Fund Review
The Fund outperformed the Composite Benchmark by a small margin. During the quarter we made one strategic asset allocation call with the aim of increasing the income yield of the Fund. We reintroduced property into the portfolio, at 5%. We maintained our exposure to South African bonds. Money market rates at around 5.5% are offering investors a negative real return. Investors need to invest in the longer end of the bond curve, where interest rates are in the region of 8%. We expect that South African interest rates will be flat well into 2013. We also kept our exposure to both South African and global equities in the Fund. Our total equity exposure is 25%. Global equities remain are our preferred asset class. Our overweight is in North American companies that continue to deliver positive earnings growth through their large exposure to emerging markets like China.

The equity portion of the portfolio remained relatively unchanged. We continue to favour the diversified commodity shares over the single commodity stocks, hence our large exposure to Anglo American and BHP Billiton in the Fund. Both Anglo American and BHP Billiton are attractive relative to historical valuations. We continue to have zero exposure in Sasol. The current Resource weighting in the equity portion of the Fund is 18 %.

Our Industrial exposure is 66% of total portfolio equity. We have maintained our overweight exposure to consumer related shares in the Fund. We are of the opinion that the consumer will be the driver of South Africa economic performance over the next few years. Thus the Fund has exposure to telecoms, retailers and healthcare. A large portion of the Fund is invested in MTN and Vodacom. Mobile telecoms shares are cash generative with decent dividend payout ratios. Retailing shares such as Woolies, Shoprite and Mr. Price provide the Fund with direct exposure to the South African consumer.

Financial shares make up 16% of equities. During the quarter we purchased shares in MMI, which has a sound investment case based on business scale, geographic footprint and a robust capital position. FirstRand and Nedbank remain our preferred banking shares.

Looking Ahead
Going into the remainder of 2012, our view is that a well diversified portfolio will deliver attractive risk adjusted returns without impacting yields unduly. We continue to position the Fund for moderate SA GDP growth that remains consumer driven. The Fund's SA equity holdings target companies that are exposed to the global commodity cycle and the South African consumer

Fund Review
During the quarter we made numerous strategic asset allocation calls with the aim of increasing the income yield of the fund. Firstly we increased our exposure to South African bonds - with money market rates at around 5.5% offering a negative real return, investors need to invest in the longer end of the bond curve, where interest rates are in the region of 8%. We expect that SA interest rates will be flat well into 2013. Secondly we added a Transnet USD Bond to the offshore component, which pays a coupon of Libor plus 270 basis points. We also increased our exposure to both SA and global equities, which remain our preferred asset class. Our overweight is in North American companies that continue to deliver positive earnings growth through their large exposure to emerging markets like China.
We continue to favour the diversified commodity shares over the single commodity stocks, hence our large exposure to Anglo American and BHP Billiton, both attractive relative to historical valuations. Thus the two trades made were the sale of Exxaro into Anglo American based on relative valuations and we switched our Amplats back into Implats. Despite the strike action and negative publicity at Implats we are of the opinion there is relatively more value in Implats than Amplats. We continue to have zero exposure in Sasol.

We have maintained our overweight exposure to consumer related shares, being of the opinion that the consumer will be the driver of South African economic performance over the next few years. Thus the fund has exposure to telecoms, retailers and healthcare. A large portion of the fund is invested in MTN and Vodacom. Mobile telecoms shares are cash generative with decent dividend payout ratios. Retailing shares such as Woolies, Shoprite and Mr. Price provide the fund with direct exposure to the SA consumer. Healthcare remains a South African and global theme and the fund's exposure to Aspen, Life Healthcare and Netcare will provide the necessary exposure.
During the quarter we purchased the newly formed life company MMI, created via the merger of Momentum and Metropolitan. MMI has a sound investment case based on business scale, geographic footprint and a robust capital position. FirstRand and Nedbank remain our preferred banking shares.

Looking Ahead
Going into the 2nd quarter 2012, our view is that global equities will continue to outperform domestic equities. We continue to position the fund for moderate SA GDP growth that remains consumer driven. The fund's SA equity holdings target companies that are exposed to the global commodity cycle and the South African consumer.

Fund Review
The Fund underperformed the composite benchmark by a small margin. In the quarter we made two strategic asset allocation calls. Firstly we increased our exposure to South African bonds because money market rates at around 5.5% are offering investors negative real return, thus investors need to invest in the longer end of the bond curve, where interest rates are in the region of 8%. Secondly we increased our offshore exposure. Our action is twofold: Firstly the Minister of Finance announced that British American Tobacco will be classified as a domestic asset and no longer a foreign asset. Secondly we continue to favour global equities as our preferred asset class. Our large overweight is in North American equities and these companies continue to deliver positive earnings growth through their large exposure to emerging markets like China. We continue to favour the diversified commodity shares over the single commodity stocks. The two resource trades we made were the sale of Arcelor Mittal (steel play) into Anglo American and the reduction in the Sasol holding to increase the Fund's weighting in BHP Billiton. Both Anglo American and BHP Billiton are attractive relative to historical valuations, while Sasol is fully valued given its project pipeline and earnings growth profile. We have maintained our large exposure to consumer related shares, being of the opinion that the consumer will be the driver of SA economic performance over the next few years. Thus the fund has large exposures to telecoms, retailers and healthcare. A large portion of the fund is invested in MTN and Vodacom as these shares are cash generative with decent dividend payout ratios. Retailing shares such as Woolies, Shoprite and Mr Price provide direct exposure to the SA consumer. Healthcare remains a South African and global theme and the exposure to Aspen, Life Healthcare and Netcare will provide the necessary exposure to this sector. We increased our holding in Abil (micro finance), as the company continues to grow its client base and advances book. We sold Investec off poor results and we do not think that the European banking environment will improve in the medium term. FirstRand and Nedbank remain our preferred banking shares.

Looking Ahead
For Q1 2012, our view is that global equities will continue to outperform domestic equities. We continue to position the Fund for moderate SA GDP growth that remains consumer driven. The Fund's SA equity holdings target companies that are exposed to the global commodity cycle and the South African consumer. Our commodity exposure is a hedge against continued global volatility and the European debt situation.