etfSA STeFI-linked Money Market Deposit

1 etfSA STeFI-linked Money Market Deposit Managed by Nedbank April 5, 2011 | Beta Solutions | | +2711 295 9601 | South Africa Contents The etfSA STeFI-linked Money Market Deposit .. 3 Background on etfSA STeFI-linked Money Market Deposit .. 3 Features of the 3 Treatment of Distributions .. 3 Costs of investing in etfSA STeFI-linked Money Market Deposit .. 3 Historical performance of the stefi index .. 3 The Alexander Forbes stefi Index .. 5 Background on Mike Brown .. 5 etfSA STeFI-linked Money Market Deposit 3 The etfSA STeFI-linked Money Market Deposit Background on etfSA STeFI-linked Money Market Deposit is owned and managed by Mike Brown Consulting Services (FSP License No 39217) and its managing director is Mike Brown An investment into the etfSA STeFI-linked Money Market Deposit ( SLMMD ) ultimately represents a Deposit with Nedbank Ltd through etfSA Investor SchemeTM.

2 The investment is managed by Nedgroup Beta Solutions, a wholly owned subsidiary of Nedbank. The etfSA STeFI-linked Money Market Deposit is an investment offered to etfSA Investor SchemeTM clients as a facility to park funds. Product Profile Enabling investors to park funds in a risk free asset, possibly on a temporary basis in order to time investments. Provides an asset allocation alternative to equities, bonds and property investments already available in ETF securities. Provides a competitive product to Money Market unit trusts on the ETF dedicated etfSA platform.

3 The product offers the convenience of a Money Market fund Deposit note, but with the ability to withdraw funds at any time, to make additional investments and do debit order investments on a regular basis. The amounts required form clients for investment will be kept low in order to enhance convenience and to differentiate the products from less flexible competitive offerings by other product providers.. A separate and unique application form will apply to the etfSA STeFI-linked Money Market Deposit , but existing etfSA clients will be able to switch into and out of the STeFI-linked Money Market Deposit through the normal additional investment, switch or transfer transaction processes applicable to the etfSA Investor SchemeTM Treatment of Distributions Distributions are accrued interests up until last business day of the month.

4 They are paid out on the last business day of the month by issue of additional units. Costs of investing in etfSA STeFI-linked Money Market Deposit The product management fee payable to Nedbank is The etfSA annual administration platform fee ranges from to depending on total investment (refer to page 7 on the etfSA application form) All fees exclude VAT. Historical performance of the stefi index The performance of the stefi index over time is dependent on two factors: The performance of the underlying components of the index The weights of each of the components in the index We show performance over the last 10 years relative to the level of inflation (as measured by the Consumer Price Index or CPI).

5 The relative performance is based on an initial Deposit of R100 on a stefi Index linked product on the 29th of December 2000. The following assumptions have been used in our calculation: Interest is accrued weekly. Interest payments are re-invested on a monthly basis; Annual management fee of etfSA STeFI-linked Money Market Deposit 4 The expected performance of the stefi Index linked product, relative to Consumer Price Inflation, is shown in the two graphs below up until December 2010. Figure 2 shows the performance on a compound basis the stefi Index linked product, at , comfortably outperforms inflation which returned since January 2001.

6 Figure 1. Historical performance of a STeFI-linked product relative to CPI compound returns 6080100120140160180200220240260 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 STeFI-linked Source: Stats SA, Bloomberg Figure 2 shows the same performance, but on an annualised basis the STeFI-linked product returned on average after management costs since January 2001 compared to on average for inflation. Figure 2. Historical performance of a STeFI-linked product relative to CPI annualised returns -5 -3 -1 13579111315 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Annual returns (%) Source.

7 Stats SA, Bloomberg etfSA STeFI-linked Money Market Deposit 5 The Alexander Forbes stefi Index The Alexander Forbes Short Term Fixed Interest ( stefi ) Composite index is a proprietary index that measures the performance of Short Term Fixed Interest or Money Market investment instruments in South Africa. It is a benchmark index constructed by Alexander Forbes, calculated and published daily by the South African Futures Exchange (SAFEX), and has become the industry benchmark for cash equivalent investments ( up to 12 months).

8 It is comprised of: 1. 15% of the stefi Call Deposit Index which is based on an Interbank Call rate SARB-SABOR. 2. 30% of the stefi 3 month NCD Index which is based on 3 month NCD instruments measured at SAFEX rates. 3. 35% of the stefi 6 month NCD Index which is based on 6 month NCD instruments measured at SAFEX rates. 4. 20% of the stefi 12 month NCD Index which is based on 12 month NCD instruments measured at SAFEX rates. Figure 3. The Components of the Alexander Forbes stefi Index 12m NCD20%Over-night15%3m NCD30%6m NCD35% Source: Nedbank The above weights have been determined by long term Market supply.

9 The stefi Composite index daily effective return is based on the weighted average daily effective returns of the above underlying indices. Background on Mike Brown Mike Brown worked as Chief Economist of the Chamber of Mines in the 1970s and early 1980s. He spent some 20 years in stock broking as Head of Research and Director of some of South Africa s largest stockbrokers, and was one of the top economists in South Africa. In the late 1990s, he helped establish Satrix, the first Exchange Traded Fund (ETF) Manager in South Africa and managed Satrix full time from 2003 to 2009, before leaving to establish etfSA .

10 Mike Brown is an authorised Financial Services Provider (FSP No. 39217).