Unadjusted, fully accessible and current quoted prices in active markets for identical assets or liabilities. Included within

this category are investments listed on any recognised stock exchange or quoted on the AIM Market in the UK.

Level 2 – Quoted prices for similar assets or liabilities or other directly or indirectly observable inputs which exist for the duration

of the period of investment. Examples of such instruments would be forward exchange contracts and certain other derivative

instruments.

Level 3 – Where no active market exists and recent transactions for identical instruments do not provide a good estimate of fair

value, the value is the Directors’ best estimate, based on advice from relevant knowledgeable experts, use of recognised valuation

techniques and on assumptions as to what inputs other market participants would apply in pricing the same or similar instruments.

Included within this category are investments in private companies or securities, whether invested in directly or through pooled

Private Equity vehicles, (see notes 10 and 26(d) for further information).

(ii) Investments

As an investment trust company, the Company measures its fixed asset investments at fair value through profit or loss and treats

all transactions on the realisation and revaluation of investments held as fixed assets, as transactions on the Capital Account.

Purchases are recognised on the relevant trade date, including expenses which are incidental to the acquisition of the investments.

Sales are also recognised on the trade date, after deducting expenses incidental to the sales. Quoted investments are valued at bid

value at the close of business on the relevant date on the exchange on which the investment is quoted. Included within investments

are short-dated gilts which have been classified as current investments in the balance sheet given their short maturity of six months

or less. Investments which are not quoted or which are not frequently traded are stated at Directors’ best estimate of fair value. In

arriving at their estimate, the Directors make use of recognised valuation techniques and may take account of recent arm’s length

transactions in the same or similar investment instruments. Where no reliable fair value can be estimated, investments are carried at

cost less any provision for impairment.

With respect specifically to investments in Private Equity, whether through funds or partnerships, where year end valuations are

not available the Directors rely on unaudited valuations of the underlying unlisted investments as at 30 September as supplied by

the investment advisers or managers of those funds or partnerships rolled forward for any calls and distributions in the subsequent

quarter and any foreign exchange movements plus significant events which have occurred in the subsequent quarter. The advisers

or managers’ unlisted investment policy applies methodologies consistent with the International Private Equity and Venture

Capital Valuation guidelines (‘IPEV’). The Directors regularly review the principles applied by the managers to those valuations to

ensure they are in compliance with the above policies. Distributions from Private Equity funds are recognised when the right to

distributions is established. Direct investments are fair valued on initial recognition and are revalued at the balance sheet date at fair

value with reference to a price earnings model. Changes in fair value are recognised in the Income Statement.

(iii) Derivative Instruments

Derivatives including forward exchange contracts, futures and options are classified as fair value through profit or loss and

accounted for as financial assets or liabilities. Where it can be demonstrated that the derivative is connected to the maintenance

of the Company’s investments, the change in fair value is recognised as capital and shown in the Capital column of the Income

Statement. Where an option is written in the expectation that it will not be exercised, or that any losses on exercise will be

outweighed by the value of the premiums received, the premiums are recognised in the Revenue column of the Income Statement.

The value of the premium is usually the option’s initial fair value and is recognised evenly over the life of the option. Subsequent

changes to fair value are adjusted in the Capital column of the Income Statement such that the total amounts recognised within

Revenue and Capital represent the change in fair value of the option.

(iv) Debt Instruments

The Company’s debt instruments include the 4.25% perpetual debenture stock included in the Balance Sheet at proceeds received,

net of issue costs, as well as unsecured loan notes, bank borrowings and overdrafts. These are all initially measured at the amount of

cash received less direct issue costs and subsequently measured at amortised cost using the effective interest rate method. No debt

instruments held during the year required hierarchical classification.

The fair market value of the Company's borrowings are set out in notes 13, 15 and 16. Finance charges, including interest, are

accrued using the effective interest rate method. See 2(c)(vii) below for allocation of finance charges within the Income Statement.

(v) Foreign currency

Foreign currency monetary assets and liabilities are expressed in sterling at rates of exchange ruling at the Balance Sheet date.

Purchases and sales of investment securities, dividend income, interest income and expenses are translated at the rates of exchange

prevailing at the respective dates of such transactions. Exchange profits and losses on fixed assets investments are included within

the changes in fair value in the Capital Account. Exchange profits and losses on other currency balances are separately credited or

charged to the Capital Account except where they relate to revenue items.

(vi) Income

Income from equity shares is brought into the Revenue Account (except where, in the opinion of the Directors, its nature indicates

it should be recognised within the Capital Account) on the ex-dividend date or, where no ex-dividend date is quoted, when the

Company’s right to receive payment is established. Fixed returns on non-equity shares and debt securities are recognised on a

time apportionment basis so as to reflect the effective yield on the investment. Dividends are accounted for on the basis of income

actually receivable, without adjustment for any tax credit attaching to the dividends. Dividends from overseas companies are shown

gross of withholding tax. Where the Company has elected to receive its dividends in the form of additional shares rather than in cash

(scrip dividends), the amount of the cash dividend foregone is recognised as income. Any excess in the value of the shares received

over the amount of the cash dividend foregone is recognised in the Capital Account. Rebates on investee funds management fees

are accounted for on a receipts basis.

(vii) Expenses, including finance charges

Expenses inclusive of associated value added tax (VAT) are charged to the Revenue Account of the Income Statement, except as

noted below:

– expenses incidental to the acquisition or disposal of fixed assets investments are charged to Capital Reserves via the Capital

Account;

– costs of professional advice relating to the capital structure of the Company are charged to Capital Reserves (see note 2(c)(xi));

– 100% of management fees, invoiced to the Company in respect of certain Private Equity investments, are allocated to Capital

Reserves, via the Capital Account, in accordance with the Board’s long-term expected split of returns from those investments;

– 75% of other management fees and finance costs are allocated to Capital Reserves via the Capital Account, in accordance with

the Board’s long-term expected split of returns from the investment portfolio (excluding Private Equity investments) of the

Company.

All expenses are accounted for on an accruals basis.

(viii) Taxation

Taxation currently payable is calculated using tax rules and rates in force at the year end, based on taxable profit for the period

which differs from the net return before tax. Note 7(b) sets out those items which are not subject to UK Corporation Tax.

NOTES TO THE ACCOUNTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

85Annual Report and Accounts 2022

Financial Report

Deferred tax is provided for in accordance with FRS102 on all timing differences that have been enacted by the Balance Sheet date

and are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax assets are only recognised

if it is considered more likely than not that there will be suitable profits from which the future reversal of timing differences can

be deducted. In line with the recommendations of the SORP, the allocation method used to calculate the tax relief on expenses

charged to capital is the “marginal” basis. Under this basis, if taxable income is capable of being offset entirely by expenses charged

through the Revenue Account, then no tax relief is transferred to the Capital Account.

(ix) Dividends payable

Dividends are included in the financial statements on the date on which they are paid or, in the case of final dividends, when they

are approved by shareholders.

(x) Capital Redemption Reserve

This is a non-distributable reserve. The nominal value of ordinary share capital repurchased for cancellation is transferred out of

Share Capital and into the Capital Redemption Reserve, on a trade date basis. Where shares are repurchased into treasury, the

transfer of nominal value to the Capital Redemption Reserve is made if and when the shares are cancelled.

(xi) Capital Reserves

These are distributable reserves which may be utilised for the repurchase of share capital and for distributions to shareholders by

way of dividend.

Capital reserve – arising on investments sold

The following are accounted for in this reserve:

• gains and losses on the disposal of fixed asset investments and derivatives;

• realised exchange differences of a capital nature;

• costs of professional advice, including related irrecoverable VAT, relating to the capital structure of the Company;

• other capital charges and credits charged or credited to this account in accordance with the above policies; and

• costs of repurchasing ordinary share capital into treasury or for cancellation, including related stamp duty, are recognised on a

trade date basis.

Capital reserve – arising on investments held

The following are accounted for in this reserve:

• increases and decreases in the valuation of fixed asset investments and derivatives held at the year end; and

• unrealised exchange differences of a capital nature.

(xii) Revenue reserve

The revenue reserve represents accumulated revenue profits retained by the Company that have not currently been distributed to

shareholders as a dividend.

(xiii) Use of judgements, estimates and assumptions

The presentation of the financial statements in accordance with accounting standards requires the Board to make judgements,

estimates and assumptions that affect the accounting policies and reported amounts of assets, liabilities, income and expenses.

Estimates and judgements are continually evaluated and are based on perceived risks, historical experience, expectations of

plausible future events and other factors. Actual results may differ from these estimates.

The areas requiring the most significant judgement and estimation in the preparation of the financial statements are: accounting

for the value of unquoted investments and recognising and classifying unusual or special dividends received as either revenue or

capital in nature.

The policy for valuation of unquoted securities is set out in note 2(c)(ii) and further information on Board procedures is contained

in the Report of the Audit Committee and note 26(d). The choice to only apply cash flows in the roll forward process is a judgment

made each year for the indirect investments. Material judgments were applied to the valuation of the Company’s direct investment,

Inflexion Strategic Partners. This investment was valued using an earnings method multiplied by an average of European listed

comparable companies multiple (where the judgement of which comparable companies to select and what discounts to apply

are subjective). This resulted in an uplift of £3.8m. The fair value of unquoted (Level 3) investments, as disclosed in note 10 to the

accounts, represented 11.5% of total investments at 31 December 2022. In the opinion of the Directors, under foreseeable market

conditions the collective value of such investments may rise or fall in the short term by more than 25%. A fall of 25% in the value of

the unlisted (Level 3) portfolio at the year-end would equate to £144m or 3.1% of net assets and a similar percentage rise should be

construed accordingly.

We have considered the impact of climate change on the value of both the listed and private equity investments included in the

Report and Accounts. The listed investments should already include the impact in their prices as quoted on the relevant exchange

and consistent with that view, we do not believe the impact on the private equity investments would be material as underlying GP's

take ESG, including climate change factors, into account during their processes.

Dividends received which appear to be unusual in size or circumstance are assessed on a case-by-case basis, based on

interpretation of the investee companies’ relevant statements, to determine their allocation in accordance with the SORP to either

the Revenue Account or Capital Account. Dividends which have clearly arisen out of the investee company’s reconstruction or

reorganisation are usually considered to be capital in nature and allocated to Capital Account. Investee company dividends which

appear to be paid in excess of current year profits will still be considered as revenue in nature unless evidence suggests otherwise.

The value of dividends received in the year treated as capital in nature, as disclosed in note 19, was not material in relation to capital

reserves or the revenue account. The value of special dividends receivable in any period cannot be foreseen as such dividends are

declared and paid by investee companies and funds without prior reference to the Company.

3. INCOME

2022

£’000s

2021

£’000s

Income from investments:

UK dividends

7,582

8,059

Overseas dividends

86,686

69,559

94,268

77,618

Other Income:

Interest on cash and short-term deposits

1,967

Other Income

–

1,967

Total income

96,235

77,629

Included within income from investments is £1,576,000 (2021: £1,425,000) of special dividends classified as revenue in nature in

accordance with note 2(c)(xii).

NOTES TO THE ACCOUNTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

87Annual Report and Accounts 2022

Financial Report

4. MANAGEMENT FEES

2022

£’000s

2021

£’000s

Payable directly to Columbia Threadneedle Investments:

– in respect of management services provided by the Manager (i) 14,113 14,760

– reimbursement in respect of services provided by sub-managers (i) 4,216 4,980

Total directly incurred management fees 18,329 19,740

Incurred indirectly within funds managed by Private Equity managers (ii) 2,614 3,082

Total direct and indirect management fees 20,943 22,822

(i) 75% of these fees allocated to capital reserve arising on investments sold. See note 2(c)(vii).

(ii) Indirectly incurred fees are included within the value of the respective funds and are not invoiced to or paid for by the Company. The fees are disclosed here

for completeness and transparency.

Directly incurred fees are analysed as follows:

Management fees

2022

£’000s

2021

£’000s

– payable directly to Columbia Threadneedle Investments 18,329 19,740

Less: allocated to capital reserves (see note 19) (13,747) (14,805)

Allocated to revenue account 4,582 4,935

(a) Management fees payable to Columbia Threadneedle Investments

The Manager provides investment management, company secretarial, financial, marketing and general administrative services to the

Company under the terms of an agreement which may be terminated upon six months’ notice given by either party. In the event of

a change of control of the Manager, the Company may give three months’ notice of termination.

The Manager’s remuneration is based on a fee of 0.325% per annum of the market capitalisation of the Company up to £3.0 billion,

0.30% between £3.0 and £4.0 billion and 0.25% above £4.0 billion, calculated at each month end on a pro rata basis (2021: 0.35%

per annum of the market capitalisation of the Company up to £3.0 billion, 0.30% between £3.0 and £4.0 billion and 0.25% above

£4.0 billion); the fee is adjusted for fees earned by the Manager in respect of investment holdings managed or advised by the

Manager or other members of the Columbia Threadneedle Investments Group. Variable fees payable in respect of third-party sub-

managers are also reimbursed.

(b) Management fees payable to the Private Equity funds of funds managers

At 31 December 2022 the Company had outstanding commitments in 36 Private Equity funds (2021: 39) (see note 23). Fees in

respect of Private Equity funds are based on capital commitments and are charged quarterly against the underlying investments

in those funds. The fees are not directly incurred by the Company and are disclosed for information purposes only. The fee rates

applying during 2022 varied from 0.10% per annum to 2.50% per annum (2021: 0.10% to 2.50%).

PE Investment Holdings 2018 LP pays an annual fee of £1,000 to the General Partner. This is not directly incurred by the Company

but included in the underlying value of the investment.

