Inflation fears took a back seat to worries over economic downturn, as events surrounding US mortgage providers Freddie Mac and Fannie Mae further unnerved the financial sector. The resultant flight to security boosted government bond prices. The Fund continued to sell fully priced financial sector bonds to make room for attractively priced new issues.The Fund returned ahead of its benchmark during August. The Fund benefited from a long duration position. As Sovereign bonds outperformed the credit market the Funds overweight position into government bonds boosted performance. Some gains were offset by stock selection within the insurance sector. Holdings in AIG didn't fair so well and returned well behind their peers.