INVESTMENTS & RETIREMENT

THE

DVISOR

Never before has a generation had so many options for retirement – opportunities for travel, hobbies or retreat to a cozy home on a tranquil island. For some, however, the thought of life after retirement evokes fear and dread. CFAL clients and the general public got a chance to examine their feelings and their preparation for leaving the workforce during the Company’s annual CFAL 360° Retirement Series themed Finishing Strong.

Presenters included representatives from government and the private sector, including The Honourable Zhivargo Laing, Minister of State for Finance, who outlined the govern-ment’s strategy for dealing with the economic downturn; and Algernon Cargill, Director of the National Insurance Board, whose presentation discussed the ever increasing demands on the fund and the Board’s plans for protecting it for future generations.

Continued on page 5

BISX Q3 REVIEW Impeded by continuous deterioration across all equity sectors, the local stock exchange saw a challenging quarter as its market capitalization plummeted 4.92 percent or $149.59 million to a value of $2.89 billion. Trading activity contin-ued its moderate trend with a total of 936,527 shares crossing the exchange via 322 trades for a value of $5,399,356.38. However, trading volume could not compensate for performance as the Bahamas International Securities Exchange (BISX) All Share Index closed at 1,502.04 points at quarter end, subsequent to a calculated decrease of 77.19 points or 4.88 percent. Reporting its highest quarterly retraction since 2008, the Index has seen a cumulative loss of 210.32 points or 12.28 percent year to date.

The composition of the equity index was notably affected as the strength of various sectors aptly reflected the state of the market. Financials continued to dominate the market as the most preva-lent sector, accounting for 83.01 percent of the Index. Entertainment and Energy followed with respective weightings of 6.86 percent and 5.31 percent. Utilities comprised 2.16 percent of the Index while Real Estate accounted for 0.81 per-cent.

Health Care, Consumer Durables and Industrials represented smaller portions with measurements of 0.71 percent, 0.63 percent and 0.50 percent.

Continued on page 2

Retirement: Finishing Strong

Minister of State for Finance Zhivargo Laing receives a gift from CFAL’s VP of Business Development & Client Relations Sean Longley (left) and Client Relations Officer Khalil Braithwaite at the Company's annual CFAL 360° Retirement Series. Minister Laing discussed the government’s plans for addressing the economic slowdown.

ISSUE 15 - October 2009

IN THIS ISSUE ♦ RETIREMENT: FINISHING STRONG ♦ THE IMPLICATIONS OF UNEMPLOYMENT ♦ H1N1 (SWINE FLU): 10 THINGS NOT TO DO

♦ BISX Q3’09 REVIEW ♦ QUARTERLY FUNDS REVIEW

2 Due to trading activity throughout the quarter, thirteen (13) of the listed stocks saw price movements, with three (3) advancements and ten (10) retractions.

The quarter’s star performers were Doc-tors Hospital Health Systems (DHS) +15.82 percent, Commonwealth Bank Limited (CBL) +4.08 percent and Con-solidated Water BDRs +2.84 percent. Quarterly laggards included: Freeport Concrete Company Limited (FCC) -10.00 percent, AML Foods Limited (AML) -0.24 percent, Bahamas Property Fund (BPF) -2.27 percent, FirstCarib-bean International Bank (CIB) -3.66 percent. Further, major decreases were recorded by J.S. Johnson (JSJ) -4.95 per-cent, FOCOL Holdings Limited (FCL) -11.59 percent, Bank of the Bahamas Limited (BOB) -14.99 percent, Fam-Guard Corporation Limited (FAM) -14.95 percent, Cable Bahamas Limited (CAB) -12.82 percent, Finance Corpora-tion of the Bahamas (FIN) -15.22 per-cent.

Leading healthcare service provider, Doctor’s Hospital Health Systems (DHS) leaped $0.28 or 15.82 percent to end the quarter at $2.05. The stock has seen a 52-week high of $2.85 and a 52-

week low of $1.32.

Year to date the company has paid cu-mulative dividends of $0.08 per share.

This translates to a dividend yield of 3.90 percent. Financial results for the fiscal year 2009 indicate net income of $3.81 million or $0.38 per share and a revenue increase of $0.90 million to $43.08 million.

Market heavyweight Commonwealth Bank Limited (CBL) closed the quarter at $5.87, an increase of $0.23 or 4.08 per-cent.

Year to date the stock is down 16.14 per-cent and holds a dividend yield of 5.11 percent. During the quarter the stock traded a total of 123,103 shares across 88 trades for a value of $694,690.79. The company has seen a 52 week high of $7.50 and a 52-week low of $5.26 per share.

