Threadneedle UK Equity Income Fund

Annual Short Report 7 March 2018 Fund Manager s Report Richard Colwell Performance of Class 1 Income shares* Over the twelve months to 7 March 2018, the published of Class 1 Income shares in the Threadneedle UK Equity Income Fund has fallen from 98.42p to 92.75p. Looking at performance within its peer group, the total return on the fund for the twelve months ending 28 February 2018, including net reinvested income, is -0.09% as compared to a sector median return of +4.36% over the same period. (For information the FTSE All-Share Total Return Index returned +4.40% over the same period). Market Overview and Portfolio Activity The FTSE All-Share index returned 4.4% in the year under review. Sterling advanced over the period, especially in the second half when investors grew more confident about the UK s ability to secure a favourable post- Brexit trade deal with the EU and anticipated that the Bank of England would raise rates. In political news, Prime Minister Theresa May s unexpected call in April for a snap general election fuelled hopes that this would lead to an increased parliamentary majority for the Conservatives, which would strengthen the government s hand in the Brexit negotiations. In the event, June s election resulted in the Conservatives losing their overall majority; this triggered angst over the implications for Brexit. The end of 2017 saw UK and European officials conclude the first stage of the Brexit negotiations, with agreement on some key sticking points, including the so-called divorce settlement. However, investors remained anxious about the next stage of the negotiations and the border between Northern Ireland and the Republic post-brexit. On the economic front, high inflation prompted a quarter-point rate hike from the Bank of England in November. The rise in inflation, along with sluggish wage growth, has weighed on consumer spending; this contributed to the slowdown in the UK s growth in 2017. However, wage growth improved in the fourth quarter. On another positive note, productivity growth was resilient; indeed, the second half of 2017 constituted the best six months for productivity growth since the financial crisis. Over the review period, we focused on building up our existing holdings, notably Marks & Spencer, BT, Sherborne Investors, Johnson Matthey and Cobham. We believe that Marks & Spencer has interesting levers to pull, despite investors concerns over the UK s retail sector. Management s plans to cut costs and close stores in unprofitable locations could be an additional positive catalyst for the stock. BT is working to provide clarity * In pound Sterling and against UK peer group. on issues such as the pension and capital expenditure levels, which should help to alleviate some market concerns. We also participated in the latest cash raising by proven turnaround specialists Sherborne; we believe the company is well positioned to emulate the success of its most recent project, Electra Private Equity. We are positive about Johnson Matthey s progress in developing battery technology and in enhancing existing technology for diesel and gasoline, and also feel its healthcare division has strong growth potential. We topped up Cobham by purchasing shares, and by participating in its rights issue. In our view, its resilient underlying business offers multiple opportunities for value creation, which the new management team should be able to unlock. We sold WS Atkins at a profit following the strong run-up in the shares after the firm received a takeover bid from Canadian rival SNC Lavalin. Other exits included National Grid and Standard Life. We believed that National Grid was fully valued and have less conviction in the outlook for the company given the clear regulatory headwinds in the UK. For Standard Life, we had an unfavourable view of its merger with Aberdeen Asset Management and were wary of the terms and execution of the deal. While there are uncertainties about the UK s domestic political and economic prospects, we believe that the outlook for UK equities