Contents Newsflash Market Comment Other Commentators Economic Update STANLIB Money Market Fund... 9

Transcription

1 29 June 2015

2 Contents Contents... 2 Newsflash... 3 Market Comment... 3 Other Commentators... 5 Economic Update... 6 STANLIB Money Market Fund... 9 STANLIB Enhanced Yield Fund... 9 STANLIB Income Fund... 9 STANLIB Flexible Income Fund STANLIB Multi-Manager Absolute Income Fund... 10

3 Newsflash If Greece continues on this path of exiting the Eurozone, how long will markets be negatively affected? Market Comment A week ago markets were happy because it looked like everyone wanted a deal on Greece. The probability of a Greek exit from the euro was put at 20%. Now that probability has shot up to as high as 80%, the highest it has ever been, through all the Greek troubles of the last four or five years. So markets are a tad shocked. This was not expected. UBS has a much lower probability of exit of 40%. Credit Suisse s Andrew Garthwaite does not expect a Greek exit (30-50% probability); but if there is one, he sees only a one-in-three chance that this leads to a systemic European crisis. Maybe the Greek Prime Minister didn t really want a deal, because nothing he got would be good enough to get Greece away from yet another austerity program. The debt is just too high, too onerous. We all knew it is too high at 165% of GDP and unless Germany and other euro nations cut that debt down dramatically, say by 50%, a Greek exit was/is inevitable. So now the big question is what effect it will have on the rest of Europe s markets and the global markets.beyond today and perhaps most of this week. No-one knows for sure, but Greece s economy has shrunk by some 30% since It is now 1.8% of the Eurozone GDP. The population is around eleven million people, similar to Zimbabwe (similar economies?). So it really is a small economy and obviously an exit from the euro will cause enormous short-tomedium-term pain for Greeks; but for the rest of Europe it shouldn t amount to much is our best guess, beyond a day or two of ructions. This morning by around 10am Germany s Dax Index is -3.6% at 11,078, back where it was just over a week ago (went to a low of 10,797 on June 16 th ). Sure, the day is still young, so it could get worse. The Dow Jones Euro Stoxx 50 Index is also trading where it was ten days ago, down -3.9% today, up about 12% so far in 2015 in euros. US futures are -1.3%. It is said that the risk of potential contagion if Greece leaves the euro is roiling global markets, with the euro currency also down to a three-week low against the dollar of $ Contagion refers to other countries that are struggling, such as Portugal, perhaps looking to follow Greece s example. However, how realistic is this? In other words, if Greece exits the Eurozone, it will renege totally on its debt and its debt will be history. We would all love to be free of debt; however, who is willing to bear the cost of going through this massive pain that the country and its people will endure? (huge uncertainty, collapsed new currency, massive inflation, unemployment etc.). The JSE All Share Index is down -1.5% in fairly early trading at 51,900, back where it was 10 days ago - and last July Financial & Industrials are -1.7%, while mining shares are -0.3%. Naspers is down more than most at -4.3% after Tencent fell a similar percentage this morning in Hong Kong. Our Banks Index is -1.1%. All-in-all, most of the quality shares are holding up fairly well, such as AVI, Aspen, Bidvest, British American Tobacco, Discovery, Firstrand, Mondi, Mr Price, Remgro etc. One positive this morning, totally overlooked because of Greece, is that China cut interest rates by 0.25% with effect from today, their 4 th cut in the last 8 months, in line with the government s intent to prop up growth.