For the second consecutive quarter, Consolidated Water Company (CWCB) has outperformed a vast ma-jority of publicly listed stocks. As at quarter end, the company settled at a price of $3.26 per BDR, adding $0.09 or 2.84 percent during the term. A total of

62,000 shares crossed the local exchange throughout the quarter, amassing a value of $224,400.00. The company has seen a 52-week high of $3.85 and a rela-tive low of $1.27 and carries a current dividend yield of 1.70 percent.

On the other hand, Finance Corporation of the Bahamas Limited (FIN) saw the most significant price decline for the quarter as its stock price tumbled $1.67 or 15.22 percent to a low of $9.30 per share. Year to date the stock has de-creased $2.57 or 21.65 percent. Closing the quarter with a dividend payment of $0.13 per share, the stock has cumulative annual dividend yield of 5.59 percent.

During the quarter a total of 59,397 shares valued at $616,723.30 changed hands via 24 trades. The company’s net income reported for the three months ended July 31st, 2009 was $3.35 million representing a decrease of $2.07 million or 38.17 percent relative to the same pe-riod last year while total assets were valued at $870.39 million.

Cable Bahamas Limited was this quar-ter’s second most noteworthy detractor. Closing at a stock price of $9.93, the stock has seen a substantial decline of $1.46 or 12.82 percent. Year to date the stock is down $4.10 or 29.22 percent. Notwithstanding its price depreciation, the company’s financial statements con-tinue to reflect profitability.

Continued on page 5

Q3 2009 Top Performers Q3 2009 Gain Market Cap. (%)

DHS  15.82%  0.71% 

CBL  4.08%  19.97% 

CWCB  2.84%  0.23% 

BISX Q3 REVIEW Continued from page 1

CircleVision Financial Planning TM

Business Development & Client Relations: Sean K. Longley | slongley@cfal.com Pension Administration: Sophia Thurston | sthurston@cfal.com Registrar & Transfer Agency & Escrow Services Garnal Brown | gbrown@cfal.com

Shareholder Services: Garnal Brown | gbrown@cfal.com Brokerage, Trading & Custodial Services: Tamara Evans | tevans@cfal.com Investment & Portfolio Management Pamela Musgrove | pmusgrove@cfal.com

Corporate Advisory Services: Anthony Ferguson | aferguson@cfal.com Client Relationship Manager (Freeport): Ellison Delva | edelva@cfal.com General Enquiries: Tel: 502 7000 (Nassau) | 351.8928 (Freeport) info@cfal.com | www.cfal.com

The Advisor | Issue 15 - October 2009

3

THE CFAL ADVISOR

An interim labour force survey pub-lished in August 2009 by the Depart-ment of Statistics revealed that as of May, 2009, unemployment in The Bahamas had risen to 14.2% from 8.2% in the previous year. Since that report was published, the Four Seasons Hotel in Exuma announced that 500 employ-ees were released as a result of the clo-sure of that operation. The RIU on Paradise Island, the Wyndham Resort in Cable Beach and a few hotels in Freeport have shut-down their proper-ties temporarily, resulting in a few hundred more workers joining the growing army of the unemployed. From a labour force of approximately

185,000 workers, almost 30,000 are out of work. A figure of that magnitude has certain implications for the social and economic welfare of the country. Indeed, to the extent that labour sur-veys do not include discouraged work-ers (those who have stopped looking for jobs) the unemployment figure is probably higher than that reported by the Department.

The unemployment rate is an indica-tor of the health of the economy; it is a gauge of the growth of the economy and a measure of the effect of a reces-sion. Many observers, including the IMF and Standards & Poor’s have predicted negative growth for the Ba-hamian economy for 2009. As ex-pected, the unemployment rate is a “lagging” indicator and as such the unemployment numbers tend to in-crease long after the recession has ar-rived. This could be bad new for The Bahamas because even though em-ployers are reluctant to release people when the recession starts, they are stubbornly against hiring them when the economy improves. It is unlikely, therefore, that the unemployment rate will be reduced over the next year or eighteen months.

Continued on page 6

THE IMPLICATIONS OF UNEMPLOYMENT

As a result of the closure of several resort properties in New Providence and Grand Bahama, a few hundred more workers have joined the growing army of the unemployed. From a labour force of approximately 185,000 workers, almost 30,000 are out of work.

