Annual Short Report 1 June 2017 Fund Manager s Report Alex Lyle Performance Over the twelve months to 1 June 2017, the offer price of accumulation units rose by 21.60% from 125.90p to 153.10p. In view of the nature of the Trust and its investment remit there is no directly comparable market index. Market Overview and Portfolio Activity Global equities performed very strongly over the period under review, with all of the major regional markets posting double-digit returns in local currency terms. The returns for UK-based investors were even stronger due to the weakness of sterling following the UK s vote to leave the European Union. Over the year as a whole, equity markets benefited from a marked improvement in global risk appetite, a rise in commodity prices, some better-than-expected corporate results, ongoing monetary stimulus and signs of economic stabilisation in China. Trump s victory in November s US presidential election fuelled a strong market rally amid expectations of lower taxes, looser regulation and increased infrastructure spending. There were strong gains by cyclical (economy sensitive) stocks as new stimulus measures from the Trump administration could help boost global growth. Technology stocks have performed particularly well since the election. Within the US, robust employment data and solid economic growth heightened expectations for a rate hike. The Federal Reserve (Fed) duly delivered a rise of 25 basis points in both December and March. However, investors were reassured by the Fed s dovish comments that accompanied the second hike. Markets in the US and UK hit successive record highs in 2017, and key European markets scaled new heights as populist political parties in Europe lost ground. Sentiment was also supported by the continuation of record low interest rates in both Japan and the eurozone. Additionally, the European Central Bank extended its bond-buying scheme until at least December 2017. Throughout the year, the Bank of Japan endeavoured to boost inflation and weaken the yen, with mixed success. In the UK, the Bank of England (BoE) cut rates to a historic low after the Brexit vote, to help support the economy. Economic activity globally has generally been more robust than expected, particularly in the UK which has proved more resilient than many commentators predicted at the time of the Brexit vote. The muchanticipated triggering of Article 50 by Theresa May on 29 March, followed by the announcement of a UK general election on 8 June, had little immediate impact on the market. Emerging markets produced strong gains despite the rise in US interest rates and Trump s protectionist rhetoric. There was some thawing of relations between the US and China following April s meeting between the presidents of both countries. Core government bond markets experienced mixed fortunes. The market in Japan posted a negative return in contrast to the gains seen in the UK and Europe, while returns from US Treasury bonds were flat. The UK bond market was the best performer, buoyed by the BoE s measures to steady financial markets after the Brexit vote. In addition to cutting rates to 0.25%, the central bank introduced a bank-funding scheme and expanded its bond-purchasing programme to include corporate as well as government bonds. The latter measure provided further support for UK investmentgrade corporate bonds, while high-yield bonds and emerging market bonds also had a strong year, buoyed the improvement in risk appetite. In the first half of the reporting period, we reduced the trust s exposure to European equities, via the European Fund, given the initial uncertainty caused by the Brexit vote. However, later in the year we added back to Europe, as some of the political risk had dissipated and we were encouraged by the strength of company earnings and appealing valuations. During the year, we felt it prudent to realise some gains on UK equities following their strong performance, and we trimmed the holdings in the UK Fund, the UK Institutional Fund and the UK Growth & Income Fund. These funds have significant exposure to companies with substantial overseas earnings, whose shares have risen strongly as these firms are beneficiaries of the weaker pound. Some of the proceeds from these sales were directed towards global emerging-market equities, as a number of resource-rich economies benefited from last year s rally in commodity prices. Sentiment towards several countries was also supported by further interest rate cuts and government stimulus measures designed to boost economic activity. We have been encouraged by the improved outlook for corporate earnings and more attractive valuations. A key portfolio adjustment in the first quarter of 2017 was a reduction in the fund s exposure to the US stock market, which had reached record highs and looked relatively fully valued. There is also some debate as to whether President Trump will be able to deliver a major cut in corporate taxation, which in many cases has already been factored into valuations. Within the fixed-income component of the portfolio, we increased the exposure to investment-grade corporate bonds and emerging-market local currency bonds. Conversely, we reduced the position in the Global Opportunities Bond Fund and took some profits on the Sterling Bond Fund. We hold a positive view on the prospects for global equities. While interest rates have already moved away from emergency settings in the US, and are likely to continue along an upward path in 2017, monetary policy in the UK, Europe and Japan should remain accommodative. Although sentiment towards Asian and emerging market equities was initially hurt by Trump s stated protectionist policies, his recent pronouncements have been more conciliatory. Overall, compared to their longer-term history, we believe that equities offer better value than bonds. 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 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 June 2017 1 June 2016 Accumulation units 1.49% 1.48% Summary of Trust Performance Performance History (%) Unit class 2017 1 2016 2015 2014 2013 2012 Accumulation units +8.36 +14.15 +4.73 +3.99 +18.94 +12.54 1 To 31 May 2017. 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 63,926,324 145.09 44,058,981 1 June 2016 Accumulation units 56,282,676 119.28 47,183,644 1 June 2015 Accumulation units 60,948,165 120.78 50,462,790 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 1.9025 153.10 116.30 1 June 2016 Accumulation units 1.7052 127.30 107.80 1 June 2015 Accumulation units 1.5416 129.30 103.20 Past performance is not a guide to future performance.
Classification of Investments 1 June 2017 vs 1 June 2016 60% 50% Threadneedle Navigator Growth Managed Trust 1 June 2017 1 June 2016 40% 30% 20% 10% 0% UK equity Overseas equity UK bond Overseas bond Net other assets Portfolio Information Top Five Holdings as at 1 June 2017 % of Trust Threadneedle UK Fund 19.34 Threadneedle UK Growth & Income Fund 15.52 Threadneedle UK Institutional Fund 14.69 Threadneedle UK Corporate Bond Fund 13.03 Threadneedle European Fund 10.04 Top Five Holdings as at 1 June 2016 % of Trust Threadneedle UK Fund 19.04 Threadneedle UK Growth & Income Fund 16.87 Threadneedle UK Institutional Fund 13.87 Threadneedle UK Corporate Bond Fund 12.63 Threadneedle European Fund 10.06
Investment Objective and Policy To achieve 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. 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 2017. 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 2017. 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. 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 June 2017 the figure for the risk and reward profile disclosed in the most recent NURS-KII representing this trust is 4. The trust is in this specific category because historically it has shown a medium 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.
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): 0800 953 0134* Telephone non-uk Residents: (dealing & customer enquiries): +352 46 40 10 7020* Fax UK Investors (dealing): 0845 113 0274 Fax non-uk Investors (dealing): +352 2452 9807 Email (enquiries): questions@service.columbiathreadneedle.co.uk 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
To find out more visit columbiathreadneedle.com Threadneedle Investment Services Limited, ISA Manager, Authorised Corporate Director and Unit Trust Manager. Registered No. 3701768. 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 191635