SANLAM NIVERSAL UNDS LC · 2017. 8. 31. · 2Sanlam Centre Global Select Equities Fund and Sanlam FOUR Active European (ex UK) Equity Fund were closed with effect from 22 June 2017

SANLAM UNIVERSAL FUNDS PLC

SANLAM UNIVERSAL FUNDS PLC Unaudited condensed interim financial statements for the six months ended 30 June 2017


UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS for the six months ended 30 June 2017 Contents Page(s) Company information 1 - 6 Directors’ report 7 - 12 Economic & market review 13 - 18 Investment Manager’s reports 19 - 87 Statement of comprehensive income

of the Company 88 of the Funds 89 - 104

Statement of financial position of the Company 105 of the Funds 106 - 122

Statement of changes in net assets attributable to holders of redeemable participating shares

of the Company 123 of the Funds 124 - 139

Statement of cash flows of the Company 140 of the Funds 141 - 156

Portfolio of investments 157 - 368

Bridge Global Property Income Fund 157 - 159 P-Solve Inflation Plus Fund 160 - 161 Sanlam African Frontier Markets Fund 162 - 164 Sanlam Global Best Ideas Fund 165 - 168 Sanlam Global Bond Fund 169 - 185 Sanlam Global Financial Fund 186 - 189 Sanlam Global Property Fund 190 - 195 Sanlam World Equity Fund 196 - 212 Satrix World Equity Tracker Fund 213- 237 SIIP India Opportunities Fund 238 - 240 SIM Global Equity Income Fund 241 - 243 Sanlam Strategic Bond Fund 244 - 249 Sanlam Accel Income Fund 250 - 251 Satrix North America Equity Tracker Fund 252 - 263 Satrix UK Equity Tracker Fund 264 - 267 Satrix Europe (ex UK) Equity Tracker Fund 268 - 277 Sanlam Equity Allocation Fund 278 - 285 Satrix Emerging Market Equity Tracker Fund 286 - 306 Sanlam Managed Risk Fund 307 - 308


UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS (CONTINUED) for the six months ended 30 June 2017 Contents (continued) Page(s) Portfolio of investments (continued)

Sanlam Private Wealth Global High Quality Fund 309 - 311 Sanlam FOUR US Dividend Income Fund 312 - 314 High Street Global Balanced Fund 315 - 318 Sanlam FOUR Global Equity Fund 319 - 322 Sanlam FOUR Stable Global Equity Fund 323 - 324 Sanlam FOUR Active UK Equity Fund 325 - 327 Sanlam FOUR Multi-Strategy Fund 328 - 332 Anchor Global Capital Plus Fund 333 - 336 Bridge Global Equity Income Growth Fund 337 - 339 Anchor Global Equity Fund 340 - 342 Bridge Global Managed Growth Fund 343 - 345 SIM Global Emerging Markets Fund 346 - 349 ABSA Africa Equity Fund 350 - 352 Sanlam Centre American Select Equity Fund 353 - 355 Sanlam Global Convertible Securities Fund 356 - 359 Sanlam Japan Equity Fund 360 - 363 Sanlam Centre Active US Treasury Fund 364 - 365 Autus Global Equity Fund 366 - 368

Notes to and forming part of the unaudited condensed interim financial statements 369 - 496 Securities Financing Transactions Regulation Disclosures 497 - 520 Purchases and Sales for the period ended 30 June 2017 521 - 572


1

COMPANY INFORMATION

Directors of Sanlam Ùniversal Paul Dobbyn – Irish

1

Funds Plc (the “Company”) Thomas Murray – Irish1

Haydn Franckeiss – South African Richard Aslett – British

All Directors are non-executive

Registered number 267451

Funds of the Company Sanlam Centre Global Select Equity Fund2

Bridge Global Property Income Fund3

P-Solve Inflation Plus Fund Sanlam African Frontier Markets Fund Sanlam Global Best Ideas Fund Sanlam Global Bond Fund Sanlam Global Financial Fund Sanlam Global Property Fund Sanlam World Equity Fund Satrix World Equity Tracker Fund SIIP India Opportunities Fund SIM Global Equity Income Fund Sanlam Strategic Bond Fund

Sanlam Accel Income Fund Satrix North America Equity Tracker Fund

Satrix UK Equity Tracker Fund Satrix Europe (ex UK) Equity Tracker Fund Sanlam Equity Allocation Fund Satrix Emerging Market Equity Tracker Fund

Sanlam Managed Risk Fund Sanlam Private Wealth Global High Quality Fund Sanlam FOUR US Dividend Income Fund High Street Global Balanced Fund Sanlam FOUR Active European (ex UK) Equity Fund

2

Sanlam FOUR Global Equity Fund Sanlam FOUR Stable Global Equity Fund Sanlam FOUR Active UK Equity Fund Sanlam FOUR Multi-Strategy Fund Anchor Global Capital Plus Fund Bridge Global Equity Income Growth Fund

3

Anchor Global Equity Fund Bridge Global Managed Growth Fund

3

SIM Global Emerging Markets Fund Absa Africa Equity Fund

Sanlam Centre American Select Equity Fund

Sanlam Global Convertible Securities Fund Sanlam Japan Equity Fund Sanlam Centre Active US Treasury Fund Autus Global Equity Fund Wisian Capital South African Equity Fund

4

1Paul Dobbyn is considered an independent Director by the Central Bank of Ireland and the Irish Stock Exchange. Thomas Murray is

considered an independent Director by the Irish Stock Exchange only. 2Sanlam Centre Global Select Equities Fund and Sanlam FOUR Active European (ex UK) Equity Fund were closed with effect from

22 June 2017 and 30 June 2017, respectively. 3During the period ended 30 June 2017, effective from 13 June 2017, the Funds were renamed. The previous names of these Funds

were Grindrod Global Property Income Fund, Grindrod Global Equity Income Growth Fund and Grindrod Global Managed Growth Fund, respectively. 4Wisian Capital South African Equity Fund was approved by the Central Bank of Ireland as an authorised designated sub-fund of the

Company on 17 January 2017. As of the date of these financial statements, the Fund has not yet launched.


2

COMPANY INFORMATION (CONTINUED)

Registered office of the Company Beech House Beech Hill Road Dublin 4 Ireland

Manager, Securities Lending Agent Sanlam Asset Management (Ireland) Limited & Secretary Beech House Beech Hill Road Dublin 4 Ireland Administrator Sanlam Asset Management (Ireland) Limited Beech House Beech Hill Road Dublin 4 Ireland Registrar & Transfer Agent Brown Brothers Harriman Fund Administration Services (Ireland) Limited 30 Herbert Street Dublin 2 Ireland Investment Managers Sanlam Investment Management (Pty) Limited

1

55 Willie Van Schoor Avenue Bellville 7530 South Africa Sanlam FOUR Investments UK Limited

2

1 Ely Place London, EC1N 6RY United Kingdom Investment Manager – Sanlam Centre Centre Asset Management LLC American Select Equity Fund, Sanlam 48 Wall Street Centre Active US Treasury Fund Suite 1100 New York, N.Y. 10005 United States of America

Investment Manager – Sanlam Private Sanlam Private Investments (UK) Limited Wealth Global High Quality Fund 16 South Park Sevenoaks Kent TN13 1AN United Kingdom Investment Manager – Sanlam AllianceBernstein Limited Global Property Fund 50 Berkeley Street London W1J 8HA United Kingdom 1Satrix World Equity Tracker Fund, SIIP India Opportunities Fund, Sanlam African Frontier Markets Fund, Sanlam Global Financial

Fund, Sanlam Global Best Ideas Fund, Satrix North America Equity Tracker Fund, Satrix UK Equity Tracker Fund, Satrix Europe (ex UK) Equity Tracker Fund, Satrix Emerging Market Equity Tracker Fund, Sanlam Managed Risk Fund, SIM Global Equity Income Fund and SIM Global Emerging Markets Fund are managed by Sanlam Investment Management (Pty) Limited. 2Sanlam Strategic Bond Fund, Sanlam Equity Allocation Fund, Sanlam Accel Income Fund, Sanlam FOUR US Dividend Income

Fund, Sanlam FOUR Active European (ex UK) Equity Fund, Sanlam FOUR Global Equity Fund, Sanlam FOUR Stable Global Equity Fund, Sanlam FOUR Active UK Equity Fund and Sanlam FOUR Multi-Strategy Fund are managed by Sanlam FOUR Investments UK Limited.


