Fund Guide on Linked Platforms. June 2017

Transcription

1 Fund Guide on Linked Platforms June 2017

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3 5 About STANLIB 6 Multiple capabilities 8 STANLIB core range 10 STANLIB funds on external guided architecture platforms 11 STANLIB funds on Tax-Free Savings Account 12 STANLIB funds on external open architecture platforms (linked platforms) 13 STANLIB offshore funds on external offshore platforms 15 STANLIB core and extended range insights 38 Contact details 3

4 Our presence across the African continent Ghana Uganda Kenya Tanzania Namibia Botswana Swaziland Lesotho South Africa

5 A leading investment business We are a multi-specialist investment company in nine African countries with business partners in North America, United Kingdom, Europe, Middle East and Asia. We have USD45.4 billion assets under management and administration (ZAR593 billion) as at 30 June 2017 for over retail and institutional clients across Africa. About STANLIB STANLIB is a multi-specialist investment company in Africa. We have a physical presence in nine African countries and business partners in North America, the United Kingdom, Europe, the Middle East and Asia. With dedicated teams specialising in fixed interest, listed property, equities, research, multi-asset allocation, multimanagement and alternatives, we draw on the in-depth knowledge of a broad range of experts. This unique blend of skills and perspectives enables us to make better-informed decisions so we can help our clients, both individuals and institutions, to achieve their financial goals. Additional facts STANLIB has more than 100 investment experts. We have one of the oldest existing unit trusts in South Africa, the STANLIB Equity Fund. STANLIB pioneered the Fundisa Fund, which is a unit trust investment created to encourage lower income families to save for their children s tertiary education from as little as R40 per month. It is the first ever public/private partnership in the services industry. About this document This document is aimed at you, the financial adviser, providing a guide on how to access STANLIB funds via the following Linked Product Platforms: AIMS Alexander Forbes Allan Gray Ashburton Discovery Glacier Investec Momentum Old Mutual PPS PSG Sygnia Wealthport Additional updates on all STANLIB portfolios are available from your Investment Specialist or Relationship Manager, the STANLIB contact centre ( ) or by visiting our website at stanlib.com. We employ over 696 employees directly. STANLIB manages over R100 billion in money market assets and we are the largest player in the money market space. We have won 83 Raging Bull Awards and 92 Morningstar Awards. STANLIB is proud to have been named Africa's best provider of Money Market Funds for 2017 at the Global Finance Awards. 5

6 Multiple capabilities Our philosophy Throughout our growing business, our thinking remains the same the belief that no two clients are the same; and an investment philosophy which dictates that thorough research informs everything we do. At STANLIB, we focus on finding opportunities where others may not and work tirelessly to make sure that every decision counts when the time is right. FIXED INCOME PROPERTY EQUITY M ACTIVE SINGLE MANAGER Money Market Bonds Income High Yield Investment Grade Liability Driven Investments Africa Income Listed Property Direct Property Developed Markets Listed Property Emerging Markets Listed Property Africa Listed Property Equity Africa Equity Absolute Multi-Ass PASSIVE SINGLE MANAGER Bond Trackers Inflation Linked Bonds Trackers Listed Property Trackers Listed Equity Trackers Smart Beta (Factor Strategies) Multi-Factor Equity Strategies Global Equity Multi-Ass Funds MULTI-MANAGER Money Market Bonds Income Listed Property Flexible Property SA Equity Global Equity Balanced Defensive Real Retu Specialist Shari'ah 6

7 How we invest When there are literally thousands of variables to monitor and interpret, you not only need an eye on every ball, you need a dedicated, uninterrupted expert eye on every ball. Our chosen business model of specialist investment teams allows the investment professionals to focus on what they do best. These small focused investment teams are the workshops where our client promise of creating financial freedom is crafted by skilled professionals. The team heads have owner-like autonomy with respect to setting their investment philosophies and processes, while enjoying the support of a shared robust business framework. In line with the principle of focused expertise, we have partnered with several global companies to manage the ex-africa portion of our portfolios: Fidelity, who manage cash and multi-asset funds; Brandywine, who manage bonds; and Columbia Threadneedle, who manage equities and multi-asset funds. ULTI-ASSET ALTERNATIVES EX-AFRICA SOLUTIONS Return Infrastructure Development Private Equity Property Development Cash (Fidelity) Global Bonds (Brandywine) et REITs Unlisted Debt Africa Unlisted Debt Global Equity (Columbia Threadneedle) Multi-Asset (Columbia Threadneedle) Goal-Based Investing Active Risk Management Asset- Liability Management Completion Strategies et Passive Tracker Balanced rn Risk Profiles Alternative Assets Fund of Funds Global Equity Global Bonds Global Cash Multi-Strategy Portfolio Construction Model Portfolios Manager Research Services 7

8 STANLIB Core Range Time horizon Conservative Moderately Conservative Moderate Moderately Aggressive Aggressive Maximum exposure to growth assets 5 years+ STANLIB Equity Fund 100% 25% STANLIB Balanced Fund 75% 25% 25% 3-5 years STANLIB Absolute Plus Fund 60% 25% 25% 1-3 years STANLIB Balanced Cautious Fund 40% 25% 15% 1 years+ STANLIB Flexible Income Fund 25% 25% Domestic Equity Property Offshore 8

9 Risk profile Fund Time horizon Fund objective Portfolio limits Regulation 28 * Performance fees Offshore exposure Launch date Aggressive STANLIB Equity Fund 5 years+ This fund aims to provide long-term capital growth by investing in both local and offshore equities. Exposure to offshore assets is limited to a maximum of 25% X X v Jan-70 Moderately aggressive STANLIB Balanced Fund 3-5 years This fund aims to provide capital growth over time at a lower risk than pure equity funds. The fund invests in a diversified spread of cash, bonds, property, equity and offshore assets. Exposure to equities is limited to a maximum of 75% v X v Aug-94 Moderate STANLIB Absolute Plus Fund 3-5 years This fund aims to provide investors exposure to the potential upside of domestic equities with limited downside. It aims to provide capital protection over a rolling one-year period by investing in financial instruments that protect the portfolio in down markets. Exposure to equities is limited to a maximum of 60% v X v Dec-05 Moderately conservative STANLIB Balanced Cautious Fund 1-3 years This fund aims to provide reasonable capital growth and income over a three-year investment horizon. It invests in a diversified spread of cash, bonds, property, equity and offshore assets with a maximum of 40% in property and equities. Exposure to equities and properties is limited to a maximum of 40% v X v Jan-09 Conservative STANLIB Flexible Income Fund 1 year+ This fund aims to provide income generation and capital growth, targeting outperformance over traditional money market income funds, by investing in the full spectrum of fixed interest instruments and property. Maximum weighted average maturity of two years and exposure to offshore and property is limited to a maximum of 25% v X v Apr-04 *Regulation 28 stipulates that the maximum exposure to equities and property combined is 90% 9

