Fund Objective

To achieve long term capital growth for investors.

View on Past Performance

The BlackRock UK Fund underperformed its benchmark in the third quarter of 2008, falling 21.0% versus the FTSE All-Share index, which fell by 12.4%. Our holding in Man Group detracted from performance, as the hedge fund manager suffered from the poor performance of its flagship AHL Fund, and wider concerns about the hedge fund industry.Pub group Enterprise Inns was also weak due to a downbeat trading update and concerns over the company's financing. Within the resources sector, lower commodity prices and concerns over slowing global growth impacted holdings such as Oilexco, Peter Hambro Mining and Sibir Energy, however our underweight positions in the larger companies, such as Royal Dutch Shell, BP and Anglo American, helped offset the underperformance.Among the holdings that delivered positive performance over the period were companies that stood to benefit from the lower oil price, including budget airline easyJet, and bus and rail company FirstGroup. The latter was also boosted by the stronger US dollar. Meanwhile, an increasing likelihood of interest rate cuts helped real estate companies, such as Hammerson.Portfolio activity during the quarter saw us add new positions in consumer goods group Reckitt Benckiser, switching out of Unilever, and National Grid. We added to existing holdings in banks HSBC and Royal Bank of Scotland, and reduced Standard Chartered. We exited our positions in miners Anglo American and ENRC.

Future Expectations

UK equities continue to be affected by events in the credit markets that have led to increased volatility across equity markets globally. We expect to see further volatility in the short term, and while it is apparent that a slowdown in the western economies is underway, the global economic backdrop is becoming more uncertain as well.

Fund Details