Focus

The Weekly

A Market and Economic Update 5 February 2018

Contents

Newsflash ..................................................3

Market Comment ...................................................................................................................... 3 Other Commentators ............................................................................................................... 5

Economic Update ......................................7

Rates ....................................................... 12

STANLIB Money Market Fund............................................................................................... 12 STANLIB Enhanced Yield Fund ............................................................................................ 12 STANLIB Income Fund .......................................................................................................... 12 STANLIB Extra Income Fund ................................................................................................ 12 STANLIB Flexible Income Fund ........................................................................................... 12 STANLIB Multi-Manager Absolute Income Fund ................................................................ 12

Newsflash It appears that a global stock market correction may have begun. It is way

overdue. It should present another buying opportunity.

Market Comment OFFSHORE MARKETS

As is usual, the US stock market may have started a global correction, the first correction

since the MSCI World global index fell by -4.5% from August to November 2016.

Since the low in November 2016, the index gained a very impressive +35.5% in dollars by

23rd January 2018, with barely any pullback in one of the most sustained uptrends in

history.

So a pullback or correction is way overdue. Obviously no-one knows how long it may last or

how much it may decline, but a normal bull-market correction seldom declines more than -

7% for the S&P 500 Index (currently down -3.4% from its high).

The correction has been sparked by the jump in bond yields, with the US 10-year yield now

up from 2.43% at end 2017 to 2.84% today, a +17% rise in yield.

Four years ago the yield touched a high of 3% and in late December 2009 it was at 3.84%,

so the current yield remains low compared with history. In 1987 it triggered the stock

market crash by rising to the magical 10% level, much higher than the current 2.84%.

The yield jumped on Friday after the monthly US jobs report came out better than expected

at 200,000 jobs created (net), but in particular it was US wages rising by +2.9% year-on-

year, the highest increase in 9 years, that caused market participants to worry that perhaps

the US Fed, now under new Chairman Powell, would need to raise interest rates more than

the expected three times in 2018 to ward off rising inflation.

However, it is way too early to assume that a new trend is in place or that inflation will rise

much from current levels.

Our STANLIB Economist, Kevin Lings, says typically wages would be rising by around +4%

year-on-year in the strong part of the economic cycle, so 2.9% is still quite low.

Usually in a stock market correction, bond yields decline (prices rise) as investors sell out of

shares and buy bonds. This has barely occurred yet, with the 10-year yield now at 2.84%.

Many potential buyers are possibly waiting for the more attractive 3% level.

The biggest share by market value in the world, Apple, has declined by around -11% from

its high so far, back at August 2017 levels.

Whereas Apple is down just over -5% so far in 2018, the US Technology sector is still up

+4.3% in 2018, ahead of the +3.4% for the S&P 500 Index. The sector returned around

+30% last year, easily the best sector.

The MSCI Emerging Markets Index had an even more amazing run, gaining +51.3% in

dollars from its most recent correction low on the 22nd of December 2016 to its peak on 23rd

January 2018.

Firming emerging market currencies certainly played a role in this run. The rand was at

13.90 to the dollar in December 2016 versus today’s 12.02 (+13.5% stronger).

The MSCI China Index, by far the biggest index in the MSCI Emerging Markets Index

(31%), gained +77.4% from December 2016 to its high on 26th January 2018.

Global listed property shares are still struggling, down around -2.8% in dollar terms in 2018,

having declined last week as bond yields jumped.

European shares are down for a sixth day today (down -0.7%), while the Nikkei Index

dropped the most in 14 months this morning (-2.6%). The Chinese shares listed in HK

dropped just -0.4%, while the Hang Seng Index in HK dropped -1.1%.

LOCAL MARKETS

The JSE All Share Index is down for the 6th consecutive day today and is -7.1% from its 25th

January record high, so has already had a fairly substantial correction…back at October

levels and similar to the lows in December.

The main culprits are Naspers and the Resilient family of listed property shares. Naspers

peaked at 4090 rand in November and is down -22.4% from that level at 3168 rand today (-

2.4% after falling -2% in each of the previous two days), its lowest price since October.

