Uncertain and speculative energy prices have caused us to focus on valuation as a determining factor in asset selection. Looking at broad segments of the Fund, holdings in the coal & consumable fuels segment had a positive impact on relative performance for the third quarter. The Fund’s alternative energy segment (wind, solar, biofuels, etc) included some of the strongest and weakest holdings for the quarter, resulting in a minimal net impact on the Fund’s relative returns. This segment of the Fund, formerly around 20% of the Fund's assets, represented less than 5% of assets at the end of the quarter. While we believe the long-term prospects for alternative energy production are good, the weight of our alternative energy holdings will be dictated by the relative attractiveness of these companies within our investable universe.

In terms of individual holdings, Anadarko Petroleum Corp. (3.1% of the Fund), an oil and gas exploration and production company, and Halliburton Co. (3.7%), an energy services company, had the largest positive impact on the Fund’s relative performance. In contrast, China Integrated Energy, Inc. (1.3%), an oil & gas refining & marketing company, was one of the biggest detractors from the Fund’s relative performance for the quarter.

Uncertain and speculative energy prices have caused us to focus on valuation as a determining factor in asset selection. The best performing segments of the Fund on Fund, a relative basis, were integrated oil & gas and oil & gas storage & transportation. In terms of individual holdings, EOG Resources, Inc. (1.8% of the Fund), an oil and gas exploration and production company, and Boots & Coots Inc (1.0%), an oil field services company, had the largest positive impact on the Fund’s relative strength. The Fund's alternative energy segment (wind, solar, biofuels, etc), had a minimal but mixed impact on relative performance. This segment of the Fund, formerly around 20% of the Fund's assets, represented less than 5% at the end of the quarter. While we believe the long-term prospects for alternative energy production are good, the weight of our alternative energy holdings will be dictated by the relative attractiveness of these companies within our investable universe.

In contrast to these positive factors, holdings in the oil & gas exploration & production segment had a negative impact on the Fund's relative performance for the quarter. Anadarko Petroleum Corp. (3.3%), one of the holdings in this segment, was one of the biggest detractors from the Fund’s relative performance for the quarter.

Uncertain and speculative energy prices caused us to focus on valuation as a determining factor in asset selection, and this was a key reason for the strong performance of the Fund relative to its benchmark during the quarter. The best performing segments of the Fund, on a relative basis, were integrated oil & gas and oil & gas exploration and production. Anadarko Petroleum Corp (5.4% of the Fund), an oil and gas exploration and production company, and Smith International, Inc (1.1%), an oil field services company, were the largest contributors to the Fund's outperformance. The Fund's alternative energy segment (wind, solar, biofuels, etc), had a minimal but mixed impact on relative performance. This segment of the Fund was reduced during the quarter from around 20% of the Fund's assets to less than 5%. While we believe the long-term prospects for alternative energy production are good, the weight of the Fund's alternative energy holdings will be dictated by the relative attractiveness of these companies within the Fund's investable universe.