Presenters Name by gyvwpsjkko



         December 2010

                         Performance through Focus

              Economic Overview and Outlook         1-2

              Equity Sector Overview and Outlook    3-5

              Fixed Interest Overview and Outlook    6

              Economic Indicators                    7

              Market Indicators                      8

              Contact Details                        9

              Regulatory Information                10
    World Economic Overview and Outlook
    Equities rise as fears about the economy ease;                                            Following a pullback in November, global equity markets rallied strongly in
    gold is supported by inflation fears                                                       December. Growing signs that the world economy is strengthening and fading
                                                                                               fears about the fiscal troubles in Europe were the main drivers behind a recovery
     1500                                        1500                                5.0       in risk appetite among investors.
                      S & P 500 Index
                                                                                              Incoming real economic data from around the world confirms that the momentum
                                                                                     4.5       loss during the middle quarters of 2010 did not degenerate into a renewed full-
     1250                                        1250
                                                                                               scale global slump, and indicates that activity may actually have accelerated
     1100                                                                            4.0       towards year-end. As a result of the better data consensus, global growth
                                                                                               forecasts for 2011 were lifted, albeit moderately. Overall, global growth is still
                                                                                               generally expected to be slow in 2011, but the recent data has strongly raised
                                                 950                                 3.5       confidence that the global recovery will be sustained in spite of still-considerable
                                                                                               structural headwinds.
      800                                                    Gold in $
                                                             US Treasury Bond
                                                                                              While concerns about the outlook for the world economy and fiscal troubles in
                                                             yield                             Europe eased over the past month, policy tightening in China came to the fore as
      675                                        700                                 2.5       a concern for investors. As inflation rose during the course of 2010, the Chinese
                 08             10                      08               10
                                                                                               central bank gradually tightened policy, and when it escalated to over 5% in
            Source: OMIGSA (Iris)                                                              November, with the key food component rising to more than 11%, the Chinese
                                                                                               authorities hiked interest rates late in December, following a series of increases in
                                                                                               banks’ reserve ratio requirements. Investors will keep a close eye on
    US surveys point to improving growth, yet, rates to stay low                               developments in China early in 2011 in order to assess policy risks.

                                                                                              We have held the view since last year that the initial part of the global recovery
       70                                           6                                          would be surprisingly strong, but that a momentum loss during the course of 2010
                  Manufacturing survey                                                         was inevitable. While both have played out precisely as we expected, there is no
                  Services sectors survey
                                                                                               denying that, for now (and despite the improvement in sentiment over the past few
                                                                                               months), fiscal tightening and the jobless nature of the recovery so far, have kept
                                                                    Fed Funds rate             prospects for the world economy pretty unexciting.

                                                                                              Looking forward, there is no denying that global prospects remain, as the US
       50                                                                                      Federal Reserve put it, still ‘unusually uncertain’. However, it would appear as if
                                                                                               downside risks are slowly starting to abate.
             Above 50 denotes
       40    expansion
                                                                                               OMIGSA Economic Research Unit view: Investor fears about a ‘double-
                                                                                               dip’ cycle eased during the course of the past few months, but growth
            02         05        08         11
                                                        06     08             10
                                                                                               prospects still look pretty unexciting. At best, we expect moderate global
                                                                                               growth in 2011.
            Source: OMIGSA (Iris)

        Local Economic Overview and Outlook
       The past month saw generally favourable economic developments in South Africa:           Rand firms; inflation starts moderate uptrend
        Inflation, at 3,6% in November, remained near the low end of the 3% - 6% inflation
        target range; South Africa was formally invited to join the BRIC group of countries;
        the rand firmed further and data on the real economy indicate that the local             20.0                                            20
                                                                                                         Rand per €                                        Prime rate    CPI inflation
        economic recovery remains on track.
                                                                                                         Rand per US$
                                                                                                 15.0                                            15
       The key event of December was the further strengthening of the rand. By month
        end it was trading below R6.70 against the US dollar, below R8.75 against the euro
        and around R10.25 against the British pound. These levels were last seen in              12.0
        2006/7. This strength can be ascribed to the still-positive sentiment towards
        emerging markets in general, the strength of precious metal prices and positive
                                                                                                  8.5                                             5
        sentiment towards South Africa, following the invitation to join the BRIC grouping.