4 This was after the Shanghai Composite Index fell over 20% from its recent high, amidst record high margin debt (money borrowed to buy shares), aggravated also by a large number of new or initial public offerings (new share listings). Our SA government bond yields have spiked up a bit amidst some selling out of riskier emerging markets (risk-off), which in turn is hurting listed property. This in spite of a risk-off move offshore out of equities into bonds. The bond yield of the German 10- year has fallen sharply from 0.91% on Friday to 0.73% today (flight to safer investments). When bond yields decline, prices/values rise. Similarly the US 10-year yield is down from 2.47% on Friday to 2.33% today. This yield has broadly been rising from 1.66% at end January to 2.5% recently, in response to a lower risk of deflation and higher economic growth/employment and better wage growth too. As yet, the rise in yields has not upset the longer term bull market (lower yields/higher prices). Meanwhile the global listed property index is back at its low for the year, down -10.5% in dollars, partly because of the higher bond yields. The forward dividend yield is now a fairly juicy 4%, at least juicy for developed markets, where cash continues to yield 0% and bond yields are under 2%. The chart below shows that the fund is back at similar levels to May 2013, in dollar terms. Source: I-Net Bridge STANLIB s view is that IF the US 10-year yield rises from the current 2.33% to 4.25% in a year s time, then Global Listed Property should return about 6.25% in dollars in that 12-month period. Should bond yields remain lower though, returns could be closer to 10%+ (See below; BCA expects yields to be lower). Local listed property had started to recover a bit after its recent -11.5% correction, but today it is down over 1% and still looks quite expensive on a dividend yield of 5.6%, which is just 67% of the current SA 10-year bond yield of 8.3%, compared with the long-term average of 90%. Allowing for the fact that 25% of property dividends now come from offshore, a premium is warranted compared with history. If one accords a premium of 25% versus the 90% historic average, then 0.75 times the historic average of 0.9% = 0.67%, which one could argue means that currently our listed property index is actually potentially now at fair value. Of course load shedding has raised the risk profile of local property earnings and dividends. In fact, one of the Stockbroker analysts, Naeem Tilly of Avior, thinks that currently the SA Listed Property Index is trading at fair value relative to bonds, once you dig down a bit deeper.

5 For example, the SA-only listed property shares, being those that have no offshore exposure, are trading on a forward dividend yield one year out of 7.5%, which is 90% of the current bond yield of 8.3%. These shares comprise 76% of the index, he says. Those shares with offshore exposure are currently trading at a big premium to the local shares, meaning their forward dividends yields are much lower, ranging from 3.9% for those invested in Rumania to 5.5% for those in Australia. Obviously there is still some risk that bond yields may rise further once US interest rates are hiked; for example consensus expects the US 10-year to rise to 2.8% from the current 2.3% at that stage. If consensus is wrong and the US yield rises much less, that would be positive. Other Commentators US Market Analyst, Elaine Garzarelli Garza said on Friday that globally shares had priced in a resolution to the Greek debt crisis, so clearly the latest unexpected turn of events will cause equities to react negatively. Despite this, her quantitative ( black box ) indicator remains unchanged at 69.5% for the US stock market, which is still in bullish territory (a level below 30% is a bear market signal). She says for her indicators to decline to below 30%, a combination of several negative events would have to occur. Such events might be bullish sentiment rising, interest rates rising, short rates rising above long rates, and/or indications of a possible recession ahead. She remains bullish and expects corrections to be limited to 4-7%. US house prices rose by +5.3% y/y in April and the advance is spread everywhere, with the Pacific division states showing the strongest rise of 38% over the past 3 years. Rents have been rising too. Consumer spending, which accounts for 66% of economic activity, rose by 0.9% in May, the most since August The Fed s inflation measure, the core PCE deflator, is up +1.2% y/y, but still below their target of 2%. BCA Research They still expect US bond yields to be lower in a year s time because US inflation will remain low, shortterm rates will only move up gradually, the global economy has plenty of slack and interest rates in most of the world will likely remain low for an extended period. This is definitely not a consensus view, although our offshore bond manager, Brandywine, also expects bond yields to remain largely capped at levels not much higher than current levels, partly because of the very high levels of government debt in most countries, including the US ($17 trillion, 100% of GDP). Germany has debt to GDP of around 80%, the UK 90% and Spain 100%, amongst others. Japan is closer to 200%. Paul Hansen Director: Retail Investing

