Conversion of the threadneedle uk property trust into a property authorised investment fund (paif)

Important information

At the unitholder meeting on 9 April 2015, the proposal to convert the Threadneedle UK Property Trust (the Trust) into the Threadneedle UK Property Authorised Investment Fund (the Threadneedle PAIF), was approved by the requisite majority of investors.

14 May 2016: Conversion completed

For details of the fund share classes and respective conversion merger factors, please read our share class map.

3 March 2016: Effective date for conversion announced as 14 May 2016

We have written to unitholders to inform them that the Trust will be converted into the Threadneedle PAIF on 14 May 2016.

Unitholders will have received a letter and detailed Questions & Answers (Q&A) booklet in the post. It is important you read this to understand the potential impact of the conversion on you as an investor.

6 October 2015: Tax exemption announced for PAIF conversions

The Scottish Government has introduced an exemption from the tax changes introduced on 1 April 2015 for the conversion of existing funds into property authorised investment funds. The exemption is effective from 6 October 2015. This means a tax charge will no longer be incurred as a result of converting the Threadneedle UK Property Trust to a PAIF structure, and as such we will progress the conversion. We will write to unitholders when we have a revised effective date for the conversion.

23 April 2015: Postponement of effective date of Conversion

The intention had been for the conversion to take place on 2 May 2015. However, when the tax regime governing the transfer of properties situated in Scotland changed on 1 April 2015, there was unexpectedly no relief from tax for the conversion of existing funds into property authorised investment funds. Due to the fact that the Trust holds commercial property in Scotland it was likely that there would be a significant tax charge if the conversion were to take place on 2 May 2015.

Until there was certainty over the potential taxation consequences, we decided to postpone the conversion and the Trustee has agreed to this postponement.

Why are we making this change?

We believe the PAIF structure will significantly benefit our tax-exempt investors, including those investing through an Individual Savings Account (ISA), Self-Invested Personal Pension (SIPP) and also charities and directly invested pension funds. We are proposing to convert the Trust into a PAIF so that eligible investors can enjoy those benefits. For further information on the potential impact to non-exempt investors please read our Q&A booklet.

What are my options / do I need to take any action?

You do not need to take any action to receive shares in the Threadneedle PAIF. On 14 May 2016 you will receive shares in the Threadneedle PAIF of the same type and class as you currently hold in the Trust, and at the same time all units in the Trust will be cancelled.

However, depending on your personal tax circumstances, you may prefer to receive units in the Threadneedle UK Property Authorised Trust (the Feeder Fund), an FCA authorised unit trust investing wholly in the Threadneedle PAIF, but taxed on the same basis of the Trust. To do this you must complete the Form of Election (the “Pink Form”) you will have received in the post and return to us no later than 25 April 2016.

Option	Action
Receive shares in the Threadneedle PAIF (Threadneedle UK Property Authorised Investment Fund)	No action required.
Receive units in the Feeder Fund (Threadneedle UK Property Authorised Unit Trust)	Complete the Form of Election (the “Pink Form”) received in the post and return to us no later than 25 April 2016.

Please carefully read the Q&A booklet for more information about the potential impact on non-exempt investors.

How will my investment be affected by the conversion?

The conversion will not affect the value of your investment, the way it is managed, or its risk profile. However, the Threadneedle PAIF will pay income distributions on a quarterly basis whereas the Trust pays half-yearly.

Columbia Threadneedle Investments will bear all costs associated with the proposed conversion. The conversion will not result in any changes to the fees paid by you, and you will remain in a share class directly corresponding to your current unit class.

When will the conversion take place?

What is a PAIF?

A PAIF is an open-ended investment company, the gains of which are exempt from corporation tax. This structure was introduced by HMRC as a way of enabling eligible investors in authorised UK property funds to receive gross income from their investments (i.e. not taxed). The PAIF structure therefore brings significant benefits to our tax-exempt investors, including individuals investing through an Individual Savings Account (ISA) or Self-Invested Personal Pension (SIPP), as well as tax-exempt institutional investors such as charities and pension funds.

We believe that the Trust’s conversion to a PAIF will boost the income of tax-exempt investors by 25%. For further information on the potential impact to non-exempt investors, please see Section 3.5 of our Q&A booklet.

Why did the conversion not go ahead on 2 May 2015?

On 1 April 2015 an unexpected change took effect on the tax regime governing the transfer of properties situated in Scotland. Due to the fact that the fund holds commercial property in Scotland it was likely that there would be a significant tax charge if the conversion were to take place on 2 May 2015.

Correspondence & literature

This section contains a record of correspondence and literature related to the conversion.

Item	Date
Threadneedle PAIF Prospectus	14 May 2015
Threadneedle PAIF (feeder fund) Prospectus	14 May 2015
Client letter	3 March 2016
Q&A (revised)	3 March 2016
Form of Election (Pink Form)	3 March 2016
Client letter	24 April 2015
Client letter	9 March 2015
Shareholder circular	9 March 2015
Q&A	9 March 2015

Further information

Copies of the documents that have been sent to all unitholders are available in the related documents box, however,if you believe you are affected by this proposal but have not yet received an information pack, or have any questions, please contact us on 0800 953 0134*. Alternatively, contact your financial adviser. If you do not have a financial adviser you can find one in your area at www.unbiased.co.uk**

*Calls may be recorded

**Please note Threadneedle does not endorse the advisers found on this site

Conversion of the threadneedle uk property trust into a property authorised investment fund (paif)

Important information

14 May 2016: Conversion completed

3 March 2016: Effective date for conversion announced as 14 May 2016

6 October 2015: Tax exemption announced for PAIF conversions

23 April 2015: Postponement of effective date of Conversion

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