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March 2009 Newsletter

March 1st, 2009

CANADIAN ADVANTAGE FUND

February saw the Canadian Fund fall 2.4%, while the S&P; TSX Index dropped 6.3%. The decline was led by the financial and industrial sectors, which we are currently underweight, falling by 10% each. The US led financial crisis that started in 2007 has spread globally with economies around the World retrenching from consumer spending and business investment. The market is now pricing in a severe recession; however, the timing and speed of recovery is still uncertain and thus keeping market’s volatile. Even with stocks sitting at 10 year lows and with favorable valuations, investor confidence has not yet returned. The materials sector has been the greatest performer so far this year as demand from Asia, infrastructure spending, and investor’s appetite for hard assets is all helping the sector remain positive for the year. Last month saw a few select winners like copper producer First Quantum, pipeline servicer ShawCor, and Suncor Energy ending the month with double digit returns. Our selective investment methodology has helped us outperform the general market by 5% over the last 12 months as we seek the best opportunities in the market, rather than tracking the index, that are likely to show leadership going forward.

WORLD ADVANTAGE FUND

The World Fund had another decent month, ending down 1.6%, while the MSCI World Index ($Cdn) fell 8.0%. The theme developing in equity markets around the World is that large cap diversified companies in select industries, like infrastructure and basic materials, are outperforming their weaker peers in the financial and consumer sectors. The World Fund, mainly flat since June 1st and beating its benchmark by 30% in the same period, continues to benefit from investing in strong countries with good cash reserves like Switzerland and Norway. Having the ability to seek out the best opportunities in each country and sector from a global perspective has proved to very useful in the current uncertain environment. Some of the winners last month were Freeport-McMoRan Copper & Gold, benefiting from higher commodity prices, as well as Swiss oil service contractor Transocean which has long term contracts locked in at last year’s record oil prices.

Van Arbor Asset Management is an Asset Management company dedicated to creating wealth using a disciplined, proprietary investment strategy with an emphasis on preserving capital while generating superior long-term returns.

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