The fund is purely domestic after selling its holding in London-registered Old Mutual shares. It had the highest bank exposure in the sector after Sage Financial Services. Banks under-performed insurers during the quarter but the fund maintained above-average performance, thanks to large holdings in Discovery and Abil, and a judicious halving of the Nedcor holding. A 7% position in Liberty Holdings was acquired.

(Financial Mail - 24 October 2003)

On the 1 November 2003, due to the amalgamation of various manco's the FTNIB Financials Fund has changed its name to Nedbank Financials Fund. This fund is part of the Active Return Range.

Following an exceptional performance for the last quarter, the financial Index was one of the poorer performing indices on the JSE during the past quarter. Within the financial sector, life assurers and insurers performed better than banks.

During the quarter the last remaining offshore investment was sold (a holding in Old Mutual) and the proceeds repatriated.

The major purchase in the fund was Liberty Holdings, which has a very attractive dividend yield with an underpin to the dividend as a result of excess capital in the business. The share underperformed following the resignation of Liberty's chief executive, Roy Andersen, and poor earnings performance. However, the earnings base is now very low and there is likely to be a strong focus on improving efficiencies in the business and shareholders' capital.

The fund manager's significantly reduced the holding in Nedcor following the release of poor interim results. The share has continued to perform poorly.

The best performers during the quarter include Discovery Holdings (+21%) - the fund manager's increased the holding at the time of their rights issue, which was particularly opportune and ABIL (+17%). The biggest detractors were Nedcor (-20%), Remgro (-7%) and Firstrand (-4.5%).

Stronger overall markets and lower interest rates are positive for life assurers, while the valuation of banks remains attractive. The latter is largely as a result of high dividend yields and a reasonably stable earnings outlook in a very volatile market.

The fund manager's continue the search for interesting long-term opportunities to add value to the investment in this fund.

Comment for period 1 January 2003 to 17 March 2003 - David Southey, FT NIB

During January 2003, the domestic equity market contributed to the positive performance of the fund, but once again the overweight foreign holding dragged down the overall return. In February, the fund outscored the competition yet again! Bearing in mind that the fund was significantly overweight in foreign equities and cash during the month, its short-term Micropal ranking at number 2 was nothing short of sensational in the face of the remarkable strengthening in the currency. No active trading took place on the fund for the period 1 to 17 March 2003.

Comment for period 18 March 2003 to 31 March 2003 - Debbie Tredoux, Quaystone

A number of transactions were concluded to increase exposure in the fund to Old Mutual, Sanlam and Investec. These three shares have all performed dismally over the past few months and now offer a lot of value. Furthermore, it has been decided to repatriate the offshore funds, which currently constitute about 20% of the fund, and focus the fund on selecting South African listed financials.

Valuations are particularly compelling at the moment, so despite the fact that the rand has strengthened significantly, we still think that this move will be to the long term benefit of the fund's performance.

Nedcor Retail Investments have now adopted the strategy of outsourcing the investment management of their unit trust funds on a "best of breed" basis, either within the wider Nedcor group where performance and skills substantiate this, or to third-party asset managers.

As a result, from 18 March 2003, the FT NIB Selected Financial Opportunities Fund will be managed by Debbie Tredoux of Quaystone, assisted by Alistair Lea. Debbie has 17 years investment management experience and has a strong track record as a financials analyst.