Fund Objective

The investment objective and policy of this Fund is to provide a combination of income and long-term capital growth. Investment will be in a diversified portfolio of equities, bonds and other related investments.

View on Past Performance

At the end of September, the Fund ranked in the fi rst quartile of its peer group over three months, outperforming both its benchmark index and sector average. Over the longer-term, the Fund ranked in the fi rst quartile over three and fi ve years and since launch, outperforming the sector average. 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.During the month, we disposed of our holdings in Signet and Tesco in view of a deteriorating environment for retailers and reduced our position in Marks & Spencer. Conversely, we added further to our already substantial positions in defensive, bluechip companies, notably Aviva, BP, Royal Dutch Shell and Vodafone. We also started a new position in the international plastic and fi bre products supplier, Filtrona, which, we believe, has defensive qualities yet to be recognised by the market.For the time being, we are not minded to change our view that the markets face a challenging period. Positively, a slowing economy could provide the right conditions for lower interest rates before the end of the year. However, the cash fi nances of consumers, governments and companies are under pressure at the current time, with negative implications for corporate earnings. In the short term, therefore, any additions to the Fund's equity portfolio are likely to be limited.

Future Expectations

Currently, we have substantial holdings in defensive market sectors, such as pharmaceuticals, oils and telecommunications, and our bond portfolio remains largely constructed of gilts or gilt equivalents. We believe this gives us the right degree of defensiveness if markets fall further while still allowing investors to participate if markets recover sooner than we expect. At the end of September, the Fund was invested 37% in equities, 52% in bonds and 11% in cash.

Fund Details