ST. JAMES S PLACE INVESTMENT BOND

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1 INTRODUCING THE ST. JAMES S PLACE 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 amounting to 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 WHY YOU SHOULD CONSIDER POOLED INVESTMENTS your money is collectively invested by professional fund managers The problem with putting your money into banks and building societies is that although your original capital is secure, your income level is not guaranteed, and there is no prospect of capital growth. In addition, over the longer term, the real value of your capital, measured by what you can buy with it, goes down as inflation pushes up the cost of living. To counteract these risks, you should consider making an investment in longer term investments, such as stocks and shares. For many private investors, the task of selecting individual shares and achieving a broadly based portfolio can be daunting, time consuming and potentially expensive. With pooled funds, your 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. This approach is available with the St. James s Place Investment Bond, which also allows you access to the St. James s Place Investment Committee whose role is to select and monitor a range of professional Investment Managers for you. 1

4 WHAT YOUR INVESTMENT BOND CAN DO FOR YOU The St. James s Place Investment Bond provides you with a single, long-term investment which can: maximise growth prospects spread risk offer a range of carefully selected and monitored Investment Managers give you the option of a regular and predictable income reduce paperwork to a minimum allow you to switch between funds easily reduce your personal liability to Income and Capital Gains Taxes. a single, long-term investment INVESTMENT CHOICES Of course, a fund can only grow as quickly as the skill of the manager allows. The simple fact is that many people will not achieve sufficient growth on their investment because the performance of their chosen Investment Manager is inadequate. This makes it very important to ensure that you have invested with an Investment Manager who can provide good returns and more importantly, one who has the potential to do well in the future. The St. James s Place Approach to Investment Management has been developed with this in mind. The St. James's Place Investment Bond is a unit-linked* investment which enables you to select a distinctive choice of funds. The funds are actively managed by leading fund management groups, each of which has an exceptional record for long-term investment performance. 2 * an explanation of unit-linking is given on page 5

5 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 twenty funds per Plan. MANAGED FUNDS St. James s Place offers a range of Managed Funds 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 Corporate Bonds, Gilts, Property 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. 3

6 HOW YOUR INVESTMENT BOND CAN PROVIDE AN INCOME (See pages 7 to 9 for important information) If you require an income, your St. James s Place Investment Bond can provide regular payments monthly, quarterly, half yearly, or termly to meet costs such as school fees as you choose. You may currently withdraw up to 5% per year of your original investment for up to 20 years free of any liability to tax. You are therefore assured of the benefit of payments which are predictable as well as regular. This can remove the uncertainty of trying to predict either future interest rates, as with building society investments, or future dividend payments, as with stocks and shares. If you do not use your 5% allowance in any one year, you may carry it forward to future years. If the net income and capital growth of your original investment, after tax and charges, are more than 5% per year, your Bond will grow in value even after the 5% withdrawal. In any year when net income and capital growth are less than 5%, the value of your Bond will fall if you continue to take 5% withdrawals. If you require an income, your St. James s Place Investment Bond can provide regular payments 4

7 HOW YOUR INVESTMENT BOND IS SET UP 100% of your investment is allocated to units The St. James s Place 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. Your 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, so the whole of the money is invested on your behalf, without the deduction of an initial charge. Although you are free to partially or fully encash your Bond at any time (encashments from a fund which holds property may be subject to a delay of up to six months), the charging structure has been designed so that you get the best value for money if you hold it for at least six years. Details of the reducing surrender charge if you cash in before then (or take regular withdrawals exceeding 5% per year of your original investment) are set out on pages 9 and 10. 5

8 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 500. 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. You may choose at outset to have your Bond structured as a series of individual policies. AUTOMATIC FUND TRANSFER FACILITY This facility allows you to switch your investment from either the Deposit Fund to other funds (i.e. Managed Funds) or vice versa over a period of time. In effect you are drip feeding your investment either into or out of the Deposit Fund.You might want to use this facility if you are unsure as to whether you want to be fully invested, or if you are intending to withdraw your investment and want to do it gradually to reduce the effect of any stockmarket fluctuations. You decide the frequency and the amounts involved. Full details of this facility will be provided on request. 6

9 TAXATION OF YOUR BOND: YOUR PERSONAL SITUATION You can encash up to 5% of the original amount of each investment into the Bond, every policy year, for 20 years, without any immediate Income Tax liability. 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. Income Tax may be due at a rate based on the difference between the basic and higher rates of tax, depending on your individual circumstances. 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; and Part encashments or certain part assignments, where the amount encashed or assigned exceeds the 5% allowable credit (see below). You can encash up to 5% of the original amount of each investment into 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 from (or certain part assignments of) the Bond exceed the 5% allowable credit in any individual policy year, or exceed the cumulative brought forward amount, the excess is a chargeable gain, which may give rise to a higher rate Income Tax liability. 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. 7

