The third quarter proved to be a truly nasty period for financial markets, as the credit crisis stepped up a gear and investors began to worry about the toll it would take on the alreadyslowing world economy. The average global stock market fell by 11.4% over the three months, although this figure was improved for European investors by the considerable weakening of the euro.Over this turbulent period, the Fund fell back by 8.1% in euro terms, putting it slightly behind its average peer, which lost 7.9%. We raised our exposure to US equities at the end of July because we favoured both the market and the currency. This proved very useful to the Fund's performance for the quarter, as American equities - helped by the dollar's climb against the euro - were by far the most resilient of the major regions.Increasing our Japanese weighting helped too, partly because of the yen's appreciation against the single currency, and partly because our core Japanese holding, Societe Generale Japan Core Alpha, achieved a positive return - one of only three Japanese equity funds in the sector to do so in the third quarter. Earlier in the year, we were struggling against those of our peers with large exposures to commodities, as they continued to register strong returns while most other investments fell.We resisted the temptation to add direct commodity exposure to the Fund as we thought that their prices had become dangerously over-inflated. Amid all the banking clamour of the past months, it would have been easy to miss the price falls of natural resources investments, but fall they have. In the UK, for example, banks' share prices have collectively fallen by 26% in 2008, but mining shares have plunged by more than 34%.
