Fund Partners WAY Fund Managers Limited WAY Global Cautious Portfolio Fund Interim Short Report for the period from 1 April 2013 to 30 September 2013
Interim Short Report for the period from 1 April 2013 to 30 September 2013 Contents Page Report of the Investment Adviser 3 Portfolio Statement 5 Performance Record 7 General Information 9 Risk Profile 11 Management and Professional Service Providers' Details 12 2
REPORT OF THE INVESTMENT ADVISER (unaudited) for the period from 1 April 2013 to 30 September 2013 Investment Objective and Policy The objective of the Fund is total investment return, through conservative investment in a diversified portfolio of Collective Investment Schemes, Investment Trusts, other listed securities, cash or near cash, deposits and money market instruments. 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, including cash, at any time. Unregulated Collective Investment Schemes may be used up to the full extent permitted by the Regulations. The portfolio will be actively managed. Derivatives will not be used. Currency hedging transactions may be used where appropriate, and borrowing will be permitted on a temporary basis under the terms of the Regulations. Investment review Over the reporting period the Fund returned -2.86%* against its IMA Mixed Investment 0%-35% benchmark figure of - 1.00% (source: Financial Express Analytics). One of the reasons for this underperformance is the holding in the EEA Life Settlements, which has been suspended since 1st December 2011. The WAY Fair Value Pricing Committee took the decision to write-down the value of this holding, which has been a serious drag on the performance of the Fund. Over the period the Fund has aimed to maximise growth, and has achieved this by being positioned very near to its equity exposure limits. Fund selection is aimed toward funds that are very flexible in their approach as we enter a period in which the likelihood is that interest rates will rise. In these conditions traditional fixed income tends to perform poorly, so the Fund has invested with managers who have demonstrated that they can adapt to challenging/changing conditions. The top performers in the Fund over the reporting period were the River & Mercantile World Recovery, which was added to the Fund in July, and the WAY Freestyle Growth Portfolio, while the top underperformers include Phaunos Timber, PIMCO Global Advantage Real Return, and Allianz RCM Continental European, which was sold at the end of the accounting period due to its poor performance and replaced with a strong-performing European ETF. Having reviewed the performance of PIMCO Global Advantage Real Return, it seems likely that the underperformance was due to exposure to the Emerging Market-linked sector which has been heavily sold off but is likely to recover over the next reporting period. In May, the Artemis Strategic Bond Institutional Income Fund holding was sold and replaced with the Old Mutual Global Strategic Bond and the JP Morgan Income Opportunities, as the portfolio looked to reduce exposure to higheryield bond funds and move toward more growth-orientated, defensive funds positioned for a market correction. *E Accumulation share class 3
REPORT OF THE INVESTMENT ADVISER (continued) (unaudited) for the period from 1 April 2013 to 30 September 2013 Outlook We continue to monitor economic activity closely and adapt according to our analysis of the macro-economic environment. The Fund will look to remain relatively short duration within fixed income as bond markets remain volatile. Rates in the US could rise as economic activity picks up and tapering eventually starts. While Europe has witnessed some political instability (particularly Italy), it has also exhibited a stronger macroeconomic picture. Structural reforms are being carried out in Spain, which is certainly an encouraging step. Furthermore, the peripheral debt will benefit from the accommodative stance from the European Central Bank, which very recently reiterated its intention to keep interest rates low over a significant period. It is probable that exposure to European equity may be increased as may European peripheral debt. The widening gap between Global Emerging Markets and Developed Markets is presenting an ever greater buying opportunity for the former. This is balanced with the extra risk and volatility often associated with global emerging markets but we believe the current valuations are particularly attractive and a small increase in allocation is likely. Trevor Chanter WAY Fund Managers Limited 31 October 2013 4
