Threadneedle Investment Funds ICVC pdf

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Threadneedle
Investment Funds ICVC
Annual Report and Accounts
Threadneedle Investment Funds ICVC
March 2012
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
1
Contents
Company Information 3
Director’s Report 4
Threadneedle Investment Funds ICVC
Threadneedle Investment Funds ICVC market a variety
of share classes, offering a selection of net income,
gross income, net accumulation or gross accumulation
of distributable income. Different classes or
combinations of classes are available on different funds.
The range of share classes that exists are as follows;
Class 1, Class 1 Hedged, Class 2, Class 2i, Class 2
Hedged and Class X.
All share types and classes are covered in this Annual
Report.
Aggregated Financial Statements for
Threadneedle Investment Funds ICVC 5
Notes to the Aggregated Financial Statements for
Threadneedle Investment Funds ICVC 6 – 9
UK:
UK Fund 10 – 14
UK Select Fund 15 – 18
UK Smaller Companies Fund 19 – 21
UK Growth & Income Fund 22 – 25

UK Equity Income Fund 26 – 30
UK Monthly Income Fund 31 – 34
Monthly Extra Income Fund 35 – 39
UK Corporate Bond Fund 40 – 44
High Yield Bond Fund 45 – 49
Strategic Bond Fund 50 – 54
Sterling Bond Fund 55 – 58
Sterling Fund (formerly UK Cash Fund) 59 – 61
Europe:
European Fund 62 – 65
European Select Fund 66 – 69
European Smaller Companies Fund 70 – 73
Pan European Smaller Companies Fund 74 – 77
Pan European Fund 78 – 81
European Bond Fund 82 – 86
European Corporate Bond Fund 87 – 90
European High Yield Bond Fund 91 – 95
US:
American Fund 96 – 100
American Select Fund 101 – 104
American Smaller Companies Fund (US) 105 – 107
Dollar Bond Fund 108 – 111
Japan:
Japan Fund 112 – 115
Japan Smaller Companies Fund 116 – 119
Pacific Basin & Emerging Markets:
Asia Fund 120 – 123
Latin America Fund 124 – 127
Emerging Market Bond Fund 128 – 132
International:

Global Select Fund 133 – 136
Global Bond Fund 137 – 141
Institutional Funds:
UK Institutional Fund 142 – 145
UK Overseas Earnings Fund 146 – 149
Statement of Authorised Corporate
Director’s (ACD) Responsibilities 150
Statement and Report of the Depositary 150
Independent Auditors’ Report 151
Portfolio Statements:
UK Fund 152 – 153
UK Select Fund 154 – 155
UK Smaller Companies Fund 156 – 157
UK Growth & Income Fund 158 – 159
UK Equity Income Fund 160 – 161
UK Monthly Income Fund 162 – 163
Monthly Extra Income Fund 164 – 167
UK Corporate Bond Fund 168 – 171
High Yield Bond Fund 172 – 177
Strategic Bond Fund 178 – 186
Sterling Bond Fund 187
Sterling Fund (formerly UK Cash Fund) 188
European Fund 189 – 191
European Select Fund 192 – 193
European Smaller Companies Fund 194 – 197
Pan European Smaller Companies Fund 198 – 201
Pan European Fund 202 – 204
European Bond Fund 205 – 209
European Corporate Bond Fund 210 – 214
European High Yield Bond Fund 215 – 220

American Fund 221 – 222
American Select Fund 223 – 224
American Smaller Companies Fund (US) 225 – 226
Dollar Bond Fund 227 – 228
Japan Fund 229 – 230
Japan Smaller Companies Fund 231 – 232
Asia Fund 233 – 236
Latin America Fund 237 – 238
Emerging Market Bond Fund 239 – 242
Global Select Fund 243 – 246
Global Bond Fund 247 – 250
UK Institutional Fund 251 – 253
UK Overseas Earnings Fund 254 – 255
Comparative Tables 256 – 267
Performance Summaries 268 – 271
Ongoing Charges Figure Summary 272 – 273
Risk and Reward Profiles 274 – 275
Shares Issued and Redeemed Summary 276
Further Information 277 – 278
Directory 279
Important Information 280 – 284
Please note that the Sterling Fund is currently
registered for public offer in the UK only and it is
not intended to be registered outside the UK
unless otherwise decided by the ACD. Shares in
the Sterling Fund must not be marketed to the
public in any other jurisdiction.
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
2
Contents

(continued)
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
3
Company
Threadneedle Investment Funds ICVC
Registered Number IC000002
Registered Office
60 St Mary Axe, London EC3A 8JQ
Director
There is a sole director, the Authorised Corporate Director
(the “ACD”), which is Threadneedle Investment Services
Limited.
Board of Directors of the ACD
Chairman and Chief Executive
C J Henderson
Other Directors
C D Fleming
T N Gillbanks
P J W Reed
N J Ring
Company Information
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
4
This is the Annual Report and Accounts for Threadneedle
Investment Funds ICVC, which reviews the performance of
the funds and financial markets over the 12 months to
7th March 2012.
During the period under review, financial markets
experienced phases of ‘risk on’ or ‘risk off’ as they were
buffeted by a number of important economic and geopolitical

events. Initially, markets had to contend with the ‘Arab
Spring’, the earthquake and tsunami in Japan, the marked
slowdown in global growth and the spiralling sovereign debt
problems in the eurozone.
After the sharp falls seen in the summer, equity markets
rallied strongly in the latter part of the review period. In
December, markets were buoyed by the Long-Term
Refinancing Operation (LTRO) from the European Central
Bank. This alleviated immediate liquidity pressures in the
eurozone, allowing European banks to secure three-year
funding on particularly favourable terms. In recent months,
equity markets have also responded positively to some
stronger economic data from the US and a number of
emerging markets.
Against the backdrop of fluctuating risk appetite, government
bonds performed well over the year as a whole, helped by
their ‘safe haven’ appeal. Investment grade and high yield
corporate bonds, along with emerging market bonds, also
posted positive returns with investors drawn to the attractive
yields available on these assets.
Overall, the global economic climate remains challenging
and, in this environment, companies with strong business
models and robust balance sheets should fare significantly
better than their weaker competitors. Moreover, it is
particularly encouraging to see that many of the stronger
companies are returning cash to investors in the form of
higher dividends and share buybacks. Equity valuations
continue to look attractive by historical comparison and also
relative to other asset classes.
We hope that you find the individual fund reports

informative. If you would like further information regarding
any aspect of your investment, or about other Threadneedle
products, please either contact us directly or speak to your
financial adviser. Alternatively, you may find it helpful to visit
threadneedle.com for further information about
Threadneedle.
Thank you for your continued support.
Crispin Henderson
Director
Director’s Report
Aggregated Financial Statements for
Threadneedle Investment Funds ICVC
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
5
STATEMENT OF TOTAL RETURN
for the accounting period 8th March 2011 to 7th March 2012
2012 2011
Notes £000 £000
Income
Net capital gains/(losses) 2 (128,829) 1,699,593
Revenue 3 624,490 572,045
Expenses 4 (234,068) (231,849)
Finance costs
Derivative expense (937) (816)
Interest (696) (527)
qqqqqqqqqqr
Net revenue/(expenses) before taxation 388,789 338,853
Taxation 5 (20,613) (18,292)
Net revenue/(expenses) after taxation 368,176 320,561
qqqqqqqqqqr

Total return before distributions 239,347 2,020,154
Finance costs: Distributions (429,719) (385,068)
qqqqqqqqqqr
Change in net assets attributable to
shareholders from investment activities (190,372) 1,635,086
zzzzzzzzzzzzzzz
STATEMENT OF CHANGE IN NET ASSETS ATTRIBUTABLE
TO SHAREHOLDERS
for the accounting period 8th March 2011 to 7th March 2012
2012 2011
£000 £000
Opening net assets attributable to shareholders 19,301,636 17,292,591
Movement due to sales and repurchases
of shares:
Amounts receivable on the issue of shares 5,266,122 5,253,263
Amounts receivable on inspecie transfer 27,742 –
Amounts payable on the cancellation of shares (5,593,183) (5,072,856)
(299,319) 180,407
Dilution adjustment 11,133 14,009
Compensation 1 46
Stamp duty reserve tax (4,617) (3,334)
Change in net assets attributable to
shareholders from investment activities
(see statement of total return above) (190,372) 1,635,086
Retained distribution on accumulation shares 207,369 182,573
Unclaimed distribution monies brought back
into account (347) 258
qqqqqqqqqqr
Closing net assets attributable to shareholders 19,025,484 19,301,636
zzzzzzzzzzzzzzz

BALANCE SHEET
as at 7th March 2012
2012 2011
Notes £000 £000
Assets
Investment assets 18,412,378 18,800,321
qqqqqqqqqqr
Debtors 6 548,289 474,665
Cash and bank balances 609,491 510,231
qqqqqqqqqqr
Total other assets 1,157,780 984,896
qqqqqqqqqqr
Total assets 19,570,158 19,785,217
qqqqqqqqqqr
Liabilities
Derivative liabilities (4,893) (18,639)
qqqqqqqqqqr
Creditors 7 (364,421) (342,281)
Bank overdrafts (119,789) (66,212)
Distribution payable on income shares (55,571) (56,449)
qqqqqqqqqqr
Total other liabilities (539,781) (464,942)
qqqqqqqqqqr
Total liabilities (544,674) (483,581)
qqqqqqqqqqr
Net assets attributable to shareholders 19,025,484 19,301,636
zzzzzzzzzzzzzzz
The aggregated financial statements represent the sum of the
individual funds within the umbrella company. Further analysis of the
distribution and the net asset position can be found within the

financial statements of the individual funds.
We hereby certify the Annual Report and Accounts on behalf of the
Directors of Threadneedle Investment Services Limited.
C J Henderson T N Gillbanks
Director Director
4th May 2012
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
6
Notes to the financial statements
For the accounting period 8th March 2011 to 7th March 2012
1 ACCOUNTING POLICIES
(1) Basis of accounting
The financial statements have been prepared under the historical
cost basis, as modified by the revaluation of investments and in
accordance with UK Generally Accepted Accounting Practice
(“UKGAAP”), and in accordance with the Statement of
Recommended Practice (the “SORP”) for Financial Statements of
Authorised Funds issued by the Investment Management
Association (IMA) in October 2010.
(2) Aggregation
The aggregated accounts represent the sum of the individual funds
within the umbrella company. Further analysis of the distribution
and the net asset position can be found within the financial
statements of the individual funds.
(3) Recognition of revenue
Revenue is included in the Statement of Total Return on the
following bases:
Dividends on quoted equities and preference shares are
recognised when the security is traded ex-dividend.
Dividends, interest and other income receivable include any

withholding taxes but exclude any other taxes such as attributable
tax credits.
Special dividends are treated as either revenue or capital
depending on the facts of each particular case.
Stock dividends are recognised as revenue on the basis of the
market value of the shares at the date they are quoted ex-dividend.
Interest on debt securities and bank and short-term deposits is
recognised on an earned basis.
In the case of debt securities any difference between acquisition
cost and maturity value is recognised as revenue over the life of the
security using the effective yield basis of calculating amortisation.
Dividends and distributions from collective investment schemes are
recognised when the security is quoted ex-dividend.
Underwriting commission is recognised when the issue takes place,
except where the fund is required to take up all or some of the
shares underwritten, in which case an appropriate proportion of the
commission is deducted from the cost of those shares.
Underwriting commission is treated as revenue except for the
proportion that is deducted from the cost of shares, which is capital.
Stocklending revenue and any associated charges are recognised
on an accruals basis.
Equalisation on distributions received is treated as a repayment of
capital and deducted from the cost of the investment.
Management fee rebates
In the absence of a rebate mechanism an indirect charge for
management fees would occur in respect of investments in other
Threadneedle funds. Any such target funds themselves bear a
management fee, which reduces the values of those funds from
what they otherwise would be. The rebate mechanism operates to
ensure that investors in the Fund bear only the fee validly

applicable to them. Depending upon the ACD’s treatment of
management fees within the underlying funds, where management
fees are charged to capital, any rebate is classified as a capital item
and does not form part of the amount available for distribution.
(4) Treatment of expenses (including management expenses)
All expenses other than those relating to the purchase and sale of
investments, are included in expenses, in the Statement of Total
Return. Expenses are recognised on an accrual basis and include
irrecoverable VAT where appropriate. The ACD’s charges in respect
of the following funds, are added back for the purpose of
determining the amount available for distribution:
Dollar Bond Fund
Emerging Market Bond Fund
European Bond Fund
Global Bond Fund
High Yield Bond Fund
Monthly Extra Income Fund
Sterling Bond Fund
Strategic Bond Fund
UK Equity Income Fund
UK Growth & Income Fund
UK Monthly Income Fund
(5) Allocation of revenue and expenses to multiple share classes
The allocation of revenue and expenses to each share class is
based upon the proportion of the fund’s capital net assets
attributable to each share class, on the day the revenue is earned
or the expense is suffered.
Revenue equalisation, annual management charge and registration
fees are specific to each share class.
(6) Allocation of return on hedged share classes

