The Sceptre UK Fund had another good month in October and was up 3.0% after all fees and is now well ahead of the FT All-share index – the Year to Date and Trailing 12 month’s numbers are as follows:

	Period YTD Trailing 12 mnth * Gross Net Gross Net Sceptre UK Fund 15.1% 13.2% 29.3% 25.4% FT All-share 10.3% - 17.9% -

The month was quite active on the trading front for us and we closed 2 positions and opened a new position during the month. We still have 2 or 3 names that we would like to buy that are trading a little higher than our target “buy” price but, given the general market strength over the past few months, we hope that our patience will be rewarded and the stock prices will come back into our buying levels. We also added to 2 of our existing holdings on price weakness as the market over reacted to trading statements which, in our view, are indicative of short term trading weakness in sound and fundamentally very cheap businesses.

Two of our top 5 holdings appreciated by over 10% in the month – one of these was our Lloyd’s Underwriter which is continuing to benefit from this years absence of any “serious” hurricanes or other major natural disasters. In common with most Underwriters the exposure to USA hurricane damage risk was reduced but the higher premiums received and the lack of damage so far should now result in substantial returns for the 2006 year of account.

As a result of closing 2 holdings and the fact that we have only just commenced buying the one new holding the fund currently has an exceptional cash weighting which is now about 15%. Normally we would aim to be fully invested but, as explained above, we feel that patience and careful buying over the next few weeks will give us a much more valuable portfolio. We are continuing to evaluate many different stocks each week and whilst we find many that are (in our view) overvalued or “fair” value, we also are finding potential candidates for the Fund.

Please let us know if you have any questions on the Fund or its performance,

Chris Broadhurst
CEO