10 STANLIB funds on external guided architecture platforms Ashburton Investments STANLIB Bond Fund (A) 0.75% STANLIB Global Bond Feeder Fund (B3) ** 0.30% STANLIB Global Balanced Cautious Feeder Fund (B3) ** 0.50% STANLIB Global Balanced Feeder Fund (B3) ** 0.50% STANLIB Property Income Fund (B1) ** 1.00% Investec i-select # STANLIB Absolute Plus Fund (B1) 1.0% STANLIB Aggressive Income (B1) 0.90% STANLIB Balanced Fund (B1) 1.0% STANLIB Balanced Cautious Fund (B1) 1.0% STANLIB Equity Fund (R) 1.0% STANLIB Euro Currency Fund of Funds (A) 0.50% STANLIB European Equity Feeder Fund (B3) ** 0.70% STANLIB Flexible Income Fund (B1) 0.75% STANLIB Global Balanced Feeder Fund (B3) ** 0.50% STANLIB Global Balanced Cautious Feeder Fund (B3) ** 0.50% STANLIB Global Equity Feeder Fund (B3) ** 0.50% STANLIB Global Property Feeder Fund (B3) ** 0.40% STANLIB Income Fund (B6) 0.60% STANLIB Property Income Fund (B1) 1.00% STANLIB SA Equity Fund (R) 1.00% STANLIB US Dollar Currency Fund of Funds (A) 0.50% PPS Investments STANLIB Absolute Plus Fund (B1) 1.00% STANLIB Balanced Fund (B1) 1.00% STANLIB Equity Fund (R) 1.00% PSG Asset Management Total annual fee Investment management fee Annual management fee Annual management fee Fund rebate STANLIB Absolute Plus Fund (B1) 1.00% 0.00% STANLIB Aggressive Income Fund (B1) 0.90% 0.00% STANLIB Balanced Fund (B1) 1.00% 0.00% STANLIB Bond Fund (R) 0.75% 0.00% STANLIB Euro Currency Fund of Funds (A) 0.50% 0.10% STANLIB European Equity Feeder Fund (B3) ** 0.70% 0.00% STANLIB Extra Income Fund (R) 0.75% 0.00% STANLIB Flexible Income Fund (B1) 0.75% 0.00% STANLIB Global Balanced Feeder Fund (B3) ** 1.00% 0.00% STANLIB Global Bond Feeder Fund (B3) ** 1.50% 0.50% STANLIB Global Equity Feeder Fund (B3) ** 1.00% 0.00% STANLIB Global Property Feeder Fund (B3) ** 0.60% 0.00% STANLIB Income Fund (B6) 0.60% 0.00% STANLIB Property Income Fund (B1) 1.00% 0.00% Sygnia Emporium STANLIB Flexible Income Fund (B1) 0.75% Investment management fee 10

11 Wealthport STANLIB ALSI 40 Fund (A) 0.42% STANLIB Balanced Fund (B1) 1.00% STANLIB Bond Fund (A) 0.75% STANLIB Extra Income Fund (R ) 0.75% STANLIB Flexible Income Fund (B1) 0.80% STANLIB Income Fund (B6) 0.60% STANLIB Index Fund ( R) 0.50% STANLIB Institutional Money Market Fund (B13) 0.50% STANLIB Property Income Fund (B1) 1.00% ** + underlying funds Annual management fee STANLIB funds on Tax-Free Savings Account Fund and class Glacier Investec Momentum PSG Wealthport STANLIB Absolute Plus Fund X X X X STANLIB Aggressive Income Fund X X X X STANLIB ALSI 40 Fund X X X STANLIB Balanced Cautious Fund X X X STANLIB Balanced Fund X X X X X STANLIB Bond Fund X X X STANLIB Enhanced Yield Fund X X X STANLIB Equity Fund X X X X STANLIB Extra Income Fund X X X STANLIB Flexible Income Fund X X X X X STANLIB Global Balanced Cautious X X X Feeder Fund STANLIB Global Balanced Feeder Fund X X X STANLIB Global Equity Feeder Fund X X STANLIB Global Property Feeder Fund X X X X STANLIB Income Fund X X X STANLIB Index Fund X X X STANLIB Property Income Fund X X X X X STANLIB SA Equity Fund X X X 11

12 STANLIB funds on external open architecture platforms (linked platforms) Domestic AIMS Alexander Forbes Discovery Glacier Momentum STANLIB Absolute Plus Fund* X X X STANLIB Aggressive Income Fund X X X X X STANLIB ALSI 40 Fund X X X X STANLIB Balanced Fund* X X X X X STANLIB Balanced Cautious Fund* X X X X STANLIB Bond Fund X X X X STANLIB Equity Fund X X X STANLIB Extra Income Fund* X X X X STANLIB Flexible Income Fund* X X X STANLIB Income Fund X X X X X STANLIB Index Fund X X X X STANLIB Property Income Fund X X X X X STANLIB Resources Fund X X X X STANLIB SA Equity Fund X X X X STANLIB Shari ah Equity Fund X X X X X * Regulation 28 Compliant Global (Rand Denominated) AIMS Alexander Forbes Discovery Glacier Investec Momentum STANLIB Euro Currency Fund of Funds X X X X STANLIB European Equity Feeder Fund X X X X X STANLIB Global Balanced Cautious Feeder Fund X X X X X STANLIB Global Balanced Feeder Fund X X X X X STANLIB Global Bond Feeder Fund X X X X X STANLIB Global Equity Feeder Fund X X X X X STANLIB Global Property Feeder Fund X X X X X STANLIB US Dollar Currency Fund of Funds X X X X 12

13 STANLIB offshore funds on external offshore platforms Equity Currency Momentum Wealth International Glacier International Allan Gray Old Mutual International STANLIB European Equity Fund EUR X X STANLIB Global Emerging Markets Fund USD X X STANLIB Global Equity Fund USD X X X Fixed Interest and Cash Currency Momentum Wealth International Glacier International Allan Gray Old Mutual International STANLIB Global Bond Fund USD X X X X STANLIB Euro Cash Fund EUR X STANLIB Sterling Cash Fund GBP X STANLIB US Dollar Cash Fund USD X Managed Solutions Currency Momentum Wealth International Glacier International Allan Gray Old Mutual International STANLIB Global Balanced Fund USD X X X STANLIB Global Balanced Cautious Fund USD X X X X Property Currency Momentum Wealth International Glacier International Allan Gray Old Mutual International STANLIB Global Property Fund USD X X X For more information on STANLIB s offshore range, please speak to your Investment Specialist or visit All of the above funds are FSB approved. 13

14 Multi-specialist investment backed by * years of collective investment experience. * As at 30 June 2017 stanlib.com STANLIB is an authorised financial service provider. 14

15 STANLIB core and extended range insights Absolute Return STANLIB Absolute Plus Fund 16 Multi-Asset STANLIB Balanced Fund 18 STANLIB Balanced Cautious Fund 19 Equity STANLIB Equity Fund 21 STANLIB SA Equity Fund 22 Fixed Interest STANLIB Aggressive Income Fund 24 STANLIB Flexible Income Fund 25 STANLIB Bond Fund 26 STANLIB Income Fund 27 Property STANLIB Property Income Fund 30 Global Solutions STANLIB Global Equity Feeder Fund 32 STANLIB Global Property Feeder Fund 33 STANLIB Global Balanced Feeder Fund 34 STANLIB Global Balanced Cautious Feeder Fund 35 Note: STANLIB funds not listed above are accessible on Linked Platforms and detailed on page 8 and 9. 15

