After pausing in September, global equity markets rebounded in October on improved investor sentiment and favorable economic data. For the month, the MSCI World index rose more than 5% in dollar terms.

Europe and global technology stocks performed very well while Japan under performed other markets. The rand appreciated mildly against the US dollar, resulting in lower rand returns.

Continuing jobless claims fell for the fourth week in six, inventories continued to contract, and the mix of stronger final sales combined with leaner inventories raised investor's hopes for a robust GDP number. Furthermore, implied profits at $1.3 trillion were up 33% from prior year levels and capital spending continued to increase, especially within the technology sector.

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 for SA investors).

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.

Global markets rose again in June as the MSCI World Index rose by 1.72% for the month. Global liquidity remained robust as both the US Federal Reserve Bank and the European Central Bank lowered interest rates in June.

The Pacific Rim rose by 6% in June as money flowed into the region following months of relative underperformance. The technology and energy sectors each rose by 10%, followed by the materials and financial sectors, each rising by 9% for the month. Japan has risen by 19% from its 2003 nadir in late April through the end of June, and many of the Japanese financials, battered earlier in the year, rose by between 20%-50% in June alone.

The strength is the rand resulted in negative rand returns over the month.

World Equity Markets remained very volatile during March but recovered from their lows after the successes of coalition forces in Iraq. Markets reacted positively on the fact that the war would end soon. The strong recovery from mid month resulted in equity markets ending flat to marginally up over the month. The Rand continued to strengthen and this resulted in negative Rand returns for investors with international exposure in whatever form.

The Fund out performed its benchmark substantially over the month, mainly as a result of a large cash transaction during the month. It delivered positive returns against a declining world equity index.

After the steep decline in international markets and international hard currencies, the opportunity exists for SA investors to get exposure to these investment areas at reasonable levels. This action may result in favourable Rand returns over the longer term. Investments in global markets and equity markets must be made with a long term investment horizon.

The Fund marginally out performed its benchmark index, the MSCI World, by more around 0.5% 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.

The performance of the Fund was negatively affected by the 59% holding in North America as American markets declined strongly throughout 2002 and the US Dollar also depreciated against most hard currencies.

Large positions in poor performing sectors such as Consumer Cyclicals and Technology impacted performance negatively while positions in Energy and Consumer Staples supported performance. Some of the largest positions in the Fund include Vodafone, Nestle, Unilever, Sony, Canon, NTT, Microsoft, General Electric, Wal Mart and Pfizer.

Overall, we believe that global stocks are ripe for a cyclical upturn after three consecutive years of steady losses. This sequence of declines has eliminated most-if not all-the froth created by the stock bubble experienced at the end of the last decade and the early part of 2000, and it has brought overall market valuations to much more reasonable levels. We also remain confident that by investing in companies that are industry leaders, albeit at reasonable valuations, the portfolio is positioned to out performance regardless of the economic environment.

The geopolitical tensions and uncertain global economic climate is expected to remain with us during the first half of 2003. Under such an uncertain environment, the risk-reward ratio does not warrant big risks and portfolio is structured accordingly.

After the steep decline in international markets and international hard currencies, the opportunity exists for SA investors to get exposure to these investment areas at reasonable levels. This action may result in favourable Rand returns over the longer term.

This Fund continues to offer the investor a diversified global equity portfolio. The Fund is not actively managed and performance is generated through positions in Regions, countries, sectors and companies. It is not the intention to run large cash positions and we aim to remain relatively fully invested in international equity markets.

Buys & Sells :
No major buy or sell events took place over the month.

Performance & Reason:
The Fund delivered good Dollar performance over the month, but Rand returns was negatively effected due to the strong appreciation in the Rand. American and European continued to rise. Finance stocks and certain telecom counters like Vodafone performed well.

Outlook:
We have yet to see a broadening in the economic data to suggest a sustained upturn in activity is at hand. Consumers remain reserved in their spending attitudes while corporations continue to focus on repairing balance sheets. Relative to 2002, 2003 is likely to be a better year economically because of a further stimulus from lower interest rates, and the potential for a resolution of issues in the Middle East. The wildcard is fiscal policy changes in the United States.