Responsible Investment Fund ICVC For the year ended: 31.05Authorised Corporate Director's Report* and Financial Statements for: *The Authorised Corporate Director’s Report in accordance

F&C Responsible Investment Funds ICVC Annual Report and Audited Financial Statements For the year ended:

31.05.2017

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Authorised Corporate Director's Report* and Financial Statements for:

*The Authorised Corporate Director’s Report in accordance with the Investment Management Association (IMA) SORP (2014) and the CollectiveInvestment Schemes sourcebook comprises those items denoted above along with the Fund Objective, Market Review, Activity, Outlook,Comparative Table, Portfolio Statement and Material Portfolio Changes of each sub-fund.

Certification of Financial Statements by Directors of the Authorised Corporate Director*

Independent Auditor's Report

Report of the Depositary

Financial Statements of F&C Responsible Investment Funds ICVC

Responsible Principles

F&C Responsible Investment Funds ICVC

Company Information*

Statement of Authorised Corporate Director’s Responsibilities

Contents

Directory*

F&C Responsible Global Equity Fund

F&C Responsible UK Equity Growth Fund

F&C Responsible UK Income Fund

Notes to the Financial Statements applicable to all sub funds

Registered Office

Head Office and Principal Place of Business

Exchange House


Directory

State Street Trustees Limited

Depositary


Company Information

Primrose StreetLondon

20 Churchill Place

EC2A 2NY

IFDS House

Investment Advisor

International Financial Data Services (UK) Limited

Administrator and Registrar

144 Morrison Street

E14 5HJLondon

LondonEC2V 7WS

EdinburghEH3 8EX

Atria One

Independent Auditors

Level 4 One Wood StreetPricewaterhouseCoopers LLP Eversheds LLP

Legal Advisors

London BasildonSt Nicholas LanePrimrose Street

F&C Managers Limited

SS15 5FS

Exchange House

EssexEC2A 2NY

Authorised Corporate Director Fund Accounting and Unit Pricing

525 Ferry Road

EH5 2AWEdinburgh

Telephone: 0800 085 2752, Facsimile: (0207) 600 4180

Regulated by the Financial Conduct Authority.

F&C Fund Management Limited State Street Bank and Trust Company

EH5 2AWEC2A 2NY

525 Ferry RoadEdinburgh

Exchange HousePrimrose StreetLondon

1

There were no cross holdings between sub-funds in F&C Responsible Investment funds ICVC as at 31 May 2017.

F&C Responsible Investment Funds ICVC (the 'Company') is an investment company with variable capital under the Open-Ended InvestmentCompany Regulations 2001 (SI2001/1228). The Company is an umbrella company with 3 individual sub-funds, and each of the sub-funds is aUCITS scheme.

Instrument of Incorporation and Prospectus

Financial Statements

These financial statements are for the year 1 June 2016 to 31 May 2017.

Shareholders


F&C Fund Management Limited, the Authorised Corporate Director (ACD) of the Open-Ended Investment Company (OEIC), is the sole director. TheACD has appointed F&C Managers Limited as the Investment Advisor to the individual sub-funds of the OEIC.

Company Information

Company Information

Shares of the Company have no par value and the share capital of the Company will at all times equal the sum of the net asset value of each of thesub-funds. Shareholders are not liable for the debts of the Company. The assets of each sub-fund are treated as separate from those of every othersub-fund and are invested in accordance with the investment objectives and policy of that sub-fund.

Each fund is a segregated portfolio of assets and, accordingly, the assets of a fund belong exclusively to that fund and shall not be used todischarge directly or indirectly the liabilities of, or claims against, any other person or body, including the Company or any other fund and shall notbe available for any such purpose.

The Company adopted segregated liability status for funds on 8 June 2012. From that date the assets of one fund may not be used to satisfy theobligations of another fund.

While the provisions of the OEIC Regulations provide for segregated liability between funds, the concept of segregated liability is relatively new.Accordingly, where claims are brought by local creditors in foreign courts or under foreign law contracts, it is not yet known how those foreigncourts will react to regulations 11A and 11B of the OEIC Regulations.

Additional sub-funds may be added at the ACD’s discretion.

The investment objectives, investment policies and investment activity reports, for each sub-fund are included in the financial statements for thatsub-fund.

The Company was incorporated and authorised by the Financial Conduct Authority on 8 August 2001 under registered number IC118.

F&C Responsible Global Equity Fund F&C Responsible UK Equity Growth FundF&C Responsible UK Income Fund

As at 31 May 2017 the OEIC comprised the following sub-funds:

The Operating charges figure for each share class can be found in the Fund’s Comparative Tables.

Other Information

The F&C Responsible Global Equity Fund, F&C Responsible UK Equity Growth Fund and F&C Responsible UK Income Fund offer both Accumulationand Income shares.

Copies of the current prospectus, the latest annual report and any subsequent reports are available from the Administrator.

2

(continued)


Company Information

●●●●

●

a)

b)

c)

d)

to be consistent with, and promote, sound and effective risk management;

to be in line with the business strategy, objectives, values and interests of the Company;

not to encourage excessive risk-taking as compared to the investment policy of the relevant Company;

to provide a framework for remuneration to attract, motivate and retain staff (including directors) to which the policy applies in order to achieve the objectives of the Company; and

to ensure that any relevant conflicts of interest can be managed appropriately at all times.

senior management;

risk takers;

control functions; and

employees receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities have a material impact on the risk profile of the Company.

The Company’s remuneration policy is part of the BMO GAM (EMEA) framework for promoting sound remuneration management, with theobjective of providing total compensation to its employees that is warranted by corporate, business unit/function and individual performanceand is comparable to market competitors, whilst being consistent with and promoting sound and effective risk management and the achievementof fair outcomes for all customers. Its purpose is to facilitate achievement of the business objectives and corporate values of the Company, with theprimary focus on clients, whilst ensuring that BMO GAM (EMEA) is able to attract, retain and motivate the key talent required to achieve thesebusiness objectives and corporate values without incentivizing excessive or inappropriate risk.

The board of directors (the “Board”) of the Company is responsible for the remuneration policy of the Company and for determining theremuneration of the directors of the Company and other staff who undertake professional activities for the Company. The Board has delegated toF&C Asset Management Plc’s Risk and Remuneration Committee (the “Committee”) responsibility for maintaining a compliant remuneration policy.The Committee is solely comprised of non-executive directors of F&C Asset Management plc. The Board has adopted the remuneration policyapplicable to all members of the F&C Group (“BMO Global Asset Management (EMEA)”) for this financial year as reviewed and approved by theCommittee periodically (at least annually). The Committee is responsible for, and oversees, the implementation of the remuneration policy in linewith the UCITS Regulations. The Board considers that the members of the Committee have appropriate expertise in risk management andremuneration to perform this review.

Applicability

The remuneration policy, which incorporates compliance with UCITS V requirements applies to staff whose professional activities have a materialimpact on the risk profile of the Company or of the funds it manages (“Identified Staff”) and so covers:

The Identified Staff list and the selection criteria above are subject to regular review (at least annually) by the Committee as well as formallyreviewed in the event of significant organisation changes and changes in remuneration regulations the Company is subject to.

Linking remuneration with performance

Remuneration policy

The purpose of the Company’s remuneration policy is to describe the remuneration principles and practices within the Company and for suchprinciples and practices:

Decision making and governance

Report on RemunerationThis section of the annual report has been prepared in accordance to the Article 14a(4) of Directive 2009/65/EC, as amended by Directive2014/91/EU (“UCITS V Directive”) and the Financial Conduct Authority’s Handbook (SYSC 19E: UCITS Remuneration Code).

Following the recent application of the UCITS V Directive on 18 March 2016, F&C Fund Management Limited, the authorised corporate director of F&C Responsible Investment Funds ICVC has approved and adopted a revised remuneration policy which is consistent with the remuneration principles applicable to UCITS management companies. The size of the Company and the size of the funds it manages, the internal organisation and the nature, the scope and the complexity of their activities have been taken into consideration in this disclosure.

3

(continued)


Company Information

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Fixed remuneration is determined taking into account factors including the requirements of the particular role and the staff member's experience, expertise, contribution level the fixed pay for comparable roles. Fixed remuneration is set, with reference to market data, at a level that is sufficient to attract high calibre staff as well as to permit the operation of a fully-flexible remuneration policy (including the possibility of a staff member receiving reduced or no variable remuneration in a particular year). The Committee keeps the balance between fixed and variable remuneration under review.Variable remuneration is determined annually by reference to both financial and non-financial company performance considerations. External competitor practices are included in the funding review to ensure compensation opportunities in the markets within which the Company operates are given due consideration and retention risks are effectively managed. Incentive funding is developed in view of current and projected economics and risks, supported by BMO GAM (EMEA) Audit and Compliance Committee inputs, ensuring risk-adjustments and qualitative and quantitative considerations, such as the cost and quantity of capital and liquidity are actively considered as funding adjustments. The Committee ensures that all incentive awards are not paid through vehicles or methods that facilitate the avoidance of the requirements with regard to remuneration imposed by applicable law and/or regulations.

Variable remuneration is allocated to respective business functions by reference to:

● contribution of the respective business function or unit to corporate performance;

● business function performance relative to pre-determined targets and objectives, including adherence to risk management obligations;and

● competitive market pay data.

Individual award allocations are referenced to the individual achievement during the performance year relative to pre-agreed objectives and assessment of market comparability. Performance is assessed in relation to pre-agreed objectives, which include financial and non-financial goals (including the achievement of fair customer outcomes), compliance with the BMO Group’s policies and procedures, adherence to risk management and compliance requirements and the BMO Code of Conduct. The assessment of performance for Identified Staff reflects multi-year performance in a manner appropriate to the life-cycle of the funds that are managed by Company.

Application of Financial Conduct Authority’s Handbook (SYSC 19E: UCITS Remuneration Code) pay-out process rules, save for disapplication at individual or Company level, which is determined by an annual proportionality assessment.

Quantitative remuneration disclosure

In accordance with the European Securities and Markets Authority (ESMA) Guidelines, the UCITS V Remuneration requirements will come into effectfollowing the first full performance period since its application. The revised remuneration policy of the Company has been in place for less than afull performance period and consequently, the quantitative remuneration disclosures are not included in this report. The Company will disclose thequantitative UCITS remuneration information in the next annual report for the Company where information for a full performance year will beavailable.

When setting remuneration levels, the following components and principles form part of the remuneration management framework:

4


Company Informationas at 31 May 2017

Securities Financing Transactions

F&C Responsible Global Equity Fund 1) Global Data

Proportion of securities and commodities on loan as at 31 May 2017 £000 % Total lendable assets excluding cash and cash equivalents: 302,876Securities and commodities on loan 4,655 1.54%

Assets engaged in SFTs and total return swaps as at 31 May 2017 £000 % Fund assets under management (AUM) 326,299

Absolute value of assets engaged in:Securities lending 4,655 1.43%

2) Concentration Data

Top 10 Collateral IssuersName and value of collateral and commodities received as at 31 May 2017 £000Government of United Kingdom 2,970Republic of France 1,086Kingdom of the Netherlands 237Federal Republic of Germany 226Kingdom of Belgium 210United States of America Treasury 182Cash Collateral -

Top 10 CounterpartiesName and value of outstanding transactions as at 31 May 2017 £000Securities lendingMorgan Stanley & International 3,525Barclays Capital Securities 1,130

3) Aggregate Transaction Data

Type, Quality and Currency of Collateral as at 31 May 2017Type Quality Currency £000Securities lendingBonds Investment Grade Sterling 2,970Bonds Investment Grade Euro 1,759Bonds Investment Grade US dollar 182

Total collateral held 4,911

Maturity Tenor of Collateral (remaining period to maturity) as at 31 May 2017

Type

Less than one day

£000

One day to one week

£000

One week to one month£000

One to three

months£000

Three months to

one year£000

Above one year

£000

Open maturity

£000Total£000

Securities lending - - - 62 10 4,839 - 4,911- - - 62 10 4,839 - 4,911

5


Company Information (continued)

as at 31 May 2017

Counterparty details as at 31 May 2017

Type £000Securities lending United Kingdom Bi-lateral 4,911


Maturity Tenor of SFTs and Total Return Swaps (remaining period to maturity) as at 31 May 2017

Type

Less than one day

£000

One day to one week

£000


One to three

months£000

Three months to

one year£000

Above one year

£000

Open maturity

£000Total£000

Securities lending - - - - - - 4,655 4,655- - - - - - 4,655 4,655

4) Re-use of Collateral

Re-use of collateral received % Share of collateral re-used at period end 10.00%Maximum allowable collateral re-use 15.00%

Cash Collateral reinvestment returns £000Returns to collective investment undertaking -

The Fund does not engage in re-use of collateral.

5) Safekeeping of Collateral Received

Names and value of custodians safekeeping collateral as at 31 May 2017 £000State Street 4,911

Number of custodians safekeeping collateral 1

6) Safekeeping of Collateral Granted

7) Return and Cost

for the year ended 31 May 2017

Total£000 £000 £000 £000

Securities lendingGross return 25,162 3,355 5,035 33,552% of total gross return 75% 10% 15%

Country of counterparty establishment Settlement and clearing

*All direct costs from securities lending are borne by lending agent.

The Fund does not borrow stock from counterparties; therefore, no collateral has been granted.

Collective Investment Undertaking

Manager of Collective Investment Undertaking

Third Parties (e.g. lending agent)

6



as at 31 May 2017


F&C Responsible UK Equity Growth Fund1) Global Data

Proportion of securities and commodities on loan as at 31 May 2017 £000 % Total lendable assets excluding cash and cash equivalents: 377,464Securities and commodities on loan 2,350 0.62%


Absolute value of assets engaged in:Securities lending 2,350 0.58%


Top 10 Collateral IssuersName and value of collateral and commodities received as at 31 May 2017 £000France, Republic of (Government) 1,296Germany, Federal Republic of (Government) 1,128Belgium, Kingdom of (Government) 345Netherlands, Kingdom of the (Government) 2

Top 10 CounterpartiesName and value of outstanding transactions as at 31 May 2017 £000Securities lendingBNP Paribas Arbitrage 2,139JP Morgan Securities 211


Type, Quality and Currency of Collateral as at 31 May 2017Type Quality Currency £000Securities lendingBonds Investment Grade Euro 2,770Bonds Investment Grade US dollar -



Type

Less than one day

£000

One day to one week

£000


One to three

months£000

Three months to

one year£000

Above one year

£000

Open maturity

£000Total£000

Securities lending - - - 251 42 2,478 - 2,771- - - 251 42 2,478 - 2,771

7



as at 31 May 2017


Type £000Securities lending United Kingdom Bi-lateral 225Securities lending France Bi-lateral 2,546


Maturity Tenor of SFTs and Total Return Swaps (remaining period to maturity) as at 31 May 2017

Type

Less than one day

£000

One day to one week

£000


One to three

months£000

Three months to

one year£000

Above one year

£000

Open maturity

£000Total£000

Securities lending - - - - - - 2,350 2,350- - - - - - 2,350 2,350


Re-use of collateral received % Share of collateral re-used at period end 10.00%Maximum allowable collateral re-use 15.00%

The Fund does not engage in re-use of collateral.


Names and value of custodians safekeeping collateral as at 31 May 2017 £000State Street 2,771

Number of custodians safekeeping collateral 1


7) Return and Cost


Total£000 £000 £000 £000








8



as at 31 May 2017


F&C Responsible UK Income Fund1) Global Data

Proportion of securities and commodities on loan as at 31 May 2017 £000 % Total lendable assets excluding cash and cash equivalents: 268,154Securities and commodities on loan - 0.00%


Absolute value of assets engaged in:Securities lending - 0.00%


Top 10 Collateral IssuersName and value of collateral and commodities received as at 31 May 2017 £000

Top 10 CounterpartiesName and value of outstanding transactions as at 31 May 2017 £000Securities lending


Type, Quality and Currency of Collateral as at 31 May 2017Type Quality Currency £000Securities lending


Type

Less than one day

£000

One day to one week

£000


One to three

months£000

Three months to

one year£000

Above one year

£000

Open maturity

£000Total£000

Securities lending - - - - - - - -- - - - - - - -


Type £000


Re-use of collateral received % The Fund does not engage in re-use of collateral.


