Any effort to time the equity markets is best left for the brave but foolish market speculators and the so called "day traders". They tend to only remember that rare once-off occasion when they got it right (albeit years ago). At Indequity we follow a long term outlook when making investment decisions using fundamental analyses, considering a wide range of factors (both locally and internationally), supported by our carefully developed technical analysis techniques. We do not make changes to the portfolio in a "knee-jerk" reaction fashion.

As a result we missed the opportunity to close out on all equity exposures that the fund had towards the end of June. Although we did start to move some funds during June (From Allan Gray Optimal into ABSA Money Market) and then again in August (From Sanlam Inflation Linked to Allan Gray Optimal), we now know that it was too little to slow.

The current deepening of the global financial crises and the threat of a global recession coupled with the speed with which it all happened (and is still busy happening) prompted us to move aggressively and much faster during September. We have now radically altered the asset allocation of the portfolio and went from a 74% equity exposure to a 76% cash exposure. We have slowed the decline in value dramatically and will maintain these cash holdings until we are confident that the equity markets have stabilised. This might take anything from two months to two years.

In conclusion we can reassure our Unit Trust investors that we continuously monitor the funds portfolio and will move the funds between asset classes as we deem necessary.

The fund has performed in line with the negative performance of the JSE equity market during the month of June.

As a typical retirement / pension fund unit trust, the fund does not react to short term market movements by moving in and out of asset classes. In line with the Fund Manager's long-term outlook for equities the fund will continue to hold on to its basic equity exposure. The situation is however carefully monitored.

During the month of June the fund has moved just over 15% of its assets out of the Allan Gray optimal fund into an ABSA money market account. The move will have a small effect on lowering the equity exposure of the fund.

January 2008 gave us a taste of the year to come with the equity markets jumping all over the place. This is the kind of market that makes speculators' hair turn grey. At Indequity we follow sound investment principals with the long term investment returns as our only goal. We do not try and follow the short term market fluctuations, experience having shown that no investor can correctly time the markets' turning points.

The fund's manager, Chris Meyer continues to believe that the South African economy will continue to grow despite the threat from the slowdown in the USA economy. However as in the past our equity markets will continue to follow the trends set by the USA equity markets. As a long term investor this will provide the opportunity to buy into excellent South African companies at low share prices (Low P/E ratios). This will provide investors with superior returns in the long run, especially if compared to an investment in any other asset class, including property and, definitely cash and bonds.

Although the fund has made a small change to its asset allocation by moving more funds out of equities, Indequity will in general continue to hold its equity positions that have to date assisted in making the fund a top performer in its class.

As predicted since our fact sheet on May the equity markets are struggling to find direction. This we believe will continue to be the case for at least another 3 to 4 months. Our reasoning is that we will again see a rising equity market as soon as companies start reporting their earnings. These earnings we believe will continue to reflect the positive state of the South African economy. The Fund's asset manager, Mr. Chris Meyer, takes a longer-term view and does not try to "time" the market in the short term. As such the fund has continued to hold its percentage equity exposure on a high level. This investment strategy is in line with the expected strong performance of the South African economy over the next 3 to 5 years, followed closely by strong company results and share prices. Investors wishing to invest any fixed capital sum should do so in equal instalments over the next 3 to 4 months. This will avoid missing out on any upward move but at the same time will allow for a possible lower average purchase price of units in the Fund.

December 2007 shall be remembered as the month when the equity markets started to take a turn for the worse. The question now is if this is the end of the good times (bull market) or is this just a correction from an overheated economy/equity market. The biggest concern is the possibility of a recession in the USA. This will have a negative effect on the USA equity markets and it will keep putting pressure on our local equity markets.

The fund's manager, Chris Meyer continues to believe that the South African economy will continue to grow despite this threat from the slowdown in the USA. Our equity markets might however continue to follow the negative USA equity markets. As a long-term investor this will provide the opportunity to buy into excellent South African companies at low share prices (Low P/E ratios). This will provide investors with superior returns in the long run, especially if compared to an investment in any other asset class, including property and, definitely cash and bonds.

The fund will therefore continue to hold its equity positions that have to date assisted in making the fund a top performer in its class.