The UK equity market suffered from heightened volatility over the third quarter, as problems originating in the US sub-prime (higher risk) mortgage market escalated into a full-blown credit crisis. The FTSE All-Share index fell 1.8% in total return terms, with earlier losses somewhat offset by a late rally following the Federal Reserve's decision to slash US interest rates by 50 basis points.The Fund performed well over the period, ranking in the first quartile of its peer group. This was partly due to its bias towards large caps, which outperformed their smaller peers. The major transaction over the period involved selling our holding in EMI, as a counter bid for the music group appeared unlikely to emerge.