ZURICH HORIZON FUNDS DUE DILIGENCE

Transcription

1 ZURICH HORIZON FUNDS DUE DILIGENCE

2 2 / 3 DUE DILIGENCE CONTENTS About Zurich 3 About Columbia Threadneedle Investments 5 The case for multi-asset funds 8 Risk profiling 9 Zurich Horizon funds 11 Zurich Horizon Multi-Asset I 16 Zurich Horizon Multi-Asset II 17 Zurich Horizon Multi-Asset III 18 Zurich Horizon Multi-Asset IV 19 Zurich Horizon Multi-Asset V 20 Key risks explained 21 How safe is my clients money? 22 Contacts 23 Disclaimer 23

3 ABOUT ZURICH Zurich has created the Zurich Horizon fund range to deliver a complete and compliant end to end process for advisers and their clients. The Zurich Horizon fund range is made up of the five Zurich Horizon Multi-Asset funds and we have worked with the investment manager Threadneedle Asset Management Limited (Threadneedle) to create funds that deliver outcomes in line with the process and expectations we ve developed. This document will provide you with the information advisers need to help answer questions from the Financial Conduct Authority on your fund recommendations. ZURICH IN THE UK In the UK, Zurich provides customers with investment, pension and protection products under the Sterling and Zurich brands. The strategy in the UK is to build a competitive and sustainable business, delivering value to customers, distributors and shareholders through award winning propositions. With over 60,000 employees serving customers in more than 170 countries, we aspire to become the best global insurer as measured by our shareholders, customers and employees. A GLOBAL BUSINESS Employees 60,000+ Countries 170+ Zurich offer a wide range of general and life insurance products and services for individuals, small businesses, mid-sized and large companies and multinational corporations. Zurich has a strong position in North America and Europe, and a growing position in Asia-Pacific, the Middle East and Latin America. FINANCIAL STRENGTH RATINGS Zurich Insurance Company Ltd AA-/positive Standard & Poor s Zurich has extensive experience in the Life and Pensions market in the UK, offering customers quality products and services since Aa3/stable A+/stable (As at January 2015) Moody s A.M. Best As at 31 December 2014 Zurich s UK Life business had 42 billion of funds under management. The Zurich Horizon fund range is operated by Zurich Investment Services (UK) Limited. The Zurich Intermediary Platform is provided by Sterling ISA Managers Limited (SIML), which is part of Zurich s UK Life business part of a group of companies of which the ultimate parent is Zurich Insurance Group Ltd, a company registered in Switzerland (number CH /a). ABOUT ZURICH Zurich is one of the world s largest insurance groups, and one of the few to operate on a truly global basis. Our mission is to help our customers understand and protect themselves from risk. OUR VALUES Our values have stood us in good stead for more than 130 years and provide a sound foundation for the future. They are integrity, customer centricity, sustainable value creation, excellence and teamwork. A CRITICAL COMPONENT OF OUR SUCCESS These values shape Zurich s culture and define who we are, helping to set us apart in an increasingly competitive industry. They help us to keep the trust of our customers, our people, our shareholders and the communities in which we live and work.

4 4 / 5 DUE DILIGENCE ZURICH S COMMITMENT The Zurich Commitment sums up our thinking about who we are, why we re in business, and what we offer to all our stakeholders. We follow these beliefs in everything we do, including the Zurich Horizon funds. WE CARE ABOUT OUR CUSTOMERS. Our customers are the individuals, families, businesses and institutions that face risk every day. We must earn their trust and the commitment of the agents, brokers and others that help us serve them. We must deliver the insights, products and services that empower them to understand and protect themselves from those risks. As One Zurich, we can and must exceed their expectations. And when adversity strikes, we must be there for each of them with the solutions and financial strength to deliver on our promise. WE CARE ABOUT OUR PEOPLE. Our people are the diverse women and men who together strive to make Zurich the best global insurer. We value their passion and personal integrity, and recognise those as a basis of our strength. We must invest in their capabilities and expertise so that each may fulfil his or her individual potential. WE CARE ABOUT OUR SHAREHOLDERS Our shareholders are the individuals and institutions that provide the financial strength that backs our promises. We must deliver a fair, reliable and sustainable return on their investment. We must do so with a clear focus on our core business of insurance, an uncompromising commitment to financial and portfolio discipline, and to investing in our future. WE CARE ABOUT OUR COMMUNITIES. Our communities are where our customers, our people and our shareholders live and work. While we can be proud of the contribution to society Zurich makes through our core business of insurance, we must also give back to our communities through our talent, time and resources. We must celebrate success, and learn from mistakes. We must live up to our common set of values, and hold each other accountable.

