The Weekly Focus (18 February 2013) - Liberty

18 February 2013

Contents
Newsflash ................................................................................................ 3
Market Comment ................................................................................................... 3
What does the Japanese stock market look like in dollar terms after its big run? ..................... 6
JP Morgan note on SA fund managers .......................................................................... 6
Snippets of Info ..................................................................................................... 7
Economic Update ....................................................................................... 8
Weekly Market Analysis ............................................................................... 10
Rates .................................................................................................... 11
Standard Bank Money Market Fund ............................................................................ 11
STANLIB Enhanced Yield Fund .................................................................................. 11
STANLIB Income Fund ............................................................................................ 12
STANLIB Extra Income Fund ..................................................................................... 12
Glossary of terminology .............................................................................. 13
2

Newsflash
Garzarelli expects the cyclical US bull market to stay in place for a long time –
despite corrections along the way.
Market Comment
• As we look around at markets, we see a lot of commentators calling for a market correction,
some - especially those sitting with too much cash - almost literally praying for a correction,
even begging for one! (let me in, please!)
• So far after 7 weeks of 2013, the developed market MSCI World Index has returned 5.4% in
dollars (10.9% in rands), the US S&P 500 Index is up 6.6%, Australia’s index is up almost 9% and
the Japanese Nikkei Index is up 10% (although close to 0% in dollars, because the yen has fallen
sharply).
• The London FTSE Index is up 7.2% in sterling, but only 2.2% in dollars, because the pound has
actually declined by about the same percentage as the rand (4.5%). The MSCI Europe excluding
the UK Index has returned 4.6% in dollars (10.1% in rands).
• The JSE All Share Index has returned 3.7% in rands, or -1.5% in dollars.
• So, where to now? Well, on the one hand we have my favourite US market commentator, Elaine
Garzarelli, saying that one of her indicators in her quantitative model, the number of bullish
investment advisors in the US, actually declined last week from a reading of 54.7% to 52.6%.
This means there were fewer bullish investment advisors, which is a market-positive sign, since
excessive bullish levels are dangerous and a level above 53% is bearish for that indicator.
• She says this modest retreat indicates a normal correction may be postponed. After all, there
are so many people waiting for a pullback, that it may not actually happen, or at least not
when everyone wants it or expects it, e.g. now. She says if this indicator continues to decline,
she would upgrade it.
• Otherwise her proprietary stock market indicator composite continues to be bullish at 80% and
she says that she “expects this cyclical bull market to stay in place for a long time” -
something that is somewhat unusual for her, because quantitative models like hers are always
subject to change as conditions change.
• On the other hand, we have Bank of America Merrill Lynch putting out an interesting research
piece, wherein they say they like equities and are overweight, but expect a short-term pullback
of 5-7%, because of what they call their new Bull & Bear Index (the “B&B”).
• They explain that movements in share prices are driven by many factors, such as the economy,
government policy, earnings, interest rates and valuation; however, they think that tactical
moves (less than 3 months) are often better explained by sentiment, positioning and technicals
(the charts).
3

• According to their new Bull & Bear Index investor sentiment towards risk assets is now at a
more bullish level today than 99% of all readings since 2002. The current reading of 9.6 is close
to maximum bullish (a reading of 10) and thus triggers a contrarian “sell” signal for risk assets
like equities. They hasten to point out that the index would have prompted a “buy” signal on
June 5 th last year, one day after the equity market troughed. Interesting!
• Their back-testing shows that since 2002 a “sell” signal of 8.0+ would on average have been
followed by a 12% peak-to-trough correction in global equities within 3 months.
• Their advice for longer-term investors is to therefore wait for a 5-7% correction before adding
to positions. The plot thickens!
• Something that can make a difference comes from a report compiled by UBS, saying equity
holdings in pension funds globally are very low. In Germany, Italy, Spain and Japan they are
below 20%. In the UK they are at a 30-year low of 44% in equities, yet this is one of the highest
allocations. The peak allocation in the UK was 78% in 1993.
• The US and Australia are two of the highest at around 50% of their pension funds in equities.
• In Asia, both Japan and Korea have equity holdings below 10%!!
• Insurance companies in Europe are even more risk-averse.
• This suggests that even a small rotation back into equities by institutional investors could have
a marked effect on the equity markets. This has not yet begun, says UBS. Growth in Europe
would probably be the most powerful trigger (not happening yet) and losses in bonds could also
spur a switch (losses have started, but in a small way).
• The JP Morgan Global Government Bond Index is down 2.9% in dollar terms so far in 2013 and is
down 1.5% from exactly one year ago.
• Brandywine, the managers of our global bond fund, prefer to use the Barclays Global Aggregate
Bond Index, because it includes corporate bonds, although the index only started in 2009. This
index is down 1.9% so far in 2013, but is still up 1.4% on a year ago.
• The big, long (31 years) bull market in global government bonds may be under threat now, but
the long-term trend remains intact.
• Below we show a chart of the developed stock market index (MSCI World) relative to the JP
Morgan Global Government Bond Index.
4