Some fund managers have changed their benchmark from the SWIX Index to the Capped

SWIX Index, which may be affecting the share. Naspers is about 22% of the SWIX Index

and is capped at 10% of the Capped SWIX Index, implying that fund managers may be

selling the share to reduce it to 10% of share portfolios.

Meanwhile Resilient’s share price is down around -34% so far in 2018, despite good results

released last week. NepiRock is down -40.5%, FortressB is down -45% and Greenbay -

36.5%.

These shares have contributed strongly to pushing the SA Listed Property Index down by a

substantial -17.1% in 2018, back to where it was over 3 years ago.

It had a similar correction between October 2015 and December 2015, falling -18.3%

before recovering by May 2016. The good news is that the dividend yield of the sector has

shot up to 6.9%, the highest in over 4 years, almost as high as current money market

yields.

NepiRock has been one of the most popular property shares over the past few years with

its focus on strong Easter European countries. It will report results on 20th February.

What makes the fall in SA listed property shares even harder to understand - at least now

that the Viceroy report has come out on Capitec rather than as rumoured on these property

shares - is that the SA government 10-year bond yield remains low at 8.52%, down from a

recent high of 9.3% in late October.

Usually it is rising bond yields that drive property shares down, but not this time.

So it does appear as if the SA Listed Property Index and unit trusts like the STANLIB

Property Income Fund offer good value at current prices.

The ALSI 40 Index is now down -3.7% in 2018, the JSE Financial & Industrial Index is down

-4.9%, the JSE Mid-Cap Index is down -4.7% and the Small-Cap Index -4.2%.

The JSE Resources Index is now down -0.6% in 2018 after a sharp -8.3% fall from its 13

January high.

The JSE General Retailers Index that jumped sharply in December and again in January,

has fallen back by -5.2% amidst profit-taking, while the JSE Banks Index, which also

jumped in both December and again in January, has corrected so far by -7% from record

highs just over a week ago.

The JSE Life Insurance Index has retreated by -5.6% from its recent high, while other

shares that had run hard lately are correcting too, such as Clicks, Dischem, Barlows,

Imperial, Bidvest, Capitec, RMB Holdings and Sasol.

Most shares are falling today.

All-in-all, this JSE correction is probably a buying opportunity, but because the market may

fall further over the next few days, perhaps one staggers one’s buying over a few days or a

week.

Other Commentators

US Market Analyst, Elaine Garzarelli Garza’s quants model reading remains unchanged at a bullish 74.5% (a level below 30% is

a bearish signal).

The S&P 500 Index is up +30% since the early November 2016 election day, and Garza

expects corrections to be limited to 4-7% (currently -3.4%).

While investors are worried about rising bond yields and possibly more-than-expected Fed

hikes, in the past the S&P 500 Index has rallied through rate hikes until eventually a

recession is engineered by the Fed and an inverted yield curve appears.

This means short-term rates are higher than long-term rates. Currently the fed funds rate is

at 1.5%, well below the 2.84% of the 10-year bond yield, so the 1.34% gap between the two

implies that there would have to be another 5-6 more rate hikes of 0.25% to produce an

inverted yield curve, which is at least 12 months away and possibly longer.

Meanwhile the US dollar trade-weighted index is down -3.0% this year as analysts believe

the tax reforms could widen the current account deficit. However, the lower dollar is good

for US company earnings, which is good for shares.

So far about 40% of companies have reported fourth quarter 2017 earnings, with 79%

beating forecasts. Earnings are up an extraordinary +20% year-on-year in the fourth

quarter and will likely be up +23% in calendar 2018, helped by the tax cut, global growth, a

weaker dollar and higher oil prices.

Fair value for the S&P 500 Index is currently at 2,736 (based on a PE multiple of 18 times

forecast earnings of 152 for 2018), meaning at 2,789 the S&P 500 Index is +1.9%

overvalued. Shares usually rise 20-50% above fair value when Garza’s quants model is as

bullish as it is now.