Names and value of custodians safekeeping collateral as at 31 May 2017 £000


9



as at 31 May 2017


7) Return and Cost


Total£000 £000 £000 £000







10

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Director

On behalf of F&C Fund Management Limited

Authorised Corporate Director

15 August 2017

This report contains the information required by the Statement of Recommended Practice (SORP) for Financial Statements of Authorised Funds issued in May 2014, the Open-Ended Investment Companies Regulations 2001 and the Collective Investment Schemes sourcebook, in the case of annual financial statements and was approved for publication on 15 August 2017.

comply with the requirements of the UK Financial Reporting Standard 102 (FRS 102) and the Statement of Recommended Practice forFinancial Statements of Authorised Funds issued by the Investment Management Association (IMA) in May 2014;

select suitable accounting policies and then apply them consistently;

keep proper accounting records, which enable it to demonstrate that the financial statements as prepared comply with the aboverequirements;

take reasonable steps for the prevention and detection of fraud and non-compliance with laws or regulations;

The ACD is responsible for the management of the Company in accordance with its Prospectus and the Regulations.

make judgements and estimates that are prudent and reasonable; and

Certification of Financial Statements by Directors of the Authorised Corporate Director

prepare financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in operation.

follow generally accepted accounting principles and applicable United Kingdom accounting standards;

F&C Responsible Investment Funds ICVCStatement of Authorised Corporate Director’s Responsibilities in relation to the Regulations of theCompany

The Open-Ended Investment Companies Regulations 2001 and the Collective Investment Schemes sourcebook (the 'Regulations') as issued andamended by the Financial Conduct Authority, require the ACD to prepare financial statements for each annual accounting period which give a trueand fair view of the financial affairs of the Company and of its Number of Errors on the property of the Company for the year. In preparing thefinancial statements the ACD is required to:

11

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(i)

(ii)

has carried out the issue, sale, redemption and cancellation, and calculation of the price of the Company’s shares and the application of theCompany’s income in accordance with the Regulations and the Scheme documents of the Company, and

has observed the investment and borrowing powers and restrictions applicable to the Company.

any consideration relating to transactions in the Company’s assets is remitted to the Company within the usual time limits;

the Company’s income is applied in accordance with the Regulations; and

the instructions of the Authorised Fund Manager (“the AFM”) which is the UCITS Management Company, are carried out (unless they conflictwith the Regulations).

The Depositary also has a duty to take reasonable care to ensure that Company is managed in accordance with the Regulations and Schemedocuments in relation to the investment and borrowing powers applicable to the Company.Having carried out such procedures as we consider necessary to discharge our responsibilities as Depositary of the Company, it is our opinion,based on the information available to us and the explanations provided, that in all material respects the Company, acting through the AFM:

State Street Trustees Limited

15 August 2017


the Company’s cash flows are properly monitored and that cash of the Company is booked into the cash accounts in accordance with theRegulations;

the sale, issue, repurchase, redemption and cancellation of shares are carried out in accordance with the Regulations;

Report of the Depositary to the Shareholders of the F&C Responsible Investment Funds ICVCfor the year ended 31 May 2017

The Depositary must ensure that the Company is managed in accordance with the Financial Conduct Authority’s Collective Investment Schemessourcebook, the Open-Ended Investment Companies Regulations 2001 (SI 2001/1228), as amended, the Financial Services and Markets Act 2000,as amended, (together “the Regulations”), the Company’s Instrument of Incorporation and Prospectus (together “the Scheme documents”) asdetailed below.

The Depositary must in the context of its role act honestly, fairly, professionally, independently and in the interests of the Company and its investors.

The Depositary must ensure that:

The Depositary is responsible for the safekeeping of all custodial assets and maintaining a record of all other assets of the Company in accordancewith the Regulations.

the value of shares of the Company are calculated in accordance with the Regulations;

12

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Independent Auditor's Report to the Shareholders of F&C Responsible Investment FundsICVC

We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown orinto whose hands it may come save where expressly agreed by our prior consent in writing.

We have no exceptions to report arising from this responsibility.

Responsibilities for the financial statements and the auditOur responsibilities and those of the Authorised Corporate Director

As explained more fully in the Authorised Corporate Director’s Responsibilities Statement set out on page 11, the Authorised Corporate Director isresponsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

This report, including the opinions, has been prepared for and only for the Company’s shareholders as a body in accordance with paragraph 4.5.12of the Collective Investment Schemes sourcebook as required by paragraph 67(2) of the Open-Ended Investment Companies Regulations 2001 andfor no other purpose.

Propriety of accounting records and information and explanations received

Under the Collective Investment Schemes sourcebook we are required to report to you if, in our opinion:

What we have audited

the statement of total return for the year then ended;

proper accounting records have not been kept; or

the financial statements are not in agreement with the accounting records.

the Distribution Tables.

In our opinion:

Other matters on which we are required to report by exception

The financial reporting framework that has been applied in their preparation is United Kingdom Generally Accepted Accounting Practice (UnitedKingdom Accounting Standards, comprising FRS 102: “The Financial Reporting Standard applicable in the UK and Republic of Ireland” andapplicable law), the Statement of Recommended Practice ‘Financial Statements of UK Authorised Funds’ issued by the Investment ManagementAssociation (the “Statement of Recommended Practice for UK Authorised Funds”), the Collective Investment Schemes sourcebook and theInstrument of Incorporation.

we have obtained all the information and explanations we consider necessary for the purposes of the audit; and

the information given in the Authorised Corporate Director’s Report for the financial year for which the financial statements are prepared isconsistent with the financial statements.


In our opinion, F&C Responsible Investment Funds ICVC's financial statements, (the "financial statements of the Company"):

Report on the financial statements

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards onAuditing (UK and Ireland) ("ISAs (UK & Ireland)"). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards forAuditors.

Opinions on matters prescribed by the Collective Investment Schemes sourcebook

In applying the financial reporting framework, the Authorised Corporate Director has made a number of subjective judgements, for example inrespect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events.

Our opinion

F&C Responsible Investment Funds ICVC (the “Company”) is an umbrella fund with a number of sub-funds. The financial statements of theCompany, included within the Annual Report and Audited Financial Statements (the “Annual Report”) comprise the financial statements of each ofthe sub-funds, which are prepared by F&C Fund Management Limited (the “Authorised Corporate Director”), and comprise for each of the sub-funds:

give a true and fair view of the financial position of the Company and each of the sub-funds as at 31 May 2017 and of the net revenue andnet capital gains of the scheme property of the Company and each of the sub-funds for the year then ended;

have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, the Statement of RecommendedPractice for UK Authorised Funds, the Collective Investment Schemes sourcebook and the Instrument of Incorporation.

the statement of change in net assets attributable to shareholders for the year then ended;

the notes to the financial statements applicable to all sub-funds and notes to the financial statements of individual sub-funds, which includeother explanatory information; and

the balance sheet as at 31 May 2017;

13

(continued)

Independent Auditor's Report to the Shareholders of F&C Responsible Investment FundsICVC


●

●●

a)

b)

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basisfor us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination ofboth.

We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our own judgements, andevaluating the disclosures in the financial statements.

In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the auditedfinancial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledgeacquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we considerthe implications for our report.

What an audit of financial statements involves

We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining evidence about the amounts and disclosures in thefinancial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused byfraud or error. This includes an assessment of:

whether the accounting policies are appropriate to the Company’s and each of the Company's sub-fund's circumstances and have beenconsistently applied and adequately disclosed;

the reasonableness of significant accounting estimates made by the Authorised Corporate Director; and

the overall presentation of the financial statements.

Notes:The maintenance and integrity of the BMO Global Asset Management website is the responsibility of the Authorised Corporate Director; thework carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for anychanges that may have occurred to the financial statements since they were initially presented on the website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in otherjurisdictions.

PricewaterhouseCoopers LLPChartered Accountants and Statutory Auditors Edinburgh15 August 2017

14

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Responsible is committed to taking a more socially responsible approach to investment by making the most of these opportunities andreducing its contribution to the problems through:

Investing in companies whose products, services and operations make positive contribution to society, and those which demonstrate aresponsible attitude in all aspects of their business, notably including their customers, employees, the communities in which they operate andthe environment.

Avoiding investment in companies that do particular harm, including those involved in the supply or production of armaments; or whichoperate irresponsibly, particularly with regard to the environment, human rights or animal welfare issues; or which are involved in theproduction of alcohol, tobacco or pornography; or in gambling.

We recognise that Responsible's core aim of investing only in those companies which, in what they do and the way they do it, on balance make apositive contribution to society cannot be fully captured in the policies described here. Accordingly, we may on rare occasions exclude companieswhich we judge conflict with that aim even when they do not fall foul of any of the negative criteria set out in this document. We may also on rareoccasions where a company is considered, on balance, to make a positive contribution to society, include a company that breaches a negativeinvestment selection criterion in a minor, inconsequential or non-material way.

Using its influence as an investor to encourage companies in their efforts to improve their management of environmental and socialresponsibility issues.

Philosophy



Introduction

Responsible is the name of a range of socially responsible investment funds provided by the BMO Group. These funds are invested in companyshares and bonds to provide capital growth and income for customers. Published policy is outlined on the www.bmogam.com website, which statespositive and negative criteria but without these specificities.

Many people believe that investors should have some moral responsibility for the investments they make. Responsible is committed to thisprinciple and offers people a way to invest in the stockmarket while expressing this sense of responsibility. Responsible does this by applying ethicaland environmental principles to the selection of investments, and by using its influence as a shareholder to encourage more socially responsible andenvironmentally sustainable behaviour by companies.

Investment in companies raises both ethical opportunities and ethical difficulties for investors. Opportunities, because companies can make a verypositive contribution to society, by creating jobs and wealth and by providing many of the products and services on which a sustainable societydepends. By becoming shareholders, investors have the opportunity to support the positive contribution some companies make.

However, companies can also give rise to many social and environmental problems by, for example, making harmful products, acting irresponsiblywith regard to customers, employees and the communities in which they operate, and by polluting the environment. Investors in such companiesinevitably feel some responsibility for the harm that they do.

Companies do not, however, fit neatly into one category or the other. They commonly have a satisfactory approach to some aspects of theiractivities and weaknesses in others. Where the failings are not so serious as to disqualify a company outright for inclusion in the portfolio,Responsible will take a balanced view across all its activities. An investment is more likely to be made in cases where there is clear scope for ashareholding to give opportunities to influence it for the better.

15

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●●●●●●●●●●

●●●

Ethical;

Environmental; and

While recognising that many issues overlap, for practical purposes Responsible Criteria are separated into:

Human rights abuses; and

Poor relations with employees, customers or suppliers.

Effective anti-corruption controls; and

Transparent communication.

Tobacco production;

Alcohol production;

Responsible Policies

Negative criteria

Gambling;

Pornography or violent material;

Manufacture and sale of weapons;

Unnecessary exploitation of animals;

Nuclear power generation;

Poor environmental practices;

Positive criteria

Supplying the basic necessities of life e.g. healthy food, housing, clothing, water, energy, communication, healthcare, public transport, safety,personal finance, education;

Offering product choices for ethical and sustainable lifestyles e.g. fair trade, organic;

Improving quality of life through the responsible use of new technologies;

Good environmental management;

Actively addressing climate change e.g. renewable energy, energy efficiency;

Social.

Promotion and protection of human rights;

Good employment practices;

Positive impact on local communities;

Good relations with customers and suppliers;

Summary of all Responsible Criteria

16

(continued)

1.

(a)

(b)

(c)

(d)

(e)

(f)

(g)

Interest on debt securities bought or sold is excluded from the capital cost of securities, and is dealt with as part of the revenue of the sub-fund.

Treatment of special dividends

The ordinary element of stock dividends is treated as revenue and therefore forms part of the distribution. Any enhancement above the cashdividend is treated as capital, and taken to net capital gains/(losses).

Special dividends may be treated as repayments of capital or as revenue dependent on the facts of the particular case.

Basis of valuation of investments

Listed investments of the sub-funds, other than BMO managed funds, have been valued at market value at 12pm on 31 May 2017. Marketvalue is defined by the IMA SORP 2014 as fair value which generally is bid value of each security, excluding any accrued interest in the case offixed and floating rate securities.

Suspended securities of companies currently in administration or receivership have been valued at nil market value. All other suspended orunlisted securities have been valued at their suspended price, a broker supplied price or such other price deemed appropriate by theAuthorised Corporate Director. Any such prices are based on the Authorised Corporate Director’s opinion of fair value with the intention ofestimating market value and are disclosed within the notes to the financial statements of the relevant sub-fund.

Revenue from stock lending is accounted for net of bank and agent fees and is recognised on an accruals basis.

Investments in single priced authorised and recognised funds managed by the BMO group companies have been valued at the single price asat 12pm on 31 May 2017.

Stock lending revenue

Dividends on equities are recognised when the security is quoted ex-dividend. Revenue from unquoted equity investments is recognised whenthe dividend is declared. Dividends received include any withholding taxes but exclude attributable tax credits. Dividends from UK Real EstateInvestment Trusts ('REITs') are recognised as distributable income when the securities are quoted ex-dividend.

Distributions from collective investment schemes are recognised when the security is quoted ex-dividend. Equalisation on distributionsreceived is deducted from the cost of the investment. Distributions on investments in accumulation shares are recognised gross in theStatement of Total Return, with a transfer being made from the capital property to the revenue property of the sub-fund.

Revenue recognition

All of the sub-funds have been prepared on a going concern basis. The accounting policies outlined below have been applied on a consistentbasis throughout the year.

Other revenue, including interest on bank balances, is accounted for on an accruals basis.

Treatment of stock dividends

Gains and losses, including exchange differences in the valuation of investments held at the balance sheet date, including unrealised exchangedifferences, are treated as capital.

Dividends received from UK REITs are split into PID (Property Income Distributions) and Non-PID components for tax purposes. Revenuearising from UK REITs tax-exempt rental business is colloquially known as PID revenue and is taxable in the hands of the Fund. A UK REIT mayalso carry out activities that give rise to taxable profits and gains. It is from these that the REIT will make a Non-PID distribution. These aretreated for tax purposes in the same way as dividends from UK companies.

Interest on debt securities comprises the coupon interest and the difference between the purchase price and the expected maturity pricespread over its expected remaining life. This is treated as revenue with the difference adjusting the cost of the shares and treated as capital.

Interest on debt securities bought or sold

The sub-funds receive ACD fee rebates on their holdings of external collective investment schemes. This ACD fee rebate is accrued within thesub-funds on a daily basis in line with the agreements held, and is recognised within the sub-funds as either revenue or capital, in line withwhere the ACD fee was paid from within the underlying fund.


as at 31 May 2017

The financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments, and in accordancewith UK Financial Reporting Standard 102 (FRS 102) and the Statement of Recommended Practice (SORP) for Authorised Funds issued by theInvestment Management Association (IMA) in May 2014.

Accounting and distribution policies

Notes to the Financial Statements applicable to all sub-funds

Basis of accounting

17

(continued)


Notes to the Financial Statements applicable to all sub-funds(h)

(i)

(j)

(k)

(l)

(m)

(n)

(o)

(p)

Derivative contracts are shown in the portfolio statement at market value. The exposure to the open position on these contracts is shown inthe balance sheet as open derivatives commitment and the resulting profit or loss is reflected in the net capital gains/(losses). The marginspaid on these contracts are included in the amounts held at derivative clearing houses and brokers.

Derivative contracts

Underwriting commission

Underwriting commission is accounted for when the issue underwritten takes place. Where the Company is required to take up all of theshares underwritten, the commission received is treated as a deduction from the cost of the shares taken up. Where the Company is requiredto take a proportion of the shares underwritten, the same proportion of the commission received is treated as a deduction from the cost ofshares taken up and the balance is taken to revenue.

The allocation of revenue and expenses to each share class is based upon the proportion of the individual sub-fund's assets attributable toeach share class on the day the revenue is earned or the expense is suffered. The Authorised Corporate Director's periodic charge, Registrar'sfee, Accounting & Administration fees and the Report & Accounts printing costs are specific expenses to each share class.

