It was a difficult quarter for markets, with bouts of volatility. The "risk-off" trade reasserted itself as manufacturing data disappointed (US, Europe and China) and US employment stalled. The situation in the eurozone remains uncertain, though recent actions by the authorities indicate a more coordinated response. The rand sold off as investors dumped emerging market currencies. A positive spin-off of the economic slowdown has been a significant drop in the price of oil, which has contributed to a decline in inflation. As a result, there was a downward shift in local interest rate expectations. The All Share Index was slightly up (+1.0%), with gains from financials and industrials (benefiting from lower interest rate expectations) outweighing losses from resources (investors fretting over falling Chinese commodity demand). Property (+10.3%), bonds (+5.2%) and income (+3.0%) all gained (lower interest rate expectations), with our bond market benefiting from substantial foreign inflows. Cash returned 1.3%. In rand terms, global equities were up (+1.0%) aided by rand weakness; global bonds were positive in $ terms (+0.6%) and strongly up in rand terms (+7.8%).

At quarter end, on a see-through basis, we were underweight local equities relative to benchmark. We were overweight our property building block; we maintain our exposure to property via our defensive Flexible Property fund. We added to our absolute income building block overweight position, at the expense of cash; this tactical tilt continues to add value. Regarding our foreign exposure, equities is the dominant allocation with the balance in US dollars.

The Fund delivered a return of 1.8% for the quarter, ahead of its peer group average. Over the past 12 months, the Fund delivered a return of 8.0%, slightly lagging its CPI + 3% targeted return of 8.7%. With the All Share Index's gain over the past 12 months being in single digits, it has been difficult to achieve the fund's return objective. While over time we expect to achieve our targeted return, it is likely that this target will remain under pressure in a world of low interest rates and sluggish growth.

It was a strong quarter for markets, with only mild volatility. The "risk-on" trade came back in full force as US economic data continued to improve (manufacturing and employment), and the Fed committed to keeping rates low at least through late 2014. Markets were further encouraged by eurozone developments finance ministers approved a financial rescue for Greece, and the ECB provided a liquidity boost to European banks with a second round of lending. There were also negative news releases which markets chose not to focus on - Moody's downgraded the credit ratings of Italy, Portugal and Spain, and China growth concems resurfaced with the official growth target being lowered from 8% to 7.5%, a poor trade report and a decline in factory output. The All Share Index was up strongly (+6.0%) for the quarter, led by financials and industrials and mid/small caps. Property (+8.0%), bonds (+2.4%) and income (+2.0%) all gained over the quarter, with our bond market benefiting from substantial foreign inflows. Cash retumed 1.3%. In rand terms, global equities were up strongly (+6.0%) despite significant rand strength over the quarter; global bonds were positive in $ terms (+1.1%) but down in rand terms (-4.5%) due to rand strength.

At quarter end, on a see-through basis, we were underweight local equities relative to benchmark. We were overweight our property building block; we maintain our exposure to property via our defensive Flexible Property fund. We remained significantly overweight our absolute income building block at the expense of cash; this tactical tilt continues to add value. Regarding our foreign exposure, we switched from foreign equities (selling into market highs near quarter end) into the US dollar.

The Fund delivered a return of 2.8% for the quarter, in line with its peer group average. Over the past 12 months, the Fund delivered a retum of?1 %, lagging its CPI + 3% targeted retum of 9. 1 %. With the All Share Index only up 7.5% over the past 12 months, it has been difficult to achieve the fund's return objective. While over time we expect to achieve our targeted return, it is likely that this target will remain under pressure in a world of increasing inflation, low interest rates and sluggish growth.

It was a strong quarter for markets, despite bouts of volatility. Markets gained early in the quarter on a debt deal that alleviated the Greek situation. Focus then turned to Italy as its bond yields spiked. Markets surged late November when the world's major central banks acted jointly to provide cheaper dollar funding to European banks. Indices turned negative when the ECB quashed hopes that it would expand its bond purchase program, but bounced back late in the quarter on positive US data. Markets were further encouraged as the ECB provided European banks with much needed longer term liquidity. The All Share Index was up sharply (+8.4%) for the quarter, led by financials and industrials and large/mid caps. Interest rate sensitive asset classes continued to climb higher with Eurozone woes increasing the likelihood of global central banks remaining dovish; property (+3.7%), bonds (+3.5%) and income (+2.2%) did well over the quarter, with our bond market benefiting from strong foreign inflows. Cash returned 1.4%. In rand terms, global equities were up strongly (+7.9%) with the rand relatively flat over the quarter; global bonds were only up slightly (+1.1%).

At quarter end, on a see-through basis, we were underweight local equities relative to benchmark. We were overweight our property building block; we maintain our exposure to property via our defensive Flexible Property fund. We remained significantly overweight our absolute income building block at the expense of cash; this tilt was value additive over the quarter with Absolute Income outperforming cash by around 0.8%. We reduced our foreign exposure by repatriating our entire euro position at around R10.90:€. Most of our foreign exposure is to global equities, with a small exposure to the US dollar.

The Fund delivered a return of 3.2% for the quarter, in line with the average of its peer group. It benefited from an improvement in the performance of our real return building block. Over the past 12 months, the Fund delivered a return of 4.8%, lagging its CPI + 3% targeted return of 9.1%. With the SWIX only up 4.3% for the year, it has been difficult to achieve the fund's return objective. While over time we expect to achieve our targeted return, it is likely that this target will remain under pressure in a world of increasing inflation and sluggish growth.