Fundamentals - July 2007 - Old Mutual

FUNDAMENTALS
INVESTMENT PERSPECTIVES FOR INSTITUTIONAL INVESTORS
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Contents
ECONOMIC & MARKETS UPDATE
1 Global economy
2 Local economy
2 Global asset allocation
3 Local asset allocation
4 Fixed income
5 Market and economic indicators
INSIGHTS
6 SA private equity in the spotlight
SECOND QUARTER 2007
PERFORMANCE THROUGH FOCUS
Mark Gevers
Head: Private Equity
INSIDE OMIGSA
8 New private equity fund on the way
10 Performance overview – 2nd quarter 2007
“Our second multi-manager private
equity fund will provide even greater
diversification than the first fund.”
See page 8.
www.omigsa.com

ECONOMIC & MARKETS UPDATE
Commentary for the period ending 30 JUNE 2007.
GLOBAL ECONOMY
OMIGSA view
While downside risks to the US economy have not disappeared, latest data supports our long
held view that a recession is unlikely in the world’s biggest economy. Global interest rate risks
remain skewed to the upside as growth remains generally strong and underlying inflation risks
have risen. However, we still think it unlikely that policy makers will tighten policy so aggressively
as to risk a serious global downturn in 2008.
- Concerns about the health of the US economy eased over the past three months as incoming data
pointed to a notably better growth performance in the second quarter from the very slow 0.7% annualised
growth in the first.
- However, all forms of housing activity remain extremely weak. While this has had little discernable
impact on the rest of the economy, it remains a risk to the US growth outlook.
- US inflation has remained tame, with the closely watched CPI (excluding food and energy) easing from
2.9% in September 2006 to 2.3% in May 2007. However, with the labour market tight, capacity utilisation
at an industry high and commodity prices still lofty, inflation risks remain.
- With the economy rebounding recently and inflation risks still elevated, the US Fed continues to regard
upside inflation risks as greater than downside growth risks. The Fed is unlikely to ease rates unless
inflation drops further and/or the economy slows unexpectedly.
- The rest of the world continues to grow strongly, with emerging Asia and the Euro-area still leading
US: Growth rebounds & inflation eases
120.0
Industrial production
Core inflation
5
115.0
4
110.0
3
105.0
2
99.5
1
Index
95.0
99 01 03 05 07
99 01 03 05 07
0
Old Mutual Investment Group
1 Fundamentals - July 2007

the charge and growth forecasts still being revised upwards. With inflation risks high in these areas
too, a number of central banks have tightened policy further, and concerns have mounted that rates may
have to rise further than expected.
LOCAL ECONOMY
CONTINUED
OMIGSA view
Chances of a further rate hike at the Monetary Policy Committee meeting in August remain high.
While data and event flow will likely determine what happens thereafter, we remain confident that
rates will not rise further. However, rates are unlikely to be lowered anytime soon.
- Strong growth, sustained worries over the large current account deficit and upside surprises to inflation
dominated the local scene over the past three months. As a result, the SA Reserve Bank (SARB) was
left with no option but to raise rates again in June, after leaving rates unchanged at the previous two
meetings.
- Data released by the Reserve Bank over the past quarter confirmed that while production growth in the
economy slowed during the first quarter, consumer and investment spending growth remained buoyant
– the former still growing at an real annual rate of over 7% and the latter by over 15%. As a result,
the deficit on the current account remained large at 7% of GDP.
- More importantly, inflation unexpectedly breached the 6% upper limit of the inflation target range and
looks set to only return to inside the range later this year. To make matters worse, wage demands have
increased sharply and inflation expectations are probably doing so too.
- Risks to local interest rates therefore remain firmly to the upside. While there were some signs of a
moderate slowdown in consumer spending during the second quarter, inflation risks are now of paramount
importance to the central bank.
- Early indicators for the second quarter point to a welcome slowdown in consumer spending growth.
Car sales, typically the most interest rate-sensitive component of consumer spending, have declined
sharply and there were also tentative signs of a slowdown in consumer credit demand, even before the
National Credit Act took effect.
Spending boom & large foreign trade deficit
30
Investment spending growth
Consumer spending growth
Current account balance
10
20
5
0
0
-5
-20
-30
81 86 91 96 01 06
% of GDP
81 86 91 96 01 06
-10
GLOBAL ASSET ALLOCATION
OMIGSA view
Global growth is likely to remain strong for the rest of the year, supporting earnings. Valuations
are not stretched and we are positive on equities over the medium term. We favour emerging
markets over developed markets. Despite bonds offering better value after the recent correction,
we believe that globally bonds have entered a long-term secular bear market. As long-term
investors, we therefore hold no global bonds.
Old Mutual Investment Group
2
Fundamentals - July 2007

