Protected Consensus Markets Fund Guide

Transcription

1 This is not a customer document and is intended for financial advisers only Protected Consensus Markets Fund Guide Balancing protection and performance Available through a selection of Irish Life Pension, Investment and Savings Products

2 Why you should consider the Protected Consensus Markets Fund for your clients Four great reasons... 1 Performance potential when markets are rising Access to our Consensus Markets Fund which has a high equity content along with smaller allocations to bonds and cash. This fund is managed by ILIM and benefits from their market- leading indexation skills. This helps to minimise the risk of the fund underperforming its relevant benchmarks. 2 Up to 100% participation When investment markets are performing well, we could invest up to 100% in the Consensus Markets Fund. 3 Built-in protection when markets are falling If markets fall, we switch some of the fund to our Protected Fund to act as a safety net. The protected price pledge is an extra level of protection and is designed so that the unit price of the Protected Consensus Markets Fund will not fall below 80% of its highest value. 4 Full flexibility and choice There is no minimum investment period. Investors can switch in and out of the Protected Consensus Markets Fund at any stage to one of the large range of funds available on our products. The fund is available for lump sum or regular contributions. Standard product rules apply. Important information: The money invested in this fund is not 100% protected. For more information on the Protected Consensus Markets Fund, talk to your Account Manager today. The information in this guide is correct as at August 2010 but may change.

3 Contents 1 Introduction 2 2 How the fund works 3 3 How different investment conditions could affect the performance of the fund 7 4 Important information about the fund 11 5 Questions and answers 14 1

4 1 Introduction Getting the balance right Are your clients looking for a fund that delivers the performance potential of global markets but with some level of protection built in? Then the Protected Consensus Markets Fund may be what they are looking for. We have designed the fund with a view to providing investors with a better balance between performance and protection. So they can participate in market growth but have a limit to what they can lose on their investment. We believe that the Protected Consensus Markets Fund is a suitable stepping stone from the safety of deposits and capital guaranteed products to providing increased exposure to global stock markets. This fund gives investors the opportunity to benefit from some of the performance of our Consensus Markets Fund with significant security features built in. The aim of the fund is to provide growth when markets are performing well and deliver some protection when markets are falling. This is done through a dynamic asset allocation process between two funds our Consensus Markets Fund which drives performance and the Protected Fund which acts as a safety net. This is explained further on. In addition the aim of the protected price pledge is that the unit price of the Protected Consensus Markets Fund will not fall below 80% of its highest value. This pledge is designed to apply for an initial period up to 11 September 2015 and is provided by Deutsche Bank. Deutsche Bank is Germany s biggest bank with a market capitalisation of over 32 billion. Deutsche Bank is a global financial services provider offering commercial, investment, private and retail banking. It has a credit rating of A+ from Standard and Poors and has over 1.5 trillion in assets.* The result of this design is a fund with lower volatility than the Consensus Markets Fund itself, which could make it more suitable for a more cautious investor who still wants to benefit from upside potential but with downside protection built in. What sets this fund apart relative to other funds in its category is that it offers: Up to 100% participation In favourable market conditions, it is possible that the Protected Consensus Markets Fund could invest 100% in the Consensus Markets Fund. Full Flexibility It also offers full flexibility in that it is available on a large range of our pension, investment and savings products and open for lump sum and regular contributions. Investors can switch in and out of the fund at any stage. *(Source: Bloomberg, August 2010) 2

5 2 How the Fund works The return of the Protected Consensus Markets Fund is based on the performance of a mix of two funds; the Consensus Markets Fund and the Protected Fund. We have added another layer of protection to the fund by adding the protected price pledge. Potential returns Consensus Markets Fund Protected Consensus Markets Fund Protection Protected Fund + Protected Price Pledge 3

