1. Commentary

October was again a strong month with all accounts posting gains of more than 5% before fees. Encouragingly, the driving force behind October's gains was a different system from that which drove September's returns.

Favourable conditions returned for Zone Capital's high frequency mean reversion systems after ongoing analysis pointed towards a parameter change on one of the pairs we trade a few months ago.

The different systems are also integrating well with our Variable Fractional Percent ("VFP") risk management approach as the systems that are doing well during the month are managing to extend their gains, while the underperforming systems have their overall impact minimised.

Naturally, we are keen for the current market conditions to continue and in the mean time we remain diligent on the systems development front.

For those interested in learning more about the people behind Zone Capital, click here to go to a recent interview conducted by OANDA Corporation with our co-founder and chief trader Malcolm Morley.

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

Results presented are after fees

2. Fund Performance

	Oct 07	Sep 07
% Return	4.5%	8.9%

3. Track Record* Update

Cumulative Performance

Summary Performance Statistics

	Since Jan 04
Cumulative % return	666%
Annualised % return	70%
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