5. OTHER EXPENSES

2022

£’000s

2021

£’000s

Other revenue expenses

Auditor’s remuneration:

for audit and audit-related assurance services

(1)

148 140

Custody fees 494 523

Depositary fees 201 207

Directors’ emoluments (see Remuneration Report on pages 65 to 68):

Fees for services to the Company 387 385

Subscriptions 21 21

Directors’ and officers’ liability insurance 80 45

Marketing 3,006 1,083

Loan commitment and arrangement fees

(2)

293 243

Registrars fees 156 133

Professional charges 202 271

Printing and postage 191 138

Sundry expenses 388 311

Total other revenue expenses 5,567 3,500

Other capital expenses 46 57

Total other expenses 5,613 3,557

All expenses are stated gross of irrecoverable VAT, where applicable.

(1) Total auditor’s remuneration for audit services, exclusive of VAT, amounted to £143,000, (2021: £134,000 exclusive of VAT, of which £5,000 related to the

prior year). Irrecoverable VAT of £5,000 (2021: £6,000) is included within the table above. There were no non-audit services paid to EY in the year (2021: none).

(2) Under loan facility agreements (see note 13) the Company pays commitment fees on any undrawn portions of the facilities.

6. FINANCE COSTS

2022

£’000s

2021

£’000s

Debenture stock 24 24

Loans 13,891 10,845

Overdrafts 66 244

13,981 11,113

Less: allocated to capital reserves (see note 2(c)(vii) and note 19) (10,486) (8,335)

Allocated to revenue account 3,495 2,778

The interest on the debenture stock, loans and overdrafts is further analysed as follows:

Loans and overdrafts repayable within one year, not by instalments (see note 13) 768 1,669

Debenture and loans repayable after more than one year, not by instalments (see notes 15 and 16) 13,213 9,444

13,981 11,113

NOTES TO THE ACCOUNTS (CONTINUED)

89Annual Report and Accounts 2022

Financial Report

7. TAXATION ON ORDINARY ACTIVITIES

(a) Analysis of tax charge for the year

Revenue

£’000s

Capital

£’000s

2022

Total

£’000s

Revenue

£’000s

Capital

£’000s

2021

Total

£’000s

Overseas taxation 10,383 – 10,383 7,740 – 7,740

Indian tax on capital gains – 551 551 – 138 138

Total taxation (see note 7(b)) 10,383 551 10,934 7,740 138 7, 878

The tax assessed for the year is lower (2021: lower) than the standard rate of Corporation Tax in the UK.

(b) Factors affecting the current tax charge for the year

Revenue

£’000s

Capital

£’000s

2022

Total

£’000s

Revenue

£’000s

Capital

£’000s

2021

Total

£’000s

Net return on ordinary activities before taxation 82,978 (563,421) (480,443) 66,240 860,916 927,156

Net return on ordinary activities multiplied by the standard

rate of corporation tax of 19% (2021: same)

15,766 (107,050) (91,284) 12,586 163, 574 176,160

Effects of:

Dividends

(1)

(17,911) – (17,911) (14,747) – (14,747)

Exchange losses

(1)

(74) – (74) 33 – 33

Capital returns

(1)

– 102,437 102,437 – ( 167,981) (1 67,981)

Expenses not deductible for tax purposes 279 9 288 100 11 111

Expenses not utilised in the year 1,940 4,604 6,544 2,028 4,396 6,424

Overseas tax in excess of double taxation relief 10,383 – 10,383 7,740 – 7,740

Indian tax on capital gains

(2)

– 551 551 – 138 138

Total taxation (see note 7(a)) 10,383 551 10,934 7,740 138 7,878

(1) These items are not subject to Corporation Tax within an investment trust company.

(2) The Company is liable to taxation in India on gains realised on the sale of securities within 12 months of purchase. The tax is allocated to Capital Reserve as

it relates to capital transactions.

The Company has an unrecognised deferred tax asset of £90.8 million (2021: £84.2 million) in respect of unutilised expenses at 31 December 2022 which has

not been recognised in the financial statements as it is unlikely to be utilised in the foreseeable future. Of this amount £32.4 million (2021: £30.4 million) relates

to revenue expenses and £58.4 million (2021: £53.8 million) to capital expenses.

8. NET RETURN PER SHARE

2022

pence

2022

£’000s

2021

pence

2021

£’000s

Total return (94.22) (491,377) 172.73 919,278

Revenue return 13.92 72,595 10.99 58,500

Capital return (108.14) (563,972) 161.74 860,778

Weighted average ordinary shares in issue, excluding shares

held in treasury – number

521,526,881 532,196,543

9. DIVIDENDS

Dividends on ordinary shares Record date Payment date

2022

£’000s

2021

£’000s

2020 Third interim of 2.90p 3-Jan-2021 1-Feb-2021 – 15,563

2020 Final of 3.40p 16-Apr-2021 13-May-2021 – 18,146

2021 First interim of 3.00p 16-Jul-2021 2-Aug-2021 – 15,967

2021 Second interim of 3.00p 8-Oct-2021 1-Nov-2021 – 15,902

2021 Third interim of 3.00p 7-Jan-2022 1-Feb-2022 15,804 –

2021 Final of 3.80p 8-Apr-2022 10-May-2022 19,929 –

2022 First interim of 3.20p 1-Jul-2022 1-Aug-2022 16,654 –

2022 Second interim of 3.20p 7-Oct-2022 1-Nov-2022 16,596 –

68,983 65,578

A third interim dividend of 3.20p was paid on 1 February 2023 to all shareholders on the register on 6 January 2023.

The Directors have proposed a final dividend in respect of the year ended 31 December 2022 of 3.90p payable on 11 May 2023 to

all shareholders on the register at close of business on 11 April 2023. The total dividends paid and payable in respect of the financial

year for the purposes of the income retention test for Section 1159 of the Corporation Tax Act 2010 are set out below.

2022

£’000s

2021

£’000s

Revenue available for distribution by way of dividends for the year 72,595 58,500

First interim dividend for the year ended 31 December 2022 – 3.20p per share (2021: 3.00p) (16,654) (15,967)

Second interim dividend for the year ended 31 December 2022– 3.20p per share (2021: 3.00p) (16,596) (15,902)

Third interim dividend for the year ended 31 December 2022 – 3.20p per share (2021: 3.00p) (16,589) (15,804)

Proposed final dividend for the year ended 31 December 2022 – 3.90p per share (2021: 3.80p) (20,218) (19,929)

(estimated cost based on 518,411,856 shares in issue at 6 March 2023, excluding shares held in

treasury)

Estimated amount transferred to/(from) revenue reserve for Section 1159 purposes

(1)

2,538

(9,102)

All dividends are paid from revenue.

(1) Represents 3% of total income as stated in note 3 (2021: -12%)

The table below reflects the revenue reserve after adjusting for the third interim and final dividends for the years to 31 December

2022 and 31 December 2021.

2022

£’000s

2021

£’000s

Revenue reserve at 31 December (per Balance Sheet) 97,464 93,852

Third interim dividend for the year ended 31 December 2022 – 3.20p per share (2021: 3.00p) (16,589) (15,804)

Proposed final dividend for the year ended 31 December 2022 – 3.90p per share (2021: 3.80p) (20,218) (19,929)

Adjusted revenue reserve at 31 December 60,657

58,119

NOTES TO THE ACCOUNTS (CONTINUED)

91Annual Report and Accounts 2022

Financial Report

10. INVESTMENTS

Investments

Level 1

(1)

£’000s

Level 3

(1)

£’000s

2022

Total

£’000s

Level 1

(1)

£’000s

Level 3

(1)

£’000s

2021

Total

£’000s

Cost at 1 January 3,929,156 442,353 4,371,509 3,294,199 398,619 3,692,818

Unrealised gains/(losses) at 1 January 1,330,795 76,819 1,407,614 1,187,434 (23,884) 1,163,550

Fair value of investments at 1 January 5,259,951 519,172 5,779,123 4,481,633 374,735 4,856,368

Purchases at cost 2,013,522 57,617 2,071,139 2,437,570 85,979 2,523,549

Sales proceeds (2,282,107) (56,438) (2,338,545) (2,405,486) (75,170) (2,480,656)

Gains on investments sold 183,903 36,146 220,049 602,873 32,925 635,798

(Losses)/gains on investments held (766,477) 18,668 (747,809) 143,361 100,703 244,064

Fair value of investments at 31 December 4,408,792 575,165 4,983,957 5,259,951 519,172 5,779,123

Analysed at 31 December

Cost 3,844,474 479,678 4,324,152 3,929,156 442,353 4,371,509

Unrealised gains 564,318 95,487 659,805 1,330,795 76,819 1,407,614

Fair value of investments at 31 December 4,408,792 575,165 4,983,957 5,259,951 519,172 5,779,123

(Losses)/gains on investments held at fair value

2022

£’000s

2021

£’000s

Gains on investments sold during the year 220,049 635,798

(Losses)/gains on investments held at year end (747,809) 244,064

Total (losses)/gains on investments (527,760) 879,862

Investments sold during the year have been revalued over time since their original purchase, and until they were sold any unrealised gain or loss was included in

the fair value of investments.

(1) The hierarchy of investments and derivative instruments is described in note 2(c)(i) and below.

No investments held in 2022 or 2021 were valued in accordance with Level 2.

Level 1 includes investments and derivatives listed on any recognised stock exchange or quoted on the AIM market in the UK and quoted open-ended funds.

These also include gilts of approximately £60m.

Level 3 includes investments in private companies or securities, whether invested in directly or through pooled Private Equity vehicles, for which observable

market data is not specifically available.

Investments managed or advised by Columbia Threadneedle Investments

The portfolio of investments, excluding unquoted investments, did not include at any time during the year any funds or investments

managed or advised by Columbia Threadneedle Investments (2021: none). Under the terms of the Company’s Management

Agreement with the Manager set out in note 4, the management fee is adjusted for fees earned by the Manager on all such

holdings.

Unquoted investments

Unquoted investments include £574.9 million (2021: £518.9 million) of investments described as Private Equity, together with £0.3

million (2021: £0.3 million) of other partnerships, the underlying portfolios of which principally comprise unlisted investments. These

are valued in accordance with the policies set out in note 2(c)(ii).

It is in the nature of Private Equity and similar unquoted investments that they may be loss making, with no certainty of survival, and

that they may prove difficult to realise. The concept of “fair value” as applied to such investments is not precise and their ultimate

realisation may be at a value materially different from that reflected in the accounts. Further details on the valuation process in

respect of Private Equity investments can be found in note 26(d).

11. SUBSTANTIAL INTERESTS

At 31 December 2022 the Company held more than 3% of one class of the capital of the following undertakings held as investments,

none of which, in the opinion of the Directors, provide the Company with significant influence.

Investment and share class

Country of

registration,

incorporation and

operation Holding

(1)

Private Equity Funds

Dover Street VI LP USA 11.12

HarbourVest Partners VII – Buyout Partnership Fund LP USA 3.86

HIPEP V – Direct Fund LP USA 15.66

HarbourVest Partners V – Asia Pacific and Rest of World LP USA 4.74

HIPEP VI – Emerging Markets Fund USA 12.06

HIPEP VI – Asia Pacific Fund LP USA 4.93

Pantheon Europe Fund III LP USA 44.41

Pantheon Europe Fund V LP Scotland 9.29

Pantheon Asia Fund IV LP Channel Islands 8.40

Pantheon Asia Fund V LP Channel Islands 6.19

Pantheon Global Secondary Fund III LP Scotland 3.50

Graycliff USA 4.78

Volpi Capital Europe 4.28

Maison Capital China 4.84

MVM USA/Europe 4.10

PE Investment Holdings 2018 LP* Scotland 100.00

Other Investments

Esprit Capital Fund 1 LP England 10.80

(1)

The Company neither has a controlling interest nor significant influence in the management of any of these undertakings. The

Board has no participation in the investment decision making process as this lies solely with the General Partner.

The valuation of those holdings greater than 10% are: Dover Street VI LP: £170,000; HIPEP V – Direct Fund LP: £340,000; HIPEP

VI – Emerging Markets Fund: £15,501,000; Pantheon Europe Fund III LP: £1,847,000; PE Investment Holdings 2018 LP: £235,707,000;

Esprit Capital Fund 1 LP: £305,000

The Company had no subsidiaries at any time during the year.

*In 2018 the Company signed a Limited Partnership agreement in which it holds 100% of the Limited Partner share in PE Investment

Holdings 2018 LP and Columbia Threadneedle Investments holds the General Partner interest. The Partnership was set up to

partake in Private Equity investments. The Board has no participation in the investment decision making process as this lies solely

with the General Partner and therefore no consolidated financial statements are prepared. The registered address of PE Investment

Holdings 2018 LP is 6th Floor, Quartermile 4, 7a Nightingale Way, Edinburgh, EH3 9EG.

The profit for the year ended 31 December 2022 in the LP was £64.0m and the Capital and Reserves was £235.7m.

The outstanding commitment is shown in note 23.

NOTES TO THE ACCOUNTS (CONTINUED)

93Annual Report and Accounts 2022

Financial Report

12. DEBTORS

2022

£’000s

2021

£’000s

Investment debtors 425 420

Forward exchange contracts* 737 –

Prepayments and accrued income 4,887 3,761

Overseas taxation recoverable 5,012 4,086

11,061 8,267

* Forward exchange contracts with a net unrealised capital gain of £737,000 (2021: net unrealised capital loss of £4,806,000) were

valued in accordance with level 2. See notes 2(c)(i), 14 and 26(c).

13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Loans

Non-instalment debt payable on demand or within one year

2022

£’000s

2021

£’000s

€72 million repayable July 2022 – 60,452

Sterling loan £50 million repayable January 2022 – 50,000

– 110,452

In July 2015 the Company entered into a loan arrangement facility drawing loans in Euros, equivalent at that date to £50 million,

at commercial fixed interest rates. This was repaid in July 2022. At 31 December 2021 there was £50 million drawn down under the

£150 million unsecured revolving credit facility, which was repaid in March 2022. This facility expired in September 2022 and was

not renewed.

