Annual Financial Report, 1 Aug 2023 07:00

01 August 2023, 07:00

Source - LSE Regulatory

RNS Number : 8094H

CT Global Managed Portfolio - CMPI

01 August 2023

To: RNS

Date: 1 August 2023

From: CT Global Managed Portfolio Trust PLC

LEI: 213800ZA6TW45NM9YY31

Statement of Audited Results for the year ended 31 May 2023

Income shares - financial highlights

- Annual dividend increased by 8.3% to 7.20p per Income share compared to the prior year.

- Dividend yield⁽¹⁾ of 6.0% at 31 May 2023, based on total dividends for the financial year of 7.20p per Income share. This compares to the yield on the FTSE All-Share Index of 3.7%. Dividends are paid quarterly.

- Net asset value total return⁽²⁾ per Income share of -7.4% for the financial year, underperforming the total return of the FTSE All-Share Index of +0.4% by -7.8% points.

- Share price total return⁽²⁾ per Income share of -2.1% for the financial year, underperforming the total return of the FTSE All-Share Index of +0.4% by -2.5% points.

- Net asset value total return per Income share of +143.3% since launch on 16 April 2008, the equivalent of +6.1% compound per year. This has outperformed the total return of the FTSE All-Share Index of +128.0%, the equivalent of +5.6% compound per year.

Growth shares - financial highlights

- Net asset value total return per Growth share of -5.8% for the financial year, underperforming the total return of the FTSE All-Share Index of +0.4% by -6.2% points.

- Share price total return per Growth share of -7.8% for the financial year, underperforming the total return of the FTSE All-Share Index of +0.4% by -8.2% points.

- The net asset value per Growth share has increased by +134.8% since launch on 16 April 2008, the equivalent of +5.8% compound per year. This has outperformed the total return of the FTSE All-Share Index of +128.0%, the equivalent of +5.6% compound per year.

Notes:

(1) Dividend yield - based on dividends at the annual rate of 7.20p per Income share for the financial year to 31 May 2023 and the Income share price of 121.0p at 31 May 2023.

(2) Total return - the return to shareholders calculated on a per share basis taking into account both the reinvestment of any dividends paid in the period and the increase or decrease in the share price or NAV in the period.

Chairman's Statement

Performance

For the Company's financial year to 31 May 2023 the NAV total return (capital performance plus the reinvestment of any dividends paid) was -7.4% for the Income shares and -5.8% for the Growth shares, both of which underperformed the +0.4% total return for the FTSE All-Share Index, the benchmark index for both share classes. Of relevance and for interest, the FTSE Closed End Investment Companies Index total return was -4.4% for the year.

The dominant influence on performance over the past year was what happened to discounts of share prices to net asset values of many underlying investments. The average discount for the investment trust sector steadily widened from 8% at the start of the year to 16% by the end. There is no one reason that caused discounts to widen, however the overall economic environment, with sharply rising inflation and the response from monetary authorities to raise interest rates after more than a decade of being at very low levels, was an important factor. Performance is discussed more fully in the Investment Manager's Review, however most companies experienced a fall in their share price over the year and this transmitted uncertainty through to investors. Uncertainty created adverse sentiment amongst investors who became very risk averse and cautious. This was reflected in widening discounts of share prices to net asset values across the investment company universe.

For Income shareholders, I am pleased to report that dividends have now been increased in each of the last twelve years. For Growth shareholders seeking long term performance, while the last two financial years have been difficult, it is pleasing to note that their net asset value compound annual growth rates to 31 May 2023 have been 6.3% over ten years and 5.8% from launch on 16 April 2008, outperforming the compound annual growth rates for the FTSE All-Share Index for the same periods.

Revenue and Dividends

For the financial year ended 31 May 2023, four interim dividends have now been paid, totalling 7.20p per Income share, which represents an increase of 8.3% from the prior financial year (2022: 6.65p per Income share). This has been achieved while adding £353,000 to the revenue reserve. The fourth interim dividend was paid after the year-end on 7 July 2023.

This is the twelfth consecutive year of increase and the yield on the Income shares was 6.0% on the year-end Income share price, compared with 3.7% for the FTSE All-Share Index.

From an income perspective, the revenue return per Income share of 7.96p (2022: 6.85p) illustrated continuing growth. It has been a genuinely encouraging feature that many holdings, especially in the Income Portfolio, increased dividends. The increase in exposure to UK equity investment companies, in both portfolios also enhanced revenue growth.

In the absence of unforeseen circumstances, it is the Board's current intention, in accordance with the Company's stated dividend policy to pay four quarterly interim dividends; and each of at least 1.80p per Income share so that the aggregate dividends for the financial year to 31 May 2024 will be at least 7.20p per Income share.

After allowing for the payment of the fourth interim dividend, CT Global Managed Portfolio Trust has a revenue reserve of £2.5 million, approximately 70% of the current annual dividend cost (at 7.20p per Income share). In addition, the £29.6 million distributable reserve (the 2022 special reserve, which was created following the cancellation of the share premium account) is attributable to the Income Portfolio. These reserves can be drawn on to support the payment of dividends to Income shareholders if and when considered appropriate by the Board.

Performance Fee

Since the launch of the Company in 2008, in addition to an annual investment management fee based on the total assets of each Portfolio, if certain conditions were met a performance fee had been payable to Columbia Threadneedle Investment Business Limited (the 'Manager'). The performance fee, in respect of any one financial year, was capped at 0.35% of the total assets of the relevant Portfolio.

Over recent years, the use of performance fees, which are often complicated and costly, has reduced across the investment company sector. As was explained in my Chairman's Statement in the Interim Report to 30 November 2022, during the year, the Board and the Manager discussed the appropriateness of the performance fee and were pleased to agree its cessation with effect from 29 September 2022. Both the Board and Manager believe this to be in shareholders' best interests as it simplifies and reduces the level of fees incurred by the Company in the future. The last performance fee generated and payable to the Manager was in the year to 31 May 2021. There was no change made to the annual investment management fee which remains at 0.65% per annum of the total assets of each Portfolio, subject to being reduced to 0.325% per annum on any assets which are invested in other investment vehicles managed by the Manager.

Borrowing

The Company has a £5 million unsecured term loan at a fixed interest rate of 2.78% (which is fully drawn down in the Income Portfolio) and a £5 million unsecured revolving credit facility ('RCF'), both with The Royal Bank of Scotland International Limited, which are available until 10 February 2025. At the year-end £2 million of the RCF had also been drawn down in the Income Portfolio, resulting in total borrowings of £7 million in the Income Portfolio (10.4% of its gross assets) and zero in the Growth Portfolio.

The Board is responsible for the Company's gearing strategy and sets parameters within which the Investment Manager operates. Borrowings are not normally expected to exceed 20% of the total assets of the relevant Portfolio; in practice they have been modest and primarily used to enhance income in the Income Portfolio.

Management of Share Price Premium and Discount to NAV

In normal circumstances we aim to ensure the discount to NAV at which our shares trade is no more than 5%. In practice over the years the shares have generally traded close to NAV and, during the financial year to 31 May 2023, the Income shares traded at an average premium of 0.7% and the Growth shares traded at an average discount of -0.4%.

We are active in issuing shares to meet demand and buying back shares when this is appropriate. During the financial year 1,665,000 new Income shares and 190,000 new Growth shares were issued from the Company's block listing facilities at an average premium to their respective NAVs of 1.6% and 1.5%. In addition, and primarily in the second half of the financial year, 815,000 Growth shares were bought back into treasury at an average discount to NAV of 3.7%. No Income shares were bought back.

The Board is seeking shareholders' approval to renew the powers to allot shares, buy back shares and sell shares from treasury at the forthcoming Annual General Meeting ('AGM'). Specifically, the Board is seeking approval to allow the Company to issue up to 20% of its Income shares and up to 20% of its Growth shares without rights of pre-emption and in this respect there are two resolutions proposed. Each resolution is for up to 10% and, therefore, for an aggregate of up to 20% of each of the Income shares and Growth shares. This approach allows any shareholder who may not wish to give approval to an aggregate limit higher than that recommended by corporate governance guidelines the ability to approve the first resolution for up to 10% and to also consider the second resolution separately for a further 10%. The Board believes the ability to issue and buy back shares helps to reduce the volatility in the premium or discount of the share prices to the underlying NAVs and the 20% overall share allotment authority and the 14.99% buy back authority with respect to both the Income shares and Growth shares are therefore in the best interests of all shareholders.

Share Conversion Facility

Shareholders have the opportunity to convert their Income shares into Growth shares or their Growth shares into Income shares annually subject to minimum and maximum conversion thresholds which may be reduced or increased at the discretion of the Board.

The ability to convert without incurring UK capital gains tax should be an attractive facility for shareholders who wish to do so, and the next conversion date (subject to minimum and maximum thresholds) will be on 26 October 2023. Information is provided in the Annual Report and Financial Statements and full details will be provided on the Company's website (ctglobalmanagedportfolio.co.uk) from 7 August 2023.

Board Changes

Following the Annual General Meeting on 29 September 2022, David Harris retired from the Board. David was the Senior Independent Director and Sue Inglis now fulfils this role. As part of its succession plan, the Board was pleased to appoint Shauna Bevan as a non-executive Director with effect from 9 June 2022.

Company Name

As reported in my statement in the Annual Report to 31 May 2022, following the acquisition of the Company's Manager by Columbia Threadneedle Investments, part of Ameriprise Financial, during the financial year the Board resolved to change the Company's name to CT Global Managed Portfolio Trust PLC with effect from 29 June 2022. There has, however, been no change to the personnel running the activities of your Company in terms of both fund management and administration.

Change of Auditor

As was explained in my Chairman's Statement in the Interim Report to 30 November 2022, in view of increasing audit fees, it was agreed to conduct a competitive audit tender during the financial year. This was no reflection on the quality of the incumbent Auditor's work or any issue other than cost. Following this process, KPMG LLP resigned as the Company's Auditor, having served since its appointment in September 2017. The Board then appointed BDO LLP and it has now completed the audit for the financial year to 31 May 2023. Shareholders will be asked to approve its re-appointment at the forthcoming AGM on 28 September 2023.

