The fund returned 0.65% in March and 3.54% for the first quarter of the year. While the performance was modest in absolute terms, it should be seen against the backdrop of a negative month for the All Share Index which returned a negative 1.4% for the month. The All Bond Index fared not much better returning also a negative figure of 0.23%. Therefore the main reason for the fund's positive performance came from stock picking. Once again the overweight position in Chemicals (+1.0%) and Banks (+4.9%) added to the performance. Having no nominal bonds paid off in March as cash outperformed by almost a percent. Going forward there is a definite change in the general investment mood as it looks more and more certain that the tightening of the US interest rate cycle is likely to moved forward to the third quarter of this year. Bond yields have begun to react negatively to this information. In the short term fund is likely to stay with the current asset allocation stance on the basis that equities should still remain the asset class of choice.

The fund had a strong month returning 5.45% in December. The main reason for the fund's performance came from asset allocation where the fund was well overweight in equities. Equities had a very positive month with the All Share Index rising by 6.9% against the All Bond Index of only 0.1%. Within equities, IT had the largest rise of 12.4% followed by Basic Industries of 10.7%. Resources also performed well returning 8.8% for the month. In terms of the size effect, December was not a feature as all the sectors returned roughly the same, viz; Top 40 + 7.0%, Mid Caps + 6.2% and Small Caps +7.6%. The main feature of December was the volatility in rand which lost -2.8% to the US $ and a significant - 5.8% to the UK £ . This provided the catalyst for the large caps, particularly the resources to have a positive month.