Fund Objective

The investment objective of the fund is to invest primarily in equities and equity type investments of companies incorporated in the UK or which, in the opinion of the Investment Adviser (or sub-adviser), carry on a substantial part of their operations in the UK.

View on Past Performance

The Fund's managers initiated a number of new purchases, with AstraZeneca, BSkyB and Ashtead Group all added to the portfolio. The managers reduced the Fund's positions in BT Group, Gallaher Group, and Tesco to lock in profits after a run of strong performance that left them looking expensive. The UK Equity Fund performed slightly better than the FTSE All Share Index, although both were virtually flat over the monthStock selection in the financials and utilities sectors had a positive impact, while holdings in the industrials sector detracted from returns. A limited weighting in the materials sector also contributed negatively. Among the Fund's top contributors to relative performance were the limited exposure to both HSBC Holdings in the financials sector and the oil company Royal Dutch Shell, as they fell during the month. The biggest negative impact came from the holding of First Choice. The stock was hit by the news of a merger between Thomas Cook and MyTravel which had both been regarded as potential bidders for First Choice. The industrials company Tomkins also suffered a fall in its share price despite an unexpected increase in the dividend.

Future Expectations

Despite recent volatility, the underlying financial position of most UK companies remains strong. There is little evidence of excessive valuations, high inflation or credit pressures, which would normally signal a significant longterm market correction.

Fund Details