The Fund has returned 32.5% over the last year and 34.3% p.a. over the last five years. This has been an exceptional period for South African equities. While the Fund has delivered outperformance over the last five years it has lagged the return of the benchmark FTSE/JSE All Share Index over the last year. After an extended period of strong equity returns by the market it is not unusual for disparity within the market to diverge with parts of the market becoming extremely overvalued. We have previously discussed the types of investments that we are finding attractive in what is now an expensive overall market. SAB, MTN, Remgro and Richemont are the Fund's largest holdings. They are all high quality companies with good management whose earnings are likely to outperform the market and which can still be acquired at reasonably attractive prices. The Fund is however very underweight cyclical companies whose earnings are now at extremely high levels. While their earnings may go higher in the short-term, we believe that they are likely to substantially underperform the earnings growth of the Fund's holdings over the medium-term. Should these shares move from expensive to irrational levels the Fund may very well underperform its benchmark in the shortterm. As you know, in terms of our investment philosophy which we have consistently applied over the last 34 years, we are willing to accept short-term underperfomance by being different to the benchmark and by not buying shares that are trading above their underlying intrinsic value even if they could rise further in the short-term. This philosophy reduces the risk of capital loss and enables the Fund to take advantage of the opportunities for long-term outperformance that arise during times like this. While overall market levels imply much lower future return prospects for all equities we remain confident of our ability to outperform the benchmark index and through our proprietary fundamental research continue to find investments that should generate attractive long-term returns for our investors without assuming greater risk than the market.

The Fund has returned 32.6% over the last year and 33.5% p.a. over the last five years. This has been an exceptional period for South African equities. While the Fund has delivered outperformance over the last five years it has lagged the return of the benchmark FTSE/JSE All Share Index over the last year. After an extended period of strong equity returns by the market it is not unusual for disparity within the market to diverge with parts of the market becoming extremely overvalued. We have previously discussed the types of investments that we are finding attractive in what is now an expensive overall market. SAB, MTN, Remgro and Richemont are the Fund's largest holdings. They are all high quality companies with good management whose earnings are likely to outperform the market and which can still be acquired at reasonably attractive prices. The Fund is however very underweight cyclical companies whose earnings are now at extremely high levels. While their earnings may go higher in the short-term, we believe that they are likely to substantially underperform the earnings growth of the Fund's holdings over the medium-term. Should these shares move from expensive to irrational levels the Fund may very well underperform its benchmark in the short-term. As you know, in terms of our investment philosophy which we have consistently applied over the last 33 years, we are willing to accept short-term underperfomance by being different to the benchmark and by not buying shares that are trading above their underlying intrinsic value even if they could rise further in the short-term. This philosophy reduces the risk of capital loss and enables the Fund to take advantage of the opportunities for long-term outperformance that arise during times like this. While overall market levels imply much lower future return prospects for all equities we remain confident of our ability to outperform the benchmark index and through our proprietary fundamental research continue to find investments that should generate attractive long-term returns for our investors without assuming greater risk than the market.

The benchmark FTSE/JSE All Share Index delivered another strong performance over the last year with a return of 36.9%. This compares to 39.6% for the Fund. The market's three-year annualised return has been 44.9%. These levels of returns from equities are clearly unsustainable in the long-term. We have been cautioning for some time that expectations for returns from the market should be tempered. While we have clearly been too conservative to date, we continue to believe that the FTSE/JSE All Share Index currently offers much lower future return prospects and is unlikely to be immune to the increased volatility that inevitably comes from higher equity prices. Nonetheless, we remain confident of our ability to outperform the benchmark index and through our proprietary fundamental research continue to find investments that should generate attractive long-term returns for our investors. Many of these counters are high quality businesses whose earnings are expected to grow faster than the market and which can be acquired at attractive valuations. The Fund has increased its exposure to selected industrial shares such as SAB and Richemont, which can be acquired at attractive valuations given their long-term growth prospects versus those of the market.