16 Marius Oberholzer Peter van der Ross Absolute Return Team Marius Oberholzer joined STANLIB in September 2009 from Sarala Capital in Cape Town, where he was the Managing Partner responsible for providing strategic direction for the firm. His role was focused on corporate finance solutions and spearheading the group s unlisted investment activities. Marius holds a BCom degree from Stellenbosch University and an MSc in Global Finance from the Hong Kong University of Science and Technology and New York University. Peter van der Ross joined STANLIB in January 2016 as a Fund Manager in the Absolute Return team. Peter has 19 years of investment management experience, as well as a background in life insurance from Momentum and Liberty. He was previously Head of LibFin Investments, where he was the custodian of the relationship between Liberty and STANLIB, as well as other service providers. Before joining Liberty, Peter was Head of Investment Strategy at Momentum Asset Management where he chaired the asset allocation committee. He also spent five years at RMB Asset Management. His experience and background are exceptionally complementary to the existing and varied skills sets in the Absolute Return team. Peter holds a Bachelor of Business Science from the University of Cape Town and is a CFA charterholder. 16

17 STANLIB Absolute Plus Fund (Regulation 28 compliant) This fund is a specialist portfolio and aims to achieve capital growth, as well as some level of capital protection over the long-term. In the short-term the fund aims to profit from a rising equity market and protect investors against capital losses in a weak equity market. Who should invest? This fund is targeted at investors who: Are aiming for a certain level of targeted return and capital preservation over their investment term. Find comfort in their money being managed towards clearly defined investment objectives. Fund update quarter The second quarter saw a broad continuation of the rand s fortunes dominating the local asset market. The rand opened the quarter at R13.41 to the US dollar, weakened to R13.95 (as it was still suffering from the after-effects of the late-march cabinet reshuffle), rallied to R12.56 and weakened in the last two weeks of June to close the quarter at R All major local asset classes returned less than cash, so in domestic assets, it certainly paid to be defensively positioned. During the first half of this year we have generally preferred to take equity risk globally rather than domestically and this paid off over the period. Globally, the cyclical expansion certainly paused over the period. Fund information 1 Year ended 30 June 2017 Fund size R2.5 billion Fund standard deviation (ann.) 4.27 Benchmark standard deviation (ann.) 1.11 Risk profile Moderate Asset allocation 9.44% 29.52% Domestic Equity 4.15% Domestic Bonds 0.96% Domestic Cash Global Equity 13.18% Global Property Global Bonds 7.49% 34.97% Global Cash Performance figures (%) (June 2017) Quarter 1 Year 3 Years 5 Years Fund Benchmark Source: Morningstar Fund benchmark CPI Commodities were generally weak, despite the weaker US dollar. Major bond market yields stayed low despite the consensus at the start of the year that bond yields would rise; and developed world 10-year inflation expectations drifted lower. However, global equity markets broadly powered ahead. Domestically, significant news came in the form of confirmation that South Africa (SA) was in technical recession with negative real growth over the last quarter of 2016 and the first quarter of This significant for two reasons: 1. Typically, SA s GDP cycle reflects that of the global economy as we are a relatively open economy. Our GDP is however, slowing at a time when the globe is expanding, suggesting that this recession is of our own doing. 2. We have for some time been highlighting that this year we have been expecting to see downside inflation surprises with interest rate cuts to follow. The inflation surprises have started and after some reflection on the risk of further sovereign downgrades, we maintain the view that interest rates will be cut here in the near future. At the right prices, we are happy holders of bonds and rate sensitive stocks to capitalise on this view. Fund performance has been satisfactory and our positive global cyclical stance has proven correct, however, this is cold comfort since in absolute terms, we always strive to generate cashbeating returns in the short-term and inflation-beating returns over periods three years and longer. The backing up of bond yields could provide some volatility during the coming quarter which should provide opportunities for us. 17

18 Robin Eagar Warren Buhai Kobus Nell Anwaar Wagner Multi-Asset Team Robin Eagar joined the STANLIB investment team in 2005 as an industrial analyst and shortly thereafter became a general equity manager in the Aggressive Equity space. In 2007 Robin moved to the Multi Asset investment space where he is currently the Head of Multi-Asset. He had previously spent five years working in private equity and corporate finance in London finance investing in various emerging markets and the UK. Robin began his career in 1998 with Standard Bank s Corporate Finance team in Johannesburg, advising on corporate re-structures, mergers and acquisitions and public to private transactions. Following five years spent in corporate finance at Standard Bank, Warren Buhai joined STANLIB in 2005 where he specialised in resources analysis and fund management. He has been a Fund Manager for STANLIB Multi-Asset since Kobus Nell joined STANLIB in 2003 on completion of his accountancy articles in the unit trust pricing department and corporate actions and confirmations. He joined the Unconstrained Equity team as a Research Analyst and Assistant Fund Manager in He also specialises in resources sector research and has been managing the STANLIB Gold and Precious Metals Fund (now merged with the STANLIB Resources Fund) since He is a PricewaterhouseCooperstrained Chartered Accountant, and is also a CFA charterholder. With 17 years of investment management experience, including five years of international investing, Anwaar Wagner joined STANLIB in 2015 as a Fund Manager in the Multi-Asset team. He previously worked at Old Mutual Global Emerging Markets(GEM) as the Fund Manager of the GEM Fund. Prior to that, he worked as Head of Basic Materials, Equity Analyst and Fund Manager for the Old Mutual Resources Fund. His passion and wealth of industry experience has seen him bag three Raging Bull Awards and S&P Micropal Awards. Anwaar started out as a Trainee Analyst at Oasis Management before moving to Metropolitan Asset Managers in He holds a Bachelor of Business Science from the University of Cape Town and is registered with the South African Institute of Financial Markets (SAIFM). 18

