marriot income specialists

“Invest for Income”

– what does it mean?

What do people invest for ?

• For capital growth

• Save R 100 000 every year for ten years

• R 1 million saved capital

• Sensible investments

• Value R 2.5 million

Critical unanswered questions?

• How do you choose sensible investments?

• How could you have known 10 years ago that

today the value would be R 2.5 million?

• Is R 2.5 million enough – how do you know?

1 Year 3 Years 5 Years 7 Years 10 Years

Rank 4/161 11/130 5/113 1/96 14/60

Annualised Return

20.4% 22.1% 19.4% 16.6% 17.5%

Sector Average 10.5% 16.7% 14.1% 9.7% 15.4%

As at 31st December 2014 Source: ProfileData

Sources of Investment Income

• Cash

• Bonds

• Property

• Equity

R -

R 50 000

R 100 000

R 150 000

R 200 000

R 250 000

R -

R 1 000 000

R 2 000 000

R 3 000 000

R 4 000 000

R 5 000 000

R 6 000 000

R 7 000 000

R 8 000 000

03 04 05 06 07 08 09 10 11 12 13 14

Inc

om

e P

rod

uc

ed

Ca

pita

l V

alu

e

Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)

Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)

Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund

R1 million Investment since 2004

Source: ProfileData & Marriott

R -

R 50 000

R 100 000

R 150 000

R 200 000

R 250 000

R -

R 1 000 000

R 2 000 000

R 3 000 000

R 4 000 000

R 5 000 000

R 6 000 000

R 7 000 000

R 8 000 000

03 04 05 06 07 08 09 10 11 12 13 14

Inc

om

e P

rod

uc

ed

Ca

pita

l V

alu

e

Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)

Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)

R85k

Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund

R1 million Investment since 2004

Source: ProfileData & Marriott

R -

R 50 000

R 100 000

R 150 000

R 200 000

R 250 000

R -

R 1 000 000

R 2 000 000

R 3 000 000

R 4 000 000

R 5 000 000

R 6 000 000

R 7 000 000

R 8 000 000

03 04 05 06 07 08 09 10 11 12 13 14

Inc

om

e P

rod

uc

ed

Ca

pita

l V

alu

e

Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)

Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)

R85k

R187 k

Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund

R1 million Investment since 2004

Source: ProfileData & Marriott

R -

R 50 000

R 100 000

R 150 000

R 200 000

R 250 000

R -

R 1 000 000

R 2 000 000

R 3 000 000

R 4 000 000

R 5 000 000

R 6 000 000

R 7 000 000

R 8 000 000

03 04 05 06 07 08 09 10 11 12 13 14

Inc

om

e P

rod

uc

ed

Ca

pita

l V

alu

e

Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)

Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)

R85k

R39k

R187k

Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund

R1 million Investment since 2004

Source: ProfileData & Marriott

R -

R 50 000

R 100 000

R 150 000

R 200 000

R 250 000

R -

R 1 000 000

R 2 000 000

R 3 000 000

R 4 000 000

R 5 000 000

R 6 000 000

R 7 000 000

R 8 000 000

03 04 05 06 07 08 09 10 11 12 13 14

Inc

om

e P

rod

uc

ed

Ca

pita

l V

alu

e

Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)

Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)

R85k

R39k

R187k

R198k

Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund

R1 million Investment since 2004

Source: ProfileData & Marriott

R -

R 50 000

R 100 000

R 150 000

R 200 000

R 250 000

R -

R 1 000 000

R 2 000 000

R 3 000 000

R 4 000 000

R 5 000 000

R 6 000 000

R 7 000 000

R 8 000 000

03 04 05 06 07 08 09 10 11 12 13 14

Inc

om

e P

rod

uc

ed

Ca

pita

l V

alu

e

Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)

Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)

R85k

R39k

R187k

R198k

R7.2 mil

R2.5 mil

Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund

R1 million Investment since 2004

Source: ProfileData & Marriott

R -

R 50 000

R 100 000

R 150 000

R 200 000

R 250 000

R -

R 1 000 000

R 2 000 000

R 3 000 000

R 4 000 000

R 5 000 000

R 6 000 000

R 7 000 000

R 8 000 000

03 04 05 06 07 08 09 10 11 12 13 14

Inc

om

e P

rod

uc

ed

Ca

pita

l V

alu

e

Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)

Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)

R59k

R39k

R102k

R167k

R7.1 mil

R2.0 mil

Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund

R1 million Investment since 2004

Source: ProfileData & Marriott

3.1 3.0

2.7

1.9

0.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Proctor and

Gamble

Nestle Johnson and

Johnson

US 10 Year

Government

Bond Yield

US Cash Index 1

month Libor

0.25%

1.13%

2.50%

3.63%

0%

1%

1%

2%

2%

3%

3%

4%

4%

Current Fed

Fund Rate

End 2015 End 2016 End 2017

US Fed Funds Rate Projections

Portfolio

100%

Equities

Select Multi-National Blue Chip Companies vs US long term

Bond Yield & Cash Yield

Source: Bloomberg

Source: National sources; McKinsey Global Institute

57%

58%

62%

81%

0% 50% 100%

Public speaking

Death

Investing in the stock market

Skydiving

What scares you?