6 Consensus Markets Fund The Consensus Markets Fund is managed by ILIM on an indexed basis. ILIM s world-class indexation skills will help minimise the risk of the fund underperforming the market and increases the overall efficiency of the fund. The asset allocation weights in the fund are determined by the allocation decisions of all the investment managers in Ireland and as such eliminate manager selection risk. The fund follows the same asset allocation as our ever popular Consensus Fund, but without the allocation to property. We have excluded property because of its illiquidity which makes it unsuitable to the dynamic asset allocation process underpinning the Protected Consensus Markets Fund. So the good news for your clients is that they get the benefit of the combined wisdom of investment managers in Ireland and the allocations they make to equities, bonds and cash (current asset mix) but with the added advantage of regular rebalancing that comes with the Protected Consensus Markets Fund. Our Consensus Fund is Ireland s most popular fund, with approximately 5.5 billion in assets under management (31 July 2010). The Protected Fund This fund is made up of German and French Government short-term bonds and cash deposits in high quality and leading European banks which have a credit rating of Aa3 or higher by the rating agency Moodys. Current Mix of Assets Consensus Markets Fund Protected Fund Equities 77.3% Bonds 16.5% Government Bonds and Cash 100% Cash 6.2% Source: Irish Life Investment Managers The above is correct as at 31 July The assets in the Consensus Markets Fund will change over time as it matches the allocations of the main investment managers in Ireland. If the main investment managers change their allocations very significantly in the future, we may change how we decide the mix of assets in the Consensus Markets Fund so that it is closer to the current asset mix. For the latest factsheet on the fund, please go to Warning: The value of your investment may go down as well as up. The Protected Consensus Markets Fund may be affected by changes in currency exchange rates. 4

7 After the fund opens, the amount that is invested in the Protected Consensus Markets Fund is split between the Consensus Markets Fund and the Protected Fund and will depend on the dynamic asset allocation process and be based on fund performance. If your client invests regularly, the mix between the Consensus Markets Fund and the Protected Fund will be different each time they invest. Consensus Markets Fund grows When the Consensus Markets Fund is doing well, investors will gain increased exposure to the Consensus Markets Fund to take advantage of that growth and the amount linked to the Protected Fund will be reduced. Consensus Markets Fund falls If the value of the Consensus Markets Fund falls, the exposure to the Consensus Markets fund is reduced and the amount linked to the Protected Fund will be increased. Consensus Markets Fund Protected Fund Consensus Markets Fund Protected Fund The Protected Consensus Markets Fund opens in September At the start, the mix between the two funds is as follows: 100% Consensus Markets Fund 0% Protected Fund If investment markets perform well, up to 100% of the Protected Consensus Markets Fund could be linked to the Consensus Markets Fund. If markets perform poorly, more of the Protected Consensus Markets Fund could be linked to the performance of the Protected Fund than to the Consensus Markets Fund. If markets have very large falls, most and even 100% of the fund could be linked to the returns from the Protected Fund. This would substantially reduce the possibility for growth thereafter. Our factsheet will include the fund mix and is available on The process used to calculate the exposure to the Consensus Markets Fund is based on an investment strategy known as Constant Proportion Portfolio Insurance (CPPI). For more detailed information on how this strategy works, please see page 15. 5

8 Protected Price Pledge Protected Price Pledge There is a protected price pledge to provide some protection. The aim of this pledge is that the unit price of the Protected Consensus Markets Fund will not fall below 80% of its highest value. This protected price pledge rises every time the Protected Consensus Markets Fund price reaches a new high locking in a portion of any gains made. The example below shows how the protected price pledge changes as the unit price of the Protected Consensus Markets Fund changes. This does not represent the actual or expected performance of the fund. Unit price Time (Years) Protected Consensus Markets Fund Price Protected Price Pledge The protected price pledge applies to allocated units in the fund. The number of units allocated to the fund can change as units are deducted for certain charges (for example yearly plan charges) or if units are cashed in (for example regular withdrawals or encashments. Please see Is the fund available for switches, withdrawals or transfers? on page 14). This pledge is designed to apply for an initial period up to 11 September The protected price pledge is provided to us by Deutsche Bank AG. For important information on this protection including circumstances where it may be reduced or removed, please see pages