6 Economic Update 1. SA current account deficit improved in Q to 4.8% of GDP, helped by a very substantial increase in dividend inflows. SA import intensity continues to rise, which has hurt job creation 2. SA petrol price to rise again in July Almost all of the benefits of the lower petrol price in late 2014 and early 2015 have now been reversed. 3. A take-it-or-leave it vote is a recipe for disaster in Greece 1. In Q1 2015, South Africa s current account deficit improved to -4.8% of GDP, up from -5.1% of GDP in Q4 2014, -5.8% of GDP in Q3 2014, and a recent low of -6.2% of GDP in Q This was better than market expectations for the deficit to remain around -5.1% of GDP (STANLIB -4.8% of GDP). In value terms, the current-account deficit narrowed to R billion from R billion in Q (these are annualised numbers). For 2014 as a whole, the current-account deficit was recorded at R206.64bn (5.4% of GDP), smaller than the 2013 deficit of 5.8% of GDP. Although South Africa s current account deficit has narrowed it remains substantial by historical as well as global standards. The better than expected Q current account deficit largely reflects a massive increase in dividend receipts, coupled with a slump in dividend outflows. This helped to narrow the deficit on the services account, which more than offset a widening of the trade deficit. SA s trade deficit widened to 1.8% of GDP in Q1 2015, from -0.9% of GDP in Q As recently as Q SA recorded a surplus on the trade account. During the latest quarter, the value of merchandise exports fell by 2.3%q/q, although there was a 3.4%q/q increase in the volume of exports. This means the decline in the value of exports was largely a negative price effect. Overall, South Africa s export performance remains somewhat disappointing given the improvement in world growth (albeit modest) and the weaker Rand. The value of SA imports rose by 1.0%q/q in the first quarter of 2015, which took the ratio of imports to Gross Domestic Expenditure (GDE) (also known as import intensity ) to 26.3%, its highest level since prior to the global financial market crisis in The net effect of a rise in imports and a decline in exports meant deterioration in SA s trade deficit to R71.45bn in Q from R35.10bn Q As mentioned above, there was a massive improvement in the net dividend outflows, which fell from R82.6bn in the final quarter of 2014 to a mere R26.4bn in the first quarter of This was due to a fairly significant increase in dividend inflows, which rose from R52.6bn in Q to a record high of R89.20bn in Q In general, dividend inflows have been trending higher as South Africans invest more international and receive dividend income, but the latest rise is very substantial and not easy to fully explain. A large part of the dividend inflows appear to reflect South African companies earning income of their investment outside of South Africa. In addition, dividend outflows dropped sharply from R135.2bn in the final quarter of 2014 to R115.6bn in the first quarter of This fall-off in dividend outflows was largely expected, and partly reflects weakening domestic economic conditions and a slowdown in company earnings; especially mining companies. Fortunately, the improvement in SA travel receipts continued in Q1 2015, albeit at a much more modest pace given the recent impact of more onerous travel regulations imposed by South Africa on foreigners arriving in the country. During the first quarter of 2015, travel receipts rose by a further R0.77 billion to R billion, which is once again the best level ever recorded, and far exceeds the level of travel receipts recorded during the Soccer World Cup (Q2 2010). Over the past year, SA travel receipts are up an encouraging R11.8 billion or 12.2%y/y, but should ideally have been up a little higher given the weakness of the Rand. Overall, the turnaround in South Africa s travel inflows is extremely welcome, given the disappointing fall-off in inward bound tourism following the world cup in 2010 as well as South Africa s poor performance in the recent international survey of travel and tourism competitiveness. However, it is important that the authorities find a way to stream-line the latest imposition of more travel regulations on foreign tourists.

7 Travel payments (outflows) remained largely unchanged in Q to R36.97bn (up R0.73bn quarter-onquarter), mainly reflecting the increased cost of foreign travel. The net result was that the surplus on the Travel Account rose fractionally in Q to another all-time record high of R71.4 billion. Looking forward, there is still no clear indication, in terms of the most recent trade data, that the weaker Rand is helping to improve SA s trade balance, while the relatively low commodity prices and slower Chinese growth remain a drag on South Africa s export performance. Given the current slowdown in the domestic economy, we still expect import demand to ease somewhat over the coming quarters. Equally, the Rand weakness should eventually start to benefit some exporters (albeit modestly), while a further pick-up in world growth during 2016 should also help SA s exports. This moderation in imports and uplift in exports could translate into an improved trade and current account deficit over the next year relative to 2014; which will hopefully ease some of the pressure on the Rand. While this is potentially good news in terms of the improvement in South Africa s external vulnerability and credit ratings, it does signal very sluggish domestic economic growth and a lack of infrastructure and investment spending. 2. On Friday, 26 June 2015, the Department of Energy announced that the petrol price (95 ULP) will increase by 41c/l with effect from Wednesday, 1 July (93 ULP will rise by 44c/l). This means that the price of 95 Octane (ULP, Gauteng) will now cost R13.77 per litre, which is only 62c/l below the record high of R14.39/l in April 2014, and up R3.46/l since the low in February The price of diesel will increase by 4c/l (0.005%), while the price of paraffin will rise by 8c /l (retail price), and gas by 56c/kg. The latest increase in the petrol price reflects a combination of the higher oil price and the weaker exchange rate. During the review period from 29 May 2015 to 25 June 2015, the average Rand/US Dollar exchange rate weakened to R12.32 compared to R11.95 during the previous period. The weaker Rand contributed 21.0c/l to the increase in the basic fuel price. In addition, the average oil price was somewhat higher last month, which added 20c/l to the petrol price increase. The petrol price increase in July 2015 will have a significant impact on the inflation rate, pushing the monthly inflation rate by a further 0.2 percentage points. It will also further dent consumer spending and confidence. For example a 70 litre tank of petrol would have cost R722 to fill in February This has now increased to R994, a rise of R242 per tank. Assuming someone fills their petrol tank twice a month, the monthly cost would be an additional R484, which is fairly substantial relative to most people s monthly income. Unfortunately, the direct benefit of the lower petrol price, which fell by R4.02/l from September 2014 to February 2015, has now largely been eroded. Consequently, consumer spending is expected to slump further in the months ahead, aggravated by relatively large increases in electricity, water, and other administered prices. Encouragingly, the daily under recovery on the petrol price on 25 June 2015 was only around 4c/l. This means that at this stage it is entirely possible that the petrol will decline by almost 40c/l in August Clearly, though a lot can happen to the exchange rate and oil price in a month. 3. In the next few days, Greece will have to make the usual monthly payments to pensioners and civil servants, as well as settling a $1.5bn loan repayment to the International Monetary Fund, which becomes due tomorrow. In the meantime the country has introduced capital controls and closed the banks and stock market for six days starting today. Each bank account holder will be limited to a cash withdrawal of 60 per day. Athens has only two options, either to pay up or to default. Ministers have already made it clear they will prioritise paying pensioners and government employees over the IMF. Hence, in the absence of a deal, it is more certain that Greece will default.