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Annual Dividends

Dot com

bubble

Asian

financial

crisis

Black

Wednesday

Sub-prime

crisis

Global

debt crisis

Source: Bloomberg

Market Cap Filter

Dividend filter

Economic screen Industry screen

Market capitalisation > R2bn

Int: Listed on major first world exchanges

Market Cap Filter

Dividend filter

Economic screen Industry screen

Paid dividends for the last 3 years

Market Cap Filter

Dividend filter

Economic screen

Industry screen

Filters out companies vulnerable

to current economic conditions

Market Cap Filter

Dividend filter

Economic screen

Industry screen

exclusions

Top 13 International Brands in China

Exposure to 9 of these brands

Market Cap Filter

Dividend filter

Economic screen

Industry screen

exclusions

Market Cap Filter

Dividend filter

Economic screen

Industry screen

Filters out companies in

unpredictable industries

Market Cap Filter

Dividend filter

Economic screen

Industry screen

0

200

400

600

800

1000

1200

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Resources Industry

Dividends

0

1

2

3

4

5

6

7

8

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Software Industry

Dividends

exclusions

Source: I-Net

Market Cap Filter

Dividend filter

Economic screen

Industry screen

Most widely

held stock in SA

exclusions

0

20

40

60

80

100

120

140

Dec 11 Dec 12 Dec 13 Dec 14

Brent Crude Oil ($ per barrell)

Source: I-Net

Market Cap Filter

Dividend filter

Economic screen

Industry screen

Company screen

Filters out companies with

specific risks to dividend

Market Cap Filter

Dividend filter

Economic screen

Industry screen

Company screen

Strategy?

Debt levels?

Cash flow?

Margins?

exclusions

Market Cap Filter

Dividend filter

Economic screen

Industry screen

Company screen

Filtered out companies with

risks to future dividends

Source: Bloomberg & I-Net

Market Cap Filter

Dividend filter

Economic screen

Industry screen

Company screen

Yield screen

Market Cap Filter

Dividend filter

Economic screen

Industry screen

Company screen

Yield screen

Yield: 0.3%

PE: 100

Yield: 1.8%

Yield: 1.9%

exclusions

Market Cap Filter

Dividend filter

Economic screen

Industry screen

Company screen

Yield screen

South Africa: 15 companies

International: 21 companies

Local Equities Dividend Growth

FNB 28%

British American Tobacco 26%

Mr Price 26%

Nedbank 18%

Bidvest 16%

AVI 15%

Clicks 13%

MMI 12%

Life Healthcare 12%

Standard Bank 11%

Spar 11%

Liberty 9%

Tiger Brands 9%

Nampak 9%

Vodacom -5%

Average: 14%

Source: I-Net & Company Financials

International Equities Dividend Growth Allianz 17.8%

Spectra Energy 12.8%

General Electric 12.7%

General Mills 11.6%

Diageo 9.1%

Coca Cola 8.9%

Philip Morris International 8.4%

Pfizer 8.2%

Reynolds American 8.1%

Vodafone 7.9%

IMI PLC 7.8%

Procter & Gamble 7.0%

Johnson & Johnson 6.1%

Unilever 6.0%

Kelloggs 5.6%

British American Tobacco 5.2%

McDonald's 5.1%

Nestle 4.9%

Verizon 3.4%

HSBC 2.1%

Sanofi-Aventis 1.1%

Average: 8%

Source: Bloomberg

Source: National sources; McKinsey Global Institute

3.5

3.1

0

1

2

3

4

5

6

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Marriott Offshore Equities – Weighted Average Yield

(16 Companies with a 20 year track record)

Weighted Average Equity Yield JSE All Share Index

Feeder

Funds International

Funds

International

Investment

Portfolio

Source: Bloomberg & I-Net

Hybrid Real

Estate

Fund

Local

Equity 35%

Offshore

Equity 25%

Floating

rate

instruments

40%

Balanced Fund

Local Equity

15%

Offshore

Equity 60%

Offshore

REITS 10%

Floating rate

instruments

15%

Worldwide Fund

Market Cap Filter

Dividend filter

Economic screen

Industry screen

Company screen

Yield screen

South Africa: 15 companies

International: 21 companies

Umbrella Solution

• Why the Umbrella Solution? – Designed with retirement reform in mind

– Guided by independent, non executive trustees

– Low costs – 1% all in fee including administration costs

Why the Umbrella Solution?

• Low costs

• No Marriott initial fee

• All in fee of 1% per annum

– Includes administration as well as operating costs of the fund such as audit

– Includes asset management

– No performance fees

• Fees for advisors will be as agreed between the employer

and advisor – Marriott will facilitate the payment which can

be: – Asset based

– Contribution based

12.0%

15.0%

18.5%

22.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

1% 2% 3% 4%

Pe

rce

nta

ge s

avin

g ra

te

All in Fee

Savings rate needed to achieve a 70% replacement income upon retirement

Assumptions: Term 40 years Portfolio Return = Inflation + 5% Guaranteed Inflation Linked Annuity Rate = 6.5%

• 1% all in cost

54% increase in savings rate

Why the Umbrella Solution?