CONTINUED
- For local investors, the only asset classes that delivered positive returns in June were emerging market
equities and SA cash.
- This reinforced the dichotomy between developed market equities (up 3.2% in rands for the quarter)
and emerging market equities (up 11.3% in rands for the quarter).
- After a good start to the quarter, the US S&P 500 Index experienced some volatility, ending the threemonth
period up 6.3% in dollars but falling 1.8% during June. This was on the back of further shakeups
in the US sub-prime housing market as investors wait to see whether this will spill over into other
markets.
- The rand strengthened against most currencies during the quarter, dampening rand-based returns of
offshore investments.
- Globally, government bond yields rose sharply this quarter before partially retracing. For the period,
global government bonds were down 1.7% in dollars.
- The meltdown in the US sub-prime housing market claimed its first victims, with two hedge funds from
Bear Stearns collapsing dramatically and needing to be bailed out. This put pressure on the financial
sector. However, the fallout from this has not yet spilled over into emerging market spreads and growth
assets.
- Internationally, real estate was heavily affected by the increase in bond yields and ended the quarter
down 6.7% in dollars according to the MSCI World Real Estate index.
Emerging markets relative to world markets
0.2600
0.2500
0.2250
0.2000
0.1800
0.1600
0.2600
0.2500
0.2250
0.2000
0.1800
0.1600
0.1400
0.1400
0.1200
0.1200
0.0967
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
0.0967
LOCAL ASSET ALLOCATION
OMIGSA view
Thus far, we have seen SA equities perform in line with our base case – lower returns than last
year but still positive and volatile. We remain positive on SA equities and are finding increased
value after the recent correction. We are, however, taking action to reduce exposure to volatility
in the asset class. We remain negative on SA bonds over the short-term, despite the recent pull
back in yields. We find the short end of the curve more attractive from a risk-return perspective.
We prefer property to bonds for the purposes of gaining duration, as well as from a long-term
fundamental perspective.
- After a promising start to the quarter, equity markets were volatile and lost ground in June; pulled down
by divergent sectoral performance.
- Rising interest rates put interest rate-sensitive stocks under pressure, with general retailers down 6.7%
and banks 6.9% lower.
- Resources were 6.8% up for the quarter. But this rally was concentrated and mainly a result of a 20%
rise in BHP Billiton during the quarter.
- Notwithstanding a jittery market during the quarter, the local bourse did deliver another positive return,
with the ALSI up 4.3% and the SWIX up 2.6% for the period.
Old Mutual Investment Group
3 Fundamentals - July 2007

- Bonds retreated further, making June the third worst month for the All Bond Index since December 2001.
The index was down 2.1% in June and 1.7% for the quarter.
- SA listed property, while giving up more ground than bonds in June, ended the quarter still slightly
positive at 0.3%.
- Thus far, an investor would rather have been in SA listed property than local bonds this year, with the
All Bond Index moving sideways year-to-date and listed property delivering a healthy 16.1%.
CONTINUED
FIXED INCOME
OMIGSA view
The more negative inflation outlook exposed the grossly overvalued long end of the bond curve.
Although we were surprised by the extent of the April inflation spike, we have always maintained
that the 12+ maturity band of the bond curve is expensive, hence the large underweight tilt to
this sector. The caution paid off, although it could be argued that yield curve normalisation had
been relatively limited. Twelve-month NCDs offer very good value on a risk-adjusted basis. In the
bond market, we will maintain our defensive position for now, but will be on the lookout for
opportunities to reduce the underweight tilt.
Bond yields retraced in reaction to negative inflation news
%
10
3-Month rate
R196
31-Mar-07
30-Jun-07
9
R153
R157
R186
8
R209
7
- 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
Term to maturity
- Global bond yields rose in reaction to sticky inflation and the realisation that interest rates are likely
to stay higher for longer.
- Local April inflation data printed worse-than-expected, while a number of developments raised concerns
about the inflation outlook.
- The central bank reacted by raising the repo rate by 50 basis points (bps).
- The yield curve was forced upwards, causing bonds to underperform cash by a significant margin.
- The market has priced another 50 bps increase in the repo rate.
- Twelve-month NCDs are still trading at relatively attractive levels, although we expect limited upward
pressure in the short-term.
- The correction in the bond market is well advanced and short- and medium-dated bonds are starting
to offer some value.
- However, further yield curve normalisation remains a risk considering uncertainty regarding the mediumterm
inflation outlook, which implies potential underperformance by ultra long dated bonds (12+ maturity
band of the All Bond Index).
- An improved inflation outlook and/or further policy tightening may lure bulls back.
Old Mutual Investment Group
4
Fundamentals - July 2007

