Download Friends Life Investment Bond Fund Guide

Investment Bond Guide YOUR INVESTMENT OPTIONS
Friends Life Investment Bond
Fund Guide
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Investment Bond Fund Guide
We understand the decision on where to invest your money is an important one. We have designed this
guide to try and help you make the right investment choices to suit your goals and priorities.
This guide tells you about:
• The funds which are available under your Bond and where to go for more information.
• Our risk ratings and how they relate to your funds.
• The risk warnings and additional fund charges that may apply to the funds available to you.
In addition to the information provided in this guide, we have online support available at
www.friendslife.co.uk.
This guide is not designed to provide you with advice on the suitability of any investment funds
as this will depend on your personal circumstances and approach to risk. Your financial adviser
can give you more information on funds and their suitability for you, the tax treatment of your
plan, the minimum investment amount and any charges that will apply to your Investment Bond.
Please remember a bond is intended to be a medium to long-term investment, meaning at least
five years to ten or more.
You should also read:
• the Key Features of the Investment Bond
• the Investment and Trustee Bond Plan Booklet
• your personal illustration provided by your financial adviser
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Investment Bond Fund Guide CONTENTS
Contents
• Your fund choices 4
• Your guide to risk 6
• The investment funds 10
• ‘Income’ producing funds
21
• Further information 28
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YOUR INVESTMENT OPTIONS Investment Bond Guide
Your fund choices
Through your Investment Bond, you have the freedom to invest in up to 30 investment funds. These funds will
form your investment portfolio. Your portfolio will reflect your attitude to risk and your investment aims after
discussions with your financial adviser. We offer an extensive selection of funds.
Spreading your Investment
We offer a wide range of funds to choose from so that you can match your investment aims with your approach
to risk. Please note, fund charges may vary depending on the funds selected.
Our range of investment funds invest in different types of assets, which fall broadly into four main categories:
MONEY MARKET – Money that is invested with banks, building societies and other
organisations to produce interest. The ‘Money Market’ in simple terms provides a mechanism
for short-term borrowing and lending between organisations. Although such investments
tend to be much less volatile than other investments such as equities, a drawback is that the
interest paid by the borrower can be lower than the rate of inflation and/or the charges for a
Money Market fund, meaning that, in real terms, the investment may fall in value. Investments
will typically include what are described as ‘near cash’ instruments such as Certificates of
Deposit, Floating Rate Notes and Treasury Bills.
Although funds that invest wholly in this asset class are generally designed to produce a
relatively stable return there could be circumstances where the fund price may fall. For
instance if there is a default by one of the banks where cash is on deposit, a default by one of
the borrowers, a downward market movement in the value of one or more of the ‘near cash’
instruments held (due to a weakening in the financial position of the issuing organisation),
or for certain securities, a significant movement in the level of money market interest rates.
FIXED INTEREST – When we talk about fixed interest investments, we mean bonds. Bonds
are loans to a government (known as gilts) or a company (known as corporate bonds) for
a set period. Bonds offer a predictable rate of return in the form of a fixed rate of interest
throughout their term (conventional bonds) or interest that is linked to inflation (index-linked
bonds). This predictability makes them useful assets for financial planning. Bonds issued by
companies are not as secure as those issued by a government, as companies can sometimes
go out of business and/or default on the loan.
PROPERTY – As an asset class, ‘property’ usually means investing in commercial
property such as offices or retail, leisure and industrial developments. It can also include
residential property. Property can experience sharp increases in value but is also subject to
heavy falls.
SHARES – are also known as equities. Owning shares in a company means that you have a
share in the value of the company’s assets. It also means that you can share in a company’s
profits by receiving dividends. Dividends are payments from a company to its shareholders
and are usually paid twice a year. Shares are bought and sold on stock markets and their
values can go up and down.
Spreading your money across different asset classes could offer you the best opportunity to meet your
financial objectives while helping to spread your risk of losses. This philosophy is at the heart of the funds we
have selected for our products. But remember, the value of investments can go down as well as up and is not
guaranteed. This means that you could get back less than you invested, particularly in the early years.
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Investment Bond Fund Guide YOUR FUND CHOICES
Investing with Friends Life – Our range of investment funds
Within our range of funds we think you’ll find a combination of funds to meet your investment needs and
attitude to risk.
Aviva Investors
Investment specialist, Aviva Investors is a global asset manager with expertise in real estate, fixed income,
equity and multi-asset investment.
Friends Life has historically provided a wide range of funds covering the major asset classes and Aviva
Investors manage most of them on our behalf, having taken over the management from AXA Investment
Management in 2015.
AXA Investment Management continue to manage some of the overseas equities funds for Friends Life.
External investment solutions
We believe in offering you choice and have selected a number of investment partners who we believe diversify
and enhance our range of funds. Among our investment partners are some of the industry’s major fund managers.
If you invest in any of these external funds, you are not investing directly in the fund managed by the external
company. Instead you will invest in a ‘mirror’ fund which will then invest in the external fund, which we call the
‘underlying fund’. So the mirror fund would be called, for example ‘FL Newton Multi Asset Growth AL’ to reflect
the underlying fund.
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YOUR GUIDE TO RISK Investment Bond Fund Guide
Your guide to risk
This section covers our definition of risk. Please make sure that you understand it.
Information on the risks associated with the individual funds is shown later in
this guide.
What do I need to think about when it comes to risk?
Before choosing the fund(s) you wish to invest in, consider your personal financial situation and what you want
to get out of your investment. Make sure that the fund(s) is right for you and you are comfortable with the level
of risk you select.
Your financial adviser will help you assess your financial situation, needs and attitude to risk.
How do Friends Life rate the risks involved?
Friends Life calculates its risk ratings using historical performance data, based upon the methods set by
European Union rules. We also carry out further research using information from the fund’s investment
manager(s). We review each fund’s risk rating annually and these may change over time. The timing of your
investment decisions is very important and you should consult a financial adviser. Past performance is not a
guarantee of future performance.
Our risk ratings go from 1 to 7, with 1 being the lowest and 7 the highest. As a point of reference, a fund with a
risk rating of 4 (medium volatility) would typically experience the volatility you would expect from a fund
invested in a range of different investments (for example shares, property and bonds) without any bias to a
particular investment type.
How accurate are the risk ratings?
They are simply a guide. Fund values will normally fall and rise in line with movements in the investment
markets. Over time a fund manager may change the assets they invest in. This may mean that funds move from
one risk ratings to another.
You should review your fund choice regularly to make sure it’s still meeting your objectives. But remember, past
performance is not a guide to the future. The risk ratings may not prove to be accurate.
Please note that funds have been assigned a risk rating based on our methodology for assessing risk, which is
described above. It is important that you look up the risk rating for each fund and do not rely on the fund name
as this may contain the same words as one of our defined risk ratings. Two funds investing in the same asset
classes may perform differently as the actual assets in the individual funds will be different.
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Investment Bond Fund Guide YOUR GUIDE TO RISK
Our investment risk ratings
We grade investment funds on a scale of 1 – Lowest volatility to 7 – Highest volatility. The risk rating assigned
to each fund will match one of the defined risk ratings, or investment approaches below:
Risk rating
Risk rating description
1
Lowest
volatility
The historical performance of funds with this risk rating have typically experienced
the lowest volatility of all the funds Friends Life has rated. This means that these
funds have the lowest potential for substantial changes in value compared with
other Friends Life funds.