Impact of costs on different salary bands • Contribution Rate = 10%

• Expected Return = 12%

• Annual Fee = 1.14%

• Average annual fee over 10 years:

Why the Umbrella Solution?

No fixed monthly fee:

R40 fixed monthly fee:

Umbrella Solution

• Why the Umbrella Solution? – Designed with retirement reform in mind

– Guided by independent, non executive trustees

– Low costs – 1% all in fee including administration costs

– Annuity for life – seamless transfer to Marriott’s Living Annuity

– Simple Offering – only 3 investment portfolios

Investment Choice

Yield = 3.5%

Growth in income = 8.0% after fees

Investment Choice

Local

Equities

International

Equities

Yield = 4.0%

Growth in income = 6.0% after fees

Investment Choice

International

Equities

Local

Equities

Yield = 5.0%

Growth in income = 2.0% after fees

Investment Choice

Local

Equities

International

Equities

Date High Equity

Portfolio Inflation (CPI) Real Return

1 Year 24.4% 5.1% 19.3%

3 Years 18.7% 5.4% 13.3%

5 Years 16.2% 5.1% 11.1%

7 Years 13.3% 5.7% 7.6%

10 Years 14.2% 5.9% 8.3%

Investment track record

Source: Profile Data – The track record of the high equity portfolio has been calculated using Marriott’s underlying portfolios

Date Balanced Fund

of Funds Inflation (CPI) Real Return

1 Year 16.8% 5.1% 11.7%

3 Years 15.3% 5.4% 9.9%

5 Years 12.9% 5.1% 7.8%

7 Years 11.1% 5.7% 5.4%

10 Years 13.1% 5.9% 7.2%

Investment track record

Note: Marriott Balanced Fund of Funds has been used as a proxy for the returns of the Umbrella Balanced Portfolio.

Date Low Equity

Portfolio Inflation (CPI) Real Return

1 Year 11.7% 5.1% 6.6%

3 Years 10.3% 5.4% 4.9%

5 Years 9.6% 5.1% 4.5%

7 Years 9.0% 5.7% 3.3%

10 Years 10.3% 5.9% 4.4%

Investment track record

Source: Profile Data – The track record of the low equity portfolio has been calculated using Marriott’s underlying portfolios

Umbrella Solution

• Why the Umbrella Solution? – Designed with retirement reform in mind

– Guided by independent, non executive trustees

– Low costs – 1% all in fee including administration costs

– Annuity for life – seamless transfer to Marriott’s Living Annuity

– Simple Offering – only 3 investment portfolios

– Income focused investing ensures more certainty to

the Salary Replacement Ratio

Why the Umbrella Solution?

Monthly income earned:

R 173,000 in year 25

Value in today's terms:

(Ave inflation 6%) R40,300

Salary Replacement Ratio:

76%

Monthly income earned: R 173,000 in year 25

Value in today's terms: (Ave inflation 6%) R40,300

Salary Replacement Ratio: 76%

Conclusion: Umbrella Solution

• Low cost– 1% all in fee including administration costs

• Simple Offering – only 3 investment portfolios

• With a meaningful and accurate Salary Replacement

Ratio

The content of this presentation is for general information purposes only and is not intended to serve as financial, investment or any other type of advice. It has been

prepared solely for informational purposes and is not an offer to buy or sell or solicitation of an offer to buy or sell any product offered by Marriott. The information

contained herein shall not be deemed accurate or current except as of the date of issue. Marriott does not intend to and disclaims any duty to update or correct such

information. Any reliance on the information contained herein is at the user's own risk.

Furthermore, this presentation may contain certain forward-looking statements and forward-looking views, which involve both known and unknown risks, assumptions,

uncertainties and other important factors that could materially influence the actual performance. No assurance can be given that these will prove to be correct and no

representation or warranty express or implied is given as to the accuracy or completeness of such views or as to any of the other information in this presentation and

financial condition, and plans and expectations. Future results may differ materially from past or current results, and actual results may differ materially from those

projected in the forward-looking statements.

Marriott will not be responsible for any loss or damage howsoever arising of any nature, including consequential loss or damage suffered or incurred, directly or

indirectly, pursuant to or as a result of the use of, or any reliance on, this presentation or the information contained herein.

You are hereby deemed to have agreed that any dispute of whatsoever nature relating to or arising out of any use of this presentation, whether directly or indirectly,

shall be governed by the laws of the Republic of South Africa, and shall be subject to the exclusive jurisdiction of the courts of the Republic of South Africa.

You are further hereby deemed to have acknowledged that you have read and understood this disclaimer and agree to be bound by these terms and conditions. Use of

this presentation indicates acceptance of these terms and conditions.

Licensed Financial Services Provider