Allocation of revenue and expenses to multiple share classes

Exchange rates

Authorised Corporate Director’s charge

Transactions in overseas currencies are translated to Sterling at the rates of exchange ruling on the day of any such transaction. Foreigncurrency balances are converted to Sterling at the exchange rates applicable at the end of the accounting period.

Deferred tax assets are recognised only to the extent that it is more likely than not that there will be taxable profits from which underlyingtiming differences can be deducted.

Current taxation

Deferred taxation

The ACD’s periodic charge is charged to the income property of the individual sub-funds. For the purposes of determining the distribution ofF&C Responsible UK Income Fund the ACD’s periodic charge is borne by the capital property of that sub-fund for share classes 1Accumulation, 1 Income and 2 Income.

Distribution policy

The revenue on income shares is distributed to shareholders annually on the last business day of July. The F&C Responsible UK Equity GrowthFund and F&C Responsible Global Equity Fund also distribute on 31 January. The F&C Responsible UK Income Fund also distributes on 30April, 31 October and 31 January. The income on accumulation shares is retained and reinvested and is reflected in the value of the shares.

Expenses

The charge for taxation is based at the current rate on taxable revenue for the period less allowable expenses. UK dividend income is disclosednet of any related tax credit. Overseas dividends are disclosed gross of any foreign tax suffered, with the tax element being separatelydisclosed in the taxation note.

Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date other than those differencesregarded as permanent. Any liability to deferred tax is provided at the average rate of tax expected to apply. Deferred tax assets and liabilitiesare not discounted to reflect the time value of money.

All expenses are recognised on an accruals basis and are charged to the revenue property of the individual sub-funds with the exception of theexpenses, such as handling charges, which relate to the purchases and sales of investments. These are charged to capital.

18

Notes to the Financial Statements applicable to all sub-fundsfor the year ended 31 May 2017

2.

3. Financial instruments

●

●●●●

●●●

Movements in rates affect the value of investments;

Movements in rates affect short term timing differences; and

Movements in rates affect the revenue received.

Currency exposure is monitored closely and is considered to be part of the overall investment process. Currency hedges via forward exchangecontracts or futures will only be used in the event of a specific currency risk being identified.

The Company may be subject to short-term exposure to exchange rate movements, for instance, where there is a difference between the datean investment purchase or sale is entered into and the date when settlement of the proceeds occurs. The Fund Manager may elect to hedgeagainst this risk.

The Company receives revenue in currencies other than Sterling and the Sterling values of this revenue can be affected by movements inexchange rates. The Fund Manager may elect to hedge against this risk.

Market price risk arises mainly from uncertainty about future prices of financial instruments held. It represents the potential loss the Companymight suffer through holding market positions in the face of price movements.

The ACD monitors on a daily basis the asset allocation of the portfolio in order to minimise the risk associated with particular countries andindustry sectors whilst continuing to follow the investment objective. An individual fund manager has responsibility for monitoring the existingportfolio selected in accordance with the overall asset allocation parameter and seeks to ensure that individual stocks also meet the riskreward profile that is acceptable.

Foreign currency risk

The revenue and capital value of the Company's investments can be significantly affected by currency translation movements as some of theCompany's assets and revenue are denominated in currencies other than Sterling which is the Company's functional currency.

The ACD has identified three principal areas where foreign currency risk could impact the Company:

Equity shares, collective investment schemes, equity related instruments, floating rate securities, fixed income securities and money marketinstruments which are held in accordance with the individual sub-fund's investment objectives and policies;

Cash, liquid resources and short-term debtors and creditors that arise directly from its operations;

Shareholders' funds which represent investors' monies, which are invested on their behalf;

Short-term borrowings used to finance investment activity; and

Derivative transactions which the individual sub-funds may also enter into, principally forward foreign currency contracts, futures and options,the purpose of which is to manage the currency and market risks arising from the individual sub-fund's investment activities and relatedfinancing.

Market price risk

It is, and has been throughout the year under review, the Company's policy that no trading in financial instruments shall be undertaken tomake short-term speculative gains.

The main risks arising from the Company's financial instruments are market price, foreign currency, liquidity, interest rate, credit and defaultrisks. The ACD reviews policies for managing each of these risks and these are summarised below. These policies have remained unchangedsince the beginning of the year to which these financial statements relate.

In pursuing the investment objectives of the individual sub-fund's the Company may hold a number of financial instruments which comprise:

Equalisation

The quoted price of shares includes the value of securities and the revenue accrued up to that time, in respect of those securities.

When buyers purchase shares, the price they pay includes a sum not only to equate with the value of the securities comprised within thatshare, but also an amount to equate with the revenue included.

All shareholders in the same share class receive the same pence per share distribution, but those with Group 2 shares have their distributionpartially made up of a return of the sum equating to the revenue content in the purchase price of their shares. This sum represents theaverage amount of revenue included in all Group 2 shares. It is deemed to be a return of capital, and as such is not liable to income tax. Itmust, however, be deducted from the cost of shares for capital gains tax purposes.

(continued)


19


(continued)


Default risk

Certain transactions in securities that the Company enters into expose it to the risk that the counter-party will not deliver the investment (purchase) or cash (sale) after the Company has fulfilled its responsibilities.

The Company mainly deals, however, on a 'delivery versus payment' basis which reduces counter-party risk. The Company only buys and sells investments through brokers which have been approved by the ACD as an acceptable counter-party. In addition, limits are set as to the maximum exposure to any individual broker that may exist at any time; these limits are reviewed quarterly.

The Company may use derivatives for the purpose of efficient portfolio management and/or meeting its investment objective. Such use is not expected to have a detrimental effect on the risk profile of the Company.

F&C Responsible UK Income Fund invests in bonds that are at risk of default at any time.

Bond defaults may be characterised by any missed or delayed payment of interest or principal, bankruptcy or breach of certain financial covenants that may render them financially distressed. This risk is minimised by regularly monitoring the bonds internally and externally through the ratings agencies.

Other risk

Credit risk

F&C Responsible UK Income Fund invests in bonds issued by a number of companies.

If any individual company fails to perform well, the credit rating of the company may well fall and the bonds would fall in price. All investments are monitored internally and externally by a number of different agencies and assigned ratings, which often change over time. The Company closely monitors the ratings of the bonds within the portfolio.

The risk of low market liquidity, through reduced trading volumes, may affect the ability of the Company to trade financial instruments at values indicated by market data vendors. From time to time, liquidity may also be affected by stock specific or economic events.

To manage these risks the Investment Manager undertakes detailed research to select appropriate investment opportunities in line with the Company’s objective. All stocks are valued daily but those stocks identified as being less liquid are reviewed on a regular basis for pricing accuracy.

Interest rate riskThe Company invests predominately in equity shares and investments which neither pay interest nor have a maturity date. It also invests in bonds. The individual sub-funds may also invest in fixed rate securities and floating rate securities, as well as fixed and floating rate deposits. Any change to the interest rates relevant for particular securities may result in either revenue increasing or decreasing or the ACD being unable to secure similar returns on the expiry of contracts or the sale of securities. In addition, changes to prevailing rates or changes in expectations of future rates may result in an increase or decrease in the value of the securities held.

In general, if interest rates rise, the revenue potential of the individual sub-funds also rises, but the value of fixed rate securities will decline. A decline in interest rates will generally have the opposite effect.

Liquidity risk

The primary source of this risk to the Company is the liability to shareholders for any cancellation of shares. The Company’s assets comprise mainly of readily realisable securities. If insufficient cash is available to finance shareholder redemptions then securities held by the Company may need to be sold.

20


(continued)


Sensitivity analysis

F&C Responsible

Global Equity Fund

F&C Responsible UK Equity

Growth Fund

F&C Responsible UK Income

Fund

Market Price Risk

If market prices move by: 10.00% 10.00% 10.00%

then the impact on the portfolio will be: 9.79% 9.83% 8.67%

Foreign Currency Risk

If EUR exchange rates move by: 5.00% 5.00% 5.00%

then the impact on the portfolio will be: -1.06% 0.00% 0.00%

If GBP exchange rates move by: 5.00% 5.00% 5.00%


If USD exchange rates move by: 5.00% 5.00% 5.00%


If JPY exchange rates move by: 5.00% 5.00% 5.00%

then the impact on the portfolio will be: -0.53% 0.00% 0.00%

Interest Rate Risk

If interest rates move by: 100bps 100bps 100bps

then the impact on the portfolio will be: 0.00% 0.00% -0.56%

Inflation Risk

If inflation moves by: 100bps 100bps 100bps


Page386084

The numerical disclosures required by FRS13 are shown within each individual sub-fund's Financial Statements and can be found on the pages indicated below.

F&C Responsible Global Equity Fund F&C Responsible UK Equity Growth FundF&C Responsible UK Income Fund

21

Global equity markets made gains over the twelve months as a more optimistic outlook for global economic growth drove increased risk appetite,with correspondingly strong contributions from emerging markets. Signs of stabilisation in the Chinese economy were also generally supportive forthe emerging markets asset class. While global equity markets largely shrugged off the shock Brexit vote in June 2016, Donald Trump´s victory inthe US presidential elections in November highlighted the trend of rising populism and heighted political uncertainty across the world. Despite this,populist parties failed to make any meaningful impact in various European elections held throughout the period, including the Netherlands andFrance. Trump’s surprise victory in the US presidential election drove markets higher amid hopes that the administration would deliver on pledges tocut taxes and regulation while raising spending on infrastructure. However, the failure of the US administration to get healthcare reform throughCongress in March, and only a slim marginal win in May, raised questions over the legislative path of Trump´s plans. The substantial fall in thepound, especially during the first half of the period, boosted the returns from overseas equities for UK-based investors.

Among the new additions to the portfolio in the period was Xylem, the leader in water infrastructure products, addressing ageing infrastructure indeveloped markets and new water infrastructure in emerging markets. We added Kerry Group, the ingredients and flavours producer enabling theincreased demand for healthier and more natural foods. We also initiated new positions in Japan Exchange, which stands to benefit from increasedtrading volumes as well as expanding into new business areas, and IT services provider SCSK, which we see as well positioned to benefit fromgrowth in increased IT infrastructure spending. We sold Willis Towers Watson, as we deemed the merger of Willis and Towers Watson asweakening the original investment thesis. Towards the end of the reporting period, we sold out of Spectra Energy as the company's merger withEnbridge makes it unacceptable on account of activities in the Canadian Oil Sands region.

Jamie Jenkins & Nick Henderson£325.8 million13 October 1987

Market Review

Fund size

27 June 2017

Performance Summary

F&C Fund Management Limited

The F&C Responsible Global Equity Fund returned 31.4% over the 12-month period. By comparison, the MSCI World Index returned 32.0%. Allfigures are net of fees, in sterling terms and on a total return basis.


Fund Objective

Investment is concentrated in companies in any market whose products and operations are considered to be making a positive contribution tosociety and seeks to avoid companies which, on balance, are felt to be harming the world, its people, or its wildlife. The portfolio is chosen with theaim of achieving long-term capital growth.

Authorised Corporate Director's Investment Report

The Fund may invest indirectly through other permitted investment vehicles in accordance with its investment powers as set out in the Prospectus.


Fund manager

Our portfolio positioning retains its bias towards higher quality, sustainable growth companies that can prosper in spite of near-term economic andpolicy-driven volatility. We believe these companies should outperform over the long term, due to their robust cash flow, focus on improving totalshareholder returns and increasing franchise value. We remain overweight in healthcare and information technology, and are underweight oil, gas& consumable fuels and pharmaceuticals.

Strategy remains focused on delivering long-term capital growth through investment in an ethically screened and diversified portfolio of globalequities.

Launch date

The most recent value of the SRRI for the Fund was 5, published on 26 January 2017. From the most recent review it has been determined that thisis still appropriate.

A fuller explanation of the SRRI and the risk and reward profile of the Fund is contained in the Fund's KIIDs.

Synthetic Risk and Reward Indicator

The Synthetic Risk and Reward Indicator is calculated in accordance with the Key Investor Information Regulations and is disclosed in a fund's KIIDs(Key Investor Information Documents). It is calculated from the last five years' performance data and shows the historic volatility of the Fund and isupdated periodically. The SRRI is reported against standard bands ranging from 1 (lower risk/reward) to 7 (higher risk/reward). This classification isintended as a general indication of the overall level of risk of a fund in order to facilitate comparisons between funds.

22

Portfolio Statement

Holdings

MarketValue£000

TotalNet Assets

%

AUSTRALIA (1.23%*) 4,372 1.34CSL 58,209 4,372 1.34

BELGIUM (1.31%*) 3,798 1.17Umicore 72,893 3,798 1.17

CANADA (0.06%*) - -

DENMARK (1.35%*) - -

FINLAND (1.49%*) 4,423 1.36Amer Sports 244,390 4,423 1.36

FRANCE (3.72%*) 10,762 3.30Essilor International 51,178 5,304 1.63Suez 385,385 5,458 1.67

GERMANY (9.07%*) 27,608 8.47Allianz 34,471 5,180 1.59Continental 21,170 3,703 1.14Fresenius 93,968 6,270 1.92Gerresheimer 79,247 5,248 1.61SAP 86,300 7,207 2.21

IRELAND (3.61%*) 12,723 3.90Accenture 'A' 63,666 6,138 1.88Kerry 96,157 6,585 2.02

JAPAN (10.93%*) 36,676 11.26Daiseki 217,300 3,624 1.11Japan Exchange 414,500 5,208 1.60Keyence 24,600 8,688 2.67Kubota 506,600 6,230 1.91SCSK 149,700 5,147 1.58Toray Industries 540,100 3,508 1.08Toyota Motor 102,500 4,271 1.31

NETHERLANDS (3.31%*) 14,736 4.52ING 648,603 8,478 2.60QIAGEN 243,639 6,258 1.92

NORWAY (2.23%*) 5,915 1.82DNB 442,266 5,915 1.82

SINGAPORE (2.07%*) 4,490 1.38ComfortDelGro 2,147,900 2,904 0.89Raffles Medical 2,032,800 1,586 0.49

SWITZERLAND (2.14%*) 4,986 1.53Novartis 78,849 4,986 1.53

TAIWAN (1.45%*) 6,729 2.07Taiwan Semiconductor Manufacturing 1,280,000 6,729 2.07

UNITED KINGDOM (6.05%*) 24,623 7.56Delphi Automotive 104,643 7,058 2.17Intertek 127,313 5,466 1.68Prudential 483,160 8,402 2.58Rotork 1,550,837 3,697 1.13

UNITED STATES (49.29%*) 159,324 48.91Acuity Brands 33,112 4,196 1.29Amazon.com 9,168 7,115 2.18Amdocs 178,666 8,961 2.75


as at 31 May 2017

23

Portfolio Statement

Holdings

MarketValue£000

TotalNet Assets

%


(continued)

as at 31 May 2017

Apple 112,825 13,504 4.15Cardinal Health 116,355 6,666 2.05Cognex 46,252 3,347 1.03Crown Castle International # 85,880 6,925 2.13CVS Health 82,804 4,952 1.52eBay 130,730 3,524 1.08Henry Schein 60,529 8,622 2.65Intercontinental Exchange 137,204 6,431 1.97Mastercard 111,003 10,511 3.23Mettler-Toledo International 22,049 9,953 3.06PayPal 155,176 6,172 1.89Praxair 80,644 8,265 2.54Principal Financial 122,618 5,971 1.83Roper Technologies 47,215 8,376 2.57SVB Financial 29,573 4,003 1.23Tractor Supply 90,207 3,851 1.18US Bancorp 223,585 8,897 2.73Union Pacific 87,333 7,538 2.31VF 123,163 5,159 1.58Xylem 158,279 6,385 1.96

Portfolio of investments 321,165 98.59

Net other assets 4,597 1.41

Total net assets 325,762 100.00

All investments held are listed, unless otherwise stated.* Comparative figures shown in brackets relate to 31 May 2016.# Real Estate Investment Trust.

