Fund Objective

The objective of the fund is to provide a total return of capital and income in excess of the total return.

View on Past Performance

During August, the unit bid price of the Marlborough UK Micro-Cap Growth Fund rose by 2.1% compared to a rise for the FTSE SmallCap Index of 3.5% and a fall of 2.5% for the FTSE Aim Index. For the year to date we are now down 13.8% compared to falls of 15.1% for the SmallCap and 22.8% for Aim. August was a quiet month, at least compared to July and we employed our time hopefully to good use by adding to a number of our holdings and clearing out losers where we have lost faith.As a result we have reduced our number of holdings to c.100 and I would expect this number to fall further.During the month we added to our holdings in Relax, Managed Support, Neutrahealth, Advanced Medical Solutions, London Capital and SDI and we added a new holding in Amino. SDI was unusual as we were averaging down, however with the market cap mostly covered by net cash and all the directors and most senior staff having bought recently a little higher up, the opportunity was hopefully too good to miss.Cash remained high at £2.9m with a further £0.9m to come from cash bids for Netstore and Future Objects, making 14% in total. Netstore was a new cash bid during the month, and there was also an approach for Ascribe by the management while Georgica remains on sale. With microcap multiples down to low single figures in many cases we expect this Mergers & Acquisitions activity to continue.

Future Expectations

As I write, September has started with fears of worldwide recession bringing markets down towards June lows

Fund Details