newgold brochure

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NEWGOLD EXCHANGE TRADED FUND

“NewGold ETF is one of the simplest and cost-efcient methods for investors to invest directly

in physical gold.”

What are Exchange Traded Funds?

An Exchange Traded Fund (or ETF) is an investment vehicle traded on a stock exchange, much like shares. Most ETFsare passively managed index funds which normally track an index, with their main objective being to participate in the

economic growth of an industry, sector or commodity. ETFs provide the attraction of the returns of a traditional tracker fund

(like unit trusts) with the liquidity of a listed security. ETFs are traded at prevailing market prices, which are approximately

the same price as the Net Asset Value (NAV) of their underlying assets over the course of the trading day.

Individual investors should view ETFs as core, long-term investments.

Why invest in ETFs as an alternative to other similar investments?

Low Cost - Because ETFs are designed to closely track the performance of their respective benchmarks, they have less

frequent portfolio changes than actively managed funds, making them less expensive to operate. Additionally, because

subscriptions and redemptions occur ‘in-specie’, there are fewer internal costs associated with operating ETFs, resulting

in the overall lower costs associated with ETFs.

Tradability - ETFs provide investors with the ability to gain exposure to a broad market in one transaction as they trade

on a stock exchange throughout the trading day. Investors buy and sell ETFs like shares, typically through a stock broking

account or through an accredited nancial services provider by means of an investment plan.

With unit trust investments, managed by active fund managers, investors are not aware at what prices their securities are

bought or sold. Most actively managed funds are bought and sold at the closing day’s NAV and all buy and sell transactions

are conducted directly with the fund company. In contrast, ETFs are bought and sold on a stock exchange throughout the

day based upon market prices, which uctuate according to supply and demand.

Transparent - Actively managed funds report their holdings on a quarterly or less frequently basis whereas ETFs disclose

their portfolio holdings on a daily basis. The ETF performance and portfolio composition are a reection of the underlyingindex as the holdings of an ETF closely mirror the underlying index it tracks as a benchmark. This provides ETF investors

with a greater degree of nancial transparency.

Diversied investment - ETFs give investors a straightforward and inexpensive way to obtain a broad exposure to a

given index, sector, country or commodity compared to the purchase of several individual company shares.




Advantages of ETFs

- ETFs provide a diversied exposure through buying a single share

- ETFs offer a market related performance or return

- Straightforward access to the performance of key indices and sectors

- A cost effective way of trading a basket of shares through a single transaction

- Automatic portfolio rebalancing of the constituent holdings of the respective index

- The exibility to buy and sell the ETF securities during JSE trading hours

- A convenient method to invest and realise returns on investment

- The convenience of calculating the value of the ETF investment at any time

- Provide an opportunity for individuals and smaller institutions to track a market

Disadvantages of ETFs

ETFs operate on the principle that in the medium to long term, tracking specic markets, indices or commodities offer better

‘after-cost’ returns than unit trusts that trade through active fund managers. The ETF investor therefore does not trade to

‘beat the market’, but banks on returns from the consistency of ‘being the market’.

What are the risks associated with ETFs?

- Investment in ETFs involve numerous risks including, general market risks, interest rate risks, exchange rate risks,

inationary risks, liquidity risks and legal and regulatory risks.

- The value of an investment in an ETF may increase as well as decrease as the market changes.

- ETFs are not capital protected and therefore investors may not get back the amount invested.

How can investors profIt from ETFs?

As with any other security, investors usually buy and sell their ETFs through the securities exchange. Prots (or losses) are

made from the difference between the buying and selling prices. Like any other security, ETFs do however carry the risk of

losing rather than gaining money. Individual investors should view ETFs as core, long-term investments designed to reduce

the price uctuations that generally characterise arbitrary buying and selling of securities.

What are the investment strategies that can be used by investors with ETFs?

Asset Allocation - Managing asset allocation could be difcult for individual investors given the costs and assets required

to achieve proper levels of diversication. ETFs provide investors with exposure to broad segments of the equity markets

to conveniently, efciently and affordably allocate their assets.

Cash Management - Investors typically seek exposure to equity markets, but often need time to make investment decisions.

ETFs provide a “parking place” for cash that is designated for equity investment. Because ETFs are liquid, investors can

participate in the market while deciding where to invest their money for equity investments.




Hedging risks - ETFs are effective hedging tools for managing risk. For example, investors can guard against over concentrated

equity positions by using ETFs as single stock substitutes. This hedging technique can reduce risk and volatility by letting

stockholders diversify away from large equity positions to the companies they own or work at.

Transition Management - When institutional investors change asset managers, one of their over-riding concerns is preserving

the ability to maintain equity exposure while the transition occurs. One way to achieve this goal is to liquidate the portfolio while

simultaneously buying ETFs. Once the assets are transitioned, the new manager can redeem the ETF shares to pay for their

share purchases.