CFAL | CircleVision Financial Planning TM

4 4

THE CFAL ADVISOR

H1N1 (Swine flu) isn't in the headlines as much as it was when it was brand new this spring, and while there have been deaths and hospitalizations in countries worldwide, most cases have been relatively mild.  

That's the good news. But the bad news is it may pick up steam during the usual flu season ‐‐ and it could worsen. With that in mind, here are 10 swine flu "don'ts".  

1. Don't expect seasonal flu vaccination to prevent swine flu. The seasonal flu vaccine doesn't protect against swine flu. Scientists are working on a swine flu vaccine, but that will be a separate vaccination. 

 

Do get vaccinated against seasonal flu when that vaccine becomes available. Sea‐sonal flu can be serious, especially for in‐fants, elders, and people with weak im‐mune systems.   

2. Don't count on a face mask to prevent swine flu infection. According to the CDC, it's not clear how effective face masks are at preventing the transmission of the H1N1 or seasonal influenza viruses. The same is true for N95 respirators worn snugly over the face as filters. 

  

But the CDC does recommend that sick people wear a face mask to avoid spreading their illness if they must be in close contact with other people. However, don't rely on a face mask as your only protection ‐‐ you still need other swine flu prevention steps:  

• Wash your hands often.  • Cover your mouth and nose with a tissue when coughing or sneezing.  

• Avoid touching your eyes, nose, and mouth.  • If you have flu‐like symptoms, avoid others until you've been free of fever for 24 hours.  

• Stay at least 6 feet away from people with flu‐like illness.  

 

If you do wear a face mask, don't reuse it. Face masks should be worn once and then thrown out.   

3. Don't hold or attend a swine flu party. The guest of honor at a swine flu party is some‐one who's got swine flu. The point is for other guests to catch the virus in the hopes that they'll have a mild illness and gain immunity so that they won't get sick if the H1N1 virus worsens. 

 

That's a bad idea, according to the CDC, 

because there's no way to know whether swine flu will be severe or fatal in swine flu party guests ‐‐ or anyone else that they, in turn, infect.   

 

4. Don't neglect planning. One of the CDC's golden rules for dealing with swine flu is for sick people to stay home. That means plan‐ning ahead in case you or someone in your family gets sick. Sick children should stay home.  The CDC has also issued guidelines for colleges, universities, and businesses on how to deal with swine flu.    

Workers may want to look into how their company handles sick leave or time off to care for someone with swine flu. And you might also want to stock up on tissues, disinfectants, and soap or alcohol‐based hand sanitizers for work and home. 

 

5. Don't forget to clean up. Flu viruses can linger on books, toys, countertops, door‐knobs, phones, linens, eating utensils, etc. Use a household disinfectant, following the directions on the products' label. 

 

The CDC recommends that when you laun‐der linens of someone who has the flu, don’t hug the laundry before washing it, and set the clothes dryer to the hot setting. Wash your hands with soap and water (or use an alcohol‐based hand gel) immediately after handling dirty laundry.  

6. Don't get complacent. Don't shrug off swine flu precautions. The U.K.'s National Health System notes that when someone sick with flu talks, sneezes, spits, or coughs, infected flu droplets can travel at least 1 meter (about 3.3. feet). The NHS recom‐mends that when you use a tissue, you  throw it out after one use.  

7. Don't panic. Swine flu is a pandemic, but so far, it's been a "moderate" pandemic. That could change. Health officials have said they expect to see a range of severity in cases, including more hospitalizations and deaths, and they've cautioned that the virus could change and become harsher.   

The overwhelming majority of patients experience mild symptoms and make a full recovery within a week, often in the ab‐sence of any form of medical treatment. Pregnant women and people with underly‐ing health conditions are at higher risk for complications.  

 

8. Don't leave home if you've got flu‐like symptoms. Those symptoms include fever, cough, sore throat, runny or stuffy nose, body aches, headache, chills, and fatigue; diarrhea and vomiting may also be symp‐toms of swine flu. 

 

Unless you're going to get medical care, stay home to avoid infecting others. That means not going to work or school, not running your normal errands, and not trav‐eling. Wait until at least 24 hours after you are free of fever of 100°F, or signs of fever, without taking fever‐reducing medicines.  

