Fund Objective

The fund aims to achieve a long-term return in excess of the long-term return that is typically achieved from United Kingdom equity markets.

View on Past Performance

At the end of September, the Fund ranked in the fourth quartile of its peer group over three months. However, since launch, the Fund has outperformed both its benchmark index and its sector average, to rank in the fi rst quartile. UK equities fell sharply in September, as the process of deleveraging in the global banking sector accelerated with dire consequences for a number of long-established names (particularly in the US).Mining stocks fell back sharply during the month and we exploited periods of price weakness to rebuild our positions in a number of companies. In particular, we invested in ENRC and Xstrata and added to our holding in Kazakhmys. We consider the mining sector to be an outstanding store of long-term value.Conversely, we sold the remainder of the Fund's position in British Airways, due to our growing concerns about prospects for air travel as the global economy slows. We disposed also of our holdings in British Energy and Imperial Tobacco after both stocks had exhibited their defensive qualities through a challenging period.

Future Expectations

We remain alert to the possibility of further market volatility in the near term. Undoubtedly economic conditions have deteriorated and the UK economy faces a more diffi cult period. We are highly cautious about stocks consumer related or sensitive to interest rates and continue to invest very selectively in the banking sector with positions in just four banks - Barclays, HBOS, Lloyds TSB and RBS - at month end.However, in a more challenging market environment, we expect growth to become an increasingly precious commodity and growth companies to begin to command premium ratings at some point. For this reason, and notwithstanding our moves over recent months to a more defensive position, an emphasis on attractively valued growth stocks in the portfolio has been maintained.

Fund Details