Fund Objective

To invest predominantly in UK corporate bonds with the aim of generating income.

View on Past Performance

as at 31 March 2008 (see overleaf) During the quarter, the Trust recorded a return of -2.59% compared to -4.32% for the benchmark, Merrill Lynch Sterling Corporate Bond. Goldman's maintained their cautious investment strategy, benefiting from a heavily overweight position in gilts against an essentially non-gilt benchmark. Equity market volatility widened spreads and justified the Trust's risk-averse investment approach.Overweight positions in life insurance and utilities helped the portfolio to benefit from market conditions and falling interest rates. At the end of the quarter, the Trust was about 14% underweight corporates and 2% underweight financials in market value terms vs the benchmark.

Future Expectations

The market outlook remains uncertain as monetary authorities work to prevent economic slowdown turning into recession. Further cautious interest rate cutting by the Bank of England is expected and the bond market is already pricing in 1% of interest rate cuts within the next 12 months. Key inflationary factors include rising energy, commodity, raw materials and food prices.The UK's targeted Consumer Prices Index may rise more slowly than the Bank has forecast as consumer spending eases, but sustained high oil prices could inhibit rate cutting.

Fund Details