Audited Statement of Results for year ended 31.12.16

An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY


Foreign & Colonial Investment Trust PLC

Exchange House, Primrose Street, London EC2A 2NY
Telephone +44 (0)20 7628 8000 Facsimile +44 (0)20 7628 8188
www.foreignandcolonial.com


Date: 7th March 2017

Contact: Paul Niven
F&C Management Limited
020 7011 4385



FOREIGN & COLONIAL INVESTMENT TRUST PLC
Audited Statement of Results
for the year ended 31 December 2016




Summary of Results

Share price total return of 23.7%

Strong performance with 23.9% net asset value total return with debt at market value

Discount closed the year at 7.4%

Proposed full year dividend of 9.85p – 46
th
consecutive annual increase

An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY
The Chairman’s Statement

Dear Shareholder,

2016 was an extraordinary year in terms of political events, stock market
returns and sterling weakness. Despite the upheaval, I am delighted to
report that your Company had a very strong year, achieving a total
shareholder return of 23.7%. Our Net Asset Value (“NAV”) total return with
debt at market value rose at its strongest annual rate for over a decade,
gaining 23.9%. The proposed total dividend for 2016 is 9.85 pence per
share, an increase of 2.6% on the year – our forty-sixth consecutive annual
rise in dividends.


These results further strengthen our long-term record of delivering growth in both capital and income for our
shareholders. Over ten years the share price total return is 141%, equivalent to 9.2% per annum and over twenty
years is 443%, which equates to 8.8% per annum.

Performance
Our NAV per share with debt at market value rose from 483.4 pence to 587.2 pence per share while the share
price increased from 449.2 pence to 544.0 pence. In sterling terms, investors enjoyed the strongest annual
returns from global equity markets since 1999 with your Company ending the year at a new record high for both
the share price and NAV. Volatility was a notable feature throughout the year, with few predicting the combined
outcomes of the US Presidential elections and the UK’s Brexit Referendum. While we delivered NAV total returns
of 23.9% this fell short of the 29.6% delivered by our benchmark, the FTSE All-World Index.

This shortfall was largely due to a significant reversal in performance within equity markets, with a substantial rally
in areas previously out of favour, such as resources and economically sensitive stocks. Our underweight position
in the highly performing North American region and underperformance from stock selection there also detracted
from returns as did our exposure to private equity which, despite posting strong returns, lagged benchmark returns
over the year. While we underperformed listed markets over the year, we performed well relative to our peer group
and continue to deliver excess shareholder total returns over the longer term.

Earnings and dividends
We have made strong progress in our earnings over recent years. Revenue per share of 10.6 pence earned in
2016 represents a rise of 26% by comparison to 2015. This improvement in earnings was helped by the receipt
of £4.4m of special dividends from our investments.

Subject to shareholder approval at the Annual General Meeting (“AGM”), shareholders will receive a final dividend
of 2.70 pence per share on 2 May 2017 bringing the total dividend for the year to 9.85 pence. That represents an
increase of 2.6% over 2015 which compares with an increase of 1.6% in the Consumer Price Index. After the full
year dividend, which is fully covered, our revenue reserve will stand at about one year's worth of dividends.

A rising income stream in real terms is important for our shareholders and it is a clear focus of the Board that we
maintain our record of long-term dividend growth ahead of the rate of inflation. As ever, there remains a great deal
of uncertainty over the global economic outlook but the Board is planning another dividend increase ahead of
inflation for 2017.

Our direct and indirect costs, expressed as the ongoing charge, were 0.79%, down from 0.80% in 2015.

Gearing
Gearing levels ended 2016 modestly lower on the year. In June, we secured £75m of new long-term debt in two
tranches with twelve and fifteen year maturities. The borrowings were undertaken ahead of the Brexit Referendum
and replaced short-dated foreign currency denominated debt. At a blended rate of 3.04%, we locked in interest
costs for these borrowings at some of the lowest levels seen in many generations. Our range of fixed rate

An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY
borrowings is complemented by access to short term funding when required.