9 3 How different investment conditions could affect the performance of the fund The following are two examples that aim to show you how the Protected Consensus Markets Fund would have worked in different stock market conditions in the past had it been available at the time. The Protected Consensus Markets Fund opens in September They are not estimates of future returns. Example 1: A period when markets did not perform well June 2004 to June 2009 Unit Price Protected Consensus Markets Fund Simulation /04 12/04 06/05 12/05 06/06 12/06 06/07 12/07 06/08 12/08 06/09 Date Consensus Markets Fund Protected Consensus Markets Fund Protected Price Pledge The graph above shows the unit price of the Protected Consensus Markets Fund for the period highlighted. It also shows the Consensus Markets Fund and the protected price pledge. The unit prices include an annual fund charge of 1% on the Consensus Markets Fund and 1.6% on the Protected Consensus Markets Fund. These charges are for illustration only. For further details on charges please see page 14. Another way of looking at this is by way of an example of an amount invested. If your client invested a regular contribution of 1,000 per month over 5 years ( 60,000 in total) in the Protected Consensus Markets Fund, their fund value would have fallen to 58,124 on 30 June That is a fall of 1,876 over the period. If your client invested regularly in the Consensus Markets Fund on its own, their fund value would have fallen to 47,475 on 30 June That is a fall of 12, % of the highest unit price of the Protected Consensus Markets fund would have been protected during this time. The protected price pledge amount would have been 57,743 on 30 June If your client had cashed in their plan or switched to another fund on 30 June 2009, they would have received the Protected Consensus Markets Fund value of 58,124 as this was higher than the protected price pledge amount. In this example, plan charges have not been taken into account. Please see our product booklets and Fund Guide for details of all charges that apply on our plans. 7

10 Volatility Comparison: Annualized volatility of the Consensus Markets Fund 14.2% Annualized volatility of the Protected Consensus Markets Fund 6.5% Investment mix: There would have been on average 68.9% of their investment linked to the Consensus Markets Fund returns over the 5 year period. The Protected Consensus Markets Fund would have had the following amounts linked to the performance of the Consensus Markets Fund and the Protected Fund over each year as follows: Amount in Year 1 Year 2 Year 3 Year 4 Year 5 Consensus Markets Fund 94.9% 94.3% 92.7% 53.9% 8.7% Protected Fund 5.1% 5.7% 7.3% 46.1% 91.3 (Source: Irish Life Investment Managers) Warning: These figures are estimates only. They are not a reliable guide to the future performance of this investment. 8

11 Example 2: A period when markets performed well December 2002 to December The graph above shows the unit price of the Protected Consensus Markets Fund for the period highlighted. It also shows the Consensus Markets Fund and the protected price pledge. The unit prices include an annual fund charge of 1% on the Consensus Markets Fund and 1.6% on the Protected Consensus Markets Fund. These charges are for illustration only. For further details on charges please see page 14. Another way to look at this is by way of an example of an amount invested. If your client invested a regular contribution of 1,000 per month over 5 years ( 60,000 in total) in the Protected Consensus Markets Fund, their fund value would have increased to 71,403 on 31 December That is a gain of 11,403 over the period. If your client invested regularly in the Consensus Markets Fund on its own, their fund value would have risen to 74,108 on 31 December That is a gain of 14, % of the highest unit price of the Protected Consensus Markets fund would have been protected during this time. The protected price pledge amount would have been 63,253 on 31 December If your client were to cash in their plan or switch to another fund on 31 December 2007, they would have received the Protected Consensus Markets Fund value of 71,403 as this was higher than the protected price pledge amount. In this example, plan charges have not been taken into account. Please see our product booklets and Fund Guide for details of all charges that apply to our plans. 9

12 Volatility Comparison: Annualized volatility of the Consensus Markets Fund 9.6% Annualized volatility of the Protected Consensus Markets Fund 7.9% Investment mix: There would have been on average 90% of their investment linked to the Consensus Markets Fund returns over the 5 year period. The Protected Consensus Markets Fund would have had the following amounts linked to the performance of the Consensus Markets Fund and the Protected Fund over each year as follows: Amount in Year 1 Year 2 Year 3 Year 4 Year 5 Consensus Markets Fund 88.3% 91.8% 95.5% 91.2% 83.2% Protected Fund 11.7% 8.2% 4.5% 8.8% 16.8% (Source: Irish Life Investment Managers) Warning: These figures are estimates only. They are not a reliable guide to the future performance of this investment. 10

