Financial Advisers

Market commentary or fund strategy at this time is often out of date within a very short period of time. Therefore, this update is a brief factual overview of performance and stock contributors over the month of March. We are all too aware that accurate and timely communication is vital to both you and your clients, so for the most up-to-date information please contact your usual Gartmore representative.

To view individual fund commentaries please click on one of the below links:

Gartmore Cautious Managed Fund
Gartmore China Opportunities Fund
Gartmore Corporate Bond Fund
Gartmore Emerging Markets Opportunities Fund
Gartmore European Selected Opportunities Fund
Gartmore UK Absolute Return Fund
Gartmore UK Alpha Fund
Gartmore UK Equity Income Fund
Gartmore US Growth Fund
Gartmore US Opportunities Fund

For professional investors only. Not to be circulated to retail investors.


Gartmore Cautious Managed Fund

Review
The enthusiasm in global equity markets continued to sustain the rally in UK equities during March. Uncertainty surrounding the impending general election and the prospect of a hung parliament in the UK failed to dampen spirits, and although there is an underlying apprehension regarding the domestic economic climate, confidence in a global recovery meant that nearly all FTSE All-Share sectors delivered positive returns. The more recovery-oriented, cyclical companies delivered the greatest gains, while defensives (notably the large pharmaceuticals sector) were weaker. Mining was particularly strong, buoyed by rising commodity prices.

Over March the Fund gained 3.5%. Given our defensive positioning and cash balances this is not an unreasonable result, being only marginally behind the IMA Cautious Managed Sector Average of 3.7%. We were overweight some stocks that performed very well, including Lloyds, Anglo American and GKN, while detractors came from the places we would expect in this environment, such as our underweight exposure to mining and higher exposure to the out-of-favour defensive sectors like pharmaceuticals.

Short term weakness has presented a number of opportunities to raise holdings in stocks that we feel have strong potential, such as BT, Resolution and Dairy Crest. We have also taken profits from some of our large overweights like BAE Systems and Centrica.

We continue to add to corporate bond positions within financials. This month this has included Anglo Irish, Standard Life and Beazley. We feel that financial issues continue to represent good value, and in many cases much better than the equivalent equity.

Outlook
Our concerns for the domestic economy, and the subsequent impact on the asset classes into which we invest, remain unchanged this month. If anything, a further rally in equities with little underlying change in the environment increases our discomfort with the present state of affairs. The speed with which the market has priced in a return to peak earnings has been remarkable, and seems to us to be more than a little premature. The outcome of the election is very uncertain at present, and yet even this has not shaken the boundless enthusiasm for equities which has characterised our environment for over a year now.

Over the month inflation expectations, as measured by the return on index-linked gilts, continue to rise. This suggests that we are likely to see weakness in the gilt market later in the year. This is much in line with our views of the past few months, and as such the portfolio's structure remains largely the same.

Important Information
Source for all fund performance data: Lipper. Basis: Mid to mid, net income reinvested and net of fees in UK sterling terms as at 31.03.10, unless otherwise stated. Past performance is not a guide to future performance. The value of investments can go down as well as up and you may not get back your original investment. When a fund holds high yielding bonds there is an increased risk of capital erosion through default or if the underlying yield is below the distribution yield. You should also be aware that economic conditions and changes to interest rate levels may significantly impact the values of high yield bonds. The annual management fee is currently charged to the capital of the Fund. Whilst this increases the yield, it will restrict the potential for capital growth. The level of yield may be subject to fluctuation and is not guaranteed. Please ensure your clients read the Simplified Prospectus before investing. The opinions expressed reflect Gartmore's views as at 20 April 2010 and are subject to change.

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Gartmore China Opportunities Fund

Review
The Gartmore China Opportunities Fund rose by 6.8% in March, while the MSCI Zhong Hua Index gained 5.8%. The Fund has risen 20.9% and ranks in the top decile of the IMA Asia Pacific (excluding Japan) Sector over the last six months.