Core-satellite Strategy - This strategy is a blend of index and active investing. Index investments, such as ETFs become the

foundation of the portfolio’s construction and actively managed investments are added as satellite positions. With this approach,

investors index their core holdings to more efcient asset classes and limit their selection to active managers that deliver

consistent alpha or outperformance for other categories.

Sector Rotation - Convenient market exposure to various industry sectors is readily obtained with ETFs. By tactically shifting

assets, investors can over and underweight specic sectors according to their nancial research, economic outlook, or market

objective. Owning or selling concentrated business segments allows ETF investors to capitalise on both positive and negative

sector trends.

Debunking the myths around investing in ETFs

Myth 1: The best ETFs to own are…

The best ETFs to own are the ones that help investors reach their own unique nancial goals. Just because a certain ETF is

popular, heavily advertised, or widely followed, does not necessarily deem it better than other ETFs or an appropriate choice for

a particular investor. Instead of focusing on one or two individual funds, an investor should concentrate on building a portfolio

of ETFs that offer broad exposure to key asset classes like shares, bonds, commodities, real estate etc.

Myth 2: ETFs are only for day traders and short-term investors

The truth is that ETFs are effective portfolio building tools for all types of investors. While ETFs are often used by active

investors as trading vehicles, they can be effectively used by ‘buy-and-hold’ or long-term investors. One investor may purchase

a particular ETF to hedge, while another may purchase the same ETF with a different strategy, perhaps, for example, to grow

capital. The unique product design of ETFs allows investors with both similar and dissimilar investment objectives to own the

same fund and still accomplish their goal.

Myth 3: ETFs are the same as individual shares

Even though ETFs are traded on major stock exchanges alongside individual shares, they are not the same as shares. Rather,

ETFs consist of an underlying portfolio of securities that is designed to follow a specic index or investment strategy.

ETFs are typically more diversied than individual shares.




NewGold

Absa Capital’s NewGold Exchange Traded Fund (NewGold) was initially launched on the Johannesburg Stock Exchange

(JSE) in November 2004. NewGold was designed to track the price of gold and create an investment tool enabling institutional

and retail investors to invest in a listed instrument (structured as a debenture) that is fully backed by gold bullion.

Each NewGold security is equivalent to approximately 1/100 ounces of real gold bullion held in a secured stockpile of gold

bullion.

Underlying Asset

Allocated Account

All NewGold gold bars are held in an allocated account - An allocated account is an account held in a customer’s name

evidencing that uniquely identiable bars of gold have been ‘‘allocated’’ to the customer and are segregated from other

metal held in the vault of that dealer. The client has full title to this gold with the dealer holding it as custodian and therefore

does not carry third party credit risk.

Gold Delivery Bars

All gold is kept in the form of London Gold Delivery Bars and Good Delivery Standards are prescribed by LBMA. For more

information - www.lbma.org.uk

Custodian

The gold is kept in the vault of the Custodian, Brink’s Limited.

Fees

Management fee: 0.40% p.a. accrued daily and debited in gold monthly in arrears.

Fund Facts

As at 30 September 2011

Issuer NewGold Issuer Limited

Manager NewGold Manager (Pty) Ltd

Originators Absa Bank Limited acting through the Absa Capital division

ISIN ZAE000060067

Primary Listing Date 02 Nov 04

Net asset value (South Africa) R18,796,399,201.13

No of issued securities (South Africa) 147,236,300

No of tonnes 44.54

No of ounces 1,432,115.68




The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will uctuate so that

an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted.

Performance data current to the most recent month-end may be obtained by calling +27(0)11 895 5517 or by visiting www.absacapitaletfs.com

NewGold Performance

Performance History as of 30 September 2011*

*Source: Absa Capital

*Source: Calculated by Absa Capital

*Source: Absa Capital

1 Year 2 Year 3 Year Since Inception

Annualised Return 43.28% 31.52% 20.78% 25.78%

Last month return: 3.12%

Return since inception: 388.13%

How to invest in NewGold?

