Report of the Investment Committee 2008 - St James's Place

Andrew GreenSJP/GAM ManagedWe have continued to witness high levels of volatility in worldwide financialmarkets but with the authorities continuing to take proactive steps to addressboth the current financial crisis and the developing recession, markets may havebegun to show some tentative initial signs of wanting to establish a pause in thecollapse of values seen in 2008. Throughout the year we have maintainedliquidity at around 17-20%. In addition, one quarter of the fund was invested inthe Japanese market with a corresponding exposure to the Yen, which we havegradually hedged back into as Sterling has weakened, which has helped recent performance.In addition, in the previous two years, we specifically reduced small company content of theportfolio and built up holdings like Deutsche Telekom in Germany and Bristol Myers in the US.This action together with our positioning in pharmaceuticals has also provided support. Acombination of these three factors has helped us avoid the very worst of the sell-off to date butnonetheless the portfolio has been impacted by the routing of those stocks that are perceived tohave a recovery bias, but in the subdued environment we are entering, those situations offering ameasure of growth and stability will become increasingly valued.16