3

COMPANY INFORMATION (CONTINUED) Investment Manager – Bridge Bridge Fund Managers (Proprietary) Limited Global Property Income Fund, Bridge 5 Arundel Close Global Equity Income Growth Fund, Kingsmead Office Park Bridge Global Managed Growth Fund PO Box 3211 Durban, KwaZulu Natal, 4001 South Africa Investment Manager – P-Solve P-Solve Investments Limited Inflation Plus Fund 11 Strand London WC2N 5HR United Kingdom Investment Manager – Sanlam Cameron Hume Limited Global Bond Fund Exchange Place 1 1 Temple Street Edinburgh, EH13 0JB United Kingdom Investment Managers – Sanlam Sanlam FOUR Investments UK Limited World Equity Fund 1 Ely Place London, EC1N 6RY United Kingdom Sanlam Investment Management (Pty) Limited

55 Willie Van Schoor Avenue Bellville 7530 South Africa Centre Asset Management LLC 48 Wall Street Suite 1100 New York N.Y. 10005 United States of America AllianceBernstein Limited 50 Berkeley Street London W1J 8HA United Kingdom DIAM International Limited ` Bracken House One Friday Street London, EC4M 9JA United Kingdom Investment Manager – High Street Global High Street Asset Management (Pty) Limited Balanced Fund The Offices of Hyde Park Block B, 1 Strouthos Road Hyde Park, Sandton Gauteng 2196 South Africa


4

COMPANY INFORMATION (CONTINUED)

Investment Manager – Anchor Global Anchor Capital (Pty) Limited Capital Plus Fund, Anchor Global 25 Culross Road Equity Fund Bryanston Sandton 2191 South Africa

Investment Manager – Absa Africa Absa Asset Management (Pty) Limited Equity Fund Barclays Sandton South Campus 15 Alice Lane 2

nd Floor

South Africa

Investment Manager – Sanlam Global Zazove Associates, LLC Convertible Securities Fund 1001 Tahoe Boulevard Incline Village NV89451 Unites States of America

Investment Manager – Sanlam Japan Asset Management One Ltd Equity Fund Mizuho House 30 Old Bailey London EC4M 7AU United Kingdom

Investment Manager – Autus Global Autus Fund Managers (Pty) Limited Equity Fund Pointbreak Building The Vineyards Office Estate 99 Jip De Jager Avenue Bellville 7530 South Africa

Investment Allocation Manager Sanlam FOUR Investments UK Limited1

1 Ely Place London, EC1N 6RY United Kingdom

Investment Transition Managers Morgan Stanley & Co. International Limited 25 Cabot Square Canary Wharf London E14 4QA United Kingdom

State Street Bank Europe Limited 20 Churchill Place Canary Wharf London E14 5HJ United Kingdom

Investment Advisors Sanlam FOUR Investments UK Limited 1 Ely Place London EC1N 6RY United Kingdom

High Street Global Ltd OMC Chambers Roadtown Tortola British Virgin Islands 1Sanlam FOUR Investments UK Limited is the investment allocation manager to Sanlam Centre Global Select Equity Fund, Sanlam

Global Bond Fund, Sanlam Global Property Fund, Sanlam World Equity Fund, Satrix World Equity Tracker Fund, SIIP India Opportunities Fund, Satrix North America Equity Tracker Fund, Satrix UK Equity Tracker Fund, Satrix Europe (ex UK) Equity Tracker Fund, Satrix Emerging Markets Equity Tracker Fund, Sanlam Equity Allocation Fund and Sanlam Japan Equity Fund.


5

COMPANY INFORMATION (CONTINUED) Depositary Brown Brothers Harriman Trustee Services (Ireland) Limited 30 Herbert Street Dublin 2 Ireland Listing Broker Maples and Calder 75 St. Stephens Green Dublin 2 Ireland

Auditor Ernst & Young

1

Harcourt Centre Harcourt Street Dublin 2 Ireland Legal Adviser Maples and Calder 75 St. Stephens Green Dublin 2 Ireland

Distributors Sanlam FOUR Investments UK Limited 55 Willie van Schoor Avenue Bellville 7530 South Africa

P-Solve Investments Limited 11 Strand London WC2N 5HR United Kingdom Bridge Fund Managers (Proprietary) Limited 5 Arundel Close Kingsmead Office Park PO Box 3211 Durban, KwaZulu Natal, 4001 South Africa Anchor Capital (Pty) Limited 25 Culross Road Bryanston Sandton 2191 South Africa High Street Asset Management (Pty) Limited The Offices of Hyde Park Block B, 1 Strouthos Road Hyde Park, Sandton Gauteng 2196 South Africa Sanlam Global Investment Solutions Ltd Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda 1The auditor has not expressed an opinion nor have they reviewed the unaudited condensed interim financial statements for the six

months ended 30 June 2017.


6

COMPANY INFORMATION (CONTINUED) Distributors (continued) Absa Asset Management (Pty) Limited Barclays Sandton South Campus 15 Alice Lane 2nd Floor South Africa Autus Fund Managers (Pty) Limited Pointbreak Building The Vineyards Office Estate 99 Jip De Jager Avenue Bellville 7530 South Africa


7

DIRECTORS’ REPORT

The Directors of Sanlam Universal Funds plc (the “Company”) present herewith their unaudited condensed interim financial statements for the period ended 30 June 2017.

RESULTS AND BUSINESS ACTIVITIES Detailed investment reviews are included in the Reports of the Investment Managers on pages 19 to 87. The results of operations are set out in the Statement of Comprehensive Income on pages 88 to 104. The Directors also draw your attention to the significant events during the period disclosed in Note 16 on page 494. PRINCIPAL RISKS AND UNCERTAINTIES The Company is exposed to the risks associated with the financial instruments and markets in which they invest. There has been no significant change to the principal risks and uncertainties to which the Company is exposed since the most recent annual financial statements of the Company. A further comprehensive summary of the risk factors that investors should consider is included in the prospectus of the Company and the offering supplement of each Fund. DIVIDENDS The present intention of the Directors is to distribute sufficient surplus net income of specific share classes, currently:

Fund Name Classes

Distribution

Frequency

P-Solve Inflation Plus Fund A (GBP) / B (GBP) / C (GBP) Annual

Sanlam Global Best Ideas Fund A (GBP) / C (GBP) Annual

Sanlam Global Financial Fund A (GBP) / C (GBP) Annual

Sanlam African Frontier Markets Fund A (GBP) / C (GBP) Annual

Satrix World Equity Tracker Fund I (GBP) Annual

SIM Global Equity Income Fund

A (USD) / A (GBP / B (USD) / C (USD)

/ I (USD) Semi-Annual

Sanlam Strategic Bond Fund A Income (GBP) / I Income (GBP)/

P Income (GBP)

Monthly

Sanlam Accel Income Fund Class A Net Income Monthly

Satrix North America Equity Tracker Fund I (GBP) Annual

Satrix UK Equity Tracker Fund I (GBP) Annual

Satrix Europe (ex UK) Equity Tracker Fund I (GBP) Annual

Satrix Emerging Markets Equity Tracker Fund I (GBP) Annual

Sanlam Managed Risk Fund

A (GBP) / I (GBP) / N (GBP) / D(GBP)

/ L(GBP / N2 (GBP) Annual

Sanlam Private Wealth Global High Quality Fund

C Income (GBP) / D Income (USD) /

E Income (USD) / F Income (GBP) /

G Income (USD) Semi-Annual

Sanlam FOUR US Dividend Income Fund Distribution A (GBP) / Distribution A

(USD) / Distribution A (EUR)

Quarterly

Sanlam FOUR Active European (ex UK) Equity

Fund A (GBP) / C (GBP) Annual

Sanlam FOUR Global Equity Fund Distribution A (GBP) Quarterly

Sanlam FOUR Stable Global Equity Fund Distribution A (GBP) Quarterly

Sanlam FOUR Active UK Equity Fund C (GBP) Annual

I (GBP) Semi-Annual

Sanlam FOUR Multi-Strategy Fund

Income Distribution A (GBP) / Income

Distribution B (GBP) / Income

Distribution Founder (GBP) Monthly

Absa Africa Equity Fund A (USD) / A (EUR) / A (USD) Monthly

Sanlam Centre Active US Treasury Fund A (USD) / B (USD) / D(USD) / E(USD) Semi-Annual


8

DIRECTORS’ REPORT (CONTINUED)

DIVIDENDS (CONTINUED) For those Funds which distribute annually, dividends (if any) will be declared and paid following the completion of the annual audits for the year ended 31 December in each calendar year. Sanlam Accel Income Fund, Sanlam Strategic Bond Fund, Sanlam FOUR Multi-Strategy Fund and Sanlam Centre Active US Treasury Fund will distribute on a monthly basis and for those Funds that distribute on a semi-annual or quarterly basis, the dates for the distributions will be as stated in the Fund supplement. All dividends will be subject to the discretion of the Directors.

Payment will be made in cash unless the payment is for an amount less than USD100, EUR100 or GBP100 (depending on the functional currency of each Fund) in which case such payment will be automatically reinvested in the purchase of shares of the relevant class, for the account of the relevant shareholder.

The Directors reserve the right to change the dividend policy of the Fund to reflect changes that may occur from time to time in the requirements for qualifying as a reporting Fund for the purposes of United Kingdom taxation.

