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Portfolio Service Investment Report 30 th June 2016 – 30 th September 2016 Waverton Investment Management Limited 16 Babmaes Street London SW1Y 6AH www.waverton.co.uk Authorised and Regulated by the Financial Conduct Authority

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Portfolio Service Investment Report

30th June 2016 – 30th September 2016

Waverton Investment Management Limited 16 Babmaes Street

London SW1Y 6AH

www.waverton.co.uk Authorised and Regulated by the Financial Conduct Authority

Contents

Waverton Investment Management 2

Past performance is no indication of future performance. The value of investments and the income from them is not guaranteed and can go down as well as up. Investors may not get back the value of their original investment.

CONTENTS

Introduction 3

Market Perspectives 4

Portfolio Commentary 7

Portfolio Performance 8

Performance Summary 10

Risk Warning 11

Portfolio Holdings 12

Portfolio Service Mandates 15

About Waverton 16

Further Information 17

Introduction

Waverton Investment Management 3

INTRODUCTION

Thank you for your investment in the Waverton Portfolio Service. We are pleased to provide our report for the third quarter of 2016. Our portfolio range We manage portfolios across the risk spectrum, from defensive through to growth portfolios. Our platform based Portfolio Service is available exclusively to clients of financial advisers to provide a cost effective and efficient means of investment. Our range of portfolios is shown below:

Portfolio

Long Term

Investment

Objectives

Risk

Category

Portfolio

Long Term

Investment

Objectives

Risk

Category

Growth CPI+4.5% High Defensive CPI+3.0% Low/Medium

Balanced CPI+4.0% Medium Conservative CPI+2.5% Low/Medium

Cautious CPI+3.5% Medium Bond Focus CPI+2.0% Low

More details of each Mandate, including its benchmark, volatility range and risk category explanation can be found on page 15. Our investment approach The portfolios invest in a diversified range of assets which seek consistent, less volatile returns when compared to the market. This involves blending a variety of different asset classes so that the portfolio participates in some of the upside in rising equity markets, but also aims to limit some of the downside when markets are falling. Waverton has an active approach to investing both at the asset allocation and fund selection level. In terms of asset allocation the strategic positions are constantly reviewed and tactically adjusted according to market conditions. Our tactical asset allocation is driven by the Waverton Asset Allocation Committee which meets every six weeks or more frequently, if required, and ensures portfolios are managed in accordance with their long-term objectives but also with a degree of latitude, particularly important as Waverton is a house which is flexible and pragmatic and does not seek to ‘hug’ benchmarks. The equity and alternative elements of the portfolios are largely invested through third party funds and vehicles. For these elements, the investment managers go through a rigorous fund selection process which requires extensive and detailed knowledge of the individual managers, their investment style and how they behave over different periods of the market cycle. Strong performance is not enough to ensure a fund remains in the portfolio. If it does not fit with the team’s expectation of the business cycle it will be sold. The bond element of the portfolios is managed by our specialist fixed income team through the Waverton Sterling Bond Fund which holds direct investments in UK and overseas government and corporate bonds. All portfolios are constantly monitored to ensure that they are consistent with the original mandate, our house view and the risk parameters of the portfolio.

Market Perspectives

Waverton Investment Management 4

MARKET PERSPECTIVES

THE LAST QUARTER…

“What doesn’t kill

you makes you

stronger”

Donald Tusk, President

of the European Council

24th June 2016

OUTLOOK FOR INTEREST RATES

In March 2009, the Bank of England Base Rate fell to a record low of 0.5%. This was widely hailed as a necessary measure to stave off the ravages of depression and preserve the integrity of the banking system, the near universal opinion being that this emergency measure would not be long lasting and would be followed by a normalisation of rates as economic recovery took hold and inflation gathered pace on the back of QE – so called ‘money printing’. In the ensuing years it became clear that deflation was probably a greater and more immediate threat to global prosperity than inflation; there have been more column inches in Market Perspectives discussing deflation than inflation in recent years. However, until last June’s edition (when we forecast that both short and long interest rates in the UK would fall) our conclusion was invariably that the next move in the Base Rates would be up. It is impossible to overstate the unprecedented and unexpected nature of the environment we are in. The impact that this has had on bond yields has been truly extraordinary.

Back in March we talked about negative interest rates as if they were a bizarre but temporary visitation.

