In September the fund's unit price was satisfactorily in the middle of the rises reported by the JSE Mid Cap Index (+1.7%), and the JSE Small-Cap Index (up 5.3%).

We managed to keep the fund relatively fully invested throughout the month, although we suffered a few disappointments. These included:
o The termination of the discussions with a private equity buyer to de-list Iliad, which caused the share price to fall back by 16%. We have a 1% holding in this company.
o A disappointing trading update from Datatec following slow growth in one of its smaller subsidiaries -we have a 2.5% holding in this company.
o The terms of the acquisition of the Booysendal Platinum property from Mvelephanda Resources at a price that was, in our opinion, disappointingly punitive to Northam shareholders. While we recognise the strategic value of the transaction to Northam, it is our intention to oppose the transaction on its currently proposed financial terms.
o Unexpected further strength in the rand on the back of a weak US dollar, which caused the rand hedge aspect of the portfolio, which is significant, to largely underperform.
In contrast, the fund also benefited from some excellent successes.These included: o Recovery from some of the small-cap resource companies we hold on the back of recovering commodity prices -these included Metorex and Palamin (Copper).
o 26% appreciation in Oceana Fishing following the publication of a cautionary announcement.

We are hopeful of an improvement in relative performance in the last quarter of 2007, given the under-performance of many of the fund's industrial rand hedge positions in the last period.

Anthony Sedgwick
Polaris Capital

April was a tricky month. While the fund holds some incrediblewinners (Merafe, Palamin, Bell, Shoprite), it was hampered by several under-performers (Datatec, Altech, Reunert, Trencor and BTG). The net result was that the fund was up for the month, however, performance lagged that of the JSE Small- and Mid-Cap Indices and is now slightly behind the returns of these Indices' year-to-date performances.

The primary reasons for this relative performance have been:

-A more conservative and defensive stance relative to the Index make-up and many of our competitor's positions. We have expected the rand to be weaker rather than stronger and this has been wrong. Consequently, our more defensive rand-hedge exposed portion of the portfolio has lagged the benchmarks -examples here include Trencor and Net 1.

-Our preference for the suppliers to the Building and Construction boom rather than the physical contractors via Altron and Reunerthas worked well in the case of Altron. However, Reunert -where investors seem concerned over the impact of the copper price on the company’s earnings - has underperformed dramatically. We anticipate the company’s interim earnings (which will be published shortly) with some excitement.

-Although we hold some large positions that demonstrate our conviction, these are not in what we would consider speculative companies. One of the most impressive areas of performance this year has come from the junior platinum miners, most of which have nothing more than small, unpaid for equity stakes in the mineral rights, over a property where the resource base is as yet unproven.Typically, mining operations are planned for several months if not years in the future, and dividends are unlikely to be paid for several years thereafter. We are disappointed to have missed this opportunity as we have clearly not understood the dynamics driving the appreciation of these stocks in preference for our more defensive choices, which have nonetheless been very rewarding investments at the same time.

Although the market has appreciated beyond our January 2007 expectations, and we would expect a period of consolidation at some point, the fund remains fully invested. We are confident that our share selection, based on best relative value, will prove rewarding in those circumstances.

The Nedbank Entrepreneur Fund ended 2006 with a blast. The fund was significantly ahead of the JSE Mid- and Small-Cap Indices, +4.9%and +5.9% for the month respectively.

For the year, the fund returned a highly satisfactory +48.0% in comparison to the JSE All Share, Mid-Cap and Small-Cap Indices,+41.2%, +43.1% and +44.1% respectively.

If investors consider that the 2-year annual compound growth rate in the fund is now 39.6%, the 3 year rate is 46.9%, and the 5-year rate of growth is 38.8%, it is blindingly obvious that it is highly unlikely that this rate of growth will be sustained in the immediate future periods. Consequently, I would advise investors to revise their expectations of future growth appropriately. Having said that, I remain confident that we will continue to find exciting investment opportunities and do not consider the companies that we are invested in to be over-valued. In addition, the decision to close the fund to new inflows in early 2006 has meant that the fund is reasonably unconstrained by size limits.

As we enter 2007, the primary themes that the fund is exposed to are the following:

1. Platinum (about 15% of the fund): Although we are concerned by the recent weakening in some of the high flying commodity prices of 2006,most notably copper, we are much less concerned about the threat to platinum (and all platinum group metals) as a result of these metals' specific supply versus demand fundamentals, as well as the inevitable weakening in the rand that will result from falling commodity prices. We expect significant growth in earnings and dividends from the reasonably priced share selections that we have made and draw additional comfort from the attraction that these shares offer from a corporate action perspective where quality opportunities are limited.

2. Fixed Investment spending (about 23% of the fund): We remain convinced that this is the area where one can most confidently expect growth to occur in the domestic South African economy over the next 5 years. We also remain circumspect about the valuations of most of the building contractor businesses and retain our preference for the material suppliers to the industry, where the valuations are more reasonable and the predictability of growth more accurate.

3. Domestic Consumer (about 20% of the fund): Although we have been extremely concerned at the rate of credit extension growth in South Africa and the apparent limitless access to credit that is currently available to consumers, which must come to an end at some point, we do not believe that it is imminent. As a consequence, having reduced our exposure to this sector significantly in mid-2006, we have recently built it up quite materially through selective purchases.

4. Rand hedge (about 36% of the fund - including platinum): We retain quite an aggressive exposure to stocks that will benefit from a weakening rand, and are pleased that the fund has performed so well in the short term in an environment of a strengthening rand, which had reached R7-90 to the US dollar in October2006.