March 2015

Graham Tucker

THE SENATE

GROUP

2

MACROSOLUTIONS

MacroSolutions is a focused, boutique asset manager which specialises in

building integrated, multi-asset class solutions

Focused

Unconstrained (AUM: R40bn)

Strategic asset allocation for life company

Complementary businesses: US$6bn international assets, R5bn listed property

Boutique: “As invested as you are”

Equity ownership

Alignment through bonus re-investment

Multi-asset class solutions

Client outcome driven by accountability and integration

3

RANGE OF SOLUTIONS

4

DELIVERING TO OBJECTIVES

Real returns from inception to 31 December 2014

Source: Old Mutual Investment Group, MacroSolutions | ** Conservative fund = Optimised Defensive with Stable Growth Returns from July 2007

3.1% 3.7%

7.5%

8.5%

13.7%

0%

2%

4%

6%

8%

10%

12%

14%

16%

OM Real Income OM Conservative Fund OM Balanced OM Flexible OM Maximum Return

CPI +2%

CPI +6%

CPI +5%

CPI +3%

5

BALANCED FUNDS AUM AS AT END DECEMBER 2014

Source: MacroSolutions

0

20

40

60

80

100

120

140

160

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6

BALANCED FUNDS AUM AS AT END DECEMBER 2014

Source: MacroSolutions

Fund size (R billions)

10 20 40 60 80 100

Mk

t c

ap

(R

billio

ns)

<#

of st

oc

ks>

5 <128> 2.0% 4.0% 8.0% 12.0% 16.0% 20.0%

10 <105> 1.0% 2.0% 4.0% 6.0% 8.0% 10.0%

20 <73> 0.5% 1.0% 2.0% 3.0% 4.0% 5.0%

50 <38> 0.2% 0.4% 0.8% 1.2% 1.6% 2.0%

100 <21> 0.1% 0.2% 0.4% 0.6% 0.8% 1.0%

Ownership level required to achieve a fund positioning of 1%

0

20

40

60

80

100

120

140

160

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7

PHILOSOPHY: WHAT DO WE BELIEVE IN?

Integrated Solutions

Active asset allocation & specialist selection

Theme & price

Unique philosophy: top down & bottom up

Accountability & teamwork

Product focused teams

Perspective

Long-term

Discipline

Process & measurement

8

INTEGRATED SOLUTIONS

ACCOUNTABILITY

ASSET ALLOCATION

SELECTION

CLIENT

OUTCOME

PORTFOLIO CONSTRUCTION

RISK MANAGEMENT

9

WHY US

Client

Portfolio manager

MacroSolutions

Old Mutual Investment Group

Old Mutual

Accountability

Team

Specialist

Trust

10

FEES: PREDICTABLE AND COMPETITIVE

Estimated immediate

reduction in contribution of fees to TER, incl. VAT

Unit trusts

Old Mutual Flexible Fund -1.5%

Old Mutual Balanced Fund -1.4%

Old Mutual Stable Growth Fund -0.7%

Life Funds

Old Mutual Edge28 Life Fund -1.5%

Old Mutual Flexible Life Fund -1.5%

Old Mutual Balanced Life Fund -1.3%

Old Mutual Stable Growth Life Fund -0.8%

Overall w/average -1.3%

Source: MacroSolutions

11

TEAMWORK, ACCOUNTABILITY & INTEGRATION

Graham Tucker John Orford

ASSET

ALLOCATION

EQUITY

SELECTION

Denzil Burger Rian Le Roux

John Orford

Aggressive Balanced

Peter Brooke

Alida Jordaan Warren vd Westhuizen

Arthur Karas Peter Brooke

Conservative

12

MACROSOLUTIONS TEAM

Alida Jordaan

Portfolio Manager (21 Yrs)

Warren vd Westhuizen Portfolio Manager

(14 Yrs)

Arthur Karas

Portfolio Manager (24 Yrs)

Evan Robins

Portfolio Manager

(15 Yrs)

Rian Le Roux

Chief Economist

(35 Yrs)

Johann Els Economist

(29 Yrs)

SA Equities Listed Properties Economics

Graham Tucker Portfolio Manager

(14 Yrs)

