ANNUAL REPORT

FOR THE YEAR ENDED

31 DECEMBER 2023

CONTENTS

Strategic Report

Company Overview 2

Financial Highlights 3

Chairman’s Statement 4

Fund Manager’s Review 9

Our Approach to Responsible Investment 17

Twenty Largest Listed Equity Holdings 28

Ten Year Record 30

Business Review 32

Purpose, Values and Investment Objective 32

Section 172 Statement 34

Key Stakeholder and Shareholder Engagement 35

Principal Policies 37

Key Performance Indicators 40

Principal and Emerging Risks 42

Long-Term Viability 44

Governance Report

Board of Directors 47

Directors’ Report 49

Corporate Governance Report 54

Report of the Management Engagement

Committee 57

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 105

Other Information

Management and Advisers 110

Additional Information for Shareholders 111

How to Invest 113

Alternative Performance Measures 114

Glossary of Terms 117

2024-25 Financial Calendar

Annual General Meeting 2 May 2024

Final dividend for 2023 payable 9 May 2024

Interim Results for 2024 announced end July 2024

First interim dividend for 2024 payable August 2024

Second interim dividend for 2024 payable November 2024

Third interim dividend for 2024 payable February 2025

Final Results for 2024 announced March 2025

Final dividend for 2024 payable May 2025

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

and private 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, it's smart to start with F&C.

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.

The Company’s 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

those 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 2023

FINANCIAL HIGHLIGHTS

8.1% share price total return*

+8.1%

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 114.

† The final dividend for 2023 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 53 years. Over the last ten years

it has increased by 63.3% (5.0% compound per annum), compared with inflation of 32.8% (2.9% 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

2023202220212020201920182017201620152014

962.0

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 £3,030.

Net Asset Value total return*

of 11.3%, with debt at market

value, which was behind the

return from our benchmark, the

FTSE All-World Index, of +15.1%

+11.3%

Annual dividend*† per share

up by 8.9% to 14.7p, our 53rd

consecutive annual increase

53rd

The discount* to NAV moved

from 3.0%, to end the year at

5.9%

100

200

300

400

500

600

700

800

900

1,000

1,100

2023202220212020201920182017201620152014

1,022.1

-10

-8

-6

-4

-2

2023202220212020201920182017201620152014

-5.9

2023202220212020201920182017201620152014

14.7

CHAIRMAN’S STATEMENT

“ONE OF THE GREAT STRENGTHS OF YOUR COMPANY IS

ITS ROBUST CORPORATE STRUCTURE AND ITS ABILITY

TO TAKE A LONG-TERM PERSPECTIVE WITH RESPECT TO

INVESTMENT OPPORTUNITIES.”

Dear Shareholder,

2023 was a good year for global equity markets after

significant losses during 2022. For most of the year overall

market returns were driven by a handful of the largest US

listed companies. As a result, market concentration was

the highest it has been in decades. Gains amongst this so-

called ‘Magnificent Seven’ group of stocks, which includes

Amazon, Apple, Microsoft and Nvidia, each of which are

held in our portfolio, were a reversal of the losses seen

amongst this cohort in 2022 and were driven, in part, by

optimism over Artificial Intelligence (‘AI’).

As well as investor enthusiasm for the AI theme, the global

economy performed significantly better than had been

feared. Despite further rises in interest rates by major

central banks during 2023 the US and global economy

avoided recession, delivering a better outcome than had

widely been expected at the start of the year. As the

year progressed investors had increasing conviction that

an economic soft landing would unfold, with economic

growth slowing but remaining reasonably robust, and

inflation rates would continue to decline in 2024. This led

to the view that central banks would be able to embark on

a course of meaningful cuts in interest rates and a global

recession could be avoided. This propelled equity markets

more broadly to strong gains in the latter months of the

year, leading to a period of solid returns for our listed

portfolio.

Our net asset value ('NAV') per share, with debt at market

value, rose from 932.1 pence to 1,022.1 pence and our

share price rose from 904.0 pence to 962.0 pence. The

Company produced a strong NAV total return in absolute

terms of +11.3% but underperformed the total return from

our benchmark of +15.1%. In common with much of the

investment company sector, the discount at which our

share price traded relative to NAV widened. It moved from

3.0% at the start of the year to end the year at 5.9%. This

widening detracted from shareholder returns, resulting in

a share price total return of +8.1%. Following a challenging

year for markets in 2022 when we had delivered the

strongest shareholder return amongst our peer group of

global investment companies, in 2023 our return slightly

lagged those peers.

In many respects, performance trends within equity

markets during 2023 were a reversal of those of the prior

year. Developed equity markets performed well, with the

US S&P 500 index delivering dollar returns of greater than

25%, while the Japanese market produced its strongest

annual return for decades. The largest capitalised growth

stocks which had suffered material losses during 2022

recovered meaningfully despite further rises in interest

rates and lingering concerns over inflation. Our portfolio,

having navigated volatile markets relatively successfully

during the prior year, began 2023 with a greater

weighting to more lowly-rated, value stocks relative to

the more expensive, faster growing, growth stocks. This

stance was adjusted during the early part of the year

to provide a more balanced exposure. Growth stocks

subsequently delivered material outperformance against

cheaper value stocks.

We delivered strong absolute performance from most

of our underlying strategies, most notably European

equities, but under exposure relative to our benchmark

index to some of the very largest stocks in the market

5Annual Report and Accounts 2023

Strategic Report

in several of our US and global strategies led to modest

underperformance against our benchmark index within

our listed equity portfolio. Meanwhile, our private equity

holdings, in aggregate, lost value over the year and

produced returns well behind those of listed equivalents.

As our portfolio of investments is predominantly invested

in overseas assets, the rise in sterling, which gained 6.0%

against the US dollar, was detrimental to absolute returns.

In a year when equity markets delivered good positive

returns, our gearing added value.

I reported last year that our strong performance had led

to our inclusion, for the first time since 2009, in the FTSE

100 index. I am pleased to report that we maintained

our position in this index of leading UK listed companies

through the year and have now retained our place in the

index for the longest period since it was launched 40

years ago. While there is much debate over the challenges

facing listed UK companies and the performance

delivered by our domestic market, our decision to adopt

a truly global approach to consideration of investment

opportunities has served shareholders extremely well.

Although it is not our primary comparator index, since

the FTSE 100 index was launched in 1984 your Company

has delivered a cumulative total return of approximately

double the return of this index, with a gain of over 7,800%

over the forty year period, equivalent to 11.6% total return

per annum.

LONG-TERM RESULTS

Our investment objective is the delivery of growth in both

capital and income for shareholders over the long-term

and our results remain strong. While there have been

periods of volatility over shorter-term periods, global

equity markets have delivered extremely impressive

returns in recent decades.

Over the ten years to the end of 2023 your Company

delivered a total shareholder return of +203.0%, equivalent

to +11.7% per annum, which compares with a return of

+178.6% (equivalent to +10.8% per annum) from our

benchmark index. As well as strong returns over the decade,

returns for shareholders have been remarkably consistent

on an annual basis, with only two years of negative returns,

which in each case were less than 1% per annum.

Further demonstrating the importance of taking a

long-term perspective to investment returns, over the

FCIT NAV and share price performance vs Benchmark

(1)

over 10 years

FCIT annual dividend growth vs Consumer Price

Index over 10 years

Rebased to 100 at 31 December 2013

Source: Columbia Threadneedle Investments & Refinitiv Eikon

100

150

200

250

300

350

2015 20202013 2016 2017 2018 20192014

FCIT - NAV total return

FCIT - Share price total return

2021

Market Benchmark

20232022

100

110

120

130

140

150

160

170

2015

2020

2013

2016

2017

2018

2019

2014

Consumer Price index

F&C Investment Trust

annual dividend per share

2021

2023

2022

Rebased to 100 at 31 December 2013

Source: Columbia Threadneedle Investments & Refinitiv Eikon

(1) See glossary of terms on page 117 for explanation of "benchmark".

twenty-year period to 31 December 2023 the Company’s

NAV return was +561.8%, equivalent to +9.9% per annum.

Our NAV capital-only return over the past twenty years

was +410.3% (8.5% per annum) and our shareholder

total return was 667.9%, or 10.7% per annum. Dividends

paid to shareholders have risen by 5.0% per annum over

the past decade and by 7.1% 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.

FIFTY THIRD CONSECUTIVE ANNUAL DIVIDEND

INCREASE

It was another positive year for our earnings, with our

gross income exceeding £100m for the first time and our

net return rising to another record high of £81.7m. Special

dividends increased to £4.4m (2022: £1.6m). The impact

of currency movements reduced our income by £0.6m

(2022: +£4.9m). Our Net Revenue Return per share rose

by 13.7%, to 15.83 pence, from 13.92 pence per share in

2022. This is a lower rate of increase than the previous

year but, nonetheless, represents another period of robust

growth in our income.

Inflation remained elevated, particularly in the early part

of the year, but began to decline at a relatively brisk pace

during the second half of the year. Indeed, the annual rate

of inflation (as measured by the Consumer Price Index)

fell to 4.0% by the end of the year, less than half that of

the 10.5% level seen at the end of 2022.

It remains the ambition of the Board to deliver real rises

in dividends for shareholders over the long-term that

are sustainable. I am therefore pleased to report another

rise in the proposed annual dividend which will again be

fully covered by our revenue. Subject to approval at the

Annual General Meeting (‘AGM’), shareholders will receive

a final dividend of 4.5 pence per share on 9 May 2024,

bringing the total dividend for 2023 to 14.7 pence: an

increase of 8.9% over that of 2022. The increase compares

to the 4.0% rate of inflation and means that the growth

in our total dividend has exceeded the UK inflation rate

over three, five and ten years. Indeed, the growth in

our dividends over the past decade, at 63.3%, is almost

double that of UK inflation over the equivalent period.

Furthermore, as well as being our fifty-third consecutive

rise in annual dividends, our full year 2023 dividend is our

one hundred and fifty-sixth annual dividend payment.

We continue to benefit from a strong financial position

with respect to both our revenue reserve (£107.3m),

which represents almost one year of dividend payments

to shareholders, and our capital reserves which stood at

£4.66bn at the year end. We therefore remain very well

placed to continue our track record of increasing annual

dividends well into the future.

COMPANY RATING AND EFFICIENCY

Since the Covid-19 pandemic, your Company’s shares have

generally traded at a discount to NAV. They did, however,

trade at a premium rating once again in the early part

of the year but in common with the wider investment

company sector the discount widened over 2023.

Consequently, we bought back a total of 8.6m shares into

treasury as part of our commitment towards achieving

a sustainably low deviation between our share price and

NAV as well as reducing the volatility of the discount. Our

discount averaged 6.6% over 2023 and ended the year at

5.9%.

Our Ongoing Charges figure declined to 0.49%, down

from 0.54% in 2022. Management fees declined by

9.5%, reflecting the benefits of firstly our revised fee

arrangement with Columbia Threadneedle Investments

(0.3% on our market capitalisation up to £4 billion and

at 0.25% thereafter), secondly a lower level of equity

assets managed by third party managers and thirdly

a lower fee arrangement with JPMorgan, our newly

appointed US large cap growth manager. The Board

remains focused on delivering value for money for

shareholders as part of its performance objectives.

BORROWINGS

We entered 2023 with £244m of cash and cash

equivalents, reflecting the impact of long-term borrowings

which we had drawn but not invested during 2022 and

the relatively cautious view of our Fund Manager. We did

not undertake any new borrowings over the course of

the year, but we invested some of our cash. Our overall

borrowings stood at £581.0m at the end of the year,

meaning that our effective gearing level (with debt at par

and including our £80m holding of Government bonds as

part of our investment portfolio) rose to 9.9% from 7.3% at

the start of the year.

The Company remains exceptionally well positioned with

respect to long-term borrowings, which (excluding our

very small perpetual debenture) we have put in place with

CHAIRMAN’S STATEMENT (CONTINUED)

7Annual Report and Accounts 2023

Strategic Report

maturities out to 2061 and have a blended fixed interest

rate of approximately 2.4%. Low interest rates present

a low hurdle for our investments held against these

borrowings to add value for shareholders over the life of

the loans.

F&C INVESTMENT TRUST LECTURE

Following the success of the lectures that the Company

sponsored in 2018, 2020 and 2022, I am pleased to advise

that the Company will again be sponsoring a lecture this

year. The lecture will be held at The Nobu Hotel, London

on 6 June 2024, with the theme "Social Change and

Future Generations " and will feature thought-provoking

presentations from two renowned speakers as well as

information on the Company’s investment approach from

our Fund Manager, Paul Niven.

As tickets will be limited, they will be made available to

shareholders and the public via a ballot, with successful

applicants selected at random. Video clips will be made

available to everyone on the Company’s website following

the event.

BOARD COMPOSITION

Anuradha (Anu) Chugh was appointed to the Board on 1

July 2023, replacing Francesca Ecsery who retired from

the Board at the conclusion of the 2023 AGM. Anu’s

appointment continues our succession planning which

aims to ensure that we maintain the highest levels of

skills and experience on the Board in order to deliver the

Company’s objective.

I am sorry to report that Tom Joy will step down from

the Board on 31 March. Tom has accepted an opportunity

to take a new executive role which precludes him from

continuing as a Director of the Company. We shall miss

Tom’s considerable investment knowledge and experience

in global equity markets. The process to recruit his

successor is already under way and we expect to make an

announcement at, or shortly after, the AGM.

ANNUAL GENERAL MEETING

This year’s AGM will again be a "hybrid" meeting, which

will enable shareholders who cannot attend in person

to view the AGM online and to participate by asking

questions and voting if they wish. Full details of how to do

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

Proxy or Form of Direction.

Voting will 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 fandc.com.

OUTLOOK

2023 saw a reversal of many of the performance

trends which had dominated equity markets in 2022.

The renewed optimism in large capitalisation growth

stocks has pushed US equity market valuations to high

levels. It is important to recognise, however, that the

high valuation levels are largely a function of the small

number of exceptional companies which hold dominant

market positions in segments of the market which have

enjoyed rapid growth and which provide exciting growth

prospects for investors going forward.

While economic growth is slowing it currently seems that

the outlook for the global economy looking into 2024

and beyond is significantly better than had been feared.

Inflation should continue to moderate, falling closer to

central banks’ targets and the interest rate cuts which

markets are now pricing in should materialise as we move

through this year. With a reasonable outlook for corporate

earnings this backdrop presents a generally more positive

fundamental picture for global equities.

As usual, however, markets face numerous risks. Market

valuations, while concentrated in a specific segment of the

market, leave limited scope for disappointment if inflation

and interest rates remain higher, or corporate earnings

prove less robust, than expected. Furthermore, conflict in

both Ukraine and the Middle East present ongoing risks

to wider economic fundamentals, primarily through any

potential impact on commodity prices. Globally the large

number of elections taking place in 2024 also present

scope for uncertainty and impact on investor sentiment.

In particular the US Presidential election in November is

likely to prove a point of focus as we move through the

year.

One of the great strengths of your Company is its

robust corporate structure and its ability to take a

long-term perspective with respect to investment

opportunities. While interest rate rises have recently

presented challenges in the form of increased costs for

those companies which needed to refinance their debt,

our long-dated and diversified fixed rate loans provide

extremely low rates of funding for our investments. Our

dividend, set to rise for the fifty-third consecutive year,

is covered by our earnings and we continue to hold

significant revenue reserves which should help us to meet

our aspiration of delivering rises in dividends in real terms

in coming years. Technological advancements in AI and

related areas are creating great excitement and significant

opportunity for investors. There are also signs that market

performance is broadening beyond the dominant (and

highly valued) few which should benefit our diversified

approach.

Our Private Equity portfolio, which is predominantly

focused on mid-market opportunities, has largely avoided

exposure to some of the more speculative areas of the

market in the last few years and our recent Growth and

Venture Capital investments remain very early in terms of

their programme. While exits within the private markets

space have slowed materially, we continue to see good

opportunities in terms of both primary and secondary

investment.

There remains uncertainty with respect to the near term

economic and political outlook and we expect an element

of volatility in both bond and equity markets as inflation

and interest rate expectations adjust over 2024 and as

investors assess the implications of fast-evolving trends

in AI and technology. Nonetheless, we remain confident

that our long-term focus and diversified approach will

continue to serve shareholders well in terms of pursuit of

our objective of delivering growth in capital and income.

Beatrice Hollond

7 March 2024

CHAIRMAN’S STATEMENT (CONTINUED)

9Annual Report and Accounts 2023

Strategic Report

FUND MANAGER’S REVIEW

“WHILE NEAR TERM UNCERTAINTY OVER THE PATH OF

INTEREST RATES AND ECONOMIC GROWTH REMAINS HIGH

AND POLITICAL EVENTS AND MILITARY CONFLICT PRESENT

RISKS, WE REMAIN OPTIMISTIC ON THE PROSPECTS FOR

OUR HOLDINGS OVER THE LONGER TERM.”

MARKET BACKDROP

A small group of stocks, who have come to be known

as the ‘Magnificent Seven’, comprising Apple, Alphabet,

Amazon, Meta, Microsoft, Nvidia, and Tesla, dominated

market returns during 2023. These stocks collectively

doubled in value over the year, with Nvidia delivering the

strongest returns amongst all of the S&P 500 constituents.

It became the fifth amongst this group to end the year

with a $1 trillion market valuation.

The marked turn in fortunes for leading technology-

based companies after a poor 2022 was fuelled, in part,

by investor excitement related to Artificial Intelligence

(‘AI’). Applications such as Chat-GPT entered public and

market consciousness, leading to a debate over the speed

of technological advancement, the likely rate of uptake

by businesses and consumers and the wider economic

and social implications for workers and corporates. Each

of these seven highly performing companies were seen

as key beneficiaries from the more widespread adoption

of AI, with Nvidia the standout winner in performance

terms over the year. More generally, the outperformance

of highly valued growth stocks in the US market was

particularly pronounced in the early part of the year. Rises

in interest rates caused stress in US regional banks, with

Silicon Valley Bank ('SVB') the largest bank to fail since

Washington Mutual during the Global Financial Crisis in

2008. The US Federal Reserve responded quickly and

forcefully to contain the problem and widespread fears

that this would generate a broader credit crunch proved

to be unfounded.

Despite ongoing strength in labour markets, with US

unemployment hitting the lowest rate since 1969 at 3.4%

in April, as the year progressed inflation began to fall and

the widely expected recession failed to materialise. Having

raised interest rates to 5.5% at their July meeting, the US

rate-setting committee kept them on hold for the rest of

the year and, following the December meeting, dovish

comments by the Chair, Jerome Powell, fuelled hopes that

rate cuts were likely in the coming spring. Markets rallied

in response, taking the gain in the S&P500 to 26.3% in US

dollar terms for the year. As optimism increased that the

US economy would enjoy a soft landing, even conflict in

the Middle East could not disrupt market optimism and

the rally in equities broadened beyond the previously

dominant mega-cap technology names, reflecting a view

FCIT share price 2023 (pence per share)

825

850

875

900

925

950

975

1,000

Dec

2022

Mar

2023

Jun

2023

Sep

2023

Dec

2023

Source: Refinitiv Eikon

that earnings more widely would remain positive and that

the cost of government and corporate borrowing should

continue to ease.

Outside of the US, Japan enjoyed a renaissance in

the stock market, with the Nikkei delivering the best

annual return in yen terms for more than three decades.

Optimism over corporate reform and the prospects for

improving focus on shareholder value buoyed markets.

Elsewhere in Asia though, China and Hong Kong

delivered negative returns for the year, with investor

disappointment over a lack of policy action and sluggish

growth post Covid impacting sentiment. By contrast,

despite a relatively poor economic backdrop, Europe

had a good year. As in the US, inflation declined closer to

central bank targets as the year progressed and, although

Germany seemed to be on the edge of recession during

the year, investors focused on the prospect of interest

rates cuts in 2024, boosting market valuations, despite

sluggish corporate earnings.

INVESTMENT PERFORMANCE

As explained on page 32, 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 the wide

range of skills and resources available from the Manager

or, in the case of the majority of our US exposure, from

external third-party managers. The Company invests

in both public and private equity opportunities across

the world and has adopted this diversified approach to

reduce risk and produce consistent returns for investors

with the objective of delivering growth in both capital and

income over the long-term.