is more measured. A notably narrow range of stocks have led the market, underpinned by short-term earnings momentum. Meanwhile, several companies are trading at relative lows we feel that some of these have been unfairly treated by the market. Furthermore, there remains a large cohort of UK-listed firms which are disproportionately undervalued relative to international peers even those which are truly global in their operations. This, along with the fact that sterling is still below the level seen before the EU referendum, should help ensure that UK firms remain popular candidates for overseas takeover bids. Political noise after the UK s election last June seemed to slow bid momentum, but overall deal volumes are now starting to pick up. In a broader context, we are cautious about the gradual withdrawal of global liquidity, and the risks this could pose for equities, given their rich valuations. We are also mindful that the increased influence of passive investments could amplify any synchronised market downturn, just as it has supported earlier gains. Nevertheless, the indiscriminate nature of any such pullback should present us with opportunities to add to favoured names at attractive valuations. As patient, conviction investors we will continue to avoid whipsaw momentum trades and instead concentrate on company fundamentals to target strong risk-adjusted returns. Fund Facts Fund Accounting and Distribution Dates Accounting Dates Payment Dates 7 March 7 May 7 June 7 August 7 September 7 November 7 December 7 February Ongoing Charges Figure The Ongoing Charges Figure (OCF) is the European standard method of disclosing the charges of a share class of a fund based on the financial year s expenses and may vary from year to year. It includes charges such as the fund s annual management charge, registration fee, custody fees and distribution cost but ordinarily excludes the costs of buying or selling assets for the fund (unless these assets are shares of another fund). Where published, the Key Investor Information Document (KIID) contains the current OCF. For a more detailed breakdown please visit columbiathreadneedle.com/fees. Share class 7 March 2018 7 March 2017 Class 1 Income shares 1.63% 1.62% Class 1 Accumulation shares 1.63% 1.62% Class 1 CHF Hedged Accumulation shares 1.62% 1.62% Class 1 EUR Hedged Accumulation shares 1.63% 1.61% Class 1 USD Hedged Accumulation shares 1.63% 1.62% Class 2 Income shares 1.06% 1.05% Class 2 Accumulation shares¹ 1.05% 1.05% Class D Income shares² 1.03% Class L Income shares² 0.61% Class L Accumulation shares² 0.61%

Share class 7 March 2018 7 March 2017 Class X Income shares 0.05% 0.05% Class X Accumulation shares² 0.06% Class Z Income shares 0.83% 0.82% Class Z Accumulation shares 0.83% 0.82% Class Z CHF Hedged Accumulation shares 0.83% 0.82% Class Z EUR Hedged Accumulation shares 0.83% 0.82% Class Z USD Hedged Accumulation shares 0.83% 0.82% The Ongoing Charges Figure is annualised based on the fees incurred since commencement date. 1 Commenced 28 April 2016. 2 Commenced 12 May 2017. Summary of Fund Performance Performance History (%) Share class 2018 1 2017 2016 2015 2014 2013 Class 1 Income shares -3.40 +6.55 +12.88 +3.62 +5.74 +28.42 Class 1 Accumulation shares -3.40 +6.54 +12.87 +3.62 +5.72 +28.44 Class 1 CHF Hedged Accumulation shares 2-3.52 +4.90 +11.59 +2.06 +6.21 Class 1 EUR Hedged Accumulation shares 2-3.47 +5.50 +12.25 +3.21 +4.48 Class 1 USD Hedged Accumulation shares 2-3.07 +7.41 +13.74 +3.16 +6.14 Class 2 Income shares -3.31 +7.16 +13.53 +4.22 +6.34 +29.15 Class 2 Accumulation shares 3-3.31 +7.14 +20.12 Class D Income shares 4-3.31-0.79 Class L Income shares 4-3.24-0.52 Class L Accumulation shares 4-3.24-0.53 Class X Income shares 5-3.15 +8.24 +14.64 +5.27 +2.39 Class X Accumulation shares 4-3.15-0.18 Class Z Income shares -3.27 +7.40 +13.78 +4.45 +6.58 +29.39 Class Z Accumulation shares -3.28 +7.38 +13.79 +4.45 +6.56 +29.41 Class Z CHF Hedged Accumulation shares 2-3.39 +5.73 +12.62 +2.21 +6.88 Class Z EUR Hedged Accumulation shares 2-3.35 +6.32 +13.13 +3.95 +7.37 Class Z USD Hedged Accumulation shares 2-2.94 +8.30 +14.67 +3.96 +6.75 1 To 28 February 2018. 