F&C Investment Trust PLC

Annual Report • Mar 14, 2024

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. 2  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  3 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 0 100 200 300 400 500 600 700 800 900 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% 5.9% 0 100 200 300 400 500 600 700 800 900 1,000 1,100 2023202220212020201920182017201620152014 1,022.1 -10 -8 -6 -4 -2 0 2 2023202220212020201920182017201620152014 -5.9 0 2 4 6 8 10 12 14 16 2023202220212020201920182017201620152014 14.7 4  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 50 100 150 200 250 300 350 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". 6  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. 8  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 10  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 12  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. 14  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. 16  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. 18  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 0 50 100 150 200 250 FCIT Benchmark (3) Tons CO2e / sales $m 185 125 2020 158 72 Source: MSCI ESG 2021 155 96 124 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 $m invested in the total portfolio. 20  The grey line in the chart above represents a net zero- aligned benchmark trajectory. It is based on taking the financed emissions intensity of the FTSE All-World Index, which is the market benchmark for the Company, as at the end of 2019 and reducing this by 50% by 2030. The bars represent financed emissions intensity for the Company, showing data as at the end of the last three financial years. This has decreased, from 44.5 to 40.3 tCO2e/$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. 0 20 40 60 80 100 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. 22  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 24  SDG alignment as at 31 December 2023 53 % 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 26  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. 28  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 30  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. 32  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 34  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. 36  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, 38  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) 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 1 (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. 40  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) 1 Year % 3 Years % 5 Years % 10 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) 1 Year % 3 Years % 5 Years % 10 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 42  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. 44  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. 46  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. 48  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. 50  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. 52  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 54  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 56  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). 58  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 60  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. 62  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). 64  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 66  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 68  Shareholder total return vs benchmark total return over ten years Rebased to 100 at 31 December 2013 Source: Columbia Threadneedle Investments & Refinitiv Eikon 75 100 125 150 175 200 225 250 275 300 325 350 375 400 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 70  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. 72  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. 74  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 76  • 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 78  INCOME STATEMENT for the year ended 31 December Revenue £’000s Capital £’000s 2023 Total £’000s Revenue £’000s Capital £’000s 2022 Total £’000s 10 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) 3 Income 106,621 – 106,621 96,235 – 96,235 4 Management fees (4,146) (12,438) (16,584) (4,582) (13,747) (18,329) 5 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) 6 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) 7 Taxation on ordinary activities (11,067) (3,118) (14,185) (10,383) (551) (10,934) 8 Net return attributable to shareholders 81,660 451,184 532,844 72,595 (563,972) (491,377) 8 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 Share 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 9 Dividends paid – – – (71,837) (71,837) 16 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 Share 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 9 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. 80  BALANCE SHEET at 31 December Notes £’000s 2023 £’000s £’000s 2022 £’000s Fixed assets 10 Investments 5,451,521 4,924,533 Current assets 10 Investments 79,357 59,424 12 Debtors 11,244 11,061 21 Cash and cash equivalents 87,170 243,836 177,771 314,321 Creditors: amounts falling due within one year 13 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 16 Share capital 140,455 140,455 17 Capital redemption reserve 122,307 122,307 18 Capital reserves 4,664,438 4,289,599 18 Revenue reserve 107,287 97,464 Total shareholders’ funds 5,034,487 4,649,825 19 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 20 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 9 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) 21 Net (decrease)/increase in cash and cash equivalents (155,490) 205,385 21 Cash and cash equivalents at the beginning of the year 243,836 53,111 21 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. 82  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. (c) Principal accounting policies 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. 84  (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. 86  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 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. 88  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 90  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). 92  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 94  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 Shares 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 Shares 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). 96  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) 98  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 (c) Credit risk and counterparty exposure 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; (c) the maximum price (exclusive of expenses) which may 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 of England Lloyds of 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 register of members of the Company at close of business 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 (c) if it is undesirable in the interests of the Company 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 Conduct Authority. © 2024 Columbia Threadneedle Investments. WF560250 (01/24) UK. Expiration Date: 31/01/2025 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 Register or you are told they are out of date • 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 © 2024 Columbia Threadneedle Investments. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.