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Monday, November 19, 2012 5:15 AM


All information is at 31 October and unaudited.

Performance at month end with net income reinvested

                                   One   Three    One   Three     Five
                                 month  months   year   years    Years
Share price                      -0.4%    2.2%   7.0%   24.1%   -13.8%
Net asset value                   1.7%    4.5%  12.0%   31.6%   -10.9%
FSTE All-Share Total Return       1.0%    4.4%   9.8%   29.8%     5.2%

Sources: BlackRock and Datastream

BlackRock took over the investment management of the Company with effect from 1 April 2012.

At month end
Net asset value - capital only:   145.06p
Net asset value - cum income*:    147.81p
Share price:                      137.00p
Total assets (including income):   £41.9m
Discount to cum-income NAV:          7.3%
Gearing:                             4.0%
Net yield:                           3.7%
Ordinary shares in issue**:    28,379,268
*includes net revenue of 2.75 pence per share
** excludes 4,554,664 shares held in treasury

Sector Analysis                         Total assets(%)
Oil & Gas Producers                               13.7
Banks                                             10.2
Pharmaceuticals & Biotechnology                    9.1
Mining                                             7.8
Tobacco                                            7.8
Media                                              6.5
Mobile Telecommunications                          5.6
General Retailers                                  4.7
Non Life Insurance                                 3.7
Life Insurance                                     3.7
Food Producers                                     3.2
Support Services                                   2.9
Gas, Water & Multiutilities                        2.6
Aerospace & Defense                                2.4
Equity Investment Instruments                      2.4
Financial Services                                 2.3
Electronic & Electrical Equipment                  2.1
Electricity                                        2.1
Non Equity Investment Instruments                  2.0
Real Estate Investment & Services                  1.8
Technology Hardware & Equipment                    1.4
Software & Computer Services                       1.4
Oil Equipment, Services & Distribution             1.0
Industrial Engineering                             0.9
Total of Equity                                  101.3
Net Current Liabilities                          (1.3)
Total                                            100.0

Ten Largest Equity Investments(in alphabetical order)

Company                              % of Total assets
Antofagasta                                        4.2
AstraZeneca                                        3.2
British American Tobacco                           5.3
GlaxoSmithKline                                    3.7
HSBC                                               7.9
Royal Dutch Shell B                                8.3
Tate & Lyle                                        3.3
Tullow Oil                                         4.4
UBM                                                3.8
Vodafone                                           5.9

Commenting on the markets, Nick McLeod-Clarke & Adam Avigdori, representing the Investment Manager noted:


October was the fifth consecutive positive month for the UK equity market, helped by better macroeconomic data from the US and elsewhere. A mix of cyclicals and financials were the strongest contributors to performance but the month was difficult for shares of companies with more defensive earnings, which were amongst the most negative contributors to market returns. This was particularly true for companies in the oil & gas, telecoms, pharma and tobacco sectors.

Portfolio Performance

The portfolio outperformed the FTSE All-Share Index during October, returning +1.7% compared to the index return of +1.0% over the month.

Amongst the top contributors to portfolio returns was Tate & Lyle, the supplier of speciality ingredients to the food and beverages industries, which is benefitting from the market's re-appraisal of the company's new management team and its strategy. Shares of gaming software company Playtech continued to fare well as the company announced the launch of a new framework designed to integrate content and an improved user experience on mobile devices. CSR, the technology company that provides multi-function semiconductor platforms, announced third quarter results that were well ahead of market expectations. The largest contributor to index-relative returns was BG Group, which is not owned in the portfolio. BG's share price underperformed on concerns around the delivery of demanding production targets. These fears were confirmed at the end of October when BG announced that it expects no production growth in 2013 due to production delays in a number of projects.

Amongst the detractors to portfolio returns was specialty pharmaceutical company Shire, whose drugs portfolio includes treatments for hyperactivity and rare diseases. Shire reported earnings for the third quarter that were lower than the market's expectations, though it expects to meet its target for double-digit earnings growth for the year. British Sky Broadcasting underperformed as the market took a negative read across from a Scandinavian Pay TV company's profit warning; however, we retain confidence in Sky's communications strategy and dominant content position. Other detractors were modest, with British American Tobacco shares moving lower with the rotation away from companies with defensive earnings, and Severn Trent and Vodafone also lagging as investors favoured cyclical companies.

Activity over the month saw us sell positions in Unilever and Sage Group, and trim holdings of Vodafone, BHP Billiton and 3i Infrastructure. We added to the holdings of British American Tobacco, Severn Trent and Tate & Lyle, whilst initiating new positions in retailer Halfords, industrial turnaround specialist Melrose and oil services company Wood Group.


The macro environment remains stable but depressed, and a wide range of outcomes are still possible. Interventions by the ECB, Federal Reserve and Japanese Central Bank provided a great deal of liquidity, which may have reduced downside risk in the short term but this needs to translate into growth to be effective.

Overall, UK equity valuations still look attractive compared to those of most other asset classes, with the prospect of high quality earnings and dividend growth. We expect domestic consumption to remain under pressure and hence we prefer to hold positions in companies with exposure to growth markets. The UK equity market has considerable exposure to overseas earnings and provides many good investment opportunities.

16 November 2012

(Source: PR Newswire )
(Source: Quotemedia)


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