Threadneedle Navigator Cautious Managed Trust

Transcription

1 Interim Short Report 1 December 2017 Fund Manager s Report Alex Lyle Performance During the period under review the offer price of accumulation units fell by -1.67% from p to p. In view of the nature of the trust and its investment remit there is no directly comparable market index. Market Overview and Portfolio Activity It was another positive period for most world stock markets. Equities in Japan, Asia and global emerging markets posted double-digit returns in local currency terms, buoyed by the weaker US dollar, upbeat global growth indicators and further signs of economic stabilisation in China. Elsewhere, the US market scaled new highs and European equities also moved ahead. The notable laggard was the UK market, amid continued uncertainty surrounding the government s Brexit negotiations. Overall, investors were encouraged by the upward revisions to global economic growth forecasts, better-than-expected company earnings, higher commodity prices, improved prospects for US corporate tax reforms and further takeover activity. On the political front, concerns in Europe eased following the victory of pro-eu candidate Emmanuel Macron in May s French presidential election, and his party s triumph in June s parliamentary elections. Investors also responded favourably to Angela Merkel s success in September s German federal elections, although she has subsequently found it difficult to form a coalition government. In the UK, April s unexpected decision by Theresa May to call a snap general election on 8 June caused some temporary jitters. Following the election, the Conservatives had to negotiate with Northern Ireland s Democratic Unionist Party to secure a working majority in parliament. In Japan, the market reacted positively to Prime Minister Abe s victory in October s general election, amid hopes that this would reinvigorate his stimulus and reform programme. Another key influence on financial markets was central bank monetary policy. The Federal Reserve (Fed) raised official US interest rates by 25 basis points to 1.0%-1.25% in June. In September, the Fed announced that it would begin unwinding its balance sheet from October, and maintained its plans for another US interest-rate hike by the end of the year. The US economy and labour market have continued to strengthen. Within the UK, the Bank of England raised rates from the record low of 0.25% to 0.5% at the start of November. Inflationary pressures have increased, fuelled by sterling s weakness since the Brexit vote, and the bank has concerns over the level of household debt. Amid the improved economic momentum in Europe, the European Central Bank announced that it would reduce its monthly bond-buying programme from 60bn to 30bn from January. However, interest-rate rises in the eurozone appear some way off. It was a mixed period for core government bond markets. While those in the US, Europe and Japan achieved positive returns in local currency terms, the UK gilt market posted a negative return. It was also a lacklustre period for UK investment-grade corporate bonds, although high yield bonds and emerging market bonds continued to benefit from investors risk appetite and the ongoing search for higher yields. During the review period, we increased the exposure to equity markets in Europe and Japan. Additionally, we adjusted the UK equity element by moving some money out of the UK Equity Income Fund. Within the fixed income portion of the portfolio, we realised some gains on high yield bonds, which are trading on richer valuations after their strong run over the past year and now offer a less attractive risk/reward opportunity. We also lowered the exposure to UK investment-grade corporate bonds. Elsewhere, we adjusted the exposure to emerging market bonds by reducing the position in dollar-based issues and adding to local currency bonds. Investors continue to be encouraged by the Trump administration s progress in enacting market-friendly reforms, and the acceleration in economic growth across much of the world. Global inflation generally remains subdued and earnings expectations are rising, creating a supportive backdrop for world equities. October saw the Fed start to unwind its balance sheet. In time, this could possibly lead to higher bond yields as more bonds come onto the market. However, for now the taper path is so gradual that we see little chance of market disruption. We continue to monitor geopolitical risks, including developments in North Korea, the unfolding situation in Spain concerning Catalonia s bid for independence, and the ongoing investigation into possible Russian involvement in Donald Trump s election campaign. Additionally, the US will face mid-term elections in We still regard equities as a more attractive proposition than bonds and expect to retain that view for now. Fund Facts Fund Accounting and Distribution Dates Accounting Dates Payment Dates 1 June 1 August 1 December 1 February Ongoing Charges Figure The Ongoing Charges Figure (OCF) is the European standard method of disclosing the charges of a unit class of a trust based on the financial year s expenses and may vary from year to year. It includes charges such as the trust s annual management charge, registration fee, custody fees and distribution cost but ordinarily excludes the costs of buying or selling assets for the trust (unless these assets are shares of another fund). The non-ucits retail scheme Key Investor Information (NURS-KII) contains the current OCF. The calculation includes the trust s share of the expenses of the underlying fund less any fee rebates received. The share of costs of the underlying funds may fluctuate due to changes in investment decisions, which may be required as a result of changes in market conditions. For a more detailed breakdown please visit columbiathreadneedle.com/fees. Unit class 1 December June 2017 Income units 1.67% 1.62% Accumulation units 1.67% 1.62% The Ongoing Charges Figure is annualised based on the fees incurred during the accounting period or since commencement date.

