Most of the shares in your portfolio have paused for breath after their strong rises of the past few months. In most cases, we expect further outperformance, and have kept the shares.

We have been taken by surprise by the Rand strengthening to below R7/US$. Over the past month or two we had started to re-orient the portfolio away from "Rand strength" to "Rand-neutral". This process is now on hold, and we may even reverse it partially.

There is political pressure on the Government to allow the Rand to depreciate in an orderly manner. We believe this is their intention, but they will err on the side of caution, to prevent unwanted volatility. Therefore, over the next 24 months the Rand will probably be stronger than our earlier expectations of ranging between R7 and R9.

We remain impressed with the performance of the South African economy. The commencement of interest rate cuts heralds better times. We thus remain invested in shares that benefit from a strong local economy.

The overall stockmarket is likely to remain more volatile than the portfolio you have entrusted to us.

March continued to be a volatile month for equity markets and most sectors delivered poor returns.

The funds relative performance improved significantly since December 2002. We strive to reduce the risk of loss of capital to the investor and will continue to do so in the future.

We believe the bear market is not over yet. We are thus focusing more on preserving your capital than chasing returns.

Willie Jonker from Interneuron has been appointed as fund manager as of 1 December 2002.