With reference to the Statement of Comprehensive Income on pages 88 to 104, Shareholders should note that surplus net income for the year ended 31 December 2016 was distributed during the course of 2017 as follows: P-Solve Inflation Plus Fund distributed GBP 287,842 (2016: GBP 420,663), Sanlam African Frontier Markets Fund distributed USD Nil (2016: USD 1,713), Sanlam Global Best Ideas Fund distributed USD 1,191 (2016: USD 1,777), Sanlam Global Financial Fund distributed USD 34,372 (2016: USD 35,054), Sanlam World Equity Tracker Fund distributed USD 12,928 (2016: USD 13,268), SIM Global Equity Income Fund distributed USD 215,961 (2016: USD 239,760), Sanlam Strategic Bond Fund distributed GBP 2,015,923 (2016: GBP 1,775,999), Sanlam Accel Income Fund distributed GBP 428,077 (2016: GBP 486,992), Sanlam North America Equity Tracker Fund distributed USD 8,813 (2016: USD 15,333), Sanlam UK Equity Tracker Fund distributed GBP 24,783 (2016: GBP 35,254), Sanlam Europe (ex UK) Equity Tracker Fund distributed EUR 12,478 (2016: EUR 15,801), Sanlam Emerging Market Equity Tracker Fund distributed USD 173,598 (2016: USD 186,084), Sanlam Private Wealth Global High Quality Fund distributed GBP 85,040 (2016: GBP 100,384); Sanlam FOUR US Dividend Income Fund distributed USD 42,134 (2016: USD 44); Sanlam FOUR Stable Global Equity Fund distributed GBP 27 (2016: GBP 20); Sanlam FOUR Active UK Equity Fund distributed GBP 4,523 (2016: GBP 1,189,207); Sanlam FOUR Multi-Strategy Fund distributed GBP 13,530 (2016: GBP 6,776), Sanlam FOUR UK Income Opportunities Fund distributed GBP Nil (2016: GBP 6,916) and Sanlam Centre Active US Treasury Fund distributed GBP 175,663 (2016: n/a). During the period ended 30 June 2017, only Sanlam FOUR Active UK Equity Fund made distributions out of capital, distributing an amount of GBP£ 1,908 out of capital at the end of April 2017. No other Funds of the Company made distributions out of capital during the period ended 30 June 2017. DIRECTORS The Directors of the Company during the period were as follows:

Paul Dobbyn (Irish)

Thomas Murray (Irish)

Haydn Franckeiss (South African)

Richard Aslett (British)

Paul Dobbyn is a Director of Sanlam Global Funds Plc and Sanlam Qualifying Investors Funds Plc.

Thomas Murray is a Director of Sanlam Global Funds Plc and Sanlam Qualifying Investors Funds Plc. Thomas Murray is also a Director of Sanlam Asset Management (Ireland) Ltd. (“SAMI”).

Haydn Franckeiss is a Director of Sanlam Global Funds Plc and Sanlam Qualifying Investors Funds Plc. Richard Aslett is the Chief Executive Officer of SAMI. Richard Aslett is also a Director of Sanlam Global Funds Plc, Sanlam Qualifying Investors Funds Plc and SAMI.


9

DIRECTORS’ REPORT (CONTINUED) DIRECTORS’ AND SECRETARY’S INTEREST IN SHARES AND CONTRACTS At 31 December 2016, Haydn Franckeiss had an interest of 60,604 shares in Sanlam Global Best Ideas Fund. During the period these shares were switched for shares in SIM Global Equity Income Fund. At 30 June 2017, Haydn Franckeiss had an interest of 60,123 shares in SIM Global Equity Income Fund. During the period Richard Aslett disposed of 20,403 shares in Sanlam Strategic Bond Fund. At 30 June 2017, Richard Aslett does not have a beneficial interest in any shares of the Company’s Funds. The other Directors who held office on 30 June 2017 had no interest in the shares of the Company or Funds at that date or at any time during the financial period. None of the Directors has a service contract with the Company. The Manager holds non-participating shares of the Company as explained in the notes to the Financial Statements. RELATED PARTIES Disclosures in respect of related parties are contained in note 8 to the financial statements. CONNECTED PERSONS Part 2, Chapter 10 of the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015 (the “CBI UCITS Regulations”) on transactions involving connected persons states that any transactions between a UCITS and a Connected Person must be carried out as if negotiated at arm’s length. Transactions must be in the best interests of the shareholders.

A ‘Connected Person’ is defined as the Management Company or Depositary to a UCITS; and the delegates or sub-delegates of such a Management Company or Depositary (excluding non-group company sub-custodians appointed by a Depositary); and any associated or group company of such a Management Company, Depositary, delegate or sub-delegate. The Directors are satisfied that there are arrangements (evidenced by written procedures) in place, to ensure that the obligations set out above are applied to all transactions with Connected Persons entered into during the period and that all such transactions have complied with these obligations. SUBSEQUENT EVENTS Other than as disclosed in note 18, up to the date of the approval of these financial statements there were no events subsequent to the period end, which, in the opinion of the Directors of the Company, may have had an impact on the unaudited condensed interim financial statements for the period ended 30 June 2017. ACCOUNTING RECORDS The measures taken by the Directors to ensure compliance with the Company’s obligation to keep proper accounting records are the use of appropriate systems and procedures which are carefully implemented by the Administrator. The accounting records of the Company are kept at Beech House, Beech Hill Road, Dublin 4, Ireland.


10

DIRECTORS’ REPORT (CONTINUED) STATEMENT OF DIRECTORS’ RESPONSIBILITIES Irish company law requires the Directors to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the Company and of the results of the Company for that period.

In preparing those financial statements, the Directors are required to:

Select suitable accounting policies and then apply them consistently; Make judgements and estimates that are reasonable and prudent; Follow applicable accounting standards or disclose or explain material departures from them in the

financial statements; Ensure that financial statements comply with the Memorandum and Articles of Association; Provide a fair review of the development and performance of the Company; Give a description of principal risks and uncertainties that they may face; and Prepare the financial statements on the going concern basis, unless it is inappropriate to presume that

the Company will continue in business.

The Directors are responsible for keeping proper books of account which disclose with reasonable accuracy, at any time, the financial position of the Company and to enable them to ensure that the financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the EU and comply with the Irish Companies Act 2014 and the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011 (as amended) (the “UCITS Regulations”). They are also responsible for safeguarding the assets of the Company and in fulfilment of this responsibility, they have entrusted the assets of the Company to the Depositary for safekeeping, in accordance with the Memorandum and Articles of Association of the Company. The Directors are responsible for taking reasonable steps for the prevention and detection of fraud and other irregularities. CORPORATE GOVERNANCE CODE The European Communities (Directive 2006/46/EC) Regulations (S.I. 450 of 2009 and S.I.83 of 2010) (the “Regulations”) require the inclusion of a corporate governance statement in the Director’s Report.

Although there is no specific statutory corporate governance code applicable to Irish collective investment schemes whose shares are admitted to trading on the Irish Stock Exchange (“ISE”), the Irish Funds (“IF”) has published a corporate governance code (“IF Code”) that may be adopted on a voluntary basis by Irish authorised collective investments schemes. This code became effective from 1 January 2012, with a twelve month transitional period. It should be noted that the IF Code reflects existing corporate governance practises imposed on Irish authorised collective investment schemes, as noted above. On 19 December 2012, the Board of Directors voluntarily adopted the IF Code as the Company’s corporate governance code.

The Board of Directors has assessed the measures included in the IF Code as being consistent with its corporate governance practises and procedures for the financial period. The code is available at www.sanlam.ie.

In addition to the IF Code, the Company is subject to corporate governance practices imposed by:

i) The Irish Companies Act 2014, which is available for inspection at the registered office of the Company. It may also be obtained at http://www.irishstatutebook.ie/eli/2014/act/38/enacted/en/html.

ii) The Articles of Association of the Company which are available for inspection at the registered office of the Company at Beech House, Beech Hill Road, Dublin 4, Ireland and the Companies Registration Office in Ireland.

iii) The CBI UCITS Regulations and related Guidance Notes of the Central Bank of Ireland which can be obtained from the Central Bank of Ireland website at http://www.centralbank.ie/regulation/industry-sectors/funds/Pages/default.aspx and are available for inspection at the registered Office of the Company.

iv) The ISE through the ISE Code of Listing Requirements and Procedures which can be obtained from the ISE’s website at http://www.ise.ie/Products-Services/Investment%20Funds/List-a-Fund/Open%20ended%20rules.pdf?v=1032015.

http://www.sanlam.ie/http://www.centralbank.ie/regulation/industry-sectors/funds/Pages/default.aspxhttp://www.ise.ie/Products-Services/Investment%20Funds/List-a-Fund/Open%20ended%20rules.pdf?v=1032015http://www.ise.ie/Products-Services/Investment%20Funds/List-a-Fund/Open%20ended%20rules.pdf?v=1032015


11

DIRECTORS’ REPORT (CONTINUED)

CORPORATE GOVERNANCE CODE (CONTINUED) v) SAMI's Programme of Activity, Business Plan and Code of Conduct, which are available for

inspection at the registered office of SAMI at Beech House, Beech Hill Road, Dublin 4, Ireland. vi) SAMI is also subject to the Corporate Governance Code of the Sanlam Group.

The Board of Directors is responsible for establishing and maintaining internal control and risk management systems of the Company in relation to the financial reporting process. Such systems are designed to manage rather than eliminate the risk of error or fraud in achieving the Company’s financial reporting objectives and can only provide reasonable and not absolute assurance against material misstatement and loss. The Board of Directors has delegated this duty to SAMI.

SAMI is appointed as administrator to maintain the books and records of the Company. SAMI is authorised and regulated by the Central Bank of Ireland and must comply with the rules imposed by the Central Bank of Ireland. SAMI also monitors and evaluates the external auditor’s performance, qualifications and independence.