19 STANLIB Balanced Fund (Regulation 28 compliant) The STANLIB Balanced Fund provides capital growth over time at a lower risk than pure equity funds. It invests in a diversified spread of cash, bonds, property, equity and offshore assets, with a maximum of 75% in equities. This fund is suitable for retirement savings schemes. Who should invest? This fund is targeted at investors: Aiming to achieve capital growth with lower risk than equity only funds With a time horizon of five years or more to invest With a moderately aggressive risk profile Fund update quarter The STANLIB Balanced Fund returned 0.8% over the second quarter of 2017, outperforming its benchmark by 0.3%. The excess liquidity measures in some emerging markets, which helped to strengthen commodity prices and emerging market currencies, started to roll over in the period. Developed markets such as the US, Europe and the UK, became more vocal about their desire and intent to normalise monetary policy by hiking interest rates, effectively stepping away from the highly accommodative policies that followed the 2008 global financial crisis. Higher inflation rates coupled with sustainable economic recoveries which remain key ingredients to justify such policy changes still remain uncertain. Reduction in the size of balance sheets, both in the US and Europe, has come onto the agenda. The increased probability of macroeconomic policy errors coupled with heightened global political uncertainty, have increased overall equity market risk in general, although specific individual equity market opportunities have started to present themselves. Domestic cash (+1.4%) and bonds (+1.6%) outperformed domestic equity (-0.8%). International equity performed well (+5%), continuing its positive trajectory despite the 2.3% appreciation of the rand against the US dollar. In dollar terms, the MSCI Emerging Markets Index delivered 6.4%, materially outperforming MSCI South Africa Index (3.6%) as well as the MSCI World Index (4.2%). Looking ahead We have positioned the fund conservatively, given the extent of equity market gains over the past seven years, together with the level of valuations and continued uncertainty around the global growth path. We remain cautiously tilted to high quality multi-national companies that have a long-term history of compounding returns over time and are focusing on selective domestic equity opportunities. Fund information 1 Year ended 30 June 2017 Fund size R5.9 billion Fund standard deviation (ann.) 4.80 Benchmark standard deviation (ann.) 6.02 Risk profile Moderate Asset allocation 3.41% 1.97% Domestic Equity 45.05% 1.06% Domestic Bonds Domestic Cash Domestic Commodities 23.09% Domestic Property Global Equity 0.81% 1.71% Global Bonds 8.08% Global Property 14.81% Global Cash Performance figures (%) (June 2017) Quarter 1 Year 3 Years 5 Years Fund Benchmark Source: Morningstar Fund benchmark 60% FTSE/JSE Shareholders Weighted All Share Index 25% BEASSA All Bond Index 9% MSCI World Index 6% Barclays Global Aggregate Bond Index From a local sector perspective, the resources index underperformed, declining 6% as commodity prices sold off post a strong rally. Financials also underperformed, increasing by a marginal 0.3% as consumer pressure intensified, whilst enjoying some buffer from downward trending inflation expectations. Industrial shares were the clear outperformer, advancing 3.4% and continuing the year-to-date outperformance. Value underperformed growth-style shares during the period, with Media and Technology still the key drivers of performance. Equity valuation levels in general remain elevated, with a preference for income products which should still be able to deliver inflation beating returns without the risk of substantial capital losses in the former. Our preference remains skewed to offshore equities, where we find more value and conviction relative to the domestic equity market. 19

20 STANLIB Balanced Cautious Fund (Regulation 28 compliant) The STANLIB Balanced Cautious Fund is a low equity balanced fund aimed at providing reasonable capital growth and income over a three-year investment horizon. This fund invests in a diversified spread of cash, bonds, property, equity and offshore assets, with a maximum of 40% in property and equities. This fund is suitable for retirement savings schemes. Who should invest? Looking ahead We have positioned the fund conservatively, given the extent of equity market gains over the past seven years, together with the level of valuations and continued uncertainty around the global growth path. We remain cautiously tilted to high quality multi-national companies that have a long-term history of compounding returns over time and are focusing on selective domestic equity opportunities. This fund is targeted at investors: With a time horizon of three years to invest Aiming for moderate capital growth and a reasonable level of income With a moderately conservative risk profile Fund update quarter The STANLIB Balanced Cautious Fund increased by 0.9% the second quarter of 2017, underperforming its benchmark by 0.3%. The excess liquidity measures in some emerging markets, which helped to strengthen commodity prices and emerging market currencies, started to roll over in the period. Developed markets such as the US, Europe and the UK, became more vocal about their desire and intent to normalise monetary policy by hiking interest rates, effectively stepping away from the highly accommodative policies that followed the 2008 global financial crisis. Higher inflation rates coupled with sustainable economic recoveries which remain key ingredients to justify such policy changes still remain uncertain. Reduction in the size of balance sheets, both in the US and Europe, has come onto the agenda. The increased probability of macroeconomic policy errors coupled with heightened global political uncertainty, have increased overall equity market risk in general, although specific individual equity market opportunities have started to present themselves. Domestic cash (+1.4%) and bonds (+1.6%) outperformed domestic equity (-0.8%). International equity performed well (+5%), continuing its positive trajectory despite the 2.3% appreciation of the rand against the US dollar. In dollar terms, the MSCI Emerging Markets Index delivered 6.4%, materially outperforming MSCI South Africa Index (3.6%) as well as the MSCI World Index (4.2%). From a local sector perspective, the resources index underperformed, declining 6% as commodity prices sold off post a strong rally. Financials also underperformed, increasing by a marginal 0.3% as consumer pressure intensified, whilst enjoying some buffer from downward trending inflation expectations. Industrial shares were the clear outperformer, advancing 3.4% and continuing the year-to-date outperformance. Value underperformed growth-style shares during the period, with Media and Technology still the key drivers of performance. Fund information 1 Year ended 30 June 2017 Fund size R8.1 billion Fund standard deviation (ann.) 2.99 Benchmark standard deviation (ann.) Risk profile Moderately conservative Asset allocation 8.10% 0.91% 25.63% Domestic Equity 1.41% Domestic Bonds Domestic Cash 15.67% Domestic Commodities 6.66% 0.69% 20.34% 20.59% Domestic Property Global Equity Global Property Global Bonds Global Cash Performance figures (%) (June 2017) Quarter 1 Year 3 Years 5 Years Fund Benchmark Source: Morningstar Fund benchmark 45% STeFI Call Deposit Rate Index 25% FTSE/JSE Shareholders Weighted All Share Index 15% BEASSA All Bond Index 6% Barclays Global Aggregate Bond Index 5% FTSE/JSE SA Listed Property Index (SAPY) 4% MSCI AC World Index (ZAR) Equity valuation levels in general remain elevated, with a preference for income products which should still be able to deliver inflation beating returns without the risk of substantial capital losses in the former. Our preference remains skewed to offshore equities, where we find more value and conviction relative to the domestic equity market. 20

21 Herman van Velze Theo Botha Equity Team Herman van Velze joined STANLIB in 1995 as a research analyst. Since then he has held the positions of Head of Research, Fund Manager, Head of Balanced Funds and he is currently the Head of Equities and a member of STANLIB s executive committee. His service with STANLIB was intermitted by two years in a resource-focused private equity company as a deal originator. The equity team manages a range of equity funds and sets out to invest in equities that show distinct intrinsic value and the potential to outperform the market. As Head of Equities, Herman oversees a number of fund managers and analysts that provide company research to the team and actively pursue investment ideas. Opportunities are refined and extensively reviewed by the team under his leadership and considered for the fund. The resources sector remains a key interest of his and he actively researches the sector. Theo Botha is a highly experienced industry professional who currently heads the Industrial team, with direct research responsibility for the Luxury Goods, Food Manufacturing, Hospitals and Pharmaceutical sectors. He also manages the Industrial, Nationbuilder and Sci-Tech unit trusts, together with other industrial-specific mandate funds for the Liberty group. Prior to joining Liberty Asset Management as Head of the Research Sector in 1999, Theo spent nine years with UAL/NIB Asset Management in various research and fund management positions. Theo completed his BCom Honours degree in 1989, majoring in Investment Management and he has been a CFA charterholder since

