Fund Objective

The Fund's objective is to deliver positive returns on an annual basis with the prospects of long-term capital growth commensurate with investment in equities.

View on Past Performance

Global equity markets endured an exceptionally turbulent month, as turmoil in the US and UK banking industries reverberated around the globe. Stocks crashed after the House of Representatives rejected a rescue plan in the US; however markets rebounded sharply on the last day of the month amid feverish speculation that the deal would be salvaged. The MSCI World index lost 9.8% in sterling, total return terms.The Fund lagged its cash benchmark over the period, but outperformed its peer group. Our corporate bond exposure hurt performance, in particular our exposure to AIG, as the entire financial system came under intense pressure. The nature of the Federal Reserve's bailout of the world's largest insurer has led to deep uncertainty about the prospects for AIG's creditors.During the month we scaled back our exposure to natural gas. We also added to our holding in the Fidelity European Equity Market Neutral fund. This fund aims to achieve positive absolute performance, regardless of the prevailing market backdrop, by investing in a roughly equal amount of long and short positions drawn from the pan-European equity universe.

Future Expectations

However, we remain comfortable with our financial credit exposure, given that banks have already begun to repair their balance sheets, with concerted global governmental support. The asset class will also be less hampered by economic headwinds which may continue to act as a drag on equities, property and commodities. Elsewhere, tumbling equities also weighed on returns, although the blow was cushioned by our hedging strategies and thematic allocations.

Fund Details