Interim Report & Financial Statements. Elite Income Trust. For the six months ended 30 November 2017 (unaudited)

Transcription

1 Interim Report & Financial Statements Elite Income Trust For the six months ended 30 November 2017 (unaudited)

2 contents Elite Income Trust Page Authorised Fund Manager s ( AFM ) Report* 3 Certification of Financial Statements by Directors of the AFM* 4 Elite Income Trust 5 General Information 16 Contact Information 19 * Collectively these comprise the AFM s Report. 2

3 Authorised Fund Manager's Report We are pleased to present the Interim Report & Financial Statements for Elite Income Trust for the six months ended 30 November Authorised Status Elite Income Trust (the "Fund") is a Unit Trust authorised by the Financial Conduct Authority ("FCA"), with effect from 30 April The Fund has an unlimited duration. Unitholders will in no event be liable for the debts of the Fund. Notices served on the Fund should be delivered to the AFM, WAY Fund Managers Limited, at its registered address. Structure of the Fund The Fund is a non-ucits retail scheme ("NURS"). Investment of the assets of the Fund must comply with the FCA's Collective Investment Schemes Sourcebook ("COLL"), the FCA s Investment Funds Sourcebook ( FUND ) and the investment objective and policy of the Fund. Under the Alternative Investment Fund Managers Directive ( AIFMD ) we are required to disclose remuneration information (see page 17) in regards to those individuals whose actions have a material impact on the risk profile of the Fund. Base Currency: The base currency of the Fund is Pounds Sterling. Share Capital: The minimum initial lump sum investment is 5,000/$5,000 and subsequent minimum investment is 5,000/$5,000 for the Fund. 3

4 Certification of Financial Statements by Directors of the AFM For the six months ended 30 November 2017 (unaudited) Directors' Certification This report has been prepared in accordance with the requirements of COLL and FUND, as issued and amended by the FCA. We hereby certify the report on behalf of the Directors of WAY Fund Managers Limited. The Directors are of the opinion that it is appropriate to continue to adopt the going concern basis in the preparation of the Financial Statements as the assets of the Fund consist predominantly of securities that are readily realisable, and accordingly, the Fund has adequate resources to continue in operational existence for the foreseeable future. V. Hoare I. Hobday WAY Fund Managers Limited 25 January

5 Investment Manager s Report For the six months ended 30 November 2017 (unaudited) Investment Objective The objective of the Fund is to achieve a competitive level of income, with capital growth. Investment Policy The Fund will achieve its objective through investment in a diversified portfolio of Collective Investment Schemes (whose underlying investments are principally in higher yielding UK fixed interest securities and UK equities, the proportions of which will be varied at the discretion of the Manager), transferable securities (including investment trusts), warrants, deposits and money market instruments. There may also be some exposure to global stockmarkets from time to time at the discretion of the Manager. The Fund may also invest in unregulated Collective Investment Schemes such as hedge funds (where investment in such funds would be consistent with the investment objective and policy of the Fund). The assets of the Fund will be managed in such a way that the Units in the Fund will be qualifying investments for Individual Savings Accounts. The portfolio will be actively managed and will normally remain fully invested save for such operational liquidity as is required from time to time. The manager may invest up to 100% of the value indirectly into transferable securities to include fixed interest securities at its discretion. The use of derivatives and/or hedging transactions are permitted in connection with the efficient portfolio management of the Fund, and borrowing will be permitted in accordance with the Regulations. On giving 60 days' notice to Unitholders, the Fund may, in addition to its other investment powers, use derivatives and forward transactions for investment purposes. It is not intended that the use of derivatives in this way will change the risk profile of the Fund. Subject to the above, the Fund may invest in any asset class and adopt any investment technique or strategy permitted under the rules in COLL as such rules are applied to Non-UCITS retail schemes. Investment Review The Elite Income Trust returned +1.45% over the period vs a total return of +1.18% for the IA OE Mixed Investment 20-60% Shares Index. Source: Morningstar Advisor Workstation. Figures shown are total return, net of all charges. The last 6 months have seen a number of tragic events, with ISIS inspired terror attacks, the Grenfell Tower fire, hurricanes, earthquakes and one of the worst mass shootings in US history. Our first thoughts and sympathies are with the victims and their families and friends. Yet despite these terrible events and a number of potentially damaging geo-political developments, equity markets have been relatively benign for investors. The Korean nuclear tests caused some alarm and a lot of sabre rattling in Pyongyang and Washington, but the volatility in markets was short lived. In general, this has been down to positive economic data and a second quarter earnings season that was better than expected. June saw Theresa May s attempt to achieve a strong mandate for Brexit negotiations backfire horribly, as Jeremy Corbyn performed much better than expected. The result left the UK with an uncomfortable coalition between the Tories and the DUP, leaving Theresa May as a lame duck Prime Minister. Yet despite this, the real driver of markets over the summer was the change in tone from Central bankers, who appeared to coordinate a far more hawkish stance than previously seen. The result of this was a sharp rise in bond yields, and a rotation in equities away from interest rate sensitive sectors such as Consumer Staples & Utilities into Financials. US Financials also received a boost from the most recent set of stress tests, as the capital returns allowed by the banks was significantly higher than expected. We subsequently added a position in the SPDR US Financials ETF as we believe the sector has compelling valuations that are backed by an Administration that is actively seeking de-regulation. 5

