PRODUCT KEY FACTS

Premier June 2014

This statement provides you with key information about this product. This statement is a part of the offering document. You should not invest in this product based on this statement alone. There is a ‘Glossary’ section at the end of this statement. For those words which are underlined, please refer to the ‘Glossary’ section for explanations.

Quick Facts Name of Friends Provident International Policy currency: US Dollar, Sterling, company: Limited (“Friends Provident Euro or Dollar International”) Minimum investment: For regular premium: Single or regular • Regular premium USD 150, GBP 100, premium: • Single premium EUR 150 or HKD 1,200 (optional) (monthly) Quarterly, half-yearly and yearly Regular premium Monthly, quarterly, premiums are calculated on frequency: half-yearly and yearly a pro-rata basis, i.e. 3, 6 or 12 times the monthly Minimum premium 5 years minimum investment payment term: respectively For single premium: Period with surrender The whole premium payment USD 3,000, GBP 2,000, charge: term until your chosen EUR 3,000, or HKD 24,000 Option Date Maximum investment: N/A Governing Law of policy: The Death benefit: 101% of the policy value

Important • This investment-linked assurance scheme (“ILAS policy”) is a long-term investment-cum- product. It is only suitable for investors who:

– understand that the principal will be at risk – have both investment and estate planning objectives as it is a packaged product that includes both investment and insurance element with death benefits payable to third party beneficiaries.

• This ILAS policy is not suitable for investors with short- or medium- term liquidity needs.

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Important (Cont.) Fees and charges – Up to 23% of your premiums (after taking into account all applicable extra allocation) will be paid to Friends Provident International to cover all the fees and charges at the ILAS policy level, of which 0% is the cost of life protection, and this will reduce the amount available for investment.

Please note that the above figures are calculated based on the following assumptions: (a) the payment of regular premium of HKD 100,000 per annum; (b) you hold your ILAS policy for 25 years; (c) an assumed rate of return of 3% per annum throughout 25 years; and (d) there is no early withdrawal/termination of your ILAS policy. You must understand that these ILAS level charges are on top of, and in addition to, the underlying funds level charges. The above figures do not take into account any early surrender charge.

The above percentages of your premiums for covering the total fees and charges are calculated based on the assumptions above for illustration purposes. The actual percentages may change depending on individual circumstances of each case, and will be significantly higher if the premium amount is lower.

• Long-term features – Upfront charges (Charge as a result of allocation rates): (a) Up to 5% of all premiums you pay for the entire premium payment term will be deducted upfront as charges and will not be available for investment. This means that the remaining amount of premiums available for investment may be 95% of your premiums paid in this period. As an illustration, this means that for each HKD 1,000 of premiums you pay each year, the premiums available for investment (after deduction of all upfront charges only) are as follows:

Premiums available for investment Policy Year Premiums you pay (after deduction of all upfront charges only) 1 - 25 HKD 1,000 HKD 950 (95%)

You should note that the above illustration merely shows the impact of upfront charges on the premiums available for investment and does not reflect the impact of any other applicable fees and charges. Early surrender charge: (b) There will be an early surrender charge of up to 100% of the value of Initial Units in case of policy termination or surrender before your chosen Option Date.

• Intermediaries’ remuneration Although you may pay nothing directly to the intermediary who sells/distributes this ILAS policy to you, the intermediary will receive remuneration which, in effect, will be borne out of the charges you pay. You should ask your intermediary before taking up your ILAS policy to know more about the level or amount of the remuneration that the intermediary will receive in respect of your ILAS policy. If you ask, your intermediary should disclose the requested information to you.

What is this product and how does it work? • Premier is an investment-linked assurance scheme. It is a life insurance policy issued by Friends Provident International. This is not a fund authorised by the SFC pursuant to the Code on Unit Trusts and Mutual Funds (“UT Code”).

• The premiums you pay, after deduction of any applicable fees and charges of your ILAS policy, will be invested by Friends Provident International in the “underlying funds” corresponding to the investment-linked funds you selected (see below) and will accordingly go towards accretion of the value of your ILAS policy. Your ILAS policy value will be calculated by Friends Provident International based on the performance of the underlying funds corresponding to the investment-linked funds you selected from time to time and the ongoing fees and charges which will continue to be deducted from your ILAS policy value.

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What is this product and how does it work? (Cont.) • Note, however, that all premiums you pay towards your ILAS policy, and any investments made by Friends Provident International in the underlying funds corresponding to the investment-linked funds you selected, will become and remain the assets of Friends Provident International. You do not have any rights or ownership over any of those assets. Your recourse is against Friends Provident International only.

