Sanlam Alternative Income Fund

Monthly Fact Sheet January 2009

SANLAM ALTERNATIVE INCOME FUND Fund objective

Portfolio detail

The objective of the Sanlam Alternative Income Fund (SAIF or the Fund) is to offer a liquid, mainly dividend-yielding investment that will track the South African short-term interest rate cycle. Income distributed to investors will aim to exceed the average after-tax yield normally received from money-market portfolios. The Fund has a conservative investment mandate that will follow a risk profile focused on capital preservation subject to strict criteria, in accordance with the requirements of the Collective Investments Schemes Control Act (CISCA). The credit risk is diversified in credit-rated investments of a high credit quality. Investments are in rand denominated, redeemable, cumulative preference shares and liquid instruments and any other securities allowed by CISCA.

Unlisted Prefence Shares >12 months

58.30

Liquid and CIS Investm ents

Fund information

41.70

0

20

40

60

80

100

Classification

Domestic – Fixed Interest – Varied Specialist

Risk profile

Low

Top 10 holdings

Benchmark

After tax return on the Sanlam Money Market Fund (individual tax rate of 40%)

Ultimate Credit Risk of Securities

Asset Manager

Sanlam Investment Management

SIM Money Market Fund

-

Launch date

25/05/2007

FirstRand Limited

AA-(zaf)

Constant price

100 cents per unit maintained

Sanlam Ltd

AA-(zaf)

> 12 months

15.08

Investec Ltd

AA-(zaf)

> 12 months

10.05

Nedbank Group Ltd

AA-(zaf)

7 days/30 days

7.54

Stanlib Corporate MMF

AAA(zaf)

24 hours

6.28

Credit Rating

Maturity

% of Portfolio

24 hours

25.42

> 12 months/24 hours

16.29

Credit rating from Fitch

AA- (zaf)

Liquidity

48 hours (subject to provisions of CISCA and deed)

Absa Bank Ltd

AAA(zaf)

> 12 months/24 hours

5.74

Initial fee

0.00%

Nedbank Ltd

AA(zaf)

> 12 months/24 hours

5.54

1.65% (VAT of 14% included)

Investec Bank Limited

AA-(zaf)

30 days

5.03

This fee includes an ongoing 0.30% trailer fee for intermediaries. More competitive fee classes are available for larger investments

Sanlam Capital Markets Ltd

A-(zaf)

> 12 months

2.51

Annual service fee

Total Expense Ratio*

1.75%

Portfolio performance 1 Year (%)

Income declaration dates Last day of each month Income price dates

Within one working day of new month

Valuation time of fund

17:00

Trading closing time

11:00

Minimum investment

Lump sum R20 000 / Monthly R1 000

Fund size

R4 008.9 million

Trustee

Standard Bank of SA

*Total Expense Ratio (TER): This fund (retail class) has a TER of 1.75%. For the period from 1 January 2008 to 31 December 2008 1.75% of the average net asset value of the portfolio were incurred as charges, levies and fees related to the management of the portfolio. The ratio does not include transaction costs. A higher TER does not necessarily imply a poor return, nor does a low TER imply a good return. The current TER can not be regarded as an indication of future TER’s.

Alternative Income Fund Benchmark

8.66 7.07

3 Years (%) 5 Years (%) -

-

Average Effective rate for month of Jan 2009: 8.86%

• Investors are advised to familiarize themselves with the unique risks pertaining to their investment choices, including the disclaimer hereunder. • Investors should seek the advice of a properly qualified financial consultant/advisor before investing. • Income tax status is subject to current income tax legislation and may change in future.

Manager information PHYSICAL ADDRESS: 2 Strand Road, Bellville 7530 Fax: +272 (21) 947-8224

POSTAL ADDRESS: PO Box 30, Sanlamhof 7532 Email: [email protected]

CLIENT CONTACT CENTRE Tel: +27 (21) 916-1800 Website: www.sanlamcollectiveinvestments.com

Disclaimer The price of each unit is aimed at a constant value. The total return to the investor is primarily made up of dividends 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 Fund. Past performance is not necessarily a guide to the future. 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 the manager/scheme. Commission and incentives may be paid and if so, would be included in the overall costs. Performance: Annualised Growth Rate. The source is Morningstar. Actual investment performance will differ based on the fees applicable, the actual investment date and the date of reinvestment of income. Member of the ASISA.

Fund Information

THE SANLAM ALTERNATIVE INCOME FUND (“SAIF”) o The return will be mainly in the form of tax-free dividends, with a small portion of taxable interest income.

Background Sanlam Collective Investments launched the Sanlam Alternative Income Fund on 25 May 2007 and amalgamated the Sanlam Dividend Income Fund with the Sanlam Alternative Income Fund on 30 June 2007.

o In addition, corporate investors will receive STC credits (in accordance with current legislation). o 48 hour liquidity, subject to provisions of deed. o Monthly dividend distributions. o Current fund size: R4.0bn.

Fund Objective Who should invest The fund offers a low risk investment offering an attractive after tax return exceeding money market after-tax yields, with returns mainly in the form of taxfree dividends.

o Sophisticated high net worth individuals who have utilised their interest exemption who require a regular, tax efficient income.

Salient Features

o Corporates in need of STC credits

SAIF is the first “new generation” dividend fund in the industry and is essentially a redeemable preference share conduit. The fund has a conservative investment mandate that follows a risk profile focused on capital preservation and invests predominantly in: o redeemable preference shares, and o liquid instruments (such as the Sanlam Money Market Fund). Capital risk is restricted as the fund will have no exposure to: o non-cumulative or preference shares, or

o Investors seeking to increase their portfolios’ liquid holdings with a better after tax yield than a money market fund.

non-redeemable

(listed)

o fixed-rate preference shares. The fund return tracks short-term interest rate movements – allowing investor protection against interest rate exposure and ensuring preservation of capital.

SAIF Characteristics

o Investors seeking protection from equity and bond market volatility.

Returns and Costs SAIF yielded an average return of 8.86% for the month of January 2009 (effective annualised rate). This return is based on the A1 retail class charging a 1.45% annual service fee. The yield is net of this annual service fee. The yield published in the press is the average yield calculated over a 7-day rolling period (after costs). The return currently comprises 70% tax-free dividend income and 30% taxable interest income. Please note a more competitive fee class offering enhanced yields is available for larger investments.

Portfolio Manager • Started his investment career in 1990 as an investment analyst at Sanlam and was appointed as chief investment analyst in 1994

o Fund credit rating of AA-(zaf) from Fitch ratings, (similar to that of the major banks).

• Became senior portfolio manager in 1994 and was appointed as Head: Gensec Private Clients in 1999

o Investment in high-quality assets with credit risk to major SA banks and institutions, subject to strict diversity criteria as per CISCA requirements.

• 2001: Appointed Managing Director of Sanlam Private Investments

o Unit price is aimed at a constant value of 100c and consequently there are no CGT implications.

• 2003 to date: Managing Director of Sanlam Collective Investments TIENIE VAN DER MESCHT B.Sc., MBA