Source: I-Net Bridge
• This chart shows how equities outperformed bonds from 1994 (as far as the bond index goes) to
2000, when the TMT bubble burst. Since then the bond return is still more than double the
equity return (from a relative reading of 6 to the current 2.75), even after the rally in equities
over the past 4 years.
• Global equities are trying bravely to outperform bonds, from a very low level (a reading of 1.65
in March 2009) - and have certainly done so of late - but they have a long way to go to get back
to the 3.5 relative level seen in 1994.
• Meanwhile, back at the ranch, Garzarelli says corporate earnings reports in the US continue to
come in stronger than consensus estimates, with about 70% of the 356 companies in the S&P
500 Index having beaten consensus. In addition revenue or sales gains remain strong too.
• She is forecasting a 6% gain in 2013 in operating earnings and projects a fair value of 1680 for
the S&P 500 Index - about a 10% gain from here.
• News on the US economy has mostly been upbeat and she thinks there is little likelihood that
we will see economic growth problems ahead. Unemployment claims have fallen to a 5 year
low, January bank loans accelerated significantly, we have seen a massive global interest rate
easing cycle and the US budget deficit has narrowed from -10% of GDP to -6%.
• She expects GDP growth to rebound to 2% in the first quarter after a 0.1% drop in the fourth
quarter of 2012. Growth should improve during the year, reaching 2.8% next year.
• Garza does not expect quantitative easing (QE) to end anytime soon and does not expect a US
rate hike before late 2015.
5

What does the Japanese stock market look like in dollar terms after
its big run?
Source: I-Net Bridge
• The Nikkei is still down 71% in yen terms from 1989’s high, despite the huge 33.5% jump since
mid-October last year.
• The chart above shows that the index is a little better off in dollar terms, down “just” 56%
over the past 24 years. This is because the yen has gained 22% against the dollar since 2003,
despite losing 20% against the dollar since mid-October 2012.
• The chart above is interesting in that since the low in 2003, in dollars the Nikkei has actually
been on an uptrend and has reached a very interesting juncture - being the apex of a triangle.
This indicates an imminent breakout one way or another. If it breaks upwards, that would end
the 24 year-old bear market, at least in dollar terms.
• If one believes the intent of the Prime Minister, Abe, then it should break upwards. Abe seems
determined to put Japan back on the map.
JP Morgan note on SA fund managers
• For the past few years, SA Institutional and Retail Fund Managers have sold equities locally and
sent the money offshore, in accordance with the raised offshore allowances.
• JP Morgan says local fund managers actively on average cut SA equity market weightings by a
sizeable 18.4% from 2005 though the first half of 2008 and since 2009 have cut by a further 22%.
• Much of the switch has been into offshore holdings and cash, given exchange control regulations
relaxed in December 2010, which increased offshore limits by 5% to 25%.
6

