Elite LJ Portfolio Fund

Transcription

1 Fund Managers WAY Fund Managers Limited Elite LJ Portfolio Fund Annual Short Report for the year ended 30 April 2013

2 ELITE LJ PORTFOLIO FUND Authorised Corporate Director s Report and Financial Statements as at 30 April 2013 Contents Page Elite LJ Absolute Return Portfolio Fund Report of the Investment Adviser 3 Portfolio Statement 6 Performance Record 7 Distribution Table 9 Elite LJ Active Portfolio Fund Report of the Investment Adviser 10 Portfolio Statement 12 Performance Record 13 General Information 14 Risk Profile 17 Management and Professional Service Providers' Details 19 2

3 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND REPORT OF THE INVESTMENT ADVISER for the year ended 30 April 2013 Investment Objective, Policy and Strategy The objective of the Sub-fund is to achieve a total positive return in all market conditions, through investment in a diversified portfolio of transferable securities (including investment trusts), collective investment schemes, warrants, cash or near cash, deposits, money market instruments and derivatives. Subject to the requirements of the Regulations, the portfolio will normally remain fully invested. There will, however be no restrictions on the underlying content of the investments held, in terms of investment type, geographical or economic sector, other than those imposed by the Regulations, meaning that the Investment Advisor has the absolute discretion to weight the portfolio towards any investment type or sector at any time. The maximum holding of cash will be 50% of the Sub-fund's total net assets. Unregulated collective investment schemes may be used up to the full extent permitted by the Regulations. The portfolio will be actively managed and the Sub-fund may invest in derivatives for investment purposes as well as for efficient portfolio management purposes (including hedging). It is not intended that the use of derivatives in this way will change the risk profile of the Sub-fund. Borrowing will be permitted under the terms of the Regulations. Subject to the above, the Sub-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. Performance Over the review period and since launch, the relative performance of Elite LJ Absolute Return Portfolio Fund has been as follows: Cumulative Performance 6 months 1 year 2 years 3 years *Launch Elite LJ Absolute Return Portfolio Fund-Acc 5.40% 8.84% N/A N/A 13.60% IMA Absolute Return Average Sector 3.53% 5.14% N/A N/A 6.40% Discrete Annual Performance to 30 April * Elite LJ Absolute Return Portfolio Fund-Acc N/A N/A N/A 4.38% 8.84% *Since re-launch on 26 September 2011 Source: Financial Express. Total Return. Net income reinvested. Investment Outlook and Review Following the switches that occurred after the Elite LJ Absolute Return Portfolio merger in late 2011, the number of changes within the portfolio has reduced in the current reporting period. The ETFS Physical Gold tracker was sold as the performance had become more correlated to equity markets in the early part of 2012 and so was not providing as much diversification as required. The proceeds were used to increase exposure in the Liontrust Special Situations Fund, which provides exposure to a diversified portfolio of UK equities and which has performed strongly over the past few years. Following a dip in equity markets during the summer of 2012, equity exposure was increased by switching JPM Global Convertibles into Troy Trojan Income Fund and buying Threadneedle European Smaller Companies Fund. With interest rates expected to remain at historically low levels for a considerable period we anticipate continued demand for higher yielding equities, which the Troy Trojan Income Fund invests in. With the economic and political concerns pushing European equity valuations down to historically cheap levels, a small investment was made into Threadneedle European Smaller Companies Fund based on strong historical performance and exposure to sectors that are leaders in the global market but that have been impacted by the turmoil within the European economy. 3

4 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND REPORT OF THE INVESTMENT ADVISER (continued) The ETFX FTSE100 Leveraged 2x Fund is periodically held to tactically gain short term exposure following equity market falls to benefit from any bounce and was sold since the last annual report when equity markets rallied. Henderson Private Equity Investment Trust continues to generate positive performance as cash is returned with its winding up process getting closer to its conclusion. The proceeds have been used to invest into the ishares S&P500 Fund, which invests into US equities by tracking the S&P500 index. Exposure was gained to US equities because there are signs that the US housing market is recovering, which will encourage more jobs to be created and help improve the economic and corporate outlook. Asset Allocation As at the 30th April 2013 the Portfolio was diversified across the following asset classes: 4