The Company has procedures in place to ensure all relevant books of accounts are properly maintained and are readily available, including production of annual and half-yearly financial statements. The annual financial statements of the Company are required to be approved by the Board of Directors of the Company and the annual and half yearly financial statements are required to be filed with the Central Bank of Ireland and the ISE.

The statutory financial statements are required to be audited by the independent auditors who report annually to the Board on their findings.

The Board evaluates and discusses significant accounting and reporting issues as the need arises.

Shareholders’ meetings The convening and conduct of shareholders’ meetings are governed by the Articles of Association of the Company and the Companies Acts. Although the Directors may convene an extraordinary general meeting of the Company at any time, the Directors of the Company are required to convene a general meeting within eighteen months of incorporation and fifteen months of the previous annual general meeting thereafter. Shareholders representing not less than one-tenth of the paid up share capital of the Company may also request to convene a shareholders meeting. Not less than twenty one days notice of every annual general meeting and any meeting for the passing of a special resolution must be given to shareholders and fourteen days’ notice must be given in the case of any other general meeting unless the auditors of the Company and all the shareholders entitled to attend and vote agree to shorter notice. Two members present either in person or by proxy constitutes a quorum at a general meeting provided that the quorum for a general meeting convened to consider any alteration to the class rights of shares is two shareholders holding or representing by proxy at least one third of the issued shares of the relevant Funds or class. Every holder of participating shares or non-participating shares present in person or by proxy who votes on a show of hands is entitled to one vote. On a poll, every holder of participating shares present in person or by proxy is entitled to one vote in respect of each share held by him and every holder of non-participating shares is entitled to one vote in respect of all non-participating shares held by him. The chairman of a general meeting of the Company, or at least two members present in person or by proxy, or any holder or holders of participating shares present in person or by proxy representing at least one-tenth of the shares in issue having the right to vote at such meeting, may demand a poll. Shareholders may decide to sanction an ordinary resolution or special resolution at a shareholder’s meeting. An ordinary resolution of the Company (or of the shareholders of a particular Funds or class) requires a simple majority vote cast by the shareholders voting in person or by proxy at the meeting at which the resolution is proposed. A special resolution of the Company (or of the shareholders of a particular Fund or class) requires a majority vote of not less than 75% of the shareholders present in person or by proxy and voting in general meeting in order to pass a special resolution including a resolution to amend the Articles of Association.


12

DIRECTORS’ REPORT (CONTINUED) Composition and Operation of the Board Unless otherwise determined by an ordinary resolution of the Company in a general meeting, the number of Directors may not be less than two. Currently the Board of Directors of the Company is composed of four Non-Executive Directors, being those listed on page 3 of these financial statements with Paul Dobbyn, Thomas Murray and Richard Aslett being Irish residents. None of the Company’s Directors hold directorships with the Depositary. The business of the Company is managed by the Directors, who exercise all such powers of the Company as are not required by the Companies Acts or the Articles of Association to be exercised by the Company in a general meeting. A Director may, and the company secretary of the Company on the requisition of a Director will, at any time summon a meeting of Directors. Questions arising at any meeting of Directors are determined by a majority of votes. In the case of quality of votes, the chairman has a second or casting vote. The quorum necessary for the transaction of business at a meeting of the Directors is two. All key management functions of the Company have been delegated to SAMI. SAMI will manage these in terms of their Programme of Activity and Business Plan. SAMI is approved by the Central Bank of Ireland, and is authorised as a UCITS Management Company and an Alternative Investment Fund Manager. VALUATION OF INVESTMENTS As at 30 June 2017, the following delisted securities were held by the Company:

- Accident Exchange Group Plc (Sanlam Global Best Ideas Fund; Sanlam Global Financial Fund) - African Bank Investments Limited (Satrix Emerging Markets Equity Tracker Fund) - Banco Espirito Santo SA (Satrix Europe (ex-UK) Equity Tracker Fund)

- DBA Telecommunications Asia (Sanlam Global Best Ideas Fund; Sanlam Global Financial Fund) - Hanergy Thin Film Power Group Limited (Satrix Emerging Markets Equity Tracker Fund) As at 30 June 2017, the following thinly traded securities were held by the Company: - Du Pont ‘S’ Fractional Shares (Sanlam World Equity Fund) - Stanbic IBTC Holding Co. Rights (Sanlam African Frontiers Market Fund)

The fair value of those securities listed above and used in preparing these financial statements may differ significantly from the values that would have been used had those securities had readily available market prices at 30 June 2017. All other investments in 2017 have readily available market prices.

Approved by the Board of Directors on 30 August 2017


13

ECONOMIC & MARKET REVIEW

for the six months ended 30 June 2017

Global Economics Review Global economic conditions lifted towards the end of 2016 and remained relatively buoyant in the first half of 2017. Real GDP trended at close to an estimated 3%. Amongst the developed economies (DM) an upturn in corporate profits growth supported a welcome lift in investment spending, amidst elevated levels of business and consumer confidence. An increase in the global manufacturing purchasing managers’ index (PMI), relative to its 2016 level, was reflected in firmer global industrial production growth. This supported metals prices. The increase in commodity prices since 2016 and easing financial conditions, amidst firm foreign capital inflows into emerging market (“EM”) countries offering attractive yields, lent considerable support to economic activity in EM economies in 1H17. India and China continued to deliver the world’s strongest economic growth. China’s policymakers are targeting 6.5 per cent growth per year for the five year period ending 2020 although President Xi Jinping did indicate early in 2017 that real GDP growth should not be pursued at the expense of financial stability. Amongst DM economies, US President Trump’s reform agenda, including the widely publicised fiscal policy reform initiative, failed to gather momentum, although the withdrawal of the US from the Trans-Pacific Partnership trade deal signalled a shift towards a less open foreign trade regime. Although US real GDP advanced by a moderate 1.2% seasonally adjusted and annualised in 1Q17, growth lifted to 2.6% in 2Q17. And, although declining to a degree, the share of corporate profits in GDP, as measured in the US national accounts, remained elevated through the first two quarters of the year. Also, employment growth remained relatively firm and the unemployment rate continued to decline, reaching 4.4% in June 2017. This level is close to historic lows for this series and is far below the peak of 10.0% recorded in October 2009. Meanwhile, the US housing market remained stable with low housing inventory levels supporting house prices. The decline in vacancy rates, nonetheless, appeared to bottom in the second quarter. News flow in Europe was dominated by coverage of the elections in The Netherlands and France. In the former, the Euro-sceptic Party for Freedom (PVV), which had seemingly been gathering momentum amongst voters early in the year, lost ground as the mainstream People’s Party for Freedom and Democracy (VVD) secured the most votes in the March 2017 general election. In France, Emmanuel Macron (an independent reformist) defeated Marine Le Pen, a Euro-sceptic, from the National Front in the second round run-off for the Presidency in May 2017. Subsequently, in an alliance with the Democratic Movement, Macron’s La République En Marche! secured a majority in France’s National Assembly following the June 2017 legislative election. Macron’s promised reform agenda includes restricting government spending and labour market reform. The election results in the Netherlands and France sparked a marked appreciation of the euro against the US$ as concerns over possible disintegration of the Euro project eased – at least for now. Political developments aside, the euro, which was materially undervalued at the beginning of the year, was supported by the lift in Euro area real GDP, which advanced 2.3% seasonally adjusted and annualised in 2Q17 and closed the real GDP growth gap between the euro area and the US. In addition, the economies of the Eurozone, in aggregate, continued to record a large current account surplus, reflecting not only Germany’s enormous surplus, but also surpluses in other countries such as The Netherlands, Italy and Spain. The UK is one notable exception to the generally satisfactory growth outcomes recorded in DM. The sharp depreciation of sterling, following last year’s EU membership referendum, fueled an increase in UK CPI, which increased 2.6% in the year to June 2017. The weakness of sterling, against the backdrop of a wide current account deficit, implies significant downside risk to UK final domestic demand. Indeed, despite a relatively buoyant labour market real GDP growth moderated in 1H17, as higher inflation constrained real income growth and household consumption spending.


