WHAT IS AN IDEAL Living Annuity Investment? Celebrating 170 years of enabling dreams

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? WHAT WOULD BE THE IDEAL CHARACTERISTICS OF A LIVING ANNUITY INVESTMENT? Strong long term performance Client needs to fund an income for a potentially very long period Client would like to leave assets as part of estate Client wants competitive returns versus alternatives No negative months Avoids having to make monthly withdrawals from reduced asset value Reduces urge to switch to conservative investments Easier conversations between planner and client Liquid Client needs to make regular withdrawals to fund income Liquidity for income should not come at a cost Managed by trusted company This is client’s life savings and must sustain them for the rest of their life

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? IS THERE A SOLUTION THAT MEETS THESE CHARACTERISTICS? OLD MUTUAL SMOOTHED FUNDS OLD MUTUAL ABSOLUTE SMOOTH GROWTH PORTFOLIO OLD MUTUAL ABSOLUTE STABLE GROWTH PORTFOLIO CORE GROWTH LIFE FUND

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? Favourite non-Old Mutual Living Annuity Investments on Old Mutual Wealth Fund Name * Fund Category Coronation Balanced Plus SA MA High Equity Foord Balanced Allan Gray Balanced NGI Stable (Nov 2007) SA MA Low Equity Prudential Inflation Plus Coronation Balanced Defensive Investec Opportunity Allan Gray Stable Coronation Capital Plus SA MA Medium Equity Coronation Strategic Income SA MA Income Top funds (by AUM) used by planners for Living Annuity clients. 10 years or since inception monthly returns used to end Sep 2017. Source: Fund factsheets, Profile Media Fund Analytics for UT funds. AGP Smooth factsheet..

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? Favourite non-Old Mutual Living Annuity Investments on Old Mutual Wealth Fund Name * Fund Category Coronation Balanced Plus SA MA High Equity Foord Balanced Allan Gray Balanced NGI Stable (Nov 2007) SA MA Low Equity Prudential Inflation Plus Coronation Balanced Defensive Investec Opportunity Allan Gray Stable Coronation Capital Plus SA MA Medium Equity Coronation Strategic Income SA MA Income OM Absolute Growth Smooth Life Fund Top funds (by AUM) used by planners for Living Annuity clients. 10 years or since inception monthly returns used to end Sep 2017. Source: Fund factsheets, Profile Media Fund Analytics for UT funds. AGP Smooth factsheet..

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? WHAT WOULD BE THE IDEAL CHARACTERISTICS OF A LIVING ANNUITY INVESTMENT? Strong long term performance Client needs to fund an income for a potentially very long period Client would like to leave assets as part of estate Client wants competitive returns versus alternatives No negative months Avoids having to make monthly withdrawals from reduced asset value Reduces urge to switch to conservative investments Easier conversations between planner and client Liquid Client needs to make regular withdrawals to fund income Liquidity for income should not come at a cost Managed by trusted company This is client’s life savings and must sustain them for the rest of their life

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? STRONG LONG TERM PERFORMANCE Fund Name * 1 Yr 3 Yr 5 Yr 10 Yr or since inception * High Equity Fund 1 7.1% 7.0% 12.1% 10.7% High Equity Fund 2 6.8% 6.5% 10.8% 9.9% High Equity Fund 3 5.9% 8.3% 12.5% Low Equity Fund 1 (Nov 2007) 6.0% 6.7% 9.0% 9.6%* Low Equity Fund 2 7.4% 10.2% Low Equity Fund 3 7.2% 9.6% 10.3% High Equity Fund 4 6.2% 7.8% 9.5% Low Equity Fund 4 8.1% 8.9% 10.0% Medium Equity Fund 5.7% 9.1% 9.2% Income Fund 8.6% 8.4% 8.2% Top funds (by AUM) used by planners for Living Annuity clients. 10 years or since inception monthly returns used to end Sep 2017. Source: Fund factsheets, Profile Media Fund Analytics for UT funds. AGP Smooth factsheet..

