Half-year Report

Date: 27 July 2017

Contact: Paul Niven - Fund Manager

0207 011 4385

F&C Investment Business Limited

FOREIGN & COLONIAL INVESTMENT TRUST PLC

Unaudited Statement of Results

for the half-year ended 30 June 2017

SUMMARY OF UNAUDITED RESULTS FOR THE HALF-YEAR ENDED 30 JUNE 2017

· Our share price was 586.0 pence representing a total return of 8.7%

· Our net asset value total return was 9.1% which compares with 6.3% from our benchmark, the FTSE All-World Index

· The first interim dividend will be 2.5 pence per share while another above-inflation rise is planned for the 2017 total dividend. This will mark the 47th consecutive annual increase.

Chairman's Statement

Markets and performance

The first half of 2017 saw further upward movement in equity markets with the FTSE All-World index progressing by 6.3%. Our Net Asset Value ("NAV") gained 9.1% in total return terms and so compared favourably to market indices.

Our shareholder returns were 8.7% over the period as our discount widened modestly to 7.7%. We continued our policy of buying back shares though, at 3.2m shares, our level of buybacks was down significantly on last year.

Equities performed strongly over the first half with a number of bellwether market indices, including the S&P 500 and the FTSE 100, hitting new record highs during the period. Corporate earnings surpassed expectations and, with a modest but synchronised upturn underway across the global economy, investor sentiment improved further. In contrast to 2016, growth stocks, particularly technology companies, performed strongly and there was marked rotation away from resources as the oil price declined and optimism over President Trump's pro-growth policies waned.

Within our portfolio we saw particular strength from Emerging Markets, which posted a gain of 18.9%, outperforming the market index. Our European equities strategy also posted strong absolute returns, of 12.7%, broadly in line with market returns. Elsewhere on the portfolio we delivered excess returns over market comparators with strong performance from our growth oriented strategy in US equities helping North American holdings to a 7.0% return. Our global strategies also exceeded benchmark returns with our multi-manager funds and holdings in smaller companies both delivering good relative returns. All strategies delivered good absolute levels of return and most exceeded benchmarks. Private equity posted a relatively modest gain of 2.3% partly reflecting a lag in pricing of these investments. We made a small number of new commitments in this area, reflecting our flexible approach to private equity investments. In recent years we have taken advantage of record low rates of borrowing to restructure our debt maturity profile and, during the first half, our net gearing level dropped modestly to end the period at 6.4%.

Despite improving growth, inflationary pressures generally remained subdued in most economies. Nonetheless, the US Federal Reserve raised interest rates by another 0.5% over the period and a number of other central banks indicated that they were inclined to rein in easy policies which have been in place since the Global Financial Crisis.

Aside from more fundamental factors, politics remained a focus for investors. The honeymoon period for President Trump proved to be short-lived as he struggled to push forward plans for tax and healthcare reform and expectations for fiscal stimulus in the US ebbed. France elected a pro-Euro, reformist President in Emmanuel Macron and rejected the more extreme policies to the relief of many investors. The reduction of near- term political risk, combined with a marked improvement in Eurozone economic and corporate performance led to strength in the Euro and the equity market there. Closer to home, Theresa May's majority was reduced after a poor election campaign and, with growth slowing and inflation rising, the outlook for the UK economy seemed to have darkened as Brexit negotiations got underway.

*Debt at market value

Source: F&C

Income and Dividends

Our reported income continued to make good progress and net revenue return per share rose 7.6% to 7.24p in the first six months of the year on the equivalent period of 2016. With a large portion of investments held overseas our income was helped by an estimated £3.8m through the fall in sterling year on year. Offsetting this, to some extent, we received less in special dividends, which fell from £4.2m in the first half of 2016, to £2.1m in 2017.

We paid an interim dividend of 2.45p per share in February 2017 and a final dividend of 2.7p in respect of 2016 in May. The first interim dividend of 2.5p for 2017 will be paid on 1 August. It is the intention of the Board to deliver another real rise in dividends for 2017. This will mark the forty-seventh consecutive rise in annual dividends from your Company.

