Fund Objective

To achieve long term capital growth.

View on Past Performance

During the month the Trust returned -16.9%, while the Index returned -17.8%. European smaller companies experienced a highly volatile month as economic data continued to deteriorate and pressures within credit markets became more pronounced. In this environment, smaller companies underperformed their larger counterparts, culminating in the worst monthly performance since the 1987 crash. All sectors fell more than 15% over the month.The natural resources sector was the worst performer as commodity prices declined, while the consumer goods sector held up relatively better. During September, the fund benefited from our increased emphasis on the consumer goods sector. Our underweight position in the natural resources sector was also helpful.Givaudan, a Swiss fragrances and flavours specialist, proved very steady, and CTS Eventim, the German internet ticketing group, performed well. Industrial sector stocks, on the other hand, generally suffered poor performances over the month.

Future Expectations

Given the background of the global credit crunch and the marked deterioration in expectations for European economic growth, European smaller companies have been subjected to some aggressive selling in an environment of volatile share prices and falling profit forecasts. As a result, however, we believe valuations are attractive in several areas and a number of share prices already reflect the likelihood of further deterioration in economic conditions.We remain focused on companies with strong niche positions, good growth prospects and effective management with a commitment to shareholder value.

Fund Details