The funds' portfolio manager has noticed a number of positive indicators that the global economy is in the process of recovering, however he continuous to be cautious. Capital protection is regarded as more important than squeezing out that extra 1% return. There is however a saying in the market "Never bet against the market" and as such a number of changes was made to the portfolio. These adjustments were made in both asset allocation of the portfolio (moving more of the cash into equities) as well as moving funds between managers. Amongst other the manager has switched some of the portfolio's funds into the Allan Gray Bond fund, ABSA Select Equity fund, Sanlam SIM Top Choice Equity fund and the Coronation Top 20 fund. These funds have performed strongly during the past 12 & 36 month periods. As a fund of funds the Indequity Balanced Value fund provides investors with a diversified portfolio amongst different asset classes as well as into top performing fund managers. The funds manager is constantly evaluating the wide range of unit trust options in the market and adjusts the funds portfolio for the benefit of its investors. The Global economy continuous to be in difficult waters and a further recovery from the current market levels might be slow.

The fund aggressively sold out of the Technical fund with a view to rebalance the portfolio amongst asset classes and portfolio managers.

With the equity markets in decline and the high level of volatility in the equity market, the manager has for the moment kept the proceeds in cash. The manager is monitoring the equity markets on a daily basis.

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.

At the Balanced Value FoF we made the decision during September/October 2008 to be more cautious and rather focus on capital preservation. This strategy has worked well so far but we have moved back into Equities during March as we
i) believe the market was oversold when the JSE All Share Index reached 19000,
ii) the G20's efforts to stimulate the world economy will have some positive results,
iii) the proposed changes in the accounting and auditing profession's handling of the valuation of companies/banks' assets on their reporting dates will have a positive effect on the financial statements of these companies/banks in the near future.

The fund's general investment rules for the short term will however be maintained. This rule is quite simple in that the fund manager will only re-invest into equities on days/weeks when the market is lower, i.e. we will buy when prices are low. A general rule would be to buy when the JSE All Share Index is close to 19000. With volatility as high as it is the fund will also divest from equities when the JSE All Share Index moves above 22500. For this reason we advise clients to have faith and leave the investing of their funds in the fund managers' hands as they are continuously monitoring the situation.

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 equity markets are truly volatile. Had these comments been written on 1 January 2009 the fund's manager would have had to acknowledge that the fund is busy missing out on a strong recovery in the equity markets. However, not two weeks later the markets have again started to drift back. From a fundamental point of view, the fund manager is still not convinced that the world economy is out of the woods, and that the current crises is far from over. Accordingly the fund will continue to have a relative low equity exposure.

In anticipation of further pressure on the economy and a lowering of interest rates by the central banks (South Africa's Reserve Bank included) the fund has moved all the assets held in the Allan Gray Optimum Fund into Sanlam's Bond Fund towards the middle of December (just a few days before the lowering of the Repo Rate by the Reserve Bank). More interest rate cuts are expected and should allow this investment to outperform both Cash/Money market investments and equity investments during 2009.

The fund manager will re-invest into equities on days/weeks when the market is lower, i.e. we will buy when prices are low. A general rule would be to buy when the JSE All Share Index is close to 19000. With volatility as high as it is the fund will also divest from equities when the JSE All Share Index moves above 22500. For this reason we advise clients to have faith and leave the investing of their funds in the fund managers' hands as they are continuously monitoring the situation.

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.