Threadneedle Navigator UK Index Tracker Trust

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1 Annual Short Report 1 June 2017 Fund Manager s Report Alex Lyle Performance Over the twelve months to 1 June 2017, the UK equity market, as measured by the FTSE All-Share Index rose by % on a total return basis. The bid price of accumulation units in the Trust rose by 25.02% from p to p during the same period. Please note that the FTSE All-Share Index return quoted above is at global close as of 31 May 2017, although the Trust is valued at 12 noon on the following day. Market Overview and Portfolio Activity The trust uses a passive management approach that aims to approximately match the performance of the FTSE All-Share index. The approach involves buying all of the largest stocks and some of the smaller stocks in the index, weighting the stocks roughly in line with their weightings in the index. With a view to mirroring as closely as possible the performance of the FTSE All-Share index, the trust s biggest purchases during the period included new holdings in Smurfit Kappa, ConvaTec, CYBG, GVC and Metro Bank. Additionally, the existing position in pharmaceutical company Shire was increased. Conversely, sales included SABMiller and ARM. The former was taken over by Anheuser-Busch InBev in a deal that created the world s largest brewing company, while UK technology firm ARM was acquired by Japanese company SoftBank. The UK equity market performed very strongly over the year, with the FTSE All-Share index reaching a new record high. Political developments dominated sentiment, with the country unexpectedly voting to leave the European Union (EU) in the June referendum. The vote for Brexit sparked political and market uncertainty but Theresa May s swift appointment as the new prime minister quickly reassured investors. In the aftermath of the Brexit vote, companies with substantial overseas earnings led the market rally, as the sharp fall in sterling proved beneficial for these stocks. Additionally, a range of stimulus measures from the Bank of England (BoE) in August helped to support financial markets. These included a cut in official interest rates to a record low of 0.25%, the expansion of the BoE s bond-purchasing programme and the introduction of a bank-funding scheme. In November, Donald Trump s unexpected victory in the US presidential election led investors to favour cyclical (economy sensitive) stocks over more defensive companies. Investors focused on the positives of his presidency, such as the prospect of looser regulation, tax cuts and increased infrastructure spending. However, the cyclical trade ebbed in 2017 as it became apparent that the path to implementing his growthfriendly policies would be far from smooth. At the end of March, the focus returned to Brexit as Theresa May began the process of leaving the EU by triggering Article 50. This had little impact on the market as the decision had already been largely priced in. However, in April she called a snap general election for 8 June. Sterling initially rallied on hopes that an increased majority for the Conservatives could enable the government to achieve a favourable post-brexit deal with the EU. However, towards the end of the period the currency suffered as opinion polls cast doubt on whether the Conservatives could indeed secure a bigger majority. Overall, UK economic indicators since the Brexit vote have been more positive than initially expected. However, there have recently been signs that consumer spending could be losing momentum as the fall in sterling has increased inflationary pressures at a time when pay awards remain muted. Nevertheless, the weaker pound has supported exports and boosted overseas corporate earnings, while the domestic economy has gained from greater inbound tourism. There is still considerable uncertainty surrounding the UK s negotiating strategy on Brexit, and the UK equity market is likely to prove volatile in response to future developments. Election Update The commentary contains a market background with a snapshot of investor sentiment during the period under review. Although the UK election has since taken place, the result has no retroactive bearing on what investors were thinking prior to the vote. Fund Facts Fund Accounting and Distribution Dates Accounting Dates Payment Dates 1 June 1 August 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 Key Investor Information Document (KIID) contains the current OCF. For a more detailed breakdown please visit columbiathreadneedle.com/fees. Unit class 1 June June 2016 Accumulation units 0.93% 0.91%

2 Summary of Trust Performance Performance History (%) Unit class Accumulation units To 31 May 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, unless otherwise stated. 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 June 2017 Accumulation units 41,344, ,198,596 1 June 2016 Accumulation units 36,273, ,217,585 1 June 2015 Accumulation units 41,717, ,326,343 Distribution History/Unit Price Range Pence per unit Highest offer price (pence) Lowest bid price (pence) Year to Unit class 1 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 June 2017 vs 1 June % 25% 1 June June % 15% 10% 5% 0% Financials Consumer goods Consumer services Oil & gas Industrials Health care Basic materials Telecommunications Utilities Technology Derivatives Net other assets Portfolio Information Top Five Holdings as at 1 June 2017 % of Trust Royal Dutch Shell B Shares 7.17 HSBC Holdings 5.61 British American Tobacco 4.28 BP 3.70 Glaxosmithkline 3.45 Top Five Holdings as at 1 June 2016 % of Trust Royal Dutch Shell B Shares 6.50 HSBC Holdings 4.28 British American Tobacco 3.85 GlaxoSmithKline 3.47 BP 3.21

4 Investment Objective and Policy To achieve capital growth. The Manager s investment policy is to mirror as closely as possible the performance of the FTSE All-Share Index (formerly known as the Ft-Se Actuaries All-Share Index) by investing primarily in UK equities. The Manager may utilise stock lending and derivatives in order to facilitate Efficient Portfolio Management. Key Investor Information Document (KIID) Subscription requirements The KIID is a pre-contractual document and investors have to confirm that they have read the latest KIID before making a subscription. Threadneedle has the right to reject a subscription if the investor does not confirm that they have read the latest KIID at the time of application. Investors can obtain the latest KIID from columbiathreadneedle.com. Changes to the directors of the Manager The following changes have been made to the directors of the Manager: Appointment of Ms. Laura Weatherup on 11 July 2016 Appointment of Mr. Dominik Kremer on 22 July 2016 Resignation of Mr. Tim Gillbanks on 31 March 2017 Increase to the Trustee s Fee From 1 June 2016, the fee payable to the Trustee was increased from 0.008% to 0.01% per annum. This was agreed as a result of additional services to be performed by the Trustee. Changes to the Prospectus There have been no changes made to the prospectus during the period from 2 June 2016 to 1 June Changes to the Trust Deed There have been no changes made to the trust deeds during the period from 2 June 2016 to 1 June Key Risks Investment Risk: The value of investments can fall as well as rise and investors might not get back the sum originally invested. 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. Tracker Risk: The Investment Policy of the Trust is to replicate the reference index. The effect of on-going charges means that although tracking this index, the Trust will not exactly replicate the index performance. 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 June 2017 the figure for the risk and reward profile disclosed in the most recent KIID representing this trust is 5. The trust is in this specific category because historically it has shown a medium to high 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 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: International Financial Data Services (UK) Limited (Authorised and regulated by the FCA) St Nicholas Lane Basildon Essex SS15 5FS Directors of the Manager K Cates (non-executive) T Gillbanks (Resigned from the Board on 31 March 2017) D Jordison D Kremer (Appointed to the Board on 22 July 2016) A Roughead (non-executive) L Weatherup (Appointed to the Board on 11 July 2016) Investment Manager Threadneedle Asset Management Limited (Authorised and regulated by the FCA) Registered Office Cannon Place 78 Cannon Street London EC4N 6AG * Calls will be recorded. 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 LLP One Wood Street London EC2V 7WS Independent Auditor PricewaterhouseCoopers LLP Atria One 144 Morrison Street Edinburgh EH3 8EX

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