MARKET
AS AT 30 JUNE 2007 DY% PE RATIO 1 MONTH %* 12 MONTH %*
FTSE/JSE All Share Index 2.2 15.9 -1.0 36.9
FTSE/JSE Resources Index 2.0 16.5 0.8 29.5
FTSE/JSE Industrial Index 2.0 15.6 -1.3 48.9
FTSE/JSE Financial Index 3.5 13.1 -4.0 33.1
FTSE/JSE SA Quoted Property Index 6.2 16.2 -3.4 51.0
ALBI BEASSA Bond Index -2.1 7.7
STEFI Money Market Index 0.7 8.3
MSCI World Index (R) -1.6 22.8
MSCI World Index ($) -0.7 24.2
* TOTAL RETURN INDEX PERCENTAGE CHANGE
ECONOMIC INDICATORS
LATEST DATA
PREVIOUS YEAR
EXCHANGE RATES:
Rand/USD June - 07 7.04 7.15
Rand/UK Pound June - 07 14.12 13.22
Rand/Euro June - 07 9.53 9.09
Rand/Aus$ June - 07 6.01 5.31
COMMODITY PRICES:
Gold Price ($) June - 07 649.65 614.25
Gold Price (R) June - 07 4 590.12 4 382.84
Oil Price ($) June - 07 71.80 72.85
INTEREST RATES
Prime Overdraft June - 07 13.00% 11.00%
BA Rate June - 07 9.54% 7.40%
R157 Long-bond Yield June - 07 8.49% 8.65%
INFLATION:
CPI (y-o-y) May - 07 6.9% 3.9%
CPIX (y-o-y) May - 07 6.4% 4.1%
REAL ECONOMY:
GDP Growth (y-o-y) Q1 - 07 5.1% 5.0%
HCE Growth (y-o-y) Q1 - 07 7.7% 6.5%
(Household Consumption Expenditure)
GFCF Growth (y-o-y) Q1 - 07 16.2% 11.4%
(Gross Fixed Capital Formation)
Manufacturing Production (y-o-y) May - 07 6.6% 5.5%
(Seasonally adjusted)
BALANCE OF PAYMENTS:
Trade Balance (cumulative12 month) May - 07 - $9.1bn - $5.7bn
Current Account (% of GDP) Q1 - 07 -7.0% -6.4%
Forex Reserves (incl. gold) June - 07 $27.8bn $24.7bn
(All information relates to month end.)
Old Mutual Investment Group
5
Fundamentals - July 2007

SA private equity in
the spotlight
INSIGHTS
Mark Gevers
Head: Private Equity
In what has been a spectacular growth year for the local private equity industry, investors poured
some R14 billion into private equity funds in 2006, pushing funds under management in the
sector up by an impressive 32% to R56.2 billion, according to the latest South African Venture
Capital (SAVCA) Industry Review.
OMIGSA’s Alternative Assets division has played a significant role in this growth. As one of the country’s
leading funders of private equity and infrastructure transactions, it can boast a combined portfolio of
investments valued at over R9 billion (as at 31 December, 2006). The division participated in some of the
largest and highest-profile deals of the last 12 months.
A handful of high-profile transactions have captured the media headlines, including the likes of Peermont
Global, Primedia, Brandcorp, Edcon and Consol. However, industry activity has been far broader than this,
with approximately R6 billion invested across 803 different transactions, excluding these big deals, SAVCA
reports. Almost 80% of the investment (R3.4 billion) was into black-owned and controlled companies,
continuing the dominance of black economic empowerment (BEE) transactions in the sector.
Two important developments have helped to smooth the way for the excellent growth in the asset class:
new amendments to capital gains tax and the unveiling of the Department of Trade and Industry (DTI)’s
BEE Codes of Good Practice. Announced by Finance Minister Trevor Manuel in his February 2007 Budget
speech, the capital gains tax changes have provided clarity on the taxation of private equity realisation
gains, while the new BEE Codes have introduced specific requirements for companies that should help
to further underpin the important role of private equity in financing BEE transactions.
The local asset class remains very popular with international investors, as about 75% of the funds raised
last year came from offshore, according to KPMG. Offshore investors are attracted to South African
companies’ relatively high earnings growth prospects combined with their relatively low gearing.
Although trustees of local institutions generally remain wary of investing in private equity – largely due
to a lack of reliable performance data, worries over illiquidity and a lack of understanding – a recent
paper has shed some light on the topic. A study examining the suitability of private equity as an investment
for South African pension funds (by I. Missankov, R. van Dyk, A. van Biljon, M. Hayes and W. van der
Veen), presented at the Convention of the Actuarial Society of South Africa in October 2006, was generally
favourable, concluding that there are certain benefits for pension funds that invest in private equity.
Research on a sample set of 11 local private equity funds over a 13-year period found that they delivered
a performance premium of 18% per annum (before costs) relative to the FTSE-JSE Africa All Share Index,
while providing a low correlation to the performance of conventional asset classes. The private equity
funds’ risk-adjusted performance was also good relative to other asset classes over the period.
In terms of asset allocation, it found that if pension funds allocate up to 10% of assets to private equity
Old Mutual Investment Group
6 Fundamentals - July 2007

