Aberdeen Life European Equity Growth Fund

July 2010

Market review

• European equities fell sharply in the second quarter amid volatile trading caused by the Eurozone sovereign debt crisis. Markets were at first pressured by credit rating downgrades of Greece, Spain and Portugal, Greece was eventually bailed out by the Eurozone and the IMF. Also dismaying were Germany’s unilateral ban on naked short-selling and uncertainty over the US financial reform bill. Towards the period-end, lacklustre economic data and looming fiscal austerity – which clouded growth prospects – kept the mood subdued, while fears that the European Central Bank was scaling back its emergency support to Eurozone banks added further stress.

Fund review

• During the quarter, we introduced Fugro, an attractively valued oil service company with a leading market position and a healthy balance sheet. We also added to Schindler in view of its good long-term outlook. Conversely, we divested Deutsche Post and Portugal Telecom because of deteriorating business prospects. In addition, we pared back BMW following its strong share price performance, to manage the level of exposure to the cyclical sector.

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