24

Material Portfolio Changes

Major purchasesCost

£000 Major salesProceeds

£000Kerry 6,243 Spectra Energy 5,509 Xylem 5,909 MEDNAX 5,362 Japan Exchange 4,736 Kansas City Southern 3,433 SCSK 4,387 Willis Towers Watson 3,155 Apple 3,740 USS 2,723 PayPal 3,333 SVB Financial 2,534 Amdocs 2,797 Murata Manufacturing 2,508 Keyence 2,525 Novo Nordisk 2,333 Acuity Brands 2,507 Cognex 2,057 VF 2,475 Cardinal Health 1,757



25

Share Class 1 - Accumulation

Change in net assets per share

Opening net asset value per share

Return before operating charges*

Operating charges

Return after operating charges*

Distributions

Retained distributions on accumulation shares*

Closing net asset value per share

*after direct transaction costs of:

Performance

Return after charges

Other information

Closing net asset value (£’000)

Closing number of shares

Operating charges

Direct transaction costs

Prices

Highest share price

Lowest share price

0.10% 0.05% 0.06%

482.00 379.60 383.00

363.30 322.60 300.20

1.66% 1.69% 1.66%

45,661 37,297 49,627

9,474,991 10,079,804 13,279,483

30.24% (0.99%) 20.93%

481.92 370.02 373.71

0.43 0.17 0.22

- - -

111.90 (3.69) 64.67

- -

(7.27) (6.01) (5.54)

370.02 373.71 309.04

31/05/17(p)

31/05/16(p)

31/05/15(p)

119.17 2.32 70.21


Comparative Tablesas at 31 May 2017

26


Comparative Tables (continued)

as at 31 May 2017

Share Class 1 - Income




Operating charges


Distributions on income shares



Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price

473.70 373.10 376.50

357.00 317.10 295.10

1.68% 1.72% 1.65%

0.10% 0.05% 0.06%

1,468,827 1,348,902 2,307,988

6,955 4,905 8,480

0.42 0.17 0.21

30.22% (1.03%) 20.94%

473.52 363.63 367.41

- - -

(7.24) (6.05) (5.41)

109.89 (3.78) 63.61

363.63 367.41 303.80

117.13 2.27 69.02

31/05/17(p)

31/05/16(p)

31/05/15(p)

27



as at 31 May 2017





Operating charges


Distributions




Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price 273.70 242.30 222.50

0.10% 0.05% 0.06%

366.10 285.60 285.50

0.81% 0.82% 0.80%

190,232 118,749 91,862

51,981,375 42,625,732 32,935,328

31.36% (0.12%) 21.96%

365.96 278.59 278.92

0.33 0.13 0.16

2.78 2.44 1.93

87.37 (0.33) 50.23

(2.78) (2.44) (1.93)

90.06 1.86 52.23

(2.69) (2.19) (2.00)

278.59 278.92 228.69

31/05/17(p)

31/05/16(p)

31/05/15(p)

28



as at 31 May 2017





Operating charges





Performance


Other information



Operating charges


Prices

Highest share price


0.10% 0.05% 0.06%

98.19 77.24 77.81

0.83% 0.86% 0.88%

48,834 27,915 12,582

50,054,714 37,294,944 16,641,482

31.32% (0.16%) 21.83%

97.56 74.85 75.60

0.09 0.04 0.04

23.44 (0.12) 13.63

(0.73) (0.63) (0.47)

24.18 0.50 14.23

(0.74) (0.62) (0.60)

74.85 75.60 62.44

31/05/17(p)

31/05/16(p)

31/05/15(p)

29



as at 31 May 2017





Operating charges


Distributions




Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price

Share class 4 - Accumulation was launched 10 August 2016.

48.62

0.10%

57.92

0.10%

19,269

33,279,558

15.80%

57.90

0.05

0.72

7.90

(0.72)

7.96

(0.06)

50.00

31/05/17(p)

30



as at 31 May 2017





Operating charges





Performance


Other information



Operating charges


Prices

Highest share price


0.10% 0.05% 0.06%

480.80 377.80 380.60

0.11% 0.14% 0.04%

14,811 11,724 12,561

3,111,203 3,211,120 3,407,015

32.21% 0.56% 22.42%

476.04 365.10 368.70

0.43 0.17 0.21

117.61 2.05 68.46

(6.67) (5.65) (5.06)

118.09 2.53 68.59

(0.48) (0.48) (0.13)

365.10 368.70 305.30

31/05/17(p)

31/05/16(p)

31/05/15(p)

31

Notes £000 £000 £000 £000

Net capital gains/(losses) 2 65,196 (92)

Revenue 3 4,989 3,477

4 (2,435) (1,800)

6 (3) (2)

2,551 1,675

5 (519) (341)

2,032 1,334

67,228 1,242

6 (2,053) (1,366)

65,175 (124)

£000 £000 £000 £000

200,590 175,112

79,904 66,130

(21,529) (41,540)

58,375 24,590

65,175 (124)

1,622 1,012

325,762 200,590

Notes to the Financial Statements are on pages 34 to 39.

for the year ended 31 May 201701/06/15 to 31/05/16

Opening net assets attributable to shareholders

01/06/16 to 31/05/17

Amounts payable on cancellation of shares

Change in net assets attributable to shareholders from investment activities

Closing net assets attributable to shareholders

Retained distribution on accumulation shares

Statement of Change in Net Assets Attributable to Shareholders

Expenses

Distributions

Total return before distributions

Net revenue after taxation

Taxation

Net revenue before taxation

Interest payable and similar charges



Income

01/06/16 to 31/05/17 01/06/15 to 31/05/16


Statement of Total Return

Amounts receivable on creation of shares

32


31/05/17 31/05/16Notes £000 £000

321,165 199,200

8 1,361 882

5,863 2,665

328,389 202,747

(412) (8)

(446) (311)

9 (1,769) (1,838)

(2,627) (2,157)

325,762 200,590

Cash and bank balances

Current assets

Investments


Net assets attributable to shareholders

Distribution payable

Total liabilities

Other creditors

Creditors

Total assets

Balance Sheetas at 31 May 2017

Debtors

Bank overdrafts

Assets

Liabilities

33

1.

2.

01/06/16 to 31/05/17

01/06/15 to 31/05/16

£000 £000Non-derivative securities 64,875 40Forward foreign exchange currency contracts (139) 12Currency gains/(losses) 467 (125)Handling charges (7) (19)

65,196 (92)

3.01/06/16 to

31/05/1701/06/15 to

31/05/16£000 £000

UK dividends 307 280Overseas taxable revenue (306) (70)Overseas non-taxable revenue 4,767 3,108Property revenue from taxable overseas REITs 184 115Bank interest 4 7Interest on capital - 14Stock lending revenue 33 22UK scrip dividends - 1

4,989 3,477

4.01/06/16 to

31/05/1701/06/15 to

31/05/16£000 £000

2,222 1,629

39 14- 1

17 68 6

64 27

33 3245 4612 9

7 11 2

44 496 41 1

149 144

2,435 1,800

Administration costs

Please see pages 17 and 18 for accounting policies.

The net capital gains/(losses) during the year comprise:


Notes to the Financial Statementsas at 31 May 2017

Expenses include irrecoverable VAT where applicable.

Accounting policies

Net capital gains/(losses)


KIID publication costsLegal fees

Revenue

Accounting & administration fees

Revenue collection charges

ACD's periodic charge

Depositary's feesPayable to the Depositary, associates of the Depositary, and agents of either of them:

Other expenses:

Safe custody fees

Total revenue

Expenses

Stock lending charges

Payable to the ACD, associates of the ACD, and agents of either of them:

Audit fee

Total expenses

Registrar's feesReport & accounts printing costsOut of pocket expenses

34


(continued)Notes to the Financial Statementsas at 31 May 2017

5.01/06/16 to

31/05/1701/06/15 to

31/05/16£000 £000

(a)519 341

(b)

2,551 1,675

510 335

(61) (56)(954) (621)510 346519 341

(5) (4)

519 341

(c)

(d)

6.

Distributions and interest

01/06/16 to 31/05/17

01/06/15 to 31/05/16

£000 £000367 283

1,821 1,134

2,188 1,41719 6

(154) (57)

2,053 1,366

3 2

2,056 1,368

Finance costs

Factors that may affect future tax charges:

At the year end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of £2,036,331 (31/05/16: £1,526,627)relating to surplus management expenses. No deferred tax asset was recognised in the current or prior year as it was considered unlikely theFund would generate sufficient taxable profits in the future to utilise these amounts.

Interim dividend distributions

Bank interest

The distributions take account of revenue received on the creation of shares and revenue deducted on the cancellation of shares, andcomprise:

Deduct: Revenue received on creation of shares

Net distributions for the year

Taxation

Analysis of charge in year:Irrecoverable overseas tax

Total finance costs


Factors affecting current tax charge for the year:

Final dividend distributions

Add: Revenue deducted on cancellation of shares

Movement in excess management expenses

Effects of:

Overseas non-taxable revenue*UK dividends*

The tax assessed for the year is higher than (2016: higher than) the standard rate of corporation tax in the UK for an Open-Ended InvestmentCompany of 20% (2016: 20%). The differences are explained below:

Corporation tax of 20% (2016: 20%)

Deferred taxation:

There is no provision required for deferred taxation at the Balance Sheet date in the current or prior year.

Overseas tax expensed

Total tax charge for the year (note 5a)

Irrecoverable overseas tax

Open Ended Investment Companies are exempt from tax on capital gains, subject to certain exceptions. Therefore, any capital return is notincluded within the above reconciliation.

*As an authorised OEIC these items are not subject to corporation tax.

Details of the distribution per share is set out in the Distribution Tables on page 40.

35



7.01/06/16 to

31/05/1701/06/15 to

31/05/16£000 £000

2,032 1,33419 17

2 15

2,053 1,366

8.31/05/17 31/05/16

£000 £000885 390220 269

- 1256 222

1,361 882

9.31/05/17 31/05/16

£000 £0001,437 993

56 46561 95

215 285

1,769 1,838

10.

01/06/16 to 31/05/17

01/06/15 to 31/05/16

01/06/16 to 31/05/17

01/06/15 to 31/05/16

£000 £000 £000 £000104,799 66,068 47,969 39,237

85 37 (80) (28)

97 22 (1) (1)

182 59 (81) (29)

104,981 66,127 47,888 39,208

01/06/16 to 31/05/17

01/06/15 to 31/05/16

01/06/16 to 31/05/17

01/06/15 to 31/05/16

% % % %

0.08 0.06 0.17 0.07

0.09 0.03 0.00 0.00

Amounts payable for cancellation of shares

Total other creditors

Accrued ACD's periodic charge

Total costs

Total net trades in the year after transaction costs

Purchases

Accrued expenses

Purchases awaiting settlement

Total costs

Portfolio transaction costs

Taxes 0.04 0.01

Equities

Equities

Equities


Accrued revenueAmounts receivable for issue of shares

Movement between net revenue and net distributions

Commissions

Sales

Other creditors

Total debtors

Debtors

Overseas tax recoverable

Net revenue after taxationRevenue deficit payable from capital

Accrued ACD expense rebate

01/06/15 to 31/05/16% %

Commissions 0.06 0.04

Total transaction cost expressed as a percentage of average net asset value.

Total transaction cost expressed as a percentage of asset type cost.Purchases Sales

CommissionsEquities

Net revenue received on share class conversions

0.10 0.05

01/06/16 to 31/05/17

Taxes

TaxesEquities

36



11.

12.

%Share Class 1 - Accumulation: 1.50Share Class 1 - Income: 1.50Share Class 2 - Accumulation: 0.75Share Class 2 - Income: 0.75Share Class 4 - Accumulation: - Share Class 4 - Income: -

01/06/16 31/05/17

Opening shares in issue Creations Cancellations

Shares converted

Closing shares in issue

Share Class 1 - Accumulation: 10,079,804 1,347,067 (1,867,473) (84,407) 9,474,991Share Class 1 - Income: 1,348,902 455,797 (315,141) (20,731) 1,468,827Share Class 2 - Accumulation: 42,625,732 13,026,121 (2,827,754) (842,724) 51,981,375Share Class 2 - Income: 37,294,944 11,513,024 (2,404,797) 3,651,543 50,054,714Share Class 4 - Accumulation: - 33,593,978 (314,420) - 33,279,558Share Class 4 - Income: 3,211,120 - (99,917) - 3,111,203

13.

All share classes have the same rights on winding up.

Capital commitments and contingent liabilities

The ACD's periodic charge on each share class is as follows:

On 31 May 2017, the Fund had no capital commitments (31/05/16: £nil) and no contingent liabilities (31/05/16: £nil).

The Fund has three share classes in issue: Class 1, Class 2, Class 4.

The net asset value of each share class, the net asset value per share and the number of shares in each share class are given in the Comparative Tables on pages 26 to 31.

The distributions per share class are given in the Distribution Tables on page 40.

Related party transactions

F&C Fund Management Limited, as Authorised Corporate Director (ACD), is a related party, and acts as principal in respect of all transactionsof shares in the Company. The aggregate monies received through issue, and paid on cancellation are disclosed in the Statement of Change inNet Assets Attributable to Shareholders. Amounts due to, or from, F&C Fund Management Limited at the end of the accounting year aredisclosed in notes 8 and 9 respectively.

Amounts payable to F&C Fund Management Limited in respect of fund management are disclosed in note 4 and amounts due at the end of the year in note 9.

Average portfolio dealing spread

The ACD is also the ACD or Manager for other authorised funds and those funds may invest in each other where this is within the investmentobjectives of the investing fund. Such transactions will be conducted on an arm’s length basis within the regulations and the terms of theprospectus. No such transactions were entered into during the current year.

The average portfolio dealing spread at the balance sheet date was 0.06% (31/05/16: 0.07%).

Reconciliation of the shares movement in the year:

Shareholders' funds

37



14.

31/05/17 31/05/16£000 £000

Barclays Capital Securities 3,703 3,916Credit Suisse Securities 1,208 33HSBC Bank - 1,122JP Morgan Securities - 267Morgan Stanley - 1,757

4,911 7,095

31/05/17 31/05/16£000 £000

4,911 6,828- 267

4,911 7,095

15.

Total TotalCurrencyAustralian dollar 4,372 2,460Canadian dollar - 128Danish krone 14 2,722Euro 60,546 35,612Japanese yen 36,752 21,872Norwegian krone 5,977 4,505Singapore dollar 4,507 4,136Swiss franc 5,051 4,413Taiwanese dollar 6,732 2,914US dollar 178,419 111,749

Total 302,370 190,511

The aggregate value of securities on loan at 31 May 2017 is £4,655,154 (31/05/16: £6,740,649). Securities on loan are included in theportfolio statement and no account is taken of any collateral held. The aggregate value of collateral held at 31 May 2017 is £4,910,801(31/05/16: £7,095,305). The identities of the counterparties are listed in the counterparties table below. The form of the collateral is listed inthe collateral held table below.

Counterparties

Securities on loan

Collateral heldBondsEquities

Interest rate risk profile of financial assets and liabilities

Currency exposure

The Fund's net cash holding of £5.451m (31/05/16: holding £2.657m) is held in a floating rate deposit account. Interest is earned byreference to LIBOR Indices for all USD, EUR, GBP, CHF and JPY currencies as determined by the British Bankers Association. For all othercurrencies interest is earned by reference to their international benchmark equivalents.

The Fund receives revenue from holdings in equities. The cashflow from these investments may fluctuate depending upon the particulardecisions made by each company. Given that the Fund's objective is to seek capital growth, these cashflows are considered to be ofsecondary importance and are not actively managed.

Currency exposure

The gross earnings and fees paid for the year are £33,287 (31/05/16: £21,995) and £8,125 (31/05/16: £5,499).

Total collateral held


Financial instruments

A substantial proportion of the financial net assets of the Fund are denominated in currencies other than Sterling with the effect that thebalance sheet and total return can be significantly affected by currency movements.

31/05/17 31/05/16

Currency exposure

The analysis and tables provided below refer to the narrative and numerical disclosure on ‘Financial Instruments Risks’ on pages 19 to 21.

As at 31 May the Fund had the following net currency exposure (excluding Sterling):

38



16.

Assets Liabilities Assets Liabilities£000 £000 £000 £000

321,165 - 199,198 -- - 2 -

321,165 - 199,200 -

Level 1 The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date;

Level 2 Inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability,either directly or indirectly;

Level 3 Inputs are unobservable (ie for which market data is unavailable) for the asset or liability.

For financial instruments held at fair value in the balance sheet, the Fund is required to disclose for each class of financial instrument, ananalysis of the level in the fair value hierarchy (as set out in FRS 102 paragraph 11.27) into which the fair value measurements arecategorised. The Fund has early adopted the three levels of the fair value hierarchy under FRS 102 which are as follows:

Fair values of financial assets and liabilities

There is no material difference between the value of the financial assets and liabilities, as shown in the balance sheet and their fair value.

