Fund review

The review of the S&P South Africa Sovereign Bond 1+ Year Index (SPFIZAA) in Q1 2024 saw no changes to the Index. The fund performed in line with the Index. The
R186 Government bond remained the largest bond in the fund and its yield increased from 8.67% to 9.27% and its modified duration decreased from 2.53 to 2.27 over
the quarter. The fund’s yield increased from 10.85% to 11.63% and its modified duration decreased from 5.75 to 5.62 over the quarter.

Market overview

In the first quarter of 2024, global markets were quite resilient despite the unchanged interest rates in major economies. The US labour market remained strong over the
first quarter but poses challenges from a monetary policy perspective. Major central banks globally have not yet cut interest rates, which might be due to the delay by the
US Federal Reserve (Fed). Over the first quarter of 2024, MSCI EM increased by 2.2% and MSCI World by 3.0% both outperforming MSCI EMEA which had a fall of
0.6%. Global equity performed well, driven by technology and communication services.

In South Africa, there remains persistent challenges within the macroeconomic environment hindering economic growth, mainly due to continuous electricity outages and
supply side challenges related to the failing railway and ports infrastructure, which provided little relief to the SA inflation rate remaining towards the upper end of the 3%
to 6% target range. At the last MPC meeting, the Governor emphasised anchoring inflation to 4.5% and was aligned to market expectations of keeping interest rates
unchanged. Local equities were up over the first quarter with the FTSE/JSE Top 40 up 3.85% and the FTSE/JSE Capped SWIX up 2.9%. The ALBI declined by 1.9%
whilst the rand strengthened to 18.80 against the USD over the quarter.