Fund Objective

The objective of the Taylor Young Growth Fund is to provide capital growth.

View on Past Performance

No new purchases were made over the quarter, although we added to ITE, the cash rich international exhibitions company, SSL International, the medical goods company which has benefited from takeover interest over the past few months, Johnson Matthey, Forth Ports, Charter, where the company balance sheet is particularly strong at the current time and also BG, which is experiencing great success in discovering additional oil in the Gulf of Mexico.Holdings were trimmed in Ultra Electronics, where the rating seems to be a little ambitious in the short term, Renishaw, which has benefited from the pronounced weakness in sterling over the period, and in Standard Chartered, where despite the overall quality of the bank, the rating appears somewhat out of line with its peer group. The holding in Close Brothers, the diversified banking group, was sold.Overall, it was noticeable that mid and smaller sized companies fared worse in the poor market conditions than international companies with strong diversified earning bases. This factor accounted for a large proportion of the underperformance of the fund seen during the quarter.However, the franchises of the Fund's holdings remain strong, and when market conditions pick up it is to be expected that these holdings will benefit accordingly.

Future Expectations

On a global perspective, economic conditions are likely to get worse before they start to get better. The world's banking system is under significant strain and further casualties are almost certain, perhaps even of hitherto seemingly safe household names. The forced reduction in leverage throughout the hedge fund universe may also prove problematic.However, on a slightly brighter note, the fall in the oil price and the easing of inflationary influences should allow interest rates to fall in the developed world, and even China has embarked tentatively on a programme of monetary easing. Equity markets are certain to remain highly volatile in the short term but it is at times of fear and tension that the best investment opportunities emerge for patient, long-term investors in solidly-financed, well-managed companies.

Fund Details