Equity markets experienced extreme weakness during September, impacted by a confluence of negative factors including delays to the bailout of key financial institutions, the intensifying seizure within credit markets and the prospect of a deeper developed world slowdown in 2009. Commodity related areas performed particularly poorly, given rapidly falling commodity prices and evidence of slowing growth in the developing economies.Hitherto out of favour sectors such as real estate and non-life insurance performed better, reflecting attractive valuations and the forced unwinding of widely held hedge fund positions. The fund modestly outperformed a very weak benchmark in September, aided by cash balances at the top of the normal range. The fund benefited through avoiding some of the stocks worst affected by the ongoing crisis, such as Bradford & Bingley and Punch Taverns.Elsewhere, defensive plays including Northumbrian Water and De La Rue held up well. Against this some of the fund's more cyclical positions (Interserve, Charter and Cookson) were weak due to the growing economic concerns. During September the exposure to companies related to the oil and mining industries was further reduced through the sale of Wellstream and Weir group. The underweight stance in general retail was modestly reduced through the purchase of Mothercare.Elsewhere, we increased weightings in the Lloyds insurance sector (on hopes of capacity reduction leading to a better insurance pricing environment) through additions to existing positions in Amlin and Hiscox.The fund remains overweight the support services sector (where there are companies offering defensive growth prospects), aerospace & defence (where we are more focused on defence companies with visible growth) and chemicals (on stock specifics and companies which are major beneficiaries of sterling weakness).