Two major factors contributed to the performance of this fund over the Quarter. Global Equity markets appreciated more than 5% in Dollar terms and the Rand strengthened by more than 6% against the US Dollar (resulting in lower Rand returns).

Economic data has become incrementally more positive, driven by low interest rates and signs of a recovery in business and consumer confidence. The Japanese market was very strong over the quarter and Technology stocks continued to perform well on a global basis.

The fund out performed its benchmark index, the MSCI World, by more 2.5% in 2002. Global equity markets fell by 19% in US Dollar terms and the Rand strengthened by around 28% over the period, resulting in a large negative return in Rand terms.

Global equity markets fell 4.86% in December, their worst since the Great Depression, ending the year down 19.89% in US Dollar terms. All three major US indices recorded their first three-year losing streaks since 1939-1941, wiping out approximately $2.7 trillion in 2002 (S&P 500 down 23%; Dow down 17%; Nasdaq down 32%). Seventeen western European benchmark indexes declined this year, led by the 44 percent slide of Germany's DAX. The last time the German benchmark fell as much was in 1948. The Pacific Rim performed relative well and Japan was helped by a stronger Yen exchange rate.

Throughout 2002, global market declines was driven by various macro factors such as weak economic data, overvalued prices, tension in the Middle East, corporate accounting/governance issues, a lack of business confidence and spending, and fundamental deterioration at the company level.

At the global sector level, IT and telecomm ended the year down 38% and 32% respectively. Both sectors however rose in the fourth quarter despite falling in December. Utilities rose 4% in December but still fell 17% in 2002. The consumer staples sector rose 3% in December and despite posting a flat return in 2002, was the top relative performing sector for the year.

A relatively weak dollar boosted international returns across virtually all regions. For 2002, euro, yen, sterling and SA Rand rose 18%, 11%, 10% and 28% versus the dollar. The slow economic recovery, deficit concerns, the stock market slump and bond yields at four-decade lows, crimped demand for US dollars. The deficit in the U.S. current account, the broadest measure of trade, held near a record high of $127 billion, equal to 4.8 percent of the country's gross domestic product. The escalating risk of war is resulting in less capital flows into the US.

2002 was not a good year for investors with US$ exposure and investments in developed equity markets.