Six months on, it seems to be the norm in large parts of the world and now many corporate yields

have followed government paper in falling below zero. Henkel and Sanofi both issued zero coupon

bonds over par; others like GE and Johnson & Johnson found their existing paper pushed up to a level

which offered new investors negative yields to maturity. This is not just a phenomenon which applies

to short dated paper: the German, Swiss and Japanese 10 year government bonds have persistently

- World stock markets continue to grind higher, led by Asia and Japan.

- Key government bond yields mark time, maintaining very low yields.

- Emerging Market sovereign debt yields hit record lows.

- The pound experiences its 5th consecutive quarterly loss – its longest

run of losses in 32 years.

- The UK’s August Purchasing Managers’ index experiences its biggest

rebound in its 20 year history; September’s PMI also comes in

significantly ahead of expectations.

- The Bank of England cuts its Base Rate to 0.25%; the US Federal

Reserve indicates that a December rate rise is likely.

- Gold and the oil price both stall, ending the quarter where they

started.

- Henkel and Sanofi become the first non-financial private companies

to issue bonds over par, with negative yields.

- Deutsche Bank shares fall to their lowest level since listing in 1992.

Against the

expectations

of the last 7

years, the

Bank of

England Base

Rate fell to

0.25%

Negative

yields in the

bond market

have become

more

pervasive.

Market Perspectives

Waverton Investment Management 5

traded at negative yields for several months. We highlighted in the March edition of Market

Perspectives how damaging negative rates would be to the profitability of commercial banks and

therefore credit creation in the world economy. We also alluded to the impact all this has on pension

funds and insurance companies, and their liabilities. The more that longer dated bonds descend into

negative yield territory the worse these problems become.

The implications of this on expected returns in the fixed interest arena going forward is frightening. As

bond yields fall, the value of bonds already in issue rises further and further above their redemption

value. The coupons on new issues fall correspondingly lower and the accustomed level of income can

only be replaced if investors move up the risk curve either into poorer quality credits or higher duration

bonds. Even good quality credits are risky if the duration is long dated. By way of example, if in July

you had bought the 0.4% Japanese 2056 government bond (issued at par in May of this year) when it

traded at 113 and then sold it in mid-September at 92 (following an entirely unremarkable and very

slight back up in yields) you would have lost 21% of your capital in little more than two months. You

would also have lost in that time 53 years’ worth of coupon income. This is an extreme example but,

bearing in mind that some 60% of the world’s bonds now carry a negative yield, it is illustrative of the

dangers.

The bottom line is that anyone who extrapolates historic returns from fixed interest securities into the future is likely to be sorely disappointed – deflation or no deflation. Since the inception of the Barclays US Aggregate index in 1976, investment grade bonds have produced a compound nominal return of 7.5% with comparatively low volatility; to achieve the same return over the next seven years, yields would have to fall to -3% to -4% by the end of the period. Conversely, if yields gradually rise to a more normal 5% over the next 7 years, the compound return would be in the region of -1% per annum.

Source: Bloomberg 07.10.016

OUTLOOK FOR EQUITY MARKETS

The considerations outlined on the previous page have caused us to revise our expectations for

returns on all investment strategies going forward. Our thoughts are outlined in our new Investment

Mandates Guidance Notes booklet. Expectations for the more fixed interest orientated mandates have

been downgraded more than those for equity orientated mandates – though equities have been

downgraded as well because fundamentally all asset classes are to some degree priced off prevailing

interest rates. Equities are also going to be affected by long term demographic issues, global debt

levels and changes in profitability, many of which look challenging going forwards.

A major factor governing the long term return outlook for shares will be productivity. If more people

can work with greater efficiency using new technology with all the advantages of division of labour,

then long term advantage will still accrue to equity investors in spite of a rising interest rate headwind.

This has been the history of progress throughout time immemorial and will continue to be so as long

as globalisation trumps isolationism, free trade wins over protectionism and progress defeats luddism.

It is notable that the 1850s, which represent a golden age in the expansion of global trade and saw

Income is

falling and

capital is at

risk.

We cannot extrapolate

past returns.

We have lowered our

expectations.

Productivity growth and

free trade will be important determinants of long run

equity returns.

Market Perspectives

Waverton Investment Management 6

rapid innovation in the fields of technology and communication followed upon the abolition of the Corn

Laws and a general decline in tariffs; and that one of the worst periods for equity investment, from

1929 to the mid-1930s, was an era of protectionism. We must earnestly hope that Brexit heralds a

new era of free trade rather than being seized upon by politicians around the world as a licence to

batten down the hatches and sacrifice free enterprise and comparative advantage in favour of populist

measures to control immigration or subsidise failing domestic industries. So far, the signs are that Mrs.