Urvesh Desai Portfolio Manager

(12 Yrs)

Denzil Burger Portfolio Manager

(31 Yrs)

Peter Brooke Boutique Head

(20 Yrs)

Khangwelo

Nemukongwe Property Analyst

(5 Yrs)

Gary Davids

Research Analyst (6 Yrs)

John Orford Portfolio Manager

(12 Yrs)

13

LEVERAGING SPECIALIST SKILLS

Property Alternatives Global 10 Subsidiaries

Listed Commodities Equity

Direct Infrastructure Bonds

Private equity Cash

Hedge funds Alternatives

Fixed income

Cash

Bonds

Inflation linkers

Equity

Resources

Financials

Local industrials

MACROSOLUTIONS Asset allocation

Africa

Shared services Compliance Legal Trading Risk management IT

Global industrials

14

Buy lots Cheap

Expensive

Bo

tto

m U

p

Pric

e: V

alu

atio

ns

Reduce

Buy some

Sell all

Deteriorating theme

Improving theme

Top Down Macro Environment

“Integrating top

down & bottom up”

PHILOSOPHY: THEME AND PRICE

15

PRICE: LONG-TERM ASSET ALLOCATION VIEW

SA

Equity

Property

Bonds

Cash

Global*

Equity

Bonds

Cash

Real return View

5.0%

4.5%

2.5%

0.5%

5.0%

-1.0%

-1.0%

Neutral

Neutral

–

Neutral

+

–

–

More balanced outlook

Key risk is earnings delivery

More expensive but benefits from oil price

Lower inflation is very supportive

Better real returns but lacks leverage

Maintain diversification for

risk management

Best risk adjusted returns

Record low yields = low returns

Cash is trash

Source: Old Mutual Investment Group | NB: These are long-term, real returns expected over the next five years, as at 15 January 2015 * The international return expectations above are in US Dollar terms; any rand depreciation will add to returns in rands.

Comment

Neutral

+

16

THEMES

Oil price

Better global growth

Lower inflation

SA surprises

– Lower inflation & rates

– Stronger consumer

China transition

– Consumption > Investment

Low return world

– Dividend yield

17

OLD MUTUAL BALANCED FUND

Effective exposure as at 31 December 2014

Well diversified; small positive bias to growth

Source: Old Mutual Investment Group

SA Property 5%

Global Equities, 25%

SA Equities

40%

SA Money Market

12%

SA Nominal Bonds, 16%

SA Convertible Bonds, 1%

Global Bonds, 0%

Commodities, 1%

18

4.6%

4.7%

5.5%

5.6%

5.8%

5.8%

6.4%

6.5%

6.6%

10.9%

0% 2% 4% 6% 8% 10% 12% 14% 16%

MTN

Firstrand

Sasol

Steinhoff

Old Mutual

Investec

Nedcor

BAT

Richemont

Naspers

7.2

47.3

-13.1

35.2

10.4

33.2

23.6

17.8

2.1

38.7

-20% 0% 20% 40% 60%

SWIX:

15.4%

Tilt 12 Months % Total Return

0.4

-0.8

4.0

2.4

5.3

4.7

3.9

2.4

1.4

-3.7

OLD MUTUAL BALANCED FUND

Top ten shares as at 31 December 2014

Source: Old Mutual Investment Group

LONG-TERM PERSPECTIVES

20

LONG TERM LESSONS

Equities for the long term

Cash is trash

Time is your friend

Inflation is the enemy

The power of compounding

Don’t put all your eggs in one basket

Asset allocation adds value

21

Annualised real return since December 1929 – December 2014

HISTORIC LONG-TERM REAL RETURNS

Source: Old Mutual Investment Group, MacroSolutions

22

EXPECT LOWER REAL RETURNS IN THE FUTURE

Source: Old Mutual Investment Group, MacroSolutions

23

INFLATION IS PUBLIC ENEMY #1

Source: Old Mutual Investment Group, MacroSolutions

24

CASH IS TRASH

SA cash has delivered a real return of 0.8% over last 90 years

Real wealth takes more than 80 years to double

Globally, real returns from cash have been negative

Investors have gone backwards in real terms

Historic performance of SA cash:

