The second quarter of 2012 has seen global markets return to a 'risk-off' environment, compared to the majority of the first quarter when markets were in a more positive 'risk-on' mode. The mood began to change in the middle of March as investors increasingly began to focus on the threats to global economic growth, and this continued into the second quarter. The catalyst for this renewed pessimism was once again events in the euro-zone, most notably focused on Greece, but investors were also concerned about softening economic data in the USA and whether the Chinese authorities would be able to deliver a soft landing. These issues in aggregation provided some significant headwinds, and ensured that global macroeconomic and political events continued to be the primary drivers of markets during the second quarter, rather than company specifics and fundamentals. With this negative backdrop, Indian equity markets, as measured by the MSCI India (US$) Index delivered a return of -9.54% for the second quarter. However, this in itself disguised the nature of the quarter. Markets sold-off fairly persistently in April and even more so in May. This took Indian equity markets to levels not seen since the start of the year as markets decreased by more than -16% during the period. The heightened fear and genuine threat of a euro-zone breakup weighed heavily on investors and it was only during June, especially following the second Greek election in the middle of the month, that fears dissipated somewhat and equity markets started to rally. This saw the MSCI India (US$) Index rise by more than 7% during June, and thus significantly reduced the effects seen over the quarter.

2012 started with international investors clearly relieved that 2011 was over, and in turn this led to a more positive outlook for markets, as investors' confidence levels rose. While the first quarter of 2012 appears relatively dull from a news event perspective compared to the first quarter of 2011, there continue to be many issues facing markets during the period. The European financial crisis continues to dominate concerns. However, the effective introduction of quantitative easing and other liquidity packages within the euro-zone has been one of the significant factors alleviating investors' concerns. This has helped restore health, at least temporarily, in the European banking system. In March, the MSCI India (US$) Index lost 5.4% and underperformed the MSCI EM index (down 3.5%). Domestic factors like state elections, budget and Reserve Bank of India's (RBI) monetary policy review failed to boost investor confidence. Moreover, uncertainty over macro economic factors weighed on market sentiment. On the sectors front defensive sectors like consumer staples and health care outperformed while cyclical sectors like energy, industrials and materials underperformed during the month. Foreign fund inflows continue to be positive with FII's making net investment of US$ 1.7 billion in equities. Meanwhile, credit rating agency Fitch said that India's GDP could grow around 7.5% in the next fiscal. It has assessed that the country is reaching the bottom of the current economic cycle. Consumption demand appears to have stabilised as private consumption rebounded, rising 6.2% yearon- year for the quarter ended December, compared to a 2.9% increase in the preceding quarter ended September.

At least 85% of the assets of this portfolio should be invested offshore. (Supplemental Trust Deed & ASISA Guideline)
The manager will be permitted to invest on behalf of the Sanlam India Opportunities Feeder Fund in offshore investments as legislation permits (Supplemental Trust Deed)

The Sanlam International Equity Fund of Funds will change it's name to Sanlam India Opportunity Feeder Fund and change sectors from Foreign--Equity--General to Foreign--Equity--Varied Specialist on 01 Mar 2012. The fund loses its history.

The last quarter of 2011 remained very similar to the third quarter in terms of market sentiment, with the European crisis continuing to be the focus of attention. The twists and turns, largely predicated on market expectations of an announcement of a solution by European governments, dominated the period. This continued to create market uncertainty, as investors looked to the politicians to restore confidence. Europe was not the only market facing problems as the USA continued to pose a threat of returning to a recession. Meanwhile, slowing growth in China was the centre of attention in the emerging markets.

For the quarter global equity markets, as measured by the MSCI World Index, rose 7.59%. This however, has to be seen in the context of the third quarter when markets fell nearly -17%. The fourth quarter started with markets gaining over 10% in October, although this was the bounce from the lows seen in the third quarter. In contrast November was a weak month as markets once again sold-off, though the rally towards the end of the month meant that the index only finished -2.5% lower. December did see some market volatility, but as the end of the year approached markets rallied to finish the month almost exactly where it had started. As for 2011 as a whole, despite the very weak third quarter, global equity markets only finished -5.54% down. The overall market sentiment would suggest a much weaker return, although this reflects the fact that the market decline was primarily a second-half of the year event.