· This is the review for the TelecomWatch Model Portfolio for the 19th May 2003. (Be sure to read the disclaimer at the end of this review) The fairly quiet drift higher that we have seen since the end of hostilities continues but there is still plenty of action in certain stocks. The market and telecoms in particular are drifting. The telecomwatch index is the same level as it was 6 weeks and 12 weeks ago giving a certain deja vu sensation. We have been here before for the index as it touches its moving average - see the TW- index chart but we are left feeling that it would not take much to lift or drop the market at this stage. In a sense we should consider the performance as encouraging in the light of the vicious terrorist attacks in recent days.

The Telecom Watch Model Portfolio started at £30,000 on 5th September 2001.

The investment universe is the 21 active stocks in the Telecom Watch Index in which we can invest and the prime object of the fund is to outperform that index but with a secondary mandate to make money for our model investors who would be large institutions. In the last fourteen weeks, we have also started to track the performance of our invested stocks relative to the sector with a new objective that we should at this level also outperform the index.

We aim first to set an appropriate investment level for the index. Over the period since 5th September 2001, the cash level in the fund has averaged around 30%. In the 12 months we have sought to limit the maximum cash level to less than 30% to reflect the position of Investment Managers. The present cash level is 22%.
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Once we have chosen an appropriate exposure to the sector, we choose stocks for the fund using a number of criteria developed by us, including management performance, news flow, valuation and stock market performance.

Today the fund stands at £39,465, a 31.5% increase since the fund began.

In the past week the telecomwatch index of leading telcos rose just 0.1%.

The telecomwatch model portfolio rose 0.9% in the past week - Invested stocks rose 1.1%. In the last 10 weeks our portfolio is up 14.7% outperforming in 9 weeks out of the 10 and compared with a rise of 10.3% for the index over the same period. Invested stocks have outperformed the index by 10.5% over the same period. The relative performance since inception rose again to 130.8% from 129% last week and setting another new record. (measured since the start of the portfolio on September 5th 2001).

Following this week's review of investments - we have reduced one holding and added to one.

We still feel that the present level of the market in telecommunications stocks is going a long way to reflecting the uncertainty but financial markets must be considered vulnerable to terrorist activities arguing for a fairly cautious stance.

Do not take any part of this summary as a recommendation for any investment action. This is a test of the telecomwatch system which is designed to be either a part of a broker's research service or as a back-up advisory service directly reporting to fund managers or buy-side analysts. Telecom Watch ltd or its management can take no responsibity for losses incurred by anybody who ignors this warning and takes any investment decision as a result of reading this review. Any investment decision by a non-professional investor should be discussed with an independent financial advisor.


For further details of the fund and access to the investment decisions please contact Telecom Watch