13 4 Important information about the fund How are the potential returns of the Protected Consensus Markets Fund provided? The potential returns are provided from the returns of the Consensus Markets Fund and the Protected Fund. For added security there is a protected price pledge. We are committed to passing the full value of the return of the Protected Consensus Markets Fund to investors but this could be less than the amount they have invested in this fund. If one or more of the assets of the fund fails to perform, we will not be responsible for making up any shortfall. We will not pay more than the value of the assets in the fund. Who provides the protected price pledge? IMPORTANT Deutsche Bank AG acting through their London branch (Deutsche Bank) provide the protected price pledge to us under the terms of a contract between Deutsche Bank and Irish Life. Deutsche Bank AG is authorised under German Banking Law (BaFin - Federal Financial Supervisory Authority) and authorised and subject to limited regulation in the UK by the Financial Services Authority. Deutsche Bank AG is a leading investment bank, rated Aa3 by Moody s, A+ by Standard & Poors and AA- by Fitch. These ratings were correct in August 2010 but can change over time. Investors have a contract with us, Irish Life Assurance plc (Irish Life). We have a separate contract with Deutsche Bank to provide the protected price pledge in relation to this fund. Deutsche Bank also calculate how much of the Protected Consensus Markets Fund is linked to the performance of the Consensus Markets Fund through the dynamic asset allocation process. Our commitment to investors is to pass on the full amount we receive from Deutsche Bank for their investment. We restrict our commitment to investors to the amount we actually receive from Deutsche Bank. We will not use any other assets to meet these commitments. This means that if Deutsche Bank cannot pay us what they owe, or if the contract with Deutsche Bank has terminated, investors may not receive the protected price pledge. (for more information on circumstances where the protected price pledge may be reduced or removed, see page 12). They will however receive the actual value of the assets in the Protected Consensus Markets Fund at that date. Deutsche Bank s commitment is restricted to their contract with us. Investors do not have a contract with Deutsche Bank and in no event will they be entitled to make a claim directly against Deutsche Bank under the protected price pledge. They are also not entitled to any claim against Deutsche Bank in relation to Deutsche Bank s obligation to calculate what proportion of the fund s performance is linked to the Consensus Markets Fund and what proportion is linked to the Protection Fund. What happens when the protected price pledge is triggered? If there was a gradual or sudden and severe fall in the market leading to a large fall in the value of the Protected Consensus Markets Fund, the unit price would fall to the protected price. We would trigger the protected price pledge at that point. This means that we will rely on Deutsche Bank under the terms of our contract with them to make up any shortfall in the fund value to make sure that the unit price did not fall below 80% of its highest ever value. The Protected Consensus Markets Fund would then be fully invested in the Protected Fund. 11