The total market value of the short-term loans at 31 December 2022 was £nil (2021: £110,832,000 based on the equivalent

benchmark gilts or relevant commercially available current debt).

14. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Other

2022

£’000s

2021

£’000s

Investment creditors 2,933 42

Forward exchange contracts – 4,806

Management fees payable to the Manager 1,863 2,241

Cost of ordinary shares repurchased – 784

Other accrued expenses 2,394 1,404

7,190 9,277

15. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Loans

Non-instalment debt payable after more than one year

2022

£’000s

2021

£’000s

2.80% Loan notes £25 million repayable June 2028 25,000 25,000

3.16% Loan notes £50 million repayable June 2031 50,000 50,000

2.92% Loan notes £75 million repayable May 2048 75,000 75,000

0.93% Loan notes €42 million repayable June 2026 37,264 35,263

2.59% Loan notes £57 million repayable June 2042 57,000 57,000

2.69% Loan notes £37 million repayable June 2049 37,000 37,000

2.72% Loan notes £20 million repayable June 2059 20,000 20,000

2.09% Loan notes £50 million repayable June 2036 50,000 50,000

2.15% Loan notes £50 million repayable June 2038 50,000 50,000

2.33% Loan notes £40 million repayable June 2056 40,000 40,000

2.06% Loan notes £50 million repayable March 2037 50,000 –

1.96% Loan notes £45 million repayable March 2056 45,000 –

1.87% Loan notes £45 million repayable March 2061 45,000 –

581,264 439,263

In June 2016 the Company issued fixed rate senior unsecured notes in tranches of £25 million and £50 million sterling denominated

loan notes expiring in June 2028 and June 2031 respectively. In May 2018 the Company issued fixed rate senior unsecured notes

of £75 million sterling denominated loan notes expiring in May 2048. In June 2019 the Company issued fixed rate senior unsecured

notes in tranches of EUR42 million, £57 million, £37 million and £20 million expiring in June 2026, June 2042, June 2049 and June

2059 respectively. In June 2021 the Company issued fixed rate senior unsecured notes in tranches of £50 million, £50 million and

£40 million expiring in June 2036, June 2038 and June 2056 respectively. In March 2022 the Company issued fixed rate senior

unsecured notes in tranches of £50 million, £45 million and £45 million expiring in March 2037, March 2056 and March 2061

respectively. Interest rates applying to the notes are commercially competitive and fixed until the expiry dates.

The market value of the long-term loans at 31 December 2022 was £399,134,000 based on the equivalent benchmark gilts or

relevant commercially available current debt (2021: £458,896,000).

At 6 March 2023, long-term borrowings comprised £544 million loan notes and €42 million loan notes.

16. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Debenture

2022

£’000s

2021

£’000s

4.25% perpetual debenture stock – secured 575 575

The 4.25% perpetual debenture stock, which was issued in 1960, is listed on the London Stock Exchange and secured by floating

charges over the assets of the Company. The market value of the debenture stock at 31 December 2022 was £429,000

(2021: £429,000).

NOTES TO THE ACCOUNTS (CONTINUED)

95Annual Report and Accounts 2022

Financial Report

17. SHARE CAPITAL

2022

Shares held in

treasury

Number

entitled to

dividend

Number

Total shares

in issue

Number

Issued and

fully paid

nominal

£’000s

Ordinary shares of 25p each

Balance brought forward 35,035,876 526,783,140 561,819,016 140,455

Shares repurchased by the Company and held in treasury 8,371,284 (8,371,284) – –

Balance carried forward 43,407,160 518,411,856 561,819,016 140,455

2021

Shares held in

treasury

Number

entitled to

dividend

Number

Total shares

in issue

Number

Issued and

fully paid

Nominal

£’000s

Ordinary shares of 25p each

Balance brought forward 25,172,380 536,646,636 561,819,016 140,455

Shares repurchased by the Company and held in treasury 9,863,496 (9,863,496) – –

Balance carried forward 35,035,876 526,783,140 561,819,016 140,455

During the year the Company bought back 8,371,284 ordinary shares at a total cost of £70,749,000, all of which were placed in

treasury.

Since the year end, and up to 6 March 2023, no further ordinary shares of 25p each have been repurchased.

18. CAPITAL REDEMPTION RESERVE

2022

£’000s

2021

£’000s

Balance brought forward and carried forward 122,307 122,307

19. OTHER RESERVES

Capital reserve

arising on

investments

sold

£’000s

Capital reserve

arising on

investments

held

£’000s

Capital

reserves

– total

£’000s

Revenue

reserve

£’000s

Gains and losses transferred in current year:

Gains on investments and derivatives sold (see note 10) 220,049 – 220,049 –

Losses on investments held at year end (see note 10) – (747,809) (747, 809) –

Exchange movements on foreign currency loans, cash balances

and derivatives

(51,042) 39,660 (11,382) –

Management fees (see note 4) (13,747) – (13,747) –

Finance costs (see note 6) (10,486) – (10,486) –

Other capital charges (see note 5) (46) – (46) –

Indian capital gains tax (see note 7) (551) – (551) –

Net revenue return attributable to shareholders – – – 72,595

Total gains and losses transferred in current year 144,177 (708,149) (563,972) 72,595

Cost of ordinary shares repurchased in year (see note 17) (70,749) – (70,749) –

Dividends paid in year (see note 9) – – – (68,983)

Balance brought forward 3,519,393 1,404,927 4,924,320 93,852

Balance carried forward 3,592,821 696,778 4,289,599 97,464

Included within the capital reserve movement for the year is £459,000 (2021: £1,526,000) of dividend receipts recognised as capital

in nature in accordance with note 2(c)(xii). £1,247,000 of transaction costs on purchases of investments are included within the

capital reserve movements disclosed above (2021: £1,343,000). £726,000 of transaction costs on sales of investments are similarly

included (2021: £782,000).

20. NET ASSET VALUE PER ORDINARY SHARE

2022 2021

Net asset value per share – pence 896.94 1,002.49

Net assets attributable at end of period – £’000s 4,649,825 5,280,934

Ordinary shares of 25p in issue at end of year, excluding shares held in treasury – number 518,411,856 526,783,140

Net asset value per share (with the debenture stock and long-term loans at market value – see notes 15 and 16) was 932.10p (2021:

998.72p).

NOTES TO THE ACCOUNTS (CONTINUED)

97Annual Report and Accounts 2022

Financial Report

21. RECONCILIATION OF NET RETURN BEFORE TAXATION TO CASH FLOWS FROM OPERATING ACTIVITIES

2022

£’000s

2021

£’000s

Net return on ordinary activities before taxation (480,443) 927,156

Adjust for non-cash flow items, dividend income and interest expense:

Losses/(gains) on investments 527,760 (879,862)

Exchange losses/(profits) 10,995 (4,075)

Non-operating expenses of a capital nature 46 57

(Increase)/decrease in debtors (310) 60

Decrease in creditors (122) (61)

Dividends receivable (94,268) (77,618)

Interest payable 13,981 11,113

Tax on overseas income (11,703) (4,346)

446,379 (954,732)

Cash flows from operating activities (before dividends received and interest paid) (34,064) (27,576)

22. ANALYSIS OF CHANGES IN NET DEBT

Cash

£’000s

Short-term

loans

£’000s

Long-term

loans

£’000s

Debenture

£’000s

Forward

exchange

contracts

£’000s

Total

£’000s

Opening net debt as at

31 December 2021

53,111 (110,452) (439,263) (575) (4,806) (501,985)

Cash-flows:

Drawdown of loans – – (140,000) – – (140,000)

Repayment of loans – 110,329 – – – 110,329

Net movement in cash and cash

equivalents

205,385 – – – – 205,385

Non-cash:

Effect of foreign exchange

movements

(14,660) 123 (2,001) – 5,543 (10,995)

Closing net debt as at

31 December 2022 243,836 – (581,264) (575) 737 (337, 266)

Cash

£’000s

Short term

loans

£’000s

Long-term

loans

£’000s

Debenture

£’000s

Forward

exchange

contracts

£’000s

Total

£’000s

Opening net debt as at

31 December 2020

46,654 (40,000) (366,041) (575) 9,061 (350,901)

Cash-flows:

Drawdown of loans – (130,000) (140,000) – – (270,000)

Repayment of loans – 120,000 – – – 120,000

Transfer of loan from long-term

to short term

– (61,407) 61,407 – – –

Net movement in cash and cash

equivalents

(5,159) – – – – (5,159)

Non-cash:

Effect of foreign exchange

movements

11,616 955 5,371 – (13,867) 4,075

Closing net debt as at

31 December 2021 53,111 (110,452) (439, 263) (575) (4,806) (501,985)

NOTES TO THE ACCOUNTS (CONTINUED)

99Annual Report and Accounts 2022

Financial Report

23. CAPITAL COMMITMENTS

The Company had the following outstanding capital commitments at the year end:

2022

Currency

2021

Currency

2022

£’000s

2021

£’000s

Managed by Harbourvest:

HarbourVest Partners VII:

– Buyout Partnership Fund LP US$4.3m US$4.3m 3,566 3,167

– Venture Partnership Fund LP US$0.5m US$0.5m 436 388

– Mezzanine Fund LP US$0.7m US$0.7m 599 532

Dover Street VI LP US$3.1m US$3.1m 2,583 2,294

Dover Street VII LP US$3.2m US$3.2m 2,650 2,353

HarbourVest Partners V – Asia Pacific and Rest of World LP US$1.5m US$1.5m 1,247 1,107

HarbourVest Partners VIII:

– Buyout Partnership Fund LP US$1.8m US$1.8m 1,496 1,329

– Venture Partnership Fund LP US$0.8m US$0.8m 665 591

HIPEP V – Direct Fund LP €2.1m €2.1m 1,830 1,732

HIPEP VI – Asia Pacific Fund LP US$1.3m US$1.3m 1,039 923

Managed by Pantheon:

Pantheon Europe Fund III LP €5.4m €5.4m 4,756 4,500

Pantheon Europe Fund V LP €4.5m €5.3m 3,993 4,450

Pantheon Asia Fund IV LP US$2.7m US$2.7m 2,203 1,956

Pantheon Asia Fund V LP US$3.5m US$3.7m 2,889 2,713

Pantheon Global Secondary Fund III LP US$2.4m US$2.4m 2,037 1,809

Pantheon Access SICAV

(2)

US$266.0m US$113.3m 221,091 83,658

Selected by Columbia Threadneedle Investments:

Esprit Capital Fund I LP £0.27m £0.27m 265 265

Astorg VI

(1)

€1.1m €1.1m 994 940

Inflexion Supplemental IV

(1)

£0.0m £0.1m – 61

August Equity IV

(1)

£0.2m £0.5m 198 469

DBAG Fund VII

(1)

€0.0m €0.4m – 304

Procuritas VI

(1)

€0.9m €2.3m 791 1,968

Warburg Pincus China Fund

(1)

US$0.0m US$0.0m – 12

Stellex Capital

(1)

US$0.0m US$0.0m 9 8

Centana

(1)

US$0.3m US$0.5m 211 377

Graycliff

(1)

US$1.3m US$1.3m 1,065 946

Volpi Capital

(1)

€0.0m €0.1m 27 87

MidOcean

(1)

US$0.0m US$1.2m – 854

Maison Capital

(1)

US$0.1m US$0.6m 46 473

Inflexion Partnership Capital II

(1)

£1.4m £1.8m 1,374 1,806

Inflexion Buyout Fund V

(1)

£0.4m £0.7m 425 696

PE Investment Holdings 2018 LP

(1)(2)

£186.6m £29.1m 186,618 29,118

Verdane Edda

(1)

SEK 15.1m SEK 15.1m 1,204 1,230

MVM

(1)

US$3.0m US$7.7m 2,470 5,696

Inflexion Supplemental V

(1)

£3.6m £4.0m 3,587 4,020

Graycliff IV

(1)

US$5.1m US$6.6m 4,249 4,864

Centana II

(1)

US$3.0m US$4.1m 2,472 3,063

MED Platform

(1)

€1.7m €1.9m 1,472 1,589

Inflexion Buyout Fund VI

(1)

£14.7m £15.0m 14,748 15,000

Hg Saturn 3

(1)

US$10.0m – 8,313 –

483,618 187,348

(1) Columbia Threadneedle Investments is responsible for the selection and oversight of these funds, within the terms of its management agreement with the

Company.

(2) Additional commitments were made in the year to Pantheon Access SICAV and PE Investment Holdings 2018 LP of US$180m and £180m respectively.

100

24. RELATED PARTY TRANSACTIONS

The following are considered related parties: the Board of Directors and the Manager (including fellow members of Columbia

Threadneedle Investments).

There are no transactions with the Board other than aggregated remuneration for services as Directors as disclosed in the

Remuneration Report on page 65 and as set out in note 5. There were no outstanding balances with the Board at the year end.

There were no transactions with the Ameriprise group other than those detailed: in note 4 on management fees; in note 10, where

investments managed or advised by Columbia Threadneedle Investments are disclosed; in note 14 in relation to fees owed to the

Manager at the Balance Sheet date; and in the Report of the Management Engagement Committee on page 56 regarding the

Management agreement in respect of Private Equity fees and a trademark licence agreements in respect of the “F&C” name.

25. GOING CONCERN

In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting

Council. They have also considered the Company’s objective, strategy and investment policy, the current cash position of the

Company, the availability of borrowings and compliance with covenants and the operational resilience of the Company and its

service providers. More information on the Board's assessment is provided on pages 42 and 43.

