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.

Attunga's three funds all reported negative returns for December - the Enviro Opportunities Fund returned -8.53% (-6.75% YTD), the Power & Enviro (Offshore) Fund -5.81% (-8.19%) and the Agricultural Trading Fund -2.05% (+22.42%).

Attunga blamed the lack of weather stimulus for high electricity prices at the start of summer as a significant driver of the December results. The commissioning of new power stations, as well as fewer active traders in the market over December also affected returns. For the Agricultural Trading Fund, lower crude oil prices and losses on US wheat spreads offset gains on volatility spreads in other commodities.

The Austral Equity Fund recorded a return of +0.45% in December, bringing its 2008 return to +1.30% and its 2009 financial year return to +2.90%.

The fund's positive return came amidst less volatile market conditions in December, although overall liquidity in equity markets was low. As a result the fund's trading activity was relatively low, the fund's return being mainly attributed to existing interest rate securities positions. The Austral Equity Fund is an event driven fund which invests mainly in Australian companies that are, or may be, involved in special situations or corporate events.

The Prime Value Growth Fund (PVGF) recorded a loss of -4.9% in November, bringing its YTD performance to -33.1%. The Prime Value Imputation Fund (PVIF) also posted a loss of -8.3% in November, making its YTD performance -41.2%. Both funds invest in a long portfolio of predominantly Australian listed equities.

The PVGF outperformed the S&P/ASX300 Index (-6.3% in November), which Prime Value attributed to the fund's underweight positions in Australian financial and consumer discretionary stocks, while at the same time holding cash in negative market conditions. Although optimistic about investment prospects in 2009, the fund will remain cautious in the near term.

The PVIF underperformed the S&P/ASX300 Index, mostly due to the fund's overweight position to Australian industrial stocks, although this was somewhat offset by the fund's cash holding.

The Platypus Asian Equities Fund was down -0.14% in November, while the Platypus Australian Long/Short Fund was up +0.21% (both in USD). The respective YTD returns for these funds are now +2.31% and -6.53%.

The Asian Equities Fund, a systematic long/short Asian equities fund, cites the fund's overall net short position over recent months as the main driver of performance. The fund remains lightly invested across countries.

The Australian Long/Short Fund, a systematic long/short Australian equities fund, noted that the local currency return for the month was in fact +0.41%. Overall the positive November result was attributed to the strong performance of the fund's market neutral portfolio, which returned +4.43% on an attributed basis.