Product brochure WEALTH MANAGEMENT PLAN. A way to manage your wealth now and into the future. For the Hong Kong market only

Transcription

1 Product brochure WEALTH MANAGEMENT PLAN A way to manage your wealth now and into the future For the Hong Kong market only

2 IMPORTANT INFORMATION This product is an investment-linked assurance scheme ( ILAS policy ). It is a life assurance policy issued by Old Mutual International Isle of Man Limited ( Old Mutual International ). Your investments are subject to the credit risks of Old Mutual International. The premiums you pay towards your ILAS policy, any funds that are transferred to Old Mutual International under the ILAS policy, and any investments made by Old Mutual International in the underlying funds you select, will become and remain the assets of Old Mutual International. You do not have any rights or ownership over any of those assets. Your recourse is against Old Mutual International only. The premiums you pay, after deduction of any applicable fees and charges of your ILAS policy, will be invested by Old Mutual International in the underlying funds you select. You may also transfer your existing funds, which are funds listed in the Investment Choices brochure Old Mutual International Investment Choices for the Wealth Management Plan, held in your name to Old Mutual International as a premium payment in kind. Your ILAS policy value will be calculated by Old Mutual International based on the performance of your selected underlying funds (including the funds that are transferred). Due to the various fees and charges levied by Old Mutual International on your ILAS policy, the return on your ILAS policy as a whole may be lower than the return of the underlying funds you select (including the funds that are transferred). Early surrender or withdrawal of the policy may result in a significant loss of principal (premiums). Poor performance of underlying funds may further magnify your investment losses, while all charges are still deductible. The Investment Choices available under this product can have very different features and risk profiles. Some may be of high risk. The principal brochure of the Wealth Management Plan consists of this product brochure and the Investment Choices brochure Old Mutual International Investment Choices for the Wealth Management Plan. The principal brochure should be read in conjunction with the product key facts statement of the Wealth Management Plan. For definitions of the capitalised terms used in this product brochure, please refer to the Glossary section. 2

3 CONTENTS AT A GLANCE A wealth management option for changing goals 4 How the Wealth Management Plan works 5 Making an investment Currency denomination Eligibility Plan arrangement Investing into the Wealth Management Plan 6 Minimum premium amounts Allocating your premiums In-specie transfers Investment Choices extensive opportunities 8 Flexibility to adjust 10 Changing your Investment Choices Wealth Interactive online service 10 Calculating the Policy Value 11 Accessing your money 12 Partial surrender/withdrawal equally across all policies Full surrender Charges table 14 Applying for and administering online 20 Termination 20 Death benefit claims 20 Old Mutual International across the globe 21 Tax efficiency 22 Tax planning Foreign Account Tax Compliance Act 23 The Isle of Man an offshore investment centre 24 Your right to change your mind 25 Borrowing powers 25 Glossary 26 Appendix 1 Currency equivalent amounts applicable to Plans denominated in currencies other than HK$ 27 Further information 29 3

4 A WEALTH MANAGEMENT OPTION FOR CHANGING GOALS WEALTH PLANNING IS NEVER EASY. Personal circumstances and investment goals tend to change at different stages of your life, so it is crucial to select a product that can evolve in line with your changing needs and risk profile. This is how the Wealth Management Plan is designed. 4

5 HOW THE WEALTH MANAGEMENT PLAN WORKS MAKING AN INVESTMENT The Wealth Management Plan (the Plan ) is a whole of life, investment-linked, life assurance policy. It has no fixed premium payment term, so it is up to you to decide how long you want to remain invested in it. You should note that the Plan is a long-term investment-cum-life assurance product and an early surrender charge may be applied at a maximum period of 5 years from the payment of the relevant premium. See page 18 for details of the early surrender charge. At the commencement of your Plan, you must contribute an initial lump sum premium. The minimum amounts for lump sum premiums are shown on page 6. If you would like to make regular premium payments subsequent to your initial lump sum premium, you can do so after the first Plan anniversary. Once your Plan has commenced, you can also consider contributing additional lump sum premiums from time to time. We may also accept in-specie transfers (please see page 7 for the details) as the whole or as part of a lump sum premium, subject to our acceptability criteria. This product is an ILAS policy issued by Old Mutual International. Your investments are subject to the credit risks of Old Mutual International. CURRENCY DENOMINATION Because today s investors are internationally mobile, we offer a number of currencies as below for you to choose at commencement. Once selected, the currency your Plan is denominated in is fixed and cannot be changed. For lump sum premiums only, you can contribute in a different currency while regular premiums (if any) need to be paid, throughout the whole premium payment term, in the denominated currency. Hong Kong Dollars (HK$) Sterling Pounds ( ) US Dollars (US$) Euros ( ) Singapore Dollars (S$) Canadian Dollars (C$) Australian Dollars (A$) New Zealand Dollars (NZ$) Japanese Yen ( ) Swiss Franc (CHF) ELIGIBILITY The Wealth Management Plan is available to Plan holders who are individuals between 18 and 79 years of age (both inclusive), as well as corporate and trustee investors. You can apply either in your own name only, or jointly with one or more other persons with whom you have an insurable interest. Regardless of whether the Wealth Management Plan is on a single or joint basis, you have the option of setting it up with either Single Life Assured or Joint Lives Assured, Last Death. Under a Last Death basis, the death benefit will be payable and the Plan will cease on the death of the last of those named as lives assured. At the commencement of the Plan, one of the lives assured must be aged 79 or below. In the event of the death of the last life assured, the death benefit payable will be 105% of the Policy Value as at the date when we calculate the final value of the Plan after the last of the underlying funds corresponding to your Investment Choices has been redeemed. See page 20 Death benefit claims for details of death benefits. PLAN ARRANGEMENT The Plan can be issued as a cluster of 12 identical policies; or more subject to our approval. This may be beneficial if you wish to distribute or possibly assign it to other members of your family. It may also provide tax efficiency, particularly for investors who are, or intend to become, UK resident and may be affected by UK tax rules at a later date. Please seek independent tax advice. 5

