Times change, Friends don t. Investments with Friends First, stand the test of time. Pensions Protection Investments Saving and Investing with Friends First Conductor Savings Plan Conductor Investment Plan www.friendsfirst.ie
About Friends First Friends First is one of Ireland s oldest and most established Life Assurance companies, meeting the financial needs of our customers since 1834. We have over 276,000 customers and employ over 300 people in Ireland. Friends First is fully owned by the Dutch Insurance Group, Achmea, one of Europe s leading insurance players. About Achmea Achmea was founded in the Netherlands in 1811 as a mutual insurance company with strong cooperative roots. Its main shareholders are the Achmea Association, a representative body of its customers and Rabobank also a mutual organisation which is one of Europe s leading banks. Achmea remains committed to the mutual ownership model, being the largest mutual/cooperative company in Europe, with a strong focus on developing products and services that meet its individual and corporate customer s needs. As a result, Achmea is not listed on any stock exchange. Friends First Life Assurance Company manages total assets of 4.4bn, generated Total Premiums of 458m in 2014 and is regulated by the Central Bank of Ireland. At Friends First, we are focused on providing leading protection, retirement and investment solutions which are tailored to your individual needs and will provide you with the required benefits when they are needed most. We want to assist you in meeting your goals through your lifetime, but acknowledge that your needs and circumstances will change. So where possible our products are flexible offering a range of options and alternatives which you can choose during the term of your plan. Achmea employs 14,600 people in its Dutch business and 2,000 across its international operations. It insures over 8 million people in The Netherlands, one of the top 10 largest insurance markets in the world. In the Dutch market, Achmea is the largest provider of non-life, health and income protection insurance and is also a leading provider of life and pensions. Achmea manages total assets of 93.2bn in 2014, and had total equity of 9.8bn in June 2014. It generated total premiums of 20bn from its domestic and international operations to that date. Achmea holds a financial strength and long-term counterparty credit rating (Standard & Poors) of A- and had solvency cover of 2.15 times the minimum margin at June 2014. In addition to the Netherlands, Achmea is also active in 5 other countries including Ireland, Turkey, Greece, Slovakia and Australia. Achmea s aim is to consolidate its market leadership in the Netherlands and to build an integrated, European Insurance group by developing significant market positions in a number of international markets where it is present. Achmea, resulting from its ability to adapt to a changed market environment but remain true to its mutual ethos, now aspires to become the most trusted insurer in its home market and ultimately in international markets where it is present through operating companies.
Contents 2 Important Notice to Prospective Investors 3 What does the future hold for you? 5 What are your Savings or Investment goals? 6 What do we mean by Saving and Investing? 7 What Next? 8 The Friends First Investment Selection 14 Your Savings & Investment Options 15 s 16 Additional Customer Information Investments
Important Notice to Prospective Investors AT FRIENDS FIRST WE WANT YOU TO BE SATISFIED WITH YOUR INVESTMENT. BEFORE YOU PROCEED WITH AN INVESTMENT YOU SHOULD READ THIS BROCHURE, AND THE WARNINGS PROVIDED THROUGHOUT, CAREFULLY. IF YOU ARE IN ANY DOUBT ABOUT THE SUITABILITY OF THIS INVESTMENT FOR YOUR NEEDS YOU SHOULD DISCUSS THESE WITH YOUR FINANCIAL ADVISOR. IN PARTICULAR, BEFORE INVESTING, YOU SHOULD UNDERSTAND THE FOLLOWING VERY IMPORTANT POINTS : This product should be considered as a medium to long-term investment. By medium term we mean 5 to 7 years. You should not invest in this product if your intended investment timeframe is shorter than this. The value of the investments available on this product will fluctuate over the full term. There are no guarantees of performance. You need to be comfortable with the possibility that you (or your estate in the event of your death) may get back less than you originally invested. If, having regard to your age you consider that such an outcome is not acceptable to you or to the beneficiaries of your estate then you should not invest in this product. You need to be particularly careful if the funds you are investing in use gearing or borrowing and be sure that you understand the reason for this. Gearing exaggerates the impact of changes in value of the underlying asset. If the value of the asset goes down the effect of gearing is to cause a greater loss than if gearing had not been used. If you cash-in your investment in the early years, surrender penalties may apply which may result in you receiving less than you invested. In assessing the suitability of any investment you need to take into account your own attitude to risk, your likely need to access your investment and your life stage (e.g. if you are approaching or in retirement). 3
