During the twelve months from 1 May 2007 to 30 April 2008, the Trust returned 1.2% in capital terms. This result compares extremely favourably to a return from the benchmark of -3.8% WM Private Client Growth Index. By further comparison the FTSE All-Share index declined 7.3%, the FT World Index fell 0.6% while the FT UK Gilts All Stocks Index rose 1.4%.The year under review has seen dramatic moves in markets and spikes in volatility. While early June saw a number of indices hitting all time highs, the sub-prime mortgage crisis in the US began to unravel as the country's housing market slump continued. Investors became increasingly unsure about markets as no-one could identify where the exposure to this toxic sector lay.These fears increased as lending (and therefore liquidity) between banks dried up in the uncertain climate, and the crisis spread from US fi nancial institutions and hedge funds into the global fi nancial system, offering the prospect of a US or indeed global recession. Equity markets unsurprisingly saw a sharp decline, prompting even more severe shocks in the fi nancial system, with the run on Northern Rock a particularly startling event.In the face of this, central banks, and particularly the US Federal Reserve worked hard to avert a global recession, with the Fed cutting the discount rate (at which it will lend to banks) as well as the Fed Funds Rate (the general interest rate) sharply, which injected vital liquidity into the US system as well as shoring up the US consumer.The ECB acted to provide liquidity in Europe, with only the Bank of England appearing more reluctant to take drastic action, saying that high inter bank lending rates were a refl ection of the credit risk in the system, although latterly in 2008 it too has made cash available to UK fi nancial institutions in return for their mortgage backed securities.
