In line with our philosophy of aggressively taking positions in highest-conviction stocks as reflected in SIM's specialist equity unit trusts, the Top Choice Fund ended the quarter holding over 8% in three stocks. It is the stated aim of the fund to position itself aggressively into stocks where we see the best upside, thereby providing our investors with a concentrated portfolio of stocks.

During the quarter we added to our position in Shoprite, which is now our top holding. The stock outperformed the All Share Index by some 4%. In the past number of years Shoprite has invested in creating a dominant food retail franchise at the bottom end of the market. The Checkers brand is also undergoing a revival and turning out to be a serious challenger in the middleincome segment. Africa remains the untapped growth opportunity in the group. Shoprite will also benefit from high food inflation.

The second-largest holding remains MTN, which has excellent growth prospects in the rest of Africa where mobile penetration is only 20% (compared to approx. 70% in South Africa). The share experienced a volatile quarter during which it peaked at close to R113 in September. We still see upside in the share, and in the past management has demonstrated an ability of unlocking value by being involved in shrewd acquisitions.

The third-largest holding is Standard Bank. After underperforming during the previous quarter, Standard Bank experienced a very difficult September in spite of posting solid interim results. This was clearly as a result of sub-prime woes that have been weighing on banks internationally. We do not believe that our local banks are materially exposed to sub-prime debt and that valuations are currently extremely attractive as we are close to the peak in the interest rate cycle.

We remain negative on the resources stocks. Our holdings in Harmony and Angloplats significantly underperformed after disappointing the market with poor numbers and in both cases losing their CEO. Nonetheless, we remain positive on the prospects of precious metals, especially gold. We will continue with our philosophy of aggressively backing our high-conviction views by taking large positions in stocks. While this has proved a testing quarter, we remain confident that the fund will ride the market volatility and continue to outperform its peers over the longer term.

In line with our philosophy of aggressively taking positions in highest-conviction stocks as reflected in SIM's specialist equity unit trusts, the Top Choice Fund ended the quarter holding over 8% in three stocks. It is the stated aim of the fund to position itself aggressively into stocks where we see the best upside, thereby providing our investors with a concentrated portfolio of stocks.

Our top holding is Barloworld, which outperformed the All Share Index during the quarter by approximately 5%. Barloworld has made some company transforming decisions in the past nine months, replacing both its chairman and CEO, unbundling its coatings business and PPC and disposing of underperforming operating entities and releasing excess capital. With Caterpillar and Avis businesses becoming the core of the business post the restructuring, the group is poised to benefit from the infrastructure and mining boom, and we see further upside in the share.

The second-largest holding remains MTN, which has excellent growth prospects in the rest of Africa where mobile penetration is only 20% (compared to approx. 70% in South Africa). While the share underperformed during the quarter, it remains a dominant player in Nigeria and we believe that the end of the tax holiday in 2007 will be offset by excellent growth over the next two years as MTN further consolidates its leadership position. MTN is trading below fair value, with corporate activity in the sector demonstrating considerable upside in the share.

The third-largest holding is Standard Bank, which, like other banks, underperformed during the quarter. Banking shares have been impacted by inflationary pressures derived from food and petrol prices, which led to the Reserve Bank hiking interest rates by another 50 basis points in the past quarter, with another hike in August looming. Standard Bank has a very strong retail franchise and is poised to capitalise on corporate credit growth and also participate in infrastructure finance.

In terms of sectoral positioning, the stock picks of the fund are heavily biased towards the financial and industrial sectors where we see the best value. Resource shares have performed strongly as global growth surprised on the upside, but the shares are now discounting most of the good news. The fund retains exposure to selected resource shares such as Mvela Resources, which is the likely consolidator in the sector, and we sold our holding in Eland Platinum after it ran above our intrinsic value. While we remain positive on equities, we caution investors that the returns obtained in the first half of the year are unlikely to be matched in the second half of 2007.

We reiterate our philosophy of aggressively taking positions in highest conviction stocks as reflected in SIM's specialist equity unit trusts. The Top Choice Fund ended the quarter with over 8% in five stocks. It is the stated aim of the fund to position itself aggressively into stocks where we see the best upside, thereby providing our investors with a concentrated portfolio of stocks. Our top holding is Standard Bank with its premier banking franchise in South Africa and its growing footprint in Africa and other emerging markets.

We also have a sizeable holding in ABSA, where the synergies post the Barclays deal are clearly filtering through. We believe that banks will re-rate as soon as the market acknowledges the end of the current interest rate up-cycle. Barloworld remains one of our largest holding as the radical restructuring of the company unfolds. We have already benefited from a special dividend of R5 and we expect the value-unlocking process of unbundling and selling non-core operations to continue. MTN delivered earnings growth of 73% in 2006 and now has a subscriber base of over 40 million. It has operations in 21 geographies and now derives higher earnings from Nigeria than South Africa.

It is worth pointing out that in the context of a weakening rand and higher oil price, MTN has been able to externalise cash flows and gain exposure to oil-producing economies. We would also like to highlight that our cautious view on commodities did not prevent us from capitalising on Eland Platinum, which delivered a return of over 89% during the quarter. It is with such a blend of select larger mainstream stocks and smaller undiscovered gems that we will seek to deliver superior returns to our investors.

In line with our philosophy of aggressively taking positions in highest conviction stocks as reflected in SIM's specialist equity unit trusts, the Top Choice Fund ended the year holding over 9% in three stocks. It is the stated aim of the fund to position itself aggressively into stocks where we see the best upside, thereby providing our investors with a concentrated portfolio of stocks.

Our top holding is MTN, which was one of the best performers in the top 40 during the quarter, delivering returns of over 35%. MTN has excellent growth prospects in the rest of Africa where mobile penetration is only 20% (compared to approx. 70% in South Africa). MTN is a dominant player in Nigeria and it has enhanced its prospects outside South Africa by acquiring Investcom last year. MTN is trading below fair value, with corporate activity in the sector demonstrating considerable upside in the share.

The second-largest holding is Barloworld, which announced a major business restructuring in December. We have been positive on the stock given its potential for value unlocking and are pleased that the restructuring will go some way to set the business on track to do so. With the Caterpillar becoming the core of the business post the restructuring, the group is poised to benefit the infrastructure and mining boom and we see further upside in the share.

The third-largest holding is Standard Bank, which is one of the premier retail banks in South Africa. Standard Bank has a very strong retail franchise, which has benefited from the consumer credit boom, but also is one of the leading corporate and investment banks in the country. Standard Bank is trading at a discount to the market, with its current rating not fully reflecting excellent long-term growth prospects.

In terms of sectoral positioning, the stock picks of the fund are biased towards the financial and industrial sectors where we see the best value.

While we are pleased that the fund delivered solid returns in the December quarter, we would caution investors that despite our high conviction bets, returns are unlikely to be of the same magnitude in 2007.