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? STRONG LONG TERM PERFORMANCE Fund Name * 1 Yr 3 Yr 5 Yr 10 Yr or since inception * High Equity Fund 1 7.1% 7.0% 12.1% 10.7% High Equity Fund 2 6.8% 6.5% 10.8% 9.9% High Equity Fund 3 5.9% 8.3% 12.5% Low Equity Fund 1 (Nov 2007) 6.0% 6.7% 9.0% 9.6%* Low Equity Fund 2 7.4% 10.2% Low Equity Fund 3 7.2% 9.6% 10.3% High Equity Fund 4 6.2% 7.8% 9.5% Low Equity Fund 4 8.1% 8.9% 10.0% Medium Equity Fund 5.7% 9.1% 9.2% Income Fund 8.6% 8.4% 8.2% OM Absolute Growth Smooth (Apr 2008) 6.3% 10.1% 13.2% 11.0%* Inflation + 5% Top funds (by AUM) used by planners for Living Annuity clients. 10 years or since inception monthly returns used to end Sep 2017. Source: Fund factsheets, Profile Media Fund Analytics for UT funds. AGP Smooth factsheet..

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? Aggressive asset allocation for long-term growth, including alternative assets Local Assets Global Assets Growth Assets over long term 83% Characteristics: Real returns over long term Volatile

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? ALTERNATIVE INVESTMENTS – WHY DO YOU NEED THEM? Great diversifier from more conventional asset classes Returns less correlated to stock market performance Provide a more stable return pattern than equities Access different sources of return Not available in normal unit trusts

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? WHAT WOULD BE THE IDEAL CHARACTERISTICS OF A LIVING ANNUITY INVESTMENT? Strong long term performance Client needs to fund an income for a potentially very long period Client would like to leave assets as part of estate Client wants competitive returns versus alternatives No negative months Avoids having to make monthly withdrawals from reduced asset value Reduces urge to switch to conservative investments Easier conversations between planner and client Liquid Client needs to make regular withdrawals to fund income Liquidity for income should not come at a cost Managed by trusted company This is client’s life savings and must sustain them for the rest of their life

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? Traditionally you had to choose between high returns or stable returns Fund Name * Volatility Max Drawdown # Neg Months High Equity Fund 1 9.3% -20.3% 38 High Equity Fund 2 8.6% -19.0% 39 High Equity Fund 3 7.4% -10.2% 35 Low Equity Fund 1 (Nov 2007) 4.6% -4.4% 23 Low Equity Fund 2 5.8% -8.6% 34 Low Equity Fund 3 4.2% -2.6% 25 High Equity Fund 4 7.5% -18.2% Low Equity Fund 4 4.4% -3.3% 32 Medium Equity Fund 6.2% -8.4% 36 Income Fund 1.8% -0.8% 9 Top funds (by AUM) used by planners for Living Annuity clients. 10 years or since inception monthly returns used to end Sep 2017. Source: Fund factsheets, Profile Media Fund Analytics for UT funds. AGP Smooth factsheet..

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? STRONG LONG-TERM PERFORMANCE AND LOW RISK Fund Name * Volatility Max Drawdown # Neg Months High Equity Fund 1 9.3% -20.3% 38 High Equity Fund 2 8.6% -19.0% 39 High Equity Fund 3 7.4% -10.2% 35 Low Equity Fund 1 (Nov 2007) 4.6% -4.4% 23 Low Equity Fund 2 5.8% -8.6% 34 Low Equity Fund 3 4.2% -2.6% 25 High Equity Fund 4 7.5% -18.2% Low Equity Fund 4 4.4% -3.3% 32 Medium Equity Fund 6.2% -8.4% 36 Income Fund 1.8% -0.8% 9 OM Absolute Growth Smooth (Apr 2008) 2.1% 0%* 0* *Negative returns are possible on Absolute Growth portfolios. Top funds (by AUM) used by planners for Living Annuity clients. 10 years or since inception monthly returns used to end Sep 2017. Source: Fund factsheets, Profile Media Fund Analytics for UT funds. AGP Smooth factsheet..

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? HOW SMOOTHING WORKS *Negative returns are possible on Absolute Growth portfolios.

