PRESCIENT INCOME PROVIDER FUND MINIMUM DISCLOSURE DOCUMENT INVESTMENT AND RETURN OBJECTIVE The Fund aims to generate income and outperform the South African cash and short-term bond market MAY 2015 through a full interest rate cycle. In addition, the Fund aims to provide some growth in capital. The Fund is Regulation 28 compliant. ABOUT THE FUND INVESTMENT PROCESS Fund manager: Guy Toms Farzana Bayat Jean-Pierre du Plessis The Fund invests in cash, short-term, high-quality capital market instruments, preference shares and property. A number of techniques are used to generate returns, including duration management, yield enhancements via credit exposure and risk management strategies, where these strategies are designed to provide downside protection. Risk is also mitigated by applying credit limits of A and A1/F1 or better for bond and money market instruments respectively. Where appropriate, the Fund may also invest in offshore markets. Benchmark: SteFi Call 110% RISK INDICATOR Return Target: Headline CPI +3% CONSERVATIVE Fund size: R5.5bn RELATIVE PERFORMANCE RETURNS (%) Fund SteFi Call 1-3 Yr BI 110% 150% 120% 1 Year 10.59 SteFi Call 110% Minimum investment: R10 000 lump-sum R1 000 per month 90% 9.45 5.55 5.88 5 Years (p.a.) 8.95 5.76 7.04 60% Since inception (p.a.) 9.78 7.57 7.66 30% 140.81 98.83 100.40 Since inception (total return) Inception date: 31 December 2005 Fund 6.61 6.00 3 Years (p.a.) Income distribution (monthly): 6.59 cents per unit for the past 12 months 0% Nov-05 Jan-08 Apr-11 Dec 14 Jan 15 Apr 15 May 15 RETURNS VERSUS BENCHMARK (%) SteFi Call 110% Fund SteFi Call 110% 1-3 Yr BI 10% Alpha 2.21% 8% Sharpe Ratio 6% Standard deviation % Positive months 0% Current Yield 3 Years (p.a.) 5 Years (p.a.) Since inception (p.a.) 1.08 2.12% 0.65 2.29% Max gain 2% 1 Year 1.38 -1.16% Max drawdown 4% Custodian: Nedbank WHO SHOULD INVEST Investors seeking a low to medium risk offering, aiming to maximise income via exposure to primarily the South African Money and Bond markets. This Fund is suitable to investors with a short- to medium-term investment horizon. 28.0% 25% 20% 15% Total expense ratio: 0.95% KPMG 7.66% 35% 29.7% Fee class: A1 Auditors: 92.11% PORTFOLIO COMPOSITION 30% Initial Fee: 0.00% Annual management fee: 0.86% (incl VAT) RISK STATS (Since inception) Fund 12% Fund classification: South African - Multi Asset - Income 13.6% 12.3% 10% 1.1% Property Preference Shares Floating Rate Bonds Fixed Bonds CLN Corporate FRN FRN Cash -5.0 2.5% 1.6% 1.7% Offshore (GBP) 1.5% Offshore (AUD) 3.3% -0.6% Offshore (ZAR) 0% Offshore (USD) 5.2% 5% Tel: 0800 111 899 Web: www.prescient.co.za Email: [email protected] Prescient is a registered Financial Services Provider (FSP no. 612) PRESCIENT INCOME PROVIDER FUND MAY 2015 INCOME DISTRIBUTIONS Declaration Payment Amount (c) Unit Price (c) 2015/05/28 2015/06/01 0.54 130.50 2015/04/30 2015/05/04 0.58 130.50 2015/03/31 2015/04/01 0.60 129.97 2015/02/27 2015/03/02 0.54 129.80 2015/01/30 2015/02/02 0.53 128.74 2014/12/31 2015/01/01 0.58 128.68 2014/11/28 2014/12/01 0.52 127.09 2014/10/31 2014/11/03 0.94 127.30 2014/09/30 2014/10/01 0.34 127.66 2014/08/29 2014/09/01 0.25 126.44 2014/07/31 2014/08/01 0.42 124.80 2014/06/30 2014/07/01 0.68 124.70 FUND COMMENTARY Janet Yellen said it will be appropriate for the Fed to raise rates at some point this year and remains confident that inflation will move back to the 2% target over the medium term. Yellen believes that if the Fed delays monetary policy tightening this year by waiting for inflation and unemployment to reach objective levels then this would risk overheating the economy. Improving jobs growth, steady core inflation and a recovery in housing remain evident, however negative headline inflation, low Q1 GDP and a strong US dollar will maintain uncertainty in the Fed language. US equities had a volatile month returning 1% despite the weak GDP print and hawkish comments by the Fed on hiking interest rates. The US 10 year bond remained flat at 2.1% after initially rising to 2.3% during the month. In SA, the May MPC meeting resulted in an unchanged repo rate decision