Fund Objective

The Fund is designed to achieve growth in capital and income

View on Past Performance

The value of the Fund at 31st March 2005 was £9.1 million. The return from inception (1st November 2002) to the end of March 2005 was 37.44% which outperformed the MSCI World by 10.68%. The return on the Orchard Fund was 9.53% over the half year compared to a benchmark performance of 6.22% over the same period. During this time the Fund paid a dividend of 0.08p in October 2004 to its income unitholders.The UK market continued to outperform the US due to its large cap defensive weightings in oils, pharmaceuticals and telecoms and a flurry of bid speculation in mid and small cap stocks. US markets, which represent approximately 50% of the MSCI, were hit by a series of earnings warnings in the technology sector (a sign that corporate spending has not picked up in the US), the General Motors March warning and the regulatory probe into AIG.

Future Expectations

The market is likely to continue to focus on US macro economic indicators. The Fed indicated in Q1 that it would keep to its tightening policy at a 'measured pace' after it increased rates by 25bps in early February and in late March to 2.75%. Accordingly, Lehman Brothers expects rates to rise steadily to 3.75% by December.However the Fed has cautioned against neglecting inflation so rates could rise further. Many commentators believe that the US housing market looks increasingly frothy and vulnerable to increases in interest rates. The high oil pirce continues to be a concern as to its effects on inflation and dampening global growth.Due to the above uncertainty over US economic growth, the equity and credit markets remain vulnerable to stock specific shocks such as AIG and General Motors. It is also likely that the end of Alan GreenspanÂ’s tenure as Chairman of the Fed will add to this general increase in risk aversion over the next two quarters.

Fund Details