The fund returned -0.9% for the month, with the strongest performance coming from the Industrial holdings which returned 0.1%, while the Resource holdings suffered with the strengthening of the rand and returned only -3.6%. Resource holdings make up 16% of the Fund's holdings. The Financial holdings also struggled, returning -2.2% for the month.

The strong rand eventually caught up with the FTSE/JSE Resource stocks, which declined by -5.0% for the month. Within the Fund's holdings the big exception to this general decline was Impala, with a return of 5.0%, which announced the selling of its LonPlats stake to Lonmin and future BEE investors. This opens the way for a potential special dividend and goes a long way to cleaning up the corporate structure in Impala.

Within Industrials our large weighting in Food continued to add to the Fund's performance with Astral returning 8.9%, AVI 5.6% and Rainbow 8.8%. Amongst other domestic Industrials good returns were achieved by Pepkor with 10.8%, MTN 9.6%, Telkom 8.7% and Shoprite 13.3%. Despite people's concern about the strong rand hampering South Africa's economic growth, we still feel this sector is the most immune to the strong rand due to the offset in falling interest rates.

In the Financials, the Fund was badly affected by the resignation of Richard Loubser at Nedcor, causing the share to decline by -14.5%. This dragged down the rest of the Bank holdings, which returned -4.0%. Our largest weighting in Banks is Standard Bank, which returned -1.5%. The best performance in the Financial holdings came from Sanlam which returned 5.2%, which is our biggest holding in the Life Assurance sector.

The Optimiser fund had a good month in June returning 1.8% versus the -2.2% of the FTSE/JSE index. The Financial and Industrial holdings returned 3.8% and 3.7%, while Resources returned -6.9% for the month.

Within Resources, the rand strengthening by 7.3% over the month has created a lot of uncertainty about the future earnings of most of the companies. This is reflected in the share prices of most Resource companies. The only sector which seems to have benefited over the month has been the Gold sector.

Within Industrials, the best performance came from the domestic Industrials. The Retailers returned 7.3%, Rebserve 8.1% and Supergroup 9.7%. We expect further interest rate cuts and the resilience of the domestic economy, which has been supported by government spending and reinvestment in South Africa by the domestic mining companies, to be supportive of domestic industrial earnings. Another sector that has done well has been Telcoms, which returned 18.6% on the back of much better that expected results. In particular, at MTN the Nigerian operation has more than offset the lack of growth in South Africa. In Financials, there was a slight outperformance of the index, given good returns by Capital Alliance with 10.0%, First Rand 6.0% and Sanlam 6.8%. To meet the Fund's mandate, presently we prefer Banks to the Insurance sector as the valuations are stronger in the Banking sector and there is much better visibility of earnings. The current valuations of banks are such that we do not require earnings growth to justify our holdings in them.

The Fund returned -7.5% for the month, marginally outperforming the FTSE/JSE index return of -7.9%. The Fund's holdings in the Industrial sector outperformed the relevant index by 2%, while the Resource and Financial holdings underperformed over the month. The Fund is overweight Financials and Industrials and underweight Resources.

The Fund has a 21% weighting in Resources the bulk of which is made up of Anglo American, the best performing stock within the Resource sector, and this position has recently been increased. The next best has been holdings in Billiton, which returned -5.5% for the month. These two stocks are well diversified and their earnings have defensive characteristics in relation to the strengthening rand as well as to the poor global backdrop. In addition, they have the least exposure to the newly proposed Royalty Bill. This Bill has serious implications for low margin companies but fortunately the Fund has positioned itself in high margin Resource counters. To illustrate this - if a proposed royalty of 4% is implemented in the Platinum sector, then Company A, with a margin of 40% will have its earnings before tax fall by 10%. However, Company B, with a margin of 10%, will have its earnings decline by 40%. We still think there is some risk to further earnings downgrades in the single commodity companies should the rand stay at current levels.

Within Industrials our strong preference for domestic retailers has been beneficial to the Fund, outperforming the index by 8.3%. Other performances from the domestic Industrials were mixed, with Bidvest (1.3%), Primemedia (5.8%) and Spur (11.7%) delivering good returns, while this was offset by a fall in stocks usually considered defensive in this environment, such as Remgro which fell 13.1%, Shoprite -10.7% and Astral -13.2%. The Fund was helped by its large underweight position in Richemont (it is approximately 2.8% underweight relative to the unit trust general equity universe), which declined by 14.2% for the month.

The biggest detraction from performance in the Financial sector has been the Fund's holding in Sanlam which fell 14.4%. Life Assurance companies' earnings and book values are ultimately connected to the fortunes of the local equity and bond markets. We do, however, feel that the market has taken an overly negative view on the Insurance sector. While we agree that growth will be hard to come by in terms of new business, the balance sheets of these companies remain strong and valuations very attractive. As a result we have sold out of our holdings in Coronation and PSG and bought Old Mutual.

The Fund returned -2.7% for the month, outperforming the FTSE/JSE return of -5.2%. The Fund's holdings in all three sectors outperformed their respective index returns, with particularly strong outperformance from the Resource holdings. The Fund is underweight Resources and overweight Financials.

Within Resources the stronger Rand and the weak global markets have put a serious damper on the earnings outlook for many South African domiciled Resource companies. Resource companies that have operations outside of SA have a much more defensive income statement which has been reflected in the performance of the various Resource counters. This is highlighted by the outperfmance of the Fund's holdings in Sappi (+4.9%) versus Sasol (-13.6%). This was also mirrored in the Gold sector, where holdings in AngloGold, with a high overseas exposure, returned 3.9% versus Goldfields, which the Fund doesn't own, that returned -8.0%. The out-of-court asbestos settlement with Gencor has recently been confirmed and this, combined with a stronger Platinum price, has made Impala the strongest performer in the Resource component of the Fund with a return of 8.0%.

Once again the international Industrials fared the worst, with SAB and Richemont each returning approximately -9.0%. Fortunately the Fund has less that one percent exposure to these two counters combined. We have seen some retracting in Domestic Industrials, although recent trading statements have tended to be supportive of earnings. This, combined with the dividend yields that we are getting from counters such as Truworths and Tiger Brands, have encouraged us to remain overweight in this sector. We have made recent additions to the Fund in this area, namely Mediclinic and Astrapak, both on a dividend yield of 4.0%.

Financials was a strong performing sector and this was largely due to our overweight position in Banks. The stronger rand and the lower interest rates that this will bring continue to underpin the valuations and prospects for this sector. The biggest detraction from performance has been Investec with a return of -12.0% as it's overseas operations continue to struggle. We have since sold out of our position.