1. Commentary

Financial markets suffered from unusual volatility in December as the debt and equity markets continue to feel the effects of the collapse the sub prime debt markets, as well as concerns over global political instability.

Against this backdrop, Zone Capital's systems had comparatively less volatility and varied around breakeven for the month. The final result was a small loss of around 1%.

Looking back on the year, Zone Capital achieved a return of 13.8% for the calendar year for its track record account. While this result is clearly less than previous years, we remain relatively pleased that we were able to hold an 8 month drawdown to a modest 5%. As mentioned in previous reports, we have been particularly encouraged with how our algorithms have managed risk, limiting drawdowns in our underperforming months while posting some significantly positive months.

Having finished the year within 1% of an all time equity high, we look forward to the New Year with excitement and confidence.

For more information please visit our website: www.zonecapital.com.au

Results presented are after fees

2. Fund Performance

	Dec 07	Nov 07
% Return	(1.0%)	6.7%

3. Track Record* Update

Cumulative Performance

Summary Performance Statistics

	Since Jan 04
Cumulative % return	709%
Annualised % return	69%
Maximum Drawdown	18.7%
Sharpe Ratio	1.7
Sortino Ratio	6.1

*Track Record, as presented, is based on the trading account of FuturesTech Pty Ltd (an entity wholly owned by Malcolm Morley, a director of Zone Capital) for the period January 2004 – December 2006 and for the Zone Trading Trust 1 thereafter. The returns above are after deducting pro-forma fees, consisting of a 2% pa management fee plus a 25% high water marked performance fee. Zone Capital does not represent in any way that the past performance of the Track Record is any indication of likely future performance.

www.zonecapital.com.au