Overweight holdings in Haitian Intl Holdings, China Eastern Airlines, Baidu, Li Ning and Weichai Power all delivered the month's strongest returns. Haitian is an industrials small cap stock which has benefitted from very strong results. The company is confident that they can take advantage of what they regard as the strongest operating environment ever for plastic inspection moulding machines. We invested in China Eastern Airlines some months ago to take advantage of a consolidation in airlines. China Eastern Airlines is currently performing well as the market is looking for beneficiaries of a stronger Chinese yuan. Sportswear and brand company, Li Ning is one of our longer term plays, machinery company Weichai is our largest overweight in the Fund and Baidu continues to perform strongly in the IT sector following Google's exit from China.

Investments in China Agri (food products), Shenua (energy) and Ping An (insurance) detracted most over the month. China Agri's share price has remained stagnant since the start of the calendar year. However, we remain positive on the food processing business and retain our overweight position in the stock. Shenhua is a conservative coal company with a large proportion of contract sales. The company suffered as a result of market disappointment over the smaller than expected rise in contract prices. We retain our conviction in this company based on its strong outlook, margins and growth prospects. We do not own Ping An in the Fund but prefer other insurance companies such as China Taiping which have positively offset the negative impact of not holding Ping An.

There was a reasonable level of portfolio activity over the month. Following two disappointing management meetings, we sold our positions in Ports Design and Zhejiang Expressway. We took a new position in the hotel and leisure company, Wynn Macau, which has secured stronger revenues than expected and is a company with an exemplary position in the VIP segment. We are confident of Wynn Macau delivering unexpected earnings in the future. We took advantage of a pull back in the market to acquire a position in China High Speed which provides gearboxes for wind turbines.

Outlook
Despite the diminishing impact of various government stimulus packages and a fear of increasing regional interest rates, we continue to see signs of the recovery during 2010. The recovery in emerging markets appears to have gained traction as the G7 economies continue to benefit from improvements in underlying credit conditions. We expect China to continue to benefit as the recovery gathers momentum and we remain confident that Chinese equities represent good value. There are still many doubters on China which continues to offer the potential for unexpected earnings growth particularly within the consumer and technology sectors.

Important Information
Source for all fund performance data: Lipper. Basis: Mid to mid, net income reinvested and net of fees in UK sterling terms as at 31.03.10, unless otherwise stated. Past performance is not a guide to future performance. The value of investments can go down as well as up and you may not get back your original investment. The Fund can invest in smaller companies which can be more risky than investing in larger companies due to lack of liquidity and increased volatility. Emerging markets tend to be more volatile than more established stock markets and therefore your money is at greater risk. Other risk factors such as political and economic conditions should also be considered. Funds investing in overseas securities are exposed to and can hold currencies other than sterling. As a result, exchange rate movements may cause the value of investments to decrease or increase. Please ensure your clients read the Simplified Prospectus before investing. The opinions expressed reflect Gartmore's views as at 21 April 2010 and are subject to change.

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Gartmore Corporate Bond Fund



* Please note that the Gartmore Corporate Bond Fund was launched on 18.07.09 to receive the assets of the Rensburg Corporate Bond Trust (managed by John Anderson) on the merger of the two funds on 18.07.09. Performance figures prior to 18.07.09 reflect the performance of the Rensburg Corporate Bond Trust converted from an offer to offer basis to a mid to mid basis. The benchmark index changed to the iBoxx Sterling Non-Gilts Index on 18.07.09.

Performance
Over the month the Gartmore Corporate Bond Fund returned 2.4%, compared to a return of 1.9% for the Markit iBoxx Sterling Non-Gilts Index and a return of 2.4% for the IMA £ Corporate Bond Sector Average. Long term performance remains strong with the Fund ranked in the first quartile over 2,3,4,5 and 10 years*.