26. FINANCIAL RISK MANAGEMENT

The Company is an investment company, listed on the London Stock Exchange, and conducts its affairs so as to qualify in the UK as

an investment trust under the provisions of Section 1158 of the Corporation Tax Act 2010. In so qualifying, the Company is exempted

in the UK from corporation tax on capital gains on its portfolio of investments.

The Company’s objective is to secure long-term growth in capital and income through a policy of investing primarily in an

internationally diversified portfolio of publicly listed equities, as well as unlisted securities and Private Equity, with the use of

gearing. In pursuing the objective, the Company is exposed to financial risks which could result in a reduction of either or both of

the value of the net assets and the profits available for distribution by way of dividend. These financial risks are principally related to

the market (currency movements, interest rate changes and security price movements), liquidity and credit. The Board of Directors,

together with the Manager, is responsible for the Company’s risk management. The Directors’ policies and processes for managing

the financial risks are set out in (a), (b) and (c) on the following pages.

The significant accounting policies which govern the reported Balance Sheet carrying values of the underlying financial assets and

liabilities, as well as the related income and expenditure, are set out in note 2 to the accounts. The policies are in compliance with

UK Accounting Standards and best practice, and include the valuation of financial assets and liabilities at fair value except as noted

in (d) on page 105 and in notes 13, 15 and 16 in respect of loans and the perpetual debenture stock. The Company does not make

use of hedge accounting rules.

(a) Market risks

The fair value of equity and other financial securities, including any derivatives, held in the Company’s portfolio fluctuates with

changes in market prices. Prices are themselves affected by movements in currencies, interest rates and other macroeconomic,

market and financial issues, including the market perception of future risks. The Board’s policies for managing these risks within the

Company’s objective are set out on page 31. The Board meets regularly to review full, timely and relevant information on investment

performance and financial results. The Manager assesses exposure to market risks when making each investment decision and

monitors ongoing market risk within the portfolio.

The Company’s other assets and liabilities may be denominated in currencies other than sterling and may also be exposed to

interest rate risks. The Manager and the Board regularly monitor these risks. Foreign currency borrowings are limited to amounts

and currencies commensurate with the portfolio’s exposure to those currencies, thereby limiting the Company’s exposure to future

changes in foreign exchange rates. The debenture deed and loan contracts are agreed and signed by the Board and compliance

with the agreements is monitored by the Board at each meeting. Gearing may be short or long-term in sterling and foreign

NOTES TO THE ACCOUNTS (CONTINUED)

101Annual Report and Accounts 2022

Financial Report

currencies, and enables the Company to take a long-term view of the countries and markets in which it is invested without having

to be concerned about short-term volatility.

Currency Exposure

The carrying value of the Company’s assets and liabilities at 31 December, by currency, are shown below:

2022

Short-term

debtors

£’000s

Cash and

deposits

£’000s

Debentures

£’000s

Unsecured

loans

£’000s

Short-term

creditors

£’000s

Net monetary

assets/

(liabilities)

£’000s

Investments

£’000s

Net exposure

£’000s

Sterling 910 140,518 (575) (544,000) (3,619) (406,766) 655,131 248,365

US Dollar 5,223 78,890 – – (2,872) 81,241 2,909,773 2,991,014

Euro 3,088 19,682 – (37, 264) (5) (14,499) 416,633 402,134

Yen 465 3,445 – – (454) 3,456 348,674 352,130

Other 1,375 1,301 – – (240) 2,436 653,746 656,182

Total 11,061 243,836 (575) (581,264) (7,190) (334,132) 4,983,957 4,649,825

2021

Short-term

debtors

£’000s

Cash and

deposits

£’000s

Debentures

£’000s

Unsecured

loans

£’000s

Short-term

creditors

£’000s

Net monetary

assets/

(liabilities)

£’000s

Investments

£’000s

Net exposure

£’000s

Sterling 643 30,576 (575) (454,000) (3,292) (426,648) 600,273 173,625

US Dollar 3,514 17,490 – – (5,757) 15,247 3,452,574 3,467,821

Euro 2,355 1,600 – (95,715) (186) (91,946) 527, 843 435,897

Yen 611 2,845 – – (42) 3,414 401,020 404,434

Other 1,144 600 – – – 1,744 797,413 799,157

Total 8,267 53,111 (575) (549,715) (9,277) (49 8,189) 5,779,123 5,280,934

The principal currencies to which the Company was exposed were the US Dollar, Euro and Yen. The exchange rates applying against

sterling at 31 December, and the average rates during the year, were as follows:

2022 Average 2021

US Dollar 1.2029 1.2405 1.3545

Euro 1.1271 1.1718 1.1910

Yen 158.7167 161.2491 155.9717

102

Based on the financial assets and liabilities held adjusted for the underlying gross exposure value of the forward exchange contracts

against USD, and exchange rates applying at each Balance Sheet date, a weakening or strengthening of sterling against each of

these currencies by 10% would have had the following approximate effect on annualised income after tax and on NAV per share:

Weakening of sterling

US$

£’000s

€

£’000s

2022

£’000s

US$

£’000s

€

£’000s

2021

£’000s

Income Statement Return after tax

Revenue return 3,771 1,221 787 3,119 874 656

Capital return 297,120 40,214 35,213 327,859 43,590 40,443

Total return 300,891 41,435 36,000 330,978 44,464 41,099

NAV per share – pence 58.04 7.99 6.94 62.83 8.44 7.80

Strengthening of sterling

US$

£’000s

€

£’000s

2022

£’000s

US$

£’000s

€

£’000s

2021

£’000s

Income statement return after tax

Revenue return (3,771) (1,221) (787) (3,119) (874) (656)

Capital return (297,120) (40,214) (35,213) (327,859) (43, 590) (40,4 43)

Total return (300,891) (41,435) (36,000) (330,978) (44,464) (41 ,099)

NAV per share – pence (58.04) (7.99) (6.94) (62.83) (8.44) (7.80)

These analyses are broadly representative of the Company’s activities during the current and prior years as a whole, although the

level of the Company’s exposure to currencies fluctuates in accordance with the investment and risk management processes.

Interest rate exposure

The exposure of the financial assets and liabilities to interest rate risks at 31 December is shown below:

Within

one year

£’000s

More than

one year

£’000s

2022

Total

£’000s

Within

one year

£’000s

More than

one year

£’000s

2021

Total

£’000s

Exposure to floating rates

Cash 144,096 – 144,096 27,798 – 27,798

Exposure to fixed rates

Deposits 99,740 – 99,740 25,313 – 25,313

Gilts 59,424 – 59,424 – – –

Debentures – (575) (575) – (575) (575)

Other borrowings – (581,264) (581,264) (110,452) (439, 263) (549,715)

Net exposure at year end 303,260 (581,839) (278,579) (57,341) (439,838) (497,179)

Exposures vary throughout the year as a consequence of changes in the composition of the net assets of the Company arising out

of the investment and risk management processes.

NOTES TO THE ACCOUNTS (CONTINUED)

26. FINANCIAL RISK MANAGEMENT (CONTINUED)

103Annual Report and Accounts 2022

Financial Report

Interest received on cash balances, or paid on bank overdrafts and borrowings, is at ruling market rates. The interest rate applying

on the debenture stock is set out in note 16. There were fixed interest investment securities of approximately £60m at the year

end.

The Company’s total returns and net assets are sensitive to changes in interest rates on cash and borrowings, except in respect of

the debenture, loans and Gilts (see notes 10, 13, 15 and 16), on which the interest rates are fixed.

Based on the financial assets and liabilities held, and the interest rates pertaining, at each Balance Sheet date, a decrease or

increase in interest rates by 2% would have the following approximate effects on the Income Statement revenue and capital

returns after tax and on the NAV:

Increase

in rate

£’000s

2022

Decrease

in rate

£’000s

Increase

in rate

£’000s

2021

Decrease

in rate

£’000s

Revenue return 2,881 (2,881) 556 (556)

Capital return – – – –

Total return 2,881 (2,881) 556 (556)

NAV per share – pence 0.56 (0.56) 0.11 (0.11)

Other market risk exposures

Based on the portfolio of investments held at each Balance Sheet date, and assuming other factors remain constant, a decrease

or increase in the fair values of the portfolio by 20% would have had the following approximate effects on the net capital return

attributable to equity shareholders and on the NAV:

Increase

in value

£’000s

2022

Decrease

in value

£’000s

Increase

in value

£’000s

2021

Decrease

in value

£’000s

Income statement capital return 996,791 (996,791) 1,155,825 (1,155,825)

NAV per share – pence 192.28 (192.28) 219.41 (219.41)

(b) Liquidity risk exposure

The Company is required to raise funds to meet commitments associated with financial instruments, Private Equity investments and

share buybacks. These funds may be raised either through the realisation of assets or through increased borrowing. The risk of the

Company not having sufficient liquidity at any time is not considered by the Board to be significant, given: the large value of the

listed investments held in the Company’s portfolio (88.5% at 31 December 2022); the liquid nature of the portfolio of investments;

the industrial and geographical diversity of the portfolio and the ability to meet short term settlements through our custody account

and the availability of loan facilities. Cash balances are held with approved banks, usually on overnight deposit. The Manager reviews

liquidity at the time of making each investment decision. The Board reviews liquidity exposure at each of its meetings.

The Company has total borrowings of £582 million as set out in notes 15 and 16. Their terms limit the amount which the Company

may borrow at any one time as a proportion of the relevant portfolio of investments and cash. The most onerous financial covenant

limits total borrowings to 35% of the Company’s adjusted net asset value, which at 31 December 2022 was £4,071 million. Actual

borrowings at par value at 31 December 2022 were £581.3 million in loans (market value: £399.1 million) (see note 15) and £0.6

million (market value: £0.4 million) in a debenture (see note 16).

At 31 December 2022 the Company had £483.6 million outstanding commitments to Private Equity investments, payable over more

than one year (see note 23).

104

The contractual maturities of the financial liabilities at each balance sheet date, based on the earliest date on which payment can be

required, were as follows:

2022

Three months

or less

£’000s

More than three

months but less

than one year

£’000s

More than

one year

£’000s

Total

£’000s

Other creditors 7,190 – – 7,190

Long-term liabilities

(1)

(including interest) 1,372 12,280 861,538 875,190

8,562 12,280 861,538 882,380

2021

Three months

or less

£’000s

More than three

months but less

than one year

£’000s

More than

one year

£’000s

Total

£’000s

Forward exchange contracts 4,806 – – 4,806

Other creditors 115,194 341 – 115,535

Long-term liabilities

(1)

(including interest) – 10,890 654,043 664,933

120,000 11,231 654,043 785,274

(1) See notes 15 and 16 for maturity dates

The Company is exposed to potential failure by counterparties to deliver securities for which the Company has paid, or to pay for

securities which the Company has delivered. The Board reviews all counterparties used in such transactions, which must be settled

on the basis of delivery against payment (except where local market conditions do not permit).

A list of pre-approved counterparties is maintained by the Manager. Broker counterparties are selected based on a combination of

criteria, including credit rating, balance sheet strength and membership of a relevant regulatory body. The rate of default in the past

has been negligible. Payments in respect of Private Equity investments are made only to counterparties with whom a contracted

commitment exists. Cash and deposits are held with approved banks.

The Company has an ongoing contract with the Custodian for the provision of custody services. The contract was reviewed

and updated in 2017. Details of securities held in custody on behalf of the Company are received and reconciled monthly. The

Depositary has regulatory responsibilities relating to segregation and safe keeping of the Company’s financial assets, amongst other

duties, as set out in the Directors’ Report. The Board has direct access to the Depositary and receives regular reports from it via the

Manager.

To the extent that the Manager carries out management and administrative duties (or causes similar duties to be carried out

by third parties) on the Company’s behalf, the Company is exposed to counterparty risk. The Board assesses this risk through

regular meetings with the management of Columbia Threadneedle Investments (including the Fund Manager) and with its Risk

Management function. In reaching its conclusions, the Board also reviews Columbia Threadneedle Investment's annual Audit and

Assurance Faculty Report.

The Company had UK Gilts of approximately £60m in its portfolio at the year end (2021: none). None of the Company’s financial

assets are past its due date or impaired.

NOTES TO THE ACCOUNTS (CONTINUED)

26. FINANCIAL RISK MANAGEMENT (CONTINUED)

105Annual Report and Accounts 2022

Financial Report

During the year the Company reduced the forward exchange contract from approximately £200m in sterling to £20m against

the US dollar. At 31 December 2022 there was a net unrealised capital gain of £737,000 (2021: net unrealised capital loss of

£4,806,000).

The maximum exposure to credit risk on cash and debtors equates to their carrying amounts as per the balance sheet.

(d) Fair values of financial assets and liabilities

The assets and liabilities of the Company are, in the opinion of the Directors, reflected in the balance sheet at fair value, or at a

reasonable approximation thereof, except for the long-term loans which are carried at amortised cost and the debenture which is

carried at proceeds less costs, in accordance with Accounting Standards.

The fair values of the long-term loans and debenture at 31 December 2022 are set out in notes 15 and 16. Borrowings under

overdraft and short-term loan facilities do not have a value materially different from their capital repayment amount. Borrowings in

foreign currencies are converted into sterling at exchange rates ruling at each valuation date.

The fair value of investments quoted on active markets is determined directly by reference to published price quotations in these

markets.

Forward currency contracts are valued on the basis of exchange rates for a similar contract for the same residual duration, as

provided by the counterparty.