5 ABOUT COLUMBIA THREADNEEDLE INVESTMENTS Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle Group of Companies. It is a leading global asset management group that provides a broad range of actively managed investment strategies and solutions for individual, institutional and corporate clients around the world. With more than 2000 people including over 450 investment professionals based in North America, Europe and Asia, they manage 324 billion1 of assets across developed and emerging market equities, fixed income, asset allocation solutions and alternatives. Columbia Threadneedle s priority is the investment success of their clients. They aim to deliver the investment outcomes their clients expect through an investment approach that is team-based, performancedriven and risk-aware. By sharing insights across asset classes and geographies Columbia Threadneedle generate richer perspectives on global, regional and local investment landscapes. The ability to exchange and debate investment ideas in a collaborative environment enriches their teams investment processes and results in better informed investment decisions for their clients. COLUMBIA THREADNEEDLE S VALUES Columbia Threadneedle s values are the characteristics that define them. They represent the unique combination of skills, attributes and abilities through which they strive to build a successful business and culture. Client Focus, Excellence, Integrity, Respect THREADNEEDLE S INVESTMENT POLICY Threadneedle believe that they can deliver superior risk adjusted returns for their clients through: An active approach that takes advantage of market inefficiencies Their perspective advantage the combination of macro and micro insights The appropriate allocation of risk Columbia Threadneedle Investments is the global asset management group of Ameriprise Financial, Inc. (NYSE: AMP), a leading US-based financial services provider. As part of Ameriprise, they are supported by a large and well-capitalised diversified financial services firm. The Threadneedle Group of Companies rebranded as Columbia Threadneedle Investments on 30 March Threadneedle Asset Management Ltd (Threadneedle), part of Columbia Threadneedle Investments (Columbia Threadneedle) is the investment manager for the five Zurich Horizon Funds. 1 AUM of 324bn: includes the combined assets under management of the Columbia and Threadneedle group of companies as at 31 December Source: Ameriprise Financial Q earnings release, Columbia Threadneedle MACRO Global coverage Economic background Investment themes Asset allocation Valuation framework GLOBAL PERSPECTIVE ADVANTAGE MICRO Specialist investment teams Sector groups Security research Company meetings Source: Columbia Threadneedle as at 30 March 2015

6 6 / 7 DUE DILIGENCE INVESTMENT TEAM ASSET ALLOCATION STRATEGY GROUP JIM CIELINSKI Global Head of Fixed Income WILLIAM DAVIES Head of Global Equities MATTHEW COBON Head of Interest Rates and Currency, EMEA MARK BURGESS Chief Investment Officer, EMEA LEIGH HARRISON Head of Equities, Europe JEFF KNIGHT Global Co-Head of Asset Allocation TOBY NANGLE Global Co-Head of Asset Allocation ALEX LYLE Head of Managed Funds, EMEA Manager of the Zurich Horizon fund range.

7 MACRO Asset Allocation Strategic Group Multi Asset Team TOBY NANGLE ALEX LYLE MICRO Equity professionals Fixed income professionals Alternative professionals Source: Columbia Threadneedle as at 30 March 2015

8 8 / 9 DUE DILIGENCE THE CASE FOR MULTI-ASSET FUNDS The Zurich Horizon funds are a range of multi-asset, risk profiled funds which cater for different risk appetites. Changes in the economic environment affect different asset classes in different ways. This means that the investment returns from one class don t tend to correlate with those from other classes. The Zurich Horizon funds aim to achieve a positive investment return for a targeted level of risk by investing in a mixture of asset classes, and reviewing and changing the weightings between these classes in a measured way. The funds investment manager, Threadneedle Asset Management Limited (Threadneedle), is a proven multi-asset investment manager with over 20-years experience in managing multi asset strategies. Threadneedle s culture of teamwork and sharing ideas means that there is significant interaction across the whole investment team. The multiasset team is able to draw upon this to make sure that every Zurich Horizon fund benefits from the best ideas in investment. Alex Lyle is the named manager for the Zurich Horizon fund range and together with the multi-asset team has the overall responsibility for managing the portfolios. However, the decision-making process encompasses specialist teams from sector investment, strategic analysis and tactical asset allocation through to fundamental research and risk management. THE TYPE OF CLIENTS WHO MAY BE INTERESTED IN MULTI-ASSET FUNDS: Clients looking for capital growth to help achieve specific goals such as building their retirement fund. Investors lacking confidence, but keen to feel more in control. The funds are designed to give a clearer picture of intended performance. Clients wanting some involvement, but without the time, expertise or inclination to get heavily involved possibly looking to research or validate your recommendations before pressing the button. Sophisticated investors wanting to see what s happening under the bonnet with access to detailed underlying funds and portfolio information.

9 RISK PROFILING WHAT IS RISK PROFILING? You can be confident that if your clients invest in a Zurich Horizon risk profiled fund, the fund will be regularly monitored to fit within the risk profile provided by evalue. The Zurich Horizon funds are managed in line with the evalue risk profiles, so all you need to do is monitor your clients risk appetite, not the funds level of risk. All the work around maintaining a portfolio that s appropriate for a particular level of risk is done by the investment managers, with reference to evalue s asset allocations. The funds are specifically designed to fit within the risk profiles described in the evalue guide Helping you assess your clients attitude to risk in this pack. Threadneedle s investment approach starts by using the asset allocation provided by evalue and then takes into account Threadneedle s views on any market sectors expected to under/over perform in the next period making sure that the fund still lies within the risk profiles. KEY TERMS EXPLAINED RISK TARGETING The volatility band the fund will fall into is determined by the fund manager and they will manage it within that band (eg between 10% and 13%) outlined in the prospectus. However, volatility is only one component of risk. The funds that make up the Zurich Horizon fund range do not have fixed volatility targets. RISK PROFILING Instead of specifying a particular volatility band, your target is to satisfy the needs of a certain type of investor. The Zurich Horizon funds are risk profiled. RISK RATING This is when an independent agency is paid to assign a number to a fund based on how it measures against the agency s risk profiles. The investment manager doesn t need to manage the fund to that target. LEVEL OF RISK RISK PROFILE 1 CAUTIOUS 2 MODERATELY CAUTIOUS 3 BALANCED 4 MODERATELY ADVENTUROUS 5 ADVENTUROUS ZURICH HORIZON MULTI-ASSET FUND I ZURICH HORIZON MULTI-ASSET FUND II ZURICH HORIZON MULTI-ASSET FUND III ZURICH HORIZON MULTI-ASSET FUND IV ZURICH HORIZON MULTI-ASSET FUND V

