Aberdeen Life World Equity Fund

July 2010

Market review

• Global equities fell in the three months to the end of June, reversing gains from the first quarter. Optimism about the global economy faded as Europe’s fiscal woes took centre stage. China’s attempts to rein in its housing market also added to anxiety. Greece was eventually bailed out by the Eurozone and the IMF, while regional governments backtracked from expansionary fiscal policies in favour of ambitious austerity plans. The normalisation of monetary policies was also postponed. With the exception of emerging markets, most central banks in Asia raised interest rates and Brazil became the first in Latin America to increase borrowing costs in over a year.

Fund review

• During the quarter, we sold Italian lender Intesa Sanpaolo, on concerns over the European banking sector. We also pared back chip manufacturer Intel and French electrical specialist Schneider Electric, following relatively strong share price performance. In contrast, we topped up Brazilian lender Banco Bradesco, telco Vodafone in the UK, tobacco company Philip Morris and UK based oil producer Royal Dutch Shell beca use of their attractive valuations. We also added to Swiss drugmaker Novartis, US based retail pharmacy CVS Caremark and chip foundry TSMC on attractive fundamentals.

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