momentum wealth investor guide

Transcription

1 momentum wealth investor guide wealth

2 contents 1. Welcome to Momentum Wealth 3 2. Investment series overview 7 3. Investment components Minimum investment amounts Bank details Monitoring your investment Making changes to your investment Business rules and practices Contact details 43

3 01 Welcome to Momentum Wealth

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5 Welcome to Momentum Wealth Thank you for partnering with us on your journey towards financial wellness. We undertake to honour your trust with remarkable service and inspired investment products. The purpose of this guide is to provide you with relevant information about your investment and to guide you through each aspect of managing your investment with us. It also contains information about our investment options and our business practices on our local investment platform. Momentum Wealth is one of the largest linked investment service providers (LISP) in South Africa, with combined assets under administration of more than R135 billion. We form part of MMI Group Limited, a division of MMI Holdings Limited, which was formed after the successful merger of Momentum and Metropolitan. We provide a diverse range of investments and retirement solutions with access to local and international investment markets to suit a variety of investor needs. This effectively positions us as the provider of choice for pre- and postretirement product solutions that meet your needs throughout the seasons of your life. Our offering includes solutions that cater for your capital growth, wealth preservation and income generating needs. Important: We strongly recommend that you read this guide in conjunction with our investment series brochure. Please also note that it is important to first seek expert advice from a licensed financial adviser before making any changes to your investment. wealth investor guide 2014 Page 5 of 44

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7 02 Investment series overview

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9 Investment series overview We offer a broad range of investment options to suit a variety of investor needs. Investments Retirement savings and income Momentum Trust investors Flexible Investment Option An accessible investment solution that allows you to save for a specific need and to generate a regular capital drawdown, if needed. Retirement Annuity Option A tax-efficient vehicle that allows you to save for retirement or supplement your existing retirement savings. Trust Flexible Investment Option Momentum Trust Limited investors can invest in a Trust Flexible Investment Option specifically tailored to meet their trust needs. Flexible Endowment Option A medium- to long-term investment with a minimum investment term of five years. During this time you have access to some of your capital through one interest-free loan and one withdrawal. An endowment has tax and estate planning benefits. Retirement Preservation Option For more information about our investment series, please speak to your financial adviser. Alternatively, please refer to the product brochures available at our website Trust Endowment Portfolio Momentum Trust Limited investors can invest in a Trust Endowment Portfolio that consists of a Trust Flexible Investment Option and five Trust Flexible Endowment Options. Flexible Investment Option An accessible investment solution that allows you to save for a specific need and to generate a regular capital drawdown, if needed. Retirement Annuity Option A tax-efficient vehicle that allows you to save for retirement or supplement your existing retirement savings. Flexible Tax-free Option This is a a tax-free savings product that encourages individual savings. In terms of the Taxation Laws Amendment Act, 2014, any amount received from a tax-free savings product, including all returns will be tax-free in the hands of the individual who owns it. wealth investor guide 2014 Page 9 of 44

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11 03 Investment components

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13 Investment components You can choose from a selection of local and international investment components, such as collective investment schemes, multi-manager portfolios (wrap funds), fund of funds, exchange traded funds (ETFs), alternative dealing funds (ADFs), direct top 40 shares and personal share portfolios (PSPs). Investment component minimum investment amounts Local collective investment schemes: R100 per investment component. International collective investment schemes: R per investment component. Important: For investment components, such as ADFs, international and PSPs, it can take longer for your investment instruction to be processed. These time delays vary depending on the investment component and the bank involved. 3.1 Collective investment schemes Collective investment schemes (or unit trusts) provide you with affordable access to experienced investment professionals who manage funds according to set investment mandates and varying risk profiles. With us, you have access to a wide range of local and international collective investment schemes. These also include money market funds, registered fund of funds (FoFs) and ETFs. We deal with money market funds and ETFs separately in this section. You can invest in collective investment schemes across all our investment products. How do you invest? You can make a lump-sum investment and/or regular investment to your investment. We calculate the value of your investment by multiplying the number of units bought by that day s unit price. Distributions (interest and dividends) are automatically reinvested into the same investment component. Depending on the investment component s rules, you can switch between components at any time. Important: The above minimums are subject to the minimum investment amounts shown in Section 4. Investment managers may have higher minimum investment amounts that must be adhered to. Fees and charges Unit price: This is the price at which you can buy or sell units in a collective investment scheme. This price is calculated daily on business days. *Management companies initial fee: This is a one-off fee applied by certain management companies when an investment is made. It is calculated as a percentage of the investment amount and is deducted before units are bought at that day s unit price. For more information, please speak to your financial adviser or read the relevant fund s fact sheet. Management companies ongoing management fee: This fee differs between collective investment schemes and companies. Management companies calculate this fee based on the value of the underlying assets in the scheme. They do this after deducting expenses and before distributing the investment returns to unit holders. **Platform administration fees: For a complete breakdown of the platform administration fees that may apply to your investment, please refer to our fee schedule at * A management company is a company that buys, sells and manages a portfolio of securities. The management company allows investors to pool their investment amounts with other investors and invest in professionally managed groups of diversified securities. ** A platform can be seen as a supermarket for investments. The platform itself is not an investment, but rather it brings together a number of different underlying investment options, in one location. wealth investor guide 2014 Page 13 of 44

