October saw a sharp rebound on US stock markets. Spill-over to the local market was limited by the steady strengthening of the rand during the month which took the shine off the rand hedges. Both the fund and its benchmark were almost flat for the month. The fund has outperformed its benchmark by nearly 14% over a six-month period.

Markets remain extremely volatile. Recent economic data out of the US indicates that the recovery and aversion of a double-dip recession is in balance. We believe that risks lie on the side of US markets slipping further and do not buy into the bear market being over. On the other hand, the local economy is performing well and we remain overweight in SA industrials and banks. We will be watching for peaks in inflation and the interest rate cycle to assess the impact on the consumer and the economy. The fund has a healthy exposure to small- and mid-cap industrials.

During the month, Anglo Platinum was switched into Northam. Billiton, Anglos, Sasol and Abil were sold. The fund took up positions in Grintek, Mustek and MTN. Exposure to gold was increased and Harmony and Goldfields were increased.

The fund added 2.3% during September which was pleasing given a 2.9% decline on the All Share Index and further sharp declines on US markets. Strong relative performance was due to low or zero exposure in Richemont, life assurers and technology while resources and banks were stronger during the month. Over six months the Fund has outperformed its benchmark by 21.2% and is placed first in its unit trust category.

The environment remains clouded by concerns over the state of the US economy. The fund managers believe the balance of risk lies towards a further sell-off on global markets driven by talk of war, worse than expected earnings and a jittery US consumer. They expect gold to continue to perform well in this environment and have added to the exposure. The fund managers continue to prefer shares dependent on the local economy and remain overweight SA industrials and banks. They will be watching for peaks in inflation and the interest rate cycle to assess the impact on the consumer and the economy.

During the month, Gencor was switched into Impala and Anglo Platinum. Billiton, Anglos and Tiger Brands were added to. We sold Iscor, Aspen, Tiger Wheels

For the month the Fund matched the strong performance of its benchmark the FTSE/JSE All Share Index which rebounded from its lows of early August. This built on the Fund's recent outperformance of the benchmark with cumulative outperformance of 6.4% and 14.7% for 3 and 6 months respectively. During August the Fund benefited from the build up of exposure to commodity shares as well as strong performance by industrial counters. Small and mid-cap
industrials such as Cashbuild, Massmart, Woolies and Tourvest reported sparkling results which boosted share prices.

Recent economic data and company results have indicated that the recovery in the global economy has stalled, while the local economy has surprised with its buoyancy and resilience to recent interest rate hikes. Despite the real threat of further hikes we remain bullish on local industrial and financial companies on account of the attractive valuations, dividend yields and relatively strong market conditions. The fund managers remain wary of global equity markets and have lightened on stocks with exposure to global markets.

Stocks sold included BHP Billiton, Old Mutual and Illovo. AECI, Iscor and ABSA were added to the Fund and the exposure to Sasol was increased.

The Fund outperformed its benchmark, the ALSI, by almost 6% in April. Strong performance can be ascribed to hefty gains by Banking Stocks and selected Industrials. With the exception of Golds and Platinums, Resource Stocks underperformed during the month as the Rand strengthened and the Fund benefited from its below weight position in Mining Houses. Exposure to the Resources Sector has been marginally reduced as the chance of a rapid rebound in the global economy diminishes and the Rand trengthens
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However, the Fund Manager anticipates a further upswing in the commodity cycle later in the year and will retain at least a 30% Commodity weighting.

The Fund remains overweight Industrials as it is felt that valuations are compelling and the South African economy is in better shape than is made out. The exposure to Financials is no more than on-weight while questions remain over the timing and extent of further interest rate hikes.

During the month Sappi, Investec, Coronation, Steinhoff, Richemont and Aveng were sold. Additions to the Fund included NIB, Liberty, Tiger Brands, Nu-World, and Nampak.

The fund performed in line with in benchmark. At the expense of financials, in particular, resource exposure was further increased. The fund manager anticipates further short-term outperformance by the Resource sector and is bullish about selected industrials.

The PSG Growth Fund underperformed its benchmark as resources did well during the fourth quarter. This is expected to change as the fund could benefit from the continued strengthening of the Rand aided by the switch into financial and industrial shares. The fund is also fully invested.