May’s new administration broadly favours progressive globalisation and free trade in spite of some

rather regressive talk about immigration and her curious proposals for the workings of private

companies. However, in the European Union the rhetoric tends very much the other way and in the

United States the presidential election has fanned some rather ominous looking flames. Both

presidential candidates seem to be against the putative Trans Pacific Partnership. If America

abandons this, not only will it be a setback for the principle of free trade, it will likely be to China’s long

term strategic advantage relative to the West.

One of the problems contributing to the malaise of recent years has been the collapse in developed

world productivity. Whereas between 1950 and 1973 GDP in the G7 expanded by 4% per hour

worked, since 2008 it has been less than 1%. Demographics has been one factor behind this (i.e.

fewer people of working age, and more in the dependency stage – particularly in places like Japan

and Germany); another may be that, as economies move away from agriculture and then from

manufacturing to services, productivity enhancements are less easy to come by. If that is true,

emerging markets are by definition still to benefit from the kind of productivity gains which propelled

the developing world decades ago. The demographics of the developing world look better too, with

working age population growth even in China (often seen as the laggard on this front) over the next

fifteen years looking much healthier than in the developed world (Eastern Europe being the worst of

all).

In the summer we undertook a reappraisal of our stance on emerging markets, about which we have been cautious for the last few years. Some of the factors which have led to their under-performance, such as weakness in commodity prices and a strong US dollar, appear largely to have played out; others, like the imbalances in China and the ructions in South American politics rumble on but don’t appear to be of pressing concern. In the meantime, valuations relative to the western world have become more enticing, growth rates look better, government finances are generally healthier and currencies are cheaper. We currently have meaningful exposure and may look to increase this if the opportunity presents itself.

Demographics are also

important.

Emerging markets look

more interesting than the

developed world.

Portfolio Commentary

Waverton Investment Management 7

PORTFOLIO COMMENTARY

Portfolios have made steady progress since June and are now comfortably ahead on a year to date basis. During the quarter the fixed income strategy increased by c.4%. Post-Brexit blues dissipated further in September. Since the vote, safe-haven fixed income underperformed, credit spreads ground tighter, volatility remains stubbornly low, and emerging market debt was well bid. We are cognisant the market has a dependence on liquidity; it is upbeat whenever the rate-of-change of liquidity stays positive, and reacts badly whenever monetary conditions appear likely to be withdrawn. The markets behaviour during the quarter was no exception. Central banks continue to signal that loose liquidity conditions are here to stay with the only major central bank contemplating a rate hike, the Fed, deferring an increase until at least the December FOMC meeting, despite dissent among the ranks. A hesitant Fed and extreme policy accommodation elsewhere will continue to sustain depressed government bond yields to the benefit of many risk asset markets, for now, at least. Looking forward, we expect central banks will remain supportive of financial markets in Q4, but mounting operational and political constraints such as a scarcity of bonds to buy, political backlash against negative rates and unforeseen problems for banks and pension funds could lead central banks to change course and taper asset purchases in 2017. The main factor explaining much of the returns we have seen over the past few years is duration. As tapering takes place, and the policy torch will pass from monetary to fiscal, the flood of liquidity will recede. We fear that bond markets are ever closer to a “duration event” where the negative returns could be many multiples of expected annual returns and the ensuing investor reaction could highlight the shortage of liquidity in credit markets. We are mindful of this in our exposure to the asset class. The equity component had a good quarter with all geographies posting positive returns. Sterling weakness in the aftermath of Brexit continued to provide a tailwind for our global approach adding, on average, 4% to the returns of our non-UK exposure. There have been two new additions to the UK. The Lindsell Train UK Equity and Evenlode UK Income Funds have been added with the intention of increasing the exposure to ‘quality’ as a style. Long term investors in our portfolios will remember that we have previously done very well from holding Lindsell Train but had to part company with it when we cut exposure to the UK. It is a fund that has a focussed approach and concentrates on quality companies with enduring brands. Evenlode has a similar style overlay but with an income bias that we think will be beneficial if interest rates continue to remain low. Pershing Square was the best performer in the US portfolio – we shall make no further comment on that holding, enough has been written in the past. Of the factor funds that we own the minimum volatility, that has had such a good year, lagged somewhat but this was more than made up for by the stellar returns from Lyrical the active value managers that have previously struggled. The US over the quarter has perfectly highlighted the benefits of a diversified approach as the danger of market timing the different factors that drive markets is as high as it has ever been. In Europe the active funds had mixed fortunes. Schroders and Reyl Asset Management performed well beating indices but Argonaut continued its run of poor form. The last year has been a very difficult one for Barry Norris’s fund. We are by nature, patient investors and are prepared to put up with periods of underperformance as it is often the case that a manager’s particular style just happens to be out of favour. However the results are showing no signs of improvement and there has also been some corporate activity that concerns us. This holding is under review.