14 3.2 Multi-manager portfolios (wrap funds) A multi-manager portfolio is a combination of different collective investment schemes held within a single investment portfolio. To efficiently manage the portfolio, an investment manager chooses a combination of underlying collective investment schemes to manage investors risk, investment returns, needs and goals. You can invest in multi-manager portfolios across all our investment products. Please note that for the Flexible Tax-free Option, you will not be able to invest in the multimanager portfolio if an underlying collective investment scheme has a performance-based fee. How do you invest? You can make a lump-sum investment and/or regular investment to your investment. We need a copy of the signed multi-manager portfolio mandate you have agreed to. A multi-manager portfolio is a portfolio of multiple investment components chosen by your discretionary investment manager. The different investment components are managed as one portfolio and the multi-manager portfolio aims to meet a specific investment need. We use the allocation percentages chosen by your discretionary investment manager to split your investment amount into the different investment components in the multi-manager portfolio. We calculate the value of your holding in each of the multi-manager portfolio investment components by multiplying the number of units bought by that day s unit price. Distributions (interest and dividends) are automatically reinvested into the investment component it is received from. Depending on the multi-manager portfolio mandate s terms and conditions, you can switch out of the portfolio. Investment component minimum investment amounts These minimums are set by the investment manager. Fees and charges Unit price: This is the price at which you can buy or sell units in a collective investment scheme. This price is calculated daily on business days. Management companies initial fee: This is a one-off fee applied by certain management companies when an investment is made. It is calculated as a percentage of the investment amount and is deducted before units are bought at that day s unit price. For more information, please speak to your financial adviser or read the relevant fund s fact sheet. Management companies ongoing management fee: This fee differs between collective investment schemes and companies. Management companies calculate this fee based on the value of the underlying assets in the scheme. They do this after deducting expenses and before distributing the investment returns to unit holders. Discretionary management fee: This fee is charged by your discretionary financial adviser for the management of the multi-manager portfolios. Platform administration fees: For a complete breakdown of the platform administration fees that may apply to your investment, please refer to our fee schedule at Exchange traded funds (ETFs) An ETF is a special type of collective investment scheme. It typically is a tracker fund that is listed on a stock exchange and trades like a share. A tracker fund or index fund (also known as a passive fund) is a collective investment scheme that is designed to track (mirror) the performance of a specific benchmark index, like the JSE All Share Index. The index used varies from bonds to equity, from resources to financials, and from local to international, depending on the specific ETF. You can invest in ETFs across all our investment products, except for the Flexible Tax-free Option. How do you invest? You can make a lump-sum investment and/or regular investment to your investment. If you are invested in an ETF, you must have a fee account. We will, therefore, automatically create a fee account for you. Page 14 of 44 wealth investor guide 2014

15 You must hold at least 2.5% of your investment in this fee account. If you do not have a fee account, or you do not tell us which investment component to use as part of your investment allocation, we will switch 2.5% from your investment component(s) to the default money market fund (currently, the Momentum Money Market Fund) to create a fee account for your fees. You can only buy or sell whole units. This may result in small cash amounts left after we have processed the transaction. We will pay these small cash amounts into your fee account. If we receive distributions for your investment in ETFs, we will also pay the distributions into your fee account. If you need a drawdown (income), your investment must allow for a drawdown account. We will, therefore, automatically create a drawdown account for you (if necessary). If you do not tell us which investment component(s) to use as part of your investment allocation, we can switch your yearly drawdown percentage or amount from your investment component(s) to the default money market fund (currently, the Momentum Money Market Fund) to create a drawdown account for your drawdowns. For more information about ETFs, please speak to your financial adviser, or refer to the terms of your Wealth investment product. Investment component minimum investment amounts A minimum of R5 000 is required for each ETF (after fees). Fees and charges Unit price: This is the price at which you can buy and sell units in an ETF. Management companies ongoing management fee: This fee differs between collective investment schemes and companies. Management companies calculate this fee based on the value of the underlying assets in the collective investment scheme. They do this after deducting expenses and before distributing the investment returns to unit holders. Platform administration fees: For a complete breakdown of the platform administration fees that may apply to your investment, please refer to our fee schedule at Direct Top 40 shares You can invest in the direct Top 40 shares across all our investment products, except for the Flexible Tax-free Option. You can actively take part in choosing the shares you would like to invest in. You can invest in ETFs across all our investment products, except for the Flexible Taxfree Option. How do you invest? You can make a lump-sum investment and/or regular investment to your investment. If you are invested in direct Top 40 shares, you must have a fee account. We will, therefore, automatically create a fee account for you. You must hold at least 2.5% of your investment in this fee account. If you do not have a fee account, or you do not tell us which investment component to use as part of your investment allocation, we will switch 2.5% from your investment component(s) to the default money market fund (currently, the Momentum Money Market Fund) to create a fee account for your fees. You can only buy or sell whole units. This may result in small cash amounts left after we have processed the transaction. We will pay these small cash amounts into your fee account. If we receive distributions for your investment in direct Top 40 shares, we will also pay the distributions into your fee account. If you need a drawdown (income), your investment must allow for a drawdown account. We will, therefore, automatically create a drawdown account for you (if necessary). If you do not tell us which investment component(s) to use as part of your investment allocation, we can switch your yearly drawdown percentage or amount from your investment component(s) to the default money market fund (currently, the Momentum Money Market Fund) to create a drawdown account for your drawdowns. For more information about direct Top 40 shares, please speak to your financial adviser, or refer to the terms of your Wealth investment product. wealth investor guide 2014 Page 15 of 44