Economic and Market background
March was a positive month for credit markets, especially amongst higher yielding assets. Sovereign risks abated somewhat over the month and credit default swap spreads for Portugal, Italy, Greece and Spain narrowed. March saw global equity markets rally although the strong correlation between various regions is now starting to weaken. Sovereign risks, currency strains and unevenness in the global recovery are forcing equity investors to become more discerning.

The economic data continued to improve in March. Merrill Lynch recently raised its forecast for Global GDP growth by 0.1% after upgrading growth expectations for Korea, Australia, India and Canada. The US manufacturing Institute for Supply Management (ISM) index reading for March came in at 59.6, comfortably above expectations of 57 (any reading above 50 indicates growth). The US employment index slipped marginally from February's levels but still indicated growth in manufacturing employment. Similarly non-farm payrolls for March, despite coming in slightly below expectations, still showed the biggest monthly gain for employment in three years. In our view, the economic recovery is starting to take hold and feed on itself, as the improving data suggest.

Investment Strategy
The key focus over the month was upping portfolio risk in order to tap into the nascent economic recovery.

We disposed of some of our higher quality holdings such as oil producer BP and European Investment Bank debt. With the proceeds we invested in some slightly lower quality, higher yielding names. These included insurer Aviva, mutual retailer Co-Operative Group, the Coventry Building Society and budget fashion retailer Matalan.

Over the last few months, the high yield weighting on the Gartmore Corporate Bond Fund has steadily increased. Although last year's returns were a once in a lifetime affair, in our view the stable returns of 7-10% we expect this year in the high yield market look attractive relative to government debt and investment grade bonds. At present high yield stocks compare favourably to other fixed income assets, and offer further spread tightening potential given the outlook for default rates and economic growth.

Our favoured sectors remain financials and consumer-related stocks and we continue to shun gilts. The latter asset class, still reeling from the destabilising effect of quantitative easing, has been adversely impacted from the consequences of the Greek deficit and increasing political uncertainty. 10 year gilts are currently yielding around 4% which in our view do not represent good value for money.

Outlook
Markets remain credit friendly, inflation is relatively subdued and the economic recovery currently taking place is likely to prove beneficial to company earnings. Yet we must remain vigilant as exogenous shocks, namely sovereign risks, could still adversely impact credit markets. Also, the robustness of the economic recovery itself could prove problematic to the bond market if central banks are forced into raising rates prematurely.

Important Information
Source for all fund performance data: Lipper. Basis: Mid to mid, net income reinvested and net of fees in UK sterling terms as at 31.03.10. Past performance is not a guide to future performance. The value of investments can go down as well as up and you may not get back your original investment. This Fund invests in bonds and other fixed income securities and derivatives which collectively may be more volatile than a fund investing solely in cash or bonds. The Fund may trade instruments which are not exchange traded and therefore contain the risk a counterparty may not be able to honour its contractual obligations. Currently, the annual management charge is taken from the capital of the Fund, which will increase the income yield, but restrict the potential for capital growth. Yields may change in the opposite direction to interest rates, however, not by the same increments. The Fund invests in corporate bonds whose prices are aligned with the credit worthiness of the underlying corporate. A deterioration in a corporate credit rating may have a negative impact on the bonds price. Derivatives may be used for the purpose of efficient portfolio management. However, appropriate risk monitoring will ensure that there is no significant increase in a fund's risk profile. Derivatives will not be used for investment purposes. Please ensure your clients read the Simplified Prospectus before investing. The opinions expressed reflect Gartmore's views as at 21 April 2010 and are subject to change.

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Gartmore Emerging Markets Opportunities Fund

Review
The Gartmore Emerging Markets Opportunities Fund rose by 7.3% in March while the MSCI Emerging Markets Index and the IMA Global Emerging Markets Sector gained 8.5% and 9.2% respectively.

