ST. JAMES S PLACE INTERNATIONAL INTERNATIONAL INVESTMENT BOND

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1 INTRODUCING THE ST. JAMES S PLACE INTERNATIONAL INTERNATIONAL INVESTMENT BOND

2 THE ST. JAMES S PLACE PARTNERSHIP The St. James s Place Partnership is an elite group, made up of many of the most experienced, able and highly-regarded professionals working in financial services today. The Partners so called because of their common purpose and shared values work from a network of offices across the UK. On average, they have 17 years experience in financial services: only a small proportion of financial advisers can meet our selection criteria. PART OF THE ST. JAMES S PLACE WEALTH MANAGEMENT GROUP The St. James s Place Wealth Management Group is a provider of a wide and growing range of financial services of outstanding quality, available exclusively through the Partnership. The St. James s Place Wealth Management Group has grown strongly and consistently, and now has funds under management in excess of 17 billion. The St. James s Place Wealth Management Group is owned by St. James s Place plc, a public company that was established by Mike Wilson, Sir Mark Weinberg and Lord Rothschild and is now placed within the FTSE 250.

3 OUR INVESTMENT STRATEGY designed to produce money for personal needs and enjoyment in the right amounts and Asound investment strategy, maximising the financial resources of the individual, should be designed to produce money for personal needs and enjoyment in the right amounts and at the right time, so far as overall wealth and personal circumstances will permit. Like all financial planning, an investment strategy will be unique to the individual it will have a different emphasis or relevance in each case although there are some common factors which will almost always assume overwhelming importance. at the right time 1

4 RISK Risk is the chance that an individual may suffer misfortune. In investment terms it is the possibility that the investment will fall in value. Understanding an individual s degree of aversion to risk is fundamental although this does not mean to say that all investors are risk averse. It is simply a case that they will make different decisions when matching risk to reward. Other than the obvious inherent financial risk involved in investments offering variable returns, inflation has a pernicious influence in eroding value. The impact of inflation reduces the effective buying power of a sum of money and over a period of years this effect can be significant Putting your money into banks and building societies will ensure that your capital does not reduce in absolute terms, but in real terms its purchasing power falls year after year as inflation eats into its real value. In addition, your income level will fluctuate as interest rates move up and down. To combat these risks over the medium to long-term, you should consider investment in real assets, such as stocks and shares of the kind to which the St. James s Place International Investment Bond gives you access. you should consider investment in real assets 2

5 DIVERSIFICATION money is collectively invested by professional fund managers Although risk cannot be removed, it can be managed by a well diversified portfolio. For many private investors the task of selecting individual shares and achieving a broad based portfolio can be daunting, time consuming and potentially expensive. With pooled funds, money is collectively invested by professional fund managers with other investors funds. This allows the managers to spread the risk across a wider range of shares and markets than would otherwise be possible. Diversification is not, however, just about managing risk. It also offers a sensible method of obtaining exposure to some of the less sophisticated world markets and enables UK investors, most of whom will have portfolios of predominantly UK stocks, to diversify into international shares thus taking advantage of other economies financial cycles, interest rates and currency movements. 3

6 WHAT YOUR INTERNATIONAL INVESTMENT BOND CAN DO FOR YOU Our International Investment Bond is designed to deal with these issues and provides you with a single long-term investment which can: Maximise growth prospects. The International Investment Bond is issued by St. James s Place International who are based in the International Financial Services Centre in Dublin, and bears no tax on the investment profits. All income and gains earned under the Bond will accumulate tax-free (with the exception of a small amount of unreclaimable Withholding Tax on dividend income). Spread risk. The investment can be spread across one or several Specialist or Managed funds and the investor can switch between these funds at little or no cost. Furthermore, there is no tax payable for switching investments between funds within the Bond. Provide the option of a regular and predictable income. You may take regular or irregular withdrawals from the Bond, the proceeds of which will be paid without deduction of any tax.there is no charge for using this income facility providing the withdrawals do not exceed 10% of the Bond value in any 12 month period. Reduce paperwork to a minimum. Although your Bond will hold a range of investments, all purchases, sales and dividend receipts will be dealt with by St. James s Place International. Once the International Investment Bond has been established there is no further paperwork and unit statements and valuations can be obtained at any time. Indeed, there is not even a requirement to enter this investment on your UK Tax Return unless you withdraw more than 5% of the original investment in any policy year. there is no tax payable for switching investments between funds 4