14

ECONOMIC & MARKET REVIEW (CONTINUED) for the six months ended 30 June 2017 Global Economics Review (continued) Prime Minister Theresa May’s attempt to obtain a stronger mandate to negotiate a “hard Brexit” (which could end UK membership of the EU single market) by calling a general election in June 2017, failed as the Conservative Party lost its majority in the UK parliament. This entrenched uncertainty around the likely final outcome of the negotiation process. This outcome is not ideal, especially since there is limited time left to determine the future of migrants in both the UK and the EU, in addition to negotiating a UK-EU trade agreement before the “Brexit” deadline on 29th March 2019. As regards inflation, DM headline consumer price inflation (CPI) lifted a little in 1H17. In the Euro area, the increase in the annual advance in CPI, albeit modest, was welcomed as it eased the deflation concerns of the European Central Bank. At the same time, core CPI remained low and stable, on aggregate, in DM. This backdrop assisted DM central banks in maintaining loose monetary policy stances. Accordingly, the US Federal Open Market Committee (FOMC) proceeded cautiously in shifting towards a less accommodative policy stance. It increased the target range for the Federal Funds Rate by 0.25% in March 2017, followed by an additional increase of 0.25% in July 2017, which left the target range at 1.0% to 1.25%. At the conclusion of its June 2017 meeting the FOMC continued to signal a gradual pace of interest rate “normalization”. According to the FOMC Monetary Policy Statement, the Committee expects that through gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labour market conditions will strengthen somewhat further.” In Europe, the ECB expressed confidence that its loose monetary policy stance has helped stabilise the Euro area economy. At the conclusion of its Governing Council meeting in June 2017, the Bank signalled it is still too early to end its support measures, indicating that it expected its key interest rates to remain unchanged for “an extended period of time, and well past the horizon of (its) net asset purchases”. Its net asset purchases (currently €60 billion per month) are expected to continue until end December 2017 “or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim”. Even so, given the improvement in Euro area real GDP growth and receding deflation concerns, expectations of a shift towards a less accommodative monetary policy stance by the ECB have been building. Global Economic Outlook If history is a trustworthy guide, the June 2017 global all-industry PMI should be consistent with continued decent real GDP and industrial production growth. Global unemployment has also declined substantially from its “Great Recession” level and employment growth is supporting retail sales. Encouragingly, too, global trade activity has gathered momentum, following an extended lull in the post-recession period. The current economic expansion amongst the DM economies is, nonetheless, long in the tooth when compared with the average length of previous expansions. Ultimately, it is likely to be difficult to maintain growth momentum if productivity trends remain as soft as in the first half of this year – especially if there is a decisive shift towards less trade liberalization or even protectionism. Still, following years of deleveraging there is no excessive growth evident in private sector credit extension, on aggregate, in DM economies. Inflation does not appear to be a threat either at present. Indeed, income growth in current prices is trending at a relatively low level. Accordingly, there is no need for DM central banks to act aggressively on monetary policy. Even so, real interest rates remain extraordinarily low and it is apparent that central banks are likely to shift towards “normalization” of monetary policy, led by the US Federal Reserve. In particular, attention is being focused on likely changes in the balance sheets of the G4 central banks over the next few years. The US FOMC has already signalled its intention to reduce the size of its balance sheet. In time, the European Central Bank, the Bank of England and the Bank of Japan are expected to follow, although in the case of the Bank of Japan, action is probably some way off considering the Bank’s commitment to its bond yield target.


15

ECONOMIC & MARKET REVIEW (CONTINUED)

for the six months ended 30 June 2017

Global Economic Outlook (continued) Still, the pace of DM monetary policy normalization is expected to be gradual, especially since any sharp increase in real interest rates would expose countries with high government debt levels to potentially unmanageable increases in their debt servicing burdens. In Europe, in particular, there is risk to long-term fiscal sustainability, since the implementation of economic reforms needed to lift income growth is likely to be slow in countries such as Italy (and possibly France despite President Macron’s best efforts). This continues to hold material risk to debt dynamics – especially in the absence of a decisive shift towards a fiscal union in Europe. Renewed focus on political risk could also emerge ahead of Italy’s general election (which may take place before its scheduled date in 2018), given concerns that a Euro-sceptic coalition could emerge. Polls have indicated similar levels of support for Prime Minister Renzi’s Democratic Party (PD) and the Euro-sceptic Five Star Movement (5SM). The concern is that the possible formation of unstable political party coalitions could scupper economic reform, which would heighten long-term fiscal risk in the country. A shift to a less accommodative monetary policy stance amongst the large G4 central banks in the years ahead and the implied tightening of global financial conditions, would be a concern to indebted EM economies with significant macroeconomic imbalances. At least, however, EM real interest rates, in aggregate, have increased substantially relative to real DM interest rates, following the 2013 “taper tantrum” (when former US Federal Reserve Chairman Bernanke announced the arrival of US Federal Reserve balance sheet “tapering” in May 2013). This should, ostensibly, ease the risk to EM to some extent. That said continued optimism in EM would partially depend on the absence of renewed weakness in commodity prices or sharper than expected increases in global risk-free interest rates, which could expose debt vulnerabilities. Meanwhile, China’s economy continues to deliver. But, it does appear “over-indebted” and “over-invested”. Much of China’s debt is in local currency and the bank system is largely state-owned. Further, the country saves more than it invests and despite large capital outflows last year, the level of China’s reserves remains substantial. Still, China’s real GDP growth may disappoint, accompanied by a falling share of investment in GDP in the years ahead. And, despite the mitigating factors noted, the risk of a disorderly adjustment to a lower investment ratio amidst accelerated deleveraging is probably not nil. Market Review The first quarter of 2017 contained a lot of news (as well as noise) around Donald Trump and how he is fairing as a president. Markets continued in a positive manner on the back of his campaign rhetoric regarding tax reforms and deregulation. However, towards the end of the quarter doubts started to form amongst investors - relating to the efficacy which Trump would be able to deliver on his promises. Very little has in fact been implemented to date and the jury is still out. As a result the reflation trade lost momentum towards the end of the quarter, specifically in Europe. Economic data from across the globe had been improving over the quarter; “soft data” had seen significant improvement whereas the hard data had been lagging and was much more moderate in magnitude. Going into the second quarter investors were eagerly waiting for the hard data to confirm the recovery. While it is widely acknowledged that the economy is showing signs of improvements, risks to the global economy have not disappeared. One of these risks for equity markets going forward is a significant increase in inflation without the accompanying earnings growth. It seems that recently perceived market shocks, those events which were perceived as a negative at the time, namely BREXIT and the Trump victory, has sent equities to all-time highs while volatility has descended to all-time lows. That being said, the bond markets did not agree with the rosy picture that equities painted in the first quarter of 2017, and also advanced over the same period.


16

ECONOMIC & MARKET REVIEW (CONTINUED) for the six months ended 30 June 2017 Market Review (continued) During the first quarter global equity markets, as measured by the MSCI World Index rose 6.38%

1. For the

calendar months over the quarter, the MSCI World returned 2.41%, 2.77% and 1.07% respectively. Most major regions produced positive returns; Asia Pacific ex Japan led the charge rising 11.76% while Europe followed with a positive 7.44%, North America and Japan followed with returns of 5.88% and 4.49% respectively. As noted above, risks very much remain and not the least in Europe going forward. That being said the region did avoid perceived market risk events during the first quarter. In Europe, the risks that were averted were namely the Dutch elections, where voters remained in the moderate category and did not move towards a more right leaning stance; while in Germany Angela Merkel has fared respectably in the state elections - removing some fears of a similar shake-up in political stance as in the Netherlands. Looking at markets from a regional perspective: over the quarter China performed better than investors expected and this has been a boon to the Asian markets. With no other negative surprises of significance, at least for investors, combined with improving fundamentals across the region - Asia was the star performer both in dollar and local currency terms. There was some rerating in Asia, however this was in line with improvements in fundaments and therefore the region remained cheap. In local currency terms the US, Eurozone and UK equities rose strongly during the quarter with returns of 5.84%, 6.02% and 7.93% respectively. Japan declined only marginally with a return of -0.17% in local currency terms. From a sector perspective, it was clear to see a strong quarter for equity markets with only the energy sector posting a negative return. Oil sold off strongly after experiencing range bound trading for an extended period of time resulting in the energy sector posting a return of -4.95% over the period. Information technology posted the strongest returns by rising 12.25%. Virtually all sectors produced a return between 6.5 and 8.5%, those sectors being, from largest to smallest in return; heath care, consumer discretionary, consumer staples, materials, industrials and utilities. Financials lagged somewhat but that did not come as a big surprise after the strong returns the sector posted post the US elections. The sector returned 4.72% while telecommunications services lagged all the rest significantly with a return of only 1.09%. For the first quarter of 2017, global bonds, as measured by the Barclays Capital Global Aggregate Bond Index, rose 1.76%. The bond markets lost significant ground in the latter part of 2016 due to the risk on sentiment that ensued post the US elections; the strong equity market continued, although the correlation between equity markets and bond markets during this quarter reversed. Even though it is a fairly short time period being only three months, the magnitude of the swing in performance correlation of the bond markets has been very interesting with some investors surely shaking their heads. Over the quarter the index produced returns of 1.13%, 0.47% and 0.15%. In the corporate bond market, the Barclays Capital Global Aggregate Corporate Bond Index rose 1.59% for the quarter. The returns for the Corporate Bond Index over the past six months have been more muted versus the Global Index, albeit it has followed the general bond market returns fairly consistently. For the calendar months of January, February and March the index returned 0.88%, 0.73% and -0.02% respectively.

1

All performance numbers are in US dollars unless stated otherwise.


