The Fund seeks to maximise total return. The Fund invests globally at least 70% of its total assets in the equity securities of companies whose predominant economic activity is in healthcare, pharmaceuticals, medical technology and supplies and the development of biotechnology.

The Fund underperformed its benchmark over the month*.

Performance was driven primarily by sub-sector allocation and was aided by stock selection. The biotechnology sub-sector accounted for most of the gains as reported acquisition interest in Genzyme, a large holding of the Fund, produced a sharp rise in that stock and stimulated gains in smaller biotech companies stocks as well. Somewhat offsetting the biotech gains, the medical device & supplies sub-sector was negatively affected by investor concerns regarding declining utilisation trends in the US. The Fund’s underweight in large capitalisation pharmaceuticals and focus on smaller, specialty pharmaceutical companies was a significant positive for the month as investors once again focused on growth prospects.

The Fund remains diversified across numerous sub-sectors in healthcare. Our growth bias and individual stock performance has slightly increased our significant overweight in the biotechnology sub-sector. Our underweight in pharmaceuticals remains. We trimmed our weighting in the medical devices & supplies sub-sector on both poor utilisation trends and a disappointing earnings report and outlook from Baxter, a position we sold. Softening utilisation trends triggered our exit from the orthopedic implant market and we sold both Stryker and Zimmer. The funds from these sales were reallocated into existing holdings in the healthcare providers & services sub-sector and cash.

Poor investor sentiment continued to weigh on healthcare throughout most of the period. However, the pick-up in acquisition activity along with excellent early reads on second quarter earnings expectations appeared to be shifting investor perception late in the month. Fundamentals, long-term, remain robust and healthcare reform legislation in the US appears more benign than originally anticipated. Innovation and rising demand worldwide remain the key long-term drivers of investment performance in the sector. Both of these factors remain robust and provide the foundation of our long-term positive view.

*Reported Fund performance relative to its benchmark over the month was negatively affected by the timing differential between pricing of the Fund and its benchmark.