it improves the efficiency of a portfolio and contributes to meeting real return investment objectives.
However, the regulatory maximum is currently 5% - consistent with international practice.
Looking ahead, industry experts agree that competition for private equity deals will heat up even further,
given the keen interest being demonstrated by foreign private equity players like Blackstone Capital and
Kohlberg Kravis Roberts (KKR). According to the latest SAVCA and Deloitte survey of private
equity confidence, sentiment remains very positive regarding future industry activity.
Old Mutual Investment Group
7 Fundamentals - July 2007

New private equity
fund on the way
Mark Gevers
Head: Private Equity
INSIDE OMIGSA
Following on the heels of the remarkable success of the first Old Mutual Multi-Manager Private
Equity Fund, OMIGSA’s Alternative Investments boutique is readying itself for the launch of its
second multi-manager private equity fund, “Old Mutual Multi-Manager Private Equity Fund 2”.
With the first fund closed to new investors, Fund 2 will offer the same structural advantages as
its predecessor, but aims to provide an even greater diversification of fund managers, as well
as unique exposure to the attractive international private equity space.
FIRST FUND WOWS ITS INVESTORS
The exceptional performance of our first multi-manager fund during the 13 months since inception has
certainly paved the way for the success of this second fund, and helps to prove that the benefits of
diversification can be achieved if invested with the right fund managers.
As shown in the graph, the fund has recorded an
annualised net return (after tax and performance
fees) of between 54.1% and 68% since May 2006,
depending on the tax status of the investor. It
should be stressed that this performance measure
is conservative, since we consistently use the
discounted valuation methodology advocated by
the European Venture Capital Association (EVCA)
and endorsed by the South African Venture Capital
Association (SAVCA).
Old Mutual Multi-Manager Private Equity Fund 1
The first Multi-Manager Fund is invested across
three different funds managed by some of South
Africa’s most experienced private equity managers
– OMIGSA Private Equity Fund 1 (comprising about
40% of the fund), Ethos Private Equity Fund V (with
a target 30% weighting) and Brait Private Equity
Fund IV (also targeted at 30%). While OMIGSA’s Source: OMIGSA
fund features several underlying investments that
are relatively mature, both Ethos and Brait have been actively building up their investments over the
period.
A significant driver of the excellent performance to date in the first fund has been the fact that the
underlying investments have delivered strong returns from day one. These include stakes in Pepkor, one
of South Africa’s largest retail chains, Foodcorp and Life Healthcare, all of which have recorded strong
operational performances. These mature investments have helped to mitigate the “J-Curve” effect on
cash returns common in private equity funds, in which cash returns are typically negative or low in the
short-term.
Old Mutual Investment Group
8 Fundamentals - July 2007