• JP Morgan says now that most fund managers are fully invested offshore (at 25% maximum),
they expect these trends to start reversing.
• On average there was a move back into SA equities in the 4 th quarter of 2012. This may signal
the start of a reversal of the significant domestic equity disinvestment process by domestic
fund managers.
• JP Morgan forecasts that there will be approximately R160bn of recurring domestic institutional
cash flows in 2013 and with domestic fund managers now on average largely at the 25% offshore
investment limit, they expect some of the new cash flows to be deployed into SA equities,
against the backdrop of potentially rising global bond yields.
• So while JP Morgan would be fully invested offshore (at 25%), they advocate being overweight
in domestic equities, neutral in SA cash and underweight in SA bonds.
• They are looking for SA equity returns of approximately 10-15% over the next 12 months, which
should outperform SA bonds and cash.
• STANLIB is looking for a total return of 0-13% from SA equities, depending on the extent to
which current earnings forecasts are met over the next year. If current forecasts are met, then
we could get 10% from our equity market plus a 3% dividend yield for 13% in total.
• So STANLIB is now neutral on SA equities, whilst remaining overweight on offshore equities,
expecting a return of 15% in rands (assuming 5% rand depreciation).
• STANLIB is anticipating a total return of 8.9% from local listed property, depending of course on
how bond yields fare. Returns of 7.5% are expected from bonds, 7% from Income Funds and 5%
from money market funds.
Snippets of Info
• Despite the 4.5% decline in the rand so far in 2013, foreign investors have actually invested
more in our equities (R5.6bn net) than in our bonds (R3.7bn net) so far, making R9.3bn in total.
• Average house prices in SA reached R894‚510 in January 2013‚ up 5.2% from R850‚589 in
January 2012‚ according to latest statistics from bond originator‚ ooba.
• “The property market is gaining confidence and we expect property prices will continue to
show positive nominal price growth for the year ahead‚” said Rhys Dyer‚ ooba’s chief operating
officer.
• First time home buyer activity continues to drive the market‚ with over 51% of ooba’s
applicants in January being first time home buyers. The average house price for first-time
buyers was up 5.5% year on year to R686‚452. Despite the high number of first time home
buyers‚ the average home loan deposit dropped 4.5% year on year to R133‚805‚ representing
15% of the average purchase price.
Paul Hansen
(Director: Retail Investment Marketing - Investments)
7

Economic Update
Locally last week, Stats SA released the retail sales data for December 2012. According to this
latest survey, retail sales grew by a respectable 1.0%m/m, in real terms, during December
(seasonally adjusted), down slightly from 1.2%m/m in November, but well up on the 1.7%m/m
decline recorded in October. On an annual basis, retail sales rose by 2.3%m/m (real), which is well
below the growth rates achieved in the early part of 2012. The growth in December was a little
better than expected, but the consensus was based on a small sample size. The December data
suggests that the retail sector had a reasonably good, but not especially strong, festive shopping
season. Looking back over the past few months of retail data, the August 2012 retail sales
performance was probably positively impacted by the surprise interest rate reduction in July.
However, in September and October the transport strikes and disruptions in the mining sector
seemed to have a negative impact on sales, partly due to a disruption of inventory levels, but also a
loss of consumer income and confidence.
November and December’s retail activity represents a welcome improvement, signalling a solid
festive season. Importantly, in the three months from October to December retail sales recorded a
decline of 0.2%, measured quarter-on-quarter. This will tend to dampen SA’s fourth quarter
estimate of GDP growth. The annual rate of change in SA retail sales has been volatile in recent
months. While this volatility is partly due to base effects that reflect the distortion created by
the timing of public holidays, the extreme volatility suggests that data collection is proving
erratic. Hence, retail sales should be analysed on a trend basis, rather than placing a huge amount
of emphasis on any specific monthly sales report. On a trend basis it has to be acknowledged that
consumer spending is losing momentum. The consumer has to cope with a range of cost increases
that are systematically eroding their retail spending power. These include higher energy costs,
transport costs, education fees, medical service costs and water costs. Households cannot avoid
these increases, as they relate to necessities or essential goods. While the rapid growth in
unsecured credit has provide some support to retail activity, it is likely to moderate somewhat in
the coming, albeit off a relatively high base.
Offshore, in Q4 2012 Euro-area GDP fell by 0.6%q/q, seasonally adjusted, and by 0.9%y/y. This was
worse than market expectations for a decline of 0.4%q/q and compares with -0.1%q/q in Q3 2012.
Euro-area GDP has declined in four of the last five quarters, signaling a return to outright recession
conditions. For 2012 as a whole, the Euro-area declined by 0.5%y/y, after growing by 1.6% in 2011.
Please note, the Euro-area GDP data may be revised in two further estimates of Euro-area
economic activity for the final quarter of 2012. The weakness in the Euro-area during the final
quarter of 2012 was extremely broad-based and included quarter-on-quarter GDP declines in
Belgium, Germany, Spain, France, Italy, Cyprus, Netherlands, Austria, and Portugal. The recession
is also reflected in record high unemployment rates, especially in southern Europe.
8

