The Edelweiss Fund (Bermuda) Ltd. • Nr.

46 31 October 2010
NAV per share: $337.05

Monthly Letter to Our Shareholders

Dear  fellow  shareholders,

At  a  glance
It  was  nine  years  ago  this  month  that  a  few  folks  with  a  puny  $7  million  
In  US  dollars
started  what  was  to  become  the  Edelweiss  Fund.  It  was  a  nice,  round  $100  per  
NAV  per  share   $  337.05
Month  return   4.36% share.  We  picked  the  US  dollar  as  a  reference  currency  even  as,  in  hindsight,  
Year-­‐to-­‐date  return   18.50% we  should  have  picked  something  more  exotic,  like  the  Venezuelan  Bolivar.  It  
would  have  made  more  sense  at  least  in  terms  of  performance––the  only  
In  British  pounds thing  everyone  watches  even  as  they  pretend  otherwise.
NAV  per  share   ₤  210.12
Month  return   2.25% Measured  in  Bolivars,  our  nine-­‐year  total  return  is  an  awesome  1’847%.  In  US  
Year-­‐to-­‐date  return   19.30%  
dollars,  we  delivered  a  somewhat  duller  237%.  In  Australian  dollars,  it  is  a  
downright  petty  73%.  Three  imaginary  holders,  one  from  each  country,  would  
In  Euros
NAV  per  share   €  241,70 be  at  complete  odds  as  to  whether  or  not  we  have  accomplished  our  
Month  return   2,03% investment  objectives.  In  the  mind  of  an  Aussie,  a  73%  return  over  nine  years  
Year-­‐to-­‐date  return   21,78% seems  modest  when  viewed  against  our  antediluvian  notions  of  capital  
preservation.  On  the  other  hand,  for  a  Venezuelan  investor,  the  Edelweiss  
In  Swiss  francs Fund  is  surely  a  bubble  waiting  to  burst.  Welcome  to  Disneyland.
NAV  per  share   ₣  331,15
Month  return   4,36%
We  all  know  that  prices  are  expressed  in  terms  of  money  and  that  with  simple  
Year-­‐to-­‐date  return   12,52%
arithmetic  we  can  figure  our  profit.  But  that’s  when  the  trouble  starts  as  we  
Asset  allocation look  at  our  gain  (or  loss)  and  wonder  as  to  how  we  have  done  and  why.  
Lacking  perspective,  we  end  up  looking  around  to  see  what  others  have  done
—and  satiate  ourselves  in  the  idiotic  notion  of  comparative  worth.  What  
30% virtually  all  investors,  journalists  and  pundits  fail  to  see  is  the  nature  of  money  
47% Gold itself.  Hardly  anyone  asks  “what  is  my  money  worth?”  The  dollar  price  of  gold  
Silver
15% Liquid  assets
is  up  386%  in  nine  years  but  1’822%  in  terms  of  Argentinian  pesos.  Which  one  
8% Equities of  us  is  richer?    

Portfolio  details  are  published  quarterly  

It  is  precisely  such  riches  and  the  euphoria  of  illusory  prosperity  that  comes  
and  posted  on  the  Fund’s  website.        
            from  four-­‐digit  profit  returns  that  Mr.  Bernanke  is  delivering  good  and  hard  to  
Contact all  Americans  (and  to  the  world).  If  we  could  just  conjure  up  a  few  more  
www.edelweissfund.com trillions,  life  will  be  good.  Nearly  everyone  seems  to  be  in  agreement.  If  our  
edelweiss@equinoxeais.com money  was  cheaper  and  more  plentiful  than  our  neighbors’,  riches  would  
follow.  Let’s  make  it  so.  Friedrich  Schiller  described  it  best:  “Against  stupidity  
the  very  gods  themselves  contend  in  vain.”  ¡Viva  Venezuela!
Nothing   herein   should   be   construed   as   an  
offer   to   sell   or   a   solicitation   to   buy   anything  
to   anyone,   anywhere.   Performance   reported   Despite  the  pain  of  the  last  few  years,  the  ruin  we  anticipated  on  October  
for  any   particular   time   may   have   been   due  to  
extraordinary   market   conditions   that   may  
2001,  is  yet  to  come.  More  folks  seem  to  understand  it  even  as  the  consensus  
not   occur   again.   Past   performance   is   no   has  yet  to  grasp  that  the  cause  of  our  financial  and  economic  wreck  is  official  
guarantee   of   future   results.   This   report   may  
mischief  in  money  itself.  That  our  views  have  been  vindicated  insofar  as  we  
not   be   reproduced   or  disseminated   in   whole  
or  in   part  without   prior   written   consent  from   have  done  well  in  terms  of  money,  should  not  be  a  matter  of  exuberance  but  
the   Fund   Manager.   ©2010   Sage   Capital   one  of  humble  appreciation  for  having  found  a  lighted  buoy  that  marks  
Zürich  AG.  All  rights  reserved.
treacherous  waters  on  a  stormy  night.   —Tony  Deden