CONTINUED
Old Mutual’s Multi-Manager Private Equity Fund 1 has also benefited from new investments by the
underlying Ethos Private Equity Fund V in such companies as: Plumblink, a leading plumbing and sanitaryware
merchant; retailer Moresport, which owns Sportsman’s Warehouse and Outdoor Warehouse; Kanderlane,
dominant in the independent deployment of ATMs; and delisted financial services broker Alexander Forbes.
Meanwhile, Brait Private Equity Fund IV has more recently participated in the buyout and delisting of
Consol Glass, and acquired Nature’s Choice Holdings, a food wholesaling and logistics group. Both the
Ethos and Brait funds are on four- to five-year active investment programmes that will see them buying
up stakes in targeted, unlisted companies, all of which are expected to contribute “alpha” (above marketrelated
returns) to the Old Mutual Multi-Manager Fund in the coming years, while also adding further
diversification benefits.
With each of the Ethos and Brait funds closed to new investors, our Multi-Manager Private Equity Fund
2 will now offer the only way for investors to gain access to the exciting potential of these, as well as
other, underlying funds.
NEW FUND OFFERS SIMILAR ADVANTAGES
The new fund will enjoy the same structural advantages as its predecessor, helping to overcome some
of the traditional drawbacks of private equity investing such as illiquidity.
Thanks to its life wrapper structure on the Fairbairn platform, it offers tax advantages, while also providing
investors with a leveraged facility in that their funds may be geared on a one-to-one basis.
OMIGSA also provides a liquidity facility, allowing participants to sell their investment in the fund on a
quarterly basis at a 5% discount to valuation. However, by its nature private equity is a long-term investment,
and we encourage people to invest on that basis. After all, the real returns in private equity are unlocked
when the underlying investments are sold, typically after at least a five year holding period.
UNIQUE AMONG SA PRIVATE EQUITY FUNDS
An exciting new feature of the second fund is that it will invest in an even more diverse array of underlying
fund managers and unlisted investments. These will include OMIGSA Private Equity Funds 1 and 2, Brait
Fund IV and Ethos Fund V, as well as the Lereko Metier Fund 1.
To provide a small indication of their holdings, OMGISA Fund 2 already holds a stake in Oceanic Bank, a
fast-growing Nigerian commercial bank, and the Lereko Metier Fund 1 has invested in IT company Datapro.
To these we also expect to add between one to three more funds, of which at least one is likely to offer
exposure to the rapidly growing international private equity market, an exciting prospect for local investors.
With each of these funds holding between six and 10 private equity investments, investors in our Multi-
Manager Fund 2 will ultimately have exposure to more than 50 different investments, including some
offshore, creating an exceptionally diverse portfolio and one that will be unique in the South African
private equity space.
Even better news is that both minimum investment levels and costs will remain low. As with its predecessor,
we are endeavouring to charge the lowest management and performance fees of any private equity multimanaged
fund in the country.
At the same time, the minimum required investment will be small enough to allow smaller institutions
and sophisticated retail investors access to the diversification and return benefits of the asset class usually
reserved for larger institutions. With such attractive features, we are very optimistic about the prospects
for the new fund - both in terms of its performance and take-up by investors.
Old Mutual Investment Group
9 Fundamentals - July 2007

Performance overview –
2nd quarter 2007
Thabo Dloti
Chief Executive Officer
INSIDE OMIGSA
The JSE reached a new high of 29 510 on 20 June, but this came at the price of increased volatility
for the period under review to end-June. During the first six months of the year, the total return
of the FTSE /JSE All Share Index was 15.1%. This compares with an 18.8% return recorded for
the first six months of last year. The index continued to climb in early July, reaching yet another
historic high. As many market commentators forecast, it seems that the local market is heading
for lower nominal returns this year. Nonetheless, the ALSI still ended the quarter 4.3% higher
despite some volatility
However, analysts have
commented that the
nature of these returns has
changed. In the past, the
rise in the market was
fairly broad-based across
most sectors. But much of
the ALSI’s performance
during the second quarter
can be attributed to the
resource (6.8%) and
industrial (5.6%) sectors.
The interest rate-sensitive
sectors have been looking
a bit anaemic, as a result
of resurgent inflationary
pressures and rising
interest rates. The General
30,000
29,000
28,000
27,000
26,000
25,000
24,000
23,000
22,000
21,000
JSE All Share (Capital Only)
(30 June 2006 to 29 June 2007)
20,000
Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07
Retailers sector declined 6.7% during the second quarter of this year, while Financials fell 1.7%. Banks
slipped 6.9% during this period.
On the whole, the outlook for shares remains positive based on still sound fundamentals – but further
volatility is expected for the remainder of the year.
INSTITUTIONAL PERFORMANCE REMAINS STRONG
Old Mutual Investment Group SA’s (OMIGSA) Macro Strategy Investments boutique has also demonstrated
its ability to deliver top performance across the risk spectrum in the institutional space.
This boutique has a proven track record of delivering consistent outperformance through its active asset
allocation and continues to shine in the Alexander Forbes Global Manager Watch (Large) survey for the
period to end-June this year.
In this moderate risk category, the segregated funds managed by this boutique ranked among the top three
over one, three and five years (see graph on page 11).
Old Mutual Investment Group
10 Fundamentals - July 2007