6 INVESTING INTO THE WEALTH MANAGEMENT PLAN MINIMUM PREMIUM AMOUNTS LUMP SUM PREMIUM INVESTING You must contribute an initial lump sum premium reaching the required minimums as stated in the table below at commencement. If you wish, you can then make additional lump sum premiums. MINIMUM* LUMP SUM PREMIUM (OR CURRENCY EQUIVALENT) CURRENCY INITIAL ADDITIONAL HK$ 360,000 36,000 30,000 3,000 US$ 45,000 4,500 45,000 4,500 REGULAR PREMIUM INVESTING After 12 months from the commencement of your Plan, you can also contribute ad-hoc regular premiums if you want, as long as the amounts reach the required minimums as stated in the table below. Making regular premiums is optional with no commitment to any premium payment term. MINIMUM* REGULAR PREMIUM (OR CURRENCY EQUIVALENT) IF CHOSEN FREQUENCY INITIAL FUTURE INCREASE Monthly Quarterly Halfyearly Yearly Monthly Quarterly Halfyearly Yearly HK$ 6,000 18,000 36,000 72,000 1,200 3,600 7,200 14, ,500 3,000 6, ,200 US$ 750 2,250 4,500 9, , ,250 4,500 9, ,800 You can reduce or stop your regular premiums at any time, without penalty or prior approval. If you reduce or stop any regular premiums, there may be an impact on the return or benefit you originally anticipated. You may also increase or re-start your regular premiums, subject to our acceptance. Increases to the regular premiums are subject to the minimum amounts as stated in the table above. If you want to change your existing premium payment frequency in the future, for example from monthly to quarterly, you can do so by giving us advance notice before the next regular premium is due for collection. * We reserve the right to change the minimum amount requirements with not less than one-month s prior written notice or such shorter period of notice in compliance with the relevant regulatory requirements. 6

7 ALLOCATING YOUR PREMIUMS You may allocate your regular premiums to any Investment Choices that are made available. Accordingly, you do not need to restrict yourself to the Investment Choices you made for your initial lump sum premium. If you would like to increase your regular premium in the future, the same investment instruction applicable to your initial regular premiums will apply. You can find out about the Investment Choices available on page 8. The premiums you pay towards your ILAS policy, any funds that are transferred to the ILAS policy as detailed on the next section, and any investments made by Old Mutual International in the underlying funds you select, will become the assets of Old Mutual International. You do not have any rights or ownership over any of those assets. Your recourse is against Old Mutual International only. The premiums you pay, after deduction of any applicable fees and charges of your ILAS policy, will be invested by Old Mutual International in the underlying funds corresponding to the Investment Choices you select for our asset liability management. The return on your investments is calculated or determined by Old Mutual International with reference to the performance of your selected underlying funds (including any funds that are transferred). IN-SPECIE TRANSFERS If you own any existing funds which are the underlying funds listed in the Old Mutual International Investment Choices for the Wealth Management Plan, you may transfer your existing funds held in your name to Old Mutual International as a premium payment in kind, subject to our acceptance. This is also known as in-specie transfers. The title to your existing funds will be transferred to and become the assets of Old Mutual International as explained below. If you have chosen in-specie transfers as the whole/ part of your initial lump sum or additional lump sum premiums, the minimum required per fund is HK$60,000 (or currency equivalent). The funds acceptable for in-specie transfers are those underlying funds listed in the Old Mutual International Investment Choices for the Wealth Management Plan and are subject to our acceptance. We currently offer this service free of charge. There may, however, be charges made by external parties upon transferring the funds. AFTER THE FUNDS ARE TRANSFERRED Once we are granted a power of attorney on the transferring your existing funds and have received all the necessary documentation, we will be able to proceed with the transfer. The value of an in-specie transfer will be the market value obtained by Old Mutual International as at the Working Date of the underlying funds being transferred after deduction of expenses and taxes for the transaction. The respective number of notional units of the Investment Choices (corresponding to such underlying funds) will then be allocated to your Plan which correspond to the value of the underlying funds which are transferred. Upon completion of transfer, the title to your existing funds will be transferred to and become the assets of Old Mutual International and you will cease to have any legal ownership or beneficial interest in the transferred underlying funds. You will cease to be a unit holder or shareholder of the transferred underlying funds, and will be allocated notional units in the Investment Choices corresponding to the transferred underlying funds instead. Old Mutual International has the right to stop promoting and making available to prospective investors, or stop accepting additional investments by existing clients in respect of any Investment Choices, or terminate any Investment Choices if considered necessary. The decision may be made by Old Mutual International on the basis of a number of factors, which include but not limited to commercial consideration, merger, de-authorisation or termination of the underlying fund, and/or closure for further subscription. 7