PORTFOLIO STATEMENT (unaudited) as at 30 September 2013 Percentage Market of total Value net assets Holding Portfolio of Investments % United Kingdom: 30.94% (40.71%) 288,187 Artemis UK Growth 1,138,382 1.94 304,046 Avoca Credit Absolute Return 3,460,438 5.90 175,000 Inland Homes 195,125 0.33 949,718 Investec Enhanced Natural Resources 1,013,634 1.73 2,729,114 JP Morgan Strategic Bond 2,922,881 4.99 536,989 Liontrust Special Situations Income 1,394,367 2.38 278,341 Old Mutual UK Dynamic Equity 682,242 1.16 1,640,000 Phaunos Timber 482,234 0.82 400,863 PIMCO Diversified Income 2,838,113 4.84 67,452 River & Marcantile UK Equity Smaller Companies 708,213 1.21 533,165 River & Mercantile UK Equity Unconstrained 1,718,445 2.93 2,980,747 Schroder Strategic Bond 1,588,738 2.71 18,142,812 30.94 Global: 46.46% (28.08%) 10,560 Carmignac Global Bond 1,068,794 1.82 3,373,811 City Financial Strategic Global Bond 2,569,494 4.38 77,500 F&C Global Smaller Cap Equity Fund 528,693 0.90 37,443 GS Global Strategic Income Bond Portfolio 4,149,420 7.08 23,626 JP Morgan Income Opportunity 2,502,465 4.27 255,193 Liontrust Global Strategic Bond 2,414,129 4.12 2,635,509 Old Mutual Global Strategic Bond 2,830,774 4.83 76,480 Pantheon International Participations 813,747 1.39 454,483 PIMCO Global Advantage Real Return 2,751,546 4.70 1,929,929 Psigma Global Equity 2,162,872 3.69 207,555 River and Mercantile World Recovery 646,472 1.10 2,411,549 WAY Absolute Return 2,773,041 4.73 1,598,726 WAY Freestyle Growth Portfolio 2,019,991 3.45 27,231,438 46.46 North America: 9.22% (14.08%) 88,732 Brown Advisory American 1,278,627 2.18 32,553 EEA Life Settlements WAY* 2,980,379 5.09 911,920 Psigma American 1,140,183 1.95 5,399,189 9.22 Asia: 2.77% (3.43%) 572,162 Old Mutual Asia Pacific 663,708 1.13 607,340 Origo Partners Preferred Stock 394,767 0.67 1,029,930 Schroder Asia Alpha Plus 566,874 0.97 1,625,349 2.77 5
PORTFOLIO STATEMENT (continued) Percentage Market of total Value net assets Holding Portfolio of Investments % Europe: 4.84% (4.19%) 2,461,828 Artemis European Opportunities 1,633,423 2.79 49,477 Renasset Ottoman 555,631 0.95 6,257 UBS ETF MSCI EMU TRN 644,721 1.10 2,833,775 4.84 Emerging Markets: 2.22% (2.50%) 61,607 GS N-11 Equity Portfolio 389,762 0.67 171,703 JOHCM Asia ex-japan 228,365 0.39 380,388 Somerset Global Emerging Markets 676,900 1.16 1,295,027 2.22 Portfolio of investments: 96.45% (92.99%) 56,527,590 96.45 Net other assets: 3.55% (7.01%) 2,074,724 3.55 Total Net Assets 58,602,314 100.00 Note: Comparative figures shown in brackets relate to 31 March 2013 All investments are Collective Investment Schemes unless otherwise stated *The stock is currently suspended 6
PERFORMANCE RECORD Price and Income History Highest Lowest Calendar Share Price Price year Class p p Distribution** 2009 A Accumulation 119.24 98.05 - B Accumulation 118.63 97.71 - B Income 118.67 97.75-2010 A Accumulation 132.19 117.49 - B Accumulation 131.03 116.63 - B Income 131.04 116.64-2011 A Accumulation 132.67 120.20 - B Accumulation 131.50 118.87 - B Income 131.51 118.88-2012 A Accumulation 130.99 121.89 - B Accumulation 130.99 120.46 - B Income 131.00 120.47-2013* A Accumulation - - - B Accumulation 140.46 130.82 - B Income 140.47 130.83 - E Accumulation 107.69 101.71 - E Income 107.69 101.71 - T Income 107.41 101.37 - *from 1 January 2013 to 30 September 2013. **since the launch of the Fund, no revenue distributions or accumulations have been made. Net Asset Value Net Asset Shares Net Asset Value Accounting Share Value in per share Date Class issue p 31 March 2011 A Accumulation 64,135 48,783 131.84 B Accumulation 6,146,275 4,748,660 129.79 B Income 47,235,462 36,501,770 129.77 31 March 2012 A Accumulation 14,787 11,567 127.84 B Accumulation 5,823,026 4,611,825 126.26 B Income 47,206,577 37,384,680 126.27 31 March 2013 A Accumulation - - - B Accumulation 5,543,168 4,094,478 135.38 B Income 51,394,545 37,959,852 135.39 E Accumulation 104 100 104.00 E Income 104 100 104.00 T Income 717,111 692,849 103.50 30 September 2013* A Accumulation - - - B Accumulation 5,204,280 3,915,786 132.91 B Income 46,879,372 35,270,159 132.92 E Accumulation 102 100 102.23 E Income 102 100 102.23 T Income 6,518,458 6,408,981 101.71 7
PERFORMANCE RECORD (continued) Other Relevant Prices Share Price Date Class p Launch date 21 January 2008 A Accumulation 100.00 25 February 2005 B Accumulation 100.00 25 February 2005 B Income 100.00 14 January 2013 E Accumulation 101.81 14 January 2013 E Income 101.81 14 January 2013 T Income 101.80 Accounting date 30 September 2013 A Accumulation - B Accumulation 133.20 B Income 133.21 E Accumulation 102.46 E Income 102.46 T Income 101.93 Latest date 14 November 2013 A Accumulation - B Accumulation 134.91 B Income 134.92 E Accumulation 103.90 E Income 103.88 T Income 103.27 Total Expense Ratio ('TER') This is a measure of the cost associated with managing the Funds. Apart from the initial charge, all the other expenses are included in the TER. The TER is an internationally accepted standard for the comparison of cost for authorised Funds. Where the Fund invests its assets in other Collective Investment Schemes ('CIS'), the TERs attributable to the underlying CIS are taken into account: a) The TER (or equivalent) of each underlying CIS are pro-rated in line with the proportion of the fund it represents. b) All the pro-rated figures are added to the TER of the Fund, giving a synthetic TER total. The TERs of the Fund for the period under review per share class are as follows: 30/09/2013 31/03/2013 A Accumulation n/a 2.09% B Accumulation 2.54% 2.39% B Income 2.54% 2.39% E Accumulation 2.04% 1.89% E Income 2.04% 1.89% T Income 2.34% 2.19% 8