Our portfolio of investments delivered a return of +11.7%

for the year against the benchmark return of +15.1%. The

contributors to our total return are shown in the table

below.

Our year-end allocations and underlying geographic

exposures are shown in the tables below and overleaf.

LISTED EQUITIES

Developed market equities posted strong gains, after a

year of losses in 2022. Amongst our regional strategies

European equities (including UK equities and Gilts)

posted a gain of 22.7% while North America, our largest

exposure, increased by 16.6%. Japan (+11.4%) also

delivered strong gains while emerging markets were a

laggard, rising by a relatively modest 0.4% for the year.

Excitement over the potential impact from AI was a

significant contributor to market performance during

the year. Nvidia, which ended the year as our sixth

Contributors to total returns in 2023 (%)

Portfolio return

(1)

11.7

Management fees (0.4)

Interest and other expenses (0.4)

Buy backs 0.2

Change of value of debt (0.1)

Gearing/other 0.3

NAV total return 11.3

Change in share price discount (3.2)

Share price total return 8.1

FTSE All-World total return 15.1

Source: Columbia Threadneedle Investments

(1) See Glossary of terms on page 120 for explanation of "Portfolio return".

Underlying Classification of Listed Investment

Portfolio (excluding Gilts) as at 31 December 2023

Technology 25.6%

Consumer Discretionary 17.0%

Financials 14.6%

Industrials 12.6%

Healthcare 10.4%

Energy 4.9%

Consumer Staples 3.8%

Basic Materials 3.8%

Telecommunications 3.2%

Utilities 2.6%

Real Estate 1.5%

Source: Columbia Threadneedle Investments

FUND MANAGER’S REVIEW (CONTINUED)

11Annual Report and Accounts 2023

Strategic Report

largest holding, produced the strongest returns amongst

the S&P500 stocks, gaining by 239% and helping the

bellwether index to a return, in US dollar terms, of +26.3%.

It benefited from increased demand for its AI processors,

where the company holds a dominant market position.

While Nvidia produced extraordinary levels of return on

the year, it followed a halving of the stock price in 2022.

This pattern of recovery in share prices was repeated

across the other leading growth stocks in the US market.

Meta, which had declined in value by close to two thirds

in 2022, also posted strong gains on the year, up by 194%

in US dollar terms. Including the performance of the

other five stocks which constitute the 'Magnificent Seven'

(Apple (+49.0%), Alphabet (+58.3%), Amazon (+80.9%),

Microsoft (+58.2%) and Tesla (+101.7%)) in aggregate this

group of stocks doubled in value over the year, propelling

them to a combined weight of around one third of the US

stock market. Such high levels of market concentration

have rarely been seen throughout history and, reflecting

the narrow performance seen during the year, the gap

between the annual return from the market capitalisation

and equally weighted versions of the index (+13.8%) was

the widest since 1998 and the “dot com” bubble.

The marked outperformance of highly valued growth

stocks relative to more lowly rated value holdings

contrasted with the performance trends of the prior year.

Financial stocks were hit particularly hard during the first

quarter when SVB collapsed, leading to a brief period of

contagion that threatened to cause wider damage to the

financial system. Around the same time, Credit Suisse,

which had been under pressure for some time, suffered

large deposit outflows and agreed to a takeover by

UBS, backed by state-based guarantees from the Swiss

government.

Our North American returns (+16.6%) were behind

those of the US benchmark (+18.9%). Barrow Hanley,

our longstanding US value manager, produced a return

of +7.1%, which lagged the broader market but which

exceeded the returns from comparator value-based

indices. Our exposure to Barrow Hanley was reduced

during the first quarter, as we split our exposure to

value stocks and funded a new allocation to Columbia

Threadneedle Investments. This new strategy produced

modest underperformance from the date of funding to

the end of the year.

As reported last year, we also allocated capital to a new

growth-based strategy managed by JPMorgan Asset

Management, divesting in entirety from T Rowe Price,

who had delivered below benchmark returns in recent

years. This strategy produced returns of +26.0% from

the point of funding in January to end of the year, the

highest return of all of our strategy exposures, but lagged

the exceptional returns of growth-oriented stocks over

the period. Finally, within our North American allocation,

our core holding, which is also managed by Columbia

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

geographic exposure versus Index at 31 December 2023

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 38.6 58.1 63.4 16.6 18.9

Europe inc UK

(4)

12.2 23.3 16.1 22.7 13.4

Japan 4.7 6.3 6.2 11.4 12.8

Emerging Markets 6.1 8.7 9.9 0.4 3.6

Developed Pacific 3.6 4.4 4.8

Global Strategies

(2)

27.1 10.7 15.1

Private Equity

(3)

11.3 (1.7)

(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, Global Sustainable Opportunities and latterly Global Focus.

(3) Includes the holdings in Schiehallion and Syncona.

(4) Includes the holdings in Gilts.

Source: Columbia Threadneedle Investments

Threadneedle Investments, kept pace with strong markets,

producing a return of +19.5%, slightly ahead of benchmark.

The US value portfolio, managed by Barrow Hanley,

delivered good returns against value indices, delivering

outperformance of around 2%. Much of the excess return

was driven by positions in industrials and information

technology, where stock selection was beneficial to

relative returns. Two stocks stood out in terms of

positive contribution to returns during the year. Firstly,

Broadcom, which increased by 93.6%. This company

designs, develops and supplies semiconductor and

infrastructure software solutions and it reported strong

growth in AI and enterprise software segments. The

integration of recently acquired VMW may provide

scope for further improvement in growth in due course.

The second significant contributor to relative returns

for the year was Vertiv Holdings which, in delivering a

gain of 233.5%, rivalled Nvidia for best performing US

holding during the year. This company supplies cooling

equipment and technology to data centres and stands to

benefit from increased spending on digital infrastructure.

Improvements in margins and bullish sentiment on AI

helped contribute to strong returns. Other positive

contributors included technology company Qualcomm

(+28.0%) which stands to benefit from a recovery in the

handset market, while Dollar General was a detractor.

This holding was disposed of during the year after the

company reduced earnings guidance meaningfully due

to softer sales and challenges in clearing inventory.

The manager concluded that these uncharacteristic

operational challenges from a previously highly

performing stock were likely to continue.

JPMorgan delivered strong returns although they did

slightly lag the gain from the Russell 1000 Growth

index. Technology and consumer discretionary holdings

produced the strongest returns from a sectoral

perspective. Overweight positions in index heavyweights

Meta and Nvidia, as well as a position in Uber were all

helpful for relative returns, with each of these stocks

more than doubling in value over the year. Conversely,

while a smaller portion of the portfolio, stock selection in

financials (including a small position in SVB Financial, the

holding company of SVB), energy and in healthcare stocks

was detrimental to relative returns.

Our European portfolio produced excellent returns in

absolute and relative terms, gaining by 22.7% versus the

benchmark return of +13.4%. Significant contributors

during the year included Melrose Industries (+100.0%)

which, after three consecutive years of annual losses,

posted strong performance as the spin-off of its autos

business demonstrated the focus on its core aerospace

division, where the business quality is high and future

prospects for growth are strong. CRH (+71.7%) was also

a highlight, with strong underlying business performance

and a re-listing in the US driving new investor interest

while also, unfortunately, demonstrating some of the

shortcomings of a UK listing for leading companies.

Litigation finance company Burford (+83.2%) was also a

highlight during the year, with a significant legal decision

relating to the forced nationalisation of Argentinian

oil company, YPF, contributing to positive results.

Elsewhere, UBS (+62.1%) which, with state backing,

purchased troubled Credit Suisse on attractive terms,

to create an enlarged wealth management group, was

buoyed as investors warmed to the deal, recognising

improved growth prospects and positive synergies from

the transaction. Other positives included our holding in

SAP (+44.1%), which is seeing a return to growth in cloud

revenues and viewed as another beneficiary of the AI

theme. Detractors from returns included some of our bank

holdings, including disappointing returns from the Bank

of Ireland (-7.5%) as well as poor returns from online food

delivery platforms, Delivery Hero (-45.3%) and JustEat

(-29.9%) due to increased competition and slowing

growth.

In 2023 our Japanese strategy slightly underperformed

its benchmark, though still gained by 11.4% on the year.

The Japanese market enjoyed a very strong year in local

currency terms (the Nikkei gained 30.9%), though returns

for sterling-based investors were somewhat dampened by

yen weakness. Japanese equities in general hit levels not

seen for over thirty years, spurred by global interest rate

cut expectations, economic re-opening, healthier wage

growth, modest inflation, and long-awaited improvements

in corporate governance. We saw sector allocation

headwinds in 2023, with an underweight stance on banks

detracting as Japanese lenders rallied on the prospects

of higher net interest margins. An overweight stance on

healthcare was also a headwind given the fact that this

more defensive sector underperformed in the more risk-

tolerant environment. In contrast to the US, the Japanese

market also saw strong performance from lowly rated

stocks in 2023, largely driven by Tokyo Stock Exchange

emphasis on cheap (low Price to Book ratio) companies

FUND MANAGER’S REVIEW (CONTINUED)

13Annual Report and Accounts 2023

Strategic Report

improving their valuation ratios through increased

dividends and buybacks. Stylistically, the portfolio was

relatively overweight to more highly valued quality growth

names and therefore the strong performance of value was

a headwind during the year.

There were some good returns from individual stock

selection decisions. Owning Daiwa House (+28.7%),

Japan’s leading manufacturer of houses and commercial

and logistics facilities, drove significant returns, as the

company saw solid sales of logistics facilities, a recovery

in its hotel business and positive increases in shareholder

returns. Long-term holding Hoya (+23.2%) also drove

positive returns, as the company saw resilient growth in its

eyecare business and signs of a recovery in its EUV mask

blank business, an instrumental part of cutting-edge semi-

conductor manufacturing.

Recent years have been challenging for emerging markets

equities and this area, while posting a modest positive

return for the first time in three years, was disappointing,

with the gain of 0.4% behind that of the benchmark.

Throughout most of the year tighter financial conditions

weighed on risk sentiment, although during the second

half inflation began to decline and central banks began

to cut interest rates. Unlike many developed markets

(excluding Japan), value significantly outperformed

growth during the year.

The Chinese equity market posted significant declines,

falling by 17%, due to lacklustre recovery from Covid-19

and the impact of geopolitical tensions. The year had

started on a positive note for China with optimism

surrounding the re-opening after Covid-19. However, the

excitement was short lived as the lack of meaningful

policy support and sudden policy changes against

targeted industries, as well as ongoing elevated levels of

tensions with the US and Taiwan, contributed negatively

to sentiment. Our exposure to China and Hong Kong

detracted from our performance, particularly in our

investments in healthcare and insurance, with AIA

(-24.2%) and Wuxi Biologics (-53.1%) notable drags on our

returns.

India was again a bright spot as mid-sized companies

rallied with increased optimism around Prime

Minister Modi’s continued focus on infrastructure and

manufacturing, as well as business minded reforms. Our

investments in the healthcare (Torrent Pharmaceuticals

+41.9%) and consumer (Nestle India +29.1%) sectors

helped performance. India remains one of the more

exciting markets due to a long runway of growth

prospects, however, we are being selective given valuation

concerns in certain pockets of the market.

Although we had a holding in TSMC (+28.6%), our

underexposure to micro chip makers in South Korea and

Taiwan detracted from relative returns. Latin America had

a strong 2023 and our portfolios benefited from owning

MercadoLibre (+76.0%) and Raia Drograsil (+34.3%).

The Brazilian market was dominated by stocks such

as Petrobras. Mexico also had a strong year, with the

currency outperforming the US dollar as a nearshoring

theme took hold. We have kept a wide range of exposure

there through the largest retailer (the aforementioned

MercadoLibre) as well as one of the leading banks (Grupo

Financiero Banorte +45.6%).

Within our Global Strategies, we started the year

with exposure to Global Income, Global Sustainable

Opportunities and Global Value. The combined return

from these components was +10.7%, behind that of the

index (+15.1%). Each of our respective allocations within

this strategy lagged returns from the market index. Our

Global Income allocation, which targets a diversified

exposure to stocks that provide a higher dividend yield

than the market, gained by 13.3% which was a highly

respectable result, considering returns from high yield

index comparators. This strategy is helpful for the

management of our overall revenue and has, over a

period of more than a decade, delivered results which

have matched broad index returns, while providing a

higher income for the Company. The holding in Broadcom

(+93.6%) was a positive contributor though Bristol-Myers

Squibb (-30.0%) detracted, as did underexposure to the

“Magnificent Seven” during the year.

Our Global Value strategy that is managed by Pyrford (an

investment boutique that operates independently within

Columbia Threadneedle Investments), unsurprisingly

lagged global index returns with a gain of 9.7% for the

year. While the strategy had positive contributions from

stock selection in China and Europe, the underweight

stance on the highly performing US market and an

overweight stance on Asian equities, which lagged,

was detrimental. More significant, however, was a zero

weight in some of the US mega-cap growth stocks which

produced such strong returns.

While our Global Sustainable Opportunities strategy

held a material position in highly performing

Nvidia, unfortunately, many of the key drivers of

underperformance seen in other components of our

Global Strategies allocation (underexposure to the

'Magnificent Seven') helped to drive underperformance

here. This factor, plus the holding in SVB Financial, which

was partially sold just ahead of financial collapse, and a

holding in Orsted which suffered financial write-downs

during the year, contributed to underperformance from

the strategy. We divested from this strategy towards the

end of the year, allocating capital instead to a new Global

Focus strategy, managed by Columbia Threadneedle

Investments, which has a long track record of delivering

strong returns, has a less constrained approach and

which offers comparable credentials from a responsible

investment perspective.

PRIVATE EQUITY

Activity across fundraising, deal activity and exits

remained relatively muted over the course of 2023, with

the backdrop centred around the valuation disconnect

between buyers and sellers and an elevated caution

around the economic outlook.

After a strong period of performance, where our private

equity holdings delivered excess returns relative to listed

markets in 2021 and 2022, returns last year were relatively

disappointing. Our overall private equity portfolio

delivered a modest decline in value, of -1.7%, with all areas

posting losses on the year. Recent investments, managed

by Columbia Threadneedle Investments, fared best on the

year, though still delivered a return of -0.2%. Our exposure

here tends to be focused on mid-market businesses where

valuations are attractive and where these businesses have

high levels of cashflow generation. We have, therefore,

deliberately avoided the later stage private market

opportunities which had been fuelled to speculative levels

of valuations and which have suffered the most during the

past year. In addition, our co-investments, as well as fund

opportunities, have a focus on businesses which require

limited amounts of additional cash financing to fund their

ongoing operations and growth ambition.

A feature of the private, as well as public, markets last

year was the decreasing availability of financing, in part

driven by the collapse of SVB and a generalised tightening

in credit conditions and this has pressured overall

valuations in the private markets as well as leading to

pressure on the ongoing operations of some cash hungry

enterprises. While we saw a significant slowdown in exits

last year, we did enjoy a very good realisation on one of

our recent co-investments – the sale of Polyplus (which

provides solutions for advanced biologic, cell and gene

therapy) to Sartorius, an international pharmaceutical and

laboratory equipment supplier, which resulted in a 3.7x

return on our investment and a 61% internal rate of return

with overall proceeds in excess of €22m. Less positively,

despite excellent progress in terms of its underlying

business, we wrote down the value of our holding in

Inflexion Strategic Partners, from £79.6m to £60.0m

during the year. This reduction reflected a valuation

Private Equity portfolio

Commitment outstanding

31 December 2023

£’000s

Value of holding

31 December 2023

£’000s

Total Private Equity portfolio

(1)

Brought forward

483,353 574,860

Committed in 2023

(2)

15,000 -

Cash drawn in 2023

(2)

(61,511) 61,511

Cash returned in 2023

(2)

- (39,763)

Valuation movements

(3)

- 9,966

Exchange movements

(3)

(13,461) (12,523)

Total Private Equity portfolio

(3)

Carried forward

423,381 594,051

(4)

(1) Exchange rates ruling at 31 December 2022

(2) At actual exchange rates in 2023

(3) Exchange rates ruling at 31 December 2023

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

Source: Columbia Threadneedle Investments

FUND MANAGER’S REVIEW (CONTINUED)

15Annual Report and Accounts 2023

Strategic Report

level which is consistent with that of a new investor who

allocated capital into the structure during the year.

In recent years we have invested in two bespoke Pantheon

Future Growth programmes which invest in leading

growth and venture private equity managers on a global

basis. Our two programmes had initial total commitments

of $360m. These investments have a long time horizon

and we remain several years away from being fully drawn

on our commitments. It will be perhaps a decade before

we can properly assess investment outcomes fully. It is

important to note, however, as has been stated in previous

reports, that these investments 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.

Our holdings in Syncona (-31.8%), a backer of healthcare

companies, and Schiehallion C shares (-1.8%) both had a

poor year. Schiehallion is managed by Baillie Gifford and

invests in late stage disruptive technology businesses.

Older fund investments, which we hold with Harbourvest

and Pantheon, declined modestly in value (-2.9%). We

continue to work with the managers to realise value from

these holdings as they head towards the end of their lives.

Overall, our private equity holdings have been a drag on

returns this year but have been a strong contributor over

the long term and we remain well positioned.

PORTFOLIO ACTIVITY

We made several material changes to the portfolio

through the year. In recent years, we have been active

in the management of our relative exposures between

growth and value stocks in the US. We began to reduce

significantly our exposure to large capitalisation growth

stocks from the second half of 2020, after a period of

extremely strong relative performance during the early

stages of the recovery after Covid-19 had hit equity

markets, and carried on reducing exposure through to the

early part of 2022. This strategy of reducing our weight

in highly valued stocks, many with a focus on disruptive

technology, was accretive to returns in 2022 as cheaper,

value stocks outperformed significantly, in part driven

by rises in inflation and interest rates as well as by a

convergence in relative valuations within the market.

During the first quarter of 2023, recognising the

significant outperformance of US value stocks, as well as

the likely risks of economic slowdown impacting on the

performance of this area, we cut our overall exposure to

US value through a reduction in our holdings managed

by longstanding manager, Barrow Hanley. In addition, we

chose to allocate a portion of our US capital to Columbia

Threadneedle Investments, to manage a complementary

US value strategy for us. We had previously identified

Columbia Threadneedle Investments as a highly

performing manager in this space and this had the

additional benefit of reducing the fees paid to third party

managers as part of the overall mandate.

In addition to net sales of US value stocks we also chose,

having made significant divestments in recent years, to

switch our remaining US growth exposure from T Rowe

Price to JPMorgan Asset Management. T Rowe Price

delivered disappointing performance for the Company in

recent years and our view was that JPMorgan offered a

strong performance track record, backed by significant

resources and a robust process which had displayed

flexibility in managing different phases of performance for

growth stocks. We did not anticipate that equity markets

would deliver returns which were dominated by such a

narrow group of companies during 2023 but JPMorgan

have an excellent track record of delivering strong returns

for investors against different backdrops for growth

stocks.

Elsewhere, within our listed equity portfolio, towards the

end of the year we switched exposure from the Global

Sustainable Opportunities strategy to a new Global

Focus strategy, managed by Columbia Threadneedle

Investments. These strategies have similar portfolio

characteristics from a responsible investment perspective

but the new strategy that we have invested in has more

freedom with respect to its investment opportunities. The

Global Focus strategy has a more than decade long track

record of delivering strong returns for investors through

an approach which focuses on high quality businesses

with faster than market growth prospects.

REVENUE RETURNS

Our gross income was up by 10.8% to £106.6m, exceeding

the £100m level for the first time and our net income

per share gained by 13.7% from 13.92 pence per share to

15.83 pence per share. Special dividends rose to £4.4m

(from £1.6m in 2022). The impact of sterling was modest,

detracting £0.6m, compared with a positive impact of

£4.9m in 2022.

Another strong year for our revenue pushed our earnings

to a new record high in 2023 and it is pleasing to report

that our dividend will again be covered by revenue for the

year. Our substantial revenue reserve ended the year at

£107.3m. We will deliver our fifty-third consecutive annual

dividend increase for shareholders in May of this year.

GEARING

Our gearing stood at 9.9% at the end of the year, above

the level of 7.3% at the start of the year. Gearing added

0.3% to our NAV total return on the year, whilst the fair

value of our debt increased modestly, detracting 0.1%

from our NAV return.

