Monthly Update

Month ending October 2008

1.  Commentary

October turned out to be another strong month for Zone Capital with accounts posting gains of around 5% after fees, despite the wild ride the financial markets have endured.

As has been our way in recent times, the majority of profits for the month occurred over a period of around a week while the remainder of the month our systems were, essentially, breakeven. We were particularly pleased with the performance of the systems and risk management given that profits were earned during a period representing an extreme in both volatility and spread. The spread in particular works against our high frequency mean reversion systems as it is a transaction cost we simply cannot avoid.

While it is expected that the liquidity providers in the FX market will widen spreads in a volatile environment, we were disappointed by the degree of widening that our current counterparty chose in comparison to other counterparties that we monitor.

While spreads seem to have returned to a sense of normality at present, we are embarking on another series of tests in an attempt to find an alternative counterparty so that we can swap if the situation continues or occurs again.

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

2.  Fund Performance

3.  Track Record* Update

Cumulative Performance

Summary Performance Statistics