Performance (to 30/06/10)

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Percentage Growth to latest quarter end, bid price to bid price, no charges, UK Net in fund currency. currency. Source : Lipper

Cumulative performance (% change 30/06/10)

	1 year	3 years	5 years	Since launch (25/09/89)
Fund	19.0	-14.5	16.3	372.3
Sector Median	19.0	-17.5	14.0	239.2
Quartile Rank	3rd	2nd	2nd	1st

Percentage Growth to latest month end, total return, no charges, UK Net in fund currency. Source : Lipper

Discrete performance (% change 30/06/10)

	30/06/09 - 30/06/10	30/06/08 - 30/06/09	29/06/07 - 30/06/08	30/06/06 - 29/06/07	30/06/05 - 30/06/06
Fund	19.0	-21.9	-7.9	15.5	17.7
Sector Median	19.0	-20.1	-13.3	17.1	18.5

Percentage growth for discrete 1 year periods, bid price to bid price, no charges, UK Net in fund currency. Source: Lipper

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Why recommend this fund to your clients?

• First quartile performance against the IMA UK All Companies sector since launch, over 20 years ago.
• An established stockpicking FTSE All-Share fund.
• Industry leading Social Responsibility expertise, integrating environmental, social and governance issues into our investment decision making process.

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A closer look at the Fund

Fund aims

The Fund aims to deliver top quartile performance over a rolling three-year period measured against the UK All Companies Sector.

The Fund also aims to outperform the FTSE All-Share Index.

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What does the Fund invest in?

The Fund has the ability to invest across the FTSE All-Share Index. This universe consists of all the sectors of the UK equity market.

Fund suitability

The Fund is suitable for investors looking for:

• long-term capital growth through investing in an actively managed fund featuring high quality UK stocks
• a fund that will consider social responsibility as part of its overall investment process.

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Investment philosophy

Our investment philosophy and style is best described as follows:

• Focused -The portfolio will typically have between 50-60 holdings and over 40% of assets in the top ten holdings
• Long-term - Investment holding periods of three to four years
• Stockpicking - We construct portfolios on a bottom up basis
• Responsible - Embedded environmental, social and governance (ESG) analysis provides a broader perspective and represents the views of our customers in the investment process.

Our investment approach is structured to consider companies at three levels to identify stocks which are mis-priced.

• Investment themes - The increasingly short-term nature of the investment industry, evidenced by declining stock holding periods, results in long-term opportunities being overlooked. We have adopted a long-term investment philosophy and evaluate the effect of long-term investment themes.
• Industry trends - The increasingly narrow focus of most investors has resulted in our broadening the scope of inputs beyond traditional investment research to identify wider industry trends or linkages between industries.
• Company specific - We believe that the market can inefficiently discount company specific events such as management change. Therefore we devote a large amount of analytical resource to changing company situations.

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Top 10 holdings

(as 30/06/10)

	% Fund
Smiths Group	4.7
Standard Chartered	4.3
Rio Tinto	4.3
BG Group	4.1
HSBC Holdings	4.0
British American Tobacco	4.0
SABMiller	3.9
Reckitt Benckiser Group	2.8
Compass Group	2.8
Scottish & Southern Energy	2.7
Total	37.6

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Sector breakdown

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Stock example

1. Aggreko

Aggreko is the largest provider of temporary power generation globally. Its largest markets include North America, Europe and many emerging nations particularly in South America and Africa. The company provides temporary power to a variety of sources such as, the forthcoming World Cup in South Africa helping to power hospitals and schools in countries with insufficient generation capacity.

2. Smiths Group

The company delivers products and services across a range of industries such as detection, medical and energy. The appointment of new management with a proven track record of delivering value for shareholders enhanced the potential attractions of the group. Previous management had failed to drive the company forward. The new CEO has announced a number of achievable restructuring improvements, which will ultimately result in strong share price performance.

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Strategy and outlook

Over the last three months the UK equity market has fallen by 11.8%. Markets have continued to remain concerned that recent softness in a number of US economic data points, coupled with the public debt problems in Europe, may result in the global economy experiencing a double dip recession. We believe that these concerns are overplayed and the emergence of Asian economies should result in a sustainable economic recovery, all be it somewhat muted.

Our strategy is biased towards those companies with emerging market exposure, given their superior long-term growth prospects. This is coupled with a number of businesses with exposure to western economies who command strong market presence and are well positioned to perform in challenging markets.

During the quarter new holdings were initiated in Royal Bank of Scotland and National Express Group. Both companies have the potential to benefit from an improvement in returns into a slightly better economic environment. Royal Bank of Scotland remains a leveraged play on the UK economy with the potential for recovery as forecast momentum has bottomed out. National Express offers the potential that new management will be able to derive improved returns from its public transport operations in the UK, Spain and North America after a period of underperformance. Holdings in Rolls Royce and Weir Group were also added to, as both remain long-term beneficiaries of demand from Asian infrastructure requirements.

Over the last three years the Trust is ranked in the second quartile and has outperformed the median of the peer group by 3.0%. It remains our view that the Trust remains well placed to perform in future, reflecting the bias towards companies attractively valued with exposure to a number of long term themes, such as the buildout of infrastructure and services in Asia and the potential for better recovery in the western economies than the current market consensus.

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Investment process overview