16 Investment component minimum investment amounts A minimum of R5 000 is required for each share (after fees). Fees and charges Share price: This is the price at which you can buy and sell shares. We trade at the end of day closing prices on business days. Platform administration fees: For a complete breakdown of the fees that apply to your investment, please refer to our fee schedule at Momentum Personal Share Portfolio (PSP) The Momentum PSP is a tailored insurance-licensed portfolio made up of various securities such as equities, bonds and derivatives. It gives you access to a selection of South Africa s leading portfolio managers to help you choose a focused and flexible portfolio of suitable listed securities. Wealth Portfolio Management is our in-house PSP provider. You can benefit from faster processing and lower fees when you invest through Wealth Portfolio Management. With the Momentum PSP, you can decide if you want to participate in making investment decisions, ranging from full manager discretion to execution only. You can invest in a PSP across all our investment products, except for the Flexible Investment Option and the Flexible Tax-free Option. How do you invest? You can make a lump-sum investment to your investment. If you are invested in a PSP, you must have a fee account. We use this account to pay all adviser and administration fees. If you invest through Wealth Portfolio Management, the investment management fee is also paid from this account. We will, therefore, automatically create a fee account for you. You must hold at least 2.5% of your investment in this fee account. If you do not have a fee account, or you do not tell us which investment component to use as part of your investment allocation, we will switch 2.5% from your investment component(s) to the default money market fund (currently, the Momentum Money Market Fund) to create a fee account for your fees. If you need a drawdown (income), your investment must allow for a drawdown account. We will, therefore, automatically create a drawdown account for you (if necessary). If you do not tell us which investment component(s) to use as part of your investment allocation, we can switch your yearly drawdown percentage or amount from your investment component(s) to the default money market fund (currently, the Momentum Money Market Fund) to create a drawdown account for your drawdowns. Regulation 28 applies to PSP investments that form part of a Retirement Annuity Option or a Retirement Preservation Option. If your investment does not comply with Regulation 28 because of market or currency movements, we will ask you to change your portfolio so that it will comply. If you do not make this change in time, we will have to switch the non-compliant portion into a default money market fund (currently, the Momentum Money Market Fund), so that your investment portfolio will comply. You may switch the non-compliant portion from the default component into another investment component, provided that your overall investment portfolio complies. For more information about PSPs and Regulation 28, please speak to your financial adviser, or refer to the terms of your Wealth investment product. Investment component minimum investment amounts The minimum lump-sum investment amount is R (after fees). Wealth Portfolio Management has an investment minimum of R Other PSP providers have their own investment minimum. If their minimum is higher than ours, you must meet their minimum amount. Fees and charges Share price: This is the price at which you can buy and sell shares. Page 16 of 44 wealth investor guide 2014

17 PSP investment management fee: Please refer to your preferred PSP provider s fee schedule. Brokerage fees apply when trading securities. Platform administration fees: For a complete breakdown of the platform administration fees that apply to your investment, please refer to our fee schedule at Alternative dealing funds (ADFs) ADFs are investment vehicles that use different investment strategies to generate reliable investment returns under various market conditions. ADFs include hedge funds. You can invest in ADFs as part of our endowment options. How do you invest? You can make a lump-sum investment to your investment. If you are invested in an ADF, you must have a fee account. We will, therefore, automatically create a fee account for you. You must hold at least 2.5% of your investment in this fee account. If you do not have a fee account, or you do not tell us which investment component to use as part of your investment allocation, we will switch 2.5% from your investment component(s) to the default money market fund (currently, the Momentum Money Market Fund) to create a fee account for your fees. If you need a drawdown (income), your investment must allow for a drawdown account. We will, therefore, automatically create a drawdown account for you (if necessary). If you do not tell us which investment component(s) to use as part of your investment allocation, we can switch your yearly drawdown percentage or amount from your investment component(s) to the default money market fund (currently, the Momentum Money Market Fund) to create a drawdown account for your drawdowns. For more information about ADFs, please speak to your financial adviser, or refer to the terms of your Wealth investment product. Investment component minimum investment amounts The minimum lump-sum investment amount is R , but this may differ for each fund. Each ADF provider has its own investment minimum. If their minimum is higher than ours, you must meet their minimum amount. Fees and charges Unit price: This is the price at which you can buy and sell units in an ADF. Management companies initial fee: This is a one-off fee applied by certain management companies when an investment is made. It is calculated as a percentage of the investment amount and is deducted before units are bought at the day s unit price. For more information, please speak to your financial adviser or read the relevant fund s fact sheet. Management companies ongoing management fee: This fee differs between funds and companies. Management companies calculate this fee based on the value of the underlying assets in the scheme. They do this after deducting expenses and before distributing the investment returns to unit holders. Platform administration fees: For a complete breakdown of the platform administration fees that apply to your investment, please refer to our fee schedule at Other specialised investment options The following investment components each have their own specific rules and practices. Please speak to your financial adviser for more information about these components: Protected investments are structured investments or guaranteed investments that include our Protected Index Plan (PIP), Global Growth Allocator and Prosperity fund range. A term-certain annuity guarantees that we will pay you a regular amount for the period you have specified. If you die before the expiry date, we will continue to pay the amount to your beneficiaries. You can invest in term-certain annuity guarantees as part of the Flexible Investment Option and the Retirement Income Option. wealth investor guide 2014 Page 17 of 44

