The term "as safe as a bank" does not apply anymore as they are the reason for the current financial crisis. Everyone is hoarding cash and is extremely cautious and reluctant to lend to anyone. The flight to cash and bonds are pushing the prices of perpetual preference shares down giving us opportunities to get in at low prices and high yields. Bonds on the other hand are in demand pushing the yields lower making it unattractive to yield seekers. The financial crisis forces banks and other institutions to sell equities in order to get liquidity. But as all good things must come to an end, as we learned yet again, so must extremely negative situations also improve. Although we cannot call the end of the crisis nor the bottom of the market, we can see extremely good value especially in the resources sector. Notwithstanding the good value, we do want to keep to our investment objective which is to preserve capital and will wait for more stable markets before increasing the equity exposure. We are looking to add more resources and some industrials but remain cautious of the financial sector and listed property, not that we think they will also be a casualty of the subprime virus but due to our own high interest rates.

The PAM Balanced Fund has been renamed to the Sasfin Balanced Fund. Effective on 1 June 2008.

The world markets are under pressure with sub-prime fall outs and fraud trading popping up like mushrooms. The likelihood of America entering a recession is growing by the day and a bail by the Bush administration, by means of tax rate cuts to stimulate the economy, seems too late. Domestically the SA economy is facing a serious challenge to maintain economic growth with the ongoing power supply shortage. It looks like we have reached the peak in the interest rate cycle and that the next round of talks should be about possible rate cuts. Progressive is gearing towards a defensive tactical strategy in the asset allocation of its funds.