Elite Balanced Trust. Short Report for the year ended 31 May Investment Objective and Policy. Risk Profile. Fund Facts

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1 Elite Balanced Trust Short Report for the year ended 31 May 2016 Investment Objective and Policy The objective of the Fund is to provide a total positive return above the IMA Mixed Investment 40%-85% Shares Index, over a 3 year rolling period, with an emphasis on providing capital appreciation. Capital invested in the Fund is at risk and there is no guarantee that the investment objective will be met over the 3 year rolling period or in respect of any other period. The Fund will achieve its objective through investment in a portfolio of Collective Investment Schemes, transferable securities (including investment trusts), warrants, deposits and money market instruments selected from the various world markets. 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 portfolio will be actively managed and normally remain fully invested save for such operational liquidity as is required from time to time. 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 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. Fund Facts Risk Profile Interim/Annual Accounting End Dates 30 November 31 May Ex-dividend (xd) Dates - 01 June Income Distribution/ Accumulation Dates - 31 July Please refer to the Full Prospectus for details of all the risks. The Fund has exposure to credit, counterparty and usual market risks. Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up. Exchange rate changes may cause the value of any overseas investments to rise or fall. You should always regard investments in the Fund as medium to long term. Page 1

2 Charges Unit Types Initial Charge Annual Management Charge Total Expense Ratios Total Expense Ratios 31/05/15 Unit Type A 5.25% 1.50% 2.31% 2.39% Unit Type B 0.00% 1.00% 1.81% 1.89% Unit Type B USD 0.00% 1.00% 1.81% 1.89% Unit Type C 5.25% 1.50% 2.31% 2.39% Distributions/Accumulations Distributions Distribution payable 31/07/16 # Distribution paid 31/07/15 # Unit Type A Accumulation Unit Type B Accumulation Unit Type B Accumulation USD Unit Type C Accumulation # Rates are listed in pence/cents dependent on Unit Type currency. Comparative Tables Performance Record A Accumulation B Accumulation 31/05/15 31/05/14 31/05/15 31/05/14 (p) (p) (p) (p) (p) (p) Change in net assets per Unit Opening net asset value per Unit Return before operating charges* (2.66) (2.22) Operating charges (3.29) (3.35) (3.34) (2.16) (2.22) (2.24) Return after operating charges* (5.95) (4.38) Closing net asset value per Unit Retained distributions on accumulation Units * after direct transaction costs of: Performance Return after operating charges (3.98%) 9.60% 6.09% (3.50%) 10.15% 6.15% Other information Closing net asset value 2,987,568 3,278,836 3,450,449 9,380,819 7,922, ,270 Closing number of Units 2,083,816 2,195,867 2,532,587 7,773,278 6,335, ,189 Operating charges 2.31% 2.39% 2.55% 1.81% 1.89% 2.05% Direct transaction costs 0.00% 0.00% 0.02% 0.00% 0.00% 0.02% Prices Highest Unit price Lowest Unit price Page 2

3 Comparative Tables (continued) Performance Record (continued) B Accumulation USD C Accumulation 31/05/15 31/05/14 31/05/15 31/05/14 (c) (c) (c) (p) (p) (p) Change in net assets per Unit Opening net asset value per Unit Return before operating charges* (6.87) (2.12) Operating Charges (2.01) (2.18) (2.24) (2.62) (2.67) (2.66) Return after operating charges* (8.88) (4.74) Closing net asset value per Unit Retained distributions on accumulation Units * after direct transaction costs of: Performance Return after operating charges (7.51%) 0.42% 17.35% (3.99%) 9.60% 6.09% Other information Closing net asset value 109, ,494 99,780 6,322,947 7,943,026 12,308,718 Closing number of Units 146, , ,768 5,538,062 6,679,835 11,345,498 Operating charges 1.81% 1.89% 2.05% 2.31% 2.39% 2.55% Direct transaction costs 0.00% 0.00% 0.02% 0.00% 0.00% 0.02% Prices Highest Unit price Lowest Unit price Major Holdings Top 10 Holdings % of Fund Marlborough Multi Cap Income 5.01 Old Mutual Global Equity Absolute Return 4.99 Liontrust Special Situations 4.88 UK Gilt 1.5% 22/07/ Henderson UK Absolute Return 4.19 CF Miton UK Multi Cap Income 3.99 AQR Managed Futures 3.99 ishares $ TIPS 3.82 Jupiter Strategic Bond 3.54 ishares Core FTSE Top 10 Holdings % of Fund 31/05/15 Liontrust Special Situations 4.73 CF Miton UK Multi Cap Income 3.81 River and Mercantile World Recovery 3.75 GLG Japan CoreAlpha Equity 3.70 Royal London UK Equity Income 3.69 ishares S&P M&G Optimal Income 3.43 Invesco Perpetual Monthly Income Plus 3.21 Trojan Income 3.10 Blackrock Asia Special Situations 3.07 Page 3

4 Portfolio Information Breakdown by Geographical Region % % 19.84% % 5.49% 2.81% 0 United Kingdom [31.69%] Global [19.26%] North America [16.34%] Europe [9.87%] Asia Pacific [13.63%] Net other assets [6.68%] % of Fund % of Fund 31/05/15 Emerging Markets Brazil Comparative figures shown above in square brackets relate to 31 May 2015 Investment Manager s Report Investment Review The last 12 months has seen a sharp pickup in volatility across asset classes as fears of a slowdown in global growth, a halving of the oil price and the threat of rising interest rates in the US, lead to a sell-off in risk assets. Equity markets traded sideways for the first few months of the period, as a closely fought UK General Election and fears of a Greek exit from the Eurozone failed to dent investor confidence. However, China s change in stance towards its currency policy in August was the spark for an extraordinary period of volatility in markets, with the FTSE 100 falling nearly 12% in a matter of days as investors grew fearful that China was slipping into a recession. The volatility seen in August continued into September as evidence of slower economic growth in China and the threat of rising interest rates in the US weighed on investor sentiment. Despite a late flourish on the last day of the month, global equity markets moved lower, with few exceptions, to make Q3 the worst quarter for equity markets since the Euro crisis of Page 4