The unemployment rate for the Euro-area was last recorded at 11.7%, which is the highest on
record. While Germany and France are technically not in recession, the recent fall-off in economic
activity in the two largest economies in the Euro-area is a significant concern. Over the past year
France has declined by 0.3%y/y, while Germany has grown by a mere 0.4%y/y. More positively, key
forward looking economic indicators in the Euro-area have started to improve including business
climate indicators (IFO) and economic sentiment indicators. We continue to forecast 0% growth for
the Euro-area in 2013, with the second half of the year expected to be slightly stronger than the
first.
According to the US Census Bureau, U.S. retail sales rose 0.1% in January 2013. Sales at most
department stores also saw a rise despite tax bills for most Americans going up following the
expiration of a payroll-tax holiday that pulled an estimated $9 billion out of the economy in the
first month of 2013. However, a closer look suggests spending is slowing. Measuring retail sales
excluding gasoline, cars and building materials, (which is how government analysts view
consumption when calculating the nation's economic growth rate), weakened in January, rising just
0.1%, against 0.7% in both December and November 2012.
US Manufacturing production fell 0.4% in January 2013. December’s initially reported gain of 0.8
percent was revised higher to a 1.1% gain, so on an absolute level basis, factory output is actually
little changed from what the Federal Reserve had first reported in December. What bears noting
here is the directional change for a number of key components. Motor vehicle and parts production,
for example, was off 3.2% on the month. That was enough to swamp the 2.9% gain in this
component in the prior month. Computer and electronics production fell 0.5% in January as well.
Consumer products production, which makes up 27.3% of all output, fell 0.2%. One month does not
make a trend, but it seems as though the manufacturers of consumer products and automobiles
dialed back production in anticipation of weaker demand. The weakness was not isolated to
consumer-related parts of the economy. Information processing equipment for businesses fell 0.3%
on the month and materials output fell 0.2%. Output at U.S. mines, which comprises about 15% of
total industrial production, fell 1.0% in January as well. Capacity utilization fell to 79.1% from an
upwardly revised 79.3% in December.
Kevin Lings, Laura Jones and Xhanti Payi
(STANLIB Economics Team)
9

Weekly Market Analysis
Currencies/ indices/
Friday’s Close
Weekly Move
YTD
commodities
15/02/13
(%)
(%)
Indices
*MSCI World – US Dollar 1406.92 -0.25 5.11
*MSCI World – Rand 12439.57 -0.51 9.94
*MSCI Emerging Market – US Dollar 1066.52 0.53 1.02
*MSCI Emerging Market – Rand 9429.89 0.27 5.66
All Share Index – US Dollar 4602.17 -0.21 -1.53
All Share Index – Rand 40681.34 -0.52 3.65
All Bond Index 436.41 0.02 0.56
Listed Property J253 1334.54 1.04 3.66
Currencies
US Dollar/Rand 8.84 -0.31 4.59
Euro/Rand 11.80 -0.44 5.85
Sterling/Rand 13.72 -1.91 -0.27
Euro/US Dollar 1.34 0.03 1.28
Commodities
Oil Brent Crude Spot Price ($/bl) 117.66 -1.04 5.90
Gold Price $/oz 1610.31 -3.45 -3.81
Platinum Price S/oz 1682.00 -1.92 9.29
* MSCI - Morgan Stanley Capital International
Source: I-Net Bridge
10