10 10 / 11 DUE DILIGENCE RISK PROFILE SERVICE PROVIDER The Zurich Horizon funds are aligned to the risk profiles provided by evalue. evalue evalue provides market-leading stochastic modelling solutions to the financial services industry that integrate risk profiling and in-depth fund research with portfolio review and construction tools. As an independent thought leader in the field of financial planning and stochastic modelling, evalue solutions enable advisers and their clients to stay ahead of market trends and optimise long term investment strategies. Its software solutions equip businesses with a uniquely effective means of communicating investment risk and reward. evalue s heritage dates back to 1993 within global consultancy firm Towers Perrin, now Towers Watson. With risk profiling and investment forecasting, evalue has grown to be the main provider of stochastic forecasting solutions. Now over 80% of UK product providers and banks use evalue s services and over half of the adviser market has access to evalue s solutions. The business operates on an independent basis as an associate company of FE (Financial Express), the leading financial data provider in the UK, which acquired evalue in early 2011 from Towers Watson. CREATING THE ASSET ALLOCATIONS The asset allocations are derived using an adapted version of the standard efficient frontier methodology. The method involves determining the asset allocations which will achieve the highest expected final fund value for a given risk target over the relevant investment period. SETTING RISK TARGETS Risk targets for each term are set based on benchmark asset allocations for the highest and lowest risk categories. Targets for the remaining risk levels are spread appropriately between the high and low risks. The risk targets use the variation in the final fund value and will change with each quarterly calibration. APPLYING CHARGES The charge assumptions used in asset allocation calculations are consistent with general product and asset management charges on products available on the UK market. These will not exactly match the charges actually levied on any given investment, particularly when the cost of advice is added to the product charge. However, the allocations themselves are more sensitive to the relative level of charges rather than the charges themselves. KEEPING ALLOCATIONS STABLE For practical purpose, it is sensible for the allocations to be relatively stable over time and not to be unduly affected by small changes each quarter. Any lack of stability is most likely to happen in respect of asset classes with very similar characteristics and are strongly correlated. In this circumstance, relatively small differences in the risk and reward profile of these asset classes might lead to large swings in allocation between them, which are out of proportion both to the change in economic condition and to the change in expected results. Therefore, certain assets with very similar characteristics are combined in line with market practice. APPLYING MARKET CONSTRAINTS The asset grouping, charges and risk targets corresponding to each investment time horizon, are in theory sufficient to create efficient portfolios. However, the results might not always be desirable and achievable. For example, particularly large allocations to property would be unacceptable under certain circumstances due to the poor liquidity and potential lack of diversification. Therefore market related constraints are applied to ensure reasonable levels of diversification and liquidity. OPTIMISE ALLOCATIONS evalue s team of investment experts use highly sophisticated mathematical techniques to work out the mix of assets which give the highest return given the constraints and targets. Results are then reviewed by the evalue investment committee for consistency and suitability. The asset allocations vary by term as the risk/reward characteristics for each asset also varies by term. Source: evalue as at 1 February 2015

11 THE ZURICH HORIZON FUND RANGE ZURICH S ROLE The Zurich Horizon fund range is operated by Zurich Investment Services (UK) Limited. Zurich are responsible for the overall operation of the funds. The funds cater for different risk appetites. A risk profiling tool from evalue is available on the Zurich Intermediary Platform. This tool helps advisers to discuss their clients attitude to risk with them. It helps advisers talk about the impact of those risks, alongside the rewards of their clients investment choices, and select suitable investment products. It can also be used as part of a regular review process. Zurich has designed funds to offer advisers a potential fund solution to match the current risk attitudes of their clients. INVESTING FOR GROWTH We have worked with evalue and Threadneedle to design these funds with an objective to grow investments over the medium to long term. The evalue tool has three investment term bands and we use asset allocations derived from evalue s long term time horizon to deliver the balance between growth and volatility. You can use evalue s fund risk assessor tool to profile these funds for clients relative to their individual investment term. Please be aware that the evalue risk profile mappings for shorter time-scales do not translate directly into equivalent risk profiles for longer time-scales. For instance, a risk profile of 3 over a five-year term may not equate to a risk profile of 3 over a 20 year term. The funds are managed to risk profiles staggered from the lower risk Zurich Horizon Multi-Asset Fund I, through to the higher risk Zurich Horizon Multi-Asset Fund V.

12 12 / 13 DUE DILIGENCE HOW THE FUNDS ARE MANAGED The funds use the five strategic weightings of asset classes produced by evalue. evalue updates its strategic asset weightings every quarter. Zurich have chosen Threadneedle Asset Management Limited (Threadneedle), part of Columbia Threadneedle Investments group (Columbia Threadneedle), to manage the funds. Threadneedle believe in active fund management, so the Investment Manager can make tactical changes to the evalue asset class weighting. However, all of these decisions are taken in the context of the risk models with the aim of ensuring that the funds remain aligned to their risk profiles. The investment manager adds three layers of active management. The investment manager s own views on asset allocation is overlaid on that produced from evalue. The investment manager selects which funds to include within the tactical asset allocation. Those funds themselves are actively managed. UNDERLYING FUNDS Once the asset allocation is set, they select a blend of funds to align to the risk profiles while maximising possible returns. The Zurich Horizon funds invest mostly in other funds managed or operated by Threadneedle, although from time to time they may invest in other collectives if required. Threadneedle offer a wide range of funds from across the whole asset spectrum. Investing in their own funds gives their investment managers the confidence that these funds will be actively managed and with interests aligned to their own. It also removes unnecessary layers of charges.

