PHOENIX UNIT TRUST MANAGERS

MANAGER’S ANNUAL SHORT REPORTFor the year ended 30 September 2016

PUTM EUROPEAN UNIT TRUST

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Dear InvestorWelcome to the PUTM European Fund annual report forthe 12 months to 30 September 2016.

PUTM European Unit Trust

Short ReportFor the twelve months ended 30 September 2016

Performance Review Over the review period, the Fund increased 21.8%.(Source: HSBC, Gross of AMC, GBP, based upon themovement in the Cancellation Price, GBP for 12 monthsto 30/09/16). This is compared with the increase of21.1% by its benchmark index. (Source: Datastream,MSCI Europe ex UK, net dividends reinvested, in sterlingfor 12 months to 30/09/16).

In the table below, you can see how the Fund performedagainst its sector average over the last five discrete one-year periods.

Source: Fund performance is HSBC, Gross of AMC, GBP, based upon the movement in the Cancellation Price to30 September for each year. Benchmark Index performance is Datastream, MSCI Europe ex UK, net dividendsreinvested, in sterling to 30 September for each year. The Benchmark Index changed from the FTSE Europe ex UK,Total Return, to the MSCI Europe ex UK, net dividends reinvested on 30/04/11.

Past performance is not a guide to future performance.

The value of units and the income from them can go down as well as up and is not guaranteed. You may not get backthe full amount invested.

Please note that all past performance figures are calculated without taking the initial charge into account.

Standardised Past Performance

PUTM European Unit Trust 21.8 3.3 3.7 28.0 17.4

Benchmark Index 21.1 3.9 4.4 27.2 14.5

Sept 15-16 Sept 14-15 Sept 13-14 Sept 12-13 Sept 11-12% growth % growth % growth % growth % growth

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We sold Nordea. We switched the proceeds intoSwedbank, which has excess capital and it is likely that a75% dividend pay-out ratio will be paid. Insurer Aegonwas sold after meetings with management which lead usto question their assumptions around morbidity andmortality. Swedish Match was sold after delivering on ourinvestment case.

Market Outlook and Fund Strategy

We are now in a protracted period of uncertainty. TheUK will begin negotiations with the EU in 2017. Withthis great uncertainty and the potential for contagion ofpolitical unrest and economic slowdown to Europe,central banks are likely to retain substantially supportivemonetary policy. At a corporate level, the outlook ispoorer and over time business plans will have to beadjusted.

Portfolio and Market Review

Early in the period, European equities were depressed byconcerns over demand growth from emerging markets anddoubts about the sustainability of the region’s ability togrow earnings. Luxury goods and auto firms were thehardest hit due to earnings being directly tied up with thegrowth of the Chinese economy. News that Volkswagenhad been cheating on its emissions also hit the autosector.

Into 2016, and, by June the UK’s EU referendumdominated markets, progressing to become the maininvestment feature for the year. Markets responded byrotating into perceived defensive areas such as consumerstaples, while financials and cyclicals were weak. Asidefrom financials, large companies outperformed small andmid-caps. The unexpected result of the referendum in theUK brought new risks and is an emphatic challenge to thestable orthodoxy that has driven Europe for the last fiftyyears. This story is yet to fully play out.

The Fund increased modestly over the period, beating itsrelevant benchmark by a thin margin. From aperformance perspective, strong contributions were madeby owning Covestro. Evidence of increased tightening inthe polycarbonates market boosted the stock. Not owningpharmaceutical firm Novartis (we prefer Roche as it has astronger therapeutic franchise) was a detractor to returns.The stock rebounded alongside the entire sector due to itsdefensive qualities. Our overweight position in AtlasCopco weighed on returns. It fell on earnings vulnerabilitydue to lower demand for mining equipment.

In terms of activity, a new position in publisher Relx wasadded to the portfolio. The company benefits from thesecular growth trend of on-line subscriptions forprofessional journals, while we also added Scout 24, theleading provider of classified advertisements for autos andreal estate in Germany, with new managementrestructuring its operations. Wartsila, the power generationand marine propulsion business, was added afterreporting weak Q1 deliveries which hit the share price.This is typical of the lumpy nature of the business.