17

ECONOMIC & MARKET REVIEW (CONTINUED) for the six months ended 30 June 2017 Market Review (continued) In the second quarter of 2017, the stock market got off to a weak start on concerns over Trump’s policy implementation, the French Presidential election and geopolitical risks surrounding North Korea. The market turned risk on after some of these uncertainties receded. In June, the stock market traded in a narrower range after lower than expected US jobs data and a wait-and-see attitude ahead of important events during the month; the UK general election and FOMC meeting being the most notable. The FOMC decision on 15th June was a significant event reaffirming the tightening policy direction by the US Federal Reserve Bank. The market is currently pricing in a further two hikes whilst the Fed’s rhetoric is implying another five. Market volatility is currently about as low as it has been in the last 20 years while equity and bond markets remain in conflict regarding the health of the economy. In the UK, political risk remains elevated following the “failed” general election Theresa May called – the outcome of which clearly not what she had in mind. A global improving market outlook should however help the UK see modest economic growth continuing forwards. Over the quarter there were some positive signs elsewhere in Europe; better inflation data out of Spain and Germany and Macron’s victory in France was part of the reason why Draghi hinted towards tightening conditions. Macron’s rhetoric is pro-business and with a strong government France has a good chance to change restrictive policies such as sticky labour conditions which are not helpful to productivity. In the USA the employment picture keeps on improving and the benign recovery continues. Earnings in 2015 and 2016 were weak in the USA whilst in 2017 it has grown fairly well. Corporate profitability has also picked up year to date. That being said, valuations versus the rest of the world remain rich and investors should take that into account. Globally there is a lot of political uncertainty, though this is not evident in equity markets. A risk factor that remains is a derailing of China. Another would be the US Fed tightening in an aggressive and too fast manner – however we believe that is unlikely. Italian elections could possibly be a surprise later in 2017, but for the market at least it has not surfaced as a real concern. During the quarter global equity markets, as measured by the MSCI World Index rose 4.03%

2. Since the

US elections the index has only posted gains on a calendar month basis – that is now eight straight consecutive months of positive returns. For the calendar months over the second quarter the MSCI World returned 1.48%, 2.12% and 0.38% respectively. All major regions produced positive returns; Europe produced the strongest results by rising 7.37% while Japan followed with a positive 5.19%. North America followed with a return of 2.82% whilst Asia ex Japan rose 1.54% over the quarter. Looking at regional markets in local currency; Japan outperformed significantly by posting a return of 6.07% over the quarter. Versus Japan the other major regions produced muted numbers, the strongest being North America with a return of 2.67%. Europe followed with a return of 1.79% whilst Pacific ex Japan rose 1.14%. From a sector perspective, the big outlier in performance was the energy sector that posted a negative return of -8.98% over the second quarter. Oil continued selling off after a weak first quarter where it sold off more than 11%. The only other sector to post a significant negative number over the period was Telecommunication Services with a decline of -4.88%. Materials also fell producing a return of -1.34% whilst Consumer Staples only fell marginally by declining -0.42%. The strongest sector was Health Care with a return of 2.91%, followed by Industrials and Financials with returns of 1.62% and 1.23% respectively. For the first quarter of 2017, global bonds, as measured by the Barclays Capital Global Aggregate Bond Index rose 2.60%. The bond markets gained significant ground in the first ten weeks of the quarter but then lost significant ground post the Fed’s decision to raise interest rates. This is already the second time this has happened in 2017. During the final month of the quarter treasuries were detractors whilst investment grade credit continued to advance. Over the quarter the index produced returns of 1.13%, 1.55% and -0.09%.

2 All performance numbers are in US dollars unless stated otherwise.


18

ECONOMIC & MARKET REVIEW (CONTINUED) for the six months ended 30 June 2017 Market Review (continued) In the corporate bond market, the Barclays Capital Global Aggregate Corporate Bond Index rose 3.53% for the quarter. After following the general bond market during the first quarter of the year, the corporate index has outperformed notably in the second. For the calendar months of April, May and June the index returned 1.40%, 1.67% and 0.42% respectively.


19

BRIDGE GLOBAL PROPERTY INCOME FUND Investment Objective The Bridge Global Property Income Fund (the “Fund”) aims to provide investors with a high level of current income, as well as long-term income and capital growth, by investing primarily in a global range of transferable securities of real estate companies and real estate related companies, or in companies which own significant real estate assets at the time of investment or in Real Estate Investment Trusts (REITS) including publicly traded closed-ended real estate funds listed or traded on a regulated stock exchange or market. The Fund’s name was changed this year from Grindrod Global Property Income Fund to Bridge Global Property Income Fund to reflect the fact that the Investment Manager of the Fund changed its name from Grindrod Asset Management (Pty) Limited to Bridge Fund Managers (Pty) Limited. Fund Performance

Note: The Fund is benchmarked against the GPR 250 REIT Index. Performance figures longer than 12 months are annualised. Figures are quoted gross of Investment Manager and Manager fees.

The US Federal Reserve (“Fed”) increased their US target interest rate by 25bps at both their March and June meetings, with the current rate now at 1.25%. According to the Fed, the US labour market has continued to strengthen and the latest batch of US economic data shows that economic activity has been rising moderately in 2017. The US unemployment rate has fallen to the lowest level in 16 years following 80 consecutive months of jobs growth. The Fed also announced that the US$4.5 trillion bond portfolio it had acquired through a series of quantitative easing programmes would be sold gradually. While the Fed appears committed to a further rate hike this year, current economic data suggests that economic activity has slowed, which may push the next hike into 2018. The expected increase in fiscal stimulus from President Trump’s economic policies, while good for economic growth, will also be inflationary and take some of the pressure off the US Federal Reserve to keep interest rates lower for longer. A combination of higher official interests and higher inflation should lead to higher bond yields and higher borrowing costs for listed property companies. Market sentiment to US mall REITs continues to be negative as the outlook for their trading metrics continue to be questioned by investors. Analysts have lowered their expectations for 2017 and 2018. The threat of online shopping and the vast improvements made in home entertainment systems has seen a decline in the number of mall visits. These issues are impacting mall owners in most developed nations, where online shopping is growing well in excess of 20% per annum. The number of announcements from US retailers looking to close stores has increased during the year.

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

1st Qtr 2017 2nd Qtr 2017 YTD Inception

Fund USD-terms 0.00% -2.07% -2.07% 4.86%

Benchmark 1.24% 1.29% 2.53% 9.92%

Excess return -1.24% -3.36% -4.60% -5.06%


20

BRIDGE GLOBAL PROPERTY INCOME FUND (CONTINUED)

Fund Performance (continued) Against this backdrop, the global listed property markets were moderately positive during the first half of the year, with the GPR 250 REIT index up by 2.53%. The index was supported by positive performance from the US and European regions, while Africa was slightly positive, Asia and Oceania returns were negative. The Fund was down 2.07%, underperforming its benchmark by 4.60% year to date. The underperformance came about as a result of the Fund’s underweight position in the US and overweight position in South Africa. The US and European components of the GPR 250 REIT index increased by 1.8% and 2.1% respectively. The underperformance to its benchmark can also be attributed to the Fund’s service fee and the payment of dividend withholdings tax, neither of which are adjusted for when comparing the Fund’s performance to the benchmark. Fund Outlook There is still significant political uncertainty which is likely to influence the direction of financial markets in the second half of 2017. The election of Emmanuel Macron as the next French president over Marine Le Pen in May did dampen the wave of anti-EU populism that had started to gain momentum last year. The German federal elections are scheduled to occur later this year, where we may see Angela Merkel’s leadership being challenged, increasing uncertainty for financial markets in the short-term. While the Fed appears committed to a further rate hike this year, current economic data suggests that economic activity has slowed, which may push the next hike into 2018. If Donald Trump and his administration get their way, US economic growth will accelerate in 2017 and 2018 and the Fed will raise interest rates as inflation moves beyond the 2% target rate. Bond yields will rise and the US dollar is likely to strengthen, given limited scope in other developed markets to raise interest rates in 2017. The Fed continues to suggest that they wish to normalise rates in the US and unwind their balance sheet. While increased economic growth should support higher occupancies and market rental growth, higher bond yields will lead to higher borrowing costs and higher capitalisation rates (i.e. lower property values) in the short-term. Although prices are likely to be volatile in the short-term, the current one year forward income yield on the portfolio has increased to 4.86% following price weakness in the second quarter. This relatively high yield should provide some downside protection. At the same time, the Fund’s investments are focussed on high-quality REITs with strong balance sheets that should be able to weather a more difficult operating environment throughout 2017. Investment Manager

Bridge Fund Managers (Pty) Limited


21

P-SOLVE INFLATION PLUS FUND Investment Objective The investment objective of the P-Solve Inflation Plus Fund (the “Fund”) is to grow capital by delivering a return in excess of UK inflation as measured by the Retail Price Index. This is achieved by diversifying investments across various asset classes and providing the opportunity for real capital growth. The reduction of risk will be accomplished through the diversification and tactical rotation of assets, rather than through the targeting of risk using a static allocation.

The Fund may offer downside capital preservation during adverse market conditions, however, this is not guaranteed.

Fund Performance

Note: The Fund is bench marked against Retail Price Index. Performance figures longer than 12 months are annualised. Figures are quoted gross of Investment Manager and Manager fees.

The Fund size as of 30 June 2017 was £52.8m and the Fund returned 2.51% over the first half of 2017, outperforming its benchmark which returned 1.95% for the same period. Equity slightly underperformed over this period as Emerging markets and Asia Pacific ex Japan dragged. European equities were also boosted by Emmanuel Macron’s election as French President.

Economics led the way over the first quarter of this year, but political developments put a few bumps in the road.

Over the course of the first quarter it became clear that economic activity is expanding in all of the major economic regions, and doing so at an accelerating rate. By the end of March inflation was at or above 2%, a target for central banks, in three of the G7 leading economies.

The exception to this good news was a fall in copper and oil prices. These hinted at the possibility of falling industrial demand, although the fall in the oil price also reflected a resurgence in US shale oil production.

