Global equity markets, measured by the MSCI World Index, ended the 3rd quarter 2004 positively and delivered a return of 1.89% in USD terms.

The South African rand depreciated by about 4% against the dollar. At one stage during the quarter the rand was as low as R6.70 but strengthened to around R6.45/$ at quarter-end. The rand's weakness impacted positively on performance.

Most countries delivered positive returns over the quarter. Hong Kong, Korea, Finland and the UK's FTSE were leaders with returns ranging between 2% and 7% in USD terms. Japan declined substantially by more than 8%, followed by other losers that included the technology Nasdaq and the Dow Jones (losing more than 3%).

Industries that performed really well included oil and gas (due to the record-breaking oil price), mining stocks and banks. Software stocks declined by more than 8% and drove the Nasdaq lower. Beverages also fell, mainly due to Coca Cola's decline on a weaker than expected profit outlook.

US: In the US, overall economic data weakened as employment weakened. However, payrolls rose by 144 000 and the overall unemployment rate declined to 5.4%, the lowest since October 2001. Underlying job growth, however, still remains somewhat muted. Producer prices fell despite rising raw material prices, as some producers were unable to pass along price increases. The US trade deficit narrowed but is still near record levels. Finally, core inflation was lower than expected. With an expected economic growth rate of over 4.5% for 2004 and potential inflation concerns, the Fed raised rates in the second quarter - the first time since 2002.
Within North America, energy and materials led performance, rising 8.8% and 5.6% respectively, while consumer staples and healthcare lagged.

Pan Europe: The ECB revised its GDP and inflation forecasts upward as inflation rose, driven by higher oil prices. UK industrial production and consumer prices fell, while producer prices rose. In Germany, unemployment rose and business confidence fell; however, manufacturing orders were above expectations. European economic growth lags the global recovery, mainly owing to poor consumer spending and an unemployment rate of around 9%, the highest in four years. Inflation remains under control and with oil prices coming off 14-year highs, the ECB remains reluctant to raise rates, currently at 2%. European technology stocks rose sharply in September as improved sales propelled the sector up 9.8%.

Asia Pacific: In Japan, machine orders fell by more than expected and Japan unexpectedly lowered its second-quarter growth forecast, driving down both Japanese equities and the yen, although the yen did recover late in the month. Exports did however rise in Japan, the first such increase in three months, and this drove factory production higher. Australian economic growth was the slowest in nine months as inflation increased. New Zealand boosted interest rates to 6.25%, its fifth interest rate hike in 2004.

Asian markets recovered strongly in the third quarter after having had their worst quarter (2nd Q) since June 2003, mainly owing to slower than expected growth in China and rising US interest rates. Australia, Singapore and Hong Kong performed very well. Asian markets are very dependent on economic growth and export demand from the US and China and if these decline, markets will be impacted negatively. Although Asian energy and materials (up 6.6% and 4.7% respectively) continued to outperform, telecoms lagged within the region, falling by 4.3%.

The Fund's underweight position in the US and overweight positions in the UK and Korea supported performance, while the overweight position in Japan and Germany detracted from performance. Exposure to the US is less than 50%.

The Fund remains overweight in financials and selected technology companies and underweight positions are held in industrials, utilities and telecommunication stocks.

Global Equity markets, measured by the MSCI World Index, ended the second quarter 2004 marginally positive and delivered a return of 0.32% in USD terms.

The South African rand delivered another strong performance and appreciated by more than 2% against the dollar. At one stage during the quarter the rand was as low as R7.10 but strengthened to around R6.20/$ at quarter-end. The rand strength impacted negatively on performance if measured in rands.

Industries that performed really well included Leisure, Hotels and Airlines. Coming off a low base due to geopolitical risks and looking more stable going forward, these tourism-related stocks performed well. Software stocks also rose and the higher oil price supported Oil and Gas companies (up around 8%). Some of the underperforming sectors include Metals and Minerals, Technology Hardware and Specialist Financial Services companies. The Mining Index in Europe lost 7% in euro terms over the quarter.

US:
The US economy continues to grow at a solid pace, driven by consumer spending and a weaker US dollar. With an expected economic growth rate of over 4.5% for 2004 and potential inflation concerns, the Fed has raised rates for the first time since 2002, to 1.25%. The economic environment is supportive of company earnings and profit growth rates of 15% - 22% are expected for the second quarter.

Pan Europe:
European economic growth lags the global recovery, mainly driven by poor consumer spending and an unemployment rate of around 9%, the highest in 4 years. Inflation remains under control and with oil prices coming off 14-year highs, the ECB remains reluctant to raise rates, currently at 2%.