At year end, our total borrowings were £581.0m in

aggregate. We held £87m in cash and £80m in short-

dated gilts (which is not reflected in our liquidity

position). Our blended average fixed interest rate on our

outstanding loans is approximately 2.4%, which remains

exceptionally low by historic standards. Over the long

term, we expect the returns from the investments we have

made from these borrowings to exceed the cost of the

debt and to therefore be accretive to NAV returns.

CURRENT MARKET PERSPECTIVE

The fundamental backdrop for equity markets over the

remainder of this year appears constructive with economic

growth expected to continue at a reasonable pace and

inflation levels in developed economies likely to decline

to levels closer to central banks' targets. Consequently,

interest rate cuts should begin as we move towards

the middle of the year. This environment suggests that

corporates should deliver robust earnings growth and

corporate credit risk should, in general, remain relatively

muted.

This benign perspective is not without risks. The widely

expected economic recession failed to materialise in 2023

and both consumer and corporate sectors have proven

to be far more resilient in the face of rising interest rates

than had been feared. It is worth remembering the adage,

however, that ‘monetary policy works with a long and

variable lag’ and there does remain the likelihood that the

full impact of past rate rises has yet to be felt. Furthermore,

while politics will be in focus in 2024 with elections in both

the US and the UK, investors have become accustomed to

unexpected outcomes in recent years and so the scope for

political shocks this year may be somewhat diminished.

Despite this, we do anticipate volatility into and around the

US Presidential election and the accompanying rhetoric will

be closely scrutinised with respect to wider implications

in areas such as trade policy. There does remain scope for

political events to play a role in driving market returns.

For global equity markets, although the fundamental

picture appears positive, valuations are, once again,

relatively demanding. As has been the case in recent years,

a narrow segment of the market has driven returns and the

US market continues to command a significant premium to

the rest of the world. However, in recent years, it has rarely

been a successful strategy to bet against the continued

outperformance of US stocks and of US technology

stocks in particular. The AI theme has provided additional

support to a number of large US stocks and investors are

increasingly discriminating between the corporate winners

and losers of what may prove to be a profound and wide-

ranging disruptive force.

While near term uncertainty over the path of interest rates

and economic growth remains high and political events

and military conflict present risks, we remain optimistic on

the prospects for our holdings over the longer term. Our

diversified portfolio seeks to spread exposure to a range

of investment opportunities, balancing consideration of

growth prospects alongside the quality and consistency

of earnings while ensuring that we do not overpay for

exciting, but potentially highly valued, companies. In

coming years accelerating technological change and an

increasing influence from AI will create opportunities and

risks, both in those companies which stand to directly

benefit from these trends and for those which stand to be

challenged. Our approach is well placed to identify and

capture both the beneficiaries of these trends and those

whose business prospects are underpriced, through our

broad and deep consideration of investment opportunities

from across the world.

Paul Niven

Fund Manager

7 March 2024

FUND MANAGER’S REVIEW (CONTINUED)

17Annual Report and Accounts 2023

Strategic Report

OUR APPROACH TO RESPONSIBLE

INVESTMENT

AS STEWARDS OF £5.5 BILLION OF ASSETS, WE BELIEVE INVESTING RESPONSIBLY IS

FUNDAMENTAL TO LONG-TERM WEALTH CREATION.

OUR APPROACH

We believe that good financial outcomes are more likely to

be achieved if we fully understand the risks and opportunities

that relate to the markets in which we invest. More than ever,

Environmental, Social and Governance ('ESG') factors are

critical components of this understanding. As a responsible

investor we need to ensure that we, and the companies we

invest in, have a robust approach to managing environmental

and social risks and opportunities. We also expect good

governance practices which we believe positions issuers better

to manage risks, identify opportunities and deliver sustainable

growth. We have a Manager that integrates ESG into its

research and investment process and encourages stronger

ESG practices through its engagement and voting activities.

Our approach covers our own governance responsibilities

on matters such as the composition of the Board but,

most importantly, it is our portfolio of investments which

represents the greatest impact we can have. As responsible

investment and sustainability are integral, 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'), the UK and AIC Corporate

Governance Codes and the Task Force on Climate-related

Financial Disclosures ('TCFD').

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 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 Board has broadened its approach in 2024, beyond the

primary focus on climate change, and agreed four priority

themes: Social Media and Responsible AI, Human Rights, Net

Zero and Biodiversity. We will provide more information on

these areas in future reports.

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 a robust approach to

managing ESG risks and opportunities can support the

achievement of sustainable growth and investment returns.

Our Manager sets out its expectations for issuers in its

Environmental and Social practices statement and its

Corporate Governance Guidelines which are available on the

Manager’s website at columbiathreadneedle.com.

We view engagement and proxy voting as powerful

levers that can help us create investor value and targeted

responsible investment engagement with issuers is an

important part of our Manager’s investment approach.

Our purpose with engagement is to support long-term

investment returns by mitigating risk, capitalising on

opportunities linked to ESG factors and reducing any

material negative impact that our investment decisions could

have on these factors. We believe that we can play a part

in building a more sustainable and resilient global economy

by encouraging issuers to improve their ESG practices. This

can also help drive positive impacts for the environment and

society that are in line with achieving the United Nations

Sustainable Development Goals ('SDGs').

Active use of our voting rights is 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

line on key governance issues such as executive pay and

integrate sustainability issues into the voting process,

particularly climate change, biodiversity, human rights and

board level 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.

EXCLUSIONS

The focus of our Manager's responsible investment approach

is to incorporate material ESG issues into investment

decisions and to engage with investee companies to

encourage them towards meeting or setting best practices

in the management of ESG issues. However, the Board

believes that there are some business activities which are

incompatible with a responsible approach to investment and

where exclusion or divestment are the only options: namely,

tobacco producers, cluster bombs and landmines and

thermal coal. We exclude companies with exposure to these

activities which exceed certain revenue thresholds.

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 the low-

carbon transition, whilst continuing to maximise returns to

our shareholders, identifying 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 may ultimately choose to

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.

We are engaging with our managers to understand their

current ESG approaches and plans to develop these in future.

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

average carbon intensity of the Company’s listed

investments.

PERFORMANCE IN 2023

The weighted-average carbon intensity of the portfolio

increased over 2023 and as at the end of the year was in

line with that of the benchmark. This was in large part a

consequence of changes in sector exposure, driven in turn

by changes to the composition of manager allocations,

as well as their stock selection decisions. Exposure to the

energy and utilities sectors increased overall over the course

of the year, which pushed up the Scope 1 & 2 emissions

represented by the portfolio.

We retain our commitment to a net zero target and

continue to aim to strike a balance between reduction in

the carbon intensity of our portfolio over the medium to

long term with our overriding objective to deliver growth in

capital and income for shareholders.

CLIMATE CHANGE AND OUR NET ZERO COMMITMENT

Weighted-average carbon intensity

('WACI')

(2)

2019

100

150

200

250

FCIT

Benchmark

(3)

Tons CO2e / sales $m

185

125

2020

158

Source: MSCI ESG

2021

155

124

2022

165

137

136

2023

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

(2) WACI shows the emissions impact of companies as a proportion of sales. It is calculated by dividing greenhouse gases (‘GHG’) emissions by the revenue

generated by companies held. It is reported in GHG per $m of underlying revenues of holdings in the portfolio. A low score indicates that a fund invests in more

carbon-efficient companies.

(3) See Glossary of terms on page 117 for explanation of 'Benchmark'.

OUR APPROACH TO RESPONSIBLE INVESTMENT (CONTINUED)

19Annual Report and Accounts 2023

Strategic Report

We 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. One significant

contributor to the portfolio’s emissions profile is US electric

utility Vistra, which still has a legacy coal fleet that it is in

the process of phasing out. Our Manager has engaged with

Vistra since 2018, including direct dialogue with the CEO and

CFO as well as a number of meetings with sustainability and

strategy leaders. The company has significantly improved

its climate strategy over this period, which now includes

a target for net zero emissions by 2050; a 60% reduction

target by 2030 from a 2010 baseline; and a commitment to

have its targets and strategy verified by the Science-based

Targets Initiative.

Another major contributor is cement firm CRH. Again, our

Manager has had several discussions with the firm on its

emissions reduction strategy, which in 2023 included a site

visit to its Platin cement plant in Ireland

(1)

and discussions

with the board chair on climate risks and opportunities.

The company has targets around the carbon intensity of

its electricity use and is investing in alternative production

methods for cement, such as clinker replacements.

Decarbonising the cement production process is challenging

but necessary and we would argue that continuing to invest

in companies that are involved in solutions is important for

the energy transition, even if this increases the portfolio's

carbon intensity and carbon footprint in the short term.

As companies in our portfolio such as Vistra and CRH 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

(2)

The primary focus of this approach remains unchanged from

the previous year and is aligned to the Climate Action 100+

framework. The methodology has three key components:

1. Company level assessment. Using a range of data

sources, our Manager has created a framework to assess

companies’ performance on a number of criteria relating

to their emissions management and strategy. This

framework is used to assign an alignment rating:

• Aligned: company meets expectations highly in all

relevant categories.

• Aligning: company meets core expectations

around disclosure, setting targets and strategy.

• Committed: company has not yet met these

expectations, but has committed to set a science-

based target.

• Not aligned: company does not meet expectations

and has not committed to set a science-based

target.

2. Portfolio analysis and target setting. Company level

alignment statuses are aggregated to give portfolio

level alignment. Targets are then set to increase the

overall proportion of companies in the Aligned or

Aligning category over time. The Manager makes

active use of stewardship to improve the alignment

of companies, aiming to have at least 70% of

portfolio emissions either Aligned or under active

engagement for the funds committed to using this net

zero framework. In 2023, this figure was 79.6%, thus

achieving this target.

In addition to the portfolio alignment status we

calculate portfolio-level financed emissions intensity

(3)

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

3. We monitor our investment in firms providing low-

carbon solutions.

The charts overleaf show the Company’s current

performance on these metrics, as well as the targets that

we have set.

(1) https://docs.columbiathreadneedle.com/documents/ESG Viewpoint_Challenges of realising zero-carbon cement.pdf?inline=true

(2) https://docs.columbiathreadneedle.com/documents/Net Zero Investing - Columbia Threadneedle Investments Approach.pdf?inline=true

(3) Sum of the GHG emissions of each portfolio company, weighted by the proportion of each company that the portfolio holds as a proportion of each $m

invested in the total portfolio.

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 as at the end of the last three financial years.

This has decreased, from 44.5 to 40.3 tCO2e/$m invested.

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 voting power.

We are focusing 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 (see below).

CLIMATE CHANGE AND PRIVATE EQUITY

Disclosure, strategies and targets continue to improve

within the private equity asset class, as evidenced in the

annual survey of General Partners ('GPs') carried out by one

of our managers in this asset class, Columbia Threadneedle

Investments. They found that of the GPs surveyed, 17%

have a net zero target in place, with a further 13% planning

to implement this in the next 12 months. The proportion

reporting carbon emissions on the majority of their holdings

has more than doubled since 2021, from 20% to 46%.

Industry best practice is also evolving, with the publication

in late 2023 of the Private Markets Decarbonisation

Roadmap, which seeks to be a standard methodology for

implementing net zero approaches across private asset

classes. One of our private equity managers, HarbourVest,

was a project lead for this initiative and our third manager,

Pantheon, was a contributor.

All three managers have published company-level TCFD

reports and all are working on emissions data for underlying

portfolio companies.

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

(1) Shows the financed emissions of the Company in relation to the amount

invested. We calculate the total emissions of the companies held using the

same method as for total emissions calculation (shown above). We then

express this as a proportion of each $m invested in the portfolio.

Financed emissions intensity

(1)

OUR APPROACH TO RESPONSIBLE INVESTMENT (CONTINUED)

Aligned 0.2%

Aligning 51.3%

Committed 28.1%

Not Aligned 20.2%

Not Assessed 0.3%

Company-level alignment status, as a % of total

portfolio financed emissions

(1)

(1) Sum of the GHG emissions of each portfolio company, weighted by the

proportion of each company that the portfolio holds

21Annual Report and Accounts 2023

Strategic Report

TASK FORCE ON CLIMATE-RELATED FINANCIAL

DISCLOSURES ('TCFD') REPORTING

In June 2023 our Manager published its second company

level report on how it manages climate-related risks and

opportunities in investment portfolios and across its

business operations in line with the recommendations of the

TCFD.

This year, in accordance with the deadline for complying

with regulations set by the Financial Conduct Authority,

a disclosure specific to the Company’s portfolio will be

published on the Manager’s website. This report will provide

data on the portfolio’s carbon footprint and the largest

individual contributors to it by individual issuer and sector

as well as the overall net zero alignment of the portfolio. We

have included much of this data in this Annual Report.

More information on how to interpret climate data for

investment portfolios is outlined on our Manager’s website

at: https://www.columbiathreadneedle.co.uk/en/inst/

insights/esg-viewpoint-interpreting-climate-data-for-

investment-portfolios/.

With respect to the listing of its shares on the New Zealand

Stock Exchange, by virtue of its listing on the London Stock

Exchange, the Company is exempt from the climate-related

disclosure requirements imposed under New Zealand law.

269 UNIQUE

MEETINGS VOTED

votes with

management 86.8%

votes against

management 13.2%

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 2023, it voted against management on

13.2% of proposals. This compared to 21% in 2022 and 19% in

2021. There are a number of reasons for the decrease in the

number of votes cast against management. These include

increased access to management and boards, where we

can have direct discussions on potential improvements that

encourages alignment with our voting policy; a tightening of

the regulatory environment that requires companies across

sectors and markets to adhere to global best practice; and

the annual update to our voting policy that takes into account

new market trends, local market best practices and other

factors.

The highest number of votes against management related

to director elections and compensation. The Manager did

not support 24% (2022:43%) of all management resolutions

relating to remuneration, often due either to concerns

around the incentive reward disclosure or a misalignment

between pay and long-term performance. Levels of overall

quantum and grants through vehicles such as an annual

bonus scheme or long-term incentive plan should be

designed to promote sustainable, long-term shareholder

value creation and reflect the executives’ work and

contribution to the company.

Votes against management on director elections related

mostly to board structure, particularly on independence but

also on diversity and tenure. Boards should have a diverse

representation of skills, background, and expertise that

can manifest in a variety of ways. Non-executives should

be primarily independent of the company, although we

recognize that, in certain cases, connected non-executives

have a valuable role to play.

Each year the Manager’s proxy voting and corporate

governance analysts lead a review of its voting policy, with a

view to updating, where necessary, the principles that form

the basis of the Manager's approach.

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%

2023

Climate Change 24%

Environmental Stewardship 12%

Business Conduct 4%

Human Rights 10%

Labour Standards 18%

Public Health 7%

Corporate Governance 25%

714 ISSUES RAISED

WITH 164 LISTED

COMPANIES ACROSS

26 COUNTRIES.

OUR APPROACH TO RESPONSIBLE INVESTMENT (CONTINUED)

During 2023, the Manager engaged with 164 listed

companies in our portfolio to encourage stronger policies

and disclosure on a range of responsible investment

issues. Corporate governance was a key theme for ESG

engagement accounting for 25% of issues raised with

companies. Effective corporate governance is instrumental

to supporting the delivery of strategic objectives that drive

long-term shareholder value. It is also critical to fostering

accountability and maintaining legal, ethical and reputational

standing among a company’s key stakeholders. Within

this theme remuneration, board effectiveness and board

diversity were priorities.

Climate change continued to be a high priority, accounting

for 24% of issues raised during engagement. The Manager

continued its work with the Climate Action 100+ initiative,

joining collaborative engagements to discuss companies'

progress towards net zero. Following the success of this

and other investor engagement, and active encouragement

by certain governments, it has been found that many

companies have targets in place but that implementation

is often lacking. In 2024 the Manager will continue to seek

concrete plans that include interim milestones and clear

alignment of capital expenditure.

Environmental stewardship was a key focus for the Manager

in 2023, 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 that 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.

ENGAGEMENT

23Annual Report and Accounts 2023

Strategic Report

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.

At the end of December 2023, 53% of investee company

revenues had a positive link to the SDGs. As in previous

years the goal most represented was SDG 8 – Decent Work

and Economic Growth. This reflects holdings in technology

companies such as Microsoft, Alphabet, Apple 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

– increased from 11% in 2022 to 12% in 2023. A diverse range

of holdings align with this goal, including gas and chemicals

companies providing essential solutions to the energy

transition, such as China based electric vehicle manufacturer

BYD Co, and telecommunications companies that support

stronger communications infrastructure through the

provision of wireless services, such as Cisco systems and

Axiata.

This year, our analysis identified a small increase in negative

mapping, from 9% to 12%. 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. Those companies

contributing negatively to SDG 13 include power generators,

mining companies and those involved in transportation

including delivery services.

More information on SDGs can be found at: https://docs.

columbiathreadneedle.com/documents/ESG Viewpoint -

Sustainable Development Goals (SDGs) - A framework for

investors.pdf?inline=true

SDG alignment as at 31 December 2023

positive revenue

alignment with

the SDGs

FCIT

Source: Columbia Threadneedle Investments, as

at 31st December 2023, designed for illustrative

purposes, subject to change.

Other = SDGs less than 2% aligned.

Revenue alignment breakdown:

Positive 53%

Negative 12%

Neutral 22%

Cash & Sovereigns 13%

Unmapped 0%

Other (positive link)

Neutral

Cash

Unmapped

Other (negative link)

Source: Columbia Threadneedle Investments, as at 31st December 2023.

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 53%

NEGATIVE 12%

NEUTRAL 22%

CASH & SOVEREIGNS 13%

UNMAPPED 0%

OTHER (POSITIVE LINK)

NEUTRAL

CASH

OTHER (NEGATIVE LINK)

OUR APPROACH TO RESPONSIBLE INVESTMENT (CONTINUED)

25Annual Report and Accounts 2023

ADOBE INC

(0.41% OF THE COMPANY'S PORTFOLIO)

THEME: HUMAN RIGHTS

SUB-THEME(S): HUMAN RIGHTS OTHER

SDG TARGET(S): 10 REDUCED INEQUALITIES

Background

In this case, we sought reassurance on Adobe’s use of AI.

It is an example which demonstrates that engagement

with investee companies is not only to encourage better

ESG practices. Sometimes it is equally important to

gain insight in order to understand how good practices

operate, especially in a field moving as fast as AI.

Adobe is one of the largest software companies in the

world, offering a suite of products and services used

by creative professionals, businesses, and customers

to create, manage, measure and optimise content and

experiences. Artificial Intelligence ('AI') is embedded in

many of its offerings and has the power to drive greater

innovation and monetisation opportunities. With this in

mind, their approach to Responsible AI was high on our

engagement agenda.

Action

We held a dialogue with Adobe's Investor Relations and

General Counsel to learn more about the company's

approach to Responsible AI. We asked about the

company’s governance approach as well as requesting

further details on its impact assessment. We also

discussed areas of biggest potential risks and the

company's approach to mitigating them. Several years

ago, Adobe formed an AI ethics governance committee

which is responsible for conducting an AI ethics

review every time an AI feature is proposed. It involves

identifying potential harm and bias and conducting

multiple tests to minimise and eliminate these risks

where possible. In order to measure the success of its

efforts to mitigate AI bias or harm, the company tracks

the percentage of outputs that are categorised as

harmful. Adobe provided context about its Firefly tool

(its generative machine learning model used in the field

of design) which is trained solely on its licensed assets in

order to reduce copyright related risks. It also mentioned

that a wide variety of teams are involved in the oversight

of testing to ensure diversity of perspectives are taken

into account. Beyond social issues, the environmental

risks in relation to AI are believed by Adobe to be more

nascent. Nonetheless, the topic is addressed at board

level when considering the potential impact on its net

zero commitment.

Verdict

Overall, it is clear the company has been ahead of the

curve on Responsible AI which presents a revenue

opportunity, competitive advantage and the opportunity

for proactive risk mitigation. We were encouraged

by the constructive dialogue, using the opportunity

to understand better Adobe’s leading approach. We

will take some of these findings and outcomes into

our internal Responsible AI assessment framework

as Responsible AI remains a key topic for 2024.

Engagements such as these are key for us to continue to

evolve our understanding of how companies are thinking

about Responsible AI and to learn and share good

practices as we encourage industry-wide improvement.

