Audited Statement of Results for the year ended 31.12.17

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 2018

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 2017







Summary of Results

Share price total return of 21.0%, ahead of the market benchmark of 13.8%

A net asset value total return of 16.9% (debt at market value)

Annual Dividend per share up 5.6% to 10.4p, our 47
th
consecutive annual increase

Discount of 4.3%, our lowest year end level for over 10 years

The Chairman’s Statement

Dear Shareholder,

As we begin to mark Foreign & Colonial’s 150th anniversary and the launch
of the investment trust industry, I am very pleased to report another year of
strong gains with a total shareholder return of 21.0%.


150-year milestone
Before reporting on our results for last year, we should perhaps take a moment to reflect on
the last 150 years. It is remarkable to think that the original purpose of Foreign & Colonial
Investment Trust has remained relevant throughout its long history. Providing exposure to a
globally diversified portfolio of private and listed securities in one place, with access to all
aspects of portfolio construction including portfolio allocation, stockpicking, manager selection
and risk management at a reasonable cost, the investment trust that launched an industry 150
years ago is as relevant today as it ever was.

Performance
2017 was a good year. Our Net Asset Value (“NAV”) total return with debt at market value rose
by 16.9% and our total shareholder return was 21.0%. We benefited from a rise in global stock
markets with many indices reaching new record highs over the year. The 21.0% rise in our total
shareholder return over the year significantly exceeded the 13.8% return of our benchmark,
the FTSE All-World Index.

Many of our investment portfolios delivered returns in excess of their market benchmarks and we benefited from
exposure to technology related stocks and the outperformance of Europe, Japan and Emerging Markets. In
another year of strongly rising equity markets gearing was also helpful to performance. Returns on our private
equity investments were lower than on our listed equities but have been higher over the longer term. The majority
of our private equity portfolio was invested over ten years ago and is therefore quite mature. I am pleased to say
that this means our fund of fund programme is returning cash to us (£77.8m net in 2017).

Delivering long-term growth in capital and income
We look to deliver sustainable long-term growth in capital and income and I am pleased to say
that over ten years our share price total return is 156.1%. This is equivalent to 9.9% per annum.
Over twenty years it is 453.4%, which equates to 8.9% per annum.

Dividend growth has also been strong, with an annualised rise of 5.9% in payments over the
past decade and 7.4% over the past twenty years. Foreign & Colonial has paid a dividend every
year for 150 years.

Earnings and Dividends
We continued to see good growth in income during the year helping to bring our Net Revenue Return per share
up to 11.7 pence from 10.6 pence last year. While sterling had gained slightly against a number of major currencies
by the end of the year, average exchange rate levels over the period were still down on 2016 and this was
estimated to add to our income by £3m (£6m in 2016). Special dividends treated as income were £2.7m for the
year, £1.7m lower than last year.

Shareholders will be asked to approve a final dividend of 2.7 pence per share payable on 1 May 2018. This will
bring the total dividend for the year to 10.4 pence, a rise of 5.6%, which compares with the 3.0% rise in the
Consumer Prices Index, and will be the 47
th
year of rising dividends. The 2017 dividends are fully covered by
earnings and after payment of the final dividend the Revenue Reserves will significantly exceed one year’s worth
of dividends.

The Board remains confident that our investment portfolio will generate revenue increases higher than inflation
over the long term and our intention is to continue to deliver sustainable real rises in dividend per share to
shareholders.

Efficiency
Control of costs continues to be a focus of the Board. Annualised costs are calculated as a proportion of net assets
in accordance with two recognised yardsticks: the AIC’s “Ongoing Charges”, and the EU’s new “Total Cost”
measure introduced under PRIIPs. Ongoing Charges for 2017, which take account of expected future costs, have
remained level at around 0.8% of net assets for the last three years. This calculation includes approximately 0.3%
attributable to fees incurred within investee funds. Total Costs, as measured under the EU rules for the first time,
include costs such as interest and transaction charges as well as the charges within investee funds and therefore
show a higher figure of 1.06%. The Board and Manager will keep the Company’s costs under continuous review.