6 Investment Manager s Report (continued) For the six months ended 30 November 2017 (unaudited) Investment Review (continued) Over the period, our concerns over the political landscape in the UK saw us trim back the UK equity weighting, by reducing our positions in the Miton UK Multi-Cap income, Liontrust Special Situations and Troy Trojan Income Funds. Using the proceeds from these sales, we added a weighting in Japanese equities. Under Prime Minister Abe s leadership there have been improvements to corporate governance and, after years of stagnant growth, underlying earnings have been trending higher. Having looked at various different implementation options we decided to add the Coupland Cardiff Japan Income & Growth Fund. This strategy has the advantage of an attractive dividend whilst the value tilt to the portfolio gives us exposure to an area of the Japanese market that we see outperforming in the current environment. Over the period, we also topped up our existing positions in the Blackrock European Equity Income and Fundsmith Equity Fund's, as we looked to increase our overseas equity exposure. Outlook Looking forward our base scenario remains broadly unchanged: we currently have globally synchronized economic growth with subdued inflation, and the data is pointing to continuity going into Earnings are growing and interest rates are only rising slowly, supporting current equity valuations. Low levels of unemployment and wage inflation could push interest rate expectations higher, but we see this as more of a risk for the second half of In fixed income, we stay short duration and maintain our pronounced underweight in developed sovereigns. We also keep corporate credit spreads below our strategic quota. Even though both investment grade and high yields spreads could tighten further, the risk premia in either segment are simply not attractive enough for us, especially relative to equities. Within equities Europe continues to offer less demanding equity valuations, monetary policy remains supportive and political risks have receded. While European equities have performed less well than other markets in recent months, these factors should allow the market to catch up in due course. We also believe 2018 could be a good year for Japan, with Abenomics back on track following last October s lower house election. The equity market has performed handsomely this year - even without the tailwind of a weakening currency, whilst corporate profit growth is broad based and market valuations are still among the most appealing worldwide. Investment Manager LGT Vestra LLP 13 December

7 Net Asset Value per Share and Comparative Table As at 30 November 2017 (unaudited) Net Asset Value Date Net Asset Value of Net Asset Value Percentage Unit Class # Units in issue per Unit # Change (%) Unit Type A Accumulation 31/05/17 1,430, , p 30/11/17 1,600, , p 1.04 Unit Type A Income 31/05/17 610, , p 30/11/17 557, , p (0.01) Unit Type B Accumulation 31/05/17 1,480,446 1,223, p 30/11/17 4,195,416 3,423, p 1.29 Unit Type B Income 31/05/17 16,450,093 13,858, p 30/11/17 16,309,729 13,706, p 0.25 Unit Type B Income USD 31/05/17 308, , c 30/11/17 323, , c 4.95 Unit Type C Accumulation 31/05/17 1,204, , p 30/11/17 707, , p 1.03 Unit Type C Income 31/05/17 13,266,783 11,596, p 30/11/17 13,599,755 11,887, p (0.01) # Listed in Sterling / US Dollars dependent on Unit Type currency. 7

8 Performance Information As at 30 November 2017 (unaudited) Operating Charges Synthetic Rebates from Other expense underlying Transaction Operating AMC* expenses ratio funds costs Charges Date (%) (%) (%) (%) (%) (%) 30/11/17 Unit Type A (0.01) Unit Type B (0.01) Unit Type B USD (0.01) Unit Type C (0.01) /05/17 Unit Type A Unit Type B Unit Type B USD Unit Type C * Annual Management Charge The Operating Charge is the total expenses paid by the Fund in the period, annualised, against its average Net Asset Value. This will fluctuate as underlying costs change. The Fund has invested in Collective Investment Schemes during the period and the expenses incurred by these schemes are included in the above as the Synthetic expense ratio. Risk Warning An investment in a Unit Trust should be regarded as a medium to long term investment. Investors should be aware that the price of Units and the income from them may fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency of the fund are subject to fluctuation in exchange rates, which may be favourable or unfavourable. 8

