Equity markets, as expected, continued to rise in June with the MSCI World index rising 0.9% in dollar terms and 0.6% for the quarter. In local currencies, the S&P 500 returned 0.1% in the month, the MSCI Europe (excluding the UK) returned 3.7%, the UK's All Share index returned 3.4% and Japan's Topix index returned 3.0%. Emerging markets returned nearly 4% and smaller companies out-performed, particularly in the US where the Russell 2000 returned 3.9%. The US Dollar rose 2.0% against the Euro, 1.7% against Sterling and by 2.7% against the Yen, but fell 1.1% against the Rand.

Growth in the 1 st quarter GDP for the US was revised up to 3.8% annualised, the eighth consecutive quarter above 3%. As a result, the Fed raised rates again to 3.25%, and further increases are expected. In the UK, a pronounced slowdown is apparent while growth in Europe and Japan has also been sluggish. Interest rates in both were unchanged The modest deceleration in global economic growth which is universally expected is increasingly hard to identify, particularly as there are some signs of an improving outlook in Europe and Japan. Growth in emerging economies remains strong.

Commodity prices continued to rise, with the oil price touching $60 a barrel, before retreating a little. The US economy is clearly growing above capacity, but core inflation remains subdued. The global excess of savings is keeping bond yields slow, while corporate profitability continues to rise steadily, more from the efforts of companies to raise margins and returns on capital than from economic conditions.

The conversion of the fund into a fund of funds proceeded in the month, with some frictional costs from the investment process. Core positions have been established in pooled vehicles managed by Merrill Lynch; Morgan Stanley; Threadneedle; Taube, Hodson & Stonex; and Investec. These are global funds and each comprises some 15% of the portfolio.

They are being supplemented by smaller satellite positions to gain exposure to preferred sectors, including Japan and Energy. While these positions are being built up, the remainder of the portfolio is held in generalist and index funds, which are switched when appropriate. This process is continuing in July, with additional satellite positions being added.

The Fund returned 0.5% in the month in US Dollar terms, and -0.2% in the quarter. These were equivalent to -0.6% and 7.0% in Rands. In each case, performance was a little behind the index.

Rising earnings and firm bond markets mean that equities continue to look undervalued, and so we continue to be firmly bullish. Markets are likely to continue upwards over the Summer, although the strong US Dollar may continue to hold the US market back. The portfolio remains fully invested and, although minor setbacks are possible, we are confident of further market gains in the remainder of the year.

Equity markets were weak in April, against the usual seasonal pattern, with the MSCI World index falling 2.1% in US Dollar terms. In local currencies, the S&P 500 fell 1.9%, Europe excluding the UK fell 2.6%, the UK fell 2.3% and Japan fell 4.4%. The US Dollar rose 0.7% against the Euro, but fell 1.1% against Sterling and by 1.9% against the Yen. Following the shareholder vote in favour of converting the Investec Global Multi Manager Fund from a "manager of managers" vehicle to a fund of funds, we are in the process of restructuring the portfolio. The Fund's exposure from segregated portfolios is being converted into holdings in pooled vehicles. This is an exciting development in that it provides us as managers with much greater flexibility to diversify the portfolio, to pursue opportunities for enhancing returns more aggressively, and to reduce exposure when the market outlook deteriorates.

The core portfolio will continue to comprise a combination of specialist global equity managers. We believe strongly that the most reliable source of superior returns over the long haul is 'bottom up' stock selection and that a global approach to stock selection amongst larger capitalisation issues is much more compelling now that globalisation has caused international stock market returns to become much more highly correlated. This contrasts with the traditional regionally disaggregated approach still favoured by the majority of other funds of funds. In the context of the core portfolio regional funds may be held in order to adjust that portfolio's overall geographical allocations to correct for structural regional biases that may result from the methodologies of individual global managers.

Between 15 and 30% of the Fund will be allocated to a combination of high conviction investment themes which could be regional, such as Japan or Emerging markets; sectoral, such as global energy; market capitalisation based, such as specialist smaller companies funds; or a function of manager style, such as deep value or growth.

In view of the impending restructuring, there were no changes in the balance of allocation between the three managers in April. The fund fell by 1.8% in the month. Merrill Lynch and Marvin & Palmer both performed poorly, but Morgan Stanley had an exceptionally good month, rising 1.5% in value.

The combination of weak markets, rising earnings and firm bond markets has improved the attractiveness of equities further, and increased our equity conviction. We do not think that markets will necessarily wait until Autumn before rallying, despite a prevailing mood of pessimism and nervousness among investors. We expect to maintain a full equity exposure in the restructured fund in anticipation of a renewal of the up-trend.

Equity markets retreated again in March with the MSCI World index falling 1.9% in US Dollar terms. The US Dollar rallied again, by 1.9% against Sterling, by 2.1% against the Euro and by 2.5% against the Yen, accounting for the weak performance. The S&P 500 lost 1.8%, Europe excluding the UK lost 2.4%, the UK 2.7% and Japan 1.5%. There has been no change in the balance of allocation between the three managers in the quarter. The Investec Global Multi Manager Fund fell a disappointing 2.7% in the month.

Rising earnings and the dull start to the year are improving the attractiveness of equities, and we remain positive on the outlook. The next few months are traditionally a dull time for markets, but we are not convinced that this year will follow the usual pattern. Equities are good value in absolute terms, and very good value relative to bonds, while earnings growth continues to be strong. We have maintained our equity exposure a little, but are ready to raise it again at the appropriate time.

Effective from 1 April 2005, the Investec Global Multi-Manager Fund has changed its name to Investec Global Equity Fund of Funds.

Global equities finished 2004 on a strong note rising by 3.8% on the month and 12.1% on the quarter. This boosted what had hitherto promised to be a lacklustre advance for 2004 as a whole to a respectable 15.2%, albeit in terms of a weaker US Dollar. Over the quarter the S&P 500 rose 9.2%, Europe excluding the UK rose 17.9%, while the UK rose 13.2% and Japan 12.3%. The leading sectors were Telecommunications and Utilities with advances of 16.1% and 14.9% respectively, healthcare remained weak with an advance of just 6.4% and profit taking caused the Energy sector to lag with a gain for the quarter of 7%.

There has been no change in the balance of allocation between the three managers in the quarter given that there is no strong case for favouring any particular style. Marvin & Palmer had another good month in December, as markets continue to favour their growth style of investment. Morgan Stanley also performed well despite the defensive nature of their investment style. The performance of Merrill Lynch was, again, broadly in line with the Index.

We remain positive on the equity outlook, although rising markets are reducing the scope for further gains. Equities remain good value relative to bonds, but in absolute terms, their attraction depends on continued earnings growth in the current year. The valuation of the US market is full but not excessive, in the absence of accelerated earnings growth, but there is potential for earnings to continue to surprise positively in Europe and Japan.

We are reasonably optimistic about global growth rates which, notwithstanding the current deceleration, appear to be sustainable, most markets are in steady up-trends, and investors' caution with regard to equities may be diminishing.