The rand has continued to strengthen, which should relieve some of the inflationary pressures in the domestic economy and it is likely that domestic interest rates can fall significantly next year. This is positive news for the domestic economy. The fund manager's continue to find domestic industrial shares attractively priced on depressed earnings. The strong rand has exerted further pressure on resource stock prices, where they are increasingly finding compelling valuations. The overall market is now considered to offer compelling long-term value.

During October the rand continued to strengthen, which should relieve some of the inflationary pressures in the domestic economy. With government easing the 2003 inflation target it is likely that we have seen the last interest rate increase. This is positive news for the domestic economy. The fund managers continue to find domestic industrial shares attractively priced on depressed earnings. The strong rand has exerted further pressure on resource stock prices, where the fund managers are increasingly finding compelling valuations. The overall market is now considered to offer compelling long-term value.

The fund continues to be overweight in Industrial shares. Many industrial shares are trading on attractive multiples on depressed earnings and provide the opportunity for superior long-term returns. Retail shares in particular are very attractively priced with the fund owning large positions in Woolworths, Foschini and Edgars. The fund's underweight position in resource shares has reduced as some shares have derated to more attractive levels. The overall market is now considered to offer good long-term value.

The fund continues to be overweight in Industrial shares. Many industrial shares are trading on attractive multiples on depressed earnings and provide the opportunity for superior long-term returns. Retail shares in particular are very attractively priced with the Fund owning large positions in Woolworths, Foschini and Edgars. The fund's underweight position in resource shares has reduced as some shares have derated to more attractive levels. The overall market is now considered to offer good long-term value.

The fund continues to be overweight in Industrial shares. Many industrial shares are trading on attractive multiples on depressed earnings and provide the opportunity for superior long-term returns. Retail shares in particular are very attractively priced with the fund owning large positions in Woolworths, Foschini and Edgars. The fund's underweight position in resource shares has reduced as some shares have derated to more attractive levels. The overall market is now considered to offer good long-term value.

The fund continues to be overweight in Industrial shares. Many industrial shares are trading on attractive multiples on depressed earnings and provide the opportunity for superior long-term returns. Retail shares in particular are very attractively priced with the fund owning large positions in Woolworths, Foschini and Edgars. The fund's underweight position in Resources is reflective of the fund manager's view that there is currently little value in the large internationally listed resource shares that constitute a large portion of the All Share Index. The fund manager's do however still find value in selective resource shares.

The fund continues to be overweight in Industrial Consumer and Industrial shares. The fund managers believe that there is a significant disparity in valuations within the South African share market. Many industrial shares are trading on attractive multiples on depressed earnings and provide the opportunity for superior long-term returns. Retail shares in particular are very attractively priced. The fund's underweight position in Resources is reflective of the fund managers view that there is currently little value in the large internationally listed resource shares that constitute a large portion of the All Share index. The fund managers do however still find value in selective resource shares.

The Allan Gray Equity Fund is overweight in Industrial Consumer and Industrial shares. Allan Gray Equity Fund manager believe that there is a significant disparity in valuations within the South African share market. Many industrial shares are trading on attractive multiples on depressed earnings and provide the opportunity for superior long-term returns. The fund's underweight position in Resources is reflective of Allan Gray Equity Fund manager view that there is currently little value in the large internationally listed resource shares that constitute a large portion of the All Share index. We do however still find value in selective resource shares such as Sasol, Avmin and Avgold, which are all large holdings in the fund.

The Allan Gray Equity Fund has won the S&P 2002 award for the best fund within the Domestic Equity General sector over a three year period.