2
Low
volatility
The historical performance of funds with this risk rating have typically experienced
low volatility compared with other funds Friends Life has rated. This means that
these funds have a low potential for substantial changes in value compared with
other Friends Life funds.
3
Low to
Medium
volatility
The historical performance of funds with this risk rating have typically experienced
low to medium volatility compared with other funds Friends Life has rated. This
means that these funds have a low to medium potential for substantial changes in
value compared with other Friends Life funds.
4
Medium
volatility
The historical performance of funds with this risk rating have typically experienced
medium volatility compared with other funds Friends Life has rated. This means
that these funds have a medium potential for substantial changes in value
compared with other Friends Life funds.
5
Medium
to High
volatility
The historical performance of funds with this risk rating have typically experienced
medium to high volatility compared with other funds Friends Life has rated. This
means that these funds have a medium to high potential for substantial changes
in value compared with other Friends Life funds.
6
High
volatility
The historical performance of funds with this risk rating have typically experienced
high volatility compared with other funds Friends Life has rated. This means that
these funds have a high potential for substantial changes in value compared with
other Friends Life funds.
7
Highest
volatility
The historical performance of funds with this risk rating have typically experienced
the highest volatility of all the funds Friends Life has rated. This means that these
funds have the highest potential for substantial changes in value compared with
other Friends Life funds.
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YOUR GUIDE TO RISK Investment Bond Fund Guide
Risk Warnings
Some of the funds carry particular risks because of the type of assets they invest in. Please see the table
shown from page 10 onwards for details of the funds that carry the following risks.
Risk Warning Risk Warning Description
A
Investment is not guaranteed: The value of an investment is not guaranteed and can
go down as well as up. You could get back less than you have paid in.
Price: At times, a fund may need to change the way its price is calculated to ensure that
those moving into and out of the fund and existing unitholders/shareholders are treated
fairly and are not disadvantaged by any large cashflows.
Suspend trading: Fund managers have the ability, in certain circumstances, to suspend
trading in their funds for as long as necessary. When this occurs we will need to delay the
‘cashing in’ or switching of units in the relevant fund. You may not be able to access your
money during this period. The circumstances in which we may delay a switch, withdrawal
or transfer can include but are not limited to the following:
if a large number of customers want to take money out of the same fund at the same time;
if there are practical problems selling the assets in which a fund is invested;
if the fund (or part of it) is managed by an external company, they may insist on a delay.
Stock Lending: Where a fund is involved in the temporary transfer of securities, there is a
risk that the borrower may not be able to return the security to its owner. This may have a
negative effect on the performance of the fund.
Derivatives: Most funds can invest in derivatives for the purpose of efficient portfolio
management or risk reduction. For funds that also use derivatives for investment purposes
we apply an additional risk warning due to the possible increase in the risk and volatility of
the fund.
B
Currency Risk: Where a fund invests in share classes or securities priced in currencies
other than the fund’s base currency, changes in exchange rates can contribute to the
value of the investment going up or down.
C
Emerging Markets: Where a fund invests in emerging markets, it is likely to be more
volatile than one that invests in developed markets. These markets may not be as
strictly regulated and securities may be harder to buy and sell than those in more
developed markets. These markets may also be politically unstable which can result in
the fund carrying more risk.
D
Smaller Companies: Where a fund invests in the shares of smaller companies, these
shares can be more volatile and may be harder to buy and sell than larger company
shares which can result in the fund carrying more risk.
E
Fixed Interest: Where a fund invests in fixed interest securities, such as corporate or
government bonds, changes in interest rates can contribute to the value of the investment
going up or down. If interest rates rise, the value is likely to fall. Bonds with a lower credit
rating are known as sub-investment grade or junk bonds. These carry an increased risk
that the issuer of the bond will be unable to continue the interest payments or return the
capital at maturity.
F
Specialist: Where a fund invests only in a specific or limited range of industry sectors, it
may carry more risk than funds that invest across a broader range or variety of sectors.
These funds can be more volatile and carry higher risk due to their lack of diversification.
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Risk Warning Risk Warning Description
G
Derivatives: Where a fund uses derivatives for investment purposes, there may be an
increase in the risk and volatility of the fund. Some derivative investments also expose
investors to counterparty or default risk where another party is unable to meet its
obligations and pay what is due, which could result in the loss of the value of the
derivative itself.
H
Cash/Money Market Funds: These are not cash deposit accounts but invest in money
market instruments and short-term bonds and can fall in value. In a low interest rate
environment the charges applied to a cash fund may be greater than its return, so you
could get back less than you have paid in.
I
Physical Property: Where a fund invests in physical property, these properties are not
easy to buy or sell. In exceptional circumstances, we may need to delay the ‘cashing in’ or
switching of units in the fund and you may not be able to access your money during this
period. The value of properties held is generally a matter of the valuer’s opinion rather
than fact.
J
Index-Linked: Where a fund invests in index-linked bonds, changes in inflation rates
can contribute to the value of the investment going up or down. If inflation falls, the
value is likely to fall.
K
High Cash Levels: Due to the way some funds are managed there may be periods
when they have large cash holdings. This can be a deliberate asset allocation decision
or while suitable investment opportunities are researched and selected. A fund’s
growth potential may be less during this period.
L
Reinsured Funds: Where a fund invests in an underlying fund operated by another
insurance company through a reinsurance agreement, if the other insurance company
were to become insolvent, you could lose some or all of the value of your investment in
this fund.
M
Ethical: Where a fund invests only in sectors and securities that meet its agreed ethical
criteria, it may carry more risk than funds which are free from these restrictions. The
ethical companies invested in can be involved in new and innovative technologies or new
markets and can therefore have a higher risk profile than organisations involved in more
mainstream activities.
N
Alternative Investments: Where a fund invests in alternatives, it may carry more risk
as these instruments are generally priced less regularly and may be harder to buy and
sell than investments in more conventional asset classes. Alternatives include
commodities, hedge funds, private equity, real estate investment trusts (REITS),
venture capital and currencies.
O
Convertible Bonds: Where a fund invests in convertible bonds, it will experience the
risks associated with holding bonds until conversion at which point it will experience
the risks associated with holding equities. To compensate for having additional value
through the option to convert from a bond to an equity, a convertible bond typically
has a coupon rate lower than that of a similar, non-convertible bond.
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THE INVESTMENT FUNDS Investment Bond Fund Guide
The investment funds
Creating a balanced and successful portfolio of investments involves working closely with your financial adviser to
determine your attitude to risk and then choosing an appropriate spread of investments to match it.
The following table lists the funds that you can invest in through your Friends Life Investment Bond.
For each fund listed we provide its risk rating (definitions on page 7), any risk warnings (definitions start on page
8) that apply and whether there is an Additional Yearly Fund Charge and/or a One-off Charge. The funds
available can change at any time and further information about the listed funds including their aims, performance
statistics and asset splits can be found in separate fund factsheets available for each individual fund at
www.friendslife.co.uk/funds.
Charges explained
Charges are taken to cover the cost of setting up your Bond, including any commission (which will be shown on your
illustration). They also pay for administering your Bond, professionally investing your money and an element of life
insurance cover. However, they do not cover any fee you may wish to pay your financial adviser. For details of the
Bond charges see the section ‘What are the charges?’ of the Key Features of the Investment Bond and your
personal illustration.
