The Fund outperformed the Composite Benchmark by a tidy margin. The majority of the outperformance can be attributed to our overweight equities position in the Fund. During the quarter we down weighted our exposure to SA bonds and switched the proceeds into cash. The yield compression was driven by the foreign demand for bonds and the benign inflation data that increased the possibility of further rate cuts. In a similar vein we reduced our offshore bond holding and switched the proceeds into global equities. We did not increase our SA equity weighting over the quarter, as we prefer global equities relative to SA equities. During the quarter we adjusted the equity portion of the portfolio. We reduced our exposure to Billiton and switched the proceeds into ArcelorMittal. Our rationale for the switch was that the Billiton share price would be capped by the possible billion USD acquisition of the Canadian Potash Company coupled to the lack of clarity on the Australian mining super tax. We believe the worst is behind Arcelor post the announcement that the dispute with Kumba will be resolved through arbitration. We reduced our holding in Reunert to zero and used the proceeds to buy Implats. There are 3 factors that underpinned our up weighting of Implats, namely organic volume growth is increasing, cost management continues to improve and the potential acquisition of the adjoining BRPM mine will increase synergies and efficiencies. We have maintained our large exposures to telecoms shares MTN and Vodacom. The Fund benefited from the announcement that Walmart intends making an offer of R 148 for Massmart. We believe that historically low inflation and interest rates coupled to an improving South African economic recovery plus internal restructuring of these businesses will drive operational performance. We continue to maintain an overweight position to banks, with FirstRand our preferred counter. The unbundling of the life assets from FirstRand should lead to a rerating of the bank assets. The Fund also has an exposure to Nedbank; we wait and see as to the offer HSBC makes for a controlling stake in Nedbank.

Looking Ahead
Going into the 4th quarter, equities are still our preferred asset class relative to property, bonds and cash. We do expect equity returns to remain well ahead of inflation projections for the balance of 201 0 and into 2011, against a backdrop of low interest rates and global liquidity. We remain underweight bonds, as we are wary of the increased supply of new bond issuances may subdue returns and we believe that interest rates have bottomed both globally and locally.

Fund Review
The Fund underperformed its composite benchmark by a small margin. The majority of the negative performance can be attributed to our overweight equity position, as shares prices pulled back on concerns regarding the European debt crisis and its impact on global economic growth. We increased our bond exposure from around 11% to 14% over the quarter, supported by our views that the currency will be stronger for longer, that global demand for emerging market assets will continue and the benign South African inflation and interest rates environment will persist in the shorter term. During the quarter we increased our exposure to Sasol as operational efficiencies are showing significant signs of improvement. In addition, a depreciating Rand and rising oil price should be the catalysts for the perfect environment in which Sasol will perform. Sasol has also announced an improved and progressive dividend policy. Other significant resource positions include no exposure to gold shares and an underweight position in platinum shares. Retail shares like Massmart, Woolies and Pick & Pay also remain dominant positions in the Fund. We believe that historically low inflation and interest rates coupled with an improving South African economic recovery and internal restructuring of these businesses will drive operational performance. The Fund also participated in the initial public offering of Life Health Care Hospital Group, the third largest hospital operator in South Africa. Healthcare and Pharmaceuticals are a global investment theme which will continue to perform, as an aging population spends more of their disposable income on maintaining or improving their health.

Looking Ahead
Equities remain our preferred asset class relative to property, bonds and cash. We expect equity returns to remain well ahead of inflation projections for 2010, against a backdrop of low interest rates and global liquidity.

Fund Review
The fund returned 3.04% for the final quarter of 2009, marginally underperforming its composite benchmark which returned 3.4%. Our overweight equities position contributed the majority of our positive return, however our underweight position in resources in the quarter led to slight underperformance of the benchmark. Our underweight position in resources is predominantly as a result of no gold exposure and an underweight position in platinum as we think a stable currency and rising cost pressures should lead to a continued decline in general profitability in both sectors. During the quarter, we increased our fixed interest weightings to reflect our stronger local currency and demand for emerging market fixed interest assets.

Looking Ahead
Going into the first quarter of 201 0 we'll look maintain our current asset class weightings, being overweight in equities and underweight in fixed interest assets.