September was a continuation of uncertainty in global financial markets stemming from sovereign defaults risks and opinions about a possible double dip recession. The large sale (close to R20bn) of domestic bonds by foreign holders has resulted in a significant weakening of the ZAR. GRAPH - PERFORMANCE COMPARISON

The currency weakness has assisted the fund to record a small monthly loss of 0.19% vs. the ALSI loss of 3.61%. For the year to date, the fund's return is +0.48% vs. the ALSI return of -5.36%. During the month we sold the AGL position and made some small purchases.

While developed world fiscal problems dominate global financial news, equity markets continue to suffer from uncertainty and as a result the ALSI lost 1.99% in the month. With continued USD weakness, the ZAR remains relatively strong which together with industrial action do not bode well for export and manufacturing industries. Financial services makes up about 39% of our domestic portfolio. During the month we have added new investments in Brait and Petmin and increased our holding in Rand Merchant Insurance. RMI provide access to long term, short term and health care insurance. We will continue to hold a large position in order to get a reasonable exposure to each of these businesses.

The domestic portfolio (excluding the holding in our Global Fund) achieved a return of 3% in a market that was very volatile with a flat return for the month. Following the split in RMBH, we retained the investment in the insurance holding company RMI and sold the banking portion. During the early part of the month our hedging strategy worked well which we closed out and reopened towards month end. The only new portfolio holding is Aspen. We expect very good results later this month from ABIL and Coronation.

From a macro perspective I expect further economic headwinds in respect of possible interest rate hikes from central banks

Thanks to a 6.2% return in December the equity market delivered a total return of 19% for the year. The fund's return for the year of 14.5% should be evaluated against its average net equity exposure of 82% and the appreciation of the ZAR against the USD of 10.4% which reduced the 14.7% USD performance of theinvestment in the BlueAlpha Global Equity Fund Whilst the consumer servicesFund. sector returned 43% for the year, materials was the worst performing sector with a return of 12%. On a share specific basis I can report that the fund owned Coronation and Metair, two of the best performing shares on the JSE for 2010.