The benchmark FTSE/JSE All Share Index delivered another strong performance over the last year with a return of 40.2%. This compares to 40.8% for the Fund. The market's three-year annualised return has been 44.3%. These levels of returns from equities are clearly unsustainable in the long-term. We have been cautioning for some time that expectations for returns from the market should be tempered. While we have clearly been too conservative to date, we continue to believe that the FTSE/JSE All Share Index currently offers much lower future return prospects and is unlikely to be immune to the increased volatility that inevitably comes from higher equity prices. Nonetheless, we remain confident of our ability to outperform the benchmark index and through our proprietary fundamental research continue to find investments that should generate attractive long-term returns for our investors. Many of these counters are high quality businesses whose earnings are expected to grow faster than the market and which can be acquired at attractive valuations. The Fund has continued to increase its exposure to selected industrial shares such as SAB and Richemont, which can be acquired at attractive valuations given their long-term growth prospects versus those of the market. These shares are also likely to be beneficiaries of a more normal weaker Rand exchange rate.

The benchmark FTSE/JSE All Share Index delivered another strong performance over the last year with a return of 33.9%. This compares to 34.5% for the Fund. The market's three-year annualised return has been 40.7%. These levels of returns from equities are clearly unsustainable in the long-term. We have been cautioning for some time that expectations for returns from the market should be tempered. We continue to believe that the FTSE/JSE All Share Index currently offers much lower future return prospects and is unlikely to be immune to the increased volatility that inevitably comes from higher equity prices. Nonetheless, we remain confident of our ability to outperform the benchmark index and through our proprietary fundamental research continue to find investments that should generate attractive long-term returns for our investors. Many of these counters are high quality businesses whose earnings are expected to grow faster than the market and which can be acquired at attractive valuations. The Fund has continued to increase its exposure to selected industrial shares which can be acquired at attractive valuations given their long-term growth prospects versus those of the market. These shares are also likely to be beneficiaries of a more normal weaker Rand exchange rate.

The benchmark FTSE/JSE All Share Index delivered another strong performance over the last year with a return of 36.7%. This brings the three-year annualised return for the market to 43.4%. These levels of returns from equities are clearly unsustainable in the long-term. We have been cautioning for some time that expectations for returns from the market should be tempered. While we have clearly been too conservative to date, we continue to believe that the FTSE/JSE All Share Index currently offers much lower future return prospects and is unlikely to be immune to the increased volatility that inevitably comes from higher equity prices. Nonetheless, we remain confident of our ability to outperform the benchmark index and through our proprietary fundamental research continue to find investments that should generate attractive long-term returns for our investors. Many of these counters are high quality businesses whose earnings are expected to grow faster than the market and which can be acquired at attractive valuations. The Fund has continued to increase its exposure to selected financial shares which represented 29.4% of the portfolio at 31 March 2007. We believe that the earnings of these shares are likely to outperform those of the market over the medium-term and can still be acquired at ratings that are well below that of the market.

The benchmark FTSE/JSE All Share Index delivered another strong performance over the last year with a return of 42.9%. This brings the three-year annualised return for the market to 44.0%. These levels of returns from equities are clearly unsustainable in the long-term. We have been cautioning for some time that expectations for returns from the market should be tempered. While we have clearly been too conservative to date, we continue to believe that the FTSE/JSE All Share Index currently offers much lower future return prospects and is unlikely to be immune to the increased volatility that inevitably comes from higher equity prices. Nonetheless, we remain confident of our ability to outperform the benchmark index and through our proprietary fundamental research continue to find investments that should generate attractive long-term returns for our investors. Many of these counters are high quality businesses whose earnings are expected to grow faster than the market and which can be acquired at attractive valuations. The Fund has continued to increase its exposure to selected financial shares which represented 29.4% of the portfolio at 31 March 2007. We believe that the earnings of these shares are likely to outperform those of the market over the mediumterm and can still be acquired at ratings that are well below that of the market