Maturity of financial liabilities

The financial liabilities of the Fund as at 31 May 2017 are payable either within one year or on demand, as were the financial liabilities of theprevious year ended 31 May 2016.

Total fair value

Fair value

Valuation technique

31/05/2017 31/05/2016

Level 1Level 2

39


Netrevenue Equalisation

Distributions paid/payable to

31/07/2017

Distributions paid to

31/07/2016Group 1 (p) (p) (p) (p)30/11/2016 0.4931 - 0.4931 0.5085Final 2.2903 - 2.2903 1.9316Group 2 (p) (p) (p) (p)30/11/2016 - 0.4931 0.4931 0.5085Final 1.6499 0.6404 2.2903 1.9316




31/07/2017


31/07/2016Group 1 (p) (p) (p) (p)30/11/2016 0.1222 - 0.1222 0.1219Final 0.6052 - 0.6052 0.5080Group 2 (p) (p) (p) (p)30/11/2016 0.0286 0.0936 0.1222 0.1219Final 0.4478 0.1574 0.6052 0.5080

Share Class 4 - Accumulation*30/11/2016: Group 1: Shares purchased prior to 10 August 2016 31/05/2017: Group 1: Shares purchased prior to 1 December 2016

Group 2: Shares purchased from 10 August 2016 to 30 November 2016 Group 2: Shares purchased from 1 December 2016 to 31 May 2017



31/07/2017Group 1 (p) (p) (p)30/11/2016 0.1681 - 0.1681Final 0.5532 - 0.5532Group 2 (p) (p) (p)30/11/2016 0.0064 0.1617 0.1681Final 0.3552 0.1980 0.5532




31/07/2017


31/07/2016Group 1 (p) (p) (p) (p)30/11/2016 2.0801 - 2.0801 1.8727Final 4.5924 - 4.5924 3.7726Group 2 (p) (p) (p) (p)30/11/2016 2.0801 - 2.0801 1.8727Final 4.5924 - 4.5924 3.7726


Distribution Tablesfor the year ended 31 May 2017

Distribution in pence per share

31/05/2017: Group 1: Shares purchased prior to 1 December 2016 Group 2: Shares purchased from 1 December 2016 to 31 May 201730/11/2016: Group 1: Shares purchased prior to 1 June 2016 Group 2: Shares purchased from 1 June 2016 to 30 November 2016

30/11/2016: Group 1: Shares purchased prior to 1 June 2016 Group 2: Shares purchased from 1 June 2016 to 30 November 201631/05/2017: Group 1: Shares purchased prior to 1 December 2016 Group 2: Shares purchased from 1 December 2016 to 31 May 2017


*Share class launched 10 August 2016.

40


Authorised Corporate Director's Investment Reportfor the year ended 31 May 2017

Fund Objective

The Fund provides an investment medium for people who do not regard financial gain as the sole criterion for investment but look to wider issues.Investment is concentrated in UK companies whose products and operations are considered to be of long-term benefit to the community both athome and abroad, with the aim of achieving long-term capital growth and increasing income, with the emphasis on capital growth.





The most recent value of the SRRI for the Fund was 5, published on 26 January 2017. From the most recent review it has been determined that thisis still appropriate.

Fund manager Catherine StanleyFund size £402.6 millionLaunch date 1 June 1984

Market Review

UK stocks made gains over the 12 months. While UK shares plunged on the day of the shock Brexit referendum result in June, the marketsubsequently rebounded. Exporters and businesses with a large proportion of their earnings coming from overseas were boosted by the significantdepreciation in the pound. In August, the Bank of England announced an interest rate cut and initiated a new phase of quantitative easing.However, UK economic data was generally positive for most of the period, defying expectations of a Brexit-related slowdown. Cyclical sectorstended to outperform, while Donald Trump´s victory in the US presidential elections in November increased expectations on US interest rates,providing a major headwind for defensive stocks such as utilities. Sterling recovered some of its lost ground early in 2017, despite the UK triggeringthe Article 50 process to leave the EU in March 2017. Although inflation picked up on rising fuel and food prices, with Consumer Price Inflation(CPI) in May 2017 seeing its highest level since mid-2013, the Bank of England maintained its accommodative monetary policy.

Among the purchases during the period were SSP and Biffa via an initial public offering (IPO). We invested in healthcare services company UDG Healthcare, which should benefit from increased outsourcing in the pharmaceutical sector. We also added piping system manufacturer Polypipe, which was attractively valued post the Brexit vote. Sales included Arm Holdings, which left the portfolio after it was acquired by SoftBank, which was positive for the portfolio.

UK equities made a reasonable start to 2017, with a good performance from smaller companies. This in part reflected the generally upbeat globalgrowth picture that came through in economic data with markets proving resilient to the news that US rates were rising once more, and also to theearly political difficulties of President Trump. There has been a reversal in sector leadership away from resources which had been very strongthrough 2016. Domestic economic news continues to indicate that the economy is still in growth mode, with exporters being helped by betterdemand from overseas and the lower sterling rate, and this should continue to be the case in the near term. The pace of expansion could slow onthe consumer side as inflation starts to impact spending, and margins of some companies will be hurt by higher labour costs. As ever, the UKmarket and sector leadership may be more driven by global developments. Earnings trends have been supportive but need to remain so for furthermarket UK equity gains.

Performance Summary

The F&C Responsible UK Equity Growth Fund returned 23.2% over the 12-month period. By comparison, the FTSE All Share Index returned 24.5%.All figures are net of fees, in sterling terms and on a total return basis.

Fund performance was impacted by the significant headwind from strength in the largely unethical resources sectors. The big oil and miningcompanies, which are large constituents of the FTSE All-Share, continued to exhibit strength as the dollar and commodity prices rose. In addition,there were a couple of stocks which saw downgrades as they approached the end of 2016 and realised they would not meet market forecasts -Laird is one such example.

27 June 2017F&C Fund Management Limited

41

Portfolio Statement

Holdings

MarketValue£000

TotalNet Assets

%

BASIC MATERIALS (1.12%*) 13,324 3.31

ChemicalsJohnson Matthey 70,755 2,205 0.55

Forestry & PaperMondi 153,764 3,123 0.78

MiningAnglo American 213,187 2,218 0.55BHP Billiton 488,393 5,778 1.43

CONSUMER GOODS (5.51%*) 24,564 6.10

Food ProducersAssociated British Foods 191,388 5,782 1.44

Personal GoodsBurberry 181,963 3,283 0.81Ted Baker 107,517 2,662 0.66Unilever 294,669 12,837 3.19

CONSUMER SERVICES (15.19%*) 71,368 17.73

General RetailersJD Sports Fashion 1,220,770 5,511 1.37Saga 1,850,844 3,739 0.93Vertu Motors 6,271,574 2,869 0.71

MediaAscential 1,261,043 4,434 1.10Daily Mail & General Trust 'A' Non-Voting 346,657 2,402 0.60Informa 539,185 3,618 0.90RELX 371,322 6,212 1.54

Travel & LeisureCompass 576,392 9,660 2.40Domino's Pizza 1,171,554 3,701 0.92InterContinental Hotels 164,435 7,194 1.79Merlin Entertainments 790,842 4,148 1.03On the Beach 1,084,398 4,281 1.06SSP 1,054,344 5,167 1.28TUI 236,651 2,840 0.71Whitbread 131,361 5,592 1.39

FINANCIALS (20.13%*) 82,436 20.48

BanksAldermore 1,527,273 3,769 0.94HSBC 2,968,397 20,236 5.03Lloyds Banking 14,816,620 10,551 2.62

Financial ServicesIntermediate Capital 860,350 7,575 1.88John Laing 2,239,924 6,623 1.64Jupiter Fund Management 822,109 4,068 1.01

Life InsuranceLegal & General 3,806,958 9,643 2.40Prudential 679,752 11,821 2.94

Real Estate Investment & ServicesSt. Modwen Properties 1,282,956 4,478 1.11U & I 1,880,693 3,672 0.91


as at 31 May 2017

42

Portfolio Statement

Holdings

MarketValue£000

TotalNet Assets

%


(continued)

as at 31 May 2017

HEALTH CARE (9.68*) 48,628 12.08

Health Care Equipment & ServicesSmith & Nephew 201,242 2,733 0.68UDG Healthcare 423,062 3,439 0.85

Pharmaceuticals & BiotechnologyAstraZeneca 209,812 11,021 2.74Clinigen 296,418 2,637 0.66Dechra Pharmaceuticals 188,076 3,547 0.88Entelos 'A' ** 1,768,192 - -Genus 158,801 2,976 0.74GlaxoSmithKline 922,652 15,597 3.87Shire 147,443 6,678 1.66

INDUSTRIALS (25.55%*) 92,653 23.01

Construction & MaterialsCRH 121,794 3,450 0.86Keller 292,907 2,515 0.62Polypipe 1,052,288 4,365 1.08Tyman 1,725,629 5,902 1.47

Electronic & Electrical EquipmentHalma 618,635 7,108 1.77

General IndustrialsDS Smith 1,123,096 4,911 1.22

Industrial EngineeringHill & Smith 245,860 3,484 0.86Rotork 1,227,850 2,927 0.73

Support ServicesAshtead 339,740 5,395 1.34Biffa 2,008,917 3,973 0.99Bunzl 282,083 6,922 1.72Experian 577,076 9,383 2.33Intertek 100,037 4,295 1.07IWG 1,248,565 4,166 1.03Rentokil Initial 3,329,383 8,866 2.20Restore 1,134,057 4,763 1.18Sanne 407,710 2,728 0.68Wolseley 147,500 7,500 1.86

OIL & GAS (1.74%*) - -

TECHNOLOGY (7.78%*) 34,239 8.50

Software & Computer ServicesComputacenter 574,720 4,920 1.22Craneware 182,157 2,368 0.59Micro Focus International 343,567 8,259 2.05Sage 575,039 4,132 1.03Softcat 876,295 3,809 0.95Sophos 1,547,378 6,948 1.72

Technology Hardware & EquipmentLaird 2,697,328 3,803 0.94

43

Portfolio Statement

Holdings

MarketValue£000

TotalNet Assets

%


(continued)

as at 31 May 2017

TELECOMMUNICATIONS (5.23%*) 17,406 4.32

Fixed Line TelecommunicationsBT 1,435,666 4,418 1.10

Mobile TelecommunicationsVodafone 5,599,373 12,988 3.22

UTILITIES (3.66%*) 13,228 3.29

ElectricitySSE 163,733 2,464 0.61

Gas, Water & MultiutilitiesNational Grid 647,562 7,062 1.76United Utilities 359,023 3,702 0.92




All investments held are listed, unless otherwise stated.

**Manually priced securities. See note 16.* Comparative figures shown in brackets relate to 31 May 2016.

44


Major purchasesCost


£000Biffa 3,643 Royal Dutch Shell 'B' 7,426SSP 3,482 ARM 5,804Aldermore 3,472 Hill & Smith 5,609Polypipe 3,209 Equiniti 4,557Shire 2,855 HSBC 3,189Anglo American 2,839 Derwent London 2,967Mondi 2,767 Rathbone Brothers 2,564BT 2,599 SThree 2,545UDG Healthcare 2,595 Capita 2,445Sanne 2,307 Berendsen 2,409



45





Operating charges


Distributions

Retained distributions on accumulation shares



Performance


Other information



Operating charges

Direct transaction costs**

Prices

Highest share price

Lowest share price

**Dilution levy has not been deducted within direct transaction costs.

1,021.00 973.00 944.20

0.11% 0.17% 0.06%

1,354.00 1,169.00 1,175.00

1.71% 1.71% 1.69%

179,201 158,024 206,641

13,245,815 14,269,051 17,596,412

22.16% (5.70)% 14.26%

1,352.89 1,107.46 1,174.34

1.31 1.85 0.64

15.62 15.08 11.97

245.43 (66.88) 146.60

(15.62) (15.08) (11.97)

265.88 (48.23) 164.46

(20.45) (18.65) (17.86)

1,107.46 1,174.34 1,027.74



31/05/17(p)

31/05/16(p)

31/05/15(p)

46



as at 31 May 2017





Operating charges





Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price


829.50 797.20 786.50

0.11% 0.17% 0.06%

1,093.00 962.70 973.80

1.69% 1.67% 1.64%

18,092 15,932 27,502

1,666,082 1,770,159 2,842,518

22.08% (5.66)% 14.25%

1,085.89 900.02 967.53

1.06 1.52 0.53

198.74 (54.74) 121.95

(12.87) (12.77) (10.35)

215.10 (39.81) 136.35

(16.36) (14.93) (14.40)

900.02 967.53 855.93

31/05/17(p)

31/05/16(p)

31/05/15(p)

47



as at 31 May 2017





Operating charges


Distributions




Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price


245.90 233.60 224.00

0.11% 0.17% 0.06%

328.80 278.70 280.30

0.80% 0.80% 0.79%

87,330 71,501 50,134

26,572,022 26,821,097 17,898,794

23.28% (4.83)% 15.30%

328.65 266.58 280.10

0.32 0.44 0.15

6.43 6.02 5.10

62.07 (13.52) 37.17

(6.43) (6.02) (5.10)

64.38 (11.44) 39.16

(2.31) (2.08) (1.99)

266.58 280.10 242.93

31/05/17(p)

31/05/16(p)

31/05/15(p)

48



as at 31 May 2017





Operating charges





Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price


62.93 60.54 59.78

0.11% 0.17% 0.06%

83.26 73.00 74.10

0.84% 0.86% 0.88%

22,343 17,705 11,896

27,127,086 25,945,409 16,217,462

23.05% (4.88)% 15.08%

82.36 68.24 73.35

0.08 0.12 0.04

15.73 (3.58) 9.78

(1.61) (1.53) (1.30)

16.35 (3.00) 10.37

(0.62) (0.58) (0.59)

68.24 73.35 64.87

31/05/17(p)

31/05/16(p)

31/05/15(p)

49



as at 31 May 2017





Operating charges


Distributions




Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price


137.30 130.20 124.00

0.11% 0.17% 0.06%

184.50 154.80 155.70

0.30% 0.29% 0.29%

30,052 34,056 35,882

16,298,019 22,885,610 23,063,827

23.91% (4.35)% 15.87%

184.39 148.81 155.58

0.18 0.25 0.08

4.40 4.08 3.52

35.58 (6.77) 21.31

(4.40) (4.08) (3.52)

36.06 (6.34) 21.71

(0.48) (0.43) (0.40)

148.81 155.58 134.27

31/05/17(p)

31/05/16(p)

31/05/15(p)

50



as at 31 May 2017





Operating charges


Distributions




Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price


138.60 131.20 124.60

0.11% 0.17% 0.06%

186.70 155.70 156.60

0.00% 0.00% 0.00%

- - -

200 200 200

24.27% (4.05)% 16.13%

186.59 150.15 156.49

0.18 0.25 0.08

- - -

36.44 (6.34) 21.74

- -

36.44 (6.34) 21.74

- - -

150.15 156.49 134.75

31/05/17(p)

31/05/16(p)

31/05/15(p)

51



as at 31 May 2017





Operating charges





Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price


833.50 802.60 793.30

0.11% 0.17% 0.06%

1,107.00 966.30 984.50

0.06% 0.05% 0.03%

51,609 46,241 54,601

4,731,957 5,118,921 5,623,996

23.94% (4.12)% 16.02%

1,090.64 903.33 970.85

1.07 1.53 0.53

216.26 (40.00) 137.43

(28.95) (27.52) (24.63)

216.85 (39.55) 137.69

(0.59) (0.45) (0.26)

903.33 970.85 858.05

31/05/17(p)

31/05/16(p)

31/05/15(p)

52



as at 31 May 2017

Share Class B - Accumulation




Operating charges


Distributions




Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price


181.50 172.30 164.70

0.11% 0.17% 0.06%

243.40 205.30 206.50

0.56% 0.56% 0.56%

13,966 14,471 14,068

5,742,471 7,352,338 6,818,748

23.57% (4.60)% 15.56%

243.21 196.82 206.31

0.23 0.33 0.11

5.25 4.90 4.18

46.39 (9.49) 27.78

(5.25) (4.90) (4.18)

47.58 (8.41) 28.81

(1.19) (1.08) (1.03)

196.82 206.31 178.53

31/05/17(p)

31/05/16(p)

31/05/15(p)

53

Notes £000 £000 £000 £000

Net capital gains/(losses) 2 69,594 (28,361)

Revenue 3 11,074 11,190

4 (4,058) (4,112)

6 (3) (1)

7,013 7,077

5 (28) (12)

6,985 7,065

76,579 (21,296)

6 (6,988) (7,146)

69,591 (28,442)

£000 £000 £000 £000

357,930 400,724

19,426 30,716

(49,183) (50,115)

(29,757) (19,399)

69,591 (28,442)

4,828 5,046

1 1

402,593 357,930

Taxation


Statement of Total Returnfor the year ended 31 May 2017

01/06/16 to 31/05/17 01/06/15 to 31/05/16

Income

Expenses





Distributions


Statement of Change in Net Assets Attributable to Shareholdersfor the year ended 31 May 2017

01/06/16 to 31/05/17 01/06/15 to 31/05/16


Unclaimed distributions







54


31/05/17 31/05/16Notes £000 £000

397,846 342,147

8 3,648 5,644

3,893 12,275

405,387 360,066

(1,068) (1,109)

9 (1,726) (1,027)

(2,794) (2,136)

402,593 357,930


Assets

Investments

Current assets

Debtors


Total assets

Liabilities

Creditors


Other creditors

Total liabilities



55

1.

