The fund returned 8.9% for the quarter, against 8.3% from the benchmark MSCI World Index (dividends reinvested) in US dollar terms. For a rolling 12-month period, the fund's return of 23.3% is ahead the benchmark's 20.9% (both returns in US dollar terms). Equity markets rose strongly over the quarter with the MSCI World Index rising 8.3% for the period, and 17.8% year-todate. This quarter's rally was based on a combination of steadily improving global economic news flow along with the US Federal Reserve's decision to delay the tapering of their quantitative easing programme. The rally paused in August on news of a potential war in Syria but resumed when diplomatic means averted any military response. The quarter ended on a negative note as politicians failed to agree on budgetary and debt issues causing the US government to shut down as of 1 October. Europe was the best performing region, rising 13.7% (in US dollar terms), while North America performed the worst, rising only 6.0% (in US dollar terms). Asia ex-Japan rose 10.4% and Japan 8.0% (both in US dollar terms). The fund's regional positioning had a small negative impact on performance during the quarter. Amongst the global sectors, materials (+11.6%), industrials (+10.8%) and consumer discretionary (+10.0%) performed the best. Utilities (+3.5%) and consumer staples (+3.0%) lagged the overall market. The fund's underlying managers had a neutral impact on performance for the quarter. The standout performance for the period was from Sands Capital Growth fund that rose 16.8%; almost double that of the index. This performance was driven by Facebook (+101.9%), Baidu (+64.0%) and Salesforce (+36.0%); all of which are top 10 holdings. Facebook is a good example where the team's deep research and understanding allowed for high conviction in a company that was very publicly not performing to 'expectation'. Having participated in the IPO, Sands added to its holding as the price fell and has been rewarded for holding firm throughout the storm surrounding Facebook in its first few months as a public company. Contrarius Global Equity delivered a strong performance for the quarter, rising 11.4%. Its top position is Apple (+20.2%), which benefited from speculation relating to new products for 2013 and new carrier relationships, especially in China. Safeway (+35.2%) and Ocado (+32.8%) also contributed to the fund's excellent quarter. The Coronation Global Emerging Market Fund also did well with holdings such as Naspers (+27.2%), Baidu (+64.0%) and Cognizant Technology Solutions (+31.1%); all significantly outperforming the markets this quarter. In addition, Vulcan Value Partners, Zadig Memnon Fund and Polar Japan Fund outperformed the market this quarter, while Cantillon Global Equity and Nedgroup Global Equity underperformed their benchmarks and slightly detracted from our overall performance.

Outlook
It is now five years since the start of the global financial crisis in 2008 and equity markets have risen strongly since the lows of that time. Although the MSCI World Index remains slightly below its all-time high, both the Dow Jones and S&P indices recently reached new record highs. However, some of the challenges remain and although picking up, global growth remains sluggish. The eventual tapering and withdrawal of monetary stimulus also remains a future hurdle the market still has to contend with. Equities are more fully valued than in the recent past and the risk of volatility remains high. However, we believe that equities remain an attractive investment compared to other asset classes.

The fund returned 0.9% (in US dollar terms) for the quarter, in line with the 0.8% from the benchmark MSCI World Index. For a rolling 12-month period, the fund's return of 21.0% is in line with the benchmark's 19.3%. After a strong start to the quarter, markets suffered a sharp pull back in June as equities, bonds and commodities all sold off. The MSCI World Index therefore rose only 0.8% for the quarter. The sell-off was firstly due to the US Federal Reserve Bank (the Fed) announcing that it 'might' start scaling back its asset purchase program later this year. This caused an immediate reaction, especially in the bond market, which suffered its worst first half of a year since the bear market of 1994. Equities also suffered, especially emerging markets, of which the index fell 8.0% over the quarter. Secondly, the liquidity crisis in China, where interbank interest rates spiked to as much as 25% during June as the Chinese central bank displayed its determination to restrain the reckless credit growth by refusing to lend to the stretched banking system, also contributed to the sell-off. Japan was the best performing region, rising 4.4% (in US dollar terms), while Asia ex-Japan performed the worst, falling 10.9% (in US dollar terms). North America rose 2.0%, while Europe was broadly flat, falling a mere 0.14% (both in US dollar terms). The fund's regional positioning had a negative impact on performance during the quarter. Among the global sectors, consumer discretionary, healthcare and telecoms were all positive for the quarter. Materials and energy stocks had the worst return, falling 8.7% and 2.3% respectively. Overall, the underlying funds also detracted from performance over the quarter. Cantillon Global Equity had a weak quarter returning -2.1%, mainly due to its high weighting in consumer staples stocks, such as Nestlé (-9.8%) and Heineken (-16.8%) and emerging market stocks such as Bank Rakyat Indonesia (-11.4%). Sands Capital also struggled with exposure to emerging market companies and some negative company specific news flow. Amongst their top 10 stocks, Arm Holdings (-13.8%), Petrofac (-16.4%) and Allergan (-25.5%) all declined over the period. The Coronation Global Emerging Market Fund had a good quarter compared to the emerging market indices, but still fell by 4.3% and thereby detracted from this fund's performance over the period. On a positive note, Contrarius Capital had a great quarter, delivering a return of +6.6% and far exceeding the MSCI World Index. Ocado (+88.8%), Western Digital (+23.5%), SBI Holdings (+31.8%), Gannett (+11.8%) and The New York Times (+12.9%) all contributed to this excellent return.