Private Equity
Our private equity holdings delivered strong returns of 24.7% in 2016 and generated £69.6m of net cashflow. Our
past commitments have now been repaid in full and we retain £264m of value in exposure at the year end. We
expect further profits to be realised for shareholders as these holdings mature, further enhancing shareholder
returns.

The Board has agreed to recommit capital to a new private equity programme taking a more focused, opportunistic
and direct approach that is flexible and will ultimately be considerably cheaper. We are doing this by making good
use of the internal expertise at F&C. New commitments to this programme have been made over the course of
the year.

Buyback and share issue policies
The year saw a general widening in investment trust discount levels. This deterioration in rating was driven by
reduced investor demand as a function of uncertainty arising from Brexit as well as a perceived overhang from
institutional sellers in the investment trust sector as a whole. For most of the year our discount traded wider than
the 7.5% average level that the Board has set for the purpose of discount control. Our desire to meet our discount
control objective led us to increase the pace of buybacks from the lowest level in a decade and purchase 12.4m
shares. The discount closed the year at 7.4%. It remains the aspiration of your Board to reach a point where our
share price trades at or around the NAV of the Company.

Contributors to total return in
2016
%
Portfolio return 24.3
Management fees (0.4)
Interest and other Expenses (0.3)
Buy-backs 0.2
Change of value of debt (0.1)
Gearing 0.2
Net Asset Value total return 23.9
Increase in discount (0.2)
Share price total return 23.7
FTSE All-World Total Return 29.6
Source: F&C

Your Board
We continue to ensure that proper succession arrangements are in place. Edward Knapp was appointed during
the year and brings to us his experience in board advisory and business transformation, including deep expertise
in financial services and risk. Stephen Burley will retire immediately following the AGM in April having served nine
years. Our thanks are extended to Stephen whose investment insight and experience have been particularly
helpful in recent years as the Company’s strategy has evolved.

Our strategy
At the start of 2013 your Board made the strategic decision to allocate more capital to overseas markets, creating
a truly global growth portfolio. This decision has helped to significantly improve returns to shareholders; over the
following four years, we have seen the domestic market, represented by the FTSE All-Share Index, deliver a
healthy 44.1% return but well behind the 81.6% delivered from global equities.

We carry out a review of the Manager’s overall investment performance and services following each year end with
continual monitoring throughout the year. As a consequence it has again been decided that F&C be reappointed
as our Manager.

Outlook
Long running trends in inflation and interest rates may well have turned on a secular basis, with significant
implications for investment opportunities across and within stock markets. Despite longer term uncertainty and

An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY
the unclear political environment, we enter 2017 with some renewed impetus in the global economy and signs of
improvement in corporate earnings for the first time in several years. Markets have responded with enthusiasm
and the US economy continues to be very resilient.

Your Company therefore faces a year of challenges and opportunities as it has on numerous occasions since it
was launched as the very first investment trust in 1868. Not only are we proud of our heritage but also of our
relevance for investors in today’s world. We will continue to adapt and innovate. Our corporate structure enables
us to take a long term view, borrowing in different currencies to invest and providing a rising income stream in real
terms to our shareholders over time. As we move towards the celebration of your Company’s 150th anniversary
in 2018, you can be assured that we will remain focused on extending our record of delivering growth in capital
and income to you over the longer term from our globally diversified equity portfolio.




Simon Fraser
Chairman
6 March 2017


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 based on the Directors’ current view and on information known to them at
the date of this document. Nothing should be construed as a profit forecast.

An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY
Weighting, stock selection and performance over one year in each investment portfolio strategy and
underlying geographic exposure versus Index at 31 December 2016
Investment
Portfolio
Strategy
Our portfolio
strategy
weighting %
Underlying
geographic
exposure* %

Benchmark
weighting %
Our strategy
performance in
Sterling %
Index
performance in
sterling %
UK 6.2 8.6 6.2 17.8 18.9
North America 32.5 47.3 56.3 28.5 34.1
Europe ex UK 12.9 19.4 14.5 14.1 19.7
Japan 8.3 10.1 8.4 26.1 22.7
Emerging
Markets
9.8 11.9 10.4 26.7 33.1
Developed
Pacific
- 2.7 4.2 - 29.8
Global
Strategies**
22.1 29.3 29.6
Private Equity 8.2 24.7
Source: F&C
*Represents the geographic exposure of the portfolio, including underlying exposures in private equity and fund holdings.
**The Global Strategies consist of Global Income, Global Multi-Manager and Global Smaller Companies and have been in
existence for less than three years.