A number of the Fund's overweight holdings in companies sensitive to changing economic expectations performed well over the month, among them the Turkish bank, Garanti and the Mexican materials company, Mexichem. Garanti's share price was pushed higher this month as four potential suitors declared an interest in GE's 20% stake in the bank. Mexichem has made a number of successful acquisitions and has spare financial capacity to continue this strategy. We expect the company to benefit as China becomes a net importer of fluorinated products which should provide support to global prices. Least successful was our overweight position in the Taiwanese IT company, Compal. Compal's shares fell when it announced that it expects its personnel costs in China to increase 8-10% this year amid labour shortages on the mainland. However, Taiwan remains a significant weight in the portfolio and we remain overweight in Compal given our conviction in the recovery in corporate PC demand.

March saw significant activity for the portfolio. The Fund took several new positions, one of which was Taiwan's, Fubon Financial. Fubon has a clear China growth strategy and has already taken a 20% stake in a small mainland bank. The bank is already strong in wealth management and we are confident of significant upside potential. We also increased our holding in the Chinese IT company, Tencent. We believe that Google's departure from China will present opportunities for smaller, niche players, especially Tencent. Advertisers are also likely to support smaller search engines to prevent Baidu's monopoly. Elsewhere, we exited our position in Chinatrust Bank. Our concerns in Chinatrust are centred on very low loan growth of between 3% and 5%, the substantial risk of dilution relating to new equity issuance, bad debt provisions and write downs and the uncertainty surrounding the company's acquisition of AIG Taiwan.

The Fund's positioning reflects our positive view of the prospects for emerging markets. We see attractive investment opportunities in resource-rich countries such as India (Sesa Goa), Brazil (Petrobras) and Russia (Rosneft). We expect a recovery in cash generation across a broad range of sectors and industries, leading us to have a healthy exposure to cyclical industries.

Outlook
The recovery in the broader emerging markets appears to have gained traction as the G7 economies exhibit improvements in underlying credit conditions. The impact of various government stimulus packages may be diminished. And fear of regional interest rates rising. We remain confident of a shallow, yet broad-based recovery in the G7 nations during 2010. We expect China, Russia and Mexico to gain most from the recovery as it gathers momentum and are therefore maintaining a key overweight in these regions whilst underweighting South Africa and South Korea.

As improvements in global demand filter through the emerging economies, we expect to see earnings improvements across our cyclical stocks. We continue to favour those companies operating in consumer staples (e.g. Shoprite, Want Want) and information technology (e.g. Lite-On Technology, Baidu) whilst underweighting financials (e.g. Sberbank).

Important Information
Source for all fund performance data: Lipper. Basis: Mid to mid, net income reinvested and net of fees in UK sterling terms as at 31.03.10, unless otherwise stated. Past performance is not a guide to future performance. The value of investments can go down as well as up and you may not get back your original investment. This Fund invests in emerging markets, which tend to be more volatile than more established stock markets and therefore your money is at greater risk. Funds investing in overseas securities are exposed to and can hold currencies other than sterling. As a result, exchange rate movements may cause the value of investments to decrease or increase. In addition, the Fund can invest in smaller companies which can be more risky than investing in larger companies due to lack of liquidity and increased volatility. Please ensure your clients read the Simplified Prospectus before investing. The opinions expressed reflect Gartmore's views as at 21 April 2010 and are subject to change.

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Gartmore European Selected Opportunities Fund

Review
Over the month, the Gartmore European Selected Opportunities Fund delivered 8.0%, outperforming the IMA Europe ex UK Sector Average (7.8%) and the FTSE World Europe ex UK Index (7.4%).

New holdings were concentrated in the consumer sector, with names such as Luxottica, Pernod and PPR joining the portfolio. One of the many ways in which Europe is underestimated is in the strength and depth of its consumer franchises. While much of the 'China story' has thus far benefited the industrial and cyclical sectors, we foresee this shifting as the Asian consumer class grows in both size and taste. Hence the aforementioned portfolio newcomers.

Holdings in Alcatel, Deutsche Post and EDF were sold, reflecting our concerns over the trading outlook for each of these businesses.