AGM

The Annual General Meeting is scheduled to be held on 28 September 2023 at Exchange House, Primrose Street, London, EC2A 2NY at 11.30am. Peter Hewitt, the Investment Manager, will as usual give a presentation and provide an overview of the financial year together with his view on the outlook.

Voting on all resolutions at the AGM will be held on a poll, the results of which will be announced and posted on the Company's website following the meeting. All shareholders are therefore encouraged to make use of the proxy form or form of direction provided, in order that they can lodge their votes.

Should shareholders have any questions or comments in advance, these can be raised with the Company Secretary (MPTCoSec@columbiathreadneedle.com). Following the AGM, the Investment Manager's presentation will be available on the Company's website ctglobalmanagedportfolio.co.uk

Continuation Vote

At the Annual General Meeting, shareholders will be asked to vote to approve an ordinary resolution to the effect that the Company continues as an investment trust. The requirement to put a resolution to shareholders at the 2023 AGM (being five years since the last continuation vote) is set out in the Company's Articles of Association.

The Board believes that the Company has proved a very effective vehicle for shareholders to gain exposure to a wide range of markets and sectors:

• over the five years to 31 May 2023, the NAV total return for the Income shares and Growth shares has been +11.8% and +11.6% respectively. Whilst positive, these returns are behind the total return of +15.2% from the FTSE All-Share Index, largely due to investment company share price discounts widening since late 2021;

• the NAV total return of both the Income shares and Growth shares has outperformed the FTSE All-Share Index since launch on 16 April 2008;

• the NAV total return of both the Income shares and Growth shares have equalled or bettered the benchmark index in eleven of the fifteen financial years since launch;

• excluding the one-off special dividend which was paid in 2018, the total annual dividend to Income shareholders has risen by 26.3% over the last five years which compares favourably to Consumer Price Inflation which has risen by 24.1% over the same period;

• the annual dividend on the Income shares has been increased in each of the last twelve years. This dividend represents an attractive yield of 6.0% based on the share price at the year-end;

• since the Company's launch, both the Income shares and Growth shares have traded at close to NAV (average premium of 0.4% and discount of 0.1% respectively);

• annually the Company offers the ability to switch between the Growth shares and Income shares, and vice versa, in a tax efficient and cost-effective manner to suit investors' needs; and

• the ongoing charges of running the Company, excluding the costs of the underlying investments, have reduced from 1.50% at launch to 1.17% for the Income shares and 1.07% for the Growth shares for the year just ended, and the Performance fee, which cost up to 0.35% of total assets in some years, has been removed.

Accordingly, the Board strongly believes that it is in the best interests of shareholders for the Company to continue and encourages shareholders to vote in favour of the resolution, as they intend to do in respect of their own shareholdings.

Outlook

As with last year, there is a heightened level of uncertainty pervading through financial markets. The war in Ukraine, political upheavals in the UK and elsewhere and levels of inflation not previously experienced this century are all factors. In order to combat the latter, interest rates have been raised faster and higher, and look likely to remain higher for longer than had been expected. The fear of recession is also a headwind to progress in stock markets which, not surprisingly lack confidence. Investment companies have been de-rated, as measured by average share price discounts, to levels not seen since the global financial crisis of 2008/2009.

Whilst the chances of a recession over the next year have increased, valuations of UK companies in particular have already gone some way to take account of this possibility. They are at historically low levels both in absolute and relative terms and on a longer-term perspective offer the patient investor the prospect of attractive returns. As always, the Manager's focus is on selecting only the highest quality investment companies with experienced managers in the belief that this will serve shareholders' interests best.

David Warnock

Chairman

31 July 2023

Investment Manager's Review

Stock Market Background

The past twelve months have been a period of considerable turmoil in financial markets. Inflation, which had begun to rise sharply in the second half of the last financial year, proved anything but "transitory" and has continued to rise for much longer than had been anticipated, peaking in the UK at over 11% last autumn. Only recently has it begun to start trending lower. In response, central banks everywhere increased interest rates. In the case of the UK, the Bank of England raised rates from 1% at the start of the period under review to 4.5% by the end. This has meant a 350% rise in the absolute cost of money over a relatively short time period which has had ramifications on asset prices generally, and on discounts across the investment company sector.

Equity markets have been stalked throughout the year by the fear of recession with investors concerned with what that could mean for prospective corporate profitability and valuations of equity markets. And yet, despite sharp rises in interest rates, economies, even that of the UK, did not slump into recession. Key factors behind this were buoyant consumer demand coupled with extremely tight labour markets throughout most developed economies, which meant unemployment remained at very low levels. The ongoing war in Ukraine, political turmoil in the UK and the all-embracing cost of living crisis which affected both the corporate sector and the wider population kept investor sentiment very adverse and raised investor uncertainty to high levels.

This was reflected in bursts of volatility for most equity markets which limited positive returns to modest levels.

Total Return by Region for Year to 31 May 2023 (sterling adjusted)

FTSE Europe ex UK	+8.5%
FTSE Japan	+6.8%
S&P 500 (US)	+4.7%
FTSE World ex UK	+4.0%
FTSE All-Share	+0.4%
FTSE Pacific ex Japan	-4.3%
MSCI Emerging Markets	-6.5%

Source: Columbia Threadneedle Investments

The table above highlights that the UK market reverted once again to its role as one of the lower performers in the league table of equity market returns for global stock markets. Another long-term relative underperformer has been the Japanese stock market; however, over the past year, it appears as one of the better relative performers. In local currency terms, performance was even stronger, however the Yen (which for many years had been a strong currency) weakened, declining by 7% against Sterling (one of the traditionally weaker currencies).

The table below highlights the performance trends within the UK equity market over the past year. They are a continuation of the trends that became evident during the second half of the Company's previous financial year and marked a reversal of the trends within the market that had existed since the Brexit referendum. Leadership within the UK stock market has come from the very biggest companies which are in the FTSE 100 Index. This trend has been mirrored with other developed economy stock markets in the US and Europe.

Total Returns for Year to 31 May 2023

FTSE 100 Index +1.7%

FTSE 250 Index -5.4%

FTSE Small Cap (ex Investment Companies) Index -8.7%

FTSE Closed End Investment Companies Index -4.4%

The FTSE 100 Index comprises 84% of the FTSE All-Share Index by market value and has heavy weightings in sectors like oils, banks, pharmaceuticals, utilities and consumer staples. With the possible exception of pharmaceuticals, these are viewed as mature "old economy" sectors with low growth characteristics. However, during times of acute uncertainty, investors can exhibit a preference for larger companies which are perceived as less volatile, safer and better placed to survive an adverse environment of rising inflation and interest rates. Taking a longer perspective, it is these very sectors which dominate the UK stock market that have been a key element behind the long-term underperformance of UK equities.

Performance

For the year to 31 May 2023 the FTSE All-Share Index managed a marginal 0.4% rise (in total return terms). Over the same period the net asset value ('NAV') of the Growth shares declined by 5.8% whilst that of the Income shares experienced a 7.4% fall (again both in total return terms).

There are three key factors which help to explain this performance.

The first and perhaps the most important factor, which has caused the investment company sector (along with both the Growth Portfolio and Income Portfolio) to lag the benchmark has been what has happened to discounts. The principal way share prices of investment companies are valued by the stock market is by reference as to whether the share price trades at a discount or premium to the underlying net asset value of the investment company in question. There was a steady widening of the average sector discount over the past year from 8% to 16% as at 31 May 2023. Although this figure is an average, with a few investment companies maintaining a consistently tight rating, the vast majority of investment companies across a wide variety of sectors experienced a widening of their share price discounts in relation to net asset values. Whilst there is no single element that caused this, one that has played a significant role has been overall uncertainty about the investment environment which has translated through to very adverse sentiment amongst retail investors who are a key audience for investment companies. To help put in perspective the magnitude of the movement in the average sector discount, aside from a very brief period at the start of the COVID lockdown in March 2020, the average sector discount is now at its widest for a decade.

Second, the sharp rise in interest rates over the past year has severely affected the valuations of many investment companies in the wider alternatives sector. The term "alternatives" refers to investment companies in infrastructure, renewables, property, private equity and a series of new smaller sub sectors such as royalty income. The common theme is that their assets are valued by reference to a discount rate which is applied to the cash flows generated by underlying assets. When interest rates rose rapidly this was also reflected in a rise in the discount rates used which often led to a corresponding reduction in asset value. Some investment companies in these areas were trading at premiums (e.g. renewables) but have since moved to discounts. In the case of property and private equity trusts, discounts of 40%-50% are now not uncommon. Given that there has been a great deal of issuance in these sectors over the past decade, the wider alternatives sector accounts for nearly half of the total assets of the investment company sector. The Income Portfolio has a number of these companies where dividends form a large part of their total return. Whilst the dividends have generally continued to be paid, and in certain cases increased, asset values and share prices have fallen, which is a key reason why the Income Portfolio has underperformed over the past year.

The third factor which has worked against performance for active fund managers is best illustrated by the earlier table of the performance of various UK Indices split by size over the past year. When the largest companies outperform, it is difficult for active fund managers, who for reasons of risk and diversity will not wish to have too concentrated a portfolio dominated by holdings in a few very large companies. Typically, they tend to prefer medium and smaller sized companies which grow faster and tend to outperform over the longer term. As explained earlier, this has not been the case over the past year. Similar trends have been evident in European and US stock markets. This has resulted in many equity focused investment companies lagging benchmarks over the past year.