• Due to the various fees and charges levied by Friends Provident International on your ILAS policy, the return on your ILAS policy as a whole may be lower than the return of the underlying funds corresponding to the investment-linked funds you selected. Please see section ‘Understanding our charges’ (page 22 to 25) of the Product Brochure of Premier for details of the fees and charges payable by you.

• “Underlying funds” which correspond to the investment-linked funds available for selection are listed in the Investment-linked Funds Leaflet.

• Although your ILAS policy is a life insurance policy, because your death benefit is linked to the performance of the underlying funds corresponding to the investment-linked funds you selected from time to time, your death benefit is subject to investment risks and market fluctuations. The death benefit payable may be significantly less than your premiums paid and may not be sufficient for your individual needs.

• You must maintain your ILAS policy value at or above a Minimum Policy Value at all times after the Initial Period. The policy value may fall below the Minimum Policy Value under various circumstances, including, without limitation, a market downturn which is beyond your control. This means that even if you do not make any withdrawals, reduce the regular premium amount or take any premium holidays, your policy value may still fall below the Minimum Policy Value. If so, your ILAS policy will terminate and you will be subject to any applicable surrender charge. Please refer to section ‘Termination’ (page 18) of the Product Brochure of Premier for details.

What are the key risks? Investment involves risks. Please refer to the principal brochure of Premier which consists of the Product Brochure, Investment-linked Funds Leaflet and Underlying Funds Annual Charges Leaflet for details including the risk factors.

• Credit and insolvency risks – Premier is an insurance policy issued by Friends Provident International. Your investments are subject to the credit risks of Friends Provident International.

• The investment-linked funds available under Premier can have very different features and risk profiles. Some may be of high risk. Please read the principal brochure of Premier and the offering document of the underlying funds involved for details.

• Early surrender penalty – This ILAS policy is designed to be held for a long term period. Early surrender may result in a significant loss of principal. Poor performance of underlying funds may further magnify your investment losses, while all charges are still deductible.

• Premium holiday – with no premium contribution during premium holiday, the value of your ILAS policy may be significantly reduced due to fees and charges, which are still deductible during premium holiday.

• Market risks – Return of this ILAS policy is contingent upon the performance of the underlying funds corresponding to the investment-linked funds and therefore there is a risk of capital loss.

• Foreign exchange risks – The investment returns of your ILAS policy may be subject to foreign exchange risks as some of the investment-linked funds may be denominated in a currency which is different from that of your ILAS policy.

• Early termination risks – Your ILAS policy will terminate in the event that your policy value falls below the Minimum Policy Value after the Initial Period even if you do not make any withdrawals, reduce the regular premium amount or take any premium holidays. The policy value may fall below the Minimum Policy Value under various circumstances, including, without limitation, a market downturn which is beyond your control. You will also be subject to any applicable surrender charge upon termination of your ILAS policy.

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Is there any guarantee? Premier does not have any guarantee of the repayment of principal. You may not get back the full amount of premium you pay and may suffer investment losses.

Other features A. Allocation rate – Subject to the amount of regular premium you pay, an allocation rate of 95% to 110% of your regular premium will apply in allocating Initial Units and Accumulation Units of the investment-linked funds you selected to your ILAS policy. The allocation rates are set out in the table below:

Allocation rates Monthly premium Initial Units (months 1 to 18) Accumulation Units (month 19+) USD 150 – USD 249 95%* 95%* USD 250 – USD 499 100% 100% USD 500 – USD 999 105% 100% USD 1,000 plus 110% 100%

*5% of each of your regular premium will be taken as a charge.

B. Premium increase – Provided there are five or more years remaining to the Option Date, you can increase your regular premiums on any premium due date. The minimum premium increase per month is USD 50 (GBP 33, EUR 50 or HKD 400). The increased portion of the new regular premium will be subject to a Subsequent Initial Period. Throughout the Subsequent Initial Period, Initial Units will be notionally allocated to your ILAS policy in respect of the increased portion at the allocation rate applicable to the new regular premium amount. Where the new regular premium amount puts your regular premium into a higher allocation band, you will be able to benefit from the higher allocation rate on the increased portion. Please refer to section ‘Regular premium increases’ (page 14) of the Product Brochure of Premier for details and details of minimum premium increase amounts in other payment frequencies.

C. Reducing premiums – After the Initial Period, the amount of your regular premium may be reduced on any premium due date, provided the reduced regular premium amount is above the minimum investment levels for regular premiums as shown in section ‘Quick Facts’ of this statement. After completion of the Initial Period, if your reduced regular premium falls below USD 250 (GBP 167, EUR 250 or HKD 2,000) per month, Accumulation Units will be notionally allocated to your ILAS policy at the allocation rate applicable to your original premium amount (see item A ‘Allocation rates’ above). Please refer to section ‘Reducing premiums’ (page 15) of the Product Brochure of Premier for details.

