The value of our defensive portfolio has risen 2.3% since our special portfolio report as at 31 December. Most of that is due to the swag of dividends paid throughout February and March so far. That's somewhat less than the 4% the All ordinaries Accumulation Index has risen over the same short period. But we don't beat ourselves up too much over such short-term figures. That's especially the case with our defensive portfolio which is designed to hold its value when the stockmarket falls, a situation we haven't endured over the past three, or even 12, months. It's a cliche but investing is like running a marathon, not a sprint. And, on that score, the defensive portfolio is roughly even with the index which has risen 16.7% since its launch on 6 March, 2001.

In terms of individual stocks, Suncorp Metway (SUN-$14.28) has been the top performer since year end. This Queensland-based financial services conglomerate has risen 15% and paid a 30-cent fully-franked interim dividend as well. It was a stock which we had recommended strongly under its old management team but we're not so enthused about the incumbents. For the moment we're sitting pat but if the price continues to rise, we'll reconsider our position. Westpac (WBC-$18.04) has been the other double-digit gainer, up 13% since 31 December.

On the down side, property developer and manager Westfield Holdings (WSF-$12.60) has been the biggest loser, falling 10% since 31 December. That doesn't concern us at all. In fact, if we had some cash on hand we would be topping up our holding at today's prices. Relative to its economic, or intrinsic, value Westfield is cheaper today than it has been for several years.

The only change we made to the portfolio was the purchase of 4,500 MMC Contrarian (MMA-$0.93) shares in January at 91 cents. MMC is a listed investment company run by Erik Metanomski, a manager we respect. Our purchase price (and the current market price) represents an attractive discount to the stock's underlying investment portfolio. Unfortunately Metanomski doesn't provide details of the stocks he purchases so the only one we know for sure is printing concern PMP (PMP-$1.30) because he has popped up as a substantial shareholder. It's not a stock we follow, nor do we have plans to, but we're sure the appropriate research has been conducted and calculations made.

With the defensive portfolio's cash balance at a lowly $1,419, we won't be making any new acquisitions until a few more dividends accumulate or we sell one of our current holdings. Not that inactivity bothers us. It saves on brokerage costs and tax bills.

However, those who've been reading our recent cover stories about holding some cash aside may think we're saying one thing and doing another by not keeping some powder dry in this portfolio. However, we actually view the portfolio's largest holding, New South Wales-based gaming group Tab (TAB-$4.61), as a de facto cash holding. That's because the company is currently the subject of a takeover duel between Victorian-based gambling behemoth Tabcorp (TAH-$11.84) and the focused Queensland-based UNiTAB (UTB-$6.55). We anticipate that we'll be liquidating that holding sometime in the near future.

Overall, we're comfortable with the number of stocks in the portfolio. We'd say 12-15 thoughtfully selected stocks would be roughly the right range to provide a suitable 'defence' against harsh economic or market conditions. And, at the moment, we have a good spread across finance, property, retailing, infrastructure, beverages, gaming, telecommunications and resources. Not to mention some good diversification through Brambles' (BIL-$5.15) spread of operations and the share portfolio represented by MMC Contrarian. Who knows what the future holds but, whatever lies in store, our defensive portfolio is in good shape to handle it.