As is explained in the Chairman's Statement, at the forthcoming AGM, shareholders will be asked to approve an ordinary resolution that the Company continues as an investment trust. Over the past five years, since the last continuation vote, the NAV total return of both the Growth shares and Income shares are behind the benchmark. This is entirely the result of the magnitude of the reversal in performance, due to reasons outlined earlier, which has occurred over the past eighteen months. However, since the Company's launch (in April 2008) to 31 May 2023, the NAV total return of both the Income shares and Growth shares are ahead of the FTSE All-Share Index, the benchmark index, and have also equalled or bettered the benchmark in eleven of the fifteen financial years since launch.

Growth Portfolio - Leaders and Laggards

Starting with the underperformers, an interesting theme is that none of the laggards is a conventional investment company investing into listed equities. The Schiehallion Fund C shares declined by 45% over the past twelve months. Managed by Baillie Gifford, it invests in late-stage private companies principally in the technology sector. Whilst underlying revenue growth across its portfolio is in excess of 50% most of its key holdings (Space X, ByteDance, Wise and Stripe) are not yet profitable and, in an environment of rising interest rates and higher discount rates, have had their valuations severely marked down. At the same time, the share price has moved from a premium to a discount of over 40% to the net asset value. Encouragingly, the managers have frequently revalued the holdings so valuations are not historic but current. Despite the performance of the shares the underlying portfolio retains very exciting prospects for growth. Schroders Capital Global Innovation Trust experienced a 38% fall in its share price. At 0.3% of net assets, it is one of the smallest holdings in the Growth Portfolio and trades at a near 50% discount to net assets. There are some companies with significant potential, such as the largest holding Oxford Nanopore. However, evidence of progress in the trust's net asset value is needed before the wide discount will narrow. Against an adverse background for UK and European listed property companies TR Property Investment Trust had a 29% decline in its share price. As has been mentioned earlier, valuations moved lower as the effect of rising interest rates fed through to yields on property assets. Share prices of property companies experienced significant widening of their discount to net asset value. There are early signs, however, that valuations are stabilising, particularly where rental growth is still evident. TR Property Investment Trust has a strong long-term record of growth in both its net asset value and dividends and remains a core holding. Hipgnosis Songs Fund ('Hipgnosis') owns song catalogues which generate royalty income from a variety of sources but principally from streaming services, the growth of which is key to growing its royalty income. It has built a unique catalogue of over 65,000 song copyrights from artists and song writers. Whilst the net asset value has grown rapidly, the share price has declined by 25% as the market is uncertain whether the discount rate used to value the portfolio has reflected the wider changes in the investment environment. Hipgnosis had a series of equity issues to acquire song catalogues and also used gearing for this purpose. Gearing has risen and will not be used to fund further acquisitions. Management are exploring ways of corroborating the value of its song portfolio which they believe will underscore the reported asset value. At a discount of over 45% the share price offers attractive value. RIT Capital Partners has been a long-term holding; however, it had a disappointing year with a share price decline of 23%. Over the past decade the trust has built a strong long term performance record by capturing most of the upside in equity markets and materially less than the market in down phases. Last year, in part due to the private equity element of the portfolio, the net asset value performed slightly worse than global equities which caused the share price to decline and the discount to widen out to 22%. At the widest discount the shares have traded at for many years, the trust offers outstanding long-term value.

Turning to the better performers, the leader was private equity company Oakley Capital Investments ('Oakley') whose share price gained 22% over the year. Oakley's focus is European companies in the education, technology and consumer sectors. Most of their investments are in founder-led smaller or medium-sized companies so competition for deals from other private equity companies is much less. Oakley achieved strong growth over the year with prospects that this will continue for the current year. Despite the good performance the shares trade on a discount of over 30%. Perhaps surprisingly, after a challenging calendar 2022 for the technology sector, Polar Capital Technology Trust and Allianz Technology Trust achieved share price gains of 14% and 11% respectively. All of these gains happened in the last quarter of the financial year and were driven by the mega tech holdings in both of their portfolios. These are the companies which are likely to be the major beneficiaries of the boom in Artificial Intelligence applications which will become a major source of future growth. It should be noted that technology companies which are not profitable in the early stages of their growth and only generating revenues are still out of favour, both in the listed and unlisted sectors. This recovery in the technology sector is confined to existing very large companies which have substantial amounts of cash on their balance sheets and the resources to take advantage of new opportunities. Finsbury Growth & Income Trust, which is in the UK equity income sector, experienced a share price gain of 13% which also marked a welcome recovery after a difficult 2022. Its highly concentrated portfolio is focused on UK companies with consistent earnings growth. There is exposure to global consumer brands through Diageo, Unilever and Burberry and also to data analytics and platform services through RELX, London Stock Exchange and Sage. Having been de-rated in 2022, the inflation resilience of much of the portfolio, along with inherent growth prospects, have been rewarded with a strong recovery over the past year. Finally, a better performance from European stock markets provided a tail wind for Henderson European Focus Trust to record an 11% share price return. Its portfolio is balanced between significant exposure to the oil and industrial sectors and also the pharmaceutical and luxury goods sectors where Europe has a strong roster of leading companies.

Income Portfolio - Leaders and Laggards

Turning to the laggards in the Income Portfolio. The shares in Digital 9 Infrastructure produced a return of -42.3% which was not due to the net asset value declining, but rather a wide share price discount of 45% opening up. Digital 9 Infrastructure owns subsea fibre assets, the infrastructure for terrestrial television and radio broadcasting in the UK and Ireland's largest wireless internet provider. However, the jewels in the crown are data centres mainly in Iceland and Finland which are powered by renewables. These data centres require a great deal of power so if renewables can be used this makes them very attractive. However, they also require a significant capital expenditure to exploit the opportunity ahead for them. When its shares initially moved to a small discount, the possibility of raising funds via an equity issue disappeared and the market began to be concerned over levels of gearing that would be needed to fund future growth. Management are evolving a plan to complete the strategy and, if successful, there is considerable upside. LXI REIT came into the portfolio when it acquired our long time holding Secure Income REIT in June 2022. However, the problems that have affected many companies in the property sector were manifest here. The net asset value fell 15% as property yields moved upwards reducing the asset value. In tandem, the shares moved to a wide discount, currently around 30%. A positive indication of financial health was that the dividend was increased 5% and the company forecast an increase for next year, also of 5%, which gives a prospective dividend yield of 6.5%. Hipgnosis Songs Fund, which returned -25%, was covered in the Growth Portfolio section. Encouragingly, from an income perspective the fund has continued to pay the dividend which gives an attractive 6.3% yield. The final two in the laggards list are both Swiss-based, listed on the Zurich Stock Exchange and biotech specialists. HBM Healthcare Investments fell by 18% whilst BB Biotech was down by 17% over the year. Both investment companies have good long-term records. However, both suffered as the biotech sector in general fell out of favour in the second half of the financial year. Both funds pay dividends out of capital, albeit in both cases they were reduced. However, they remain well managed with considerable investment resource underpinning them and by paying a dividend, enable a fund with an income element to the objective to gain exposure to a potentially exciting sector with considerable growth prospects.

The leading positive performer was Biopharma Credit with a total return of 10%. The trust is a specialist lender to medium-sized pharmaceutical companies where they often need significant cash resources to fund research and development programmes. The funds are lent against royalties from existing pharmaceutical products that are already in the market generating revenues. In addition, should the company they have lent to be acquired, often Biopharma has an equity option arrangement where it benefits from the deal. This is what happened last year with Biopharma paying its regular 7% dividend yield and then a sizeable special dividend to shareholders following the acquisition of one of the companies to which it had made a loan. Scottish American Investment Company also returned 10% over the year. The trust is in the global equity income sector and has built an impressive long-term performance record both in capital and income. Most of the equity portfolio is invested in companies with reliable compounding earnings records, strong competitive positions and proven management. Around 15% is invested in property and bonds and, although it has a relatively low dividend yield of 2.7%, the dividend grew at a healthy 9% last year. Scottish American Investment Company should be viewed as a core position. CC Japan Income & Growth Trust, which is managed by Japanese specialist boutique Coupland Cardiff, delivered a 9% return last year. One aspect of much improved corporate governance in Japan is the increasing importance of dividends in shareholder returns. Over half of listed companies in the TOPIX Index have net cash, yet, Japanese companies have the lowest pay-out ratio of all developed stock markets. CC Japan Income & Growth Trust's portfolio is well balanced across a range of sectors and is constructed to capture both strong dividend and capital growth. JPMorgan Global Growth & Income is also in the global equity income sector and achieved an 8% return over the past year. The trust has built a good long-term performance record and in the past year, Scottish Investment Trust has been successfully merged into it. The management team effectively utilises the JPMorgan team of analysts located around the globe for their best ideas, which are then incorporated into the portfolio. The trust has become a core holding for the Income Portfolio. NB Private Equity Partners was in the list of better performers last year and has managed to retain that position this year with a return of 7%. The trust is managed in the US and that is where the majority of the portfolio is invested. The investment strategy is to focus on co-investments with other private equity firms. The portfolio is well diversified across a variety of sectors and has returned 13.6% p.a. in dollar terms over the last five years. The balance sheet is cautiously managed with gearing of only 6%. Despite this strong performance the shares are on a discount of around 30%.

(all share prices are total return)

Investment Strategy and Prospects

The outlook for equity markets continues to be challenging. Writing in last year's Annual Report it was thought then that developed economies would likely be in recession by the middle of 2023. This has not proven to be the case and even the UK economy has managed to retain a positive momentum. What has been more difficult has been inflation. There are signs it is beginning to come down in the US. However, although the fall back in energy prices has, from double-digit levels, turned inflation lower in the UK, it is of concern that core inflation remains sticky. Whilst for the Federal Reserve in the US the policy of raising interest rates to combat inflation may be close to a peak, it appears that may not be the case in the UK, Eurozone and other developed economies. The higher for longer scenario raises the chances that a recession could occur, later this year or in 2024.

These are headwinds for financial markets and, although corporate profits have been more resilient than expected, the uncertainty created by the fear of recession will be a key influence affecting equity markets over the next year.

