Unity UI 5.6 - Character holding Sword(prefab/sword image not visible)

Hi

I'm in the process of upgrading a game from Unity 4.6 to Unity 5.6.2, all is going well, but something has been bugging me for a few hours already. My character starts the level holding a sword. The sword is not visible in Editor, all was working fine in Unity 4.6. All other game objects are visible apart from the character object they are holding (inventory system for character)

The code is working, no errors, the prefab is attached and linked correctly to the correct material, shader is mobile-diffuse, made no difference shader. All seems to be linked up as before.

Any ideas, cant figure it out, all I can think of is something changed in Unity 5, the way you add prefabs to character prefabs or something to do with the images and they not being picked up by the editor??

Thank you