Fund Objective

To provide a stable, low risk investment with a competitive level of interest.

View on Past Performance

At the beginning of the year, the Fund was fully invested in AAA rated bonds but we later took the opportunity to switch into some UK gilts. We became more negative on longer dated bonds and shifted the bias towards shorter dated issues within the portfolio.The Fund reduced its exposure to gilts towards the end of 2001, switching into AAA bonds. We continued to diversify the Fund into higher yielding AAA credits and purchased bonds including Rabobank Nederland and Landwirtsch Rentenbank.

Future Expectations

Most major economies should strengthen during the year ahead with an upturn in global economic growth. As a result, we believe the current monetary easing cycle is coming to an end. However, interest rates could be held at low levels for some time to sustain economic confidence.Although interest rates may rise when economies recover, they are likely to be held at low levels in historical terms. As we enter a new growth phase, we expect inflation to remain low. Therefore, the longer term outlook for A

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