Hedged share classes allow the ACD to use currency hedging
transactions to reduce the effect of exchange rate fluctuations
between the Reference Currency or Reference Currencies and the
Hedged Currency (for further definitions refer to page 278). Where
undertaken, the allocation of return in relation to hedging
transactions is applied in respect of that hedged share class only.
(7) Distribution policy
In accordance with the Collective Investment Schemes
Sourcebook, where the revenue from investments exceeds the
expenses for any share class, a distribution will be made from that
share class. Should expenses exceed revenue for any share class,
there will be no distribution for that share class and the shortfall
will be transferred to capital.
Revenue attributable to Accumulation shareholders is retained at
the end of each distribution period and represents a reinvestment
of revenue.
The following funds distribute on a monthly basis and use a fixed
rate distribution for the first 11 months as set by the Fund Manager
at the beginning of the accounting year:
Monthly Extra Income Fund
UK Monthly Income Fund
Where distributions are unclaimed for a period of six years these
are brought back into the relevant fund as capital.
(8) Basis of valuation of investments
The investments of the fund are valued at fair market prices at
12 noon (UK time), being the valuation point on the last working
day of the accounting period.
Investments are stated at their fair value which generally is the bid
valuation of each security.
These bid values are sourced from independent pricing sources; to

the extent that an independent pricing source is not available then
quotes are obtained from a broker. Where the ACD deems that
these valuations are unrepresentative of a fair valuation of the
security, a fair valuation adjustment is applied based upon the
ACD’s opinion of fair value.
(9) Exchange rates
Assets and liabilities expressed in foreign currencies at the end of
the accounting period are translated into sterling at the exchange
rates ruling at 12 noon (UK time), being the valuation point on the
last working day of the accounting period.
Transactions denominated in a foreign currency are translated into
sterling at the exchange rates ruling at the date of the transaction.
(10)Deferred tax
Deferred tax liabilities are provided in full in respect of all items for
which recognition falls in different accounting periods for
accounting and taxation purposes and deferred tax assets are
recognised to the extent that they are considered recoverable.
Further analysis of the deferred tax assets can be found within the
financial statements of the individual funds.
(11) Derivatives
The total net return in respect of any derivative transactions
entered into, is analysed between capital gain or loss, and revenue
or expense. Any capital gains or losses are included within “Net
capital gains/(losses)”, and any revenue or expense is included
within “Revenue” or “Finance costs” respectively, in the Statement
of Total Return.
The revenue return element in respect of Futures is calculated by
reference to the quoted yield of the index upon which the Future is
based compared to LIBOR. The revenue so calculated may
represent revenue or expenses in a fund’s accounts, in accordance

with whether the fund has held a net long or short position, when
considering the accounting period as a whole. The revenue or
expense position is reversed where LIBOR exceeds the quoted
yield of the relevant index.
Ongoing premia on credit default swaps are charged or credited to
revenue/expenses on an accruals basis, depending on whether
protection is bought or sold.
Notes to the Aggregated Financial Statements for
Threadneedle Investment Funds ICVC
The premium that may be received on an option is treated as
revenue where the motives and circumstances determine that the
return is income in nature and there is no immediate capital loss
generated at the time the transaction is entered into.
Any positions open at the period end are reflected in the Balance
Sheet at their market value, either using available market prices or
the ACD’s assessment of the fair value, based on counterparty
valuations and appropriate pricing models.
Cash held at future brokers as margin is reflected separately within
“Cash and bank balances”.
Derivative revenue and expense are netted off for the purposes of
disclosure. The net balance is disclosed within either the revenue
or finance cost note depending on whether the balance is in a net
revenue or expense position respectively.
2 NET CAPITAL GAINS/(LOSSES)
Net capital gains/(losses) during the period comprise:
2012 2011
£000 £000
Non-derivative securities (127,602) 1,684,736
Derivative contracts (3,099) 1,115
Forward currency contracts 5,543 25,925

Other gains/(losses) (2,804) (11,692)
Transaction costs (867) (491)
qqqqqqqqqqr
Net capital gains/(losses) (128,829) 1,699,593
zzzzzzzzzzzzzzz
3 REVENUE
2012 2011
£000 £000
UK dividends 170,643 141,441
Overseas dividends 198,250 161,674
Stock dividends 6,193 10,369
Interest on debt securities 240,758 251,239
Interest on short term investments 1,073 632
Derivative revenue 125 966
Bank interest 1,351 1,165
Underwriting commission 22 324
Stocklending commission 5,586 3,667
Management fee rebate on collective
investment scheme holdings 466 550
Miscellaneous revenue 23 18
qqqqqqqqqqr
Total revenue 624,490 572,045
zzzzzzzzzzzzzzz
4 EXPENSES
2012 2011
£000 £000
Payable to the ACD or associates of the ACD,
and the agents of either of them:
Annual management charge (211,955) (209,635)
Registration fees (19,163) (19,101)

qqqqqqqqqqr
(231,118) (228,736)
zzzzzzzzzzzzzzz
Payable to the depositary or associate of the
depositary, and the agents of either of them:
Depositary’s fees (727) (701)
Safe custody fees (1,359) (1,567)
Revenue collection expenses (319) (358)
qqqqqqqqqqr
(2,405) (2,626)
zzzzzzzzzzzzzzz
Other expenses:
Regulatory fee (294) (261)
Audit fee (242) (220)
Miscellaneous expenses (9) (6)
qqqqqqqqqqr
(545) (487)
zzzzzzzzzzzzzzz
*Total expenses (234,068) (231,849)
zzzzzzzzzzzzzzz
*Including irrecoverable VAT where applicable.
5 TAXATION
2012 2011
£000 £000
a) Analysis of charge in period
Corporation tax – (12)
Overseas taxes (21,259) (16,491)
Capital gains tax (note 5c) 647 (1,775)
Irrecoverable tax (1) (9)
Adjustments in respect of prior periods – (5)

qqqqqqqqqqr
Total current tax (note 5b) (20,613) (18,292)
qqqqqqqqqqr
Total tax charge for period (20,613) (18,292)
zzzzzzzzzzzzzzz
b) Factors affecting taxation charge for period
qqqqqqqqqqr
Net revenue before taxation 388,789 338,853
zzzzzzzzzzzzzzz
Net revenue before taxation multiplied by
the standard rate of corporation tax of 20% (77,758) (67,771)
Effects of:
Revenue not subject to taxation 71,688 60,629
Overseas taxes (21,259) (16,491)
Overseas taxes expensed 1,081 3,337
Excess expenses (39,734) (42,720)
Distributions treated as tax deductible 44,723 46,513
Capital gains tax (note 5c) 647 (1,775)
Irrecoverable tax (1) (9)
Adjustments in respect of prior periods – (5)
qqqqqqqqqqr
Current tax charge for period (note 5a) (20,613) (18,292)
zzzzzzzzzzzzzzz
c) Capital gains tax
Provision at start of period (1,775) –
Capital gains tax charge in statement of
total return for period (note 5a) 647 (1,775)
qqqqqqqqqqr
Provision at end of period (1,128) (1,775)
zzzzzzzzzzzzzzz

6DEBTORS
2012 2011
£000 £000
Amounts receivable for the issue of shares 171,797 97,270
Sales awaiting settlement 250,385 259,698
Accrued revenue 121,957 115,059
Foreign withholding tax recoverable 4,120 2,624
United Kingdom income tax recoverable 30 14
qqqqqqqqqqr
Total debtors 548,289 474,665
zzzzzzzzzzzzzzz
7 CREDITORS
2012 2011
£000 £000
Amounts payable for the cancellation
of shares (102,647) (68,202)
Purchases awaiting settlement (230,232) (240,683)
Accrued expenses (482) (574)
Amounts payable to ACD (19,316) (18,723)
Income tax payable (7,698) (9,177)
Corporation tax payable (3,136) (3,147)
Capital gains tax payable (910) (1,775)
qqqqqqqqqqr
Total creditors (364,421) (342,281)
zzzzzzzzzzzzzzz
8 RELATED PARTY TRANSACTIONS
Threadneedle Investment Services Limited, as Authorised
Corporate Director (ACD), is a related party and acts as principal in
respect of all transactions of shares in the funds.
The aggregate monies received through issues and paid on

cancellations are disclosed in the Statement of Change in Net
Assets Attributable to Shareholders.
Further analysis of the amounts due to or from, and payable to
Threadneedle Investment Services Limited can be found within the
financial statements of the individual funds.
The following funds invest in a number of sub-funds of Threadneedle
Specialist Investment Funds ICVC, all transactions in respect of which
are transacted with Threadneedle Investment Services Limited.
Details of the investments are shown in the portfolio statement:
Asia Fund
UK Institutional Fund
Details of revenue received from the sub-funds are shown in Note 3.
All transactions have been entered into the ordinary course of
business on normal commercial terms.
Notes to the Aggregated Financial Statements for
Threadneedle Investment Funds ICVC
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
7
Notes to the financial statements (continued)
9 SHARES
Funds currently have up to 6 share classes; Class 1, Class 1 Hedged,
Class 2, Class 2i, Class 2 Hedged and Class X shares. Where a fund
has more than one share class, each class may suffer different
expenses.
Consequently the level of net revenue attributable to each share
class will differ. Further analysis of the annual management charge
and registration fees on each share class can be found within the
‘Shareholder Funds’ note of the individual funds.
10 STOCKLENDING
During the period under review, the Company has entered into

certain stocklending transactions to increase the revenue of the
funds.
The following funds have benefited from these arrangements
during the period:
American Fund
American Select Fund
American Smaller Companies Fund (US)
Asia Fund
Dollar Bond Fund
Emerging Market Bond Fund
European Bond Fund
European Corporate Bond Fund
European Fund
European High Yield Bond Fund
European Select Fund
European Smaller Companies Fund
Global Bond Fund
Global Select Fund
High Yield Bond Fund
Japan Fund
Japan Smaller Companies Fund
Latin America Fund
Monthly Extra Income Fund
Pan European Fund
Pan European Smaller Companies Fund
Sterling Bond Fund
Strategic Bond Fund
UK Corporate Bond Fund
UK Equity Income Fund
UK Growth & Income Fund

