The AMP Total Return Fund was up +0.01% in January, bringing its 12 month return to -32.6%.

The Fund's underlying managers maintained an extremely low level of exposure during the month, and due to the Fund's active risk reduction in the last quarter of 2008 leverage was around 1.2x. Positive returns were gained in macro/commodity strategies, in particular natural gas, European emissions trading and gasoline markets. Negative returns came from leveraged loan markets due to a lack of liquidity, as well as distressed and event driven strategies. The manager continued to reduce exposure to certain strategies, including fixed income and distressed securities, believing that this, along with reduced amounts of leverage, will position the Fund well to take advantage of future opportunities.

The BlackRock Asset Allocation Alpha Fund (Class D) returned +1.30% in January, increasing the Fund's three month return to +9.74% and 12 month return to +36.87%.

The Fund, which utilises a tactical asset allocation strategy to exploit trends, mis-pricing opportunities and likely developments in global asset markets, achieived positive returns from almost all positions. These included commodity/currency (long gold vs Euro), bond/bond (primarily long term in Australian vs US 10 year) and equity/cash (short US equities) positions. The only negative influence on performance were bond/cash positions (mostly long in US 30 year bonds vs short on Australian cash rate futures).

MM&E Capital's Investment Trust No's 1 & 2 both gained +0.22% in January, bringing their respective 12 month returns to -5.5% and -6.4%.

Both funds gained from the successful completion of the private equity bid for MYOB, the narrowing of the spread on Arrow Energy's bid for Pure Energy and the exit from convertible positions in Commonwealth Bank and Macquarie Airports. These were partially offset by convertible losses on Rio Tinto and Wesfarmers. Looking ahead the funds will continue to increase their position in St George convertibles, soon to be redeemed due to the merger with Westpac, and build a position in the wide spread between Rio's UK and Australian listed shares.

The Prime Value Growth Fund lost -3.4% in January, while the Prime Value Imputation Fund lost -6.5%. Both funds are Australian equity long only funds, whose 12 month returns now stand at -27.2% and -37.8% respectively.

The Growth Fund suffered from an underweight position in the Healthcare sector, which negated positive contributions from an underweight position in Financials and the Fund's cash holding. Leighton Holdings (-34.9% following an earnings downgrade and asset write-down), NAB (-9.3%) and CSR (-19%) were the biggest detractors, while gains were made on Rio Tinto (+10.9%), CSL (+11.3%) and Woolworths (+3.9%).

The Imputation Fund lost ground due to an overweight position in Industrials and underweight positions in Healthcare and Materials, though the Fund's cash position mitigated losses to some extent. Gains were made on Caltex (+22% on an earnings upgrade), Codan and Incitec Pivot (+7.2%), whiles losses were made on Westpac (-7.8% following capital raising), NAB and CSR.

Aviva Investors' High Growth Share Fund lost -3.6% in January, bringing its 12 month return to -28.4%, while the Sustainable Investment Fund lost -5.3% (12 month return -29.9%).

The High Growth Share Fund, an equity long/short fund that limits short selling to only 25% of the Fund's value, made gains on positions in CSL and Rio Tinto but losses on Asciano Group and Origin Energy.

The Sustainable Investment Fund suffered from exposure to companies with weaker balance sheets, such as Asciano, Fairfax and Stockland. Defensive stock selections, including Origin Energy and QBE, also lost ground. The companies that did perform well during the month, such as Rio, Incitec Pivot and CSL, were not held in large enough quantities to offset these losses.

The Absolute Asian REIT Property Fund was down -4.27% (USD class) in January, while the Absolute Macro Diversified Fund was down -2.32% and the Absolute Trading 1 Fund -2.16%.

The Asian REIT market showed signs of decreased volatility for the second consecutive month, suggesting that the market is bottoming out, although prices were more mixed. The manager reduced exposure to Australian REITs, as they remain under pressure while the outlook for the Australian economy remains bleak.

The declining AUD affected returns for the Absolute Trading 1 Fund, however the manager will maintain a long position in AUD believing it has the scope to rise to $0.80 (USD) this year. They also added a short NZD position to the portfolio, expecting the NZD to lag the AUD in any recovery.

The Macro Diversified Fund continued to suffer from declining global equity and property markets, however did post a positive return with the Fund's gold position (over +5%) and soft commodities positions (+4%). This was more than offset however by losses in emerging markets equities and property.

HFA Accelerator Plus Ltd, a listed investment company, recorded an impressive return of +24.95% in January, due mainly to a 6.5x leverage level over the underlying fund.

The manager reported that all underlying portfolio strategies produced positive returns, in particular market neutral, equity long/short and relative value strategies.

This result comes as many other absolute return funds actively endeavour to reduce their amount of leverage, in response to extremely poor 2008 returns. It should be noted that although the company was up by almost +25% in January, its 3 month return is currently -31.85% and its 12 month return -65.49%. These figures show that although leverage can be extremely damaging to returns in adverse market conditions, in good times it can significantly increase investor value.

The TechInvest Intercept Capital Fund was down -0.59% in January, bringing its 12 month return to +10.8%.

The Fund continued to increase investments and short sales throughout January, and was 46% invested in 34 companies identified as undervalued by month end. Short sales (in 20 companies) made up 39% of the Fund, along with an index position. The portfolio ended January weighted towards the Wireless & Internet, Software & Services and Hardware & Equipment sectors. Positive contributors to the monthly return were Google and Apple Inc, while major detractors were Salesforce.com, eBay and Nokia.

The Platypus Australian Equity Fund, an equity long only fund, declined by -7.3% in January. This result comes after the Fund lost -44.93% over 2008.

The manager attributed January's poor result (which underperformed the ASX/S&P300 Accumulation Index by -2.46%) to negative returns on David Jones and Leighton Holdings. Both companies revised their profit guidance down by approximately 5% during the month, resulting in significant falls in price. No stock in the Fund's portfolio made a material positive contribution to overall performance. Poor market liquidity hindered the manager's attempts to reduce exposure to retail stocks, however they were encouraged by the significant decrease in market volatility, and signs that recent fiscal and monetary measures to stimulate the Australian economy are having a positive impact.

The Headland Global Diversified Fund returned -1.02% in January, due mainly to an overweight position in bonds.

Bond markets were negative in January as investors sold over concerns of increased government issuance. However although the Fund reduced its exposure over the month, it does remain in the bond market with the major trends of falling interest rates and lower inflation expectations. Losses were also experienced in FX markets, however the Fund benefited from falling commodity prices during January. A short position in crude oil made the largest positive contribution to overall performance, as oil prices fell 20% over the month.

Headland is a systematic Global Macro fund which commenced operations in November 2006, with annualised performance of +7.40% and total return of 16.58% since inception . In 2008 Headland returned a positive 1.75%, following a return of 9.96% in 2007.