13 The chart below shows the relative position of the funds asset allocation as at launch versus the evalue Q strategic weightings of asset classes for the investment horizon in excess of 15 years (excluding cash, including property), as published on the Zurich Intermediary Platform. The funds weightings are calculated using the asset category at fund level, not taking into account any other asset categories of the underlying securities or the fund s cash position. ZURICH HORIZON MULTI-ASSET I-V: ASSET ALLOCATION SECTOR SUMMARY AT LAUNCH ( ) This chart shows the relative position against the evalue asset allocations for each asset class. I II III IV V CASH +0.13% +0.04% +0.01% +0.04% +0.05% UK FIXED INTEREST -2.97% -4.90% -3.97% -3.65% UK EQUITY +2.84% +1.52% +0.94% +0.56% +0.71% OVERSEAS DEVELOPED EQUITY +2.27% +2.21% +2.73% +1.94% EMERGING MARKET EQUITY -0.60% -1.52% PROPERTY +1.08% +0.80% +0.92% -1.17%

14 14 / 15 DUE DILIGENCE INVESTMENT PROCESS OVERVIEW STAGE 1 evalue STRATEGIC ASSET ALLOCATION Every quarter, evalue review and update the asset allocations for each of their risk profiles. STAGE 2 ZURICH HORIZON FUNDS ASSET ALLOCATION Threadneedle consider the evalue asset allocations and decide on the tactical asset allocations for the Zurich Horizon funds. Regular meetings take place to discuss the key factors affecting stock markets and investing. The aim of this stage is to ensure that all of Threadneedle s key fund managers have the opportunity to put forward their thoughts and views to help shape their overall thinking behind what they believe will happen in global investment markets. This helps drive their asset allocation model which is used as a base for building funds. STAGE 3 FUND SELECTION The managers within the Threadneedle Managed Fund team use this asset allocation model, in conjunction with their strategic market views, to help select the most appropriate funds for the Zurich Horizon funds to hold. STAGE 4 RISK MANAGEMENT Threadneedle s independent risk team analyse each of the Zurich Horizon funds in depth, to highlight any potential investments which could result in the funds having an undue concentration of risk, and to ensure the funds remain within their designated risk profile. STAGE 5 OVERSIGHT In addition to the above, Zurich undertake portfolio risk management to ensure the funds are run in accordance with the fund objectives. evalue evalue strategic asset allocations defined Threadneedle ECONOMIC RESEARCH GROUP VALUATION RESEARCH GROUP Identify investment regime. Identify asset preference. Identify our key differentiators to the consensus. Set risk tolerance levels. Attribute and size risk budget according to value conviction Implement via internal funds, direct holdings, and passive strategies Zurich oversight SECTOR & THEMATIC RESEARCH GROUP Full look-through bottom-up risk analysis ex post

15 USEFUL INFORMATION AVAILABILITY The funds are exclusively available through Zurich. You can invest in these funds through the Zurich Intermediary Platform s Investment Account, ISA or Retirement Account. AVAILABLE SHARE CLASSES Class Z Net Income Shares and Class Z Net Accumulation Shares are available for all five funds on the Zurich Intermediary Platform. SECTORS FOR COMPARISON TOOLS Many providers of risk-profiled funds do not include their funds in IA sectors. You will also not find the Zurich Horizon funds in the Investment Association sectors. This is because the asset allocation rules for funds in the IA Mixed Asset Sectors do not align well with the way in which risk profiled funds are run. The asset allocations of risk profiled funds can change over time so they will not always fit within a sector with a constrained asset allocation (such as Mixed Investment 0-35% Shares which cannot hold more than 35% equities). They also do not aim to use a fully flexible asset allocation so do not compare well with funds in the Flexible Investment Sector which at any time can hold funds investing from 100% equities to no equities. Risk-profiled funds are managed to defined risk profiles, so have constrained asset allocation parameters which may change in the future. FINANCIAL CONDUCT AUTHORITY REGULATION The Zurich Horizon funds are UK funds regulated by the Financial Conduct Authority, structured as Non-UCITS Retail Schemes (NURS). This gives Threadneedle the flexibility to include property investments as part of their asset allocation. CHARGES The Zurich Horizon funds have no initial charge, no performance fee and no bid offer spread. The share classes are clean, so there is no rebate to declare for tax purposes. PRICE COMPARISON These funds are very competitively priced relative to other similar risk-profiled funds. It is important to use the total cost (Ongoing Charges Figures) to compare the cost of funds, as this takes into account all fund costs, not just the annual management charge (AMC). INFORMATION FOR CUSTOMERS Documentation for the Zurich Horizon fund range is available via the Zurich Horizon website at Up to date information about the funds can be found at any time in the Key Investor Information document (KIID) which is available on the website. A risk-profiled fund s performance should be compared to its strategic asset allocation benchmark, because this benchmark is a proxy for the clients risk profile.