UK Fund
UK Institutional Fund
UK Monthly Income Fund
UK Overseas Earnings Fund
UK Select Fund
UK Smaller Companies Fund
The funds have earned £7,975,000 (2011: £5,043,000) and paid fees
of £1,153,000 (2011: £663,000) to Threadneedle Investment Services
Limited and £1,236,000 (2011: £713,000) to J.P. Morgan to process
these arrangements. The aggregate value of stock on loan at the
end of the annual accounting period was £789.78m
(2011: £878.35m), whilst the value of collateral held for these
arrangements was £840.51m (2011: £918.48m). The collateral was
held as either securities transferred in CREST by a DBV (Delivery
by Value) or Gilt DBV, or in the form of overseas government
bonds, supranational bonds or certificates of deposit. The nature
and value of collateral held is analysed by asset class in the table
below.
Analysis of Collateral Held
Total 2012 Total 2011
Value £000 % of Total Value £000 % of Total
Bonds 840,513 100 918,479 100
qqqqqqqqqqqqqqqqqqqqqqqq
840,513 100 918,479 100
vvzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
11 DILUTION ADJUSTMENT
Under certain circumstances the ACD has the power to charge a
dilution adjustment on the purchase and/or redemption of shares.
If charged, the dilution adjustment will be paid into the fund. Full
details of the operation of the scheme can be found in the

Prospectus.
12 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
In pursuing their investment objectives, each of the funds may
hold a number of financial instruments. These financial
instruments comprise securities, derivatives and other
investments, cash balances, debtors and creditors that arise
directly from the funds’ operations, for example, in respect of sales
and purchases awaiting settlement, amounts receivable for
creations and payable for redemptions and debtors for accrued
revenue.
The funds may also enter into a range of derivative transactions
whose purpose is efficient portfolio management. In addition the
funds only execute derivative contracts where both the derivative
instrument and the counterparty have been approved by the ACD.
A sensitivity analysis for the relevant funds is shown in their notes
to the financial statements, contained within the full accounts,
where derivative holdings could impact the fund significantly. The
main risks arising from financial instruments and the ACD’s
policies for managing these risks are stated below. These policies
have been applied throughout the period under review. These
policies have been consistent for both the current and prior period
to which these financial statements relate.
Market price risk
Market price risk arises mainly from uncertainty about future prices
of financial instruments held. It represents the potential loss the
funds might suffer through holding market positions in the face of
price movements. This means the value of an investor’s holding
may go down as well as up and an investor may not recover the
amount invested. Bond funds hold a range of fixed interest
instruments which may be difficult to value and/or liquidate.

Investors should consider the degree of exposure of these funds in
the context of all their investments.
The funds’ investment portfolios are exposed to market price
fluctuations, which are monitored by the ACD as per the policies as
set out in the Prospectus. The investment guidelines and
investment and borrowing powers set out in the Instrument of
Incorporation, the Prospectus and in the Financial Services
Authorities Collective Investment Schemes Sourcebook describe
the nature of the market price risk to which the fund will be exposed.
Liquidity risk
Liquidity risk is the risk that the fund can not raise sufficient cash to
meet its liabilities when due. One of the key factors influencing this
will be the ability to sell investments at, or close to, the fair value
without a significant loss being realised.
Under normal circumstances, the funds will remain close to fully
invested. However, where circumstances require: either because a
view of illiquid securities markets or high levels of redemptions in
the fund, the fund may hold cash and/or more liquid assets.
Temporary higher liquidity levels may also arise during the
carrying out of a change in asset allocation policy, or following a
large issue of shares.
The ACD manages the fund’s cash to ensure it can meet its
liabilities. The ACD receives daily reports of subscriptions and
redemptions enabling the ACD to raise cash from the fund’s
portfolio in order to meet redemption requests. In addition the ACD
monitors market liquidity of all securities, with particular focus on
the FRN market, seeking to ensure the funds maintain sufficient
liquidity to meet known and potential redemption activity. Fund
cash balances are monitored daily by the ACD and Administrator.
Where investments cannot be realised in time to meet any

potential liability, the fund may borrow up to 10% of its value to
ensure settlement. All of the fund’s financial liabilities are payable
on demand or in less than one year.
Notes to the Aggregated Financial Statements for
Threadneedle Investment Funds ICVC
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
8
Notes to the financial statements (continued)
Credit risk
Credit risk arises from three main sources. Firstly, the possibility
that the issuer of a security will be unable to pay interest and
principal in a timely manner. Secondly, for asset backed
investments (including FRNs) there is the possibility of default of
the issuer and default in the underlying assets meaning that the
fund may not receive back the full principal originally invested.
Thirdly, there is counterparty risk, which is the risk that the
counterparty will not deliver the investment for a purchase, or cash
for a sale after the fund has fulfilled its responsibilities, which
could result in the funds suffering a loss.
In order to manage credit risk the funds are subject to investment
limits for issuers of securities. Issuer credit ratings are evaluated
periodically and an approved issuer list is maintained and
monitored. In addition the funds only buy and sell investments
through brokers which have been approved by the ACD as an
acceptable counterparty and limits are set and monitored to cover
the exposure to any individual broker. Changes in broker’s
financial ratings are periodically reviewed.
Some funds will invest in what are considered riskier bonds (below
investment grade). This brings the potential for increased risk of
default and could affect both the income and the capital value of

the fund. Further details can be found in the sub-fund financial
statements.
Interest rate risk
Interest rate risk is the risk that the value of the funds’ investments
will fluctuate as a result of changes in interest rates. All the funds
invest in floating rate securities. The income of these funds may be
affected by changes in interest rates relevant to particular
securities or as a result of the ACD being unable to secure similar
returns on the expiry of contracts or sale of securities. The value of
fixed interest securities may be affected by interest rate
movements or the expectation of such movements in the future.
Interest receivable on bank deposits or payable on bank overdraft
positions will be affected by fluctuations in interest rates.
The interest rate risk profile for the relevant funds is shown in their
notes to the financial statements, contained within the full
accounts.
Foreign currency risk
Foreign currency risk is the risk that the value of the funds’
investments will fluctuate as a result of changes in foreign
currency exchange rates. For those funds where a proportion of the
net assets of the fund are denominated in currencies other than the
fund’s base currency, the balance sheet can be affected by
movements in exchange rates. The ACD monitors the foreign
currency exposure of the funds and may seek to manage exposure
to currency movements by using forward exchange contracts or by
hedging the value of investments that are priced in other
currencies. The foreign currency risk profile for the relevant funds
is shown in their notes to the financial statements, contained
within the full accounts.
Notes to the Aggregated Financial Statements for

Threadneedle Investment Funds ICVC
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
9
Notes to the financial statements (continued)
Threadneedle UK Fund
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
10
STATEMENT OF TOTAL RETURN
for the accounting period 8th March 2011 to 7th March 2012
2012 2011
Notes £000 £000
Income
Net capital gains/(losses) 2 (23,748) 154,529
Revenue 3 37,623 30,983
Expenses 4 (14,631) (14,925)
Finance costs: Interest 6 (23) (13)
qqqqqqqqqqr
Net revenue/(expenses) before taxation 22,969 16,045
Taxation 5 (49) (19)
Net revenue/(expenses) after taxation 22,920 16,026
qqqqqqqqqqr
Total return before distributions (828) 170,555
Finance costs: Distributions 6 (22,920) (16,026)
qqqqqqqqqqr
Change in net assets attributable to
shareholders from investment activities (23,748) 154,529
zzzzzzzzzzzzzzz
STATEMENT OF CHANGE IN NET ASSETS ATTRIBUTABLE
TO SHAREHOLDERS
for the accounting period 8th March 2011 to 7th March 2012

2012 2011
£000 £000
Opening net assets attributable to shareholders 1,296,052 1,126,049
Movement due to sales and repurchases
of shares:
Amounts receivable on the issue of shares 240,551 309,986
Amounts payable on the cancellation of shares (378,390) (296,279)
(137,839) 13,707
Dilution adjustment 261 1,506
Stamp duty reserve tax (1,167) (441)
Change in net assets attributable to
shareholders from investment activities
(see statement of total return above) (23,748) 154,529
Retained distribution on accumulation shares 2,152 699
Unclaimed distribution monies brought back
into account (5) 3
qqqqqqqqqqr
Closing net assets attributable to shareholders 1,135,706 1,296,052
zzzzzzzzzzzzzzz
BALANCE SHEET
as at 7th March 2012
2012 2011
Notes £000 £000
Assets
Investment assets 1,111,584 1,274,625
qqqqqqqqqqr
Debtors 7 35,154 49,230
Cash and bank balances 2,069 27,003
qqqqqqqqqqr
Total other assets 37,223 76,233

qqqqqqqqqqr
Total assets 1,148,807 1,350,858
qqqqqqqqqqr
Liabilities
Creditors 8 (6,599) (50,743)
Distribution payable on income shares (6,502) (4,063)
qqqqqqqqqqr
Total liabilities (13,101) (54,806)
qqqqqqqqqqr
Net assets attributable to shareholders 1,135,706 1,296,052
zzzzzzzzzzzzzzz
DISTRIBUTION TABLE
for the accounting period 8th March 2011 to 7th March 2012
Dividend distribution in pence per share
Class 1 Shares
Net Income
Distribution Gross Tax Net Distribution Distribution
Period Revenue Credit Revenue Equalisation Paid/Payable Paid
2011/2012 2010/2011
Group 1
08/03/11 to 07/09/11 1.0310 0.1031 0.9279 – 0.9279 0.6777
08/09/11 to 07/03/12 0.4351 0.0435 0.3916 – 0.3916 0.1585
Group 2
08/03/11 to 07/09/11 0.4641 0.0464 0.4177 0.5102 0.9279 0.6777
08/09/11 to 07/03/12 0.1803 0.0180 0.1623 0.2293 0.3916 0.1585
Total distributions in the period 1.3195 0.8362
Class 2 Shares
Net Income
Distribution Gross Tax Net Distribution Distribution
Period Revenue Credit Revenue Equalisation Paid/Payable Paid