D. Withdrawals – Premier allows you to receive a regular income or make one-off withdrawals from Accumulation Units free of charge at all times when Accumulation Units are available. Withdrawals are subject to a minimum withdrawal amount of USD 750 (GBP 500, EUR 750 or HKD 6,000) per withdrawal and the Minimum Policy Value. Please refer to section ‘Regular or one-off withdrawals’ (page 17) of the Product Brochure of Premier for details.

E. One-off single premium – Provided there are five or more years remaining to the Option Date, you can make one-off single premium payments with a minimum payment of USD 3,000 (GBP 2,000, EUR 3,000, or HKD 24,000) at any time. Any one-off single premium payments you made will be applied in allocating notional Accumulation Units to your ILAS policy and will be subject to a once-only charge of 7% of each one-off single premium paid.

F. Premium holidays – After the Initial Period, premium holidays are allowed for a maximum period of 12 months subject to the Minimum Policy Value. Charges will continue to be taken during the premium holiday period though death benefit shall remain unaffected. Please refer to section ‘Premium holidays’ (page 15) of the Product Brochure of Premier for details.

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What are the fees and charges? Friends Provident International reserves the right to vary the fees and charges or imposes new fees and charges with not less than 3 months’ prior written notice or such shorter period of notice in compliance with the relevant regulatory requirements.

Scheme level

Applicable rate Deduct from Policy charges Charge as a result If your regular premium amount is less than USD 250 Your regular premium payments. of allocation rates (GBP 167, EUR 250 or HKD 2,000) per month, 95% of your regular premiums will apply in allocating notional units of investment-linked funds you selected to your ILAS policy – 5% of each of your regular premiums paid will be taken as a charge.

However, if your monthly regular premium at the commencement date of your ILAS policy is USD 250 (GBP 167, EUR 250 or HKD 2,000) or more and you have subsequently reduced the monthly regular premium to below USD 250 (GBP 167, EUR 250 or HKD 2,000), this 5% charge will not be applicable to your reduced regular premiums. Initial charge 6% per year of the value of the Initial Units, including Policy value by deduction of Initial those allocated due to any premium increase. The Units quarterly based on the policy charge will continue to be deducted until the Option commencement date in proportion Date. to the value of the investment- linked funds in your ILAS policy at the time the charge is taken. Plan fee USD 72 (GBP 48, EUR 72 or HKD 576) per year. That is Policy value by deduction USD 6 (GBP 4, EUR 6 or HKD 48) per month. of Accumulation Units monthly based on the policy commencement date. During periods where there are no Accumulation Units, the plan fee will be accrued without interest. Once Accumulation Units become available, any accrued plan fees will be deducted from the Accumulation Units immediately. In the event of a surrender where no Accumulation Units are available, any plan fee debt will be deducted from Initial Units before any applicable surrender charge. In the event of death claim where no Accumulation Units are available, we will deduct any plan fees owing to us before we pay the death benefit. Additional single 7% of the premium for each additional single premium Additional premium before it is premium charge paid. This is a once-only charge. applied in allocating Accumulation Units to your ILAS policy. Paid up charge Nil.

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What are the fees and charges? (Cont.)

Surrender charge If the policy is surrendered before the Option Date, Policy value by deduction of a surrender charge will be taken as a percentage of Initial Units in your investment- the value of Initial Units. During the first 12 months linked funds in proportion to the of the policy and until you have paid the first year’s value of investment-linked funds contractual premiums due, the surrender charge will in your ILAS policy at the time of be 100% of the value of Initial Units. Thereafter, the surrender. surrender charge will depend on the remaining term as set out below:

Remaining term 25 24 23 22 21 20 19 18 17 16 15 14 13 (years) Surrender charge 100 87 84 81 78 75 72 69 66 63 60 57 54 rate (%) Remaining term 12 11 10 9 8 7 6 5 4 3 2 1 0 (years) Surrender charge 51 48 45 42 39 36 33 30 24 18 12 6 0 rate (%)

Part years will be rounded up to the next whole year. Other charges Where premiums are paid by credit card Friends Each premium payment Provident International will charge 1.95% of each collected through credit card. premium paid to cover the charges imposed by the credit card issuing company. Investment-linked fund charges Administration 1.2% per year of the Gross Value of each investment- Each investment-linked fund on charge linked fund. the valuation day directly. This charge is reflected in the unit price of the investment-linked fund. Bid/offer spread Nil. Switching charge Nil. Other investment- Friends Provident International will be entitled to take These expenses are reflected in linked fund-related from each Friends Provident International investment- the unit price of the investment- costs linked fund a number of expenses as follows: linked fund.