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Fund Performance

Comparative Table

Return after charges 18.49% 3.65% 3.67% 18.65% 3.66% 3.67%

Other Information

Closing net asset value (£000) 56,780 53,911 57,307 23 41 55Closing number of units 3,037,608 3,417,214 3,764,934 1,862 3,862 5,312Operating charges 1.09% 1.06% 1.07% 1.12% 1.06% 1.07%Direct transaction costs 0.15% 0.23% 0.23% 0.15% 0.23% 0.23%

Prices

Highest unit price (pence) 1,915.47 1,373.98 1,729.98 1,289.75 1,268.41 1,196.06Lowest unit price (pence) 1,492.52 1,858.78 1,461.21 1,286.23 938.45 1,010.24

Fund Facts

Accounting dates Payment dates

31 March, 30 September 31 May, 30 November

Accumulation Income30/09/16 30/09/15 30/09/14 30/09/16 30/09/15 30/09/14

Change in net assets per unit pence pence pence pence pence pence

Opening net asset value per unit 1,577.62 1,522.13 1,468.25 1,064.94 1,039.59 1,015.44

Return before operating charges* 310.06 72.75 69.97 211.35 49.96 48.31Operating charges (18.43) (17.26) (16.09) (12.72) (11.86) (11.05)

Return after operating charges* 291.63 55.49 53.88 198.63 38.10 37.26

Distributions on income share – – – (21.22) (12.75) (13.11)

Closing net asset value per unit 1,869.25 1,577.62 1,522.13 1,242.35 1,064.94 1,039.59

Retained distributions on accumulation units 32.77 18.73 18.97 – – –

* after direct transaction costs of: 2.49 3.64 3.58 1.68 2.48 2.47

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Top ten holdings

Investments held at 30 September 2016Total NetAssets

Holding %

Nestlé 5.06

Roche Holding 4.83

SAP 2.94

Novo Nordisk 2.75

Anheuser-Busch 2.44

Total 2.36

ASML Holding 2.26

Deutsche Telekom 2.17

Fresenius 2.14

Danske Bank 2.00

Investments held at 30 September 2015Total Net

AssetsHolding Investment %

Roche Holding 4.67

Bayer 3.28

Novo Nordisk 3.24

Novartis 3.20

Orpea 2.88

Danske Bank 2.86

ING Groep 2.55

Nestlé 2.51

Total 2.49

Fresenius 2.30

Asset Allocation

Total NetAssets

as at 30 September 2016 %

Industrials 20.4

Financials 17.7

Consumer Goods 13.0

Technology 11.5

Healthcare 11.2

Consumer Services 7.7

Basic Materials 4.7

Oil & Gas 4.6

Telecommunications 4.2

Utilities 3.7

Others 1.1

Cash 0.2

Total NetAssets

as at 30 September 2015 %

Financials 22.9

Healthcare 17.5

Industrials 17.2

Consumer Goods 9.5

Basic Materials 8.2

Technology 6.9

Others 6.6

Consumer Services 5.9

Telecommunications 4.8

Cash 0.5

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Report and accountsThis document is a short report of the PUTM EuropeanUnit Trust for the twelve months ended 30 September2016.

Copies of the annual and half yearly report long formreport of this fund can be obtained from the websitewww.phoenixunittrust.co.uk or client services on thetelephone number provided.

Other Information

The information in this report is designed to enable you tomake an informed judgement on the activities of the fundduring the period it covers and the results of thoseactivities at the end of the period.

Risk Warning Please remember that past performance is not a guide tofuture performance. The value of an investment and therevenue from it can fall as well as rise as a result ofmarket and currency and investors may not back theamount they invested, particularly in the case of earlywithdrawal.

Tax levels and reliefs are those currently applicable andmay change. The value of any tax relief depends onpersonal circumstances. Depending on the fund, the valueof your investment may change with currencymovements.

Issued by:Phoenix Unit Trust Managers Limited (PUTM)Registered office:1 Wythall Green WayWythallBirminghamB47 6WGAuthorised and regulated by the Financial ConductAuthority

Other Information International Financial Data Services (UK) LimitedPO Box 12997ChelmsfordCM99 2EN

Trustee National Westminster Bank PlcYounger Building, 1st Floor3 Redheughs AvenueEdinburghEH12 9RHAuthorised by the Prudential Regulation Authority andregulated by the Financial Conduct Authority and thePrudential Regulation Authority.

Auditor Ernst & Young LLPTen George StreetEdinburghEH2 2DZ

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B663.09.16S

Head Office address:1 Wythall Green Way, Wythall, Birmingham B47 6WGChanges of address – regulatory requirementsFCA regulation requires us to send this report mailing to theaddress held on file on the accounting date of 30 September2016. If you have confirmed a change of address with us sincethat date we will ensure all future correspondence will be sentto your new address.

ValuationsValuations can be requested by contacting client services.

Any questionsFurther information about the activities and performance of tehfund for this and previous periods can be obtained from theInvestment Manager. If you have any questions please call ourClient Services team on 0330 1233 703 or emailputmoversightteam@phoenixgroup.com

Contact usClient Services 0330 1233 7003www.phoenixunittrust.co.uk