2011/2012 2010/2011
Group 1
08/03/11 to 07/09/11 1.3377 0.1338 1.2039 – 1.2039 0.9216
08/09/11 to 07/03/12 0.7253 0.0725 0.6528 – 0.6528 0.4233
Group 2
08/03/11 to 07/09/11 0.6500 0.0650 0.5850 0.6189 1.2039 0.9216
08/09/11 to 07/03/12 0.3126 0.0313 0.2813 0.3715 0.6528 0.4233
Total distributions in the period 1.8567 1.3449
Investment Report
Investment Objective
To achieve capital growth.
Investment Policy
The ACD’s investment policy is to invest the
assets of the Fund principally in equities of
companies domiciled in the UK or which have
significant UK operations. If the ACD
considers it desirable, it may further invest in
other securities (including fixed interest
securities, other equities and money market
securities).
Performance of Net Income Class 1
Shares*
Over the twelve months to 7th March 2012,
the published share price of the Threadneedle
UK Fund has fallen from 87.61p to 87.20p.
Looking at performance within its peer group,
the total return on the Fund for the twelve
months ending 29th February 2012, including
net reinvested income, is +4.23% as
compared to a median return of +1.43% over

the same period. (For information the FTSE
All-Share Total Return Index returned +1.53%
over the same period).
Portfolio Activity
The period under review was a challenging
one for the UK stock market, with initial
tentative gains giving way to a significant
sell-off over the summer, followed by a
meaningful recovery in the final three months
of the reporting period. The net result was
that the FTSE All-Share Index was little
changed on the year. However, the fund
comfortably outperformed the market in
delivering a healthy return.
The fund’s sector positioning proved
beneficial, with the below-benchmark
weighting in financials adding particular
value. However, the bulk of the
outperformance came from stock selection.
Highlights included speciality plastics
business Filtrona, house builder Persimmon,
and cash and carry operator Booker. The
diverse nature of these companies illustrates
the breadth of good opportunities available in
the market. At the same time the fund did not
hold Lloyds Banking Group or BHP Billiton
and, with both stocks losing significant value,
this decision proved correct.
Throughout the year, rather than getting
caught up in the daily news flow on the

eurozone crisis or the domestic economy, we
pursued a stock-picking approach. New
purchases included Imperial Tobacco, a high-
yielding company with significant exposure
to fast-growing international markets; and
contract caterer Compass, a business with a
very strong balance sheet and good structural
growth opportunities. Elsewhere, we also
bought into jet engine producer Rolls-Royce,
where long-term maintenance contracts
provide good visibility of earnings.
Among the key disposals were power
generation equipment supplier Aggreko,
where we sold out at a significant profit
following an excellent period of performance.
Profits were also locked in through partial
sales of Filtrona and packaging company
Rexam.
Looking ahead, we will continue to undertake
careful research of companies, so that we can
invest in long-term winners and add to our
holdings with confidence on any market
setbacks. We believe that this approach will
continue to support strong relative
performance.
*In pound Sterling and against UK peer group.
Please refer to pages 256-267 for comparative tables.
Threadneedle UK Fund
Class 2 Shares
Net Accumulation

Distribution Gross Tax Net Net Revenue Net Revenue
Period Revenue Credit Revenue Equalisation Accumulated Accumulated
2011/2012 2010/2011
Group 1
08/03/11 to 07/09/11 0.8719 0.0872 0.7847 – 0.7847 0.5034
08/09/11 to 07/03/12 0.4798 0.0480 0.4318 – 0.4318 0.2790
Group 2
08/03/11 to 07/09/11 0.3379 0.0338 0.3041 0.4806 0.7847 0.5034
08/09/11 to 07/03/12 0.3910 0.0391 0.3519 0.0799 0.4318 0.2790
Total distributions in the period 1.2165 0.7824
Group 2: shares purchased during a distribution period
DISTRIBUTION TABLE
(continued)
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
11
Threadneedle UK Fund
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
12
1 ACCOUNTING POLICIES
The accounting policies for the Fund are the same as those
disclosed in the aggregated financial statements on page 6.
2 NET CAPITAL GAINS/(LOSSES)
Net capital gains/(losses) during the period comprise:
2012 2011
£000 £000
Non-derivative securities (23,739) 154,538
Other gains/(losses) 1 –
Transaction costs (10) (9)
qqqqqqqqqqr
Net capital gains/(losses) (23,748) 154,529

zzzzzzzzzzzzzzz
3 REVENUE
2012 2011
£000 £000
UK dividends 35,080 27,263
Overseas dividends 555 145
Stock dividends 1,890 3,353
Interest on short term investments 31 47
Bank interest 29 25
Underwriting commission – 37
Stocklending commission 38 113
qqqqqqqqqqr
Total revenue 37,623 30,983
zzzzzzzzzzzzzzz
4 EXPENSES
2012 2011
£000 £000
Payable to the ACD or associates of the ACD,
and the agents of either of them:
Annual management charge (13,565) (13,769)
Registration fees (1,009) (1,103)
qqqqqqqqqqr
(14,574) (14,872)
zzzzzzzzzzzzzzz
Payable to the depositary or associate of the
depositary, and the agents of either of them:
Depositary’s fees (30) (29)
Safe custody fees (13) (11)
qqqqqqqqqqr
(43) (40)

zzzzzzzzzzzzzzz
Other expenses:
Regulatory fee (7) (7)
Audit fee (7) (6)
qqqqqqqqqqr
(14) (13)
zzzzzzzzzzzzzzz
*Total expenses (14,631) (14,925)
zzzzzzzzzzzzzzz
*Including irrecoverable VAT where applicable.
5 TAXATION
2012 2011
£000 £000
a) Analysis of charge in period
Overseas taxes (49) (19)
qqqqqqqqqqr
Total current tax (note 5b) (49) (19)
qqqqqqqqqqr
Total tax charge for period (49) (19)
zzzzzzzzzzzzzzz
b) Factors affecting taxation charge for period
qqqqqqqqqqr
Net revenue before taxation 22,969 16,045
zzzzzzzzzzzzzzz
Net revenue before taxation multiplied by
the standard rate of corporation tax of 20% (4,594) (3,209)
Effects of:
Revenue not subject to taxation 7,504 6,153
Overseas taxes (49) (19)
Overseas taxes expensed 10 4

Excess expenses (2,920) (2,948)
qqqqqqqqqqr
Current tax charge for period (note 5a) (49) (19)
zzzzzzzzzzzzzzz
The Fund has not recognised a deferred tax asset of £44,076,089
(2011: £41,165,561) arising as a result of having unutilised
management expenses. It is unlikely that these expenses will be
utilised in future years.
6 FINANCE COSTS
Distributions and Interest
The distribution takes account of revenue received on the creation
of shares and revenue deducted on the cancellation of shares and
comprises:
2012 2011
£000 £000
Interim 14,870 10,412
Final 7,266 4,762
qqqqqqqqqqr
22,136 15,174
Add: Revenue deducted on cancellation of shares 1,975 1,398
Deduct: Revenue received on creation of shares (1,191) (546)
qqqqqqqqqqr
Net distribution for the period 22,920 16,026
zzzzzzzzzzzzzzz
Interest 23 13
qqqqqqqqqqr
Total finance costs 22,943 16,039
zzzzzzzzzzzzzzz
Details of the distribution per share are set out in the table on
pages 10 and 11.

7DEBTORS
2012 2011
£000 £000
Amounts receivable for the issue of shares 27,854 3,301
Sales awaiting settlement – 40,570
Accrued revenue 7,224 5,331
Foreign withholding tax recoverable 76 28
qqqqqqqqqqr
Total debtors 35,154 49,230
zzzzzzzzzzzzzzz
8 CREDITORS
2012 2011
£000 £000
Amounts payable for the cancellation of shares (5,258) (1,240)
Purchases awaiting settlement (178) (48,213)
Accrued expenses (11) (11)
Amounts payable to ACD (1,152) (1,279)
qqqqqqqqqqr
Total creditors (6,599) (50,743)
zzzzzzzzzzzzzzz
Notes to the financial statements
for the accounting period 8th March 2011 to 7th March 2012
Threadneedle UK Fund
9 RELATED PARTY TRANSACTIONS
Threadneedle Investment Services Limited, as Authorised Corporate
Director (ACD), is a related party and acts as principal in respect of
all transactions of shares in the Fund.
The aggregate monies received through issues and paid on
cancellations are disclosed in the Statement of Change in Net
Assets Attributable to Shareholders.

Any amounts due to or from Threadneedle Investment Services
Limited at the end of the accounting period in relation to share
issues and cancellations are disclosed in Notes 7 and 8.
Amounts payable to Threadneedle Investment Services Limited in
respect of fund management and registration services are disclosed
in Note 4 and amounts outstanding at the year end in Note 8.
Threadneedle Investment Services Limited did not enter into
securities transactions with the Fund during the period.
All transactions have been entered into in the ordinary course of
business on normal commercial terms.
10 SHAREHOLDER FUNDS
UK Fund currently has two share classes; Class 1 and Class 2
shares. The charges on each share class are as follows:
Annual management charge
Class 1 shares 1.50%
Class 2 shares 1.00%
Registration fees
Class 1 shares 0.175%
Class 2 shares 0.035%
The net asset value of each share class, the net asset value per
share, and the number of shares in each class are given in the
comparative table on page 256. The distribution per share class is
given in the distribution table on pages 10 and 11. All classes have
the same rights on winding up.
11 STOCKLENDING
During the period under review the UK Fund has entered into
stocklending arrangements. The Fund has earned £54,000
(2011: £158,000) and paid fees of £8,000 (2011: £22,000) to
Threadneedle Investment Services Limited and £8,000 (2011: £23,000)
to J.P. Morgan to process these arrangements. The value of stock on

loan at the end of the accounting period was £25.89m (2011:
£29.22m), whilst the value of collateral held for these arrangements
was £28.84m (2011: £31.17m). The collateral was held as either
securities transferred in CREST by a DBV (Delivery by Value) or Gilt
DBV, or in the form of overseas government bonds, supranational
bonds or certificates of deposit.
The nature and value of collateral held is analysed by asset class in
the table below.
Analysis of Collateral Held
2012 2011
Value £000 % of Total Value £000 % of Total
Bonds 28,843 100 31,172 100
qqqqqqqqqqqqqqqqqqqqqqqq
28,843 100 31,172 100
vvzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
12 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
The analysis and tables provided below refer to the narrative
disclosure on derivatives and other financial instruments risks on
pages 8 and 9.
Currency exposures
A small proportion of the net assets of the Fund are denominated in
currencies other than Sterling, with the effect that the balance sheet
and total return can be affected by currency movements.
Net foreign currency assets
Non-
Monetary monetary
exposures exposures Total
Currency 2012 £000 £000 £000
Euro 2 – 2
US Dollar 75 – 75

Currency 2011 £000 £000 £000
Euro 1 – 1
Swiss Franc 28 – 28
Interest rate risk profile of financial assets and financial liabilities
The interest rate risk profile of the Fund’s financial assets and
financial liabilities at 7th March 2012 was:
Financial
Floating rate Fixed rate assets not
financial financial carrying
assets assets interest Total
Currency 2012 £000 £000 £000 £000
Euro 1 – 1 2
UK Sterling 2,068 – 1,146,662 1,148,730
US Dollar – – 75 75
Currency 2011 £000 £000 £000 £000
Euro 1 – – 1
Swiss Franc – – 28 28
UK Sterling 991 26,011 1,323,827 1,350,829
Financial
Floating rate Fixed rate liabilities not
financial financial carrying
liabilities liabilities interest Total
Currency 2012 £000 £000 £000 £000
UK Sterling – – (13,101) (13,101)
Currency 2011 £000 £000 £000 £000
UK Sterling – – (54,806) (54,806)
As at the 7th March 2011 the fixed rate financial assets includes
deposits which had a weighted average interest rate of 0.45%.
There are no material amounts of non interest-bearing financial
assets, other than equities, which do not have maturity dates.

