September saw unprecedented moves to prevent global systemic financial failure. US mortgage giants Fannie Mae and Freddie Mac were taken into conservatorship, effectively nationalisation, Lehman Brothers collapsed and a rescue bid came from Bank of America for Merrill Lynch. AIG was rescued with an $85bn loan from the Fed who became its 80% owner. The US's oldest money market fund Reserve Primary Fund "broke the buck" i.e. was worth less than $1.Lloyds TSB moved to acquire HBOS and the LSE imposed a ban on short selling of financial shares. A $700bn TARP (troubled asset rescue programme) of US banks was proposed to Congress. Mitsubishi UFJ injected $8.5bn into Morgan Stanley, acquiring a 20% stake. The remaining investment banks in the US (Goldman Sachs, Morgan Stanley) became regulated bank holding companies. Washington Mutual's assets were seized. Rejection of the TARP triggered widespread panic.Citigroup proposed a rescue bid for Wachovia. Bradford & Bingley's deposit base was bought by Santander and their mortgages nationalised. Fortis was rescued by a Benelux consortium, Hypo Real Estate was offered a lifeline by the German central bank, Glitnir Bank in Iceland was nationalised, Dexia was rescued by authorities in Belgium France and Luxemburg and the Irish government guaranteed 100% of Irish bank deposits.The fund was down 4.8% last month, against a benchmark performance down 3.2%. The bond holdings performed relatively well, but with the equity market sharply down and some of the other asset categories also marked down, the fund suffered. The worst performing holdings were Nomura Global Infrastructure Builders, down 9.7% on fears of global recession, while the Dexion Absolute Fund was down 12.8%.We made a number of changes to the portfolio last month. These arose from a re-assessment made by our fund advisors of the various fund investment styles. In some cases it was felt these did not represent the best way to achieve the expected returns from the fund, given the fund risk profile. These changes covered all asset classes within the core portfolio.