5 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND REPORT OF THE INVESTMENT ADVISER (continued) Outlook Global economies look set to continue to display slowly recovering economic growth and some developed economies may fluctuate between recession and growth, which means that economic stimulus through low interest rates or Quantitative Easing is also likely to remain. It is expected that investment activity will remain low in at least the short term as the portfolio is kept widely diversified to help reduce volatility. Market Overview Equity markets dipped early last summer, as investor concerns over the impact that the European sovereign debt crisis will have on economic growth and corporate profits returned. However, equity markets were helped by comments by the European Central Bank that it will do whatever it takes to protect the Eurozone from collapse. Further uncertainty surfaced towards the end of December 2012 due to the looming US fiscal cliff ; as automatic tax increases and spending cuts were due to take effect unless further legislation was agreed by politicians. In the event, automatic tax cuts were averted as US policymakers agreed to delay decisions until March 2013, which bought more time for politicians to reach agreement. There are signs that global economic growth is generally improving, particularly in the US with an improving housing market, yet many regions, including the UK and Europe, remain sluggish. Equity markets are likely to remain volatile as investors deliberate the impact of slow growth and subsequent political uncertainty, as witnessed by the recent falls following Italian elections and Cypriot banking crisis. However, the slow recovery has meant investors expect interest rates to remain low for a long time, which has helped support equity markets from falling too far. With interest rates remaining at low levels, the prices of fixed income markets, particularly corporate bonds, have generally risen over the previous year. With interest rates likely to remain low, corporate bond prices are likely to remain supported. Lewis Jarrett & Co Investment Adviser to the Fund May

6 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND PORTFOLIO STATEMENT as at 30 April 2013 Percentage Market of total Value net assets Holding % UK Collective Investment Schemes : 46.44% (34.26%) 225,888 Kames High Yield Bond Fund B 517, ,063 Kames High Yield Bond Fund A 588, ,957 Kames Strategic Bond B Fund 1,054, ,302 Liontrust Special Situations Fund 1,249, ,610 M&G Strategic Corporate Bond Fund 1,133, ,005,616 M&G UK Inflation Linked Corporate Bond Fund 1,144, ,474 Standard Life Global Index Linked Bond Fund 1,382, ,591 Threadneedle European Small Company Fund 469, ,521 Threadneedle Credit Opportunities 1,120, ,349 Troy Trojan Income Fund 1,277, ,936, Overseas Collective Investment Schemes : 48.91% (60.38%) 613,496 Absolute Insight Credit Fund 1,168, ,788 Aquilla Risk Parity 12 Fund 1,103, ,849 Aviva Investors Global Convertibles Absolute Return 1,154, ,650 ishares Barcap Index Linked Gilts ETF 1,498, ,000 ishares S+P 500 Index Fund 225, ,818 Melchior Selected Trust European Absolute Return Fund 864, ,603 MLIS Columbus Circle Investors Healthcare 1,009, ,975 New Capital Wealthy Nations Bond H 1,166, ,156 Smith & Williamson Enterprise Fund 891, ,954 Veritas Global Real Return A 1,179, ,000 AcenciA Debt Strategies 209, ,470, UK Investment Trusts : 0.27% (1.59%) 15,958 Henderson Private Equity Investment Trust 58, Property : 2.39% (2.26%) 460,992 Braemar Student Accomodation 511, Market Value of Investments : 98.01% (98.49%) 20,976, Net other assets 1.99% (1.51%) 429, Total Net Assets 21,405, Note: Comparative figures shown in brackets relate to 30 April