8 Yesterday, Greece s announced that it will hold a referendum on whether or not to accept the bail-out conditions (austerity measures) proposed by the rest of Europe. The question for the referendum has not yet been announced. Another factor that will need to be clarified is whether Greece will remain in the Eurozone or not. The logistics of an exit will be dreadful. The infamously inefficient Greek administration will have a hard time organising the referendum in less than a week and the referendum could cost more than 100m when the public coffers are literally empty. In addition, if they exit, the printing of a new currency would also be a costly and administratively intensive exercise. Beyond the cost, though, there is the problem that this referendum has no real objective. Voting on a non-existing proposal is bizarre and only serves to highlight that the referendum is really about the standing of Greece in Europe. The outcome for the rest of Europe is probably less daunting and the knock-on effect will be minimal. However exiting the Euro will be a gloomy situation for Greek people. The prospects for a Greece exit from the Euro-area have risen to 80%. Please follow our regular economic updates on Kevin Lings, Laura Jones & Kganya Kgare (STANLIB Economics Team)

9 Rates These rates are expressed in nominal and effective terms and should be used for indication purposes ONLY. STANLIB Money Market Fund Nominal: Effective: 6.27% per annum 6.45% per annum STANLIB is required to quote an effective rate which is based upon a seven-day rolling average yield for Money Market Portfolios. The above quoted yield is calculated using an annualised seven-day rolling average as at 26 June This seven- day rolling average yield may marginally differ from the actual daily distribution and should not be used for interest calculation purposes. We however, are most happy to supply you with the daily distribution rate on request, one day in arrears. The price of each participatory interest (unit) is aimed at a constant value. The total return to the investor is primarily made up of interest received but, may also include any gain or loss made on any particular instrument. In most cases this will merely have the effect of increasing or decreasing the daily yield, but in an extreme case it can have the effect of reducing the capital value of the portfolio. STANLIB Enhanced Yield Fund Effective Yield: 6.53% STANLIB is required to quote a current yield for Income Portfolios. This is an effective yield. The above quoted yield will vary from day to day and is a current yield as at 26 June The net (after fees) yield on the portfolio will be published daily in the major newspapers together with the all-in NAV price (includes the accrual for dividends and interest). This yield is a snapshot yield that reflects the weighted average running yield of all the underlying holdings of the portfolio. Monthly distributions will consist of dividends and interest. Interest will also be exempt from tax to the extent that investor s are able to make use of the applicable interest exemption as currently allowed by the Income Tax Act. The portfolio s underlying investments will determine the split between dividends and interest. STANLIB Income Fund Effective Yield: 7.33% Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. A schedule of fees and charges and maximum commissions is available on request from the company/scheme. CIS can engage in borrowing and scrip lending. Commission and incentives may be paid and if so, would be included in the overall costs. The above quoted yield will vary from day to day and is a current yield as at 26 June 2015.