Outlook

Broadening global economic growth and an upturn in corporate earnings along with subdued inflation rates and borrowing costs continue to support equity markets.

It is not just the US where the fundamental picture has brightened. The Eurozone has plenty of spare capacity and has seen increased growth momentum. The corporate sector there, having disappointed consistently in recent years, is producing solid earnings growth and a potential reinvigoration of the EU under the progressive French President Macron and German Chancellor Merkel could yield further gains. In the Emerging Markets, with China continuing to deliver solid growth and Brazil and Russia exiting recession, the premium over developed market growth rates has begun to expand once again.

The UK is something of an outlier amongst major global economies. The picture here appears challenging with a squeeze in real incomes underway and increased political uncertainty.

Importantly for equity investors, corporate earnings are showing increased vigour, and this strength is helping to push global equity markets on to new record highs. The combination of low inflation levels, supported by improving earnings momentum along with a synchronised economic upturn is fuelling optimism on the outlook for corporates. In addition, within equity markets, a growth strategy has returned to favour, with technology stocks leading the way.

Inflation levels remain low and, while central bankers are likely to continue on the path of policy normalisation, rate rises should be modest. Indeed, the absence of inflationary pressures is helping to extend the economic cycle and the environment remains one where corporate earnings should continue to support equity prices. Despite potential challenges we continue to see opportunities in equity markets. Nonetheless, a world of easy monetary policy has inflated valuations across multiple asset classes and so we should not be surprised to see greater headwinds to shorter-term market progress as and when interest rates rise further.

Simon Fraser

Chairman

26 July 2017

Source: F&C

*Represents the geographic exposure of the portfolio, including underlying exposures in private equity and fund holdings

UNAUDITED CONDENSED INCOME STATEMENT

The total column is the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations.

UNAUDITED CONDENSED STATEMENT OF CHANGES IN EQUITY

UNAUDITED CONDENSED BALANCE SHEET

UNAUDITED CONDENSED STATEMENT OF CASH FLOWS

 UNAUDITED NOTES ON THE CONDENSED ACCOUNTS

1 Results

The results for the six months to 30 June 2017 and 30 June 2016 constitute non-statutory accounts within the meaning of Section 434 of the Companies Act 2006. The latest published accounts which have been delivered to the Registrar of Companies are for the year ended 31 December 2016; the report of the Auditors thereon was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The condensed financial statements shown for the year ended 31 December 2016 are an extract from those accounts.

2 Accounting policies

These condensed financial statements have been prepared on a going concern basis in accordance with the Companies Act 2006, FRS102, Interim Financial Reporting (FRS104) and the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts"(SORP).

The accounting policies applied for the condensed set of financial statements are set out in the Company's annual report for the year ended 31 December 2016.

3 Income

4 Fees and other expenses and interest payable and similar charges

* Including reimbursement in respect of services provided by sub-managers

The primary related party transaction is with the Manager, F&C Investment Business Limited. The Manager receives remuneration of 0.365% per annum of the market capitalisation of the Company, calculated at each month end date on a pro-rata basis. The fee is adjusted for fees earned by the Manager in respect of investment holdings managed or advised by the Manager. Variable fees payable in respect of third party sub-managers are also reimbursed. The services provided by the Manager remain unchanged from those disclosed within the accounts for the year ended 31 December 2016. The level of variable fees payable in respect of third party sub-managers and private equity managers remain unchanged since the year end.

5 Taxation

The taxation charge of £4,442,000 (30 June 2016: £3,839,000) relates to irrecoverable overseas taxation.

6 Net return per share

Net return per ordinary share attributable to ordinary shareholders reflects the overall performance of the Company in the period. Net revenue recognised in the first six months is not indicative of the total likely to be received in the full accounting year.

7 Dividends

The Directors have declared a first interim dividend in respect of the year ending 31 December 2017 of 2.50p per share, payable on 1 August 2017 to all shareholders on the register at close of business on 7 July 2017. The amount of this dividend will be £13,583,000 based on 543,319,179 shares in issue at 6 July 2017. This amount has not been accrued in the results for the half-year ended 30 June 2017.