Best performing local asset class over calendar year: 16%

Worst performer over 10 years: 40%

Bottom line:

Rather own shares in a bank than save your money in the bank

25

ACTIVE ASSET ALLOCATION ADDS VALUE

Source: Old Mutual Investment Group, MacroSolutions

26

THE VALUE OF DIVERSIFICATION

Source: Old Mutual Investment Group, MacroSolutions

27

THE VIRTUE OF PATIENCE

Source: Old Mutual Investment Group, MacroSolutions

1 day and 1 week: Rolling total returns, June 1995 to current

1 month to 10 years: Rolling total returns, January 1925 to current

28

MacroSolutions

Deliver multi-asset class solutions

Best of both worlds: Boutique model within a larger group

Unique philosophy of theme and price

In the size sweet spot

Long-term lessons

Inflation is the enemy

Require the appropriate level of growth assets

Within an actively managed, diversified portfolio

Patience is key

CONCLUSION

Thank you

30

Dharmesh Dayal Business Development

MACROSOLUTIONS TEAM

Johann Els Economist

Evan Robins Portfolio Manager

Marietjie Jooste Technical Assistant

John Orford Portfolio Manager

Sathyen Mahabeer Chief Operating Officer

Khangwelo Nemukongwe Property Analyst

Arthur Karas Portfolio Manager

Peter Brooke Head: MacroSolutions

Denzil Burger Portfolio Manager

Melanie Vollenhoven Distribution Specialist

George Petje Research Analyst

Graham Tucker Portfolio Manager

Urvesh Desai Portfolio Manager

Rian le Roux Economist

Gary Davids Research Analyst

Alida Jordaan Portfolio Manager

Merrelyn Diale Business Development

Warren van der Westhuizen Portfolio Manager

31

REGULATORY INFORMATION

Old Mutual Investment Group (Pty) Limited

Physical Address: Mutualpark, Jan Smuts Drive, Pinelands, 7405

Telephone number: +27 21 509 5022

Old Mutual Investment Group (Pty) Limited (Reg No 1993/003023/07) is a licensed financial services provider, FSP 604, approved by the Registrar of Financial Services Providers (www.fsb.co.za) to provide intermediary services and advice in terms of the Financial Advisory and Intermediary Services Act 37 of 2002. 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. The investment portfolios may be market-linked or policy based. Investors’ rights and obligations are set out in the relevant contracts. 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. 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. Disclosures: 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 the Old Mutual Investment Group are remunerated with salaries and standard incentives. Unless disclosed to the client, no commission or incentives are paid by the Old Mutual Investment Group to any persons other than its representatives. All inter-group transactions are done on an arms length basis. We outsource investment administration of our local funds to Curo Fund Services (Pty) Ltd, 50% of which is owned by the Old Mutual Investment Group. Disclaimer: The contents of this document and, to the extent applicable, the comments by presenters do not constitute advice as defined in FAIS. Although due care has been taken in compiling this document, Old Mutual Investment Group does not warrant the accuracy of the information contained herein and therefore does not accept any liability in respect of any loss you may suffer as a result of your reliance thereon. The processes, policies and business practices described may change from time to time and Old Mutual Investment Group specifically excludes any obligation to communicate such changes to the recipient of this document. Old Mutual Investment Group has comprehensive crime and professional indemnity insurance. For more detail, as well as for information on how to contact us and on how to access information please visit www.oldmutualinvest.com.

32

THE SANDTON SKYLINE FOR SA EQUITY

Source: Old Mutual Investment Group, MacroSolutions

December 1924 – December 2014

33

INVESTMENT CONCLUSIONS

Oil price

Overweight global equity

Overweight Europe & Japan; Africa pauses

Overweight Barrow Hanley

South Africa surprises

Overweight SA bonds; offshore pauses

Overweight SA inc.

Neutral property

Low return world

Overweight SA financials

Alternatives

34

GLOBAL BOND YIELDS ARE LOW COMPARED TO HISTORY

Source: Old Mutual Investment Group, MacroSolutions

1703 – 2014

35

MAKING SOUTH AFRICAN BONDS RELATIVELY ATTRACTIVE

Source: Old Mutual Investment Group, MacroSolutions

January 1941 – December 2014