The New Star Diversified Absolute Return Fund fell 9.4%* over the three months to 30 September while the IMA UK Zeros sector lost 9.1%*. The growing financial crisis eliminated parts of the corporate landscape such as US investment banking and generated record volatility. In the UK, the FTSE 100 Total Return Index lost 12.9%* in September, its worst monthly loss since the stockmarket crash in 1987.Corporate bonds also struggled after the Lehman Brothers insolvency highlighted the rising risks of investing in non-governmental fixed interest markets. Even respected hedge funds were suffering sharp losses. These trends affected the fund although it would have been more resilient but for the widening in discounts to net asset value among closed-end funds.Real Estate Opportunities zeros were particularly hard hit as investors continued to shun property funds with bank borrowings; its gross redemption yield rose to about 40%.