       The strength of the rand is a double-edged sword. On the positive side it helps to                                                        0
        contain inflation, enables local business to overhaul production capacity with
        relatively cheap imported capital equipment, and sends a positive message
        regarding investors’ perceptions about the economic and policy outlook. On the            5.0                                            -5
                                                                                                                                                      00     02    04     06    08       10
                                                                                                        00     02    04   06    08   10
        negative side it is hurting exporters and companies competing with imports, thus
        negatively affecting the outlook for growth and employment. The common                          Source: OMIGSA (Iris)
        perception is that the rand has become overvalued relative to South Africa’s urgent
        growth and employment needs, but the current global environment may keep the
                                                                                                 SA growth still slow and patchy
        currency strong for some time to come.

       Inflation remains well contained, but the September number of 3.2% was most
        likely the bottom of the down cycle. While it rose moderately to 3.6% over the past        20
                                                                                                         Consumer spending growth
                                                                                                                                          20    130
        two months, 2011 will likely see only a moderate further rise, provided the rand                 Fixed investment growth                           Manufacturing production
        does not weaken materially. We expect inflation to end 2011 at around 5%.                  15                                     15    120

       Declining inflation, sustained rand strength and a slow economic recovery resulted
                                                                                                   10                                     10    110
        in lending rates falling to the lowest level since 1974. This is only sustainable if
        inflation remains well within target, inflation expectations come under better control
                                                                                                    5                                     5
        and wage demands moderate. We are sceptical that these will all occur over the
        medium term, so we expect rates to start rising sometime in future. However, the
                                                                                                    0                                     0
        next up cycle in rates still appears to be many months away.
                                                                                                   -5                                     -5                            Index
         OMIGSA Economic Research Unit view: The local economy is recovering,                                Y-o-Y % change
         albeit still moderately and in an unbalanced fashion. With the rand strong and
                                                                                                  -10                                     -10
         inflation well contained, interest rates will likely remain at low levels for an               00      02   04   06    08   10               00     02    04     06     08      10
         extended period.                                                                               Source: OMIGSA (Iris)

    Equity Sector Overview and Outlook
    Resources                                                               Small Companies
       The basic materials sector produced a return of 11.7% for              The small cap and mid-cap indices returned 11.3% and 6.6%
        2010, underperforming the FTSE/JSE All Share Index (ALSI)               respectively for the three months ended 31 December 2010,
        by 7.3% for the year. While the sector benefited from stronger          while the FTSE/JSE Top 40 Index returned 9.9%. In particular,
        commodity prices, particularly iron ore, copper and coal, these         the outperformance of shares at the small cap level was good.
        gains were somewhat offset by the stronger rand, potentially            The better performance in the this area indicates an increased
        punitive new taxes (Australia, Chile) and concerns about                appetite for risk.
        mining rights in South Africa.
                                                                               The market has been very strong over the last quarter, based
       Only the oil & gas and chemicals sectors managed to                     on capital flows into emerging markets and a major allocation
        outperform the ALSI in 2010, with the laggards including the            swing from bonds into equity. International capital is looking for
        coal mining, construction and platinum mining sectors.                  better yields and capital growth prospects.

       The Old Mutual Mining and Resources Fund continued to                  The second round of Spanish bank stress tests and the
        outperform the benchmark, and is ranked first amongst its peer          continued European state bailout agreements will dominate the
        group over both the three- and five-year periods.                       news in the quarter ahead. The USA has spent a massive
                                                                                amount on stimuli, but has only managed to stabilise the
       We had previously stated that we found similarities between             economy and grow it moderately. Economic growth numbers
        2010 and 2008, and these similarities are increasingly                  are being revised down and China continues to rein in liquidity.
        apparent in 2011. Given high commodity prices, high share               The mergers and acquisitions boom continues and will pick up
        prices, a cyclical slowdown in China and the high debt levels in        in the year ahead.
        some European Union (EU) countries, managers should take
        the increased risk into account.                                       Portfolio managers will remain focused on earnings growth and
                                                                                the strength of balance sheets. Companies with good cash
       While the very-strong rand has dampened the short-term                  flows and under-geared balance sheets will be in a position to
        outlook for some shares, we feel it is also an ideal time to            take market share either organically, or by acquisition.
        increase our offshore exposure to further optimise the risk-
        adjusted returns.

