shorters, page-57

Yes, their quarterly statement will look bad.

BUT, they compare with All Ordinaries index return. As FMG is in the index by certain weighting, the fund also have almost exactly the same weighting. So if index return is negative 10%, so will the fund negative 10% return.

It will ONLY look bad if FMG is NOT in the index and fund has holdings in them.

Then the fund manager will write something like this: "this quarter has been extremely difficult market as commodity prices (especially iron ore collapsed to $80/t). The fund added more positions into iron ore companies such as FMG to take advantage of weak share prices (that is at $3 bought more shares as I said before). The fund believes over the long term iron ore will recover to more stable price around $120/t as Chinese government will fund more infrastructure projects."