Asia Pacific:
A recent release of the influential Japanese Tankan Survey shows that Japanese manufacturing executives are the most optimistic in 13 years due to strong demand for their products coming from China and the US.

Not only is the manufacturing sector upbeat, but long-awaited consumer spending, (nearly 50% of the economy) is also starting to emerge. The combination of sustained consumer and capital spending is a powerful force that bodes well for the Japanese economy and markets.

Asian markets had their worst quarter Since June 2003, mainly driven by slower expected growth in China and rising US interest rates. China fell the most after the Government decided to slow growth going forward, aiming for 7%, down from 9% in 2003. Australia is also benefiting from an export boom, while housing and consumer spending is showing signs of slowing. China is now Australia's largest export market. South Korea keeps selling Kia cars and flat-screen TVs to China and the US, as exports rose by more than 30% on 2003.

Asian markets are very dependent on economic growth and export demand from the US and China and if these decline, markets will be negatively impacted.

The Fund's underweight position in the US and overweight positions in Germany and Switzerland supported performance, while the overweight position in Japan and Taiwan detracted from performance. Exposure to the US is less than 50%.

The Fund remains overweight in financial and selected technology companies and underweight positions are held in cyclical consumer goods, utilities and telecommunication stocks.

At the security level, our overweight position in Nissan Motors rose by 11% following the announcement of both a stock buy-back plan as well as an increase in the company's dividend. Heidelberg Cement, up 15%, also boosted relative performance as expectations were increased for the German construction industry given German economic growth. Safeway also aided relative performance as the stock of the US grocery chain rose by 13% following the resolution of a union strike. Detracting from performance were underweight positions in Toyota Motor and Cisco. The stocks rose by 13% and 8% respectively, Toyota on better-than-expected sales figures, and Cisco on an increase to some sell-side earnings estimates.

The fund is split between value manager Sanford Bernstein and growth manager Alliance Capital. They have been encouraged to give their best ideas - there are just 107 shares compared with 300-500 in a typical global equity portfolio. The fund returns have been above average for most of its life but in late 2003 had a slump as Alliance Capital disappointed. The growth mandate will soon be moved to Wellington, a more focused house.

The MSCI World Index fell by 0.66% in USD terms in March, as investors again focused on geopolitical concerns following the train bombings in Madrid. Defensive sectors outperformed in local currency terms as the energy and industrial sectors fared well and telecoms underperformed. Economic data was mostly negative for the month as consumer confidence/investor optimism fell in Germany, France and Italy, fewer jobs than expected were added in the US, Japanese machinery orders fell sharply, and UK factory production rose by less than expected.

Regional returns varied widely in March, as the returns for the Pacific region, Europe and North America were 5.9%, -2.3%, and -0.1% respectively.

The US dollar continued its mixed performance in March as the yen reversed course and rose by 5.0% against the dollar. However, the euro and sterling fell by 1.1% and 1.0% respectively against the dollar for the month. The rand appreciated strongly and this impacted negatively on returns for SA investors.

The MSCI World Index rose by 1.7% in USD terms in February, although economic data were mixed for the month. Regional returns were varied in February, as the USD returns for the Pacific region, Europe, and North America were 0.8%, 2.9%, and 1.3% respectively.

European manufacturing expanded at the fastest pace in three years, unemployment in the US fell to 5.6%, the lowest rate in two years, Japan machine orders rose again, exceeding expectations by 8.1%, and both the German and French economies expanded for the second straight quarter.

Information technology, the best-performing sector in the Pacific region in January, was the worst relative performer in February, falling by 4%. In North America, technology also posted the weakest return for the month, falling by 3%, and the consumer staples sector rose by 5% for the month in North America.

The US dollar was again mixed in February as the yen fell by 3.1% against the dollar, the euro was flat, and sterling rose by 2.0% against the dollar for the month.

Effective from 1 Apr 04, the Sanlam Global Trust changed its name to the Sanlam Global Equity Fund.

The MSCI World Equity Index rose by 6.27% in USD terms in December, finishing the year up 33.1%. The SA rand appreciated by more than 20% against the US dollar, resulting in substantially lower fund returns when measured in rands.

Given both the strong euro and yen in December, regional returns in US dollars for Europe, North America and the Pacific were 8.2%, 5.2% and 6.9% respectively. The US dollar weakened again in December, hitting an all-time low against the euro and an eleven-year low against sterling in December.

Lower interest rates globally, improved economic growth prospects and the end to the Iraq war all contributed to improved market sentiment in the second half of 2003. The big winners included technology stocks, selective metals and minerals (gold) and cyclical companies (such as semiconductors and construction firms). Underperforming stocks included pharmaceuticals and certain food companies.