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Momentum Protected Index Plan (Momentum PIP) - 100% Option

Momentum Protected Index Plan (Momentum PIP) - 100% Option. Capital protection and equity market participation. Momentum PIP. Many investors are attracted to the potential of capital gains from the stock market. They can afford to commit capital for a three and a half year investment term.

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Momentum Protected Index Plan (Momentum PIP) - 100% Option

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  1. Momentum Protected Index Plan (Momentum PIP) - 100% Option

  2. Capital protection and equity market participation

  3. Momentum PIP • Many investors are attracted to the potential of capital gains from the stock market. • They can afford to commit capital for a three and a half year investment term. • But they want some form of capital protection. • Cash offers protection but after tax returns are low. • They don’t want to back a particular fund manager’s choices as many managers do not outperform the index.

  4. Momentum PIP • The Momentum PIP is designed for such an investor • Three and a half year index-linked investment that offers exposure to the performance of the FTSE/JSE Top 40 Index (the index); • Simple way to get equity exposure with a 100% capital protection; • Monthly launches offering 100% capital protection and 100% participation, subject to economic conditions; • Growth in the index is to a capped level; • Can be chosen in any of Momentum Wealth's investments, including retirement products. • Averaging over the last nine months of the three and a half year investment term with the intention of reducing the risk to investors in the event of market correction; • Has daily Rand pricing.

  5. Momentum PIP Source: INET (04/04/2013) Past levels of the index is not a guide to its future levels. The chart shows the index levels of the FTSE/JSE Top 40 Index from 31 December 2009 to 31 March 2013.

  6. Momentum PIP • Investor suitability • Liquidity • Inclusion in portfolio construction can improve the efficient frontier • Provides a form of capital protection • Lock in gains but still maintain exposure • Often cheaper than actively managed portfolios 100% Equity Structured product Balanced Strategy Expected Returns 100% Bonds 100% Cash Risk Level

  7. Momentum PIP • How is the investment return calculated? • If the index has risen since trade date: If, at maturity, the final index level (after averaging) is higher than the starting index level on the trade date, you will receive 100% of the index’s investment, but not more than the cap. Your investment will receive the same growth (in percentage) as the performance of the index. So, for every 1% that the index rose over the investment term, you will earn 1% investment growth. The final index level we use to determine the growth is calculated using the average of the monthly closing index levels over the last nine months of the three-and-a-half-year investment term. This may be capped if the index’s investment rose by more than the cap over the term of your investment. The cap’s level is set on the trade date. • If the index has fallen since trade date: If, at maturity, the final index level (after averaging) is lower than the starting index level on the trade date, you will receive your capital investment amount back after we have allowed for any withdrawals by you during the investment term of the Momentum PIP. * The cap level is determined on the trade date. For the current indicative cap refer to the trade details.

  8. Momentum PIP • Final payoff profile

  9. Momentum PIP • Scenario analysis

  10. Momentum PIP • Illustration of averaging

  11. Momentum PIP • Fees and charges

  12. Momentum PIP • Benefits • 100% participation in the index with 100% capital protection; • Split funding allowed; • Enhances portfolio construction; • Daily Rand pricing; • Minimum investment of R50 000 and invested in increments of R1 000 thereafter; for retirement products the minimum investment reduces to R10 000 • Monthly launches (mid month to mid month); • On maturity, the investment is deposited into the Momentum Money Market Fund.

  13. Momentum PIP • Benefits • Can be accessed through any of Momentum Wealths investment products, including retirement products* • Capital Gains Tax vs. income tax for the Flexible Endowment Option; • Opportunity to realise attractive returns relative to cash; • Embedded Financial advice and administration fees; • Final index level is calculated as the arithmetic average of the closing levels of the index over the last nine months. * The maximum allocation of an investor’s portfolio into the Momentum PIP via one of Momentum’s retirement products is limited to 25%. The Momentum PIP is not an investment option on the Retirement Annuity Option and the Retirement Preservation Option where the investor’s term to retirement is shorter than the investment term of the Momentum PIP.

  14. Momentum PIP • Benefits • If purchased in a FEO & TEO – classified as “Long Term Insurance Category C”; • If purchased in a FIO – classified as “Securities and Instruments: Warrants, certificates and other instruments”; • If purchased in RAO & RPO – classified as “Retail Pension Benefit”; • If purchased in RIO – classified as “Long Term Insurance Category B”;

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