9 Portfolio Statement As at 30 November 2017 (unaudited) Holdings or Nominal Market value % of Total Value Investments Net Assets Asia Pacific 7.17% [2.34%] Collective Investment Schemes 7.17% [2.34%] 67,184 CC Japan Income & Growth 1,115, ,037 Prusik Asian Equity Income 845, ,952 Schroder International Selection Asian Total Return 708, ,668, Europe 3.97% [3.25%] Collective Investment Schemes 3.97% [3.25%] 115,260 BlackRock European Equity Income 1,475, ,475, Global 38.12% [41.80%] Collective Investment Schemes 36.38% [39.81%] 16,136 AQR Managed Futures 1,531, ,151 Fidelity Global Dividend 1,127, ,667 Fundsmith Equity 1,681, ,682 Gold Bullion Securities 960, ,002 Henderson Strategic Bond 15, ,381,372 Jupiter Strategic Bond 2,242, ,311 Legg Mason Western Asset Macro Opportunities Bond 1,728, ,218 Muzinich Global Tactical Credit 1,550, ,000 Old Mutual Global Equity Absolute Return 1,663, ,339 River and Mercantile World Recovery 1,034, ,536, Investment Companies 1.74% [1.99%] 428,500 International Public Partnerships 648, , North America 12.16% [9.89%] Collective Investment Schemes 12.16% [9.89%] 25,006 Findlay Park American 1,989, ,485 ishares MSCI USA Dividend IQ 1,589, ,460 SPDR S&P US Financials Select Sector 946, ,526, United Kingdom 22.41% [28.72%] Collective Investment Schemes 22.41% [28.72%] 486,191 CF Miton UK Multi Cap Income 989, ,504 Liontrust Special Situations 2,226, ,945 Marlborough Multi Cap Income 954, ,137,465 Schroder Income 2,351, Threadneedle UK Equity Income Threadneedle UK Select ,528 Trojan Income 1,815, ,338,

10 Portfolio Statement (continued) As at 30 November 2016 (unaudited) Holdings or Nominal Market value % of Total Value Investments Net Assets Fixed Interest 10.05% [11.00%] 1,680,330 UK Gilt Inflation Linked 0.125% Bonds 22/03/2026 2,089, ,000 UK Gilt 2.75% Bonds 07/09/ , ,858 UK Gilt 5% Bonds 25/03/ , ,739, Portfolio of investments 34,933, Net other assets 2,277, Net assets 37,210, All investments are Collective Investment Schemes unless otherwise stated. Comparative figures shown above in square brackets relate to 31 May Gross purchases for the six months: 4,800,721 [2016: 15,586,778]. Total sales net of transaction costs for the six months: 3,749,632 [2016: 16,840,302]. 10

11 Statement of Total Return For the six months ended 30 November 2017 (unaudited) 01/06/17 to 30/11/17 01/06/16 to 30/11/16 Income Net capital gains 236,024 1,474,557 Revenue 405, ,291 Expenses (234,020) (239,483) Interest payable and similar charges (777) (2,364) Net revenue before taxation 170, ,444 Taxation - - Net revenue after taxation 170, ,444 Total return before distributions 406,335 1,669,001 Distributions (362,132) (399,322) Change in net assets attributable to Unitholders from investment activities 44,203 1,269,679 Statement of Change in Net Assets Attributable to Unitholders For the six months ended 30 November 2017 (unaudited) 01/06/17 to 30/11/17 01/06/16 to 30/11/16 Opening net assets attributable to Unitholders 34,683,450 33,631,030 Amounts received on issue of Units 5,538,035 2,247,239 Less: Amounts paid on cancellation of Units (3,112,575) (3,621,456) 2,425,460 (1,374,217) Dilution Levy Change in net assets attributable to Unitholders from investment activities (see above) 44,203 1,269,679 Retained distribution on accumulation Units 57,230 44,706 Unclaimed distributions 80 - Closing net assets attributable to Unitholders 37,210,621 33,571,198 The above statement shows the comparative closing net assets at 30 November 2016 whereas the current accounting period commenced 1 June

