The Wallace Australia Opportunities Fund (WAOF) returned +1.71% in December, bringing its 2008 return to +48.9%. This fund has now produced positive returns for every month since March 2008.

The fund's long/short strategy returned +0.937% for December, mainly attributed to net short positions in financial and consumer staples stocks, and a small net long position in industrials. This was partially offset by the fund's net long exposure in material stocks. The event driven strategy returned +0.777% in December, with the fund taking advantage of short term trading opportunities.

The Prime Value Imputation Fund (PVIF) recorded a loss of -1.7% in December, and was down -40.6% for 2008, while the Prime Value Growth Fund (PVGF) returned -31.5% in 2008 (+1.1% in December).

Both funds benefited from underweight positions in financial and telecommunications stocks, and overweight positions in industrial stocks, however individual stock selection in the PVIF contributed to a negative overall return. Prime remains cautious in the short term, although there have been some recent positive signs (falling volatility, small data improvements and central bank and government interventions), and believe good opportunities will present themselves in the coming months.

Regal's Tasman fund lost 2.9% in December and their Amazon fund was down 0.6% for the month. Over 2008 the Tasman fund lost 9.8% and the Amazon fund lost 8.18%.

The manager's report says that some short positions in the industrial sector did not work out, costing the funds 2 percentage points. Also impacting returns was Telstra's decision to adopt a comatiove stance with the federal government over the national broadband network.

Both the Amazon and Tasman funds aim to maximise returns with only moderate risk and low correlation to euity markets.

The Excalibur Absolute Return Fund returned +3.74% in December, ending 2008 with a return of +12.23% and a worst month of -0.94%.

Since inception (June 2006) the fund has returned +66.59%, compared to the S&P 500 which returned -34.42% in the same period. Due to low interest rates worldwide, market uncertainty and a recessionary global economic environment Excalibur is expecting significant AUM growth in 2009 due to increased interest in the fund. The Excalibur Absolute Return fund specialises in trading FX products, with a flexibility in its mandates to enable it to profit in all market conditions.

The Elstree Enhanced Income Fund returned -5.62% in December, reducing its 2008 return to -36.4%. The December return underperformed the All Ordinaries Accumulation Index (0%) and the UBS All Maturities Bond Index (-1.2%).

Elstree attributed December's disappointing result to a decline in price in an AXA hybrid security, in which the fund has a 10% holding, due to forced liquidation. The fund was also negatively affected by an early redemption of the Allco Alleasing hybrid at a discounted price.

In their annual credit risk analysis, Elstree noted that the averaged corporation is currently not highly geared, and in general leverage has not increased this decade.

Prodigal's Absolute Return Fund performed strongly in December with the manager reporting an estimated gain of 6%. The fund has lost -19.96% over the year but, after the second positive month in a row, the manager says that they expect the rapid rate of recovery to hold over coming months.

The fund employs a mix of strategies including quantitative trading, capital structure arbitrage, convertible arbitrage and risk arbitrage. With a geographic mandate covering Asia (excluding Japan) the main markets currently invested in are Australia (34%), Hong Kong (17%, and India (also 17%).

MM&E Capital saw small losses both of their Investment Trusts, No. 1 and 2, in December. Trust No.1 recorded a loss of -0.98% for the month, bringing it's return for the year to -4.88%, while Trust No.2 was down -1.01% for the month and -5.98% for the year. The manager has exited a loss making position in Indophil Resources after the company revealed that, despite assurance to the contrary, a takeover deal with Alsons Corporation may not proceed.

Trust No. 1 is MM&E Capital's oldest fund with an inception date of July 2002 and approximately A$69.9 million under management. Trust No. 2 began investing in July 2004 and currently has A$9.9 million under management. Trust No. 1 is closed to new investors while Trust No. 2 is currently open with a minimum investment amount of A$25,000. Both Trusts aim to deliver returns of 15% p.a. (gross of fees) with volatility of 5% p.a. or less regardless of movement in the equity market index. Trust No. 2 is managed in a near identical fashion to Trust No. 1 and neither Trust employs leverage.

MM&E Capital is a dedicated Australian event driven hedge fund manager which employs strategies in takeover and demerger arbitrage, convertible securities arbitrage, capital raisings (i.e. IPOs, Placements, Sell Downs and Rights Issues) and Buy/Write dividend stripping.

MM&E Capital's Takeover Target fund had a positive month in December with a gain of 1.19%, but remains down -30.84% over the year.

The manager said that profits were realised from a holding in Incitec Pivot while ongoing positions in Helthscope, Origin Energy and Insurance Australia Group all rose in value.

The Fund uses an event driven strategy where medium term (6-24 months) positions are taken in ASX listed stocks that meet the internal selection criteria.

Plato Asset Management's Core Composite (long only) and Core Composite 130/30 have reported significantly improved performance in December, while their Market Neutral fund recorded its worst month since inception.

The Core Composite fund was down -1.43% for the month after falling -32.18% in the three months to November. Similarly, the 130/30 fund fell -1.78% which was a good result compared with a total drop of -31.89% during the three preceding months.

Plato's Market Neutral fund managed to avoid any significant losses throughout 2008, but a fall of -4.2% in December has left the fund with a negative return for the year of -2.75.

Blue Fin Capital's Managed Commodities Account ended 2008 on a positive note with a return of +1.78% in December, bringing its 2008 return to +11.43%.

Positive returns were generated through the fund's strategies in grains, softs and metals, although these were partially offset by negative returns in energies. The fund however underperformed against its benchmarks, the CSFB Managed Futures and Barclays Systematic Index, which returned 15.59% and 16.10% respectively in 2008 (to November). The Managed Commodities Account employs short term trading approaches in North American commodities futures markets, combining quantitative trading strategies with a robust risk management framework.