SKANDIA GLOBAL FUNDS PLC - Fidelity Investments

Skandia Global Funds plc
Interim Report and Unaudited Financial Statements for the period ended 30 June 2012
SKANDIA EMERGING MARKET DEBT FUND
INVESTMENT ADVISER’S REPORT FOR THE PERIOD ENDED 30 June 2012
Skandia Emerging Market Debt Fund – Stone Harbor Investment Partners LP
Below is a report from the Investment Adviser of the Skandia Emerging Market Debt Fund for the first six months of 2012.
The Skandia Emerging Market Debt Fund was launched on 4 November 2003 with a starting Net Asset Value per share of USD
10.00.
Investment Adviser’s Commentary
During the first half of 2012, the Fund returned +5.90%, underperforming the JPMorgan EMBI Global Diversified Index benchmark
which returned +7.12%.*
The Fund had a solid return and outperformed its benchmark in the first quarter. Country selection decisions contributed to roughly
half of the positive excess returns, led by exposure to emerging markets’ corporate debt, which continued to rebound from the sharp
market correction seen in September 2011. Venezuela external debt benefited from attractive valuations and high oil prices. It was
also helped by President Chavez’s declining health in combination with the rise of a strong opposition candidate. Key drivers of
excess returns in issue selection included allocations to local currency markets in Brazil, Colombia, Malaysia, Mexico and South
Africa, which outperformed relative to benchmark hard currency sovereign debt.
The Fund produced a modest positive return but lagged the benchmark in the second quarter. Country selection accounted for the bulk
of the underperformance, notably an overweight to Argentine external sovereign debt, as questions regarding the consistency and
economic orthodoxy of government policy weighed on asset prices. Exposure to Brazil corporate debt also pared gains. Key
detractors in issue selection included an allocation to US dollar-denominated local law bonds in Argentina, as well as positions in the
Brazilian Real, Russian Rouble and South African Rand. Exposure to local bond markets in Brazil and Mexico enhanced
performance, as did bond selection in Venezuela external sovereign debt.
*Performance figures refer to Class A shares and are sourced from Morningstar. Calculation basis: bid to bid, net of fees, gross
income reinvested in fund base currency (US Dollars).
References to benchmarks are for illustrative purposes only and are not intended to imply a performance objective. There is no
guarantee that the Skandia Emerging Market Debt Fund will outperform this benchmark.
Source: Stone Harbor Investment Partners LP, as at 29th June 2012.
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