What does the future hold for you? We are all different. We have different values, needs and wants in our daily lives and different expectations of the future. Perhaps you live in the moment and don t worry too much about the next month or next year; or maybe you place a value on planning for whatever the future has instore. At Friends First, we believe that these two perspectives on life don t have to be mutually exclusive. Saving and investing may sound like hard work, but when you think about it the more you control your finances, the less your finances control you. On balance, saving now allows you live your life with greater flexibility and opportunity as you have the peace of mind that comes from knowing you have the financial support in place to cover the expected and unexpected. It makes sense to put away spare cash when you can afford it so that you are prepared for what the future holds; but you don t have to be a slave to it. Saving and Investing is all about helping you live the life you want. 4
What are your Savings or Investment goals? Set your targets and with a small amount of planning and ongoing monitoring, you can ensure that you have the financial support in place that will allow you to live your life the way you want to. The Basics: everyone needs to put aside enough to meet basic needs. There can be quite a lot of these; light, heat, food, mortgages, clothes, insurances etc. It is important not to be over eager with your savings: so make sure you leave plenty of room for the basics. Your emergency fund: the future is uncertain and your circumstances can change quite quickly. You should make sure you have a fund set aside for unexpected expenses or if you lose a source of income. The important thing about your emergency fund is that you should be able to get access to it quickly when it s needed. Your surplus: after that it s a matter of what do you want? Do you want more? You have worked hard, you deserve more! Do you want to travel? Do you want to indulge a hobby? Maybe you want to go back to college! You want your children to have education and other opportunities! Do you want to save for a rainy day or build up a nest egg? Do you want to protect what you already have or make it grow? Do you want to build up a fund to leave to your grandchildren? Or maybe it s not about something specific. Maybe it s just about making your money work better for you so you have choices later on in life. The Conductor Savings and Investment Plans, from Friends First, are designed to help give you these choices. 5
What do we mean by Saving and Investing? When we talk about savings we usually mean a regular amount you can afford to put aside on an ongoing basis, usually monthly. Most people s first experience of savings is putting a little aside into An Post, the credit union or the local bank. These are good safe places to keep your money in the short term. However, they don t tend to pay a lot of interest, which can mean your money won t keep pace with inflation over time. If you are saving over the medium to long term, you should consider funds specifically designed for longer term savings. As an example, many people look to invest their monthly Child Benefit to build up a fund for all those expenses down the road. The current rate of child benefit is 130 per month (June 2015). If you have two children and decided to save the entire 260 per month, the example below, shows how it is possible to build up a substantial fund over time. Accumulated Value (m) m90,000 m80,000 m70,000 m60,000 m50,000 m40,000 m30,000 m20,000 m10,000 m16,464 When we talk about investments we usually mean a once off lump sum you want to put away that may or may not be repeated. These would typically be higher amounts than your regular savings amounts. At Friends First, we don t believe that Investments are just for the Dragons in the Den! We ve designed investments for everyone. Whether you re a saver or investor; risk taker or conservative; experienced investor or novice, our Conductor Savings and Investment Plans will have the right solution for you. Estimated Value of Fund at 5 Year intervals m35,446 m57,522 m82,845 m0 5 10 15 20 Term (Years) Illustration assumptions: The above estimated values assume the following : savings of 260 a month of which 100% is invested; investment growth of 6% a year; fund management charge of 1.25% a year and a policy fee of 3.50 a month (which increases at 2% a year). They are also shown after deduction of the Life Assurance Premium Levy (1% as at June 2015) and Exit Tax (41% as at June 2015). Warning: Past performance is not a reliable guide to future performance. Warning: The value of your investment may go down as well as up. Warning: Funds may be affected by changes in currency exchange rates. Warning : If you invest in this product you may lose some or all of the money you invest. 6