2 Commenced 3 April 2014. 3 Commenced 28 April 2016. 4 Commenced 12 May 2017. 5 Commenced 28 July 2014. Source: Morningstar and Threadneedle. Bid to bid prices are quoted (i.e. not including any initial charge) with net income reinvested for a UK basic rate tax payer and gross income reinvested for a non-uk resident. Performance data is quoted in sterling apart from hedged share classes, where applicable, which are in the hedged currency. Past performance is not a guide to future investment 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. Net Asset Value (NAV) As at Share class NAV ( ) NAV pence per share Number of shares in issue 7 March 2018 Class 1 Income shares 368,908,652 92.01 400,926,969 7 March 2017 Class 1 Income shares 458,627,504 97.70 469,440,679 7 March 2016 Class 1 Income shares 508,686,745 85.44 595,397,128 7 March 2018 Class 1 Accumulation shares 230,891,805 129.06 178,900,787 7 March 2017 Class 1 Accumulation shares 252,135,803 131.73 191,403,198 7 March 2016 Class 1 Accumulation shares 178,048,487 110.62 160,948,493 7 March 2018 Class 1 CHF Hedged Accumulation shares 402,999 134.04 300,658 7 March 2017 Class 1 CHF Hedged Accumulation shares 544,397 146.12 372,574 7 March 2016 Class 1 CHF Hedged Accumulation shares 156,191 108.88 143,446 7 March 2018 Class 1 EUR Hedged Accumulation shares 2,095,085 128.53 1,629,997 7 March 2017 Class 1 EUR Hedged Accumulation shares 919,239 128.18 717,119 7 March 2016 Class 1 EUR Hedged Accumulation shares 508,919 96.96 524,870 7 March 2018 Class 1 USD Hedged Accumulation shares 1,053,522 150.78 698,723 7 March 2017 Class 1 USD Hedged Accumulation shares 1,121,721 172.93 648,658 7 March 2016 Class 1 USD Hedged Accumulation shares 317,482 124.24 255,546 7 March 2018 Class 2 Income shares 210,342,954 102.42 205,367,961 7 March 2017 Class 2 Income shares 355,995,836 108.20 329,006,664

As at Share class NAV ( ) NAV pence per share Number of shares in issue 7 March 2016 Class 2 Income shares 398,881,815 94.15 423,656,379 7 March 2018 Class 2 Accumulation shares 274,017 116.79 234,626 7 March 2017 Class 2 Accumulation shares 206,487 118.53 174,211 7 March 2018 Class D Income shares 1,718,983 181.90 944,993 7 March 2018 Class L Income shares 15,411,882 173.04 8,906,635 7 March 2018 Class L Accumulation shares 139,416,362 277.45 50,248,860 7 March 2018 Class X Income shares 1,053,155 113.00 932,013 7 March 2017 Class X Income shares 1,174,447 118.18 993,784 7 March 2016 Class X Income shares 212,864 101.82 209,057 7 March 2018 Class X Accumulation shares 50,320,736 290.89 17,298,673 7 March 2018 Class Z Income shares 1,955,409,724 137.08 1,426,492,453 7 March 2017 Class Z Income shares 1,848,080,073 144.45 1,279,367,778 7 March 2016 Class Z Income shares 1,500,599,678 125.38 1,196,884,492 7 March 2018 Class Z Accumulation shares 959,094,461 170.26 563,301,037 7 March 2017 Class Z Accumulation shares 799,277,195 172.41 463,595,811 7 March 2016 Class Z Accumulation shares 582,997,558 143.63 405,898,161 7 March 2018 Class Z CHF Hedged Accumulation shares 464,913 137.57 337,940 7 March 2017 Class Z CHF Hedged Accumulation shares 714,058 148.79 479,914 7 March 2016 Class Z CHF Hedged Accumulation shares 92,658 109.89 84,322 7 March 2018 Class Z EUR Hedged Accumulation shares 6,645,179 135.32 4,910,832 7 March 2017 Class Z EUR Hedged Accumulation shares 12,484,082 133.92 9,321,764 7 March 2016 Class Z EUR Hedged Accumulation shares 4,736,077 100.49 4,712,878 7 March 2018 Class Z USD Hedged Accumulation shares 2,610,927 155.55 1,678,459 7 March 2017 Class Z USD Hedged Accumulation shares 2,009,190 176.96 1,135,384 7 March 2016 Class Z USD Hedged Accumulation shares 1,579,521 126.10 1,252,625 Distribution History/Share Price Range Highest Lowest Year to Share class Pence per share 7 March 2018 Class 1 Income shares 3.8612 104.06 90.54 7 March 2017 Class 1 Income shares 3.7078 98.49 81.88 7 March 2016 Class 1 Income shares 3.5535 94.97 79.20 7 March 2018 Class 1 Accumulation shares 5.2814 140.32 126.07 