WAM ACTIVE LIMITED — Capital/Financing Update 2018

Mar 27, 2018

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23 March 2018

Dear optionholder,

Exercise your options to receive the fully franked 2.85 cents per share interim dividend

Interim profit up 85.0% and increased fully franked dividend

I am writing to you as a holder of WAM Active Limited (ASX: WAA) options. WAM Active recently announced its FY2018 interim results to the market. Highlights from the announcement include:

• Interim profit before tax up 85.0%

• 11.2% investment portfolio performance, outperforming the index

• Increased fully franked interim dividend of 2.85 cents per share.

Your WAM Active options

Your WAM Active options enable you to acquire new shares without paying brokerage fees at the price of $1.14 per share. This price is at a discount to the share price of $1.155[] . If you exercise your options before 6 April 2018, you will receive the fully franked 2.85 cents per share interim dividend. The options are currently trading on the ASX under the code WAAO where you have the opportunity to sell or purchase additional options. WAM Active options are currently trading at 1.2 cents[] .

Key dates

Ex dividend date 12 April 2018 Dividend record date 13 April 2018 Dividend payment date 27 April 2018 Options expiry date 17 September 2018

Understanding options

Options can be difficult to understand, so we have enclosed a brief factsheet that explains how they work. If you have any further questions about your WAM Active options, please call us on (02) 9247 6755.

Yours sincerely,

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Geoff Wilson AO Chairman

*As at 22 March 2018

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wilsonassetmanagement.com.au Telephone. + 61 2 9247 6755 Fax. +61 2 9247 6855

info@wilsonassetmanagement.com.au Level 11, 139 Macquarie Street Sydney NSW 2000 Australia

ABN 49 126 420 719

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Options explained

Many listed investment companies (LICs) issue bonus options to shareholders giving optionholders various benefits, including the opportunity to buy shares at a discount. This fact sheet explains the key features and benefits of LIC options.

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Key terms

Bonus option issue

Overview

Options give the optionholder the right, but not the obligation, to buy shares in the LIC at a fixed price until they expire. If the share price increases above the option exercise price optionholders have the opportunity to acquire new shares at a discount.

The issue of free options to shareholders by a company. A company may issue bonus options when it lists on the ASX (initial public offering) or once it is trading.

Optionholders have two main choices before their options expire:

1 2 Exercise some or all Sell some or all options options for the exercise for a profit. price and be issued new shares in the LIC.

If optionholders take no action, their options will simply expire.

Exercise price

The price shares can be purchased when an option is exercised. Sometimes called the strike price.

Expiry date

The last day to exercise options.

In the money

Buy shares at a discount

Example:

If shares are trading on the ASX above the exercise price:

Optionholders can exercise their options and be issued new shares in the company at a discount to the current market price.

If shares are trading on the ASX below the option exercise price:

Optionholders can choose not to exercise their options and instead buy additional shares on market at less than the exercise price.

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Receive shares
for 2� less than
their current price
$1.12
$1.10
Share price Exercise price
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Share price is below
exercise price -
do not exercise
$1.10
$1.00
Share price Exercise price
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A phrase used when the share price of the underlying shares is higher than the exercise price of the option.

Option price

The price options are trading at on the ASX.

Underlying shares

The company shares or securities over which the options are issued. Options can be exercised to receive additional underlying shares.

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Benefits

Acquire shares at a discount

Until the time the options expire, optionholders can exercise options to receive shares in the company for a fixed price (the exercise price). If the exercise price is lower than the current price of the underlying shares, optionholders acquire shares at a discount.

Receive dividends

If optionholders exercise their options before the record date for dividends, they are entitled to receive any announced dividends for each option exercised. This assumes the shares received from the exercise of options are held on the dividend record date.

No brokerage

Unlike buying shares trading on the ASX, exercising options allows optionholders to acquire new shares without paying brokerage.

Sell options for a gain

As options trade on the ASX, optionholders can sell their options for a profit. Options are issued at no cost to the option holder.

Grow assets

Issuing options grows the assets of the LIC. As the company’s size increases, the on-market liquidity for its shares can increase.

Motivate the manager

Options incentivise the manager of the LIC to do all they can to increase the share price above the exercise price, for example, by delivering strong portfolio performance. If the share price rises above the exercise price, more optionholders are likely to exercise their options, increasing the total assets of the LIC and the fees payable to the manager.

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Flexibility

Optionholders have maximum flexibility and can exercise, sell or hold their options in any combination until they expire.

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If you would like further information about options, please contact Alexandra Hopper.

(02) 9247 6755 | info@wilsonassetmanagement.com.au wilsonassetmanagement.com.au

Disclaimer: The information provided in this document is general only. It does not take into account the investment objectives, financial situation or particular needs of any person and may not be appropriate for your requirements. We strongly suggest that investors consult a financial adviser prior to making any investment decision.