OMIGSA Macro Strategy Investments vs.
AF Global Manager Watch (Large) - Returns to 30.06.07
12 Months
3 Years
5 Years
Investec
38.0%
Allan Gray
36.4%
Allan Gray
26.9%
OMIGSA
34.3%
OMIGSA
35.7%
Oasis
24.4%
Oasis
34.0%
Prudential
35.2%
OMIGSA
24.0%
Allan Gray
33.9%
Investec
34.8%
Prudential
23.5%
RMBAM
32.8%
Coronation
34.8%
RMBAM
23.3%
Prudential
31.6%
Oasis
34.2%
Cadiz Af rican Harvest
23.2%
Coronation
31.5%
Cadiz African Harvest
33.9%
Coronation
23.1%
Sanlam
31.4%
RMBAM
33.3%
Investec
23.0%
Stanlib
30.4%
Sanlam
33.3%
Sanlam
22.0%
Metropolitan
29.8%
Stanlib
33.0%
Metropolitan
21.3%
Cadiz African Harvest
29.8%
Metropolitan
32.9%
Stanlib
20.7%
0% 10% 20% 30% 40% 50%
Source: Alexander Forbes Asset Consultants
0% 10% 20% 30% 40% 50%
0% 10% 20% 30% 40%
Macro Strategy Investments has also demonstrated its ability to deliver exceptional performance in the
conservative fund space with its Profile Stable Growth Fund ranked second in the Alexander Forbes Global
Manager Watch (Conservative) survey over the one year period to end-June 2007. This fund does not yet
have a three year track record within the survey. In addition, Macro Strategy Investments has a more
conservative offering in this space with Profile Capital, which is targeted at beating cash returns.
The more aggressively positioned Profile Pinnacle Fund is ranked in the top two over three years and is
the top performing fund over both one and five years in the Alexander Forbes Global Manager Watch
(Dynamic) survey.
Profile Pinnacle Fund vs AF Global Manager Watch
(Dynamic) - Returns to 30.06.07
12 Months
3 Years
5 Years
OMIGSA
(Pinnacle)
34.1%
Coronation
36.4%
OMIGSA
(Pinnacle)
25.0%
Momentum
32.3%
Coronation
31.1%
OMIGSA
(Pinnacle)
35.6%
Coronation
23.9%
Stanlib
31.0%
Stanlib
35.2%
RMBAM
22.8%
RMBAM
30.6%
SY mmETRY
34.1%
Stanlib
22.7%
IS
30.5%
Allan Gray
29.4%
Momentum
33.1%
SY mmETRY
22.7%
Metropolitan
29.3%
RMBAM
32.4%
SMM 70
22.2%
SMM 70
28.9%
Metropolitan
32.3%
Momentum
21.4%
SYmmETRY
28.1%
Investec
27.0%
SMM 70
32.0%
Metropolitan
20.5%
0% 10% 20% 30% 40% 50%
Source: Alexander Forbes Asset Consultants
0% 10% 20% 30% 40% 50%
0% 10% 20% 30% 40%
Old Mutual Investment Group
11 Fundamentals - July 2007