16 16 / 17 DUE DILIGENCE ZURICH HORIZON MULTI-ASSET FUND I FUND OBJECTIVE The aim of the Fund is to grow the amount invested over the medium to long term and to keep the fund within a designated risk profile. INVESTMENT POLICY The Fund invests predominantly in other funds (underlying funds) that are managed by Threadneedle and its group of companies. Underlying funds will mainly have exposure to fixed income securities, including corporate and government bonds, and will also take some exposure to UK equities. The Zurich Horizon Multi-Asset range of funds aims to cater for investors with different risk appetites. The Funds carry staggered risk profiles starting from Zurich Horizon Multi-Asset Fund I and becoming progressively higher in risk through to, Zurich Horizon Multi-Asset Fund V. evalue Ltd, an independent risk profile service provider, using the output from its investment research tools, produces a range of five strategic weightings of asset classes aligned to five risk profiles based on a long term time horizon. evalue updates these weightings on a quarterly basis and Threadneedle will consider the weightings when deciding on the composition of the investment of the Zurich Horizon Multi-Asset range of funds. INVESTOR PROFILE The fund may be suitable for an investor seeking income and capital growth and who is prepared to tolerate moderate price fluctuations. The fund is suitable for an investor looking for a Risk Profile of 1. RISK PROFILE 1 This Fund is aligned to risk profile 1, which means that it aims to deliver growth through assets that demonstrate moderate price fluctuations, with greater emphasis placed on fixed income securities and lower exposure to equities. KEY RISKS Investment risk Effect of Risk Profile Suitability of investment Investment in funds No capital guarantee Inflation risk Interest rate risk Liquidity risk Volatility risk These Risk factors must be understood before making an investment in the fund. See page 21 for more information. ASSET ALLOCATION AS AT LAUNCH UK Fixed Interest 60.03% UK Equity 39.84% Cash 0.13% FUND HOLDINGS THE FUNDS INVEST IN THE FOLLOWING THREADNEEDLE FUNDS: Sterling Bond 32.11% Fixed interest 27.92% UK 31.85% UK Equity Income 5.05% UK Smaller Companies 1.87% UK Select 1.07% Cash 0.13% 100% LAUNCH DATE RISK PROFILE Risk profile 1 (evalue) AVAILABLE SHARE CLASSES Class Z Net Income Shares (ISIN GB00BTKH4788) Class Z Net Accumulation Shares (ISIN GB00BTKH4895) ESTIMATED YIELD Z Inc 1.80% Z Acc 1.80% MINIMUM SUBSCRIPTIONS & HOLDINGS No fund restrictions CHARGES ONGOING CHARGE FIGURE 0.84% (OCF)* FEES AND EXPENSES INITIAL CHARGE 0% SWITCHING FEE 0% REDEMPTION FEE 0% The asset breakdown shown is calculated using the asset category at fund level, not taking into account any other asset categories of the underlying securities or the fund s cash position. All figures rounded to two decimal points. Any platform charges will apply on top of fund charges. Up to date charges can be found in the KIIDs. * The ongoing charges figure shown here is an estimate of the charges. The Fund s annual report for each financial year will include detail on the exact charges made. The yield figure is estimated because the share class is relatively new and has insufficient track record to calculate the yield exactly. The ongoing charges figure may vary from year to year and will exclude the costs of buying or selling assets for the fund (unless these assets are shares of another fund)

17 ZURICH HORIZON MULTI-ASSET FUND II FUND OBJECTIVE The aim of the Fund is to grow the amount invested over the medium to long term and to keep the fund within a designated risk profile. INVESTMENT POLICY The Fund invests predominantly in other funds (underlying funds) that are managed by Threadneedle and its group of companies. Underlying funds will mainly have exposure to fixed income securities and to the shares of companies constituted or operating within developed markets (for example UK, US, Europe and Japan), with some exposure to UK property. The Zurich Horizon Multi-Asset range of funds aims to cater for investors with different risk appetites. The Funds carry staggered risk profiles starting from Zurich Horizon Multi-Asset Fund I and becoming progressively higher in risk through to, Zurich Horizon Multi-Asset Fund V. evalue Ltd, an independent risk profile service provider, using the output from its investment research tools, produces a range of five strategic weightings of asset classes aligned to five risk profiles based on a long term time horizon. evalue updates these weightings on a quarterly basis and Threadneedle will consider the weightings when deciding on the composition of the investment of the Zurich Horizon Multi-Asset range of funds. INVESTOR PROFILE The fund may be suitable for an investor seeking income and capital growth and who is prepared to tolerate moderate price fluctuations. The fund is suitable for an investor looking for a Risk Profile of 2. RISK PROFILE 2 This Fund is aligned to risk profile 2, which means that it aims to deliver growth through assets that demonstrate moderate price fluctuations, with emphasis placed on fixed income securities and equities and some exposure to property. KEY RISKS Investment risk Effect of Risk Profile Suitability of investment Investment in funds No capital guarantee Inflation risk Interest rate risk Liquidity risk Volatility risk These Risk factors must be understood before making an investment in the fund. See page 21 for more information. ASSET ALLOCATION AS AT LAUNCH UK Fixed Interest 39.10% UK Equity 36.52% Overseas Developed Equity 13.27% Property 11.08% Cash 0.04% The asset breakdown shown is calculated using the asset category at fund level, not taking into account any other asset categories of the underlying securities or the fund s cash position. All figures rounded to two decimal points. FUND HOLDINGS THE FUNDS INVEST IN THE FOLLOWING THREADNEEDLE FUNDS: Sterling Bond 25.49% UK Corporate Bond 13.61% UK 31.29% UK Equity Income 3.48% UK Smaller Companies 1.10% UK Select 0.65% European 2.95% American 7.52% Japan 2.80% UK Property 11.08% Cash 0.04% 100% CHARGES ONGOING CHARGE FIGURE 0.83% (OCF)* LAUNCH DATE RISK PROFILE Risk profile 2 (evalue) AVAILABLE SHARE CLASSES Class Z Net Income Shares (ISIN GB00BTKH4903) Class Z Net Accumulation Shares (ISIN GB00BTKH4B20) ESTIMATED YIELD Z Inc 2.00% Z Acc 2.00% MINIMUM SUBSCRIPTIONS & HOLDINGS No fund restrictions FEES AND EXPENSES INITIAL CHARGE 0% SWITCHING FEE 0% REDEMPTION FEE 0% Any platform charges will apply on top of fund charges. Up to date charges can be found in the KIIDs. * The ongoing charges figure shown here is an estimate of the charges. The Fund s annual report for each financial year will include detail on the exact charges made. The yield figure is estimated because the share class is relatively new and has insufficient track record to calculate the yield exactly. The ongoing charges figure may vary from year to year and will exclude the costs of buying or selling assets for the fund (unless these assets are shares of another fund)