with 2 members voting for a hike whilst 4 members opted for no hike. Reserve bank governor Kganyago sent out a hawkish speech citing upside inflation risks from the currency, electricity and wages. Headline CPI was seen to breach the 6% target in Q1 and Q2 of 2016 with average inflation for 2015 adjusted to 4.9% from 4.8%. Headline SA inflation increased to 4.5% from 4.0%, largely due to increasing food prices, transport fees from higher fuel levies and alcoholic beverages and tobacco products due to rising sin taxes. The weaker exchange rate pass-through has been muted given lacklustre consumer demand. Core inflation has been sticky of late but did decrease to 5.6% from 5.7% whilst PPI decreased to 3.0% from 3.1%. The R186 sold-off by 23bps to end the month at 8.16% as uncertainty about a Greek default decreased investors risk appetite together with increased probability of a US interest rate hike in June. 3-month Jibar rose slightly to 6.13% from 6.12% over the month, while 12-month Jibar ticked up by 10bps to 7.5%. The FRAs (forward rate agreements) shifted higher around 10-30bps over the month across the curve. Currently, the market is pricing in 50bps worth of rate hikes out to 6 months and 100ps worth of rate hikes over the next 12 months. DISCLAIMER Collective Investment Schemes in Securities (CIS) should be considered as medium to long-term investments. The value may go up as well as down and past performance is not necessarily a guide to future performance. CISs are traded at the ruling price and can engage in scrip lending and borrowing. A schedule of fees, charges and maximum commissions is available on request from the Manager. There is no guarantee in respect of capital or returns in a portfolio. A CIS may be closed to new investors in order for it to be managed more efficiently in accordance with its mandate. CIS prices are calculated on a net asset basis, which is the total value of all the assets in the portfolio including any income accruals and less any permissible deductions (brokerage, STT, VAT, auditors fees, bank charges, trustee and custodian fees and the annual management fee) from the portfolio divided by the number of participatory interests (units) in issue. Forward pricing is used. The Fund's Total Expense Ratio (TER) reflects the percentage of the average Net Asset Value (NAV) of the portfolio that was incurred as charges, levies and fees related to the management of the portfolio. A higher TER 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 TER's. During the phase in period TERs do not include information gathered over a full year. The Manager retains full legal responsibility for any third-party-named portfolio. Where foreign securities are included in a portfolio there may be potential constraints on liquidity and the repatriation of funds, macroeconomic risks, political risks, foreign exchange risks, tax risks, settlement risks; and potential limitations on the availability of market information. The investor acknowledges the inherent risk associated with the selected investments and that there are no guarantees. Please note that all documents, notifications of deposit, investment, redemption and switch applications must be received by Prescient by or before 13:00 (SA), to be transacted at the net asset value price for that day. Where all required documentation is not received before the stated cut off time Prescient shall not be obliged to transact at the net asset value price as agreed to. Prices are published daily and are available on the Prescient website. Prescient is a member of the Association for Savings and Investments SA. Prescient Investment Management (Pty) Ltd is an Authorised Financial Service Provider (FSP No. 612) The offshore currency exposure has a hedge in place between USDZAR levels of 11.57-12.50, expiring in June 2015. The Fund returned 0.44% for May, slightly underperforming the benchmark performance of 0.51%. We have continued to maintain the short duration position. Prescient is a registered Financial Services Provider (FSP no. 612)
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