Fund Objective

The Fund aims to provide a high level of income together with long term capital growth.

View on Past Performance

The FTSE All-Share rose in August (+4.4 per cent), along with most developed markets, albeit on very low volumes even considering that the month is traditionally one of the quietest in terms of activity. Commodities and related markets continued to fall with the oil price retreating from its intra month high of near $148 per barrel in July, to around $110 by end of August.Other commodities also endured falls with gold, silver and platinum significantly down in the month as were most emerging markets. The US dollar, helped by stronger than expected GDP numbers for Q2, rallied against all major currencies groups and encouraged/caused commodity/metals prices to continue to fall. Rotation in markets away from commodities and miners aided a recovery in some of the most beaten up consumer cyclicals, especially those with high leverage.A slightly better UK inflation report and, more importantly, a lower oil price helped to moderate UK interest rate expectations and a stronger dollar benefited equity market performance. While the FTSE 100 was up 4.2 per cent in the month, the Small Cap rose 4.6 per cent and the Mid Cap by 5.9 per cent (all capital returns only).Market leadership was mixed with some cyclicals (Paper, Autos and General Retailers) outperforming alongside the more defensive Beverages (Diageo and USD strength) and Healthcare sectors. Losers in August included the defensive Fixed Line Telecoms, Tobacco and Electricals sectors plus among the cyclicals, Miners, Chemicals and Industrial Metals.The Fund return in August was +4.6 per cent against the FTSE All-Share return of +5.0 per cent a relative underperformance of 0.6 per cent against benchmark. The average return for the Micropal peer group was 4.8 per cent leaving the fund in the 3rd quartile for August. Sales were greater than purchases in the month as net liquidations amounted to £575k resulting in a cash balance of £419k representing 0.9 per cent of total assets.

Future Expectations

In economic and profit terms risks remain on the downside and we remain defensively positioned. However, if the scope for a greater policy response to the problems increases, as inflation falls, we will take a more pro cyclical view.

Fund Details