Despite mixed economic data, further policy easing by central banks saw markets close the quarter in positive territory. International Markets were generally up during the quarter, with the exception of Japan, which was down 1.5%. The US (S&P 500 Index) was up 5.8%, the UK (FTSE 100 Index) was up 3.1% and the MSCI Emerging Markets Index was up 7.9% (in US dollar terms).

Commodity prices strengthened this quarter, with most commodities relevant to South African miners gaining - platinum was up 16.8%, gold was up 11.1% and copper was up 6.8%. After a significant fall last quarter, the oil price (Brent Crude) increased by 16.1%.

The rand weakened by 1.8% against the US dollar and 3.2% against the euro. Inflation has dropped back into the upper region of the South African Reserve Bank's target band, where we expect it to remain in the medium term. The Reserve Bank dropped the repo rate by 50bps in July, and left it unchanged at their most recent Monetary Policy Committee meeting. Interest rates are currently at multi-decade lows.

This quarter was characterised by significant labour unrest within the local resources sector, which placed South Africa high on the international news agenda. The unprecedented tragedy that occurred at Lonmin's Marikana mine was the catalyst for further strikes, which have subsequently spread to other sectors of the local economy. Despite this, the South African equity market held up well over the quarter and reached an all-time high during September.

The FTSE/JSE All Share Index gained 7.3% during the quarter, with the recent material sectoral diversion continuing - industrials were up 10.5%, financials were up 6.5% and resources were up 2.9%.

The fund continues to closely track its benchmark, the FTSE/JSE Top 40 index, and delivered a return only marginally below that of the benchmark. All index changes that occurred during the quarter were timeously acted upon so as to minimise the relative risk in the fund.

Global markets ended the quarter lower as weaker than expected economic data and renewed concerns around European growth took centre stage. The S&P 500 in the US ended the quarter down by 3.3%, Japan's Nikkei was down 10.7% and the MSCI Emerging Markets index closed down 8.8% (in US dollar terms).

Against this backdrop the South African equity market held up relatively well at aggregate level in rand terms over the quarter and touched its all-time high during the period. This, however, masks a massive sectoral diversion, with financial and industrial shares strongly up and resources shares continuing to head lower. The weaker currency also supported the market, given the heavy weighting towards rand hedge shares in our market. The currency ended the quarter at 8.14 to the dollar, 6.0% weaker against the US dollar.

Commodity prices weakened over the quarter as global economic data, from China to Europe and the US, was lower than expectations. The oil price fell 21.9% (Brent Crude), and most commodities relevant to South African miners were negative for the quarter, with: copper down 9.2%, gold down 3.8% and platinum down 12.9%.
The FTSE/JSE All Share Index gained 1.0% during the quarter, with considerable sectoral diversion as resources shares (down 3.6%) substantially underperformed industrial (2.6%) and financial shares (4.6%). Foreigners were net buyers of equities again this quarter, with a particular appetite for high yield defensive and consumer stocks.

The fund marginally underperformed its benchmark, the FTSE/JSE Top 40 Index, which closed the quarter up 0.6%. This underperformance was largely due to fees and trading costs incurred as the fund rebalanced to reflect changes in the headline index.

All index changes that occurred during the quarter were timeously acted upon so as to minimise the relative risk in the fund.

Global markets had a strong start to the year with the MSCI World index closing the quarter up 11.7% in US dollar terms. It was an excellent start to the year for the US market with the S&P 500 index enjoying its best first quarter in 14 years, up by 12.0%. Emerging markets were also particularly strong (the MSCI Emerging Markets Index was up 14.1% in USD) outperforming both the UK and Japanese markets (FTSE100 up 7.6% and Nikkei up 11.5%).

Commodity prices were broadly stronger for the quarter. Oil prices were up 14.9% (Brent Crude) driven largely by on-going tensions in the Middle East. With the exception of Aluminium (down 5.2%) precious and industrial metals were stronger (gold up 6.7%, platinum up 18.8% and copper up 11.7%) over the quarter.

Supported by strong net inflows, the currency ended the quarter at 7.6 to the dollar, 5.4% stronger than its December closing level. The FTSE/JSE All Share index gained 6.0% during the quarter underperforming most global markets. Despite stronger commodity prices, concerns around slowing growth in China saw resources shares come under significant pressure.

The FTSE/JSE Resources index ended the quarter down 3.3%, substantially underperforming the FTSE/JSE Industrial (+10.5%) and FTSE/JSE Financial index (+12.8%). In line with global markets, the local bourse experienced continued volatility, with most of the positive performance coming through in January.

The fund continues to closely track its benchmark, the FTSE/JSE Top 40 Index, which closed the quarter up 5.1%. All index changes that occurred during the quarter were timeously acted upon so as to minimise the relative risk in the fund.

The fourth quarter of 2011 saw global markets deliver a strong performance. This was due, in part, to better co-ordinated central bank measures in Europe to provide additional liquidity to the banking system, and firmer US economic data. The US market was particularly strong (the S&P 500 Index was up by 11.2%), as was the UK market (up 8.7%), outperforming most emerging markets (MSCI Emerging Markets Index was up 4.4% in USD) and the negative Japanese market (the Nikkei Index fell 2.8%).

Commodity prices were mixed for the quarter. Oil prices were up 4.5% (Brent Crude), given on-going Middle East instability and slightly stronger economic news. Gold was down 4.6%, as was platinum (-10.4%). Most other commodities relevant to South African miners were significantly down, while copper was up over the quarter (8.5%).

The Rand was little changed against the US Dollar (+0.1%) and 3.4% stronger against the Euro.

The FTSE/JSE All Share Index gained 8.4% during the quarter, coming off a low base at the end of the third quarter, ending the year just 2.6% up. There was little sectoral diversion for the quarter: resources shares (+7.3%) underperformed industrial shares (+9.2%) and financial shares (+8.7%). Equity markets experienced continued volatility, with most of the positive performance coming through in October (+9.4%) and thereafter fluctuating in a range, influenced mainly by developments in Europe.

On 7 December, the FTSE/JSE advisory committee announced that British American Tobacco (BTI) would be included in the FTSE/JSE indices effective 19 December. This followed the earlier proposal by the National Treasury that all inward listed shares be classified as domestic and included in the major indices. Given the size of BTI and its impact within the index, the December rebalance of the FTSE/JSE Top 40 saw the fund incur higher than normal trading costs to effect the necessary changes.

Despite this the fund delivered a return only marginally below its benchmark, the FTSE/JSE Top 40 Index, which closed the quarter up 8.4%. All index changes that occurred during the quarter were timeously acted upon in order to minimise the relative risk in the fund.