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Investments Fixed Interest Portfolio As at 30 June 2013 Portfolio facts Portfolio objectives Type Income asset class structure Performance target CPI Inflation, Money Markets funds, Income funds Portfolio manager Craig Pheiffer Gary Smith Trevor O’Callaghan Jacques Theron Paul Steven Lance Gordon Qualifications FSB-approved Portfolio Managers Asset management company Absa Asset Management Private Clients Mandate Institutional/Trust/Private Client Contact Susan Buys (011) 647 0874 Bronwen de Klerk (011) 647 0827 Laurna Edwards (011) 647 0860 The Fixed Interest Portfolio invests primarily in domestic fixed interest rate securities (Bonds, NCDs). The Absa Money Market Fund is included to provide liquidity. This portfolio is ideal for clients who are concerned about income and are looking for a shorter-term money management solution. Capital is not guaranteed, mainly due to the bond portion of the portfolio being subject to market price fluctuations. To apply fixed-rate investments of differing maturities to provide income stability and a yield advantage over money market rates over a medium-term time horizon. There is flexibility to move between instruments of differing maturities. Typically, a bar-bell structure is used to provide about one-half at a long-term fixed rate (more than 12 months) and one-half at a short-term fixed rate (less than 6 months). The duration of this portfolio is about 2 years. Risk profile and advisable minimum term Low Minimum investment R 5 000 000 Income Reinvested or paid out at the client’s discretion Current yield Medium Medium-High Medium Term Medium to Long Term Short to Medium Term Portfolio fees Management fee 0.40% p.a. (VAT excl.) Minimum fee R20 000 p.a. (excl. VAT) Upfront fee Negotiable Brokerage Bond scale where applicable Weighted portfolio yield: 5.7% Representative performance to 30 June 2013 (%) Advantage: This portfolio should sustain a relatively higher yield Parameters Restricted to minimum AA-rated financial institutions’ treasury instruments and AA-rated Bond Exchange of SA listed bonds. The yields and hence the market values may fluctuate. Long Term X Absa Money Market Fund = 4.9%, NCDs 3-6 mnths = 5.2%, NCDs 12 mnths = 5.8%, Bonds (YTM) = 6.0%. over cash in the medium term, whether official interest rates remain flat, are cut or are raised. High X Short Term Portfolio details Low-Medium One year Three years (cmpd p.a.) Five years (cmpd p.a.) Fixed Interest Portfolio (Total Return) 5.51 7.22 8.18 STEFI Composite Index 5.25 5.71 7.16 Structure of portfolio Source: PortCIS Liquidity Funds are available on short notice (subject to normal market settlement periods of approximately 3 days). Penalties may apply on NCDs that are redeemed early. Bonds sold before maturity will be at prevailing market values. Commentary The current global market suggests that, in general, interest rates will remain at low levels, at least until 2015. SA interest rates are expected to remain flat in this period but it is also wise to protect against any official rate cuts by holding fixed-rate investments. Conversely, if official rates rise sooner than expected this portfolio has the flexibility to respond by selling bonds and up weighting short term securities that benefit immediately from rising rates. The portfolio is therefore actively managed to achieve yield advantage. The information contained in this communication does not constitute an offer or solicitation to enter into any transaction, nor does it constitute any recommendation, guidance or proposal to enter into any transaction. The information is provided for illustrative purposes only and is not guaranteed. Past performance is no indication of future performance. A private client portfolio of direct investments and not a collective investment scheme. Absa Portfolio Managers (Pty) Limited trading as Absa Asset Management Private Clients, Registration No: 1954/001116/07, Authorised Financial Services Provider (licence No. 552)