What Next? Acknowledging that saving, or investing what you already have, is a good thing to do is the first step. The fact that you are reading this brochure is a good start! The next step is to decide how much you want to save or invest and then how you want your money invested. It is usually best to talk to your Financial Broker or advisor to help you with these decisions. Consider the Conductor Savings and Investment Plans 2 They are flexible and give you options on how you want your money to work for you. 3 They have a broad range of investment choices, many unique to Friends First. 1 They allow you to start with a little or a lot and build as you go. The Conductor Savings and Investment Plans put you in control It s easy to get started. Just decide on the amount you want to save or invest and then select an investment fund that suits you. It doesn t matter if you only have a small amount to invest. We pool your savings with those of our other like minded savers, which helps us to keep costs down, and helps you to get a spread of investments you wouldn t be able to achieve on your own. Our plans are also very flexible. You can change the fund you are invested in any time without charge. 4 They allow you to adjust your plan as your needs change. 7
The Friends First Investment Selection Everyone s financial needs, attitudes and goals are different and no single approach will suit everyone. When it comes to savings and investments, feeling comfortable with how your money is being managed for you is important. To feel comfortable, you need to understand the investment options open to you. The correct approach is key to meeting your goals. Picking an investment option to support your Savings and Investments can be complicated. We call the options investment funds and we have tried to make our options easy to understand by focusing on the various different aspects of each investment fund. Each investment fund is designed to generate returns for you by buying certain assets with your money. Some investment funds hold a single type of asset and others hold a mix of different assets. The assets might be company shares, corporate bonds, government bonds, property, cash deposits, currency trades, commodities among others. Some of our investment funds do not buy assets directly and instead work by mirroring the movement in the value of assets. You can find full details on our approach to investment funds in our Fund Range Brochure, which should be read in conjunction with this brochure. We also produce Fact Sheets, which provide more detailed information on each individual fund. The investment fund that you select will determine how your savings or investments can work for you. The Cash Deposits are usually more stable and secure than Shares or Commodities, however, they do not have the same opportunity to increase in value. Your Financial Broker or Adviser will sit down with you to ensure that your investment approach is the correct one for you. They will ensure you have considered, and understood, the basic building blocks of selecting investment funds, being; Risk and Return, Diversification and Your attitude to risk. Risk and Return Different types of investments offer different growth potential. However, a high potential for growth, usually goes with a higher risk of loss. Diversification Diversification is all about spreading your risk: not putting all your eggs in one basket. It is most easily understood if you look at it on two levels not only should you ensure your savings or investments are spread across lots of different things, you should also ensure that these things behave differently to each other so they don t all have their ups and downs at the same time. Your attitude to risk It s one thing saying that an investment carries a certain degree of risk, but the real question is understanding how much risk you, as an investor, are prepared to take on. To help you match the funds you choose with your own appetite for risk we have rated all our funds on a risk scale from 1, being the lowest risk, to 7, being the highest. To help you decide how much risk is right for you we have also developed an Investment Suitability Tool which you can use in conjunction with your Financial Broker or Adviser. You ll find this on our website at www.friendsfirst.ie/services/ist/ist.html 8