8 INVESTMENT CHOICES - EXTENSIVE OPPORTUNITIES The Wealth Management Plan gives you access to a broad range of Investment Choices whose underlying funds are authorised by the Securities and Futures Commission (SFC) and managed by renowned fund management companies. The funds cover a wide spectrum of asset classes, investment strategies and geographic regions, allowing you to build a portfolio to meet your investment needs and risk appetite. You can change your Investment Choices to match your goals as they evolve. Please note that SFC authorisation is not a recommendation or endorsement of an underlying fund nor does it guarantee its commercial merits or performance. Old Mutual International is part of Old Mutual Wealth within the Old Mutual Group. We have been in the wealth management industry since 1845 and have funds under management of billion*. As a Hong Kong resident, you will have access to an extensive range of SFC authorised underlying funds through the Investment Choices (which invest into unlisted unit trusts/ mutual funds and exchange traded funds). The Investment Choices available to you are listed in the document: Old Mutual International Investment Choices for the Wealth Management Plan. Should you leave Hong Kong to reside in another jurisdiction after your Plan has commenced, you may be entitled to some other arrangements and can access other underlying assets which are not listed in the Investment Choices brochure at your request, subject to our criteria and approval. You should note that these arrangements are optional and will be available only when you reside out of Hong Kong. These optional arrangements or underlying assets are not authorised by the SFC for public offering in Hong Kong. The arrangements will be subject to fees and charges higher than those in the charges table on page 14. If you are interested, you can refer to the policy terms and conditions for more details about the optional arrangements, and obtain more information from your financial adviser in the first instance or Old Mutual International. * as at 30 June, Source: Old Mutual. 8

9 BUILDING A PORTFOLIO The Plan puts you in control of your own wealth management. Building a portfolio to match your investment goals and risk appetite requires prudent asset selection and market knowledge. You can either do it yourself, or you can appoint an investment adviser to make recommendations to you and you can then instruct us. Alternatively, you can appoint a delegated third party to instruct us directly on your behalf. If you decide to leave this task to the professionals you appoint, you may need to discuss and agree your expected services and fee with them as these will be separated from the charges detailed in the charges table on page 14. Investment involves risks. The value of your Wealth Management Plan is calculated with reference to the value of the underlying funds corresponding to your Investment Choices, so it will be dependent upon the performance of those funds. You should be aware that the value of the Investment Choices is not guaranteed as their prices may fall as well as rise. The Investment Choices available under this product can have very different features and risk profiles. Some may be of high risk. 9

10 FLEXIBILITY TO ADJUST CHANGING YOUR INVESTMENT CHOICES If your investment goals change or the market environment alters, you can switch between the Investment Choices made available under the Wealth Management Plan. There is no limit to the number of Investment Choices you can hold. Changing from one Investment Choice to another is subject to our minimum investment amounts in the table or those imposed by the underlying fund managers. In cases where the underlying funds of the Investment Choices available are exchange traded funds, they are denominated in HK$ only. We reserve the right to change the minimum amount requirements with not less than onemonth s prior written notice or such shorter period of notice as is in compliance with the relevant regulatory requirements. CURRENCY DENOMINATION OF THE INVESTMENT CHOICE MINIMUM AMOUNTS PER INVESTMENT CHOICE, WHERE THE UNDERLYING FUND IS: UNLISTED UNIT TRUST/ MUTUAL FUND EXCHANGE TRADED FUND HK$ 4,800 12, US$ ,000 A$ 800 Switching-in or out of your Investment Choices where your request is made online is free. There is a charge only if your request is made offline such as via , fax or hard copies. See page 17 for details of the asset dealing charge. WEALTH INTERACTIVE ONLINE SERVICE Our customers expect and deserve excellent and timely services and support around the clock, whether they are at home or abroad. Our Wealth Interactive allows you and your financial adviser to securely apply for and manage your Plan online. In summary, it: provides access for you and your financial adviser anytime of the day empowers your financial adviser to understand your investment objective using the available financial goal planning and risk profiling tools enables you to switch between Investment Choices allows you to obtain updated valuations enables you to request surrenders/ withdrawals enables you to update your personal details online enables you to review the correspondence we send you Wealth Interactive is designed to empower you and your financial adviser to better manage your wealth and is available at no extra charge. Once your Wealth Management Plan has commenced, all you have to do is simply activate your Wealth Interactive online service account so that you can enjoy the above benefits. 10

11 CALCULATING THE POLICY VALUE The value of your Wealth Management Plan is comprised of the value of the notional units of Investment Choices allocated and the value of any Transaction Accounts. More explanation of how the value of Investment Choices is calculated is as below. When we accept a lump sum premium or regular premium, the amount after deduction of any applicable fees and charges will be invested into your Investment Choices. Each of the Investment Choices is made up of notional units which are solely for the purpose of determining the value of the Wealth Management Plan. The number of units is equivalent to the number of units invested by Old Mutual International in the corresponding underlying funds you select. The unit prices of the Investment Choices are equal to the unit prices of the underlying funds which are determined by the respective fund management companies, and will not be rounded by Old Mutual International. The rounding method for determining the unit prices of the underlying funds is prescribed by the fund management companies. If there is any distribution paid by the underlying funds, it will be placed in the Transaction Account. The number of notional units of the Investment Choices allocated will not be rounded by Old Mutual International. It is in turn equal to the number of units of the underlying funds redeemed or subscribed as advised to Old Mutual International by the fund management companies. You should refer to the offering documents of the underlying funds for details of the rounding and calculation of unit prices of the underlying funds, and the fees and charges (if any) levied on the acquisition or cancellation of units of the underlying funds. 11