7 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND PERFORMANCE RECORD as at 30 April 2013 Fund Size Accounting Share Net Asset Shares Net Asset Date Class Value in per share issue p 30 April 2011 'A' Accumulation 20,623 18, 'B' Accumulation 12,247,744 10,541, April 2012 'A' Accumulation 15,040 13, 'B' Accumulation 22,397,008 19,815, April 2013 'A' Accumulation 275, , 'B' Accumulation 21,113,806 17,190, 'C' Accumulation 16,573 16, Price and Income History Calendar Share Highest Lowest Distribution Year Class Price Price per share p p p 2009 'A' Accumulation 'B' Accumulation 'A' Accumulation 'B' Accumulation 'A' Accumulation 'B' Accumulation 'A' Accumulation 'B' Accumulation * 'A' Accumulation 'B' Accumulation 'C' Accumulation * to 30 April

8 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND PERFORMANCE RECORD (continued) Other Relevant Prices Date Share Class Price per share p Launch Date 19 June 2006 'A' Accumulation 'B' Accumulation Accounts Date 30 April 2013 'A' Accumulation 'B' Accumulation 'C' Accumulation Latest date 22 July 2013 'A' Accumulation 'B' Accumulation 'C' Accumulation Total Expense Ratio (TER) The Total Expense Ratio (TER) is the total expenses of the Sub-fund, excluding interest payable and expenses of a capital nature, expressed as a percentage of the average net assets during the accounting period. The TERs of the Sub-fund's share classes as at 30 April 2013 were: Accumulation 'A' 2.93% 2012: 2.07% Accumulation 'B' 2.43% 2012: 1.57% Accumulation 'C' 2.93% 2012: 0.00% 8

9 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND DISTRIBUTION TABLE for the year ended 30 April 2013 Final - Accumulation 'A' Group 1: Shares purchased prior to 1 November 2012 Group 2: Shares purchased on or after 1 November 2012 and on or before 30 April 2013 Group Gross Tax credit Net Allocation Allocated Income at 10% Accumulation Equalisation 30/6/ /06/12 p p p p p p Final - Accumulation 'B' Group 1: Shares purchased prior to 1 November 2012 Group 2: Shares purchased on or after 1 November 2012 and on or before 30 April 2013 Group Gross Tax credit Net Allocation Allocated Income at 10% Accumulation Equalisation 30/06/13 30/06/12 p p p p p p Final - Accumulation 'C' Group 1: Shares purchased prior to 1 November 2012 Group 2: Shares purchased on or after 1 November 2012 and on or before 30 April 2013 Group Gross Tax credit Net Allocation Allocated Income at 10% Accumulation Equalisation 30/06/13 30/06/12 p p p p p p EQUALISATION Equalisation applies only to shares purchased during the distribution period (Group 2 shares). It represents the accrued income included in the purchase price of the shares. After averaging it is returned with the distribution as a capital repayment. It is not liable to income tax but must be deducted from the cost of the shares for capital gains tax purposes. 9

