Unfortunately the Women's Initiative fund delivered negative performance of 3.3% for the third quarter of 2002, although this was significantly better than the -10.1% returned by the All Share Index over the same period. The fund is currently ranked 14 out of 29 funds over the quarter. [Source: Micropal]

Our asset allocation call over the last 3 months has been disappointing, with bonds out-performing equities. The All Bond Index returned 3.7% compares to -10.1% for the All Share Index in the third quarter of 2002. However, bond valuations continue to look somewhat stretched, with the continued strength in yields not supported by an underlying improvement in fundamentals, particularly inflation developments (the outlook for which has deteriorated markedly).

Once again the quarter was characterised by a strong performance from the Mid-Cap, Small-Cap, Gold Mining and Retail sectors. During the quarter the fund sold its entire holdings in Glenrand, AECI and Tradehold. Glenrand has had an excellent run relative to the JSE, out-performing by more than 30%. Against its peers it has out-performed by a staggering 50%. Year-to-date, AECI has out-performed the All Share by over 50% and over the total holding period has out-performed by a much greater margin. The counter now appears relatively expensive on all our valuation measures. Although in Tradeholds case the discount to NAV is still quite wide, we believe that the proposed corporate actions have increased the risk profile of the company and deemed it prudent to sell the entire holding. All other transactions were due to fund flows and/or rebalancing.

Most of the strong performers during the month were small-and mid-caps. Group 5 returned over 50% after an excellent set of results. Spur Corporation, Pepkor and Foschini out-performed the Industrial index by 38%, 37% and 30% respectively. Sasol and Gencor also had a good quarter.

Some disappointments include New Africa Capital, Old Mutual, SABMiller and Angloplats.

The fund delivered negative performance in June, although this was ahead of the All Share return of 4.71% for the month. The fund is currently ranked 11 out of 21 funds over one year, with a return of 7.27%. [Source: MoneyMate]

Our asset allocation call over the last 12 months has been the correct one insofar as equities have returned 18.9% against a less impressive 6.5% from bonds. However, the dichotomy between Resources and Financials widened for the 12 months to June, with a 55.8% return from Resources versus a negative 13.1% from Financials.

The quarter was characterised by a strong performance from the Mid-Cap and Financial sectors, a weak performance from the Top 40 and Resource sectors, whilst the Industrial sector performance was flat.

The fund added 4 new counters during the quarter. Richemont was added for portfolio construction reasons, Brait and M-Cubed are deep value plays and Venfin (an investment trust) due to the extraordinary large discount to its underlying assets.

The best performers during the quarter were the Banking stocks and Retail stocks. ABSA returned 31%, BOE 38%, Firstrand 16% and African Bank 13%. Within retail, Foschini returned over 20% and Profurn over 30%. The Profurn performance appears to be largely on the back of the announced corporate action involving Firstrand and JD Group. Kersaf was also up strongly due to the changes to the board of directors as requested by a large grouping of shareholders. Some disappointments included Spur, Primedia, Tradehold and Group 5.

The fund enjoyed a reasonable March, ranking 16 out of 29 funds in the Managed Flexible Funds category. Over the past 12 months, the fund is positioned 7th with performance of 16.44%. [Source: MoneyMate]

The asset allocation call over the last 12 months has been very successful in at least one regard, namely insofar as equities have returned 38% against a desultory 7% from bonds. But, this has been dwarfed by the truly remarkable intra-market volatility within South African equities, best exemplified by a 95% return from recently vilified Resources versus a negative 10% from recently idolised Financials.

Once again the quarter was characterised by a strong performance from Resources. Resources returned over 15%, whilst Industrials and Financials returned -10% and 0% respectively. Our underweight Resources/overweight Financials position was one of the main contributing factors to the underperformance against the All Share Index during the quarter.

The fund sold half of its holding in SAB. At the inception of the fund, SAB was one of the largest active bets within the fund. SAB has had a formidable performance over the last 12 months returning over 50% versus the Industrial Index return of close to 10%. The fund manager believes that the SAB valuation is now reasonable and is no longer a deep value play. There were two major additions to the portfolio, that of Anglogold and ABSA. During the quarter ABSA was trading very close to its forward book value per share, and the fund manager believed that the corporate action regarding Unifer did not warrant such a large discount to ABSA's peer group never mind ABSA's own valuation history. ABSA currently makes up 2.5% of the portfolio.

Some of the good performances during the quarter include Sasol, KWV, AVI and Glenrand MIB. Disappointments include Gencor, African Bank, BOE, Sanlam and New Africa Capital. The fund manager believes that quite a few of the aforementioned companies weak performance was due to contagion from the problems experienced by Unifer and Saambou, and continue to believe that the said companies are being materially mis-priced by the market.

The African Harvest Women's Initiative Fund is currently positioned to benefit from strength in the equity and bond markets, whereas other funds within its sector are mostly structured to weather market weakness.