Fund Range Change - Protected Lifestyle Lebanon Policies

What is the change?

Following a review of the Protected Lifestyle Lebanon (PLL) investment options we have determined that, due to current market conditions, it is no longer possible or practical to achieve the original objectives for the current range of PLL funds. We will therefore be closing the Capital Protected Funds to PLL and replacing the funds with a range of externally managed, daily traded funds. At the same time we will also create a Lebanese Deposit fund (LDF), which will be a cash deposit fund placed with a bank(s) domiciled in Lebanon.

As part of the change it will be a requirement for all policyholders to maintain a minimum of 50% of their policy in the LDF. This means that at least 50% of all premiums paid mus be paid into the LDF. Rebalancing of policies will be carried out periodically to ensure that at least 50% of each PLL policy remains invested in the LDF. The remaining 50% can be invested into any of the new External Funds. These will be denominated in US Dollars and will include funds from a variety of sectors such as Money Market, Global Managed, Equity and Specialist.

Existing policyholders have been written to about the above. Their letter includes an Addendum detailing the fund range change and will form part of their current Policy Terms and Conditions. Letters have been issued to relevant servicing advisers who will be responsible for forwarding a copy to their clients.

When will the fund range change take place?

On 18 March 2016, which is the next quarterly dealing date for the Capital Protected Funds, we will:

• Close off the Capital Protected Funds to PLL and move 100% of all PLL policyholder investments into the newly created LDF. At the same time we will also redirect 100% of future premiums to the LDF. These switches will be done free of any charge.
• From 23 March 2016, policyholders will be given access to the new PLL External Fund range and will be able to choose to invest up to 50% of their holdings into any of these funds. Please note that policyholders do not have to invest in the External Funds, they can if they wish remain invested 100% in the LDF. The only requirement is that at least 50% of the policy value must be maintained in the the LDF.

Differences between the old fund range and the new fund range

The funds within the new range will not offer any capital protection, a feature of the Capital Protected Funds, and their value can go up or down over time in line with market conditions. However, all the funds are traded on a daily basis which means policyholders will no longer be restricted to quarterly dealing dates, allowing them to switch between the new fund options at any time. The new range has been carefully selected from leading fund groups such as BlackRock, JPMorgan, Franklin Templeton and Schroders and will provide different types of funds from cautious to adventurous. Policyholders will be able to hold any number of the funds in their policy, allowing them to create a diversified portfolio.

The External Funds will have an Offer Price and a lower Bid Price. The difference between these two prices is called a bid/offer spread. Units will be purchased at the Offer Price but they will be valued in policies at the Bid Price. The Bid Price is 2.5% lower than the Offer Price. Please note however that there is no bid/offer spread on the LDF.

Where to find details of the new PLL External Fund range

A Protection Fund Guide for Lebanon policyholders has been produced which details the investment objectives of the new fund options and the Annual Management Charge that applies to each fund (this is the charge that the External Fund manager takes for running the fund). A Fund Performance Bulletin is also available to provide investors with regular updates on how each fund is performing and can be read alongside the Protection Fund Guide for Lebanon policyholders when making fund selections.

A sample of the policyholder letter can be viewed opposite, along with the Fund Guide and fund performance bulletin. Advisers can regularly view these on the 'Protected Lifestyle Lebanon Fund Centre page' on our Adviser website.