22 STANLIB Equity Fund The STANLIB Equity Fund is a general equity fund that aims to outperform its composite benchmark over time. The fund uses a bottom-up stock-picking approach and can invest in both local and offshore equities. This fund has a mandate that is not restricted to any specific investment style. Investments are focused around companies that are housed within the fund s benchmark, with offshore being limited to a maximum of 25% of the fund. Who should invest? The fund is targeted at investors: Aiming to achieve capital growth with a time horizon of five years or more to invest Who want a single equity fund for local and offshore equities Who prefer an equity mandate that is not restricted to a specific investment style Fund update quarter We started 2017, with a moderately positive outlook for the South African economy. The expected recovery of the economy has however, been delayed somewhat due mainly to the political uncertainty. We are of the view that this will prevail for the balance of the year as we progress towards the ANC leadership election. The JSE Shareholder Weighted All Share Index returned 0%, during the second quarter of Within that, Resources lost 7%, Industrials lost 2.2% and Financials, a small negative of The only positive return was the Property sector return of 0.9%. The fund lost 0.3% during the quarter, broadly matching the benchmark. The international component of the fund delivered a strong positive return and beating its benchmark. Share selection drove returns. In sector terms, Technology,Financials and Consumer Discretionary led the way. E-commerce giant Alibaba Group, surged after forecasting revenue growth in excess of 45% for The domestic share positions that largely contributed to the negative performance during the quarter included being underweight Naspers and overweight Pioneer Foods, Kumba Iron Ore and Anglo American. Positive contributors included not owning gold and platinum shares, Brait, and being overweight Steinhoff and Alexander Forbes. Fund activity We sold our holdings in African Phoenix, AB InBev, Brait, Choppies, Dischem and Remgro; and reduced our holdings in British American Tobacco and Steinhoff. We used the proceeds to add a 2% holding in property stocks, Cashbuild, Mr Price and Pioneer Foods. We also increased our holdings in Coronation Fund Managers and Anglo American. The fund added new positions which include Halliburton, Nvidia and PepsiCo. We closed our holdings in Align Technology, Royal Dutch Shell and Bank of Ireland, as each of them fell out of favour with our investment philosophy. Looking ahead Political uncertainty, rising populism and policy divergence dominated markets over the past quarter and will continue for some time with an impact on equities. We continue to focus on quality growth, seeking competitively advantaged businesses exposed to a secular growth outcome or those that can deliver company-led growth. The prospects for inflation look benign as some of the macro factors work in SA s favour. There has been an uptick in gross domestic product that is likely to continue and agriculture is improving as a result of better rainfall. Commodity prices are up across the board and mining companies are increasing their capital expenditure. Fund information 1 Year ended 30 June 2017 Fund size R3.5 billion Fund standard deviation (ann.) 6.30 Benchmark standard deviation (ann.) 8.55 Risk profile Aggressive Asset allocation 34.22% 1.75% 3.18% 0.34% 60.50% Performance figures (%) (June 2017) Domestic Equity Domestic Cash Global Property Global Equity Global Property Quarter 1 Year 3 Years 5 Years Fund Benchmark Source: Morningstar Fund benchmark FTSE/JSE Shareholders Weighted All Share Index 22

23 STANLIB SA Equity Fund The STANLIB SA Equity Fund is a general equity fund that aims to outperform the JSE Shareholders Weighted Index (SWIX) over time. The fund uses a bottom-up stock-picking approach and can invest only in SA equities. This fund has a mandate that is not restricted to any specific investment style. Holdings are focused around companies that are constituents of the fund s benchmark. Who should invest? This fund is targeted at investors: Aiming to achieve capital growth with a time horizon of five years or more Who want a single equity fund for local equities Who prefer an equity mandate that is not restricted to a specific investment style Fund update quarter The JSE Shareholder Weighted All Share Index returned 0%, during the second quarter of Within that, Resources lost 7%, Industrials lost 2.2% and Financials, a small negative of The only positive return was the Property sector return of 0.9%. The STANLIB SA Equity Fund lost 2.45% during the quarter. The share positions that largely contributed to the negative performance during the quarter included being underweight Naspers and overweight Pioneer Foods, Kumba Iron Ore and Anglo American. Positive contributors included not owning gold and platinum shares, Brait, and being overweight Steinhoff and Alexander Forbes. Fund information 1 Year ended 30 June 2017 Fund size R1.9 billion Fund standard deviation (ann.) 6.41 Benchmark standard deviation (ann.) 8.55 Risk profile Aggressive Asset allocation 2.62% 3.90% 93.47% Domestic Equity Domestic Cash Domestic Property Performance figures (%) (June 2017) Quarter 1 Year 3 Years 5 Years Fund Benchmark Source: Morningstar Fund benchmark FTSE/JSE Shareholders Weighted All Share Index We added substantially to our Naspers position during the quarter, after taking into consideration its growth fundamentals and discount to NAV. We started a new holding in Richemont and reduced our holdings in AVI, Steinhoff and Aspen. Looking ahead We conducted an extensive analysis to understand how our equity portfolios react during extreme volatility and have reduced our tracking error as a result. We also reduced our dependence on macro drivers and currencies. We continue to expect a volatile environment both globally and domestically and our objective is to generate excess returns independent of this. Companies in general have been guiding earnings expectations down and the outlook for 2017 remains muted. Political uncertainty, rising populism and policy divergence dominated markets over the past quarter and will continue for some time with an impact on equities. We continue to focus on quality growth, seeking competitively advantaged businesses exposed to a secular growth outcome or those that can deliver company-led growth. 23

24 Henk Viljoen Victor Mphaphuli Fixed Interest Team After gaining early experience in the treasury environment at Telkom and Senbank, Henk Viljoen joined the Liberty Asset Management in 1990 and was appointed Head of Fixed Income. Henk retained this role throughout the amalgamation with Standard Corporate and Merchant Bank, resulting in the formation of STANLIB, and for many years led a multi-award-winning team, which built an undisputed reputation as the most astute and consistently successful bonds/fixed income unit in the South African investment industry. In 2008, Henk stepped away from the day-to-day management of all third-party, life asset and retail bond funds. He retained executive responsibility as the Head of the Fixed Income Team and Chairman of the Interest Rate Committee the key macro factor forum that determines the duration positioning of STANLIB s fixed income mandates. He now jointly manages the team with Victor Mphaphuli. Victor Mphaphuli is a key member of STANLIB s Fixed Interest team, which is also one of the largest in South Africa, with assets under management totalling R178.4 billion *. Victor is regarded as one of the top fixed income fund managers in the country and has won ABSIP Awards for Fund Management as well as Raging Bull Awards. He initially joined the team as a bond dealer and later assumed added responsibility for fund management. He was promoted to Head of Bond and Income Funds in 2008, assuming full responsibility for the daily management of these funds. In 2016 Victor was promoted to Co- Head of the Fixed Interest team which he jointly manages with Henk Viljoen. Victor began his financial services career as a trainee foreign currency dealer with Standard Bank s Treasury Division in After gaining experience as a bond market dealer with Nedbank Investment Bank, he joined STANLIB s forerunner, Liberty Asset Management team in * As at 30 June