Unquoted investments, including Private Equity investments, are valued based on professional advice and assumptions that

are not wholly supported by prices from current market transactions or by observable market data. The Directors make use of

recognised valuation techniques including reference to: net assets; industry benchmarks; cost of investment; roll forward of calls

and redemptions; and recent arm’s length transactions in the same or similar investments. With respect specifically to investments

in Private Equity funds or partnerships, the underlying investment advisers and managers provide regular estimated valuations to

the Directors, based on the latest information available to the managers. The Directors review these valuations for consistency with

the Company’s own accounting policies and with fair value principles. The investment advisers’ and managers’ estimated valuations

relating to the Private Equity funds’ period ends are compared annually by the Directors to the final audited annual valuations of

those funds to ensure that the managers’ valuation techniques gave rise to valid estimates. The Directors were satisfied with the

results of this annual review, which took place most recently in June 2022, indicating that the Company can, all things being equal,

continue to place reliance on the Private Equity advisers’ and managers’ estimates and valuation techniques. The Company's direct

investment in Inflexion Strategic Partners is valued with reference to an earnings multiple.

(e) Capital risk management

The objective of the Company is stated as being to secure long-term growth in capital and income. In pursuing this long-term

objective, the Board has a responsibility for ensuring the Company’s ability to continue as a going concern. It must therefore

maintain an optimal capital structure through varying market conditions. This involves the ability to:

• issue and buy back share capital within limits set by the shareholders in general meeting;

• borrow monies in the short and long terms; and

• pay dividends to shareholders out of current year revenue earnings as well as out of brought forward revenue and capital

reserves.

Changes to ordinary share capital are set out in note 17. Dividend payments are set out in note 9. The Directors have no current

intention to pay dividends out of capital reserves. Borrowings are set out in notes 13, 15 and 16.

106

27. SECURITIES FINANCING TRANSACTIONS (‘SFT’)

The Company has not, in the year to 31 December 2022 (2021: same), participated in any: repurchase transactions; securities

lending or borrowing; buy-sell back transactions; margin lending transactions; or total return swap transactions (collectively called

SFT). As such, it has no disclosure to make in satisfaction of the UK regulations on transparency of SFT, issued in November 2015.

28. AIFMD (UNAUDITED)

In accordance with the AIFMD, information in relation to the Company’s leverage and the remuneration of the Company’s AIFM are

required to be made available to investors. Detailed regulatory disclosures including those on the AIFM’s remuneration policy and

costs are available on the Company’s website or from Columbia Threadneedle Investments on request.

The Company’s maximum and actual leverage levels at 31 December 2022 are shown below:

Leverage exposure

Gross

method

Commitment

method

Maximum permitted limit 200% 200%

Actual 109% 112%

The Leverage limits are set by the AIFM and approved by the Board and are in line with the maximum leverage levels permitted in

the Company’s Articles of Association. The AIFM is also required to comply with the gearing parameters set by the Board in relation

to borrowings.

Further information on the AIFMD can be found on page 113.

NOTES TO THE ACCOUNTS (CONTINUED)

107Annual Report and Accounts 2022

Notice of Meeting

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the one hundred and forty

fourth Annual General Meeting of the Company will be held

at Merchant Taylors’ Hall, 30 Threadneedle Street, London

EC2R 8JB on Thursday 27 April 2023 at 12.00 noon for the

following purposes:

ORDINARY RESOLUTIONS:

To consider and, if thought fit, pass the following resolutions

as ordinary resolutions:

1. To receive and adopt the Directors’ report and the

audited accounts for the year ended 31 December

2022.

2. To approve the Directors’ remuneration policy.

3. To approve the Directors’ Remuneration Report

(excluding the Directors' remuneration policy) for the

year ended 31 December 2022.

4. To declare a final dividend for the year ended 31

December 2022 of 3.90 pence per ordinary share.

5. To re-elect Beatrice Hollond as a Director.

6. To re-elect Tom Joy as a Director.

7. To re-elect Edward Knapp as a Director.

8. To re-elect Rain Newton-Smith as a Director.

9. To re-elect Quintin Price as a Director.

10. To re-elect Stephen Russell as a Director.

11. To re-elect Julie Tankard as a Director.

12. To re-appoint Ernst & Young LLP as auditors to the

Company.

13. To authorise the Audit Committee to determine the

remuneration of the auditors.

14. Authority to allot shares.

THAT, in substitution for any existing authority, but without

prejudice to the exercise of any such authority prior to the

date hereof, the Directors be and they are hereby generally

and unconditionally authorised, in accordance with section

551 of the Companies Act 2006, to exercise all the powers

of the Company to allot shares in the Company and to grant

rights to subscribe for, or convert any security into, shares

in the Company (together being ‘relevant securities’) up

to an aggregate nominal amount of £12,960,296 during

the period commencing on the date of the passing of this

resolution and expiring at the conclusion of the annual

general meeting of the Company to be held in 2024 or

on 30 June 2024, whichever is earlier, unless previously

revoked, varied or extended by the Company in a general

meeting (the ‘relevant period’) save that the Company

may, at any time prior to the expiry of this authority, make

offers or enter into agreements which would or might

require relevant securities to be allotted after the expiry of

the relevant period and notwithstanding such expiry the

Directors may allot relevant securities in pursuance of such

offers or agreements.

SPECIAL RESOLUTIONS:

To consider and, if thought fit, pass the following resolutions

as special resolutions:

15. Disapplication of pre-emption rights

THAT, subject to the passing of resolution 14 above and in

substitution for any existing authority, but without prejudice

to the exercise of any such authority prior to the date

hereof, the Directors be and they are hereby authorised,

pursuant to sections 570 and 573 of the Companies Act

2006 (the 'Act'), to allot equity securities (within the

meaning of section 560 of the Act) either pursuant to the

authority conferred by resolution 14 for cash or by way of a

sale of treasury shares as if section 561(1) of the Act did not

apply to any such allotment or sale, provided this authority

shall be limited to:

(a) the allotment of equity securities in connection with an

offer of equity securities:

(i) to ordinary shareholders in proportion (as

nearly as may be practicable) to their existing

holdings; and

(ii) to holders of other equity securities as required

by the rights of those securities or as the

Directors otherwise consider necessary,

so that the Directors may impose any limits or

restrictions and make any arrangements which they

consider necessary or appropriate to deal with any

treasury shares, fractional entitlements or securities

represented by depositary receipts, record dates, legal,

regulatory or practical problems in, or under the laws

of, any territory or the requirements of any regulatory

body or stock exchange or any other matter; and

(b) the allotment (otherwise than under paragraph (a)

of this Resolution 15) of equity securities up to an

aggregate nominal amount of £12,960,296,

such authority to expire upon the expiry of the general

authority conferred by Resolution 14 above save that

the Company may at any time prior to the expiry of this

authority make offers or enter into agreements which

would or might require equity securities to be allotted

108

(and treasury shares to be sold) after the expiry of the

relevant period and notwithstanding such expiry the

Directors may allot equity securities (and sell treasury

shares) in pursuance of such offers or agreements as

if the authority conferred by this resolution had not

expired.

16. Share buyback authority

THAT, in substitution for any existing authority, but without

prejudice to the exercise of any such authority prior to the

date hereof, the Company be and is hereby generally and

unconditionally authorised, pursuant to and in accordance

with section 701 of the Companies Act 2006 (the 'Act'),

to make market purchases (within the meaning of section

693(4) of the Act) of fully paid ordinary shares of 25p each

in the capital of the Company (‘ordinary shares’) on such

terms and in such manner as the Directors may from time to

time determine, provided that:

(a) the maximum number of ordinary shares hereby

authorised to be purchased shall be 77,709,937 or, if

less, 14.99% of the number of ordinary shares in issue

(excluding treasury shares) as at the date of the passing

of this resolution;

(b) the minimum price (exclusive of expenses) which may

be paid for an ordinary share shall be 25p;

be paid for an ordinary share is the higher of:

(i) an amount equal to 105% of the average of

the middle market quotations for an ordinary

share (as derived from the London Stock

Exchange Daily Official List) for the five

business days immediately preceding the date

on which the ordinary share is contracted to

be purchased, and

(ii) an amount equal to the higher of the price

of the last independent trade for an ordinary

share and the highest current independent bid

for an ordinary share on the trading venues

where the purchase is carried out;

(d) the authority hereby conferred shall expire on 30 June

2024 unless the authority is renewed at the Company’s

annual general meeting to be held in 2024 or unless

such authority is varied, revoked or renewed prior

to such time by the Company in general meeting by

special resolution; and

(e) the Company may at any time prior to the expiry of

such authority enter into a contract or contracts to

purchase ordinary shares under such authority which

will or may be completed or executed wholly or partly

after the expiration of such authority and the Company

may purchase ordinary shares pursuant to any such

contract or contracts as if the authority conferred by

this resolution had not expired.

By Order of the Board

Columbia Threadneedle

Investment Business Limited,

Company Secretary

16 March 2023

Registered office:

Exchange House

Primrose Street

London EC2A 2NY

Registered number: 12901

This year’s AGM will again be a “hybrid” meeting, with

shareholders and savings plan holders being able to

attend the meeting in person or online. This allows many

more of our shareholders the opportunity to view the AGM

and to participate by asking questions and voting online.

Full details of how to do so are set out in your Form of

Proxy or Form of Direction. Please read these carefully as

failure to complete your form correctly will result in you

not being able to vote at the meeting.

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

Mansion

House

Bank

Monument

Cornhill

Leadenhall Steet

Threadneedle Street

Bank

England

Lloyds

London

Fenchurch St

Station

Liverpool

Street

King William Street

Bishopsgate

Old Broad Street

Lombard Street

Threadneedles

Hotel

Merchant

Taylors’ Hall

Meeting Location

109Annual Report and Accounts 2022

Notice of Meeting

Notes:

1. A member is entitled to appoint one or more proxies to

exercise all or any of the member’s rights to attend, speak

and vote at the meeting. A proxy need not be a member

of the Company but must attend the meeting for the

member’s vote to be counted. If a member appoints more

than one proxy to attend the meeting, each proxy must

be appointed to exercise the rights attached to a different

share or shares held by that member.

Please contact Computershare Investor Services PLC by

email on corporate-representatives@computershare.co.uk

or alternatively call 0800 923 1506, providing details of

your proxy appointment including their email address so

that unique credentials can be issued to allow the proxy

to access the electronic meeting. Access credentials will

be emailed to the appointee one working day prior to the

meeting. Lines are open 8.30am to 5.30pm Monday to

Friday (excluding bank holidays).

2. If the Chairman, as a result of any proxy appointments,

is given discretion as to how the votes are cast and the

voting rights in respect of those discretionary proxies,

when added to the interests in the Company’s securities

already held by the Chairman, result in the Chairman

holding such number of voting rights that she has a

notifiable obligation under the Disclosure Guidance and

Transparency Rules (‘DTRs’), the Chairman will make the

necessary notifications to the Company and the Financial

Conduct Authority (‘FCA’). As a result, any person holding

3% or more of the voting rights in the Company who

grants the Chairman a discretionary proxy in respect of

some or all of those voting rights and so would otherwise

have a notification obligation under the DTRs need not

make a separate notification to the Company and the FCA.

3. Any such person holding 3% or more of the voting rights

in the Company who appoints a person other than the

Chairman as their proxy will need to ensure that both they

and such person complies with their respective disclosure

obligations under the DTRs.

4. A Form of Proxy is provided with this notice for members.

If a member wishes to appoint more than one proxy and

so requires additional Forms of Proxy, the member should

contact Computershare Investor Services PLC on 0800

923 1506. To be valid, the Form of Proxy and any power

of attorney or other authority under which it is signed

(or a notarially certified copy of such authority) must be

received by post or (during normal business hours only) by

hand at the Company’s registrars, Computershare Investor

Services PLC, The Pavilions, Bridgwater Road, Bristol BS99

6ZY, no later than 12.00 noon on Tuesday 25 April 2023

or two business days before the time of any adjournment.

Completion and return of a Form of Proxy will not preclude

members from attending and voting at the meeting should

they wish to do so. Amended instructions must also be

received by the Company’s registrars by the deadline for

receipt of Forms of Proxy.

5. Alternatively, members may register the appointment of

a proxy for the meeting electronically, by accessing the

website eproxyappointment.com where full instructions for

the procedure are given. The Control Number, Shareholder

Reference and PIN as printed on the Form of Proxy will be

required in order to use the electronic proxy appointment

system. This website is operated by Computershare

Investor Services PLC. The proxy appointment and

any power of attorney or other authority under which

the proxy appointment is made must be received by

Computershare Investor Services PLC no later than 12.00

noon on Tuesday 25 April 2023 or two business days

before any adjourned meeting or (in the case of a poll

taken otherwise than at or on the same day as the meeting

or adjourned meeting) for the taking of the poll at which it

is to be used. If you wish to appoint more than one proxy

electronically please contact Computershare Investor

Services PLC on 0800 923 1506.

6. Investors holding shares in the Company through the

Columbia Threadneedle Investment Trust ISA, Junior ISA,

Child Trust Fund, General Investment Account, Lifetime

ISA and/or Junior Investment Account should ensure

that Forms of Direction are returned to Computershare

Investor Services PLC not later than 12.00 noon on

Thursday 20 April 2023. Alternatively, voting directions

can be submitted electronically at eproxyappointment.com

by entering the Control Number, Shareholder Reference

Number and PIN as printed on the Form of Direction.

Voting directions must be submitted electronically no later

than 12.00 noon on Thursday 20 April 2023.

7. Any person receiving a copy of this notice as a person

nominated by a member to enjoy information rights

under section 146 of the Companies Act 2006 (the 'Act')

(a ‘Nominated Person’) should note that the provisions

in notes 1, 4 and 5 above concerning the appointment

of a proxy or proxies to attend the meeting in place of

a member do not apply to a Nominated Person as only

shareholders have the right to appoint a proxy. However, a

Nominated Person may have a right under an agreement

between the Nominated Person and the member by whom

he or she was nominated to be appointed, or to have

someone else appointed, as a proxy for the meeting. If a

Nominated Person has no such proxy appointment right or

does not wish to exercise it, he/she may have a right under

such an agreement to give instructions to the member as

to the exercise of voting rights at the meeting.

