Suits investors looking for long-term capital growth from well-known and interesting European brands. Many of the companies held in the portfolio are well known in the UK, such as Nestlé and Heineken, but are not always easy to invest in directly.

The company aims to achieve a superior total return from a portfolio of high quality European investments. Henderson EuroTrust plc invests predominantly in large and medium-sized companies which are perceived to be undervalued in view of their growth prospects or on account of significant changes in management or structure.

• Henderson EuroTrust plc was voted the best European Investment Trust by both Money Observer and Moneywise Investment Trust Awards 2009.
• A proven investment philosophy is consistently applied, comprised of a high-conviction portfolio of good quality European companies generally brought and held over the medium to long term. 
• This Trust has a highly experienced management team led by a manager who has led this Trust successfully for over 16 years. Please remember that past performance is not a guide to future performance.

• This portfolio may hold only 40-60 stocks. If one of these investments declines in value, this can reduce the portfolio's value more than if it held a larger number of investments.
• Investors need to be aware of exchange rates. Most of the investments in this portfolio are not made in Sterling, so exchange rates could affect the value of and income from your investment.
• If a fund is a specialist country-specific or geographic regional fund, the investment carries greater risk than a more internationally diversified portfolio. Full details of risks.

With yet more economic uncertainty and another ‘European summit to finally solve the eurozone’s problems’, it is perhaps surprising that European markets made any progress in December.

In some ways progress has been made; the announcement by the European Central Bank of a long-term refinancing operation has already provided euro-based banks €489bn of three-year money at only 1% in its first tranche (there will be another opportunity in February). The main significance of this, is that it is yet another measure to shore up banks – the bad news being that they still need it, and the good news being that there are many ways to create solutions to this financial morass (or at least buy time). The second bit of good news could be the decision by all euro members to sign up to a firm and definite fiscal discipline agreement.

Good performance was seen by Deutsche Post, Royal Dutch and Roche during the month; the poor performers included Deutsche Boerse, SAP and Deutsche Telekom – all affected by their own merger or attempted merger activity.

During the month we sold the last of Givaudan, which has been underperforming for some time due to rising input costs. We returned to shipping and oil company Maersk in expectations that it will gain more market share in containers, and remains the most efficient company in that tough industry, and also since we feel its oil assets are under-appreciated by the market. We also bought Vivendi again, as we feel that the media and telecom conglomerate is far better managed than has historically been the case, and yet the valuation gives it no credit for reasonable growth prospects.

There is little reason for European markets to start 2012 in a buoyant mode. Valuations are attractive, but the economic situation will remain very tough for at least the next six to nine months in our view.

Tim Stevenson
December 2011