The Friends First Investment Selection What type of approach might suit you? Your Friends First Conductor Plan allows you save and invest in a number of different ways. Your Conductor Plan gives you access to over 40 different investment funds, across a number of different asset classes, fund managers and investment styles. Ready made Portfolios to suit you It can sometimes be daunting to select investment funds which are right for you. That s why Friends First has designed ready made Portfolio Funds to make this decision easier for you. Build your own portfolio If you want to take on more control of your savings or investments, you can, with the help of your Financial Broker or Adviser, build a portfolio tailored to your own specific needs. Our range includes funds investing in five asset classes from 8 different asset managers. There are actively and passively managed funds as well as those managed on an absolute, or target, return basis. Enough options to allow you build the portfolio that s right for you. Portfolio funds can be described as multi-manager, multi asset funds because they use the full breadth of asset classes, fund managers and investment styles available from Friends First, but in a single fund. Each portfolio fund is designed specifically for investors who want to take on a particular level of risk. Friends First offer two portfolio fund ranges the Magnet Range and the Compass Range. If you re new to saving and investing, one of our portfolio funds is likely to be the choice for you. Your Financial Broker or advisor will help you decide which one is right for you. 9
Investment Fund Selection This is an overview of our Fund Range. For full information on all of the funds please see our separate Fund Range Brochure. Individual fund factsheets are also available on our website at www.friendsfirst.ie We use the European Securities and Markets Authority (ESMA) risk scale where a score of 1 indicates the lowest risk and 7 indicates the highest risk. Passive The objective of these funds is to give returns that are broadly consistent with the markets they are invested in. Each has an underlying index or benchmark it aims to track. Global Equity Funds Indexed Global (Ex Euro) Equity 5 0.65% Indexed 50/50 Equity 5 0.65% Indexed World Equity 5 0.65% Regional Equity Funds Indexed Eurozone Equity 6 0.65% Indexed US Equity 6 0.65% Indexed UK Equity 6 0.65% Indexed Emerging Markets 6 0.85% Fixed Interest Funds Indexed Eurozone Corporate 3 0.65% Indexed Eurozone Long Bond 4 0.65% Indexed Eurozone Government 3 0.65% Commodities Physical Gold 6 0.85% 10
Investment Fund Selection Active The objective of these funds is to give returns that out-perform the markets they are invested in. Each fund has an underlying index or benchmark which it aims to out-perform. Managed Funds F&C Managed 5 Global Equity Funds F&C International Equity 5 KBI Global High Yield Equity 5 0.85% Regional Equity Funds F&C European Equity 6 KBI Eurozone High Yield Equity 6 0.85% F&C Irish Equity 7 F&C Explorer (Emerging Markets) 7 1.15% KBI Emerging Markets High Yield 6 0.85% Fixed Interest Funds Fixed Interest 4 European Long Bond 4 European Corporate Bond 3 Index Linked 4 Commodities Optimum Yield 5 1.00% 11
Investment Fund Selection Active Property Irish Commercial Property 5 UK Select Property 5 Cash Cash 1 Deposit 2 0.65% Specialist Funds The objective of these funds is not just to give returns which are broadly consistent or better than the markets in which they are invested. Each fund also has additional criteria which it attempts to meet. Specialist Equity Funds Stewardship (Ethical) 5 1.125% This is an international equity fund which aims to achieve growth through investing only in companies which meet certain ethical criteria. Protected Equity + 4 1.35% Calm Euro Equity 4 1.00% This fund seeks to protect investors against significant downward movements in equity markets by moving its investments between cash and equities depending on market conditions. Absolute Return Strategies Insight Currency 6 2.00% Market Neutral Equity 2 1.35% Multi Strategy Global Bond 3 0.95% Additional Objectives: all of the above Absolute Return Strategies are attempting to deliver positive returns over the medium return regardless as to underlying market conditions. Each does so in very specific ways and with varying degrees of risk. You should refer to the Fund Fact Sheet for details on the specific strategies employed by each. 12
Investment Fund Selection Portfolio Funds The objective of these funds is to use the full breadth of the Friends First fund range to build portfolios designed to maximise returns within given risk paramaters. The Magnet Range Magnet Cautious 3 0.95% Magnet Stable 4 0.95% Multi Manager Funds Magnet Portfolio 5 0.95% Magnet Adventurous 6 0.95% These portfolios will predominately use actively managed underlying funds. The Compass Range Compass Cautious 3 Compass Stable 4 Multi Manager Funds Compass Portfolio 5 Compass Adventurous 6 These portfolios will predominately use indexed underlying funds. 13