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19 04 Minimum investment amounts

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21 Minimum investment amounts The minimum investment amounts for the investment series are: Lump-sum investment R R (Flexible Tax-free Option) Regular investment R1 000 a month R3 000 every three months R6 000 every six months R a year Additional investment R5 000 at a time Important: Please make sure that there is a minimum of R invested at all times. This is the minimum amount needed to keep your investment active. For the Flexible Tax-free Option, there is a minimum of R that must remain invested at all times. This is the minimum amount needed to keep your investment active. You can only add a regular investment to an investment that has a minimum investment value of R As mentioned in Section 3, specific minimums apply to the underlying investment components. wealth investor guide 2014 Page 21 of 44

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23 05 Bank details

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25 Bank details When making a deposit or electronic fund transfer directly into our bank account, please make sure that you use the correct bank details for each investment. Remember to use your investment number (PP02 ) as the deposit reference number. Please attach the deposit slip for direct deposits or the bank confirmation for electronic transfers to your investment instructions. Flexible Investment Option (please choose one of the accounts): Bank: First National Bank Branch code: Account name: Momentum Wealth (Pty) Ltd Account number: Bank: ABSA Branch code: Account name: Momentum Wealth (Pty) Ltd Account number: Flexible Endowment Option, Flexible Tax-free Option, Traded Endowment Option and Retirement Annuity Option, Retirement Preservation Options and Retirement Income Option: Bank: First National Bank Branch code: Account name: MMI Group Limited* Account number: Deposits from the Government Employees Pension Fund (GEPF) must please be made into the following account (this account can only be used for GEPF deposits): Bank: ABSA Branch code: Account name: MMI Group Limited* Account number: *MMI Group Limited (Reg. no. 1904/002186/06), previously known as Momentum Group Ltd (Reg. no. 1904/002186/06). wealth investor guide 2014 Page 25 of 44

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27 06 Monitoring your investment

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29 Monitoring your investment We understand the importance of being able to monitor your investment. As a result, we provide you with the necessary tools to view your investments, and to request information such as investment statements and tax certificates at your convenience. 6.1 Create your online profile To view your investment online, you will first need to create a profile on our website. To do this, please follow these easy steps: Visit Click the Register button, located at the top-right of your screen. You will be directed to the registration page. Click on the Register as a client option. Complete all the required fields and click the Submit button. We will send you an activation code via SMS. You can use this code to activate your profile. Going forward, each time you log in to your account, you will receive a confirmation SMS from us. 6.2 Logging into your online profile Once you have created your online profile, you can log into your account by using the username and password you provided in the registration process. To log in, please visit and click the Login button, located at the top-right of your screen. Once logged in, you can view your personal information that we have on record, and important details about your investment. You can also change your communication preference, postal address, and also request a variety of investment and tax statements. Important: For any technical queries about your online account, please contact our ETS helpdesk on Requesting information using our realtime SMS service You can request a variety of information about your investment by using our real-time SMS and service (see table below). This service is available to investors with an investment number starting with PP02. We must have your current cellphone number and address on record for this service to work. For more information or to confirm your contact details, please call the Momentum Wealth service centre on Send an SMS to (type in the body of your SMS) Send an to [email protected] (type in the subject of your ) Balance Balance PPnumber Balance PPnumber Short statement Statement Short PPnumber Statement Short PPnumber Detailed statement Statement Detail PPnumber Statement Detail PPnumber Period statement Statement Period PPnumber Statement Period PPnumber Duplicate tax certificate DTAX year PPnumber DTAX year PPnumber wealth investor guide 2014 Page 29 of 44

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31 07 Making changes to your investment