12 ACCESSING YOUR MONEY The Wealth Management Plan is designed to provide a level of flexibility when you require access to your money by means of partial surrender/withdrawal or full surrender (both options described below), subject to any applicable early surrender charge. (See page 18 for details of early surrender charge ). Early surrender/withdrawal may result in a significant loss of premiums. The Plan can be issued as a cluster of 12 identical policies or more subject to our approval, as mentioned in Plan arrangement on page 5. The specific ways of accessing your money are listed below: Partial surrender/withdrawal equally across all policies* on a regular basis Partial surrender/withdrawal equally across all policies* on a one-off basis Full surrender of only a few policies* Full surrender of all policies of the whole Plan * Plan arrangement on page 5 explains the benefits of having clusters of policies. PARTIAL SURRENDER/ WITHDRAWAL EQUALLY ACROSS ALL POLICIES You can surrender/withdraw, either on a regular or one-off basis, equally across all policies within the Plan. You can request a partial surrender/ withdrawal on a regular basis either as a monetary amount, as a percentage of the premiums paid, or as a number of units of a selected Investment Choice. For regular partial surrenders/withdrawals, they will be paid in the currency in which your Plan is denominated on a monthly, quarterly, fourmonthly (i.e. every four months), half-yearly, or yearly basis of your choice, subject to the minimum residual values (see below) remaining in your Plan. You can request regular partial surrenders/withdrawals as long as no regular premiums are being paid currently. You can stop these at any time. The minimum amount for each partial surrender/withdrawal, whether regular or one-off, is HK$4,800, 400, US$600 or 600 (or currency equivalent). No extra charge applies for the partial surrender/ withdrawal under the Plan. The early surrender charge only applies should your Plan be fully surrendered. MINIMUM RESIDUAL VALUE PARTIAL SURRENDER/WITHDRAWAL EQUALLY ACROSS ALL POLICIES You can effect a partial surrender/withdrawal provided that the minimum residual value of your Plan after surrender/withdrawal is maintained. This value is the higher of HK$120,000 (or currency equivalent); and 125% of any outstanding establishment charge expected to be deducted over the remaining selected charging period over which payments of the establishment charge are spread. If you make a partial surrender/withdrawal request that would cause the value of your Plan to fall below the required minimum residual value, we reserve the right to decline or restrict such request. 12

13 FULL SURRENDER You can also access your investment by fully surrendering a number of policies or the whole Plan at any time. FULL SURRENDER OF A NUMBER OF (BUT NOT ALL) POLICIES UNDER THE PLAN If you are surrendering a number of policies, the minimum total surrender amount is HK$4,800, 400, US$600 or 600 (or currency equivalent). The surrender request is subject to the minimum residual value (see below) remaining in your Plan. An early surrender charge will only apply if there are any outstanding establishment charges. (See page 14 for details of the establishment charge.) MINIMUM RESIDUAL VALUE FULL SURRENDER OF A NUMBER OF (BUT NOT ALL) POLICIES UNDER THE PLAN After surrender, the minimum residual value of the remaining policies in your Plan needs to be the higher of HK$120,000 (or currency equivalent); and 125% of any outstanding establishment charge expected to be deducted over the remaining spread over period. We may require full surrender of your Plan (i.e. all remaining policies) if its value falls below the required minimum residual value, in which case the early surrender charge would be applicable. FULL SURRENDER OF ALL POLICIES OF THE WHOLE PLAN An early surrender charge will only apply should your Plan be fully surrendered and if there are any outstanding establishment charges. See page 14 for details of the establishment charge. You can make requests for full or partial surrender/withdrawal via Wealth Interactive, your online service account. Payment from your Plan will be made in the currency your Plan is denominated in or other currency you designate at surrender/withdrawal. We will normally fulfil a surrender/withdrawal request within five Working Days of receiving it at our Head Office or from realising the last underlying fund corresponding to the Investment Choice chosen. We reserve the right to defer payment of a surrender/withdrawal request if the underlying funds cannot be realised under normal market conditions. Such would be the case if the underlying fund prices were unavailable or where the external fund manager has suspended transactions from being carried out. When requesting a surrender/withdrawal, please ensure the above-mentioned minimum residual value requirements will be met. We reserve the right to change the minimum surrender/withdrawal amounts and minimum residual value with not less than one-month s prior written notice or such shorter period of notice as is in compliance with the relevant regulatory requirements. Early surrender or withdrawal of the policy may result in a significant loss of premiums. Poor performance of underlying funds may further magnify your investment losses, while all charges are still deductible. 13