12 Balance Sheet As at 30 November 2017 (unaudited) 30/11/17 31/05/17 Assets Fixed assets: Investment 34,933,008 33,641,457 Current assets: Debtors 85, ,713 Cash and bank balances 2,535,858 1,107,531 Total current assets 2,621,078 1,439,244 Total assets 37,554,086 35,080,701 Liabilities Creditors: Bank overdrafts (2,167) (269,083) Distribution payable on income Units (93,061) (72,931) Other creditors (248,237) (55,237) Total creditors (343,465) (397,251) Total liabilities (343,465) (397,251) Net assets attributable to Unitholders 37,210,621 34,683,450 12

13 Notes to the Interim Financial Statements For the six months ended 30 November 2017 (unaudited) Accounting Basis, Policies and Valuation of Investments Basis of accounting The interim Financial Statements have been prepared under the historical cost basis, as modified by the revaluation of investments and in accordance with FRS 102 The Financial Reporting Standards Applicable in the UK and Republic of Ireland and the Statement of Recommended Practice ( SORP ) for Financial Statements of UK Authorised Funds issued by the Investment Association in May The accounting policies applied are consistent with those of the audited annual Financial Statements for the year ended 31 May 2017 and are described in those Financial Statements. In this regard, comparative figures from previous periods are prepared to the same standards as the current period, unless otherwise stated. As described in the Certification of Financial Statements by Directors of the AFM on page 4, the AFM continues to adopt the going concern basis in the preparation of the Financial Statements of the Fund. Basis of valuation of investments Listed investments are valued at close of business bid prices excluding any accrued interest in the case of fixed interest securities, on the last business day of the accounting period. Market value is defined by the SORP as fair value which is the bid value of each security. Collective Investment Schemes are valued at quoted bid prices for dual priced funds and at quoted prices for single priced funds, on the last business day of the accounting period. Non-observable entity specific data is only used where relevant observable market data is not available. Typically this category will include single broker-priced instruments, suspended/unquoted securities, private equity, unlisted close-ended funds and open-ended funds with restrictions on redemption rights. 13

14 Distribution Table As at 30 November 2017 (unaudited) First Distribution in pence per Unit Group 1 Units purchased prior to 1 June 2017 Group 2 Units purchased on or after 1 June to 31 August 2017 Unit Type A Accumulation Distribution Distribution Net paid paid revenue Equalisation 31/10/17 31/10/16 # # # # Group Group Unit Type A Income Group Group Unit Type B Accumulation Group Group Unit Type B Income Group Group Unit Type B Income USD Group Group Unit Type C Accumulation Group Group Unit Type C Income Group Group # Rates are listed in pence/cents dependent on Unit Class currency. 14

15 Distribution Table (continued) As at 30 November 2017 (unaudited) Second Distribution in pence per Unit Group 1 Units purchased prior to 1 September 2016 Group 2 Units purchased on or after 1 September to 30 November 2017 Unit Type A Accumulation Distribution Distribution Net payable paid revenue Equalisation 31/01/18 31/01/17 # # # # Group Group Unit Type A Income Group Group Unit Type B Accumulation Group Group Unit Type B Income Group Group Unit Type B Income USD Group Group Unit Type C Accumulation Group Group Unit Type C Income Group Group # Rates are listed in pence/cents dependent on Unit Class currency. 15

16 General Information Types of Units The Fund can issue different types of Units in respect of the Fund. Holders of Income Units are entitled to be paid the revenue attributable to such Units, in respect of each annual accounting period. Holders of Accumulation Units are not entitled to be paid the revenue attributable to such Units, but that revenue is retained and accumulated for the benefit of Unitholders and is reflected in the price of Units. Buying and Selling Units The AFM will accept orders to deal in the Units on normal business days between 9.00 am and 5.00 pm. Instructions to buy or sell Units should be in writing to: WAY Fund Managers Limited - Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset BH21 7SB. A contract note will be issued by close of business on the next business day after the dealing date to confirm the transaction. Valuation Point The valuation point for the Fund is 12 noon on each dealing day (being each day which is a business day in London). Valuations may be made at other times under the terms contained within the Prospectus. Prices The prices of Units for each type in the Fund will be posted via a link on (Financial Express). Report The annual report of the Fund will normally be published within two months of each annual accounting period, although the AFM reserves the right to publish the annual report at a later date but not later than four months from the end of each annual accounting period. Interim Financial Statements period ended: Annual Financial Statements year ended: 30 November 31 May Distribution Payment Dates Interim Annual 31 October, 31 January and 30 April 31 July 16