10 ELITE LJ ACTIVE PORTFOLIO FUND REPORT OF THE INVESTMENT ADVISER for the year ended 30 April 2013 Investment Objective, Policy and Strategy The objective of the Sub-fund is to achieve a total positive return in all market conditions, through active investment in a diversified portfolio of transferable securities (including investment trusts), collective investment schemes, warrants, cash or near cash, deposits, money market instruments and derivatives. Subject to the requirements of the Regulations, the portfolio will normally remain fully invested. There will, however, be no restrictions on the underlying content of the investments held, in terms of investment type, geographical or economic sector, other than those imposed by the Regulations, meaning that the Investment Adviser has the absolute discretion to weight the portfolio towards any investment type or sector at any time. The maximum holding of cash will be 50% of the Sub-fund s total net assets. Unregulated collective investment schemes may be used up to the full extent permitted by the Regulations. The portfolio will be actively managed and the Sub-fund may invest in derivatives for investment purposes as well as for efficient portfolio management purposes (including hedging). It is not intended that the use of derivatives in this way will change the risk profile of the Sub-fund. Borrowing will be permitted under the terms of the Regulations. Subject to the above, the Sub-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. Performance Over the review period and since launch, the relative performance of Elite LJ Active Portfolio Fund has been as follows: Cumulative Performance 6 months 1 year 2 Years 3 years *Launch Elite LJ Active Portfolio Fund - Acc 11.44% 8.35% N/A N/A 19.21% Discrete Annual Performance to 30 April * Elite LJ Active Portfolio Fund - Acc N/A N/A N/A 10.02% 8.35% *Since re-launch on 26 September 2011 Source: Financial Express. Total Return. Net Income reinvested. Investment, Outlook and Review Following the switches that occurred after the Elite LJ Active Portfolio merger last year the number of changes within the portfolio has reduced in the current reporting period. Two new additions have been added to the portfolio during the reporting period, the Unicorn UK Income Fund, which invests into a portfolio of higher yielding UK equities, and Scottish Oriental Smaller Companies Trust, which invests into Asian smaller companies. With interest rates likely to stay at historical lows for an extended period, the demand for higher yielding assets is likely to remain strong and with the yield on many equities, including those held in the Fund, being higher than UK gilt yields, demand for these types of companies shares are likely to be supportive of their prices. The long term outlook for Asian equities is still positive due to the strong economic growth and younger demographic profile that is expected in the region and smaller company equities are likely to be one of the main beneficiaries of such a trend. The ETFX FTSE100 Leveraged 2x Fund is periodically held to tactically gain short term exposure following equity market falls to benefit from any bounce and was sold since the previous report when equity markets The Sub-fund has been holding a small weighting in longer term property developments that couldn t be sold until the schemes were completed. During the year, the Mission Germany Capital Cities Fund and Mission Tuscany Property Investment Fund were written off as the schemes were unable to receive funding to complete their work. Matrix Asset Based 2 Fund was also written off as it became apparent that no cash would be returned to shareholders. 10

11 ELITE LJ ACTIVE PORTFOLIO FUND REPORT OF THE INVESTMENT ADVISER (continued) Asset Allocation As at the 30 April 2013 the Portfolio was diversified across the following asset classes: Outlook Global economies look set to continue to display slowly recovering economic growth and some developed economies may fluctuate between recession and growth, which means that economic stimulus through low interest rates or Quantitative Easing is also likely to remain. It is expected that investment activity will remain low in at least the short term as the portfolio is kept widely diversified to help reduce volatility. Market Overview Equity markets dipped early last summer, as investor concerns over the impact that the European sovereign debt crisis will have on economic growth and corporate profits returned. However, equity markets were helped by comments by the European Central Bank that it will do whatever it takes to protect the Euro zone from collapse. Further uncertainty surfaced towards the end of December 2012 due to the looming US fiscal cliff ; as automatic tax increases and spending cuts were due to take effect unless further legislation was agreed by politicians. In the event, automatic tax cuts were averted as US policymakers agreed to delay decisions until March 2013, which bought more time for politicians to reach agreement. There are signs that global economic growth is generally improving, particularly in the US with an improving housing market, yet many regions, including the UK and Europe, remain sluggish. Equity markets are likely to remain volatile as investors deliberate the impact of slow growth and subsequent political uncertainty, as witnessed by the recent falls following Italian elections and Cypriot banking crisis. However, the slow recovery has meant investors expect interest rates to remain low for a long time, which has helped support equity markets from falling too far. Lewis Jarrett & Co Investment Adviser to the Fund May

