Fund Objective

To achieve long term capital growth coupled with a moderate but growing income.

View on Past Performance

After a very strong second half in 2003 the UK equity market marked time in the period under review with the larger companies represented by the FTSE 100 Index showing a small fall while the small and mid-cap indices had moderate gains. The Steel and Other Metals sector benefited from the strong Asian market and the Aerospace and Defence sector gained from the anticipated upturn in the global commerical aircraft market. By contrast relatively poor performances were seen from the heavyweight Pharmaceutical and Biotechnology and Telecommunications Services sectors.

Future Expectations

The recent rise in US short term interest rates from 1%, the lowest since 1953, to 1.25% is likely to lead to higher borrowing costs for businesses and consumers across the globe. The Federal Reserve indicated that it hoped to keep future increases modest, but investors are concerned that rising interest rates may knock stock market confidence worldwide. As always there are potential problems on the horizon, not least the threat of terrorism or the slowdown in the Chinese economy. Nevertheless, the stong earnings momentum in UK companies should see the UK equity market move ahead in the second half of the year.

Fund Details