Note to Clients - 2009 Key Themes

Dear Clients

On behalf of my colleagues, can I wish you all a very Happy New Year and let’s hope that it is a more prosperous one on the financial markets.

Mike Hawkins and I wanted to share with you a couple of key themes for private investors heading into a weak economic climate. In this regard, it is important to remember that it terms of economic outcomes Australia is lagging the world and that 2009 is going to be weaker than 2008. While this does not necessarily preclude a better performance from our equity market, it does suggest that any recovery will initially be very sector specific.

As always, it is our intention to make some key asset allocation calls to drive performance across client portfolios as well as driving equity portfolio performance via high conviction stock and sector calls. Our research universe will continue to grow throughout 2009. We believe that a key issue for all clients in 2009 will be to ensure that portfolio income generation is secure given the significant reduction in cash returns and the growing risk up reduced dividends.

Another theme of 2009 for investors will be the ability to be slightly more concentrated in ones portfolio. As the volatility settles down through the course of this year, and the prospects for the market improve on a sector-by-sector basis, a more concentrated portfolio may well be optimal and a major factor in driving absolute returns. It is so important this year you are in the right stocks in the right sectors of the economy.

These themes will obviously be discussed with you in more length and more tailored advice through your adviser over the coming months and we look forward to giving our clients a wonderful outcome in difficult markets. The opportunities are significant and we will strive to find and foster those opportunities for all events.

Kind regards David Evans