Absolute Return Funds in

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1 Absolute Return Funds in Supplementary Detail The Liberty Absolute return fund aims to produce low risk, inflation-beating returns with limited risk to capital. This was achieved by using two management capabilities; Stanlib with a capital preservation mandate and Investec Opportunity Fund with a relatively more growth orientated mandate. Latest fund update List of portfolios affected: Liberty (Evolve) CPI Plus Excelsior CPI Plus Liberty Real Return (Liberty Active) The Liberty Absolute return fund aims to produce low risk, inflation-beating returns with limited risk to capital. This was achieved by using two management capabilities; STANLIB (Liberty Absolute Return fund) with a capital preservation biased mandate and Investec (Investec Opportunity Fund) with a relatively more growth orientated mandate. The split of assets between Stanlib and Investec has in recent years followed an approximate 50/50 allocation. STANLIB' S process and investment philosophy behind the management of this fund has historically had a relatively defensive bias, with significant focus on protection strategies and locking in real returns. This has resulted in the portfolio struggling to perform in line with peers over most meaningful periods. Following an extensive review, Liberty took the decision to restructure the absolute return (CPI Plus proposition). The intention is to improve the ability of the fund to deliver to return objectives, particularly given how financial markets and the investment landscape have shifted over the past few years. Revised structure: 60% Investec Opportunity Fund (Unit Trust) 35% STANLIB Absolute Plus Fund (Unit Trust) 5% Alternatives allocation The assets have now been fully transitioned (as at end March) and the funds reflect the revised structure mentioned above. The new philosophy is designed to better enable risk management, favours highly liquid investments and has an increased active management focus.

2 Asset Allocation Investec Opportunity Fund 35,0 30,0 30,0% 30,3% 25,0 22,3% 20,0 15,0 10,0 7,3% 5,0 3,2% 2,9% 2,8% 2,1% 1,9% 0,0-5,0 Local Equities Local Bonds Local Cash Local Commodities Local Property Local FX Foreign Equities Foreign Cash Foreign Property Foreign FX -2,8% 45,0 STANLIB Absolute Plus Fund 41,3% 40,0 35,0 35,9% 30,0 25,0 20,0 15,0 15,0% 10,0 5,0 2,5% 5,3% 0,0 Local Cash Local Equity Local Fixed Interest Foreign Debt instrument Foreign Fixed Interest

3 Top 10 holdings Investec Opportunity Fund % British American Tobacco Plc 5.1% Sasol Ltd 5.2% Assore Ltd 3.7% Cie Financiere Richemont SA 2.5% NewGold Issuer Ltd 3.2% Santam Ltd 2.3% Standard Bank Group Ltd 1.9% Mediclinic International Plc 1.8% Visa Inc 1.8% Johnson & Johnson 1.8% STANLIB Absolute Plus Fund % STANLIB INCOME FUND 15.2% Rsa R % 31/01/ % POWERSHARES DB US DOLLAR INDE 5.8% Rsa R % 31/01/ % R2044 REPUBLIC OF SOUTH AFRICA 3.9% R2037 Republic Of South Africa 3.6% FIRSTRAND BANK LIMITED 9.5% % INVESTEC CPI-LINKED 2.6% 31/03 3.5% R186 Republic Of South Africa 2.7% R209 Republic Of South Africa 2.5% Sector Allocation Investec Opportunity Fund (30 June 2018) 7,8% 0,1% 0,1% 9,9% 11,8% 6,4% 13,7% 28,0% 22,2% Consumer Goods Financials Basic Materials Health Care Technology Industrials Consumer Services Additional Other STANLIB Absolute Return Fund (30 June 2018) 5,3% 0,8% 0,4% 1,2% 0,1% 15,0% Consumer Goods Financials 41,3% Telecommunications Unlisted Equity Fixed Interest 35,8% Money Market Unit Trusts & Pooled Investments Foreign Fixed Interest