An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY
Principal Risks and Future Prospects
The principal risks, both perceived and observed, together with their mitigations are described below. Note 25 on
the Report and Accounts details the Financial Risk Management of the Company. The risks that affect the
Company’s ongoing operations as well as the threats to security over the Company’s assets may vary in
significance from time to time. These principal risks are unchanged from those reported in the prior year.

Risk description:

Inappropriate business strategy in relation to investor needs leading to significant pressure on
the share price discount to net asset value per share.
Unchanged throughout the year under review
Mitigation:
The Board specifically considers business strategy at a formal meeting annually and monitors investor
requirements and themes at each Board meeting. A discount control mechanism has operated over many years.
The effectiveness of the marketing strategy is also reviewed at each meeting.

Risk description:
Unfavourable markets or inappropriate asset allocation, sector and stock selection, currency
exposure and use of gearing and derivatives may give rise to investment under-performance as well as impacting
capacity to pay dividends to investors. Political risk factors could also impact performance.
Unchanged throughout
the year under review
Mitigation:
Underlying investment strategies, performance and gearing are reviewed with the Fund Manager at
each Board meeting. Cash, borrowing and derivative limits are also monitored. F&C’s Performance and Risk
Oversight team provides independent oversight on investment risk management for the directly managed
portfolios. The portfolio is diversified and the Company’s structure enables it to take a long-term view of countries,
markets and currencies.

Risk description:
Failure of F&C as the Company’s main service provider to continue to operate effectively
including the loss of key staff.
Unchanged throughout the year under review
Mitigation:
The Board regularly reviews the strength of the Manager’s investment management and client
services resources and meets with their risk management team to review internal control and risk reports. The
Manager’s appointment can be terminated at six month’s notice. A business continuity plan is in place. The
Manager structures its recruitment and remuneration packages in order to retain key staff and works closely with
the Board on any significant management changes.

Risk description:
Errors, fraud or control failures at service providers or loss of data through business continuity
failure or cyber attacks could damage reputation or investors’ interests or result in loss. Cyber risks increased
generally in 2016.
Increased in the year under review
Mitigation:
The Board receives regular control reports from F&C covering risk and compliance including oversight
of third party service providers. The Board has access to F&C’s Head of Business Risk and BMO’s Group
Information Security Officer, International and requires any significant issues directly relevant to the Company to
be reported immediately. The Depositary is specifically liable for loss of any of the Company’s securities and cash
held in custody.

Ten Year Horizon
Through a series of connected stress tests over the ten years commencing 1 January 2017, the Board assessed
the effects of:
• Potential illiquidity of the Company’s portfolio during substantial market falls when needing to fund private equity
commitments.
• Substantial falls in investment values on the ability to maintain loan covenants and to repay and re-negotiate
funding.
• Significant falls in income on the ability to continue paying steadily-rising dividends and maintaining adequate
revenue reserves.
• Constraints on the Board’s ability to control the discount including those concerning the funding of buybacks
during periods of high volatility in the share price.
The Board also took into consideration the perceived viability of its principal service providers, potential effects of
anticipated regulatory changes and the potential threat from competition.

Based on its assessment and evaluation of the Company’s future prospects, the Board has a reasonable
expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the
coming ten years; the Company’s business model, strategy and embedded characteristics have helped define
and maintain the stability of Foreign & Colonial over many decades. The Board expects this to continue over many
more years to come.

An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY

Statement of Directors’ Responsibilities in Respect of the Financial Statements

In accordance with Chapter 4.1.12 of the Disclosure Guidance and Transparency Rules the Directors confirm,
that to the best of their knowledge:

• 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, balanced and comprehensive 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 they face; and
• the annual report and financial statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for shareholders to assess the
Company’s position and performance, business model and strategy; and
• the financial statements and the Directors’ Report include details on related party
transactions.
.