ENGAGEMENT CASE STUDIES provided by our Manager

ROCHE HOLDING AG

(0.54% OF THE COMPANY'S PORTFOLIO)

THEME: PUBLIC HEALTH, CLIMATE CHANGE, ENVIRONMENTAL STEWARDSHIP

SUB-THEME(S): ACCESS TO HEALTHCARE, HEALTH SECURITY, EMISSIONS MANAGEMENT, ENERGY

TRANSITION, NET ZERO STRATEGY, ENVIRONMENTAL SUPPLY CHAIN MANAGEMENT, NATURAL RESOURCES –

WATER, PRODUCT SUSTAINABILITY, SUSTAINABLE WASTE MANAGEMENT

SDG TARGET(S): 3 GOOD HEALTH AND WELL-BEING, 6 CLEAN WATER AND SANITATION, 7 AFFORDABLE

CLEAN ENERGY, 9 INDUSTRY, INNOVATION AND INFRASTRUCTURE, 12 RESPONSIBLE CONSUMPTION AND

PRODUCTION

Background

Roche is a Swiss multinational company and one of

the world’s largest pharmaceutical companies with a

broad portfolio covering diabetes care, haemophilia A,

immunology, infectious diseases, neuroscience, oncology

and ophthalmology. Over the past few years, we have

engaged with Roche on a number of ESG topics with

a strong focus on climate change. The company is

also ranked by the Access to Medicine Index and has

taken important steps to expand its access to medicine

strategies.

Action

In the second quarter of 2023, we attended Roche’s

online investor event on environmental sustainability,

attended by its Chief Financial and Information Officer

and its Global Expert in Environmental Sustainability.

Roche’s 2023 aspirations included the prioritisation of

resource allocation towards long-term sustainability

goals and the appointment of a Chief Sustainability

Officer. Roche will also refine and further develop its

internal and external reporting strategy - we have been

engaging Roche for many years on its disclosure, in

particular a demand for participating in the carbon

disclosure project survey, which the company is still not

considering at present. We are, however, pleased with

Roche’s reiteration of its commitment to submit emission

reduction targets to the Science-Based Targets Initiative

('SBTi').

We also discussed with Roche its approach to diversity

in clinical trials. Its Head of Health Equity considers

diversity in clinical trials first and foremost a data quality

issue given that assessing the safety and efficacy of

drugs and treatments based on different demographics

can lead to a more comprehensive understanding and

quality assessment of the developed products. Roche

aims to consider diversity planning early on in the

drug development process and focuses its efforts on

improving health literacy and collaborating with patient

advocacy groups.

Verdict

The investor event was very insightful, particularly

because of the many case studies provided across

its different business divisions. Roche’s 2022 Annual

Report was designed in a similar manner with many

case studies provided, but the overall strategy on

environmental stewardship and climate change remains

unclear in our view. We will continue to engage Roche

on improving transparency. On diversity in clinical trials,

we acknowledge the large amount of work that Roche

is undertaking to align with increased expectations and

regulatory changes in this area and we will continue our

engagements with Roche on this topic.

OUR APPROACH TO RESPONSIBLE INVESTMENT (CONTINUED)

ENGAGEMENT CASE STUDIES (CONTINUED)

provided by our Manager

27Annual Report and Accounts 2023

Strategic Report

LOWE'S COMPANIES INC.

(0.98% OF THE COMPANY'S PORTFOLIO)

THEME: CLIMATE CHANGE, HUMAN RIGHTS

SUB-THEME(S): EMISSIONS MANAGEMENT, HUMAN RIGHTS DUE DILIGENCE

SDG TARGET(S): 13 CLIMATE ACTION, 8 DECENT WORK AND ECONOMIC GROWTH

Background

Lowe's is the second-largest home improvement retailer

in the world. The firm's stores offer products and

services for home decorating, maintenance, repair and

remodelling, with maintenance and repair accounting

for two thirds of products sold. In 2023 we approached

Lowe’s for dialogue on environmental and social risk

management.

Action

During 2023, we had several calls with Lowe's Corporate

Sustainability and Investor Relations teams to discuss

their approach to environmental and social supply chain

risk mitigation. Amongst others, we view human rights

and climate action as key themes for engagement.

Whilst the company has a human rights policy and a

vendor code of conduct, against which suppliers are

audited, it is difficult to determine the effectiveness

of their risk mitigation efforts. There is increasing

awareness of the negative social impacts of physical

climate risk on workers and we believe it is important

that companies consider climate adaptation and the

concept of a just transition in their interactions with

suppliers. We made several recommendations to

encourage the company to assess better its supply

chain risks, including steps to map its supply chain

beyond tier 1

(1)

and to ensure grievance mechanisms

are communicated to and are being used by supply

chain workers. At the company’s request, we provided

feedback on Lowe’s ESG programmes, following the

publication of its sustainability report. Here, we focused

on Lowe's commitment to achieve net zero emissions

by 2050. We are pleased with the focus on Scope 3

emissions

(2)

and 'the use of products sold' in particular,

as this is likely to have the most positive impact on

their mitigation strategy. We are also pleased that the

company's emissions reduction targets are set to be

approved by the SBTi. We continued to highlight human

rights due diligence as an area where disclosure could

be improved significantly. Lowe's acknowledged this and

was receptive to our suggested narrative covering how

risk assessment is conducted and operational change

is implemented. Additionally, we provided insights into

the distinction between actions in its direct operations

versus the supply chain. Finally, we discussed the need

for a more proactive approach to analysing the wage

sensitivity of employees but also how ensuring suppliers

pay living wages can help mitigate other human rights

risks.

Verdict

The company has a roadmap to improve environmental

and social risk mitigation. There is a clear focus on

meeting environmental goals aligned to its net zero

commitment. That said, we encouraged the company

to consider ways to integrate social aspects, particularly

in the face of increasing human rights due diligence-

focused legislation. We will continue our engagement

with Lowe's in 2024 with a particular focus on the

implementation of more robust supplier oversight,

more transparency over the effectiveness of their

human capital management strategy in terms of worker

retention and the implementation of chemical safety

programmes.

(1) tier 1 refers to suppliers with whom the company contracts

directly.

(2) Scope 3 emissions refers to indirect emissions that result

from activities related to a company but which are not

owned or controlled by the company, including emissions

from supply chains and product use.

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.

2.97% TOTAL INVESTMENTS

£164.2M VALUE

2. ALPHABET (5)

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.

2.03% TOTAL INVESTMENTS

£112.4M VALUE

3. BROADCOM (7)

US designer and supplier of semiconductor and

infrastructure software solutions.

1.66% TOTAL INVESTMENTS

£92.0M VALUE

4. APPLE (3)

US listed technology company predominantly

involved in design, development and sale of consumer

electronics and software worldwide.

1.53% TOTAL INVESTMENTS

£84.5M VALUE

5. AMAZON.COM (6)

US listed e-commerce and cloud computing company.

Largest listed internet retailer in the world based on

market capitalisation.

1.44% TOTAL INVESTMENTS

£79.8M VALUE

6. NVIDIA (33)

US listed designer and manufacturer of graphic

processing units.

1.34% TOTAL INVESTMENTS

£73.9M VALUE

7. MASTERCARD (16)

US listed financial services company providing financial

transaction procession services worldwide as well as

offering credit and debit cards and internet payment

systems.

1.00% TOTAL INVESTMENTS

£55.1M VALUE

8. LOWE'S COMPANIES (149)

US listed retailer specialising in tools, furnishings and

building supplies. The world’s second largest home

improvement company.

0.98% TOTAL INVESTMENTS

£54.0M VALUE

9. META PLATFORMS (128)

US listed operator of social media sites and social

networking services.

0.96% TOTAL INVESTMENTS

£53.0M VALUE

10. ELI LILLY (25)

US listed pharmaceutical company that develops

diabetes, oncology, immunology and neuroscience

medicines.

0.85% TOTAL INVESTMENTS

£46.9M VALUE

29Annual Report and Accounts 2023

Strategic Report

The value of the twenty largest listed equity holdings represents 21.41% (2022: 20.96%) 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 2023 (2022: nil). There were fixed interest gilts of £80m included in the investments as at

31 December 2023 (2022: £60m).

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

(£258.3m), Pantheon Access SICAV (£105.3m), Inflexion Strategic Partners (£60.0m), IShares Core MSCI EM IMI UCITS (£48.7m) and Vanguard FTSE 100 UCITS ETF

(£37.7m) would have been included in the list.

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

11. TAIWAN SEMICONDUCTOR

MANUFACTURING (TSMC) (17)

Taiwanese listed manufacturer and designer of

semiconductors.

0.83% TOTAL INVESTMENTS

£45.7M VALUE

12. COMCAST (20)

US listed provider of media and television broadcasting

services. The company also offers video streaming,

television programming, internet and communication

services to customers worldwide.

0.82% TOTAL INVESTMENTS

£45.2M VALUE

13. WELLS FARGO (19)

US listed diversified financial services company that

provides banking, investment, mortgage, and finance

products and services internationally.

0.72% TOTAL INVESTMENTS

£39.7M VALUE

14. VERTIV (45)

US listed company that provides power systems,

monitoring equipment, and cooling solutions for data

centres, including those hosting Generative Artificial

Intelligence (AI) applications.

0.68% TOTAL INVESTMENTS

£37.9M VALUE

15. MORGAN STANLEY (94)

US listed bank providing diversified financial services

spanning investment banking, wealth management and

investment management.

0.65% TOTAL INVESTMENTS

£36.1M VALUE

16. VISA (51)

US listed financial services company operating a

worldwide retail electronic payments network as well

as offering credit and debit cards and internet payment

systems.

0.62% TOTAL INVESTMENTS

£34.0M VALUE

17. NOVO NORDISK (47)

Denmark listed pharmaceutical company operating

worldwide. Develops, produces and markets healthcare

products and educational and training materials with a

focus on diabetes related medicines and devices.

0.61% TOTAL INVESTMENTS

£33.9M VALUE

18. KLA (189)

US listed leader in the design and supply of process

control and yield management solutions for the

semiconductor industry.

0.58% TOTAL INVESTMENTS

£31.9M VALUE

19. HDFC BANK (69)

India listed bank offering a wide range of financial

services. India’s largest private sector bank by size of

balance sheet.

0.57% TOTAL INVESTMENTS

£31.6M VALUE

20. ABBVIE (111)

US listed pharmaceutical company producing

medicines for specialty therapeutic areas including

immunology, kidney disease, women’s health, oncology

and neuroscience.

0.57% TOTAL INVESTMENTS

£31.3M VALUE

TEN YEAR RECORD (UNAUDITED)

Assets at 31 December

£m 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Total assets less current

liabilities (excl loans) 2,657 2,838 3,001 3,461 3,960 3,817 4,545 4,919 5,831 5,232 5,615

Loans and debentures 227 261 299 248 292 325 436 407 550 582 581

Net assets 2,430 2,577 2,702 3,213 3,668 3,492 4,109 4,512 5,281 4,650 5,034

Number of ordinary

shares (million)

(1)

570 562 559 547 542 542 543 537 527 518 510

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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

NAV per share – with

debt at par 426.1 458.4 483.4 587.9 676.5 643.9 757.3 840.7 1002.5 896.9 987.6

NAV per share – with

debt at market value 424.8 458.4 483.4 587.2 675.8 642.9 753.9 831.8 998.7 932.1 1,022.1

NAV total return % – 5

years

(2)

71.4

NAV total return % – 10

years

(2)

184.4

Share price at 31 December

pence 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Middle market price per

share 378.0 421.2 449.2 544.0 647.0 633.0 765.0 787.0 926.0 904.0 962.0

(Discount)/premium to

NAV with debt at

market value % (11.0) (8.1) (7.0) (7.4) (4.3) (1.5) 1.5 (5.4) (7.3) (3.0) (5.9)

Share price High 383.0 425.9 465.0 544.0 649.0 741.0 778.0 807.0 941.0 946.0 992.0

Share price Low 320.5 363.0 401.6 391.2 542.0 612.0 636.0 478.0 750.0 770.0 830.0

Share price total return

% – 5 years

(2)

64.5

Share price total return

% – 10 years

(2)

203.0

31Annual Report and Accounts 2023

Strategic Report

Revenue for the year ended 31 December

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Available for ordinary

share holders – £’000s

(3)

44,037 37,857 47,262 58,393 63,486 69,438 70,937 52,480 58,500 72,595 81,660

Net revenue return per

share – pence 7.69 6.69 8.42 10.57 11.67 12.81 13.06 9.71 10.99 13.92 15.83

Dividends per share –

pence 9.00 9.30 9.60 9.85 10.40 11.00 11.60 12.10 12.80 13.50 14.70

Cost of running the Company

% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Expressed as a

percentage of average

net assets:

Total Expense Ratio

(4)

0.50 0.53 0.53 0.53 0.52 0.56 0.53 0.51 0.47 0.48 0.45

Ongoing Charges

(4)

0.86 0.87 0.80 0.79 0.79 0.65 0.63 0.59 0.54 0.54 0.49

Total Costs

(4) (5 )

– – – – 1.06 1.01 1.05 1.19 1.16 1.12 0.97

Gearing

(4)

at 31 December

% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Net gearing

8.0 8.9 8.6 6.9 7.2 6.6 9.9 8.0 9.4 7.3 9.9

(1) Shares in issue, excluding those held in treasury.

(2) Source: Morningstar UK Limited.

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

(4) See Alternative Performance Measures on page 114 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 rises in dividends in excess of inflation 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 a proportion of the

North American listed equity portfolios and 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 54 and 55.

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 remain 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 has

helped us to weather the impact of many a world crisis,

including the Covid-19 pandemic.

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

2022 UNPRI assessment and compared to our peers for key

areas of their responsible investment approach and active

ownership in listed equities. 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

to evolve our approach, our responsible investment

principles will remain at the core of our strategy.

BUSINESS REVIEW

33Annual Report and Accounts 2023

Strategic Report

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. However, we provide

information on the emissions of our portfolio companies in

Our Approach to responsible investment which begins on

page 17.

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 of

strong governance and mitigation of risk, as outlined under

the Principal Risks identified on page 42. 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 57. The management fee is based

on the Company’s market capitalisation, thus aligning the

Manager’s interests with those of our shareholders 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 40 and 41. On pages 42 to 44 are

set out what the Directors consider to be the principal

and emerging risks that the Company 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 37 to 39, whilst

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

found on pages 9 to 16. 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 44 to 46

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

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 41. In 2022 we launched new branding

for the Company and we have 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 through 2024.

SECTION 172 STATEMENT

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

requires that a Director must act in the way that 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.

BUSINESS REVIEW (CONTINUED)

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 2023

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 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.

35Annual Report and Accounts 2023

Strategic Report

KEY STAKEHOLDER AND SHAREHOLDER ENGAGEMENT

Stakeholders Engagement and Outcomes in 2023

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 17 to 27. We also show the key performance indicators that are in place to

measure our progress in meeting this net zero 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 9 to 16.

With Columbia Threadneedle we are well placed to encourage awareness and

dialogue on responsible investment issues amongst the wider community. As

in 2018, 2020 and 2022, the Company is sponsoring a lecture at The Nobu

Hotel, London on 6 June 2024, with the theme "Social Change and Future

Generations". It will include information on the Company's investment approach.

Video clips will be available on the Company’s website at fandc.com following

the event.

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.

The Company has total borrowings of £581m, the majority of which are through

sterling denominated private placements which have maturities between 2026

and 2061. The pricing levels are highly attractive by historic comparisons and

the blended fixed interest rate is approximately 2.4%. At present, the Company

does not have any short term bank facilities.

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. The results of our initiative to retain these young investors are in

line with expectations.

In 2023, we resumed our financial education programme, following our

rebranding in 2022. The Programme 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.

Shareholders

Although not in the traditional sense,

our shareholders are our 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 available to engage with

shareholders. Access to the daily publication of the Company's 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 2023, we held our second “hybrid” Annual General Meeting. This allowed

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

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 Company’s website. The 2024 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 42 to 44 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 and Sustainability Information Statement (‘NFSIS’)

into this Strategic Report with a view to cohesive reporting. The NFSIS requirements are explained on page 119, together with a guide to

the location of the embedded information.

BUSINESS REVIEW (CONTINUED)

37Annual Report and Accounts 2023

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 changes are necessary at present

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. 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 9 to 16 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.

Our Fund Manager has discretion to be invested within

the range of 90-120% of net assets. Borrowing levels and

covenant headroom are monitored at each Board meeting.

In his report, 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, political

and financial instability continues and the ongoing conflicts

in Ukraine and the Middle East are of great concern, but in

the year under review our net return per share increased by

13.7% on 2022 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 review noted on page 42.

They include worldwide economic, political and financial

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 2023 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. 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 producers of tobacco

products, controversial weapons (such as cluster bombs

and landmines) and thermal coal. We exclude companies

with exposure to these activities which exceed 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 recommendation of the FTSE Women

Leaders Review of a target of 40% women on FTSE 350

boards by the end of 2025. This was an increase from the

target of 33% set under the Hampton-Alexander Review

(1)

As at 31 December 2023, the Company meets the targets of

the FCA's Listing Rules for gender and ethnic diversity on

the board. 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 2023

(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 exceeds the FCA Listing Rules target of 40%.

(3) This exceeds the FCA 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 119.

39Annual Report and Accounts 2023

Strategic Report

Board Ethnic Background as at 31 December 2023

(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)

7 88% 3

(2)

Mixed/Multiple

Ethnic Groups

(3)

12% –

(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) This meets the FCA Listing Rules target of the Board having 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 32. 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

2023 approximately 28% 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 2023 the Manager held 167 engagements with

154 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/

Premium, 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. 2023 marks the fifty-third consecutive increased

annual dividend and the one hundred and fifty-sixth 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 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

2023 it was 0.49% and remains highly competitive within

the investment trust sector. Our Total Costs

(1)

ratio, which

includes interest and transaction costs, was 0.97%. 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

31 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 2023.

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 17 to 27.

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

BUSINESS REVIEW (CONTINUED)

41Annual Report and Accounts 2023

Strategic Report

(1) See Alternative Performance Measures on page 114 for explanation.

(2) See Glossary of terms on page 117 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:

2019

2020

2021

2022

2023

Our policy is to control the costs of running the

Company

Ongoing charges

(1)

0.63 0.59 0.54 0.54 0.49

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)

1.05 1.19 1.16 1.12 0.97

Source: Columbia Threadneedle Investments

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

2019

2020

2021

2022

2023

We aspire to seeing the shares trading at or

close to NAV per share

(Discount)/premium at 31 December

(1)

1.5 (5.4) (7.3) (3.0) (5.9)

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 (2.2) (6.1) (7. 2) (7.5) (6.6)

Source: Columbia Threadneedle Investments

Dividend: Dividend Growth per annum to 31 December 2023 (Annualised)

Year

Years

We aim to deliver a rising dividend stream in

real terms over the longer-term

Dividend

(1)

8.9 6.7 6.0 5.0 This shows the Company’s compound annual

dividend growth rate and compares it to the

Consumer Price Index.

Consumer Price Index 4.0 6.6 4.3 2.9

Source: Columbia Threadneedle Investments and Refinitiv Eikon

Performance: Total returns to 31 December 2023 (Cumulative)

Year

Years

We aim to secure long-term growth in capital

and income

Share price

(1)

8.1 27. 9 64.5 203.0

This compares the Company's share price and

NAV total return against those produced by the

benchmark and our peer group, and against

inflation.

NAV (with debt at market value)

(1)

11.3 28.2 71.4 184.4

Benchmark

(2)

15.1 26.9 73.5 178.6

AIC Global Sector Median share price

(investment companies)

(3)

12.5 (0.9) 59.5 186.0

AIC Global Sector Median NAV

(investment companies)

(3)

11.6 13.3 65.5 163.2

IA Global Sector Median

(open-ended funds)

(3)

12.0 16.6 62.5 140.2

Consumer Price Index 4.0 21.1 23.4 32.8

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

Marketing: Platforms

As at 31 December:

2019

2020

2021

2022

2023

We promote access to FCIT’s shares through all

available distribution channels with the aspiration

of being on as many platforms as possible.