Equities

Overview

Fixed Income

Portfolio Commentary

Waverton Investment Management 8

The best performing markets over the quarter were to be found predominantly in the east with Asia, Emerging Markets and Japan setting the pace. The active funds that we hold in these regions have been good to us over the years. The minimum holding period for the funds currently held is three years and all are top quartile since inception of each of the positions. The global funds that we own all added value over the quarter. The Odey fund out performed by just under 2% and the Guinness funds, Global Income and Global Innovators, beat the index by c.2% and c. 6% respectively. These funds have all been good holdings for us but are about to make way for our new Global Equity Core Fund that is coming this month. This is an exciting transition for us which we feel will add great value to our investment process. The addition of a ‘fourth leg’ to our strategy is designed to enhance the returns and lower the volatility. It has the additional benefit for clients of lowering the total expense ratio of our portfolios. The Alternatives contributed positively over the quarter whilst avoiding the volatility we saw in equity markets following the result of the EU referendum. With Mark Carney announcing a cut in interest rates in the immediate aftermath of the vote it is not surprising that the strongest returns came from our asset backed, higher yielding vehicles. Within aircraft leasing, Amedeo Air Four Plus and Doric Nimrod returned 8.61% and 5.51% respectively and within property, GCP Student Living returned 12.52%. Our infrastructure funds also continued to perform well with GCP Infrastructure up 12.33% and 3i Infrastructure 8.99%. Our infrastructure stocks have now returned 16.7% on average over the last nine months and now stand on premiums in the high teens. Whilst this is below their recent highs, these premiums are still high by historical standards. However, with the funds still yielding 4% - 4.5% we think these premiums are justified when you look at the yields available on cash and bonds. The returns from our hedge funds were much more subdued although that was to be expected after we rebalanced the Fund away from the more directional long short funds in favour a much more market neutral approach in the second quarter. Because these funds typically target fairly modest uncorrelated returns, we generally tend to hedge out any non-sterling exposure as adverse currency movements can quickly turn a positive return into a negative one. As a result, these funds received little of the benefit of sterling’s weakness post Brexit. In terms of activity, we took a new position in the Old Mutual UK Specialist Equity Fund. The Fund is a newly launched UCITS version of a very successful Cayman UK mid and small cap long short equity fund. Whilst the Fund is technically long short, the manager tends to run a very low net exposure which has averaged 5.6% since the launch of the Cayman vehicle in 2003. Over the last three years, the Cayman fund has annualised at 8.7% with a negative correlation to the FTSE 250 index. The UCITS vehicle has started well, returning 6.72% over the quarter. Other than a small addition to our gold weighting there was no other activity of note. Markets have been particularly strong of late and, in many regions, been posting new highs. This would seem to suggest a great deal of confidence in the outlook for improving economic growth. However there is also a lot of doom and gloom from strategists and economists suggesting exactly the opposite. We feel that the truth lies somewhere in the middle. A muddle through scenario seems most likely to us and in this environment portfolios should be able to post reasonable yet unexciting returns.

Alternatives

Outlook

Portfolio Performance

Waverton Investment Management 9

PORTFOLIO PERFORMANCE

These performance figures are based on the performance of the Waverton portfolio available through third party platforms. Performance is taken from internally derived Waverton figures. It is based on the performance of the underlying holdings for each portfolio and takes into account any asset allocation changes made during the period. The portfolios are invested through a mix of three Waverton Funds: Sterling Bond, Equity and Alternatives. A factsheet for each fund is available on request. The performance shown above is net of a 0.5% per annum fee to 31st March 2014 and 0.4% per annum thereafter. The performance does not allow for platform charges such as trading charges. Risk Warning: The figures contained within this report are for illustration purposes only. Past performance is no indication of future performance. The value of investments and the income from them is not guaranteed and can go down as well as up. Investors may not get back the value of their original investment.

