Fund Objective

This Fund is designed to track the capital performance of the FTSE All-Share Index and to maintain a gross income yield equal to that of the Index.

View on Past Performance

The Fund is managed on a fully-invested basis and typically has a portfolio of over 600 stocks selected from the FTSE All-Share Index. Occasionally, the Fund may invest outside the Index. UK equities fell sharply in September, as the process of deleveraging in the global banking sector accelerated with dire consequences for a number of long-established names (particularly in the US).In the UK, share price declines and governmental encouragement catalysed a bid from Lloyds TSB for the UK's largest mortgage provider, HBOS. Soon after, Bradford & Bingley, the last of the UK's demutualised building societies, followed Northern Rock into government hands, with Santander of Spain emerging the successful bidder for the bank's branch network and depositor base.Hopes of an end to the rout in the global fi nancials sector rested towards the end of the month with plans by the US government to commit US$700 billion to buying up the bad debts of US banks. The US House of Representatives failed to approve the rescue package when called to do so on 29th September, causing equities to retreat further, although a revised package of measures has been agreed in early October.The Fund tracks and invests in the FTSE All-Share Index and is not actively managed. The Fund is aimed at investors looking to invest for the medium- to long-term, who are prepared to accept fl uctuations in the value of their capital, including capital loss.

Future Expectations

The UK economy is slowing in the wake of a severe downturn in the credit cycle and this should,given time,result in lower infl ation and create the space necessary for a further reduction in UK interest rates.Meanwhile,equities do not look expensive in relation to gilts;however,with corporate earnings likely to come under pressure as the economy slows,the validity of such a measure is questionable.In the near term,therefore,it would be reasonable to expect a further period of market volatility

Fund Details