Additional Yearly Fund Charge
An Additional Yearly Fund Charge applies for investing in some funds. This covers the costs of charges from fund
managers and additional fund related costs such as audit fees, depository fees, price publication fees, custody fees
and statutory accounts preparation fees.
One-off Initial Charge
Some funds will have a One-off Initial Charge when you invest in or switch into them. Details can be
found below.
Please be aware that charges may change at any time. You can find more information in Part D of the Investment
and Trustee Bond Plan Booklet.
Please remember the value of investments can go down as well as up and is not guaranteed. This means that you
could get back less than you invest.
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Investment Bond Fund Guide THE INVESTMENT FUNDS
*Risks associated with money market funds
While investments in Cash/Money Market funds are lower risk relative to other investment risk ratings they do
not totally guarantee your capital. Certain scenarios could cause some loss of capital, for example:
• If interest rates rise, the market value of certain types of instruments held in the fund will drop.
•If an organisation the fund invests in defaults, it could mean that only a proportion of the value of an
investment is recovered.
•In very low interest rate environments the interest earned by certain instruments held by the fund could
mean that fund growth is lower than fund and product charges applied.
Money market funds are identified in the table below with * next to the fund name.
Fund name
Risk
Rating
Risk
Warning
One-off
Initial
Charge (%)
Additional
Yearly Fund
Charge (%)
Friends Life Funds
FL Cash AL*
1 – Lowest volatility
A, E, H
0.00%
0.00%
FL Defensive Distribution AL
ow to Medium
3–L
volatility
A, D, E, G, I, J, N, O
0.00%
0.00%
FL Fixed Interest AL
3 – Low to Medium
volatility
A, B, E, J, O
0.00%
0.00%
FL Monthly Sterling Corporate Bond AL
3 – Low to Medium
volatility
A, B, E, G
0.00%
0.00%
FL Reserve AL
3 – Low to Medium
volatility
A, B, D, E, I, J, N, O
0.00%
0.00%
FL Sterling Corporate Bond AL
3 – Low to Medium
volatility
A, B, E, G
0.00%
0.00%
FL Deferred Distribution AL
4 – Medium volatility
A, B, C, D, E, G, I, J, O
0.00%
0.00%
FL Distribution AL
4 – Medium volatility
A, B, C, D, E, G, I, J, O
0.00%
0.00%
FL Ethical Distribution AL
4 – Medium volatility
A, B, E, G, J, M
0.00%
0.00%
FL Global Distribution AL
4 – Medium volatility
A, B, C, D, E, G, I, J, O
0.00%
0.00%
FL High Yield Distribution AL
4 – Medium volatility
A, B, D, E, I, J, N, O
0.00%
0.00%
FL Index Linked AL
4 – Medium volatility
A, B, E, J, O
0.00%
0.00%
FL Managed AL
4 – Medium volatility
A, B, C, D, E, I, J, N, O
0.00%
0.00%
FL Monthly Distribution AL
4 – Medium volatility
A, B, C, D, E, G, I, J, O
0.00%
0.00%
FL Monthly High Yield Distribution AL
4 – Medium volatility
A, B, D, E, I, J, N, O
0.00%
0.00%
FL Property AL
4 – Medium volatility
A, B, I
0.00%
0.00%
FL Asia Pacific ex Japan Equities AL
5–M
edium to High
volatility
A, B, C, D, G
0.00%
0.00%
FL Global Equities AL
edium to High
5–M
volatility
A, B, C, D, G
0.00%
0.00%
FL Global Managed AL
5 – Medium to High
volatility
A, B, C, D, E, G, J, O
0.00%
0.00%
FL Higher Income AL
5 – Medium to High
volatility
A, B, D
0.00%
0.00%
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THE INVESTMENT FUNDS Investment Bond Fund Guide
Fund name
Risk
Rating
Risk
Warning
One-off
Initial
Charge (%)
Additional
Yearly Fund
Charge (%)
FL North America Equities AL
5 – Medium to High
volatility
A, B, D, G
0.00%
0.00%
FL UK Equity AL
5 – Medium to High
volatility
A, B, D
0.00%
0.00%
FL Japan Equities AL
6 – High volatility
A, B, D, G
0.00%
0.00%
FL Europe ex UK Equities AL
7 – Highest volatility
A, B, C, D, G
0.00%
0.00%
Risk
Warning
One-off
Initial
Charge (%)
Additional
Yearly Fund
Charge (%)
Fund name
Risk
Rating
External Funds
FL Architas Liquidity Net AL*
1 – Lowest volatility
A, E, G, H
0.00%
0.00%
FL Deutsche Managed Sterling AL*
1 – Lowest volatility
A, E, H
0.00%
0.03%
FL JPM Sterling Liquidity AL*
1 – Lowest volatility
A, E, H
0.00%
0.02%
FL Architas MA Active Reserve AL
2 – Low volatility
A, B, C, D, E, N
0.00%
0.83%
FL Architas MA Active Moderate
Income AL
3 – Low to Medium
volatility
A, B, C, D, E, N
0.00%
0.68%
FL Architas MA Passive Moderate AL
3 – Low to Medium
volatility
A, B, C, D, E, G, N
0.00%
0.21%
FL Architas Multi-Manager Diversified
Protector 80 AL
3 – Low to Medium
volatility
A, B, C, D, E, G, K, N
0.00%
0.87%
FL Artemis Strategic Bond AL
3 – Low to Medium
volatility
A, B, C, D, E, G
0.00%
0.32%
FL AXA Sterling Strategic Bond AL
3 – Low to Medium
volatility
A, B, E, G, J
0.00%
0.27%
FL F&C MM Lifestyle Defensive AL
3 – Low to Medium
volatility
A, B, C, D, E, G, N, O
0.00%
1.40%
FL Fidelity Extra Income AL
3 – Low to Medium
volatility
A, B, C, E, G, J, O
0.00%
0.52%
FL Fidelity Moneybuilder Income AL
ow to Medium
3–L
volatility
A, B, C, E, G, J, O
0.00%
0.24%
FL Fidelity Strategic Bond AL
ow to Medium
3–L
volatility
A, B, C, E, G, J, O
0.00%
0.42%
FL Henderson Fixed Interest Monthly
Income AL
3–L
ow to Medium
volatility
A, B, E, G, O
0.00%
0.48%
FL Henderson Sterling Bond AL
ow to Medium
3–L
volatility
A, E, G, O
0.00%
0.48%
FL Invesco Perpetual Corporate
Bond AL
to Medium
3 – Low
volatility
A, B, E, G
0.00%
0.54%
FL Invesco Perpetual Global Bond AL
ow to Medium
3–L
volatility
A, B, C, E, G, N, O
0.00%
0.55%
FL Investec Diversified Income AL
ow to Medium
3–L
volatility
A, B, C, D, E, G
0.00%
0.46%
