The SWIX Index surged almost 9% in September and finished the month just 3% below the record high set in October 2007, i.e. price has almost returned to precrisis levels. Weighted average company earnings have also risen from their lows, but have still got about 12% before they reach their peak that was set in 2008. It is also worth noting that the severity of the price collapse during the crisis far exceeded the fall in company earnings. From peak-to-trough, prices fell over 40% and earnings fell 19%.

The potential for company earnings to recover can also be reflected in the average company's return on equity. Earnings are about 8% away from a level where our market would return its 'average' 17% on net asset value. It appears now that from a PE rating valuation, our market has recovered well, but we believe that there is still opportunity for earnings to recover and therefore push prices further. We are well and truly into the bull phase of the market recovery. From these levels, we are still optimistic that equities will offer superior returns to other asset classes over the medium to long term.

General Retailers stood out during the month by returning 17%. Food and Drug retailers also performed very well. Foreign investors have shown a keen interest in this sector as a theme play on the emerging market consumer.

Ratings have been driven to an all time high for most of the retailers. The fact that these ratings are on record earnings' levels, compounds the expensiveness of these shares; 'A bubble waiting to be popped?'

Brait (-2%) detracted from our fund's performance as a result of their black empowerment shareholders selling below market price in a 'book-build' sale. We took advantage of this and bought shares during this bookbuild. Super Group (-5%) also detracted by not keeping pace with the very strong bull market surge.

We sold our entire Liberty Holding position during September. The upside opportunity in Discovery and Old Mutual are significantly more attractive from a rating and operational perspective. We took the opportunity to purchase a small holding in Blue Label Telecoms and added to our platinum counters.

Finally, we think the current environment creates a good opportunity for our authorities to abolish exchange control regulations for a host of reasons. The Rand is very strong, peer emerging market currencies are strong, we are experiencing a significant inflow of foreign capital as investors seek higher yield, our current account deficit has narrowed materially, the inflation outlook is good and our revenue collections are respectable.

Following on from May's 5% fall, our market gave back a further 3% in June. These are volatile times, as halfway through the month the market was actually up 2%. Global equity markets continue to be shoved around during times of conflicting news flow and apparent uncertainty. Ultimately company earnings will determine the value of shares and subsequently market indices. We continue to believe that some company earnings are cyclically low and have the potential to improve and return to customary levels. Timing of this is always indeterminate and it can be a tortuous wait. We know that companies reinvent themselves in difficult times through top line initiatives, realignment of costs and cost cutting, supplier and debtor negotiation and corporate funding restructuring. We maintain that the delivery of this earnings recovery and growth is essential for the sustainability of a bull market recovery. We have been positioned in counters that have the largest gap between their current value and potential recovery value. As global equity markets have "lost the faith" in recent months, these more cyclical counters have become progressively more attractive. As these stocks have underperformed and our perceived upside has increased we have dispassionately increased our holdings in them, namely: MTN, Steinhoff, Nedbank, Imperial and Lonmin. We also sold our holding in Richemont and invested the proceeds into Naspers-N. Super Group, Reunert and Brait were the biggest contributors to our fund performance for the month. We also did well by not owning Naspers-N for most of the period, only picking them up at the end of the month. SABMiller and Shoprite's strong performance detracted from Mastermind as we have no exposure to these shares. I have commented on the FIFA World Cup for the last year or so and would like to make a few closing remarks. I could not be more proud to be South African than I am. Our country has done remarkably well and I would put the few negative observations into perspective of the overall success. Even on the field, Bafana Bafana, ranked 86th, drew with Mexico and beat the 9th ranked French. I have learnt to blow the vuvuzela, unfortunately I still can't diski dance, caught the train home from town at 12am with my children, had amazing conversations with South Africans and foreign visitors and incredible times with friends, family and colleagues. It is wonderful to have hope. I trust you all "felt it!" AYOBA!