Technology was again a significant contributor to performance, with semiconductor names Infineon and STMicroelectronics responding positively to a combination of strong industry orders as well as their respective restructuring efforts. These companies are coming from a low base in terms of how they have been managed in the past and we continue to see good margin upside for both. Continuing the theme of restructuring is Siemens, a perennial laggard over its long term history. Finally a deep rooted restructuring is underway at this sprawling group and again, profit margins are there to be improved.

Our pharmaceutical overweight detracted from performance during the month, as the market fed off a series of strong economic data points. In such a phase, 'defensives' such as pharmaceuticals can be expected to lag. Thus, the top three detractors during March were Novartis, Sanofi and Bayer. It's worth noting that our ongoing overweight stance in this sector is balanced by an underweight in other 'defensives' such as telecoms and utilities. We remain comfortable with this positioning, not least since we expect we may be at or near the peak in the upgrades cycle for many cyclical stocks.

Outlook
What intrigues us most at this juncture is how out of favour western world large cap equities remain, relative to most other asset classes and geographies. The rush to emerging markets, mid caps as well as bonds in recent years leaves us with the growing feeling that apparently boring western blue chips are the positive surprise in store. Should this indeed unfold, the Fund is well positioned to capitalise.

Important Information
Source for all fund performance data: Lipper. Basis: Mid to mid, net income reinvested and net of fees in UK sterling terms as at 31.03.10. Past performance is not a guide to future performance. The value of investments can go down as well as up and you may not get back your original investment. Funds investing in overseas securities are exposed to and can hold currencies other than sterling. As a result, exchange rate movements may cause the value of investments to decrease or increase. In addition, the Fund can invest in smaller companies which can be more risky than investing in larger companies due to lack of liquidity and increased volatility. Please ensure your clients read the Simplified Prospectus before investing. The opinions expressed reflect Gartmore's views as at 21 April 2010 and are subject to change.

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Gartmore UK Absolute Return Fund

Review
The uncertainty stemming from the impending general election and the prospect of a hung parliament in the UK failed to dampen the spirits of the domestic equity market during March. Supported by a further upward revision of the GDP result from the final quarter of 2009, UK markets continued February's rise.

Nearly all FTSE All-Share sectors delivered positive returns, but the more recovery-oriented, cyclical companies delivered the greatest gains, while defensives (particularly the large pharmaceuticals sector) were weaker. Mining was particularly strong, buoyed by rising commodity prices.

The Gartmore UK Absolute Return Fund gained 0.9% during March, bringing the year-to-date return back into positive territory at 0.4%. The very low net exposure, implemented due to our uncertainty about the market's direction in the near term, weighed on returns given the strength in equity markets demonstrated over the month.

The greatest contribution to returns during March came from Tullett Prebon, which performed well once again on news of preliminary takeover talks. Over the first quarter the interdealer broker's share price has risen over 25%. Although we sold some of our stake after the news broke and thus reduced our weighting, at the time of writing Tullett Prebon remains our second largest position.

Close behind was our long position in transport operator Arriva, which announced mid-month that it had received an unsolicited bid. We felt that Arriva looked undervalued and that the market was placing too much weight on recent profitability and failing to take into account the impact of specific factors (such as a temporary spike in fuel costs) that mask good underlying earnings growth. Over the course of the month the share price rose over 40%, and we started reducing our exposure with strong profits.

Outlook
Our focus remains very much on stock specifics, and examining opportunities on a bottom-up basis rather than taking a position on the market as a whole. Although we are still finding more long than short positions, this is showing signs of changing. Following the rally of the past two months we are identifying more overbought situations which provide us with opportunities to take short positions in stocks.

Going forward, should the weakness in sterling persist then we can expect further takeover situations to arise as UK companies become attractive targets for overseas buyers. With Arriva and Tullett Prebon contributing strongly this month on the basis of possible corporate activity, this has the potential to generate further profits for the portfolio in the future. We don't actively seek these types of situations, and merger & acquisition potential is unlikely to be the sole driver for an investment decision. But where the likelihood exists then we will consider it as a factor when assessing the case for investment.

