Fund Objective

The objective of the fund is to achieve above average and maintainable income but without neglecting capital security and growth. The Manager intends to achieve the objective primarily through the purchase of ordinary shares with an above average yield. There is no restriction on the economic sectors or geographic areas in which the fund may invest.

View on Past Performance

September 2008 will be remembered as one of the most dramatic months in global stock markets' long and tumultuous history. Once again, financials took centre stage as rapidly evolving events at high-profile financial institutions undermined confidence in the global banking system and led to a series of bank failures, government nationalisations and 'shotgun' mergers.Contagion from financials spread widely as fears of a global recession prompted a broad-based sell-off, with few stocks posting positive returns for the month. We were relatively quiet on the trading front during September. Our continued focus on balance sheet strength and security of dividends led us to exit holdings in insulation supplier SIG and housebuilder Persimmon.Both stocks have been savagely treated by the market over the last year as concerns surrounding the weakening UK residential construction market have mounted. Although much already seems to be priced into these shares, we remain concerned about the potential for another downward leg in the UK housing market, leading to more dividend cuts and the prospect of further capital-raising.

Future Expectations

Government responses to the latest, more virulent strain of the financial crisis have been varied. Whilst nationalisations, taxpayer bail-outs and depositor guarantees are seen as necessary evils in order to avoid systemic failure, none represents the universal solution which markets desperately crave.A rapidly moving market, driven by sentiment and rumour, is both a blessing and a curse for a fund focused on the intrinsic value of businesses.Whilst dramatic downward moves in stock prices can be unnerving, they can also provide incredible value opportunities for the long-term investor. Historical precedent dictates that companies with a competitive advantage, operating in resilient industries and with selffunding operations are those best equipped to survive any downturn. Firms able to reward shareholders with generous and safe dividends should also benefit in markets where capital gains are more difficult to achieve.Your fund has been positioned to benefit from these trends for some time, and we are encouraged by the market's renewed interest in companies exhibiting these characteristics.

Fund Details