INVESTMENT OBJECTIVE The Fund’s objective is to produce above average long-term returns by investing in the South African equity market. It will simultaneously aim to assume less risk than the risk inherent in the market itself. The Fund adopts a conservative investment philosophy. FUND BENCHMARK (BMK) The Fund will measure itself against the FTSE-JSE All Share Index. It will also use an internal benchmark, the Maestro Equity Benchmark, which consists of an equal weighting of the FTSE-JSE Top40 and Findi30 indices which effectively yields an index that is roughly equally weighted between the resource, financial and industrial sectors. LEGAL STRUCTURE The Fund is a scheme in the nature of a trust known as a collective investment scheme. The portfolio manager is Maestro Investment Consulting, an approved Financial Services Provider in terms of the Financial Services and Intermediary Act, operating under licence number 739, and the Financial Institutions (Protection of Fund) Act. This portfolio operates as a white label fund under the Prescient Unit Trust Scheme, which is governed by the Collective Investment Schemes Control Act. FEE STRUCTURE The maximum initial fee is 2.0%. The annual investment management fee is 1.75%. The annual total expense ratio (TER) for period ended 30 September 2008, in respect of class A, was 2.23%. FUND SIZE R16 977 900 MANAGEMENT COMPANY Prescient Management Company Ltd PO Box 31142, Tokai, 7945 TRUSTEE AND AUDITOR Trustee: Nedbank Limited Auditor: KPMG Inc. PORTFOLIO MANAGER Capstone 96 (Pty) Ltd trading as Maestro Investment Consulting ENQUIRIES Maestro Investment Consulting Box 1289 CAPE TOWN 8000 Fax: 021 674 3209 Email: @maestroinvestment.co.za MARKET OVERVIEW We can finally turn our back on 2008. While no one will miss it, no investor will forget it either. It started off with the lights going out, per kind favour of Eskom, and turned into the most volatile, least profitable year in living memory. It proved to be the undoing of Lehman Brothers, Indy Mac, Washington Mutual and Bernie Madoff, not to talk of the near-death experience for AIG, Freddie Mac and Fannie Mae, Russia and Iceland, to mention but a few. It saw the literal seizure of global credit markets and the effective undoing of the alternative investment industry. The January 2009 edition of Intermezzo will again chronicle the salient features of the month but you will be pleased to hear that December delivered positive returns for the most part. The MSCI World and Emerging market indices rose 3.1% and 7.6% respectively. The Chinese equity market was the only major disappointment – it declined 2.7%. By far the most influential factor during December was the Fed’s decision to move to a Zero Interest Rate Policy (ZIRP). This resulted in the dollar declining sharply; it fell 9.6% against the euro. Sterling remained weak against all currencies. The weak dollar supported the gold price, which gained 6.2%, but was unable to stop the precipitous slide in the oil price, which fell 21.5% in December. The latter has now declined 72.7% from its $147 peak in July. The weak dollar together with a decline in the “risk aversion mindset” of the “global investor” saw the rand increase 8.9% on the month. The All Share index ended up 1.5%. The basic materials index fell 1.5% and financials 1.2%, but industrials ended the year firm, rising 4.7% in December. The disparity between the mid and small cap indices, which rose 8.3% and 1.8% respectively, was rather unusual. INVESTMENT ADVISOR’S COMMENT During December the NAV rose 2.5% versus the 1.1% and 1.5% returns of the Maestro equity benchmark and the All Share Index respectively. The holding in Billiton was reduced marginally at the beginning of the month. The leading decliners in December were Aspen down 10.3%, Anglo 8.6%, Digicore 8.3%, Abil 5.7% and Investec 3.2%. On a more positive note Grindrod rose 18.6%, Steinhoff 17.8%, Jasco 14.7%, Iliad 11.7%, Group Five 10.6% and Implats 8.9%. LARGEST INDIVIDUAL HOLDINGS MTN Group Ltd 4.8% Grindrod Ltd 4.5% Exxaro Resources Ltd 4.5% Mr Price Group Ltd 4.4% Sasol Ltd 4.3% Cashbuild Ltd 4.0% BHP Billiton plc 3.8% City Lodge Hotels Ltd 3.6% Digicore Holdings Ltd 3.4% Kumba Iron Ore Ltd 3.3% Total (% of Fund) MARKET RETURNS 40.6% 2.5% 1.5% 1.1% 0.6% 8.3% 1.4% -1.5% -1.2% 4.7% -35% -25% -15% -5% 5% 15% The Fund All Share Maestro bmk Top 40 Mid cap Small cap Res Finan Indus YEAR MONTH SECTOR ALLOCATION (% OF EQUITY) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% J-05 S-05 D-05 M-06 J-06 S-06 D-06 M-07 J-07 S-07 D-07 M-08 J-08 S-08 D-08 Industrial Financials Resources ASSET ALLOCATION (% OF FUND) 25.1% 9.2% 50.0% 15.7% Resources Financials Industrials Cash HISTORIC PERFORMANCE 10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0 26.0 28.0 30.0 32.0 34.0 J-05 S-05 D-05 M-06 J-06 S-06 D-06 M-07 J-07 S-07 D-07 M-08 J-08 S-08 D-08 The Fund (excl inc) All Share Maestro Equity Bmk Resources Financials Industrials