7 OUR APPROACH TO INVESTMENT MANAGEMENT Clients can choose the managers they feel are most appropriate to their investment objectives We do not employ in-house investment managers. Instead, we have chosen to operate a multimanagement approach enabling us to provide all our clients with access to a group of highly respected independent fund managers. No one company has a monopoly of investment management expertise and by using a range of external investment managers the St. James s Place Group offers greater flexibility to the investor. Clients can choose the managers they feel are most appropriate to their investment objectives; they can switch between managers without charge and take advantage of new managers who may join our range of funds. It is a fundamental principle behind the company s philosophy and is why we attach such importance to the selection of our investment managers. 5

8 HOW WE MONITOR OUR INVESTMENT MANAGERS We believe that fund managers perform better when they are actively monitored.although the investment management of each fund is the responsibility of the relevant manager, we keep a close eye on their activities.this is done through our Investment Committee under the chairmanship of Sir Mark Weinberg, with the assistance of an independent consultancy, Stamford Associates. At its regular meetings, the various managers make presentations and discuss their current strategies with the Committee. Investment performance is an important factor, but it is not the only one. In the short term, the Committee is at least equally interested in whether there has been any change in the people handling the fund at the firm, whether they are following the policies and disciplines which they described at earlier meetings, and so on. In making these assessments, the Committee is greatly assisted by Stamford Associates, who monitor the dealings and activities of the managers between meetings. If a new investment market or technique calls for the appointment of an additional firm, the Committee will select one. If the Committee loses confidence in the future potential of an existing firm, it will replace them. The Committee s approach recognises the importance of consistent long-term performance, but does not seek to influence the investment policy of the managers. Its aim is to ensure success by holding the managers accountable for their performance. All our managers compete for funds to manage. They understand that we can terminate their fund management contract in the event of consistent under-performance.we cannot guarantee investment performance but we can help to keep investment managers on their toes. The Committee s approach recognises the importance of consistent long-term performance 6

9 YOUR CHOICE OF INVESTMENT FUNDS significant flexibility to spread your investment risk. St. James s Place offers you access to a range of Managed and Specialist Funds, each managed by a carefully selected, independent fund manager. Our distinctive selection of leading fund management groups gives you significant flexibility to spread your investment risk. You may choose to invest in any one, or a combination of funds, subject to a maximum of ten funds per Plan. MANAGED FUNDS St. James s Place offers a range of Managed Funds (both and US$ denominated) uniquely available to clients of St. James s Place. A Managed Fund typically invests across a wide spread of both different types of investments and geographical areas. The Managed Funds offered by St. James s Place each have distinctive investment strategies and are managed by carefully selected independent firms of investment professionals, each of whom has been chosen because of their different and distinctive approach to investment management. We believe that by choosing to invest across a number of the St. James s Place Managed Funds, investors are being offered a real opportunity to diversify their investment portfolio. SPECIALIST FUNDS In addition to the Managed Funds, we offer a number of Specialist Funds which have a more focused investment objective. For example, these funds may invest in a particular geographical area such as the Far East, North America, Europe, or in a particular type of investment such as Equities, Corporate Bonds, Gilts, or Cash. Details of all our Funds and Fund Managers can be found in The St. James s Place Range of Investment Funds factsheet, and further information is available in the Investment Committee & Investment Managers brochure, both of which are available on request from your St. James s Place Partner. 7

10 INVESTORS FOR WHOM OFFSHORE INVESTMENT BONDS ARE PARTICULARLY APPROPRIATE MINORS Where a parent has provided capital to a minor, any income which arises will normally be taxed as the parent s (subject to an exemption where the income is less than 100 per annum for each parent and each child). It may therefore be preferable to have the capital invested in an International Investment Bond where all income and capital is rolled up and therefore no income is produced. Furthermore, when the minor reaches majority, the Bond can be transferred to him/her without producing a tax liability on the parent and all future gains being taxed on the child. INDIVIDUALS WHO ARE LIKELY TO SEE A FALL IN THEIR MARGINAL TAX RATE There will be individuals who (perhaps in anticipation of retirement or becoming non-resident) can expect their marginal rate of tax to fall, or even disappear, in the future. For such individuals the ability to obtain gross roll-up while paying a higher rate of tax, then taking income or capital when a lower rate or no tax will be paid, should result in an overall tax saving. Similar attractions may also occur where an individual is able to control his/her marginal tax rate either because he/she is able to control the level of income they receive or are able to invest in such a way as to obtain significant Income Tax deductions. Individuals obtaining gross roll-up while paying higher rate tax should result in an overall tax saving. INVESTORS ENTITLED TO AGE RELATED ALLOWANCE Such investors may find International Investment Bonds attractive as they can provide a method of taking income without restricting age related allowance. 8