Economic data continues to be solid, including housing data. The US homeownership rate

grew in 2017 for the first time in 13 years, while the US homeowner vacancy rate is at its

lowest fourth-quarter reading in 18 years, suggesting that the market for rental and single-

family homes is tight and the reason for the steady rise in home prices and rents.

Manufacturing has revived around the world. An average of the world’s six major

manufacturing countries’ purchasing managers index (PMIs), a leading indicator, is at the

best level in 7 years, when the world was recovering from the Great Recession.

The US is entering a new era with US oil output above the historic ten million barrels a day

for the first time in 40 years.

Also, Black unemployment is at a record low, while existing house sales and housing starts

are at their highest levels in 10 years.

With the S&P 500 Index up +3.4% in 2018, even after the latest correction of -3.4% so far,

Consumer Discretionary shares are doing best at +7.3%, then Financials at +5.4%, Health

Care at +5.3% and IT at +4.3%. Energy shares are -0.1%.

BCA Research

While the acceleration in average hourly earnings in January cements the case for

continued gradual rate hikes this year, inflation is not about to spiral higher.

Wage inflation remains muted and we await signs of a pickup in broader measures of

consumer price inflation.

The market is now fully priced for three rate hikes in 2018.

History suggests that rising bond yields are not an impediment to rising share prices, as

long as bond yields remain below 5% (currently 2.84%).

BCA calculates fair value for the 10-year yield at 3% currently and they think the yield will

likely peak at 3-3.25% in this cycle as inflation returns to the Fed’s 2% target.

BCA’s Investor Sentiment Index is at an all-time high (too bullish), led by individual

investors and the advisors who advise them. This calls for some release, i.e. for a

correction.

Also stock market valuations are highly stretched, particularly in the US.

The current stock market correction is overdue.

Paul Hansen Director: Retail Investing

Economic Update 1. SA recorded another impressive trade surplus of R15.7 billion in December 2017. For

2017 as a whole, SA trade surplus totaled R80.5 billion compared a surplus of a mere R1.0 billion in 2016.

2. SA ABSA PMI gained substantial ground in January 2018 moving up to 49.9 index points, just below the neutral 50-point mark and the best reading we have had since May 2017.

3. SA petrol price decreases by 30c/l on Wednesday, 7 February 2018 as a result of rand strength.

4. US GDP grew by 2.6%q/q in Q4 2017, below expectations. Final sales, however, grew by 3.2%q/q. For 2017 as a whole US grew by 2.3% and is forecast to expand by around 2.6% in 2018.

5. US added 200 000 jobs in January 2018, better than expected. Unemployment rate remained at 4.1% and wage growth jumped to 2.9%y/y. Great labour market report BUT it increases the risk of higher than expected interest rates hikes.

6. Kenya inflation accelerated to 4.8% y/y remaining within the target band and interest rates remain on hold.

1. In December 2017, South Africa’s trade balance recorded another very impressive

surplus of R15.7 billion. This compares with a revised surplus of R13.1 billion in November 2017. The market was expecting a trade surplus of around R10 billion for the month, although the trade data is extremely difficult to forecast accurately on a month-by-month basis, especially since the data is not seasonally adjusted and prone to revisions. South Africa has recorded a trade surplus in each of the past eleven months, which is an impressive turnaround, helped by an improvement in exports, but also a slowdown in import demand as fixed investment spending slumped and consumer spending softened.

For 2017 as a whole South Africa’s trade surplus totaled an incredible R80.5 billion, compared with a mere R1.0 billion in 2016. It seems fair to argue that the surge in South Africa’s surplus (+R29 billion in just the last two months) helped to support the Rand towards the end of 2017.