Rates
These rates are expressed in nominal and effective terms and should be used for indication
purposes ONLY.
Standard Bank Money Market Fund
Nominal:
Effective:
4.98% per annum
5.09% per annum
STANLIB is required to quote an effective rate which is based upon a seven-day rolling average yield for Money Market
Portfolios. The above quoted yield is calculated using an annualised seven-day rolling average as at 15 February 2013. This
seven-day rolling average yield may marginally differ from the actual daily distribution and should not be used for interest
calculation purposes. We however, are most happy to supply you with the daily distribution rate on request, one day in
arrears. The price of each participatory interest (unit) is aimed at a constant value. The total return to the investor is
primarily made up of interest received but, may also include any gain or loss made on any particular instrument. In most
cases this will merely have the effect of increasing or decreasing the daily yield, but in an extreme case it can have the
effect of reducing the capital value of the portfolio.
STANLIB Enhanced Yield Fund
Effective Yield: 5.66%
STANLIB is required to quote a current yield for Income Portfolios. This is an effective yield. The above quoted yield will
vary from day to day and is a current yield as at 15 February 2013. The net (after fees) yield on the portfolio will be
published daily in the major newspapers together with the “all-in” NAV price (includes the accrual for dividends and
interest). This yield is a snapshot yield that reflects the weighted average running yield of all the underlying holdings of the
portfolio. Monthly distributions will consist of dividends (currently tax exempt) and taxable interest. Interest will also be
exempt from tax to the extent that investor’s are able to make use of the applicable interest exemption as currently
allowed by the Income Tax Act. The portfolio’s underlying investments will determine the split between dividends and
interest.
11

STANLIB Income Fund
Effective Yield: 6.45%
Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory
interests may go down as well as up and past performance is not necessarily a guide to the future. A schedule of fees and
charges and maximum commissions is available on request from the company/scheme. CIS can engage in borrowing and scrip
lending. Commission and incentives may be paid and if so, would be included in the overall costs.” The above quoted yield
will vary from day to day and is a current yield as at 15 February 2013.
STANLIB Extra Income Fund
Effective Yield: 6.06%
Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory
interests may go down as well as up and past performance is not necessarily a guide to the future. A schedule of fees and
charges and maximum commissions is available on request from the company/scheme. CIS can engage in borrowing and scrip
lending. Commission and incentives may be paid and if so, would be included in the overall costs.”
“Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or
down.” The above quoted yield will vary from day to day and is a current yield as at 15 February 2013.
Liberty Investments’ Life Annuities
Current Rates for 18 th February 2013 – 22 nd February 2013
Payments are assumed to be paid monthly in advance with no guarantee period or annual escalation in income. Ages
indicated assume client is the exact age shown. No tax has been deducted.
Gender Male Female
Age last birthday 55 60 65 55 60 65
Contribution
R 100,000 R 727 R 769 R 831 R 649 R 684 R 734
R 250,000 R 1 886 R 1 992 R 2 147 R 1 690 R 1 778 R 1 903
R 500,000 R 3 818 R 4 029 R 4 341 R 3 426 R 3 601 R 3 851
R 1,000,000 R 7 681 R 8 104 R 8 728 R 6 898 R 7 246 R 7 747
The table above shows the monthly annuity that an annuitant will receive for life in return for the single premium in the left
hand column. Note that the annuity depends on the annuitant’s exact age and gender.
The rates above were calculated assuming maximum commission and will be enhanced if a commission discount is selected.
12

