The Fund outperformed its index, but European smaller caps endured a difficult month, after stocks fell sharply amid turmoil in the world's credit and banking industries. The MSCI European Small Cap Index plunged 18.1% in sterling, total return terms.The contagion in financial markets reached continental Europe, as the governments of Belgium, the Netherlands and Luxembourg were forced to partly nationalise Belgian-Dutch group Fortis, while German lender Hypo Real Estate had to secure a credit line from various parties, including the German government, of up to €35bn.Within the portfolio, we bought into low-cost air carrier Ryanair, which looks set to benefit from a steady decline in oil prices, with travel of this type still attracting plentiful custom. We continued taking profits from several names, including oil services provider Fugro, with prices unlikely to return to previous peaks, and Belgian discount retailer Colruyt, which has done particularly well in the current economic climate.Elsewhere, we again added to German office supplier Takkt, which has a strong international growth profile.