 

9. Don't rush to the emergency room unless you have certain symptoms.  The CDC urges people to seek emergency medical care for a sick child with any of these symptoms: 

• Fast breathing or trouble breathing  • Bluish or gray skin color  • Not drinking enough fluids  • Severe or persistent vomiting  • Not waking up or not interacting  • Being so irritable that the child does not want to be held  

• Flu‐like symptoms improve but then return with fever and cough  

Here is the CDC's list of symptoms that should trigger emergency medical care for adults: • Difficulty breathing or shortness of breath  • Pain or pressure in the chest or abdomen  • Sudden dizziness  • Confusion  • Severe or persistent vomiting  • Flu‐like symptoms that improve but then return with fever and worse cough  

• A high fever for more than three days   

10. If you're a parent, don't forget to teach your kids swine flu prevention. Children need to do the same things as adults ‐‐ stay home when sick, avoid sick people, cough and sneeze into a tissue, and wash their hands. The CDC recommends teaching kids to sing the "Happy Birthday" song twice while washing their hands with soap and water, so that they wash their hands for 20 seconds. Tell kids to stay at least 6 feet away from people who are sick. Those pointers also work for grown‐ups. 

  

Source: WebMD.com 

H1NI (SWINE FLU): 10 THINGS NOT TO DO

The Advisor | Issue 15 - October 2009

5

Other speakers included James Smith, Chairman, CFAL; Stacia Williams, President Total Image Management; Lindon Nairn, Vice President, Life Division, ColinaImperial Insurance Ltd.; Marcus Bosland, Resident

Actuary, ColinaImperial Insurance Ltd.; Kendrick Christie, Partner Grant Thornton Bahamas; Sean K. Longley, VP Business Development, CFAL; Jamaal Stubbs, Senior Research Analyst, CFAL; and Dr. Caroline

RETIREMENT: FINISHING STRONG Continued from page 1

Burnett-Garraway, Medical Director, ColinaImperial Insurance Ltd.

The seminar was designed to provide meaningful insight into the areas of retirement planning, pensions and the trends of pension legislation here in The Bahamas and the Caribbean.

Attendees agreed that the seminar was timely, provided relevant content for the time and proved to be an excellent networking opportunity.

One of several value added features of our professional financial advisory firm, the retirement seminar offered customized financial planning solutions for individuals who were new to the workforce, nearing retirement, and those with responsi-bility for choosing the best plan for their colleagues.

LEFT: Following a discussion on how the National Insurance Board is safeguarding benefits for future generations, NIB Managing Director Algernon Cargill (centre) receives a gift from CFAL representatives Sean Longley and Khalil Braithwaite.

CFAL | CircleVision Financial Planning TM

BISX Q3 REVIEW Continued from page 2

For the six-month period ended June 30, 2009, total revenue increased 4.20 per-cent to $42.10 million while net income increased 15.40 percent to $14.90 million. Inclusive of the dividend payment made at quarter end, the company has paid a total of $0.07 per share to common shareholders. The stock has a current dividend yield of 2.72 percent.

Chart 1 summarizes the top five volume leaders for the quarter. Trading 179,799 shares, FOCOL Holdings Limited (FCL) traded the highest volume. Commonwealth Bank Limited (CBL) followed with a volume of 123,103 shares while AML Foods Limited (AML) crossed a total of 111,691 shares. ICD Utilities Ltd. (ICD) exchanged 90,133

shares while FirstCaribbean Interna-tional Bank (CIB) closed out the vol-ume leaders with 77,405 shares.

There has been countless speculation regarding a global economic turnaround, yet still our local economic indicators

continue to retract. More specifically, the Bahamas International Securities Exchange closed the quarter at its lowest quarterly value since June 2006, suggest-ing continued economic uncertainty. However, we may find comfort in the words of Hon. Zhivargo Laing, “The global recovery is not something that is predictable and so for the moment The Bahamas has to take into account its own realities and know that the eco-nomic situation remains challenging.” As the road to recovery may prove to be long and drawn out, investors should look toward diversification across indus-tries while passing on fundamentally strong companies with good balance sheet and prospects for significant earn-ings growth.

Chart 1

CIB

ICD

AML

CBL

FCL

6

THE CFAL ADVISOR

The Advisor | Issue 15 - October 2009

High unemployment rates tend to indicate a loss of confidence in the economy and ultimately discourage investments, both local and foreign. A slowdown in investments nega-tively impacts economic growth and could lead to another recessionary round.

The nature of the unemployment mat-ter this time around is further cause for concern because we are essentially faced with “structural” unemploy-ment, which is by definition, the job-lessness that arises when there is in-sufficient demand for the workers that are available. In our case, the majority of the unemployed are tourism-related service workers. Given that in addi-tion to huge fall offs in visitor arrivals (16% fewer arrivals as compared to the same period last year), a large number of hotels rooms have been eliminated from the industry. What this means is that even if there is a rebound in tour-ist arrivals, the remaining hotels would experience higher occupancy rates than before and would undoubt-edly service them with existing re-duced staff levels in order to regain some of the losses from the recession.