2 Summary of Trust Performance Performance History (%) Unit class Income units Accumulation units To 30 November Source: Morningstar and Threadneedle. Bid to bid prices are quoted (i.e. not including any initial charge) with net income reinvested for a UK basic rate tax payer and gross income reinvested for a non-uk resident. Performance data is quoted in sterling apart from hedged share classes, where applicable, which are in the hedged currency. Past performance is not a guide to future investment performance. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. Net Asset Value (NAV) NAV pence per unit Number of units in issue As at Unit class NAV ( ) 1 December 2017 Income units 779, ,109,334 1 June 2017 Income units 819, ,139,559 1 June 2016 Income units 864, ,324,076 1 June 2015 Income units 1,001, ,543,338 1 December 2017 Accumulation units 11,097, ,953,789 1 June 2017 Accumulation units 11,879, ,481,679 1 June 2016 Accumulation units 11,104, ,927,075 1 June 2015 Accumulation units 11,981, ,021,416 Distribution History/Unit Price Range Pence per unit Highest offer price (pence) Lowest bid price (pence) Year to Unit class 1 December 2017 Income units June 2017 Income units June 2016 Income units June 2015 Income units December 2017 Accumulation units June 2017 Accumulation units June 2016 Accumulation units June 2015 Accumulation units Past performance is not a guide to future performance.

3 Classification of Investments 1 December 2017 vs 1 June % 50% Threadneedle Navigator Cautious Managed Trust 1 December June % 30% 20% 10% 0% UK bond UK equity Overseas bond Overseas equity Other net assets Portfolio Information Top Five Holdings as at 1 December 2017 % of Trust Threadneedle UK Corporate Bond Fund Threadneedle Navigator Income Trust Threadneedle Sterling Bond Fund Threadneedle UK Fund Threadneedle Global Bond Fund Top Five Holdings as at 1 June 2017 % of Trust Threadneedle UK Corporate Bond Fund Threadneedle Navigator Income Trust Threadneedle Sterling Bond Fund Threadneedle UK Fund Threadneedle Global Bond Fund 12.15