18 18 / 19 DUE DILIGENCE ZURICH HORIZON MULTI-ASSET FUND III FUND OBJECTIVE The aim of the Fund is to grow the amount invested over the medium to long term and to keep the fund within a designated risk profile. INVESTMENT POLICY The Fund invests predominantly in other funds (underlying funds) that are managed by Threadneedle and its group of companies. Underlying funds will mainly have exposure to shares of companies constituted or operating within developed markets (for example UK, US, Europe and Japan), lower exposure to fixed income securities, including corporate bonds and some exposure to UK property. The Zurich Horizon Multi-Asset range of funds aims to cater for investors with different risk appetites. The Funds carry staggered risk profiles starting from Zurich Horizon Multi-Asset Fund I and becoming progressively higher in risk through to, Zurich Horizon Multi-Asset Fund V. evalue Ltd, an independent risk profile service provider, using the output from its investment research tools, produces a range of five strategic weightings of asset classes aligned to five risk profiles based on a long term time horizon. evalue updates these weightings on a quarterly basis and Threadneedle will consider the weightings when deciding on the composition of the investment of the Zurich Horizon Multi-Asset range of funds. INVESTOR PROFILE The fund may be suitable for an investor seeking income and capital growth and who is prepared to tolerate moderate to large price fluctuations. The fund is suitable for an investor looking for a Risk Profile of 3. RISK PROFILE 3 This Fund is aligned to risk profile 3, which means that it aims to deliver growth through assets that may demonstrate moderate to large price fluctuations with greater emphasis placed on equity and lower exposure to fixed income securities and some exposure to property. KEY RISKS Investment risk Effect of Risk Profile Suitability of investment Investment in funds No capital guarantee Inflation risk Interest rate risk Liquidity risk Volatility risk Currency risk These Risk factors must be understood before making an investment in the fund. See page 21 for more information. ASSET ALLOCATION AS AT LAUNCH UK Fixed Interest 28.04% UK Equity 28.94% Overseas Developed Equity 32.21% Property 10.80% Cash 0.01% The asset breakdown shown is calculated using the asset category at fund level, not taking into account any other asset categories of the underlying securities or the fund s cash position. All figures rounded to two decimal points. FUND HOLDINGS THE FUNDS INVEST IN THE FOLLOWING THREADNEEDLE FUNDS: Sterling Bond 3.68% UK Corporate Bond 19.56% UK Short Dated Bond 4.80% UK 21.92% UK Equity Income 2.90% UK Smaller Companies 1.38% UK Select 2.76% European 5.54% European Select 0.83% European Smaller Companies 0.32% American 16.04% American Select 3.84% Japan 5.64% UK Property 10.80% Cash 0.01% 100% CHARGES ONGOING CHARGE FIGURE 0.80% (OCF)* LAUNCH DATE RISK PROFILE Risk profile 3 (evalue) AVAILABLE SHARE CLASSES Class Z Net Income Shares (ISIN GB00BTKH4C37) Class Z Net Accumulation Shares (ISIN GB00BTKH4D44) ESTIMATED YIELD Z Inc 2.00% Z Acc 1.90% MINIMUM SUBSCRIPTIONS & HOLDINGS No fund restrictions FEES AND EXPENSES INITIAL CHARGE 0% SWITCHING FEE 0% REDEMPTION FEE 0% Any platform charges will apply on top of fund charges. Up to date charges can be found in the KIIDs. * The ongoing charges figure shown here is an estimate of the charges. The Fund s annual report for each financial year will include detail on the exact charges made. The yield figure is estimated because the share class is relatively new and has insufficient track record to calculate the yield exactly. The ongoing charges figure may vary from year to year and will exclude the costs of buying or selling assets for the fund (unless these assets are shares of another fund)

