The unit price of the fund hit an all-time high when it broke through the NAD5,80 level for the first time. The unit price was driven by the strong market reaction following the surprise rate cut earlier in August and the continuation of the rally in September. Not only did the fund perform well in nominal terms, it also outperformed its competitors convincingly during the quarter.
We were very active during the quarter, trimming the equity exposure from a very full weighting and selling a number of shares across sectors to reduce the equity weighting to comply with the 5% liquidity requirement. We also increased the fund gearing to a lower currency by switching from SA Breweries and Richemont into Billiton and Iscor. Late in the quarter, we marginally trimmed the overweight in Anglos and Sasol following the strong performance of these counters. Lastly, the overweight positions in Didata, Telkom and Naspers were trimmed.
These actions have aligned the fund with OMAM's macro views.

The unit price of the fund tracked the very volatile equity movements during the quarter. After losing ground late in April and early in May, the unit price recovered significantly towards quarter-end, closing only marginally lower for the quarter. More importantly, it had a very strong showing against its competitors for the period.
A few themes have featured in the fund during the quarter. The fund manager's have increased the bank exposure as the sector is not expensive and the low interest rate environment is positive. The fund manager's added to the construction sector, as they believe that infrastructure spending will be a feature of the local economic growth pattern.
At an individual share level, The fund manager's have sold the entire Venfin holding and have added to Telkom. The overweight positions in Sappi and Remgro were increased on valuation considerations.
These actions reduced the liquidity levels. The fund manager's will continue to reduce the liquidity levels should the severe volatility in share prices continue.

The unit price of the fund surpassed the previous high recorded in May 1998 as the equity market continued to surge ahead. The slight bias towards non-mining stocks contributed to the positive performance of the fund during the quarter. However, the rand weakness late in the quarter provided a boost to mining shares and exposure.

The fund manager's implemented a few minor changes during the quarter. The fund manager's marginally increased the exposure to banks and consumer stocks. The strong currency weighed heavily on mining shares and is clouding earnings prospects for the sector. Following the weakness of these shares, the fund manager's bought back some of the counters that they sold earlier in the quarter.

Liquidity levels are below 5%; the fund manager's intend maintaining these lower levels as interest rates are low and are likely to decline further from current levels.