14 CHARGES TABLE The table below details the charges that may apply to you at the commencement of your Plan and all other future premiums you make will have the same charges applied. PLAN LEVEL ESTABLISHMENT CHARGE DESCRIPTION AND AMOUNT OF CHARGE This is to cover the costs of setting up your Plan and the service agreement between you and your financial adviser. The establishment charge is 7% of the premium paid. It can be evenly spread for deduction over a period from 1 year up to 4 years. The selected period over which the deduction of the establishment charge is spread can vary according to your personal circumstances and needs. Please discuss it with your financial adviser. You must note that the establishment charge (being 7% of each relevant premium paid) will also be applicable to each additional lump sum premium and/or regular premium you pay. It will be charged over a period which is the same duration the establishment charge payment period you select in respect of the initial lump sum premium payment. See the first two illustrations on How the establishment charge is calculated on the next page for further details. HOW, WHERE AND WHEN THE CHARGE IS DEDUCTED (1) In respect of the initial lump sum premium, the establishment charge is calculated on each Quarterly Date in arrears starting from the first Quarterly Date after the first Plan anniversary (until the end of your selected period over which the charge is spread) and will then be deducted as from the following Deduction Date. (2) In respect of each additional lump sum and/ or regular premiums you pay within a Plan year, the relevant establishment charge is calculated on each Quarterly Date in arrears starting from the first Quarterly Date of the subsequent Plan year (until the end of your selected period over which the charge is spread) and will then be deducted as from the following Deduction Date. Please note that the establishment charge(s) is deducted in the currency of the Plan from the Transaction Account. For example, if the first Plan anniversary is in mid-may 2014, the establishment charge is calculated on the last day in June 2014 and each subsequent calendar quarter end thereafter in September 2014, December 2014 and March 2015, until the end of your selected period over which the charge deduction is spread. Then, the charge is taken on the Deduction Date. It is deducted in the currency the Plan is denominated in. 14

15 HOW THE ESTABLISHMENT CHARGE IS CALCULATED The examples below are for illustrative purposes. ILLUSTRATION 1 Assumption: You commence your Plan on 1 January 2015 with an initial lump sum premium of HK$1 million and an establishment charge of 7% to be spread over 4 years. The first time the establishment charge is calculated will be on the first quarter end following the first Plan anniversary. In this illustration, the first anniversary will be 1 January 2016 and the first quarter end following this anniversary will be 31 March To calculate the establishment charge, any lump sum and regular premiums paid during the preceding Plan year are aggregated and the establishment charge rate is applied to it. In this illustration, the establishment charge applied would be 1.75% per year (i.e. 7% establishment charge divided over 4 years) for a total period of 4 years, which is equivalent to % per quarter (i.e. 7%/4 years/4 quarters) for a total period of 16 quarters: HK$1,000,000 x % = HK$4,375. The establishment charge is then deducted from the Transaction Account on a quarterly basis in arrears on the last Working Day of the second month following each Quarterly Date. This means the establishment charge of HK$4,375 is first deducted on 31 May 2016 (as it is the last Working Day in the second month following 31 March 2016). The next time the establishment charge is calculated will be on the following quarter end, being 30 June The next establishment charge of HK$4,375 will then be deducted on the last Working Day in the second month which follows, being 31 August In relation to the lump sum premium paid in the first Plan year, the establishment charge will continue to be deducted for a total period of 4 years. This amounts to total establishment charges of HK$70,000 (HK$4,375 x 4 quarters x 4 years) being deducted, with the last establishment charge being deducted on 28 February ILLUSTRATION 2 Assumption: In addition to the scenario outlined in Illustration 1, in the second Plan year you begin to make quarterly regular premiums of HK$50,000 on 1 January 2016 and you also make an additional lump sum premium of HK$400,000 on 1 March This results in total lump sum and quarterly premium amounts during the second Plan year are of: HK$400,000 + HK$50,000 x 4 = HK$600,000. In relation to the lump sum and quarterly premiums paid during the second Plan year, the relevant establishment charge is first calculated on the first quarter end following the end of the second Plan year (1 January 2017), being 31 March 2017 as follows: HK$600,000 x % = HK$2,625. This establishment charge is then deducted on 31 May Taking into account the relevant establishment charge in respect of the initial lump sum premium paid during the first Plan year as well (i.e. HK$4,375 as referred to in Illustration 1), the total establishment charge to be deducted on 31 May 2017 is as follows: HK$4,375 + HK$2,625 = HK$7,000 In relation to the lump sum and quarterly premiums paid in the second Plan year, the relevant establishment charge of HK$2,625 continues to be deducted for a total period of 4 years, amounting to total establishment charges of HK$42,000 (HK$2,625 x 4 quarters x 4 years) being deducted, with the last establishment charge being deducted on 28 February