Platforms 64.97 64.86 65.52 67.06 67. 53

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

35.03 35.14 34.48 32.94 32.47

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 reflect what it

believes to be the Principal and Emerging Risks that the

Company faces at present.

The extent and impact of the response from governments to

meet the costs of Covid-19 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. Russia’s

invasion of Ukraine and increased conflict in the Middle

East have added to the continuing economic and market

uncertainty and political instability, with elections in both the

UK and the US also on the horizon.

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, our former Manager, was acquired by

Ameriprise and its integration with the business of Columbia

Threadneedle Investments is largely completed.

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 such as those described above. The emergence of

new technology in the form of Artificial Intelligence, and how

that technology is used, also presents both opportunities

and threats. The Board considers 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 41.

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 9 and reported

in the Key Performance Indicators on page 41, long-term

performance remains in line with expectations. Prudent

management of the Company’s Revenue Reserve means

that its dividend paying capacity remains strong.

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.

BUSINESS REVIEW (CONTINUED)

43Annual Report and Accounts 2023

Strategic Report

Internal performance KPIs and Manager errors are monitored

by the Board for indications of continuity or other Manager

issues.

The Manager’s systems and staffing capabilities continued

to operate satisfactorily throughout 2023. 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 introduced a degree of uncertainty. A

critical milestone was the move to a new order management

system, Aladdin, widely regarded as the market leading

system. This change was completed successfully in 2023.

This risk is therefore categorised as reduced.

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 it is 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

(EMEA) 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 10 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.

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 considers that this risk

is unchanged.

RISK MONITORING

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 and

emerging 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. The results of that review

and reassessment are set out in the statement on Principal

and Emerging Risks on page 42. 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 the 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 results of illustrative stress tests, which were

based on assumptions that they considered to be the most

relevant, covering the period to 31 March 2025 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 61% fall in the

values of the public and private equity portfolios alongside

a 60% 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.

At present, the Company 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

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 2023. See also

note 24 to the Accounts.

LONG-TERM VIABILITY

The UK Corporate Governance Code and the AIC Code

of Corporate Governance require the Board to assess the

prospects of the Company over a longer period than the 12

months required by the Going Concern provision.

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 2033. The tests commenced with

a base case scenario that covered a range of assumptions

that they considered to be the most relevant, to which

BUSINESS REVIEW (CONTINUED)

(1) See Glossary of Terms on page 117 for an explanation of adjusted portfolio value.

45Annual Report and Accounts 2023

Strategic Report

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 was based

on what they believed to be severe but realistic assumptions.

It addressed the potential impact of falls of 40% in the

value of the listed investments and 35% for the private

equity investments in 2024; followed by a 20% index fall

in 2025 impacting equities, together with fluctuations

in income receipts. 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 £1.5 billion and would be at £2.1 billion by

31 December 2033. 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

£9.8 billion at 31 December 2033. Whilst a scenario that used

the movements in income, inflation and valuations in the ten

years following the 1970’s oil crisis showed that net assets

would rise to £15.0 billion by 31 December 2033.

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

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.

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)

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 should be judged and the periods over which it

would typically commit to and benefit from its private equity

investments.

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 2033.

On behalf of the Board

Beatrice Hollond

Chairman

7 March 2024

47Annual Report and Accounts 2023

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 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 public company appointments: Beatrice

is a member of the board of Brown Advisory

in the United States and chairs its international

advisory board. She is also a non-executive

director at Telecom Plus PLC, where she is

Senior Independent Director.

ANURADHA CHUGH

(1)

Appointed to the Board on 1 July 2023.

Experience and contribution: Anu brings to the

Board extensive marketing experience. She was

the Chief Executive of Pukka Herbs, where she

was responsible for governance and strategy

until June 2023. She is a marketing professional

with more than 25 years’ experience in the

consumer-packaged goods industry, having

formerly been Managing Director of Ben and

Jerrys Europe, Global Marketing Director of

Unilever and Marketing Director of Pepsi Lipton

International. Prior to that she held a number of

senior marketing roles at Unilever.

Other public company appointments: None.

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 Chief Operating Officer

and Global Head of Business Management

within the Technology function at HSBC and

prior to that he was a global Chief Operating

Officer at Barclays Bank. Until 2012 he was

at McKinsey & Company, providing board

and advisory services to clients worldwide,

focusing on growth strategy, technology,

risk and transformation, including across

asset management, banking and technology

organisations. He is a former Senior Advisor to

Revolut Limited, the global Financial Technology

company.

Other public company appointments: Edward

is a non-executive director and Chairman of the

Board Audit and Risk Committee of Ten Group

PLC, the technology service platform.

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. Until

March 2023, he was 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, where

he held a variety of different roles and ultimately

become 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 public company appointments: None.

Tom will step down from the Board with effect

from 31 March 2024.

QUINTIN PRICE

(1)(2)

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 public company appointments: None.

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 is Chief

Executive of the Confederation of British

Industry, having previously been its Chief

Economist, providing business leaders with

advice on the UK economic outlook and global

risks. Rain was formerly Head of Emerging

Markets at Oxford Economics, where she was

the lead expert on China. Prior to that, Rain

worked as a research advisor to the Bank of

England’s Monetary Policy Committee, which

included a secondment to the International

Monetary Fund.

Other public company 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 public company appointments: None.

JULIE TANKARD

(1)(2)

Chairman of the Audit Committee

Appointed to the Board and as Chairman of the

Audit Committee on 1 August 2022.

Experience and contribution: Julie has a

strong financial background. She is a fellow

of the Chartered Institute of Management

Accountants and until July 2023 was the

Chief Financial Officer and a Board member

of the Port of London Authority where, as

well as finance, she was 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 public company 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)

49Annual Report and Accounts 2023

Governance Report

DIRECTORS’ REPORT

The Directors submit the Annual Report and Accounts of

the Company for the year ended 31 December 2023. The

Corporate Governance statement, Directors’ biographies,

the Reports of the Management Engagement and Audit

Committees and the Directors' 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 2023, 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 pages 62 and 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 pages 7 and 8.

The Board’s assessment of the Company’s Principal and

Emerging Risks can be found on pages 42 to 44 with further

information in note 25 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 10.20 pence per

share, together with the final dividend of 4.50 pence per

share which, subject to approval at the forthcoming AGM

(Resolution 3), will be paid on 9 May 2024 to shareholders

registered on 12 April 2024, will bring the total dividend

for the year to 14.70 pence per share. This represents an

increase of 8.9% over the comparable 13.50 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 39 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.

CRIMINAL FINANCES ACT 2017

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, and has

zero tolerance for tax evasion. The Company's shares are

purchased through third party intermediaries, therefore no

funds flow directly into the Company. As the Company has

no employees, the Board’s focus is to ensure that the risk of

the Company’s service providers facilitating tax evasion is

also very low. Therefore it seeks assurance from its service

providers that effective policies and procedures are in place.

ACCOUNTING

The Financial Statements, starting on page 78, comply

with current UK Financial Reporting Standard (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 AUDITOR

EY have indicated their willingness to continue in office

as auditor to the Company and resolutions proposing its

reappointment and authorising the Audit Committee to

determine its remuneration for the ensuing year will be put

to shareholders at the AGM (Resolutions 11 and 12). Further

information in relation to their reappointment can be found

on page 63.

CAPITAL STRUCTURE

As at 31 December 2023 there were 561,819,016 ordinary

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

which 52,025,962 were held in treasury. The total number of

voting rights in the Company as at 4 March 2024 is set out

in Note 17 to the Notice of Annual General Meeting.

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. More details of the capital

structure can be found in note 16 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 27 April 2023,

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 10% of the number then in issue.

A total of 8,618,802 ordinary shares were bought back

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

shares bought back represented 1.7% of the shares in issue

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

31 December 2022. The purchases were made at prices

ranging between 830.0 pence and 965.4 pence and the

aggregate consideration paid for the shares, including

stamp duty and commissions, was £76.3m. A total of

2,690,221 ordinary shares have been bought back into

treasury between 31 December 2023 and 4 March 2024.

NOTIFIABLE INTERESTS IN THE COMPANY'S VOTING

RIGHTS

As at 31 December 2023 and since that date no notifications

of significant voting rights have been received under the

DTRs.

PROPORTIONAL VOTING

Approximately 43% 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 vote (‘proportional voting’). Implementation

of this arrangement is subject to a minimum threshold of

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

limit of 545,000 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 in notes 14 and 15 to the Accounts.

REMUNERATION REPORT

At the Annual General Meeting held on 27 April 2023,

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 AGM to be held in 2026. The Directors’ Remuneration

Report, which includes the remuneration policy and can

DIRECTORS’ REPORT (CONTINUED)

51Annual Report and Accounts 2023

Governance Report

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 (excluding the Directors'

remuneration policy) at the AGM (Resolution 2).

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 Board or by the Company by ordinary resolution.

All Directors so appointed are subject to re-election by

shareholders at the next annual general meeting. On

appointment, Directors are provided with a handbook

that includes key company documents and details and

have a series of meetings with key individuals at Columbia

Threadneedle Investments as part of their induction process.

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.

DIRECTOR RE-ELECTIONS

The biographies of the Directors are set out on pages 47

and 48 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. Francesca Ecsery retired from the Board

on 27 April 2023. With the exception of Anuradha Chugh,

who was appointed on 1 July 2023, all of the other Directors

held office throughout the year under review. All Directors,

with the exception of Tom Joy who will stand down from

the Board on 31 March 2024, will stand for re-election by

shareholders at the forthcoming AGM in accordance with

the Company’s Articles of Association (Resolutions 4 to 10).

DIRECTORS’ INTERESTS AND INDEMNIFICATION

There were no contracts 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 2024. 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 57.

ANNUAL GENERAL MEETING (‘AGM’)

The Company's AGM will be held at The Merchant

Taylors’ Hall, 30 Threadneedle Street, London EC2R

8JB on Thursday 2 May 2024 at 12.00 noon. The Notice

of Meeting is set out on pages 105 to 109 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:

fcitagm@columbiathreadneedle.com. The Fund Manager’s

presentation will be available to view on the Company’s

website, fandc.com, following the meeting.

The AGM 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 13 AND 14)

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 13 gives the Directors the necessary authority

to allot securities up to an aggregate nominal amount of

£12,677,571 (50,710,284 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 4 March 2024, being the latest practicable

date before the publication of the notice of the AGM.

Resolution 14 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 £12,677,571

(representing approximately 10% of the issued ordinary

share capital of the Company at 4 March 2024, 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 38 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

DIRECTORS’ REPORT (CONTINUED)

53Annual Report and Accounts 2023

Governance Report

it is advantageous to 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 15)

At the annual general meeting held in 2023 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 2023 was 69,184,310 shares or 13.57% of the

issued share capital, exclusive of the number of shares held

in treasury. Resolution 15 will authorise the renewal of such

authority, enabling the Company to purchase in the market

up to a maximum of 76,014,715 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 the requirements of the Companies

Act 2006 (the ‘Act’) and the Financial Conduct Authority

Listing Rules (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 14, 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.

APPROVAL OF INCREASE IN MAXIMUM AGGREGATE

DIRECTORS' FEES

Resolution 16 seeks approval to increase the maximum

aggregate payable in Directors' fees in any one year

from £500,000 to £750,000. The proposal represents an

increase of 50%, which compares with the rate of inflation

(as measured by the Consumer Price Index) of 66% since

the limit was last increased in 2006. The Board believes that

it is important to maintain sufficient headroom to allow for

future increases in fees, which are set at a competitive level

in order to attract and retain individuals of a high calibre.

FORM OF PROXY

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 30 April 2024.

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

25 April 2024, 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

7 March 2024

CORPORATE GOVERNANCE REPORT

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.

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

the following websites: theaic.co.uk and frc.org.uk.

GOVERNANCE OVERVIEW

The Board has established an Audit Committee, Management

Engagement Committee and Nomination Committee. 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 Directors' 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 35 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 32.

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.

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

55Annual Report and Accounts 2023

Governance Report

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 2023.

COMPOSITION OF BOARD COMMITTEES

Committee membership is noted in each Director’s

biography on pages 47 and 48, while the respective terms of

reference can be found on the Company’s website at

fandc.com.

NOMINATION COMMITTEE

The primary role of the Nomination Committee is to

review and make recommendations regarding Board

structure, size and composition, the balance of knowledge,

experience, range of skills and diversity and to consider

succession planning and tenure policy. It oversees the

process for evaluating the Board, its committees and

individual Directors. The Committee also reviews the level of

Directors' fees and makes recommendations to the Board as

appropriate.

TENURE

The Board is 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. However, the

Chairman and Directors normally serve for a maximum nine-

year term. None of the Directors standing for re-election at

the forthcoming AGM has served in excess of nine years.

DIVERSITY

The Board's policy on diversity is set out on page 38.

SUCCESSION PLANNING

A Board succession plan is in place, 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.

Sapphire Partners was engaged for the recruitment process

that resulted in the appointment of Anuradha Chugh in

July 2023 to succeed Francesca Ecsery who retired at the

conclusion of the 2023 AGM. A wide range of candidates

with diverse backgrounds, skills and experience were

considered. Sapphire Partners does not provide any other

services to the Company and has no other connection with

the Company or individual Directors.

Tom Joy will step down from the Board on 31 March 2024

due to other commitments, as explained in the Chairman's

Statement. The process to appoint his successor has

commenced and we expect the appointment to be effective

shortly after the forthcoming AGM. Nurole Limited has been

engaged to manage the selection and recruitment process

for Tom’s successor. Nurole Limited does not supply any

other services to the Company and has no other connection

with the Company or individual Directors.

In due course the Board will focus on succession for Edward

Knapp, who is due to retire from the Board in 2025.

BOARD EVALUATION AND EFFECTIVENESS

The 2023 annual evaluation of the Board, its committees

and the individual Directors has been carried out by the

Chairman. The process included the completion by each

Director of a questionnaire, which was followed by a

confidential, unattributable one-to-one interview with the

Chairman. Progress in achieving the priorities agreed for

2023 was reviewed as part of the process, as was feedback

on maintaining the culture and values of the Board. The

appraisal of the Chairman was covered as part of the

process and, as noted above, was led separately by the

Senior Independent Director. The evaluation concluded

that the Board oversees the management of the Company

effectively and continues to have 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, 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

evaluation process. The conclusion from this process was

that the Committees continued to operate effectively, with

an appropriate balance of membership, experience and

skills.

BOARD AND COMMITTEE MEETINGS

The table below sets out the Directors’ meeting attendance

record in 2023. The Board also held a separate meeting in

September 2023 to consider strategic issues. In addition to

its scheduled annual meeting, the Nomination Committee

met on several other occasions as part of the process to

recruit a new Director.

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 Committee 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 35 and 36.

DIRECTORS' REMUNERATION AND THE MANAGEMENT

FEE

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

7 March 2024

Directors’ attendance in 2023

Board

Audit

Committee

Nomination

Committee

Management

Engagement

Committee

No. of meetings

6 3 1 1

Beatrice

Hollond

(1)

6 3 1 1

Anuradha

Chugh

(2)

3 n/a n/a n/a

Francesca

Ecsery

(3)

3 n/a 1 1

Tom Joy 6 n/a 1 1

Edward Knapp 6 3 n/a 1

Rain

Newton-Smith

6 n/a 1 1

Quintin Price

(4)

6 3 n/a 1

Stephen Russell 6 3 n/a 1

Julie Tankard

(4)

6 3 n/a 1

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

(2) Appointed to the Board on 1 July 2023. Appointed to the Audit

Committee on 1 February 2024.

(3) Retired from the Board on 27 April 2023.

(4) Appointed to the Nomination Committee on 1 January 2024.

CORPORATE GOVERNANCE REPORT (CONTINUED)

57Annual Report and Accounts 2023

Governance Report

REPORT OF THE MANAGEMENT

ENGAGEMENT COMMITTEE

ROLE OF THE COMMITTEE

The primary role of the Management Engagement

Committee is to monitor the performance of the Manager

for the investment, company secretarial, financial,

administration, marketing and support services that it

provides under the investment management agreement.

It also reviews the terms of that agreement, including the

level and structure of fees payable, the length of the notice

period and best practice provisions generally. All of the

Committee’s responsibilities have been carried out over the

course of 2023 and 2024 to date. With effect from January

2024, the Committee has assumed responsibility for the

review of the Company's third-party service providers.

MANAGER EVALUATION PROCESS

The Committee met once during the year and again in

January 2024 for the purpose of the formal evaluation of

all aspects of the Manager’s performance. Its performance

is considered at every Board 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 reports on the Columbia Threadneedle

managed portfolio strategies. Quarterly updates are also

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 9 to 16.

MANAGER REAPPOINTMENT

The annual evaluation that took place in January 2024

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 outperformed the benchmark over

ten years to 31 December 2023, 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

is next due to be reviewed in January 2025. With effect

from 1 January 2023 the fee was charged at a rate of 0.3%

per annum of the market capitalisation of the Company

up to £4.0 billion and then at 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.

In the year under review, the total management fee paid

was £13.6m, a decrease from the fee of £14.1m paid in 2022,

with the reduction in the fee rate more than offsetting

the higher 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 Barrow, Hanley, Mewhinney & Strauss

and JPMorgan Asset Management for which it incurs fees.

The Company reimburses the Manager for these fees, which

in 2023 amounted to £3.0m (2022: £4.2m) (see note 4 to

the Accounts).

PRIVATE EQUITY MANAGEMENT FEES

No additional fees (beyond the 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 £1.9m for 2023 (2022:

£2.6m) (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 9 years.

Beatrice Hollond

Chairman, Management Engagement Committee

7 March 2024

59Annual Report and Accounts 2023

Governance Report

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 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;

• The operational performance of the Manager and third-

party service providers (with effect from January 2024,

this responsibility has now passed to the Management

Engagement Committee); 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. Following the change of ownership

of BMO GAM in 2021, the integration with Columbia

Threadneedle is now almost complete. The pre-existing

BMO GAM systems and controls were largely unchanged

and continued to operate effectively until the successful

implementation of the “Aladdin” order management

system in October 2023, following which the Manager’s

control framework has been aligned to that of Columbia

Threadneedle for equities and fixed interest (with the

exception of some back office and middle office functions,

which continue to be outsourced to State Street). The

Committee has received confirmation from the Manager

that the systems of risk management and internal control

operated effectively throughout the year under review and

thereafter to the date of this report.

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-Corruption Policy and Guidelines 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

REPORT OF THE AUDIT COMMITTEE

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 2023

there were no such concerns raised with the Committee.

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. Julie Tankard is

Chairman of the Committee and a fellow of the Chartered

Institute of Management Accountants. Until early 2023,

she was Chief Financial Officer of the Port of London

Authority and was also responsible for risk. The other

members of the Committee have a combination of

financial, investment and business experience through the

senior posts held throughout their careers. Details of the

Committee members can be found on pages 47 and 48.

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 investment management

agreement requires that any significant issues of direct

relevance to the Company are reported to the Committee

and to the Board without delay. There were no such reports

during the year under review and up to the date of this

report.

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.

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 and Emerging Risks and the process for the

identification of other emerging risks, are set out on

pages 42 to 44, with additional information given in note

25 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 Board, through the Committee, carried out a

robust review and assessment of the principal risks

and identification of emerging risks to the Company.

The integration of the risks identified into the analyses

underpinning the Long-Term Viability statement on page

44 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

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. In addition, the Committee receives an

annual presentation from the Manager's Chief Information

Security Officer to gain assurance on its cyber security

policies, testing and controls.

The system of risk management and internal control is

designed to manage rather than eliminate the risk of

REPORT OF THE AUDIT COMMITTEE (CONTINUED)

61Annual Report and Accounts 2023

Governance Report

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 1 October 2023 and subsequent

confirmation from the Manager that there had been no

material changes to the control environment in the period

to 4 March 2024. The report on the Manager’s control

policies and procedures with respect to the management

of clients’ investments and maintenance of their financial

records is prepared in accordance with 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’) and is reviewed and reported

on by independent reporting accountants KPMG. The

effectiveness of the controls is monitored by the Manager’s

Audit and Risk Committee which, for the year to 1 October

2023, received regular reports from its internal 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, Barrow, Hanley,

Mewhinney & Strauss, JPMorgan Asset Management, 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 2024 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 2023. 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 down in

value. The Committee also included in its 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 114 to 116 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

Columbia Threadneedle and Pantheon 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 25(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 2022 (which

become known in May/June of the following year). The

overall percentage change between the Company’s year

end valuations and those shown in the audited accounts

of the underlying holdings was immaterial. 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 determining the direct Private Equity valuations was

reviewed and confirmed by the Committee as being

appropriate. The Committee has adopted a formal valuation

policy for the Company’s private equity investments which

is reviewed annually.