During December exports declined by R11.7 billion (-10.2%m/m), while imports were down R14.5 billion (-14.1%m/m). It is not uncommon for South Africa’s foreign trade activity to slow sharply in December due to the holiday season. The average annual growth in imports over the past twelve months is a mere 0.8%, although over the past four month growth has risen to an annual average of 6.5%. The latest rise in imports, albeit relatively modest and off a low base, will provide some relief to the fiscal authorities in terms of generating additional tax revenue (import duties).

In contrast, over the past year, exports have achieved an annual growth rate of 8.1%. This improved export performance (see chart attached) partly reflects the benefit of higher commodity prices, a pick-up in export volumes of some bulk commodities, a more stable supply of electricity and less labour market unrest. SA’s export performance looks even better in Dollars (see chart attached), but has not been supported by a broad-based expansion of manufactured exports.

All of this means that not only has the South African economy benefited – at least to some extent – from the buoyancy in the world economy, but South Africa’s current account deficit also remains well under-control at less than 3% of GDP. This should feature as a positive in South Africa’s upcoming credit rating review by Moodys during March 2018.

2. The seasonally adjusted ABSA Purchasing Managers’ Index (PMI) rose to 49.9 index points in January 2018, remaining just below the neutral 50 point mark. The index is at its highest level since May 2017. The latest PMI reading together with the more recent industrial production data suggests that local manufacturing is showing signs of improvement, albeit off a low base. Looking at the main five sub-components of the index for January, there was a welcome improvement in almost all of the indicators. Sales orders increased to 50.4 from 45.0 suggesting an improvement overall domestic demand. Business activity moved up above the neutral 50-point mark to 52.0 from 42.7 for the first time since May 2017. The inventories index rose to 47.3 from 42.0. Despite the rise, the index remained below the new sales orders index meaning that the PMI leading indicator stood above 1, which bodes well for output growth going forward. Encouragingly, the index tracking expected business conditions in six months’ time recorded a sharp increase of 10.9 points, to 72.8 points in January which is the highest level since early 2010.

The purchasing prices Index declined for a second month and is now more than 10 points below the high of 80.7 reached in November 2017. A major factor in the fall off of this component is the significantly stronger rand exchange rate. The impact of the stronger rand has, so far, outweighed the upward pressure on the fuel price coming from the higher crude oil price. Another fuel price decline is expected to be announced for next week, which could alleviate price pressures even more. The purchasing commitments declined slightly from 46.3 to 45.6, but remain better than the low of 36.3 we experienced in July 2017.

Overall, the sharp improvement in the PMI is most likely due to the stronger global growth outlook as well as better political prospects for the domestic economy. The long-standing structural challenges that have weighed heavily on growth will require bold and timely reforms to lift confidence and create a conducive growth environment for manufacturing as well as other sectors of the economy.

3. The Department of Energy announced that the petrol price for both grades of petrol

(93 and 95 ULP and LRP) will decrease by 30 c/l on Wednesday 7 February 2018. The latest announcement means that the price of 95 Octane (ULP, Gauteng) will now cost R14.12 per litre. The price of diesel will decrease by 17c/l for both grades. Paraffin will decrease by 26c/l (retail price), and gas will decrease by a 23c/kg.

The Rand strengthened against the US Dollar during the period under review, on average, when compared to the previous period. The average Rand/US Dollar exchange rate for the period 28 December 2017 to 1 February 2018 was R12.20 compared to R13.23 during the previous period. This led to a lower contribution to the Basic Fuels Price on petrol, diesel and illuminating paraffin by 52.85c/l, 54,66c/l and 54.88c/l respectively.

Overall, this is good news for consumers. The latest decrease in the petrol price will subtract around 0.01 percentage points on the monthly rate of inflation and the latest daily over-recovery on the petrol price is currently around 10c/l. Any change to the petrol price next month will be highly dependent on the performance of the rand as well as the price of crude.

Unfortunately, we may be in for some negative news this month as Finance Minister Malusi Gigaba delivers his budget speech. He will be under substantial pressure to fund the budget shortfall, which means we will most likely see an increase in taxes, as well as an increase in the general fuel and Road Accident Fund levies, which are included in the price of petrol and diesel.