Directly, through a stockbroker:

- Costs:

- Broker fees: negotiated between the clients and the broker

- Standard Statutory fees apply




Contact Details

NewGold Manager

+27 (0)11 895 5517

[email protected]

+27 (0)11 895 6000 :: 15 Alice Lane, Sandton, 2196, South Africa :: www.absacapitaletfs.com

FAIS Act Notice and Disclaimer

This brochure/document/material/report/communication/commentary (“this commentary”) has been prepared by Absa Capital, the investment banking division of Absa Bank

Limited a registered bank in the Republic of South Africa with company registration number: 1986/004794/06 and with its registered ofce at: Absa Towers East, Main Street 170,

Johannesburg, Republic of South Africa (“Absa”). Absa is regulated by the South African Reserve Bank. Absa has issued this commentary for information purposes only and you

must not regard this as a prospectus for any security or nancial product or transaction. Absa does not expressly, tacitly or by implication represent, recommend or propose that

the securities and/or nancial or investment products or services (“the products”) referred to in this commentary are appropriate and/or suitable for your particular investment

objectives or nancial situation or needs. This commentary is not, nor is it intended to be, advice as dened and/or contemplated in Financial Advisory and Intermediary

Services Act, 37 of 2002, (“FAIS Act”) or any other nancial, investment, trading, tax, legal, accounting, retirement, actuarial or other professional advice or service whatsoever

(“advice”). You have to obtain your own advice prior to making any decision or taking any action whatsoever based hereon and Absa disclaims any liability for any direct,

indirect or consequential damage or losses that you may suffer from using or relying on the information contained herein even if notied of the possibility of such damage or

loss and irrespective of whether or not you have obtained independent advice. This commentary is neither an offer to sell nor a solicitation of an offer to buy any of the products,

which shall always be subject to Absa’s internal approvals and a formal agreement between you and Absa. Any pricing included in this commentary is only indicative and is

not binding as such on Absa. All the risks and signicant issues related to or associated with the products are not disclosed and therefore, prior to investing or transacting, you

should fully understand the products and any risks and signicant issues related to or associated with them. The products may involve a high degree of risk including, but not

limited to, the risk of (a) low or no investment returns, (b) capital loss, (c) counterparty or issuer default, (d) adverse or unanticipated nancial market uctuations, (e) ination

and (f) currency exchange. The value of any product may uctuate daily as a result of these risks. Absa does not predict actual results, performances and/or nancial returns

and no assurances, warranties or guarantees are given in this regard. The indicative summaries of the products provided herein may be amended, superseded or replaced by

subsequent summaries without notice. The information, views and opinions expressed herein are compiled from or based on trade and statistical services or other third party

sources believed by Absa to be reliable and are therefore provided and expressed in good faith. Absa gives no recommendation, guide, warranty, representation, undertaking

or guarantee concerning the accuracy, adequacy and/or completeness of the information or any view or opinion provided or expressed herein. Any information on past nancial

returns, modelling or back-testing is no indication of future returns. Absa makes no representation on the reasonableness of the assumptions made within or the accuracy or

completeness of any modelling or back-testing. All opinions, views and estimates are given as of the date hereof and are subject to change without notice. Absa expressly

disclaims any liability for any damage or loss as a result of errors or omissions in the information, data or views contained or expressed herein even if notied of the possibility of

such damage or loss. Absa does not warrant or guarantee merchantability, non-infringement of third party rights or tness for a particular use and/or purpose. Absa, its afliates

and individuals associated with them may (in various capacities) have positions or deal in securities (or related derivative securities), nancial products or investments identical

or similar to the products. Absa intends to make this commentary available in South Africa to persons who are nancial services providers as dened in the FAIS Act, as well

as to other investment and nancial professionals who have professional experience in nancial and investment matters. You should contract and execute transactions through

an Absa Bank Limited branch or afliate in your home jurisdiction unless local regulations permit otherwise. Absa Bank Limited is a licensed Financial Services Provider. Absa

has taken no action that would permit a public offering of the products in any jurisdiction in which action for that purpose is required. The products shall only be offered and the

offering material shall only be distributed in or from any jurisdiction in circumstances which will result in compliance with any applicable laws and regulations and which will not

impose any obligation on Absa or any of its afliates. In this commentary reference is made to various indices. The publishers and sponsors of those indices (“the publishersand sponsors”) do not endorse, sponsor or promote the products and make no warranty, guarantee, representation or other assurance (express, tacit or implied) relating to the

indices. The publishers and sponsors make no warranties (including merchantability and tness for purpose). The publishers and sponsors shall not incur any liability in respect

of any damage or loss that you may suffer as a result of investing in a product even if notied of the possibility of such damage or loss. The publishers and sponsors may amend

the composition or calculation of indices and have no obligation to have regard to your or Absa’s need in this regard. The information and views contained in this commentary

are proprietary to Absa and are protected by copyright under the Berne Convention. In terms of the Copyright Act, 98 of 1978, as amended, no part of this commentary may

be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, electronic scanning, recording, or by any information storage or

retrieval system, without the prior permission in writing from Absa. The illegal or attempted illegal copying or use of this information or views may result in criminal or civil legal

liability.”

Absa Capital, a division of Absa Bank Limited, Reg NO 1986/004794/06.Authorised Financial Services Provider. Registered Credit Provider Reg NO NCRCP7.

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