        Equity Research view: The diversified miners are protected              Equity Research view: The average price:earnings (p:e) ratio
        by their exposure to a variety of commodities and currencies in         at which small caps trade compared with large caps is now at
        their portfolios, as they typically have the best assets and tend       parity.
        to remain profitable, even in commodity downturns, unlike
        some of the pure and smaller miners. Diversified miners’
        valuations are relatively more compelling than smaller or
        single commodity plays. Non-mining resources companies’
        valuations are relatively attractive too.

    Equity Sector Overview and Outlook (cont.)
    Financials                                                                  Industrials
       The FTSE/JSE Financial Index was flat for the quarter ended                After being flat to down in the first half of 2010, the markets rallied
        31 December 2010. This was well behind the FTSE/JSE Shareholder             hard in the second six month period. For the year ending
        Weighted All Share Index (SWIX), which gained 8.1% over the same            31 December 2010, the Industrial Index rose 26.6%, outperforming
        period.                                                                     the FTSE/JSE All Share Index (ALSI) which was up 19%. Industrials
                                                                                    were helped higher in December by double-digit gains for industrial
       The Banking Index performed in line with the overall Financial Index        heavyweights MTN (+11%) and Naspers (+10%).
        over the period, while the life assurance sector declined 5.8%.
                                                                                   In 2010, interest rates and currency had a key impact on the sector:
       The poor performance of the life sector was mainly due to a 15.4%
        decline in Old Mutual over the quarter, as news of the failed bid for
                                                                                    –   The prime interest rate dropped to its lowest level since 1974.
        Nedbank by HSBC adversely affected the company in the quarter.
                                                                                        Prime started the year at 10.5% and finished at 9%. This
       2010 has been a tough year operationally for the banking sector. Low            explains why many of the discretionary consumer stocks were
        interest rates and muted economic activity put pressure on revenue,             star performers in 2010: Truworths up 64%, Foschini up 49%,
        and coupled with significant cost pressures, have meant muted                   Mr Price up 90% and Clicks up 59%.
        earnings for 2010. We do expect this to improve in 2011 as interest
                                                                                    –   The rand, and many other emerging market currencies,
        rates stabilise and economic activity picks up.
                                                                                        strengthened. The R/US dollar went from R7.40 to R6.60 over
                                                                                        2010. This explains why some of the stocks with high offshore
                                                                                        revenue streams lagged. British American Tobacco (BAT) rose
                                                                                        just 6%, and SABMiller was up just 8%.

                                                                                   Sector performance was also influenced by some significant
                                                                                    corporate action. Walmart’s offer for Massmart (Game, Makro, Dions)
                                                                                    saw the share rise 64% over the year, and 20% in September.
                                                                                    Caterpillar Inc’s acquisition of Bucyrus Mining Equipment saw
                                                                                    Barloworld’s share price rally in November and December. Furniture
                                                                                    manufacturer Steinhoff rose 14% in December after it announced it
                                                                                    had made an offer to acquire the French furniture retailer Conforama.

        Equity Research view: We expect the sector to benefit from the              Equity Research view: The industrial sector offers limited upside as
        recovering economy, which should begin to lift operating results. We        a whole, but there are pockets of value in some of the clusters that we
        believe some counters in the sector still present value, with ratings       consider worth investing in. The sector is considered defensive in
        still below historic averages.                                              uncertain times, especially considering that many companies are cash
                                                                                    flush with high dividend yields that are very attractive to foreigners.

    Equity Sector Overview and Outlook (cont.)