Significantly, the US Federal Reserve had enough confidence in the US economy to raise the Federal funds target rate, in March – for the second time in four months – to 1%. But US financial markets were affected by political events, in particular the impact of Donald Trump as incoming US President.

Rising corporate earnings and expanding economic activity assisted return-seeking assets in the second quarter, although the shine was taken off a little in the final 10 days when markets overreacted to the remarks of central bankers. Political and geopolitical developments acted as a brake from time to time but the effect was generally slight, apart from in the US, where growing question marks against the Trump administration had a cooling effect on equities.

0%

2%

4%

6%

8%


Fund GBP-terms 2.34% 0.17% 2.51% 7.18%

Benchmark 0.84% 1.11% 1.95% 2.99%

Excess return 1.50% -0.94% 0.56% 4.19%


22

P-SOLVE INFLATION PLUS FUND (CONTINUED) Fund Performance (continued) There were plenty of political developments outside the US – a presidential election in France, an unexpected general election in the UK, with an even more unexpected result – and there were unsettling geopolitical events in Syria and North Korea. But the progress of corporate earnings across the developed market economies proved more important, with improvements in the US, eurozone, UK and Japan pushing up equity prices in all of those regions.

Fund Outlook Looking ahead, the second round of Brexit negotiations began on 17 July, with citizen’s rights, exit bill and Ireland among the main talking points. The Bank of England’s August 3rd meeting will be closely watched with the potential talks of a rate hike to combat inflation. Markets will also be closely watching the German federal election in September to see if it will follow the same direction as recent French and Dutch elections in rejecting populist candidates. Elsewhere, Libya and Nigeria may be asked to join the other members of the Organisation for Petroleum Exporting Countries (OPEC) in cutting output in order to combat low oil prices. ECB President Mario Draghi is attending the Fed’s Jackson Hole meeting in August and could potentially outline his plans for the tapering of the ECB’s QE program.

Investment Manager P-Solve Investments Limited


23

SANLAM AFRICAN FRONTIER MARKETS FUND

Investment Objective The investment objective of the Sanlam African Frontier Markets Fund (the “Fund”) is to achieve long-term capital growth by investing in listed African equities (ex-South Africa) that offer above average growth potential. Fund Performance

Note: The Fund is bench marked against MSCI EFM Africa ex ZA Daily Net TR Index (MSEIAZUN). Performance figures longer than 12 months are annualised. Figures are quoted gross of Investment Manager and Manager fees.

The 6 month period to 30 June 2017 saw the Sanlam African Frontier Markets Fund advance 24.33%, outperforming its benchmark, the MSCI Africa ex-South Africa TR Index, by 794bps. Over a one-year period, the Fund is ahead of its benchmark by 804bps, and the 5 year alpha is +149bps. The Fund was launched in March 2010, which makes it 7 years old, and the since inception annualised alpha is +113bps. The Fund’s strong performance to the end of June 2017 was driven by our concentrated positions in a few Nigerian banks that we consider to be high quality and our holdings in Zimbabwe. Over a one-year period, our Egyptian holdings have been a key driver of outperformance - we have been overweight Egypt for quite some time. Fund Outlook

Zimbabwe: Although a driver of the strong performance to date, Zimbabwe is still experiencing significant foreign currency liquidity issues with foreign investors unable to move money out. The introduction of bond notes has to some extent helped the local population to transact on a day-to-day basis but most Zimbabweans remain skeptical about the long-term value of these bond notes. This has forced locals to preserve their wealth by investing on the Harare Stock Exchange. This demand for shares has to some extent contributed to the recent stock market rally, and to the Fund’s performance to date. In the second quarter, the Harare Stock Exchange rallied 41% and the 1 year return of the All Share Index is 95%. The Fund has been invested in Zimbabwe for almost 5 years and we continue to hold our investments which now make up 11% of the Fund.

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

26%


Fund USD-terms 5.40% 17.96% 24.33% 1.52%

Benchmark -0.49% 16.97% 16.39% 0.39%

Excess return 5.89% 0.99% 7.94% 1.13%


24

SANLAM AFRICAN FRONTIER MARKETS FUND (CONTINUED) Fund Outlook (continued) Zimbabwe (continued): Subsequent to the period end, we took a deliberate decision to apply a 35% write down to Zimbabwean securities in recognition of the foreign currency liquidity issues noted above. This write down was equivalent to the Old Mutual Implied Rate (OMIR) - the exchange rate implied from the differing value of Old Mutual shares listed on the London, Johannesburg and Harare exchanges. It remains difficult to ascertain when things could improve in terms of USD liquidity in Zimbabwe however, it should be noted there was an announcement that the government is setting up a sinking fund to start addressing investors FX repatriation backlog. We wouldn’t expect any significant changes soon, but if it works with time, we may see the liquidity crunch in Zimbabwe for foreign investors being alleviated. If this happens, and we are able to freely trade in and out of Zimbabwe, then we would write up our Zimbabwe holdings to reflect the traded market value. Nigeria: Recent FX policy changes created some optimism in the FX, Equities and Fixed Income markets, and that has led to some improvement in capital inflows. The Nigerian All Share Index went up by 26% in dollar terms in 2Q17. The rally was mainly driven by investors’ optimism following the Central Bank’s introduction of an exchange rate for foreign investors which seems to be working well so far. The recent rally has not been strong enough to recoup losses incurred on the stock market over the last three years. Over a 1 year period the Nigerian All Share Index is down 2.5% and the 3 year return is still a negative 27% in dollars. While the recent developments in the FX market provide some hope that the Central Bank of Nigeria may be considering a move towards a more flexible Naira exchange rate, it is important for the Central Bank to remove the current multiple exchange rate system which is causing a few distortions in the economy. During the second quarter we took a deliberate decision to price our Nigerian holdings using the NAFEX rate which is 20% weaker compared to the official interbank exchange rate of around USDNGN 315. At present foreign portfolio investors are able to access some FX liquidity on the NAFEX window at ex-change rates between USDNGN 380 – USDNGN 400. Given that the NAFEX window reflects an exchange rate that equity investors can transact on, we are valuing our Nigerian holdings using an exchange rate of USDNGN 380. However, our index provider, MSCI, is still valuing Nigeria using the overvalued exchange rate of USDNGN 315. Investment Manager Sanlam Investment Management (Pty) Limited


25

SANLAM GLOBAL BEST IDEAS FUND

Investment Objective The investment objective of the Sanlam Global Best Ideas Fund (the “Fund”) is to provide above average long-term capital growth by investing primarily in global equities which the Investment Manager has identified as being undervalued and as offering above average growth potential. Fund Performance

Note: The Fund is bench marked against the MSCI World Index. Performance figures longer than 12 months are annualised. Figures are quoted gross of Investment Manager and Manager fees.

In the first two months of 2017, the “Trump reflation trade” added to the rally in world equity markets that

started in November of last year. This buoyancy was halted in March as it became increasingly clear that

a business-friendly promise made by the Trump campaign was not the same thing as a business-friendly

policy implemented by the Trump administration. It is not unusual to see markets rally after a US election,

but this breathless run left markets looking increasingly pricey.

In the second quarter, most of the world’s respected geopolitical commentators expressed grave

reservations about the apparent intent of the Trump administration to abdicate the US’s traditional

leadership of the Western alliance and turn itself inward to “make America great again”. That this should

take the form of trashing trade agreements and building walls augurs poorly for the US economy and the

very people of middle America the administration is purporting to help. Yet, markets were reassured by the

surprisingly easy wins for president Macron and his party in France in the face of a well-organised right

wing challenge, boosting that country’s equity market by 9% in the quarter. This was in contrast to the UK,

where Theresa May’s ill-timed election call weakened her and her party considerably. We doubt that she

will survive as the leader of the Conservative party, thus impairing Britain’s position at the Brexit

negotiating table considerably and making the business climate in the UK riskier for all, in our opinion.

For the first quarter, the Fund’s holdings in Consumer Staples were the largest contributors to

outperformance. The Fund’s Industrial sector holdings detracted the most from performance. From a

country perspective, the Fund benefitted from good stockpicking in the US and the UK, producing excess

returns in both these geographies.

For the second quarter, Financials contributed the most to outperformance. The Fund’s information

technology holdings detracted most from performance for the period.

0%

2%

4%

6%

8%

10%

12%

14%


Fund USD-terms 7.68% 4.58% 12.61% 6.84%

Benchmark 6.38% 4.03% 10.66% 7.00%

Excess return 1.30% 0.55% 1.95% -0.16%


26

SANLAM GLOBAL BEST IDEAS FUND (CONTINUED) Fund Performance (continued) As at 30 June 2017, the Fund is in the top half of performance in the Morningstar global peer group ranking over one, two and three years.

Fund Outlook Based on current consensus expectations the Fund has a forward P/E of 14.9 versus 17.2 for the MSCI World index and a dividend yield of 2.6% versus 2.4%. The Fund ROE is 20% compared to 16% for the above benchmark and has superior profitability (operating margin: 23% versus 19%). The Fund has an active share of 87%. Investment Manager Sanlam Investment Management (Pty) Limited


27

SANLAM GLOBAL BOND FUND

Investment Objective The Sanlam Global Bond Fund (the “Fund”) aims to provide income with the possibility of long-term growth from capital appreciation. Fund Performance

Note: The Fund’s benchmark is the Barclays Capital Global Aggregate Bond Index. Performance figures longer than 12 months are annualised. Figures are quoted gross of Investment Manager and Manager fees.