5 Investment Manager s Report (continued) Investment Review (continued) October saw a reversal back into risk assets as global equity markets recovered some lost ground. Energy and Commodity stocks led the rally as central bankers from around the world sought to stem concerns over the global economy s health. November began with a more hawkish statement from the US Federal Reserve, raising expectations of a rate rise in December, and pushing the dollar index higher. Markets appeared unfazed at first, but soon gave back some of October s gains as a falling oil price and a number of poor company earnings reports weighed on investor sentiment. Following a strong 4 th Quarter, the start of 2016 was the poorest ever recorded for equity markets, with market sentiment turning negative despite underlying economic data not changing significantly for the worse. Although equity markets finished marginally positive for the period, this masked a fall of nearly 10% in early February that pushed the FTSE 100 index down to a low of a 22% drop from the highs seen in May last year (7103) 2. Against this backdrop, Government bonds worldwide had their best start to a year since 1996, as recession worries and Central Bank Stimulus in Europe and Japan saw yields fall and prices rise. April saw equity markets hold on to March s positive gains as the oil price continued its recovery, the US left interest rates unchanged and Chinese economic data showed further signs of stability. The US Federal Reserve (Fed) opted to keep interest rates on hold at their meeting, citing concerns over the recent weak global and US economic growth, whilst falling chances of a Brexit in the UK saw UK equities outperform. Equity markets largely traded sideways throughout May, as investors looked to take profit ahead of a crucial few weeks for equity markets. Meanwhile weak trade and manufacturing data in the UK and worse than expected import and export figures from China added to growing concerns over the health of the global economy; leading to a further strengthening of the government bond market. Outlook With markets whipsawing around sharply a number of our convictions have been tested this year, but we remain confident that the fund is well positioned for the longer term. We continue to believe that equity markets look attractive, but are cognisant of the fact that geo-political risks are increasing and that uncertainties over global growth still loom large on the minds of many investors. With this in mind, we used the recent rally from the February lows to reduce risk on the portfolio, adding to our UK Gilt position, buying US Inflation Linked Bonds and increasing exposure to Absolute Return as we look to preserve capital during periods of volatility. There is a raft of potentially significant central bank meetings in June (Fed, BoE and BoJ on Thursday 16 th ). These meetings and the Brexit vote could set the tone for global markets for the rest of the year. We remain defensively positioned ahead of these events. Sources; 1 Bloomberg 11 February Bloomberg 27 April 2015 Investment Manager Vestra Wealth LLP 17 June 2016 Page 5

6 Significant Information Under the Alternative Investment Fund Managers Directive ("AIFMD"), acting as the Alternative Investment Fund Manager ("AIFM"), WAY Fund Managers is required to disclose how those whose actions have a material impact on the Trust are remunerated. The remuneration strategy across WAY Fund Managers is governed by the Remuneration Committee, a committee appointed by the WAY Fund Managers' Board. The Remuneration Committee has established an AIFM Remuneration Policy designed to ensure the AIFM Remuneration Code in the UK Financial Authority handbook is met proportionately for all AIFM Remuneration Code Staff. WAY Fund Managers 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 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 deems itself as lower risk due to the nature of the activities it conducts. WAY Fund Managers does not pay any form of variable remuneration currently. Therefore WAY Fund Managers has provided a basic overview of how staff whose actions have a material impact on the Trust are remunerated. May 2016 Number of Beneficiaries Total remuneration paid Fixed remuneration Variable remuneration paid Carried interest paid by the AIF Total remuneration paid by the AIFM during the financial year , , Remuneration paid to employees of the AIFM who have a material impact on the risk profile of the AIF 8 61,053 61, Due to the size and structure of WAY Fund Managers, it is determined that employees of the AIFM who have a material impact on the risk profile of the AIF include the Board, Head of Product Management and Client Relations and the Head of Finance. The delegated investment manager is subject to regulatory requirements on remuneration that WAY Fund Managers 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. From 12 November 2015, the auditor for this Trust changed from Grant Thornton LLP to Deloitte LLP. This brings the Unit Trust in line with other Funds operated within the Authorised Fund Manager s group. The information in this report is designed to enable Unitholders to make an informed judgment on the activities of the Trust during the period it covers and the result of those activities at the end of the period. The long Report and Accounts are available free of charge on request. For more information about the activities and performance of the Trust during the period and previous periods, please contact: Authorised Fund Manager WAY Fund Managers Limited Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset, BH21 7SB Customer Service Centre: Authorised and regulated by the Financial Conduct Authority (FCA) Trustee Northern Trust Global Services Limited 50 Bank Street, Canary Wharf, London, E14 5NT Authorised by the Prudential Regulation Authority (PRA) and regulated by the FCA and the PRA Investment Manager Vestra Wealth LLP 14 Cornhill, London, EC3V 3NR Authorised and regulated by the FCA Please note that telephone calls may be recorded for monitoring and training purposes, and to confirm investors' instructions Auditor Grant Thornton UK LLP 30 Finsbury Square, London, EC2P 2YU From 12 November 2015 Deloitte LLP Chartered Accountants and Statutory Auditor Saltire Court,20 Castle Terrace, Edinburgh, EH1 2DB Page 6