Growth Q3 16 YTD 2015 2014 2013 2012 3 Years SI Annualised Since Inception

Waverton 6.78% 8.71% 2.61% 5.93% 18.54% 9.67% 23.22% 9.45% 53.59%

CPI+4.5% 1.40% 3.95% 4.73% 5.08% 6.66% 7.27% 16.27% 5.82% 30.88%

Balanced Q3 16 YTD 2015 2014 2013 2012 3 Years SI Annualised Since Inception

Waverton 6.00% 7.38% 2.55% 5.56% 16.24% 9.07% 20.68% 8.50% 47.38%

CPI+4.0% 1.28% 3.58% 4.23% 4.57% 6.15% 6.75% 14.60% 5.32% 27.92%

Cautious Q3 16 YTD 2015 2014 2013 2012 3 Years SI Annualised Since Inception

Waverton 5.32% 6.69% 2.47% 4.65% 13.08% 8.28% 18.06% 7.35% 40.09%

CPI+3.5% 1.15% 3.20% 3.72% 4.07% 5.63% 6.24% 12.94% 4.81% 25.01%

Defensive Q3 16 YTD 2015 2014 2013 2012 3 Years SI Annualised Since Inception

Waverton 4.72% 5.78% 2.33% 3.94% 10.36% 7.23% 15.54% 6.21% 33.15%

CPI+3.0% 1.03% 2.83% 3.22% 3.56% 5.12% 5.72% 11.31% 4.30% 22.16%

Conservative Q3 16 YTD 2015 2014 1 Year Since Inception

Waverton 4.04% 4.83% 2.18% 3.20% 7.67% 10.53%

CPI+2.5% 0.89% 2.44% 2.71% 3.05% 3.25% 8.42%

Bond Focus Q3 16 YTD 2015 2014 1 Year Since Inception

Waverton 3.94% 5.41% 1.85% 2.95% 7.75% 10.53%

CPI+2.0% 0.78% 2.07% 2.21% 2.55% 2.77% 7.00%

Period 1 year to 30th Sept 16 30th Sept 15 30th Sept 14 30th Sept 13

MPS Growth 15.96% -0.52% 6.82% 16.78%

Period 1 year to 30th Sept 16 30th Sept 15 30th Sept 14 30th Sept 13

MPS Balanced 13.70% -0.15% 6.30% 14.74%

Period 1 year to 30th Sept 16 30th Sept 15 30th Sept 14 30th Sept 13

MPS Cautious 11.54% 0.37% 5.46% 11.85%

Period 1 year to 30th Sept 16 30th Sept 15 30th Sept 14 30th Sept 13

MPS Defensive 9.68% 0.59% 4.73% 9.41%

Period 1 year to 30th Sept 16 30th Sept 15

MPS Bond 7.75% 0.36%

Period 1 year to 30th Sept 16 30th Sept 15

MPS Conservative 7.67% 0.84%

As at 30.09.2016 Inception date for Growth, Balanced, Cautious and Defensive: 31.12.2011 Inception date for Conservative and Bond Focus: 31.12.2013 Source: Waverton, Bloomberg and Morningstar.

Performance Summary

Waverton Investment Management 10

SINCE INCEPTION

ONE YEAR TO THE 30th SEPTEMBER 2016

PERFORMANCE SUMMARY

Past performance is no guarantee of future results and the value of such investments and their strategies may fall as well as rise, you may not get back your initial investment, capital security is not guaranteed.

Risk Warning

Waverton Investment Management 11

RISK WARNING

Past performance is no guarantee of future results and the value of such investments and their strategies may fall as well as rise, you may not get back your initial investment, capital security is not guaranteed. The opinions expressed may differ from those with different investment philosophies. The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. The portfolio may invest in assets which are not readily realisable or where there is counterparty risk. Changes in rates of exchange may have an adverse effect on the value, price or income of an investment. There is no guarantee of a return on Absolute Return Funds held .The returns for structured products may fluctuate according to different market conditions; you may get back less than you originally invested.

Fixed income securities which the portfolio may invest in are sensitive to interest rate risk (duration) and will increase and decrease in value as interest rates change

The information contained within this document relating to ‘yield’ is for indicative purposes only. Clients should note that yields on investments may fall or rise dependent on the performance of the underlying investment and more specifically the performance of the financial markets. As such, no warranty can be given that the expressed yields will consistently attain such levels over any given period.