Consistent outperformance is what matters to the long-term investor and Macro Strategy Investments has
proven that it can deliver attractive returns, whatever the investor’s risk preference.
RETAIL PERFORMANCE - WHETHER YOU LIKE IT MILD, MEDIUM OR HOT
A number of unit trust funds managed by OMIGSA are top quartile performers in their respective Association
of Collective Investments (ACI) categories over various periods ended 30 June 2007. These funds range
across the risk spectrum, providing clients with a choice of top performing funds whether they like their
investments mild, medium or hot.
CONTINUED
Local fund returns - 3 Years to 30 June 2007
The graph displays annualised returns for all local Old Mutual unit trust funds over three years (where the fund has
been in existence for a minimum of three years). Nominal returns have been impressive across the board, with equity
funds leading the performance ranking due to the bull market.
MILD (RISK RATINGS 1 & 2)
Our “mild” category includes risk ratings 1 and 2, based on Old Mutual’s rating scale of 1 to 5. These funds
are aimed at investors seeking capital protection, a regular income stream or some (but not primarily)
capital growth. The funds are often popular with older investors, in or nearing retirement.
The Old Mutual Income Fund (risk rating 1) is ranked second in its category over both two- and three-year
periods. It aims to pay out a high regular income without putting the investor's money at undue risk. This
fund has delivered a return of 8.3% per year over a three-year period.
The Old Mutual Enhanced Income and Real Income funds (both risk rating 2) are aimed at the more
aggressive income investor and include limited exposure to riskier assets, such as property or equities.
These funds fall into the Fixed Income Varied Specialist category and may therefore not be ranked against
other unit trust funds in this sector. They have exceeded their respective benchmarks over the one-year
period and have delivered in excess of money market returns for those income investors who were willing
to accept higher risk. The Enhanced Income Fund and the Real Income Fund have delivered one-year returns
of 11.7% and 12.1% respectively.
The Galaxy Defensive Fund of Funds (also risk rating 2) has proved popular with more conservative
investors who still want to achieve inflation-beating long term growth. It is easy to see why – as
this fund is ranked among the top three funds in its sector over one, two, three and five years for
the period ended 30 June 2007.
Old Mutual Investment Group
12
Fundamentals - July 2007

CONTINUED
MEDIUM (RISK RATING 3)
Our “medium” category is based on risk rating 3, within Old Mutual’s rating scale of 1 to 5. These funds
are aimed at investors seeking a moderate income stream and long-term capital growth. They tend to
offer investors access to multiple asset classes, and tend to be less volatile than equity-only funds.
The Old Mutual Balanced Fund (risk rating 3) invests across equities, bonds, property and cash with
a bias towards equities offering longer term value rather than those with more cyclical returns. As
this balanced portfolio offers exposure to all sectors of the market, it has a lower risk profile than
a pure equity fund. The Balanced Fund has been a top quartile performer over both one- and twoyear
periods ending 30 June 2007, delivering returns in excess of 32% a year over both these periods.
The Old Mutual Dynamic Floor Fund (risk rating 3) strives for long-term capital growth as well as
some level of capital protection. This fund uses a quantitative risk model to profit from a rising share
market and aims to protect against capital losses in a weak market. The fund invests across shares,
bonds and cash – moving from shares into fixed interest investments when the fund's value drops
below a predetermined “floor”. This fund falls into the ACI’s Absolute Targeted category and may
therefore not be ranked. However, this fund has far outstripped its benchmark of CPI +4% over one,
two- and three-year periods, delivering a return of 10.8% over the one-year period. It is notable that
this fund has outstripped its benchmark by an average of 6.8% a year since inception in November
2002, delivering a return of 14.5% a year.
HOT (RISK RATINGS 4 & 5)
Old Mutual offers a number of aggressive asset allocation and equity-only funds, which have a risk
rating of 4 or 5, that have delivered top performance for the period to end-June this year. These funds
aim for long-term capital growth and may be quite volatile in the short term.
The Old Mutual Flexible Fund (risk rating 4) is ranked first in its sector over three years and delivered
a return of 36.1% a year over this period. This fund achieves its performance objectives, firstly, by
actively moving between these asset classes to take advantage of changing economic and market
conditions and, secondly, through focused stock selection based on in-house research. The asset
manager is free to move between asset classes and the fund’s only asset allocation constraint is a
maximum offshore holding of 15%.
Two of the funds in the extensive Domestic Equity General sector have also achieved top quartile
rankings. The Old Mutual Growth Fund (risk rating 4) is a top quartile performer over both one- and
five years while the Old Mutual High Yield Opportunity Fund (risk rating 4) is a top performer over
both five- and seven years, but is currently closed to new investment. These funds delivered 44.6%
and 40.2% respectively over the one-year period.
For those who like it extra hot by playing a specific market sector, a number of Old Mutual’s specialist
equity funds have also fared exceptionally well. Refer to www.oldmutualunittrusts.co.za for more
detail on the performance of these funds.
A LITTLE INTERNATIONAL FLAVOUR
We are happy to report that a number of the unit trusts managed by Old Mutual Asset Managers
(UK) (OMAM UK) have also fared exceptionally well in their respective sectors. International exposure
helps in building a well-diversified portfolio. An offshore investment reduces portfolio risk through
geographic diversification, while also lowering emerging market and currency risk. It also provides
exposure to companies or industries not available locally.
One of the funds that has fared exceptionally well is the Old Mutual International Growth Fund of
Funds which is ranked in the top quartile of its sector over one, two, three, five and seven years (risk
rating 4, but please note risk rating does not take currency risk into account). This fund invests and
actively moves between a spread of international equity, bond and money market unit trusts. The
one-year return of this fund is 17.1% (in rand terms).
So whether your investment preference is mild, medium or hot, whether you prefer local flavour or
some foreign spice, you’ll find OMIGSA geared towards delivering excellent performance.
Old Mutual Investment Group
13 Fundamentals - July 2007

