Fund Objective

To provide long-term capital growth.

View on Past Performance

Volatility in New Europe persisted as ongoing negative signs from developed markets spilled over into the asset class. Performance continued to be driven largely by external factors, notably US recession, the global credit crunch, the impact on financial stocks and falling commodity prices.Turkey saw strong returns as the Constitutional Court's decision not to close the AK Party ended political uncertainty and brought optimism to the market. Russia was the worst performer as military action in Georgia, political uncertainty and the reversal of the oil price, combined with the global financial turmoil, drove the market down.The fund underperformed the benchmark. An overweight position in Turkey was the greatest contributor to performance; however, investment ideas detracted slightly.Stock selection in the Czech Republic contributed positively. Stock selection in Russia was the greatest detractor from performance, while off-index bets in Kazakhstan also had a negative impact.

Future Expectations

In the short term, we expect the markets in New Europe to continue to be guided by high uncertainty and volatility, driven by global sentiment, oil prices and political noise. In addition, the Convergence countries are likely to suffer on the back of EU & EUR weakness.The recent turbulence has motivated indiscriminate selling, which may allow longterm fundamental investors to reposition their portfolios as valuations fall to more attractive levels. We continue to focus on seeking to identify compelling value relative to the regional peer group. Our key secular themes remain rising consumer prosperity and infrastructure investment.

Fund Details