Northstar BCI Managed Fund’s objective is to provide investors with a moderate to high long term total return

Regulation 28
Maximum foreign exposure as permitted by SARB
Maximum effective equity exposure of 75%
Maximum effective property exposure of 25%

The Northstar SCI Managed Fund will change it's name to Northstar BCI Managed Fund, effective from 25 August 2023

The fund switched Management Company from Sanlam Collective Investments to Boutique Collective Investments (RF) (Pty) Ltd. on 25 Aug 2023

The Northstar SCI Managed Fund outperformed its passive benchmark of 50% Capped Swix, 25%
MSCI AC World Index and 25% ALBI by over 1% in 2022 (fund return 1.6% and benchmark 0.42%) as
well as outperforming its peer group, with the average fund delivering negative returns, over a tough
investing year.

Despite the rand depreciating by almost 6% against the dollar last year, the decision to be
underweight global assets paid off. The MSCI All Country World Index fell 12.6% in rands whereas
the JSE Capped Swix ended a wild 12 months, up 4.4%. The same applies to global fixed income
assets, global bonds declined over 16% in dollar terms last year, translating into a collapse of more
than 10% in rands, whereas the South African All Bond Index gained 4.2%.

Changes to Regulation 28 provided significant scope to increase the offshore component of the fund
but offshore asset valuations at the end of 2021 were not attractive versus most local asset classes.
This remained the case in 2022. Consequently, the reduction in offshore exposure which we began
to implement in the last quarter of 2021, continued into last year. An extra factor causing the shift to
local, was a deeply undervalued rand in 2022.

In addition to the asset returns mentioned above, SA cash delivered 5.2% for the period under
review and was the top performing asset class as interest rates rose, property gained a paltry 0.5%.
Whilst 2022 proved to be a year of suboptimal asset class returns, most of the fund's underlying
asset classes managed by the various Northstar teams, outperformed their respective benchmarks.

In terms of relative outperformance, our global performance was the most impressive, the offshore
stocks held by the fund fell 6% in rand terms for the year, versus the benchmark, which lost 12.6%.
The local equity exposure outperformed the Capped Swix by 81bps. Unfortunately, the fund's
income holdings slightly underperformed the ALBI benchmark - the FI component of the fund
returned 3.22%. Gold is not in the fund's composite benchmark, but the average exposure of 3.8%
over the year, contributed to absolute and relative returns as gold gained 4.6% in 2022.

Considering the present strength in the rand from the oversold levels of 2022 and the
outperformance of domestic equities and other local asset classes last year, we expect our
optimization models to drive a reversal of the por??olio's underweight of offshore assets at the
expense of SA exposure.

We also note with concern, that our expected returns on our local and offshore buy lists have
diminished from quarter 4, 2022. This is because SA assets have done well and many of our global
stocks have rallied hard in 2023, in addition we are also pairing expected profitability back, reducing
prospective returns. We expect these factors to drive down our risk asset levels in the fund until the
market begins to again offer more value.

To conclude, the fund enjoyed a solid 2022. We anticipate 2023 to also be challenging, we envision
success to require nimbleness and action to capitalize on mispricing opportunities. All our efforts
will be focused on generating alpha at both an asset class and instrument level in the year ahead.