After a grim run in June, financial markets continued to have a tough time of it into the first two weeks of July, as gloomy investors took fright at the seemingly relentless flow of bad news. However, some respite was provided in the second half of the month, as a sharp fall in the price of oil helped equity markets to recover some, but not all, of the month's earlier losses. Against this negative backdrop, the Fund registered a small loss of 0.5%.Having struggled badly in the preceding two months, gilts rebounded in July as falling commodity prices helped investors to relax their inflation forecasts. This had limited beneficial impact on our portfolio as we hold relatively few gilts on the belief that they are overvalued on a long -term view. More positively, our large and necessary exposure to equity income funds, which has hindered our performance over the last year, helped in July.This was due to the rebound seen in high -yielding banking stocks, while low-yielding resources shares, which equity income funds tend not to own, performed poorly as commodity and energy prices dropped.