Important Information
Source for all fund performance data: Lipper. Basis: Mid to mid, net income reinvested and net of fees in UK sterling terms as at 31.03.10, unless otherwise stated. Past performance is not a guide to future performance. The value of investments can go down as well as up and you may not get back your original investment. The Gartmore UK Absolute Return Fund invests in shares and derivative instruments, which are more volatile than other asset classes such as cash or bonds. The Fund aims to typically deliver absolute (more than zero) returns in each year, although an absolute return performance is not guaranteed. Over the short term it may experience periods of negative returns and consequently the Fund may not achieve this objective. The Fund may invest in smaller companies, which can be more risky than larger companies due to a lack of liquidity and increased volatility. The shares of smaller companies may be subject to more abrupt price movements than shares of larger companies. The investment approach for this Fund may involve a high level of investment activity and turnover of investments, which may generate substantial transaction costs which will be borne by the Fund. This Fund primarily invests in a single market which can be subject to particular political and economic risks. The manager may invest in markets other than the primary market and the Fund may therefore be exposed to risks in these markets. The Fund may take short positions via derivatives with the aim of profiting from falling prices. If the price rises this would result in a loss. The Fund may be subject to a Performance Fee which may influence the manager to change the risk profile of the Fund. Please see the "Performance Fee" section in the Prospectus for further information. The Fund may trade instruments, the performance of which depends on the continued solvency of the counterparties to the trades. The Fund may employ leverage as part of its investment strategy when using derivatives. Derivatives may contain a leverage component and consequently any adverse changes in the value or level of the underlying asset, rate or index can result in a loss greater than the amount invested in the derivative itself. Please ensure your clients read the Simplified Prospectus before investing. The opinions expressed reflect Gartmore's views as at 21 April 2010 and are subject to change.

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Gartmore UK Alpha Fund

Review
UK equity markets continued to march firmly ahead this month, supported by another upward revision of GDP for the final quarter of 2009, UK markets continued February's rise. Nearly all FTSE All-Share sectors delivered positive returns, with the more recovery-oriented, cyclical companies delivering the greatest gains, while defensives (especially the large pharmaceuticals sector) were weaker.

Over March the Gartmore UK Alpha Fund gained 7.2%, ahead of both the FTSE All-Share Index (6.8%) and the IMA UK All Companies Sector Average (6.9%). The greatest contribution to performance was our overweight position in Delta, which was the target of takeover activity as discussed below.

Outlook
Although market indicators are looking up, the wider UK economy faces a relatively subdued outlook. Tax rates are likely to remain high for a sustained period, though allowing interest rates, perhaps, to stay lower. This should not force us into a simple 'one dimensional stance,' - that of raising overseas exposure. Mid caps, as ever, provide many opportunities for the Fund.

Currently, a number of themes are reflected in the portfolio. As discussed previously, consumers "trading down" can benefit companies like Greggs, Holidaybreak or Rank. If interest rates stay low then we may need to find more specialist financial vehicles such as SVG or Brewin Dolphin. Thirdly, as we emerge from a severe downturn, deeper value opportunities present themselves. These are companies that have been hurt, perhaps severely, by the downturn but now that we are in recovery the revival in their businesses may have been overlooked. Examples may include Yule Catto, Grainger or SIG. Fourthly, we maintain our search to identify 'tomorrow's companies', or strong growth opportunities. Party Gaming and N Brown may fit this category, and it is no surprise that each is related to internet delivery. Lastly, it is important that we give the portfolio an element of exposure to overseas growth and this is currently being achieved through a number of sectors and stocks, for instance in Micro Focus, Spirent and Heritage Oil.

The key pointer that the recovery is genuine is the level and breadth of corporate activity that is taking place, from Kraft bidding for Cadbury to Prudential acquiring Far Eastern assets. In addition to these high profile moves, in the mid cap space targets include Forth Ports, Delta, Gulfsands Petroluem, Rensburg, VT Group, and Tullett Prebon, to name a handful.