On behalf of the Board
Simon Fraser
Chairman
6 March 2017

An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY
Income Statement



For the year ended 31
December
2016 2015
Revenue Capital Total Revenue Capital Total
£’000s £’000s £’000s £’000s £’000s £’000s

Gains on investments
and derivatives
- 620,118 620,118 - 164,815 164,815
Exchange movements on
foreign currency loans
and cash balances

857

(41,236)

(40,379)

(127)

(6,577)

(6,704)
Income 71,117 - 71,117 57,982 - 57,982
Management fees (3,063) (9,499) (12,562) (2,849) (8,791) (11,640)
Other expenses (2,758) (97) (2,855) (2,403) (59) (2,462)
Net return before finance
costs and taxation
66,153 569,286 635,439 52.603 149,388 201,991
Finance costs (1,722) (5,167) (6,889) (1,206) (3,619) (4,825)
Net return on ordinary
activities before
taxation

64,431

564,119

628,550

51,397

145,769

197,166
Taxation on ordinary
activities
(6,038) - (6,038) (4,135) (269) (4,404)
Net return attributable
to shareholders
58,393 564,119 622,512 47,262 145,500 192,762

Net return per share –
basic (pence)
10.57 102.12 112.69 8.42 25.94 34.36

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.
A statement of total recognised gains and losses is not required as all gains and losses of the Company have been reflected in the above
statement.

An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY
Statement of Changes in Equity

Share Capital Capital Revenue Total
Capital Redemption Reserves Reserve Shareholders’
Reserve Funds
For the year ended 31
December 2016
£’000s £’000s £’000s £’000s £’000s
Balance brought forward
31 December 2015
140,455 122,307 2,361,073 78,329 2,702,164
Dividends paid - - - (53,628) (53,628)
Shares repurchased by
the Company and
held in treasury

-

-

(57,613)

-

(57,613)
Net return attributable to
shareholders
- - 564,119 58,393 622,512
Balance carried forward
31 December 2016
140,455 122,307 2,867,579 83,094 3,213,435




Share Capital Capital Revenue Total
Capital Redemption Reserves Reserve Shareholders’
Reserve Funds
For the year ended 31
December 2015
£’000s £’000s £’000s £’000s £’000s
Balance brought forward
31 December 2014
140,573 122,189 2,230,361 84,390 2,577,513
Dividends paid - - - (53,323) (53,323)
Shares repurchased by
the Company and
cancelled

(118)

118

(2,121)

-

(2,121)
Shares repurchased by
the Company and
held in treasury

-

-

(12,667)

-

(12,667)
Net return attributable to
shareholders
- - 145,500 47,262 192,762
Balance carried forward
31 December 2015
140,455 122,307 2,361,073 78,329 2,702,164

An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY
Balance Sheet

At 31 December 2016 2015
£’000s £’000s £’000s £’000s
Fixed assets
Investments 3,432,682 2,932,572
Current assets
Debtors 6,648 6,044
Cash at Bank and short-term deposits 26,463 73,605
33,111 79,649
Creditors: amounts falling due within
one year

Loans - (154,096)
Other (4,785) (10,818)
(4,785) (164,914)
Net current assets/(liabilities) 28,326 (85,265)
Total assets less current liabilities 3,461,008 2,847,307
Creditors: amounts falling due after
more than one year

Loans (246,998) (144,568)
Debenture (575) (575)
(247,573) (145,143)
Net assets 3,213,435 2,702,164

Capital and Reserves
Share capital 140,455 140,455
Capital redemption reserve 122,307 122,307
Capital reserves 2,867,579 2,361,073
Revenue reserve 83,094 78,329
Total shareholders’ funds 3,213,435 2,702,164
Net asset value per share – prior
charges at
nominal value (pence)

587.92

483.42

An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY
Statement of Cash Flows

for the year ended 31 December 2016 2015
£’000s £’000s
Cash flows from operating activities before
dividends received and interest paid
Dividends received
Interest paid