Cash balances are held in floating rate accounts where interest is
calculated with reference to prevailing market rates.
Fair value of financial assets and financial 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.
Notes to the financial statements
(continued)
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
13
Notes to the financial statements
(continued)
13 CONTINGENT LIABILITIES AND COMMITMENTS
There are no contingent liabilities and commitments outstanding
(2011: Nil).
14 PORTFOLIO TRANSACTION COSTS
2012 2011
£000 £000
Analysis of total purchase costs
Purchases in period before transaction costs 307,596 783,034
Commissions 355 651
Taxes 1,362 3,748
Total purchase costs 1,717 4,399
qqqqqqqqqqr
Gross purchases total 309,313 787,433
zzzzzzzzzzzzzzz
Analysis of total sale costs
Gross sales before transaction costs 447,315 789,065
Commissions (224) (438)
Taxes (1) (1)

Total sale costs (225) (439)
qqqqqqqqqqr
Total sales net of transaction costs 447,090 788,626
zzzzzzzzzzzzzzz
Threadneedle UK Fund
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
14
Threadneedle UK Select Fund
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
15
STATEMENT OF TOTAL RETURN
for the accounting period 8th March 2011 to 7th March 2012
2012 2011
Notes £000 £000
Income
Net capital gains/(losses) 2 (1,126) 34,077
Revenue 3 7,791 6,573
Expenses 4 (3,379) (3,912)
Finance costs: Interest 6 (2) (1)
qqqqqqqqqqr
Net revenue/(expenses) before taxation 4,410 2,660
Taxation 5 (11) (3)
Net revenue/(expenses) after taxation 4,399 2,657
qqqqqqqqqqr
Total return before distributions 3,273 36,734
Finance costs: Distributions 6 (4,399) (2,657)
qqqqqqqqqqr
Change in net assets attributable to
shareholders from investment activities (1,126) 34,077
zzzzzzzzzzzzzzz

STATEMENT OF CHANGE IN NET ASSETS ATTRIBUTABLE
TO SHAREHOLDERS
for the accounting period 8th March 2011 to 7th March 2012
2012 2011
£000 £000
Opening net assets attributable to shareholders 270,557 247,870
Movement due to sales and repurchases
of shares:
Amounts receivable on the issue of shares 20,712 17,036
Amounts payable on the cancellation of shares (62,756) (28,303)
(42,044) (11,267)
Dilution adjustment 57 –
Stamp duty reserve tax (101) (123)
Change in net assets attributable to
shareholders from investment activities
(see statement of total return above) (1,126) 34,077
qqqqqqqqqqr
Closing net assets attributable to shareholders 227,343 270,557
zzzzzzzzzzzzzzz
BALANCE SHEET
as at 7th March 2012
2012 2011
Notes £000 £000
Assets
Investment assets 219,131 265,443
qqqqqqqqqqr
Debtors 7 2,904 10,033
Cash and bank balances 7,414 3,107
qqqqqqqqqqr
Total other assets 10,318 13,140

qqqqqqqqqqr
Total assets 229,449 278,583
qqqqqqqqqqr
Liabilities
Creditors 8 (901) (7,592)
Distribution payable on income shares (1,205) (434)
qqqqqqqqqqr
Total liabilities (2,106) (8,026)
qqqqqqqqqqr
Net assets attributable to shareholders 227,343 270,557
zzzzzzzzzzzzzzz
DISTRIBUTION TABLE
for the accounting period 8th March 2011 to 7th March 2012
Dividend distribution in pence per share
Class 1 Shares
Net Income
Distribution Gross Tax Net Distribution Distribution
Period Revenue Credit Revenue Equalisation Paid/Payable Paid
2011/2012 2010/2011
Group 1
08/03/11 to 07/09/11 1.0946 0.1095 0.9851 – 0.9851 0.5787
08/09/11 to 07/03/12 0.3921 0.0392 0.3529 – 0.3529 0.0610
Group 2
08/03/11 to 07/09/11 0.6829 0.0683 0.6146 0.3705 0.9851 0.5787
08/09/11 to 07/03/12 0.2057 0.0206 0.1851 0.1678 0.3529 0.0610
Total distributions in the period 1.3380 0.6397
Class 2 Shares
Net Income
Distribution Gross Tax Net Distribution Distribution
Period Revenue Credit Revenue Equalisation Paid/Payable Paid

2011/2012 2010/2011
Group 1
08/03/11 to 07/09/11 1.3861 0.1386 1.2475 – 1.2475 0.8135
08/09/11 to 07/03/12 0.6689 0.0669 0.6020 – 0.6020 0.3122
Group 2
08/03/11 to 07/09/11 0.4957 0.0496 0.4461 0.8014 1.2475 0.8135
08/09/11 to 07/03/12 0.4010 0.0401 0.3609 0.2411 0.6020 0.3122
Total distributions in the period 1.8495 1.1257
Group 2: shares purchased during a distribution period
Investment Report
Investment Objective
To achieve above average capital growth.
Investment Policy
The ACD’s investment policy is to invest the
assets of the Fund for growth, through a
concentrated, actively managed portfolio. The
select investment approach means that the
ACD has the flexibility to take significant stock
and sector positions which may lead to
increased levels of volatility. The portfolio will
consist primarily of equities of companies
domiciled in the UK, or which have significant
UK operations. If the ACD considers it
desirable, it may further invest in other
securities (including fixed interest securities,
other equities and money market securities).
Performance of Net Income Class 1
Shares*
Over the twelve months to 7th March 2012, the
published share price of the Threadneedle UK

Select Fund has risen from 81.59p to 82.13p.
Looking at performance within its peer group,
the total return on the Fund for the twelve
months ending 29th February 2012, including
net reinvested income, is +4.92% as compared
to a median return of +1.43% over the same
period. (For information the FTSE All-Share
Total Return Index returned +1.53% over the
same period).
Portfolio Activity
We believe that economic growth in the UK is
likely to remain lacklustre as both the
government and consumers continue to rein
in their spending and reduce their level of
indebtedness. It is for this reason that we
continue to focus on companies and
geographies that can still deliver good growth
despite the tough economic backdrop.
Therefore, we are targeting firms which
generate a high proportion of their sales and
profits from overseas markets, and companies
which sell products and services to other
businesses rather than to the government or
the UK consumer.
Over recent months, we have reduced the
fund’s exposure to defensive areas of the
market such as tobacco, pharmaceuticals and
telecoms, as these sectors performed strongly
when the eurozone sovereign debt crisis
worsened in the second half of 2011. We used

the stock market weakness during this period
to add several new companies to the portfolio
which are more economically sensitive as we
feel that global growth will remain intact
despite the problems in Europe. Examples of
such companies include the leading global
advertising business WPP, oil services firm
Amec and packaging company DS Smith.
The corporate sector remains in good
financial health and this is likely to lead to a
continued pick-up in merger and acquisition
activity. As sales growth is likely to remain
difficult in a low growth world, many
multinational firms may find it easier to buy
growth via the UK stock market.
Consequently, the UK Select Fund has several
midsized global businesses with good niche
technologies, which we believe are ripe for
takeover by larger multinationals. Examples
are Premier Oil, technology firm Spirent, and
several companies in the industrial sector.
Equity valuations continue to look good value
versus history and in comparison with other
asset classes such as cash or bonds.
Consequently, we are finding plenty of
attractive companies in which to invest.
*In pound Sterling and against UK peer group.
Please refer to pages 256-267 for comparative tables.
Threadneedle UK Select Fund
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012

16
1 ACCOUNTING POLICIES
The accounting policies for the Fund are the same as those
disclosed in the aggregated financial statements on page 6.
2 NET CAPITAL GAINS/(LOSSES)
Net capital gains/(losses) during the period comprise:
2012 2011
£000 £000
Non-derivative securities (1,135) 34,081
Other gains/(losses) 13 –
Transaction costs (4) (4)
qqqqqqqqqqr
Net capital gains/(losses) (1,126) 34,077
zzzzzzzzzzzzzzz
3 REVENUE
2012 2011
£000 £000
UK dividends 7,139 5,986
Overseas dividends 76 22
Stock dividends 547 518
Interest on short term investments 9 12
Bank interest 15 11
Underwriting commission – 9
Stocklending commission 5 15
qqqqqqqqqqr
Total revenue 7,791 6,573
zzzzzzzzzzzzzzz
4 EXPENSES
2012 2011
£000 £000

Payable to the ACD or associates of the ACD,
and the agents of either of them:
Annual management charge (3,047) (3,524)
Registration fees (297) (354)
qqqqqqqqqqr
(3,344) (3,878)
zzzzzzzzzzzzzzz
Payable to the depositary or associate of the
depositary, and the agents of either of them:
Depositary’s fees (19) (19)
Safe custody fees (3) (2)
qqqqqqqqqqr
(22) (21)
zzzzzzzzzzzzzzz
Other expenses:
Regulatory fee (7) (7)
Audit fee (6) (6)
qqqqqqqqqqr
(13) (13)
zzzzzzzzzzzzzzz
*Total expenses (3,379) (3,912)
zzzzzzzzzzzzzzz
*Including irrecoverable VAT where applicable.
5 TAXATION
2012 2011
£000 £000
a) Analysis of charge in period
Overseas taxes (11) (3)
qqqqqqqqqqr
Total current tax (note 5b) (11) (3)

qqqqqqqqqqr
Total tax charge for period (11) (3)
zzzzzzzzzzzzzzz
b) Factors affecting taxation charge for period
qqqqqqqqqqr
Net revenue before taxation 4,410 2,660
zzzzzzzzzzzzzzz
Net revenue before taxation multiplied by
the standard rate of corporation tax of 20% (882) (532)
Effects of:
Revenue not subject to taxation 1,552 1,305
Overseas taxes (11) (3)
Overseas taxes expensed – 1
Excess expenses (670) (774)
qqqqqqqqqqr
Current tax charge for period (note 5a) (11) (3)
zzzzzzzzzzzzzzz
The Fund has not recognised a deferred tax asset of £8,047,664
(2011: £7,377,280) arising as a result of having unutilised
management expenses. It is unlikely that these expenses will be
utilised in future years.
6 FINANCE COSTS
Distributions and Interest
The distribution takes account of revenue received on the creation
of shares and revenue deducted on the cancellation of shares and
comprises:
2012 2011
£000 £000
Interim 3,027 2,216
Final 1,205 434

qqqqqqqqqqr
4,232 2,650
Add: Revenue deducted on cancellation of shares 277 70
Deduct: Revenue received on creation of shares (110) (63)
qqqqqqqqqqr
Net distribution for the period 4,399 2,657
zzzzzzzzzzzzzzz
Interest 2 1
qqqqqqqqqqr
Total finance costs 4,401 2,658
zzzzzzzzzzzzzzz
Details of the distribution per share are set out in the table on
page 15.
7DEBTORS
2012 2011
£000 £000
Amounts receivable for the issue of shares 348 218
Sales awaiting settlement 1,734 8,965
Accrued revenue 822 847
Foreign withholding tax recoverable – 3
qqqqqqqqqqr
Total debtors 2,904 10,033
zzzzzzzzzzzzzzz
8 CREDITORS
2012 2011
£000 £000
Amounts payable for the cancellation of shares (625) (1,332)
Purchases awaiting settlement – (5,941)
Accrued expenses (6) (7)
Amounts payable to ACD (270) (312)

qqqqqqqqqqr
Total creditors (901) (7,592)
zzzzzzzzzzzzzzz
Notes to the financial statements
for the accounting period 8th March 2011 to 7th March 2012
Threadneedle UK Select Fund
9 RELATED PARTY TRANSACTIONS
Threadneedle Investment Services Limited, as Authorised Corporate
Director (ACD), is a related party and acts as principal in respect of
all transactions of shares in the Fund.
The aggregate monies received through issues and paid on
cancellations are disclosed in the Statement of Change in Net
Assets Attributable to Shareholders.
Any amounts due to or from Threadneedle Investment Services
Limited at the end of the accounting period in relation to share
issues and cancellations are disclosed in Notes 7 and 8.
Amounts payable to Threadneedle Investment Services Limited in
respect of fund management and registration services are disclosed
in Note 4 and amounts outstanding at the year end in Note 8.
Threadneedle Investment Services Limited did not enter into
securities transactions with the Fund during the period.
All transactions have been entered into in the ordinary course of
business on normal commercial terms.
10 SHAREHOLDER FUNDS
UK Select Fund currently has two share classes; Class 1 and Class 2
shares. The charges on each share class are as follows:
Annual management charge
Class 1 shares 1.50%
Class 2 shares 1.00%
Registration fees

