Fund Update November 2011

Market and Fund Performance

Markets ended in positive territory across the world with the Standard and Poor (S&P 500) Index in the US rising 7.47% and the FTSE World Index up 6.82%, both in sterling terms. This monthly performance was the best for developed markets since December 1991. The Fund returned a rise of 5.67%.

Solar Exposure and Tariff Cuts

During the month, the severity of the austerity measures come to the fore, weakening the business case for renewable energy investments even further, with the UK government proposing a 55% cut in its solar subsidy scheme. Solar panel prices have dropped to half of the level of a year ago driven by slower demand growth across Europe and rising competition from Chinese manufacturers. The Fund is still avoiding exposure to the solar sector, as we feel that the current economic backdrop is a strong headwind.

New Holdings

This month we initiated positions in Philips Electronics NA (Energy Efficiency) and Compass Group plc (Food supply & Distribution).

• Phillips (Netherlands, 1.00%) is a leading global manufacturer with a focus on lighting, medical devices and consumer electronics and domestic appliances. The company, led by a new management, has recently embarked on a landmark corporate change programme to improve business processes, cost structures and returns. Philips is a global leader across most segments of the lighting market and stands to benefit from the shift from inefficient incandescent lighting, where a very high proportion of energy is lost, to compact fluorescent or LEDs (light emitting diodes). Notably, lighting accounts for 16% of electricity consumption in the UK and 19% globally, therefore efficient lighting is key to reducing both energy consumption and carbon emissions.

• Compass (United Kingdom, 1.28%) is a contract food service provider with a range of consumer facing solutions to its clients in 70 countries, within the business, industry, healthcare and education sectors. The company is exposed to defensive growth, driven by increasing outsourcing trends within the education and healthcare sectors, with penetration rates of around 35% compared to around 90% in business and industry. Additionally, the company is exposed to structural growth opportunities as catering is 0.4% of GDP in mature markets while only 0.1-0.2% in emerging markets.

Compass is set to benefit from the increasing food supply /demand imbalance and population & urbanisation growth, particularly in emerging markets. Compass is set to benefit from the increasing food supply/demand imbalance and population & urbanisation growth, particularly in emerging markets.