14 If this happens, we would write to investors (and notify you) with the option of: switching to our cash fund, switching to any other fund of their choice on their plan or staying invested in the Protected Consensus Markets Fund. Please note if investors continue to stay invested in the fund after the protected price pledge is triggered, the fund charges will continue to be deducted from the fund. If the fund charges are greater than the growth rate of the Protected Fund at that stage, it may reduce the protected price pledge amount payable. This means that your client could get back less than 80% of the highest ever unit price. For how long does the protected price pledge apply? The contract between us and Deutsche Bank is for an initial period up to 11 September Therefore the protected price pledge applies up to this date or until it is triggered if this is earlier. We will negotiate with Deutsche Bank to try to extend this date but there is no guarantee that we will be successful. We will write to investors and their financial advisers on this. If we are successful in extending the protected price pledge beyond 2015, this may be a contract with Deutsche Bank or another counterparty. We will tell you and your client if there is an extension or if the counterparty changes. if particular provisions of the contract are breached by either of Irish Life or Deutsche Bank; for example, if Deutsche Bank stop working out how much of the Protected Consensus Markets Fund is linked to the performance of the Consensus Markets Fund and the Protected Fund, Irish Life may terminate the contract; or if Irish Life fails to supply specific information on the Protected Consensus Markets Fund to Deutsche Bank necessary to perform their functions under the contract, Deutsche Bank may terminate the contract with us. If either Irish Life or Deutsche Bank refuses or fails to pay the amounts due under the contract to each other. If there is a material breach by Deutsche Bank of services they provide under the contract. If Irish Life (or another company acting on its behalf under the contract with Deutsche Bank) cease for whatever reason to fulfil our functions under the contract. If either Irish Life or Deutsche Bank becomes insolvent or is nationalised or ceases to carry on our current business. If there is a change in tax, law or the regulatory regime that negatively impacts on Deutsche Bank with regard to their duties under the contract. If Irish Life or Deutsche Bank s obligations under the contract become impossible to fulfil or illegal or infringe the law. Are there any circumstances where the protected price pledge may be reduced or removed? IMPORTANT If there is a regulatory investigation of either Deutsche Bank or Irish Life with regard to their activities under the contract. There may be circumstances where the protected price pledge may be reduced or even removed and investors may not get the benefit of the protected price pledge. We will write to you and your client to let you know if this happens and outline the investment options available at that time. We have listed some of the circumstances below, where the protected price pledge may not apply. These include but are not limited to: If either of Irish Life or Deutsche Bank commits a material breach of the contract under which Deutsche Bank provides the pledge and does not remedy it within a specified time limit. What happens if a large part of the fund is linked to the Protected Fund? If markets have very large falls either gradually or in a sudden and severe market movement, we could link up to 100% of the Protected Consensus Markets fund to the Protected Fund. This is known as a situation where the fund has become cash-locked. As a result, investors will only benefit from any growth in the Protected Fund which would reduce the potential for growth over the rest of their investment. Even if markets recover, the fund would not benefit from further increases in the Consensus Markets Fund. 12

15 We will monitor the fund regularly and, if this happens, we will write to you and your client with the option of: switching to our cash fund, switching to any other fund of their choice on their plan; staying invested in the fund. Please note if they continue to stay invested in the fund after the protected price pledge is triggered, the fund charges will continue to be deducted from the fund. If the fund charges are greater than the growth rate of the Protected Fund at that stage, it may reduce the protected price pledge amount. Are there any circumstances where the fund could close? IMPORTANT While Irish Life will do our best to make sure the fund stays open, there may be some circumstances where we may need to close the fund and we reserve the right to do this. We will do what we believe is the best course of action in the interests of all investors in the fund. We will make all reasonable efforts to treat customers fairly if this happens. We have listed some of the circumstances below, where we may have to close the fund. These include but are not limited to: If the protected price pledge is reduced or removed which is described in more detail on page 12 (see Are there any circumstances where the protected price pledge may be reduced or removed?) If we cannot extend the contract with Deutsche Bank beyond September 2015 and we cannot find another counterparty to provide the protected price pledge. Are there circumstances where the fund could close to new contributions? There are circumstances in which we may need to close the fund to new contributions (regular or single contributions and switches) with immediate effect, for example if investment markets are severely disrupted or the fund becomes cash-locked. If this occurs we will redirect investor contributions to our cash fund. We will write to you and your client to tell you this has occurred and to give the option on which fund they want to invest in, in the future. Do all investors get the same level of protection, regardless of when they invest in the Protected Consensus Markets Fund? Investors always invest in the Protected Consensus Markets Fund at the current unit price. Regular payments will buy units at different prices over time. The level of protection an investor gets will depend on how the unit price on the day they invest in the Protected Consensus Markets Fund compares to the protected price pledge. Our promise to you and your client PROMISE We have designed this fund so that it provides access to the potential performance of the Consensus Markets Fund with some built- in security features. We are committed to treating our customers fairly in managing the fund. If there are material difficulties in operating the fund as intended. If this happens, we will write to you and your client. This is likely to include the option of: switching to our cash fund (this switch would take place by a certain date); or switching to any other fund of their choice on their plan before this date (we may also offer new fund choices at that stage). 13