8. Nominated Persons should also remember that their

main point of contact in terms of their investment in

the Company remains the member who nominated the

Nominated Person to enjoy information rights (or, perhaps,

the custodian or broker who administers the investment

on their behalf). Nominated Persons should continue to

contact that member, custodian or broker (and not the

Company) regarding any changes or queries relating to

the Nominated Person’s personal details and interest in the

Company (including any administrative matter). The only

exception to this is where the Company expressly requests

a response from a Nominated Person.

9. Pursuant to Regulation 41(1) of the Uncertificated

Securities Regulations 2001 (as amended) and for the

purposes of section 360B of the Act, the Company has

specified that only those members registered on the

on Tuesday 25 April 2023 (the ‘Specified Time’) (or, if the

meeting is adjourned to a time more than 48 hours after

the Specified Time, by close of business on the day which

is two business days prior to the time of the adjourned

meeting) shall be entitled to attend and vote at the

meeting in respect of the number of shares registered

110

in their name at that time. If the meeting is adjourned

to a time not more than two business days after the

Specified Time, that time will also apply for the purpose

of determining the entitlement of members to attend and

vote (and for the purposes of determining the number of

votes they may cast) at the adjourned meeting. Changes

to the register of members after the relevant deadline shall

be disregarded in determining the rights of any person to

attend and vote at the meeting.

If you are an institutional investor, you may be able to

appoint a proxy electronically via the Proxymity platform,

a process which has been agreed by the Company

and approved by the Registrar. For further information

regarding Proxymity, please go to www.proxymity.io.

Your proxy must be lodged by 12.00 noon on Tuesday

25 April 2023 in order to be considered valid. Before you

can appoint a proxy via this process you will need to have

agreed to Proxymity’s associated terms and conditions.

It is important that you read these carefully as you will

be bound by them and they will govern the electronic

appointment of your proxy.

10. CREST members who wish to appoint a proxy or proxies

through the CREST electronic proxy appointment service

may do so for the meeting and any adjournment(s) thereof

by using the procedures described in the CREST Manual.

CREST Personal Members or other CREST sponsored

members, and those CREST members who have appointed

a voting service provider(s), should refer to their CREST

sponsor or voting service provider(s), who will be able to

take the appropriate action on their behalf.

11. In order for a proxy appointment or instruction made using

the CREST service to be valid, the appropriate CREST

message (a ‘CREST Proxy Instruction’) must be properly

authenticated in accordance with Euroclear UK & Ireland

Limited’s specifications and must contain the information

required for such instruction, as described in the CREST

Manual (available via euroclear.com/CREST). The message,

regardless of whether it constitutes the appointment of

a proxy or is an amendment to the instruction given to a

previously appointed proxy must, in order to be valid, be

transmitted so as to be received by the issuer’s agent (ID

number 3RA50) by the latest time(s) for receipt of proxy

appointments specified in notes 4 and 5 above. For this

purpose, the time of receipt will be taken to be the time (as

determined by the time stamp applied to the message by

the CREST Application Host) from which the issuer’s agent

is able to retrieve the message by enquiry to CREST in the

manner prescribed by CREST. After this time, any change

of instructions to proxies appointed through CREST should

be communicated to the appointee through other means.

12. CREST members and, where applicable, their CREST

sponsors or voting service provider(s) should note that

Euroclear UK & Ireland Limited does not make available

special procedures in CREST for any particular messages.

Normal system timings and limitations will therefore apply

in relation to the input of CREST Proxy Instructions. It

is the responsibility of the CREST member concerned

to take (or, if the CREST member is a CREST personal

member or sponsored member or has appointed a voting

service provider(s), to procure that his CREST sponsor

or voting service provider(s) take(s)) such action as shall

be necessary to ensure that a message is transmitted by

means of the CREST system by any particular time. In this

connection, CREST members and, where applicable, their

CREST sponsors or voting service provider(s) are referred,

in particular, to those sections of the CREST Manual

concerning practical limitations of the CREST system and

timings (euroclear.com/CREST).

13. The Company may treat as invalid a CREST Proxy

Instruction in the circumstances set out in Regulation 35(5)

(a) of the Uncertificated Securities Regulations 2001 (as

amended).

14. Any corporation which is a member can appoint one or

more corporate representatives who may exercise on its

behalf all of its powers as a member provided that, if it is

appointing more than one corporate representative, it does

not do so in relation to the same shares.

Please contact Computershare Investor Services PLC by

emailing corporate-representatives@computershare.co.uk

providing details of your appointment including their

email address, confirmation of the meeting they wish to

attend and a copy of the Letter of Representation, so that

unique credentials can be issued to allow the corporate

representative to access the electronic meeting. Access

credentials will be emailed to the appointee one working

day prior to the meeting. If documentation supporting the

appointment of the corporate representative is supplied

later than the deadline for appointment of a proxy (48

hours prior to the meeting), issuance of unique credentials

to access the meeting will be issued on a best endeavours

basis.

15. Under section 527 of the Act, members meeting the

threshold requirements set out in that section have the

right to require the Company to publish on a website a

statement setting out any matter relating to:

(a) the audit of the Company’s accounts (including the

auditor’s report and the conduct of the audit) that are

to be laid before the meeting; or

(b) any circumstances connected with an auditor of the

Company ceasing to hold office since the previous

meeting at which annual accounts and reports were

laid in accordance with section 437 of the Act.

The Company may not require the members requesting

any such website publication to pay its expenses in

complying with sections 527 or 528 of the Act. Where

the Company is required to place a statement on a

website under section 527 of the Act, it must forward the

statement to the Company’s auditor not later than the time

when it makes the statement available on the website. The

business which may be dealt with at the meeting includes

any statement that the Company has been required under

section 527 of the Act to publish on a website.

16. Any member attending the meeting has the right to ask

questions. The Company must cause to be answered any

question relating to the business being dealt with at the

meeting put by a member attending the meeting. However,

members should note that no answer need be given in the

following circumstances:

(a) if to do so would interfere unduly with the preparation

of the meeting or would involve a disclosure of

confidential information;

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

111Annual Report and Accounts 2022

Notice of Meeting

(b) if the answer has already been given on a website in

the form of an answer to a question; or

the good order of the meeting that the question be

answered.

17. As at 6 March 2023, being the latest practicable date prior

to the printing of this notice, the Company’s issued capital

(less those shares held in treasury) consisted of 518,411,856

ordinary shares of 25 pence each carrying one vote each.

Therefore, the total voting rights in the Company as at

6 March 2023 are 518,411,856.

18. This notice, together with information about the total

number of shares in the Company in respect of which

members are entitled to exercise voting rights at the

meeting as at 6 March 2023 being the latest practicable

date prior to the printing of this notice and, if applicable,

any members’ statements, members’ resolutions or

members’ matters of business received by the Company

after the date of this notice, will be available at

fandc.com.

19. Any electronic address provided either in this notice or in

any related documents (including the Form of Proxy) may

not be used to communicate with the Company for any

purposes other than those expressly stated.

20. Copies of the letters of appointment between the

Company and its Directors; a copy of the Articles of

Association of the Company; the register of Directors’

holdings; and a deed poll relating to Directors’ indemnities

will be available for inspection at the registered office of

the Company during usual business hours on any weekday

(Saturdays, Sundays and Public Holidays excluded) until

the date of the meeting and also on the date and at

the place of the meeting from 15 minutes prior to the

commencement of the meeting to the conclusion thereof.

21. No Director has a service agreement with the Company.

22. Your personal data includes all data provided by you,

or on your behalf, which relates to you as a shareholder,

including your name and contact details, the votes you

cast and your shareholder Reference Number (attributed

to you by the Company). The Company determines the

purposes for which and the manner in which your personal

data is to be processed. The Company and any third party

to which it discloses the data (including the Company's

registrar) may process your personal data for the purposes

of compiling and updating the Company's records, fulfilling

its legal obligations and processing the shareholder rights

you exercise. A copy of the Company's privacy policy can

be found online at: www.fandc.com.

112

THE MANAGEMENT COMPANY

F&C Investment Trust PLC is

managed by Columbia Threadneedle

Investment Business Limited (the

‘Manager’), a wholly-owned subsidiary

of Columbia Threadneedle AM

(Holdings) PLC, which is ultimately

owned by Ameriprise Financial, Inc.

The Manager is appointed under an

investment management agreement

with the Company, which sets out

its responsibilities for investment

management, administration and

marketing. The Manager is authorised

and regulated by the Financial

Conduct Authority.

The Manager also acts as the

Alternative Investment Fund Manager.

Paul Niven is the Company’s Fund

Manager and Columbia Threadneedle

Investments’ Head of Multi-Asset

Investment and chair of its Asset

Allocation Committee. He has

extensive experience in managing

large, diversified investment funds

and has managed the Company’s

assets since July 2014. He joined the

management company in 1996.

Jonathan Latter represents the

Manager as Company Secretary and

is responsible for the Company’s

statutory compliance. He joined the

management company in 2021.

Marrack Tonkin is Head of Investment

Trusts at the Manager, with

responsibility for its relationship

with the Company. He joined the

management company in 1989.

US SUB-MANAGERS

Barrow, Hanley, Mewhinney & Strauss,

LLC (North America) – appointed

2005

JPMorgan Asset Management (UK)

Limited – appointed 2023

PRIVATE EQUITY MANAGERS

HarbourVest Partners LLC –

appointed 2003

Pantheon Ventures Limited –

appointed 2003

COMPANY SECRETARY AND

REGISTERED OFFICE

Columbia Threadneedle Investment

Business Limited

Exchange House

Primrose Street

London EC2A 2NY

Telephone: 0131 573 8300

Website: fandc.com

Email: invest@columbiathreadneedle.com

INDEPENDENT AUDITOR

Ernst & Young LLP

25 Churchill Place

London E14 5EY

CUSTODIAN

JPMorgan Chase Bank

25 Bank Street

Canary Wharf

London E14 5JP

DEPOSITARY

JPMorgan Europe Limited

25 Bank Street

Canary Wharf

London E14 5JP

NEW ZEALAND SHARE REGISTRARS

Computershare Investor Services

Limited Private Bag 92119

Auckland 1142

Level 2

159 Hurstmere Road

Takapuna

Auckland 0622

New Zealand

Telephone: +64 9 488 8700

Facsimile: +64 9 488 8787

SHARE REGISTRARS

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol BS99 6ZZ

Telephone: 0800 923 1506

Facsimile: 0870 703 6143

Authorised and regulated in the UK by

the Financial Conduct Authority.

SOLICITORS

Norton Rose Fulbright LLP

3 More London Riverside

London SE1 2AQ

STOCKBROKER

JPMorgan Cazenove

25 Bank Street

Canary Wharf

London E14 5JP

MANAGEMENT AND ADVISERS

113Annual Report and Accounts 2022

Other Information

ADDITIONAL INFORMATION

FOR SHAREHOLDERS

ALTERNATIVE INVESTMENT FUND MANAGERS

DIRECTIVE

The Company is an ‘alternative investment fund’ (‘AIF’) for

the purposes of the AIFMD and has appointed its Manager,

Columbia Threadneedle Investment Business Limited, to act

as its Alternative Investment Fund Manager (the ‘AIFM’).

The Manager is authorised and regulated by the FCA as a

‘full scope UK AIFM’.

The Company is required to make certain disclosures

available to investors in accordance with the AIFMD. Those

disclosures that are required to be made pre-investment

are included within the Investor Disclosure Document

(‘IDD’) which can be found on the Company’s website,

fandc.com. There have not been any material changes to

the disclosures contained within the IDD since it was last

updated in September 2022.

The Company and the AIFM also wish to make the following

disclosures to investors:

• the investment strategy, geographic and sector

investment focus and principal stock exposures are

included in the Strategic Report. A list of the twenty

largest listed equity holdings is included on pages 26

and 27;

• none of the Company’s assets is subject to special

arrangements arising from their illiquid nature;

• the Strategic Report and note 26 to the accounts set

out the risk profile and risk management systems

in place. There have been no changes to the risk

management systems in place in the year under review

and no breaches of any of the risk limits set, with no

breach expected;

• there are no new arrangements for managing the

liquidity of the Company or any material changes to

the liquidity management systems and procedures that

it employs;

• all authorised Alternative Investment Fund Managers

are required to comply with the AIFMD Remuneration

Code in respect of the AIFM’s remuneration. The

relevant disclosures required are within the IDD; and

• information in relation to the Company’s leverage is

contained within the IDD.

Following completion of an assessment of the application

of the proportionality principle to the FCA’s AIFM

Remuneration Code, the AIFM has disapplied the pay-out

process rules with respect to it and any of its delegates.

This is because the AIFM considers that it carries out non-

complex activities and is operating on a small scale.

KEY INFORMATION DOCUMENT

The Key Information Document relating to the Company’s

shares can be found on its website at fandc.com. This

document has been produced in accordance with the PRIIPs

Regulations.

NET ASSET VALUE AND SHARE PRICE

The Company’s net asset value is released daily, on the

working day following the calculation date, to the London

and New Zealand Stock Exchanges. The current share price

of the Company is shown in the investment trust section

of the stock market page in several leading newspapers.

Investors in New Zealand can obtain share prices from

leading newspapers in that country.

UK CAPITAL GAINS TAX (‘CGT’)

An approved investment trust does not pay tax on its

capital gains. UK resident individuals may realise net capital

gains of up to £12,300 in the tax year ending 5 April 2023

without incurring any tax liability. From 6 April 2023 this

limit is changing to £6,000.