Discount
The Board has long been committed to an effective discount control that provides benefits for shareholders in
terms of reducing volatility and enhancing returns. The Company’s discount to NAV started the year at 7.4% but,
due to improved investor demand, narrowed to 4.3% by the end of the period further enhancing shareholder
returns. The average discount level of 6.7% for the year was the lowest seen for over twenty years.

The number of shares bought back by your Company in 2017 fell to a low level of 4.4m shares. The shares have
recently been trading, and bought back, within a 5% discount level, which represents significant progress since
adjusting our policy towards a 7.5% average attainment level in May 2015.

The Board will continue to use buybacks for the benefit of shareholders in pursuit of a sustainably low deviation
between the price and NAV per share in normal market conditions. No reference will therefore be made in future
to a specific attainment level for the Company’s discount. The policy and the levels within which it operates will
continue to be reviewed with the aim of achieving our long-held aspiration of seeing the Company’s shares trading
at or close to NAV.


Contributors to total return in
2017
%
Portfolio return 15.8
Management fees (0.4)
Interest and other Expenses (0.3)
Buy-backs 0.1
Change of value of debt (0.1)
Gearing/other 1.8
Net Asset Value total return 16.9
Decrease in discount 4.1
Share price total return 21.0
FTSE All-World total return 13.8
Source: F&C
Key Information Documents
In the context of investment performance, I should draw your attention to the EU’s PRIIPs regulations which came
into effect in January of this year. Their purpose is to improve the functioning of financial markets and increase
customer protection. One aspect is the responsibility of our management company to produce a Key Information
Document. Retail
investors must now be directed to this before buying or selling shares in the Company. The document has been
prepared
according to a prescriptive methodology under the regulation such that the investment performance scenarios,
based on recent past performance, may indicate future returns for shareholders that are too optimistic. This affects
investment trusts generally and concerns have been expressed within the industry. It is to be hoped that these
issues will be quickly resolved but, in the meantime, we will continue to remind shareholders to heed the maxim
that past performance should not be taken as a guide to the future.

The Board
As part of the Board’s succession plans, we are very pleased that Beatrice Hollond agreed to join the Board in
September. She brings to us her significant experience in asset management and as a non-executive director,
including investment trusts.


“F&C Investment Trust”
Our anniversary year provides a natural reflection point to ensure your Company continues its contribution and
relevance in the modern world. As part of this, our marketing will increasingly take place under the Company’s
commonly used name “F&C Investment Trust”; the name with which Foreign & Colonial has always been
synonymous. At the AGM shareholders will be asked to approve an amendment to the articles of association to
enable the Directors to change the Company’s corporate name to “F&C Investment Trust PLC” in the year ahead.

Your Company, your future
While we look forward to celebrating our 150th anniversary in a number of ways our greatest focus is, as always,
on the future of the Company and the part that it continues to play within the investment sector as a whole. Despite
the growth in the industry, there is still much work to be done in helping people understand the benefits of saving
and investing for the longer term given that there is now a much greater need for individuals to take control of their
future financial wellbeing. State and private pensions will simply not be able to provide a comfortable retirement.
The fact that life-expectancy is so much longer, combined with the rapid rise in the cost of care in old age means
that people will have to plan their savings for their future requirements much more carefully. Consequently, we
will be focusing considerable effort during our anniversary year on supporting broader financial education across
schools and universities.

More than ever before the financial services industry needs to create simple to use, transparent
investment products that help everybody in our society invest for the long term and secure their
financial future. Your Company meets that need by being structured to provide a clear
investment choice, particularly for smaller investors to have as a core holding of their
investment portfolio. Indeed, we are confident that your Company will remain an appropriate
choice for any longer-term investor, however small or large, for many years to come. In 2018
we face another period of political and economic uncertainty as well as market volatilty, but we
still strongly believe that the best long-term investment approach is to hold a globally diversified
portfolio of publicly listed and private equities such as Foreign & Colonial.


Simon Fraser
Chairman
6 March 2018


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.