19 ZURICH HORIZON MULTI-ASSET FUND IV FUND OBJECTIVE The aim of the Fund is to grow the amount invested over the medium to long term and to keep the fund within a designated risk profile. INVESTMENT POLICY The Fund invests predominantly in other funds (underlying funds) that are managed by Threadneedle and its group of companies. Underlying funds will mainly have exposure to the shares of companies constituted or operating within developed markets (for example UK, US, Europe and Japan). There will also be exposure to fixed income securities (including corporate bonds), UK property and some emerging market equities. The Zurich Horizon Multi-Asset range of funds aims to cater for investors with different risk appetites. The Funds carry staggered risk profiles starting from Zurich Horizon Multi-Asset Fund I and becoming progressively higher in risk through to, Zurich Horizon Multi-Asset Fund V. evalue Ltd, an independent risk profile service provider, using the output from its investment research tools, produces a range of five strategic weightings of asset classes aligned to five risk profiles based on a long term time horizon. evalue updates these weightings on a quarterly basis and Threadneedle will consider the weightings when deciding on the composition of the investment of the Zurich Horizon Multi-Asset range of funds. INVESTOR PROFILE The fund may be suitable for an investor seeking income and capital growth and who is prepared to tolerate moderate to large price fluctuations. The fund is suitable for an investor looking for a Risk Profile of 4. RISK PROFILE 4 This Fund is aligned to risk profile 4, which means that it aims to deliver growth through assets that may demonstrate moderate to large price fluctuations, with greater exposure to equity and some fixed income securities and property. KEY RISKS Investment risk Effect of Risk Profile Suitability of investment Investment in funds No capital guarantee Inflation risk Interest rate risk Liquidity risk Volatility risk Currency risk Political and financial risk These Risk factors must be understood before making an investment in the fund. See page 21 for more information. ASSET ALLOCATION AS AT LAUNCH UK Fixed Interest 10.35% UK Equity 22.56% Overseas Developed Equity 51.73% Emerging Market Equity 4.41% Property 10.92% Cash 0.04% The asset breakdown shown is calculated using the asset category at fund level, not taking into account any other asset categories of the underlying securities or the fund s cash position. All figures rounded to two decimal points. FUND HOLDINGS THE FUNDS INVEST IN THE FOLLOWING THREADNEEDLE FUNDS: UK Corporate Bond 8.27% UK Short Dated Bond 2.08% UK 16.89% UK Equity Income 1.75% UK Smaller Companies 0.94% UK Select 2.98% European 7.74% European Select 2.07% European Smaller Companies 0.71% American 23.48% American Select 9.00% Japan 8.74% Global Emerging Market Equity 4.41% UK Property 10.92% Cash 0.04% 100% CHARGES ONGOING CHARGE FIGURE 0.81% (OCF)* LAUNCH DATE RISK PROFILE Risk profile 4 (evalue) AVAILABLE SHARE CLASSES Class Z Net Income Shares (ISIN GB00BTKH4F67) Class Z Net Accumulation Shares (ISIN GB00BTKH4G74) ESTIMATED YIELD Z Inc 1.60% Z Acc 1.50% MINIMUM SUBSCRIPTIONS & HOLDINGS No fund restrictions FEES AND EXPENSES INITIAL CHARGE 0% SWITCHING FEE 0% REDEMPTION FEE 0% Any platform charges will apply on top of fund charges. Up to date charges can be found in the KIIDs. * The ongoing charges figure shown here is an estimate of the charges. The Fund s annual report for each financial year will include detail on the exact charges made. The yield figure is estimated because the share class is relatively new and has insufficient track record to calculate the yield exactly. The ongoing charges figure may vary from year to year and will exclude the costs of buying or selling assets for the fund (unless these assets are shares of another fund)

20 20 / 21 DUE DILIGENCE ZURICH HORIZON MULTI-ASSET FUND V FUND OBJECTIVE The aim of the Fund is to grow the amount invested over the medium to long term and to keep the fund within a designated risk profile. INVESTMENT POLICY The Fund invests predominantly in other funds (underlying funds) that are managed by Threadneedle and its group of companies. Underlying funds will mainly have exposure to the shares of companies constituted or operating within developed markets (for example UK, US, Europe and Japan). It will also have exposure to emerging market equities and some exposure to UK property. The Zurich Horizon Multi-Asset range of funds aims to cater for investors with different risk appetites. The Funds carry staggered risk profiles starting from Zurich Horizon Multi-Asset Fund I and becoming progressively higher in risk through to, Zurich Horizon Multi-Asset Fund V. evalue Ltd, an independent risk profile service provider, using the output from its investment research tools,produces a range of five strategic weightings of asset classes aligned to five risk profiles based on a long term time horizon. evalue updates these weightings on a quarterly basis and Threadneedle will consider the weightings when deciding on the composition of the investment of the Zurich Horizon Multi-Asset range of funds. INVESTOR PROFILE The fund may be suitable for an investor seeking income and capital growth and who is prepared to tolerate large price fluctuations. The fund is suitable for an investor looking for a Risk Profile of 5. RISK PROFILE 5 This Fund is aligned to risk profile 5, which means that it aims to deliver growth through assets that may demonstrate large price fluctuations, with greatest exposure to equity, with some exposure to emerging markets and property. KEY RISKS Investment risk Effect of Risk Profile Suitability of investment Investment in funds No capital guarantee Inflation risk Interest rate risk Liquidity risk Volatility risk Currency risk Political and financial risk These Risk factors must be understood before making an investment in the fund. See page 21 for more information. ASSET ALLOCATION AS AT LAUNCH UK Equity 15.71% Overseas Developed Equity 61.94% Emerging Market Equity 13.48% Property 8.83% Cash 0.05% The asset breakdown shown is calculated using the asset category at fund level, not taking into account any other asset categories of the underlying securities or the fund s cash position. All figures rounded to two decimal points. FUND HOLDINGS THE FUNDS INVEST IN THE FOLLOWING THREADNEEDLE FUNDS: UK 8.37% UK Equity Income 2.41% UK Smaller Companies 0.81% UK Select 4.12% European 6.18% European Select 5.01% European Smaller Companies 1.13% American 21.23% American Select 18.71% Japan 9.68% Global Emerging Market Equity 13.48% UK Property 8.83% Cash 0.05% 100% CHARGES ONGOING CHARGE FIGURE 0.81% (OCF)* LAUNCH DATE RISK PROFILE Risk profile 5 (evalue) AVAILABLE SHARE CLASSES Class Z Net Income Shares (ISIN GB00BTKH4H81) Class Z Net Accumulation Shares (ISIN GB00BTKH4J06) ESTIMATED YIELD Z Inc 1.00% Z Acc 1.00% MINIMUM SUBSCRIPTIONS & HOLDINGS No fund restrictions FEES AND EXPENSES INITIAL CHARGE 0% SWITCHING FEE 0% REDEMPTION FEE 0% Any platform charges will apply on top of fund charges. Up to date charges can be found in the KIIDs. * The ongoing charges figure shown here is an estimate of the charges. The Fund s annual report for each financial year will include detail on the exact charges made. The yield figure is estimated because the share class is relatively new and has insufficient track record to calculate the yield exactly. The ongoing charges figure may vary from year to year and will exclude the costs of buying or selling assets for the fund (unless these assets are shares of another fund)