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33 Making changes to your investment You may need to make changes to your investment from time to time when your circumstances change. These include: adding to your investment, making a switch or a withdrawal, changing your personal details and ceding your investment. Kindly note that in some instances, we would require your spouse to co-sign your investment instructions, for example if you were married in community of property on or after 1 November You must read this section with our legal and tax guide, as well as the terms and investment series brochures available on our website at Important: You can request all our forms from your financial adviser. Alternatively, you can phone the Momentum Wealth service centre on , or send an to [email protected]. 7.1 Can I add to my investment? To add additional amounts to your investment, please complete the applicable instruction form and send it to us. Depending on the investment product that you are invested in, you can add to your investment by using new investment amounts or through transfers from other platforms. When adding to your investment, it is important to first discuss these changes with your financial adviser to get suitable advice. Flexible Investment Option If you have a minimum of R in your investment, you can add a regular investment to your investment. You can also make other additional investments to your investment. Traded Endowment Option You cannot add new investments to the Traded Endowment Option. You can only pay back an interestfree loan. Flexible Tax-free Option If you have a minimum of R in your investment, you can add to your investment. You can also add a regular investment. Both the additional investment and regular investment are subject to the annual and lifetime limits as per the Taxation Laws Amendment Act, Retirement Annuity Option If you have a minimum of R in your investment, you can add a regular investment to your investment. You can also make other additional investments to your investment. Retirement Preservation Option You can add to your investment at any time, as long as you are transferring investment amounts from a pension or a provident fund, and as allowed by the rules of the fund. Retirement Income Option You can only add to your investment using compulsory money (i.e. proceeds from other retirement funds). You may also combine your investments from different retirement funds into a single Retirement Income Option. Alternatively, you can transfer the proceeds of another living annuity to combine with your current Retirement Income Option with us. 7.2 Can I change my underlying investment components (switch)? Flexible Endowment Option If you have a minimum of R in your investment, you can add a regular investment to your investment. You can also make other additional investments to your investment. However, if your investments in any year are more than 120% of the total investment amount made in any one of the two previous years (each a 12-month investment payment period), a new restricted term of five years will start. A restricted term is a minimum of 5 years, calculated from the first 12-month premium paying period. To change your investment components, please complete the applicable instruction form and send it to us. Please note that switches performed online by your financial adviser on your behalf are free of charge. Important: When changing investment components, it is important to consider the financial, tax and other factors that may have an impact on your overall investment. You can discuss these with your financial adviser. wealth investor guide 2014 Page 33 of 44

34 7.3 Can I withdraw from my investment? Subject to our minimum requirements and depending on legislation, you can sell all or a part of your investment by making a withdrawal. To make a withdrawal, please complete the applicable instruction form and send it to us. Your financial adviser can also make online withdrawals on your behalf for certain investment products, provided they have a mandate or instruction from you to do so. Withdrawals done online are free of charge. Flexible Investment Option You have immediate and unlimited access to your investment. This means you can withdraw money from your investment at any time, as long as you maintain a minimum balance of R This minimum only applies if you want to make a partial withdrawal. Flexible Endowment Option You can access your investment if you need your money urgently before the five-year restricted term ends. You can access your investment by applying for an interestfree loan or by withdrawing a cash amount from your investment. Please refer to the terms of your investment for the maximum limits. At the end of five years, you can take all or some of the proceeds or leave your investment to continue to grow. Traded Endowment Option You can access your capital by requesting regular interest-free loans (drawdowns), or by withdrawing cash amounts from your investment. Flexible Tax-free Option You have immediate and unlimited access to your investment. This means you can withdraw money from your investment at any time, as long as you maintain a minimum balance of R This minimum only applies if you want to make a partial withdrawal. Retirement Annuity Option You can withdraw from your investment only when you retire (from the age of 55 onwards), or if you have proven to the Board of Trustees of the Momentum Retirement Annuity Fund that you are permanently disabled and are no longer able to work. When retiring from the fund, you can take up to one-third of your investment value in cash, which will be taxed according to the current retirement tax tables. You must use the remaining balance to buy an annuity that will give you an income during your retirement. You can also have full access to your retirement benefit if you decide to move overseas permanently. Important: The retirement industry is currently being reformed and withdrawal options for these investments may change in the 2016 tax year. Retirement Preservation Option You can make only one taxable withdrawal (partial or complete) from this investment before you reach retirement age (from the age of 55 onwards), or if you have proven to the Board of Trustees of the Momentum Preservation Fund that you are permanently disabled and are no longer able to work. Once we have requested the tax directive from SARS, the transaction cannot be cancelled, changed or reversed. If you are making or have made a partial withdrawal, no further withdrawals will be allowed from this investment until your retirement date, which can be after reaching age 55. When retiring from a pension preservation fund, you can take up to one-third of your investment value in cash, which will be taxed according to the current retirement tax tables. You must use the remaining balance to buy an annuity that will give you an income during your retirement. When retiring from a provident preservation fund, you can take your entire investment as a lump sum that will be taxed according to the current retirement tax tables. Transfers from Goverment Employees Pension Fund If your fund benefit was transferred to our Fund from the Government Employees Pension Fund (GEPF), your withdrawal benefit before retirement (the one partial withdrawal) may not be more than one-third of your fund benefit transferred to our Fund from the GEPF. It is also important to understand that if you have taken your onethird withdrawal benefit before retirement, you cannot make any further lump-sum withdrawals, not even at retirement. Page 34 of 44 wealth investor guide 2014

