Eastern European Markets
March 9, 2005

Trigon's Funds: Strong rally in new EU member states' equity markets

In February the new EU member states' and accession countries' equity markets surged higher on the back of improved global sentiment and, according to some sources, all-time record inflows into the region. Trigon CEE Fund's NAV climbed 11% and Trigon Second Wave Fund's 3.8% during the month. Past six month performance in the funds has been +34% and +46% respectively. The CEE Fund's assets increased to EUR 93m while the Second Wave crossed EUR 100m by the end of the month.

After the strong rally at the beginning of the year and in 2004 we believe that the regional blue chip bank stocks are overvalued while the rest of the market outside of the banking sector is attractively or reasonably valued. Therefore we maintain a large underweight position in the banking sector and have invested large part of our funds into telecoms, pharmaceuticals, energy, and small and mid cap companies with focus on Poland. Such positioning in our funds translates into lower risk and significant outperformance once volatility picks up in the banking sector. Trigon CEE Fund's 12 month volatility is twice lower than the index volatility - beta of below 0.5 - while the CEE Fund's alpha is 9%.

Given our current views, we recommend investing in Trigon CEE Fund and Trigon Second Wave Fund. Investors with medium risk targets could invest into the funds with a proportion 70:30, respectively. Investors with higher risk appetite could target a 50:50 proportion.

Further Information
Kristel Kivinurm-Priisalm
Director, Head of Asset Management
Trigon Capital
Pärnu Road 15
10141, Tallinn
Tel. +372 6679208
Fax. +372 6679201
Mob. +372 5112242

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