2.

01/06/16 to 31/05/17

01/06/15 to 31/05/16

£000 £000Non-derivative securities 69,597 (28,336)Currency gains/(losses) 2 (21)Handling charges (5) (4)

69,594 (28,361)

3.01/06/16 to

31/05/1701/06/15 to

31/05/16£000 £000

UK dividends 10,596 10,722Overseas taxable revenue 2 -Overseas non-taxable revenue 429 288Property revenue from UK REITs - PID - 90Bank interest 20 64Stock lending revenue 27 26

11,074 11,190

4.01/06/16 to

31/05/1701/06/15 to

31/05/16£000 £000

3,579 3,645

55 261 16 7

62 34

59 5164 7011 8

- 12 3

262 28119 19

417 433

4,058 4,112


Notes to the Financial Statements


as at 31 May 2017

Accounting policies




Expenses

Payable to the ACD, associates of the ACD, and agents of either of them:ACD's periodic charge

Revenue

Total revenue

Payable to the Depositary, associates of the Depositary, and agents of either of them:Depositary's feesSafe custody feesStock lending charges

Legal feesKIID publication costs

Other expenses:Accounting & administration feesAdministration costsAudit fee

Total expenses


Registrar's feesReport & accounts printing costs

56


Notes to the Financial Statements (continued)

as at 31 May 2017

5.01/06/16 to

31/05/1701/06/15 to

31/05/16£000 £000

(a)28 12

(b)

7,013 7,077

1,403 1,415

(2,119) (2,144)(86) (58)802 787

28 12

28 12

(c)

(d)

6.


01/06/16 to 31/05/17

01/06/15 to 31/05/16

£000 £0003,244 3,1003,623 3,977

6,867 7,077219 219(98) (150)

6,988 7,146

3 1

6,991 7,147

7.01/06/16 to

31/05/1701/06/15 to

31/05/16£000 £000

6,985 7,0653 81

6,988 7,146

Analysis of charge in year:

Taxation


The tax assessed for the year is lower than (2016: lower than) the standard rate of corporation tax in the UK for an Open-EndedInvestment Company of 20% (2016: 20%). The differences are explained below:



Effects of:



UK dividends*Overseas non-taxable revenue*



Open Ended Investment Companies are exempt from tax on capital gains, subject to certain exceptions. Therefore, any capital return isnot included within the above reconciliation.

Deferred taxation:



Interim dividend distributionsFinal dividend distributions


At the year end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of £16,573,589 (31/05/16:£15,771,142) relating to surplus management expenses. No deferred tax asset was recognised in the current or prior year as it wasconsidered unlikely the Fund would generate sufficient taxable profits in the future to utilise these amounts.

Finance costs


Bank interest

Total finance costs

Add: Revenue deducted on cancellation of sharesDeduct: Revenue received on creation of shares


Net revenue received on share class conversions


Details of the distribution per share is set out in the Distribution Tables on pages 62 to 63.



57



as at 31 May 2017

8.31/05/17 31/05/16

£000 £0001,566 3,473

313 2721,754 1,889

- 115 9

3,648 5,644

9.31/05/17 31/05/16

£000 £000726 -559 278114 180327 569

1,726 1,027

10.

01/06/16 to 31/05/17

01/06/15 to 31/05/16

01/06/16 to 31/05/17

01/06/15 to 31/05/16

£000 £000 £000 £00055,261 74,591 68,061 75,339

72 138 (112) (185)

216 290 - -

288 428 (112) (185)

55,549 75,019 67,949 75,154

01/06/16 to 31/05/17

01/06/15 to 31/05/16

01/06/16 to 31/05/17

01/06/15 to 31/05/16

% % % %

0.13 0.19 0.16 0.25

0.39 0.39 - -

Amounts receivable for issue of sharesAccrued revenueAccrued ACD expense rebate

Debtors

Sales awaiting settlement


Total debtors


Other creditors

Purchases awaiting settlementAmounts payable for cancellation of sharesAccrued expenses

Portfolio transaction costsPurchases Sales


Commissions

Equities

Taxes

Equities

Total costs

Equities

Purchases Sales

CommissionsEquities


Total transaction cost expressed as a percentage of asset type cost.

TaxesEquities

Total transaction cost expressed as a percentage of average net asset value.01/06/16 to 31/05/17 01/06/15 to 31/05/16

% %

Total costs 0.11 0.17Average portfolio dealing spread

Commissions 0.05 0.09Taxes 0.06 0.08


58



as at 31 May 2017

11.

12.

%Share Class 1 - Accumulation: 1.50Share Class 1 - Income: 1.50Share Class 2 - Accumulation: 0.75Share Class 2 - Income: 0.75Share Class 3 - Accumulation: 0.25Share Class 4 - Accumulation: -Share Class 4 - Income: - Share Class B - Accumulation: 0.50

01/06/16 31/05/17


Shares converted


Share Class 1 - Accumulation: 14,269,051 29,462 (971,556) (81,142) 13,245,815Share Class 1 - Income: 1,770,159 115,821 (191,414) (28,484) 1,666,082Share Class 2 - Accumulation: 26,821,097 1,530,641 (2,056,640) 276,924 26,572,022Share Class 2 - Income: 25,945,409 1,691,907 (3,344,496) 2,834,266 27,127,086Share Class 3 - Accumulation: 22,885,610 312 (6,587,903) - 16,298,019Share Class 4 - Accumulation: 200 - - - 200Share Class 4 - Income: 5,118,921 1,154,054 (1,372,524) (168,494) 4,731,957Share Class B - Accumulation: 7,352,338 695,626 (2,305,493) - 5,742,471

13.


F&C Fund Management Limited, as Authorised Corporate Director (ACD), is a related party, and acts as principal in respect of alltransactions of shares in the Company. The aggregate monies received through issue, and paid on cancellation are disclosed in theStatement of Change in Net Assets Attributable to Shareholders. Amounts due to, or from, F&C Fund Management Limited at the end ofthe accounting year are disclosed in notes 8 and 9 respectively.


The ACD is also the ACD or Manager for other authorised funds and those funds may invest in each other where this is within theinvestment objectives of the investing fund. Such transactions will be conducted on an arm’s length basis within the regulations and theterms of the prospectus. No such transactions were entered into during the current year.



Shareholders' funds

The Fund has five share classes in issue: Class 1, Class 2, Class 3, Class 4 and Class B.


The net asset value of each share class, the net asset value per share and the number of shares in each share class are given in the Comparative Tables on page 46 to 53.

The distributions per share class are given in the Distribution Tables on pages 62 to 63.



59

as at 31 May 2017



14.

31/05/17 31/05/16£000 £000

BNP Paribas 2,546 -HSBC Bank - 4,996JP Morgan Securities 225 4,862

2,771 9,858

31/05/17 31/05/16£000 £000

2,771 4,862- 4,996

2,771 9,858

15.

16.

PricePrice

Source

£nil ACD

Security name Method of valuation

Entelos 'A'Stock is delisted. Stock valued at zero as there is no expected future returns.

Manually priced securities

The following security prices were not readily available through published sources, and as such required to be manually calculated or hadto be sourced from a third party.




The Fund receives revenue from holdings in equities. The cashflow from these investments may fluctuate depending upon the particulardecisions made by each company. Given that the Fund's objective is to seek capital growth, these cashflows are considered to be ofsecondary importance and are not actively managed.


The financial liabilities of the Fund as at 31 May 2017 are payable either within one year or on demand, as were the financial liabilities ofthe previous year ended 31 May 2016.

The fund holds an insignificant euro US dollar currency exposure at 31 May 2017 therefore a currency table has not been disclosed.


Currency exposure

A proportion of the financial net assets of the Fund are denominated in currencies other than Sterling with the effect that the balance sheetand total return can be affected by currency movements.




Counterparties



Securities on loan

The aggregate value of securities on loan at 31 May 2017 is £2,350,342 (31/05/16: £9,374,391). Securities on loan are included in theportfolio statement and no account is taken of any collateral held. The aggregate value of collateral held at 31 May 2017 is £2,770,704(31/05/16: £9,858). The identities of the counterparties are listed in the counterparties table below. The form of the collateral is listed inthe collateral held table below.


60



as at 31 May 2017

17.


397,846 - 342,147 -- - - -

397,846 - 342,147 -

Valuation technique

31/05/2017 31/05/2016

Level 1Level 3

Fair value


Level 1 The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurementdate;

Level 2 Inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset orliability, either directly or indirectly;


Total fair value

The level 3 holding is Entelos 'A' (31/05/16: Entelos 'A').

61



Distribution paid/payable to

31/07/2017

Distribution paid to




Distributionpaid/payable to

31/07/2017

Distributionpaid to




Distributionpaid/payable to

31/07/2017

Distributionpaid to





31/07/2017



Group 2: Shares purchased from 1 June 2016 to 30 November 2016





31/05/2017: Group 1: Shares purchased prior to 1 December 2016 Group 2: Shares purchased from 1 December 2016 to 31 May 201730/11/2016: Group 1: Shares purchased prior to 1 June 2016



62


Distribution Tables (continued)





31/07/2017






31/07/2017



Share Class B - Accumulation



31/07/2017






31/05/2017: Group 1: Shares purchased prior to 1 December 2016 Group 2: Shares purchased from 1 December 2016 to 31 May 201730/11/2016: Group 1: Shares purchased prior to 1 June 2016 Group 2: Shares purchased from 1 June 2016 to 30 November 2016

63


Authorised Corporate Director's Investment Reportfor the year ended 31 May 2017

Fund Objective

Investment is concentrated in UK companies whose products and operations are considered to be of long-term benefit to the community both athome and abroad, and will generally exclude those considered to be involved with harmful products and practices or which trade extensively withoppressive regimes. Securities are chosen with the aim of achieving an above average and increasing income with the prospect of capital growth.





The most recent value of the SRRI for the Fund was 4, published on 13 March 2017. From the most recent review it has been determined that thisis still appropriate.

Fund manager Catherine StanleyFund size £324.4 millionLaunch date 13 October 1987

Market Review

UK stocks made gains over the 12 months. While UK shares plunged on the day of the shock Brexit referendum result in June, the marketsubsequently rebounded. Exporters and businesses with a large proportion of their earnings coming from overseas were boosted by the significantdepreciation in the pound. In August, the Bank of England announced an interest rate cut and initiated a new phase of quantitative easing.However, UK economic data was generally positive for most of the period, defying expectations of a Brexit-related slowdown. Cyclical sectorstended to outperform, while Donald Trump´s victory in the US presidential elections in November increased expectations on US interest rates,providing a major headwind for defensive stocks such as utilities. Sterling recovered some of its lost ground early in 2017, despite the UK triggeringthe Article 50 process to leave the EU in March 2017. Although inflation picked up on rising fuel and food prices, with Consumer Price Inflation(CPI) in May 2017 seeing its highest level since mid-2013, the Bank of England maintained its accommodative monetary policy.

Among the new additions to the portfolio in the period was piping system manufacturer Polypipe, which was attractively valued post the Brexitvote. We also invested in Biffa, a waste management business, as the company has strong market positions and the very experienced managementteam is likely to utilise consolidation opportunities to enhance profits. Sells included insurer Novae Group following poor underwriting results. Anindustry change in personal injury compensation calculation hurt the company’s results and led to a two-thirds cut in the dividend, thus we nolonger felt the holding could produce sufficient income for this portfolio.

UK equities made a reasonable start to 2017, with a good performance from smaller companies. This in part reflected the generally upbeat globalgrowth picture that came through in economic data with markets proving resilient to the news that US rates were rising once more, and also to theearly political difficulties of President Trump. There has been a reversal in sector leadership away from resources which had been very strongthrough 2016. Domestic economic news continues to indicate that the economy is still in growth mode, with exporters being helped by betterdemand from overseas and the lower sterling rate, and this should continue to be the case in the near term. The pace of expansion could slow onthe consumer side as inflation starts to impact spending, and margins of some companies will be hurt by higher labour costs. As ever, the UKmarket and sector leadership may be more driven by global developments. Earnings trends have been supportive but need to remain so for furthermarket UK equity gains.

Performance Summary

The F&C Responsible UK Income Fund returned 14.4% over the 12-month period. By comparison, the FTSE All Share Index returned 24.5%. Allfigures are net of fees, in sterling terms and on a total return basis.

Fund performance was impacted by the significant headwind from strength in the largely unethical resources sectors. The big oil and miningcompanies, which are large constituents of the FTSE All-Share, continued to exhibit strength as the dollar and commodity prices rose. In addition,there were a couple of stocks which saw downgrades as they approached the end of 2016 and realised they would not meet market forecasts -Laird is one such example.