10 TAXATION OF THE FUNDS The taxation of the funds is handled by St. James s Place and is taken into account in the unit prices. The investment income and realised capital gains (after allowing for inflation) of the funds are charged to tax at 20%. To protect the interests of all planholders, a reserve is deducted from the unit price in respect of unrealised gains. This is currently equal to 20% of the unrealised gains, but may change from time to time reflecting the anticipated realisation of these gains. Any part of the funds invested in Government securities will not be subject to Capital Gains Tax within the funds. HOW YOUR INVESTMENT BOND REDUCES PAPERWORK TO A MINIMUM Once you have discussed your needs and objectives with your St. James s Place Partner, all you need do is complete the Investment Bond application form and make your cheque payable to St. James s Place UK plc. If you would like the 5% per year withdrawals, simply say so on the application form. You may request a unit allocation statement at any time. This will show the number of units allocated to your Bond, any withdrawals or additions made during the preceeding 12 months and the Bid value of each unit as at the date of your statement. all you need do is complete the Investment Bond application form 8

11 LIFE COVER IS INCLUDED Your Bond automatically includes an element of life cover Your Bond automatically includes an element of life cover, which is based on the value of your units. If you are aged less than 70 at the outset of your Bond the death benefit is 101% of the Bid value of the units at the date of death. Otherwise, the death benefit is 101% of the Bid value of the units at the date of death less any early surrender charge which would have applied had the Bond been surrendered at the date of death. ABOUT OUR CHARGES The cost of managing the investments is charged to the funds each year and reflected in the unit price. These costs include our annual management charge, currently 1.5%, the fee paid to the Investment Manager plus various additional costs (Audit Fees, Custody Fees etc). The amount of additional costs varies from fund to fund and full details of the costs for the funds you have selected are set out in your personal illustration. If your initial investment in the Bond is less than 3,000, or if you make any withdrawals from your Bond, including regular withdrawals, an indexed plan charge will be debited to your fund each year. Details of the current level of charge is set out on your personalised illustration. As mentioned earlier, as there is no initial charge, there is an early surrender charge on withdrawals in excess of 5% a year or if you encash one or more of your clusters within six years of making the investment, as shown in the table overleaf. 9

12 NUMBER OF COMPLETE YEARS SINCE INVESTMENT CHARGES AS A PERCENTAGE OF BID VALUE OF UNITS Less than 1 year 6% 1 year 5% 2 years 4% 3 years 3% 4 years 2% 5 years 1% 6 years or more No charge As you can see, providing you hold your Bond for a period of at least six years from the date of investment, there will be no surrender charge on any withdrawals after this time. And of course, the longer you hold your Bond, the greater the prospect of achieving your long-term investment objectives. If you make partial withdrawals in excess of the cumulative 5% a year, a partial withdrawal charge will also apply.you should note, however, that the partial withdrawal charge does not apply if you surrender one or more of your clusters.the current partial withdrawal charge is shown in the Key Features brochure. More details of the charges applicable to your Bond may be found in the Plan Conditions Booklet, and on your personalised illustration. By now, you may well have some questions. The main ones are answered in the section that follows and additional information is available in our Key Features and Plan Conditions Booklet. Your St.James s Place Partner will,of course,be happy to go into further depth in individual discussions. 10

13 ANSWERS TO QUESTIONS YOU MAY HAVE IS THERE AN AGE LIMIT? No, there is no maximum age limit. Furthermore, investment can be made on behalf of a child from the age of three months. Investment can be in a single name, or in joint names in the case of a husband and wife. HOW MUCH CAN I INVEST? The minimum investment is 1,500.You can make further additional investments. There is no upper limit to the amount you can invest providing each additional investment is at least 500. CAN I SWITCH BETWEEN FUNDS? You may switch between the various funds at any time, but if you are switching out of the Property Fund we may delay your switch for up to six months. You can have up to two switches free a year. After that, further switches will incur a small administration cost. This is a valuable and costeffective facility as the cost of altering a diversified portfolio directly invested in stocks and shares could be considerable. Such switches do not constitute a disposal for the purpose of either Income Tax or Capital Gains Tax and are made on a Bid to Bid price basis. HOW CAN I FOLLOW THE PROGRESS OF MY INVESTMENTS? Unit prices are published daily in the Financial Times. The Bid price is the lower of the two prices quoted for each of the life funds. In addition, you may request a unit allocation statement at any time. Alternatively, you may prefer to contact your St. James s Place Partner for further information. 11

14 YOUR ST. JAMES S PLACE INVESTMENT BOND The St. James s Place Investment Bond can provide you with a single investment route to a variety of funds and fund managers and depending on your circumstances, a key component in your personal tax planning. It can be an investment which spreads risk, maximises growth prospects, minimises future taxation, provides you (if you choose) with a regular and predictable income and reduces paperwork to a minimum. And of course, our choice of fund management is unique in the industry. The St. James s Place Investment Bond is one of a comprehensive range of financial products and services. Your St. James s Place Partner will be pleased to answer any questions you have about this, or any other of our products. OUR GUARANTEE The St. James s Place Wealth Management Group guarantees the advice given by its representatives when recommending any of the products and services provided by companies in the group. 12

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16 Members of the St. James s Place Wealth Management Group are authorised and regulated by the Financial Services Authority. The St. James s Place Partnership and the title Partner are the marketing terms used to describe St. James s Place representatives. St. James s Place UK plc: Registered Office St. James s Place House, Dollar Street, Cirencester, Gloucestershire, GL7 2AQ, United Kingdom Registered in England Number SJP200-VR12 (03/08)