The Committee met in February 2024 to discuss the

final draft of the Annual Report and Accounts, with

representatives of EY and the Manager in attendance. EY

submitted its year end report and indicated that at that

stage it 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

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

Significant Judgements and Issues considered by the Committee

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 2022 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 down 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 2023

Governance Report

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

third 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 Audit Quality Inspection

Report for 2022/23 published by the Financial Reporting

Council (the ‘FRC’). The FRC reviewed 20 of EY’s audits,

of which 80% were graded as good or requiring limited

improvements. This reflected an improvement compared

with the previous year (65%). Of the FTSE 350 company

audits reviewed (9 of the total of 20), 89% needed no more

than limited improvements. The Committee discussed

the findings with EY's audit partner, who confirmed that

EY would continue to strive for greater consistency of

execution.

The FRC’s Ethical Standard continues 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 2023, excluding VAT, was £151,000

(2022: £143,000). The increase reflected the inflationary

environment in 2023. The Committee discussed with

EY how they are seeking to utilise new technology and

tools in the audit to enhance audit quality and efficiency.

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 auditor 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 service. There were no non-audit

services for the year ended 31 December 2023 (2022: nil).

REGULATION

The Board, through the Audit Committee, seeks to

maintain a forward-looking view of forthcoming regulatory,

legislative and governance requirements to ensure that it

is fully prepared to meet and, where appropriate, exceed

requirements, given its firm commitment that sound

governance adds value and mitigates risk.

The Committee has noted that, following the Government’s

consultation on audit and corporate governance reform,

proposals that would have introduced new annual

reporting requirements, including a requirement to disclose

distributable profits and make new statements on resilience

and material fraud, have been withdrawn. However, some

of the requirements have been reflected in the revised UK

Corporate Governance Code (the 'Revised Code') to take

effect from 1 January 2025. The Board will be responsible

for not only establishing but also for maintaining the

effectiveness of the risk management and internal control

framework and providing a declaration concerning the

effectiveness of material internal controls. The new Board

declaration will come into effect from 1 January 2026, i.e.

one year after the remainder of the Revised Code. The

Government has confirmed its commitment to the creation

of the Audit, Reporting and Governance Authority (‘ARGA’)

to replace the FRC, but the timing is unknown.

Julie Tankard

Chairman, Audit Committee

7 March 2024

REPORT OF THE AUDIT COMMITTEE (CONTINUED)

65Annual Report and Accounts 2023

Governance Report

DIRECTORS’ REMUNERATION POLICY

The Board’s policy is to set Directors’ remuneration at

a level to recruit and retain individuals 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

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 April 2023:

of the votes cast, 93.1% were in favour, with 6.9% against.

Of the total proxy votes received, 4.6% were withheld from

this resolution (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

it is expected that shareholders will be asked to approve

the Directors’ remuneration policy at the AGM to be held in

2026.

The Company’s Articles of Association currently 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 fee, 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 2024, the Board agreed

the recommendation of the Nomination Committee that,

commencing 1 January 2024, all fees should be increased

by 6% to the levels shown in the table below.

At the forthcoming AGM, shareholders will be requested to

approve an increase in the maximum aggregate Directors'

fees payable per annum to £750,000 (Resolution 16).

The limit was last increased in 2006. The Board is seeking

approval to increase this limit to ensure there is sufficient

headroom to continue to set fees at competitive levels in

order to attract and retain individuals of a high calibre to

the Board. The proposed increase of 50% compares with

the rate of inflation of 66% since the limit was last increased.

Annual fees for Board Responsibilities

2024

2023

Board

Chairman 86,600 81,705

Senior Independent Director 50,520 47,660

Director 43,300 40,850

Additional fees payable for committee membership:

Audit Committee

Chairman 15,545 14,665

Members 6,105 5,760

Nomination Committee

Chairman 3,605 3,400

Members 3,605 3,400

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 47 and 48.

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 2023 2022

Beatrice Hollond 8,020 6,752

Anuradha Chugh

(1)

– n/a

Tom Joy 3,500 3,500

Edward Knapp 8,753 8,575

Rain Newton-Smith 165 165

Quintin Price 12,461 12,461

Stephen Russell 3,360 –

Julie Tankard 332 333

(1) Appointed to the Board 1 July 2023

The Company’s register of Directors’ interests contains full details of

Directors’ shareholdings.

Since the year end, and up to 4 March 2024 (being the

latest practicable date before the publication of the Annual

Report and Accounts), the following Directors have acquired

ordinary shares in the Company: Anuradha Chugh 2,084;

Beatrice Hollond 221; Edward Knapp 35; 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 4 March 2024 the Fund Manager held 204,296

ordinary shares in the Company.

POLICY IMPLEMENTATION

The Directors’ Remuneration Report (excluding the

Directors' remuneration policy) is subject to an annual

advisory vote and therefore an ordinary resolution for its

approval will be put to shareholders at the forthcoming AGM

(Resolution 2). At the 2023 AGM, shareholders approved

the Remuneration Report in respect of the year ended

31 December 2022: of the total votes cast, 94.0% were

cast in favour of the resolution, with 6.0% against. Of the

total proxy votes received, 5.6% were withheld from this

resolution.

SINGLE TOTAL FIGURE OF REMUNERATION

The single total figure of remuneration for the Board as a

whole for the year ended 31 December 2023 was £410,500

(excluding taxable benefits). 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 2023

Governance Report

The following table sets out the annual percentage change in Directors’ fees for the years to 31 December 2021, 2022 and 2023

(where Directors have served for a full year in each of the two years and therefore fees can be compared on a like-for-like basis):

Single total figure table (audited)

Fees

£’000s

Taxable Benefits

(1)

£’000s

Total

£’000s

Director 2023 2022 2023 2022 2023 2022

Sarah Arkle

(2)

n/a 3.8 n/a 0.0 n/a 3.8

Anuradha Chugh

(3)

20.4 n/a 0.6 n/a 21.0 n/a

Francesca Ecsery

(4)

14.3 42.3 0.1 0.9 14.4 43.2

Jeffrey Hewitt

(5)

n/a 18.0 n/a 0.8 n/a 18.8

Beatrice Hollond

(6)

85.1 81.3 0.4 1.2 85.5 82.5

Tom Joy 44.3 42.3 0.4 1.3 44.7 43.6

Edward Knapp 46.6 44.5 0.4 1.2 47.0 45.7

Rain Newton-Smith

(7)

44.3 41.4 0.4 0.8 44.7 42.2

Quintin Price

(8)

53.4 51.0 0.4 1.1 53.8 52.1

Stephen Russell

(9)

46.6 40.5 0.3 0.9 46.9 41.4

Julie Tankard

(8)(10)

55.5 22.1 0.4 0.5 55.9 22.6

Total 410.5 387.2 3.4 8.7 413.9 395.9

(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) Retired from the Board on 31 January 2022.

(3) Appointed to the Board on 1 July 2023. Appointed to the Audit Committee on 1 February 2024.

(4) Retired from the Board immediately following the AGM on 27 April 2023.

(5) Retired from the Board immediately following the AGM on 3 May 2022.

(6) Highest paid Director.

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

(8) Appointed to the Nomination Committee on 1 January 2024.

(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 2022 to 2023 % change from 2021 to 2022 % change from 2020 to 2021

Sarah Arkle

(1)

n/a n/a 0.0

Sir Roger Bone

(2)

n/a n/a n/a

Anuradha Chugh

(3)

n/a n/a n/a

Francesca Ecsery

(4)

n/a 4.4 0.0

Jeffrey Hewitt

(5)

n/a n/a 0.0

Beatrice Hollond 4.7 4.2 0.0

Tom Joy

(6)

4.7 5.8 n/a

Edward Knapp 4.7 4.0 0.0

Rain Newton-Smith

(7)

7.0 n/a n/a

Quintin Price

(8)

4.7 9.2 n/a

Stephen Russell

(9)

n/a n/a n/a

Julie Tankard

(10)

n/a n/a n/a

(1) Retired from the Board on 31 January 2022.

(2) Retired immediately following the AGM on 10 May 2021.

(3) Appointed to the Board on 1 July 2023.

(4) Retired from the Board immediately following the AGM on 27 April 2023.

(5) Retired from the Board 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) Appointed to the Board on 10 March 2020, the Audit Committee on 7 May 2020 and 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

Shareholder total return vs benchmark total return

over ten years

Rebased to 100 at 31 December 2013

Source: Columbia Threadneedle Investments & Refinitiv Eikon

100

125

150

175

200

225

250

275

300

325

350

375

400

2015 20202013 2016 2017 2018 20192014

FTSE All World Index

(total return)

F&C Investment Trust Ord

2021 20232022

The following table shows the total remuneration, excluding

taxable benefits, for the Chairman over the five years ended

31 December 2023:

Remuneration for the Chairman over the five years

ended 31 December 2023

Year ended 31 December Fees £’000s

2023 85.1

2022 81.3

2021 78.0

2020 78.0

2019 77.0

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

2023

£’000s

2022

£’000s

Change

Aggregate Directors’

Remuneration

410.5 387.2 6.0

Aggregate Dividends paid

to Shareholders

71,837 68,983 4.1

Aggregate cost of ordinary

shares repurchased

76,345 70,749 7.9

COMPANY PERFORMANCE

An explanation of the performance of the Company for the

year ended 31 December 2023 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

2023:

• 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

7 March 2024

69Annual Report and Accounts 2023

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 24 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 maintenance and integrity of the website maintained

by the Manager is, so far as it relates to the Company,

the responsibility of the Manager. The Directors are

responsible for the maintenance and integrity of the

corporate and financial information that is published on

the 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 47 and 48 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

7 March 2024

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 2023 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 2023 and of its profit 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.

Our evaluation of the Directors’ assessment of the

Company’s ability to continue to adopt the going concern

basis of accounting included:

• Confirming our understanding of the Company’s going

concern assessment process and making enquiries of

the Directors and Columbia Threadneedle Investment

Business Limited (‘CTIB’ or ‘the Manager’) to determine

if the key factors that we have become aware of during

our audit were considered in their assessment.

• Inspecting board minutes to identify any risks, events

or contrary evidence that, individually or collectively,

may cast significant doubt on the Company’s ability to

continue as a going concern.

• Inspecting the Directors’ assessment of going concern

and reviewing the factors and assumptions as applied

to the revenue forecast for the period to 31 March 2025,

the stress and reverse stress tests and the liquidity

assessment of the investments held by the Company.

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.

• Reviewing the Director’s assessment of the principal

and emerging risks facing the Company, including

those that would threaten its business model, future

performance, solvency or liquidity and comparing them

to our understanding of the Company’s risks.

• Reviewing the Company’s going concern disclosures

included in the annual report in order to assess whether

the disclosures are appropriate and in conformity with

the reporting standards.

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 2025.

71Annual Report and Accounts 2023

Auditor’s Report

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

on the valuation of its investment portfolio. This is explained

on page 43 in the principal and emerging risks section

of the annual report. The Company has also explained

their climate commitments on page 18 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 climate change has been reflected in the

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

effects of material climate risks disclosed on pages 18

and 43 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.

OVERVIEW OF OUR AUDIT APPROACH

KEY AUDIT MATTERS • Incorrect valuation or ownership of the unquoted investment portfolio 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.

MATERIALITY • Overall materiality of £50.3m which represents 1% of net assets.

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

judgement, 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 2023

Auditor’s Report

Risk Our response to the risk

Incorrect valuation or ownership of

the unquoted investment portfolio and

the resulting impact on the Income

Statement (2023: £594.3m, 2022:

£575.2m)

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

unquoted 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, which is valued

by CTIB.

Valuation

The Company’s approach to the

valuation of these investments is as

follows;

• Funds and co-investments – the

Directors rely on unaudited valuations

of the underlying unquoted

investments as supplied by the PE

Managers, rolled forward for any calls

and distributions in the subsequent

period.

• Direct investment – As at 31 December

2023, the investment is valued by CTIB.

There is the risk that inaccurate

judgements 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

There is a risk that the incorrect

holdings in investments are recorded,

particularly where transactions are

initiated or settled close to the Balance

Sheet date. In addition, there is a risk of

failure to maintain proper legal title of

the unquoted investments held by the

Company which could have a significant

impact on the portfolio valuation and the

return generated for shareholders.

Valuation procedures

• We obtained an understanding of the Manager’s and primary PE Manager’s processes and

controls for the valuation of the unquoted investments by performing walkthrough procedures

and reviewing the primary PE Manager’s internal control reports to evaluate the design and

implementation of controls.

• We obtained an understanding of the governance of unquoted valuations through discussions

with the Manager and assessing the oversight of the unquoted valuation process at Board level

through reading minutes and reports of 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.

• 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 gains/(losses) on the revaluation of all unquoted investments

and tied these to the financial statements.

• We compared the Company’s valuation methodology to the requirements of International

Private Equity and Venture Capital Valuation Guidelines.

Fund and co-investments

• For all of the unquoted investments, we performed a back-testing exercise to assess the

historical accuracy of a sample of valuations of unquoted investments in the 31 December

2022 financial statements. We compared the valuations per the Company’s 2022 audited

financial statements, which were estimates at the time, to the unquoted investment values

subsequently reported by the respective PE Manager in the audited financial statements as at

31 December 2022. 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.

• For a sample of unquoted investments on the investment report, we agreed the NAV to

the estimated NAV valuations included in the 31 December 2023 NAV statements provided

directly by the respective PE Managers or PE fund administrators, whether held directly by the

Company or indirectly through PE LP. Where 31 December 2023 estimated NAV valuations are

not available, we obtained the 30 September 2023 NAV statements from the underlying PE

managers and tested management’s roll forward exercise which adjusts for cash flows, foreign

exchange movements and any other adjustments, as determined by the Manager, in the period

to 31 December 2023.

• We made enquiries of HarbourVest Partners LLC, Pantheon Ventures (UK) LLP and the CTIB

private equity team to understand:

– the annual performance of the investment funds during the year to 31 December 2023 and

the valuation approaches adopted;

– the reasons for any material variances noted between estimated and actual NAVs for the

year ended 31 December 2022; and

– whether any post balance sheet information is available that would require adjustments to

be made to the estimated 31 December 2023 NAVs.

• For a sample of unquoted investments, we confirmed the realised gains/(losses) to the notices

received from the relevant PE Manager.

Direct investment in Inflexion Strategic Partners

• With the assistance of our specialist valuation team, we performed the following procedures:

– updated our understanding of the performance of the Inflexion Strategic Partners

investment through discussions with the CTIB private equity team;

– reviewed the CTIB valuation model and assessed its appropriateness against FRS 102 and

the International Private Equity and Venture Capital Valuation Guidelines;

– challenged management’s judgements and assumptions, including: any changes to the

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 compared 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 test the mathematical accuracy of the calculation.

Ownership procedures

• 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 compared independently obtained confirmations from the underlying

general partners 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 - 2023: £4.5m, 2022: £2.1m;

Other revenue - 2023: £102.2m, 2022: £94.6m)

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 judgement

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.

The Administrator’s special dividend listing contained 24 special

dividends received during the year; 23 classified as revenue (£4.4m)

and 1 classified as capital (£0.1m).

There is a risk that an incorrect classification of special dividends

could result in an under distribution of revenue and put the

Company's Investment Trust status at risk. There is also a risk that

the revenue column is overstated to increase the dividend paid to

shareholders.

• We obtained an understanding of the Manager’s and State

Street Bank and Trust’s (the 'Administrator') processes and

controls surrounding revenue recognition and identification and

classification of special dividends by reviewing their internal

controls report and performing our walkthrough procedures. We

also obtained an understanding of 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 we agreed to an independent data vendor. We

agreed a sample of dividend receipts to bank statements.

• Where dividends were received or accrued in a 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 have

been recorded as revenue with reference to investee company

announcements obtained from an independent data vendor.

• 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.

• For a sample of special dividends, including the one special

dividend above our testing threshold, we assessed the

appropriateness of the Directors’ 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 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

(2023: £4,936.6m, 2022: £4,408.8m)

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 Barrow, Hanley, Mewhinney and

Strauss LLC, and JPMorgan Asset Management (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.

Valuation Procedures

• 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 the

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 2023 to identify prices that

have not changed around the year-end and verified whether

the Administrator’s price is a fair value through review of trading

activity.

Ownership procedures

• We obtained an understanding of the Administrator’s and the

Custodian’s processes and controls related to legal title of quoted

investments by inspecting their internal control reports.

• We compared the Company’s investment holdings at 31 December

2023 to independent confirmations received directly from

the Company’s Custodian and Depositary for the listed equity

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 2023

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 £50.3

million (2022: £46.5 million), which is 1% (2022: 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 judgement was that performance materiality was 75%

(2022: 75%) of our planning materiality, namely £37.8m

(2022: £34.9m). 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 £4.6m (2022: £4.1m) 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 £2.5m

(2022: £2.3m), 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’ reports 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 STATEMENT

We have reviewed the Directors’ statement in relation to

going concern, long-term viability and that part of the

Corporate Governance Statement 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 44;

• 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 44 to 46;

• Directors’ statement on whether it has a reasonable

expectation that the group will be able to continue in

operation and meets its liabilities set out on page 44;

• Directors’ statement on fair, balanced and

understandable set out on page 69;

• Board’s confirmation that it has carried out a robust

assessment of the emerging and principal risks set out

on page 42;

• 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 2023

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 8 years,

covering the years ending 31 December 2016 to

31 December 2023.

• 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

7 March 2024

INCOME STATEMENT

for the year ended 31 December

Revenue

£’000s

Capital

£’000s

2023

Total

£’000s

Revenue

£’000s

Capital

£’000s

2022

Total

£’000s

Gains/(losses) on investments – 477,671 477,671 – (527,760) (527,760)

18,21

Exchange movements on foreign currency loans,

cash balances and derivatives (561) (482) (1,043) 387 (11,382) (10,995)

Income 106,621 – 106,621 96,235 – 96,235

Management fees (4,146) (12,438) (16,584) (4,582) (13,747) (18,329)

Other expenses (5,727) (68) (5,795) (5,567) (46) (5,613)

Net return before finance costs and taxation 96,187 464,683 560,870 86,473 (552,935) (466,462)

Finance costs (3,460) (10,381) (13,841) (3,495) (10,486) (13,981)

Net return on ordinary activities before taxation 92,727 454,302 547,029 82,978 (563,421) (480,443)

Taxation on ordinary activities (11,067) (3,118) (14,185) (10,383) (551) (10,934)

Net return attributable to shareholders 81,660 451,184 532,844 72,595 (563,972) (491,377)

Net return per share – basic (pence) 15.83 87.46 103.29 13.92 (108.14) (94.22)

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 104 form an integral part of the financial statements.

Notes

79Annual Report and Accounts 2023

Financial Report

STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2023

Notes

capital

£’000s

Capital

redemption

reserve

£’000s

Capital

reserves

£’000s

Revenue

reserve

£’000s

Total

shareholders’

funds

£’000s

Balance brought forward 31 December 2022 140,455 122,307 4,289,599 97,464 4,649,825

Dividends paid – – – (71,837) (71,837)

Shares repurchased by the Company and held in

treasury

– – (76,345) – (76,345)

Net return attributable to shareholders – – 451,184 81,660 532,844

Balance carried forward 31 December 2023 140,455 122,307 4,664,438 107,287 5,034,487

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

The notes on pages 82 to 104 form an integral part of the financial statements.

