The Investec Value Fund performed strongly in October. This was due to the continued relative strength of the mid and small-cap sectors, and some significant moves in the prices of some of its holdings. The fund achieved performance of +5.5% in October, well ahead of the All Share Index's -0.6% fall, and the average value fund's +2.2% performance. The fund remains the top performing value fund over all periods from 1 month to five years. Major purchases over the month included new holdings in African Bank, Unitrans, Highveld, Bidvest, Naspers and Mr Price, as well as additions to existing holdings in Rainbow, Rebserve, Absa, Tongaat and Sasol. Sales were limited as there were inflows into the fund in October, and the fund managers trimmed the holdings in Mediclinic, Iscor, PPC and City Lodge. Despite the fund's strong performance, the fund managers remain comfortable with their expectation of further outperformance against the All Share Index. This is as a result of the fact that the funds average PE of just 8.2 times remains below that of the market. Most of the stocks that the fund is invested in are continuing to surprise with respect to earnings growth. The fund remains principally invested in low PE stocks exposed to the domestic economy - a sweet spot to be in at the moment, given the continued strength in the SA economy. While approximately 80% of the fund remains invested in mid and small-cap shares, the weakness in the ALSI 40 stocks (caused principally by weak international markets and a firm rand) has presented buying opportunities in some ALSI 40 stocks. Consequently, the ALSI 40 component in the fund continues to climb from the zero base of six months ago.

The Investec Value Fund continued to perform well in September, achieving a return of +2.3% for the month. This return was sufficient to place the fund in position 2 out of 9 funds for the month, and resulted in the fund outperforming the All Share Index by 4% over the month. For the quarter, it is very satisfying to note that the fund outperformed the All Share Index by 17% - a material number, and a number which justifies the fund's non-index positioning. The fund remains the top performing value fund over all periods from 3 months to five years.

Purchases over the month included increasing our holdings in Tongaat, PPC, Sasol, Grintek, Supergroup and Metair as well as initiating small holdings in two small-cap stocks which came to the market for equity financing, namely Argent and Glodina. A new holding in Highveld Steel was also implemented at 1700c to take advantage of the low implied valuation for the local steel business. Major sales included the sale of our entire small holding in Delta at a small profit, as well as the lightening of our holdings in both Mediclinic and Tiger Wheels.

Looking ahead, while there is a steady turnover of stocks within the portfolio as stocks reach fair value, the theme of the portfolio remains as it has been for the last 18 months, namely predominantly small and mid-cap stocks focused on the local economy with the added sweetener of having exposure to the growing SA export market. The gap in valuation between these stocks and the large cap shares has narrowed considerably, as this group of stocks has outperformed considerably. Despite this outperformance, we continue to believe that the local/export group of stocks continues to offer more absolute value especially when the uncertain outlook for global equities is considered. We have therefore maintained this position, although increasingly ALSI 40 stocks are finding their way onto our radar screen. For this reason, ALSI 40 stocks are now making up as much as 10% of the fund currently - well above the level of 6 months ago, and if the market continues to come our way, this level may increase further over the next few months.

The Investec Value Fund continued to perform well in August, achieving a monthly return of +4,6% - ahead of the average within the value fund universe of +2,9% and sufficient to place the Investec Value Fund in position two of nine funds over the month. The Investec Value Fund remains the top performing value fund over all periods from 3 months up to 5 years and has outperformed the All Share Index by 26% over the year to date.

Due to inflows over the month there were considerably more purchases than sales in August. Purchases included new holdings in Iscor and Sasol (Iscor being a buy back of shares sold earlier in the year at a higher price) as well as additions to our existing holdings in Rainbow, Trencor, Distellers, Grintek, ABSA, Ozz and Tongaat. Major sales included our entire holdings in AMB, Implats, MIH, Naspers (both unsuccessful trades), as well as a lightening of the Murray and Roberts holding.

Looking forward, the fund managers remain confident that the shares in the portfolio continue to offer value in absolute terms - an important consideration when the current international economic and asset price weaknesses are taken into account. We have marginally increased the fund's rand hedge characteristics over the last month. Note however that this has not been a result of a bearish view on the rand but rather that a number of stocks (specifically Sasol and Iscor) came back into buying territory. The fund still remains defensively positioned with local industrial shares with export opportunities remaining the major theme in the fund. Note however with the market playing into the fund's positioning via the current weakness in ALSI 40 stocks and the ongoing out performance of mid and small caps, we are increasingly finding value in ALSI 40 stocks. The fund's exposure to ALSI 40 stocks has thus risen to 10% of the fund from 0% six months ago and further inflows that may occur may increasingly find their way into this category.