16 5 Questions and Answers What products is the Protected Consensus Markets Fund available on? The Protected Consensus Markets Fund is available on our current pension, PRSA, ARF, investment and savings product ranges as follows: Product name Complete Solutions 1 and 2 Pension Plan Complete Solutions PRSA Options Plan Complete Solutions ARF 1 and 2 Plan Signature or Signature 2 Bond Signature Saver Plan Description Pre-retirement pension plan Non-standard PRSA plan Post-retirement pension plan Investment plan Savings plan It is also available on a range of our older products. Please contact your Account Manager for more information. What are the charges? The fund charge varies by product. The charge for the Protected Consensus Markets Fund is an additional 0.6% per annum compared with the charge for the Consensus Fund under our products. For the products listed above, details of the charges on this fund and other funds available, along with any other charges that may apply, are outlined in our product booklet and Fund Guide. For charges on older products, please contact your Account Manager. Is the fund available for switches, withdrawals or transfers? Yes, investors can switch in and out of the fund at any stage or take a regular withdrawal, encashment or transfer according to their product rules. If your client switches to another fund on their plan, the protected price pledge will not apply on that fund. Regular withdrawals will reduce your client s allocated units. The protected price pledge will only apply to their remaining units in the fund. The protected price pledge is designed to apply for an initial period up to 11 September For further important details on this, see page 12. Can I review the CPPI Formula in more detail? The formula used to calculate the exposure to the Consensus Markets Fund is based on an investment strategy known as Constant Proportion Portfolio Insurance (CPPI). This strategy invests more in the Consensus Markets Fund as the value of the fund rises, and invests less as the value falls. The proportion invested in the Consensus Markets Fund also has to take account of the fact that there is a protected price pledge of 80% of the highest ever unit price. 14

17 Time Unit price The Cushion Multiplier Percentage Percentage of the protected (A-B) in the in the Protected price Consensus Protected Consensus pledge Markets Fund Fund Markets Fund (C*D)/A (100% - E) A B C D E F Month % 0% Month % 49% Month % 26% Month % 0% Month % 0% Month % 16% Month % 8% Month % 28% Month % 12% Month % 0% Month % 0% Month % 15% This example shows the protected price pledge compared to the unit price in the fund over a short period of time. It also shows how the mix between the Consensus Markets Fund and the Protected Fund would work. In month four, when the unit price increases to 1.02, the protected price pledge also increases to 0.82 so that the percentage protected stays at 80% of the highest ever unit price of the fund. In month six, as the unit price falls to 1.02 again, the protected price pledge stays at 0.85; 80% of the highest ever unit price to that date (1.06 experienced in month five). However the amount we invest in the Consensus Markets Fund and the Protected Fund changes because of this fall in the unit price. The allocation to the Consensus Markets Fund will decrease and that to the Protected Fund will increase in accordance with the formula. In month ten, the unit price of the Protected Consensus Markets Fund has risen to a new highest ever level of 1.08 and, as a result, the protected price pledge also rises to Again the amount we invest in the Consensus Markets Fund and the Protected Fund changes, this time because of an increase in the unit price. In this case the allocation to the Consensus Markets Fund will increase and that to the Protected Fund will decrease. A simple way of demonstrating the formula for calculating the percentage exposure to the Consensus Markets Fund is as follows: ( Unit Price - protected price pledge Unit Price )x5 In other words: Cushion / Unit Price x Multiplier = % exposure to the Consensus Markets Fund Example In month three, the unit price is 0.94 and the protected price pledge is Therefore the cushion is /0.94 x 5 = 74% exposure to the Consensus Markets Fund. In the previous table this is represented by (C*D)/A. The remainder is invested in the Protected Fund (F). The Protected Consensus Markets Fund can invest a maximum of 100% in the Consensus Markets Fund. Warning: These figures are estimates only. They are not a reliable guide to the future performance of this investment. The value of your investment may go down as well as up. The Protected Consensus Markets Fund may be affected by changes in currency exchange rates. 15

