Fund Objective

To achieve capital growth

View on Past Performance

Equity markets continued to make upwards progress over the month as further signs of weakening in the US economy were seen to reinforce the prospect of lower interest rates in due course. Most markets saw good gains, although Japan continued to struggle and a weak US dollar denied sterling investors the benefit of most of the strong gains there. Bond yields drifted higher for most of the month until a shar rally late on recouped all the losses, with longer dated stocks making the strongest gains yet again.Additions were made across the broad range of equity markets. Weakness in Japan was used as an opportunity to add to exposure, the longstanding underweight position in the US was reduced somewhat, and the overweight in Europe was increased. There was a further increase in fixed interest holdings, but only to very short-dated stock.UK equity performance was helped by the strong gains in financials, telecoms and leisure. Europe performed well also, with a notably strong benefit from Scandinavian industrial stocks such as Sandvik, Yara and Atlas Copco. The US holdings were disappointing with the heavy exposure to the healthcare sector having a negative impact as growth prospects for the industry came under pressure.In the UK, Barratt Developments was sold following strong performance and Scottish & Southern was reduced. Demerger activity saw the sale of Home Retail and additions to the new holdings in Experian and Biffa. Other new holdings introduced were Premier Foods and Schroders, both of which represent good value in consolidating industries.In Europe, ABN Amro was sold, with the proceeds being switched into Societe Generale which offers better value and prospects. Telefonica and BASF were introduced, increasing exposure to the region where good opportunities can still be found. US exposure was increased through the purchase of Martin Currie North America which provides a large cap focus.

Future Expectations

Markets have performed well as conviction has grown that the US will achieve an economic soft landing and that global inflation pressures have eased also. Both equities and bonds are beginning to reflect this scenario with little room for disappointment remaining. Liquidity and cheap money could yet push prices higher, but the temptation to start locking in some profits is growing.

Fund Details