As stated in our previous commentaries, we have positioned the fund with a diversified exposure to emerging market growth, with a key focus on the developing world consumer.

During the quarter we decreased the fund's exposure to Asia somewhat, and have replaced it with a weighting in South America, focussed on Brazil. Furthermore, we have taken a position in Australia (on Asia's door step) through Rio Tinto and National Bank of Australia on the premise that the Australian economy would continue to benefit from continued growth in the Asian region.

From a local perspective we have added Clicks and Standard Bank. We believe both are strongly geared to a pickup in consumer spend given the current interest rate cycle and signs that the consumer recovery is beginning to set in.

Please refer to our 3rd quarter houseview for Valugro's outlook on the global economy and our thoughts on the state of the SA consumer.

Over the 1st quarter of 2010, Valugro has managed to reposition your fund in a manner that would allow it to capture the benefits of an increase in developing market economic growth and risk appetite. Although there are still some concerns regarding the quality of the global economic recovery, there are signs that it is beginning to gain traction.

It is against this backdrop, that in last month's fund commentary we had alluded to the fact that we would like a 40:60 split between local and offshore holdings respectively. Valugro is pleased to announce, that given favourable valuations and a strong ZAR over the period (having appreciated 1.48% to the US Dollar and 6.31% to the EURO), the fund has successfully managed to increase its desired exposure to international markets. In particular, your fund has gained a 20% and 12% exposure to the Asian (through the use of the Templeton Asian Growth Fund) and Australian regions respectively, due to Valugro's bias towards capturing emerging market growth, whilst, we have maintained our US holdings in order to better diversify your fund.

On the domestic front, Valugro had increased its base metals and oil resource exposure through Anglo American, Exxaro and Sasol. The exposure to base metals allows the fund to be better geared to an economic recovery. Thus by virtue, Valugro (given a 40% exposure to local markets) had reduced its exposure to retailers as the need to rely on their defensive qualities had slowly waned over the period, and their recent valuations had deemed them to have been relatively expensive. Looking ahead, the Valugro Active Allocation fund will endeavour to continue to exploit offshore opportunities with a continued focus on developing economies and in particular look for companies which are geared to an economic recovery.

As a new decade starts, it is worthwhile to reflect on the past decade between 1 January 2000 and 31 December 2009 from an investment perspective. It has most definitely been "The Decade of Emerging Markets and Commodities". Emerging market equity indices have far outpaced those of developed market's. The world has also experienced strong economic growth over the past 10 years, resulting in strong demand for commodities which has resulted in sharp price appreciations. The results can be summarised as follows:

1. Developed Markets
- Dow Jones Industrial Index fell 9.3% over the past decade (hardly a great return!).
- The broader S&P 500 Index fared worse, falling 24% (its worst performance since the 1930s).
- The UK's FTSE fell 22% over the past 10 years.
- Japan's Nikkei fell 44% (another very bad decade for stocks there).

2. Emerging Markets
-Russia's Index rose 802% over the past decade.
-Brazil's Bovespa Index climbed 301% for the period.
-India's Sensex Index jumped 249%.
-SA's All Share Index was up 227%
-China's Shanghai Index rose 140% over the decade.

3. Commodities
-Oil was up 210% over the decade.
-The spot gold price rose 281%.
-Platinum rose 230%.
-Copper gained 290%.

4. Currencies
- The euro, only in its infancy as the decade began, gained 43% against the US dollar over the past 10 years.
-Japan's yen gained 9% against the US dollar.
-The Brazilian real lost 6% vs the US dollar.
-SA's rand lost 19% over the decade vs the US dollar.

NB All global stock market index moves over the decade are in their local currencies, excluding dividends. Data is per the Financial Times and I-NET.