Class 1 shares 0.175%
Class 2 shares 0.035%
The net asset value of each share class, the net asset value per
share, and the number of shares in each class are given in the
comparative table on page 256. The distribution per share class is
given in the distribution table on page 15. All classes have the same
rights on winding up.
11 STOCKLENDING
During the period under review the UK Select Fund has entered into
stocklending arrangements. The Fund has earned £7,000
(2011: £21,000) and paid fees of £1,000 (2011: £3,000) to Threadneedle
Investment Services Limited and £1,000 (2011: £3,000) to J.P.
Morgan to process these arrangements. The value of stock on loan
at the end of the accounting period was £1.19m (2011: £4.97m),
whilst the value of collateral held for these arrangements was
£1.35m (2011: £5.23m). The collateral was held as either securities
transferred in CREST by a DBV (Delivery by Value) or Gilt DBV, or in
the form of overseas government bonds, supranational bonds or
certificates of deposit.
The nature and value of collateral held is analysed by asset class in
the table below.
Analysis of Collateral Held
2012 2011
Value £000 % of Total Value £000 % of Total
Bonds 1,348 100 5,233 100
qqqqqqqqqqqqqqqqqqqqqqqq
1,348 100 5,233 100
vvzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
12 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
The analysis and tables provided below refer to the narrative

disclosure on derivatives and other financial instruments risks on
pages 8 and 9.
Currency exposures
A small proportion of the net assets of the Fund are denominated in
currencies other than Sterling, with the effect that the balance sheet
and total return can be affected by currency movements.
Net foreign currency assets
Non-
Monetary monetary
exposures exposures Total
Currency 2012 £000 £000 £000
Euro 8 – 8
Currency 2011 £000 £000 £000
Euro 8 – 8
US Dollar 3 – 3
Interest rate risk profile of financial assets and financial liabilities
The interest rate risk profile of the Fund’s financial assets and
financial liabilities at 7th March 2012 was:
Financial
Floating rate Fixed rate assets not
financial financial carrying
assets assets interest Total
Currency 2012 £000 £000 £000 £000
Euro 8 – – 8
UK Sterling 7,406 – 222,035 229,441
Currency 2011 £000 £000 £000 £000
Euro 8 – – 8
UK Sterling 3,099 – 275,473 278,572
US Dollar – – 3 3
Financial

Floating rate Fixed rate liabilities not
financial financial carrying
liabilities liabilities interest Total
Currency 2012 £000 £000 £000 £000
UK Sterling – – (2,106) (2,106)
Currency 2011 £000 £000 £000 £000
UK Sterling – – (8,026) (8,026)
There are no material amounts of non interest-bearing financial
assets, other than equities, which do not have maturity dates.
Cash balances are held in floating rate accounts where interest is
calculated with reference to prevailing market rates.
Fair value of financial assets and financial 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.
Notes to the financial statements
(continued)
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
17
Notes to the financial statements
(continued)
13 CONTINGENT LIABILITIES AND COMMITMENTS
There are no contingent liabilities and commitments outstanding
(2011: Nil).
14 PORTFOLIO TRANSACTION COSTS
2012 2011
£000 £000
Analysis of total purchase costs
Purchases in period before
transaction costs 97,795 230,174

Commissions 117 227
Taxes 446 1,011
Total purchase costs 563 1,238
qqqqqqqqqqr
Gross purchases total 98,358 231,412
zzzzzzzzzzzzzzz
Analysis of total sale costs
Gross sales before transaction costs 143,653 245,398
Commissions (156) (239)
Total sale costs (156) (239)
qqqqqqqqqqr
Total sales net of transaction costs 143,497 245,159
zzzzzzzzzzzzzzz
Threadneedle UK Select Fund
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
18
Threadneedle UK Smaller Companies Fund
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
19
STATEMENT OF TOTAL RETURN
for the accounting period 8th March 2011 to 7th March 2012
2012 2011
Notes £000 £000
Income
Net capital gains/(losses) 2 89 49,804
Revenue 3 2,983 2,722
Expenses 4 (2,294) (2,298)
qqqqqqqqqqr
Net revenue/(expenses) before taxation 689 424
Taxation 5 (19) (5)

Net revenue/(expenses) after taxation 670 419
qqqqqqqqqqr
Total return before distributions 759 50,223
Finance costs: Distributions 6 (792) (600)
qqqqqqqqqqr
Change in net assets attributable to
shareholders from investment activities (33) 49,623
zzzzzzzzzzzzzzz
STATEMENT OF CHANGE IN NET ASSETS ATTRIBUTABLE
TO SHAREHOLDERS
for the accounting period 8th March 2011 to 7th March 2012
2012 2011
£000 £000
Opening net assets attributable to shareholders 192,482 130,634
Movement due to sales and repurchases
of shares:
Amounts receivable on the issue of shares 50,236 64,678
Amounts payable on the cancellation of shares (52,791) (53,034)
(2,555) 11,644
Dilution adjustment 439 681
Stamp duty reserve tax (107) (100)
Change in net assets attributable to
shareholders from investment activities
(see statement of total return above) (33) 49,623
qqqqqqqqqqr
Closing net assets attributable to shareholders 190,226 192,482
zzzzzzzzzzzzzzz
BALANCE SHEET
as at 7th March 2012
2012 2011

Notes £000 £000
Assets
Investment assets 177,125 191,890
qqqqqqqqqqr
Debtors 7 2,602 1,954
Cash and bank balances 12,292 4,587
qqqqqqqqqqr
Total other assets 14,894 6,541
qqqqqqqqqqr
Total assets 192,019 198,431
qqqqqqqqqqr
Liabilities
Creditors 8 (1,656) (5,822)
Distribution payable on income shares (137) (127)
qqqqqqqqqqr
Total liabilities (1,793) (5,949)
qqqqqqqqqqr
Net assets attributable to shareholders 190,226 192,482
zzzzzzzzzzzzzzz
DISTRIBUTION TABLE
for the accounting period 8th March 2011 to 7th March 2012
Dividend distribution in pence per share
Class 1 Shares
Net Income
Distribution Gross Tax Net Distribution Distribution
Period Revenue Credit Revenue Equalisation Paid/Payable Paid
2011/2012 2010/2011
Group 1
08/03/11 to 07/09/11 0.3286 0.0329 0.2957 – 0.2957 0.2047
08/09/11 to 07/03/12 – – – – – –

Group 2
08/03/11 to 07/09/11 0.0988 0.0099 0.0889 0.2068 0.2957 0.2047
08/09/11 to 07/03/12 – – – – – –
Total distributions in the period 0.2957 0.2047
Class 2 Shares
Net Income
Distribution Gross Tax Net Distribution Distribution
Period Revenue Credit Revenue Equalisation Paid/Payable Paid
2011/2012 2010/2011
Group 1
08/03/11 to 07/09/11 0.8114 0.0811 0.7303 – 0.7303 0.5471
08/09/11 to 07/03/12 0.2367 0.0237 0.2130 – 0.2130 0.1699
Group 2
08/03/11 to 07/09/11 0.2836 0.0284 0.2552 0.4751 0.7303 0.5471
08/09/11 to 07/03/12 0.0643 0.0064 0.0579 0.1551 0.2130 0.1699
Total distributions in the period 0.9433 0.7170
Group 2: shares purchased during a distribution period
Investment Report
Investment Objective
To achieve capital growth.
Investment Policy
The ACD’s investment policy is to invest the assets
of the Fund primarily in the equities of smaller
companies that are domiciled in the UK or have
significant UK operations.
If the ACD considers it desirable it may further
invest up to one third of the total assets of the Fund
in other securities (including fixed interest
securities, other equities and money market
securities). For liquidity purposes it may invest in

cash and near cash.
Performance of Net Income Class 1
Shares*
Over the twelve months to 7th March 2012, the
published share price of the Threadneedle UK
Smaller Companies Fund has risen from 136.29p to
138.87p.
Looking at performance within its peer group, the
total return on the Fund for the twelve months
ending 29th February 2012, including net reinvested
income, is +6.74% as compared to a median return of
+2.24% over the same period. (For information the
Hoare Govett Smaller Companies (ex Investment
Trusts) Index returned +3.90% over the same period).
Portfolio Activity
During the 12-month period under review the
market moved higher and the fund outperformed
the index. However, it was a very volatile year and
the market fell over the first six months, following
increasing concerns over economic growth in
Europe and the US, before recovering strongly in
the second six months. The crisis in Greece fuelled
concerns in other eurozone countries that if debt
levels could not be managed it would lead to an
economic depression. Eventually, the easing of
monetary and fiscal policy helped to stimulate the
eurozone economy but at lower levels than were
expected at the start of the year.
Economic growth is likely to remain low in Europe
as national debt is paid down, and there is a danger

that a misguided policy response could have a
significant impact on economic activity. However,
in an environment of lower economic growth the
fund’s strategy of investing in high quality
companies exposed to structural growth should
lead to superior returns.
The fund’s sector positioning remained biased
towards areas of structural growth, which proved
beneficial. The fund was heavily invested in
technology, engineering, industrial and chemical
companies, whilst having only a limited exposure
to areas oriented to the UK domestic economy. UK
consumers and the government have too much
debt and demand for products and services will
remain depressed.
Individual holdings that provided strong returns
during the year included IP Group, Oxford
Instruments, iomart, Elementis, Galliford Try, Cove
Energy, Genus, Mulberry, Senior and Barratt
Developments. IP Group invests in intellectual
property from UK universities. One of the
company’s investments, Oxford Nanopore, has
developed a low-cost machine to sequence genes.
The product is to be launched later this year and
will ultimately be capable of diagnosing genetic
diseases in the doctor’s surgery. Mulberry is
benefiting from huge demand for its handbags
from emerging market consumers, but also closer
to home in Europe. During the review period, we
started new holdings in Anite, Barratt

Developments, Hansteen, Petra, Rank, Salamander,
Spirit and Ubisense. Conversely, the fund sold out
of holdings in Mothercare, Centamin Egypt and
Pendragon. Both Hamworthy and Holidaybreak
were acquired by other companies.
High quality, smaller companies are uniquely
positioned to benefit from the current environment.
Small companies with plenty of cash are in a
strong position to invest, acquire and grow, which
should lead to superior investment returns.
*In pound Sterling and against UK peer group.
Please refer to pages 256-267 for comparative tables.
Threadneedle UK Smaller Companies Fund
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
20
1 ACCOUNTING POLICIES
The accounting policies for the Fund are the same as those
disclosed in the aggregated financial statements on page 6.
2 NET CAPITAL GAINS/(LOSSES)
Net capital gains/(losses) during the period comprise:
2012 2011
£000 £000
Non-derivative securities 93 49,810
Transaction costs (4) (6)
qqqqqqqqqqr
Net capital gains/(losses) 89 49,804
zzzzzzzzzzzzzzz
3 REVENUE
2012 2011
£000 £000