       The total return of the FTSE/JSE SA Listed Property Index (SAPY
        Index) increased 29.6% in 2010. Remarkably, this is
        unexceptional as it is around the average return over the index’s
        eight–year history. The return was a consequence of the almost
        1% fall in bond yields. Property yields fell eight basis points (bps)
        less. The FTSE/JSE All Share Index (ALSI) provided a 19% return
        and the All Bond Index (ALBI) 15%. General retailers, one of the
        sectors most similar to property, gained 61.5%.

       Over the final quarter listed property returned 3.1%, less than the
        ALSI (9.5%) and general retailers (6.2%), but more than the ALBI
        (0.7%), as the yield on property was flat while bond yields
        increased. This was despite disappointing newsflow with some
        results or prospects statements below expectations. Potential
        corporate action that was announced could see the listed sector
        enlarge and its quality improve.

       With less scope for bond yields to decrease, and the lagging
        operating environment still tough, we expect lower double-digit
        returns from listed property in 2011 (if bond yields are flat). This is
        still a decent return from a high-yield asset, considering the
        current low-return, low-inflation environment.

        Equity Research view: The sector is around our fair value and
        provides a one-year entry yield of 8%, with above-inflation
        distribution growth (around 6% over the year). Downside
        operational risk has declined, funding conditions are easier and
        commercial building plans passed have fallen materially. A
        genuine recovery in property conditions may take longer than
        many anticipate, with higher electricity and rate costs constraining
        net rental growth, and over-rentals possibly developing in time (a
        key concern). Large capital raisings may constrain prices. The
        direct commercial property market remains resilient. On a long-
        term secular view property is attractive, as existing rents are
        below feasibility rentals for new developments.

    Fixed Interest Overview and Outlook
                                                                                The yield spread between money market rates and the 10-year
       Local bond market yields drifted lower during December, but not         government bond yield appears excessive …
        without bouts of weakness. In stark contrast to the previous month,
        bulls eventually managed to regain the upper hand on the back of a
                                                                                                         Standard deviation
        number of supportive factors. First and foremost, the hysteria
                                                                                                         SA 10-year bond yield minus 3-month JIBAR rate
        surrounding the Eurozone sovereign debt debacle settled somewhat
                                                                                8                        Mean
        (probably only to flare up again soon), while the rand regained lost
                                                                                                         Standard deviation
        ground as the US dollar slipped against a broad range of                6
        currencies. The firmer rand, third quarter macroeconomic data and
        the latest inflation figures served as confirmation of the broad        4
        consensus that South African short-term interest rates will remain
        low for another few months. Significant US bond market weakness
        contributed to intra-month volatility and capped local market           0
        strength. Foreign investors continued to reduce their holding of
        South African bonds, a trend that started in October.                   -2

       The net result of these developments was a decrease of 19 basis
        points (bps) in the benchmark 10-year RSA government bond yield         -6
        to end December at 8.12%, after starting the year at 9.13%. With















        short rates still firmly anchored at the lowest levels in more than
        three decades, the mild bond bull rally caused the slope of the yield
        curve to flatten. As a result, nominal bonds outperformed both cash          Source: I-Net Bridge, JSE

        and inflation-linked bonds.

       To us, it appears that risk selling during November and early                Futuregrowth view:
        December resulted in an excessive steepening of the yield curve              Although the yield curve is expected to retain its positive
        slope, and inflation break-even levels rising too much, too soon. A          slope given the point in the inflation and interest rate cycle,
        relatively benign inflation outlook, stable short-term interest rates        current steepness offers a near-term tactical opportunity.
        and the improved South African fiscal situation (particularly                Corporate debt spreads keep tightening, forcing investors to
        considering the European chaos), do not support this. Technical              become more price sensitive. At current levels, inflation-
        factors such as zero new issuance by National Treasury until the             linked bonds are relatively unattractive when compared
        middle of January, and sizeable coupon payments in the near term,            against nominal bonds and cash, especially over a six-
        also offer bullish support.                                                  month period.

