Fund Objective

To provide long term high yield returns.

View on Past Performance

The high yield market broke its streak of back-to-back negative monthly returns in August, posting its first gain since May. Summer vacations dominated the month, creating a relatively inactive market that ultimately was lifted slightly higher on moderately improved (US) economic data and a continued decline in commodity prices. As a result, consumer confidence improved month-over-month, demonstrating a more resilient and upbeat economic outlook.Trading during the month was limited with some cash held in the fund to make use of future investment opportunities. New issues were once again non-existent in Europe. The portfolio showed a positive return for the month for both the US and European high yield markets. Bonds with a lower credit risk profile increased in value most as investors sought to reduce risk exposure and sell into the rally. The yield to worst (i.e. the most conservative yield scenario) for the index increased by 20 bps.

Future Expectations

Investor sentiment continued to be cautious. Yield to worst is now 11.7% with the European market continuing to be more volatile than the larger US market. We expect trading to pick up in September as investors return from their holidays and the new issue market start up again, primarily in the US.We do expect however the first new issue in Europe to happen in the next month or so, which should see trading increase. We will continue to be very selective with regard to the credits that we add to the portfolio, and will continue to focus on more defensive, shorter duration bonds while picking up fundamentally sound credits at lower levels.

Fund Details