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Investment Bond Fund Guide THE INVESTMENT FUNDS
Fund name
Risk
Rating
Risk
Warning
One-off
Initial
Charge (%)
Additional
Yearly Fund
Charge (%)
FL Jupiter Corporate Bond AL
3–L
ow to Medium
volatility
A,B,C,E,O
0.00%
0.47%
FL Jupiter Distribution AL
3–L
ow to Medium
volatility
A, B, C, D, E, O
0.00%
0.45%
FL M&G Gilt & Fixed Interest Income AL
ow to Medium
3–L
volatility
A, E, G
0.00%
0.46%
FL Old Mutual Corporate Bond AL
3–L
ow to Medium
volatility
A, B, E, G
0.00%
0.41%
FL Schroder Absolute Return Bond AL
3–L
ow to Medium
volatility
A, B, C, E, G, N
0.00%
0.44%
FL Schroder MM Diversity AL
3–L
ow to Medium
volatility
A, B, C, D, E, K, N
0.00%
1.00%
FL Schroder UK Corporate Bond AL
3 – Low to Medium
volatility
A, B, C, E, G, O
0.00%
0.35%
FL Standard Life Investments
Investment Grade Corporate Bond AL
3 – Low to Medium
volatility
A, E, G
0.00%
0.33%
FL Aberdeen Multi-Manager Cautious
Managed Portfolio AL
4 – Medium volatility
A, B, C, D, E
0.00%
1.39%
FL Architas MA Active Intermediate
Income AL
4 – Medium volatility
A, B, C, D, E, N
0.00%
0.71%
FL Architas MA Active Progressive AL
4 – Medium volatility
A, B, C, D, E, N
0.00%
0.80%
FL Architas MA Passive Intermediate AL
4 – Medium volatility
A, B, C, D, E, G, N
0.00%
0.22%
FL Architas MA Passive Progressive AL
4 – Medium volatility
A, B, C, D, E, G, N
0.00%
0.23%
FL Architas Multi-Manager Diversified
Protector 70 AL
4 – Medium volatility
A, B, C, D, E, G, K, N
0.00%
1.06%
FL Aviva Investors Property Trust AL
4 – Medium volatility
A, B, D, E, F, G, I, K, N
0.00%
0.45%
FL AXA Framlington Managed
Balanced AL
4 – Medium volatility
A, B, C, D, E, J, K
0.00%
0.27%
FL AXA Global High Income AL
4 – Medium volatility
A, B, E, G
0.00%
0.28%
FL F&C MM Lifestyle Balanced AL
4 – Medium volatility
A, B, C, D, E, G, N, O
0.00%
1.38%
FL F&C MM Lifestyle Cautious AL
4 – Medium volatility
A, B, C, D, E, G, N, O
0.00%
1.38%
FL Henderson Cautious Managed AL
4 – Medium volatility
A, B, D, E, J
0.00%
0.60%
FL Henderson UK Property AL
4 – Medium volatility
A, B, C, E, G, I, K, N
0.00%
0.58%
FL HSBC Open Global Distribution AL
4 – Medium volatility
A, B, C, D, E, N
0.00%
1.20%
FL HSBC Open Global Property AL
4 – Medium volatility
A, B, C, D, F, I, N
0.00%
1.15%
FL HSBC World Selection Balanced
Portfolio AL
4 – Medium volatility
A, B, C, D, E, N
0.00%
0.73%
FL Invesco Perpetual Distribution AL
4 – Medium volatility
A, B, D, E, G
0.00%
0.61%
FL Invesco Perpetual Monthly Income
Plus AL
4 – Medium volatility
A, B, D, E, G
0.00%
0.59%
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THE INVESTMENT FUNDS Investment Bond Fund Guide
Risk
Rating
Risk
Warning
One-off
Initial
Charge (%)
Additional
Yearly Fund
Charge (%)
FL Investec Cautious Managed AL
4 – Medium volatility
A, B, D, E, J, N
0.00%
0.52%
FL Jupiter High Income AL
4 – Medium volatility
A, B, C, D, E, O
0.00%
0.73%
FL Jupiter Merlin Growth AL
4 – Medium volatility
A, B, C, D, E, N, O
0.00%
1.54%
FL Jupiter Merlin Income AL
4 – Medium volatility
A, B, C, D, E, N, O
0.00%
1.37%
FL Margetts Providence Strategy AL
4 – Medium volatility
A, B, C, D, E, J, K, O
0.00%
1.55%
FL Margetts Select Strategy AL
4 – Medium volatility
A, B, C, D, E, K
0.00%
1.61%
FL M&G European Corporate Bond AL
4 – Medium volatility
A, B, E, G
0.00%
0.51%
FL M&G Feeder of Property AL
4 – Medium volatility
A, B, E, G, I, K
0.00%
0.94%
FL Newton International Bond AL
4 – Medium volatility
A, B, C, E, G, J, K
0.00%
0.42%
FL Newton Multi Asset Diversified
Return AL
4 – Medium volatility
A, B, C, D, E, G, J, N
0.00%
0.67%
FL Newton Multi Asset Growth AL
4 – Medium volatility
A, B, C, D, E, J, N
0.00%
0.50%
FL Architas MA Active Dynamic AL
5–M
edium to High
volatility
A, B, C, D, E, N
0.00%
1.07%
FL Architas MA Active Growth AL
edium to High
5–M
volatility
A, B, C, D, E, N
0.00%
1.03%
FL Artemis Income AL
5–M
edium to High
volatility
A, B, C, D, E, G, O
0.00%
0.60%
FL Artemis UK Select AL
5–M
edium to High
volatility
A, B, C, D, E, G
0.00%
0.65%
FL Artemis UK Special Situations AL
edium to High
5–M
volatility
A, B, C, D, G
0.00%
0.63%
FL AXA Framlington UK Select
Opportunities AL
5 – Medium to High
volatility
A, D
0.00%
0.66%
FL Baillie Gifford American AL
5 – Medium to High
volatility
A, B, D
0.00%
0.39%
FL Baillie Gifford Managed AL
5 – Medium to High
volatility
A, B, C, D, E, G
0.00%
0.34%
FL F&C MM Lifestyle Growth AL
5 – Medium to High
volatility
A, B, C, D, E, G, N, O
0.00%
1.44%
FL F&C Responsible UK Equity
Growth AL
edium to High
5–M
volatility
A, D, M
0.00%
0.74%
FL Fidelity Special Situations AL
edium to High
5–M
volatility
A, B, C, D, G
0.00%
0.75%
FL Fidelity Wealthbuilder AL
5–M
edium to High
volatility
A, B, C, D, E, G
0.00%
1.14%
FL Franklin Mutual Shares AL
edium to High
5–M
volatility
A, B, C, D, E, O
0.00%
0.63%
FL Henderson Global Equity
Income AL
5 – Medium to High
volatility
A, B, C, D, E, O
0.00%
0.62%
FL Invesco Perpetual High Income AL
5 – Medium to High
volatility
A, B, C, D, N
0.00%
0.72%
Fund name
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Investment Bond Fund Guide THE INVESTMENT FUNDS
Fund name
Risk
Rating
Risk
Warning
One-off
Initial
Charge (%)
Additional
Yearly Fund
Charge (%)
FL Invesco Perpetual Income AL
5 – Medium to High
volatility
A, B, C, D, N
0.00%
0.71%
FL Invesco Perpetual Income &
Growth AL
5–M
edium to High
volatility
A, B, D
0.00%
0.87%
FL Investec UK Special Situations AL
edium to High
5–M
volatility
A, D, E, G
0.00%
0.65%
FL Jupiter Ecology AL
5–M
edium to High
volatility
A, B, C, D, M
0.00%
0.69%
FL Jupiter Income AL
5–M
edium to High
volatility