In terms of strategy, the steady increase in exposure to investment companies focused on UK equities has been a continuing theme for both portfolios over the course of the year. The UK market has been unloved and has in relative terms underperformed most global equity markets since the Brexit referendum in 2016, such that it is the only major stock market that is valued below its long-term average. As an illustration, the current estimated forward (next 12 months) price/earnings ratio is around 10.5x against a long-term average of 14x. All other major equity markets, particularly that of the US, are valued at premiums to their long-term average. This is not simply due to a few lowly rated mega cap companies at the top end of the FTSE 100 Index (e.g. oils, banks and tobaccos) but also to the FTSE 250 Index where a majority of the genuine growth companies in the UK are listed. This segment of the UK stock market has also been significantly de-rated, yet the growth prospects of many of the underlying companies are unchanged. Amongst smaller listed companies in the UK, the de-rating has been particularly severe. That UK equities offers very attractive value is no guide to whether it will outperform in the near term; however, it is a good indicator that over the medium to long term excellent returns can be achieved from these very modest valuation levels.

Both Portfolios have sought to increase exposure in this area. As an example, the Growth Portfolio has acquired a new holding in Aberforth Smaller Companies Trust (on a 13% discount to NAV) and added to existing positions in Henderson Smaller Companies Investment Trust, Lowland Investment Company, Henderson Opportunities Trust and to the already significant position in Finsbury Growth & Income Trust. The Growth Portfolio also has substantial holdings in Fidelity Special Values, Law Debenture Corporation and Aurora Investment Trust, all UK equity specialists.

Similarly, the Income Portfolio has also increased exposure to investment companies focused on UK equities and which also offer an attractive dividend yield. In this case all are additions to existing holdings. Examples are The Merchants Trust, Mercantile Investment Trust, Lowland Investment Company, Murray Income Trust, Henderson High Income Trust and Invesco Perpetual UK Smaller Companies Investment Trust.

In the prior financial year (to 31 May 2022), the Growth Portfolio reduced exposure to a series of investment companies which were invested in companies offering secular growth prospects, particularly in the technology, biotechnology, healthcare and digital platform sectors. It is important to note that holdings in these type of investment companies have been maintained at lower weightings in the portfolio. The reason for this is that, although a period of higher inflation and higher interest rates creates a headwind in terms of recent performance, over the long-term it is from investment companies with these secular growth characteristics that returns many times the original investment can be achieved. Examples of holdings with these characteristics are: Polar Capital Technology Trust, Allianz Technology Trust, Monks Investment Trust, Biotech Growth Trust, Scottish Mortgage Investment Trust, Edinburgh Worldwide Investment Trust, Impax Environmental Markets and Worldwide Healthcare Trust.

A positive feature over the last year for the Income Portfolio has been the revenue performance from the underlying holdings. A series of global equity income funds (e.g. Murray International Trust, JPMorgan Global Growth & Income, Scottish American Investment Company and Henderson International Income Trust) have come through with solid dividends, whilst UK equity income funds (e.g. The Merchants Trust, City of London Investment Trust, Lowland Investment Company and Murray Income Trust), all of which managed to edge ahead their dividends through the pandemic, have continued to grow them over the past year. The largest holding Law Debenture Corporation increased its dividend by over 5%.

Developed economies and equity markets have done better than expected in the first half of calendar 2023. Growth has been stronger than anticipated and this fed through to profits and earnings from the corporate sector also being more resilient than had been estimated. Looking ahead, however, prospects appear fraught with uncertainties. Inflation everywhere, but especially in the UK, has proved much more sticky. In the biggest economy, the US, interest rates may be within one or two more rises of being at a peak. However, in the UK and Europe, Central Banks have more work to do and interest rates have further to rise. The big uncertainty is whether this reduces demand enough to lead to recession and if so the likely depth and duration of any slowdown. This has led to extreme caution amongst investors.

Against this background, the UK stock market has once again underperformed and whilst this may continue in the near-term, valuations of UK equities are discounting the most pessimistic of outcomes and are substantially below long-term averages. There is no doubt that patience is required, and will likely be tested. However, there is a significant opportunity for positive returns from UK equities which is reflected in both Portfolios increasing exposure to UK equity-focused investment companies, particularly those with exposure to medium and smaller companies. The other key theme is remaining invested in secular growth investment companies exposed to the technology, biotechnology, healthcare and digital platform sectors. Taking a longer view, it is from these type of investment companies that strong performance will most likely be achieved. Meantime, it is important to exercise caution in terms of investment strategy and only holding the highest quality investment companies with strong balance sheets and experienced, proven management.

Peter Hewitt

Investment Manager

Columbia Threadneedle Investment Business Limited

31 July 2023

Income Statement

For the Year Ended 31 May 2023

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Losses on investments		-	(13,698)	(13,698)
Foreign exchange losses		-	(5)	(5)
Income		5,019	-	5,019
Investment management fee		(293)	(730)	(1,023)
Other expenses		(689)	-	(689)
Return on ordinary activities before finance costs and tax		4,037	(14,433)	(10,396)
Finance costs		(95)	(143)	(238)
Return on ordinary activities before tax		3,942	(14,576)	(10,634)
Tax on ordinary activities		(11)	-	(11)
Return attributable to shareholders		3,931	(14,576)	(10,645)
Return per Income share - basic and diluted	3	7.96p	(18.16p)	(10.20p)
Return per Growth share - basic and diluted	3	-	(14.51p)	(14.51p)

The total column of this statement is the Profit and Loss Account of the Company. The supplementary revenue and capital columns are prepared under guidance published by The Association of Investment Companies.

Segmental analysis, illustrating the two separate portfolios of assets, the Income Portfolio and the Growth Portfolio, is shown in note 2 to the financial statements.

All revenue and capital items in the Income Statement derive from continuing operations.

Return attributable to shareholders represents the profit/(loss) for the year and also total comprehensive income

Income Statement

For the Year Ended 31 May 2022

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Losses on investments		-	(15,724)	(15,724)
Foreign exchange losses		-	(2)	(2)
Income		4,384	-	4,384
Investment management fee		(322)	(818)	(1,140)
Other expenses		(723)	-	(723)
Return on ordinary activities before finance costs and tax		3,339	(16,544)	(13,205)
Finance costs		(61)	(92)	(153)
Return on ordinary activities before tax		3,278	(16,636)	(13,358)
Tax on ordinary activities		(14)	-	(14)
Return attributable to shareholders		3,264	(16,636)	(13,372)
Return per Income share - basic and diluted	3	6.85p	(8.95p)	(2.10p)
Return per Growth share - basic and diluted	3	-	(32.28p)	(32.28p)

Segmental analysis, illustrating the two separate portfolios of assets, the Income Portfolio and the Growth Portfolio, is shown in note 2 to the financial statements.

All revenue and capital items in the Income Statement derive from continuing activities.

Return attributable to shareholders represents the profit/(loss) for the year and also total comprehensive income.

Balance Sheet

As at 31 May 2023

		Income shares	Growth shares	Total
	Notes	£'000	£'000	£'000
Fixed assets
Investments at fair value		64,183	82,360	146,543

Current assets
Debtors		198	68	266
Cash at bank and on deposit		3,002	5,610	8,612

		3,200	5,678	8,878

Creditors: Amounts falling due within one year		(3,650)	(518)	(4,168)

Net current (liabilities)/ assets		(450)	5,160	4,710

Creditors: Amounts falling due in more than one year		(5,000)	-	(5,000)

Net assets		58,733	87,520	146,253

Capital and reserves:
Called-up share capital		3,247	2,500	5,747
Share premium		1,917	428	2,345
Capital redemption reserve		1,760	1,553	3,313
2022 special reserve		29,588	29,581	59,169
2008 special reserve		19,422	14,930	34,352
Capital reserves		(853)	38,528	37,675
Revenue reserve		3,652	-	3,652

Shareholders' funds		58,733	87,520	146,253

Net asset value per share (pence)	6	116.41p	230.12p

Balance Sheet

As at 31 May 2022

		Income shares	Growth shares	Total
	Notes	£'000	£'000	£'000
Fixed assets
Investments at fair value		69,874	89,258	159,132

Current assets
Debtors		697	95	792
Cash at bank and on deposit		1,549	5,929	7,478

		2,246	6,024	8,270

Creditors: Amounts falling due within one year		(2,428)	(303)	(2,731)

Net current (liabilities)/ assets		(182)	5,721	5,539

Creditors: Amounts falling due in more than one year		(5,000)	-	(5,000)

Net assets		64,692	94,979	159,671

Capital and reserves:
Called-up share capital		4,596	3,692	8,288
Share premium		-	-	-
Capital redemption reserve		257	365	622
2022 special reserve		29,588	29,581	59,169
2008 special reserve		18,980	17,199	36,179
Capital reserves		8,109	44,142	52,251
Revenue reserve		3,162	-	3,162

Shareholders' funds		64,692	94,979	159,671

Net asset value per share (pence)	6	133.67p	244.41p

Cash Flow Statement

Year to 31 May 2023

	Notes	Income shares	Growth shares	Total
		£'000	£'000	£'000

Net cash outflow from operations before dividends and interest		(775)	(1,006)	(1,781)
Dividends received		3,409	1,556	4,965
Interest received		70	169	239
Interest paid		(220)	-	(220)
Net cash inflow from operating activities		2,484	719	3,203
Investing activities
Purchases of investments		(9,793)	(5,367)	(15,160)
Sales of investments		9,690	6,174	15,864
Net cash flows from investing activities		(103)	807	704
Net cash flows before financing activities		2,381	1,526	3,907
Financing activities
Equity dividends paid Proceeds from issuance of new shares	4	(3,441) 2,049	- 446	(3,441) 2,495
Share conversion - Income to Growth		(155)	155	-
Share conversion - Growth to Income		619	(619)	-
Shares purchased to be held in treasury		-	(1,827)	(1,827)
Net cash flows from financing activities		(928)	(1,845)	(2,773)
Net movement in cash and cash equivalents		1,453	(319)	1,134
Cash and cash equivalents at the beginning of the year		1,549	5,929	7,478
Cash and cash equivalents at the end of the year		3,002	5,610	8,612
Represented by: Cash at bank and short-term deposits		3,002	5,610	8,612