12 ELITE LJ ACTIVE PORTFOLIO FUND PORTFOLIO STATEMENT as at 30 April 2013 Percentage Market of total Value net assets Holding % UK Collective Investment Schemes : 49.49% (29.17%) 247,190 Baillie Gifford Overseas Amer 655, ,973 Cavendish Investments Technology Fund 457, ,876 CF Lindsell Train UK Equity Fund 615, ,081 JPM Emerging Markets Infrastructure Fund 411, ,499 Pictet Latin American Local Currency Debt -I 591, ,751 Pictet Timber - IDGGBP 520, ,681 Rathbone Global Opportunities Fund 482, ,980 SPL Parallel Private Equity (PE2) 205, ,507 Unicorn Outstanding British Companies 591, ,779 Unicorn UK Income 239, ,771, Overseas Collective Investment Schemes : 18.21% (45.69%) 3,190 DB X Trackers MSCI Rus CPD 58, ,123 Digital Funds - Stars Europe 691, ,280 ishares MSCI AC Far East X - J 524, ,855 ishares MSCI Emerging Markets 358, ,442 Matrix Asset Based 2 CEF Ret ,665 Matrix Asset Based 2 CET ,479,862 Mission Germany Capital Cities Fund ,420 Mission Tuscany PIF ,489 PFB Data Centre Fund A 123, ,755, UK Investment Trusts : 29.25% (21.45%) 25,550 Scottish Oriental Smaller Companies Trust 224, ,050 Edinburgh Dragon Trust 502, ,440 Electra Private Equity 407, ,300 Herald Investment Trust 474, ,300 Polar Capital Funds Plc - Insurance Fund - FGBPA 577, ,489 Scottish Mortgage Investment Trust 442, ,046 SVG Capital 190, ,819, Market Value of Investments : 96.95% (96.31%) 9,347, Net other assets : 3.05% (3.69%) 294, Total Net Assets 9,641, Unregulated Overseas Collective Investment Schemes Note: Comparative figures shown in brackets relate to 30 April

13 ELITE LJ ACTIVE PORTFOLIO FUND PERFORMANCE RECORD as at 30 April 2013 Fund Size Accounting Share Net Asset Shares Net Asset Date Class Value in per share issue p 30 April 2011 'B' Accumulation 8,493,691 7,847, April 2012 'B' Accumulation 11,097,735 11,369, April 2013 'B' Accumulation 9,635,518 9,128, 'C' Accumulation 5,534 5, Price and Income History Calendar Share Highest Lowest Distribution Year Class Price Price per share p p p 2009* 'B' Accumulation 'B' Accumulation 'B' Accumulation 'B' Accumulation ** 'B' Accumulation 'C' Accumulation * 20 July 2009 to 31 December 2009 ** 1 January 2013 to 30 April 2013 Other Relevant Prices Share Price per Date Class share p Launch Date 20 July 2009 'B' Accumulation Accounts Date 30 April 2013 'B' Accumulation 'C' Accumulation Latest date 22 July 2013 'B' Accumulation 'C' Accumulation Total Expense Ratio (TER) The Total Expense Ratio (TER) is the total expenses of the Sub-fund, excluding interest payable and expenses of a capital nature, expressed as a percentage of the average net assets during the accounting period. The TERs of the Sub-fund's share classes as at 30 April 2013 were: Accumulation 'A' 2.79% 2012: 0.00% Accumulation 'B' 2.29% 2012: 1.79% Accumulation 'C' 2.79% 2012: 0.00% 13

14 ELITE LJ PORTFOLIO FUND GENERAL INFORMATION The Company Elite LJ Portfolio Fund is an investment Company with variable capital incorporated under the OEIC Regulations. It is a Non-UCITS retail scheme as defined in COLL and also an umbrella Company for the purposes of the OEIC Regulations. The Company is incorporated in England and Wales with the registered number IC Shareholders are not liable for the debts of the Company. The Authorised Corporate Director ( ACD ) The ACD is the sole director of the Company and is responsible for all aspects of administration and management within the ICVC. The ACD is WAY Fund Managers Limited, Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset, BH21 7SB. WAY Fund Managers Limited is authorised and regulated by the Financial Conduct Authority and is a member of the IMA (Investment Management Association). The Depositary The Depositary acts as the custodian for all assets relating to the Company. The Depositary is State Street Trustees Limited, 20 Churchill Place, Canary Wharf, London, E14 5HJ. The Depositary is authorised and regulated by the Financial Conduct Authority. The Investment Adviser The Investment Adviser to the Company is Lewis Jarrett & Co. Prospectus Copies of the Company's Prospectus are available free of charge from the ACD upon request. Share Type The Company is authorised to issue Income and Accumulation shares. The shares currently issued are Class 'A', Class 'B' and Class 'C' Accumulation shares. 14