Weighting, stock selection and performance over one year in each investment portfolio strategy and
underlying geographic exposure versus Index at 31 December 2017
Investment
Portfolio
Strategy
Our portfolio
strategy
weighting %
Underlying
geographic
exposure* %

Benchmark
weighting %
Our strategy
performance in
Sterling %
Index
performance in
Sterling %
UK 4.3 5.8 6.1 10.5 11.8
North America 33.8 47.7 54.2 14.9 11.3
Europe ex UK 13.2 19.9 15.1 19.3 17.2
Japan 8.5 10.6 8.6 15.7 14.4
Emerging
Markets
11.1 13.2 11.8 25.6 25.8
Developed
Pacific
- 2.9 4.2 - 15.9
Global
Strategies**
22.8 15.8 13.8
Private Equity 6.3 5.9
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.

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 are unchanged from those reported in the prior year. The principal risks
identified as most relevant to the assessment of the Company’s future prospects and viability
were those relating to potential investment portfolio under-performance and its effect on share
price discount and dividends, as well as threats to security over the Company’s assets.

Risk description:

Inappropriate business strategy in relation to investor needs leading to significant pressure on
the share price.
Unchanged throughout the year under review
Mitigation:
The Board assesses investor needs through targeted research and marketing, the effectiveness of
which is kept under continuous review. Overall business strategy is formally discussed annually with the Manager
and is monitored by the Board throughout the year against their own objectives. A discount control mechanism
has operated over many years.
The Company’s discount is a Key Performance Indicator (KPI) measured by the Board on an ongoing basis.

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, gearing and income forecasts are reviewed with the
Fund Manager at each Board meeting. Cash, borrowing and derivative limits, as well as dividend paying capacity,
are 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. The Company has a Revenue Reserve which
can be used to pay growing dividends in years when income receipts fall as a result of poor market conditions.
The performance of the Company relative to its Market Benchmark, its peers and inflation is a KPI measured by
the Board on an ongoing basis.

Risk description:
Failure of F&C as the Company’s main service provider to continue to operate effectively,
including the loss of key staff, and within regulations.
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 their risk management team to review internal control and risk reports. The
Manager’s appointment can be terminated at six months’ 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.
Performance KPIs and Manager errors are monitored by the Board for indications of continuity or other Manager
issues.

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 remain
heightened.
Unchanged throughout 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.
The Board additionally monitors efficiency of service providers’ processes through efficiency KPIs.

Ten Year Horizon
Through a series of connected stress tests based on historical information, but forward-looking over the ten years
commencing 1 January 2018, 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.

In concluding that ten years is a reasonable period over which to assess future prospects of the Company, the
Board considers that this approximates the periods relating to:

• its private equity commitments;
• its borrowings, repayable by June 2031; and
• the Corporate Governance rules relating to the Directors’ tenure.


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 the 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.

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 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 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.
.




On behalf of the Board
Simon Fraser
Chairman
6 March 2018

Income Statement



For the year ended 31
December
2017 2016
Revenue Capital Total Revenue Capital Total
£’000s £’000s £’000s £’000s £’000s £’000s

Gains on investments
and derivatives
- 486,348 486,348 - 620,118 620,118
Exchange movements
on foreign currency loans
and cash balances

(95)

3,328

3,233

857

(41,236)

(40,379)
Income 78,765 - 78,765 71,117 - 71,117
Management fees (3,768) (11,305) (15,073) (3,063) (9,499) (12,562)
Other expenses (3,094) (61) (3,155) (2,758) (97) (2,855)
Net return before finance
costs and taxation
71,808 478,310 550,118 66,153 569,286 635,439
Finance costs (1,858) (5,574) (7,432) (1,722) (5,167) (6,889)
Net return on ordinary
activities before
taxation

69,950

472,736

542,686

64,431

564,119

628,550
Taxation on ordinary
activities
(6,464) (713) (7,177) (6,038) - (6,038)
Net return attributable
to shareholders
63,486 472,023 535,509 58,393 564,119 622,512

Net return per share –
basic (pence)
11.67 86.79 98.46 10.57 102.12 112.69

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.