18 There are minimum and maximum asset allocations allowable in the Protected Consensus Markets Fund that we agreed with Deutsche Bank. These are as follows: Asset Class Minimum % Maximum % Equities 0% 100% REITs and Illiquid assets 0% 10% (max of 10% in either) UCITS Hedge Funds, Managed Accounts and OTC swaps 0% 15 % Investment Grade Government Bonds, AAA/AAA- Corporate Bonds and Cash 10% 100% We anticipate staying within these allocations based on (i) the asset allocations over the last 15 years in the Consensus Fund and (ii) our asset allocation outlook going forward. As outlined earlier, the assets in the Consensus Markets Fund will change over time as it matches the mix of assets of the main investment managers in Ireland. If the main investment managers change their mix of assets very significantly in the future, we may change how we decide the mix of assets in the Consensus Markets Fund so that it is closer to the current asset mix. Alternatively, if we move outside of these allocations within the Protected Consensus Markets Fund, we may then decide to revise the mechanism for calculating the exposure to the Consensus Markets Fund as follows. Effectively the cushion is reduced by the amount the fund moves outside the allocations above. This is best illustrated by an example. Suppose we have a maximum constraint on illiquid assets of 10% and there is actually an 11% allocation within the Consensus Markets Fund. Let s also assume the fund price is 1.00 and the protected price pledge is In this instance the cushion is adjusted as follows = (100%-80%) (11% - 10%) = 20% - 1% = 19%. This is multiplied by the multiplier to get the allocation to the Consensus Markets Fund i.e. The allocation = 19% x 5 = 95%. When does rebalancing occur? The split between the Consensus Markets Fund and the Protected Fund is calculated by Deutsche Bank on the basis of a mathematical formula. Using this information we aim to rebalance on a daily basis. This ensures that the split between the two funds is up to date at all times. Is there any circumstances where a delay period could apply? In the event of the protected price pledge being triggered, Deutsche Bank has five business days to pay us the proceeds of the protected price pledge. We will delay administering any switches, regular withdrawals, encashments, transfers or benefit payments until after Deutsche Bank have made this payment to us. Please note that in extreme circumstances such as not being able to sell assets in the fund over a prolonged period of time, we may need to delay payments for longer than 5 business days for any switches, regular withdrawals, encashments, transfers or benefit payments from the fund. We will let you and your client know if such a notice period should apply. Is there an end date on this fund? The protected price pledge is designed to apply for an initial period up to 11 September (unless the contract with Deutsche Bank ends earlier). For further important details on this, see page 12. We hope to extend the initial period in the future and therefore we hope that the fund will be open-ended. However, if we cannot extend this period, we will close the fund. 16

19 Another option for you based on our Core and Explore Principles Core Options Explore Options The Protected Consensus Markets Fund is a new addition to our flagship funds offering more choice and flexibility to investors and their advisers. It could be used as an anchor fund for a more cautious investor, as the cornerstone of their portfolio or can be mixed with higher risk Explore funds for a more adventurous investor. We have classified it as a medium risk fund but in a lower risk category to Core and Consensus. This fund is underpinned by our key Core and Explore principles: Indexation The Consensus Markets Fund follows the same current asset allocation as our Consensus Fund but without the allocation to property. So your clients get the benefit from the world-class indexation skills of Irish Life Investment Managers at a lower cost to active fund management and with individual manager risk eliminated. Diversification The Consensus Markets Fund includes allocation to equities, bonds and cash and therefore gives a balanced return to any investment. Risk Management Deutsche Bank AG provide the protected price pledge on this fund to us and calculate the asset allocation between the Consensus Market Fund and the Protected Fund based on prevailing market conditions. A blend of these two risk management mechanisms is intended to reduce the risk of the fund for investors. Warning: The value of this investment may go down as well as up. Past performance is not a reliable guide to future performance. This fund may be affected by changes in currency exchange rates. 17

20 For more information on the Protected Consensus Markets Fund, talk to your Account Manager today. This is not a customer document and is intended for Financial Advisers only. Whilst every care has been taken to ensure that the information is accurate, Irish Life Assurance plc does not accept responsibility for errors contained in this document. The contents in this document do not constitute investment advice and have not been prepared based on the financial needs, objectives or specific needs of any particular person. Information is correct as at August Irish Life Assurance plc is regulated by the Financial Regulator. ILA 8185 (NPI 09-10)