In part this may be because management are choosing to buy the finished article to grow their businesses, (as opposed to the rather slower process of expanding upon their existing business), but sterling weakness also makes UK companies attractive targets. Should these trends persist then we can expect further takeover situations to arise, and we will be on the lookout for ways to benefit from this.

Important Information
Source for all fund performance data: Lipper. Basis: Mid to mid, net income reinvested and net of fees in UK sterling terms as at 31.03.10, unless otherwise stated. Past performance is not a guide to future performance. The value of investments can go down as well as up and you may not get back your original investment. The Gartmore UK Alpha Fund invests in shares, which are more volatile than other asset classes such as cash or bonds. The Fund may hold concentrated positions. If one of these concentrated positions declines in value, or is otherwise adversely affected, this can have a greater effect on the Fund's value than if it held less concentrated positions. The Fund may hold a limited number of investments. If one or more of these investments declines in value, or is otherwise adversely affected, this can have a greater impact on the Fund's value than if a larger number of investments were held. The Fund can invest in smaller companies which can be more risky than investing in larger companies due to lack of liquidity and increased volatility. Funds with an emphasis on a particular sector or geographical area are exposed to a higher risk of volatility than a fund which is more broadly diversified. Please ensure your clients read the Simplified Prospectus before investing. The opinions expressed reflect Gartmore's views as at 21 April 2010 and are subject to change. As of 4 January 2010, the name and objective of the Gartmore UK Alpha Fund was changed from the Gartmore UK Focus Fund.

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Gartmore UK Equity Income Fund

Review
Uncertainties surrounding Greek deficit funding and the prospect of a hung parliament in the UK failed to dampen the spirits of the domestic equity market during March. While we are relatively unconcerned about the latter, there is a strong case to suggest the problems in Greece are the first symptoms of an issue which is much more widespread. We would also point out that the yield on a 2-year Greek Government Bond is now higher than in late January, since when the UK equity market has rallied by over 10%. The conclusion must be that equity investors are relatively unconcerned about wider ramifications of the Greek funding crisis. We are not so sanguine.

Nearly all FTSE All-Share sectors delivered positive returns in March, but the more recovery-oriented, cyclical companies delivered the greatest gains, while some defensives (pharmaceuticals, utilities, tobacco) were weaker. Mining was particularly strong - the sector was up over 16%, adding around $50bn to the combined market cap of the sector and taking it back to the highs of May 2008.

The Gartmore UK Equity Income Fund delivered a healthy return of 5.2% this month, whilst the IMA UK Equity Income Sector Average and the FTSE All-Share Index delivered 5.8% and 6.8% respectively. Given the shape of the market it will come as no surprise that our more cyclical stocks recorded the more significant gains. More specifically, Pearson, Smiths Group, Spirent and Melrose all contributed materially to returns.

Following a relatively busy February, activity on the Fund this month was more muted. No new stocks were added to the portfolio.

Outlook
After 18 months of companies suspending or cutting dividends, company earnings are stabilising or improving and balance sheets are being repaired. As this adjustment progresses we can look forward to companies reinstating dividends, though the speed and extent of this will differ considerably between stocks and sectors. We also consider it likely that dividends will recover much more slowly than earnings - given recent turmoil we would expect company management to be more reticent with regard to the percentage of profits they are willing to distribute to shareholders. Furthermore, there will be competing demands on cashflow as companies recommence capital expenditure and inventories are rebuilt.

As ever, our focus remains on a company's ability to generate an attractive and sustainable level of income. The yield premium on the Fund is currently over 25% (the Fund yield is 4.3%, compared to the wider market with 3.4%). This is above our 20% commitment and points to the fact that, currently, we believe income and value go hand-in-hand. It has not ever been thus, most notably when banking stocks contributed over 20% of the market yield in 2006. We believe this alignment of income and value bodes well for income funds and our positioning in particular.

