Share prices continued to increase in the 3rd quarter of 2012, with the market buoyed by another round of quantitative easing in the US and significantly less negative news stemming from Europe. Although market sentiment is currently more optimistic, the economic difficulties associated with over indebted first world governments coupled with over indebted and under saved households, both locally and internationally, are unlikely to be resolved in the short term. Consequently, the Dividend Growth Fund remains defensively positioned and continues to focus on investing in companies with reliable dividend track records. The major industries currently preferred by the fund include telecommunications, food and beverages, healthcare and tobacco. This positioning will ensure that the fund continues to provide a growing income stream for its investors.

For investors preparing for retirement, the fund's ability to produce a relatively high level of dividend income and reliable income growth makes it ideal for inclusion in a retirement annuity. Over time, the fund's income growth as well as the compounding effect of reinvesting income will generate a high level of income for retirement and a more predictable end result.

For retired investors the fund is also well suited for inclusion in living annuities, as its higher yield and reliable income will assist investors avoid capital erosion (the redemption of income producing investments) and will produce income growth in excess of inflation..

The 2nd quarter of 2012 was characterised by market volatility due to renewed concerns over Europe's sovereign debt crisis and the fragility of the global economic recovery. It appears unlikely that the economic difficulties associated with over indebted first world governments coupled with over indebted and under saved households, both locally and internationally, will be resolved in the short term. Consequently, the Dividend Growth Fund remains defensively positioned and continues to focus on investing in companies with reliable dividend track records. The major industries currently preferred by the fund include telecommunications, food and beverages, healthcare and tobacco. As a result of this positioning the fund was able to increase its quarterly distribution by approximately 12%.

The first quarter of 2012 provided a positive start to the year for equity investors. Key developments that supported equity markets during this three month period included: 1) progress made in resolving the Greek Credit crisis; 2) positive US manufacturing & employment data; and, 3) comments made by the US Fed suggesting that interest rates will be kept lower for longer. Despite the recent change in market sentiment we remain of the view that the majority of sectors making up the All Share index are expensive as reflected in low dividend yields without the prospects of above average dividend growth. The South African economic outlook remains subdued and the Dividend Growth Fund continues to focus on investing in companies with reliable dividend track records.

Three major focus areas for the fund are:

o Maximum rand hedge exposure - The Rand hedge stocks included in the portfolio are companies with reliable dividend track records that are geographically diversified.

o Increased exposure to high yielding telecommunication and insurance companies - Earnings from these companies are derived from a multitude of contracts/policies making them an ideal source of reliable income for retired investors.

o Increased exposure to food producers/retailer. - The high level of global food inflation should translate in above average dividend growth as these companies pass on food inflation.

The fund's distribution for the 1st quarter of 2012 was 40.8879 cpu.

The Dividend Growth Fund returned 7.7% for 2011, which compared well with the 2.6% return for the South African All Share Index over the same period. The year proved to be challenging as the Euro zone sovereign debt crisis unfolded and concerns over a slowdown in global growth mounted.

The Dividend Growth Fund has been resilient in this tough economic environment and continues to focus on investing in companies that have proven dividend track records.
Three major focus areas for the fund are:

o Maximum Rand hedge exposure
- The Rand hedge stocks included in the portfolio are companies with reliable dividend track records that are geographically diversified.

o Increased exposure to high yielding telecommunication and insurance companies
- Earnings from these companies are derived from a multitude of contracts/policies making them an ideal source of reliable income for retired investors.

o Increased exposure to food producers/retailer.
- The high level of global food inflation should translate in above average dividend growth as these companies pass on food inflation.

The fund's distribution for the fourth quarter of 2011 increased by 7.9% to 41.6082 cpu. The recent substantial depreciation of the currency (if sustained) has improved the future distribution growth outlook for the fund.