Your Savings & Investment Options Conductor Savings Plan Regular saving is an effective way of building up a pot of money over time. Investing on a monthly basis helps you to spread the cost of meeting life s expenses over time. The Conductor Savings Plan is an open ended plan. You don t have to decide on a specific savings term, although we would recommend that it is most suited when you are thinking of saving for at least 5 to 7 years. It is designed for regular monthly savings but if your circumstances change you can stop or amend the amount you are saving at any time without charge. You can continue paying in for as long as you like. You can save from as little as 150 a month. You can also add once off lump sum amounts to your Conductor Savings Plan. The minimum once off amount is 1,000 and the maximum once off amount is usually 15,000. If you have larger once off lump sum amounts to invest, we will set up a separate Conductor Investment Plan for you. Conductor Investment Plan You may have a lump sum to invest such as an inheritance or a bonus or the proceeds from an existing investment that has come to an end. Whether your goal is to protect what you have or grow your lump sum into a larger amount, the Conductor Investment Plan has a range of options that will meet your needs. The Conductor Investment Plan is an open ended investment plan. You don t have to decide on a specific investment term, although we would recommend that it is most suited when you are thinking of saving for at least 5 to 7 years. It is designed for investing a once off lump sum of at least 10,000. You can also invest further once off lump sum amounts to your Conductor Investment Bond. The minimum additional once off amount is 1,000 and the maximum is usually 15,000. If you have larger once off lump sum amounts to invest, we will set up a separate Conductor Investment Plan. Making withdrawals Our Savings and Investment plans are designed to meet your medium to long term needs. However, circumstances change and those anticipated expenses do come around. So although our plans are not on-demand bank accounts, we have of course designed them to give you easy access to your money. Partial withdrawals You can withdraw some of your money from your Savings or Investment Plan at any time. The minimum withdrawal you can take is 500 per payment and after each withdrawal you must leave a residual value of at least 1,000 in your plan. Regular Withdrawals You can set up a regular withdrawal from your Investment Plan at any time. The minimum withdrawal amount is 100 per month and this is payable directly into your bank account. Withdrawal s A charge may apply to your partial or regular withdrawals for up to five (5) years from your policy start date and can be up to Five (5) percent of the value of the amount withdrawn. The charge can also be less than this. The actual charge and the period for which it applies will depend on the way you set up your policy. Your Financial Broker or Adviser will confirm whether this charge applies to your plan and how it works. Death On death, 101% of the surrender value of your savings or investments will be payable to your estate. Taxation There is currently a Government Levy on life assurance premiums of 1% (June 2015). There are no capital gains or income taxes deducted within our investment funds. However, any withdrawal you make (including on Death), will be subject to tax on the growth achieved above the original amount saved or invested. The tax rate for individual investors is currently 41% (June 2015). If the plan is owned by a company the tax rate that applies is currently 25% (June 2015). We deduct the tax amount due before we make any payment to you. If you do not make a withdrawal and the value of your savings or investments has increased, we deduct tax from the increase in value on every eighth anniversary from the start of your savings or investment. We will take this deduction into account when working out any tax that is due on any subsequent withdrawal or if you cash in your investment in full. 14
s The Conductor Savings and Investment Plan is a very flexible solution which you can tailor to suit your needs in a wide range of circumstances. The charges, which apply, will vary depending on your chosen options. Your Financial Broker or adviser will explain the charges that apply and you ll also find them set out in your policy documents. The charges that can apply include: Allocation rate Plan Management s s Early Exit Allocation Rate This is the proportion of your savings or investment amount which is invested. For example, if the allocation rate applicable to your contract is 95% it means that for every 100 you pay we will invest 95 in the investment fund you have chosen. This is effectively a charge of 5%. Plan management s These are based on the option selected and are