South African consumer inflation for August increased to 6.4% y/y from 6.3% y/y recorded
in July. The main driver of the inflation outcome was higher food , alcoholic beverages,
tobacco and motor vehicle price increases. Looking forward, the risk to inflation is skewed
to the upside given higher wage settlements and administered prices as well as weaker
currency. The rand has depreciated by approximately 34 percent against the US dollar
since the beginning of the year.

At the recent Monetary policy meeting held in September, the South African Reserve
Bank decided to pause raising interest rates keeping the benchmark repo rate at 5.75%.
However, Gill Macus continued to reiterate that South Africa is in a rising interest rate cycle
and that interest rates will have to be normalised in due course. We therefore expect
further interest hikes in the months ahead as the South African Reserve Bank seeks to curb
inflation and respond proactively to monetary policy normalisation in the US. Consequently,
the term to maturity of the fund is approximately 80 days ensuring investors benefit from
locking in the expected increases in interest rates today.

The fund is not exposed to any credit linked instruments and is only invested in the five
major banking institutions, ensuring the lowest possible risk for our investor.

South African consumer inflation continued to increase in May to 6.6% y/y from a 6.1%
y/y increase in April. The upward pressure on consumer inflation in recent months has
mainly been a result of high administered price inflation and a weaker exchange rate.
Administered prices such as electricity prices, fuel levies, airport and port charges among
others, have increased on average by 8.9% y/y. The weakening currency continues to put
upward pressure on inflation and its immediate impact can be seen in the petrol price
which has increased by approximately R1.92c/litre since June last year.

Despite a policy dilemma of rising inflation and declining GDP growth the South African
Reserve Bank is expected to resume raising interest rates. However, what is not clear is the
exact timing and extent of these interest rate increases. Consequently, the fund continues
to take advantage of higher yields on offer towards the longer end of the curve and has a
term to maturity of approximately 80 days.

The fund is not exposed to any credit linked instruments and is only invested in the five
major banking institutions, ensuring the lowest possible risk for our investor.

CPI increased to 5.9% y/y in February from 5.8% y/y in January. The major driver behind the increase in CPI was once again higher price increases in the food and transport categories of the CPI basket. We expect consumer inflation to continue rising throughout the year as the cost of imports is likely to increase due to the substantial depreciation of the currency.

At the first monetary policy committee meeting of the new year, the South African Reserve Bank surprised the market by increasing interest rates by 0.5% due to an expectation of rising inflation in 2014. This was despite concerns relating to subdued economic growth prospects for the South African economy. The central bank cited the weaker currency as the main reason for the deterioration in their inflation outlook and did not rule out further interest rate increases in the year ahead.

The fund is not exposed to any credit linked instruments and is only invested in the five major banking institutions, ensuring the lowest possible risk for our investor.

Consumer price inflation edged lower in November, to 5.3% y-o-y from 5.5% y-o-y in October. The moderation in CPI was primarily as a result of a decline in transport inflation underpinned by the 28c/l petrol price cut in November. Looking ahead, however, there are signs that goods inflation is beginning to react more noticeably to currency weakness. With the rand currently trading at R10.65/US$ the decline in inflation may well be short lived.

The South African Reserve Bank is expected to maintain low interest rates whilst inflation is contained and the country's economic growth prospects remain subdued. Money in the bank is currently yielding approximately 4.5% - the lowest it has been for more than 39 years. To maximise yield in this low interest rate environment, the term to maturity of the fund is being kept close to the maximum 90 days allowable limit for money market funds.

The fund is not exposed to any credit linked instruments and is only invested in the five major banking institutions, ensuring the lowest possible risk for our investor.