GENERAL INFORMATION The Company WAY Global Cautious Portfolio Fund (the 'Company') is an Investment Company with variable capital ('ICVC') incorporated in England and Wales with the number IC000381 with effect from 25 February 2005, under the OEIC Regulations. It is a Non-UCITS Retail Scheme which complies with the Collective Investment Schemes Sourcebook ('COLL') issued by the Financial Conduct Authority ('FCA'). The Shareholders are not liable for the debts of the Company. The Authorised Corporate Director ('ACD') The ACD is the sole director of WAY Global Cautious Portfolio Fund 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 WAY Global Cautious Portfolio Fund. The Depositary is State Street Trustees Limited, 20 Churchill Place, Canary Wharf, London, E14 5HJ. The Depositary is authorised and regulated by the FCA. Prospectus Copies of the Company s Prospectus are available free of charge from the ACD upon request. Share Type The Company currently has six share classes in issue. Details can be found in the prospectus available free of charge on request from the ACD. Pricing and Dealing Single prices are always quoted for shares in the Fund. Dealing in all companies 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 the 2% of the Net Asset Value of the Fund, 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 Fund. The minimum initial lump sum investment in the Fund is 50,000 for A and T share classes. The minimum subsequent investment is 50,000 for A and T share classes. The minimum investment level is 50,000 for A and T share classes. The minimum initial lump sum investment in the Fund is 5,000 for B and E share classes. The minimum subsequent investment is 5,000 for B and E share classes. The minimum investment level is 5,000 for B and E share classes. 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. 9
GENERAL INFORMATION (continued) Dilution Levy The actual cost to the Fund of purchasing or selling its 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 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 units. The dilution levy will be applied at outset and will be paid into and will become part of the Fund. The dilution levy for the Fund will be calculated by reference to the costs of dealing in the underlying investments of the Fund, including any dealing spreads, commission and transfer taxes. Management Charges, Spreads and Yields The initial charge for A and B Share Class is 5.25% (of Net Asset Value price), E Share Class and T Share Class is 2.00% (of Gross initial investment). Current periodic charges are: A Share Class 1.15%, B Share Class 1.45%, E Share Class 0.95% and T Share Class 1.25%. Certain other expenses are met by the Fund, the nature of which are detailed in the Fund 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 Fund is quoted daily on the web pages of Financial Express at www.fundlistings.com. Stamp Duty Reserve Tax Stamp Duty Reserve Tax ('SDRT') is a 0.5% tax that may be payable by the ACD, for which the Depositary may become liable when shareholders sell their shares in the Fund. 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 Fund s Prospectus, any SDRT liability incurred by WAY Global Cautious Portfolio Fund will be charged to the Fund, which could mean that less of your money will be invested for potential capital and income growth. Capital Gains Tax As an ICVC, the Fund 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 as a long term investment. 10
RISK PROFILE The following are important warnings: a) 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 the Company will be achieved; b) The Company invests 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; c) The capital value and the income from shares in the Company 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 initial 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; d) Defensive investment in cash and money market instruments, at times when relevant stockmarket indices are rising, may constrain the growth of capital invested in the Company; e) 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; f) It must be emphasised that past performance is not necessarily a guide to future growth or rates of return; g) Exemptions, thresholds and rates of tax may change in future tax years. 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. 11
Authorised Corporate Director ('ACD'), Registrar and Investment Adviser WAY Fund Managers Limited* Cedar House 3 Cedar Park Cobham Road Wimborne Dorset BH21 7SB Telephone: 01202 855 856 Directors of the Managers P. Wilcox (Chairman) P. Legg P. Hugh Smith R. Coe V. Hoare Independent Auditor Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU Fund Accountant Apex Fund Services (UK) Ltd* Veritas House 125 Finsbury Pavement London EC2A 1NQ Trustee State Street Trustees Limited* 20 Churchill Place Canary Wharf London E14 5HJ *Authorised and Regulated by the Financial Conduct Authority ('FCA') 12