The benchmark FTSE/JSE All Share Index continued its strong performance and returned 37.6% over the last year. This brings the three year annualised return for the market to 40.6%. These levels of returns from equities are clearly unsustainable in the long-term. We have been cautioning for some time that expectations for returns from the market should be tempered. While we have clearly been too conservative to date, we continue to believe that the FTSE/JSE All Share Index currently offers much lower future return prospects and is unlikely to be immune to the increased volatility that inevitably comes from higher equity prices. Nonetheless, we remain confident of our ability to outperform the benchmark index and through our proprietary fundamental research continue to find investments that should generate attractive long-term returns for our investors. Many of these counters are high quality businesses whose earnings are expected to grow faster than the market and which can be acquired at attractive valuations. The Fund has continued to increase its exposure to selected financial shares which represented 29.4% of the portfolio at 31 March 2007. We believe that the earnings of these shares are likely to outperform those of the market over the medium-term and can still be acquired at ratings that are well below that of the market.

The benchmark FTSE/JSE All Share Index delivered another strong performance over the last year with a return of 32.2%. This brings the three year annualised return for the market to 36.6%. These levels of returns from equities are clearly unsustainable in the long-term. We have been cautioning for some time that expectations for returns from the market should be tempered. While we have clearly been too conservative to date, we continue to believe that the FTSE/JSE All Share Index currently offers much lower future return prospects and is unlikely to be immune to the increased volatility that inevitably comes from higher equity prices. Nonetheless, we remain confident of our ability to outperform the benchmark index and through our proprietary fundamental research continue to find investments that should generate attractive long-term returns for our investors. Many of these counters are high quality businesses whose earnings are expected to grow faster than the market and which can be acquired at attractive valuations. The Fund has continued to increase its exposure to selected financial shares which represented 27.6% of the portfolio at 31 December 2006. We believe that the earnings of these shares are likely to outperform those of the market over the medium-term and can still be acquired at ratings that are well below that of the market.

The benchmark FTSE/JSE All Share Index delivered another strong performance over the last year with a return of 38.6%. This brings the three year annualised return for the market to 37.1%. These levels of returns from equities are clearly unsustainable in the long-term. We have been cautioning for some time that expectations for returns from the market should be tempered. While we have clearly been too conservative to date, we continue to believe that the FTSE/JSE All Share Index currently offers much lower future return prospects and is unlikely to be immune to the increased volatility that inevitably comes from higher equity prices. Nonetheless, we remain confident of our ability to outperform the benchmark index and through our proprietary fundamental research continue to find investments that should generate attractive long-term returns for our investors. Many of these counters are high quality businesses whose earnings are expected to grow faster than the market and which can be acquired at attractive valuations. The Fund has continued to increase its exposure to selected financial shares which represented 27.6% of the portfolio at 31 December 2006. We believe that the earnings of these shares are likely to outperform those of the market over the medium-term and can still be acquired at ratings that are well below that of the market.

The benchmark FTSE/JSE All Share Index delivered another strong performance during 2006 with a return of 41.2%. This brings the three year annualised return for the market to 37.6%. These levels of returns from equities are clearly unsustainable in the long-term. We have been cautioning for some time that expectations for returns from the market should be tempered. While we have clearly been too conservative to date, we continue to believe that the FTSE/JSE All Share Index currently offers much lower future return prospects and is unlikely to be immune to the increased volatility that inevitably comes from higher equity prices. Nonetheless, we remain confident of our ability to outperform the benchmark index and through our proprietary fundamental research continue to find investments that should generate attractive long-term returns for our investors. Many of these counters are high quality businesses whose earnings are expected to grow faster than the market and which can be acquired at attractive valuations. The Fund has continued to increase its exposure to selected financial shares which now represent 27.6% of the portfolio. We believe that the earnings of these shares are likely to outperform those of the market over the medium term and can still be acquired at ratings that are well below that of the market.