BALANCE SHEET

at 31 December

Notes

£’000s

2023

£’000s £’000s

2022

£’000s

Fixed assets

Investments 5,451,521 4,924,533

Current assets

Investments 79,357 59,424

Debtors 11,244 11,061

Cash and cash equivalents 87,170 243,836

177,771 314,321

Creditors: amounts falling due within one year

Other (13,836) (7,190)

(13,836) (7,190)

Net current assets 163,935 307,131

Total assets less current liabilities 5,615,456 5,231,664

Creditors: amounts falling due after more than one year

14,21

Loans (580,394) (581,264)

15,21

Debenture (575) (575)

(580,969) (581,839)

Net assets 5,034,487 4,649,825

Capital and reserves

Share capital 140,455 140,455

Capital redemption reserve 122,307 122,307

Capital reserves 4,664,438 4,289,599

Revenue reserve 107,287 97,464

Total shareholders’ funds 5,034,487 4,649,825

Net asset value per share – prior charges at nominal value (pence) 987.56 896.94

The notes on pages 82 to 104 form an integral part of the financial statements.

The Financial Statements were approved by the Board on 7 March 2024 and signed on its behalf by

Beatrice Hollond, Chairman

81Annual Report and Accounts 2023

Financial Report

STATEMENT OF CASH FLOWS

for the year ended 31 December

Notes

2023

£’000s

2022

£’000s

Cash flows from operating activities before dividends received and interest paid (25,774) (34,064)

Dividends received 98,937 93,292

Interest paid (13,842) (13,239)

Cash flows from operating activities 59,321 45,989

Investing activities

Purchases of investments (4,224,563) (2,068,248)

Sales of investments 4,155,297 2,338,540

Other capital charges and credits (63) (50)

Cash flows from investing activities (69,329) 270,242

Cash flows before financing activities (10,008) 316,231

Financing activities

Equity dividends paid (71,837) (68,983)

Repayment of loans – (110,329)

Drawdown of loans – 140,000

Cash flows from share buybacks into treasury (73,645) (71,534)

Cash flows from financing activities (145,482) (110,846)

Net (decrease)/increase in cash and cash equivalents (155,490) 205,385

Cash and cash equivalents at the beginning of the year 243,836 53,111

Effect of movement in foreign exchange (1,176) (14,660)

Cash and cash equivalents at the end of the year 87,170 243,836

Represented by:

Cash at bank 39,827 144,096

Short-term deposits 47,343 99,740

Cash and cash equivalents at the end of the year 87,170 243,836

The notes on pages 82 to 104 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 Cannon Place, 78 Cannon Street, London,

EC4N 6AG, 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 2023, as set out

in note 2 below.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Going concern

As referred to in note 24 and the Business Review on page 44, 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 2023 and 31 December 2022.

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 2023 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. FRS 102 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 2023

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 25(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 establish an estimate of the value at 31 December using unaudited valuations of the underlying unlisted

investments as at 30 September as supplied by the investment advisers or managers of those funds or partnerships and roll

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 14 and 15. 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 2023

Financial Report

Deferred tax is provided for in accordance with FRS 102 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 25(d). The choice to use the September quarter end valuations and apply a roll forward process

to incorporate any known transactions and material events is a judgement made each year for the indirect investments. The valuations as

at 31 December are not generally available before approval of the financial statements. 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). The fair value of unquoted (Level 3) investments, as disclosed in note 10 to the accounts, represented

10.7% of total investments at 31 December 2023. 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 10%. A fall of 10% in the value of the unlisted (Level 3) portfolio at the

year-end would equate to £59m or 1.2% of net assets and a similar percentage rise would equate to a similar increase in net assets.

We have considered the impact of climate change on the value of both the listed and private equity investments included in the financial

statements. The listed investments should already include the impact of climate change in their prices as quoted on the relevant

exchange. Climate risk is indirectly factored into the valuation of the indirect and direct private equity investments, by GPs and the

Manager respectively, through consideration and use of market comparable data where climate risk is factored into the quoted prices.

Specific ESG risks are covered, as applicable, as part of the investment onboarding procedures performed by the Manager. For further

detail on the private equity investment process, refer to page 18.

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 18, 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

2023

£’000s

2022

£’000s

Income from investments:

UK dividends

6,660 7,582

UK gilt income

(i)

3,070 –

Overseas dividends

91,864 86,686

101,594 94,268

Other Income:

Interest on cash and short-term deposits

5,027 1,967

Total income

106,621 96,235

Included within income from investments is £4,382,000 (2022: £1,576,000) of special dividends classified as revenue in nature in

accordance with note 2(c)(xiii).

(i) Investments were made into gilts at the end of December 2022.

NOTES TO THE ACCOUNTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

87Annual Report and Accounts 2023

Financial Report

4. MANAGEMENT FEES

2023

£’000s

2022

£’000s

Payable directly to Columbia Threadneedle Investments:

– in respect of management services provided by the Manager (i) 13,582 14,113

– reimbursement in respect of services provided by sub-managers (i) 3,002 4,216

Total directly incurred management fees 16,584 18,329

Incurred indirectly within funds managed by Private Equity managers (ii) 1,860 2,614

Total direct and indirect management fees 18,444 20,943

(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 therefore arise in the Income Statement in gains/(losses) on investments.

The fees are disclosed here for completeness and transparency.

Directly incurred fees are analysed as follows:

Management fees

2023

£’000s

2022

£’000s

– payable directly to Columbia Threadneedle Investments 16,584 18,329

Less: allocated to capital reserves (see note 18) (12,438) (13,747)

Allocated to revenue account 4,146 4,582

(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 0.30% per annum of the market capitalisation of the Company up to £4.0

billion and 0.25% above £4.0 billion, calculated at each month end on a pro rata basis (2022: 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); 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 2023 the Company had outstanding commitments in 36 Private Equity funds (2022: 36) (see note 22). 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 2023 varied from 0.10% per annum to 2.50% per annum (2022: 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

2023

£’000s

2022

£’000s

Other revenue expenses

Auditor’s remuneration:

for audit and audit-related assurance services

(1)

154 148

Custody fees 486 494

Depositary fees 197 201

Directors’ emoluments (see Remuneration Report on pages 65 to 68):

Fees for services to the Company 410 387

Subscriptions 21 21

Directors’ and officers’ liability insurance 73 80

Marketing 3,418 3,006

Loan commitment and arrangement fees – 293

Registrars fees 168 156

Professional charges 117 202

Printing and postage 199 191

Sundry 484 388

Total other revenue expenses 5,727 5,567

Other capital expenses 68 46

Total other expenses 5,795 5,613

All expenses are stated gross of irrecoverable VAT, where applicable.

(1) Total auditor’s remuneration for audit services, exclusive of VAT, amounted to £151,000, (2022: £143,000 exclusive of VAT). Irrecoverable VAT of £3,000

(2022: £5,000) is included within the table above. There were no non-audit services paid to EY in the year (2022: none).

6. FINANCE COSTS

2023

£’000s

2022

£’000s

Debenture stock 24 24

Loans 13,628 13,891

Overdrafts 189 66

13,841 13,981

Less: allocated to capital reserves (see note 2(c)(vii) and note 18) (10,381) (10,486)

Allocated to revenue account 3,460 3,495

The interest on the debenture stock, loans and overdrafts is further analysed as follows:

Loans and overdrafts repayable within one year, not by instalments 189 768

Debenture and loans repayable after more than one year, not by instalments (see notes 14 and 15) 13,652 13,213

13,841 13,981

NOTES TO THE ACCOUNTS (CONTINUED)

89Annual Report and Accounts 2023

Financial Report

7. TAXATION ON ORDINARY ACTIVITIES

(a) Analysis of tax charge for the year

Revenue

£’000s

Capital

£’000s

2023

Total

£’000s

Revenue

£’000s

Capital

£’000s

2022

Total

£’000s

Overseas taxation 11,067 – 11,067 10,383 – 10,383

Indian tax on capital gains – 3,118 3,118 – 551 551

Total taxation (see note 7(b)) 11,067 3,118 14,185 10,383 551 10,934

The tax assessed for the year is lower (2022: 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

2023

Total

£’000s

Revenue

£’000s

Capital

£’000s

2022

Total

£’000s

Net return on ordinary activities before taxation 92,727 454,302 547,029 82,978 (563,421) (480,443)

Net return on ordinary activities multiplied by the standard

rate of corporation tax of 23.5%

(1)

(2022: 19%)

21,791 106,761 128,552 15,766 (107,050) (91,284)

Effects of:

Dividends

(2)

(23,153) – (23,153) (17,911) – (17,911)

Exchange losses/(gains)

(2)

132 – 132 (74) – (74)

Capital returns

(2)

– (112,139) (112,139) – 102,437 102,437

Expenses not deductible for tax purposes 395 16 411 279 9 288

Expenses not utilised in the year 835 5,362 6,197 1,940 4,604 6,544

Overseas tax in excess of double taxation relief 11,067 – 11,067 10,383 – 10,383

Indian tax on capital gains

(3)

- 3,118 3,118 – 551 551

Total taxation (see note 7(a)) 11,067 3,118 14,185 10,383 551 10,934

(1) Nine months at the new rate of 25% and three months at previous rate of 19%.

(2) These items are not subject to Corporation Tax within an investment trust company.

(3) The Company is liable to taxation in India on gains realised on the sale of securities. The tax is allocated to Capital Reserve as it relates to capital

transactions.

The Company has an unrecognised deferred tax asset of £118.3 million (2022: £90.8 million) in respect of unutilised expenses at 31 December 2023 which has

not been recognised in the financial statements as it is unlikely to be utilised in the foreseeable future. Of this amount £40.9 million (2022: £32.4 million) relates

to revenue expenses and £77.4 million (2022: £58.4 million) to capital expenses.

8. NET RETURN PER SHARE

2023

pence

2023

£’000s

2022

pence

2022

£’000s

Total return 103.29 532,844 (94.22) (491,377)

Revenue return 15.83 81,660 13.92 72,595

Capital return 87.46 451,184 (108.14) (563,972)

Weighted average ordinary shares in issue, excluding shares

held in treasury – number

515,891,788 521,526,881

9. DIVIDENDS

Dividends on ordinary shares Record date Payment date

2023

£’000s

2022

£’000s

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

2022 Third interim of 3.20p 6-Jan-2023 1-Feb-2023 16,589 –

2022 Final of 3.90p 11-Apr-2023 11-May-2023 20,214 –

2023 First interim of 3.40p 30-Jun-2023 1-Aug-2023 17,581 –

2023 Second interim of 3.40p 6-Oct-2023 1-Nov-2023 17,453 –

71,837 68,983

A third interim dividend of 3.40p was paid on 1 February 2024 to all shareholders recorded on the register on 5 January 2024.

The Directors have proposed a final dividend in respect of the year ended 31 December 2023 of 4.50p payable on 9 May 2024 to all

shareholders recorded on the register at close of business on 12 April 2024. 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.

2023

£’000s

2022

£’000s

Revenue available for distribution by way of dividends for the year 81,660 72,595

First interim dividend for the year ended 31 December 2023 - 3.40p per share (2022: 3.20p) (17,581) (16,654)

Second interim dividend for the year ended 31 December 2023 - 3.40p per share (2022: 3.20p) (17,453) (16,596)

Third interim dividend for the year ended 31 December 2023 - 3.40p per share (2022: 3.20p) (17,325) (16,589)

Proposed final dividend for the year ended 31 December 2023 - 4.50p per share (2022: 3.90p) (22,820) (20,218)

(estimated cost based on 507,102,833 shares in issue at 4 March 2024, excluding shares held

in treasury)

Estimated amount transferred to revenue reserve for Section 1159 purposes

(1)

6,481

2,538

All dividends are paid from revenue.

(1) Represents 6% of total income as stated in note 3 (2022: 3%)

The table below reflects the revenue reserve after adjusting for the third interim and final dividends for the years to 31 December

2023 and 31 December 2022.

2023

£’000s

2022

£’000s

Revenue reserve at 31 December (per Balance Sheet) 107,287 97,464

Third interim dividend for the year ended 31 December 2023 – 3.40p per share (2022: 3.20p) (17,325) (16,589)

Proposed final dividend for the year ended 31 December 2023 – 4.50p per share (2022: 3.90p) (22,820) (20,218)

Revenue reserve after adjusting for the third interim and final dividends 67,142

60,657

NOTES TO THE ACCOUNTS (CONTINUED)

91Annual Report and Accounts 2023

Financial Report

10. INVESTMENTS

Investments

Level 1

(1)

£’000s

Level 3

(1)

£’000s

2023

Total

£’000s

Level 1

(1)

£’000s

Level 3

(1)

£’000s

2022

Total

£’000s

Cost at 1 January 3,844,474 479,678 4,324,152 3,929,156 442,353 4,371,509

Unrealised gains at 1 January 564,318 95,487 659,805 1,330,795 76,819 1,407,614

Fair value of investments at 1 January 4,408,792 575,165 4,983,957 5,259,951 519,172 5,779,123

Purchases at cost* 4,163,790 61,511 4,225,301 2,013,522 57,617 2,071,139

Sales proceeds* (4,116,288) (39,763) (4,156,051) (2,282,107) (56,438) (2,338,545)

Gains on investments sold 416,881 18,838 435,719 183,903 36,146 220,049

Gains/(losses) on investments held 63,393 (21,441) 41,952 (766,477) 18,668 (747,809)

Fair value of investments at 31 December 4,936,568 594,310 5,530,878 4,408,792 575,165 4,983,957

Analysed at 31 December

Cost 4,308,857 520,264 4,829,121 3,844,474 479,678 4,324,152

Unrealised gains 627,711 74,046 701,757 564,318 95,487 659,805

Fair value of investments at 31 December 4,936,568 594,310 5,530,878 4,408,792 575,165 4,983,957

Gains/(losses) on investments held at fair value

2023

£’000s

2022

£’000s

Gains on investments sold during the year 435,719 220,049

Gains/(losses) on investments held at year end 41,952 (747,809)

Total gains/(losses) on investments 477,671 (527,760)

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 2023 or 2022 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 £80m (2022: £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.

* These amounts include the transactions undertaken as a result of changes in the portfolio sub-managers that took place in the year.

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 (2022: 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 £594.0 million (2022: £574.9 million) of investments described as Private Equity, together with £0.3

million (2022: £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 25(d).

11. SUBSTANTIAL INTERESTS

At 31 December 2023 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 percentage

holdings have not changed since the prior year.

The valuation of those holdings greater than 10% are: Dover Street VI LP: £nil; HIPEP V – Direct Fund LP: £435,000; HIPEP VI –

Emerging Markets Fund: £14,017,000; Pantheon Europe Fund III LP: £2,740,000; PE Investment Holdings 2018 LP: £258,257,000;

Esprit Capital Fund 1 LP: £259,000.

Under FRS 102, as interests are held as part of an investment portfolio, consolidation is not required.

*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 2023 in the LP was £7.6m and the Capital and Reserves was £258.3m.

The outstanding commitment is shown in note 22.

NOTES TO THE ACCOUNTS (CONTINUED)

93Annual Report and Accounts 2023

Financial Report

12. DEBTORS

2023

£’000s

2022

£’000s

Investment debtors 1,178 425

Forward exchange contracts* – 737

Prepayments and accrued income 4,499 4,887

Overseas taxation recoverable 5,567 5,012

11,244 11,061

*There were no forward exchange contracts as at 31 December 2023. As at 31 December 2022 there was a net unrealised capital

gain of £737,000 valued in accordance with level 2. See notes 2(c)(i) and 25(c).

13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Other

2023

£’000s

2022

£’000s

Investment creditors 3,670 2,933

Management fees payable to the Manager 2,625 1,863

Provision for Capital Gains Taxation on Indian Investments 2,258 –

Cost of ordinary shares repurchased 2,700 –

Other accrued expenses 2,583 2,394

13,836 7,190

14. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Loans

Non-instalment debt payable after more than one year

2023

£’000s

2022

£’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 36,394 37,264

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 50,000

1.96% Loan notes £45 million repayable March 2056 45,000 45,000

1.87% Loan notes £45 million repayable March 2061 45,000 45,000

580,394 581,264

In June 2016 the Company issued fixed rate senior unsecured notes in tranches of £25 million and £50 million loan notes expiring in

June 2028 and June 2031 respectively. In May 2018 the Company issued fixed rate senior unsecured notes of £75 million 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 2023 was £404,572,000 based on the equivalent benchmark gilts or

relevant commercially available current debt (2022: £399,134,000).

At 4 March 2024, long-term borrowings comprised £544 million loan notes and €42 million loan notes.

15. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Debenture

2023

£’000s

2022

£’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 2023 was £429,000

(2022: £429,000).

16. SHARE CAPITAL

2023

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 43,407,160 518,411,856 561,819,016 140,455

Shares repurchased by the Company and held in treasury 8,618,802 (8,618,802) – –

Balance carried forward 52,025,962 509,793,054 561,819,016 140,455

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

During the year the Company bought back 8,618,802 ordinary shares at a total cost of £76,345,000, all of which were placed in

treasury.

Since the year end, and up to 4 March 2024, 2,690,221 ordinary shares of 25p each have been repurchased and held in treasury.

NOTES TO THE ACCOUNTS (CONTINUED)

95Annual Report and Accounts 2023

Financial Report

17. CAPITAL REDEMPTION RESERVE

2023

£’000s

2022

£’000s

Balance brought forward and carried forward 122,307 122,307

18. 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) 435,719 – 435,719 –

Gains on investments held at year end (see note 10) – 41,952 41,952 –

Exchange movements on foreign currency loans, cash balances

and derivatives

25,773 (26,255) (482) –

Management fees (see note 4) (12,438) – (12,438) –

Finance costs (see note 6) (10,381) – (10,381) –

Other capital charges (see note 5) (68) – (68) –

Indian capital gains tax (see note 7) (3,118) – (3,118) –

Net revenue return attributable to shareholders – – – 81,660

Total gains and losses transferred in current year 435,487 15,697 451,184 81,660

Cost of ordinary shares repurchased in year (see note 16) (76,345) – (76,345) –

Dividends paid in year (see note 9) – – – (71,837)

Balance brought forward 3,592,821 696,778 4,289,599 97,464

Balance carried forward 3,951,963 712,475 4,664,438 107, 287

Included within the capital reserve movement for the year is £73,000 (2022: £459,000) of dividend receipts recognised as capital

in nature in accordance with note 2(c)(xiii). £2,043,000 of transaction costs on purchases of investments are included within the

capital reserve movements disclosed above (2022: £1,247,000). £1,069,000 of transaction costs on sales of investments are similarly

included (2022: £726,000).

19. NET ASSET VALUE PER ORDINARY SHARE

2023 2022

Net asset value per share – pence 987.56 896.94

Net assets attributable at end of period – £’000s 5,034,487 4,649,825

Ordinary shares of 25p in issue at end of year, excluding shares held in treasury – number 509,793,054 518,411,856

Net asset value per share (with the debenture stock and long-term loans at market value – see notes 14 and 15) was 1,022.07p

(2022: 932.10p).