(21,403)
69,943
(6,512)

(17,805)
56,794
(4,523)
Cash flows from operating activities 42,028 34,466
Investing activities
Purchases of investments (1,233,876) (1,084,118)
Sales of investments and derivatives 1,347,880 1,126,372
Other capital charges and credits (93) (58)
Cash flows from investing activities 113,911 42,196
Cash flows before financing activities 155,939 76,662
Financing activities
Equity dividends paid (53,628) (53,323)
Repayment of loans
Drawdown of loans
(547,676)
456,100
(364,692)
396,565
Cash flows from share buybacks for treasury
shares
(57,407) (12,464)
Cash flows from share buybacks for
cancellation
- (2,121)
Cash flows from financing activities (202,611) (36,035)
Net (decrease)/increase in cash and cash
equivalents
(46,672) 40,627
Cash and cash equivalents at the beginning of
the year
73,605 32,831
Effect of movement in foreign exchange (470) 147
Cash and cash equivalents at the end of the
year
26,463 73,605

Represented by:
Cash at bank 10,071 8,322
Short-term deposits 16,392 65,283
Cash and cash equivalents at the end of the
year
26,463 73,605

An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY
Notes

1 NET RETURN PER SHARE

2016 2016 2015 2015
pence £’000s pence £’000s
Total return 112.69 622,512 34.36 192,762
Revenue return 10.57 58,393 8.42 47,262
Capital return 102.12 564,119 25.94 145,500
Weighted average ordinary shares in
issue,
excluding shares held in treasury -
number

552,403,894

560,998,806

2 DIVIDENDS
The Directors have proposed a final dividend in respect of the year ended 31 December 2016
of 2.7p per share payable on 2 May 2017 to all shareholders on the register at close of
business on 31 March 2017.

3 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 United Kingdom (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 investment objective is to secure long-term growth in capital and income
through a policy of investing primarily in an internationally diversified portfolio of public 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 full details of financial risks are contained in note 25 of the report and accounts.

4 GOING CONCERN
The Company’s investment objective, strategy and policy are subject to a process of regular Board monitoring
and are designed to ensure that the Company is invested mainly in readily realisable, listed securities and that
the level of borrowings is restricted. The Company retains title to all assets held by the Custodian and agreements
cover its borrowing facilities. Cash is held with banks approved and regularly reviewed by the Manager and the
Board.

The Directors believe that: the Company’s objective and policy continue to be relevant to investors; the Company
operates within a robust regulatory environment; and the Company has sufficient resources to continue operating
within its stated policy for the 12 month period commencing from the date of this report. Accordingly, the financial
statements have been drawn up on the basis that the Company is a going concern.

5 ANNUAL GENERAL MEETING
The annual general meeting will be held at the Merchant Taylors’ Hall, 30 Threadneedle Street, London EC2R
8JB on 25 April 2017 at 12 noon.

6 REPORT AND ACCOUNTS

An investment company within the meaning of Section 833 of the Companies Act 2006
Registered in England and Wales, Company Registration No. 12901
Registered Office: Exchange House, Primrose Street, London EC2A 2NY
This statement was approved by the Board on 6 March 2017. It is not the Company's statutory accounts. The
statutory accounts for the financial year ended 31 December 2016 have been approved and audited, and received
an audit report which was unqualified and did not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying the report. The statutory accounts for the financial year ended 31
December 2015 received an audit report which was unqualified and did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying the report.

The Report and Accounts will be posted to shareholders on or around 20 March 2017 and copies may be
obtained thereafter during normal business hours from the Company’s Registered Office, Exchange House,
Primrose Street, London EC2A 2NY. Copies are available on the internet at www.foreignandcolonial.com
from 7
March 2017.

Legal Entity Identifier: 213800W6B18ZHTNG7371

Information disclosed in accordance with Disclosure Guidance and Transparency Rule 4.1



By order of the Board
F&C Investment Business Limited, Secretary,
Exchange House,
Primrose Street,
London
EC2A 2NY
6 March 2017