Portfolio Holdings

Waverton Investment Management 12

Top 10 Issuers %

Lloyds Bank Plc 7.5

US Treasury N/B 6.5

UK Tsy 3 1/4% 2044 5.8

Barclays Bank Plc 5.1

Cooperatieve Rabobank Ua 4.3

Pershing Square Holdings 4.2

PGH Capital Plc 4.1

Standard Chartered Plc 3.5

Grainger Plc 3.2

Royal Bk Scotlnd Grp Plc 2.6

PORTFOLIO HOLDINGS

Tactical Asset Allocation Summary

Portfolio Type

Asset Allocation

Fixed Interest & Cash

Equities Alternatives

Growth 10.0% 80.0% 10.0%

Balanced 19.0% 64.0% 17.0%

Cautious 26.0% 48.0% 26.0%

Defensive 28.0% 36.0% 36.0%

Conservative 36.0% 21.0% 43.0%

Bond Focus 61.0% 11.0% 28.0%

As at 30.09.16. Source: Waverton

Portfolio Holdings

Our portfolios are constructed using three specialist funds which are managed specifically to form the building blocks of each portfolio. The Funds are the Waverton Sterling Bond Fund, the Waverton Equity Fund and the Waverton Alternatives Fund. We believe this approach has a number of advantages, one of which is that it allows access to the best ideas from the entire marketplace within each fund. More details of each Fund are shown below. WAVERTON STERLING BOND FUND – key portfolio features as at 30th September 2016

*As at 30.09.16. The above is for example purposes only and should not be considered a solicitation to buy or an offer to sell the above fund. Source: Waverton, Thompson Reuters, Datastream and Morningstar. Credit Quality is compiled from the following external agencies: S&P, Moodys and Fitch and relates to the entire Sterling Bond Fund.

Top 10 Issuers* Sector Breakdown* Credit Quality*

Portfolio Holdings

Waverton Investment Management 13

% Weight

TM Sanditon UK Fund 3.50

CF Lindsell Train UK Equity Fund Inc 1.60

Evenlode UK Income Fund 'B' Inc 1.60

iShares Core FTSE 100 Fund UCITS ETF 1.50

iShares MSCI Europe Ex UK € Fund 4.50

HSBC Plc € Stoxx 50 UCITS ETF 3.90

RAM Euro Equities Systematic Fund Ip € 1.50

Schroder European Alpha Income Z Inc 1.40

FP Argonaut European Alpha Fund Class 'I' Ins £ 1.30

iShares Russell 1000 Grow th 7.60

iShares S&P 500 Minimum Volatility UCITS ETF 6.20

Vanguard Dividend Appreciation ETF 5.80

Lyrical North American Value Acc US$ 4.90

WisdomTree Total Dividend ETF 4.20

iShares S&P 500 Index Fund UCITS ETF 3.00

Pershing Square Holdings 0.10

Source JPX-Nikkei 400 UCITS ETF 7.40

Hermes Asia Ex Japan Equity Fund 5.90

Prusik Asian Equity Income Fund 3.00

Somerset Emerging Markets Dividend Grow th Fund 2.90

Ram EM Equity Fund 2.50

Odey Allegra Developed Markets Fund 7.70

iShares MSCI World UCITS ETF 6.70

Guinness Global Innovators Fund 3.60

Waverton Global Equity Wealth Creation Fund 1.40

Waverton Protection Strategy 2.40

% Weight

Amedeo Air Four Plus 1.66

Doric Nimrod Air Tw o 2.38

MontLake Dunn WMA UCITS Fund 6.81

JL Equity Market Neutral Fund 6.55

Jupiter Absolute Return Fund I Acc 7.53

Old Mutual UK Specialist Equity Fund 7.48

Phileas Long/Short Europe I £ Acc 7.79

JP Morgan Global Macro Opportunities 6.45

Odey Odyssey Fund 4.19

HICL Infrastructure 1.87

3i Infrastructure 1.65

International Public Partnerships 1.91

GCP Infrastructure 2.02

Spinnaker Emerging Markets Macro Fund 6.08

Odey Absolute Return Fund 5.11

Verrazzano European Long-Short Fund 3.95

GCP Student Living Plc Ord 1p 6.66

Channel Islands Property 4.58

Starw ood European Real Estate 1.38

Gold 3.70

CATCo Reinsurance Opportunities Fund 0.92

Blue Capital Reinsurance Group (BCRG) Investment Trust 0.89

Weightings may not sum to 100% due to rounding and exclusion of cash. As at 30.09.2016. The above is for example purposes only and should not be considered a solicitation to buy or an offer to sell the above fund. Source: Waverton