4 FUND MANAGER COMMENTARY Investec Opportunity Fund: Performance review: Key positive contributions: Our foreign equity component was the largest contributor to returns. This was not only due to a weaker rand over the quarter, but also strong gains in US dollar terms. Over the quarter, our offshore component outperformed global markets with key contributors being Twenty-First Century Fox, Verisign, Visa, Intuit and Microsoft. These gains were marginally offset by more muted returns from holdings in Philip Morris International as well as 3M Company. Our local equity component added strongly to performance. Gains came from our rand-hedge and resource counters including Sasol, Richemont, Bid Corp, and Naspers. In addition, our holding in Capital & Counties added to performance given sterling currency moves relative to the rand. Our commodity holding in the NewGold ETF contributed meaningfully to returns up almost 10% over the quarter on the back of a stronger US Dollar. Key negative contributions: Our local bond component detracted from performance over the quarter. A deteriorating outlook for EM bonds, including SA bonds, resulted in significant selling pressure from global investors over the quarter. In addition, a deterioration in the domestic inflation outlook (rising petrol prices) saw the local 10-year yield rise by more than 80 basis points from around 8.0% to close the 2nd quarter above 8.8%. Our domestic interest-rate sensitive counters such as Santam, JSE, and Standard Bank Group weighed on returns over the quarter given the EM sell-off and unwinding SA Inc. trade. Manager Outlook & Strategy "The exuberance following the ANC elective conference and the appointment of President Cyril Ramaphosa has faded. We believe that investors were too optimistic about Ramaphosa s ability to turn the economy around in the short term, and more rational expectations have taken root. Investment and employment are required to lift growth prospects in South Africa, but capital will sit on the side-lines while there is concern about the mining charter, land appropriation and government attempts to push ahead with national health insurance without an appropriate plan for funding. The pressure on an already indebted consumer is rising with increases in VAT and the price of petrol. Lending further weight to these concerns was a negative 2.2% GDP print for the first quarter of 2018 and a disappointing current account balance. While there were seasonal factors at play, and our economy is expected to grow at approximately 1.8% for the year, investors are unsettled by what appears to be corroborating evidence. Our weak local environment is occurring during a period of stronger global growth, and one where the US Federal Reserve is comfortable to continue draining liquidity through rate hikes and quantitative tightening. Exacerbating the tightening is the expectation of additional debt issuance to fund fiscal easing in the US, and the rising price of oil which is sucking dollars out of the system. But even with this availability of debt, the long end of the US curve continues to contract relative to the short end. Trade rhetoric from the White House has crystallised into actual tariffs. Much like the wait-and-see approach to South Africa, these actions may also see companies assessing the fallout before embarking on new capital allocation. Any reversal in global trade would be bad for global growth given the potential inefficiencies it would create. What is not clear is whether these tariffs are the start of a much larger trade war, or political manoeuvring ahead of the US midterm elections in November. In light of the risks present in the global and local environments, we continue to allocate a large portion of the portfolio to high quality global equities generating high and sustainable returns on invested capital. Our selection has resulted in a balance between old economy staples and newer, higher-growth opportunities. What these businesses have in common, apart from their prodigious cash generation and exceptional returns on capital, is an ability to grow with a lower dependence on the economic cycle than the average business. In a similar vein, we have sought out locally-listed global businesses with little dependence on a weak South Africa.

5 Locally, the best opportunity in our view remains South African government bonds, offering more attractive risk-adjusted yields as EM risk-off sentiment has come to the fore. At yields of close to 9%, these instruments offer far higher risk-adjusted return potential than the retail, banking and property sectors. Our bond exposure remains prudent: Lower duration, higher quality instruments, with exposure balanced against offshore holdings to limit the potential for loss. And the deteriorating local growth environment provides nominal bonds with a further valuation underpin. We therefore maintain a balance of exposures in the portfolio that offer protection in a number of different investment environments. With risk at the fore and liquidity being drained away, we do not believe that it is appropriate to position the portfolio for a particular outcome. As always, we remain unwavering in our commitment to growing your capital in a judicious and discriminate manner." Source: Investec Asset Management STANLIB Absolute Plus Fund "Following the tough first quarter for equity markets globally and the stronger rand negatively impacting our local equity market, the second quarter was more mixed as the global trade war intensified with China, Europe and Canada implementing retaliatory tariffs on US exports. Increased fears of a global growth slowdown led to capital outflows from emerging markets (EM's) and materially weaker EM currencies. This, together with a more hawkish approach from the US Federal Reserve on its rate hike trajectory, has led investors away from the risky emerging markets to relatively more attractive developed markets. Locally the optimism around Ramaphoria has not translated into a more robust economic environment as continued political and policy uncertainty, a weaker rand and a struggling retail sector have all led to a decline in economic growth. Looking at performance, the portfolio's conservative positioning along with minimal exposure to Inflation Linked Bonds and South African Listed Properties (which was down -2.2% over the quarter) added to performance. Minimal exposure to offshore equities also contributed positively towards performance; however a tilt to Emerging Equities instead of US equity weakened the extent of this contribution. Outlook Global growth remains strong, economic fundamentals in Emerging Markets are sound, the real global risk-free rate is still negative and no indicators are suggesting a recession is imminent. The manager recognises that what they are seeing at present is typical of late-cycle environments, and have reduced the risk appetite in Q2 to reflect this. Looking ahead, the manager remains cognisant of the local and global environment, emerging market positioning and flows as well as the US Dollar and Treasury Bond positioning to name a few." Source: STANLIB Asset Managers (Absolute Return Franchise) Disclaimer The information contained in this document does not constitute advice by Liberty. Any legal, technical or product information contained in this document is subject to change from time to time. If there are any discrepancies between this document and the contractual terms or, where applicable, any fund rules, the latter will prevail. Past performance cannot be relied on as an indication of future performance. Investment performance will depend on the growth in the underlying assets, which will be influenced by inflation levels in the economy and prevailing market conditions. Any recommendations made must take into consideration your clients specific needs and unique circumstances. Liberty Group Ltd is a registered Long-term insurer and an Authorised Financial Services Provider (no. 2409). All rights reserved Terms and conditions apply.