Cash Flow Statement

Year to 31 May 2022

	Income shares	Growth shares	Total
	£'000	£'000	£'000

Net cash outflow from operations before dividends and interest	(1,234)	(1,463)	(2,697)
Dividends received	3,126	1,174	4,300
Interest received	1	9	10
Interest paid	(181)	-	(181)
Net cash inflow / (outflow) from operating activities	1,712	(280)	1,432
Investing activities
Purchases of investments	(5,154)	(15,865)	(21,019)
Sales of investments	4,025	15,180	19,205
Net cash flows from investing activities	(1,129)	(685)	(1,814)
Net cash flows before financing activities	583	(965)	(382)
Financing activities
Equity dividends paid Proceeds from issuance of new shares	(3,155) 2,120	- 3,086	(3,155) 5,206
Share conversion - Income to Growth	(212)	212	-
Share conversion - Growth to Income	173	(173)	-
Net cash flows from financing activities	(1,074)	3,125	2,051
Net movement in cash and cash equivalents	(491)	2,160	1,669
Cash and cash equivalents at the beginning of the year	2,040	3,769	5,809
Cash and cash equivalents at the end of the year	1,549	5,929	7,478
Represented by: Cash at bank and short-term deposits	1,549	5,929	7,478

Statement of Changes in Equity

For the Year ended 31 May 2023

Income shares

Share capital

£000

premium

£000

Capital redemption reserve

£000

2022

special

reserve

£000

2008

special reserve

£000

Capital reserves

£000

Revenue reserve

£000

Total shareholders' funds

£000

As at 31 May 2022

4,596

257

29,588

18,980

8,109

3,162

64,692

Increase in share capital in issue, net of share issuance expenses

132

1,917

2,049

Share conversion

442

464

Cancellation of deferred shares

(1,503)

1,503

Transfer of net income from Growth to Income Portfolio

1,187

Transfer of capital from Income to Growth Portfolio

(1,187)

Dividends paid

(3,441)

Return attributable to shareholders

(7,775)

2,744

(5,031)

As at 31 May 2023

3,247

1,917

1,760

29,588

19,422

(853)

3,652

58,733

Growth shares

As at 31 May 2022

3,692

365

29,581

17,199

44,142

94,979

Increase in share capital in issue, net of share issuance expenses

428

446

Share conversion

(22)

(442)

(464)

Cancellation of deferred shares

(1,188)

1,188

Transfer of net income from Growth to Income Portfolio

(1,187)

Transfer of capital from Income to Growth Portfolio

1,187

Shares purchased for treasury

(1,827)

Return attributable to shareholders

(6,801)

1,187

(5,614)

As at 31 May 2023

2,500

428

1,553

29,581

14,930

38,528

87,520

Total Company

As at 31 May 2022

8,288

622

59,169

36,179

52,251

3,162

159,671

Increase in share capital in issue, net of share issuance expenses

150

2,345

2,495

Share conversion

Cancellation of deferred shares

(2,691)

2,691

Shares purchased for treasury

(1,827)

Dividends paid

(3,441)

Return attributable to shareholders

(14,576)

3,931

(10,645)

Total Company as at 31 May 2023

5,747

2,345

3,313

59,169

34,352

37,675

3,652

146,253

Statement of Changes in Equity

For the Year ended 31 May 2022

Income shares

Share capital

£000

premium

£000

Capital redemption reserve

£000

2022

special

reserve

£000

2008

special reserve

£000

Capital reserves

£000

Revenue reserve

£000

Total shareholders' funds

£000

As at 31 May 2021

4,459

27,608

256

19,017

12,373

3,053

66,766

Increase in share capital in issue, net of share issuance expenses

140

1,980

2,120

Share conversion

(2)

(37)

(39)

Cancellation of deferred shares

(1)

Transfer of net income from Growth to Income Portfolio

644

Transfer of capital from Income to Growth Portfolio

(644)

Share premium cancellation

(29,588)

29,588

Dividends paid

(3,155)

Return attributable to shareholders

(3,620)

2,620

(1,000)

As at 31 May 2022

4,596

257

29,588

18,980

8,109

3,162

64,692

Growth shares

As at 31 May 2021

3,586

26,599

365

17,162

56,514

104,226

Increase in share capital in issue, net of share issuance expenses

104

2,982

3,086

Share conversion

Transfer of net income from Growth to Income Portfolio

(644)

Transfer of capital from Income to Growth Portfolio

644

Share premium cancellation

(29,581)

29,581

Return attributable to shareholders

(13,016)

644

(12,372)

As at 31 May 2022

3,692

365

29,581

17,199

44,142

94,979

Total Company

As at 31 May 2021

8,045

54,207

621

36,179

68,887

3,053

170,992

Increase in share capital in issue, net of share issuance expenses

244

4,962

5,206

Share conversion

Cancellation of deferred shares

(1)

Share premium cancellation

(59,169)

59,169

Dividends paid

(3,155)

Return attributable to shareholders

(16,636)

3,264

(13,372)

Total Company as at 31 May 2022

8,288

622

59,169

36,179

52,251

3,162

159,671

Principal Risks and Uncertainties

As an investment company, investing primarily in listed securities, most of the Company's principal risks and uncertainties that could threaten the achievement of its objective, strategy, future performance, liquidity and solvency are market-related.

A summary of the Company's risk management and internal controls arrangements is included within the Report of the Audit Committee in the Annual Report and Financial Statements. By means of the procedures set out in that summary, the Board has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. The Board also considers emerging risks which might affect the Company and related updates from the Manager on such risks are also considered. During the year, emerging risks included the outlook for inflation, rising interest rates and the war in Ukraine. Any emerging risks that are identified and that are considered to be of significance are included on the Company's risk register with any mitigations. These significant risks, emerging risks and other risks are regularly reviewed by the Audit Committee and the Board. While the effect of the COVID-19 pandemic appears to have eased, increased market volatility due to recent macroeconomic and geopolitical concerns have been considered and are referred to below in Market Risk and Investment Risk. The Audit Committee and the Board have also regularly reviewed the effectiveness of the Company's risk management and internal control systems for the period.

As was explained in the 31 May 2022 Annual Report and Financial Statements, the Company's Manager, which was part of BMO GAM (EMEA), was acquired by Ameriprise Financial and the integration of its business with Columbia Threadneedle Investments is now well advanced. The Board looks favourably upon this transaction and there has been little change for the Company. Nevertheless, an acquisition such as this may introduce some uncertainty until the integration of systems is fully implemented. A critical milestone is the move to a new order management system, Aladdin, which is widely regarded as market leading. Therefore, the Board will continue to monitor this risk closely.

The principal risks and uncertainties faced by the Company, and the Board's mitigation approach, are described below.

Market risk

The Company's assets consist mainly of listed closed-end investment companies and its principal risks are therefore market-related and include market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk.

Climate change may also have an impact on investee companies in the coming years.

Increased uncertainty in markets since the COVID-19 pandemic, the war in Ukraine and macroeconomic and geopolitical concerns have led to volatility in the Company's NAV.

Increase in overall risk during the year, given the war in Ukraine and macroeconomic and geopolitical concerns

Mitigation

The Board regularly considers the composition and diversification of the Income Portfolio and the Growth Portfolio and considers individual stock performance together with purchases and sales of investments. Investments and markets are discussed with the Investment Manager on a regular basis.

Engagement on environmental, social and governance matters is undertaken by the Manager.

The Board has, in particular, considered the impact of heightened market volatility since the COVID-19 pandemic, macroeconomic and geopolitical concerns and inflation and they are discussed in the Chairman's Statement and Investment Manager's Review. As a closed-end investment company, it is not constrained by asset sales to meet redemptions so can remain invested through volatile market conditions and is well suited to investors seeking longer-term returns.

Investment risk

Incorrect strategy, asset allocation, stock selection, inappropriate capital structure, insufficient monitoring of costs, failure to maintain an appropriate level of discount/premium and the use of gearing could all lead to poor returns for shareholders.

Increase in overall risk during the year, given the war in Ukraine and macroeconomic and geopolitical concerns

Mitigation

The investment strategy and performance against peers and the benchmark are considered by the Board at each meeting and reviewed with the Investment Manager. The Board is responsible for setting the gearing range within which the Manager may operate and gearing is discussed at every meeting and related covenant limits are closely monitored. The Manager's Investment Risk team provide oversight on investment risk management.

The Income Portfolio and Growth Portfolio are diversified and comprise listed closed-end investment companies and their compositions are reviewed regularly by the Board.

The Board regularly considers ongoing charges and a discount/premium management policy has operated since the launch of the Company. Underlying dividends from investee companies are also closely monitored and the revenue reserve and the 2022 special reserve attributable to the Income Portfolio can be drawn to support the payment of dividends to Income shareholders.

If required, the Board can hold additional meetings at short notice to discuss any significant matters.

Custody risk: Safe custody of the Company's assets may be compromised through control failures by the Custodian.

No change in overall risk during the year.

Mitigation:

The Board receives quarterly reports from the Depositary confirming safe custody of the Company's assets and cash and holdings are reconciled to the Custodian's records. The Custodian's internal controls reports are also reviewed by the Manager and key points reported to the Audit Committee. The Board also receives periodic updates from the Custodian on its own cyber-security controls.

The Depositary is specifically liable for loss of any of the Company's assets that constitute financial instruments under the AIFMD.

Operational risk: Failure of the Manager as the Company's main service provider or disruption to its business, or that of an outsourced or third party service provider, could lead to an inability to provide accurate reporting and monitoring, leading to a potential breach of the Company's investment mandate or loss of shareholders' confidence.