A rate of CGT of 10% will apply where taxable income and

gains do not exceed the income tax higher rate threshold

(£37,700 in 2022-23 tax year). A higher rate of 20% will

apply to those whose income and gains exceed this figure.

INCOME TAX

The final dividend of 3.90 pence per share is payable on 11

May 2023. Since April 2018 the annual tax-free allowance

to UK residents on dividend income is £2,000. From 6 April

2023, this is decreasing to £1,000, with a further reduction

from 6 April 2024 to £500. Dividend income received in

excess of this amount will be taxed at rates of 7.5% (basic

rate taxpayers), 32.5% (higher rate taxpayers) or 38.1%

(additional rate taxpayers). Dividend income on shares

within an Individual Savings Account is not subject to tax.

114

HOW TO INVEST

Charges

Annual management charges and other charges apply

according to the type of Savings Plan.

Annual account charge

ISA/LISA: £60+VAT

GIA: £40+VAT

JISA/JIA/CTF: £25+VAT

You can pay the annual charge from your account, or by direct

debit (in addition to any annual subscription limits).

One of the most convenient ways to invest in F&C Investment Trust PLC is through one of the Savings Plans run by

Columbia Threadneedle Investments.

CT Individual Savings Account (ISA)

You can use your ISA allowance to make an annual tax

efficient investment of up to £20,000 for the current tax

year with a lump sum from £100 or regular savings from £25

a month. You can also transfer any existing ISAs to us whilst

maintaining the tax benefits.

CT Junior Individual Savings Account (JISA)*

A tax efficient way to invest up to £9,000 per tax year

for a child. Contributions start from £100 lump sum or

£25 a month. JISAs or CTFs with other providers can be

transferred to Columbia Threadneedle Investments.

CT Lifetime Individual Savings Account (LISA)

For those aged 18-39, a LISA could help towards purchasing

your first home or retirement in later life. Invest up to £4,000

for the current tax year and receive a 25% Government bonus

up to £1,000 per year. Invest with a lump sum from £100 or

regular savings from £25 a month.

CT General Investment Account (GIA)

This is a flexible way to invest in our range of Investment

Trusts. There are no maximum contributions, and

investments can be made from £100 lump sum or £25 a

month.

CT Junior Investment Account (JIA)

This is a flexible way to save for a child in our range of

Investment Trusts. There are no maximum contributions, and

the plan can easily be set up under bare trust (where the

child is noted as the beneficial owner) or kept in your name if

you wish to retain control over the investment. Investments

can be made from a £100 lump sum or £25 a month per

account. You can also make additional lump sum top-ups at

any time from £100 per account.

CT Child Trust Fund (CTF)*

If your child already has a CTF, you can invest up to £9,000

per birthday year, from £100 lump sum or £25 a month.

CTFs with other providers can be transferred to Columbia

Threadneedle Investments.

New Customers:

Call: 0800 136 420**

(8:30am – 5:30pm, weekdays)

Email: invest@columbiathreadneedle.com

Existing Savings Plan Holders:

Call: 0345 600 3030**

(9:00am – 5:00pm, weekdays)

Email: investor.enquiries@columbiathreadneedle.com

Post: Columbia Threadneedle Management Limited,

PO Box 11114, Chelmsford CM99 2DG

You can also invest in the trust through online dealing platforms for private investors that offer share dealing and ISAs. Companies

include: Barclays Stockbrokers, EQi, Halifax, Hargreaves Lansdown, HSBC, Interactive Investor, LLoyds Bank, The Share Centre.

*The CTF and JISA accounts are opened in the child’s name and they can have access to the account at age 18.

**Calls may be recorded or monitored for training and quality purposes.

Dealing charges

£12 per fund (reduced to £0 for deals placed through the online

Columbia Threadneedle Investor Portal) for ISA/GIA/LISA/JIA and

JISA. There are no dealing charges on a CTF.

Dealing charges apply when shares are bought or sold but not

on the reinvestment of dividends or the investment of monthly

direct debits. Government stamp duty of 0.5% also applies on the

purchase of shares (where applicable).

The value of investments can go down as well as up and you

may not get back your original investment. Tax benefits depend

on your individual circumstances and tax allowances and rules

may change. Please ensure you have read the full Terms and

Conditions, Privacy Policy and relevant Key Features documents

before investing. For regulatory purposes, please ensure you

have read the Pre-sales Cost & Charges disclosure related to the

product you are applying for, and the relevant Key Information

Documents (KIDs) for the investment trusts you want to invest in,

these can be found at ctinvest.co.uk/documents.

How to Invest

To open a new Columbia Threadneedle Savings Plan, apply

online at ctinvest.co.uk Online applications are not available

if you are transferring an existing Savings Plan with another

provider to Columbia Threadneedle Investments, or if you are

applying for a new Savings Plan in more than one name but

paper applications are available at ctinvest.co.uk/documents or

by contacting Columbia Threadneedle Investments.

To find out more, visit ctinvest.co.uk

or call 0345 600 3030, 9.00am – 5.00pm, weekdays, calls may be recorded or monitored for training and quality purposes.

and Threadneedle group of companies. Financial promotions are issued for marketing and information purposes by Columbia

Threadneedle Management Limited, authorised and regulated in the UK by the Financial Conduct Authority. 291000 (01/23) UK

115Annual Report and Accounts 2022

Other Information

ALTERNATIVE PERFORMANCE MEASURES

The Company uses the following Alternative Performance Measures ('APMs') throughout the annual report, financial

statements and notes to the financial statements. The APMs are reconciled to the financial statements through the narrative

detailed below. The Board believes that each of the APMs, which are typically used within the investment trust sector,

provide additional useful information to the shareholders in order to assess the Company’s long-term performance against

its benchmark and peer group.

Discount or Premium – the share price of an investment trust company is derived from buyers and sellers trading their

shares on the stock market. This price is not identical to the NAV per share of the underlying assets less liabilities of the

Company. If the share price is lower than the NAV per share, the shares are trading at a discount. This usually indicates that

there are more sellers of shares than buyers. Shares trading at a price above NAV per share are said to be at a premium, in

which case there tend to be more buyers than sellers. The Board’s policy is set out on page 36.

31 December 2022

pence

31 December 2021

pence

Net Asset Value per share (with debt at market value) (a)

932.10

998.72

Share price per share (b)

904.00

926.00

(Discount)/Premium (c = (b-a)/a) (c)

(3.0)%

(7.3)%

Dividend growth – the amount by which the Company's annual dividend has increased compared to the previous year,

expressed as a percentage of the previous annual dividend.

31 December 2022

pence

31 December 2021

pence

Total dividend paid/payable for the prior year (a)

12.80

12.10

Total dividend paid/payable for the current year (b)

13.50

12.80

Dividend growth (c= (b-a)/a) (c)

5.5%

5.8%

Gearing – this is the ratio of the borrowings of the Company to its net assets. Borrowings have a “prior charge” over the

assets of a company, ranking before ordinary Shareholders in their entitlement to capital and/or income. They may include:

preference shares; debentures; overdrafts and short and long-term loans; and derivative contracts. If the Company has cash

assets, these may be assumed either to net off against borrowings, giving a “net” or “effective” gearing percentage, or to

be used to buy investments, giving a “gross” or “fully invested” gearing figure. Where cash assets exceed borrowings, the

Company is described as having “net cash”. The Company’s maximum permitted level of gearing is set by the Board and is

described within the Strategic Report and Directors’ Report.

31 December 2022

£’000

31 December 2021

£’000

Loans

581,264

549,715

Debenture

575

(a)

581,839

550,290

Less Cash and cash equivalents

(243,836)

(53,111)

Less Investment debtors

(425)

(420)

Add Investment creditors

2,933

Total (b)

340,511

496,801

Net Asset Value (c)

4,649,825

5,280,934

Effective gearing (d= b/c) (d)

7.3%

9.4%

Fully invested gearing (e= a/c) (e)

12.5%

10.4%

116

Net Asset Value (NAV) – the assets less liabilities of the Company, as set out in the Balance Sheet, all valued in accordance

with the Company’s Accounting Policies (see note 2 to the Accounts) and UK Accounting Standards. The net assets

correspond to Total Shareholders’ Funds, which comprise the share capital account, capital redemption reserve and capital

and revenue reserves.

31 December 2022 31 December 2021

Net assets at year end - £'000s (a)

4,649,825

5,280,934

Number of ordinary shares in issue at year end (b)

518,411,856

526,783,140

Net asset value per share (with debt at par) at year end - pence (c=a/b) (c)

896.94

1,002.49

Net Asset Value (NAV) with Debt at Market Value – the Company's debt (debenture and loans) is valued in the Balance

Sheet (on page 80) at amortised cost, which is materially equivalent to the repayment value of the debt on the assumption

that it is held to maturity. This is often referred to as "Debt at par". The current replacement or market value of the debt,

which assumes it is repaid and renegotiated under current market conditions, is often referred to as the "Debt at Market

Value" or "Debt at Fair Value". The market value of the debt is shown in notes 15 and 16 to the Accounts.

31 December 2022 31 December 2021

Net assets at year end - £'000s

4,649,825

5,280,934

Add back: Debt at par - £'000s

581,839

550,290

Deduct: Debt at market value - £'000s

(399,563)

(570,157)

(a)

4,832,101

5,261,067

Number of ordinary shares in issue at year end (b)

518,411,856

526,783,140

Net asset value (with debt at market value) at year end - pence (c=a/b) (c)

932.10

998.72

NAV Total Return – see Total Return definition

Ongoing Charges – all operating costs expected to be regularly incurred and that are payable by the Company or suffered

within underlying investee funds, expressed as a proportion of the average net assets of the Company over the reporting

year. The costs of buying and selling investments and derivatives are excluded as are interest costs, taxation, non-recurring

costs and the costs of buying back or issuing ordinary shares.

Ongoing Charges calculation

31 December 2022

£’000

31 December 2021

£’000

Management fees

18,329

19,740

Other expenses

5,567

3,500

Less loan commitment/arrangement fees

(293)

(243)

Underlying costs of Private Equity Funds and Collectives

2,614

3,272

Total (a)

26,217

26,269

Average daily net assets (b)

4,878,293

4,889,822

Ongoing charges (c= a/b) (c)

0.54%

Share Price Total Return – see Total Return definition

ALTERNATIVE PERFORMANCE MEASURES (CONTINUED)

117Annual Report and Accounts 2022

Other Information

Total Costs – these total 1.12% and comprise all operating costs actually incurred by the Company in the period and

costs suffered within underlying funds ((0.54%) as shown in the Ongoing Charges calculation), together with interest on

borrowings (0.29%) and estimated implicit and explicit costs of dealing (0.29%). These are all expressed as a proportion of

the average daily NAVs of the Company over the period. Taxation expense and the costs of buying back or issuing ordinary

shares are excluded from the calculation.

Total Expense Ratio (TER) – an alternative measure of expenses to Ongoing Charges. It comprises all operating costs

incurred in the reporting period by the Company (see notes 4 and 5 to the Accounts), calculated as a percentage of the

average net assets in that year. Operating costs exclude costs suffered within underlying investee funds, costs of buying

and selling investments and derivatives, interest costs, taxation and the costs of buying back or issuing ordinary shares.

TER calculation

31 December 2022

£’000

31 December 2021

£’000

Management fees

18,329

19,740

Other expenses

5,567

3,500

Less loan commitment/arrangement fees

(293)

(243)

Total (a)

23,603

22,997

Average daily net assets (b)

4,878,293

4,889,822

TER (c= a/b) (c)

0.48%

0.47%

Total Return – the theoretical return to shareholders calculated on a per share basis by adding dividends paid in the period

to the increase or decrease in the Share Price or NAV in the period. The dividends are assumed to have been re-invested in

the form of shares or net assets, respectively, on the date on which the shares were quoted ex-dividend.

Net Asset Value Share price

NAV/Share Price per share at 31 December 2021 (pence)

998.72 926.00

NAV/Share Price per share at 31 December 2022 (pence)

932.10 904.00

Change in the year

(6.7)% (2.4)%

Impact of dividend reinvestments

1.4% 1.5%

Total return for the year to 31 December 2022

(5.3)% (0.9)%

Net Asset Value Share price

NAV/Share Price per share at 31 December 2020 (pence)

831.78 787.00

NAV/Share Price per share at 31 December 2021 (pence)

998.72 926.00

Change in the year

20.0% 17.7%

Impact of dividend reinvestments

1.7% 1.7%

Total return for the year to 31 December 2021

21.7% 19.4%

118

GLOSSARY OF TERMS

AAF Report – Report prepared in accordance with Audit and Assurance Faculty guidance issued by the Institute of

Chartered Accountants in England and Wales.

Adjusted portfolio value – This is as defined within our loan covenant tests and comprises the gross assets less the value of

all unquoted and private equity investments.

Administrator – The administrator is State Street Bank and Trust Company to which Columbia Threadneedle has

outsourced trade processing, valuation and middle office tasks and systems.

AGM – annual general meeting of the Company.

AIC – Association of Investment Companies, the trade body for closed-end Investment Companies.

AIC Code – the AIC Code of Corporate Governance published in 2019, which addresses the principles and provisions set

out in the UK Code, as they apply to investment trust companies.

AIFMD – the Alternative Investment Fund Managers Directive that requires investment vehicles to appoint a Depositary and

an Alternative Investment Fund Manager.

AIFM – the Alternative Investment Fund Manager appointed by the Board of Directors in accordance with the AIFMD is the

Company’s Manager, as defined below.

Ameriprise Financial, Inc. – the ultimate owner of Columbia Threadneedle Investments, it is a diversified financial services

company and bank holding company incorporated in Delaware, USA.