27 June 2017F&C Fund Management Limited

64

Portfolio Statement

Holdings

MarketValue£000

TotalNet Assets

%

BASIC MATERIALS (1.78%*) 8,412 2.59

Forestry & PaperMondi 153,522 3,118 0.96

MiningBHP Billiton 447,535 5,294 1.63

CONSUMER GOODS (7.39%*) 20,381 6.28

Food ProducersDairy Crest 536,679 3,279 1.01

Household Goods & Home ConstructionBellway 83,298 2,354 0.73Headlam 591,328 3,631 1.12

Leisure GoodsPhoto-Me International 1,842,977 3,055 0.94

Personal GoodsAlexandra ** 2,935,531 - -Unilever 185,067 8,062 2.48

CONSUMER SERVICES (10.27%*) 38,521 11.87

General RetailersSaga 1,997,710 4,035 1.24MediaInforma 386,776 2,595 0.80Moneysupermarket.com 738,856 2,573 0.79RELX 144,492 2,417 0.75Wilmington 868,865 2,366 0.73

Travel & LeisureCineworld 518,719 3,709 1.14Compass 304,562 5,104 1.57Go-Ahead 175,058 3,246 1.00Hollywood Bowl 1,219,765 2,116 0.65InterContinental Hotels 46,135 2,018 0.62National Express 1,369,848 5,075 1.57TUI 272,236 3,267 1.01

FINANCIALS (27.67%*) 91,257 28.13

BanksHSBC 2,761,174 18,823 5.80Lloyds Banking 11,962,641 8,519 2.63

Equity Investment InstrumentsCarador Income Fund 4,714,586 2,626 0.81

Financial ServicesBrewin Dolphin 1,099,232 3,711 1.14Close Brothers 129,640 2,092 0.64Intermediate Capital 799,625 7,041 2.17John Laing 1,643,501 4,860 1.50Jupiter Fund Management 896,238 4,435 1.37


as at 31 May 2017

65

Portfolio Statement

Holdings

MarketValue£000

TotalNet Assets

%


(continued)

as at 31 May 2017

Life InsuranceAviva 398,991 2,101 0.65Legal & General 3,430,247 8,689 2.68Phoenix 714,217 5,428 1.67Prudential 367,404 6,389 1.97

Real Estate Investment & ServicesSirius Real Estate 7,237,601 4,053 1.25

Real Estate Investment TrustsBritish Land 323,838 2,077 0.64Hansteen 3,290,531 4,209 1.30PRS 2,450,671 2,573 0.79Secure Income 1,049,381 3,631 1.12

HEALTH CARE (6.4%*) 26,062 8.03

Pharmaceuticals & BiotechnologyAstraZeneca 209,554 11,008 3.39GlaxoSmithKline 890,485 15,054 4.64

INDUSTRIALS (13.23%*) 38,681 11.92

Construction & MaterialsKeller 228,483 1,962 0.60Polypipe 770,764 3,197 0.99Tyman 730,197 2,497 0.77

General IndustrialsDS Smith 1,153,801 5,046 1.56

Industrial TransportationRoyal Mail 530,184 2,340 0.72

Support ServicesAcal 891,284 2,449 0.76Biffa 1,451,402 2,870 0.88Connect 1,436,099 1,795 0.55De La Rue 332,140 2,235 0.69Experian 337,638 5,490 1.69RPS 1,068,407 2,927 0.90Sanne 391,159 2,617 0.81Wolseley 64,026 3,256 1.00

OIL & GAS (1.66%*) - -

TECHNOLOGY (7.15%*) 23,499 7.24

Software & Computer ServicesComputacenter 413,937 3,543 1.09FDM 435,041 3,432 1.06Micro Focus International 311,225 7,482 2.30Sage 337,316 2,424 0.75Softcat 642,190 2,792 0.86

Technology Hardware & EquipmentLaird 2,713,629 3,826 1.18

66

Portfolio Statement

Holdingsor Nominal

Values

MarketValue£000

TotalNet Assets

%


(continued)

as at 31 May 2017

TELECOMMUNICATIONS (8.29%*) 20,658 6.37

Fixed Line TelecommunicationsBT 1,181,085 3,635 1.12Manx Telecom 1,621,325 3,210 0.99

Mobile TelecommunicationsVodafone 5,955,023 13,813 4.26

UTILITIES (5.78%*) 17,526 5.40

ElectricitySSE 126,116 1,898 0.58

Gas, Water & MultiutilitiesNational Grid 723,735 7,892 2.43Pennon 235,265 2,169 0.67United Utilities 539,957 5,567 1.72

EURO DEMONINATED BONDS (1.39%*) 4,380 1.36

Corporate BondsABN AMRO Bank 2.875% 30/06/2025 EUR100,000 93 0.03Allianz 2.241% 07/07/2045 EUR100,000 88 0.03Allianz 4.75% Perpetual EUR100,000 100 0.03ASML 3.375% 19/09/2023 EUR237,000 241 0.07AusNet Services 3% 13/02/2024 EUR100,000 99 0.03Banque Federative du Credit Mutuel 0.375% 13/01/2022 EUR100,000 88 0.03BNP Paribas 0.5% 01/06/2022 EUR130,000 115 0.03Danske Bank 5.75% Perpetual EUR100,000 93 0.03Delphi Automotive 1.5% 10/03/2025 EUR111,000 97 0.03Demeter Investments 4.375% Perpetual EUR144,000 136 0.04Electricite de France 2.25% 27/04/2021 EUR500,000 472 0.15Enel Finance International 1% 16/09/2024 EUR222,000 194 0.06Engie 1.375% 19/05/2020 EUR300,000 272 0.08Hera 2.375% 04/07/2024 EUR100,000 96 0.03Iberdrola International 2.5% 24/10/2022 EUR200,000 193 0.06Imerys 2.5% 26/11/2020 EUR200,000 187 0.06ITV 2.125% 21/09/2022 EUR145,000 132 0.04KBC 1.875% 11/03/2027 EUR100,000 90 0.03Leeds Building Society 2.625% 01/04/2021 EUR104,000 97 0.03Leeds Building Society 1.375% 05/05/2022 EUR100,000 89 0.03Macquarie Bank 1.125% 20/01/2022 EUR140,000 126 0.04Priceline 2.15% 25/11/2022 EUR100,000 93 0.03ProSiebenSat.1 Media 2.625% 15/04/2021 EUR174,000 162 0.05SCOR 3% 08/06/2046 EUR100,000 92 0.03Societe Generale 0.75% 25/11/2020 EUR100,000 89 0.03Standard Chartered 4% 21/10/2025 EUR200,000 189 0.06Svenska Handelsbanken 2.656% 15/01/2024 EUR112,000 102 0.03Swedbank 2.375% 26/02/2024 EUR175,000 158 0.05TDC 1.75% 27/02/2027 EUR100,000 88 0.03Yorkshire Building Society 2.125% 18/03/2019 EUR125,000 113 0.03Yorkshire Building Society 1.25% 17/03/2022 EUR220,000 196 0.06

67

Portfolio Statement

NominalValues

MarketValue£000

TotalNet Assets

%


(continued)

as at 31 May 2017

STERLING DENOMINATED BONDS (7.17%*) 20,391 6.30

Asset-Backed SecuritiesAnnington Finance No 4 1.50813% 10/01/2023 GBP51,009 52 0.02

Corporate BondsAA Bond 2.875% 31/07/2043 GBP160,000 164 0.05Admiral 5.5% 25/07/2024 GBP120,000 135 0.04Affordable Housing Finance 3.8% 20/05/2044 GBP129,000 174 0.05Anglian Water Osprey Financing 7% 31/01/2018 GBP100,000 104 0.03Anglian Water Osprey Financing 5% 30/04/2023 GBP100,000 107 0.03Anglian Water Services Financing 5.837% 30/07/2022 GBP140,000 173 0.05Apple 3.05% 31/07/2029 GBP149,000 167 0.05Aviva 6.125% Perpetual GBP170,000 191 0.06AXA 5.453% Perpetual GBP150,000 166 0.05Bank of America 7% 31/07/2028 GBP200,000 287 0.09Bank of Nova Scotia 0.75% 14/09/2021 GBP209,000 208 0.06BHP Billiton Finance 4.3% 25/09/2042 GBP100,000 127 0.04BUPA Finance 2% 05/04/2024 GBP100,000 101 0.03BUPA Finance Subordinated 5% 08/12/2026 GBP100,000 114 0.04Canary Wharf Finance II 5.952% 22/10/2037 GBP170,000 218 0.07Chorus 6.75% 06/04/2020 GBP175,000 201 0.06Circle Anglia Social Housing 7.25% 12/11/2038 GBP107,000 186 0.06Close Brothers 4.25% 24/01/2027 GBP100,000 107 0.03Close Brothers Finance 2.75% 19/10/2026 GBP108,000 114 0.04Clydesdale Bank 4.625% 08/06/2026 GBP136,000 169 0.05Cooperatieve Rabobank 4.625% 23/05/2029 GBP100,000 117 0.04Cooperatieve Rabobank 5.25% 23/05/2041 GBP57,000 84 0.03Co-Operative Bank 4.75% 11/11/2021 GBP100,000 111 0.03CPUK Finance 7.239% 28/02/2042 GBP201,000 264 0.08DNB Bank 4.25% 27/01/2020 GBP154,000 168 0.05ELM 6.3024% Perpetual GBP150,000 162 0.05Equity Release Funding No. 3 5.05% 26/04/2033 GBP99,000 123 0.04European Investment Bank 5.625% 07/06/2032 GBP426,000 647 0.20European Investment Bank 3.875% 08/06/2037 GBP697,000 929 0.29European Investment Bank 5% 15/04/2039 GBP364,000 562 0.17European Investment Bank 4.625% 12/10/2054 GBP100,000 175 0.05Experian Finance 3.5% 15/10/2021 GBP100,000 110 0.03Fidelity International 7.125% 13/02/2024 GBP100,000 128 0.04FirstGroup 8.125% 19/09/2018 GBP91,000 99 0.03Firstgroup 6.875% 18/09/2024 GBP100,000 131 0.04GlaxoSmithKline Capital 4.25% 18/12/2045 GBP155,000 206 0.06Great Rolling Stock 6.25% 27/07/2020 GBP227,000 262 0.08Hammerson 6.875% 31/03/2020 GBP150,000 175 0.05HSBC 6.5% 20/05/2024 GBP127,000 165 0.05HSBC 5.75% 20/12/2027 GBP118,000 146 0.05HSBC 7% 07/04/2038 GBP150,000 220 0.07ING Bank 6.875% 29/05/2023 GBP196,000 206 0.06InterContinental Hotels 3.875% 28/11/2022 GBP100,000 111 0.03Intu Metrocentre Finance 4.125% 06/12/2028 GBP236,000 265 0.08John Lewis 6.125% 21/01/2025 GBP200,000 248 0.08

68

Portfolio Statement

NominalValues

MarketValue£000

TotalNet Assets

%


(continued)

as at 31 May 2017

John Lewis 4.25% 18/12/2034 GBP100,000 109 0.03KFW 5.75% 07/06/2032 GBP470,000 732 0.23KFW 5% 09/06/2036 GBP610,000 940 0.29Koninklijke KPN 5% 18/11/2026 GBP100,000 121 0.04Land Securities Capital Markets 2.399% 08/02/2031 GBP100,000 105 0.03Leeds Building Society 4.875% 16/11/2020 GBP155,000 178 0.05Legal & General 5.5% 27/06/2064 GBP100,000 110 0.03Legal & General 5.875% Perpetual GBP150,000 160 0.05Legal & General Finance 5.875% 05/04/2033 GBP60,000 86 0.03Lend Lease Europe Finance 6.125% 12/10/2021 GBP154,000 180 0.06Lloyds Bank 7.625% 22/04/2025 GBP187,000 255 0.08Lloyds Bank 6.5% 17/09/2040 GBP125,000 205 0.06London Power Networks 5.125% 31/03/2023 GBP100,000 120 0.04Macquarie Bank 3.5% 18/12/2020 GBP133,000 144 0.04Marks & Spencer 6.125% 06/12/2021 GBP100,000 119 0.04Marks & Spencer 3% 08/12/2023 GBP100,000 103 0.03Metropolitan Funding 4.125% 05/04/2048 GBP100,000 125 0.04Motability Operations 3.625% 10/03/2036 GBP100,000 118 0.04Muenchener Rueckversicherungs-Gesellschaft 7.625% 21/06/2028 GBP120,000 128 0.04Muenchener Rueckversicherungs-Gesellschaft 6.625% 26/05/2042 GBP100,000 121 0.04National Australia Bank 5.125% 09/12/2021 GBP129,000 152 0.05National Australia Bank 7.125% 12/06/2023 GBP211,000 223 0.07National Express 2.5% 11/11/2023 GBP100,000 103 0.03Nationwide Building Society 5.625% 09/09/2019 GBP100,000 111 0.03Nationwide Building Society 3.25% 20/01/2028 GBP146,000 161 0.05Next 5.375% 26/10/2021 GBP100,000 116 0.04Next 3.625% 18/05/2028 GBP100,000 104 0.03Northern Ireland Electricity 6.875% 18/09/2018 GBP60,000 64 0.02Orange 5.75% Perpetual GBP198,000 218 0.07PepsiCo 2.5% 01/11/2022 GBP100,000 108 0.03Places For People Treasury 2.875% 17/08/2026 GBP133,000 131 0.04Porterbrook Rail Finance 4.625% 04/04/2029 GBP200,000 245 0.08Prudential 1.75% 27/11/2018 GBP149,000 151 0.05Rabobank Capital Funding Trust IV 5.556% Perpetual GBP200,000 214 0.07RAC Bond 4.87% 06/05/2046 GBP130,000 147 0.05Rl Finance Bonds No 3 6.125% 13/11/2028 GBP100,000 114 0.04Saga 3.375% 12/05/2024 GBP100,000 100 0.03Scentre Trust 1 3.875% 16/07/2026 GBP100,000 116 0.04Scotland Gas Networks 3.25% 08/03/2027 GBP100,000 111 0.03Segro 6% 30/09/2019 GBP149,000 166 0.05Severn Trent Utilities Finance 6.125% 26/02/2024 GBP115,000 148 0.05Sky 4% 26/11/2029 GBP131,000 152 0.05Southern Gas Networks 6.375% 15/05/2040 GBP75,000 122 0.04SSE 8.375% 20/11/2028 (London listing) GBP50,000 81 0.02SSE 8.375% 20/11/2028 (Luxembourg listing) GBP150,000 242 0.07Stagecoach 4% 29/09/2025 GBP100,000 111 0.03Standard Chartered 4.375% 18/01/2038 GBP132,000 152 0.05Standard Life 6.546% Perpetual GBP145,000 160 0.05Suez 5.375% 02/12/2030 GBP100,000 136 0.04Svenska Handelsbanken 2.375% 18/01/2022 GBP174,000 185 0.06

69

Portfolio Statement

NominalValues

MarketValue£000

TotalNet Assets

%


(continued)

as at 31 May 2017

Telecom Italia 6.375% 24/06/2019 GBP100,000 110 0.03Telefonica Emisiones 5.289% 09/12/2022 GBP100,000 119 0.04Thames Water Utilities Cayman Finance 1.875% 24/01/2024 GBP128,000 130 0.04Thames Water Utilities Cayman Finance 5.75% 13/09/2030 GBP74,000 87 0.03Thames Water Utilities Cayman Finance 4.375% 03/07/2034 GBP100,000 126 0.04United Utilities Water 5.625% 20/12/2027 GBP180,000 244 0.08Virgin Media Secured Finance 6% 15/01/2025 GBP100,000 117 0.04Vodafone 3.375% 08/08/2049 GBP100,000 95 0.03Wales & West Utilities Finance 4.625% 13/12/2023 GBP200,000 240 0.07Wessex Water Services Finance 4% 24/09/2021 GBP100,000 112 0.04Western Power Distribution East Midlands 6.25% 10/12/2040 GBP190,000 306 0.09Westpac Banking 2.125% 02/05/2025 GBP257,000 265 0.08WM Morrison Supermarkets 4.625% 08/12/2023 GBP100,000 115 0.04Yorkshire Building Society 3.5% 21/04/2026 GBP100,000 108 0.03Yorkshire Water Services Odsal Finance 6.5876% 21/02/2023 GBP135,000 173 0.05Zurich Finance 6.625% Perpetual GBP132,000 158 0.05

Mortgage-Backed SecuritiesJuturna European Loan Conduit No.16 5.0636% 10/08/2033 GBP110,588 137 0.04Longstone Finance 4.896% 19/04/2036 GBP145,000 167 0.05

US DOLLAR DENOMINATED BONDS (0.23%*) 372 0.12

Corporate BondsLegal & General 5.25% 21/03/2047 USD200,000 163 0.05Microsoft 3.5% 12/02/2035 USD113,000 87 0.03SES Global Americas 5.3% 25/03/2044 USD173,000 122 0.04

FORWARD CURRENCY CONTRACTS (0.00%*) 5 0.00

EuroSold EUR5,062,101 for GBP4,428,447 Settlement 30/06/2017 4 -

US DollarSold USD480,757 for GBP374,889 Settlement 30/06/2017 1 -




All investments held are listed, unless otherwise stated.

