This is a pure equity fund that aims to replicate the FTSE/JSE RAFI40 Index. The appeal for an investor is the alternate weighting methodology (discussed below) to the traditional FTSE/JSE Top 40, which is a market cap weighted index. The fund is rebalanced annually in March.

All major regions and sectors around the globe posted positive returns in the final
quarter of the year: MSCI World (+8.5%), MSCI Emerging Markets (EM) (+11.8%)
and MSCI SA (+13.1%), in US dollar. The year 2019 was one of the strongest years
on record for global equities with the MSCI World up 27.6% for the year. MSCI EM
(+18.4%), although positive for the year, lagged significantly. Global equities rallied
behind signs of stabilising global growth and moderation in trade tensions between
the US and China, who in December announced that ‘Phase 1’ of an agreement had
been reached. In the UK, following the Conservative Party’s win in the general
election, Prime Minister Johnson’s Brexit policy is set to take centre stage in 2020.
The Withdrawal Agreement is likely to be passed, allowing the UK to leave the
European Union on 31 January 2020 with a pledge by the prime minister to not
prolong the transition period beyond the end of 2020.

Bond yields in developed markets rose steadily during the quarter with the
benchmark US 10-year bond yield rising from 1.66% to 1.92% while the yields on
the German 10-year bond became less negative, rising from -0.57% to -0.19%.
Commodities were generally higher at the end of the quarter. Brent crude rose
11.5% to US$66.4/bbl, after a deepening of the OPEC/OPEC+ production deal.
Gold was slightly higher (+2.6%), closing at US$1 517/oz and palladium gained
10.1% to end at US$1 946/oz. Base metals also gained with copper up 8.6%.

In South Africa, the main local equity indices, namely the FTSE/JSE Top 40 (Top 40)
(+4.5%), FTSE/JSE All Share (ALSI) (+4.6%) and FTSE/JSE Capped Shareholder
Weighted All Share (Capped SWIX) (+5.2%), were all positive in the last quarter of
2019. Despite the sell-off in November the FTSE/JSE All Bond Index (ALBI) (+1.7%)
performed in line with the cash benchmark Alexander Forbes Short Term Fixed
Interest (STeFI) Composite Index (+1.7%) as the risk sentiment improved in
December. SA listed property as measured by the FTSE/JSE SA Listed Property
Index (SAPY) (+0.58%) had a lacklustre quarter but was ahead of inflation-linked
bonds (-0.9%), which was the worst performing asset class. The full year to
December 2019 painted a very different picture in the case of bonds. The ALBI
(+10.3%) lagged the Top 40 (+12.4%) and the ALSI (+12%). The Capped SWIX
(+6.7%) and SAPY (+1.9%) were both in positive territory but struggled in
comparison to other major indices.

The rand appreciated markedly as 2019 drew to a close, ending the year at 14.01
against the US dollar. South Africa experienced record-breaking stage 6 load
shedding, implemented to relieve the grid due to unplanned breakdowns and
prevent a total blackout. The impact could be seen in the fourth quarter performance
of Industrials (-0.05%), which was flat in comparison to Resources (+13.4%) and
Financials (+2.5%). Despite its low growth potential, the South African economy
should, nonetheless, benefit from a renewed upturn in the country’s terms of trade.
In essence, this implies increased purchasing power, which should be reflected in
firmer GDP numbers in the quarters ahead, if electricity outages are restricted.

The fourth quarter of 2019 yielded more evidence that the South African Reserve
Bank (SARB) is succeeding in its quest to lower inflation expectations towards 4.5%.
Indeed, inflation prints have consistently surprised on the low side over the past
year. Headline consumer price inflation advanced just 3.6% in the year to November
2019, while core inflation increased 3.9%.

In early November 2019, Moody’s changed the outlook on South Africa’s long-term
sovereign debt from stable to negative, indicating there is a material risk of a
downgrade and that it would monitor the upcoming 2020 Budget closely.