The fund has its origins in the first international unit trust in SA, which the old Standard Bank management company launched in 1992. It has had a patchy track record, notably after the 2000 Nasdaq crash, when the fund was heavily invested in US growth shares and fell to the bottom of its sector.

The fund has recently recovered to the top of its sector over one year, though its performance has not been as consistent as that of competitors such as Investec Worldwide or Old Mutual Global Equity.

The fund is still restricted to investing in Fidelity funds, but Stanlib's Kent Grobbelaar chooses from the full menu of Luxembourg-based funds, which includes a choice of six US equity funds, four European funds and three Japanese equity funds, all with different styles and market cap biases.

The regional allocation closely follows Stanlib's allocation for its institutional clients, which has added value.

Grobbelaar says that over the past quarter, there was a 22% return from the portfolio, compared with 17% for the global MSCI index, which he attributes to the bias away from North America towards Japan and Asia. North America was the worst-performing region, but the America and American Growth fund were both in the top quartile of their regional funds over one and three years.

Grobbelaar says it is now three years since the international equity lows of October 2002, making it an unusually long bull market, so corrections can be expected - and in fact healthy - but the valuation of global equities remains attractive: forward p:e ratios in most major markets are below the mean of the past 10 years, and current earnings yields are above equivalent bond yields.

Grobbelaar says that as the rand has been trending weaker, the current exchange rate could prove to be a good buying opportunity.

Financial Mail - 02 December 2005

From a South African's perspective the portfolio had a fantastic 12 months, having benefited from the rand being the worst performing currency in the world coupled with the MSCI index gaining 8% in dollar terms. In addition the fund continues to profit from the restructuring that took place a year ago having gained 11.9% - a handsome out performance of the benchmark. The net result was a 19.8% rand return.

Of the major markets the best performer was SEA, with Japan being the worst. Our marginal overweight position in SEA contributed to returns as did the SEA fund which outperformed its benchmark and was the best performing fund in the portfolio. The overweight position in Japan detracted from returns but this was partially offset by the Japan Advantage and Smaller Companies funds which outperformed the TOPIX. Not taking too big a bet against America (49.6% of the portfolio compared to benchmark 53%) helped the fund achieve a top quartile ranking as the dollar rebounded strongly during the period under review. Our largest holding, the America fund, also added to relative returns by outperforming the S&P 500 (up 20% for the year vs. benchmark 6%). Within Europe all 4 underlying funds beat their benchmarks and all are in the top quartile!

Looking ahead fundamentals are solid in the US and SEA but are subdued in Europe and Japan. Bears would argue higher energy prices, a slowdown in economic growth and tighter monetary policy in the US could result in earnings downgrades. Conversely bulls would point out the downside should be limited by attractive valuations, strong cash flows and declining unemployment in Japan and the US. STANLIB believes the risks are balanced, however we view equities cheap relative to cash and bonds. We will remain fully invested at all times, but the portfolio is well diversified across regions, size and styles.

In dollar terms equities succumbed to profit taking as the MSCI declined by 1,5% during Q1. Due to base effects (MSCI has risen 62% since troughing 2 years ago) equities are not expected to record double-digit returns this year - although we forecast they will outperform bonds and cash. In rand terms however, the fund had a fantastic quarter and continues to benefit from the restructuring that has taken place over the last 12 months. It gained 10.6% as the local unit moved from being the best performing currency in the world last year to being the worst performer year to date. The about turn of the rands fortunes has brought some welcome relief to investors who have had to endure a rampant currency over the last few years and resulted in the fund generating a positive return of 7,4% for the 12 months ending 31 March 2005. It's also worth noting the fund has gained 15,2% in rand terms over the last 2 years as the strong equity market discussed above has offset rand strength. Of the major markets, the best performer was SEA while the USwas the worst performer. The US excluding Canada accounts for 46,7% of the fund versus benchmark 52,4% so the underweight position contributed to returns, as did two of our largest holdings, the America and American Diversified fund that outperformed the S&P 500. We remain concerned about higher inflation and interest rates in the US as well as the oil price, which recently rose above $57/barrel during the period under review. While the top down macro view for Europe is bleak we remain neutral on the region due to attractive valuations. Successful tilts to small caps via the European Smaller companies fund that is not affected by the stronger euro has added to relative returns and was our best performing fund in the portfolio gaining 7.7% in dollar terms. Performance of Japanese equities was disappointing in absolute terms as company earnings slowed. In addition our core Japan fund underperformed its benchmark detracting from relative returns, however this was offset by our two satellite funds with the smaller companies fund in particular doing well as it rose 4.4% in dollar terms. Most of the underlying funds remain overweight medium and smaller companies, though managers are increasing their exposure to large caps. Our view is equities are likely to be underpinned by the highest average level of cash on balance sheets in over 30 years. This is resulting in rising dividend payouts as well as share buy backs and may support investor's appetite for equities.

For much of 2004 equities came under pressure due to all the negative publicity in the press (record oil prices, turmoil in Iraq, rising interest rates etc). During the last quarter however equities rebounded strongly to end in the black for the second consecutive year. In dollar terms global equities rose, with the MSCI world index gaining 15.2% for the year (11.9% in Q4). The fund was up 13.1% in dollar terms during the quarter and therefore outperformed its benchmark. Using MSCI regional dollar returns South East Asian markets were once again the best performers gaining 29%. Europe was the next best (22.4%) followed by Japan (15%) with the US lagging (10.7%) - clearly currencies played a big role in determining returns i.e. strong euro and pound but weak dollar. The funds underweight position in the US added to relative returns but this was somewhat offset by an overweight position in Japan.

Further restructuring of the portfolio was undertaken in the quarter to continue the success of adding additional sub managers in the various regions. We now have two global managers who specialise in stock selection and asset allocation (19% of fund). We then have core regional managers in major markets with various tilts to different styles and market caps. The underweight exposure to both US and UK equities has been increased due to concerns over interest rate hikes and further oil price increases. In the US the widening trade deficit and consumer spending are a cause for concern. Risks in the UK include a deteriorating property market and falling consumption. Our Japanese overweight position has been kept constant due to continued improving fundamentals and attractive valuations.