COLUMBIATHREADNEEDLE.CO.UK

INVESTOR UPDATE MAY 2015

On 30 March 2015 Threadneedle Investments and its US-based affiliate Columbia Management rebranded its business as Columbia Threadneedle Investments.

INTRODUCING OUR NEW BRAND

Our experienced Portfolio Managers, strong product range and robust processes remain in place, and none of the fund names have changed. Your account numbers, phone numbers and the Investor Centre address will all be the same. Your investment success is our priority and our aim is to ensure we deliver the investment outcomes you need.

Some important things aren’t changing though

The new brand represents the combined capabilities, reach and resource of Threadneedle Investments and Columbia Management, both are owned by Ameriprise Financial a leading US-based financial services provider.

Together we are more than 450 investment professionals, located across 18 countries and responsible for US$506 billion in assets†. Our collective perspective and world view gives us deeper insight into what might affect the financial outcomes you are seeking.

Putting our views into a global context enables us to build richer perspectives, create the right solutions and deliver consistent investment performance, which ultimately leads to better outcomes.†AUM of US$506bn : Includes the combined assets under management of the Columbia and Threadneedle group of companies as of 31 March 2015. Source: Ameriprise Financial, Inc. Q1 2015 earnings release..

The world is constantly changing, but our priority remains the same — successful investment outcomes for our clients.

Our website columbiathreadneedle.co.uk gives you access to our latest investor guides and fund information. You can also view our Your success. Our priority. video which introduces our new brand.

Q1 MARKET REVIEW

OUTLOOKInvestors will have to get to grips with the different approaches to policy adopted by central banks this year. Europe and Japan have been loosening monetary policy whereas in our view, the Fed will increase interest rates, albeit modestly, this year.

Perhaps the biggest challenge facing policymakers in the developed world is to decide what to do if economic growth remains weak. If we ignore the US, there have been few signs of real economic improvement. The problem is that there is relatively little policymakers can do to stimulate growth: interest rates cannot go much lower and most governments cannot increase spending further due to already high levels of debt.

Regionally, we believe that Japanese equities should remain attractive as a weaker yen is helping to boost corporate earnings, particularly for exporters. Domestic reforms should also prove positive.

We continue to like UK equities, which produce a relatively high level of income in the form of dividends. At the time of writing the outcome of the UK election is looking uncertain and could mean the markets are volatile for the short term. However uncertain markets can also create opportunities for long-term investors.

The ‘search for income theme’ is likely to continue unabated. Assets with high levels of income will remain in demand and for that reason we remain positive on the outlook for direct commercial property. Property also has the benefit of being a tangible asset, which is important to many investors in the post-financial-crisis world, and could also provide important diversification benefits.

Economic slowdown in China Growth for 2014 was 7.4% - the slowest rate of growth for nearly a quarter of a century. Chinese authorities have unveiled a range of measures to support growth.

European Central Bank (ECB) announces expanded quantitative easing (QE)Following the announcement:

�� European bond yields have fallen (meaning that bond prices have gone up).�� German 10-year government bonds now have a lower yield than the equivalent Japanese bond.

Greek elections Post-election, the Greek financial crisis (which stretches back to 2009) continues. No major impact outside Greece so far, but concerns are growing that Greece could run out of money.

Moody’s cut Petrobras bonds to junk status Petrobras, the Brazilian oil company, has its bonds downgraded to junk by Moody’s. Latin American stock markets, such as those in Brazil, have performed poorly this year.

US Federal Reserve March statement US Federal Reserve removes the reference to a ‘patient’ policy approach. Markets already anticipated at least one US interest rate rise this year, but they were buoyed by the fact that the Fed’s own rate rise projections were less aggressive.

UK Budget No significant impact, unlike last year when major pension reforms were unveiled.

20 January

25 January

24 February

18 March

18 March

2015

22 January

Read our full Outlook on our website.

PENSIONS

INVESTING FOR INCOME

A pensions revolution is happening in the UK, sparked by the government’s announcement in the March 2014 budget that from 6 April 2015 it was to relax the rules on what retirees can do with their pension pots when they retire.

Until this year, the vast majority of defined contribution (DC) pension savers had no option but to buy an annuity – which converts a pension fund into an income for life. Only those with the biggest pensions could leave their funds invested and draw an income from it, while only those with the very smallest of funds could take the lot as cash.

But from 6 April 2015, retirees are able to do what they like with their hard-earned savings. They can:

�n cash their pension in and take the money

�n leave their pension invested and use it to generate an income

�n buy an annuity

�n mix and match the above to find the right solution for you

It means people have far greater control over their finances in retirement. However, with those freedoms comes a greater responsibility to make the right decision to keep you and your family secure in retirement. This is harder than ever, with so many options open to every retiree.

During our working lives we get an income from our salary, however, sometimes individuals and families need to supplement this income with extra work or from their savings in order to pay for luxuries or to help with the basic costs of everyday living.