A, B, D, E
0.00%
0.76%
FL Margetts Greystone Global Growth AL
edium to High
5–M
volatility
A, B, C, D, E, K, N, O
0.00%
1.67%
FL Margetts Venture Strategy AL
edium to High
5–M
volatility
A, B, C, D, K
0.00%
1.82%
FL Newton Global Equity AL
5–M
edium to High
volatility
A, B, C, D
0.00%
0.59%
FL Newton UK Income AL
edium to High
5–M
volatility
A, B, D
0.00%
0.32%
FL Schroder Income AL
5–M
edium to High
volatility
A, B, D
0.00%
0.73%
FL Schroder Income Maximiser AL
edium to High
5–M
volatility
A, B, D, G
0.00%
0.58%
FL Schroder Tokyo AL
5 – Medium to High
volatility
A, B, D
0.00%
0.66%
FL Schroder UK Smaller Companies AL
5 – Medium to High
volatility
A, D
0.00%
0.84%
FL Schroder US Mid Cap AL
5 – Medium to High
volatility
A, B, D
0.00%
0.68%
FL Stewart Investors Asia Pacific
Leaders AL
5 – Medium to High
volatility
A, B, C, D
0.00%
0.53%
FL Threadneedle Global Select AL
5 – Medium to High
volatility
A, B, C, D, E
0.00%
0.68%
FL UK Tracker AL
5 – Medium to High
volatility
A, D
0.00%
0.00%
FL AXA Framlington American
Growth AL
igh volatility
6–H
A, B, C, D
0.00%
0.62%
FL AXA Framlington Financial AL
6 – High volatility
A, B, C, D, F
0.00%
0.60%
FL AXA Framlington Health AL
6 – High volatility
A, B, C, D, F
0.00%
0.89%
FL AXA Framlington UK Growth AL
6 – High volatility
A, D
0.00%
0.68%
FL AXA Framlington UK Smaller
Companies AL
6 – High volatility
A, D
0.00%
0.69%
FL Baillie Gifford UK Equity Alpha AL
6 – High volatility
A, D
0.00%
0.27%
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THE INVESTMENT FUNDS Investment Bond Fund Guide
Fund name
Risk
Rating
Risk
Warning
One-off
Initial
Charge (%)
Additional
Yearly Fund
Charge (%)
FL Fidelity American AL
6 – High volatility
A, B, D
0.00%
0.74%
FL Fidelity European AL
6 – High volatility
A, B, C, D
0.00%
0.85%
FL Fidelity Global Property AL
6 – High volatility
A, B, C, D, F, N
0.00%
1.01%
FL Henderson European Growth AL
6 – High volatility
A, B, D, E, O
0.00%
0.61%
FL Henderson European Selected
Opportunities AL
6 – High volatility
A, B, D
0.00%
0.62%
FL Henderson US Growth AL
6 – High volatility
A, B, D, K
0.00%
0.72%
FL Invesco Perpetual Asian AL
6 – High volatility
A, B, C, D
0.00%
0.61%
FL Investec American AL
6 – High volatility
A, B, D, E, G, J
0.00%
0.62%
FL Investec Global Strategic Equity AL
6 – High volatility
A, B, C, D, G
0.00%
0.61%
FL JPM UK Equity Growth AL
6 – High volatility
A, B, D, E
0.00%
0.74%
FL Jupiter European AL
6 – High volatility
A, B, C, D
0.00%
0.90%
FL Jupiter Financial Opportunities AL
6 – High volatility
A, B, C, D, F
0.00%
0.70%
FL Jupiter UK Growth AL
6 – High volatility
A, D
0.00%
0.84%
FL Newton UK Equity AL
6 – High volatility
A, B, D
0.00%
0.67%
FL Schroder Global Cities Real Estate AL
6 – High volatility
A, B, C, D, E, F, N
0.00%
0.62%
FL Schroder UK Alpha Plus AL
6 – High volatility
A, B, D, E
0.00%
0.73%
FL Schroder UK Opportunities AL
6 – High volatility
A, D
0.00%
0.74%
FL Schroder US Smaller Companies AL
6 – High volatility
A, B, D
0.00%
0.75%
FL Allianz Emerging Markets Equity AL
7 – Highest volatility
A, B, C, D
0.00%
0.74%
FL AXA Framlington Biotech AL
7 – Highest volatility
A, B, C, D, F
0.00%
0.80%
A, B, C, D
0.00%
0.73%
A, B, D
0.00%
0.60%
A, B, C, D, F
0.00%
0.59%
FL AXA Framlington Emerging Markets AL 7 – Highest volatility
FL AXA Framlington European AL
7 – Highest volatility
FL AXA Framlington Global Technology AL 7 – Highest volatility
FL BlackRock Gold & General AL
7 – Highest volatility
A, B, C, D, F, N
0.00%
0.79%
FL Fidelity Emerging EMEA AL
7 – Highest volatility
A, B, C, D, G
0.00%
0.90%
FL Fidelity European Opportunities AL
7 – Highest volatility
A, B, C, D
0.00%
0.91%
FL First State Global Resources AL
7 – Highest volatility
A, B, C, D, F, N
0.00%
0.64%
FL Henderson China Opportunities AL
7 – Highest volatility
A, B, C, D
0.00%
0.64%
FL Henderson Emerging Markets
Opportunities AL
7 – Highest volatility
A, B, C, D
0.00%
0.71%
FL Invesco Perpetual Japan AL
7 – Highest volatility
A, B, D
0.00%
0.71%
FL JPM Emerging Markets AL
7 – Highest volatility
A, B, C, D, E
0.00%
0.60%
FL JPM Natural Resources AL
7 – Highest volatility
A, B, C, D, E, F, N
0.00%
0.75%
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Investment Bond Fund Guide THE INVESTMENT FUNDS
Risk
Rating
Risk
Warning
One-off
Initial
Charge (%)
Additional
Yearly Fund
Charge (%)
FL Jupiter European Special Situations AL
7 – Highest volatility
A, B, C, D
0.00%
0.78%
FL Schroder European Alpha Plus AL
7 – Highest volatility
A, B
0.00%
0.65%
FL Schroder European Opportunities AL
7 – Highest volatility
A,B
0.00%
0.64%
FL Schroder Global Emerging Markets AL
7 – Highest volatility
A, B, C, D, E, O
0.00%
0.69%
Fund name
Risk
Rating
Risk
Warning
One-off
Initial
Charge (%)
Additional
Yearly Fund
Charge (%)
Fund name
Funds closed to new business
and fund switches
FL Active Protector 80 AL
2 – Low volatility
A, G, K
0.00%
0.30%
FL Active Protector 70 AL
3 – Low to Medium
volatility
A, G, K
0.00%
0.30%
FL Stewart Investors Global Emerging
Markets Leaders AL
6 – High volatility
A, B, C, D
0.00%
0.57%
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THE INVESTMENT FUNDS Investment Bond Fund Guide
With Profits Funds
One-off
Initial Charge
(%)
Additional
Yearly Fund
Charge (%)
Friends Life FLC With Profits**
0.00%
0.20%
Friends Life FLC With Profits Income**
0.00%
0.20%
Fund name
With Profits Funds
If you invest in the With Profits Fund, you are entitled to bonuses arising from a share of the profits within this
fund. You receive your share of profits as bonuses that are added to your plan.
