The portfolio has had a good quarter, easily outperforming its benchmark and has attained a relative ranking of 18/78 funds. The fund has a very large overweight position in financial shares and an underweight position in resource and industrial shares. While there has been no material performance difference in the sectors on the JSE this year, we believe that the overweight position, especially in banks, will ultimately benefit from lower interest rates. Banks have in fact outperformed since the quarter end. While it may take a while for bank earnings to recover, once economic growth starts in 2010, the volume effect, coupled with a massive write-back in bad debt provisions, will result in very good earnings growth.

The portfolio is positioned for:

-Equity Market Weakness - Reduced the risk in the fund as we expect some weakness.
-Rand Stability
-Positive impact from the recent interest rate reductions.
-The fund is not positioned for excessive Rand weakness.
-The tracking error, at 3.4% & the portfolio beta (another form of risk measurement) are relatively low at the moment, a position congruent with our view on the equity market