Fund Objective

To achieve long-term capital and income growth through investing principally in UK equities.

View on Past Performance

Equities everywhere have had a very difficult time as confi dence waned in the wake of the collapse and rescue of a number of US fi nancial institutions. Fear reigns throughout the fi nancial system. The US Congress's plan to kick-start the fi nancial system by acting as the buyer of last resort for mortgage securities at depressed levels aims to restore confi dence as do a number of protective measures elsewhere, including greater protection for depositors.Recent levels of pessimism are unprecedented in the context of the last 30 years. However the best returns are often made by investors with the nerve to buy during periods of uncertainty. Although the British economy is in for a gloomy time, the same is not necessarily true of all of the stocks in its internationally diversifi ed stock market. As Warren Buffett said: 'Be greedy when others are fearful and fearful when others are greedy.'

Future Expectations

We remain cautious in our exposure to financial stocks and favour insurance companies over banks. We continue to prefer companies with strong balance sheets and to avoid those where there is less margin for error should earnings disappoint. Good quality, cash generative franchises with healthy prospects for dividend growth continue to attract our investment.Although the outlook for corporate earnings looks diffi cult, much of this has already been priced into shares. No bell will ring to mark the end of the current bear market but it is already long by historic standards. There is a lot of value in many sound companies and, barring a protracted global recession, current conditions could provide excellent buying opportunities.

Fund Details