4 Investment Objective and Policy To achieve a total return by way of income and capital growth from investment in collective investment schemes managed or advised by, or in the case of an authorised company whose authorised corporate director is Threadneedle Investment Services Limited or any company within the group of companies of which it is a member. The Trust may also hold cash from time to time. The Manager may utilise forward transactions and derivatives in order to hedge against price or currency fluctuations and to facilitate Efficient Portfolio Management. Non-UCITS Retail Scheme Key Investor Information Documentation (NURS KII) Subscription requirements The NURS-KII is a pre-contractual document and investors have to confirm that they have read the latest NURS-KII before making a subscription. Threadneedle has the right to reject a subscription if the investor does not confirm that they have read the latest NURS-KII at the time of application. Investors can obtain the latest NURS-KII from columbiathreadneedle.com. Changes to the directors of the Manager The following changes have been made to the directors of the Manager: Appointment of Ms. Michelle Scrimgeour on 14 August 2017 Changes to the trusts The Threadneedle Navigator UK Index Tracker Trust, the Threadneedle Navigator Growth Trust and the Threadneedle Navigator Income Trust will be closed on 22 March Subject to approval by unitholders at an extraordinary meeting to be held on 14 February 2018, the Threadneedle Navigator Cautious Managed Trust, the Threadneedle Navigator Balanced Managed Trust, the Threadneedle Navigator Growth Managed Trust and the Threadneedle Navigator Adventurous Managed Trust will merge with similar funds in the Threadneedle Managed Funds range on 16 March For further information about the mergers, please refer to or contact the Manager using the details set out on the following page. Changes to the Prospectus There have been no changes made to the prospectus during the period from 2 June 2017 to 1 December Changes to the Trust Deed There have been no changes made to the trust deeds during the period from 2 June 2017 to 1 December Key Risks Investment Risk: The value of investments can fall as well as rise and investors might not get back the sum originally invested. Investment in Funds Risk: The Investment Policy allows the trust to invest principally in units of other collective investment schemes. Investors should consider the investment policy and asset composition in the underlying trusts when assessing their portfolio exposure. Inflation Risk: Most bond and cash funds offer limited capital growth potential and an income that is not linked to inflation. Inflation is likely to affect the value of capital and income over time. Interest Rate Risk: Changes in interest rates are likely to affect the trust s value. In general, as interest rates rise, the price of a fixed rate bond will fall, and vice versa. Derivatives for EPM/Hedging Risk: The investment policy of the trust allows it to invest in derivatives for the purposes of reducing risk or minimising the cost of transactions. Volatility Risk: The trust may exhibit significant price volatility. Effect of Dual Pricing Risk: The trust is dual priced and there is a difference between the buying price and the selling price of units. Further risks applicable to the trust can be found in the Prospectus. Risk and Reward Profile As at 1 December 2017 the figure for the risk and reward profile disclosed in the most recent NURS-KII representing this trust is 3. The trust is in this specific category because historically it has shown a medium to low level of volatility (how much the value of the trust went up and down compared to other categories). It is based on past performance data in pound sterling. If your investment in the trust is not in pound sterling, please check the figure for the risk and reward profile disclosed on our website (columbiathreadneedle.com) according to the currency of your investment in the trust.

5 General Information The information in this report is designed to enable unitholders to make an informed judgement on the activities of the trust during the period it covers and the results of those activities at the end of the period. For further information, please contact Threadneedle Investment Services Limited. The Long Form Report and Financial Statements is available free of charge on request from the Manager and on our website. For more information about the activities and performance of the trust during the period and previous periods, please contact the Manager at the administration address noted below, or visit our website at columbiathreadneedle.com. Contacts: Manager and Alternative Investment Fund Manager (AIFM) Threadneedle Investment Services Limited (Authorised and Regulated by the Financial Conduct Authority (FCA)) Registered Office Cannon Place 78 Cannon Street London EC4N 6AG Client Services Details Address: Threadneedle Investment Services Limited PO Box 10033, Chelmsford, Essex CM99 2AL Telephone UK Investors: (dealing & customer enquiries): * Telephone non-uk Residents: (dealing & customer enquiries): * Fax UK Investors (dealing): Fax non-uk Investors (dealing): (enquiries): Registrar Threadneedle Investment Services Limited Delegated to: DST Financial Services Europe Limited** (Authorised and regulated by the FCA) St Nicholas Lane Basildon Essex SS15 5FS Directors of the Manager K Cates (non-executive) D Jordison D Kremer A Roughead (non-executive) M Scrimgeour (Appointed to the Board on 14 August 2017) L Weatherup Investment Manager Threadneedle Asset Management Limited (Authorised and regulated by the FCA) Registered Office Cannon Place 78 Cannon Street London EC4N 6AG Trustee Citibank Europe plc, UK Branch (Authorised by the Prudential Regulatory Authority (PRA) and regulated by the FCA and PRA) Head Office and Registered Office Citigroup Centre Canada Square Canary Wharf London E14 5LB Legal Advisers Eversheds Sutherland (International) LLP One Wood Street London EC2V 7WS Independent Auditor PricewaterhouseCoopers LLP Atria One 144 Morrison Street Edinburgh EH3 8EX * Calls will be recorded. ** International Financial Data Services (UK) Limited changed its name to DST Financial Services Europe Limited on 15 August 2017.

6 To find out more visit columbiathreadneedle.com Threadneedle Investment Services Limited, ISA Manager, Authorised Corporate Director and Unit Trust Manager. Registered No Registered in England and Wales. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. columbiathreadneedle.com