used to pay for the administration of your plan. They can include a monthly or annual charge and a separate percentage of the value of your fund each year. These would be in addition to the s. The monthly or annual charge can increase annually. Fund management s These charges differ depending on which investment fund you choose. They are a set annual percentage of the value of each fund. A performance charge also applies to some investment funds. These charges are deducted within each fund, so the increase or decrease in the value of your savings or Investment already includes this charge. The percentage charges for each fund are detailed on pages 14-17. Early Exit A Conductor Savings and Investment Plans are medium to long term investments. If you set up a plan and then decide to cancel it in the early years, we impose a charge to recover the costs we incurred in setting up the plan. If you cancel your policy within 5 years from your policy start date, a charge of up to 5% can apply. The charge can also be less than this. The actual charge and the period for which it which applies will depend on the way you set up your policy. Your Financial Broker or Adviser will confirm whether this charge applies to your plans and how it works. 15
Additional Customer Information What if my circumstances change? When you save or invest money it is vitally important that the plan and options you choose reflect what you are trying to achieve from it. Your Friends First Savings and Investment Bonds offers a choice of options which can be tailored to your needs as you progress through your financial lifecycle. These options include your fund choice as your risk profile may change. We would recommend that you regularly review your progress in conjunction with your Financial Adviser to ensure it is continuing to meet your goals. Keeping In Touch We will write to you once a year giving you a statement of how your savings or investment is performing. In addition, you can also access up to date details of your plan at any time by registering with our On-Line Service Centre at www.friendsfirst.ie/service. Once registered you will be able to access policy details, current values, investment performances and fund information. More information If you need help regarding your policy at any stage in the future, please speak to your Financial Advisor or call our Customer Services team on q 1890 923 308 or by email to info@friendsfirst.ie For information on the full range of products and funds available from Friends First, please contact your Financial Adviser or visit our website at www.friendsfirst.ie 16
Warning: Past performance is not a reliable guide to future performance. Warning: The value of your investment may go down as well as up. Warning: Funds may be affected by changes in currency exchange rates. Warning : If you invest in this product you may lose some or all of the money you invest. FUND WARNINGS: 1. Performance Fees: In addition to the s quoted; The growth of the Insight Currency fund will be subject to a 20% monthly performance fee which only applies when the growth rate exceeds 7% p.a.. The Market Neutral Equity fund will be subject to a performance fee of 10% of any growth achieved above cash returns (specifically 3-month EURIBID). The Global Bond Fund is subject to a performance fee of 10% of any absolute out-performance of Citigroup Euro Government Bond (50%)/Web(50%) Combined index( ). The Magnet and Compass Ranges may include some of these funds. 2. The price protection on the Protected Equity+ Fund, Series 3 is provided by Deutsche Bank AG. 3. Money invested in the Deposit fund is placed with one or more Banks. The payment of interest and security of capital is provided by the Bank(s). The Bank(s) and not Friends First are providing the security on the Deposit fund. Please refer to the Fund Factsheet. 4. The property fund managers reserve the right to place a withdrawal limit or/and to defer encashment for up to six months or such time as is necessary to facilitate the sale of assets if required. Lee Harding, Da Capo Goldsmiths Friends First Life Assurance Company Ltd Friends First House Cherrywood Business Park Loughlinstown Dublin 18 www.friendsfirst.ie PLEASE NOTE: The risk rating provided in this document represents Friends First view. Your personal risk profile or outlook may differ from this view. Please talk to your Broker or Financial Adviser for assistance in choosing the most appropriate approach for your needs. This document provides a brief overview of the Friends First range of funds. Please refer to the relevant product brochure for specific information in relation to product terms and conditions. Friends First Life Assurance Company Limited is regulated by the Central Bank of Ireland. The information in this brochure is based on our understanding of current law and revenue practice. BR192, Jun 15