As we get older and enter retirement, we usually need to generate an income to replace our salary – either through a pension, savings or other types of investment.

In retirement, generating an income is crucial for those with an outstanding mortgage or rent to pay, while all of us will need some kind of income to cover the cost of bills, hobbies, travel and all the other essentials of everyday life.

The questions we all need to ask ourselves are:

�n how much income do I need?

�n what savings or investment products might help me achieve that level of income?

How seriously you approach tackling your income needs will also depend on what you need the income for: whether that’s as a supplement to your salary, to boost your pension or merely for holidays and treats.

Our Investor Guide to Pensions provides an overview of pensions, details on saving for retirement and outlines the options available to you when you retire. You can view the guide on our website.

Our Investor Guide to Investing for Income explains some of the options available and the reasons why you may wish to invest for income. You can view the guide on our website.

CUSTOMER COUNCILWe are well aware of how much trust you have placed in us by choosing us to manage your money.

Your views, feedback and experience are critically important for us to continue to provide products and services to suit your future needs. We can only do this by working with you to develop a deeper understanding of what you expect both from us, and from investment services generally. This is why we have created the Customer Council.

As a member of the Council you will be invited to take part in a limited number of high-level interviews, surveys, and exclusive events over the next year. We use the information you provide to us to make real improvements to our products, services and how we communicate to our investors.

myThreadneedle

REGULATORY CHANGES – IMPORTANT INFORMATION

myThreadneedle is our online transaction and valuation service which provides you with instant access to your investments with us, 24 hours a day, at a time convenient for you. The site is secure and password-protected so only you can see your portfolio of investments.

On 1 June 2015 the UK regulator, the Financial Conduct Authority, will introduce new rules which will provide you with extra protection in regards to the way we handle your money when you buy and sell shares in our funds.

A legal notification providing full details of the change has been sent to you with your April 2015 statements – it is also available on our website columbiathreadneedle.co.uk/legal.

You are not required to take any action relating to this change, however, if you have any questions please contact us on 0800 953 0134* Monday to Friday 8am to 6pm, or contact a financial adviser.

To create your account, please call us on 0800 953 0134* for an activation code and then visit mythreadneedle.com

On the site you can:

�n carry out transactions: make a new investment, top-up an existing investment, sell an investment, switch holdings to another Threadneedle fund Please note that customers who deal directly with us and not via a financial adviser can carry out transactions on the site

�n view valuations

�n compare Threadneedle funds

�n plan for an investment goal

�n access a range of educational material

If you would like to join the council please email columbiathreadneedle@thewisdomcouncil.com

Important information: This material is for information only and does not constitute an offer or solicitation of an order to buy or sell any securities or other financial instruments, or to provide investment advice or services. Past performance is not a guide to future performance. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. Information gained from external sources is believed to be reliable but its accuracy or completeness cannot be guaranteed. Issued by Threadneedle Investment Services Limited. Registered in England and Wales, Registered No. 3701768, Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. columbiathreadneedle.com Issued 05.15 | J22758

CONTACT DETAILS

Phone: 0800 953 0134* (Monday to Friday, 8am – 6pm)

Email: questions@service.columbiathreadneedle.co.uk

Address: Threadneedle Investment Services Limited, PO Box 10033, Chelmsford, CM99 2AL

Web: columbiathreadneedle.com

If you need to get in touch with us, please use the details below.

*Calls may be recorded.

SWIM IT. RIDE IT. RUN IT. As the Global Financial Services Partner we are pleased to support the ITU World Triathlon Series - the pinnacle of the sport and a platform to promote a more active lifestyle.

In 2015 the series will visit 10 cities around the globe as the world’s best athletes battle it out to be crowned World Champion and seek Olympic qualification. Close to 50,000 Age Group athletes also participate in the Series, 1 million spectators attend the events and the Series is enjoyed by a global TV audience of 156 million.

In the UK we are proud to support Access Sport, a youth development charity which builds community sport programmes throughout the country. Clients and employees involved in the triathlon have helped to raise in excess of £75,000 to support the charity and harness the proven power of sport to tackle social exclusion, inactivity and obesity in areas where help is most needed.

Working with Access Sport to encourage children to get involved in sport.

Find out more about the triathlon and Access Sport on our website.

INVESTING IN OUR COMMUNITYIn 2013 we set up the Columbia Threadneedle Foundation with the aim of growing our commitment to investing in the community by building partnerships that create positive social impact and engendering social change.

Through the Foundation, we have committed to major partnerships with national charities The Art Room, Access Sport and PFEG (Personal Finance Education Group). In addition to contributing funds, we work with these charities to develop their fundraising and provide a variety of pro bono skills and resources.

In April 2014 we launched an employee volunteering programme – to date over 145 employees have participated in volunteering activities with local charities.

*Please note we record calls for your protection and to improve our standards.

Employee volunteers support a riverside clear-up day for UK environmental charity Thames21.