Regular bonuses, if any, are added at least monthly by increasing the unit price. In addition, we may pay a final
(sometimes known as terminal) bonus when you leave the With Profits Fund. We regularly review bonus rates
and these can change at any time. The amount available for bonuses is affected by several factors which
include the cost of meeting any guarantees provided under new and existing policies in the With Profits Fund.
Please remember that future bonuses cannot be guaranteed as they come from profits we have not yet earned.
If the investment performance of the With Profits Fund is lower than that reflected in the bonuses we have
already added to your plan and you leave the Fund either before or after your chosen retirement date then we
are likely to reduce the value of units. This is known as a ‘market value reduction’ (MVR). An MVR does not
apply at your chosen retirement date, or on death. Any MVR is designed to protect policyholders who continue
to invest in the With Profits Fund.
We declare bonuses and manage the With Profits Fund in line with our Principles and Practices of Financial
Management (PPFM). An abbreviated version of that document, including information about the different types
of bonus which can be added to your plan, and in what circumstances MVRs may apply, can be found in our
‘Guide to how we manage our with profits business’. Copies of both documents are available from our website
www.friendslife.co.uk/withprofits or by contacting us.
Important information about our fund ranges
Securities lending may take place on the unit linked funds. Securities lending aims to generate additional
income for the funds involved. It is a common practice in financial markets whereby securities are temporarily
lent by one financial institution (on behalf of the ultimate owner of the securities), to another financial
institution for a fee. The borrowing financial institution provides acceptable collateral (e.g. gilts, other
securities) equal to the market value of securities borrowed plus a margin to cover any drop in the value of
collateral provided relative to the securities borrowed. Checks on collateral are made daily and further
collateral demanded if required. This occurs until the securities are returned. In extreme situations the fund
may experience a loss if the borrower breaches its agreement with the lender and the collateral held, when
sold, is insufficient to cover the cost of purchasing the securities lent. Securities lending will not affect any
transactions you wish to make on your Bond.
External Funds ranges
Please note that if you invest in these funds, you are not investing directly into the fund managed by the external
company. Instead you will invest into a ‘mirror’ fund which will then invest in the external fund, which we call the
‘underlying fund’. So, the ‘mirror’ fund would be called, for example, ‘FL Newton Multi Asset Growth AL’ to reflect
the underlying fund.
When Friends Life adds funds to the external fund range, we set up a ‘mirror fund’ which invests in the same
underlying external fund. The performance and unit price will not be the same. Friends Life will set the starting
price of a fund, then the price of the mirror fund will evolve over time in a different way to the underlying external
fund. The fund prices will evolve differently due to a number of factors which include the difference in charges
applied to the funds, the time taken to buy or sell holdings in such investment funds which are managed
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Investment Bond Fund Guide THE INVESTMENT FUNDS
externally, any deductions for Life taxation and the mirror fund may hold a greater amount of cash for certain
periods of time. Cash held in the fund will reduce the potential for growth.
The difference in unit prices will affect quoted performance of the mirror fund compared to the underlying
external fund.
In addition, the unit price will not be the same, because of the time taken to buy or sell holdings in such investment
funds which are managed externally.
The underlying funds will be managed and operated in accordance with their published fund aims and the
regulations applicable to that type of investment.
Friends Life Architas Protector Funds
The aim of the FL Architas Protector Funds is to provide elements of both growth and protection based on the
return available from investment into the Architas Multi-Manager Diversified Protector funds (the underlying
funds). The aim of the underlying funds is to offer some growth of capital potential whilst at the same time
protecting a fixed proportion of the highest value reached by the underlying fund. It is important to understand
that they do not aim to protect all of your investment and you could get back less than you invest. The FL Architas
Multi Manager Diversified Protector 70 Fund and the FL Architas Multi Manager Diversified Protector 80 Fund are
‘mirror’ funds that invest in the underlying funds. You should be aware that an exact mirror in performance of the
underlying fund does not occur due to the following reasons:
•The Friends Life fund may not be wholly invested in the underlying fund at all times because it also holds an
element of money market assets,
• The time taken to buy or sell holdings in the underlying fund,
• The mirror fund and underlying fund have different levels of charges and taxation.
As a result you won’t get back exactly the same return as if you had invested directly into the underlying fund and
there is no assurance that the level of protection will be the same.
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THE INVESTMENT FUNDS Investment Bond Fund Guide
Before investing in these funds it is important that you understand how the capital protection works and the
specific circumstances in which the protection could fail. An important starting point is to understand that these
funds do not offer a guarantee and you could get back less than the amount you invest. Also the funds growth
potential is reduced compared to identical funds that do not offer protection. The underlying funds invest in a mix
of risky and lower risk assets and these are regularly rebalanced to reflect the performance of those assets and
to maintain the protection. When markets are volatile there could be significant buying and selling of assets which
could reduce the performance of the funds. If the share price of the funds falls and continues to fall, then in order
to achieve the protection, the fund could become 100% invested in lower risk assets and could remain so for
some time. Consequently there will be little or no prospect of investment growth during this period and limited
prospects of growth in the early stages of any market recovery. There are additional costs to the fund for
providing the protection and these are reflected in the fund charges. These charges reduce the potential for
investment growth. As mentioned above, there are certain events that could cause the protection to fail. These
events and further risks associated with the funds are explained in ‘Your guide to the FL Architas Protector
funds’. It is important that you read this guide and are comfortable with these risks before investing. Further
and more detailed information regarding these funds is also available in this guide, and from your financial adviser.
How costs of buying and selling assets may affect your unit price
The unit price(s) of a fund will take into account the costs of buying or selling assets of the fund, e.g. dealing costs
and taxes. Funds use different methods to reflect these costs, e.g. a dilution levy – a transaction charge which
may be made by the underlying fund manager.
The price allocated to transactions will depend on whether the fund is buying or selling assets, either on a given
date or over the longer-term. Two valuations of each of our funds are made at every valuation point. One takes
into account the prices at which the assets could be bought and the associated purchase costs. This is the
‘purchase valuation’. The other is the ‘sale valuation’, and reflects the prices and costs of selling assets. We
monitor cash flows of our funds to set the unit price either on a purchase valuation or a sale valuation basis. The
difference between a purchase and a sale valuation can vary and may be significant. This means you may get
back less than you expect, especially with regard to property funds where the difference could exceed 7%.
You can get more information from ‘Our unit-linked principles and practices’ document which is available from
our website www.friendslife.co.uk.
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Investment Bond Fund Guide INCOME PRODUCING FUNDS
‘Income’ producing funds
We offer a number of funds that have been designed to provide income in the form of regular withdrawals.
These funds typically invest in assets that have the capacity to earn dividends or interest payments. They can
then use this income to provide payments to investors on a regular basis. The level of the payments will
fluctuate depending on the income that is received by the fund.
We will send a statement each month informing you of the monthly amount payable.