35 You are also allowed to make one complete or partial withdrawal from your investment before you reach your specified retirement age. This withdrawal is taxable according to the current lump-sum withdrawal tax table. Please note that withdrawal lump sums are taxed more aggressively than retirement lump sums. Important: The retirement industry is currently being reformed and withdrawal options for these investments may change in the 2016 tax year. Retirement Income Option You can only make regular drawdowns (income) from your investment. You have the flexibility to choose an income level of between 2.5% and 17.5% of your investment value each year. This allows you to choose an income level that is suited to your personal needs and circumstances. This amount can be paid to you every month, every three months, every six months or annually. 7.4 How do I change my personal details? To change your personal details, please complete the applicable instruction form and send it to us. Remember to include all the supporting documents that are requested in the form. Your financial adviser can assist you with this process. 7.5 Can I transfer the rights of my investment (cession)? Transfer of your rights in the investment to another person or entity as security (collateral cession) This happens when you decide to transfer the ownership rights of your investment to another person (cessionary) to be held as security for a debt. It is done by way of a written agreement between you and the cessionary. The agreement ends after you have paid the debt. Ownership and rights then revert back to you. You can cede a Flexible Investment Option, a Flexible Endowment Option and a Traded Endowment Option to a third party as security. Under a collateral cession, a part cession is not allowed, the whole investment is ceded as security. You can cede your investment by sending us a copy of your security cession agreement. We will note the cession and confirm it in writing. If the whole investment is ceded to a cessionary (usually a financial institution), your ability to transact on that investment will be limited. This means that you may not withdraw, transfer or switch the ceded investment without written permission from the cessionary. You can cancel a security cession by sending us an official cancellation from the cessionary. Your financial adviser can help you with this process. What happens to my beneficiary nomination when I cede my investment? When noting a collateral cession on an investment, the beneficiary nomination is by law suspended for the period the collateral cession is in place. This means we will cancel all current beneficiary nominations. You must therefore officially re-nominate a beneficiary for your investment once a cession is cancelled. Your financial adviser can help you with this process. Important: If there is a registered security cession on your investment and the last insured life passes away during the term of the cession, we will pay the investment value to the cessionary. The cessionary must then refund the excess amount to your estate. Please speak to your financial adviser for more information about cessions. Permanent transfer of your rights in the investment to another person or entity Flexible Endowment Option and Traded Endowment Option: You must send us a copy of the outright cession for the transfer of your investment. Only full transfers are allowed. Flexible Investment Option: You must send us a transfer instruction. Full and partial transfers are allowed. After completing the applicable instruction form, please send it to us, along with all the required supporting documents. Your financial adviser can help you with this process. wealth investor guide 2014 Page 35 of 44

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37 08 Business rules and practices

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39 Business rules and practices 8.1 Financial adviser licence requirements According to the Financial Advisory and Intermediary Services Act of 2002 (FAIS), financial advisers must be appropriately licensed to give advice. The licence requirements apply to new investments and any changes on an existing investment, including switches, debit order changes, unit transfers and additional investments. If your financial adviser is not appropriately licensed, we will follow a transitional money market fund process: Your investment amount will be placed in a default money market fund (currently, the Momentum Money Market Fund) from the date on which we confirm your financial adviser s inappropriate licence status. The Momentum Money Market Fund is a collective investment scheme managed by Momentum Asset Management. If, for any reason, we cannot use the Momentum Money Market Fund, the money will remain in the bank account it was originally deposited into. Once all the requirements have been met, we will carry out the investment instruction. No switching fees will apply when switching out of the Momentum Money Market Fund within the first 30 days. Important: We will only follow this process if: you agree to it on the investment application, it is available as an investment component on the specific investment product you are invested in, and if your financial adviser is appropriately licensed for collective investment schemes. 8.2 Valid instructions We can only make changes to your investment once we have received a valid instruction. A valid instruction is a completed Momentum Wealth instruction form that is signed and dated, and is sent to us with all the supporting documents requested in the form. Once we have received your instruction, we will validate it using our normal verification process. Important: If your financial adviser has a Category I FSP licence, you have to sign all your instructions to us. If financial advisers have a Category II FSP licence and you have signed a discretionary mandate with them, they can send us investment instructions directly on your behalf. In this instance, your financial adviser must provide us with a copy of the mandate. 8.3 Processing valid instructions We aim to process valid instructions within two business days. However, this depends on when we received the request and the volume of instructions we received on that day. Once processed, investment instructions are send to the relevant management company at 11am the next business day. The management companies buy or sell units at the unit price on that day. Extended turnaround times Kindly note that instructions for offshore investment components, ADFs and PSPs take longer to process. We will also not be able to process instructions within two business days under the following circumstances: If there are extraordinary events in the industry that may cause significant market changes and increased dealing activity. If we receive an unusually large inflow of investment instructions at the same time. If an investment instruction is not clear, not correct or when all information was not completed. In any other event when we have no control over the situation, including natural disasters, fire, war and riots. We are not responsible for loss or damages in any of these circumstances. International investment components When we receive a deposit for investment into an international investment component and its trade date is not immediate, we will allocate your foreign currency to an account that does not pay interest. Alternatively, you have the option to ask that this amount must first be wealth investor guide 2014 Page 39 of 44