7 March 2017 Class 1 Accumulation shares 4.8751 131.90 107.59 7 March 2016 Class 1 Accumulation shares 4.4828 118.11 101.80 7 March 2018 Class 1 CHF Hedged Accumulation shares 5.6396 154.79 131.18 7 March 2017 Class 1 CHF Hedged Accumulation shares 5.1565 146.20 106.17 7 March 2016 Class 1 CHF Hedged Accumulation shares 4.2737 116.14 98.29 7 March 2018 Class 1 EUR Hedged Accumulation shares 5.1836 139.49 122.87 7 March 2017 Class 1 EUR Hedged Accumulation shares 4.5690 129.07 95.82 7 March 2016 Class 1 EUR Hedged Accumulation shares 3.6948 99.37 86.17 7 March 2018 Class 1 USD Hedged Accumulation shares 6.4925 177.28 146.68 7 March 2017 Class 1 USD Hedged Accumulation shares 5.8439 173.03 120.02 7 March 2016 Class 1 USD Hedged Accumulation shares 4.7074 128.46 107.66 7 March 2018 Class 2 Income shares 4.3655 115.42 100.76 7 March 2017 Class 2 Income shares 4.1712 109.09 90.36 7 March 2016 Class 2 Income shares 3.9770 104.22 87.26 7 March 2018 Class 2 Accumulation shares 4.8518 126.43 114.04 7 March 2017 Class 2 Accumulation shares¹ 3.5671 118.68 96.40 7 March 2018 Class D Income shares² 5.7202 202.89 178.92 7 March 2018 Class L Income shares² 5.5457 192.49 170.18 7 March 2018 Class L Accumulation shares² 8.7163 299.33 270.83 7 March 2018 Class X Income shares 4.7890 126.36 111.08 7 March 2017 Class X Income shares 4.5315 119.15 97.99 7 March 2016 Class X Income shares 4.2775 111.84 94.30 7 March 2018 Class X Accumulation shares² 9.1176 312.51 283.84 7 March 2018 Class Z Income shares 5.7981 154.16 134.82 7 March 2017 Class Z Income shares 5.5273 145.63 120.40 7 March 2016 Class Z Income shares 5.2553 138.51 116.17 7 March 2018 Class Z Accumulation shares 7.0203 184.00 166.23 7 March 2017 Class Z Accumulation shares 6.4311 172.62 140.00 7 March 2016 Class Z Accumulation shares 5.8669 152.34 132.10 7 March 2018 Class Z CHF Hedged Accumulation shares 5.8324 157.98 134.56 7 March 2017 Class Z CHF Hedged Accumulation shares 5.2907 148.88 107.34

Highest Lowest Year to Share class Pence per share 7 March 2016 Class Z CHF Hedged Accumulation shares 4.3656 117.01 99.43 7 March 2018 Class Z EUR Hedged Accumulation shares 5.5001 146.27 128.49 7 March 2017 Class Z EUR Hedged Accumulation shares 4.8120 134.41 99.47 7 March 2016 Class Z EUR Hedged Accumulation shares 3.8613 102.97 89.09 7 March 2018 Class Z USD Hedged Accumulation shares 6.7544 181.81 151.23 7 March 2017 Class Z USD Hedged Accumulation shares 6.0287 177.07 121.97 7 March 2016 Class Z USD Hedged Accumulation shares 4.8157 129.52 108.79 1 Commenced 28 April 2016. 2 Commenced 12 May 2017. Past performance is not a guide to future performance. Classification of Investments 7 March 2018 vs 7 March 2017 30% 25% 7 March 2018 7 March 2017 20% 15% 10% 5% 0% Industrials Consumer services Portfolio Information Financials Health care Consumer goods Top Five Holdings as at 7 March 2018 % of Fund AstraZeneca 6.74 GlaxoSmithKline 5.24 Electrocomponents 4.77 Imperial Brands 4.45 WM Morrison Supermarkets 4.40 Utilities Oil & gas Basic materials Telecommunications Derivatives Net other assets Top Five Holdings as at 7 March 2017 % of Fund GlaxoSmithKline 6.72 AstraZeneca 6.71 Imperial Brands 5.87 WM Morrison Supermarkets 4.28 Royal Dutch Shell B Shares 3.82

Investment Objective and Policy To achieve an above average rate of income combined with sound prospects for capital growth. The ACD s investment policy is to invest the assets of the Fund primarily in UK equities. It may, however, invest in other securities such as convertibles and gilts. Key Investor Information Document (KIID) Subscription requirements The KIID is a pre-contractual document and investors have to confirm that they have read the latest KIID before making a subscription. Threadneedle has the right to reject a subscription if the investor does not confirm that they have read the latest KIID at the time of application. Investors can obtain the latest KIID from columbiathreadneedle.com. Changes to the management of the ACD The following changes have been made to the directors of the ACD: Resignation of Mr Tim Gillbanks