Waverton Equity Fund Holdings Waverton Alternatives Fund Holdings

Portfolio Holdings

Waverton Investment Management 14

Growth Balanced Cautious Defensive

Financial Fixed Income 4.31 8.61 13.53 15.99

Government Fixed Income 1.05 2.10 3.30 3.90

Consumer, Cyclical Fixed Income 0.42 0.84 1.32 1.56

Energy Fixed Income 0.09 0.18 0.29 0.34

Communications Fixed Income 0.06 0.11 0.18 0.21

TM Sanditon UK Fund United Kingdom 2.80 2.24 1.68 1.26

CF Lindsell Train UK Equity Fund Inc United Kingdom 1.28 1.02 0.77 0.58

Evenlode UK Income Fund 'B' Inc United Kingdom 1.28 1.02 0.77 0.58

iShares Core FTSE 100 Fund UCITS ETF United Kingdom 1.20 0.96 0.72 0.54

iShares MSCI Europe Ex UK € Fund Europe 3.60 2.88 2.16 1.62

HSBC Plc € Stoxx 50 UCITS ETF Europe 3.12 2.50 1.87 1.40

RAM Euro Equities Systematic Fund Ip € Europe 1.20 0.96 0.72 0.54

Schroder European Alpha Income Z Inc Europe 1.12 0.90 0.67 0.50

FP Argonaut European Alpha Fund Class 'I' Ins £ Europe 1.04 0.83 0.62 0.47

iShares Russell 1000 Grow th North America 6.08 4.86 3.65 2.74

iShares S&P 500 Minimum Volatility UCITS ETF North America 4.96 3.97 2.98 2.23

Vanguard Dividend Appreciation ETF North America 4.64 3.71 2.78 2.09

Lyrical North American Value Acc US$ North America 3.92 3.14 2.35 1.76

WisdomTree Total Dividend ETF North America 3.36 2.69 2.02 1.51

iShares S&P 500 Index Fund UCITS ETF North America 2.40 1.92 1.44 1.08

Pershing Square Holdings North America 0.08 0.06 0.05 0.04

Source JPX-Nikkei 400 UCITS ETF Japan 5.92 4.74 3.55 2.66

Hermes Asia Ex Japan Equity Fund Asia Excl. Japan 4.72 3.78 2.83 2.12

Prusik Asian Equity Income Fund Asia Excl. Japan 2.40 1.92 1.44 1.08

Somerset Emerging Markets Dividend Grow th Fund Emerging Markets 2.32 1.86 1.39 1.04

Ram EM Equity Fund Emerging Markets 2.00 1.60 1.20 0.90

Odey Allegra Developed Markets Fund Global 6.16 4.93 3.70 2.77

iShares MSCI World UCITS ETF Global 5.36 4.29 3.22 2.41

Guinness Global Innovators Fund Global 2.88 2.30 1.73 1.30

Waverton Global Equity Wealth Creation Fund Global 1.12 0.90 0.67 0.50

Waverton Protection Strategy Hedging 1.92 1.54 1.15 0.86

Amedeo Air Four Plus Aircraft Leasing 0.17 0.28 0.43 0.60

Doric Nimrod Air Tw o Aircraft Leasing 0.24 0.40 0.62 0.86

MontLake Dunn WMA UCITS Fund CTA 0.68 1.16 1.77 2.45

JL Equity Market Neutral Fund Market Neutral 0.65 1.11 1.70 2.36

Jupiter Absolute Return Fund I Acc Market Neutral 0.75 1.28 1.96 2.71

Old Mutual UK Specialist Equity Fund Market Neutral 0.75 1.27 1.94 2.69

Phileas Long/Short Europe I £ Acc Market Neutral 0.78 1.33 2.03 2.81

JP Morgan Global Macro Opportunities Global Macro 0.65 1.10 1.68 2.32

Odey Odyssey Fund Global Macro 0.42 0.71 1.09 1.51

HICL Infrastructure Infrastructure 0.19 0.32 0.49 0.67

3i Infrastructure Infrastructure 0.17 0.28 0.43 0.60

International Public Partnerships Infrastructure 0.19 0.32 0.50 0.69

GCP Infrastructure Infrastructure 0.20 0.34 0.52 0.73

Spinnaker Emerging Markets Macro Fund Long/Short Equity 0.61 1.03 1.58 2.19

Odey Absolute Return Fund Long/Short Equity 0.51 0.87 1.33 1.84

Verrazzano European Long-Short Fund Long/Short Equity 0.40 0.67 1.03 1.42

GCP Student Living Plc Ord 1p Property 0.67 1.13 1.73 2.40

Channel Islands Property Property 0.46 0.78 1.19 1.65

Starw ood European Real Estate Property 0.14 0.23 0.36 0.50

Gold Commodity 0.37 0.63 0.96 1.33

CATCo Reinsurance Opportunities Fund Insurance 0.09 0.16 0.24 0.33

Blue Capital Reinsurance Group (BCRG) Investment Trust Insurance 0.09 0.15 0.23 0.32