Important Information
Source for all fund performance data: Lipper. Basis: Mid to mid, net income reinvested and net of fees in UK sterling terms as at 31.03.10, unless otherwise stated. Past performance is not a guide to future performance. The value of investments can go down as well as up and you may not get back your original investment. The Fund can invest in smaller companies which can be more risky than investing in larger companies due to lack of liquidity and increased volatility. The annual management fee is currently charged to the capital of the Fund, which may restrict the potential for capital growth. Funds with an emphasis on a particular sector or geographical area are exposed to a higher risk of volatility than a fund which is more broadly diversified. Please ensure your clients read the Simplified Prospectus before investing. The opinions expressed in reflect Gartmore's views as at 21 April 2010 and are subject to change.

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Gartmore US Growth Fund

Performance
The Gartmore US Growth Fund rose by 7.8% in March, outperforming the S&P 500 Index (6.4%) and the IMA North America Sector Average (6.8%).

Market Review
In March US equities resumed their upward climb buoyed by improving economic conditions, a brightening outlook for corporate profits and continued highly accommodative monetary and fiscal policies.

US economic data continued to improve. During the month the Institute for Supply Management's (ISM) manufacturing index came in at 59.6, comfortably above expectations of 57 (any reading above 50 indicates growth). The new orders and production components of the index showed continued positive momentum and manufacturers' inventories expanded for the first time in almost four years (suggesting that restocking is happening at last). The employment index slipped marginally from February's levels but still indicated growth in manufacturing employment. Similarly non-farm payrolls for March, despite coming in slightly below expectations, still showed the biggest monthly gain for employment in three years. If annualised, the ISM reading for March is consistent with a 5.9% increase in US real GDP.

Contributors to Performance
Our overweight stance in Apple contributed positively to performance. Although the recently released iPad had varied reviews, satisfactory pre-sales figures helped support the shares during the month. We continue to hold the stock as we see potential for rebuilding market share in the PC market, and improving margins with the new 3GS i-Phone.

The energy sector had a difficult month with the S&P 500 Oil & Gas index down 0.16%. Unsurprisingly, detractors came from our high conviction plays in the sector such as oilfield equipment and services company National Oil Varco and gas producer Range Resources.

Fund Activity
Over the month we closed several positions which had reached their price target. These included software developer Adobe. We took advantage of share price strength to book some gains in internet engines Baidu and Google.

Currently the Fund is most overweight information technology, materials and consumer discretionary companies. The Fund is slightly overweight financials. These positions are held principally at the expense of sectors with more defensive characteristics, notably consumer staples and utilities.

Outlook
The question remains as to whether the US can transition from recovery mode to a sustainable expansion. The housing market is still weak and employment growth remains elusive. However, recent data have, in the main, pointed to incremental improvements in the US economy. Many US businesses are beginning to rebuild their inventories and a rebound in railroad traffic would suggest that imports are growing in order to meet stronger final demand. These factors support our view that the US economy will continue to recover this year. Against this backdrop, we continue to identify and invest in a range of attractive opportunities in the equity market.

Important Information
Source for all fund performance data: Lipper. Basis: Mid to mid, net income reinvested and net of fees in UK sterling terms as at 31.03.10, unless otherwise stated. Past performance is not a guide to future performance. The value of investments can go down as well as up and you may not get back your original investment. Funds investing in overseas securities are exposed to and can hold currencies other than sterling. As a result, exchange rate movements may cause the value of investments to decrease or increase. The Fund is permitted to, and may hold, a limited number of investments from time to time. Should one or more of these investments decline or be otherwise adversely affected, it may have a more pronounced effect on the Fund's value than if a larger number of investments were held. In addition, the Fund can invest in smaller companies which can be more risky than investing in larger companies due to lack of liquidity and increased volatility. Please ensure your clients read the Simplified Prospectus before investing. The opinions expressed reflect Gartmore's views as at 21 April 2010 and are subject to change.

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Gartmore US Opportunities Fund