Fund Objective

To achieve capital growth with an increasing income.

View on Past Performance

The Fund added to holdings in HSBC, International Power and Xstrata. New positions were initiated in National Express, Halfords, UBM and RSA given the good upside identified for these companies. Holdings in BP, Reed Elsevier and Diageo were reduced. commodity markets. Increased evidence emerged across the world of slowing levels of economic activity and stress arising from the fallout of the credit crisis.Interest rates were reduced by a number of central banks and expectations are high for further rate cuts. The UK government announced plans to inject £37bn into the UK banks through the issue of ordinary and preference shares. Towards the month end Barclays Bank announced a £7bn funding package and Centrica launched a £2.2bn rights issue.During the month the FTSE All share Index declined 11.9%. Holdings which contributed to Fund performance included BP, Centrica and Britvic. Holdings which detracted from performance included Greene King, Xstrata and Ashtead but we remain confident about the long-term prospects for these companies.

Future Expectations

Developed economies are encountering a significant consumer-driven correction and we think this will exert pressure on corporate earnings. On the positive side, equity market valuations are far from demanding in many cases. As such, whilst short term performance may be volatile, on a medium-term view, we remain positive on prospects for the market.

Fund Details