CONTACT US
Mike van Heerden
Senior Executive
Business Development (SA)
Tel: (021) 509-5082
mvheerden@omigsa.com
SOURCES
Standard & Poor’s Fund Services, Inet-Bridge and OMIGSA. Lump sum investments to the end of June 2007, distributions reinvested
and NAV-NAV prices used (i.e. initial charges excluded). Total expense ratio figures are annualised for 6 months to end June 2007. Unit
trusts are generally medium- to long-term investments. The value of your units may go down as well as up and past performance is no
indication of future growth. Fluctuations or movements in exchange rates may cause the value of underlying international investments
to go up or down. Unit trusts can engage in borrowing and scrip lending. The fund’s TER reflects the percentage of the average Net
Asset Value of the portfolio that was incurred as charges, levies and fees related to the management of the portfolio. During the phasein
period Total Expense Ratios do not include information gathered over a full year. A higher TER does not necessarily imply a poor
return, nor does a low TER imply a good return. The current TER cannot be regarded as an indication of future TERs. A schedule of fees
and charges and maximum commissions is available from the company/intermediary. The daily price is based on the current value of
the fund’s assets plus income (minus expenses) divided by the number of units in issue. Specialist equity funds may hold greater risk
as exposure limits to a single security may be higher. A fund of funds unit trust invests only in other collective investment schemes,
which may levy their own charges. A feeder fund portfolio is a portfolio that, apart from assets in liquid form, consists solely of units
in a single portfolio of a collective investment scheme. Certain funds may be capped to enable them to be managed in accordance with
their mandates.
FUND MANAGERS AND TOTAL EXPENSE RATIO
Fund TER Boutique Fund Manager
Old Mutual Income 0.86% Fixed Income Jennifer Sheehy
Old Mutual Enhanced Income 1.14% Fixed Income Wikus Furstenberg
Old Mutual Real Income 1.38% Macro Strategy Investments Peter Brooke
Galaxy Defensive Fund of Funds 1.68% SYmmETRY Multi-Manager Manager selection and
monitoring by SYmmETRY
Old Mutual Balanced Fund 1.34% Macro Strategy Investments Peter Brooke
Old Mutual Dynamic Floor Fund 1.70% Absolute Return Investments Garth Taljard
Old Mutual Flexible Fund 1.41% Macro Strategy Investments Peter Brooke
Old Mutual Growth Fund 1.15% Select Equity Investments Richard Hasson
Old Mutual High Yield Opportunity Fund 1.43% Value Investments Boutique Michael Schröder
Old Mutual International Growth Fund of Funds 2.69% OMAM UK* Tracy Lander
* Not part of the OMIGSA structure
Thabo Dloti
Chief Executive Officer
Tel: (021) 504-7375
tdloti@omigsa.com
Jerry Mnisi
Senior Executive
Business Development (SA)
Tel: (011) 217-1751
jmnisi@omigsa.com
Old Mutual Investment Group (South Africa) (Pty) Limited 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. Reg No 1993/003023/07
Old Mutual Investment Group is a wholly owned subsidiary of Old Mutual (South Africa Limited). The investment portfolios may be market-linked or policy based.
Investors’ rights and obligations are set out in the relevant contracts. 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. Information and opinions have been compiled or arrived at by Old Mutual Investment Group (South
Africa) (Pty) Limited - OMIGSA - from sources believed to be reliable, but OMIGSA does not accept liability for any loss arising from the use hereof nor makes
any representation as to their accuracy or completeness. Any underlying research or analysis has been procured by OMIGSA for its own purposes and may have
been acted on by OMIGSA or an associate for its or their own purposes. Old Mutual Investment Group (South Africa) (Pty) Limited , P.O. Box 878, Cape Town, 8000,
Mutualpark, Jan Smuts Drive, Pinelands, 7405.
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