10 STANLIB Extra Income Fund Effective Yield: 6.80% Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. A schedule of fees and charges and maximum commissions is available on request from the company/scheme. CIS can engage in borrowing and scrip lending. Commission and incentives may be paid and if so, would be included in the overall costs. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. The above quoted yield will vary from day to day and is a current yield as at 26 June STANLIB Flexible Income Fund Effective Yield: 7.35% Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. A schedule of fees and charges and maximum commissions is available on request from the company/scheme. CIS can engage in borrowing and scrip lending. Commission and incentives may be paid and if so, would be included in the overall costs. The above quoted yield will vary from day to day and is a current yield as at 26 June STANLIB Multi-Manager Absolute Income Fund Effective Yield: 5.46% Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. A schedule of fees and charges and maximum commissions is available on request from the company/scheme. CIS can engage in borrowing and scrip lending. Commission and incentives may be paid and if so, would be included in the overall costs. The above quoted yield will vary from day to day and is a current yield as at 26 June 2015.

11 Glossary of terminology Bonds A bond is an interest-bearing debt instrument, traditionally issued by governments as part of their budget funding sources, and now also issued by local authorities (municipalities), parastatals (Eskom) and companies. Bonds issued by the central government are often called gilts. Bond issuers pay interest (called the coupon ) to the bondholder every 6 months. The price/value of a bond has an inverse relationship to the prevailing interest rate, so if the interest rate goes up, the value goes down, and vice versa. Bonds/gilts generally have a lower risk than shares because the holder of a gilt has the security of knowing that the gilt will be repaid in full by government or semi-government authorities at a specific time in the future. An investment in this type of asset should be viewed with a 3 to 6 year horizon. Cash Collective Investments Compound Interest Dividend Yields Dividends Earnings per share An investment in cash usually refers to a savings or fixed-deposit account with a bank, or to a money market investment. Cash is generally regarded as the safest investment. Whilst it is theoretically possible to make a capital loss investing in cash, it is highly unlikely. An investment in this type of asset should be viewed with a 1 to 3 year horizon. Collective investments are investments in which investors funds are pooled and managed by professional managers. Investing in shares has traditionally yielded unrivalled returns, offering investors the opportunity to build real wealth. Yet, the large amounts of money required to purchase these shares is often out of reach of smaller investors. The pooling of investors funds makes collective investments the ideal option, providing cost effective access to the world s stock markets. This is why investing in collective investments has become so popular the world over and is considered a sound financial move by most investors. Compound interest refers to the interest earned on interest that was earned earlier and credited to the capital amount. For example, if you deposit R1 000 in a bank account at 10% and interest is calculated annually; your balance will be R1 100 at the end of the first year and R1 210 at the end of the second year. That extra R10, which was earned on the interest from the first year, is the result of compound interest ("interest on interest"). Interest can also be compounded on a monthly, quarterly, half-yearly or other basis. The dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its share price. The higher the yield, the more money you will get back on your investment. When you buy equities offered by a company, you are effectively buying a portion of the company. Dividends are an investor s share of a company s profits, given to him or her as a part-owner of the company. Earnings per share is a measure of how much money the company has available for distribution to shareholders. A company s earnings per share is a good indication of its profitability and is generally considered to be the most important variable in determining a company s share price.

12 Equity Financial Markets Fixed Interest Funds Gross Domestic Product (GDP) Growth Funds Industrial Funds Investment Portfolio JSE Securities Exchange Price to earnings ratio Property Resources and Basic Industries Funds A share represents an institution/individual s ownership in a listed company and is the vehicle through which they are able to share in the profits made by that company. As the company grows, and the expectation of improved profits increases, the market price of the share will increase and this translates into a capital gain for the shareholder. Similarly, negative sentiment about the company will result in the share price falling. Shares/equities are usually considered to have the potential for the highest return of all the investment classes, but with a higher level of risk i.e. share investments have the most volatile returns over the short term. An investment in this type of asset should be viewed with a 7 to 10 year horizon. Financial markets are the institutional arrangements and conventions that exist for the issue and trading of financial instruments. Fixed interest funds invest in bonds, fixed-interest and money market instruments. Interest income is a feature of these funds and, in general, capital should remain stable. The Gross Domestic Product measures the total volume of goods and services produced in the economy. Therefore, the percentage change in the GDP from year to year reflects the country's annual economic growth rate. Growth funds seek maximum capital appreciation by investing in rapidly growing companies across all sectors of the JSE. Growth companies are those whose profits are in a strong upward trend, or are expected to grow strongly, and which normally trade at a higher-thanaverage price/earnings ratio. Industrial funds invest in selected industrial companies listed on the JSE, but excluding all companies listed in the resources and financial economic groups. An investment portfolio is a collection of securities owned by an individual or institution (such as a collective investment scheme). A funds portfolio may include a combination of financial instruments such as bonds, equities, money market securities, etc. The theory is that the investments should be spread over a range of options in order to diversify and spread risk. The primary role of the JSE Securities Exchange is to provide a market where securities can be freely traded under regulated procedures. Price to earnings ratio or p: e ratio is calculated by dividing the price per share by the earnings per share. This ratio provides a better indication of the value of a share, than the market price alone. For example, all things being equal, a R10 share with a P/E of 75 is much more expensive than a R100 share with a P/E of 20. Property has some attributes of shares and some attributes of bonds. Property yields are normally stable and predictable because they comprise many contractual leases. These leases generate rental income that is passed through to investors. Property share prices however fluctuate with supply and demand and are counter cyclical to the interest rate cycle. Property is an excellent inflation hedge as rentals escalate with inflation, ensuring distribution growth, and property values escalate with inflation ensuring net asset value growth. This ensures real returns over the long term. These funds seek capital appreciation by investing in the shares of companies whose main business operations involve the exploration, mining, distribution and processing of metals, minerals, energy, chemicals, forestry and other natural resources, or where at least 50 percent of their earnings are derived from such business activities, and excludes service providers to these companies.