15 GENERAL INFORMATION (continued) Pricing and Dealing Mid prices are always quoted for shares in the Sub-funds. Dealing in all ICVCs operated by WAY Fund Managers Limited may be carried out between 09:00 and 17:00 hours on any business day. Investors and advisers may normally buy and sell shares over the telephone. Prices are quoted on a forward basis. This means that all deals are based on a price that is calculated at the next valuation point (which is 12:00 hours on each business day) following receipt of instructions. Instructions received before 12:00 hours will be priced at 12:00 hours that day, whilst those deals taken later in the day will receive the next dealing price which is fixed at 12:00 hours on the following business day. In respect of large deals, which for the purpose is defined as a single purchase or redemption of shares equivalent to more than 2% of the Net Asset Value of the Company, the ACD may charge a dilution levy on the price of shares. In respect of a purchase, this is added to the cost and, in respect of a redemption, this is deducted from the proceeds. The amount is not retained by the ACD but is paid into the Subfunds. The minimum initial lump sum and subsequent investment in a Sub-fund is 3,000 in respect of Class 'A' shares and Class 'C' shares and 10,000 in respect of Class 'B' Shares. At its absolute discretion, the ACD may accept a lower minimum amount for the purchase and sale of shares. A contract note in respect of any purchase will be issued immediately and full settlement, in cleared funds, is due within four business days of the purchase date. Share certificates will not be issued. Instructions to sell your shares may be required to be given in writing to WAY Fund Managers Limited, Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset BH21 7SB. A contract note confirming the instruction to sell will be issued immediately. Following receipt of a correctly completed Form of Renunciation, a cheque in settlement will be sent direct to you or your Bank/Building Society within four business days. Dilution Levy The actual cost to the Company of purchasing or selling a Sub-fund's investments may be higher or lower than the mid-market value used in calculating the share price, e.g., due to dealing charges or through dealing at prices other than the mid-market price. In normal circumstances these costs are charged to the Sub-fund. Under certain circumstances (e.g. large volumes of deals) this may have an adverse effect on the interests of Shareholders generally. In order to prevent this effect, called dilution, WAY Fund Managers has the power to charge a dilution levy on the sale and/or redemption of shares. The dilution levy will be applied at outset and will be paid into the Sub-fund and become part of the relevant Sub-fund. The dilution levy for each Sub-fund will be calculated by reference to the costs of dealing in the underlying investments of that Sub-fund, including any dealing spreads, commission and transfer taxes. 15

16 GENERAL INFORMATION (continued) Management Charges The initial charge for 'A', 'B' and 'C' share classes in each Sub-fund is 6% and the current periodic charge is 1.00% for 'B' Share classes and 1.50% for 'A' and 'C' Share classes. Certain other expenses are met by the Company and the individual sub-funds, the nature of which are detailed in the Company s Prospectus. Reports Reports, in their short-form, will be sent to all shareholders on an annual and half-yearly basis. The long-form accounts are available free of charge on request from the ACD. Publication of Prices The price of shares in the Sub-funds are quoted daily on the web pages of Financial Express at Stamp Duty Reserve Tax Stamp Duty Reserve Tax ( SDRT ) is a 0.5% tax that may be payable by the Company, for which the Depositary may become liable when shareholders sell their shares in the Company. This may have an affect on you as the shareholder depending on how the ACD will be treating this particular charge. Subject to limits contained within the Company's Prospectus, any SDRT liability incurred by the Company will be charged to the individual Sub-funds, which could mean that less of your money will be invested for potential capital and income growth. Capital Gains Tax As an ICVC, the Company is exempt from UK Capital Gains Tax. An individual s first 10,900 of net gains on disposals in the 2013/2014 tax year are exempt from tax. Gains in excess of 10,900 for 2013/2014 are subject to a rate of tax dependent on an individual's total annual taxable income. Important Information It is important to remember that the price of shares, and the income from them, can fall as well as rise and is not guaranteed and that investors may not get back the amount originally invested. Past performance is not a guide to future performance. Changes in the rate of exchange of currencies, particularly where overseas securities are held, may also affect the value of your investment. The issue of shares may be subject to an initial charge and this is likely to have an impact on the realisable value of your investment, particularly in the short term. You should always regard ICVC investment as long term. 16

