From late April 2003 to early February 2006 the JSE has moved up some 173%. This equates to an average increase of nearly 44% per annum for a period just short of 3 years. During this time the JSE never suffered a drop of more than 13% in any interim period.

This average annual growth is excessively high by historical standards.

Since 1960 the only other major upward JSE moves bigger than the current one of 173% that also never suffered more than a 13% drop in their run-up were:

1. The period July 1982 to August 1987 (a 498% increase, averaging growth of 41% p.a. for the 5 years)

2. The period August 1976 to October 1980 (an increase of more than 387%, averaging 46% p.a. for the 4 years), and

3. The period April 1961 to April 1969 (an increase of more than 462%, averaging 24% p.a. for 8 years).
Interestingly all 3 of the above huge equity market increases were followed by declines in excess of 40% within the 2 years following their peak. Finally, the period from January 1988 to April 1998 also produced a massive return (426% in total, averaging over 17,5% p.a. for the10 years), BUT this increase had 3 significant falls during the 10 year period, each fall of which was about 20% in size.

Conclusions to draw from the above in respect of how much longer the current JSE bull run will continue? Quite frankly, none. As Warren Buffet says: "if the key to riches lay in history books then all librarians would be millionaires".

We may be close to the end of the bull run or only half-way through it. At ValuGro we don't spend time trying to predict these things but instead research historical facts (such as past company results and economic data) in order to grow your wealth.

"This was a year in which any fool could make a bundle in the stock market. And we did".

The above words of Warren Buffett refer to the U.S. equity market in 1995 and his performance, but in my opinion apply equally to 2005's equity market here in S.A. and our performance therein.

Over the 12 months to 31 December 2005 the JSE All Share Index rose 43%. Your fund was launched on 18 March 2005 and over the 9 ½ months between that date and 31 December the JSE All Share Index rose some 33%. This was very much in line with your funds return of some 34% (incl . dividends) over the period. Interestingly your fund still performed in the top quartile of all SA's general equity funds over that period, even though not significantly outperforming the All Share Index benchmark. I have indicated previously that when the All Share Index is moving up strongly your fund will battle to strongly outperform it. A number of factors contribute to this, including the fact that unit trust legislation limits our maximum holding in any single stock to 10%. Accordingly when shares which exceed this percentage in the index (such as Anglos and Billiton) are flying upwards we are at an obvious disadvantage. Over the last 12 months the price of Anglos moved up 60% and Billiton 55%, well ahead of the Index's 34% increase.

While I am sure most of you are happy with the 34% increase in the value of your fund units over the last 9 ½ months, I know that we can perform better relative to the Index. Accordingly I look forward to a good relative outperformance in 2006.