25 STANLIB Aggressive Income Fund The STANLIB Aggressive Income Fund aims to provide investors with a high level of income in addition to capital growth over the longer term. The fund offers flexible exposure to property, bonds and money market instruments through different economic environments. This fund is a more aggressive solution than the STANLIB Flexible Income Fund, allowing for a maximum property exposure of 50%. It has no duration limit. Who should invest? The fund is targeted at investors who: Would like to achieve a high level of income and the potential for capital growth Seek elements of both fixed instruments and property in a well-diversified fund Prefer one actively managed solution for all their fixed interest needs Fund update quarter the relatively weak inflation and growth data as transitory. The market expects them to increase rates by another 25 basis points in 2017 and to gradually continue to increase rates thereafter. The European Central Bank signalled it could potentially adjust its loose monetary policy in response to improving economic conditions, and this could negatively impact EM assets. The South African Reserve Bank (SARB) is now expected to cut interest rates due to low growth and the consumer price index falling back inside the targeted band of 3 6%. This follows the SARB indicating that they have reached the end of the hiking cycle and leaving the repo rate unchanged at 7% at their last meeting. Fund information 1 Year ended 30 June 2017 Fund size R2.4 billion Fund standard deviation (ann.) 2.36 Benchmark standard deviation (ann.) 4.37 Modified duration 6.68 years Risk profile Moderate The fund s size remained unchanged at R2.4 billion at the end of the second quarter of The fund s modified duration was increased from 3.15 to 6.68 by purchasing fixed coupon government bonds which were funded by the sale of floating rate notes. The fund s exposure to listed property was underweight at 31% compared to 33% for the benchmark. Asset allocation 3.52% 30.76% Domestic Property Domestic Bonds Domestic Cash Given the negative political headlines and rating agency actions that characterised the second quarter, bonds performed well with the All Bond Index returning 1.5% for the quarter and outperforming other asset classes with a 4% return for the first half of the year. The cabinet reshuffle at the end of the first quarter, which saw the Finance Minister and his deputy replaced, caused the weakness in local 10-year bond yields to spill over to the second quarter. This was viewed as a buying opportunity by foreign investors, amidst the risk-on environment which benefited emerging market (EM) assets, as they increased their local bond holdings by R21 billion during the quarter. As a result bond yields rallied to 8.35% before closing the quarter weaker at 8.79% due to market concerns that major central banks will tighten monetary policy conditions quicker than initially anticipated. Despite ending the quarter largely unchanged at R13.10/$, the rand traded to a low of R12.56/$ during the quarter on the back of positive EM sentiment. The five-year SA sovereign risk spread improved from a high of 225 basis points during the quarter to 199 basis points at the end of June in line with peer EM spreads % Performance figures (%) (June 2017) Quarter 1 Year 3 Years 5 Years Fund Benchmark Source: Morningstar Fund benchmark 33.33% FTSE/JSE SA Listed Property Index (SAPY) 33.33% BEASSA All Bond Index 33.33% STeFI Composite Index South Africa was downgraded by the three rating agencies during the quarter, with Standard & Poors and Fitch cutting the foreign currency rating to sub-investment grade. Fitch also cut the local currency rating to below investment grade. Both Moody s and Standard & Poors have the local currency rating one notch above the sub-investment grade. There is the risk that any of them cutting the local currency rating to below investment grade, will lead to capital outflows as some foreign investors will be forced to sell local currency bonds. This will lead to higher borrowing costs for the government, putting pressure on the already strained fiscal position exacerbated by the technical recession. In international markets, the US Federal Reserve hiked interest rates by another 25 basis points during the quarter after the seeing 25

26 STANLIB Flexible Income Fund (Regulation 28 compliant) The STANLIB Flexible Income Fund is a fixed interest fund that aims to provide income generation and capital growth, targeting outperformance over traditional money market and income funds, by investing in the full spectrum of fixed interest instruments and property. This fund offers investors one solution to manage their fixed interest needs across changing interest rate cycles. It has no maturity limitations. Property and offshore is limited to a maximum of 25% of the fund. Who should invest? The fund is targeted at investors who: Require a specialist fixed interest fund as part of a diversified fund Have a long-term investment horizon than traditional money market income funds Prefer one actively managed solution for all their fixed interest needs Fund update quarter The size of the STANLIB Flexible Income Fund increased R200 million at the end of the first quarter to R1.2 billion at the end of the second quarter of The modified duration of the fund decreased from 1.73 years to end the quarter at 1.43 years, in order to capture the value created by the expected increase in bond yields. The fund s exposure to listed property was maintained at zero, with valuations in the listed property market considered expensive. Given the negative political headlines and rating agency actions that characterised the second quarter, bonds performed well with the All Bond Index returning 1.5% for the quarter and outperforming other asset classes with a 4% return for the first half of the year. The cabinet reshuffle at the end of the first quarter, which saw the Finance Minister and his deputy replaced, caused the weakness in local 10-year bond yields to spill over to the second quarter. This was viewed as a buying opportunity by foreign investors, amidst the risk-on environment which benefited emerging market (EM) assets, as they increased their local bond holdings by R21 billion during the quarter. As a result bond yields rallied to 8.35% before closing the quarter weaker at 8.79% due to market concerns that major central banks will tighten monetary policy conditions quicker than initially anticipated. Despite ending the quarter largely unchanged at R13.10/$, the rand traded to a low of R12.56/$ during the quarter on the back of positive EM sentiment. The five-year SA sovereign risk spread improved from a high of 225 basis points during the quarter to 199 basis points at the end of June in line with peer EM spreads. In international markets, the US Federal Reserve hiked interest rates by another 25 basis points during the quarter after the seeing the relatively weak inflation and growth data as transitory. The market expects them to increase rates by another 25 basis points in 2017 and to gradually continue to increase rates thereafter. The European Central Bank signalled it could potentially adjust its loose monetary policy in response to improving economic conditions, and this could negatively impact EM assets. The South African Reserve Bank (SARB) is now expected to cut interest rates due to low growth and the consumer price index falling back inside the targeted band of 3 6%. This follows the SARB indicating that they have reached the end of the hiking cycle and leaving the repo rate unchanged at 7% at their last meeting. Fund information 1 Year ended 30 June 2017 Fund size R1.2 billion Fund standard deviation (ann.) 1.31 Benchmark standard deviation (ann.) 1.20 Modified duration 1.43 years Risk profile Moderately conservative Asset allocation 4.29% 17.03% Domestic Property Domestic Bonds 78.67% Domestic Cash Performance figures (%) (June 2017) Quarter 1 Year 3 Years 5 Years Fund Benchmark Source: Morningstar Fund benchmark 110% STeFI Composite Index South Africa was downgraded by the three rating agencies during the quarter, with Standard & Poors and Fitch cutting the foreign currency rating to sub-investment grade. Fitch also cut the local currency rating to below investment grade. Both Moody s and Standard & Poors have the local currency rating one notch above the sub-investment grade. There is the risk that any of them cutting the local currency rating to below investment grade, will lead to capital outflows as some foreign investors will be forced to sell local currency bonds. This will lead to higher borrowing costs for the government, putting pressure on the already strained fiscal position exacerbated by the technical recession. 26

