The Fund returned 2.92% for the month.

The Namibian Stock Exchange (NSX) Overall Index returned 14.6% monthon-month. Over the past year the NSX Overall Index is down 47%.

The recent domestic market rally seems to be based on market sentiment as there has been little change in the underlying fundamentals. The rally has also been concentrated in areas which we think will face the biggest headwinds for the next 3 years, namely a) very cyclical stocks, such as platinum, b) industries that are overbuilt in terms of capacity, such as paper, and c) stocks that are not paying dividends because of leverage or thin margins, such as global financials. Instead the Fund continues to take defensive positions in domestic equity, choosing to wait for a change in the economic environment rather than following the current market whims.

The Fund's offshore component faired less well, ending 1 % down, as the Namibian dollar strength against the pound Sterling and US$ took its toll on performance. In global bond markets, where we are targeting to be fully invested in corporate bonds, we have seen the benefits of this position as corporate yields compressed over the month. The Fund's international equities ended positively as world markets rallied, though underperforming the benchmark due to deep value positions in Europe.

The Fund returned 0.4% for the month of December

The Fund's SA equity holdings returned 7.8% for the month. This was driven by good performances by consumer stocks such as Foschini and Tiger Brands.

The performance of the local equity and bond holdings was unfortunately more than offset by the negative returns on the foreign holdings. This was as a result of the strength of the Namibian dollar against both the US dollar (5.5%) and sterling (12.4%)

International equity markets rallied in most countries from heavy falls earlier in the final quarter, with the exception of the US and the UK. Whilst earnings are likely to be affected by the global economic slowdown, the current pricing of international equities reveals significant value opportunities in many developed markets. International bonds also rallied on the back of falling inflation and interest rates.

The Bank of Namibia's MPC, which met on 18 December 2008, lowered the repurchase rate by 0.5% to 10.0%. The Bank indicated that their latest inflation forecast shows further price slowdowns and that domestic demand has been well contained and is in need of a measure of stimulation. The Bank, however, remains vigilant about the upside risks to inflation from exogenous factors.

The National Consumer Price Index (NCPI) declined to 11.7% in line with global trends for November. The decline is attributed to lower food and transport costs as a result of falling oil prices. Slowing global demand is also expected to ease the inflation outlook.