Glossary of terminology
Bonds
Cash
Collective
Investments
Compound Interest
Dividend Yields
Dividends
Earnings per share
Equity
A bond is an interest-bearing debt instrument, traditionally issued by governments as part of their
budget funding sources, and now also issued by local authorities (municipalities), parastatals
(Eskom) and companies. Bonds issued by the central government are often called “gilts”. Bond
issuers pay interest (called the “coupon”) to the bondholder every 6 months. The price/value of a
bond has an inverse relationship to the prevailing interest rate, so if the interest rate goes up, the
value goes down, and vice versa. Bonds/gilts generally have a lower risk than shares because the
holder of a gilt has the security of knowing that the gilt will be repaid in full by government or
semi-government authorities at a specific time in the future. An investment in this type of asset
should be viewed with a 3 to 6 year horizon.
An investment in cash usually refers to a savings or fixed-deposit account with a bank, or to a
money market investment. Cash is generally regarded as the safest investment. Whilst it is
theoretically possible to make a capital loss investing in cash, it is highly unlikely. An investment in
this type of asset should be viewed with a 1 to 3 year horizon.
Collective investments are investments in which investors‟ funds are pooled and managed by
professional managers. Investing in shares has traditionally yielded unrivalled returns, offering
investors the opportunity to build real wealth. Yet, the large amounts of money required to
purchase these shares is often out of reach of smaller investors. The pooling of investors’ funds
makes collective investments the ideal option, providing cost effective access to the world’s stock
markets. This is why investing in collective investments has become so popular the world over and
is considered a sound financial move by most investors.
Compound interest refers to the interest earned on interest that was earned earlier and credited to
the capital amount. For example, if you deposit R1 000 in a bank account at 10% and interest is
calculated annually; your balance will be R1 100 at the end of the first year and R1 210 at the end
of the second year. That extra R10, which was earned on the interest from the first year, is the
result of compound interest ("interest on interest"). Interest can also be compounded on a monthly,
quarterly, half-yearly or other basis.
The dividend yield is a financial ratio that shows how much a company pays out in dividends each
year relative to its share price. The higher the yield, the more money you will get back on your
investment.
When you buy equities offered by a company, you are effectively buying a portion of the company.
Dividends are an investor’s share of a company’s profits, given to him or her as a part-owner of the
company.
Earnings per share is a measure of how much money the company has available for distribution to
shareholders. A company’s earnings per share is a good indication of its profitability and is
generally considered to be the most important variable in determining a company’s share price.
A share represents an institution/individual’s ownership in a listed company and is the vehicle
through which they are able to “share” in the profits made by that company. As the company
grows, and the expectation of improved profits increases, the market price of the share will
increase and this translates into a capital gain for the shareholder. Similarly, negative sentiment
about the company will result in the share price falling. Shares/equities are usually considered to
have the potential for the highest return of all the investment classes, but with a higher level of
risk i.e. share investments have the most volatile returns over the short term. An investment in this
type of asset should be viewed with a 7 to 10 year horizon.
13

Financial Markets
Fixed Interest Funds
Gross Domestic
Product (GDP)
Growth Funds
Industrial Funds
Investment Portfolio
JSE Securities
Exchange
Price to earnings
ratio
Property
Resources and Basic
Industries Funds
Smaller Companies
Funds
Value Funds
Financial markets are the institutional arrangements and conventions that exist for the issue and
trading of financial instruments.
Fixed interest funds invest in bonds, fixed-interest and money market instruments. Interest income
is a feature of these funds and, in general, capital should remain stable.
The Gross Domestic Product measures the total volume of goods and services produced in the
economy. Therefore, the percentage change in the GDP from year to year reflects the country's
annual economic growth rate.
Growth funds seek maximum capital appreciation by investing in rapidly growing companies across
all sectors of the JSE. Growth companies are those whose profits are in a strong upward trend, or
are expected to grow strongly, and which normally trade at a higher-than-average price/earnings
ratio.
Industrial funds invest in selected industrial companies listed on the JSE, but excluding all
companies listed in the resources and financial economic groups.
An investment portfolio is a collection of securities owned by an individual or institution (such as a
collective investment scheme). A funds ‛ portfolio may include a combination of financial
instruments such as bonds, equities, money market securities, etc. The theory is that the
investments should be spread over a range of options in order to diversify and spread risk.
The primary role of the JSE Securities Exchange is to provide a market where securities can be
freely traded under regulated procedures.
Price to earnings ratio or p: e ratio is calculated by dividing the price per share by the earnings per
share. This ratio provides a better indication of the value of a share, than the market price alone.
For example, all things being equal, a R10 share with a P/E of 75 is much more “expensive” than a
R100 share with a P/E of 20.
Property has some attributes of shares and some attributes of bonds. Property yields are normally
stable and predictable because they comprise many contractual leases. These leases generate
rental income that is passed through to investors. Property share prices however fluctuate with
supply and demand and are counter cyclical to the interest rate cycle. Property is an excellent
inflation hedge as rentals escalate with inflation, ensuring distribution growth, and property values
escalate with inflation ensuring net asset value growth. This ensures real returns over the long
term.
These funds seek capital appreciation by investing in the shares of companies whose main business
operations involve the exploration, mining, distribution and processing of metals, minerals, energy,
chemicals, forestry and other natural resources, or where at least 50 percent of their earnings are
derived from such business activities, and excludes service providers to these companies.
Smaller Companies Funds seek maximum capital appreciation by investing in both established
smaller companies and emerging companies. At least 75 percent of the fund must be invested in
small- to mid-cap shares which fall outside of the top 40 JSE-listed companies by market
capitalisation.
These funds aim to deliver medium- to long-term capital appreciation by investing in value shares
with low price/earnings ratios and shares which trade at a discount to their net asset value.
Sources: Unit Trust and Collective Investments (September 2007), The Financial Sector Charter Council, Personal Finance (30 November 2002), Introduction to
Financial Markets, Personal Finance, Quarter 4 2007, Investopedia (www.investopedia.com) and The South African Financial Planning Handbook 2004.
14