27 STANLIB Bond Fund (Regulation 28 compliant) The STANLIB Bond Fund is a fixed interest fund that aims to provide income generation and capital growth by investing in longer dated fixed interest securities. The weighted average maturity of this fund must be more than two years. This fund has a higher volatility than money market and traditional income funds, but a lower volatility than an equity fund. Who should invest? The fund is targeted at investors: Who want an optimised total return of capital and income With a moderately conservative risk profile Fund update quarter The size of the STANLIB Bond Fund was R3.3 billion at the end of the second quarter of 2017 compared to R3.6 billion at the end of the first quarter. The fund s modified duration increased from 6.50 years to 7.00 years during the quarter as bond yields were oversold following the risk-off environment created by the central bank. The increase in duration was achieved by increasing the weight in the 12 years+ area of the benchmark. The yield curve steepened during the quarter, as the long end was negatively affected by anticipation of increased funding requirements from the government. The fund retained the overweight position in credit. In international markets, the US Federal Reserve hiked interest rates by another 25 basis points during the quarter after the seeing the relatively weak inflation and growth data as transitory. The market expects them to increase rates by another 25 basis points in 2017 and to gradually continue to increase rates thereafter. The European Central Bank signalled it could potentially adjust its loose monetary policy in response to improving economic conditions, and this could negatively impact EM assets. The South African Reserve Bank (SARB) is now expected to cut interest rates due to low growth and the consumer price index falling back inside the targeted band of 3 6%. This follows the SARB indicating that they have reached the end of the hiking cycle and leaving the repo rate unchanged at 7% at their last meeting. Fund information 1 Year ended 30 June 2017 Fund size R3.3 billion Fund standard deviation (ann.) 4.73 Benchmark standard deviation (ann.) 5.17 Modified duration 7.00 years Risk profile Moderately conservative Asset allocation Given the negative political headlines and rating agency actions that characterised the second quarter, bonds performed well with the All Bond Index returning 1.5% for the quarter and outperforming other asset classes with a 4% return for the first half of the year % Domestic Bonds The cabinet reshuffle at the end of the first quarter, which saw the Finance Minister and his deputy replaced, caused the weakness in local 10-year bond yields to spill over to the second quarter. This was viewed as a buying opportunity by foreign investors, amidst the risk-on environment which benefited emerging market (EM) assets, as they increased their local bond holdings by R21 billion during the quarter. As a result bond yields rallied to 8.35% before closing the quarter weaker at 8.79% due to market concerns that major central banks will tighten monetary policy conditions quicker than initially anticipated. Despite ending the quarter largely unchanged at R13.10/$, the rand traded to a low of R12.56/$ during the quarter on the back of positive EM sentiment. The five-year SA sovereign risk spread improved from a high of 225 basis points during the quarter to 199 basis points at the end of June in line with peer EM spreads. Performance figures (%) (June 2017) Quarter 1 Year 3 Years 5 Years Fund Benchmark Source: Morningstar Fund benchmark BEASSA All Bond Index South Africa was downgraded by the three rating agencies during the quarter, with Standard & Poors and Fitch cutting the foreign currency rating to sub-investment grade. Fitch also cut the local currency rating to below investment grade. Both Moody s and Standard & Poors have the local currency rating one notch above the sub-investment grade. There is the risk that any of them cutting the local currency rating to below investment grade, will lead to capital outflows as some foreign investors will be forced to sell local currency bonds. This will lead to higher borrowing costs for the government, putting pressure on the already strained fiscal position exacerbated by the technical recession. 27

28 STANLIB Income Fund The STANLIB Income Fund is a fixed interest fund that aims to provide a reasonable level of income as well as capital stability. The fund invests in high-yielding South African fixed interest assets including government and corporate bonds, fixed deposits and money market instruments. The weighted average maturity of this fund may not exceed two years. Who should invest? The fund is targeted at investors requiring: A regular quarterly income that aims to generate returns above money market over a two to three year period A traditional low risk income fund Fund update quarter During the second quarter of 2017, the size of the STANLIB Income Fund increased from R22.5 billion to R23.6 billion. The fund s modified duration decreased from 0.58 years to 0.49 years during the quarter due to the volatility in the bond market. Returns in the fund look attractive compared to money market returns despite the defensive positioning, as a result of investments in high yielding securities. The concentration to floating rate notes was slightly increased, leading with the new inflows. Given the negative political headlines and rating agency actions that characterised the second quarter, bonds performed well with the All Bond Index returning 1.5% for the quarter and outperforming other asset classes with a 4% return for the first half of the year. The cabinet reshuffle at the end of the first quarter, which saw the Finance Minister and his deputy replaced, caused the weakness in local 10-year bond yields to spill over to the second quarter. This was viewed as a buying opportunity by foreign investors, amidst the risk-on environment which benefited emerging market (EM) assets, as they increased their local bond holdings by R21 billion during the quarter. As a result bond yields rallied to 8.35% before closing the quarter weaker at 8.79% due to market concerns that major central banks will tighten monetary policy conditions quicker than initially anticipated. Despite ending the quarter largely unchanged at R13.10/$, the rand traded to a low of R12.56/$ during the quarter on the back of positive EM sentiment. The five-year SA sovereign risk spread improved from a high of 225 basis points during the quarter to 199 basis points at the end of June in line with peer EM spreads. in 2017 and to gradually continue to increase rates thereafter. The European Central Bank signalled it could potentially adjust its loose monetary policy in response to improving economic conditions, and this could negatively impact EM assets. The South African Reserve Bank (SARB) is now expected to cut interest rates due to low growth and the consumer price index falling back inside the targeted band of 3 6%. This follows the SARB indicating that they have reached the end of the hiking cycle and leaving the repo rate unchanged at 7% at their last meeting. Fund information 1 Year ended 30 June 2017 Fund size R24.4 billion Fund standard deviation (ann.) 0.32 Benchmark standard deviation (ann.) 0.06 Modified duration 0.48 years Risk profile Conservative Asset allocation 7.28% 92.72% Domestic Bonds Domestic Cash Performance figures (%) (June 2017) Quarter 1 Year 3 Years 5 Years Fund Benchmark Source: Morningstar Fund benchmark STeFI Composite Index South Africa was downgraded by the three rating agencies during the quarter, with Standard & Poors and Fitch cutting the foreign currency rating to sub-investment grade. Fitch also cut the local currency rating to below investment grade. Both Moody s and Standard & Poors have the local currency rating one notch above the sub-investment grade. There is the risk that any of them cutting the local currency rating to below investment grade, will lead to capital outflows as some foreign investors will be forced to sell local currency bonds. This will lead to higher borrowing costs for the government, putting pressure on the already strained fiscal position exacerbated by the technical recession. In international markets, the US Federal Reserve hiked interest rates by another 25 basis points during the quarter after the seeing the relatively weak inflation and growth data as transitory. The market expects them to increase rates by another 25 basis points 28