UK dividends 2,741 2,427
Overseas dividends 60 2
Stock dividends 35 232
Interest on short term investment – 7
Bank interest 17 9
Underwriting commission 15 15
Stocklending commission 115 30
qqqqqqqqqqr
Total revenue 2,983 2,722
zzzzzzzzzzzzzzz
4 EXPENSES
2012 2011
£000 £000
Payable to the ACD or associates of the ACD,
and the agents of either of them:
Annual management charge (2,085) (2,088)
Registration fees (176) (178)
qqqqqqqqqqr
(2,261) (2,266)
zzzzzzzzzzzzzzz
Payable to the depositary or associate of the
depositary, and the agents of either of them:
Depositary’s fees (17) (17)
Safe custody fees (2) (2)
qqqqqqqqqqr
(19) (19)
zzzzzzzzzzzzzzz
Other expenses:
Regulatory fee (8) (7)
Audit fee (6) (6)

qqqqqqqqqqr
(14) (13)
zzzzzzzzzzzzzzz
*Total expenses (2,294) (2,298)
zzzzzzzzzzzzzzz
*Including irrecoverable VAT where applicable.
5 TAXATION
2012 2011
£000 £000
a) Analysis of charge in period
Overseas taxes (19) (5)
qqqqqqqqqqr
Total current tax (note 5b) (19) (5)
qqqqqqqqqqr
Total tax charge for period (19) (5)
zzzzzzzzzzzzzzz
b) Factors affecting taxation charge for period
qqqqqqqqqqr
Net revenue before taxation 689 424
zzzzzzzzzzzzzzz
Net revenue before taxation multiplied by
the standard rate of corporation tax of 20% (138) (85)
Effects of:
Revenue not subject to taxation 567 532
Overseas taxes (19) (5)
Overseas taxes expensed 4 1
Excess expenses (433) (448)
qqqqqqqqqqr
Current tax charge for period (note 5a) (19) (5)
zzzzzzzzzzzzzzz

The Fund has not recognised a deferred tax asset of £3,961,801
(2011: £3,528,630) arising as a result of having unutilised
management expenses. It is unlikely that these expenses will be
utilised in future years.
6 FINANCE COSTS
Distributions
The distribution takes account of revenue received on the creation
of shares and revenue deducted on the cancellation of shares and
comprises:
2012 2011
£000 £000
Interim 645 496
Final 137 127
qqqqqqqqqqr
782 623
Add: Revenue deducted on cancellation of shares 92 46
Deduct: Revenue received on creation of shares (82) (69)
qqqqqqqqqqr
Net distribution for the period 792 600
qqqqqqqqqqr
Total finance costs 792 600
zzzzzzzzzzzzzzz
Net revenue after taxation 670 419
Shortfall transfer from capital to revenue 122 181
qqqqqqqqqqr
Net distribution for the period 792 600
zzzzzzzzzzzzzzz
Details of the distribution per share and any share class with a
shortfall are set out in the table on page 19.
7DEBTORS

2012 2011
£000 £000
Amounts receivable for the issue of shares 2,212 278
Sales awaiting settlement 268 1,583
Accrued revenue 122 93
qqqqqqqqqqr
Total debtors 2,602 1,954
zzzzzzzzzzzzzzz
8 CREDITORS
2012 2011
£000 £000
Amounts payable for the cancellation of shares (78) (4,322)
Purchases awaiting settlement (1,368) (1,287)
Accrued expenses (6) (7)
Amounts payable to ACD (204) (206)
qqqqqqqqqqr
Total creditors (1,656) (5,822)
zzzzzzzzzzzzzzz
Notes to the financial statements
for the accounting period 8th March 2011 to 7th March 2012
Threadneedle UK Smaller Companies Fund
9 RELATED PARTY TRANSACTIONS
Threadneedle Investment Services Limited, as Authorised Corporate
Director (ACD), is a related party and acts as principal in respect of
all transactions of shares in the Fund.
The aggregate monies received through issues and paid on
cancellations are disclosed in the Statement of Change in Net
Assets Attributable to Shareholders.
Any amounts due to or from Threadneedle Investment Services
Limited at the end of the accounting period in relation to share

issues and cancellations are disclosed in Notes 7 and 8.
Amounts payable to Threadneedle Investment Services Limited in
respect of fund management and registration services are disclosed
in Note 4 and amounts outstanding at the year end in Note 8.
Threadneedle Investment Services Limited did not enter into
securities transactions with the Fund during the period.
All transactions have been entered into in the ordinary course of
business on normal commercial terms.
10 SHAREHOLDER FUNDS
UK Smaller Companies Fund currently has two share classes; Class 1
and Class 2 shares. The charges on each share class are as follows:
Annual management charge
Class 1 shares 1.50%
Class 2 shares 1.00%
Registration fees
Class 1 shares 0.175%
Class 2 shares 0.035%
The net asset value of each share class, the net asset value per share,
and the number of shares in each class are given in the comparative
table on page 256. The distribution per share class is given in the
distribution table on page 19. All classes have the same rights on
winding up.
11 STOCKLENDING
During the period under review the UK Smaller Companies Fund
has entered into stocklending arrangements. The Fund has earned
£162,000 (2011: £41,000) and paid fees of £23,000 (2011: £5,000) to
Threadneedle Investment Services Limited and £24,000 (2011: £6,000)
to J.P. Morgan to process these arrangements. The value of stock on
loan at the end of the accounting period was £9.76m (2011: £10.00m),
whilst the value of collateral held for these arrangements was

£10.86m (2011: £11.16m). The collateral was held as either securities
transferred in CREST by a DBV (Delivery by Value) or Gilt DBV, or in
the form of overseas government bonds, supranational bonds or
certificates of deposit.
The nature and value of collateral held is analysed by asset class in
the table below.
Analysis of Collateral Held
2012 2011
Value £000 % of Total Value £000 % of Total
Bonds 10,865 100 11,156 100
qqqqqqqqqqqqqqqqqqqqqqqq
10,865 100 11,156 100
vvzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
12 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
The analysis and tables provided below refer to the narrative
disclosure on derivatives and other financial instruments risks on
pages 8 and 9.
Currency exposures
There are no material assets denominated in currencies other than
Sterling.
Interest rate risk profile of financial assets and financial liabilities
The interest rate risk profile of the fund’s financial assets and
financial liabilities at 7th March 2012 was:
Financial
Floating rate Fixed rate assets not
financial financial carrying
assets assets interest Total
Currency 2012 £000 £000 £000 £000
UK Sterling 12,292 – 179,727 192,019
Currency 2011 £000 £000 £000 £000

UK Sterling 4,587 – 193,844 198,431
Financial
Floating rate Fixed rate liabilities not
financial financial carrying
liabilities liabilities interest Total
Currency 2012 £000 £000 £000 £000
UK Sterling – – (1,793) (1,793)
Currency 2011 £000 £000 £000 £000
UK Sterling – – (5,949) (5,949)
There are no material amounts of non interest-bearing financial
assets, other than equities, which do not have maturity dates.
Cash balances are held in floating rate accounts where interest is
calculated with reference to prevailing market rates.
Fair value of financial assets and financial 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.
13 CONTINGENT LIABILITIES AND COMMITMENTS
There are no contingent liabilities and commitments outstanding
(2011: Nil).
14 PORTFOLIO TRANSACTION COSTS
2012 2011
£000 £000
Analysis of total purchase costs
Purchases in period before transaction costs 70,151 128,679
Commissions 113 155
Taxes 281 491
Total purchase costs 394 646
qqqqqqqqqqr
Gross purchases total 70,545 129,325

zzzzzzzzzzzzzzz
Analysis of total sale costs
Gross sales before transaction costs 85,390 113,288
Commissions (131) (144)
Total sale costs (131) (144)
qqqqqqqqqqr
Total sales net of transaction costs 85,259 113,144
zzzzzzzzzzzzzzz
Notes to the financial statements
(continued)
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
21
Threadneedle UK Growth & Income Fund
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
22
STATEMENT OF TOTAL RETURN
for the accounting period 8th March 2011 to 7th March 2012
2012 2011
Notes £000 £000
Income
Net capital gains/(losses) 2 6,890 34,127
Revenue 3 10,058 8,803
Expenses 4 (3,587) (3,501)
Finance costs: Interest 6 (5) (4)
qqqqqqqqqqr
Net revenue/(expenses) before taxation 6,466 5,298
Taxation 5 – 1
Net revenue/(expenses) after taxation 6,466 5,299
qqqqqqqqqqr
Total return before distributions 13,356 39,426

Finance costs: Distributions 6 (9,833) (8,585)
qqqqqqqqqqr
Change in net assets attributable to
shareholders from investment activities 3,523 30,841
zzzzzzzzzzzzzzz
STATEMENT OF CHANGE IN NET ASSETS ATTRIBUTABLE
TO SHAREHOLDERS
for the accounting period 8th March 2011 to 7th March 2012
2012 2011
£000 £000
Opening net assets attributable to shareholders 288,875 270,090
Movement due to sales and repurchases
of shares:
Amounts receivable on the issue of shares 30,405 15,774
Amounts payable on the cancellation of shares (28,076) (27,804)
2,329 (12,030)
Dilution adjustment – 22
Stamp duty reserve tax (105) (58)
Change in net assets attributable to
shareholders from investment activities
(see statement of total return above) 3,523 30,841
Unclaimed distribution monies brought back
into account (14) 10
qqqqqqqqqqr
Closing net assets attributable to shareholders 294,608 288,875
zzzzzzzzzzzzzzz
BALANCE SHEET
as at 7th March 2012
2012 2011
Notes £000 £000

Assets
Investment assets 289,659 288,506
qqqqqqqqqqr
Debtors 7 5,598 2,626
Cash and bank balances 3,841 2,815
qqqqqqqqqqr
Total other assets 9,439 5,441
qqqqqqqqqqr
Total assets 299,098 293,947
qqqqqqqqqqr
Liabilities
Creditors 8 (661) (1,845)
Distribution payable on income shares (3,829) (3,227)
qqqqqqqqqqr
Total liabilities (4,490) (5,072)
qqqqqqqqqqr
Net assets attributable to shareholders 294,608 288,875
zzzzzzzzzzzzzzz
DISTRIBUTION TABLE
for the accounting period 8th March 2011 to 7th March 2012
Dividend distribution in pence per share
Class 1 Shares
Net Income
Distribution Gross Tax Net Distribution Distribution
Period Revenue Credit Revenue Equalisation Paid/Payable Paid
2011/2012 2010/2011
Group 1
08/03/11 to 07/09/11 1.4354 0.1435 1.2919 – 1.2919 1.1125
08/09/11 to 07/03/12 0.8813 0.0881 0.7932 – 0.7932 0.6730
Group 2

08/03/11 to 07/09/11 0.5538 0.0554 0.4984 0.7935 1.2919 1.1125
08/09/11 to 07/03/12 0.3464 0.0346 0.3118 0.4814 0.7932 0.6730
Total distributions in the period 2.0851 1.7855
Class 2 Shares
Net Income
Distribution Gross Tax Net Distribution Distribution
Period Revenue Credit Revenue Equalisation Paid/Payable Paid
2011/2012 2010/2011
Group 1
08/03/11 to 07/09/11 1.5661 0.1566 1.4095 – 1.4095 1.2085
08/09/11 to 07/03/12 0.9733 0.0973 0.8760 – 0.8760 0.7435
Group 2
08/03/11 to 07/09/11 0.6042 0.0604 0.5438 0.8657 1.4095 1.2085
08/09/11 to 07/03/12 0.6830 0.0683 0.6147 0.2613 0.8760 0.7435
Total distributions in the period 2.2855 1.9520
Group 2: shares purchased during a distribution period
Investment Report
Investment Objective
To provide long term capital growth with a
reasonable and growing income.
Investment Policy
The ACD’s investment policy is to invest the assets
of the Fund primarily in ‘blue chip’ large capitalised
UK companies, but including, when deemed
appropriate small and medium-sized companies,
predominantly from the UK.
Performance of Net Income Class 1
Shares*
Over the twelve months to 7th March 2012, the
published share price of the Threadneedle UK Growth