Disclaimer
The price of each unit of a domestic money market portfolio is aimed at a constant value. The total return to the investor is
primarily made up of interest received but, may also include any gain or loss made on any particular instrument. In most
cases this will merely have the effect of increasing or decreasing the daily yield, but in an extreme case it can have the
effect of reducing the capital value of the portfolio. Collective Investment Schemes in Securities (CIS) are generally medium
to long term investments. The value of participatory interests may go down as well as up and past performance is not
necessarily a guide to the future. An investment in the participations of a CIS in securities is not the same as a deposit with
a banking institution. CIS are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and
charges and maximum commissions is available on request from STANLIB Collective Investments Ltd (the Manager).
Commission and incentives may be paid and if so, would be included in the overall costs. A fund of funds is a portfolio that
invests in portfolios of collective investment schemes, which levy their own charges, which could result in a higher fee
structure for these portfolios. Forward pricing is used. Fluctuations or movements in exchange rates may cause the value of
underlying international investments to go up or down. TER is the annualised percent of the average Net Asset Value of the
portfolio incurred as charges, levies and fees. A higher TER ratio 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 TERs. Portfolios are valued on a
daily basis at 15h30. Investments and repurchases will receive the price of the same day if received prior to 15h30. Liberty is
a full member of the Association for Savings and Investments of South Africa. The Manager is a member of the Liberty Group
of Companies.
As neither STANLIB Wealth Management Limited nor its representatives did a full needs analysis in respect of a particular
investor, the investor understands that there may be limitations on the appropriateness of any information in this document
with regard to the investor’s unique objectives, financial situation and particular needs. The information and content of this
document are intended to be for information purposes only and STANLIB does not guarantee the suitability or potential
value of any information contained herein. STANLIB Wealth Management Limited does not expressly or by implication
propose that the products or services offered in this document are appropriate to the particular investment objectives or
needs of any existing or prospective client. Potential investors are advised to seek independent advice from an authorized
financial adviser in this regard. STANLIB Wealth Management Limited is an authorised Financial Services Provider in terms of
the Financial Advisory and Intermediary Services Act 37 of 2002 (Licence No. 26/10/590)
17 Melrose Boulevard, Melrose Arch, 2196
P O Box 202, Melrose Arch, 2076
T 0860123 003 (SA Only) T+27(0)11 448 6000
E contact@stanlib.com
Website www.stanlib.com
24 Ameshoff Street, Braamfontein, 2001
P O Box 10499, Johannesburg, 2000
T 0860 456 789
E info@liberty.co.za
Website www.liberty.co.za
STANLIB Wealth Management Limited
Reg. No. 1996/005412/06
Authorised FSP in terms of the FAIS Act, 2002
(Licence No. 26/10/590)
Liberty Group Limited
Reg. No. 1957/002788/06
Authorised FSP in terms of the FAIS Act
(Licence No. 2409)
STANLIB Collective Investments Limited
Reg. No. 1969/003468/06
0126DR
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