11 EXPATRIATES Expatriates currently investing in International Investment Bonds will avoid any liability to UK tax while non-resident and, should they return to the UK, time apportionment relief will be available for gains made while outside the UK (even if withdrawals or gains are taken once the expatriate has re-established UK residence).a non-income producing investment such as an International Investment Bond may also favour expatriates as income producing assets may be taxable in the country in which they are residing. WHERE THE INVESTORS ARE TRUSTEES Where trustees have the power to invest in life assurance policies they can prove useful trustee investments because: They do not produce income in the trustees hands and can therefore help to avoid the additional Income Tax liability associated with Discretionary, and Accumulation and Maintenance Trusts. A trust only has a limited Capital Gains Tax exemption so an investment which is not liable to Capital Gains Tax can enable the trustees to follow a more active investment strategy. By investing in non-income producing investments the anti-avoidance tax provisions relating to trusts can be avoided, giving trustees more flexibility in exercising their powers. For further information, refer to the International Trustee Bond literature which is available on request, or by contacting your St. James s Place Partner. 9

12 HOW DOES TAXATION AFFECT THE BOND? The taxation of the Bond depends upon your country of residence and your personal circumstances. If you are resident in the UK for tax purposes, you may have a personal Income Tax liability on any chargeable gains arising under the Bond. Bonds are normally exempt from Capital Gains Tax. A chargeable gain may arise after a chargeable event, which is any of the following circumstances: Death of the life or lives assured, where this gives rise to benefits under the Bond; Total encashment; Assignment for money or money s worth; Part encashment (or certain part assignments) where the amount encashed (or assigned) exceeds the 5% allowable credits (see below); and Addition and/or removal of a life or lives assured. You can encash up to 5% of the original amount of each investment in the Bond, every policy year, for 20 years, without any immediate Income Tax liability. This 5% allowable credit is cumulative, in that any unused credit for a particular policy year can be carried forward and set off against a subsequent part encashment. This means, for example, that after 20 years has elapsed for each investment, up to 100% of the original investment can be encashed without incurring an immediate liability to Income Tax. Where a part encashment (or certain part assignments) from the Bond exceeds the 5% allowable credit in any individual policy year, or exceeds the cumulative brought forward amount, the excess is a chargeable gain, which may give rise to an Income Tax liability, based on your marginal rate of tax. It may be possible to use the Bond to limit any Inheritance Tax liability by using a suitable trust. Further details on the taxation of Investment Bonds can be obtained from our Tax Guide for UK Investors, a copy of which is available on request, or by contacting your St. James s Place Partner. 10

13 HOW YOUR INTERNATIONAL INVESTMENT BOND IS SET UP The investment is allocated to the fund or funds which you have chosen, in the proportions you have selected. Our International Investment Bond is a unit linked life assurance plan. Unit linking is the system whereby an investment fund is divided into a number of units, the price of which reflects the value of the underlying investments of the fund. Unit linking is widely accepted as being the fairest way of enabling people to share directly in the performance of money invested on their behalf.the investment is allocated to the fund or funds which you have chosen, in the proportions you have selected. 100% of your investment is allocated to units at the bid price, so the whole of the money is invested on your behalf, without the deduction of an initial charge. This compares favourably with many other International Investment Bonds where the money invested is allocated to units at what is called the Offer price from which an initial charge of between 5% and 7% is deducted. So 100% of your money is working for you in our International Investment Bond, rather than 93% 95%. An early encashment penalty may apply if you sell your International Investment Bond in the early years. 11

14 CLUSTERS FOR ADDED FLEXIBILITY You may choose at outset to have your Bond structured as a series of individual policies. These individual policies are called clusters and you may choose as many clusters as you feel appropriate provided each has a minimum initial value of 5,000 subject to a maximum of 20. By using the cluster facility, you may withdraw part of the investment from time to time without necessarily incurring a liability to higher rate Income Tax (although there may still be a basic rate charge). OUR GUARANTEE The St. James s Place Wealth Management Group guarantees the advice given by its representatives when recommending any of the products or services provided by companies in the Group. 12

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16 The St. James s Place Group Provides Wealth Management Services The St. James s Place Partnership and the title Partner are the marketing terms used to describe the representatives of the St. James s Place Group St. James s Place International plc is authorised and regulated by the Irish Financial Regulator St. James s Place International plc: Registered in Ireland Number Registered Office: Fleming Court, Flemings Place, Dublin 4, Ireland. SJPI036-VR14 (12/07)