16 CHARGES TABLE (CONTINUED) PLAN LEVEL MANAGEMENT CHARGE DESCRIPTION AND AMOUNT OF CHARGE The management charge percentages are tiered based on the value of the Plan (as detailed below).the management charge applicable to each tier is then added up to arrive at the total management charge. The management charge percentages applicable to each respective tier are as follows. TIERS OF THE TOTAL VALUE OF THE PLAN (HK$) (OR CURRENCY EQUIVALENT) APPLICABLE MANAGEMENT CHARGE EACH QUARTER (EACH YEAR) On the first 600, % (0.75%) On the next 600,000 up to 1,200,000 On the next 1,800,000 up to 3,000,000 On the next 3,000,000 up to 6,000,000 On the next 6,000,000 up to 12,000, % (0.50%) 0.1% (0.40%) % (0.35%) 0.075% (0.30%) Above 12,000, % (0.25%) HOW, WHERE AND WHEN THE CHARGE IS DEDUCTED The applicable charge percentage is calculated on each Quarterly Date. The charge is based on the value of the Plan and is taken from the Transaction Account on the Deduction Date in arrears in the currency the Plan is denominated in. If the Plan does not exist throughout the quarter, the charge will be calculated on a pro-rata basis relevant to the number of days the Plan has been in existence during the quarter concerned, subject to minimum of HK$750 (or currency equivalent) each quarter. The management charge is subject to a minimum of HK$750 (or currency equivalent) each quarter, or HK$3,000 (or currency equivalent) each year. The currency equivalents are listed in Appendix 1(a), where the Plan is denominated in currency other than HK$. For example, if the value of your Plan is HK$2,000,000 at the end of the quarter, the calculation of the management charges applied is illustrated as below. TIER OF THE VALUE OF THE PLAN (IN HK$) APPLICABLE MANAGEMENT CHARGE PERCENTAGE EACH QUARTER AMOUNT OF MANAGEMENT CHARGE APPLIED TO THE RELEVANT TIER (IN HK$) First HK$600, % 1,125 Next HK$600,000 up to HK$1,200,000 Next HK$800,000 up to HK$2,000, % % 800 Total management charge = 2,675 16

17 CHARGES TABLE (CONTINUED) PLAN LEVEL MANAGEMENT CHARGE DESCRIPTION AND AMOUNT OF CHARGE CALCULATION The applicable management charge of the first HK$600,000 of the value of your Plan of HK$2,000,000 is % per quarter. So, the amount applicable to this tier is HK$1,125 (i.e. HK$600,000 x %). The applicable management charge of the next HK$600,000 is 0.125% per quarter. So, the amount applicable to the tier is HK$750 (i.e. HK$600,000 x 0.125%). Finally, the applicable management charge of the remaining HK$800,000 (i.e. HK$2,000,000 HK$600,000 HK$600,000) is 0.10% per quarter. So, the amount applicable to the final tier is HK$800 (i.e. HK$800,000 x 0.1%). By adding up the amounts applicable to all tiers, the total management charge applied to the value of your Plan of HK$2,000,000 is HK$2,675 per quarter. (HK$1,125 + HK$750 + HK$800). The above example is hypothetical and for illustrative purpose only. HOW, WHERE AND WHEN THE CHARGE IS DEDUCTED ASSET DEALING CHARGE ADMINISTRATION CHARGE PAPER VALUATION CHARGE There is no charge for any switch-in or switch-out of your Investment Choices made online via Wealth Interactive, your online service account. Any request made offline, e.g. via , fax or hard copies will incur a charge (offline asset dealing charge) of HK$180 (or currency equivalent as listed in Appendix 1(b), where the Plan is denominated in currency other than HK$) to each switch-in and each switch-out transaction. A charge of HK$600 (or currency equivalent as listed in Appendix 1(c), where the Plan is denominated in currency other than HK$) per quarter is applied. If any Plan valuation in paper statement form is requested, then HK$300 (or currency equivalent as listed in Appendix 1(d), where the Plan is denominated in currency other than HK$) is charged upon each request. The total applicable amounts are accrued quarterly and deducted from the Transaction Account on the Deduction Date in the currency the Plan is denominated in. It is deducted in full, not on a pro-rata basis, from the Transaction Account on the Deduction Date in the currency the Plan is denominated in. The amount is deducted from the Transaction Account in the currency the Plan is denominated in. 17

18 CHARGES TABLE (CONTINUED) PLAN LEVEL EARLY SURRENDER CHARGE DESCRIPTION AND AMOUNT OF CHARGE This charge applies if you request a full surrender of one or a cluster of policies within your selected period over which the establishment charge is spread (which may range from 1 year to 4 years) or if there are outstanding establishment charges in respect of the relevant premium. The amount of charge applied is equal to the outstanding establishment charges applying to the initial and each additional and regular premium paid. In the worst case scenario, it could be a maximum of 7% of the premium paid. See the third illustration on How the establishment charge is calculated on page 19 for further details. HOW, WHERE AND WHEN THE CHARGE IS DEDUCTED It is calculated as the outstanding establishment charges and is deducted from the surrender value in the currency the Plan is denominated in. UNDERLYING FUNDS LEVEL You should note that the underlying funds of the Investment Choices may have separate charges such as management fee, performance fee, bid-offer spread and/ or switching fee. You do not pay these fees directly. They will be deducted and such deduction will be reflected in the unit price of the underlying funds. Please refer to the offering documents of the underlying funds, which are available from Old Mutual International upon request. OTHERS THIRD PARTY CHARGES Other fees, charges and expenses incurred and taken by any third parties such as banks and custodians will be passed on to you. Old Mutual International reserves the right to vary certain Plan charges (i.e. the management charge, asset dealing charge, administration charge and paper valuation charge) with not less than one month s prior written notice or such shorter period of notice in compliance with the relevant regulatory requirements. The return of investments under the ILAS policy shall be subject to the fees and charges of the ILAS policy and may be lower than the return of the underlying funds you select. 18

