Manager's Commentary - November 2010

Markets are uncertain and investors want capital preservation, income and low volatility.

Pender has been successful with the Pender Corporate Bond Fund, which has an actively managed fixed income portfolio. It has had superior performance and maintains an impressive current yield with low volatility. Now, many of our investors are telling us that they would like income from a balanced portfolio that has similar objectives of providing capital preservation, income and low volatility. In response, we are launching the Pender Balanced Fund that will have an actively managed portfolio of both equity and fixed income securities. The asset allocation will range from 60/40 to 40/60, as determined by Pender after consultation with our portfolio advisors.

Matthew Shandro, the manager of the Pender Corporate Bond Fund will be the portfolio advisor for the fixed income portion of the Fund and Dixon Mitchell will be the portfolio advisor for the equity portion of Fund. We surveyed the market for a manager that has a long term track record of producing strong returns with low volatility and determined that Dixon Mitchell would be the best manager for our new fund. They have been providing investment counsel and portfolio management services in Vancouver for over 10 years and now manage over $800 million. They believe in investing in a concentrated portfolio of excellent businesses and therefore have a low correlation to the major indices compared to other Canadian funds.

Initially the allocation between equity and fixed income will be 50/50. 70% of the equity portion of the portfolio will be invested in 20 high quality, dividend paying Canadian companies and the remainder will be invested in international names, in sectors that are not available in the Canadian market. The fixed income portion of the Fund will be invested in units of the Pender Corporate Bond Fund and government bonds.

We are excited to be able to introduce the Pender Balanced Fund and our new equity portfolio advisor, Dixon Mitchell, as well as provide a new joint mandate for Matthew Shandro. We assure you that we will continue our personal service and look forward to working with you over the years to come. If you would like any information on the Pender Balanced Fund or the portfolio advisors, please contact us at your convenience.

Kelly Edmison and David Barr
PenderFund Capital Management
November 29, 2010