8 Investments

Fair value hierarchy

The Company's Investments as disclosed in the balance sheet are valued at fair value.

The fair value as at the reporting date has been estimated using the following fair value hierarchy:

Level 1 includes investments and derivatives listed on any recognised stock exchange or quoted on the AIM market in the UK and quoted open-ended funds.

Level 2 includes investments for which the quoted price has been suspended, forward exchange contracts and other derivative instruments.

Level 3 includes investments in private companies or securities, whether invested in directly or through pooled Private Equity vehicles, for which observable market data is not specifically available.

The analysis of the valuation basis for financial instruments based on the hierarchy is as follows:

There were no derivative investments held in the period (half-year ended 30 June 2016 and year ended 31 December 2016: same) and no investments held which are valued in accordance with level 2.

9 Loans and Debenture

10 Other creditors falling due within one year

11 Share capital

During the period 3,233,474 ordinary shares were repurchased and held in treasury, at a total cost of £18,437,000. Since 30 June 2017 a further 225,233 ordinary shares have been repurchased and held in treasury at a cost of £1,354,000. Shares held in treasury have no voting rights and no right to dividend distributions and are excluded from the calculations of earnings per share and net asset value per share.

12 Net asset value per ordinary share

Net asset value per share (with the debenture stock and long-term loans at market value) at 30 June 2017 was 634.88p (30 June 2016: 512.27p and 31 December 2016: 587.21p). The market value of debenture stocks at 30 June 2017 was £429,000 (30 June 2016 and 31 December 2016: £429,000). The market value of the long-term loans at 30 June 2017 was £248,382,000 (30 June 2016: £242,805,000 and 31 December 2016: £251,035,000) based on the equivalent benchmark gilts or relevant commercially available current debt.

13 Reconciliation of net return before taxation to cash flows from operating activities

14 Going concern

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

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

15 VAT case

The Company reported, in its annual report and accounts to 31 December 2016, an interest in a case brought against HMRC to recover VAT paid on management fees in the period 1997 to 2000. On 11 April 2017, the Supreme Court issued a judgement in favour of HMRC. As a consequence the Company will not be entitled to any recoveries of VAT paid in the relevant period.

16 Report and accounts

The half-yearly report and accounts will be posted to shareholders and made available on the internet at www.foreignandcolonial.com shortly. Copies may be obtained during normal business hours from the Company's Registered Office, Exchange House, Primrose Street, London EC2A 2NY.

Legal Entity Identifier: 213800W6B18ZHTNG7371

By order of the Board

F&C Investment Business Limited, Secretary

Exchange House, Primrose Street, London EC2A 2NY

26 July 2017

Directors' Statement of Principal Risks and Uncertainties

Most of the Company's principal risks and uncertainties are market related and no different from those of other investment trusts investing primarily in listed equities. They are described in more detail under the heading "Principal risks and future prospects" within the strategic report in the Company's annual report for the year ended 31 December 2016 and have not changed materially since the date of that report.

The risks include: having an inappropriate strategy in relation to investor needs; failure on the part of the Manager to continue operate effectively; unfavourable markets or inappropriate asset allocation, sector and stock selection, currency exposure and use of gearing and derivatives leading to investment underperformance; and errors, fraud and control failures at service providers, or loss of data through cyber-threats or business continuity failure.

Directors' Statement of Responsibilities in Respect of the Half-Yearly Financial Report

In accordance with Chapter 4 of the Disclosure and Transparency Rules, the Directors confirm that to the best of their knowledge:

· the condensed set of financial statements has been prepared in accordance with applicable UK Accounting Standards on a going concern basis and gives a true and fair view of the assets, liabilities, financial position and net return of the Company;

· the half-yearly report includes a fair review of the important events that have occurred during the first six months of the financial year and their impact on the financial statements;

· the Directors' Statement of Principal Risks and Uncertainties shown above is a fair review of the principal risks and uncertainties for the remainder of the financial year; and

· the half-yearly report includes a fair review of the related party transactions that have taken place in the first six months of the financial year.

On behalf of the Board

Simon Fraser

Chairman

26 July 2017