Cash Cash 8.04 11.09 11.45 10.44

Equity

Altern

atives

Fix

ed I

ncom

e

Model Portfolio

Holding

Asset

Class

Weightings may not sum to 100% due to rounding and exclusion of cash. This table represents a look-through into the estimated weightings of positions for Waverton Model Portfolios As at 30.09.2016. The above is for example purposes only and should not be considered a solicitation to buy or an offer to sell the above fund. Source: Waverton

Waverton Model Portfolio Estimated Weightings

Portfolio Service Mandates

Waverton Investment Management 15

PORTFOLIO SERVICE MANDATES

Mandates & Risk Category

Portfolio Long Term Investment Objectives

Benchmark Risk Category ‡

Indicative Volatility of Returns* Equity Bonds Cash

Growth CPI+4.5% 75 15 10 High 7 - 18

Balanced CPI+4.0% 60 25 15 Medium 6 - 14

Cautious CPI+3.5% 45 35 20 Medium 5 - 11

Defensive CPI+3.0% 33.3 33.3 33.3 Low / Medium 4 - 10

Conservative CPI+2.5% 20 40 40 Low/Medium 3 - 8

Bond Focus CPI+2.0% 10 70 20 Low 3 - 7

*Historic volatility of returns are based on returns since January 1986. Bands reflect the potential range of volatility as a result

of asset allocation changes within the indicated limits. For example, the lower end of the Growth volatility band reflects the fact that there is flexibility to reduce Equity exposure to as low as 55% in exceptional circumstances in favour of Bonds and Cash.

‡The definition ‘High’, ‘Medium’ and ‘Low’ risk refer to the relative risks on the scale of mandates we offer, with volatility being the primary determinant. The extremes on our scale of low to high risk do not correspond with the extremes of low and high risk in terms of all possible investment strategies.

Risk Categories Explanation High

The possibility of periods of significant loss whilst making a higher level of longer term returns

Medium The possibility of periods of material loss whilst making a medium level of longer term returns

Low The possibility of periods of modest loss whilst making a lower level of longer term returns

Index Benchmark - Indices

Fixed Income FTSE All Stocks Government Gilt Index

Equities FTSE All World Index

Cash GBP LIBOR 1 Month

Weighted according to mandate type

About Waverton

Waverton Investment Management 16

ABOUT WAVERTON

Waverton Investment Management, originally founded as J O Hambro Investment Management (JOHIM) in 1986, is an independent discretionary investment management house. We are dedicated to providing a high quality service for private clients, charities and institutions. Our interests are aligned with those of our clients; employees own 37.5% of the equity of the company. Our business is bespoke, discretionary investment management. Our resources are focused on one business, and on achieving one aim - generating superior investment returns for our clients. We have an experienced investment team with each manager contributing to the process as a specialist in a particular asset class, geographic or industry sector. We provide a personal approach; your relationship will be with your portfolio managers. We have no relationship managers. Our principal aim is to generate attractive real returns for our clients over the long term, using an active, flexible approach through segregated portfolios or specialist funds. We attach huge importance to investing in what we believe to be the best ideas worldwide, be that in individual stocks, funds, fixed interest or alternative asset classes. Good administration is critical to the operation of a successful business. Our investment managers are supported by a dedicated in-house team. We take pride in creating a relationship characterised by prompt, clear and helpful administration. As at 30th September, Waverton had approximately £5.1billion of assets under management. Your Portfolio Management Team

Further Information

Waverton Investment Management 17

FURTHER INFORMATION

Where Waverton’s advice is given it is restricted to discretionary investment management services. We do not provide advice on the use of tax or financial planning products (even if the service which we are managing is held within such a product) or non-discretionary investment. This material is for your private information and should not be distributed further. All materials have been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on such information. Should you require any further information in respect of the information included in this presentation please address all enquiries to: Mark Barrington Waverton Investment Management Limited 16 Babmaes London SW1Y 6AH [email protected] DD: 020 7484 2058 Copies of the each Fund’s Fund Prospectus and Simplified Prospectus are available from Waverton and the administrator:

Authorised and Regulated by the Financial Conduct Authority Registered in England No 2042285

Waverton Sterling Bond Fund, Waverton Equity Fund, & Waverton Alternatives Fund *Citi Fund Services (Ireland) Limited 1 North Wall Quay Dublin 1 Ireland Tel: +353 1 637 6300 Fax: +353 1 637 6400