The Fund gained 5.26% for the quarter and 18.77% for the 2009 calendar year, outperforming the average Namibian Fund Manager by 0.62% by 1.07% respectively. You would recall that the fund tactically increased its equity exposure at the expense of cash during the quarter. This tactical asset allocation accounted for most of the out-performance as equities performed well during the quarter.

An upward adjusted of domestic equity asset allocation weightings was done to reflect our view of the global recovery and its impact on Namibia/SA economies. During the quarter the Fund was slightly underweight resources with relatively an equal weighting in both financials and industrials. Anglo America continued to be our biggest resources holding (as opposed to BIL) as we believed in its recovery story based on cost cutting, internal restructuring and improving commodity prices. This was handsomely rewarded as Anglo's returned 36% during the quarter against BHP Billiton's 16% for the same period, an out-performance of 20%.

Around 20% of the portfolio had been invested in financials, which is largely made up banks and insurance companies in line with the NSX composition of stocks. We continue to favour FirstRand and Investec as these are recovery plays in an improving global environment. For the quarter the Investec call hasn't worked as yet, but we believe the recovery is imminent whilst a 13% return on FirstRand was in line with our expectation.

Industrials, c.20% of the portfolio, performed well during the quarter. Companies such as Clicks (up 18%), SAB Miller (up 19%) & other contributed hugely to the performance whilst Mittal (down 15%) and construction stocks such as Aveng (down 10%) were the major detractors.

Looking Ahead
As we prepare for 2010 we plan to be fully invested in Namibia, SA and Foreign equities. However we do recognize that easy money had been made and may see the market pulling back after it closed the quarter at 27 666 points, an increase of 27% for 2009 CY. Taking profit on some positions will be a prudent thing to do. The Fund is positioned in line with our bearish view on the Rand resulting in an increased exposure to offshore equities.

Fund Review
Over the past 12 months, the fund has moved into positive terrttory and capital preservation now appears secure. The challenge is now to deliver real retums over ooming rolling 36 months, which we are positive on though in the very near term CPI +5% may remain a challenge, not only for us but indeed the industry as a whole. YTD our performance versus peers has improved matertally and we are now within the second quartile, however, over 12 months our numbers still lag the average on acoount of the very defensive position that our peers took last year, which worked for them and is still in the base. YTD our peers still appear to be defensively positioned relative to us, which given the strong performance of risk assets (equity and property) to date has worked in our favour and against them. We maintain the view that our relative ranking to peers over the coming quarters is likely to be influenced by asset class positioning between defensive and risk assets, with our call being on risk assets to reassert themselves.

Looking Ahead
As suggested above, over the past 12 months we have been increasing our exposure to risk assets (equity but more so property) at the expense of defensive assets- mainly bonds. The more favourable macroeconomic environment (accelerating GDP growth, lowish inflation and reduced volatility) that we expect will be positive for risk assets as well as for delivery of targeted fund retums over the medium term. At asset class level, our risk adjusted positions are Overweight Domestic Property, Equity and Cash, Neutral Offshore and Underweight Bonds and Offshore Property. Within Equity our top stock picks in order are: Telkom, MTN, Billiton, African Bank and Murray & Roberts.