Passport Series With-Profits Funds Fund Addition Rates

Fund Addition rates

The Fund Addition is an annual regular bonus which is reviewed twice a year, on 1 January and 1 July. We add the Fund Addition to your investment by increasing the price of the Passport Series With-Profits Fund by the daily equivalent of the Fund Addition rate. The bonus is quoted after the annual management charge has been deducted.

 

Smoothing

The bonus rate policy is designed to set the Fund Addition rate at a level supportable in the future and to reflect the performance achieved on the assets applicable to these policies, with a substantial degree of smoothing. We set Fund Addition rates with regard to the performance of the Fund available for the whole portfolio of business, considered separately for each currency, rather than the performance attributable to individual policies. This means that there is a greater sharing of performance between individual policies over different investment periods. This method is sometimes known as a 'mixed money' basis. The single bonus rate structure is less reactive to market movements than is a structure with two or more tiers of bonus as for most other With-Profits bonus classes, and this could lead to more occasions when payouts are more than 20% away from asset share.

 

Investment Strategy

The Passport Series With-Profits Funds are denominated in Sterling, US Dollar and Euro currencies, and separate groups of assets are used for each currency. The assets for each currency have a similar mix of fixed-interest and higher-risk assets, but there are two differences: 

 

• most of the assets are in the same currency as the Passport Series policy and are invested in the investment markets of that currency area
• the proportion of assets in property varies between Passport Series currency.