MARKET REVIEW
The FTSE/JSE SWIX All Share Index (SWIX) returned 7.0% over the second quarter of 2017. The SWIX was largely driven by five shares - Naspers, Anglo American, Standard Bank, MTN and FirstRand - that in aggregate contributed 4.8% (~70%) of the 7.0% total return. Naspers, in particular, has been the key driver contributing 3.0% (~43%) of the SWIX return. From a size perspective, Large Caps (+10%) continued to outperform Mid Caps (+3.8%) and Small Caps (+3.0%). Resources returned 17.8% outperforming Industrials (7.5%), Financials (5.1%) and SA Listed Property (+5.7%).

MSCI World and Emerging Market indices (USD) returned 4.9% and 8.0% respectively, while in the U.S. the S&P 500 gained 4.4%. In Europe, the German DAX 30 and the French CAC 40 gained 7.6% and 7.8% respectively in US Dollars. The FTSE 100 gained 4.8%. In Asia, the Hang Seng, Japanese Nikkei and MSCI China returned 8.5%, 2.1% and 14.7% respectively in US Dollars. Commodity prices were generally strong with oil up 20%, gold up 3%, palladium up 11%, platinum down 1%, nickel up 11% and zinc up 16%.

PERFORMANCE REVIEW
The Cadiz Equity Fund gained 5.5% for the third quarter compared to 7.0% for SWIX. Over the past 12 months the fund returned 17% compared to 7.0% for the SWIX. The fund generated solid returns from Naspers, Grindrod, MTN, Standard Bank and Inpex Corporation. These gains were somewhat offset by negative results in some of our other holdings, including Impala Platinum, Mediclinic, Netcare, Brait and British American Tobacco. Our underweight position in Naspers was the main detractor from relative performance.

FUND POSITIONING
The fund positioning has remained largely unchanged over the past quarter. We sold a small position in Peregrine Holdings and purchased Netcare. On the international side, we sold positions in JD.Com and Michael Kors and purchased National Oilwell Varco and Transocean. The fund remains conservatively positioned in undervalued assets that have underperformed the market over the past few years - Sasol, MTN, Grindrod, SoftBank, Howden Africa, Inpex and Impala Platinum to name a few. We believe many of these undervalued assets will generate good returns for investors over the next few years as value is unlocked through a recovery in their earnings cycle and/or management intervention.

MARKET REVIEW
The FTSE/JSE All Share Index (ALSI) fell 0.3% over the second quarter of 2017 while the FTSE/JSE SWIX All Share was flat on a total return basis. The local equity market continued to be driven by a very narrow subset of stocks - Naspers, British American Tobacco, Richemont, Mondi, Bid Corporation - as the flight to ''safety'' drove strong demand for the large cap industrial multinationals. Naspers, in particular, has been the key driver of the equity market’s 3.3% total return over the first half of 2017, generating 26.3% total return and contributing 4.1% to the equity market’s return. If Naspers were excluded for the index, the equity market would have fallen 1,04% over the first half of 2017. If we excluded the top 5 contributors - Naspers, British American Tobacco, Richemont, Mondi, Bid Corporation - which in aggregate represent 30% of the index, then the equity market would have fallen 3.3% over the first half of 2017. The equity market’s breadth is decidedly negative with domestic interest rate sensitive and resource stocks bearing the brunt of the sell-off. MSCI World and Emerging Market indices (USD) returned 4.2% and 6.4% respectively, while in the U.S. the S&P 500 gained 3.1%. In Europe, the German DAX 30 and the French CAC 40 gained 6.8% and 9.2% respectively in US Dollars. The FTSE 100 gained 4.7%. In Asia, the Hang Seng, Japanese Nikkei and MSCI China returned 8.0%, 5.2% and 10.7% respectively in US Dollars.

PERFORMANCE REVIEW
The Cadiz Equity Fund fell 1.87% for the second quarter compared to flat performance for FTSE/ JSE SWIX Index and a negative 0.3% for the FTSE/JSE All Share Index. Over the first half of 2017, the fund returned 6.7% compared to 3.3% for both the FTSE/JSE SWIX and All Share Index. The fund generated solid returns from SoftBank, JD.Com, Naspers, Investec, Richemont and Howden Africa. These gains were somewhat offset by negative results in some of our other holdings, including Grindrod, Truworths, Sasol, MTN and Metair. The rand strengthened 2.6% against the US Dollar over the quarter negatively impacting our foreign holdings. Our underweight position in Naspers was the main detractor from relative performance.

FUND POSITIONING
The fund positioning has remained largely unchanged over the past quarter. We reduced by exposure to Investec and used the funding to increase our position in British American Tobacco. The fund remains conservatively positioned in undervalued assets that have underperformed the market over the past few years - Sasol, MTN, Grindrod, SoftBank, Truworths, Woolworths, Inpex and Impala Platinum to name a few. We believe many of these undervalued assets will generate good returns for investors over the next few years as value is unlocked through a recovery in their earnings cycle and/or management intervention.

The Cadiz Mastermind Fund will change it's name to Cadiz Equity Fund, effective from 03 July 2017