It is important to note that bond income, in the form of withdrawals from the funds, can fall as well as rise, as
can capital value, and is not guaranteed. Income taken as regular withdrawals reduces the potential for capital
growth potential. For more information please see the section ‘Important information about taking withdrawals
out of your Bond’ on the next page.
The income producing funds are:
• FL Distribution AL
• FL High Yield Distribution AL
• FL Sterling Corporate Bond AL
• FL Monthly Distribution AL
• FL Monthly High Yield Distribution AL
• FL Monthly Sterling Corporate Bond AL
These funds provide distributions or payments at different regular intervals. The table below gives more detail
on these funds.
Fund Name
Distribution Timing
Payment Date
FL Distribution AL
Half Yearly
17 May and 17 November
FL High Yield Distribution AL
Half Yearly
18 February and
18 August
FL Sterling Corporate Bond AL
Quarterly
31 March, 30 June,
30 September and
31 December
Fund Name
Distribution Timing
Payment Date
FL Monthly Distribution AL
Monthly
17th of each month
FL Monthly High Yield Distribution AL
Monthly
18th of each month
FL Monthly Sterling Corporate Bond AL
Monthly
The last day of each month.
For all of the above income producing funds you can choose to either take the payments/distributions or
re-invest them.
You will be sent a statement informing you of the amounts payable after each income payment whether paid
half-yearly, quarterly or monthly.
These funds pay out a level of income generated by the assets in your chosen fund. As the level of income
generated will vary then the amount of income distribution will go up and down.
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INCOME PRODUCING FUNDS Investment Bond Fund Guide
Important information about taking withdrawals out of your Bond
If you take a regular withdrawal in the form of income from your Bond, it’s important to know that the potential
for capital growth is reduced, and the value of your investment could fall below its original level, especially at
times when investment performance is poor or when you take out more than your investment is growing by. In
addition, the more you take out, the more the potential for future growth will be reduced.
Withdrawing more than 5% of the initial amount of your investment in one plan year means you could be subject
to an immediate tax liability. You can read more about Tax in the section ‘Tax and Withdrawals’ below.
Withdrawals of more than 7.5% per annum of the value of the Bond may attract early cash-in charges. These
are considered to be a partial cash-in and cannot be made regularly.
The FL Monthly Distribution AL and FL Monthly High Yield Distribution AL funds invest in the underlying units
of the FL Distribution AL and FL High Yield Distribution AL funds respectively. These monthly funds are
specially designed to pay you a monthly amount based on the half-yearly distribution payments of the
underlying funds.
Tax and withdrawals
It is important to remember that any withdrawal taken from the Bond is considered a withdrawal of capital and
is subject to special income tax rules for calculating and assessing the amount of income tax liability that may
arise on a chargeable gain. These rules mean any chargeable gain you make on withdrawal will be free from
capital gains tax and the basic rate of income tax.
You can currently withdraw up to 5% of your initial and any additional investments each plan year for 20 years
and defer any tax. If you do not take the full 5% entitlement in any plan year, the unused amount can be carried
forward for use in future years.
If you withdraw more than 5% of your initial investment and any additional investments in any plan year and
this causes you to go over the higher rate income tax limit, you will be liable to pay income tax on the difference
between the higher and basic rates. This will be payable on the withdrawals above 5% per plan year of your
total investment(s).
If you pay tax at the additional higher rate or the chargeable gain causes you to do so you will pay tax at the
difference between the additional higher rate and the basic rate.
Withdrawals are free from capital gains tax and the basic rate of income tax, but it should be borne in mind
that all withdrawals are taken into account on final encashment of the Bond to calculate what tax (if any)
should be paid.
Tax details are subject to change and their value depends on individual circumstances. You should discuss your
individual tax implications with your financial adviser. Please note your financial adviser may charge you for
this advice.
Friends Life reserves the right to delay payment in accordance with the product terms and conditions.
Any chargeable gain on taking a regular income may mean that the high amount that people over 65 are
allowed to earn before paying income tax (known as age related allowance) is reduced. The gain may also
reduce the value of tax credits and working tax credits.
For more information about Tax and Withdrawals please see section ‘Tax and your Investment Bond’ in the
Investment Bond Guide.
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Investment Bond Fund Guide INCOME PRODUCING FUNDS
What do I need to know if I choose to take distributions from the FL Distribution AL and/or
FL High Yield Distribution AL funds?
If you chose to take half-yearly distributions or monthly withdrawals, this will reduce the underlying value of
your Investment Bond. Your personal illustration does not reflect this.
To give you an indication of how the underlying value of your Investment Bond could be affected please see
the below examples. Tables 1 to 8 illustrate £10,000 invested in FL Distribution AL, FL High Yield Distribution
AL, FL Monthly Distribution AL, or FL Monthly High Yield Distribution AL funds. They are based on the youngest
life insured being below age 65.
We have used the standard growth rates set by the Financial Conduct Authority for funds with a high equity
content. If you switch into different funds in the future, different growth rates may become more appropriate.
Please note that the growth rates are based on long-term investment returns and do not necessarily reflect
returns available over the short-term.
Table 1 – FL Distribution AL
At 1.5% per year growth the cash value would be £6,940
At 4.5% per year growth the cash value would be £9,280
At 7.5% per year growth the cash value would be £12,300
Table 2 – FL Distribution AL
At end of year
Total paid in
to date
(£)
Distributions
(£)
Effect of deductions to
date
(£)
What you might
get back
(£)
1
10,000
364
1,310
8,760
2
10,000
722
1,340
8,800
3
10,000
1,070
1,400
8,840
4
10,000
1,420
1,250
9,090
5
10,000
1,760
1,100
9,340
10
10,000
3,480
1,800
9,280
The effect of deductions over the term shown would be equivalent to bringing the investment growth rate used
down from 4.5% to 2.9% each year.
Table 3 – FL Monthly Distribution AL
At 1.5% per year growth the cash value would be £6,960
At 4.5% per year growth the cash value would be £9,310
At 7.5% per year growth the cash value would be £12,300
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INCOME PRODUCING FUNDS Investment Bond Fund Guide
Table 4 – FL Monthly Distribution AL
Total paid in
to date
(£)
Distributions
1
10,000
2
10,000
720
1,350
8,810
3
10,000
1,070
1,400
8850
4
10,000
1,410
1,250
9,110
5
10,000
1,760
1,110
9,360
10
10,000
3,480
1,810
9,310
At end of year
(£)
Effect of deductions to
date
(£)
What you might
get back
(£)
363
1,310
8,760
The effect of deductions over the term shown would be equivalent to bringing the investment growth rate
used down from 4.5% to 2.9% each year.
Notes applicable to tables 1 – 4
We have assumed that you are taking full distributions. The distributions have been estimated to be
3.70% and the figures are based on the net yield at 17 May 2016 for the FL Distribution AL and FL Monthly
Distribution AL funds. These amounts are not guaranteed and could fluctuate in the future, depending on
market conditions. The distributions will be paid in two instalments for the FL Distribution AL fund and twelve
monthly amounts, based on the half-yearly distributions, for the FL Monthly Distribution AL fund.
The illustration assumes the tiered allocation charging structure applies and that full commission has been
paid to your financial adviser.
Distributions are made on May 17 and November 17 each year for the FL Distribution AL fund. For the FL
Monthly Distribution AL fund, monthly amounts, based on the half-yearly distributions, are declared on
the 17th of each month. However, for the purposes of these illustrations, we have assumed that the next
distribution will happen straight away.