Statement of Changes in Equity

Share Capital Capital Revenue Total
Capital Redemption Reserves Reserve Shareholders’
Reserve Funds
For the year ended 31
December 2017
£’000s £’000s £’000s £’000s £’000s
Balance brought forward
31 December 2016
140,455 122,307 2,867,579 83,094 3,213,435
Dividends paid - - - (55,260) (55,260
Shares repurchased by
the Company and
held in treasury

-

-

(25,661)

-

(25,661)
Net return attributable to
shareholders
- - 472,023 63,486 535,509
Balance carried forward
31 December 2017
140,455 122,307 3,313,941 91,320 3,668,023




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

Balance Sheet

At 31 December 2017 2016
£’000s £’000s £’000s £’000s
Fixed assets
Investments 3,926,558 3,432,682
Current assets
Debtors 12,663 6,648
Cash at Bank and short-term deposits 31,136 26,463
43,799 33,111
Creditors: amounts falling due within
one year

Loans (50,000) -
Other (10,397) (4,785)
(60,397) (4,785)
Net current (liabilities)/assets (16,598) 28,326
Total assets less current liabilities 3,909,960 3,461,008
Creditors: amounts falling due after
more than one year

Loans (241,362) (246,998)
Debenture (575) (575)
(241,937) (247,573)
Net assets 3,668,023 3,213,435

Capital and Reserves
Share capital 140,455 140,455
Capital redemption reserve 122,307 122,307
Capital reserves 3,313,941 2,867,579
Revenue reserve 91,320 83,094
Total shareholders’ funds 3,668,023 3,213,435
Net asset value per share – prior
charges at
nominal value (pence)

676.53

587.92

Statement of Cash Flows

for the year ended 31 December 2017 2016
£’000s £’000s
Cash flows from operating activities before
dividends received and interest paid
Dividends received
Interest paid

(26,226)
77,631
(7,344)

(21,403)
69,943
(6,512)
Cash flows from operating activities 44,061 42,028
Investing activities
Purchases of investments (1,390,393) (1,233,876)
Sales of investments and derivatives 1,384,673 1,347,880
Other capital charges and credits (55) (93)
Cash flows from investing activities (5,775) 113,911
Cash flows before financing activities 38,286 155,939
Financing activities
Equity dividends paid (55,260) (53,628)
Repayment of loans
Drawdown of loans
-
50,000
(547,676)
456,100
Cash flows from share buybacks for treasury
shares
(25,952) (57,407)
Cash flows from financing activities (31,212) (202,611)
Net increase/(decrease) in cash and cash
equivalents
7,074 (46,672)
Cash and cash equivalents at the beginning of
the year
26,463 73,605
Effect of movement in foreign exchange (2,401) (470)
Cash and cash equivalents at the end of the
year
31,136 26,463

Represented by:
Cash at bank 3,461 10,071
Short-term deposits 27,675 16,392
Cash and cash equivalents at the end of the
year
31,136 26,463

Notes

1 NET RETURN PER SHARE

2017 2017 2016 2016
pence £’000s pence £’000s
Total return 98.46 535,509 112.69 622,512
Revenue return 11.67 63,486 10.57 58,393
Capital return 86.79 472,023 102.12 564,119
Weighted average ordinary shares in
issue,
excluding shares held in treasury -
number

543,844,221

552,403,894

2 DIVIDENDS
The Directors have proposed a final dividend in respect of the year ended 31 December 2017
of 2.7p per share payable on 1 May 2018 to all shareholders on the register at close of
business on 3 April 2018.

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 Brewery, 52 Chiswell Street, London EC1 on 23 April 2018 at 12
noon.

6 REPORT AND ACCOUNTS
This statement was approved by the Board on 6 March 2018. It is not the Company's statutory accounts. The

statutory accounts for the financial year ended 31 December 2017 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 2016 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 19 March 2018 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 foreignandcolonial.com
from 7
March 2018.

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 2018