19 HOW THE ESTABLISHMENT CHARGE IS CALCULATED ILLUSTRATION 3 Assumption: In addition to the scenario outlined in Illustration 2 on page 15, in the third Plan year you do not make any regular premiums at all and you request a full surrender of the Plan on 1 June On surrender, the early surrender charge to be deducted is the outstanding establishment charge not deducted yet. For premiums paid in each Plan year, the establishment charge is to be deducted over 4 years originally (i.e. 4 years x 4 quarters = 16 quarters). In respect of the premium paid in the first Plan year, a quarterly establishment charge of HK$4,375 is deducted on 31 May 2016, 31 August 2016, 30 November 2016, 28 February 2017, and 31 May The outstanding establishment charge is HK$70,000 HK$4,375 x 5 quarters = HK$48,125. In respect of the additional lump sum and regular premiums paid in the second Plan year, a quarterly establishment charge of HK$2,625 is deducted on 31 May The outstanding establishment charge is HK$42,000 HK$2,625 x 1 quarter = HK$39,375. If the value of your Plan is HK$2,000,000 as at 1 June 2017, the surrender value which you can get back is HK$2,000,000 HK$48,125 - HK$39,375 = HK$1,912,

20 APPLYING FOR AND ADMINISTERING ONLINE You can apply for your Wealth Management Plan online by submitting all relevant information to us with the help of your financial adviser. Once your Plan is set up, you just need to activate it and you can then enjoy the benefits as described under Wealth Interactive on page 10. Once we have accepted your application, we will issue an acceptance letter. This will be followed by the policy terms and conditions, and schedules to your online service account in Wealth Interactive, as a formal record. You can then update your personal details, obtain valuations and review the correspondence we send you at your own convenience. TERMINATION Your Wealth Management Plan will end when we have completed paying the benefits following: a request for a full surrender, or on the last death of the lives assured. Furthermore, we reserve the right to fully surrender your Plan if its value is below the minimum residual value after surrender or withdrawal. This value is the higher of HK$120,000 (or currency equivalent); and 125% of any outstanding establishment charge expected to be deducted over the remaining spread over period. DEATH BENEFIT CLAIMS For death benefit claims, we may reasonably require certain documentation and evidence before making a payment. The original death certificate must be sent to our Head Office and, in some circumstances, we may require further evidence before any payments can be made. Documentation may be sent to our Hong Kong office for onward transmission to our Head Office in the Isle of Man. The notification date will be the Working Day after receipt at our Head Office, irrespective of where the documentation is sent from. We will normally fulfil a death benefit claim within five Working Days of receiving it at our Head Office or from realising the last fund. Death claims may be subject to Isle of Man probate. The maximum interval between receipt of all relevant documentation, completed to Old Mutual International s satisfaction, and payment of the proceeds will normally be no longer than one month. 20

21 OLD MUTUAL INTERNATIONAL ACROSS THE GLOBE Old Mutual International is part of the wealth management business of Old Mutual plc. We provide the offshore and cross-border investment solutions. We recognise the importance of providing innovative, flexible, wealth management solutions and local support to our customers. Therefore, we opened our branch offices in Hong Kong in 1991 and Singapore in 2008 as our Asia hubs. We have local, dedicated teams with a wealth of experience, local market knowledge and international exposure. You can be assured that you are investing with a company that truly understands the needs of international investors. At Old Mutual we also continue to set new, higher standards to deliver ever-improving products and a wider investment choice. OLD MUTUAL INTERNATIONAL ISLE OF MAN UNITED KINGDOM EUROPE DUBAI HONG KONG SINGAPORE LATIN AMERICA CAPE TOWN QUICK FACTS OLD MUTUAL GROUP Listed on the London FTSE 100 and Johannesburg Stock Exchanges Has funds under management of billion* Serves more than 16 million customers Operates in 33 countries in South Africa, Europe, Latin America, Asia and North America Has been in the wealth management industry since 1845 Offers asset management, life assurance, banking and general insurance services Originated in South Africa *as at 30 June 2014, source: Old Mutual 21

22 TAX EFFICIENCY Old Mutual International is based in the taxefficient international financial centre of the Isle of Man. Because your investment is subject to the Isle of Man s tax regime, it will therefore grow virtually tax free. Old Mutual International is not currently liable to income tax, capital gains tax or corporation tax on the Investment Choices held in its policies. Some dividends may be subject to a tax deduction in the country where the income was produced but once inside one of our policies, the investment can accumulate free of tax. Your personal tax circumstances depend on many factors, and you may have a personal tax liability in respect of your Plan. This will largely depend upon your country of residence. It is therefore important that you seek professional advice before proceeding with any investment. TAX PLANNING Depending on your nationality, it may be beneficial to use a whole of life, investmentlinked, life assurance policy for tax planning. If you are an expatriate residing in Hong Kong for example, the Wealth Management Plan might be a suitable tax planning vehicle. It is particularly tax-efficient for British expatriates who may be planning on returning to the UK. Whatever your circumstances, we strongly recommend that you seek professional advice about your personal tax circumstances. 22

