Fund strategy remained focused on providing investors with an above average income through a broad based portfolio of UK shares. The Fund is required as a constituent of the IMA UK Equity Income sector to deliver a yield of at least 110% of that offered by the FTSE All-Share Index.The third quarter of 2008 witnessed considerable volatility. The storm that shook global financial markets in September was felt hard in the UK, where banks make up a significant portion of the index. The crisis engulfing the country's biggest mortgage lender, HBOS, raised fears of contagion to the wider economy, although investors found reassurance in the government's swift facilitation of a rescue by Lloyds TSB and a massive injection of liquidity by the monetary authorities.Within utilities holdings in National Grid, United Utilities and Scottish & Southern Energy greatly aided performance. Our position in pharmaceutical Astra Zeneca was also beneficial. Fund performance was hit significantly by our holding in Rio Tinto, but was helped by a relative lack of exposure elsewhere in the sector. Positions in Royal Dutch Shell, Man Group and Inchcape also detracted from performance.While market conditions are likely to remain turbulent in the short term, the indiscriminate nature of the market sell-off has left a good number of sound companies trading at attractive valuations.
82.07p