Global markets rebounded very strongly last month. The JSE SWIX increased an incredible 7%, one of the largest monthly returns in this remarkable thirteen month recovery period. Resources led this surge with the help of Anglos increasing just over 15%. The Resource news was dominated by the Kumba Iron Ore and ArcelorMittal SA dispute. Trade in Mittal was suspended for a few days to avoid outright panic and speculation while the news of the disagreement was communicated to the market. Needless to say the share price fell 20% when trading resumed and we believe it's going to be a lengthy arbitration period before any ruling is made. We were eagerly anticipating an opportunity to pick up some Mittal shares if the valuations became too stretched (there is also a very nice cash underpin to the share), but it appears that the market has priced this stock at a very fair 50:50 outcome for this dispute. The Department of Trade and Industry will not intervene at this stage, but will be following this contest with very keen interest given the importance of South African steel prices for manufacturing and employment. This all adds to the view that a sensible resolution will be sought. On the economic front, the Reserve Bank MPC unexpectedly cut the repo rate on 25 March. The Reserve Bank has now cut the repo rate by 5.5% in 6 instalments since December 2008. The latest cut has raised questions about the Reserve Bank's policy response function. It appears that the Bank is now intending to incorporate economic growth in its inflation targeting policy. Our biggest contributors to performance were Nedbank (+17%), Anglos (+15%), Investec Plc (+15%) and Bell Equipment (+12%). Not owning Mittal (-21%) and Shoprite (-3%) also assisted. We added Sun International and Raubex to our portfolio and slightly increased our holding in Discovery and Reunert. We funded these trades by reducing Liberty, Firstrand and Nedbank. Our focus remains on stock valuation and we have resisted the enticement of momentum driven areas of the stock market. Most of the opportunities we see are stock specific and not thematic sector valuations. We believe our fund is invested in those counters that offer good valuation and diversification credentials. The last of the World Cup Soccer tickets are being sold and the anticipation of this awesome event is bustling in our country. I recently travelled to some remote areas of a very third world country and the recognition of my Bafana Bafana t-shirt (no reference to South Africa on the shirt) was very surprising to me. Countless folk referenced it to South Africa and their excitement of the World Cup.

The SWIX All Share had a very strong finish to the calendar year, delivering 3.9% in December. There was not much difference between the performance of the tier one sectors of Resources, Financials and Industrials during the month.

The SWIX returned an outstanding 29.9% over the past 12 months with Resources (36%) the clear winner, followed by Industrials (31%) and then Financials (28%). There were not many market commentators envisaging such a sharp recovery in world markets at the beginning of the year. It has been a truly remarkable performance! Value stock pickers who didn't constrain their portfolio construction with macro views during the year were handsomely rewarded. Lower global interest rates, effective bailout packages, efficient stimulus packages and continued Chinese demand have all contributed to the positive news flow allowing a strong recovery in equity markets. Looking back at our market over the year the Platinum (56%) and General Mining (46%) sectors were the standout sectors within Resources. The Life Assurance sector (52%) was the winner amongst Financials. The Healthcare stocks (77%) stood out within the Industrial board, followed by outstanding performances from some of the Consumer Goods' counters like Steinhoff and SABMiller.

Super Group (+25%) was our star performer for the month with strong price movement post its unprecedented rights issue. Steinhoff (+15%) and Brait (+17%) were also standouts for us. In fact, it's worth mentioning that Brait returned an incredible 93% for the year, including its extremely generous dividend payouts of R1.80 a share.

We sold our remaining holding in SABMiller during the month and invested the proceeds into the underperforming MTN. SABMiller had run very hard on the news of a potential acquisition of FEMSA in Mexico and we believe that the market was forgetting its long term valuation metrics. MTN also has significant exposure offshore and with the Rand strengthening the way it has this year, it makes it very difficult to grow its earnings in Rand terms. The gap between Rand strength and the MTN rating started to widen from about March 2009. We believe the MTN rating was being held up by the Bharti deal instead of falling when the Rand strengthened. However, with this deal being called off, MTN has had to retrace in line with what its underlying currencies have done. This, together with the more recent negative news around mobile termination rate changes in Nigeria and the regulation to register SIM cards in Nigeria has seen the share price fall versus the market. MTN is on a PE of 12.2x, which is not very demanding at all and gave us the opportunity to increase our holding.

The key valuation characteristics of Mastermind remain very attractive, with a price earnings relative discount of 34% to the market average and a price to book relative discount of 39% to the market. The fund's dividend yield is also very attractive at 3.4%. Should all the counters in the fund reach their full valuation potential, based on our target share returns, then Mastermind should outperform the market by more than 30% over the next few years.