40 invested in a rand money market fund. This investment amount will remain there until you instruct us to invest it into the international investment component closer to the actual trade date. If you ask us to use a rand money market fund, we will use the default money market fund (currently, the Momentum Money Market Fund). For more information, please speak to your financial adviser. 8.4 Fee account The fee account is an investment component from where we deduct all ongoing fees. You can choose any rand money market collective investment scheme as your investment s fee account. As an added service, we monitor the balance in your fee account to make sure that there is always enough money to pay your ongoing fees. If the balance drops below the required minimum (four months fees), we will inform your financial adviser, who can then send us an instruction to have it topped-up by switching from your other investment components, or by making an additional investment (if your investment allows for it). If we do not receive an instruction to top-up the fee account, we will sell units from your investment components and allocate it to the fee account, which will cover your fees for approximately one year. Compulsory fee account You can add a fee account to any investment, but if you are invested in the Trust Flexible Investment Option or the Trust Endowment Portfolio, or a personal share portfolio (PSP), alternative dealing fund (ADF), direct Top 40 shares, exchange traded funds (ETFs), or international investment components, you must have a fee account. We will, therefore, automatically create a fee account for you. You have to invest a minimum of 2.5% (5% in the case of the trustee fees for the Trust Flexible Investment Option and Trust Endowment Portfolio) of your whole investment amount in this fee account. Important note: If you do not tell us which investment component (rand money market collective investment scheme) to use as part of your investment allocation, we will switch 2.5% (5% in the case of the trustee fees for the Trust Flexible Investment Option and Trust Endowment Portfolio) from your investment components to the default money market fund (currently, the Momentum Money Market Fund) to create a fee account for your fees. Optional fee account Only if your whole investment portfolio is invested in South African collective investment schemes, can you choose not to have a fee account. 8.5 Drawdown account The drawdown account is an investment component from where we pay your drawdown (income). You can choose any local collective investment scheme or a combination thereof as your investment s drawdown account. As an added service, we monitor the balance in your drawdown account to make sure that there is always enough money to pay your income. If the balance drops below the required minimum (your chosen income for approximately one year), we will inform your financial adviser, who can then send us an instruction to have it topped-up by switching from your other investment components or by making an additional investment (if your investment allows for it). If we do not receive an instruction to top-up the drawdown account, we will sell units from your investment components and allocate it to the drawdown account, which will cover your drawdown amounts for approximately one year. Compulsory drawdown account You can add an income drawdown account to any investment, but if you are invested in a personal share portfolio (PSP), alternative dealing fund (ADF), direct Top 40 shares, exchange traded funds (ETFs), international investment components, or the Trust Flexible Investment Option (with a drawdown), you must have an investment component for drawdowns. We will, therefore, automatically create a drawdown account for you. Important note: If you do not tell us which investment component(s) to use as part of your investment allocation, we can switch your yearly drawdown Page 40 of 44 wealth investor guide 2014

41 percentage or amount from your investment component(s) to the default money market fund (currently, the Momentum Money Market Fund) to create a drawdown account for your drawdowns. Optional drawdown account Only if your whole investment portfolio is invested in South African collective investment schemes, can you choose not to have a drawdown account. 8.6 Cooling-off period: Can I cancel my investment if it is not what I wanted? Depending on the rules that apply to your chosen investment product, you have the right to cancel an investment within 30 days after receiving the investment confirmation from us. This is known as a cooling-off period. If you choose to cancel an investment within this time, we will refund our fees and financial adviser fees. Please note that the value of an investment may have increased or decreased during this time due to market fluctuations. This means that the amount returned might be less than the investment amount you initially invested. The cooling-off period applied to an investment differs depending on the investment product being cancelled. Flexible Investment Option Legislation does not allow for a cool-off period from a Flexible Investment Option because you can make a complete withdrawal at any time, which effectively cancels the investment. If you want to cancel the investment, you must complete the required instruction form for a complete withdrawal. We will not refund our fees or the adviser fees as you would have already received these services. If you have an underlying investment component such as a term-certain annuity, you can use a cooling-off option for these investment components only. Although you can cancel that investment component, you may lose the fees you have paid the manager of the investment because these may have certain penalties for early withdrawals. Flexible Endowment Option and Traded Endowment Option The cooling-off period, as explained in the first paragraph of this section, applies to endowments. Flexible Tax-free Option You have a cool-off option on this investment agreement that enables you to end it within 30 days after receiving investment confirmation. If you do this, you may get less than what you have invested. We will pay you the investment value on the day we receive the proceeds from the assets sold. The investment value is determined by changes in the investment market and exchange rates between currencies. We will also refund all of our fees and that of your adviser. We can only refund you after we have received the sell proceeds from your chosen underlying investment components. A cool-off option under the Flexible Tax-free Option is seen as a withdrawal. This means the investment contribution(s) will still count towards your annual contribution limit for tax purposes for the tax-free savings account. Retirement Annuity Option The following rules apply to cooling-off periods in a Retirement Annuity Option: If an investment is transferred to us from another retirement annuity fund, the cooling-off period does not apply. This is because the membership of the retirement annuity fund will continue with us. However, you may transfer your investment back to the original retirement annuity fund (if allowed) or ask us to transfer it to a different retirement annuity fund of your choice. If you start a new investment in a Retirement Annuity Option using your own money, the cooling-off period also does not apply. Retirement Preservation Option The Pension Funds Act of 1956 prohibits investors from cooling-off from preservation funds. However, you can transfer your investment back to the original retirement preservation fund (if allowed) or ask us to transfer it to a different retirement preservation fund of your choice. Retirement Income Option The cooling-off period does not apply to compulsory annuities bought by retirement funds for retired wealth investor guide 2014 Page 41 of 44