on 31 March 2017; Resignation of Mr Don Jordison on 1 May 2018; Appointment of Michelle Scrimgeour on 14 August 2017. Changes to the Prospectus During the period from 8 March 2017 to 7 March 2018 the following changes were made to the Prospectus of the Threadneedle Investment Funds ICVC (the Company): Introduction of co-management for the Japan Fund, and changes to the investment policy of the fund, effective from 1 November 2017; Introduction of a compulsory conversion clause effective from 1 February 2018; Change of the name of the transfer agent and the legal advisors for the Company; Reduction of fees for certain share classes from 1 February 2018; Inclusion of a definition of near cash ; Disclosures required as a result of changes to COLL as a result of the Markets in Financial Instruments Directive (MiFID II), including amendment to the description of Class 2 Shares and Class Z Shares; Disclosures relating to the UK s decision to leave the European Union ( Brexit ); Updates to include changes to the COLL rules (including PRN, changes regarding short reports, eligible markets); Updates to reflect changes being made to UK tax on distributions (gross vs net shares, as well as tax changes more generally); Updates to the list of funds managed by the ACD and the directors of the ACD; Enhanced disclosures regarding hedged share classes and performance fee calculations; Updates to performance, dilution adjustments and available share classes; Miscellaneous changes including address of the Financial Services Ombudsman, clarification on privacy statement, clarification of dividend payment dates, addresses of paying agents. Changes to the Instrument of Incorporation During the period from 8 March 2017 to 7 March 2018, the instrument of incorporation of the Company has been updated to include a compulsory conversion clause effective 1 February 2018. Brexit In June 2016 the United Kingdom voted to leave the European Union. While negotiations progress, there is significant uncertainty relating to the UK s withdrawal from the EU, the potential consequences and precise timeframe. It is expected that the UK will exit from the EU on 29 March 2019. Depending on the outcome of the UK s negotiations with the European Union, and the existence or otherwise of any formal implementation period, it is possible that the Funds may no longer be eligible to enjoy the rights set out in the UCITS Directive. Ceasing to be so eligible may affect the ability of non-uk domiciled investors to make new investments in the Company. The ACD is monitoring the situation and will keep shareholders informed. Key Risks Investment Risk: The value of investments can fall as well as rise and investors might not get back the sum originally invested. Currency Risk: Where investments are in assets that are denominated in multiple currencies, or currencies other than your own, changes in exchange rates may affect the value of the investments. Derivatives for EPM/Hedging Risk: The investment policy of the fund allows it to invest in derivatives for the purposes of reducing risk or minimising the cost of transactions. High Volatility Risk: The fund typically carries a risk of high volatility due to its portfolio composition or the portfolio management techniques used. This means that the fund s value is likely to fall and rise more frequently and this could be more pronounced than with other funds. Further risks applicable to the fund can be found in the Prospectus. Risk and Reward Profile As at 7 March 2018 the figure for the risk and reward profile disclosed in the most recent KIID representing this fund is 5. The fund is in this specific category because historically it has shown a medium to high level of volatility (how much the value of the fund went up and down compared to other categories). It is based on past performance data in pound sterling. If your investment in the fund is not in pound sterling, please check the figure for the risk and reward profile disclosed on our website (columbiathreadneedle.com) according to the currency of your investment in the fund.