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? Bonus Smoothing Reserve History BSR Range 2012 2013 2014 2015 2016 2017 Mar Jun Sep Dec > 20% 15% to 20% 10% to 15% 5% to 10% 0% to 5% -5% to 0% -10% to -5% -15% to -10% < -15% Absolute Growth Portfolio Long Term Expected Average

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? WHAT WOULD BE THE IDEAL CHARACTERISTICS OF A LIVING ANNUITY INVESTMENT? Strong long term performance Client needs to fund an income for a potentially very long period Client would like to leave assets as part of estate Client wants competitive returns versus alternatives No negative months Avoids having to make monthly withdrawals from reduced asset value Reduces urge to switch to conservative investments Easier conversations between planner and client Liquid Client needs to make regular withdrawals to fund income Liquidity for income should not come at a cost Managed by trusted company This is client’s life savings and must sustain them for the rest of their life

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? FULL LIQUIDITY FOR DEFINED BENEFIT PAYMENTS Defined benefit payments will always pay the full fund value Defined benefit payments include: Retirement (including ill-health retirement) Annuity Income Payments Death Disability A market value adjustment (MVA) may be applied to voluntary disinvestments MVA might be applied if the Bonus Smoothing Reserve is negative. MVAs are only expected during extreme market downturns. MVAs do not impact those who leave due to defined benefit events. MVAs are applied to protect the investors who remain in the fund.

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? WHAT WOULD BE THE IDEAL CHARACTERISTICS OF A LIVING ANNUITY INVESTMENT? Strong long term performance Client needs to fund an income for a potentially very long period Client would like to leave assets as part of estate Client wants competitive returns versus alternatives No negative months Avoids having to make monthly withdrawals from reduced asset value Reduces urge to switch to conservative investments Easier conversations between planner and client Liquid Client needs to make regular withdrawals to fund income Liquidity for income should not come at a cost Managed by trusted company This is client’s life savings and must sustain them for the rest of their life

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? OLD MUTUAL IS THE CLEAR LEADER IN SMOOTHING IN SA and has been for 50 years 30 June 2017 Absolute Growth 68.2% of SA market Absolute Growth R113.1bn as at June 2017 Old Mutual 75.9% of SA market

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? OUR CAPITAL STRENGTH MEANS YOUR INVESTMENT IS SECURE Capital Strength R’bn Dec 2016 Net Assets 570.0 Liabilities 524.0 Surplus 46.0 Statutory Capital Requirement 14.3 Statutory Capital Cover 3.2x

ALSO AN IDEAL PRE-RETIReMENT INVESTMENT Reduces uncertainty without reducing returns The Power of Compound Interest Investment Amount Year 1 Year 2 Year 3 Year 4 Year 5 Total 5 years from 2007 5 years from 2009 5 years from 2007 5 years from 2009 5 years from 2007 5 years from 2009 Utopia R100,000.00 12% R176 234 Aggressive R100,000.00 -2% -21% 20% 14% 8% R113 889 Aggressive R100,000.00 20% 14% 8% 19% 22% R213 918 AGP Smooth R100,000.00 24% 3% 4% 9% 10% R160 763 AGP Smooth R100,000.00 4% 9% 10% 17% 19% R174 228 Conservative R100,000.00 -2.7% -8.9% 12.3% 11.3% 8.8% R120 541 Conservative R100,000.00 12.3% 11.3% 8.8% 18.6% 18.1% R190 475 No smoothing – can be a lot more or a lot less than expected With Smoothing= more predictable outcome

WHAT IS AN IDEAL LIVING ANNUITY INVESTMENT? THE SMOOTHED OPTIONS ON OM WEALTH Fund Name Capital Guarantee Capital Charge Fund Fee Target Return (after fund fees) Absolute Growth Portfolio Smooth 50% 0.2% 0.95% CPI + 4%-5% Absolute Growth Portfolio Stable 80% 0.7% CoreGrowth Life Fund 100% 1.8% 0.50% CPI + 2%-3% Find the funds under the TARGET FUNDS category on Old Mutual Wealth fund list

ANY DOUBTS? To offer your clients the OM Smoothed Bonus range of funds, speak to your OM consultant or contact me at fred.Liebenberg@omwealth.co.za