21 KEY RISKS EXPLAINED INVESTMENT RISK The value of investments can fall as well as rise and investors might not get back the sum originally invested. EFFECT OF RISK PROFILE Each fund s Risk Profile may limit the performance of the fund. SUITABILITY OF INVESTMENT Because the fund is a risk profiled fund, investors should regularly consult with a financial adviser to ensure that the fund continues to be a suitable investment for them. INVESTMENT IN FUNDS As this fund invests into other funds, investors should consider the underlying investments and overall risks. NO CAPITAL GUARANTEE Positive returns are not guaranteed and no form of capital protection applies. INTEREST RATE RISK Changes in interest rates are likely to affect each fund s value. In general, as interest rates rise, the price of a fixed rate bond will fall, and vice versa. INFLATION RISK Most bond and cash funds offer limited capital growth potential and an income that is not linked to inflation. Therefore, inflation can affect the real value of capital and income over time. VOLATILITY RISK There is a risk that the fund may not meet the aim expressed in the risk profile. CURRENCY RISK Where investments are made in assets that are denominated in multiple currencies changes in exchange rates may affect the value of the investments. POLITICAL AND FINANCIAL RISK Each fund invests in markets where economic and regulatory risk can be significant. These factors can affect liquidity, settlement and asset values. Any such event can have a negative effect on the value of your clients investment and investors might not get back the sum originally invested. LIQUIDITY RISK Fund invests in other funds and its liquidity depends upon the liquidity of the underlying funds and the investments they hold.

22 22 / 23 DUE DILIGENCE HOW SAFE IS MY CLIENTS MONEY? The Zurich Intermediary Platform is provided by Sterling ISA Managers Limited (SIML). Investments through the Zurich Intermediary Platform are held separately from SIMLs own assets through Sterling ISA Managers (nominees) Limited. The Zurich Horizon funds are operated by Zurich Investment Services (UK) Limited (ZIS UK), the Authorised Corporate Director for the funds. Investments held in the Zurich Horizon funds, are held separately from ZIS UK s own assets by the Depository, Northern Trust Global Services Limited. If Sterling ISA Managers Limited, the provider of the Zurich Intermediary Platform is in default, your clients may be eligible to claim in total up to 50,000 based on the value of their Zurich Intermediary Platform account and any other account provided by Sterling ISA Managers Limited. If Zurich Investment Services (UK) Limited (ZIS UK), the Authorised Corporate Director for the Zurich Horizon funds, is in default, your clients may be eligible to claim up to 50,000 of monies held in funds provided by ZIS UK, if you have a claim against ZIS UK. If any of the providers of assets or investment services available through your clients account cannot meet their financial obligations, your clients may be able to claim compensation from the Financial Services Compensation Scheme (FSCS).

23 CONTACTS ZURICH S EXPERT TEAMS ARE HERE TO HELP YOU ALL THE WAY. GENERAL SERVICING & ENQUIRIES For example: existing policy servicing, new business processing, claims and maturities, underwriting esupport TEAM For help with all technical and registration queries or [email protected] We may record or monitor calls to improve our service. IMPORTANT INFORMATION For use by professional financial advisers only. No other person should rely on, or act on any information in this document when making an investment decision. This document does not constitute an offer to sell or buy any shares in the funds. Whilst every care is taken over these comments, no responsibility is accepted for errors and omissions that may be contained therein. The value of investments and the income from them can fall as well as rise and is not guaranteed which means your clients could get back less than they invest. Changes in exchange rates will affect the value of investments made overseas. Investments in newer markets, smaller companies or single sectors offer the possibility of higher returns but may also involve a higher degree of risk. If you require further information on any of the funds, the Key Investor Information Document (KIID) and the prospectus are both available at The KIID is designed to help investors to make an informed decision before investing. You can view or download the funds KIIDs via our website.

24 For use by professional financial advisers only. No other person should rely on, or act on any information in this document when making an investment decision. DP137642A02 (04/15) ZCA The authorised Corporate Director of the Zurich Investment Funds ICVC is Zurich Investment Services (UK) Limited, which is authorised and regulated by the Financial Conduct Authority. This document is issued by and the Zurich Intermediary Platform (also known as the `Zurich Portfolio ) is brought to you by Sterling ISA Managers Limited. Zurich is a trading name of Sterling ISA Managers Limited. Sterling ISA Managers Limited, authorised and regulated by the Financial Conduct Authority. Registered in England and Wales under company number Registered Office: The Grange, Bishops Cleeve, Cheltenham, GL52 8XX