As at 30/9/03 the Fund remained fully invested in a diversified portfolio of major, medium-sized and junior gold and mining company shares active in N. America, Australasia, Africa, Russia and many other countries, as well as a large position in the metals themselves (15% silver + 21% gold + 5% palladium = 41% of total) at month end.

In September, we increased our high exposure to physical gold and silver (metals have lagged shares) and added palladium for the first time. We have bought Kinross, Goldfields, Harmony, Lihir and Ashanti. We reduced or sold Oxiana, Newcrest, Penoles, Buenaventura, High River Gold, Meridian Gold, Anglo Gold, Placer Dome, Sedimentary Holdings, IAM Gold and Kingsgate.

The logic of the gold bull market improves by the day (central bank liquidity, WGC exchange traded funds, Chinese gold market liberalisation, renewed corporate activity, some - unofficial - inflation targeting in Japan and elsewhere). The Battle Royal continues near the recent gold price highs between the "speculators" (long) and corporates (short). The "shorts' recently knocked gold to USD 368 from USD 393, though the price is now stabilising. We think that the long side will eventually triumph but we caution our investors that failure of gold to breach USD 400 may cause a short term share correction. However new money is flowing into the gold share sector, so any correction may be short-lived.

PERCENTAGE PERFORMANCE RECORD to end August 2003