That outlook does not augur well for the country over the medium term.

Persistently high levels of unemploy-ment are costly both economically and socially. Unemployment at the basic level is a waste of scarce resources that reduces the long-term growth poten-tial of the economy; the lost man-hours could never be recovered. Its impact is pervasive. It adversely af-fects government expenditure, taxa-tion and the level of government bor-rowing. Simply put, the less people spend, the less they contribute to gov-ernment indirect taxes at a time when more benefits are demanded from a shrinking revenue base. Additionally, some studies have concluded that there is a positive link between unem-ployment and rising crime and social dislocation (increased divorce rates, worsening health and lower life expec-tancy).

Given the enormous economic and social costs associated with high levels of unemployment, we are hopeful that the authorities would put in place the appropriate mix of policies and pro-grammes to steer the ship of state safely through the rough seas of this economic recession.

7 Tips for Job Hunting During a Recession

The global credit crisis and flat-lining domestic economy could make this one of the most chal-lenging times to be looking for a job in recent history. To be a successful job seeker in this climate, you have to be calm, patient and proac-tive -- and try any (or all) of these tips.

1. Pick and Choose Your Targets It’s important to put your time and energy into opportunities that you’re the most interested in and that have the best chance of coming to fruition. Pick a few companies you’re interested in and pursue them, whether they have current openings or not.

2. Work Your Network Flip through your Rolodex or social media con-tacts and let them know you’re looking.

3. Sell Yourself Preparation [includes] learning how to talk about yourself in a meaningful and powerful way

4. Consider Freelancing If you’re in a field that supports it, don’t think twice -- just do it.

5. Take a Temporary Position Consider interim staffing to fill a temporary slot. Many of these options can pay the bills until a permanent position comes along.

6. Sweat the Small Stuff

Don’t forget the personal touches. Don’t use a template cover letter -- make sure each letter addresses specific skills or qualities the com-pany is looking for.

7. Stay Positive

Retain a positive attitude. It doesn’t matter how many jobs are or aren’t out there, you’re just looking for one -- the right one for you.

Adapted from monster.com

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CFAL QUARTERLY FUNDS REVIEW

CFAL MSI Preferred Fund | As of Sep 30, 2009

Performance Analysis QTR3 YTD 1 YR

Fund  ‐2.25%  ‐3.74%  ‐6.75% 

**Benchmark  ‐1.70%  ‐4.13%  ‐5.76% 

+/‐ Benchmark  ‐0.55%  +0.39%  ‐0.99% 

** Benchmark commenced September 30, 2005 

Equities 49%

Fixed Income 46%

Cash & Equivalents 2% Other 3% Fund

Composition Equity Sector Exposure

Financials 60% Energy

26%

Other 11%

Consumer Durables 3%

CFAL Money Market Fund | As of Sep 30, 2009

Performance Analysis QTR3 YTD 1 YR

Fund  1.15%  4.06%  5.46% 

Benchmark  0.99%  2.99%  3.91% 

+/‐ Benchmark  0.16%  1.07%  1.55% 

 

Investment Type

Fund Composition

Fixed Income 81%

Cash & Equivalents 19%

Variable Rate 50%

Fixed Rate 50%

CFAL Growth Fund | As of Sep 30, 2009

Performance Analysis QTR3 YTD 1 YR

Fund  ‐4.16%  ‐10.61%  ‐14.05% 

Benchmark  ‐4.90%  ‐12.29%  ‐18.23% 

+/‐ Benchmark  +0.74%  +1.68%  +4.18% 

 

Composition by Sector

Fund Composition

Equities 66%

Fixed Income 23%

Short Term 9%

Other 2%

Financials 64%

Industrial 3%

Other 12%

Consumer Durables 21%

CFAL Bond Fund | As of Sep 30, 2009

Performance Analysis QTR3 YTD 1 YR

Fund  1.56%  4.00%  5.27% 

Benchmark  1.46%  4.38%  5.87% 

+/‐ Benchmark  +1.10%  ‐0.38%  ‐0.60% 

 

Investment Type

Fund Composition

Fixed Income 85%

Cash & Equivalents 15%

Variable Rate 66%

Fixed Rate 34%

CFAL | CircleVision Financial Planning