17 General Information (continued) Significant Information Under the Alternative Investment Fund Managers Directive ("AIFMD"), acting as the Alternative Investment Fund Manager ("AIFM"), WAY Fund Managers Limited is required to disclose how those whose actions have a material impact on the Fund are remunerated. WAY Fund Managers Limited deems themselves as lower risk due to the nature of the activities it conducts and the size of the firm. Therefore the remuneration strategy is governed by the WAY Fund Managers Limited Board and WAY Fund Managers Limited has chosen not to have a Remuneration Committee. The AIFM Remuneration Code in the UK Financial Authority handbook is met proportionately for all AIFM Remuneration Code Staff. WAY Fund Managers Limited considers its activities as non complex due to the fact that regulation limits the AIF strategies conducted and the scope of investment in such a way that investor risk is mitigated. The discretion of WAY Fund Managers Limited and the portfolio manager is strictly controlled within certain pre-defined parameters as determined in the prospectus of each Alternative Investment Fund. In its role as an AIFM, WAY Fund Managers Limited deems itself as lower risk due to the nature of the activities it conducts. WAY Fund Managers Limited does not pay any form of variable remuneration currently. Therefore WAY Fund Managers Limited has provided a basic overview of how staff whose actions have a material impact on the Fund are remunerated. November 17 Total remuneration paid by WAY during the financial year Remuneration paid to employees of WAY who have a material impact on the risk profile of the AIF Number of Beneficiaries Total remuneration paid Fixed remuneration Variable remuneration paid Carried interest paid by the AIF 44 2,082,476 2,082, , , Due to the size and structure of WAY Fund Managers Limited, it is determined that employees of the AIFM who have a material impact on the risk profile of the AIF include the Board. The delegated investment manager is subject to regulatory requirements on remuneration that WAY Fund Managers Limited deem to be equally as effective as those detailed in the AIFMD, which would include the Capital Requirements Directive or Markets in Financial Instruments Directive. 17

18 General Information (continued) Other Information The Prospectus, the NURS Kii, the Trust Deed and the most recent interim and annual reports may be inspected at the office of the AFM and copies may be obtained upon application. Unitholders who have any complaints about the operation of the Fund should contact the AFM or the Trustee in the first instance. In the event that a Unitholder finds the response unsatisfactory they may make their complaint direct to the Financial Ombudsman Service at Exchange Tower, Harbour Exchange Square, London E14 9SR. Data Protection Unitholders names will be added to a mailing list which may be used by the AFM, its associates or third parties to inform investors of other products by sending details of such products. Unitholders who do not want to receive such details should write to the AFM requesting their removal from any such mailing list. Effects of Personal Taxation Investors should be aware that unless their Units are held within an ISA, selling Units is treated as a disposal for the purpose of Capital Gains tax. Risk Warning An investment in a Unit Trust should be regarded as a medium to long term investment. Investors should be aware that the price of Units and the income from them may fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency of a fund are subject to fluctuation in exchange rates, which may be favourable or unfavourable. 18

19 Contact Information The Unit Trust Elite Income Trust Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset BH21 7SB Telephone: * Website address: (Authorised and regulated by the FCA) Authorised Fund Manager ("AFM") WAY Fund Managers Limited Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset BH21 7SB (Authorised and regulated by the FCA and a member of the Investment Association) Directors of the AFM Company Secretary of the AFM V. Hoare P. Legg I. Hobday P. Legg Non-executive Directors Trustee P. Wilcox (Resigned 17 November 2017) Northern Trust Global Services Limited 50 Bank Street, Registrar Canary Wharf, Investor Administration Solutions Limited London E14 5NT Cedar House, 3 Cedar Park, (Authorised by the Prudential Regulation Cobham Road, Authority ('PRA') and regulated by the Wimborne, PRA and FCA) Dorset BH21 7SB Investment Manager Auditor LGT Vestra LLP Deloitte LLP 14 Cornhill, Statutory Auditor London EC3V 3NR Saltire Court, (Authorised and regulated by the FCA) 20 Castle Terrace, Edinburgh EH1 2DB Sponsor WM Capital Management Limited 80 Coleman Street, London EC2R 5BJ * Please note that telephone calls may be recorded for monitoring and training purposes, and to confirm investors' instructions. 19

20 WAY Fund Managers Limited