42 members, their dependents or their nominated beneficiaries. However, you can transfer the investment back to the originating employer s retirement fund (if allowed) or ask us to transfer it to a different retirement fund of your choice. 8.7 Unclaimed benefits An unclaimed benefit is any lump sum that is due to you (or your beneficiaries) that has remained unclaimed for a period of time. We will contact you (or your beneficiaries) when a benefit must be paid. To avoid benefits remaining unclaimed, please make sure that we always have your latest contact details. If we are unable to reach you (or your beneficiaries) using the contact details provided, we will start a tracing process within six months of the benefit becoming unclaimed. As part of this process, we may use information from other divisions within MMI Holdings Limited. If we are still unable to make contact, we will use external information providers such as the Department of Home Affairs or a credit bureau. If the assets remain unclaimed, we will repeat the tracing process within a three-year period and again within 10 years. 8.8 Default money market fund We have to use a default investment component (currently, the Momentum Money Market Fund) for certain transactions and events, as explained in our the application form and product terms. A money market fund is a collective investment scheme (unit trust) that invests in selected money market instruments, which gives an income yield and a high degree of capital stability. This fund carries a risk in the sense that, although capital losses are unlikely, it may happen. An example of such a loss is if the issuer of one of the fund s instruments defaults and is not able to meet its obligation. That loss is then also a loss for the investor. 8.9 Regulation 28 (for Retirement Annuity Option and Retirement Preservation Option) If your investment does not comply with Regulation 28 because of market or currency movements, we will ask you to change your portfolio so that it will comply. If you do not make this change in time, we will have to switch the non-compliant portion into a default money market fund (currently, the Momentum Money Market Fund), so that your investment portfolio will comply. You may switch the non-compliant portion from the default component into another investment component, provided that your overall investment portfolio complies Capped or closed funds If a specific class of fund is closed or if we cannot continue to offer it, we will inform you and ask for a new investment instruction before a set date. If we do not hear from you before this deadline, we will switch the units and invest the proceeds into the default money market fund (currently, the Momentum Money Market Fund). Page 42 of 44 wealth investor guide 2014

43 8.10 Capped or closed funds If a specific class of fund is closed or if we cannot continue to offer it, we will inform you and ask for a new investment instruction before a set date. If we do not hear from you before this deadline, we will switch the units and invest the proceeds into the default money market fund (currently, the Momentum Money Market Fund). 09 Contact details wealth investor guide 2014 Page 43 of 44

44 Contact details Momentum website: Momentum Wealth service centre ShareCall number: Telephone number: +27 (0) Fax number: +27 (0) address: Postal address: PO Box 7400, Centurion, 0046 Momentum Wealth compliance department Telephone number: +27 (0) address: Postal address: PO Box 7400, Centurion, 0046 Ombud for Financial Services Providers (FAIS) Telephone number: +27 (0) Facsimile number: +27 (0) address: Postal address: PO Box 74574, Lynnwood Ridge, 0040 Pension Funds Adjudicator Telephone number: +27 (0) Facsimile number: address: Postal address: PO Box 580, Menlyn, 0063 Ombud for Long-term Insurers ShareCall number: Telephone number: +27 (0) Facsimile number: +27 (0) address: Postal address: Private Bag X45, Claremont, 7735 Disclaimer: The information in this guide is for general information purposes only and is not intended to be advice, as mentioned in the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS). The information in this document does not take your personal financial circumstances into account. For this reason, the decision to invest in the Momentum Wealth Investment Series must be made in consultation with your financial adviser, after assessing your financial situation and needs. This includes determining your specific risk profile and drawing up a plan to achieve your investment goals. The information in this document has been collected from sources deemed reliable by Momentum Wealth, which are not necessarily all inclusive, but are accurate as at the date of publication. References to any tax rates, law and legislation are based on the current tax or laws and are subject to change. Reliance upon information in this document is at the sole discretion of the reader. MMI Group Limited and Momentum Wealth will not be liable to the reader. MMI Group Limited 268 West Avenue Centurion 0157 PO Box 7400 Centurion 0046 South Africa Tel +27 (0) Fax +27 (0) Share Call [email protected] Reg. no. 1904/002186/06 Momentum, a division of MMI Group Limited, an authorised financial services and credit provider (FSP 6406) Momentum Wealth (Pty) Ltd 268 West Avenue Centurion 0157 PO Box 7400 Centurion 0046 South Africa Tel +27 (0) Fax +27 (0) Share Call [email protected] Reg. no. 1995/008800/07 Momentum Wealth is an authorised financial services provider (FSP 657)