29 Keillen Ndlovu Riaan Gerber Listed Property Keillen Ndlovu manages the largest, most successful listed property fund in South Africa (the STANLIB Property Income Fund), with assets under management of R28 billion for institutional and retail clients (as at June 2017). After beginning his property career with Standard Bank Properties in 2004, Keillen transferred to STANLIB in 2005 as a Listed Property Analyst. On successfully assuming increased responsibilities and fund management exposure, he was appointed Head of STANLIB s Listed Property Franchise in 2010, after becoming a full-time fund manager in The Listed Property team has won numerous awards over the past decade, and under his tenure has expanded its listed property offering from South Africa to the rest of Africa, Emerging Markets and Developed Markets. Riaan Gerber has been with the Listed Property team since 2007, managing listed property portfolios and analysing listed property securities in both developed and emerging markets, including South Africa. He joined STANLIB in 2005 and gained experience in financial and management accounting, tax, internal audit and financial management at both STANLIB and Standard Bank. 29

30 Lawrence Koikoi Ahmed Motara Chloe Wing See Ma Chloe Wing See Ma joined the Listed Property Team as a Listed Property Analyst in She focuses mainly on research within the local and offshore listed property markets. She also co-manages the Emerging Markets Property Fund. She was previously at Rand Merchant Bank where she worked as a Credit Analyst within the Real Estate Investment Banking space. Her qualifications include a Bachelor of Architectural Studies, BSc Property Studies (Cum Laude, Deans Merit List), BSc(Hons) in Property Studies (Cum Laude, Deans Merit List), a Postgraduate Diploma in Enterprise Management. She is working towards completing the Chartered Financial Analyst Program and is due to write her level 3 exam in June Lawrence Koikoi joined STANLIB Listed Property Franchise as a Listed Property Analyst and will be covering South Africa and Rest of Africa. Lawrence has been with the Standard Bank Real Estate investment team for 4 years gaining experience in the entire real estate financing and investment life cycle of a typical real estate transaction. He joined the team in 2011 as an assistant transactor when it made its first investment outside South Africa. His primary responsibility was assigned to compiling financial models for all new transaction in the rest of Africa division. Over the four years his responsibilities increased to include drafting investment papers, review and negotiations on legal agreements, cross border tax planning and structuring, management of transaction draw downs and financial performance review and facilitation of due diligence on key real estate investment transactions which Standard Bank made in Rest of Africa. He was also part of the team that was mandated to unwind the real estate investment division of Standard Bank in Lawrence is a qualified Chartered Accountant. Ahmed Motara joined the Listed Property Team on 1 September 2016 and focuses primarily on local listed property research. He also assists with portfolio management for the South African focused property funds. He has 13 years sell-side research experience focusing primarily on the South African Listed Property sector. He spent 10 years with Deutsche Securities and the last three years with Renaissance Capital as Equity Analyst (Vice President). He was a rated analyst in the Listed Property sector as well as Electrical and Other Equipment sector. 30

31 STANLIB Property Income Fund The STANLIB Property Income Fund invests in listed property shares and aims to provide a high level of income in addition to capital growth over time. It uses proprietary research to identify investment opportunities that aim to achieve superior long-term risk-adjusted returns. This fund aims to be fully invested in property at all times. Who should invest? The fund is targeted at investors who: Require a high level of income in addition to capital growth with a time horizon of five years to invest Want to include property as part of their diversified portfolio Fund update quarter The fund underperformed the benchmark by 0.69% for the quarter, delivering a gross total return of 0.22% relative to the benchmark return of 0.91%. The top contributors to fund performance were the overweight positions in MAS plc and Rebosis-A. MAS continues to be a core holding and a strong performer in the portfolio. The top detractors were the underweight position in Rockcastle and the overweight position in Accelerate Property Fund. A poor short-term growth outlook and the associated costs incurred negatively impacted Accelerate in June 2017 as it pursued a defensive long-term strategy. The merger of NEPI and Rockcastle resulted in Rockcastle s share price appreciating more than anticipated in June On a total return basis, listed property delivered 0.91% for the quarter, outperforming local equities (-0.39%) and underperforming cash (+1.85%) and local bonds (+1.49%). While bond yields showed no material shift from 8.9% over the quarter, continued concerns around retail spend, a weakening SA economy and political uncertainty continued to weigh on the sector performance. Year-to-date, listed property was the worst performing asset class (2.29% total return), underperforming equities (3.37%), cash (3.72%) and bonds (3.99%). As would be anticipated in a weakening SA environment, investors preferred stocks with offshore exposure offering increased defensiveness to a weakening SA environment. Unsurprisingly, Greenbay, NEPI, Redefine International, Sirius and Rockcastle all recorded double-digit total returns for the quarter, ranging between 13% - 26%. The fund has exposure to many of these names, with exposure having increased in the past six months. Sector heavyweight stocks such as Growthpoint (-5.48%) and Redefine (-0.39%), both posted negative total returns for the quarter. Looking ahead Over the next 12 months, we anticipate 8% distribution growth for the sector s dividend paying companies. A weakening bias has emerged in the rand relative to the euro and pound in the past quarter, reflected in those stocks that have outperformed and continue to outperform. We continue to expect some SA companies with significant offshore exposure to exhibit double digit distribution growth in the rand, over the next 12 months. We are positioned for this eventuality and have increasingly positioned our local property exposure towards SA property companies with defensive SA property portfolios; and defensive offshore portfolios. Listed property currently offers a forward yield of 7.2% which is below the 10-year bond yield of 8.7%. In comparison to cash and bonds, listed property however, provides the benefit of a growing income stream. Over the next 12 months, we expect listed property to deliver a total annualised return of 12%, on the assumption that bond yields are 9.0%. Fund information 1 Year ended 30 June 2017 Fund size R7.7 billion Fund standard deviation (ann.) 7.60 Benchmark standard deviation (ann.) 8.62 Risk profile Aggressive Asset allocation 1.33% 98.67% Domestic Property Domestic Cash Performance figures (%) (June 2017) Quarter 1 Year 3 Years 5 Years Fund Benchmark Source: Morningstar Fund benchmark FTSE/JSE SA Listed Property Index 31

32 Keillen Ndlovu Neil Robson Alex Lyle Global Solutions Keillen Ndlovu manages the largest, most successful listed property fund in South Africa (the STANLIB Property Income Fund), with assets under management of R28 billion for institutional and retail clients (as at June 2017). After beginning his property career with Standard Bank Properties in 2004, Keillen transferred to STANLIB in 2005 as a Listed Property Analyst. On successfully assuming increased responsibilities and fund management exposure, he was appointed Head of STANLIB s Listed Property Franchise in 2010, after becoming a full-time fund manager in The Listed Property team has won numerous awards over the past decade, and under his tenure has expanded its listed property offering from South Africa to the rest of Africa, Emerging Markets and Developed Markets. Alex Lyle is a senior portfolio manager at Columbia Threadneedle Asset Management, a company which he has worked for in its various guises for more than 25 years. He joined Hambros Bank s unit trust division in 1980, which was acquired by Allied Dunbar in 1981 and subsequently became part of Threadneedle which was bought by American Express in Neil Robson joined Columbia Threadneedle in 2011 as a portfolio manager within the Global Equities team. He is the deputy manager of the Threadneedle Global Select Fund and manages a number of global equity mandates for institutional clients. Before joining Columbia Threadneedle, Neil worked as a fund manager at companies including Martin Currie, Barings and Citibank. In addition, he was Head of Global Equity at Pioneer Investments from 2003 to