4. In the final quarter of 2017, US GDP grew by a slightly disappointing 2.6%q/q,

annualised. This compares with growth of 3.2%q/q in Q3 2017. The GDP performance in the fourth quarter of 2017 was below market expectations for growth of 3.0%q/q, although if the Q4 decline in inventories is excluded, final sales grew by a solid 3.2%q/q. For 2017 as a whole the US economy grew by 2.3%, up from 1.5% in 2016. US GDP is forecast to grow by around 2.6% in 2018, which is above the average growth rate over the past eight years of 2.2%.

The key areas of strength in Q4 2017 were, once again, household consumption (including spending on durable goods), and investment on machinery and equipment. There was also a welcome rebound is residential property investment. In total, household spending contributed a very substantial 2.6 percentage points to the quarterly GDP growth rate, while fixed investment in machinery and equipment added a further 0.6 of a percentage point. On the downside, net exports subtracted 1.1 percentage points, reflecting mainly a pick-up in imports.

This GDP estimate represents an initial assessment of US economic activity in Q4 2017, and is based on source data that are incomplete or subject to further revision. The "second" estimate for the fourth quarter of 2017, based on more complete data, will be released on 28 February 2018. The US GDP data is readily available from the US Department of Commerce, specifically the Bureau of Economic Analysis.

Overall, on a trend basis, US economic activity continues to expand at a solid pace of around 2.5%. While this is still below the longer-term average growth performance, there has been a noticeable acceleration in US economic growth during the past six to nine months. Furthermore, a wide range of US leading indicator models and their components are all suggesting that the expansion in US economic activity should continue in the months ahead, and may even pick-up momentum in the near term. This improvement in the outlook partly reflects the impact of President Trump’s tax changes, but also a broadening of the US economic recovery. Importantly, the pick-up in business confidence also appears to be fueling an increase in private sector fixed investment.

As mentioned previously, a more robust acceleration in US GDP growth is going to require a sustained and robust pick-up in private-sector fixed investment activity, coupled with acceleration in productivity growth, as well as a noticeable improvement in wages – but also only a modest increase in inflation. At this stage, while there are encouraging signs that some of these factors are moving in the right direction (especially investment in machinery and equipment), the improvement in productivity and wages (which are obviously linked) are not yet compelling or broad-based enough to meaningfully revise up our GDP growth estimate for 2018 further.

5. In January 2018, the US unemployment rate remained unchanged at 4.1%. This was in-line

with market expectations. The US unemployment rate is at its lowest level since December 2000. The US unemployment rate has moved steadily lower from a peak of 10% in late 2009. Unfortunately, the labour market participation rate also remained unchanged at 62.7% in January 2018. Overall, the participation rate remains extremely low on a trend basis, which means that the decline in the unemployment rate is still somewhat misleading given that the participation rate remains well below its historical average (see chart attached).

Non-farm payrolls rose by a substantial 200 000 jobs in January 2018, which was above market expectations for an increase of 180 000. This means that over the past 6 months, job gains have averaged 180 000 per month, including the disappointing payroll data for September 2017, which was heavily impacted by bad weather. The level of US employment is a massive 9.4 million above the peak prior to the global financial market crisis. During the financial market crisis the US lost a total of 8.7 million jobs. Consequently, the US has created more than 17 million jobs since the financial crisis ended.

The private sector gained 196 000 jobs in January 2018, after gaining a revised 166 000 jobs in December 2017. The private sector had gained employment in each of the past 95 months at an average of 192 000 jobs a month and is at a record high, comfortably surpassing the previous peak in January 2008.