13 Smaller Companies Funds Value Funds Growth Funds Smaller Companies Funds seek maximum capital appreciation by investing in both established smaller companies and emerging companies. At least 75 percent of the fund must be invested in small- to mid-cap shares which fall outside of the top 40 JSE-listed companies by market capitalisation. These funds aim to deliver medium- to long-term capital appreciation by investing in value shares with low price/earnings ratios and shares which trade at a discount to their net asset value. Growth funds seek maximum capital appreciation by investing in rapidly growing companies across all sectors of the JSE. Growth companies are those whose profits are in a strong upward trend, or are expected to grow strongly, and which normally trade at a higher-thanaverage price/earnings ratio. Sources: Unit Trust and Collective Investments (September 2007), The Financial Sector Charter Council, Personal Finance (30 November 2002), Introduction to Financial Markets, Personal Finance, Quarter , Investopedia ( and The South African Financial Planning Handbook 2004.

14 Disclaimer The price of each unit of a domestic money market portfolio is aimed at a constant value. The total return to the investor is primarily made up of interest received but, may also include any gain or loss made on any particular instrument. In most cases this will merely have the effect of increasing or decreasing the daily yield, but in an extreme case it can have the effect of reducing the capital value of the portfolio. Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. An investment in the participations of a CIS in securities is not the same as a deposit with a banking institution. CIS are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available on request from STANLIB Collective Investments Ltd (the Manager). Commission and incentives may be paid and if so, would be included in the overall costs. A fund of funds is a portfolio that invests in portfolios of collective investment schemes, which levy their own charges, which could result in a higher fee structure for these portfolios. Forward pricing is used. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. TER is the annualised percent of the average Net Asset Value of the portfolio incurred as charges, levies and fees. A higher TER ratio does not necessarily imply a poor return, nor does a low TER imply a good return. The current TER cannot be regarded as an indication of future TERs. Portfolios are valued on a daily basis at 15h30. Investments and repurchases will receive the price of the same day if received prior to 15h30. Liberty is a full member of the Association for Savings and Investments of South Africa. The Manager is a member of the Liberty Group of Companies. As neither STANLIB Wealth Management Limited nor its representatives did a full needs analysis in respect of a particular investor, the investor understands that there may be limitations on the appropriateness of any information in this document with regard to the investor s unique objectives, financial situation and particular needs. The information and content of this document are intended to be for information purposes only and STANLIB does not guarantee the suitability or potential value of any information contained herein. STANLIB Wealth Management Limited does not expressly or by implication propose that the products or services offered in this document are appropriate to the particular investment objectives or needs of any existing or prospective client. Potential investors are advised to seek independent advice from an authorized financial adviser in this regard. STANLIB Wealth Management Limited is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 37 of 2002 (Licence No. 26/10/590) Compliance No.: H257X3 17 Melrose Boulevard, Melrose Arch, 2196 P O Box 202, Melrose Arch, 2076 T (SA Only) T+27(0) E contact@stanlib.com Website STANLIB Wealth Management Limited Reg. No. 1996/005412/06 Authorised FSP in terms of the FAIS Act, 2002 (Licence No. 26/10/590) STANLIB Collective Investments Limited Reg. No. 1969/003468/06