The risk includes failure or disruption as a consequence of external events such as the COVID-19 pandemic.

External cyber attacks could cause such failure or could lead to the loss or sabotage of data.

No change in overall risk during the year, but due to the integration with Columbia Threadneedle Investments' systems this risk remains heightened.

Mitigation:

The Board meets regularly with the management of the Manager and its Operational Risk Management team to review internal control and risk reports, which includes oversight of its own third party service providers. The Manager's appointment is reviewed annually and the contract can be terminated with six months' notice. The Manager has a business continuity plan in place to ensure that it is able to respond quickly and effectively to an unplanned event that could affect the continuity of its business.

The Manager has outsourced trade processing, valuation and middle office tasks and systems to State Street Bank and Trust Company ('State Street') and supervision of such third party service providers, including the administrator of the Manager's savings plans, has been maintained by the Manager. This includes the review of IT security and heightened cyber threats.

Further to the acquisition of the Company's Manager by Ameriprise, the Board continues to monitor the integration of its business with Columbia Threadneedle Investments. Comfort is taken from its long-term financial strength and resources and commitment towards the Manager's investment trust business and savings plans.

The Manager also closely monitors the performance of its technology platform to ensure it is functioning within acceptable service levels.

Viability Assessment and Statement

In accordance with the UK Corporate Governance Code, the Board is required to assess the future prospects for the Company and considered that a number of characteristics of the Company's business model and strategy were relevant to this assessment:

· The Company's investment objective and policy, which are subject to regular Board monitoring, means that the Company is invested principally in two diversified Portfolios of listed closed-end investment companies and the level of borrowing is restricted.

· The Company's investments are principally in listed securities which are traded in the UK on the London Stock Exchange's Main Market or other regulated exchanges and which are expected to be readily realisable.

· The Company is a listed closed-end investment company whose shares are not subject to redemptions by shareholders.

· Subject to shareholder continuation votes, the next of which will be at the forthcoming AGM on 28 September 2023 and five yearly thereafter, the Company's business model and strategy is not time-limited.

Also relevant were a number of aspects of the Company's operational arrangements:

· The Company retains title to all assets held by the Custodian under the terms of a formal agreement with the Custodian and Depositary.

· The borrowing facilities, which remain available until February 2025, are subject to a formal agreement, including financial covenants with which the Company complied in full during the year.

· Revenue and expenditure forecasts are reviewed by the Directors at each Board meeting.

· The operational robustness of key service providers and the effectiveness of alternative working arrangements.

· Alternative service providers can be engaged at relatively short notice if necessary.

In considering the viability of the Company, the Directors carried out a robust assessment of the principal risks and uncertainties which could threaten the Company's objective and strategy, future performance and solvency. This included the impact of market volatility and a significant fall in equity markets on the Company's investment Portfolios. These risks, their mitigations and the processes for monitoring them are set out in Principal Risks and Uncertainties and in the Report of the Audit Committee and in the notes to the financial statements in the Annual Report and Financial Statements.

The Directors also considered:

· The level of ongoing charges incurred by the Company which are modest and predictable and (at 31 May 2023), excluding the ongoing charges of underlying funds, total 1.17% and 1.07% of average net assets for the Income shares and Growth shares respectively.

· Future revenue and expenditure projections.

· The Company's ability to meet liquidity requirements given its investment Portfolios consist principally of listed investment companies which can be realised if required.

· The ability to undertake share buy-backs if required.

· Whether the Company's investment objective and policy continue to be relevant to investors.

· Directors are non-executive and the Company has no employees and consequently the Company does not have redundancy or other employment-related liabilities or responsibilities.

· The uncertainty in markets due to the war in Ukraine and macroeconomic and geopolitical concerns and the prospects for the Company's investment Portfolios.

· That there will be a resolution to continue the Company at the forthcoming AGM on 28 September 2023. The Board fully supports the continuation of the Company and, with the support of shareholders, the expectation is for the resolution to be passed.

As the Company is subject to shareholder continuation votes in five yearly intervals, these matters were assessed over a five year period to July 2028, and the Board will continue to assess viability over five year rolling periods.

As part of this assessment the Board considered a number of stress tests and scenarios which considered the impact of sustained high levels of inflation and substantial falls in investment values on shareholders' funds over a five year period. The results demonstrated the impact on the Company's net assets and its expenses and its ability to meet its liabilities over that period and adhere to its financial covenants.

A rolling five year period represents the horizon over which the Directors believe they can form a reasonable expectation of the Company's prospects, although they do have due regard to viability over the longer term.

Based on their assessment, and in the context of the Company's business model, strategy and operational arrangements set out above, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period to July 2028.

Responsibility Statement of the Directors in Respect of the Annual Report and Financial Statements

We confirm that to the best of our knowledge:

· the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

· the Strategic Report and the Report of the Directors include 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 the Company faces; and

· we consider the Annual Report and Financial Statements, 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

David Warnock

Chairman

31 July 2023

Notes

1. The financial statements of the Company, which are the responsibility of, and were approved by, the Board on 31 July 2023, have been prepared on a going concern basis in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, Financial Reporting Standards (FRS 102) and the Statement of Recommended Practice (SORP) "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by The Association of Investment Companies (AIC). The audited financial statements for the Company comprise the Income Statement and the total columns of the Balance Sheet, the Cash Flow Statement and the Statement of Changes in Equity and the Company totals shown in the notes to the financial statements. The analysis showing the two separate Portfolios of assets attributable to the Income shares and Growth shares is disclosed to assist shareholders' understanding, but is additional to that required.

There have been no significant changes to the Company's accounting policies during the year ended 31 May 2023.

The preparation of the Company's financial statements on occasion requires management to make judgements, estimates and assumptions that affect the reported amounts in the primary financial statements and accompanying disclosures. These assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in the current or future periods, depending on the circumstance. Management do not believe that any significant accounting judgements or estimates have been applied to this set of financial statements that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year.

The Company's assets consist mainly of equity shares in closed-end investment companies which are traded in the UK or another Regulated Stock Exchange and in most circumstances, including in the current market environment, are expected to be readily realisable.

The Board has considered the Company's principal risks and uncertainties and other matters, and has considered a number of stress tests and scenarios which considered the impact of severe stock market volatility on shareholders' funds and demonstrated that if required the Company had the ability to raise sufficient funds so as to remain within its debt covenants and meet its liabilities. The Directors also have a reasonable expectation that, at the forthcoming AGM, the Company's shareholders will support the resolution, that the continuation of the Company be approved.

As such, and in light of the controls and review processes in place and the operational robustness of key service providers, and bearing in mind the nature of the Company's business and assets and revenue and expenditure projections, the Directors believe 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. For this reason, the Board continues to adopt the going concern basis in preparing the financial statements.

2. Segmental Analysis

The Company carries on business as an investment trust and manages two separate Portfolios of assets: the Income Portfolio and the Growth Portfolio. The Company's Income Statement can be analysed as follows. This has been disclosed to assist shareholders' understanding, but this analysis is additional to that required:

Year ended 31 May 2023

	Income Portfolio			Growth Portfolio			Total
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

Losses on investments	-	(7,363)	(7,363)	-	(6,335)	(6,335)	-	(13,698)	(13,698)
Foreign exchange losses	-	(5)	(5)	-	-	-	-	(5)	(5)
Income	3,307	-	3,307	1,712	-	1,712	5,019	-	5,019
Investment management fee	(176)	(264)	(440)	(117)	(466)	(583)	(293)	(730)	(1,023)
Other expenses	(281)	-	(281)	(408)	-	(408)	(689)	-	(689)
Return on ordinary activities before finance costs and tax	2,850	(7,632)	(4,782)	1,187	(6,801)	(5,614)	4,037	(14,433)	(10,396)
Finance costs	(95)	(143)	(238)	-	-	-	(95)	(143)	(238)
Return on ordinary activities before tax	2,755	(7,775)	(5,020)	1,187	(6,801)	(5,614)	3,942	(14,576)	(10,634)
Tax on ordinary activities	(11)	-	(11)	-	-	-	(11)	-	(11)
Return #	2,744	(7,775)	(5,031)	1,187	(6,801)	(5,614)	3,931	(14,576)	(10,645)

Year ended 31 May 2022

	Income Portfolio			Growth Portfolio			Total
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

Losses on investments	-	(3,245)	(3,245)	-	(12,479)	(12,479)	-	(15,724)	(15,724)
Foreign exchange losses	-	(2)	(2)	-	-	-	-	(2)	(2)
Income	3,176	-	3,176	1,208	-	1,208	4,384	-	4,384
Investment management fee	(188)	(281)	(469)	(134)	(537)	(671)	(322)	(818)	(1,140)
Other expenses	(293)	-	(293)	(430)	-	(430)	(723)	-	(723)
Return on ordinary activities before finance costs and tax	2,695	(3,528)	(833)	644	(13,016)	(12,372)	3,339	(16,544)	(13,205)
Finance costs	(61)	(92)	(153)	-	-	-	(61)	(92)	(153)
Return on ordinary activities before tax	2,634	(3,620)	(986)	644	(13,016)	(12,372)	3,278	(16,636)	(13,358)
Tax on ordinary activities	(14)	-	(14)	-	-	-	(14)	-	(14)
Return #	2,620	(3,620)	(1,000)	644	(13,016)	(12,372)	3,264	(16,636)	(13,372)

# Any net revenue return attributable to the Growth Portfolio is transferred to the Income Portfolio and a corresponding transfer of an identical amount of capital is made from the Income Portfolio to the Growth Portfolio and accordingly the whole return in the Growth Portfolio is capital. Refer to the Statement of Changes in Equity.