During 2010 as a whole, the US economy created 1 053 000 jobs, or an average of 88 000 jobs per month. In 2011, the job gains averaged a far more respectable 174 000 a month, while in 2012 job gains averaged 179 000 a month. In 2013 employment rose by an average of 192 000 jobs a month, suggesting that although the labour market was still struggling to gain significant upward momentum, the rate of increase remained encouraging. In 2014 employment rose by a very impressive monthly average of 250 000 jobs, but then slumped somewhat to an average gain of 226 000 in 2015, hurt by the especially weak job reports in March and September 2015. During 2016 job gains averaged 187 000 per month, and that momentum in 2017 (despite the impact of the recent hurricanes). Importantly, the pace of job creation is expected to naturally slow somewhat over the coming months as the economy edges closer to full employment and the participation rate remains structurally low.

In October 2017, average hourly earnings for all employees on private nonfarm payrolls surged by 9c, after rising by 11c in December 2017. This means that over the past year, average hourly earnings have now risen by a more robust 2.9%, which is the highest annual growth in wages since the onset of the global financial market crisis. Overall, US wage growth has remained incredibly low in nominal terms for a considerable time, but the latest pick-up to 2.9% coupled with recent survey data that highlights the business sector’s intention to increase wages suggest that wage growth will continue to move higher. This will start to raise concerns about higher consumer inflation and the need for the Federal Reserve to hike rates more aggressively.

The latest employment report is very strong across a broad range of indicators, especially sustained low unemployment rate, and the strong rise in employment as well as wage growth. The most disappointing aspect of the report remains the low labour market participation rate.

The on-going improvement in the labour market coupled with a noticeable acceleration in a broad-range of business activity and confidence data as well as Trump’s tax stimulus package, will encourage the Federal Reserve to continue to hike interest rates in 2018. The US has embarked on a policy of trying to gradually normalise monetary policy. Jerome Powell, the recently appoint ted Chairman of the US Federal Reserve is expected to largely continue to implement this policy in 2018. Unfortunately, the financial markets could become unsettled as interest rates are adjusted higher. Already US government bond yields have risen appreciably.

6. Inflation in Kenya accelerated slightly to 4.8% y/y from 4.5% y/y in the previous month.

This is the fifth consecutive month that inflation has remained within the target band of 2.5 – 7.5% after it spent most of 2017 above the target. Again, this could be attributed to better weather conditions as food inflation was down to 4.7% y/y. The Kenyan Shilling has strengthened against the Dollar since the year began and the uncertainty during elections had little impact on the currency. This should continue to bode well for the Kenyan inflation outlook as commodity prices (especially oil) have noticeably increased since the end of 2017. This is a concern for Kenya as it is a net commodity importer and was a net beneficiary in the fall of oil prices. The Central Bank of Kenya’s Monetary Policy Committee had its meeting on 22 January 2018 and decided to keep rates on hold at 10%. The interest rate caps which were implemented by government in 2016 have however become a hindrance as private sector credit growth remains low. According to the bank the caps have distorted the monetary policy transmission mechanism.

Kenya private sector credit extension is still weak with the latest point at 2.4% y/y growth for December 2017. Inflation is well within the target range and growth momentum is starting to slow as a result of protracted election uncertainty but also due to slowing demand overall. Real rates are positive 5.5% which give the Central Bank of Kenya room to cut rates. This is while government is making fiscal consolidation a priority this year in Kenya which is likely to be a drag on overall economic activity.

Please follow our regular economic updates on twitter @lingskevin

Kevin Lings, Laura Jones & Kganya Kgare (STANLIB Economics Team)

Rates These rates are expressed in nominal and effective terms and should be used for indication purposes ONLY.

STANLIB Money Market Fund

Nominal: 8.19%

Effective: 8.50%

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 02 February 2018. 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: 7.87%

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 02 February 2018. 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 investors 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: 8.37%

STANLIB Extra Income Fund

Effective Yield: 8.04%

STANLIB Flexible Income Fund

Effective Yield: 6.53%

STANLIB Multi-Manager Absolute Income Fund

Effective Yield: 5.69%

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 02 February 2018. For the STANLIB Extra Income Fund, Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down.

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 (RF) (Pty) 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 15h00. Investments and repurchases will receive the price of the same day if received prior to 15h00. 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 (Pty) 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 (Pty) 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 (Pty) 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.: HX3211

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