Fund Objective

To achieve a high level of income.

View on Past Performance

The third quarter of 2008 was an exceptionally difficult period for investors in higher-yielding closed-end funds. Over the 3 months to 30 September 2008, the fund fell 15.9%# while the IMA UK Equity income sector lost 9.7%#. Many funds, especially split-capital investment trusts, use gearing to increase income for shareholders. Unlike in 2001-02, however, split-capital trusts no longer invest in other split-capital trusts and have issued zero dividend preference shares rather than bank loans.While this does not reduce the losses in a falling market it does prevent an early redemption of assets and, therefore, exclude a trust from a recovery. The fund's overseas property fund holdings fell over the quarter to leave their portfolios yielding more than the cost of borrowing.Investors feared, however, that falling asset values would put pressure on such funds to sell assets at distressed prices or refinance at higher costs. This widened their discounts to net asset value.

Fund Details