Copy of Fund Manager's Report from the 30 June 2009 Interim Report.

As suggested in my 2008 Annual Report, global stock markets bottomed during the first half of 2009 and have rallied impressively since with the FTSE All Share index rising 21.9% to 30 June from a multi-year low reached in March. Concerns over credit availability, stability of the financial markets and the impact of the financial crisis on the economy continued to weigh on investors at the start of 2009 following the Lehman Brothers bankruptcy and the near collapse of the banking system in 2008. The debt unwinding and financial industry implosion had driven the economy into a tailspin. Unprecedented actions by the UK Government and the Bank of England, along with the US Treasury and the Federal Reserve, and other central banks around the world, including slashing interest rates to historical lows and substantial injection of liquidity through quantitative easing, restored a degree of confidence in the financial system triggering the rally in stocks.

We generally continued to avoid sectors which we believed would remain under pressure i.e. financials, banks, house builders, property and retail, and focused more on technology, oil and oil related and some cyclical stocks whilst maintaining a defensive bias through the use of index futures in order to cushion against a possible pull back in the market. Overall, this balanced approach has enabled the Fund to deliver a very gratifying performance during this challenging period.

Performance

For the six months to 30 June 2009, the value of the Fund increased by 35.8%* compared with a rise of 4.2%* for the average fund in the UK All Companies sector. The Fund was positioned 6th out of 321 funds in its sector.

Portfolio

At 30 June 2009, the portfolio consisted of 41 companies. Oil & Gas Producers made up 13.5% of the portfolio followed by Technology Hardware & Equipment 12.1% and Software & Computer Services 8.2%. The Fund’s overseas equities exposure was 4.6% of the portfolio.

Outlook

The ‘green shoots’ of recovery are emerging thanks to the policy makers’ massive, synchronised fiscal and monetary stimulus supportive for the financial markets. Nonetheless, the economy has sustained a significant shock and the recovery is expected to be slow and painful. The banking sector is still healing and the fiscal policies put in place across the world have led to an unprecedented rise in budget deficits. The excesses and imbalances that have built up over recent decades have contributed to the downturn and will continue to act as an impediment to growth, impacting corporate profits. Businesses and consumers are expected to become more conservative as they repair balance sheets. A very low growth or a no growth economy will be challenging for individuals, businesses and governments. Further financial shocks, a geopolitical event or a swine flu epidemic could derail any recovery.

Whilst the multi-month rally has continued, we suspect that more recently it has been driven more by sentiment and liquidity. Based on the fundamentals, the market appears to be over extended. Accordingly, we remain cautious and have maintained a defensive bias whilst focusing on stocks we believe have company-specific drivers and are expected to perform despite the challenging situation.

I thank you for your investment in the Manek Growth Fund and your continued support.