General Information The information in this report is designed to enable shareholders to make an informed judgement on the activities of the fund during the period it covers and the results of those activities at the end of the period. For further information, please contact Threadneedle Investment Services Limited. The Long Form Report and Financial Statements is available free of charge on request from the ACD and on our website. For more information about the activities and performance of the Company during the period and previous periods, please contact the ACD at the administration address noted below, or visit our website at columbiathreadneedle.com. Contacts: Registered Office Cannon Place 78 Cannon Street London EC4N 6AG Authorised Corporate Director (ACD) Threadneedle Investment Services Limited Cannon Place 78 Cannon Street London EC4N 6AG Registrar Threadneedle Investment Services Limited Delegated to: DST Financial Services Europe Limited** Authorised and regulated by the Financial Conduct Authority (FCA) St Nicholas Lane Basildon Essex SS15 5FS Investment Manager Threadneedle Asset Management Limited Cannon Place 78 Cannon Street London EC4N 6AG Authorised Corporate Director Client Services Details UK Investors Address: Threadneedle Investment Services Limited PO Box 10033 Chelmsford Essex CM99 2AL Telephone (dealing & customer enquiries): 0800 953 0134* Fax (dealing): 0845 113 0274 Email (enquiries): questions@service.columbiathreadneedle.co.uk Asian Investors Address: Threadneedle Investment Services Limited International Financial Data Services 47, avenue JF Kennedy L-1855 Luxembourg Telephone (dealing & customer enquiries): +352 2452 9817* Fax (dealing): +352 2452 9807 Email (enquiries): threadneedleenquiries@statestreet.com All Other Investors Address: Threadneedle Investment Services Limited International Financial Data Services 47, avenue JF Kennedy L-1855 Luxembourg Telephone (dealing & customer enquiries): +352 464 010 7020* Fax (dealing): +352 2452 9807 Email (enquiries): questions@service.columbiathreadneedle.co.uk Website: columbiathreadneedle.com Depositary Citibank Europe plc, UK branch (Authorised by the Prudential Regulatory Authority (PRA) and regulated by the FCA and PRA) Citigroup Centre 33 Canada Square Canary Wharf London E14 5LB Legal Advisers Eversheds Sutherland (International) LLP One Wood Street London EC2V 7WS Baum Financial Services Law Team Grosser Burstah 42 20457 Hamburg Germany Independent Auditor PricewaterhouseCoopers LLP Atria One 144 Morrison Street Edinburgh EH3 8EX Paying and Information Agent in Belgium CACEIS Belgium S.A Avenue du Port 86C B320 1000 Brussels Belgium Representative and Paying Agent in Switzerland BNP Paribas Securities Services, Paris, Succursale de Zurich Selnaustrasse 16 8002 Zurich Switzerland * Calls will be recorded. ** International Financial Data Services (UK) Limited changed its name to DST Financial Services Europe Limited on 15 August 2017. To find out more visit columbiathreadneedle.com Threadneedle Investment Services Limited, ISA Manager, Authorised Corporate Director and Unit Trust Manager. Registered No. 3701768. Registered in England and Wales. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. columbiathreadneedle.com 227385