Outlook
Although markets reacted in panic to the Fed's tapering announcement, we believe the process will be gradual, but nevertheless very important. The reason the Fed will be able to taper off more gradually is the benign trade-off between growth and inflation in the US. Growth - while decent - is being capped by spending cuts forced by the sequester, and the effective policy tightening imposed by a rise of nearly 1% in 30-year mortgage rates. That is keeping inflation in check but also disguising the fundamental strength of the US economy, thereby allowing the Fed to keep interest rates lower for longer. Europe and Japan have also reiterated their commitment to low interest rates. However, with rates so low, correlation between asset classes has been high, meaning that all markets have moved in concert. The reduction in risk appetite should, and is, causing a breakdown in these correlations as investors are forced to focus on individual nations, asset classes and companies. We believe this will be positive for equity markets as the move out of equities in the immediate aftermath of the crisis reverses. Equally important is that we believe it will be a good environment for stock pickers.

Portfolio manager
Tony Gibson Client

The Coronation World Equity [ZAR] Fund of Funds will change it's name to Coronation Global Opportunities Equity [ZAR] Feeder Fund, effective from 02 September 2013

The fund returned 7.9% (in US dollar terms) for the quarter, in line with the benchmark MSCI World Index return. For a rolling 12-month period, the fund's return of 12.0% is slightly lagging the benchmark's 12.5%. Markets had a good start to 2013, driven by strong Japanese and US markets. Newly elected Prime Minister Shinzo Abe's vocal determination to improve the Japanese economy provided the stimulus for a rally in Japanese equities and weakening of the yen as investors took note of his intention to influence monetary policy. US markets reached record highs despite the political deadlock on the fiscal budget that caused the 'sequester' to take effect 1 March. The budget cuts arising from this sequestration will certainly cloud the economic outlook but we believe the US economy will sustain its recent recovery. Europe, on the other hand, endured yet another crisis in the bailout of the Cypriot banking system, while increasing political risks were highlighted by the inconclusive outcome of Italian elections in February where anti-austerity candidates took more than half the vote. The European Union once again showed their determination to preserve the euro even if, this time, some depositors had to share in the pain. Japan was the best performing region, rising 11.8% (in US dollar terms), while Europe performed the worst, rising only 2.8% (in US dollar terms). North America rose a strong 9.8%, while Asia ex-Japan rose 7.1% (both in US dollar terms). The fund's regional positioning had a negative impact on performance during the quarter. The managers had a mixed quarter. Cantillon Global Value generated good alpha with very strong performance from many of their top investments such as Nestlé, Heineken and Reckitt Benckiser. Despite holding Apple as their number one position, Contrarius Global Equity also had a good quarter as other top positions including Safeway, Gannet and Fairfax Media more than compensated for the decline in Apple's share price. Adelphi Capital also outperformed the index this quarter. On the downside, despite an excellent return over the quarter relative to its benchmark, the Coronation Global Emerging Markets Fund detracted from performance as emerging markets underperformed developed markets. Sands Capital Growth Fund also lagged as some of its high growth companies took a breather, or declined as in the case of Petrofac and BM&F Bovespa.

Outlook
It looks like the multi-year flows out of equities into bonds are slowly reversing. This could be supportive of equities despite the recent rally and new record highs in the US. It is our belief that equities remain an attractive option over bonds. However, economic and geopolitical risks remain high and, consequently, heightened volatility should be expected.

Portfolio manager
Tony Gibson

The fund returned 4.0% (in US dollar terms) for the quarter, slightly ahead of the 2.6% return from the benchmark MSCI World Index. For the rolling 12-month period to end December, the fund's return of 17.5% is in line with the benchmark's 16.5%. Global markets ended the year on a good, albeit volatile, note. The months of October and November were largely affected by negotiations between Greece and the Troika regarding the payment of the next (previously agreed) bailout tranche. It was a difficult period, but further austerity measures from Greece and some concessions from the rest of Europe and the IMF gave rise to another last minute resolution, which buoyed European markets. Major political events included a new regime in China and a second term for US President Barack Obama in what was ultimately a comfortable re-election. While worries over a prolonged recession in China receded, resolution of the looming US 'fiscal cliff' quickly became the centre of post-election attention. The stand-off continued throughout December but an agreement on taxes was seen as positive and markets rallied strongly into early 2013. Japan also held an election which resulted in Shinzo Abe becoming prime minister for a second time. With a coalition majority, Abe's focus on inflation targeting, economic stimulus and aggressive monetary policy during the election are creating real interest in Japan, a long ignored investment market. In terms of regional equity performance, Europe was the best performing region, rising 7.1% (in US dollar terms), while north America performed the worst, falling marginally by - 0.1% (in US dollar terms). Asia ex-Japan gained 6.1% (in US dollar terms) and Japan gained 5.8% (in US dollar terms). The fund's regional positioning had a positive impact over the quarter. Overall the managers detracted from relative performance over the quarter. The biggest contributor was the Coronation Global Emerging Markets Fund, which has had an excellent year. Vulcan Value Partners and Cantillon Global Value also provided good support. On the negative side, Contrarius Global Equity and Nedgroup Global Equity failed to keep up with the markets over the quarter and were significant detractors. Despite a very strong year, Adelphi Europe Select also had a weak quarter and marginally underperformed as did Morant Wright Japan Fund.

Outlook
The market rally on the 'fiscal cliff' tax agreement may be overly optimistic as negotiations over increasing the US debt ceiling still need to take place, which will shift the focus to spending cuts. We therefore expect much of the same with regard to market volatility on daily news flow. However, there is a sense of a slow healing in the various regions and this, supported by favorable monetary policy, should continue and hopefully gather pace during 2013. Economic data out of the US is generally more positive and we expect that it will recover at a more rapid rate than Europe and Japan, which still have some way to go in dealing with the financial crisis.

Portfolio manager
Tony Gibson