Fund Objective

The Wesleyan Growth Trust aims to produce capital appreciation and an increasing income from a diversified portfolio of securities, over a medium to long-term period.

View on Past Performance

Following four strong years of share price performance, the year to 30 June 2008 was a much more difficult and volatile one for investors in world equity markets. Having begun the period near multi-year highs, share prices came under pressure in July and August last year as problems in the US 'sub-prime' mortgage market led to a sharp slowdown in the availability of credit worldwide.Despite a mini-rally through to October, helped by a cut in the discount rate by the US Federal Reserve, the crisis at Northern Rock and general concerns about a slowdown in economic activity meant the FTSE 100 index ended 2007 slightly lower than the level six-months earlier.The rate of decline in share prices, particularly financials, accelerated in early 2008 as investors had to contend with the twin concerns of the financial condition of the banking system and inflationary pressures arising from sharply higher commodity prices. UK base rates were cut by 25 basis points in February and April (as they were in December), despite the deteriorating inflationary outlook, to the current level of 5%.Ongoing losses made by many major banking groups kept the downward pressure on share prices and a number of banks were forced to issue new shares at a substantial discount to help protect their capital ratios. These issues were met with a mixed reception from investors and in the UK only the Royal Bank of Scotland issue was widely supported by existing shareholders.

Future Expectations

Market volatility has continued as the economic background both in the UK and overseas remains challenging. UK house prices have started to fall after many years of strong rises and housing transaction levels are down to a fraction of what they were previously.Stock markets have continued to experience sharp fluctuations in recent weeks. There has been a 'two-tier' market for some time now with resource stocks such as oils and mining shares moving in the opposite direction to financial shares, retailers and house builders which are deemed more sensitive to domestic economic conditions.

Fund Details