3. Return per share

The return per share for the year ended 31 May 2023 is as follows:

	Income shares			Growth shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to Portfolios	2,744	(7,775)	(5,031)	1,187	(6,801)	(5,614)
Transfer of net income from Growth to Income Portfolio	1,187	-	1,187	(1,187)	-	(1,187)
Transfer of capital from Income to Growth Portfolio	-	(1,187)	(1,187)	-	1,187	1,187
Return attributable to shareholders	3,931	(8,962)	(5,031)	-	(5,614)	(5,614)
Return per share	7.96p	(18.16p)	(10.20p)	-	(14.51p)	(14.51p)
Weighted average number of shares in issue during the period	49,363,770			38,696,431

The return per share for the year ended 31 May 2022 is as follows:

	Income shares			Growth shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to Portfolios	2,620	(3,620)	(1,000)	644	(13,016)	(12,372)
Transfer of net income from Growth to Income Portfolio	644	-	644	(644)	-	(644)
Transfer of capital from Income to Growth Portfolio	-	(644)	(644)	-	644	644
Return attributable to shareholders	3,264	(4,264)	(1,000)	-	(12,372)	(12,372)
Return per share	6.85p	(8.95p)	(2.10p)	-	(32.28p)	(32.28p)
Weighted average number of shares in issue during the period	47,655,020			38,325,735

4. Dividends

			2023 Income shares Total
Dividends on Income shares	Register date	Payment date	£'000

Amounts recognised as distributions to shareholders during the year:
For the year ended 31 May 2022
- fourth interim dividend of 2.0p per Income share	17 June 2022	8 July 2022	968
For the year ended 31 May 2023
- first interim dividend of 1.67p per Income share	16 September 2022	7 October 2022	811
- second interim dividend of 1.67p per Income share	16 December 2022	6 January 2023	829
- third interim dividend of 1.67p per Income share	17 March 2023	11 April 2023	833
			3,441

Amounts relating to the year but not paid at the year end:
- fourth interim dividend of 2.19p per Income share*	16 June 2023	7 July 2023	1,105

* Based on 50,455,503 Income shares in issue at the record date of 16 June 2023.

The fourth interim dividend of 2.19p per Income share was paid on 7 July 2023 to shareholders on the register on 16 June 2023, with an ex-dividend date of 15 June 2023.

The Growth shares do not carry an entitlement to receive dividends.

5. (a) Tax on ordinary activities

Year ended 31 May 2023

	Income Portfolio			Growth Portfolio			Total
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

Current tax charge for the year (all irrecoverable overseas tax) being taxation on ordinary activities	11	-	11	-	-	-	11	-	11

(b) Reconciliation of tax charge

	2023
	Income shares	Growth shares	Total
	£'000	£'000	£'000
Loss on ordinary activities before tax:	(5,020)	(5,614)	(10,634)
Corporation tax at standard rate of 19 per cent	(954)	(1,067)	(2,021)
Effects of:
Losses on investments not taxable	1,400	1,204	2,604
Overseas tax suffered	11	-	11
Non-taxable UK dividend income	(285)	(257)	(542)
Non-taxable overseas dividend income	(219)	(19)	(238)
Expenses not utilised	58	139	197
Current year tax charge (note 5 (a))	11	-	11

6. The net asset value per Income share is calculated on net assets of £58,733,000 (2022: £64,692,000), divided by 50,455,503 (2022: 48,397,165) Income shares, being the number of Income shares in issue at the year-end (excluding any shares held in treasury).

The net asset value per Growth share is calculated on net assets of £87,520,000 (2022: £94,979,000), divided by 38,032,949 (2022: 38,860,148) Growth shares, being the number of Growth shares in issue at the year-end (excluding any shares held in treasury).

7. During the year, the Company issued 1,665,000 (2022: 1,480,000) Income shares from the block listing facility for net proceeds of £2,049,000 (2022: £2,120,000).

During the year, valid conversion notices were received to convert 131,631 Income shares (which represented a value of £155,000). These were converted into 67,665 Growth shares in accordance with the Company's Articles and by reference to the ratio of the relative underlying net asset values of the Growth shares and Income shares on the conversion date.

The Company's Articles allow for Deferred shares to be allotted as part of the share conversion to ensure that the conversion does not result in a reduction of the aggregate par value of the Company's issued share capital. The Deferred shares were subsequently repurchased by the Company for nil consideration (as they have no economic value) and as authorised by shareholders at the September 2022 AGM.

Since the year end, the Company has not issued any further Income shares from the block listing facility.

8. During the year, the Company issued 190,000 (2022: 1,085,000) Growth shares from the block listing facility for net proceeds of £446,000 (2022: £3,086,000). During the year, the Company bought back 815,000 (2022: nil) Growth shares for treasury at a cost of £1,827,000 (2022: nil).

During the year, valid conversion notices were received to convert 269,864 Growth shares (which represented a value of £619,000). These were converted into 524,969 Income shares in accordance with the Company's Articles and by reference to the ratio of the relative underlying net asset values of the Growth shares and Income shares on the conversion date.

Since the year end, the Company has bought back a further 445,000 Growth share for treasury at a cost of £1,008,000.

9. Financial Instruments

The Company's financial instruments comprise its investment Portfolios, cash balances, bank borrowings and debtors and creditors that arise directly from its operations. The Company, which is an investment trust, holds two Portfolios of financial assets in pursuit of its investment objective.

Listed and quoted fixed asset investments held are valued at fair value.

The fair value of the financial assets and liabilities of the Company at 31 May 2023 and 31 May 2022 is not materially different from their carrying value in the financial statements.

The main risks that the Company faces arising from its financial instruments are:

(i) market price risk, being the risk that the value of investment holdings will fluctuate as a result of changes in market prices caused by factors other than interest rate or currency rate movements;

(ii) interest rate risk, being the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates;

(iii) foreign currency risk, being the risk that the value of investment holdings, investment purchases, investment sales and income will fluctuate because of movements in currency rates;

(iv) credit risk, being the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company; and

(v) liquidity risk, being the risk that the Company may not be able to liquidate its investments quickly or otherwise raise funds to meet financial commitments.

Market Price Risk

The management of market price risk is part of the fund management process and is typical of equity and debt investment. The Portfolios are managed with an awareness of the effects of adverse price movements through detailed and continuing analysis with an objective of maximising overall returns to shareholders.

Interest Rate Risk

Floating Rate

When the Company retains cash balances the majority of the cash is held in variable rate bank accounts yielding rates of interest linked to the UK base rate which was 4.5% at 31 May 2023 (2022: 1.0%). There are no other assets which are directly exposed to floating interest rate risk.

When the Company draws down amounts under its new revolving credit facility, interest is payable based on SONIA (which can vary on a daily basis) plus a margin. Initially, in the prior year, interest was based on LIBOR and was fixed at the time of drawdown.

Fixed Rate

Movements in market interest rates will affect the market value of fixed interest investments. Neither the Income Portfolio nor the Growth Portfolio holds any fixed interest investments.

The Company has a £5 million fixed rate term loan with an interest rate of 2.78% per annum.

Foreign Currency Risk

The Company may invest in overseas securities which give rise to currency risks. At 31 May 2023, the Income Portfolio had Swiss Franc denominated investments valued at £2,891,000 (2022: £3,673,000), and a US Dollar denominated investment valued at £1,327,000 (2022: £1,229,000). At 31 May 2023, the Growth Portfolio had a US Dollar denominated investment valued at £542,000 (2022: £1,028,000).

As the remainder of the Company's investments and all other assets and liabilities are denominated in sterling there is no other direct foreign currency risk. However, although the Company's performance is measured in sterling and the Company's investments (other than the above) are denominated in sterling, a proportion of their underlying assets are quoted in currencies other than sterling. Therefore movements in the rates of exchange between sterling and other currencies may affect the market price of the Company's investments and therefore the market price risk includes an element of currency exposure.

Credit Risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Manager has in place a monitoring procedure in respect of counterparty risk which is reviewed on an ongoing basis. The carrying amounts of financial assets best represents the maximum credit risk exposure at the Balance Sheet date.

Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions is considered to be small due to the short settlement period involved and the acceptable credit quality of the brokers used. The Manager monitors the quality of service provided by the brokers used to further mitigate this risk.

All the assets of the Company which are traded on a recognised exchange are held by JPMorgan Chase Bank, the Company's Custodian. Bankruptcy or insolvency of the Custodian may cause the Company's rights with respect to securities held by the Custodian to be delayed or limited. The Board monitors the Company's risk by reviewing the Custodian's internal control reports.

The credit risk on liquid funds is controlled because the counterparties are banks with acceptable credit ratings, normally rated A or higher, assigned by international credit rating agencies. Bankruptcy or insolvency of such financial institutions may cause the Company's ability to access cash placed on deposit to be delayed, limited or lost.

Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in realising assets or otherwise raising funds to meet financial commitments. The risk of the Company not having sufficient liquidity at any time is not considered by the Board to be significant, given that the Company's listed and quoted securities are considered to be readily realisable.

The Company's liquidity risk is managed on an ongoing basis by the Manager in accordance with policies and procedures in place. The Company's overall liquidity risks are monitored on a quarterly basis by the Board.

The Company maintains sufficient investments in cash and readily realisable securities to pay accounts payable and accrued expenses which are settled in accordance with suppliers stated terms. The Company has a £5 million fixed rate term loan and a £5 million unsecured revolving credit facility which are both available until 10 February 2025 with The Royal Bank of Scotland International Limited. As at 31 May 2023, £5 million of the fixed rate term loan was drawn down (2022: £5 million) and £2 million of the unsecured revolving credit facility was drawn down (2022: £2 million). The interest rate on the fixed rate term loan, which is fully drawn, is 2.78% per annum. The interest rate on the unsecured revolving credit facility is variable, and a non-utilisation fee is payable on undrawn amounts.

10. Subject to certain minimum and maximum thresholds which may be set at the discretion of the Board of CT Global Managed Portfolio Trust PLC, shareholders have the right to convert their Income shares into Growth shares and/or their Growth shares into Income shares upon certain dates, the next of which will be on 26 October 2023 and then annually or close to annually thereafter. Under current law, such conversions will not be treated as disposals for UK capital gains tax purposes. The Conversion notice period commences on 7 August 2023 and full details will be provided on the Company's website and in the Company's Annual Report and Financial Statements.