20. RECONCILIATION OF NET RETURN BEFORE TAXATION TO CASH FLOWS FROM OPERATING ACTIVITIES

2023

£’000s

2022

£’000s

Net return on ordinary activities before taxation 547,029 (480,443)

Adjust for non-cash flow items, dividend income and interest expense:

(Gains)/losses on investments (477,671) 527,760

Exchange losses 1,043 10,995

Non-operating expenses of a capital nature 68 46

Decrease/(increase) in debtors 81 (310)

Increase/(decrease) in creditors 964 (122)

Dividends receivable (98,524) (94,268)

Interest payable 13,841 13,981

Tax on overseas income (12,605) (11,703)

(572,803) 446,379

Cash flows from operating activities (before dividends received and interest paid) (25,774) (34,064)

21. ANALYSIS OF CHANGES IN NET DEBT

2023

Cash

£’000s

Long-term

loans

£’000s

Debenture

£’000s

Forward

exchange

contracts

£’000s

Total

£’000s

Opening net debt as at

31 December 2022

243,836 (581,264) (575) 737 (337, 266)

Cash-flows:

Net movement in cash and cash

equivalents

(155,490) – – – (155,490)

Non-cash:

Effect of Foreign Exchange

movements

(1,176) 870 – (737) (1,043)

Closing net debt as at

31 December 2023 87,170 (580,394) (575) – (493,799)

NOTES TO THE ACCOUNTS (CONTINUED)

97Annual Report and Accounts 2023

Financial Report

2022

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)

22. CAPITAL COMMITMENTS

The Company had the following outstanding capital commitments, which are all in relation to its private equity investments at the

year end:

2023

Currency

2022

Currency

2023

£’000s

2022

£’000s

Managed by Harbourvest:

HarbourVest Partners VII:

– Buyout Partnership Fund LP US$4.3m US$4.3m 3,365 3,566

– Venture Partnership Fund LP US$0.5m US$0.5m 412 436

– Mezzanine Fund LP US$0.7m US$0.7m 565 599

Dover Street VI LP US$3.1m US$3.1m 2,437 2,583

Dover Street VII LP US$3.2m US$3.2m 2,500 2,650

HarbourVest Partners V – Asia Pacific and Rest of World LP US$1.5m US$1.5m 1,177 1,247

HarbourVest Partners VIII:

– Buyout Partnership Fund LP US$1.8m US$1.8m 1,412 1,496

– Venture Partnership Fund LP US$0.8m US$0.8m 628 665

HIPEP V – Direct Fund LP €2.1m €2.1m 1,787 1,830

HIPEP VI – Asia Pacific Fund LP US$1.3m US$1.3m 981 1,039

Managed by Pantheon:

Pantheon Europe Fund III LP €5.4m €5.4m 4,645 4,756

Pantheon Europe Fund V LP €4.5m €4.5m 3,899 3,993

Pantheon Asia Fund IV LP US$2.7m US$2.7m 2,079 2,203

Pantheon Asia Fund V LP US$3.5m US$3.5m 2,726 2,889

Pantheon Global Secondary Fund III LP US$2.4m US$2.4m 1,922 2,037

Pantheon Access SICAV US$230.7m US$266.0m 180,946 221,091

Selected by Columbia Threadneedle Investments:

Esprit Capital Fund I LP £0.27m £0.27m 265 265

Astorg VI

(1)

€1.1m €1.1m 970 994

August Equity IV

(1)

£0.2m £0.2m 197 198

Procuritas VI

(1)

€0.6m €0.9m 543 791

Stellex Capital

(1)

US$0.0m US$0.0m 9 9

Centana

(1)

US$0.2m US$0.3m 166 211

Graycliff

(1)

US$1.3m US$1.3m 1,005 1,065

Volpi Capital

(1)

€0.0m €0.0m 27 27

Maison Capital

(1)

US$0.1m US$0.1m 44 46

Inflexion Partnership Capital II

(1)

£0.5m £1.4m 452 1, 374

Inflexion Buyout Fund V

(1)

£0.0m £0.4m - 425

PE Investment Holdings 2018 LP

(1)

£167.1m £186.6m 167,118 186,618

Verdane Edda

(1)

SEK 15.1m SEK 15.1m 1,175 1,204

MVM

(1)

US$0.5m US$3.0m 366 2,470

Inflexion Supplemental V

(1)

£2.9m £3.6m 2,898 3,587

Graycliff IV

(1)

US$3.7m US$5.1m 2,900 4,249

Centana II

(1)

US$2.0m US$3.0m 1,585 2,472

MED Platform

(1)

€1.0m €1.7m 900 1,472

Inflexion Buyout Fund VI

(1)

£11.1m £14.7m 11,084 14,748

Hg Saturn 3

(1)

US$7.0m US$10.0m 5,461 8,313

Inflexion Partnership Capital III

(1)

£15.0m – 15,000 –

423,646 483,618

(1) Columbia Threadneedle Investments is responsible for the selection and oversight of these funds, within the terms of its management agreement with the Company.

These commitments will be called upon over a number of years.

NOTES TO THE ACCOUNTS (CONTINUED)

99Annual Report and Accounts 2023

Financial Report

23. TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES

The Board of Directors is defined as a related party. Under the FCA Listing Rules, the Manager is also defined as a related party.

However, under the Investment Trust SORP issued by the AIC, in accordance with which these financial statements are prepared,

the Manager is not considered to be a related party for accounting purposes.

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 13 in relation to fees owed to the

Manager at the Balance Sheet date; and in the Report of the Management Engagement Committee on page 57 regarding the

Management agreement in respect of Private Equity fees and a trademark licence agreement in respect of the “F&C” name.

24. 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 page 44.

25. 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

FRS 102 and best practice, and include the valuation of financial assets and liabilities at fair value except as noted in (d) on page 104

and in notes 14 and 15 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 33. 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.

100

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

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:

2023

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 1,544 36,833 (575) (544,000) (7,666) (513,864) 690,033 176,169

US Dollar 2,687 33,234 – – (1,414) 34,507 3,291,645 3,326,152

Euro 3,339 13,113 – (36,394) (5) (19,947) 439,017 419,070

Yen 1,104 4,139 – – (2,493) 2,750 350,012 352,762

Other 2,570 (149) – – (2,258) 163 760,171 760,334

Total 11,244 87,170 (575) (580,394) (13,836) (496,391) 5,530,878 5,034,487

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) (7,19 0) (334,132) 4,983,957 4,649,825

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:

2023 Average 2022

US Dollar 1.2748 1.2444 1.2029

Euro 1.1540 1.1505 1.1271

Yen 179.7213 175.1086 158.7167

NOTES TO THE ACCOUNTS (CONTINUED)

25. FINANCIAL RISK MANAGEMENT (CONTINUED)

101Annual Report and Accounts 2023

Financial Report

Based on the financial assets and liabilities held, (adjusted for the underlying gross exposure value of the forward exchange

contracts against USD in the prior year), 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

2023

£’000s

US$

£’000s

€

£’000s

2022

£’000s

Income Statement Return after tax

Revenue return 3,637 1,639 708 3,771 1,221 787

Capital return 332,615 41,907 35,276 297,120 40,214 35,213

Total return 336,252 43,546 35,984 300,891 41,435 36,000

NAV per share – pence 65.96 8.54 7.06 58.04 7.99 6.94

Strengthening of sterling

US$

£’000s

€

£’000s

2023

£’000s

US$

£’000s

€

£’000s

2022

£’000s

Income statement return after tax

Revenue return (3,637) (1,639) (708) (3,771) (1,221) (787)

Capital return (332,615) (41,907) (35,276) (297,120) (40,214) (35,213)

Total return (336,252) (43,546) (35,984) (300,891) (41,435) (36,000)

NAV per share – pence (65.96) (8.54) (7.06) (58.04) (7.99) (6.94)

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

2023

Total

£’000s

Within

one year

£’000s

More than

one year

£’000s

2022

Total

£’000s

Exposure to floating rates

Cash 39,827 – 39,827 144,096 – 144,096

Exposure to fixed rates

Deposits 47,343 – 47,343 99,740 – 99,740

Gilts 79,357 – 79,357 59,424 – 59,424

Debentures – (575) (575) – (575) (575)

Loans – (580,394) (580,394) – (581,264) (581,264)

Net exposure at year end 166,527 (580,969) (414,442) 303,260 (581,839) (278,579)

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.

Interest received on cash balances, or paid on bank overdrafts and borrowings, is at ruling market rates. The interest rate applying

on the loans and the debenture stock is set out in notes 14 and 15. There were gilts of approximately £80m at the year end

(31 December 2022: £60m).

102

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, 14 and 15), 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

2023

Decrease

in rate

£’000s

Increase

in rate

£’000s

2022

Decrease

in rate

£’000s

Revenue return 797 (797) 2,881 (2,881)

Capital return – – – –

Total return 797 (797) 2,881 (2,881)

NAV per share – pence 0.16 (0.16) 0.56 (0.56)

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

2023

Decrease

in value

£’000s

Increase

in value

£’000s

2022

Decrease

in value

£’000s

Income statement capital return 1,106,176 (1,106,176) 996,791 (996,791)

NAV per share – pence 216.99 (216.99) 192.28 (192.28)

(b) Liquidity risk exposure

The Company requires funds to meet commitments associated with financial instruments, Private Equity investments, dividends

and share buybacks. These commitments may be met by utilisation of existing cash balances, 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 (89.3% at 31 December 2023); 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 £581 million as set out in notes 14 and 15. 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 portfolio value, which at 31 December 2023 was £4,944 million. Actual

borrowings at par value at 31 December 2023 were £580.4 million in loans (market value: £404.6 million) (see note 14) and £0.6

million (market value: £0.4 million) in a debenture (see note 15).

At 31 December 2023 the Company had £423.6 million outstanding commitments to Private Equity investments (see note 22).

NOTES TO THE ACCOUNTS (CONTINUED)

25. FINANCIAL RISK MANAGEMENT (CONTINUED)

103Annual Report and Accounts 2023

Financial Report

The un-discounted 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:

2023

Three months

or less

£’000s

More than three

months but less

than one year

£’000s

More than

one year

£’000s

Total

£’000s

Other creditors 13,836 – – 13,836

Long-term liabilities

(1)

(including interest) 1,372 12,272 846,839 860,483

15,208 12,272 846,839 874,319

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 – – 7,1 9 0

Long-term liabilities

(1)

(including interest) 1,372 12,280 861,538 875,190

8,562 12,280 861,538 882,380

(1) See notes 14 and 15 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 executed in 2014

and custody fees last revised 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, through the Audit Committee, also reviews the annual ISAE/AAF

Report on the Manager's internal control policies and procedures.

The Company held UK Gilts of approximately £80m in its portfolio at the year end (2022: £60m). None of the Company’s financial

assets are past its due date or impaired.

During the year the Company closed the forward exchange contract in sterling against the US dollar and therefore there is no

unrealised capital gain/loss as at 31 December 2023. At 31 December 2022 there was a net unrealised capital gain of £737,000.

The maximum exposure to credit risk on cash and debtors equates to their carrying amounts as per the balance sheet.

104

(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 2023 are set out in notes 14 and 15. 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. 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 their 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 2023, 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 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 16. 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 14 and 15.

26. SECURITIES FINANCING TRANSACTIONS (‘SFT’)

The Company has not, in the year to 31 December 2023 (2022: 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.

27. EVENTS AFTER THE END OF THE REPORTING PERIOD

There were no material events after the end of the reporting period.

NOTES TO THE ACCOUNTS (CONTINUED)

25. FINANCIAL RISK MANAGEMENT (CONTINUED)

105Annual Report and Accounts 2023

Notice of Meeting

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the one hundred and forty-fifth

Annual General Meeting of the Company will be held at

Merchant Taylors’ Hall, 30 Threadneedle Street, London

EC2R 8JB on Thursday 2 May 2024 at 12.00 noon for the

following purposes:

ORDINARY RESOLUTIONS

1. To receive and adopt the Directors’ report and the

audited accounts for the year ended 31 December

2023.

2. To approve the Directors’ Remuneration Report

(excluding the Directors' remuneration policy) for the

year ended 31 December 2023.

3. To declare a final dividend for the year ended

31 December 2023 of 4.50 pence per ordinary share.

4. To re-elect Anuradha Chugh as a Director.

5. To re-elect Beatrice Hollond as a Director.

6. To re-elect Edward Knapp as a Director.

7. To re-elect Rain Newton-Smith as a Director.

8. To re-elect Quintin Price as a Director.

9. To re-elect Stephen Russell as a Director.

10. To re-elect Julie Tankard as a Director.

11. To re-appoint Ernst & Young LLP as auditors to the

Company.

12. To authorise the Audit Committee to determine the

remuneration of the auditors.

13. 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 £12,677,571 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 2025 or on 30 June

2025, 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

14. Disapplication of pre-emption rights

THAT, subject to the passing of resolution 13 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 13 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 and sale of treasury

shares for cash in connection with an offer of, or

invitation to apply for, 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 14) of equity securities up to

an aggregate nominal amount of £12,677,571, such

authority to expire upon the expiry of the general

authority conferred by Resolution 13 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

(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.

106

15. 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 76,014,715 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

2025 unless the authority is renewed at the Company’s

annual general meeting to be held in 2025 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.

ORDINARY RESOLUTION

16. Maximum aggregate Directors' fees

THAT the maximum aggregate fees which the Directors are

entitled to receive pursuant to Article 92 of the Company's

Articles of Association be increased to £750,000 per

annum.

By Order of the Board

Columbia Threadneedle

Investment Business Limited,

Company Secretary

7 March 2024

Registered office:

Cannon Place

78 Cannon Street

London EC4N 6AG

Registered number: 12901

The AGM will 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.

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

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

107Annual Report and Accounts 2023

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 30 April 2024

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 30 April 2024 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 25 April 2024. 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 25 April 2024.

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 30 April 2024 (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

108

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 proxymity.io. Your

proxy must be lodged by 12.00 noon on Tuesday 30 April

2024 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)

109Annual Report and Accounts 2023

Notice of Meeting

(b) if the answer has already been given on a website in

the form of an answer to a question; or

or the good order of the meeting that the question be

answered.

17. As at 4 March 2024, being the latest practicable date prior

to the printing of this notice, the Company’s issued capital

(i.e. excluding those shares held in treasury) consisted of

507,102,833 ordinary shares of 25 pence each carrying

one vote each. Therefore, the total voting rights in the

Company as at 4 March 2024 are 507,102,833.

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 4 March 2024 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: fandc.com.

110

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

and Company Secretary.

Paul Niven is the Company’s Fund

Manager and Columbia Threadneedle

Investments’ Head of Asset Allocation

(EMEA). 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

Cannon Place

78 Cannon Street

London EC4N 6AG

Telephone: 020 7464 5000

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

111Annual Report and Accounts 2023

Other Information

ADDITIONAL INFORMATION

FOR SHAREHOLDERS (UNAUDITED)

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 2023.

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.

LEVERAGE

The Company’s maximum and actual leverage levels at

31 December 2023 are shown below:

Leverage exposure

Gross

method

Commitment

method

Maximum permitted limit 200% 200%

Actual 111% 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.

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 28

and 29; none of the Company’s assets is subject to

special arrangements arising from their illiquid nature;

• the Strategic Report and note 25 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 (the ‘KID’) can be found on its website at fandc.com.

The KID 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 £3,000 in the tax year ending 5 April 2025

without incurring any tax liability.

112

A rate of CGT of 10% will apply where taxable income and

gains do not exceed the income tax higher rate threshold.

A higher rate of 20% will apply to those whose income and

gains exceed this figure.

INCOME TAX

The final dividend of 4.50 pence per share is payable on

9 May 2024. From 6 April 2023, the annual tax-free

allowance to UK residents on dividend income was £1,000.

It will be reduced from 6 April 2024 to £500. Dividend

income received in excess of this amount will be taxed at

rates of 8.75% (basic rate taxpayers), 33.75% (higher rate

taxpayers) or 39.35% (additional rate taxpayers). Dividend

income on shares within an Individual Savings Account is

not subject to tax.

ADDITIONAL INFORMATION FOR SHAREHOLDERS (CONTINUED)

113Annual Report and Accounts 2023

Other Information

HOW TO INVEST

Charges

Annual management charges and other charges apply

according to the type of Savings Plan, these can be found on

the relevant product Pre-sales Cost & Charges disclosure on our

website www.ctinvest.co.uk.

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 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: 0345 600 3030**

(9.00am – 5.00pm, 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 www.ctinvest.co.uk/documents.

How to Invest

To open a new Columbia Threadneedle Savings Plan, apply

online at www.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 www.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.

Capital at risk.

This material relates to an investment trust and its Ordinary Shares that are traded on the main market of the London Stock Exchange.

The Investor Disclosure Document, Key Information Document (KID), latest annual or interim reports and the applicable terms & conditions are available from Columbia

Threadneedle Investments Cannon Place, 78 Cannon Street, London EC4N 6AG, your financial advisor and/or on our website www.columbiathreadneedle.com. Please

read the Investor Disclosure Document before taking any investment decision. This material should not be considered as an offer, solicitation, advice or an investment

recommendation. This communication is valid at the date of publication and may be subject to change without notice. Information from external sources is considered

reliable but there is no guarantee as to its accuracy or completeness.

In the UK: Issued by Columbia Threadneedle Management Limited, No. 517895, registered in England and Wales and authorised and regulated in the UK by the Financial

Financial promotion

114

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 shareholders in order to assess the Company’s performance between reporting

periods and against its 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 38.

31 December 2023

pence

31 December 2022

pence

Net Asset Value per share with debt at market value (a)

1,022.07 932.10

Share price per share (b)

962.00 904.00

(Discount)/Premium (c= (b-a)/a) (c)

(5.9)% (3.0)%

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 2023

pence

31 December 2022

pence

Total dividend paid/payable for the prior year (a)

13.50

12.80

Total dividend paid/payable for the current year (b)

14.70

13.50

Dividend growth (c= (b-a)/a) (c)

8.9%

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 from banks; 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 set out in the Business Review and in Note 25(b).

31 December 2023

£’000

31 December 2022

£’000

Loans

580,394 581,264

Debenture

575 575

(a)

580,969 581,839

Less Cash and cash equivalents

(87,170) (243,836)

Less Investment debtors

(1,178) (425)

Add Investment creditors

3,670 2,933

Total (b)

496,291 340,511

Net Asset Value (c)

5,034,487 4,649,825

Effective gearing (d= b/c) (d)

9.9% 7.3%

Fully invested gearing (e= a/c) (e)

11.5% 12.5%

115Annual Report and Accounts 2023

Other Information

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 2023 31 December 2022

Net assets at year end - £'000s (a)

5,034,487 4,649,825

Number of ordinary shares in issue at year end (b)

509,793,054 518,411,856

Net asset value (with debt at par) at year end - pence (c=a/b) (c)

987.56 896.94

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 14 and 15 to the Accounts.

31 December 2023 31 December 2022

Net assets at year end - £'000s

5,034,487 4,649,825

Add back: Debt at par - £'000s

580,969 581,839

Deduct: Debt at market value - £'000s

(405,001) (399,563)

(a)

5,210,455 4,832,101

Number of ordinary shares in issue at year end (b)

509,793,054 518,411,856

Net asset value (with debt at market value) at year end - pence (c=a/b) (c)

1,022.07 932.10

Ongoing Charges – all operating costs expected to be regularly incurred and that are payable directly by the Company or

incurred indirectly 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 2023

£’000

31 December 2022

£’000

Management fees

16,584 18,329

Other expenses

5,727 5,567

Less loan commitment/arrangement fees

– (293)

Underlying costs of Private Equity Funds

1,860 2,614

Total (a)

24,171 26,217

Average daily net assets (b)

4,969,791 4,878,293

Ongoing charges (c= a/b) (c)

0.49% 0.54%

Total Costs – these total 0.97% and comprise all operating costs actually incurred by the Company in the period and

costs suffered within underlying funds (0.49% as shown in the Ongoing Charges calculation), together with interest on

borrowings (0.28%) and estimated implicit and explicit costs of dealing (0.20%). 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.

116

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 2023

£’000

31 December 2022

£’000

Management fees

16,584 18,329

Other expenses

5,727 5,567

Less loan commitment/arrangement fees

– (293)

Total (a)

22,311 23,603

Average daily net assets (b)

4,969,791 4,878,293

TER (c= a/b) (c)

0.45% 0.48%

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 2022 (pence)

932.10 904.00

NAV/Share Price per share at 31 December 2023 (pence)

1,022.07 962.00

Change in the year

9.7% 6.4%

Impact of dividend reinvestments

1.6% 1.7%

Total return for the year to 31 December 2023

11.3% 8.1%

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)%

ALTERNATIVE PERFORMANCE MEASURES (CONTINUED)

117Annual Report and Accounts 2023

Other Information

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 – 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.

118

Columbia Threadneedle – the asset management business of Ameriprise.

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), 16, 17 and 18 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.

FTSE Women Leaders Review – an independent body that aims to increase the number of women on boards and

leadership teams which sets out target recommendations for FTSE 350 companies.

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).

GLOSSARY OF TERMS (CONTINUED)

119Annual Report and Accounts 2023

Other Information

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, provided the Company’s assets

remaining after payment of the dividend exceed 150% of its 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.

Nature Action 100 – is a global investor engagement initiative focused on driving greater corporate ambition and action to

reverse nature and biodiversity loss.

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 and Sustainability Information Statement (NFSIS) – 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 and by the Companies (Strategic Report)(Climate-related Financial Disclosure) Regulations

2022. 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,

120

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.

Non-financial information Section Page

Business model Business Review 32

Key performance Indicators Key Performance Indicators 40

Principal Risks Principal and Emerging Risks 42

Policies Principal Policies 37

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.

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 115, 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.

GLOSSARY OF TERMS (CONTINUED)

121Annual Report and Accounts 2023

Other Information

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.

122

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:

Cannon Place

78 Cannon Street

London EC4N 6AG

020 7464 5000

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