**Manually priced securities. See note 17.* Comparative figures shown in brackets relate to 31 May 2016.

70


Major purchasesCost


£000Sirius Real Estate 4,403 Royal Dutch Shell 'B' 5,688Biffa 2,818 Sirius Real Estate 4,356RPS # 2,802 Novae 3,574BT 2,498 Lavendon 3,389PRS # 2,468 PayPoint 3,101Polypipe 2,352 Sanne 3,040Tyman 2,275 HSBC 2,722Wilmington 2,182 Galliford Try 2,671Laird 2,153 Admiral 2,553RELX 2,037 Henderson 2,510

# Real Estate Investment Trust.



71





Operating charges


Distributions




Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price


214.00 209.30 193.50

0.15% 0.16% 0.07%

265.10 236.40 237.20

1.65% 1.65% 1.61%

90,510 86,969 126,306

34,185,367 37,278,699 53,341,722

13.48% (1.47)% 13.67%

264.76 233.30 236.79

0.37 0.37 0.15

9.62 9.31 8.15

31.46 (3.49) 28.48

(9.62) (9.31) (8.15)

35.45 0.26 31.91

(3.99) (3.75) (3.43)

233.30 236.79 208.31



31/05/17(p)

31/05/16(p)

31/05/15(p)

72



as at 31 May 2017





Operating charges





Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price


124.50 125.00 120.80

0.15% 0.16% 0.07%

151.00 143.30 145.80

1.64% 1.64% 1.61%

41,669 38,951 67,579

28,108,013 28,691,954 47,076,731

13.30% (1.55)% 13.44%

148.25 135.75 143.55

0.21 0.22 0.09

18.05 (2.22) 17.61

(5.55) (5.58) (5.07)

20.33 0.02 19.74

(2.28) (2.24) (2.13)

135.75 143.55 131.01

31/05/17(p)

31/05/16(p)

31/05/15(p)

73



as at 31 May 2017





Operating charges


Distributions




Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price


68.39 66.66 60.97

0.15% 0.16% 0.07%

85.38 74.87 75.10

0.80% 0.80% 0.80%

88,457 76,654 39,923

103,720,570 102,878,156 53,242,701

14.45% (0.63)% 14.58%

85.28 74.51 74.98

0.12 0.12 0.05

2.63 2.54 2.17

10.77 (0.47) 9.54

(2.63) (2.54) (2.17)

11.39 0.11 10.08

(0.62) (0.58) (0.54)

74.51 74.98 65.44

31/05/17(p)

31/05/16(p)

31/05/15(p)

74



as at 31 May 2017





Operating charges





Performance


Other information



Operating charges


Prices

Highest share price

Lowest share price


159.50 160.20 152.80

0.15% 0.16% 0.07%

195.80 182.00 186.10

0.81% 0.83% 0.81%

103,763 83,833 61,653

54,242,684 48,247,829 33,822,918

14.27% (0.71)% 14.36%

191.29 173.75 182.28

0.28 0.29 0.12

24.80 (1.30) 23.70

(7.26) (7.23) (6.48)

26.25 0.14 25.07

(1.45) (1.44) (1.37)

173.75 182.28 165.06

31/05/17(p)

31/05/16(p)

31/05/15(p)

75



as at 31 May 2017





Operating charges



Return to shareholder as a result of class closure



Performance


Other information



Closing net asset value per share (p)

Operating charges


Prices

Highest share price

Lowest share price

**Dilution levy has not been deducted within direct transaction costs.Share class 4 Income was closed 21 January 2015.

144.10

0.07%

157.90

-

0.06%

-

-

2.87%

-

0.11

(157.69)

4.45

(2.00)

4.51

(0.06)

155.24

31/05/15(p)

76

Notes £000 £000 £000 £000

Net capital gains/(losses) 2 31,376 (11,766)

Revenue 3 12,594 12,119

4 (3,473) (3,569)

6 (1) -

9,120 8,550

5 (40) (15)

9,080 8,535

40,456 (3,231)

6 (11,516) (10,985)

28,940 (14,216)

£000 £000 £000 £000

286,407 295,461

22,763 23,093

(19,775) (23,792)

2,988 (699)

28,940 (14,216)

6,060 5,857

4 4

324,399 286,407

Taxation


Statement of Total Returnfor the year ended 31 May 2017

01/06/16 to 31/05/17 01/06/15 to 31/05/16

Income

Expenses





Distributions


Statement of Change in Net Assets Attributable to Shareholdersfor the year ended 31 May 2017

01/06/16 to 31/05/17 01/06/15 to 31/05/16


Unclaimed distributions







77


31/05/2017 31/05/2016Notes £000 £000

310,145 281,875

8 2,935 2,308

15,306 5,994

328,386 290,177

- (20)

(3,026) (2,779)

9 (961) (971)

(3,987) (3,770)

324,399 286,407


Assets

Investments

Current assets

Debtors


Total assets

Liabilities

Investment liabilities

Creditors


Other creditors

Total liabilities



78

1.

2.

01/06/16 to 31/05/17

01/06/15 to 31/05/16

£000 £000Non-derivative securities 31,890 (11,521)Forward foreign exchange currency contracts (634) (241)Currency gains 129 4Handling charges (9) (8)

31,376 (11,766)

3.01/06/16 to

31/05/1701/06/15 to

31/05/16£000 £000

UK dividends 9,906 9,367Overseas taxable revenue 1 -Overseas non-taxable revenue 1,190 1,024Property revenue from UK REITs - PID 354 415Property revenue from UK REITs - Non PID 100 139Property revenue from taxable overseas REITs 27 -Property revenue from non-taxable overseas REITs 8 19Bank interest 22 36Interest on debt securities 953 1,025Stock lending revenue 31 94Underwriting commission 2 -

12,594 12,119


Notes to the Financial Statements


as at 31 May 2017

Accounting policies




Revenue

Total revenue

79



as at 31 May 2017

4.01/06/16 to

31/05/1701/06/15 to

31/05/16£000 £000

3,193 3,285(3) (7)

3,190 3,278

46 222 16 24

54 47

41 3964 7312 9

- 11 1

102 1129 9

229 244

3,473 3,569

Expenses

Payable to the ACD, associates of the ACD, and agents of either of them:ACD's periodic charge

Payable to the Depositary, associates of the Depositary, and agents of either of them:Depositary's feesSafe custody feesStock lending charges

ACD's expense rebate*

Legal feesKIID publication costs

Other expenses:Accounting & administration feesAdministration costsAudit fee

Total expenses


*This relates to a rebate paid by the ACD in order to maintain the individual sub-fund's Ongoing Charges Figure at a level consideredappropriate by the ACD.

Registrar's feesReport & accounts printing costs

80



as at 31 May 2017

5.01/06/16 to

31/05/1701/06/15 to

31/05/16£000 £000

(a)40 15

(b)

9,120 8,550

1,824 1,710

(1,981) (1,873)(240) (209)418 400

40 15(20) (28)

(1) -

40 15

(c)

(d)

6.


01/06/16 to 31/05/17

01/06/15 to 31/05/16

£000 £0005,403 4,8296,129 6,153

11,532 10,982202 204

(218) (201)

11,516 10,985

1 -

11,517 10,985

Analysis of charge in year:

Taxation


The tax assessed for the year is lower than (2016: lower than) the standard rate of corporation tax in the UK for an Open-Ended InvestmentCompany of 20% (2016: 20%). The differences are explained below:



Effects of:



UK dividends*Overseas non-taxable revenue*

Property revenue from UK REITs - Non PIDIrrecoverable overseas tax


Open Ended Investment Companies are exempt from tax on capital gains, subject to certain exceptions. Therefore, any capital return is notincluded within the above reconciliation.

Deferred taxation:

Overseas tax expensed



Interim dividend distributionsFinal dividend distributions


At the year end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of £5,547,746 (31/05/16: £5,129,770)relating to surplus management expenses. No deferred tax asset was recognised in the current or prior year as it was considered unlikely theFund would generate sufficient taxable profits in the future to utilise these amounts.

Finance costs


Bank interest

Total finance costs

Add: Revenue deducted on cancellation of sharesDeduct: Revenue received on creation of shares


Details of the distributions per share are set out in the Distribution tables on pages 86 to 87.

81



as at 31 May 2017

7.01/06/16 to

31/05/1701/06/15 to

31/05/16£000 £000

9,080 8,535ACD's periodic charge taken to capital 2,591 2,869Tax effect on ACD's periodic charge (151) (199)

(4) (220)

11,516 10,985

8.31/05/17 31/05/16

£000 £000666 233342 158

1,908 1,8973 8

16 12

2,935 2,308

9.31/05/17 31/05/16

£000 £000385 -212 342

76 117288 512

961 971

10.

01/06/16 to 31/05/17

01/06/15 to 31/05/16

01/06/16 to 31/05/17

01/06/15 to 31/05/16

£000 £000 £000 £00072,310 64,242 73,147 34,577

4,538 6,949 6,681 21,827279 101 - -

77,127 71,292 79,828 56,404

71 102 (115) (107)- - - -- - - -

71 102 (115) (107)

278 253 - -- - - -- - - -

278 253 - -

349 355 (115) (107)

77,476 71,647 79,713 56,297

Net revenue deducted on share class conversions




Amounts receivable for issue of sharesAccrued revenueAccrued ACD expense rebate

Debtors

Sales awaiting settlement


Total debtors


Other creditors

Purchases awaiting settlementAmounts payable for cancellation of sharesAccrued expenses

Portfolio transaction costsPurchases Sales


Trades in the year before transaction costs

Commissions

EquitiesBondsCollective Investment Schemes

Total commissions

Taxes


Total taxes

Total costs



82



as at 31 May 2017

01/06/16 to 31/05/17

01/06/15 to 31/05/16

01/06/16 to 31/05/17

01/06/15 to 31/05/16

% % % %

0.10 0.16 0.16 0.31- - - -- - - -

0.38 0.39 - -- - - -- - - -

11.

12.

%Share Class 1 - Accumulation: 1.50Share Class 1 - Income: 1.50Share Class 2 - Accumulation: 0.75Share Class 2 - Income: 0.75

Purchases Sales

CommissionsEquitiesBonds

Total transaction cost expressed as a percentage of asset type cost.

TaxesEquitiesBondsCollective Investment Schemes

Collective Investment Schemes

Total transaction cost expressed as a percentage of average net asset value.01/06/16 to 31/05/17 01/06/15 to 31/05/16

% %

Total costs 0.15 0.16Average portfolio dealing spread

Commissions 0.06 0.07Taxes 0.09 0.09



F&C Fund Management Limited, as Authorised Corporate Director (ACD), is a related party, and acts as principal in respect of all transactionsof shares in the Company. The aggregate monies received through issue, and paid on cancellation are disclosed in the Statement of Change inNet Assets Attributable to Shareholders. Amounts due to, or from, F&C Fund Management Limited at the end of the accounting year aredisclosed in notes 8 and 9 respectively.


Amounts payable to F&C Fund Management Limited in respect of fund management and receivable from F&C Fund Management Limited inrespect of expense rebates are disclosed in note 4 and amounts due at the end of the year in note 8.

The ACD is also the ACD or Manager for other authorised funds and those funds may invest in each other where this is within the investmentobjectives of the investing fund. Such transactions will be conducted on an arm’s length basis within the regulations and the terms of theprospectus. No such transactions were entered into during the current year.


Shareholders' funds

The Fund has three share classes in issue: Class 1 and Class 2.


The net asset value of each share class, the net asset value per share and the number of shares in each share class are given in the Comparative Tables on page 72 to 76.

The distributions per share class are given in the Distribution table on pages 86 to 87.

83



as at 31 May 2017

31/05/2016 31/05/2017


Shares converted


Share Class 1 - Accumulation: 37,278,699 399,584 (3,216,600) (276,316) 34,185,367Share Class 1 - Income: 28,691,954 1,722,768 (1,803,577) (503,132) 28,108,013Share Class 2 - Accumulation: 102,878,156 7,293,369 (6,963,161) 512,206 103,720,570Share Class 2 - Income: 48,247,829 7,869,299 (2,416,500) 542,056 54,242,684

13.

14.

31/05/17 31/05/16£000 £000

HSBC Bank - 1,563JP Morgan Securities - 1,225Morgan Stanley - 2,642

- 5,430

31/05/17 31/05/16£000 £000

- 3,867- 1,563

- 5,430

15.


Securities on loan

The aggregate value of securities on loan at 31 May 2017 is £nil (31/05/16: £5,164,827). Securities on loan are included in the portfolio statement and no account is taken of any collateral held. The aggregate value of collateral held at 31 May 2017 is £nil (31/05/16:£5,430,491). The identities of the counterparties are listed in the counterparties table below. The form of the collateral is listed in the collateral held table below.





Counterparties





Currency exposure

A proportion of the financial net assets of the Fund are denominated in currencies other than Sterling with the effect that the balance sheetand total return can be affected by currency movements.


The Fund receives revenue from holdings in equities and fixed interest investments. The cashflow from these investments may fluctuatedepending upon the particular decisions made by each company. Given that the Fund's objective is to seek capital growth, these cashflowsare considered to be of secondary importance and are not actively managed.


The financial liabilities of the Fund as at 31 May 2017 are payable either within one year or on demand, as were the financial liabilities of theprevious year ended 31 May 2016.

The fund holds an insignificant Euro and US dollar currency exposure at 31 May 2017 therefore a currency table has not been disclosed.




84



as at 31 May 2017

16.

PricePrice

Source

£nil ACD17.


284,997 - 256,668 -25,148 - 25,207 (20)

- - - -

310,145 - 281,875 (20)

Manually priced securities

The following security prices were not readily available through published sources, and as such required to be manually calculated or had tobe sourced from a third party.

Security name Method of valuation

AlexandraStock is delisted. Stock valued at zero as there is no expected future returns.

Valuation technique

31/05/2017 31/05/2016

Level 1Level 2Level 3*

Fair value


Level 1 The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date;

Level 2 Inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability,either directly or indirectly;


Total fair value

*The level 3 holding is Alexandra (31/05/16: Alexandra).

85




31/07/2017


31/07/2016Group 1 (p) (p) (p) (p)31/08/2016 1.0000 - 1.0000 1.000030/11/2016 1.0000 - 1.0000 1.000028/02/2017 1.0000 - 1.0000 1.0000Final 6.6162 - 6.6162 6.3061

Group 2 (p) (p) (p) (p)31/08/2016 - 1.0000 1.0000 1.000030/11/2016 - 1.0000 1.0000 1.000028/02/2017 - 1.0000 1.0000 1.0000Final 1.5474 5.0688 6.6162 6.3061




31/07/2017


31/07/2016Group 1 (p) (p) (p) (p)31/08/2016 1.0000 - 1.0000 1.000030/11/2016 1.0000 - 1.0000 1.000028/02/2017 1.0000 - 1.0000 1.0000Final 2.5455 - 2.5455 2.5801

Group 2 (p) (p) (p) (p)31/08/2016 - 1.0000 1.0000 1.000030/11/2016 - 1.0000 1.0000 1.000028/02/2017 - 1.0000 1.0000 1.0000Final 1.0796 1.4659 2.5455 2.5801

31/05/2017: Group 1: Shares purchased prior to 1 March 2017




31/08/2016: Group 1: Shares purchased prior to 1 June 2016 Group 2: Shares purchased from 1 June 2016 to 31 August 201630/11/2016: Group 1: Shares purchased prior to 1 September 2016 Group 2: Shares purchased from 1 September 2016 to 30 November 28/02/2017: Group 1: Shares purchased prior to 1 December 2016 Group 2: Shares purchased from 1 December 2016 to 28 February

Group 2: Shares purchased from 1 March 2017 to 31 May 2017

31/08/2016: Group 1: Shares purchased prior to 1 June 2016 Group 2: Shares purchased from 1 June 2016 to 31 August 201630/11/2016: Group 1: Shares purchased prior to 1 September 2016 Group 2: Shares purchased from 1 September 2016 to 30 November 28/02/2017: Group 1: Shares purchased prior to 1 December 2016 Group 2: Shares purchased from 1 December 2016 to 28 February 31/05/2017: Group 1: Shares purchased prior to 1 March 2017 Group 2: Shares purchased from 1 March 2017 to 31 May 2017

86


Distribution Tables (continued)





31/07/2017


31/07/2016Group 1 (p) (p) (p) (p)31/08/2016 0.7747 - 0.7747 0.705230/11/2016 0.5614 - 0.5614 0.479428/02/2017 0.4827 - 0.4827 0.3644Final 0.8111 - 0.8111 0.9945

Group 2 (p) (p) (p) (p)31/08/2016 0.3218 0.4529 0.7747 0.705230/11/2016 0.2794 0.2820 0.5614 0.479428/02/2017 0.3373 0.1454 0.4827 0.3644Final 0.4413 0.3698 0.8111 0.9945




31/07/2017


31/07/2016Group 1 (p) (p) (p) (p)31/08/2016 1.0000 - 1.0000 1.000030/11/2016 1.0000 - 1.0000 1.000028/02/2017 1.0000 - 1.0000 1.0000Final 4.2594 - 4.2594 4.2258

Group 2 (p) (p) (p) (p)31/08/2016 - 1.0000 1.0000 1.000030/11/2016 - 1.0000 1.0000 1.000028/02/2017 - 1.0000 1.0000 1.0000Final 1.1791 3.0803 4.2594 4.2258



87