• Any cost, expenses and charges incurred by Friends Provident International in acquiring, managing, maintaining, valuing or disposing of the assets relating to that investment-linked fund, not covered by the administration charge described above.

• Any expense, charge, tax, levy or fiscal enforcement not taken into account elsewhere, which Friends Provident International reasonably considers is a liability relating to that investment-linked fund.

Please refer to section ‘Understanding our charges’ (page 22 to 25) of the Product Brochure of Premier for details of the charges. The above fees and charges are payable to Friends Provident International.

Underlying funds level

You should note that the underlying funds of the investment-linked funds may have separate charges on management fee, performance fee, bid-offer spread and/or switching fee. You do not pay these fees directly as the fees will be deducted and such reduction will be reflected in the unit price of the underlying funds. For details, please refer to the offering document of the underlying funds and/or the principal brochure of Premier, which are available from Friends Provident International upon request.

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Additional Information A. Investment-linked funds – You can invest premiums in a combination of up to 10 investment-linked funds at any one time.

B. Lives assured – You have the ability to add up to four lives assured. At least one life assured must be aged 75 or less on the Option Date. The minimum age for a policyholder is 18 and the maximum is 69. If you have included other lives assured, your policy will continue to run until the death of the last assured life.

C. Multiple policies – Your Premier will be issued as a series of 10 identical policies. However you can select your Premier to be issued as one single policy by indicating your choice on the application form. Your premium is split evenly across the number of policies chosen. Please refer to ‘Behind the scenes’ (page 16) of the Product Brochure of Premier for details.

What if you change your mind? – Cooling-off period

• Cooling-off period is a period during which life insurance policyholders may cancel their policies and get back their original investments (subject to market value adjustment) within the earlier of 21 days after the delivery of the policy or issue of a notice to you or your representative. Such notice should inform you of the availability of the policy and expiry date of the cooling-off period. Please refer to the cooling off initiative issued by HKFI from time to time for reference.

• You have to tell Friends Provident International by giving a written notice. Such notice must be signed by you and received directly by Friends Provident International at Suites 1203-1211, Two Pacific Place, 88 Queensway, Hong Kong.

• You may get back the amount you paid, or less if the value of the investment-linked funds chosen has gone down.

Insurance company’s information Friends Provident International Limited Telephone: +852 2524 2027 Fax: +852 2868 4983 Suites 1203-1211, Two Pacific Place, Email: [email protected] 88 Queensway, Hong Kong Website: www.fpinternational.com.hk

Important Friends Provident International is subject to the prudential regulation of the Insurance Authority. However, the Insurance Authority does not give approval to individual insurance products, including Premier referred to in this statement.

If you are in doubt, you should seek professional advice.

The SFC takes no responsibility for the contents of this statement and makes no representation as to its accuracy or completeness.

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Glossary Initial Period means the first 18 months from the commencement date of an ILAS policy.

Subsequent Initial Period means the first 18 months from the commencement date of any premium increases.

Initial Units means the units of investment-linked fund(s) allocated to an ILAS policy during the Initial Period and the Subsequent Initial Period.

Accumulation Units are units of investment-linked fund(s) allocated to an ILAS policy after the Initial Period or the Subsequent Initial Period or as a result of one-off single premiums.

Gross Value means the value of the units of the investment-linked fund prior to the deduction of the administration charge.

Minimum Policy Value is the minimum value at or above which your ILAS policy must be maintained at all times after the Initial Period. The value of your policy must be sufficient to meet three monthly plan fees after the deduction of the applicable surrender charge.

Option Date is the date the premium payment term comes to an end.

Friends Provident International Limited Registered and Head Office: Royal Court, Castletown, Isle of Man, British Isles, IM9 1RA. Telephone: +44(0) 1624 821 212 Fax: +44(0) 1624 824 405 Incorporated company limited by shares. Registered in the Isle of Man, number 11494. Authorised by the Isle of Man Insurance and Authority. Provider of life assurance and investment products. Appointed Representative in Hong Kong: Friends Provident International Limited Hong Kong Branch Suites 1203-1211, Two Pacific Place, 88 Queensway, Hong Kong Telephone: +852 2524 2027 Fax: +852 2868 4983 Website: www.fpinternational.com.hk Authorised by the Office of the Commissioner of Insurance to conduct long-term insurance business in Hong Kong. Friends Provident International is a registered trade mark of the .

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