Fund manager John Biccard's focus on domestic mid-cap industrial shares with low p:e ratios and generous dividend yields has proved spot-on this year. While these shares, backed by improving fundamentals, have moved off undervalued levels, big-cap share valuations have suffered at the hands of the global equity bear market. Though a few Alsi 40 big-cap shares have moved into value-buying range, the fund's focus remains on midcaps, says Biccard.

The Investec Value Fund's return for June was -0,3% - well ahead of the All Share index's return of -4,7% and sufficient to place the fund in third position in the Value Sector (out of 10 funds). The fund has continued to perform well over all time periods and is currently the number one value fund over all periods from three months up till five years. Performance in June was assisted by the fund's defensive positioning which was especially important as world markets came under severe pressure. Trades over the month included purchases of ABSA, Naspers, Reunert, Kersaf, Supergroup, Comparex, Truworths, HLH and Tongaat while sales included profit taking in Nampak, Ceramic and Primedia.. Looking forward, while the fund managers continue to believe that the best value in the market remains to be found in the small and mid cap areas, the recent outperformance of these sectors together with the fact that the increasing size of the fund means we they need to invest in more liquid stocks results in the fact that the ALSI 40 component of the fund will increase slightly over the next quarter. In addition, while the fund managers continue to believe that industrials are the cheapest sector in the market, the recent retracement in financials has left most stocks in this sector also fundamentally undervalued. Given the fund's large underweight position in this sector, the fund managers will be increasing the financial weighting over the next quarter. The only sector which we remain disinterested in is the resource sector in view of the positive view on the rand, the relatively more demanding valuations in this sector and an above average exposure to global equity markets as a result of the dual listing of the major resource stocks.

The fund's principal investments remain in quality domestic counters which have additional growth prospects through exports and which have strong cash flows and attractive dividend yields. In the current increasingly uncertain world, we believe this approach will result in further strong relative performance over the next quarter.

The Investec Value Fund is currently focussed on domestic-orientated industrial shares. These shares, comprising 90% of the portfolio, are attracting increasing investor attention as the Rand firms and international stock markets remain under pressure.

After a strong start to 2002 in which the Value Fund was the top performing fund in the value category over the first quarter, the fund showed slower relative performance in April despite continuing to show strong absolute gains. For the month of April, the fund showed a return of 5.99% - well ahead of the All Share return of 1% but slightly behind the average value fund return of 6.56%. The fund performed ahead of the All Share index as a result of the fund holding a zero position in resource shares (which corrected meaningfully over the month) while the slight under performance against competitors was a result of the fund holding an almost zero holding in financials (which made a remarkable recovery over the month).

Purchases over the month included new holdings in AMB and Coronation (two laggards in the financial service sector which are offering good value) as well as new holdings in three undervalued industrial stocks (PPC, Afrox and Supergroup). The fund manager also added to existing holdings in Wetherlys, Grintek, Truworths, Brandcorp, Mediclinic, AECI, Nampak and Citylodge. Major sales included the entire holding in Remgro and Transhex at a nice profit as well as some profit taking in HLH, Iscor, Tongaat and AVI. Looking forward, the fund manager believes recent macro economic developments are extremely positive for the current positioning of the fund. The fund is 90% invested in domestic orientated industrial shares - shares which are increasingly attracting investor interest as the rand continues to firm and international markets continue to remain under pressure. The fund has no exposure to the large dual listed stocks which have performed so strongly over the period of a weakening rand and which are now appearing vulnerable as the effects of both a strengthening rand and less global appetite for cyclical stocks emerge.

The Investec Value Fund (R class) has won the S&P 2002 awards for the best fund within the Domestic Equity Value sector over a one as well as three year period.

At the AUT/Personal Finance Raging Bull awards held in Johannesburg on the 28 January 2002, the Investec Value Fund was awarded the prize for the top performing fund on a Sortino-Risk adjusted basis for the three years ending 31 December 2001 within the Domestic - Equity - Value sector.

The fund as also awarded the prize for the prize for the top performing fund for the three years ending 31 December 2001 within the Domestic - Equity - Valuel sector.

The current strategy of the Investec Value Fund is to be substantially overweight in industrial shares where the export earnings benefits of a weak rand have not yet been fully discounted by their prices. As a result, the fund is a high dividend yield, defensive, small- to mid-cap portfolio sticking to value investment norms.