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.

The Sanlam Global fund's performance has been pummelled by the strong rand and it has delivered positive performance over only six months. Fund manager Hendrik Pfaff says economic data is becoming incrementally more positive, but the fund is still languishing in the bottom quartile of its sector over all time periods. The fund has an 8,9% exposure to Japan, which performed well during the past quarter.

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.

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 strength in the rand resulted in negative rand returns.

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% and 50% in June alone.

The fund's underweight positions in the energy and consumer staples sectors, as well as overweight position in financials, did add modestly to performance in June. Stock-level positive attribution was strongest within technology and consumer staples; however, these gains were offset by negative attribution from security selection within financials and telecommunications

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 delivered a good performance over the month and out performed its benchmark. The small Rand cash holding added to performance due to the appreciation of this currency. The overweight position in Financial stocks and underweight in Energy stocks supported out performance.

Outlook:
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 outperformed its benchmark index, the MSCI World, by more than 3% 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.

For the year, positive attribution was strongest from stock selection within technology in Japan, as our overweight position in Cannon rose 15% in the fourth quarter, as sales rebounded and the company made greater than expected cost cuts. The portfolio continues to be more attractively valued than the benchmark while at the same time its expected earnings growth exceeds that of the index. The Fund's tracking error runs at just over 4% with a forward PE of around 14 times.

The portfolio remains underweight North America, overweight Europe, and modestly overweight Pacific. Cash holdings in the portfolio are 2.5%. Finance remains the largest sector overweight in the portfolio. The portfolio's largest underweights continue to be in consumer staples and energy. All the other active sector exposures are less than two percent. Largest stock holdings in the Fund include Vodafone, Pfizer, Citigroup, Canon, AIG, BNP Paribas and Royal Bank of Scotland.

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. The fund continues to offer the investor a diversified global portfolio of quality well researched companies. The Fund is actively managed and performance is generated through views taken on 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:
The Fund sold Tenet Healthcare and reduced exposure to United Technologies, a stock that has been in our portfolios for many years. We redeployed the raised cash into Fannie Mae, Affiliated Computer, Cardinal Health, and Wellpoint. All four suffered sharp declines in share prices on what we believe are non-fundamental and non-tangible issues.

Performance & Reason:
The Fund showed very strong performance vs competitor funds over November , finishing in the top quartile. The strong Rand Dollar exchange rate impacted negatively on the the Funds Rand performance but in Dollar terms, it performed well.

The largest active exposure in the portfolio is to financials and the largest underweights are in energy and consumer staples. The portfolio remains significantly underweight North America as both the value and growth components of the portfolio are underweight the region. The overall portfolio is overweight Europe as both the value and growth segments now have an overweight position.

Outlook:
We have yet to see a broadening in the economic data to suggest that 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.