      Economic Indicators to 31 December 2010
                                                                     Latest Data            Previous Year
                     Exchange Rates:
                      Rand/US$                              December-10              6.62        7.40
                      Rand/UK Pound                         December-10             10.31       11.87
                      Rand/Euro                             December-10              8.84       10.50
                      Rand/Aus$                             December-10              6.76        6.58

                     Interest Rates:
                      Prime Overdraft                       December-10            9.00%      10.50%
                      3-month NCD rate                      December-10            5.55%       7.15%
                      R157 Long Bond Yield                  December-10            7.31%       8.39%

                      CPI (y-o-y)                           November-10             3.6%         5.8%

                     National Accounts:
                      GDP Growth (y-o-y)                    September-10            3.2%        -2.4%
                      GDP Growth (q-o-q, annualised)        September-10            2.6%         0.9%
                      HCE Growth (y-o-y)                    September-10            5.8%        -2.6%
                      (Household Consumption Expenditure)
                      GFCF Growth (y-o-y)                   September-10           -1.4%        -6.7%
                      (Gross Fixed Capital Formation)

                     Balance of Payments:
                      Trade Balance (cumulative 12month)    November-10             $0.70      -$2.49
                      Current Account (% of GDP)            September-10            -3.0%       -3.1%
                      Capital Account (% of GDP)            September-10             4.1%        4.8%
                      Forex Reserves (incl. gold)           November-10            $44.45      $39.88

                      Manufacturing Production (y-o-y)       October-10             1.9%        -9.7%
                      (seasonally adjusted)

    Source: OMIGSA

      Market Indicators to 31 December 2010
                                         1 Month   Quarter   Calendar Year   12 Months   3 Yrs   5 Yrs
                                           (%)       (%)         (%)            (%)      (%)     (%)
           All Share Index                 6.2       9.5         19.0          19.0       6.5    15.2
           Shareholders Weighted Index     6.4       8.1         20.9          20.9       7.1    15.1
           All Share/Resources 50%         5.5       7.5         20.4          20.4       7.3    15.1
           Top 40 Index                    6.7       9.9         17.2          17.2       5.7    14.6
           RAFI® 40 Index                  6.7       8.1         18.5          18.5       9.5    16.3
           RAFI® All Share Index           6.3       9.5         18.6          18.6       8.6    15.8
           Resources Index                 7.7      16.5         12.3          12.3       2.9    15.2
           Financial Index                 4.7      -0.1         16.5          16.5       3.3     9.0
           Industrial Index                5.4       7.8         27.4          27.4      11.7    18.5
           Mid-cap Index                   3.1       6.6         30.3          30.3      12.9    19.3
           Small-cap Index                 4.6      11.3         24.6          24.6       3.2    16.3

           ALBI BEASSA                     1.7       0.7         15.0          15.0      10.0     7.9
           STeFI                           0.5       1.6          6.9           6.9       9.2     8.9
           Cash                            0.4       1.3          5.8           5.8       8.4     8.3

           SA Quoted Property Index        2.2       3.1         29.6          29.6      12.2    18.1

           MSCI World Index (R)            0.2       3.5          1.0           1.0      -5.3     3.9
           MSCI World Index ($)            7.4       9.1         12.4          12.4      -4.3     3.0
           JPM International Bond (R)     -5.3      -6.8         -4.4          -4.4       5.6     8.3
           US 1-month LIBOR (R)           -6.7      -5.1         -9.9          -9.9       0.6     3.9

           Inflation (Estimated)
           CPI                             0.3       0.7          3.7           3.7       6.5     6.8

    Source: OMIGSA

    For more information, please contact:

     Western Cape:
     Old Mutual Investment Group, 3rd Floor, West Campus, Mutualpark, Pinelands 7405
     Mike van Heerden – Senior Executive: Distribution                            Nirdev Desai – Investment Marketing & Sales Executive: Retail
     Tel: +27 21 509 5082                  Cell: +27 82 450 4483                  Tel: +27 21 504 6305                  Cell: +27 82 419 4770
     E-mail:                                                 E-mail:
     Paul Glendining – Investment Marketing & Sales Executive: Retail             Sue Brooks – Business Development Consultant
     Tel: +27 21 504 7690                   Cell: +27 82 414 3412                 Tel: +27 21 509 3936                Cell: +27 82 728 8732
     E-mail:                                               E-mail:

