The global economic and financial climate deteriorated markedly in the third quarter, with recession likely in many industrialised countries, notably the US, the UK and Europe. The dislocation caused by the sub-prime crisis intensified, prompting drastic action by government and central banks to keep the global banking system functional. South Africa has not escaped the fallout of global financial market developments, but the impact has been indirect and relatively limited so far. Inflationary pressures have become more endogenous and the depreciation of the Rand lately, raises the threat that inflation can stay higher for longer. The consensus view is that inflation and interest rates have peaked locally and expectations are for the MPC to leave rates unchanged for the remainder of this year and to start easing towards the middle of 2009. Although we concur with the top of the interest rate cycle view, risk remains high. We remain cautious of a financial blow-out in the global banking system, which can easily contaminate our financial market and banking system. We shall keep the fund conservatively positioned for now and continue to actively avoid higher risk investments and invest only in vanilla instruments with A1/F1 or better credit-rated counterparties. The fund is well positioned for the current uncertain financial environment, especially in the case of a liquidity squeeze or blow-out. We are confident that the good long-term performance history of the Gryphon Money Market Fund will remain intact, as performance volatility remains low.

The global economy, as well as the local economy is slowing down, but inflation remains a problem at home and is becoming an issue globally. Stagflation is becoming a real threat world wide. Locally growth is slowing due to the impact of rising interest rates on consumer demand and a less benign global environment. However, what started off as exogenous pressures on inflation (oil and food prices), are rapidly spilling over to core inflation through secondary effects. It remains difficult to predict how the Reserve Bank will react on these opposite forces in the near term, hence the August MPC meeting is now becoming nearly impossible call. But what is clear is that interest rates will need to remain higher for longer than previously expected in order to anchor inflation expectations, with then again adverse implications for growth. Market uncertainty regarding interest rates remains high. We are therefore still concentrating new investments at the short end of the curve. We continue to actively avoid higher risk investments and invest only with A1/F1 or better credit-rated counterparties. The fund is well positioned for the current uncertain interest rate environment and we are confident that the good long-term performance history of the Gryphon Money Market Fund will remain intact. The fund's performance volatility remains low.

While the local economy remained fairly buoyant throughout 2007, we are increasingly concerned about the consumer-related sectors of the economy going into 2008. The cumulative effect of eight interest rate hikes, the introduction of the National Credit Act and material price increases in food and fuel have all had an impact on consumer confidence and will increasingly impact spending. Inflation is forecast to remain above the top end of the 3-6% range targeted by the Reserve Bank, throughout 2008, due to the exogenous factors of the high oil and maize prices. While our base case is for a neutral monetary policy going forward, the risks of a further rate rise remain high, given the poor short-term inflation outlook.

Market uncertainty regarding interest rates remains high. For this reason the interest rate curve still remains relatively flat, with little relative value to be found anywhere along the curve. We continue to look for value opportunities as they arise from data announcements and surprises. We continue to actively avoid higher risk investments and invest only with A1/F1 or better credit-rated counter parties. The fund is well-positioned for the current uncertain interest rate environment and we are confident that the good long-term performance history of the Gryphon Money Market Fund will remain intact. The fund's performance volatility remains low.

While we believe that the local economy remained fairly buoyant throughout 2007, we are increasingly concerned about the consumer-related sectors of the economy going into 2008. The cumulative effect of eight interest rate hikes, the introduction of the National Credit Act and material price increases in food and fuel have all had an impact on consumer confidence and will increasingly impact spending. Inflation is forecast to remain around the top end of the 3-6% range targeted by the Reserve Bank, throughout 2008, due to the exogenous factors of the high oil and maize prices. While our base case is for a neutral monetary policy going forward, the risks of a further rate rise remain high, given the poor short-term inflation outlook.

Market uncertainty regarding interest rates remains relatively high. For this reason the interest rate curve still remains relatively flat, with little relative value to be found anywhere along the curve. We continue to look for value opportunities as they arise from data announcements and surprises. As soon as interest rate volatility reduces, new investments will be concentrated in the 12-month area in order to fix rates for the longer term in accordance with our "top of the interest rate cycle" view. We continue to actively avoid higher risk investments and invest only with A1/F1 or better credit-rated counter parties. The Fund is well positioned for the current uncertain interest rate environment and we are confident that the good long-term performance history of the Coris Capital Money Market Fund will remain intact. The Fund's performance volatility remains low.

The Coris Capital Money Market Fund has changed its name to the Gryphon Money Market Fund