Fund Objective

To provide capital growth.

View on Past Performance

At the end of September, the Fund ranked in the fourth quartile of its peer group over three months. UK equities fell sharply in September, as the process of deleveraging in the global fi nancials sector accelerated with dire consequences for a number of long-established names (particularly in the US). Mining stocks fell back sharply during the month and we exploited periods of price weakness to rebuild our positions to a number of companies.In particular, we invested in ENRC and added to our positions in Kazakhmys and Xstrata. We consider the mining sector to be an outstanding store of long-term value. Conversely, we sold the Fund's positions in British Airways and Enterprise Inns, due to our growing concerns about the prospects for both companies as the economy slows further.We disposed also of our holdings in British Energy (following a bid from EDF) and Imperial Tobacco, after this stock had exhibited its defensive qualities through a challenging period, and started new positions in AstraZeneca, British American Tobacco, Rolls Royce and Tullow Oil. Each of these, in our view, has defensive qualities and the potential to perform well, even in increasingly challenging economic conditions.

Future Expectations

We remain alert to the possibility of further market volatility in the near term. Undoubtedly economic conditions have deteriorated and the UK economy faces a more diffi cult period. We are highly cautious about stocks consumer related or sensitive to interest rates. We continue to invest very selectively in the banking sector with positions in just four banks - Barclays, HBOS, HSBC Holdings and Lloyds TSB - at month end.However, in a more challenging market environment, we expect growth to become an increasingly precious commodity and growth companies to begin to command premium ratings at some point. For this reason, and notwithstanding our moves over recent months to a more defensive position, an emphasis on attractively valued growth stocks in the portfolio has been maintained.

Fund Details