The Fund outperformed its benchmark, the Bloomberg Barclays Global Aggregate Index, by +0.07% over

the first half of 2017. The Fund and benchmark climbed 4.48% and 4.41% respectively. The Fund and its

benchmark returned 1.77% and 1.76% respectively over the first quarter. The Fund advanced 2.66%

whilst the benchmark managed 2.60% in Q2. Since inception, the Fund and the benchmark have returned

an annualized 3.18% and 3.66% respectively.

Fund Outlook

The current global economic expansion is long by historic standards and, ultimately, it is likely to be

difficult to maintain growth momentum if productivity trends remain weak – especially considering the shift

towards less trade liberalization (or even protectionism despite the recent EU-Japan trade agreement?).

Numerous risks linger, including the potential for a more rapid and impactful adjustment in China,

heightened geopolitical risk and ongoing policy uncertainty in the US. China remains a particular concern

– credit extension has been excessive and the country’s high capital to labour ratio precludes ongoing

robust productivity gains. There are numerous mitigating factors though, including China’s high level of

foreign exchange reserves and its excess of savings over investment. Looking ahead, the US FOMC is

likely to stick with its interest rate hiking path, supplemented by a reduction of its balance sheet (possibly

from late 2017). The market is currently pricing in a further two hikes whilst the Fed’s rhetoric is implying

another five. There should be one more hike in 2017 and then another two or potentially three in 2018. A

risk here is that the US tightens too fast – although we believe that is unlikely. The Fed will also be aware

of the possible inflation risk posed by fiscal expansion, especially if also accompanied by an increase in

trade protectionist measures. Valuations in North America are rich versus the rest of the world and

investors should take this into account going forward. In general though, as one portfolio manager noted,

“it is hard to find people excited about equity markets lately” – the US is no exception and if anything the

leader of the pack.

-2%

0%

2%

4%

6%


Fund USD-terms 1.77% 2.66% 4.48% 3.18%

Benchmark 1.76% 2.60% 4.41% 3.66%

Excess return 0.01% 0.06% 0.07% -0.48%


28

SANLAM GLOBAL BOND FUND (CONTINUED)

Fund Outlook (continued)

In terms of yields, investors should be more bearish on the long end going forward. The Fed’s unwinding

of their balance sheet by the end of the year will particularly have an effect in the longer end of the curve,

as well as in core rates. In the UK, the BOE has implied more hawkishness which translates more risk to

that space as well, while the ECB should add to their rhetoric to remove stimulus going forward – which

should end around the middle of 2018. Therefore, we expect the rates market to be whipsawed out of

Washington and other political centres for the foreseeable short term future.

Investment Manager Cameron Hume Limited


29

SANLAM GLOBAL FINANCIAL FUND

Investment Objective The investment objective of the Sanlam Global Financial Fund (the “Fund”) is to achieve steady growth in the US Dollar value of investments primarily through global investment in securities of companies of which the principle operations specifically focus on, and derive benefit from or pertain to, the provision of banking, insurance and other financial services. Fund Performance

Note: The Fund’s benchmark is the MSCI World Financials Index. Performance figures longer than 12 months are annualised. Figures are quoted gross of Investment Manager and Manager fees.

The Fund had a good first half of 2017.

Since the crisis it’s paid to ignore seemingly attractive valuations, and our stance of investing in banks and

insurers that are on the front foot and growing shareholder value (and are attractively valued) has helped

performance tremendously. The compounding of shareholder value at higher and predictable rates is

always important, but in tough and low growth periods like the current one compounding at a high rate is

scarce and adds considerable value. But it is not only avoiding value traps that is important, not

overpaying for compounders is just as important.

We’ve continued to do that in the spaces avoided by most competitors and not represented in the index:

Emerging markets and small and medium sized banks and insurers. In the first quarter, a few of them

came through strongly in terms of results and also higher share prices. The good news is that the share

price gains have generally only kept pace with the growth in shareholder value, hence they have not really

re-rated to being expensive and we expect these shares to continue to generate good returns. At the

same time, European banks and insurers are lagging and getting cheaper (but bear in mind their

shareholder value is only growing at 7%-10% per annum) and US financials stood still during the quarter

after their strong rally in Q4 2016.

For the second quarter, most of the Fund’s US investments reported good results and the share prices

reacted favourably to this and the SEC’s capital audits. In Europe and Asia there were winners and losers.

Generally, in each case the banks and insurers reported good results helped by their strong franchise on

the back of a gradually improving macro environment.

0%

2%

4%

6%

8%

10%

12%

14%

16%


Fund USD-terms 7.72% 6.96% 15.22% 10.39%

Benchmark 4.72% 5.26% 10.23% 2.92%

Excess return 3.00% 1.70% 4.99% 7.47%


30

SANLAM GLOBAL FINANCIAL FUND (CONTINUED)

Fund Performance (continued)

The environment remains supportive of financials and the Fund has good diversification amongst US,

Europe, UK and emerging markets. Within those geographies the Fund has good diversification amongst

banks, insurers, exchanges and asset managers. Fund Outlook

We expect good performance:

- Indications are that the probability is high that the global low growth, low inflation, low interest rate environment has ended.

- This is good for confidence (increased financial activity in terms of investment, lending and M&A). - The upswing will start (and we think it already has started) from a very healthy and low base, within a

financial sector which generally has strong and clean balance sheets (with a few exceptions in Greece, Italy and Spain).

- Because it starts from such a low base, the wave should last a number of years and should result in higher net interest margins and improved cost-to-income ratios leading to a period of sustained and above average shareholder value growth.

- The regulatory headwind seems to have peaked and automation of the additional information requirements means cost savings by banks and insurers going forward.

- Finally, the financial sector is undervalued in absolute terms and relative to the MSCI World index. The benefit from higher interest rates should see both insurers and banks re-rate and outperform.

- In short – we think the driving forces behind the rally could continue anything from four to ten years, helping financials to be an outperforming sector over that period.

Based on our experience of the past 30 years, the probability is high that next few years could see a

golden period for financials. The investment philosophy, as highlighted in the track record, means that the

probability is high that the Fund will generate good returns over the next 10 years.

Investment Manager Sanlam Investment Management (Pty) Limited


31

SANLAM GLOBAL PROPERTY FUND Investment Objective

The Sanlam Global Property Fund (the “Fund”) aims to provide long-term capital growth.

Fund Performance

Note: The Fund’s benchmark is the FTSE EPRA/NAREIT Developed Index. Performance figures longer than 12 months are annualised. Figures are quoted gross of Investment Manager and Manager fees.

The Fund has enjoyed a very pleasing start to 2017, adding 7.70% over the first six months and has

outperformed the FTSE EPRA/NAREIT Developed Index by +2.86% over this period. The Fund gained

3.12% whilst the benchmark gained 2.07% in the first quarter. In absolute terms, the Fund gained 4.44%

in the second quarter whilst the benchmark gained 2.71% and hence an outperformance of +1.73%. Since

inception, the Fund has annualized returns of 11.09%, having outperformed by +0.99% annualized.

Fund Outlook

The current global economic expansion is long by historic standards and, ultimately, it is likely to be

difficult to maintain growth momentum if productivity trends remain weak – especially considering the shift

towards less trade. Numerous risks linger, including the potential for a more rapid and impactful

adjustment in China, heightened geopolitical risk and ongoing policy uncertainty in the US. China remains

a particular concern – credit extension has been excessive and the country’s high capital to labour ratio

precludes ongoing robust productivity gains. There are numerous mitigating factors though, including

China’s high level of foreign exchange reserves and its excess of savings over investment. Looking

ahead, the US FOMC is likely to stick with its interest rate hiking path, supplemented by a reduction of its

balance sheet (possibly from late 2017). The market is currently pricing in a further two hikes whilst the

Fed’s rhetoric is implying another five. A risk here is that the US tightens too fast – although we believe

that is unlikely. The Fed will also be aware of the possible inflation risk posed by fiscal expansion,

especially if also accompanied by an increase in trade protectionist measures. Valuations in North

America are rich versus the rest of the world and investors should take this into account going forward.

Further political risk in the Eurozone is the Italian elections later this year. German elections are also due

in September; Angela Merkel’s popularity has recovered and there should be no surprises. The UK’s

political climate is expected to remain volatile for the foreseeable future – the BREXIT negotiations are a

first in history and have seemingly endless complications.

0%

2%

4%

6%

8%

10%

12%


Fund USD-terms 3.12% 4.44% 7.70% 11.09%

Benchmark 2.07% 2.71% 4.84% 10.10%

Excess return 1.05% 1.73% 2.86% 0.99%


32

SANLAM GLOBAL PROPERTY FUND (CONTINUED)

Fund Outlook (continued)

On the equity side, the UK has seen a decent run since BREXIT, boosted by the weak currency, so a

consolidation is definitely possible. In terms of Asia; a rising concern with several market participants is

Austral

Documents

SANLAM NIVERSAL UNDS LC · 2017. 8. 31. · 2Sanlam Centre Global Select Equities Fund and Sanlam FOUR Active European (ex UK) Equity Fund were closed with effect from 22 June 2017