11. The Board of Directors (the "Board") is considered a related party. There are no transactions with the Board other than aggregated remuneration for services as Directors as disclosed in the Directors' Remuneration Report within the Annual Report and Financial Statements. The beneficial interests of the Directors in the Income shares and Growth shares of the Company are disclosed in the Annual Report and Financial Statements. There are no outstanding balances with the Board at the year-end. David Warnock is a non-executive director of ICG Enterprise Trust plc. The Growth Portfolio has a holding of 190,000 shares in this company valued at £2,185,000 at 31 May 2023. Following the year-end, Simon Longfellow was appointed as a non-executive director of Invesco Perpetual UK Smaller Companies Investment Trust plc. The Income Portfolio has a holding of 450,000 shares in this company valued at £1,917,000 at 31 May 2023.

Transactions between the Company and the Manager are detailed in the notes to the financial statements in the Annual Report and Financial Statements. The existence of an independent Board of Directors demonstrates that the Company is free to pursue its own financial and operating policies and therefore, under the AIC SORP, the Manager is not considered to be a related party.

12. This statement was approved by the Board on 31 July 2023. It is not the Company's full statutory accounts in terms of Section 434 of the Companies Act 2006. The statutory Annual Report and Financial Statements for the year ended 31 May 2023 has been approved and audited and received an unqualified audit report and did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report. This will be sent to shareholders during August and will be available for inspection at 6^th Floor, Quartermile 4, 7a Nightingale Way, Edinburgh, EH3 9EG the registered office of the Company.

The full Annual Report and Financial Statements are available on the Company's website

ctglobalmanagedportfolio.co.uk

The Annual General Meeting of CT Global Managed Portfolio Trust PLC will be held at 11.30am on 28 September 2023 at Exchange House, Primrose Street, London EC2A 2NY.

The audited financial statements for the year to 31 May 2023 will be lodged with the Registrar of Companies following the Annual General Meeting.

Alternative Performance Measures ("APMs")

The Company uses the following "APMs". These are not statutory accounting measures and are not intended as a substitute for statutory measures.

Discount/premium - the share price of an investment company is derived from buyers and sellers trading their shares on the stockmarket. This price is not identical to the net asset value (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 deemed to be at a premium, usually indicating there are more buyers of shares than sellers.

		31 May 2023		31 May 2022
		Income	Growth	Income	Growth
		shares	shares	shares	shares
Net asset value per share	(a)	116.41p	230.12p	133.67p	244.41p
Share price	(b)	121.00p	225.00p	131.00p	244.00p
+Premium/ -discount (c = (b-a)/(a))	(c)	+3.9%	-2.2%	-2.0%	-0.2%

Ongoing charges - all operating costs (attributable to the relevant share class of the Company), incurred and expected to be incurred in the foreseeable future, whether charged to capital or revenue in the Company's Income Statement, expressed as a proportion of the average daily net assets (of the relevant share class of the Company) over the reporting year. In accordance with the AIC methodology, the costs of buying and selling investments are excluded in calculating ongoing charges, as are any performance fee, the cost of the Company's borrowings, taxation, non-recurring costs and the costs of buying back or issuing shares. The Company's ongoing charges calculated in accordance with this methodology are shown in column A in the following tables.

The AIC recommends that investment companies also disclose ongoing charges including any performance fee. Effective 29 September 2022, the performance fee which was payable annually to the Manager, if certain conditions were met, ceased. The last performance fee generated and payable to the Manager was in the year to 31 May 2021.

The AIC recommends that investment companies with a substantial proportion of their portfolio invested in other funds and where the relevant information is readily available should consider incorporating a relevant proportion of ongoing charges of the underlying funds into its own ongoing charges figure. These calculations are shown in column B in the following tables.

The Key Information Document ('KID') on the Company's website contains a measure of costs calculated in accordance with the UK version of the EU PRIIPs regulation as it forms part of UK law following Brexit. In addition to the costs included within the Company's ongoing charges figure in column A in the following tables, the KID methodology for calculating costs (attributable to the relevant share class of the Company) includes the costs of buying and selling investments, the cost of the Company's borrowings, any performance fee and a relevant proportion of the ongoing costs of the underlying funds. These underlying costs cover operational costs, performance fees and borrowing costs. The aggregate KID costs are expressed as a proportion of the average daily net assets (of the relevant share class of the Company) over the period. For completeness the Company has included a reconciliation in the following tables, between the methodologies.

Ongoing charges calculations - Income Portfolio

		31 May 2023		31 May 2022
		Column A⁽¹⁾	Column B⁽²⁾	Column A⁽¹⁾	Column B⁽²⁾
		£'000	£'000	£'000	£'000
Investment management fee		440	440	469	469
Other expenses		281	281	293	293
Less non-recurring costs		(11)	(11)	(68)	(68)
Ongoing charges of underlying funds		-	595	-	683
Total	(a)	710	1,305	694	1,377
Average daily net assets	(b)	60,679	60,679	66,622	66,622
Ongoing charges (c=a/b)	(c)	1.17%	2.15%	1.04%	2.07%
Ongoing charges above		1.17%
Non-recurring costs above		0.02%
Borrowing costs (Company level)		0.39%
Costs of underlying funds (including borrowing costs)		1.24%
Performance fees (five year Company average & underlying funds)		0.30%
Portfolio transaction costs		0.39%
Costs per KID methodology		3.51%

⁽¹⁾ Excluding ongoing charges of underlying funds

⁽²⁾ AIC methodology including ongoing charges of underlying funds

Ongoing charges calculations - Growth Portfolio

		31 May 2023		31 May 2022
		Column A⁽¹⁾	Column B⁽²⁾	Column A⁽¹⁾	Column B⁽²⁾
		£'000	£'000	£'000	£'000
Investment management fee		583	583	671	671
Other expenses		408	408	430	430
Less non-recurring costs		(20)	(20)	(84)	(84)
Ongoing charges of underlying funds		-	792	-	792
Total	(a)	971	1,763	1,017	1,809
Average daily net assets	(b)	90,576	90,576	105,577	105,577
Ongoing charges (c=a/b)	(c)	1.07%	1.95%	0.96%	1.71%
Ongoing charges above		1.07%
Non-recurring costs above		0.02%
Borrowing costs (Company level)		n/a
Costs of underlying funds (including borrowing costs)		0.98%
Performance fees (five year Company average & underlying funds)		0.59%
Portfolio transaction costs		0.22%
Costs per KID methodology		2.88%

⁽¹⁾ Excluding ongoing charges of underlying funds

⁽²⁾ AIC methodology including ongoing charges of underlying funds

Total return - the return to shareholders calculated on a per share basis taking into account both any dividends paid in the period and 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.

The effect of reinvesting these dividends on the respective ex-dividend dates and the share price total returns and NAV total returns are shown below.

	31 May 2023		31 May 2022
	Income shares	Growth shares	Income Shares	Growth Shares
NAV per share at start of financial year	133.67p	244.41p	142.22p	276.01p
NAV per share at end of financial year	116.41p	230.12p	133.67p	244.41p
Change in the year	-12.9%	-5.8%	-6.0%	-11.4%
Impact of dividend reinvestments†	5.5%	n/a	4.5%	n/a
NAV total return for the year	-7.4%	-5.8%	-1.5%	-11.4%

† During the year to 31 May 2023 dividends totalling 7.01p went ex-dividend with respect to the Income shares. During the year to 31 May 2022 the equivalent figure was 6.65p.

	31 May 2023		31 May 2022
	Income shares	Growth shares	Income Shares	Growth Shares
Share price per share at start of financial year	131.0p	244.0p	143.5p	277.0p
Share price per share at end of financial year	121.0p	225.0p	131.0p	244.0p
Change in the year	-7.6%	-7.8%	-8.7%	-11.9%
Impact of dividend reinvestment†	5.5%	n/a	4.3%	n/a
Share price total return for the year	-2.1%	-7.8%	-4.4%	-11.9%

† During the year to 31 May 2023 dividends totalling 7.01p went ex-dividend with respect to the Income shares. During the year to 31 May 2022 the equivalent figure was 6.65p.

Compound Annual Growth Rate - converts the total return over a period of more than one year to a constant annual rate of return applied to the compounded value at the start of each year.

	31 May 2023		31 May 2022
	Income shares	Growth shares	Income Shares	Growth Shares
Indexed NAV total return at launch	100.0	100.0	100.0	100.0
Indexed NAV total return at end of financial year	243.3	234.8	262.9	249.4
Period (years)	15.125	15.125	14.125	14.125
Compound annual growth rate	6.1%	5.8%	7.1%	6.7%

Yield - the total annual dividend expressed as a percentage of the year-end share price.

		31 May 2023	31 May 2022
Annual dividend	(a)	7.20p	6.65p
Income share price	(b)	121.00p	131.0p
Yield (c = a/b)	(c)	6.0%	5.1%

Net gearing/net cash - this is calculated by expressing the Company's borrowings less cash and cash equivalents as a percentage of shareholders' funds. If the amount calculated is positive, this is described as net gearing. If the amount calculated is negative, this is described as net cash.

	31 May 2023		31 May 2022
	Income Shares £'000	Growth Shares £'000	Income Shares £'000	Growth Shares £'000
Borrowings	7,000	-	7,000	-
Less cash and cash equivalents	(3,002)	(5,610)	(1,549)	(5,929)
	3,998	(5,610)	5,451	(5,929)
Shareholders' funds	58,733	87,520	64,692	94,979
Net gearing/-net cash	6.8%	-6.4%	8.4%	-6.2%

For further information, please contact:

Peter Hewitt, Columbia Threadneedle Investment Business Limited 0131 573 8360

Ian Ridge, Columbia Threadneedle Investment Business Limited 0131 573 8316

Sarah Gibbons-Cook, Quill PR 07702 412680

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