17 ELITE LJ PORTFOLIO FUND RISK PROFILE Investors should bear in mind that all investment carries risk and in particular should be aware of the following: Investors should appreciate that there are inherent risks in all types of investments. Stock market prices can move erratically and be unpredictably affected by many diverse factors, including political and economic events but also rumours and sentiment. Investment in the Company should be regarded as a long-term investment. There can be no guarantee that the objectives of a Sub-fund will be achieved. The Sub-funds may invest up to 20% of its assets in unregulated schemes, or schemes not covered by regulations equivalent to those in the United Kingdom. Such schemes may be less liquid than the equivalent regulated schemes which could mean that the Investment Adviser is unable to buy an additional or sell an excess holding without a delay. The reason for this could be that these funds deal less frequently than regulated funds, or that the provider has a requirement to match sellers with buyers. The Sub-funds can invest in the Alternative Investment Market, which could mean that they may hold a significant percentage of net assets in smaller companies. Such securities may, from time-to-time, be less liquid than their equivalents quoted on the main markets. At times when a Sub-fund holds more than 5% of its assets in warrants, the Net Asset Value of the Sub-fund is likely to experience higher than normal volatility. The capital value and the income from shares in the Sub-funds can fluctuate and the price of shares and the income from them can go down as well as up and are not guaranteed. On encashment, particularly in the short term, investors may receive less than the original amount invested. The ACD s preliminary charge is deducted from an investment at the outset and an equivalent rise in the value of the shares is required before the original investment can be recovered. Defensive investment in cash and money market instruments, at times when relevant stock market indices are rising, may constrain the growth of capital invested in the sub-funds. Investments may be made in assets denominated in various currencies and the movement of exchange rates may have a separate effect, unfavourable as well as favourable, on the gains and losses otherwise experienced on such investments. It must be emphasised that past performance is not necessarily a guide to future growth or rates of return. Exemptions, thresholds and rates of tax may change in future tax years. The Investment Adviser may enter into certain derivative transactions, including, without limitation, forward transactions, futures and options. The value of these investments may fluctuate significantly. By holding these types of investments there is a risk of capital depreciation in relation to certain of the Sub-funds assets. There is also the potential for capital appreciation of such assets. The ACD does not anticipate that the use of derivatives will alter the risk profile of the Company. 17

18 ELITE LJ PORTFOLIO FUND RISK PROFILE (continued) Some or all of any other charges and expenses may be treated as a capital expense in accordance with the Regulations, which may have the effect of eroding capital or constraining capital growth. The levels of income generated by the Sub-funds will fluctuate and are not guaranteed. Where a Sub-fund invests in emerging markets, such investment may carry risks associated with failed or delayed settlement of market transactions and with the registration and custody of securities. There may also be a lack of liquidity and increased volatility in the underlying securities of companies domiciled in emerging markets. The Funds may invest in other currencies. As a result, changes in the rates of exchange between currencies may cause the value of the shares to go up or down. Accordingly, investors may not receive back the amount invested. 18

19 ELITE LJ PORTFOLIO FUND Authorised Corporate Director ( the ACD ) and Registrar WAY Fund Managers Limited* Cedar House 3 Cedar Park Cobham Road Wimborne Dorset BH21 7SB Telephone: Directors of WAY Fund Managers Limited P Wilcox (Chairman) P Hugh Smith P Legg V Hoare R Coe Independent Auditor Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU Investment Adviser Lewis Jarrett & Co* 155 Newmarket Road Norwich Norfolk NR4 6SY Fund Accountant Sharefunds Limited*# Oxford House Oxford Road Aylesbury Buckinghamshire HP21 8SZ Depositary Apex Fund Services (UK) Limited*## State Street Trustees Limited* Veritas House 20 Churchill Place 125 Finsbury Pavement Canary Wharf London EC2A 1NQ London E14 5HJ * Authorised and regulated by the Financial Conduct Authority ("FCA") # To 31 October 2012 ## From 1 November