For the third consecutive quarter domestic equities were the place to be. The All Share Index returned 20.3% for the quarter compared to subdued returns from bonds (1.1%) and cash returns of 1.8%. For the year to date the ALSI has returned a very healthy 37%. Despite a strengthening rand over the quarter, the Resources sector was once again the main driver of the market return. Resources returned 25.5% for the quarter and are up 60% for the year to date on the back of continued strength in commodity prices and positive economic growth expectations. The CRB index (an indicator of broader commodity prices) reached a new high during the quarter. Financials and Industrials, while not as buoyant as Resources, also delivered strong positive returns for the quarter (13% and 20% respectively).

Domestic bonds had an uninspiring quarter, leaving the year-to-date performance of the All Bond Index in line with cash. The bond market retraced to weaker levels, at first due to profit taking following the SARB's decision to leave interest rates unchanged at the August MPC meeting, and then in reaction to higher-than-expected inflation and monetary growth data. The yield on the R153 closed at 7.85%, 30 points higher than at the end of June this year.

The Sanlam Multi-Managed Balanced Fund of Funds provides investors with access to a combination of leading balanced funds. Three of the five underlying managers in the fund finished comfortably in the top half of the peer group, with two of those managers finishing in the top quartile. We remain confident in the manager selection and thus no significant changes were made to the fund structure.

The fund is well diversified across different asset classes, investment managers and investment styles and is a great option for investors who lack the time, knowledge or skill to monitor and allocate between the various asset classes and investment managers available.

Domestic equities once again reigned supreme in the second quarter of 2005. The All Share Index returned 7.2% for the quarter compared to bonds, which returned 4.8% while cash returned 1.8%. This takes the return on the All Share Index to a healthy 13.6% for the first half of 2005. Resources have been the engine powering the ALSI on the back of a weaker rand exchange rate. The resources sector returned 27.5% for the year to date compared to 7% from the FINDI sector.

Domestic bonds had a much better second quarter after selling off in the first quarter of 2005. Bond yields fell during June mainly on a more negative outlook for world economic growth and lower international bond yields. Despite dollar oil prices reaching record highs, global bonds defied expectations and rallied in June as investors started pricing in a rising risk of a turnaround in global monetary tightening policy regimes.

The Sanlam Multi-Managed Balanced Fund of Funds provides investors with access to a combination of leading balanced funds. The fund performed well for the quarter and no changes have been made to the underlying managers as we remain confident in the manager selection.

The fund is well diversified across different asset classes, investment managers and investment styles and is a great option for investors who lack the time, knowledge or skill to monitor and choose between the various asset classes and investment managers available.

During the first quarter of 2005 the All Share Index returned a very healthy 5.9%, driven primarily by the resources sector and other rand-hedge shares.

The outperformance of these shares on the JSE was driven mainly by a stronger dollar as global investors continued their search for quality assets, which resulted in the rand weakening by more than 9% since the start of the year.

The weak rand and higher global oil prices ignited fears of a SA interest rate hike, contrary to the previously expected decrease. SA bonds performed well in January (1.5%) and February (2.0%), but reacted negatively in March in spite of very good inflation numbers. The yield on the R157 government bond retreated from its record lows of 7.65%, increasing to 8.53%. This saw bond yields increase across the board and the benchmark All Bond Index losing nearly 4% during March, giving back all the returns earned since the beginning of the year.

Three of the five underlying funds selected underperformed their peer group during the quarter, resulting in a below-average performance by the fund. However, we remain confident in the abilities of the selected specialist managers to outperform over time and consequently no large-scale changes were implemented.

The fund remains well diversified across various asset classes, investment styles and investment managers. This fund is a suitable solution for investors who want to invest their money in SA, but lack the knowledge, skill and time to select and monitor the various available asset classes, investment managers or funds.

South African investors experienced another year of good and solid growth in investment markets. During 2004 the All Share Index reached a new all-time high, bond yields dropped to record levels (resulting in price appreciation) and the rand maintained its position as one of the strongest currencies in the world. All of this occurred on the back of very low interest rates and robust economic growth. Economically speaking, this has surely been one of the best years in South Africa.

The Sanlam Multi-managed Fund of Funds increased by nearly 26% during the year, outperforming both the All Share and All Bond Indices in the process. Over the past two years the fund has grown by nearly 50%, well in excess of inflation and representing a substantial increase in wealth for investors.

The fund remains well diversified across asset classes, investment styles and investment managers. Investors who want to invest money in SA but lack the knowledge, skill and time to select and monitor the various available asset classes; investment managers or funds should find this fund a suitable solution over the longer term.