Columbia Threadneedle Savings Plans – previously the BMO savings plans, these comprise the CT General Investment

Account, CT Junior Investment Account, CT Lifetime ISA, CT Investment Trust ISA, CT Junior ISA and CT Child Trust Fund

operated by Columbia Threadneedle Management Limited, a company authorised by the Financial Conduct Authority.

Benchmark – the FTSE All-World (Total Return) Index is the benchmark against which the increase or decrease in the

Company’s NAV is measured. The Index averages the performance of a defined selection of companies listed in stock

markets around the world and gives an indication of how those markets have performed in any period. Divergence between

the performance of the Company and the Index is to be expected as: the investments within this Index are not identical

to those held by the Company; the Index does not take account of operating costs; and the Company’s strategy does not

include replicating (tracking) this Index. Prior to January 2013 the benchmark was a composite of 40% FTSE All-Share

(Total Return)/60% FTSE WI World ex UK (Total Return).

Carbon intensity – this is measured in tons of CO2 equivalent (i.e. including the basket of six Kyoto Protocol gases) of

Scope 1 and 2 emissions, divided by $1 million of sales at a company level. This is aggregated to portfolio level using a

weighted average (by holding).

Climate Action 100+ initiative – An investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters

take necessary action on climate change.

Closed-end company – a company, including an Investment Company, with a fixed issued ordinary share capital, the shares

of which are traded on an exchange at a price not necessarily related to the net asset value of the company and which can

only be issued or bought back by the company in certain circumstances.

119Annual Report and Accounts 2022

Other Information

Columbia Threadneedle – the asset management business of Ameriprise, which now owns BMO Global Asset Management.

Cum-dividend – shares are classified as cum-dividend when the buyer of a security is entitled to receive a dividend that has

been declared, but not paid. Shares which are not cum-dividend are described as ex-dividend.

Custodian – The Custodian is JPMorgan Chase Bank. The custodian is a financial institution responsible for safeguarding,

worldwide, the listed securities and certain cash assets of the Company, as well as the income arising therefrom, through

provision of custodial, settlement and associated services.

Depositary – The Depositary is JPMorgan Europe Limited. Under AIFMD rules the Company must appoint a depositary

whose duties in respect of investments, cash and similar assets include: safekeeping; verification of ownership and

valuation; and cash monitoring. Under the AIFMD rules, the Depositary has strict liability for the loss of the Company’s

financial assets in respect of which it has safe-keeping duties. The Depositary’s oversight duties will include but are not

limited to oversight of share issues/buybacks, dividend payments and adherence to investment limits.

Derivative – a contract between two or more parties, the value of which fluctuates in accordance with the value of an

underlying security. The contract is usually short-term (for less than one year). Examples of derivatives are Put and Call

Options, Swap contracts, Futures and Contracts for Difference. A derivative can be an asset or a liability and is a form of

gearing because the fluctuations in its value are usually greater than the fluctuations in the underlying security’s value.

Distributable Reserves – Reserves distributable by way of dividend or for the purpose of buying back ordinary share

capital (see notes 2(c)(x), 2(c)(xi), 17, 18 and 19 to the Accounts). Company Law requires that Share Capital and the Capital

Redemption Reserve may not be distributed. The Company’s Articles of Association allow distributions by way of dividend

out of Capital Reserves. Dividend payments are currently made out of Revenue Reserve. The cost of all share buybacks is

deducted from Capital Reserves.

Dividend Dates – Reference is made in announcements of dividends to three dates. The “record” date is the date after

which buyers of the shares will not be recorded on the register of shareholders as qualifying for the pending dividend

payment. The “payment” date is the date that dividends are credited to shareholders’ bank accounts. The “ex-dividend”

date is normally the business day prior to the record date (most ex-dividend dates are on a Thursday).

DTRs – the Disclosure Guidance and Transparency rules issued by the FCA.

EY – The Company’s auditor, Ernst & Young LLP.

FCA – Financial Conduct Authority, the conduct regulator for financial services firms and financial markets in the UK.

FCIT – F&C Investment Trust PLC or the 'Company'.

FRC – Financial Reporting Council which regulates auditors, accountants and actuaries in the UK and sets the UK's

Corporate Governance and Stewardship Codes.

Fund Manager – Paul Niven, an employee of the Manager with overall management responsibility for the total portfolio.

GAAP – Generally Accepted Accounting Practice. This includes UK Financial Reporting Standards ('FRS') and International

GAAP (IFRS or International Financial Reporting Standards applicable in the UK).

120

Hampton-Alexander Review – The independent review body which aims to increase the number of women on FTSE 350

boards.

Investment Company (Section 833) – UK Company Law allows an Investment Company to make dividend distributions

out of realised distributable reserves, even in circumstances where it has made Capital losses in any year, provided the

Company’s assets remaining after payment of the dividend exceed 150% of the liabilities. An Investment Company is

defined as investing its funds in shares, land or other assets with the aim of spreading investment risk.

Investment portfolios – sometimes referred to as strategies, the separate regional, global and Private Equity portfolios that

together make up the total investment portfolio of the Company.

Investment Trust taxation status (Section 1158) – UK Corporation Tax law allows an Investment Company (referred to

in Tax law as an Investment Trust) to be exempted from tax on its profits realised on investment transactions, provided

it complies with certain rules. These are similar to the provisions that apply to investment companies as set out above

but further require that the Company must be listed on a regulated stock exchange and that it cannot retain more than

15% of income received. The Directors’ Report contains confirmation of the Company’s compliance with this law and its

consequent exemption from taxation on capital gains.

ISAE Report – Report prepared in accordance with the International Standard on Assurance Engagements.

Leverage – as defined under AIFMD rules, leverage is any method by which the exposure of an AIF (being an investment

vehicle under the AIFMD) is increased through borrowing of cash or securities or leverage embedded in derivative

positions. Leverage is broadly equivalent to gearing, but is expressed as a ratio between the assets (excluding borrowings)

and the net assets (after taking account of borrowings). Under the gross method, exposure represents the sum of the

Company’s positions after deduction of cash balances, without taking account of any hedging or netting arrangements.

Under the commitment method, exposure is calculated without the deduction of cash balances and after certain hedging

and netting positions are offset against each other.

Manager (AIFM) – Columbia Threadneedle Investment Business Limited, which is a subsidiary of Ameriprise Financial, Inc..

Its responsibilities and the management fee are set out in the Business Model, Report of the Management Engagement

Committee and note 4 to the Accounts.

Market capitalisation – the stock market quoted price of the Company’s shares, multiplied by the number of shares in issue

excluding any shares held in treasury. If the Company’s shares trade at a discount to NAV, the market capitalisation will be

lower than the NAV or higher in the event of a premium.

Non-executive Director – a Director who has a contract for services, rather than a contract of employment, with the

Company. The Company does not have any executive Directors.

Non-Financial Information Statement (NFIS) – Under sections 414CA and 414CB of the Companies Act 2006 certain

large companies within scope are subject to an additional layer of narrative reporting originally introduced under EU

Non-Financial Reporting Directive (EU/2014/95) and implemented by amending the strategic report requirements in the

Companies Act 2006 by the Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations

2016. The regulations require those companies to disclose to the extent necessary an understanding of the company’s

development, performance, position and impact of its activity, information relating to environmental, employee, social,

respect for human rights, anti-corruption and anti-bribery matters. Although F&C Investment Trust PLC does not fall

within the scope of these requirements, the Board has opted to comply and has integrated the disclosures into the

Strategic Report. F&C Investment Trust PLC’s Non-Financial Reporting disclosures that have been made in relation to the

requirements are referenced in the following table to indicate in which part of the Strategic Report they appear.

GLOSSARY OF TERMS (CONTINUED)

121Annual Report and Accounts 2022

Other Information

Non-financial information Section Page

Business model Strategic report and business model 30

Key performance Indicators Key Performance Indicators 38

Principal Risks Principal and emerging risks 40

Policies Principal policies 35

Open-ended Fund – a collective investment scheme which issues shares or units directly to investors, and redeems directly

from investors, at a price that is linked to the net asset value of the fund.

Parker Review Committee – The independent review body which recommended each FTSE 250 company to have at least

one director from an ethnic minority background by 2024.

Peer group – investment trust companies and funds investing in Global markets on behalf of investors, in competition with

the Company and included within either the AIC Global Sector or the Investment Association (IA) Global Sector in the UK.

Portfolio Return – the gross return on assets generated by the Company's portfolio of investments.

PRIIPs – Packaged Retail and Insurance-based Investment Products regulations that require generic pre-sale disclosure of

investment “product” costs, risks and indicative future return scenarios. The Company’s ordinary shares are defined as a

product for the purposes of the regulations. Costs as calculated under PRIIPs are explained within Alternative Performance

Measures on page 117, under “Total Costs”.

Private Equity – an asset consisting of shares and debt in operating companies that are not publicly traded on a stock

exchange. The holdings in such companies may be collected in a Fund which operates as a limited partnership, with

Partners contributing capital to the Fund over a period of years and receiving proportional repayments when the

investments are sold.

Public Documents – Financial statements, reports, circulars, press releases, analyst presentations and other documents to

be issued publicly.

Science-based Targets Initiative (SBTi) – This is a partnership between Carbon Disclosure Project (CDP), the United

Nations Global Compact (UNGC), World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). SBTi

drives ambitious climate action in the private sector by enabling companies to set science-based emissions reduction

targets.

Section 172(1) – Section 172(1) of the Companies Act 2006 requires a director of a company to act in the way they consider,

in good faith, to be most likely to promote the success of the company for the benefit of its members as a whole, and in

doing so have regard to matters specified in that section. The directors are required to report on this in the Strategic Report

section of the Annual Report and Accounts each year.

Sustainable Development Goals (SDGs) – The 2030 Agenda for Sustainable Development, adopted by all United Nations

Member States in 2015, provides a shared blueprint for peace and prosperity for people and the planet, now and into the

future. At its heart are the 17 goals, which are an urgent call for action by all countries – developed and developing – in a

global partnership. They recognise that ending poverty and other deprivations must go hand-in-hand with strategies that

improve health and education, reduce inequality, and spur economic growth – all the while tackling climate change and

working to preserve our oceans and forests.

122

SSAE – Statement on Standards for Attestation Engagements issued by the American Institute of Certified Public

Accountants.

SORP – Statement of Recommended Practice. The accounts of the Company are drawn up in accordance with the

Investment Trust SORP, issued by the AIC, as described in note 2 to the Accounts.

Special Dividends – dividends received from investee companies which have been paid out of capital reconstructions or

reorganisations of the investees are sometimes referred to as Special Dividends and may be allocated to Capital Reserves

in accordance with the Company’s accounting policies and the SORP. Dividends which are unusually large in terms of the

investee companies’ annual earnings or normal payment pattern are also sometimes referred to as special but are treated

as revenue in nature unless evidenced otherwise.

The Act – the Companies Act 2006.

The Task Force on Climate-related Financial Disclosures (TCFD) – This was set up in 2015 by the Financial Stability Board

(FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies, banks, and investors

in providing information to stakeholders. Columbia Threadneedle supports the TCFD and it reports in line with TCFD

recommendations. These disclosures are not mandatory for investment companies.

The Transition Pathway Initiative (TPI) – A global, asset-owner led initiative which assesses companies' preparedness for

the transition to a low carbon economy.

Treasury shares – ordinary shares in issue that have been bought back from shareholders on the open market and kept

in treasury by the Company. Such shares may, at a later date, be reissued on the open market or cancelled if demand

is insufficient. Treasury shares carry no rights to dividends and have no voting rights and hence are not included within

calculations of earnings per share or net asset value per share.

UK Code – the UK Code of Corporate Governance, published in 2018, which sets out the standards of good practice

in relation to board leadership and effectiveness, remuneration, accountability and relations with shareholders that all

companies with a Premium Listing on the London Stock Exchange are required to report on in their annual report and

accounts.

The United Nations-supported Principles for Responsible Investment (UNPRI) – The six Principles for Responsible

Investment are a voluntary and aspirational set of investment principles that offer a menu of possible actions for

incorporating ESG issues into investment practice. In implementing them, signatories contribute to developing a more

sustainable global financial system.

GLOSSARY OF TERMS (CONTINUED)

123Annual Report and Accounts 2022

Warning to Shareholders – Beware of Share Fraud.

Fraudsters use persuasive and high-pressure tactics to lure investors into scams. They may offer to sell to you shares

that turn out to be worthless or non-existent, or to buy your shares at an inflated price in return for an upfront payment

following which the proceeds are never received.

If you receive unsolicited investment advice or requests:

• Check the Financial Services Register from fca.org.uk to see if the person or firm contacting you is authorised by

the FCA

• Call the Financial Conduct Authority ('FCA') on 0800 111 6768 if the firm does not have contact details on the

• Search the list of unauthorised firms to avoid at fca.org.uk/scams

• Consider that if you buy or sell shares from an unauthorised firm you will not have access to the Financial

Ombudsman Service or Financial Services Compensation Scheme

• Think about getting independent financial and professional advice

If you are approached by fraudsters please tell the FCA by using the share fraud reporting form at fca.org.uk/scams

where you can find out more about investment scams. You can also call the FCA Consumer Helpline on 0800 111 6768.

If you have already paid money to share fraudsters you should contact Action Fraud on 0300 123 2040 or online

at www.actionfraud.police.uk.

Registered office:

Exchange House

Primrose Street

London EC2A 2NY

020 7628 8000

invest@columbiathreadneedle.com

fandc.com

Registrars:

Computershare Investor Services PLC

The Pavilions, Bridgwater Road

Bristol BS99 6ZZ

0800 923 1506

web.queries@computershare.co.uk

computershare.com