Table 5 – FL High Yield Distribution AL
At 1.5% per year growth the cash value would be £6,930
At 4.5% per year growth the cash value would be £9,270
At 7.5% per year growth the cash value would be £12,300
Table 6 – FL High Yield Distribution AL
At end of year
Total paid in
to date
(£)
Distributions
(£)
Effect of deductions to
date
(£)
What you might
get back
(£)
1
10,000
365
1,310
8,760
2
10,000
724
1,340
8,800
3
10,000
1.070
1,400
8,840
4
10,000
1.420
1,250
9,090
5
10,000
1,770
1,100
9,340
10
10,000
3,490
1,800
9,270
The effect of deductions over the term shown would be equivalent to bringing the investment growth rate
used down from 4.5% to 2.9% each year.
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Investment Bond Fund Guide INCOME PRODUCING FUNDS
Table 7 – FL Monthly High Yield Distribution AL
At 1.5% per year growth the cash value would be £6,950
At 4.5% per year growth the cash value would be £9,300
At 7.5% per year growth the cash value would be £12,300
Table 8 – FL Monthly High Yield Distribution AL
At end of year
Total paid in
to date
(£)
Distributions
(£)
Effect of deductions to
date
(£)
What you might
get back
(£)
1
10,000
363
1,310
8,760
2
10,000
721
1,350
8,810
3
10,000
1,070
1,400
8,850
4
10,000
1,420
1,250
9,100
5
10,000
1,760
1,110
9,350
10
10,000
3,490
1,810
9,300
The effect of deductions over the term shown would be equivalent to bringing the investment growth rate
used down from 4.5% to 2.9% each year.
Notes applicable to tables 5 – 8
We have assumed that you are taking full distributions. The distributions have been estimated to be 3.70% and
the figures are based on the net yield at 18 August 2016 for the FL High Yield Distribution AL and FL Monthly High
Yield Distribution AL funds. The monthly amounts assumed for the FL Monthly High Yield Distribution AL fund
are based on the estimated half-yearly distributions from the FL High Yield Distribution AL fund. These amounts
are not guaranteed and could fluctuate in the future, depending on market conditions. The distributions will be
paid in two instalments for the FL High Yield Distribution AL fund and twelve monthly amounts, based on the
half-yearly distributions, for the FL Monthly High Yield Distribution AL fund.
The illustration assumes the tiered allocation charging structure applies and that full commission has been
paid to your financial adviser.
Distributions are made on February 18 and August 18 for the FL High Yield Distribution AL fund. For the
FL Monthly High Yield Distribution AL fund, monthly amounts, based on the half-yearly distributions, are
declared on the 17th of each month. However, for the purposes of these illustrations, we have assumed
that the next distribution will happen straight away.
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INCOME PRODUCING FUNDS Investment Bond Fund Guide
What if I choose to take payments from the FL Sterling Corporate Bond AL funds?
If you chose to take payments from the FL Sterling Corporate Bond AL or FL Monthly Sterling Corporate Bond
AL funds, this will affect the underlying value of your Investment Bond. Your personal illustration does not
reflect this.
If you take regular withdrawals from the FL Monthly Sterling Corporate Bond AL fund, part of your initial
investment will be used to provide the monthly withdrawals. This will continue until the first quarterly payment is
received. This is likely to reduce the growth potential and underlying value of your Investment Bond below the
amount you originally invested.
To give you an indication of how the underlying value of your Investment Bond could be affected please see the
below examples. Tables 9 to 12 illustrate £10,000 invested in the FL Sterling Corporate Bond AL and FL Monthly
Sterling Corporate Bond AL funds. They are based on the youngest life insured being below age 65.
We have used lower growth rates than the standard rates set by the Financial Conduct Authority for funds with
higher equity content. This is because we consider that the use of the prescribed rates might overstate the
investment potential for this fund. If you switch into different funds in the future, different growth rates may
become more appropriate. Please note that the growth rates are based on long-term investment returns and
do not necessarily reflect returns available over the short-term.
Table 9 – FL Sterling Corporate Bond AL
At 1% per year growth the cash value would be £7,240
At 4% per year growth the cash value would be £9,710
At 7% per year growth the cash value would be £12,900
Table 10 – FL Sterling Corporate Bond AL
At end of year
Total paid in
to date
(£)
Distributions
(£)
Effect of deductions to
date
(£)
What you might
get back
(£)
1
10,000
272
1,320
8,800
2
10,000
540
1,360
8,880
3
10,000
806
1,420
8,960
4
10,000
1,070
1,260
9,260
5
10,000
1,330
1,120
9,560
10
10,000
2,650
1,810
9,710
The effect of deductions over the term shown would be equivalent to bringing the investment growth rate
used down from 4% to 2.4% each year.
Table 11 – FL Monthly Sterling Corporate Bond AL
At 1% per year growth the cash value would be £7,250
At 4% per year growth the cash value would be £9,720
At 7% per year growth the cash value would be £12,900
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Investment Bond Fund Guide INCOME PRODUCING FUNDS
Table 12 – FL Monthly Sterling Corporate Bond AL
Total paid in
to date
(£)
Distributions
1
10,000
2
(£)
Effect of deductions to
date
(£)
What you might
get back
(£)
271
1,320
8,800
10,000
540
1,360
8,880
3
10,000
805
1,420
8,960
4
10,000
1,060
1,270
9,260
5
10,000
1,330
1,120
9,560
10
10,000
2,650
1,810
9,720
At end of year
The effect of deductions over the term shown would be equivalent to bringing the investment growth rate
used down from 4% to 2.4% each year.
We have assumed that you are taking full payments. The payments have been estimated to be 2.76% and
the figures are based on the net yield at 30 September 2016 for the FL Sterling Corporate Bond AL and FL
Monthly Sterling Corporate Bond AL funds. These amounts are not guaranteed and could fluctuate in the
future, depending on market conditions. The payments will be paid in four instalments for the FL Sterling
Corporate Bond AL fund and twelve monthly amounts, based on the quarterly payments, for the FL Monthly
Sterling Corporate Bond AL fund.
The illustration assumes the tiered allocation charging structure applies and that full commission has been
paid to your financial adviser.
Payments are made at the end of each calendar quarter for the FL Sterling Corporate Bond AL fund. For
the FL Monthly Sterling Corporate Bond AL fund, monthly amounts, based on the quarterly payments, are
declared at the end of each month. However, for the purposes of these illustrations, we have assumed that
the next payment will happen straight away.
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Further information
The ‘My Plans’ website can provide you with information. Go to www.friendslife.co.uk/myplans to access
more information about your plan;;
Alternatively you can contact us by calling 0345 300 0479; or write to us at:
Friends Life
PO Box 582
Bristol
BS34 9FX
United Kingdom
As part of our commitment to quality service, telephone calls may be recorded.
www.friendslife.co.uk
Friends Life, PO Box 582, Bristol, BS34 9FX. Telephone number 0117 989 9000
Friends Life Limited
An incorporated company limited by shares and registered in England and Wales, number 4096141.
Registered office: Pixham End, Dorking, Surrey RH4 1QA. Authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Telephone calls may be recorded.
Friends Life is a registered trade mark of the Friends Life group.
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