     Old Mutual Square, Umnotho Building, 3rd Floor, OMIGSA office, 93 Grayston Drive, Sandton 2196
     Taz Victor – Investment Marketing & Sales Executive: Fund of Funds           Wynand Gouws – Head: Retail Channel Management
     Tel: +27 11 217 1002                   Cell: +27 82 460 1495                 Tel: +27 11 217 1664                Cell: +27 82 450 7386
     E-mail:                                                   E-mail:

     Tebogo Mabogoane – Investment Marketing & Sales Executive: Retail            Sean du Buisson – Investment Marketing & Sales Executive: Retail
     Tel: +27 11 217 1021               Cell: +27 82 414 3409                     Tel: +27 11 217 1003                 Cell: +27 82 926 6955
     E-mail:                                                E-mail:

     Durban:                                                                      Bloemfontein:
     Viewz @ Westway, Office 3B, 11 The Boulevard, Westway Park 3611              PHG Building, 196 Nelson Mandela Drive, Bloemfontein 9300
     Imtiaz Shaik – Investment Marketing & Sales Executive: Retail                Des Bothma – Investment Marketing & Sales Executive: Retail
     Tel: +27 31 275 8305                   Cell: +27 83 292 7860                 Tel: +27 51 505 2950                 Cell: +27 82 410 2666
     E-mail:                                                 E-mail:

     Pretoria:                                                                    Eastern Cape:
     1st Floor, Glen Manor Office Park, Frikkie de Beer Street, Menlyn 0042       3rd Floor, Old Mutual Place, Cnr Cape Rd & Langenhoven Dr, Greenacres, PE 6000
     Hennie van Rensburg – Investment Marketing & Sales Executive: Retail         Colin Archibald – Investment Marketing & Sales Executive: Retail
     Tel: +27 12 369 7220                Cell: +27 83 286 2405                    Tel: +27 41 502 4906                   Cell: +27 82 804 1746
     E-mail:                                         E-mail:

     Regulatory Information
      Old Mutual Investment Group (South Africa) (Pty) Limited

      Physical address: Mutualpark, Jan Smuts Drive, Pinelands 7405

      Telephone number: +27 21 509 5022

      Old Mutual Investment Group (South Africa) (Pty) Limited is a licensed financial services provider, FSP 604, approved by the
      Registrar of Financial Services Providers ( to provide intermediary services and advice in terms of the Financial
      Advisory and Intermediary Services Act 37 of 2002. Old Mutual Investment Group (South Africa) (Pty) Limited is a wholly owned
      subsidiary of Old Mutual (South Africa) Limited. Reg No 1993/003023/07.

      The investment products are market-linked. Products are either policy based or unitised in collective investment schemes.
      Investors’ rights and obligations are set out in the relevant contracts. Market fluctuations and changes in rates of exchange or
      taxation may have an effect on the value, price or income of investments. Since the performance of financial markets fluctuates, an
      investor may not get back the full amount invested. Past performance is not necessarily a guide to future investment performance.

      Personal trading by staff is restricted to ensure that there is no conflict of interest. All directors and those staff who are likely to have
      access to price sensitive and unpublished information in relation to the Old Mutual Group are further restricted in their dealings in
      Old Mutual shares.

      All employees of Old Mutual Investment Group (South Africa) (Pty) Limited are remunerated with salaries and standard short-term
      and long-term incentives. No commission or incentives are paid by Old Mutual Investment Group (South Africa) (Pty) Limited to any
      persons. All inter-group transactions are done on an arm’s length basis.

      In respect of pooled, life wrapped products, the underlying assets are owned by Old Mutual Life Assurance Company (South Africa)
      Limited, who may elect to exercise any votes on these underlying assets independently of Old Mutual Investment Group (South
      Africa) (Pty) Limited.

      In respect of these products, no fees or charges will be deducted if the policy is terminated within the first 30 days. Returns on
      these products depend on the performance of the underlying assets.

      Old Mutual Investment Group (South Africa) (Pty) Limited has comprehensive crime and professional indemnity insurance, as part
      of the Old Mutual Group cover. For more detail, as well as for information on how to contact us and on how to access information,
      please visit


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