& Income Fund has risen from 62.11p to 62.82p.
Looking at performance within its peer group, the
total return on the Fund for the twelve months
ending 29th February 2012, including net reinvested
income, is +6.79% as compared to a median return
of +1.43% over the same period. (For information
the FTSE All-Share Total Return Index returned
+1.53% over the same period).
Portfolio Activity
In the early part of the reporting period, markets had
to contend with the implications of the Japanese
earthquake and political unrest in North Africa and
the Middle East. However, it was primarily concerns
about the European sovereign debt crisis spreading
from the peripheral countries to Italy in late July,
compounded by the loss by the US of its AAA credit
rating in early August, which culminated in a severe
contraction of risk appetite over the summer. The
second half of the review period saw significant
political fall-out in the eurozone, with new
governments in Greece, Italy and Spain. However,
the introduction by the European Central Bank of its
Long-Term Refinancing Operation (LTRO) just before
Christmas alleviated fears of a second credit crunch
and provided a boost to global equity markets.
Investors were also cheered by some better US
economic data and markets maintained their
positive momentum into the new year.
In terms of portfolio activity, during the first half of
the reporting period we added to holdings with

defensive characteristics such as pharmaceutical
business GlaxoSmithKline and Imperial Tobacco, a
high-yielding company with significant exposure to
fast-growing international markets. We also
established a new position in National Grid, using
the proceeds from the sale of HSBC. Elsewhere, we
took some profits on Filtrona, the speciality plastics
company. In the second half of the period, we
participated in a rights issue from DS Smith as the
company was using the proceeds to fund an
attractive acquisition. Elsewhere, we reduced the
exposure to mining group Anglo American and
added to the position in BAE during December.
The fund posted a good performance over the
reporting period in absolute terms and also relative
to its peer group, helped by strong stock selection.
There were notable positive contributions from
holdings across a range of different industries,
including Booker, Imperial Tobacco, Rolls-Royce,
Johnson Matthey, GlaxoSmithKline, BT and
Stagecoach. A feature common to all of these stocks
was strong dividend growth.
Growth in western economies will remain sub-trend
for a number of years, as governments tackle their
debt burdens. Liquidity injections, such as the LTRO,
will not prevent this very low growth environment
because UK and European banks, in particular, still
need to delever and repair their balance sheets,
building up sufficient capital in order to recognise
and absorb further loan losses. However, wider

corporate profitability could remain relatively
robust. Companies have reduced their own
indebtedness by around half over the last four
years, so they have more of a cushion to withstand
any economic shocks, and the prospects for UK
dividend growth have improved.
We continue to find attractively valued
opportunities in a wide range of sectors and are
confident that a carefully selected portfolio can
deliver healthy returns. For example, despite the
ongoing pressures facing domestic consumers, we
believe Marks & Spencer and ITV are interesting
shares, where the valuations do not reflect the
extent to which these businesses are starting to
improve.
*In pound Sterling and against UK peer group.
Please refer to pages 256-267 for comparative tables.
Threadneedle UK Growth & Income Fund
1 ACCOUNTING POLICIES
The accounting policies for the Fund are the same as those
disclosed in the aggregated financial statements on page 6.
2 NET CAPITAL GAINS/(LOSSES)
Net capital gains/(losses) during the period comprise:
2012 2011
£000 £000
Non-derivative securities 6,892 34,133
Other gains/(losses) 1 (1)
Transaction costs (3) (5)
qqqqqqqqqqr
Net capital gains/(losses) 6,890 34,127

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3 REVENUE
2012 2011
£000 £000
UK dividends 9,855 8,436
Overseas dividends 5 –
Stock dividends 155 324
Interest on short term investments 14 6
Bank interest 16 14
Underwriting commision – 9
Stocklending commission 13 14
qqqqqqqqqqr
Total revenue 10,058 8,803
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4 EXPENSES
2012 2011
£000 £000
Payable to the ACD or associates of the ACD,
and the agents of either of them:
Annual management charge (3,367) (3,286)
Registration fees (184) (180)
qqqqqqqqqqr
(3,551) (3,466)
zzzzzzzzzzzzzzz
Payable to the depositary or associate of the
depositary, and the agents of either of them:
Depositary’s fees (20) (19)
Safe custody fees (3) (3)
qqqqqqqqqqr
(23) (22)

zzzzzzzzzzzzzzz
Other expenses:
Regulatory fee (7) (7)
Audit fee (6) (6)
qqqqqqqqqqr
(13) (13)
zzzzzzzzzzzzzzz
*Total expenses (3,587) (3,501)
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*Including irrecoverable VAT where applicable.
5 TAXATION
2012 2011
£000 £000
a) Analysis of charge in period
Overseas taxes – 1
qqqqqqqqqqr
Total current tax (note 5b) – 1
qqqqqqqqqqr
Total tax charge for period – 1
zzzzzzzzzzzzzzz
b) Factors affecting taxation charge for period
qqqqqqqqqqr
Net revenue before taxation 6,466 5,298
zzzzzzzzzzzzzzz
Net revenue before taxation multiplied by
the standard rate of corporation tax of 20% (1,293) (1,060)
Effects of:
Revenue not subject to taxation 2,003 1,752
Overseas taxes – 1
Excess expenses (710) (692)

qqqqqqqqqqr
Current tax charge for period (note 5a) – 1
zzzzzzzzzzzzzzz
The Fund has not recognised a deferred tax asset of £12,125,810
(2011: £11,416,113) arising as a result of having unutilised
management expenses. It is unlikely that these expenses will be
utilised in future years.
6 FINANCE COSTS
Distributions and Interest
The distribution takes account of revenue received on the creation
of shares and revenue deducted on the cancellation of shares and
comprises:
2012 2011
£000 £000
Interim 6,050 5,280
Final 3,829 3,227
qqqqqqqqqqr
9,879 8,507
Add: Revenue deducted on cancellation of shares 240 255
Deduct: Revenue received on creation of shares (286) (177)
qqqqqqqqqqr
Net distribution for the period 9,833 8,585
zzzzzzzzzzzzzzz
Interest 5 4
qqqqqqqqqqr
Total finance costs 9,838 8,589
zzzzzzzzzzzzzzz
Net revenue after taxation 6,466 5,299
Annual management charge to capital 3,367 3,286
qqqqqqqqqqr

Net distribution for the period 9,833 8,585
zzzzzzzzzzzzzzz
Details of the distribution per share are set out in the table on
page 22.
7DEBTORS
2012 2011
£000 £000
Amounts receivable for the issue of shares 4,181 –
Sales awaiting settlement – 1,392
Accrued revenue 1,417 1,234
qqqqqqqqqqr
Total debtors 5,598 2,626
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Notes to the financial statements
for the accounting period 8th March 2011 to 7th March 2012
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
23
Threadneedle UK Growth & Income Fund
8 CREDITORS
2012 2011
£000 £000
Amounts payable for the cancellation of shares (354) (388)
Purchases awaiting settlement – (1,166)
Accrued expenses (6) (6)
Amounts payable to ACD (301) (285)
qqqqqqqqqqr
Total creditors (661) (1,845)
zzzzzzzzzzzzzzz
9 RELATED PARTY TRANSACTIONS
Threadneedle Investment Services Limited, as Authorised Corporate

Director (ACD), is a related party and acts as principal in respect of
all transactions of shares in the Fund.
The aggregate monies received through issues and paid on
cancellations are disclosed in the Statement of Change in Net
Assets Attributable to Shareholders.
Any amounts due to or from Threadneedle Investment Services
Limited at the end of the accounting period in relation to share
issues and cancellations are disclosed in Notes 7 and 8.
Amounts payable to Threadneedle Investment Services Limited in
respect of fund management and registration services are disclosed
in Note 4 and amounts outstanding at the year end in Note 8.
Threadneedle Investment Services Limited did not enter into
securities transactions with the Fund during the period.
All transactions have been entered into in the ordinary course of
business on normal commercial terms.
10 SHAREHOLDER FUNDS
UK Growth & Income Fund currently has two share classes; Class 1
and Class 2 shares. The charges on each share class are as follows:
Annual management charge
Class 1 shares 1.50%
Class 2 shares 1.00%
Registration fees
Class 1 shares 0.110%
Class 2 shares 0.035%
The net asset value of each share class, the net asset value per
share, and the number of shares in each class are given in the
comparative table on page 256. The distribution per share class is
given in the distribution table on page 22. All classes have the same
rights on winding up.
11 STOCKLENDING

During the period under review the UK Growth & Income Fund has
entered into stocklending arrangements. The Fund has earned
£19,000 (2011: £19,000) and paid fees of £3,000 (2011: £2,000) to
Threadneedle Investment Services Limited and £3,000 (2011: £3,000)
to J.P. Morgan to process these arrangements. The value of stock on
loan at the end of the accounting period was £8.43m (2011: £19.89m),
whilst the value of collateral held for these arrangements was
£10.91m (2011: £21.16m). The collateral was held as either securities
transferred in CREST by a DBV (Delivery by Value) or Gilt DBV, or in
the form of overseas government bonds or supranational bonds.
The nature and value of collateral held is analysed by asset class in
the table below.
Analysis of Collateral Held
2012 2011
Value £000 % of Total Value £000 % of Total
Bonds 10,914 100 21,163 100
qqqqqqqqqqqqqqqqqqqqqqqq
10,914 100 21,163 100
vvzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
12 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
The analysis and tables provided below refer to the narrative
disclosure on derivatives and other financial instruments risks on
pages 8 and 9.
Currency exposures
A small proportion of the net assets of the Fund are denominated in
currencies other than Sterling, with the effect that the balance sheet
and total return can be affected by currency movements.
Net foreign currency assets
Non-
Monetary monetary

exposures exposures Total
Currency 2012 £000 £000 £000
Euro 12 – 12
Currency 2011 £000 £000 £000
Euro 12 – 12
Interest rate risk profile of financial assets and financial liabilities
The interest rate risk profile of the Fund’s financial assets and
financial liabilities at 7th March 2012 was:
Financial
Floating rate Fixed rate assets not
financial financial carrying
assets assets interest Total
Currency 2012 £000 £000 £000 £000
Euro 12 – – 12
UK Sterling 828 3,001 295,257 299,086
Currency 2011 £000 £000 £000 £000
Euro 12 – – 12
UK Sterling 2,802 – 291,133 293,935
Financial
Floating rate Fixed rate liabilities not
financial financial carrying
liabilities liabilities interest Total
Currency 2012 £000 £000 £000 £000
UK Sterling – – (4,490) (4,490)
Currency 2011 £000 £000 £000 £000
UK Sterling – – (5,072) (5,072)
The fixed rate financial assets includes deposits which have a
weighted average interest rate of 0.45% (2011: Nil).
There are no material amounts of non interest-bearing financial
assets, other than equities, which do not have maturity dates.

Cash balances are held in floating rate accounts where interest is
calculated with reference to prevailing market rates.
Fair value of financial assets and financial 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.
13 CONTINGENT LIABILITIES AND COMMITMENTS
There are no contingent liabilities and commitments outstanding
(2011: Nil).
Notes to the financial statements
(continued)
Threadneedle Investment Funds ICVC Annual Report and Accounts March 2012
24