23 FOREIGN ACCOUNT TAX COMPLIANCE ACT Under the U.S. Foreign Account Tax Compliance Act ( FATCA ), a foreign financial institution ( FFI ) is required to report to the U.S. Internal Revenue Services ( IRS ) certain information on U.S. persons that hold accounts with that FFI outside the U.S. The FFI is required to pass that information to the IRS or the relevant non-u.s. authority, depending on the specific inter-governmental agreement ( IGA ) which binds the FFI. An FFI which does not sign or agree to comply with the requirements of an agreement with the IRS ( FFI Agreement ) in respect of FATCA and/or who is not otherwise exempt from doing so (referred to as a nonparticipating FFI ) will face a 30% withholding tax ( FATCA Withholding Tax ) on all withholdable payments (as defined under FATCA) derived from U.S. sources (initially including dividends, interest and certain derivative payments). As an FFI, Old Mutual International requires you to provide to it certain information including, as applicable, your U.S. identification details (e.g. your name, address, the US Tax Identification Number ( TIN ), etc.). Old Mutual International may be required to report the above information along with your policy details to the relevant Isle of Man authority, which will then pass this information on to the IRS. It is important that you understand that Old Mutual International will be obliged to release this information without soliciting your consent to do so. Please refer to the following paragraphs for details. Old Mutual International is registered and incorporated in the Isle of Man. The U.S. and Isle of Man have agreed an IGA to facilitate compliance by FFIs in Isle of Man with FATCA. This creates a framework for Isle of Man FFIs to rely on streamlined due diligence procedures to (i) identify U.S. indicia and (ii) report relevant tax information of those policyholders (including any Hong Kong policyholders) to the relevant Isle of Man authority (the Assessor of Income Tax as stipulated in the IGA). This is part of Old Mutual International s obligation under the IGA. The Isle of Man authority will then pass this information on to the IRS. FATCA applies to Old Mutual International and this ILAS policy. Old Mutual International s FATCA status is that of a registered deemedcompliant FFI. Old Mutual International is committed to complying with FATCA. If you fail to comply with this obligation, Old Mutual International may be required to report tax information in respect of your policy as described above. Old Mutual International could, in certain circumstances, be required to impose FATCA Withholding Tax on payments made to or taken from your ILAS Policy. Currently the only circumstances in which Old Mutual International may be required to do so are, if the Isle of Man authority fails to exchange information with the IRS under the IGA agreement, in which case Old Mutual International may be required to deduct and withhold FATCA Withholding Tax on withholdable payments made to your ILAS Policy and remit this to the IRS. You should seek independent professional advice on the impact FATCA may have on you or your ILAS Policy. 23

24 THE ISLE OF MAN - AN OFFSHORE INVESTMENT CENTRE Old Mutual International is based in the Isle of Man, which is part of the British Isles. The Isle of Man has its own government and the oldest continuous parliament in the world for over 1,000 years. This highlights the long term nature and stability of the Isle of Man. The Isle of Man is an established offshore investment centre offering a politically and economically stable environment. All the life assurance companies based on the island are closely regulated by the Isle of Man Insurance & Pensions Authority. Due to its jurisdiction and prominent offshore position, a lot of financial and related services set up their head offices on the island. You can find out more on Of all the major offshore centres, the Isle of Man is one of only a few that has a statutory compensation scheme the Isle of Man Life Assurance (Compensation of Policyholders) Regulations In the event of insolvency, policyholders are entitled to claim compensation of up to 90% of the surrender value of their policies under the compensation scheme. The compensation scheme operates globally no matter where the policyholders reside. Notwithstanding the availability of the compensation scheme, there is no guarantee that you will get back up to 90% of your contributions paid or the prevailing value of your Plan. The final value you receive, if any, may be less than the total contributions paid or the prevailing value of your Plan. This liability to policyholders is administered by the Insurance & Pensions Authority of the Isle of Man, which levies contributions from all participating insurers. These contributions are held in a Policyholders Compensation Fund. In the event that the fund is insufficient to sustain any claims made, the Insurance & Pensions Authority may defer, reduce or extinguish any amounts payable as compensation. Full details of the Regulations can be found on In recognition of the Isle of Man s status as a leading offshore base, it was voted Best International Finance Centre in 2013 at the Professional Adviser International Fund & Product Awards. It has won this top award nine times since 2001, together with three highly commended awards in the same category. 24

25 YOUR RIGHT TO CHANGE YOUR MIND You have the right to cancel your Plan within the cooling-off period as explained below. The cooling-off period is a period during which life assurance policyholders may cancel their policies and get back their original investments (subject to market value adjustment) within the earlier of 21 days after the delivery of the policy or issue of a notice to you or your representative. Such notice should inform you of the availability of the policy and expiry date of the cooling-off period. Please refer to the cooling off initiative issued by Hong Kong Federation of Insurers from time to time for reference. You have to tell your insurer either by communicating through your online service account or by giving a written notice. Such notice must be signed by you and received directly by Old Mutual International at 24th Floor, Henley Building, 5 Queen s Road Central, Hong Kong. You may get back the amount you paid, or less if the value of the Investment Choices selected has gone down. The abovementioned cancellation right does not apply to additional premiums once your policy is issued and has passed all the above conditions of the cooling-off period. BORROWING POWERS The Wealth Management Plan has no borrowing powers. Please refer to the relevant prospectuses for details of the borrowing powers and investment restrictions of the underlying funds. 25